Berry Petroleum's 2002 Earnings Rose 37% in 2002 to $30 Million.Business Editors BAKERSFIELD, Calif.--(BUSINESS WIRE)--Feb. 13, 2003 Berry Berry, former province, France Berry (bĕrē`), former province, central France. Bourges, the capital, and Châteauroux are the chief towns. Petroleum Company (NYSE NYSE See: New York Stock Exchange :BRY) today announced net income of $30 million, or $1.38 per share (basic), on revenues of $132.6 million for the year ended December 31, 2002, up 37% from $21.9 million, or $1.00 per share (basic), on revenues of $138.5 million for the year ended December 31, 2001. These results represent Berry's second highest net income ever. Net income for 2001 was adversely affected by a $4 million after-tax charge for the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of electrical receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed deemed uncollectable. However, in the first quarter of 2002, a portion of those proceeds were collected resulting in a $2.2 million after-tax credit. Total production for 2002 was 5.3 million barrels of oil equivalent (BOE BOE Based on Experience BOE Board of Education BOE Boletín Oficial del Estado (Spanish) BOE Bank of England BOE Board of Equalization BOE Board of Elections BOE Barrel of Oil Equivalent BOE Bind on Equip ), or 14,387 BOE/day, up 4% from 5 million BOE, or 13,820 BOE/day, in 2001. The average sales price/BOE received in 2002 was $19.39, down 2% from $19.79 received during 2001. For the fourth quarter of 2002, the Company earned $7 million, or $.32 per share (basic), on revenues of $36.7 million. This was up 75% from $4 million, or $.19 per share (basic) earned in the fourth quarter of 2001 on revenues of $27.5 million, but down 8% from $7.6 million, or $.35 per share (basic) earned in the third quarter of 2002 on revenues of $35.3 million. Total production for the fourth quarter of 2002 was 1.4 million BOE, or 15,208 BOE/day, up 13% from 1.2 million BOE, or 13,444 BOE/day in the fourth quarter of 2001 and up 5% from 1.3 million BOE, or 14,464 BOE/day, in the third quarter of 2002. The average sales price/BOE received in the fourth quarter of 2002 was $20.41, up 32% from $15.51 received in the fourth quarter of 2001 and down 3% from $21.03 received in the third quarter of 2002. Jerry Hoffman, Chairman, President and Chief Executive Officer, stated: "2002 was another solid year for the Company as we achieved a 17% return on capital employed Return on capital employed (ROCE) Indicator of profitability of the firm's capital investments. Determined by dividing Earnings Before Interest and Taxes by (capital employed plus short-term loans minus intangible assets). (our three-year average is 18%), and an 18% return on equity (our three-year average is 21%). Production rates were decreased significantly in 2001 due to the suspension of our steam operations as a result of the California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). energy crisis. Our most important goal for 2002 was to re-establish production rates from our core assets to the levels achieved before the steam interruption INTERRUPTION. The effect of some act or circumstance which stops the course of a prescription or act of limitation's. 2. Interruption of the use of a thing is natural or civil. . This goal was largely achieved in 2002 with a production exit rate for 2002 of approximately 15,700 BOE/day. Excluding property acquisitions, the Company's 2003 capital budget for additional development of our core properties is $27.6 million, which is down 10% from 2002 capital expenditures. We also expect our steaming operations to rise to levels near 67,000 barrels of steam per day to support our increasing production. Our target average production rate from our existing producing properties for 2003 is 16,400 BOE/day, up 14% from our 2002 average production rate of 14,387 BOE/day and we expect to exit 2003 at 17,700 BOE/day." Operating costs operating costs npl → gastos mpl operacionales ($/BOE) were $8.49 in 2002, up 6% from $7.99 in 2001. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. for the fourth quarter of 2002 were $10.17, up 44% from the fourth quarter of 2001. The primary reason for the increase was high steam costs due to high gas prices, low electricity prices and high volumes of steam from our conventional generators. The average cost of natural gas purchases in 2002 was $3.13 per Mmbtu, down from $5.76 in 2001. The average price for the fourth quarter was $3.99 and the current cost of delivered gas is $4.92 per Mmbtu. Total steam injected in·ject·ed adj. 1. Of or relating to a substance introduced into the body. 2. Of or relating to a blood vessel that is visibly distended with blood. injected 1. introduced by injection. 2. congested. in 2002 was 21.9 million barrels, up 78% from 12.3 million barrels in 2001. The average sales price per megawatt meg·a·watt n. Abbr. MW One million watts. meg  a·watt of electricity was $40.06 in 2002, down
from $79.14 in 2001. Management anticipates that operating costs will
increase to a range of approximately $8.50 - $9.50 per BOE in 2003 due
to high steaming operations and relatively high natural gas prices.During 2002, the majority of the Company's electricity was sold on the open market. However, in January 2003, Berry began delivery of electricity under reinstated Standard Offer contracts with Pacific Gas and Electric Company
