Berry Petroleum Announces Record 2004 Results.BAKERSFIELD Bakersfield, city (1990 pop. 174,820), seat of Kern co., S central Calif., at the southern end of the San Joaquin valley; inc. 1898. It is an oil, mining, and agricultural center and one of the fastest-growing U.S. cities. , Calif. -- 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 BRY could refer to:
Bry ) announced record fourth quarter 2004 net income of $25.3 million, or $1.13 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, an increase of 169% compared to prior-year fourth quarter net income of $9.4 million, or $.42 per diluted share. The Company achieved record annual earnings in 2004 of $69.2 million, or $3.08 per diluted share which was 114% higher than the $32.4 million, or $1.47 per diluted share, the Company achieved in 2003, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Robert Robert, Henry Martyn 1837-1923. American army engineer and parliamentary authority. He designed the defenses for Washington, D.C., during the Civil War and later wrote Robert's Rules of Order (1876). Noun 1. F. Heinemann Heinemann may refer to:
He continued, "Our record 2004 results were accomplished by a 24% increase in annual production and a 35% increase in our annual realized sales price per 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 over 2003. We are managing our assets to maximize profitability in this higher price environment and to add reserves through our capital program. The transformation of Berry Petroleum from a company focused only on 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). heavy oil operations, to a geographically diverse enterprise with a higher percentage of light oil and natural gas, was significant in 2004. In 2004 and through February February: see month. 2005, we added approximately 735,000 acres to our asset portfolio. Our partnerships on a portion of these prospective assets allow us to leverage additional expertise to supplement our technical capabilities and reduce our exploration and development risks. 2005 will be exciting for Berry as we begin the exploitation process of this substantial acreage position. Excluding any exploratory success, we are targeting record production in 2005 of at least 23,000 BOE per day, which represents a 12% increase over our record 2004 production of 20,537 BOE per day." Total production during the fourth quarter of 2004 averaged 21,410 barrels of oil equivalent (BOE) per day, a 15% increase from an average of 18,550 BOE per day during the prior year's fourth quarter. California production averaged a new high in the fourth quarter of 16,243 BOE per day while the Rockies assets contributed a record of 5,167 BOE per day or 24% of the Company's total fourth quarter production. Of the 21,410 BOE per day produced in the fourth quarter, 76% (16,174) was heavy crude, 17% (3,722) was light crude and 7% (1,514) was natural gas. The average realized sales price for the fourth quarter of 2004 was $34.62 per BOE, a 53% gain over the $22.68 per BOE received in the same 2003 period. Net cash provided by operating activities increased to a record $46.1 million during the fourth quarter, up 89% from $24.8 million during the prior year's fourth quarter. 2004 Full Year Earnings and Operating Results In 2004, the Company achieved record net income of $69.2 million, up 114% from $32.4 million in 2003 and record net cash provided by operating activities of $125 million, up 92% from $65 million achieved in 2003. Total oil and gas production in 2004 averaged 20,537 BOE per day, up 24% from 16,549 BOE per day in the previous year. The average realized sales price per BOE was $30.32 in 2004, up 35% from $22.52 per BOE received in 2003. Excluding the purchase price of acquisitions, in 2004 the Company spent approximately $73 million in capital expenditures, which included the drilling of 115 net wells and completing 101 workovers. Year-End 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. In 2004 Berry replaced approximately 100% of its 2004 production of 7.5 million BOE at an average finding and development cost of $9.86 per BOE and ended the year with approximately 110 million BOE of proved reserves. Net proved reserve additions from all sources in 2004 totaled approximately 7.4 million BOE, resulting in essentially no change to the 110 million BOE of proved reserves at year-end 2003. Berry's 2004 year-end reserves-to-production ratio was 14.6 years, compared to 15.5 years at year-end 2003. Of the total 7.4 million BOE of proved reserves added by the Company in 2004, revisions of previous estimates added 4.4 million BOE (58%), discoveries and extensions added 2.9 million BOE (39%), and improved recovery added 2.0 million BOE (28%), while royalty conversions subtracted 1.9 million BOE(-25%). Proved developed reserves represent 81 million BOE or 74% of total proved reserves. Subsequent to year-end, Berry completed the acquisition of certain Yuma County Yuma County is the name of two counties in the United States:
