Berry Reports Increase in Profit Over First Quarter of 2001 as Effects of the California Energy Crisis Wane.Business Editors TAFT, Calif.--(BUSINESS WIRE)--Aug. 6, 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 second quarter ended June 30, 2001, of $7.0 million, or 32 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. , on revenues of $29.4 million, up 40 percent from $5.0 million, or 23 cents per share, on revenues of $48.5 million in the first quarter of 2001, but 21 percent lower than $8.9 million, or 40 cents per share, on revenues of $36.6 million in the second quarter of 2000. For the six months ended June 30, 2001, the company earned $12.0 million, or 54 cents per share, on revenues of $77.9 million, down 33 percent from $17.8 million, or 81 cents per share, on revenues of $71.8 million for the comparable period in 2000. Net income for the first six months of 2001 was the second-best result ever achieved by Berry for the first half of a fiscal period and was achieved in spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite a $6.6 million pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern charge in March related to the nonpayment from two of California's utilities for power sales from November 2000 through March 2001. Excluding this charge, the company earned 74 cents per share in the first half of 2001, just 9 percent below the all-time record results earned by Berry of 81 cents per share in the first half of 2000. Jerry Hoffman, chairman, president and chief executive officer, said: "Berry again produced solid quarterly results in spite of abnormal challenges faced by the company. The most critical goal for the second quarter was to restart To resume computer operation after a planned or unplanned termination. See boot, warm boot and checkpoint/restart. 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 and re-establish the production of steam at a reasonable cost for injection into our core producing properties. "I am extremely pleased to report that the objective was met and that we will enjoy the benefits of steam at improved prices in the third quarter and beyond. The citizens of 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). will also benefit from the generation of our 98 megawatts of power, as it assists in alleviating electricity shortages." Net production (BOE/day) for the second quarter of 2001 was 13,611, down 6 percent and 11 percent from 14,494 in the second quarter of 2000 and 15,289 in the first quarter of 2001, respectively. Production volumes declined due to the curtailment Curtailment The act of contracting or reducing operations of a company in the hope of bringing it financial or operational stability. This management technique is often used when a company has grown too fast and is unable to effectively manage its operations. of the company's steam generation in the first quarter of this year. 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 the second quarter of 9,519 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. (B/D) was down 83 percent from the second quarter of 2000. For the first half of 2001, total steam injected of 16,376 B/D was down 70 percent from the first six months of 2000. As the company increases its steam generation and commences its 2001 drilling program in August, it is anticipated that third-quarter production will be similar to the second quarter and that production will increase in the fourth quarter of this year and in 2002. The company anticipates a total 2001 capital program of $16 million, which will include the drilling of 25 wells and the workover of 50 existing wells. The company is also participating as a 16 percent owner in the drilling of 55 new gas wells in Wyoming. Oil and gas revenues were $27.7 million in the second quarter of 2001, up from $26.5 million in the second quarter of 2000, but down from $30.7 million in the first quarter of 2001. The current quarter included a $1.1 million pretax noncash gain related to the company's crude oil hedging activities. The increase from the second quarter of 2000 was also due to higher realized crude oil prices. The decrease from the first quarter of 2001 was primarily related to lower production, which was directly caused by the lack of steam available resulting from the California electricity crisis The California electricity crisis (also known as the Western Energy Crisis) of 2000 and 2001 resulted from the gaming of a partially deregulated California energy system by energy companies such as Enron and Reliant Energy. . The company realized $21.14 per barrel for crude oil sales in the second quarter of 2001, down 5 percent from $22.19 received in the first quarter of 2001, but up 5 percent from $20.19 received in the second quarter of 2000. Including the effect of hedging activity, the average oil price was $22.05 per barrel in the second quarter of 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. per barrel were $9.02, up 26 percent from $7.14 in the second quarter of 2000 and up 7 percent from $8.41 in the first quarter of 2001. The largest factors contributing to the increased operating costs operating costs npl → gastos mpl operacionales for the quarter were very high fuel (natural gas) costs and relatively low open market electricity prices in the latter part of the quarter. Fuel gas per Mmbtu averaged $10.54 for the quarter, down from $14.15 in the first quarter and up from $3.58 in the second quarter of 2000. Hoffman commented: "It is very encouraging to note that the factors which were most responsible for high operating costs in the first half of 2001 have dramatically improved as we enter the third quarter. "Natural gas spot prices, which averaged $14 per Mmbtu for the first half of the year, are currently averaging under $4.25 per Mmbtu in the third quarter with August natural gas purchases at $3.74 per Mmbtu. Our cogeneration plants are operating and producing steam which is being injected into our heavy oil properties. Therefore, we believe that operating costs per barrel will improve in the second half of 2001." General and administrative expenses (G&A) in the second quarter were $2.0 million, up from $1.6 million in the second quarter of 2000 and $1.9 million in the first quarter of 2001. The increase was related to legal costs in connection with the company's electricity generation contracts, regulatory issues and 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 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). However, G&A for the first six months of 2001 of $3.9 million were down 9 percent from $4.3 million for the same 2000 period. The company's 38 megawatt meg·a·watt n. Abbr. MW One million watts. meg  a·watt and 18 megawatt cogeneration plants
located in the Midway-Sunset field in Kern Kern, river, 155 mi (249 km) long, rising in the S Sierra Nevada Mts., E Calif., and flowing south, then southwest to a reservoir in the extreme southern part of the San Joaquin valley. The river has Isabella Dam as its chief facility. County were idled in February
of 2001 due to the nonpayment for electricity provided to Pacific Gas
and Electric Co. (PG&E) from December 2000 through February 2001.
The company subsequently terminated the existing contracts for the
plants, resolved contract issues with PG&E and established
electricity sales going forward with a creditworthy cred·it·wor·thy adj. Having an acceptable credit rating. cred it·wor customer.
Electricity is currently sold under spot market conditions.
Hoffman added, "While this meets the company's short-term objectives, the company is reviewing its options to establish long-term, less volatile pricing for electricity generated by these facilities." The company's 42 megawatt facility located in the Placerita field has also resumed operation as of June 29, 2001. The plant operated under an interim agreement with Edison until July 18, 2001, at which time the company's Standard Offer 2 contracts, which had been terminated, were reinstated with revised pricing and other necessary amendments and included a stay on the company's litigation against Edison. The company will receive electricity payments based on a combination of natural gas prices at the Southern California Southern California, also colloquially known as SoCal, is the southern portion of the U.S. state of California. Centered on the cities of Los Angeles and San Diego, Southern California is home to nearly 24 million people and is the nation's second most populated region, border and fixed pricing. The company will be prepaid pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay ment n. for monthly power deliveries
until Edison has satisfied the past-due amount. The company anticipates
that these contracts will result in negligible  This article or section is written like a personal reflection or and may require .Please [ improve this article] by rewriting this article or section in an . steam costs for its Placerita properties. Ralph Goehring, senior vice president and chief financial officer, stated: "As of June 30, 2001, the company is owed $12.1 million plus interest by PG&E and $14.5 million plus interest by Edison, of which a total of $6.6 million was written off in the first quarter. Management does not believe a further write-off is necessary at this time. "Cash flow generated by the company's operations returned to a very healthy level in the second quarter. Cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses was $12.2 million, up from a negative $12.3 million in the first quarter. In the second quarter, we reduced our 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. by $4 million, paid our quarterly dividend of $2.2 million, expended ex·pend tr.v. ex·pend·ed, ex·pend·ing, ex·pends 1. To lay out; spend: expending tax revenues on government operations. See Synonyms at spend. 2. $2.6 million in capital expenditures, completed an acquisition for $2.1 million and had a cash balance at June 30, 2001, of $32.7 million. "In July 2001, we reduced our long-term debt by an additional $13 million to a level of $53 million at this writing. We anticipate additional significant reductions in our debt by year-end, excluding any acquisition investment." An earnings conference call will be held Aug. 7, 2001, at 8 a.m. PT. Dial 800/240-2430 or 303/205-0044 to participate. For a digital replay, dial 800/405-2236 or 303/590-3000 (passcode 373394). The digital replay will be available for seven days following the call. Berry Petroleum Co. is a publicly traded independent oil and gas production and exploitation company with headquarters in Taft. Visit www.bry.com for more information. Abbreviations used: -- BOE/Day -- Barrels of oil equivalent per day -- B/D -- Barrels per day -- Mmbtu -- Million British Thermal units British thermal unit, abbr. Btu, unit for measuring heat quantity in the customary system of English units of measurement, equal to the amount of heat required to raise the temperature of one pound of water at its maximum density [which occurs at a temperature of 39. "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, a limited 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 and government actions in the form of judicial decisions, legislation, and decisions and regulations of 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, , 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 other government agencies.