The Pacific Gas and Electric Company (PG&E) , (NYSE: PCG), is the utility that provides natural gas and electricity to most of Northern California. and Southern California Edison Southern California Edison (or SCE Corp), the largest subsidiary of Edison International (NYSE: EIX), is the primary electricity supply company for much of Southern California. It provides 11 million people with electricity. Company, which should result in improved electrical pricing and contribute to lower operating costs for the Company's crude oil production operations. These contracts are scheduled to terminate no later than December 31, 2003. Management will pursue extensions or other longer-term contracts at competitive rates for 2004 and beyond. General and administrative expenses (G&A) in 2002 were $7.9 million, or $1.51 per BOE, up 6% from $7.2 million, or $1.42 per BOE, in 2001. The increase from 2001 was primarily due to costs related to the evaluation of potential acquisitions and rent on the Company's corporate offices. The Company is targeting 2003 G&A costs of approximately $1.50 per BOE. Ralph Goehring, Senior Vice President and Chief Financial Officer, said, "The Company generated a very healthy $57.9 million in cash from operations, up 64% from $35.4 million in 2001. In the fourth quarter of 2002, Berry adopted SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System No. 143, 'Accounting for Asset Retirement Obligations Asset Retirement Obligations provide for future disposal of assets as required by SFAS 143 [1]. Firms must recognize the ARO liability in the period it was acquired, generally acquisition. .' The Company has recorded costs for the ultimate abandonment of our wells and facilities for many years under SFAS No. 19 and the effect of the change on 2002 earnings was immaterial Not essential or necessary; not important or pertinent; not decisive; of no substantial consequence; without weight; of no material significance. immaterial adj. . The effect on earnings in 2003 under the newly adopted method will be a charge of approximately $.5 million compared to a charge of approximately $.8 million under the previous method. The most significant effect of the change was to move the current accumulated ac·cu·mu·late v. ac·cu·mu·lat·ed, ac·cu·mu·lat·ing, ac·cu·mu·lates v.tr. To gather or pile up; amass. See Synonyms at gather. v.intr. To mount up; increase. financial obligation to a long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. liability account. The value of this obligation under our previous method had been recorded as a reduction to the total book value of the Company's property, plant and equipment. The accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. abandonment obligation at December 31, 2002 was $4.6 million." The present value of estimated future net cash flows from Berry's proved reserves proved reserves The quantity of minerals expected to be recoverable under current economic and operating conditions. The amount of proved reserves is important in valuing the stock of a company with significant holdings in natural resources. , discounted at 10%, was $452 million at December 31, 2002, up 61% from $280 million in 2001. These estimated cash flows were calculated using an unescalated year-end average oil sales price per barrel of $24.16 and $14.18 for 2002 and 2001, respectively. Total oil and gas reserves at December 31, 2002 were 101.7 million barrels, down slightly from 102.9 million barrels in 2001. Therefore, the Company replaced 4.1 million barrels, or 77%, of its production in 2002. Jerry Hoffman stated, "While we had a good year financially in 2002, the acquisition environment was, and remains, difficult due primarily to high commodity pricing. However, the Company acquired significant acreage positions in Kansas and Illinois and is in the process of evaluating the development potential of coalbed methane Coalbed methane is a form of natural gas extracted from coal beds. In recent decades it has become an important source of energy in United States, Canada, and other countries. production as part of our plan to diversify diversify To acquire a variety of assets that do not tend to change in value at the same time. To diversify a securities portfolio is to purchase different types of securities in different companies in unrelated industries. Berry's resource base with natural gas production. For 2003, our most important goal is to leverage our excellent balance sheet into growth assets and add a new core area for the Company outside California. We are targeting the U.S. Rockies and the Mid-continent and have established an office in Denver, Colorado to provide improved access to the available opportunities." An earnings conference call will be held February 14, 2003 at 8:00 a.m. PT. Dial 800/218-0713 to participate. For a digital replay, dial 800/405-2236 (passcode 522795). The digital replay will be available until February 28, 2003 at 11:59 p.m. PT. A webcast is available at www.bry.com. Berry Petroleum Company is a publicly traded independent oil and gas production and exploitation company with headquarters in Bakersfield, California “Bakersfield” redirects here. For other uses, see Bakersfield (disambiguation). Bakersfield (pop. 323,213GR2) is one of the fastest-growing, large-population cities in the United States. . Visit www.bry.com for more information. "Safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995:" With the exception of historical information, the matters discussed in this news release are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve risks and uncertainties. Although the Company believes that its expectations are based on reasonable assumptions, it can give no assurance that its goals will be achieved. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include, but are not limited to, the timing and extent of changes in commodity prices for oil, gas and electricity, a limited marketplace for electricity sales within California, counterparty risk Counterparty Risk The risk to each party of a contract that the counterparty will not live up to their contractual obligations. Notes: In most financial contracts, counterparty risk is known as default risk. , competition, environmental risks, litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. uncertainties, drilling, development and operating risks Operating risk The inherent or fundamental risk of a firm, without regard to financial risk. The risk that is created by operating leverage. Also called business risk. , the availability of drilling rigs and other support services support services Psychology Non-health care-related ancillary services–eg, transportation, financial aid, support groups, homemaker services, respite services, and other services , legislative and/or judicial decisions and other government regulations.
