Berry Petroleum Earns $21.9 Million in 2001.Business Editors TAFT, Calif.--(BUSINESS WIRE)--Feb. 12, 2002 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 $21.9 million, or $1.00 per share, on revenues of $139 million for the year ended December 31, 2001, compared to net income of $37.2 million, or $1.69 per share, on revenues of $172 million in 2000. For the fourth quarter ended December 31, 2001, the Company reported net income of $4 million, or $.19 per share, on revenues of $27.5 million, compared to $9.9 million, or $.45 per share, on revenues of $54 million for the fourth quarter of 2000. The average oil price, net of hedging, for 2001 was $19.79, down 9% from $21.72 in 2000. Jerry V. Hoffman, Chairman, President and Chief Executive Officer, stated, "The year 2001 produced our second highest net income in Berry's history of $21.9 million. The Company achieved a solid 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). of 11.7% and a 14.7% return on equity. We achieved these results despite the negative impacts to Berry caused by California's electrical crisis and other events. These included the receivable write-down of $6.6 million from electricity sales due to nonpayment by the California utilities, a decline in production in excess of 1,100 BOEPD BOEPD Barrels of Oil Equivalent Per Day caused by lower steam injection volumes resulting from the shut-down of our 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, soaring soaring: see flight; glider. soaring or gliding Sport of flying a glider or sailplane. The craft is towed behind a powered airplane to an altitude of about 2,000 ft (600 m) and then released. natural gas prices resulting in higher fuel cost for our steaming operations, a drop in realized crude prices in the fourth quarter of over $7/Bbl and a loss of $1.5 million relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the termination of our hedge contracts with Enron. We navigated through the electrical crisis and re-fired all of our cogeneration facilities in June of 2001 and have made significant progress on the collection of our past-due electrical receivables. Our production is currently increasing and our operating costs operating costs npl → gastos mpl operacionales are decreasing -- a very positive situation as we enter 2002." Total production for 2001 was 5 million 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 , down 9% from 5.5 million BOE produced in 2000. 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. were 102.9 million BOE, down 4% from 107.4 million BOE at December 31, 2000. The Company waited until August to commence the 2001 drilling program and drilled 37 wells, including 13 horizontals by year end. The Company spent $14.9 million on its 2001 capital program and acquired an interest in natural gas properties in Wyoming's Powder River Basin The Powder River Basin is a region in southeast Montana and northeast Wyoming about 120 miles east to west and 200 miles north to south known for its coal deposits. It is both a topographic drainage and geologic structural basin. and other drillable acreage for $2.3 million. Since the acquisition of its Wyoming properties, the Company has participated in the drilling of 67 wells and the Company's share of production has increased from 285 Mcf/day to approximately 1,060 Mcf/day. Hoffman added, "For 2002 the Company expects to spend approximately $20 million on capital development which will include approximately 52 new wells and 31 other well activities in California, participate in another 19 wells in Wyoming and $6.8 million in facility improvements. The Company is currently injecting nearly 60,000 BSPD BSPD British Society of Paediatric Dentistry (UK) and anticipates that its daily production for 2002 will approximate 15,000 barrels at a projected operating cost between $7.00 and $8.00 per barrel based upon current economics for natural gas and electricity. We believe that we can improve on our operating cost of $7.99/Bbl for 2001 by improving our `spark spread' (the price between our natural gas cost and our sales price of electricity) on our cogeneration facilities, lowering our steam cost from conventional sources, and other field improvements in 2002." Ralph J. Goehring, Senior Vice President and Chief Financial Officer, said, "The Company generated cash from operations of $35.4 million in 2001 and used its cash to fund its $14.9 million capital program, pay dividends of $8.8 million, repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. $5.1 million of Berry stock, and complete acquisitions of $2.3 million." Mr. Goehring added, "Due primarily to the electricity nonpayment situation, we did not reduce our long-term borrowings which remain at $25 million, however our working capital did improve over 2000 by $7 million. We wrote-off $6.6 million or approximately 25% of our electricity receivables in the first quarter of 2001. In September we received $11.3 million for past electricity sales plus accrued interest Accrued Interest The interest that has accumulated on a bond since the last interest payment up to but not including the settlement date. There are two methods for calculating accrued interest: 1) 360-day year method, used for corporate and municipal bonds. and are still owed $13.5 million from 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, of which $9.3 million is recorded as a current receivable. We continue to vigorously pursue the collection of these funds. In September the Company initiated a share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program and in 2001 repurchased 308,075 shares." At year end the Company had no commodity hedges in place. In December the Company terminated its crude oil and natural gas derivative contracts with Enron and recognized a net pre-tax loss on termination of these contracts of $1.5 million. The Company anticipates that it will enter into similar gas purchase hedges in the near future in an effort to manage its spark spread Spark Spread The difference between the market price of electricity and its cost of production. Notes: This measure is important because it helps utility companies determine their bottom line (profit). and lower its operating costs. The Company will be relocating its corporate headquarters to Bakersfield in March 2002 primarily in an effort to improve its competitive position in attracting and retaining talented personnel. The Company expects minimal impact on its general and administrative cost administrative cost Managed care A cost incurred by the 'business' end of a health care facility or university–eg, staffing and personnel costs, nursing home and hospital administration, insurance, and overhead expenses. Cf Indirect costs. on the relocation RELOCATION, Scotch law, contracts. To let again to renew a lease, is called a relocation. 2. When a tenant holds over after the expiration of his lease, with the consent of his landlord, this will amount to a relocation. and on future operations. Hoffman added, "2001 was a challenging year for the Company as several major events required our full attention. However, Berry maintained its financial strength and has an excellent financial platform to continue our successful growth activities in 2002. We believe that the lower commodity price environment forecast for 2002 will yield acquisition opportunities for Berry to establish another significant core area outside California. We are especially interested in diversifying and adding to our high-quality heavy oil asset base with natural gas and light oil assets." An earnings conference call will be held February 13, 2002 at 8:00 a.m. PT. Dial 800/218-0204 to participate. For a digital replay, dial 800/405-2236 (passcode 43923). The digital replay will be available until February 27, 2002 at 6:00 p.m. PT. Berry Petroleum Company is a publicly traded independent oil and gas production and exploitation company with headquarters in Taft, California Taft is a city in Kern County, California, United States. The population was 6,400 at the 2000 census. Adjoining the town to the north is the unincorporated area called Ford City. On the south end of Taft's municipal border is another unincorporated area known as South Taft. . 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, gas transportation availability, the non-existence of a liquid marketplace for electricity purchases and sales within California, 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. , uncertainties about the estimates of reserves, the prices of goods and services In economics, economic output is divided into physical goods and intangible services. Consumption of goods and services is assumed to produce utility (unless the "good" is a "bad"). It is often used when referring to a Goods and Services Tax. , 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, California Public Utilities Commission The California Public Utilities Commission (CPUC; also often commonly referred to as simply the PUC) [1] is a state Public Utilities Commission which regulates privately-owned utilities in the state of California, including electric power, , Federal Energy Regulatory Commission The Federal Energy Regulatory Commission (FERC) is the United States federal agency with jurisdiction over electricity sales, wholesale electric rates, hydroelectric licensing, natural gas pricing, and oil pipeline rates. , and/or judicial decisions and other government regulation.