From 2001 through 2004, Berry's average annual reserve replacement rate was 110%. At year-end 2004, the Company's reserve mix was 82% heavy crude oil Heavy crude oil or Extra Heavy oil is any type of crude oil which does not flow easily. It is a relative term, compared to light crude oil, but relates to specific technical issues of its own on production, transportation, and refining. , 14% light crude oil and 4% natural gas, and geographically, 88% in California and 12% in the Rocky Mountain region The Rocky Mountain Region is a floristic region within the Holarctic Kingdom in western North America (Canada and the United States) delineated by Armen Takhtajan and Robert F. Thorne. . 2004 Highlights Ralph J. Goehring, executive vice president and chief financial officer, stated, "The Company continues to perform exceedingly ex·ceed·ing·ly adv. To an advanced or unusual degree; extremely. exceedingly Adverb very; extremely Adv. 1. well and posted several records in 2004. We more than doubled our net income from the previous year and net cash provided by operating activities was up 92% to $125 million. Both results were by far the highest level in the Company's history. Berry ended 2004 with only $28 million in long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. , for a debt-to-total-capitalization ratio of 10%, and currently, after completing our Niobrara gas asset acquisition, our debt-to-capitalization ratio is under 35%. Our 2004 return on average capital employed Capital Employed 1. The total amount of capital used for the acquisition of profits. 2. The value of all the assets employed in a business. 3. Fixed assets plus working capital. 4. Total assets less current liabilities. was a healthy 26%, and our return on equity was 30%. The Company paid $11.4 million in dividends to our shareholders, which included an annual increase of $.04 per share beginning in the third quarter of 2004 and a special dividend of $.06 per share. 2005 Outlook Mr. Goehring added, "2005 looks very bright as we are targeting a 12% increase in production and crude pricing looks favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. for 2005. We have an attractive sales agreement for our California heavy crude through 2005 and the Company has approximately 7,750 barrels per day Barrels per day (abbreviated BPD, bbl/d, bpd, bd or b/d) is a measurement used to describe the amount of crude oil (measured in barrels) produced or consumed by an entity in one day. hedged for calendar 2005 at approximately WTI WTI West Texas Intermediate WTI Western Transportation Institute (Montana State University) WTI World Tribunal on Iraq WTI With The Idea (used in chess to point to the idea behind a specific move) NYMEX See New York Mercantile Exchange. NYMEX See New York Mercantile Exchange (NYM). $40.50 per barrel. The Company's existing hedge position can be viewed on its website at: http://www.bry.com/index.php?page=hedging." Excluding any future acquisitions, in 2005 the Company plans to spend approximately $107 million on drilling 210 net wells and performing 81 workovers. The Company intends to fund 100% of its capital program out of internally generated cash flow. Major areas of focus in 2005 will be: --California production -- Projects include expanding the thermal development of the Poso Creek field, the evaluation of the Company's diatomite pilot at North Midway-Sunset and additional drilling of infill in·fill n. 1. The use of vacant land and property within a built-up area for further construction or development, especially as part of a neighborhood preservation or limited growth program. 2. horizontal wells at South Midway-Sunset. --Rockies & Mid-Continent production -- In 2005 the Company will continue the development of the Brundage Canyon asset on 80-acre spacing, test the potential of 40-acre infill drilling and appraise appraise v. to professionally evaluate the value of property including real estate, jewelry, antique furniture, securities, or in certain cases the loss of value (or cost of replacement) due to damage. the northern and southern limits of the field. On the recently acquired Niobrara gas assets, the Company plans to drill approximately 60 wells as part of its ongoing development program and the initiation of the 40-acre infill program from the existing 80 acre development. --Rockies & Mid-Continent