CONDENSED INCOME STATEMENTS
(In thousands, except per-share data)
(Unaudited) (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
Revenues:
Sales of oil and gas $27,731 $26,467 $58,428 $52,457
Sales of electricity 1,316 9,969 18,534 19,080
Interest and other income,
net 357 120 979 267
Total 29,404 36,556 77,941 71,804
Expenses:
Operating costs -- oil and
gas 11,166 9,419 22,171 17,805
Operating costs --
electricity 1,316 8,833 17,970 16,263
Depreciation, depletion
& amortization 3,896 3,393 8,675 6,705
General and administrative 2,021 1,598 3,938 4,308
Write-off of electricity
receivables -- -- 6,645 --
Interest 1,155 857 2,312 1,792
Total 19,554 24,100 61,711 46,873
Income before income taxes 9,850 12,456 16,230 24,931
Provision for income taxes 2,875 3,562 4,233 7,178
Net income $ 6,975 $ 8,894 $11,997 $17,753
Basic net income per share $ .32 $ .40 $ .54 $ .81
Diluted net income per share $ .32 $ .40 $ .54 $ .80
Cash dividends per share $ .10 $ .10 $ .20 $ .20
Weighted average common
shares:
Basic 22,034 22,029 22,034 22,024
Diluted 22,084 22,195 22,088 22,202
CONDENSED BALANCE SHEETS
(In thousands)
(Unaudited)
June 30, Dec. 31,
2001 2000
Assets:
Current assets $ 69,030 $ 34,923
Property & equipment, net 200,418 201,643
Other assets 936 1,793
$270,384 $238,359
Liabilities & shareholders' equity:
Current liabilities $ 18,663 $ 36,076
Long-term debt 66,000 25,000
Deferred taxes 33,269 32,059
Shareholders' equity 152,452 145,224
$270,384 $238,359
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended
June 30,
2001 2000
Cash flows from operations:
Net income $11,997 $17,753
Depreciation, depletion & amortization 8,674 6,705
Other, net 706 2,593
Net changes in operating assets and liabilities (21,538) 311
Net cash (used in) provided by operations (161) 27,362
Net cash used in investing activities (6,457) (12,756)
Net cash provided by (used in) financing activities 36,593 (14,407)
Net increase in cash & cash equivalents 29,975 199
Cash & cash equivalents, beginning of year 2,731 980
Cash & cash equivalents, end of period $32,706 $ 1,179
COMPARATIVE OPERATING STATISTICS
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 Change 2001 2000 Change
Net production --
BOE per day 13,611 14,494 -6% 14,445 14,396 --
Electric power produced
-- Megawatt hours/day 224 1,935 -88% 654 1,978 -67%
Per BOE:
Average realized sales
price (a) $21.14 $20.19 +5% $21.83 $20.09 +9%
Operating costs 8.57 6.66 +29% 8.05 6.34 +27%
Production taxes .45 .48 -6% .43 .46 -7%
Total operating costs 9.02 7.14 +26% 8.48 6.80 +25%
Depreciation &
depletion 3.15 2.57 +23% 3.32 2.56 +30%
General &
administrative
expenses 1.63 1.21 +35% 1.51 1.64 -8%
Interest expense per
BOE .93 .65 +43% .88 .69 +28%
Fuel gas cost per Mmbtu 10.54 3.58 +194% 14.00 3.11 +350%
(a) Excludes effects of
the SFAS 133 unrealized
hedging gain .91 -- -- .42 -- --
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