CONDENSED STATEMENT OF OPERATIONS
(In thousands, except per share data)
(unaudited)
Three Months Twelve Months
Ended Ended
------------------ ------------------
12/31/01 12/31/00 12/31/01 12/31/00
-------- -------- -------- --------
Revenues:
Sales of oil and gas $19,278 $33,566 $100,146 $118,801
Sales of electricity 7,829 20,477 35,917 52,765
Interest and other income, net 372 88 2,478 483
Total 27,479 54,131 138,541 172,049
Expenses:
Operating costs -
oil and gas production 8,714 13,417 40,281 44,837
Operating costs -
electricity generation 7,616 20,476 35,506 50,566
Depreciation, depletion
& amortization 3,982 3,782 16,520 14,030
General & administrative 1,692 1,751 7,174 7,754
Interest 448 611 3,719 3,186
Write-off of
electricity receivable -- -- 6,645 --
Termination of
derivative contracts 1,458 -- 1,458 --
Total 23,910 40,037 111,303 120,373
Income before income taxes 3,569 14,094 27,238 51,676
Provision (benefit)
for income taxes (480) 4,242 5,300 14,493
Net income $4,049 $9,852 $21,938 $37,183
Basic net income
per share $.19 $.45 $1.00 $1.69
Diluted net income
per share $.18 $.44 $.99 $1.67
Cash dividends
per share $.10 $.10 $.40 $.40
Weighted average common shares:
Basic 21,791 22,034 21,973 22,029
Diluted 22,000 22,219 22,110 22,240
CONDENSED BALANCE SHEETS
(In thousands)
Dec. 31, 2001 Dec. 31, 2000
------------- -------------
ASSETS
Current assets $28,201 $34,923
Property & equipment, net 203,413 201,643
Other assets 912 1,793
-------- --------
$232,526 $238,359
======== ========
LIABILITIES & SHAREHOLDERS'
EQUITY
Current liabilities $22,364 $36,076
Long-term debt 25,000 25,000
Deferred taxes 32,009 32,059
Shareholders' equity 153,153 145,224
-------- --------
$232,526 $238,359
======== ========
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended
------------
12/31/01 12/31/00
-------- --------
Cash flows from operations:
Net income $21,938 $37,183
Depreciation, depletion
& amortization 16,520 14,030
Increase in deferred
income taxes (51) 3,147
Other, net (504) 249
Net changes in operating
assets and liabilities (2,470) 11,325
Net cash provided by operations 35,433 65,934
Net cash used in investing (17,029) (28,370)
Net cash used in financing (13,897) (35,813)
Net increase in cash
& cash equivalents 4,507 1,751
Cash & cash equivalents,
beginning of period 2,731 980
Cash & cash equivalents,
end of period $7,238 $2,731
Basic per share cash flow
from operations $1.61 $2.99
COMPARATIVE OPERATING STATISTICS
Three Months Ended Year Ended
------------------ ----------
12/31/01 12/31/00 Change 12/31/01 12/31/00 Change
-------- -------- ------ -------- -------- ------
Oil & Gas
Net production-BOE/D 13,444 15,701 -14% 13,820 14,937 -7%
Per BOE:
Average sales price $15.51 $23.11 -33% $19.79 $21.72 -9%
Operating costs(a) 6.50 8.95 -27% 7.50 7.77 -3%
Production taxes .55 .37 +49% .49 .43 +14%
Total operating costs 7.05 9.32 -24% 7.99 8.20 -3%
Depreciation/depletion 3.22 2.62 +23% 3.28 2.57 +28%
General & administrative
expenses 1.37 1.21 +13% 1.42 1.42 -%
Interest expense $.36 $.42 -14% $.74 $.58 +28%
Electricity
Net megawatts
per day 1,840 1,967 -6% 1,251 1,979 -35%
Fuel gas cost
per Mmbtu $2.44 $8.08 -70% $5.76 $4.95 +16%
(a) Excluding production taxes BOE/D - Barrels of oil equivalent per day. |
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