Berry Petroleum Reports Results for the First Quarter of 2013

  Berry Petroleum Reports Results for the First Quarter of 2013

Business Wire

DENVER -- May 06, 2013

Berry Petroleum Company (NYSE: BRY) reported net earnings of $32 million, or
$0.58 per diluted share, for the first quarter of 2013. After considering
items such as derivatives and transaction costs, adjusted net earnings were
$37 million, or $0.67 per diluted share. Oil and natural gas revenues were
$267 million during the quarter and discretionary cash flow for the quarter
totaled $134 million, with net cash provided by operating activities of $92
million. Operating margin was approximately $49 per BOE, supported by sales of
our California oil at a $10 average premium to WTI.

Berry's first quarter 2013 production averaged 39,676 BOE/D. The Company's oil
mix was 79%, or 31,154 BOE/D in the first quarter up 24% from the first
quarter of 2012. Total production for the first quarter of 2013 and fourth
quarter of 2012 was as follows:

                     First Quarter 2013  Fourth Quarter 2012
Oil (BOE/D)           31,154    79   %    30,649     78   %
Natural gas (BOE/D)   8,522      21   %    8,851       22   %
Total (BOE/D)         39,676     100  %    39,500      100  %
                                                            

New Steam Floods production increased 11% from the fourth quarter of 2012 to
an average of 2,355 BOE/D. The rise in production was a result of continued
steam flood response at McKittrick 21Z. In the first quarter, Berry drilled
the first seven of the 50 steam injection wells planned at McKittrick during
2013, and the Company anticipates drilling the remaining steam injection wells
in the second quarter of 2013. The Company also added an additional steam
generator in the first quarter, increasing McKittrick's steam capacity to
approximately 25,000 barrels of steam per day.

First quarter Diatomite production rose 7% from fourth quarter levels to an
average of 4,115 BOE/D. The Company expects continued focus on increasing the
number of active completions to translate into steady production growth. In
the first quarter of 2013, the Company added 48 new completions and drilled 17
replacement wells in the Diatomite.

First quarter Permian production averaged 8,105 BOE/D, approximately 2% higher
than the fourth quarter of 2012. The Company drilled ten net wells using a
three-rig program during the first quarter, and plans to continue at this pace
during the second quarter of 2013. While Berry's quarterly production again
increased, constraints in the form of higher line pressure, periodic gas plant
downtime and ethane rejection have continued as a result of record activity
levels in the Permian.

Production from the South Midway properties averaged 13,095 BOE/D in the first
quarter, compared with fourth quarter 2012 production of 13,070 BOE/D. In the
second quarter of 2013, the Company plans to continue development at Ethel D,
where seven producing wells and four steam injection wells are scheduled. Also
during the second quarter, the Company plans to drill two horizontal producing
wells at Formax, in addition to seven new producing wells and seven
recompletions at Placerita.

In the first quarter, the Company's Uinta production averaged 7,305 BOE/D, 3%
lower than the fourth quarter of 2012. The Company drilled 19 wells in the
first quarter that are commingled in the Wasatch and Green River formations.
However, delayed completion activity negatively affected production as the
Company worked off field storage which had resulted from refinery turnarounds.
In the first quarter, Berry began transporting crude oil via rail to markets
outside of Utah to reduce stored oil volume. The Company resumed completion
activities in April, and expects to drill an additional 20 wells in the second
quarter, when production is expected to return to growth.

In the first quarter, the Company's natural gas assets in the Piceance and
East Texas declined 6% sequentially with no capital investment.

Berry Petroleum Company's previously announced merger with Linn Energy is
expected to close around the end of the second quarter of 2013. On March 13,
2013, Berry Petroleum and Linn Energy received early termination of the
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, in connection with the proposed merger. Other closing conditions
include the approval of the stockholders of Berry, shareholders of LinnCo,
unitholders of LINN Energy, and FERC approval.

Teleconference Call

Berry will not host an earnings conference call. However, Berry expects to
file its quarterly report Form 10-Q with the Securities and Exchange
Commission within the week.

