Berry Petroleum Earns $9.2 Million in First Quarter 2003.Business Editors 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.--(BUSINESS WIRE)--May 8, 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 for the first quarter ended March 31, 2003 of $9.2 million, or $.42 per share, on revenues of $47.3 million, up 7% from net income of $8.6 million, or $.40 per share in the first quarter of 2002 and up 31% from net income of $7.0 million, or $.32 per share in the fourth quarter of 2002. Results in the first quarter of 2003 included the pre-tax 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 $2.5 million for the cost of a pilot project and associated leasehold An estate, interest, in real property held under a rental agreement by which the owner gives another the right to occupy or use land for a period of time. leasehold n. acreage, while the first quarter of 2002 included the pre-tax gain from the recovery of a $3.6 million receivable for electricity sales which had been written off by the Company in 2001. Jerry Hoffman, Chairman, President and Chief Executive Officer, stated, "The first quarter of 2003 showed continued improvement, with increased production and solid results. On April 8, 2003 the Company announced that the Board of Directors had approved a special one-time dividend of $.04 per share, payable May 2, 2003, and a 10% increase in future dividends from $.10 to $.11 per share per quarter. The Board determined an adjustment to the dividend level was warranted based on consistently improved operational results." Oil and gas production on a BOE/day basis averaged 15,736 in the first quarter of 2003, which was 3% higher than 15,208 in the fourth quarter of 2002, and 14% higher than the first quarter of 2002 average of 13,799. Management has targeted average production for calendar year 2003 of approximately 16,400 BOE/day before any impact from 2003 acquisitions. Ralph Goehring, Senior Vice President and Chief Financial Officer, stated, "Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. from oil and gas operations, at $14.3 million for the quarter, compared very favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. to $7.7 million in the first quarter of 2002 and $10.5 million in the fourth quarter of 2002." Mr. Goehring continued, "World crude oil prices were significantly higher in the 2003 first quarter compared to 2002 and our average selling price The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. for our 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. increased 53% to $24.23 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 from $15.87 in the first quarter of 2002. However, the average posting for our heavy crude oil has subsequently declined to approximately $19.75/Bbl on May 6, 2003 from $24.00/Bbl at March 31, 2003. Natural gas prices spiked spike 1 n. 1. a. A long, thick, sharp-pointed piece of wood or metal. b. A heavy nail. 2. A spikelike part or projection, as: a. in the first quarter of 2003 with fuel cost per MMBtu averaging $5.40 versus $2.49 for the first quarter of 2002. The Company has hedged a portion of its natural gas demand to protect ourselves from future natural gas price increases." Mr. Hoffman added, "The fundamentals of our business have continued to improve, so we continue to vigorously pursue opportunities for significant growth. The Company is proceeding with a capital budget plan for 2003 of approximately $27.6 million. This plan includes the drilling of 98 new wells, of which 13 will be horizontal. We anticipate that most of these new wells will be online by the end of the third quarter and should allow the Company to achieve an exit rate for 2003 of approximately 17,700 BOE/day. As of March 31, 2003, five new wells have been drilled, three of which were horizontal. On the acquisition front, in the first quarter of 2003, the Company completed the acquisition of a Poso Creek area property in Kern County, California Kern County is a county located in the southern Central Valley of the U.S. state of California. Established in 1866, it extends east beyond the southern slope of the Eastern Sierra Nevada range into the Mojave Desert, and includes parts of the Western Indian Wells Valley, and for $2.5 million. We estimate that this property includes approximately 2.5 million barrels of 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. . This property, which has minimal current production, will be developed in late 2003 and throughout 2004." Mr. Hoffman continued, "In April 2003, the Company entered into a Purchase and Sale Agreement for the acquisition, for approximately $49 million, of producing properties and leasehold acreage in the Brundage Canyon field in the Uinta Basin in Utah. The Company anticipates the acquisition will close in the third quarter of 2003. The Brundage Canyon properties consist of approximately 43,500 net acres, and are currently producing approximately 2,200 net BOE/day of light crude oil and natural gas and we estimate the proved reserves at 8.6 million BOE (75% light oil and 25% natural gas). The Company believes the Uinta Basin and the surrounding sur·round tr.v. sur·round·ed, sur·round·ing, sur·rounds 1. To extend on all sides of simultaneously; encircle. 