prospects -- The Company and its joint venture partner, Bill Barrett Corporation Bill Barrett Corporation is an energy company based in Denver, Colorado. Its core business is natural gas and oil exploration and development in the Rocky Mountains region of the United States. , will begin testing the oil potential of the Lake Canyon acreage with at least two shallow test wells at approximately 6,000 feet in the Green River trend. These initial drill sites will be approximately three miles west of the Company's Brundage Canyon field. Drilling of the first deep natural gas test well in Lake Canyon is now scheduled for the fourth quarter of 2005. The Company intends to drill its obligation wells at Coyote Flats (45 miles southwest of Brundage Canyon), which will target the Ferron sands and Emery emery: see corundum. emery Granular rock consisting of a mixture of the mineral corundum (aluminum oxide, Al2O3) and iron oxides such as magnetite (Fe3O4) or hematite (Fe2O3). coals. Additionally, the Company will participate with Bill Barrett Corporation to begin testing of both Niobrara gas and Pennsylvanian formation oil prospects in the recently acquired Tri-State acreage in Colorado, Nebraska and Kansas. Change in Cost Allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as The Company is changing its allocation of steam costs between its electricity and its oil and gas operations. This revised allocation is based on the conversion efficiency of the cogeneration cogeneration In power systems, use of steam for both power generation and heating. High-temperature, high-pressure steam from a boiler and superheater first passes through a turbine to produce power. facilities. Additionally, the Company is including the cost of electricity generated by its cogeneration facilities and consumed con·sume v. con·sumed, con·sum·ing, con·sumes v.tr. 1. To take in as food; eat or drink up. See Synonyms at eat. 2. a. in its field operations in its operating costs operating costs npl → gastos mpl operacionales for oil and gas. The reallocation Noun 1. reallocation - a share that has been allocated again allocation, allotment - a share set aside for a specific purpose 2. reallocation of these operating costs and the financial presentation of the Company's results of operations were based on discussions with the Securities and Exchange Commission. This revised allocation has no impact on either net income or net cash provided by operating activities for 2004 or prior years. The Company's prior allocation for cogeneration steam costs was that 100% of the cogeneration costs in excess of the electricity revenues were determined to be the cost of steam provided to the Company's oil and gas operations. The revised allocation, combined with the electricity charges, nominally increased the Company's reported operating costs for oil and gas for accounting purposes and caused the Company to report an operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. (excluding Depreciation, depletion depletion n. when a natural resource (particularly oil) is being used up. The annual amount of depletion may, ironically, provide a tax deduction for the company exploiting the resource because if the resource they are exploiting runs out, they will no longer be able & amortization charges) from electricity generation. The Company's reported operating costs for oil and gas increased and its reported operating costs for electricity generation decreased by approximately $1.9 million in 2003 and $1.5 million in 2004. On a per BOE basis this change in allocation increases oil & gas operating costs $0.32 from $10.05 to $10.37 for 2003 and $0.19 from $10.77 to $10.96 for 2004. Teleconference Call An earnings conference call will be held Monday, March 7, 2005 at 11 a.m. Eastern Time (8 a.m. Pacific Time). Dial 1-888-396-2384 to participate, using passcode 53475179. International callers may dial 617-847-8711. For a digital replay available until March 21, 2005, dial 1-888-286-8010 (passcode 85920611). Listen live or via replay on the web at www.bry.com. Transcripts of this and previous calls may be viewed at www.bry.com/tele.htm. Berry Petroleum Company is a publicly traded independent oil and gas production and exploitation company with its headquarters in Bakersfield, Calif. 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. "Safe harbor 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; exploration, 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. ; 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. ; acquisition risks; 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; 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 or Tribal regulations.