Non-GAAP Financial Measures

This press release includes discussion of “discretionary cash flow,” “adjusted
net earnings,” and “operating margin per BOE,” each of which are “non-GAAP
financial measures” as defined in Regulation G of the Securities Exchange Act
of 1934, as amended. Discretionary cash flow consists of cash provided by
operating activities before changes in working capital items. The Company uses
discretionary cash flow as a measure of liquidity and believes it provides
useful information to investors because it assesses cash flow from operations
for each period before changes in working capital, which fluctuates due to the
timing of collections of receivables and the settlements of liabilities.
Adjusted net earnings consists of net earnings before non-cash derivatives
gains (losses), oil and natural gas property impairments and charges related
to the extinguishment of debt. The Company believes that adjusted net earnings
is useful for evaluating the Company's operational performance from oil and
natural gas properties. Operating margin per BOE consists of oil and natural
gas revenues less oil and natural gas operating expenses and production taxes
divided by the total BOEs produced during the period. The Company uses
operating margin per barrel as a measure of profitability and believes it
provides useful information to investors because it relates the Company's oil
and natural gas revenue and oil and natural gas operating expenses to its
total units of production providing a gross margin per unit of production,
allowing investors to evaluate how the Company's profitability varies on a per
unit basis each period. These measures should not be considered in isolation
or as a substitute for their most directly comparable GAAP measures. Other
companies calculate non-GAAP measures differently and, therefore, the non-GAAP
measures presented in this release may not be comparable to similarly titled
measures used by other companies.

                                                                 
Explanation and Reconciliation of Non-GAAP Financial
Measures
                                                                    
Discretionary Cash Flow ($ millions):
                                                                    
                                                        Three Months Ended
                                                        3/31/2013   12/31/2012
Net cash provided by operating activities               $ 91.7      $   109.8
Net increase in current assets                          12.6        10.8
Net decrease in current liabilities, including book     29.6       5.6
overdraft
Discretionary cash flow                                 $ 133.9    $   126.2
                                                                        

Adjusted Net Earnings ($ millions):          
                                               
                                               Three Months Ended
                                               3/31/2013
Adjusted net earnings                          $     37.3
After tax adjustments:
Non-cash derivative loss                       (1.9          )
Dry hole expense                               (0.2          )
Impairment of oil and natural gas properties   (1.5          )
Transaction costs                              (1.3          )
Net earnings, as reported                      $     32.4    
                                                             

Operating Margin Per BOE:                                        
                                                                    
                                                        Three Months Ended
                                                        3/31/2013   12/31/2012
Average sales price including cash derivative           $ 75.95     $   72.47
settlements
Operating cost—oil and natural gas production           24.13       23.35
Production taxes                                        3.02       2.57
Operating margin                                        $ 48.80    $   46.55
                                                                        

About Berry Petroleum Company

Berry Petroleum Company is a publicly traded independent oil and natural gas
production and exploitation company with operations in California, Texas,
Utah, and Colorado. The Company uses its web site as a channel of distribution
of material company information. Financial and other material information
regarding the Company is routinely posted on and accessible at
http://www.bry.com.

Safe Harbor Under the “Private Securities Litigation Reform Act of 1995”

Any statements in this news release that are not historical facts are
forward-looking statements that involve risks and uncertainties. Words such as
“estimate,” “expect,” “would,” “will,” “target,” “goal,” “potential,” and
forms of those words and others indicate forward-looking statements. These
statements include but are not limited to forward-looking statements about the
expectations of plans, strategies, objectives and anticipated financial and
operating results of the Company, including the Company’s drilling program,
production, and other guidance included in this press release. These
statements are based on certain assumptions made by the Company based on
management’s experience and perception of historical trends, current
conditions, anticipated future developments and other factors believed to be
appropriate. Such statements are subject to a number of assumptions, risks and
uncertainties, many of which are beyond the control of the Company, which may
cause actual results to differ materially from those implied or expressed by
the forward-looking statements. Important factors which could affect actual
results are discussed in the Company’s filings with the Securities and
Exchange Commission, including its Annual Report on Form10-K under the
headings “Risk Factors” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations.”


CONDENSED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
                                                                
                                                     Three Months Ended
                                                     3/31/2013     12/31/2012
REVENUES
Oil and natural gas sales                            $ 266,772     $ 248,911
Electricity sales                                    7,589         8,586
Natural gas marketing                                2,027         2,253
Gain on sale of assets                               23            12
Interest and other income, net                       475          307       
                                                     276,886       260,069
EXPENSES
Operating costs—oil and natural gas production       86,148        84,862
Operating costs—electricity generation               5,296         5,975
Production taxes                                     10,784        9,326
Depreciation, depletion & amortization—oil and       68,084        67,023
natural gas production
Depreciation, depletion & amortization—electricity   394           426
generation
Natural gas marketing                                1,878         1,956
General and administrative                           22,278        18,293
Interest                                             24,687        21,690
Dry hole, abandonment, impairment and exploration    962           13,486
Realized and unrealized loss (gain) on               737           (8,306    )
derivatives, net
Impairment of oil and natural gas properties         2,467        —         
                                                     223,715      214,731   
Earnings before income taxes                         53,171        45,338
Income tax provision                                 20,737       6,838     
Net earnings                                         $ 32,434     $ 38,500  
                                                                   
Basic net earnings per share                         $ 0.59       $ 0.70    
Diluted net earnings per share                       $ 0.58       $ 0.69    
                                                                   