2. To enclose or confine on all sides so as to bar escape or outside communication. n. area offer numerous opportunities for the Company to achieve its growth goals." Mr. Hoffman further commented, "We are encouraged by the increased activity by other operators in the general area of our 208,000 acres in Kansas and the opportunities our land position may offer. We are discouraged dis·cour·age tr.v. dis·cour·aged, dis·cour·ag·ing, dis·cour·ag·es 1. To deprive of confidence, hope, or spirit. 2. To hamper by discouraging; deter. 3. by the low water production and associated gas in our first pilot in Kansas which resulted in the write-off of this pilot and associated leased acreage. However, we are continuing to evaluate the locations and method of drilling additional test wells on our substantial remaining leasehold position in Kansas. As anticipated, our Illinois Illinois, river, United States Illinois, river, 273 mi (439 km) long, formed by the confluence of the Des Plaines and Kankakee rivers, NE Ill., and flowing SW to the Mississippi at Grafton, Ill. It is an important commercial and recreational waterway. pilot continues to dewater de·wa·ter tr.v. de·wa·tered, de·wa·ter·ing, de·wa·ters To remove water from (a waste product or streambed, for example). and the results are not yet conclusive Determinative; beyond dispute or question. That which is conclusive is manifest, clear, or obvious. It is a legal inference made so peremptorily that it cannot be overthrown or contradicted. ." In 2003, the Company plans to spend approximately $1 million for improvements at its Poso Creek, 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). property and may spend up to $15.5 million in Utah to drill up to 26 development, step-out and exploitation wells, if that acquisition is completed early enough in 2003. These expenditures will be in addition to the $27.6 million capital budget approved earlier. The Company anticipates funding property acquisitions and related capital projects through both cash generated from operations and borrowings from its credit facility. An earnings conference call will be held Friday, May 9, 2003 at 8:00 a.m. PT. Dial 1-800-240-4186 to participate. International callers may dial 303-205-0033. For a digital replay available until May 23, dial 1-800-405-2236 (passcode 536586#). 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, 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. . "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 and/or judicial decisions and other government regulation.
CONDENSED INCOME STATEMENTS
(In thousands, except per share data)
(unaudited)
Three Months Ended
3/31/03 3/31/02
Revenues:
Sales of oil and gas $34,354 $19,678
Sales of electricity 12,880 7,314
Interest and other income, net 20 378
Total 47,254 27,370
Expenses:
Operating costs - oil and gas operations 13,184 8,086
Operating costs - electricity generation 12,880 6,983
Depreciation, depletion & amortization 4,454 3,992
General and administrative 2,257 1,862
Recovery of electricity receivables - (3,631)
Dry hole and abandonment 2,487 -
Interest 209 423
Total 35,471 17,715
Income before income taxes 11,783 9,655
Provision for income taxes 2,606 1,035
Net income $9,177 $8,620
Basic and diluted net income per share $.42 $.40
Cash dividends per share $.10 $.10
Weighted average common shares:
Basic 21,758 21,732
Diluted 21,920 21,811
CONDENSED BALANCE SHEETS
(In thousands)
(unaudited)
3/31/03 12/31/02
Assets
Current assets $35,020 $28,705
Property, buildings & equipment, net 226,814 228,475
Other assets 876 893
$262,710 $258,073
Liabilities & Shareholders' Equity
Current liabilities $28,235 $32,394
Deferred taxes 34,779 33,866
Long-term debt 15,000 15,000
Other long-term liabilities 5,187 4,755
Shareholders' equity 179,509 172,058
$262,710 $258,073
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Three Months Ended
3/31/03 3/31/02
Cash flows from operating activities:
Net income $9,177 $8,620
Depreciation, depletion & amortization 4,454 3,992
Dry hole and abandonment 2,487 -
Other, net 972 246
Net changes in operating assets and liabilities (8,731) 3,629
Net cash provided by operating activities 8,359 16,487
Net cash used in investing activities (4,871) (4,333)
Net cash used in financing activities (2,175) (7,173)
Net increase in cash and cash equivalents 1,313 4,981
Cash and cash equivalents at beginning of year 9,866 7,238
Cash and cash equivalents at end of period $11,179 $12,219
COMPARATIVE OPERATING STATISTICS
(Unaudited)
Three Months Ended
3/31/03 3/31/02 Change
Oil and gas:
Net production - BOE/day 15,736 13,799 14%
Per BOE:
Average sales price $24.23 $15.87 53%
Operating costs 8.78 5.95 48%
Production taxes .53 .56 (5%)
Total operating costs 9.31 6.51 43%
Depreciation, depletion and amortization 3.15 3.21 (2%)
General and administrative expenses 1.59 1.50 6%
Interest expense .15 .34 (56%)
Electricity:
Electric power produced - Mwh/day 2,137 2,051 4%
Electric power sold - Mwh/day 1,951 1,890 3%
Average sales price - $/Mwh $73.39 $36.35 102%
Fuel gas cost - $/MMBtu 5.40 2.49 117%
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