CONDENSED STATEMENTS OF INCOME
(In thousands, except per share data)
(unaudited)
Three Months Ended Twelve Months Ended
12/31/02 12/31/01 12/31/02 12/31/01
Revenues:
Sales of oil and gas $28,736 $19,278 $102,026 $100,146
Sales of electricity 7,865 7,829 28,827 35,917
Interest and other income, net 147 372 1,762 2,478
Total 36,748 27,479 132,615 138,541
Expenses:
Operating costs - oil and
gas production 14,223 8,714 44,604 40,281
Operating costs -
electricity generation 7,865 7,616 28,496 35,506
Depreciation, depletion &
amortization 4,056 3,982 16,452 16,520
General & administrative 1,758 1,692 7,928 7,174
Interest 179 448 1,042 3,719
Write-off (recovery) of
electricity receivable - - (3,631) 6,645
Loss on termination of
derivative contracts - 1,458 - 1,458
Total 28,081 23,910 94,891 111,303
Income before income taxes 8,667 3,569 37,724 27,238
Provision (benefit) for income
taxes 1,611 (480) 7,634 5,300
Net income before accounting
change $7,056 $4,049 $30,090 $21,938
Effect of accounting change,
net of taxes (66) - (66) -
Net income $6,990 $4,049 $30,024 $21,938
Basic net income per share $.32 $.19 $1.38 $1.00
Diluted net income per share $.32 $.18 $1.37 $.99
Cash dividends per share $.10 $.10 $.40 $.40
Weighted average common
shares:
Basic 21,752 21,791 21,741 21,973
Diluted 21,952 22,000 21,939 22,110
CONDENSED BALANCE SHEETS
(In thousands)
Dec. 31, Dec. 31,
2002 2001
ASSETS
Current assets $28,705 $28,201
Property & equipment, net 228,475 203,413
Other assets 893 912
$258,073 $232,526
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities $32,394 $22,364
Long-term debt 15,000 25,000
Deferred taxes 33,866 32,009
Other long-term liabilities 4,755 -
Shareholders' equity 172,058 153,153
$258,073 $232,526
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended
12/31/02 12/31/01
Cash flows from operations:
Net income $30,024 $21,938
Depreciation, depletion & amortization 16,452 16,520
Increase (decrease) in deferred income taxes 1,857 (50)
Other, net (184) (505)
Net changes in operating assets and liabilities 9,746 (2,470)
Net cash provided by operations 57,895 35,433
Net cash used in investing activities (36,526) (17,029)
Net cash used in financing activities (18,741) (13,897)
Net increase in cash & cash equivalents 2,628 4,507
Cash & cash equivalents, beginning of period 7,238 2,731
Cash & cash equivalents, end of period $9,866 $7,238
COMPARATIVE OPERATING STATISTICS
Three Months Ended Year Ended
12/31/02 12/31/01 Change 12/31/02 12/31/01 Change
Oil & Gas
Net production-
BOE/D 15,208 13,444 +13% 14,387 13,820 +4%
Per BOE:
Average sales
price $20.41 $15.51 +32% $19.39 $19.79 -2%
Operating costs(a) 9.57 6.50 +47% 7.94 7.50 +6%
Production taxes .60 .55 +9% .55 .49 +12%
Total operating
costs 10.17 7.05 +44% 8.49 7.99 +6%
Depreciation/
depletion 2.90 3.22 -10% 3.13 3.28 -5%
General &
administrative
expenses 1.26 1.37 -8% 1.51 1.42 +6%
Interest expense $.13 $.36 -64% $.20 $.74 -73%
Electricity
Net megawatts
per day - produced 2,126 1,936 +10% 2,050 1,325 +55%
Net megawatts
per day - sold 1,860 1,821 +2% 1,848 1,245 +48%
Average sales price
per megawatt $43.97 $43.92 -% $40.06 $79.14 -49%
Fuel gas cost
per Mmbtu $3.99 $2.44 +64% $3.13 $5.76 -46%
(a) Excluding production taxes
BOE/D - Barrels of oil equivalent per day.
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