Berry Petroleum Reports Profitable First Quarter 2001 Results Despite the Impact of California's Electricity Crisis.[ADP (1) (Automatic Data Processing) Synonymous with data processing (DP), electronic data processing (EDP) and information processing. (2) (Automatic Data Processing, Inc., Roseland, NJ, www.adp. W590 ] Business Editors TAFT, Calif.--(BUSINESS WIRE)--May 8, 2001 Berry Berry, former province, France Berry (bĕrē`), former province, central France. Bourges, the capital, and Châteauroux are the chief towns. Petroleum Co. (NYSE NYSE See: New York Stock Exchange :BRY) today announced net income for the first quarter ended March 31, 2001, of $5.0 million, or $0.23 per share, down 44% and 49% from $8.9 million, or $0.40 per share, in the first quarter of 2000 and $9.9 million, or $0.45 per share, in the fourth quarter of 2000, respectively. The primary reasons for the decline in income from 2000 were an after-tax charge of $4.2 million related to the non-payment from the company's major power-generation customers for electricity sales from November 2000 through March 2001, and higher operating costs operating costs npl → gastos mpl operacionales compared with the first quarter of 2000. This charge represents approximately 25%, or $6.6 million, of the March 31, 2001, receivables for power production since November 2000. Excluding this charge, the company would have earned $9.2 million, or $0.42 per share. This action was deemed necessary due to the bankruptcy bankruptcy, in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most filing of Pacific Gas and Electric Co. (PG&E) on April 6, 2001, the current insolvency insolvency Condition in which liabilities exceed assets so that creditors cannot be paid. It is a financial condition that often precedes bankruptcy. In the context of equity, insolvency is the inability to pay debts as they become due; insolvency under the balance-sheet and possibility of a similar filing by 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. Co. (Edison) in the very near future, and the inability of the various entities of the state of California to constructively resolve the complex issues related to this crisis. Jerry Hoffman, chairman, president and chief executive officer, stated, "Berry had a very good quarter considering the challenges of the current power crisis. As a result of the breach of the contracts by the two utilities, the unwillingness of Governor Davis to raise rates, and actions taken by the 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, , the economical operation of the company's 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 was destroyed, and we were forced to shut down our cogeneration plants, representing approximately 98 megawatts of electricity capacity. "Consequently, the most important short-term goal of the company is to re-initiate power generation and steam production from the company's cogeneration plants. Therefore, Berry exercised its right to terminate its electricity sales contracts Sales Contract Contract between a seller and buyer for the sale of goods, services, or both. with both utilities as a necessary first step to accomplish this goal. "The company has proceedings in the bankruptcy court bankruptcy court n. the specialized Federal court in which bankruptcy matters under the Federal Bankruptcy Act are conducted. There are several bankruptcy courts in each state, and each one's territory covers several counties. with respect to PG&E and filed 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. against Edison to obtain the courts' confirmation of the prior termination of the contracts. "We are hopeful that these actions will result in the start-up of electrical power and steam generation from these facilities in the upcoming few weeks." Oil and gas revenues were $30.7 million in the first quarter of 2001, up $4.7 million from $26 million in the first quarter of 2000, but down from $33.6 million in the fourth quarter of 2000. The increase from the first quarter of 2000 was due to higher production and higher realized oil prices. The company realized $22.19 per barrel in the 2001 period, up 11% from $19.99 per barrel in the first quarter of 2000. 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. from oil and gas operations were $8.41 per barrel of oil equivalent The barrel of oil equivalent (bboe, sometimes BOE) is a unit of energy based on the approximate energy released by burning one barrel of crude oil. The US Internal Revenue Service defines it as equal to 5.8 × 106 BTU [1]. 5. (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 ) in the first quarter of 2001, up from $6.15 in the first quarter of 2000, but lower than $9.64 in the fourth quarter of 2000. The most important factor in the increase from the first quarter of 2000 was the effect on steam costs of high natural gas prices. The company's average cost of fuel gas purchases was $14.15/Mmbtu in the first quarter of 2001, up 442% from an average of $2.61/Mmbtu in the first quarter of 2000. Currently, conventional steam generation for the company's heavy oil properties is confined con·fine v. con·fined, con·fin·ing, con·fines v.tr. 1. To keep within bounds; restrict: Please confine your remarks to the issues at hand. See Synonyms at limit. to two generators at the company's Placerita field, or approximately 4,500 barrels of steam per day. Ralph Goehring, senior vice president and chief financial officer, added, "Cash management was an important and challenging issue for the company in the first quarter. Net cash used in operations for the quarter was $12.3 million, down $29.8 million from $17.5 million provided by operations in the first quarter of 2000. "The largest factors in the reduction in cash flow were unpaid electrical generation revenues of $12.6 million and the payment of $9.4 million to a major oil company for an annual revenue sharing revenue sharing Funding arrangement in which one government unit grants a portion of its tax income to another government unit. For example, provinces or states may share revenue with local governments, or national governments may share revenue with provinces or states. royalty. Other uses of cash included $2.2 million in dividends and $1.7 million in capital expenses." Net production (BOE/day) for the first quarter of 2001 was 15,289, up 7% from 14,297 in the first quarter of 2000, but down from 15,701 in the fourth quarter of 2000. Although management has been pleased with production from the company's core heavy oil properties given the amount of steam available in the quarter, management estimates production may decrease another 20% in the next several months as the oil reservoir An oil reservoir, petroleum system or petroleum reservoir is often thought of as being an underground "lake" of oil, but it is actually composed of hydrocarbons contained in porous rock formations. cools. General and administrative expenses ($/BOE) decreased to $1.39 in the first quarter of 2001 from $2.08 in the first quarter of 2000. The primary reason for the decrease was lower legal expenses in the current year quarter. However, management anticipates higher legal expenses for the remainder of the year due to various issues related to California's current electricity crisis. Depreciation expenses increased to $4.8 million in the first quarter of 2001 primarily due to a $0.7 million write-off of the remaining unamortized costs of the company's S01 and S02 power- generation contracts and depreciation of the completed capital projects from 2000. On April 18, 2001, the company completed its acquisition of a 15.833% non-operated working interest in the Fort Union 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. leases in the South Joe Creek field in the 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. , Wyo., for $2.1 million. The company estimates the 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. , net to its interest, to be approximately 2.2 Bcf. This small acquisition was made as an entry into the developing area of coalbed methane gas production in the mid-continent area. Berry Petroleum Co. is a publicly traded independent oil and gas production and exploitation company with its headquarters in Taft, Calif. Note: A conference call is scheduled for May 9, 2001, at 7:55 a.m. PT. To participate, dial 800/218-8862 or 303/205-0033. For a digital replay, dial 800/405-2236 or 303/590-3000 with passcode 331451, until May 16, at 5:00 p.m. PT. There will also be a live and on-demand Webcast at www.bry.com. "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, So. Cal. border pricing for natural gas, pipeline capacity for natural gas to and within California, the non-existence of a liquid marketplace for electricity purchases and sales within California, competition, environmental risks, 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, 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 INCOME STATEMENTS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
March 31, 2001 March 31, 2000
Revenues:
Sales of oil and gas $ 30,697 $ 25,990
Electricity revenue 17,218 9,110
Interest and other income, net 622 147
Total 48,537 35,247
Expenses:
Operating costs -- oil and gas 11,005 8,385
Operating costs -- electricity 16,654 7,430
Depreciation, depletion & amortization 4,779 3,312
General and administrative 1,917 2,710
Write-off of electricity receivables 6,645 --
Interest 1,157 935
Total 42,157 22,772
Income before income taxes 6,380 12,475
Provision for income taxes 1,358 3,616
Net income $ 5,022 $ 8,859
Basic and diluted net income per share $ 0.23 $ 0.40
Diluted net income per share $ 0.23 $ 0.40
Cash dividends per share $ 0.10 $ 0.10
Weighted average common shares:
Basic 22,034 22,018
Diluted 22,097 22,198
CONDENSED BALANCE SHEETS
(In thousands)
(Unaudited)
March 31, 2001 Dec. 31, 2000
ASSETS
Current assets $ 67,988 $ 34,923
Property & equipment, net 199,406 201,643
Other assets 993 1,793
$ 268,387 $ 238,359
LIABILITIES & SHAREHOLDERS'
EQUITY
Current liabilities $ 18,578 $ 36,076
Long-term debt 70,000 25,000
Deferred taxes 32,165 32,059
Shareholders' equity 147,644 145,224
$ 268,387 $ 238,359
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
March 31, 2001 March 31, 2000
Cash flows from operations:
Net income $ 5,022 $ 8,859
Depreciation, depletion &
amortization 4,779 3,312
Other, net (370) 1,318
Net changes in operating assets
and liabilities (21,744) 4,059
Net cash (used in) provided by
operations (12,313) 17,548
Net cash used in investing
activities (1,666) (7,075)
Net cash provided by (used in)
financing activities 42,797 (10,070)
Net increase in cash & cash
equivalents 28,818 403
Cash & cash equivalents, beginning
of year 2,731 980
Cash & cash equivalents, end of
period $ 31,549 $ 1,383
COMPARATIVE OPERATING STATISTICS
Three Months Ended
March 31, 2001 March 31, 2000 Change
Net production-BOE per day 15,289 14,297 +7%
Per BOE:
Average sales price $22.19 $19.99 +11%
Operating costs 8.00 5.70 +40%
Production taxes 0.41 0.45 -9%
Total operating costs 8.41 6.15 +37%
Depreciation & depletion 3.47 2.48 +40%
General & administrative expenses 1.39 2.08 -33%
Interest expense per BOE 0.84 0.72 +17%
Fuel gas cost per Mmbtu 14.15 2.61 +442%
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