Dividends per share                                  $ 0.08       $ 0.08    
                                                                             

CONDENSED BALANCE SHEETS
(In thousands)
(unaudited)

                                                  3/31/2013      12/31/2012
ASSETS
Current assets                                     167,782         157,025
Oil and natural gas properties, (successful        3,177,892       3,128,502
efforts basis) buildings and equipment, net
Derivative instruments                             17,491          10,891
Other assets                                       27,468         28,984
                                                   $ 3,390,633    $ 3,325,402
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities                                192,517         286,632
Deferred income taxes                              281,925         255,471
Long-term debt                                     1,756,907       1,665,817
Derivative instruments                             —               1,239
Other long-term liabilities                        112,478         101,452
Shareholders’ equity                               1,046,806      1,014,791
                                                   $ 3,390,633    $ 3,325,402
                                                                     

CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)

                                                      Three Months Ended
                                                       3/31/2013   12/31/2012
Cash flows from operating activities:
Net earnings                                           $ 32,434     $ 38,499
Depreciation, depletion and amortization               68,478       67,450
Gain on sale of assets                                 (23      )   (12      )
Amortization of debt issuance costs and net discount   1,709        1,681
Impairment of oil and natural gas properties           2,467        12
Dry hole and impairment                                449          12,430
Derivatives                                            3,146        (1,375   )
Stock-based compensation expense                       3,195        2,230
Deferred income taxes                                  19,648       5,370
Other, net                                             2,381        (8       )
Allowance for bad debt                                 —            (36      )
Change in book overdraft                               (232     )   (8,793   )
Net changes in operating assets and liabilities        (41,954  )   (7,624   )
Net cash provided by operating activities              91,698      109,824  
                                                                    
                                                                    
Cash flows from investing activities:
Development and exploration of oil and natural gas     (174,663 )   (151,915 )
properties
Property acquisitions                                  (2,897   )   (2,608   )
Capitalized interest                                   (1,799   )   (3,938   )
Proceeds from sale of assets                           480         13       
Net cash used in investing activities                  (178,879 )   (158,448 )
                                                                    
Net cash provided by financing activities              86,974      48,832   
                                                                    
Net (decrease) increase in cash and cash equivalents   (207     )   208
Cash and cash equivalents at beginning of period       312         104      
Cash and cash equivalents at end of period             $ 105       $ 312    
                                                                             

OPERATING DATA
(unaudited)
                                                                            
                                              Three Months Ended      
                                               3/31/2013  12/31/2012  Change
Oil and natural gas:
Heavy oil production (BOE/D)                   19,566      19,058
Light oil production (BOE/D)                   11,588     11,591   
Total oil production (BOE/D)                   31,154      30,649
Natural gas production (Mcf/D)                 51,132     53,106   
Total (BOE/D)                                  39,676      39,500
                                                                        
Oil and natural gas, per BOE:
Average realized sales price                   $ 75.27     $  70.51     7   %
Average sales price including cash             75.95       72.47        5   %
derivative settlements
                                                                        
Oil, per BOE:
Average WTI price                              $ 94.36     $  88.23     7   %
Price sensitive royalties                      (2.81   )   (2.65    )
Quality differential and other                 (1.25   )   0.79
Oil derivatives non-cash amortization          0.89       (1.03    )
Oil revenue per BOE                            $ 91.19    $  85.34    7   %
Add: Oil derivatives non-cash amortization     —           1.03
Oil derivative cash settlements                (0.89   )   1.57     
Average realized oil price                     $ 90.30    $  87.94    3   %
                                                                        
Natural gas price:
Average Henry Hub price per MMBtu              $ 3.34      $  3.41      (2  )%
Conversion to Mcf                              0.22        0.24
Natural gas derivatives non-cash               —           —
amortization
Location, quality differentials and other      (0.09   )   (0.14    )
Natural gas revenue per Mcf                    $ 3.47     $  3.51     (1  )%
Natural gas derivatives non-cash               —           —
amortization
Natural gas derivative cash settlements        (0.01   )   (0.03    )
Average realized natural gas price per Mcf     $ 3.46     $  3.48     (1  )%
                                                                        
Operating cost - oil and natural gas           $ 24.13     $  23.35     3   %
production per BOE
Production taxes per BOE                       3.02       2.57     
Total operating costs per BOE                  $ 27.15     $  25.92     5   %
                                                                        
DD&A - oil and natural gas production per      19.07       18.44        3   %
BOE
General & administrative per BOE               6.24        5.03         24  %
Interest expense per BOE                       $ 6.91      $  5.97      16  %
                                                                            

Contact:

Berry Petroleum Company
Investors and Media
Zach Dailey, 1-303-999-4071
or
Shawn Canaday, 1-303-999-4000
 
Press spacebar to pause and continue. Press esc to stop.