CONDENSED INCOME STATEMENTS
(In thousands, except per share data)
(unaudited)
Three Months Twelve Months
------------------ ------------------
12/31/04 12/31/03 12/31/04 12/31/03
-------- -------- -------- --------
Revenues
Sales of oil and gas $67,356 $38,562 $226,876 $135,848
Sales of electricity 13,075 11,240 47,644 44,200
Interest and other income,
net 319 219 426 816
-------- -------- -------- --------
Total 80,750 50,021 274,946 180,864
-------- -------- -------- --------
Expenses
Operating costs -- oil & gas 21,943 15,861 82,419 62,651
Operating costs --
electricity 12,776 10,741 46,191 42,254
Depreciation, depletion &
amortization -- oil & gas 8,256 5,313 29,752 17,258
Depreciation, depletion &
amortization -- electricity 950 851 3,490 3,256
General and administrative 5,152 5,013 20,354 12,868
Loss on disposal of assets 641 - 410 -
Dry hole, abandonment &
impairment 745 1,708 745 4,195
Interest 490 569 2,067 1,414
-------- -------- -------- --------
Total 50,953 40,056 185,428 143,896
-------- -------- -------- --------
Income before income taxes 29,797 9,965 89,518 36,968
Provision for income taxes 4,481 609 20,331 4,605
-------- -------- -------- --------
Net income $25,316 $9,356 $69,187 $32,363
======== ======== ======== ========
Basic net income per share $1.15 $.43 $3.16 $1.49
Diluted net income per share $1.13 $.42 $3.08 $1.47
Cash dividends per share $.12 $.11 $.52 $.47
Weighted average common shares:
Basic 21,949 21,789 21,894 21,772
======== ======== ======== ========
Diluted 22,450 22,020 22,444 22,031
======== ======== ======== ========
CONDENSED BALANCE SHEETS
(In thousands)
(unaudited)
12/31/04 12/31/03
-------- --------
Assets
Current assets $62,822 $43,286
Property, buildings & equipment, net 338,706 295,151
Other assets 14,105 1,940
-------- --------
$415,633 $340,377
======== ========
Liabilities & Shareholders' Equity
Current liabilities $66,661 $46,826
Deferred taxes 49,672 38,559
Long-term debt 28,000 50,000
Other long-term liabilities 8,214 7,654
Shareholders' equity 263,086 197,338
-------- --------
$415,633 $340,377
======== ========
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Twelve Months
12/31/04 12/31/03
-------- --------
Cash flows from operating activities:
Net income $69,187 $32,363
Depreciation, depletion & amortization (DD&A) 33,242 20,514
Dry hole, abandonment & impairment (569) 3,756
Deferred income taxes 8,981 1,496
Stock based compensation 5,309 2,872
Loss on sale of assets 410 -
Other, net 569 400
Net changes in operating assets and liabilities 7,484 3,424
-------- --------
Net cash provided by operating activities 124,613 64,825
Net cash used in investing activities (85,187) (87,723)
Net cash provided by (used in) financing
activities (33,394) 23,690
-------- --------
Net increase in cash and cash equivalents 6,032 792
Cash and cash equivalents at beginning of year 10,658 9,866
-------- --------
Cash and cash equivalents at end of period $16,690 $10,658
======== ========
COMPARATIVE OPERATING STATISTICS
(unaudited)
Three Months Twelve Months
------------------------ -----------------------
12/31/04 12/31/03 Change 12/31/04 12/31/03 Change
-------- -------- ------ -------- -------- -----
Oil and gas:
Net production-BOE
per day 21,410 18,550 +15% 20,537 16,549 +24%
Per BOE:
Average sales
price before
hedges $39.54 $24.59 +61% $33.64 $24.48 +37%
Average sales
price after
hedges $34.62 $22.68 +53% $30.32 $22.52 +35%
Operating costs 11.03 8.48 +30% 10.10 9.73 +4%
Production taxes .11 . 81 -86% .86 .64 +34%
Total operating
costs 11.14 9.29 +20% 10.96 10.37 +6%
DD&A -- oil and
gas 4.19 3.11 +35% 3.96 2.86 +38%
General &
administrative
expenses 2.62 2.94 -11% 2.71 2.13 +27%
Interest expense $.23 $.33 -30% $.27 $.23 +17%
Electricity:
Electric power
produced --
Megawatt
hours/day 2,148 2,101 +2% 2,121 2,100 +1%
Electric power
sold --
Megawatt
hours/day 1,944 1,964 -1% 1,915 1,925 -1%
Average sales price
-- $/MWh $70.20 $62.20 +13% $70.24 $62.91 +12%
Natural gas cost
-- $/MMBtu $5.98 $4.37 +37% $5.46 $4.88 +12%
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