Refinances Debt, Announces Uinta Basin Opportunities, and Declares Quarterly Dividend
DALLAS, Nov. 07, 2024 (GLOBE NEWSWIRE) -- Berry Corporation (bry) (NASDAQ: BRY) ("Berry” or the "Company”) today reported third quarter 2024 results and quarterly fixed dividends totaling $0.03 per share. The Company also announced entry into a new $545 million term loan facility that will enable the successful completion of a transformative debt refinancing. The details for today's earnings call, also accessible by webcast, are listed below.
Quarterly Highlights
- Third quarter production averaged 24,800 BOE per day, with production increasing at the end of the quarter as additional wells were brought online
- Annual 2024 production expected to reach the mid-point of guidance of 24,600 to 25,800 BOE per day
- Increased Free Cash Flow(1) 55% quarter over quarter
- Declared third quarter fixed dividends of $0.03 per share
- Entered $545 million term loan credit facility to redeem all the Company's $400 million notes due 2026 and refinance the current RBL credit facility due August 2025. Valor Upstream Credit Partners, L.P., which is managed by Breakwall Capital LP in partnership with Vitol, is the sole lender on the new term loan credit facility
- Based on the outperformance of the initial four well Uinta farm-in confirming significant value potential, executed another larger farm-in deal and actively marketing an opportunity to accelerate horizontal well development of the Company's Utah assets
"Based on activity across the Uinta basin, much of which is adjacent to our existing acreage, we believe our Utah assets have the potential to be a substantial long-term value driver for our shareholders. We entered a second farm-in agreement covering approximately 5,800 gross acres, which will help accelerate the appraisal of our acreage. Additionally, we are evaluating potential JV partners to accelerate our phase 1 plans to drill up to two multi-well horizontal drilling pads starting in 2025.
"We also have promising upside opportunities in California. Success from new sidetracks drilled in the Thermal Diatomite reservoir are yielding over 100% rates of return, further driving our capital efficiency efforts. By executing on these opportunities to leverage our world class California assets, we are stronger, more resilient, and better positioned to accelerate development in Utah while still honoring our commitment to generate sustainable Free Cash Flow,” Araujo continued.
"Finally, we are excited to partner with Valor, Breakwall and Vitol on a new term loan facility This financing will enable us to redeem all of our notes due in 2026 and refinance our existing credit facility, while also providing us with the ability to deploy capital into high rate of return projects, including the significant opportunity we see in our Uinta position. Importantly, the unique structure provides Berry with great flexibility to repay the loan in advance, pursue strategic opportunities, and return capital to shareholders,” Araujo concluded.
Selected Comparative Results
| Three Months Ended | |||||||||||||
| September 30, 2024 | June 30, 2024 | September 30, 2023 | |||||||||||
| (unaudited)
(in millions, except per share amounts) | |||||||||||||
| Oil, natural gas & NGL revenues(1) | $ | 154 | $ | 169 | $ | 173 | |||||||
| Net income (loss) | $ | 70 | $ | (9 | ) | $ | (45 | ) | |||||
| Adjusted Net Income(2) | $ | 11 | $ | 14 | $ | 12 | |||||||
| Adjusted EBITDA(2) | $ | 67 | $ | 74 | $ | 70 | |||||||
| Income (loss) earnings per diluted share | $ | 0.91 | $ | (0.11 | ) | $ | (0.60 | ) | |||||
| Adjusted earnings per diluted share(2) | $ | 0.14 | $ | 0.18 | $ | 0.15 | |||||||
| Cash Flow from Operations | $ | 71 | $ | 71 | $ | 55 | |||||||
| Capital expenditures | $ | 26 | $ | 42 | $ | 14 | |||||||
| Free cash flow(2) | $ | 45 | $ | 29 | $ | 42 | |||||||
| Production (mboe/d) | 24.8 | 25.3 | 25.3 | ||||||||||
| (1) | Revenues do not include hedge settlements. | ||||||||||||
| (2) | Please see "Non-GAAP Financial Measures and Reconciliations” later in this press release for reconciliation and more information on these Non-GAAP measures. | ||||||||||||
"Our new term loan credit facility will allow us to redeem our 2026 Notes and refinance our current RBL before year end. To comply with the new debt covenants and support our exciting plans for further development in our Utah assets, we are transitioning our shareholder return model to prioritize the repayment of debt and investment in opportunities that will generate sustainable Free Cash Flow(1) and drive long-term shareholder value. We remain committed to a disciplined approach to maintaining a healthy balance sheet, and our dividend policy now targets a fixed dividend rate of $0.12 per share annually, subject to board approval. This new approach is designed to return capital to our shareholders at a sustainable level, while enabling us to pursue the highest capital return opportunities in front of us, including developing our assets in the Uinta Basin.”
Third Quarter 2024 Financial and Operating Results
Q3 2024 Compared to Q2 2024
Oil, natural gas and NGL revenues (excluding hedging settlements) for the third quarter of 2024 decreased from the second quarter of 2024, driven by a decrease in oil prices and, to a lesser extent, lower volumes. Net income for the third quarter of 2024 increased compared to the second quarter due to unrealized hedge gains in the third quarter, the impairment charge in the second quarter and the income tax impact. Adjusted EBITDA(1) and Adjusted Net Income(1) decreased in the third quarter of 2024, compared to the prior quarter generally due to decreased commodity revenues (as a result of lower prices and volumes), as well as lower margins from the well servicing and abandonment segment. Decreased capital expenditures for the third quarter drove increased Free Cash Flow(1) compared to the second quarter of 2024, while Cash Flow from Operations remained steady. Capital expenditures were $26 million in the third quarter of 2024 compared to $42 million in the second quarter of 2024, with the decrease driven by lower drilling activity, as expected, and the second quarter also included capital related to the Utah farm-in development program. At September 30, 2024, the Company had liquidity of $104 million, consisting of $9 million cash and $95 million available for borrowings under its revolving credit facilities.
Q3 2024 Compared to Q3 2023
Compared to the third quarter of 2023, oil, natural gas and NGL revenues (excluding hedging settlements) decreased, which was mainly driven by lower oil prices and lower volumes in the third quarter of 2024. Adjusted EBITDA(1) and Adjusted Net Income(1) for the third quarter of 2024 also decreased compared to the third quarter of 2023, driven by the decreased commodity revenues (as a result of lower prices and volumes) and lower margins from the well servicing and abandonment segment, offset by a decrease in lease operating costs. Free Cash Flow(1) in the third quarter of 2024 was slightly higher than the third quarter of 2023, while both Cash Flow from Operations and capital expenditures increased.
Guidance Update
For the full year 2024, the new Company guidance for Adjusted General & Administrative (G&A)(2) expenses for the E&P Segment & Corp is an increased range of $6.30/boe to $6.50/boe due to inflationary pressure, and for the Well Servicing & Abandonment Segment Adjusted EBITDA(2) is a decreased range of $6 million to $8 million due to local market disruption resulting in lower rates and activity.
| (1) | Please see "Non-GAAP Financial Measures and Reconciliations” later in this press release for reconciliation and more information on these Non-GAAP measures. |
| (2) | Adjusted General & Administrative expenses and Well Servicing & Abandonment Segment Adjusted EBITDA are non-GAAP financial measures. The Company does not provide a reconciliation of these measures because the Company believes such reconciliation would imply a degree of precision and certainty that could be confusing to investors and is unable to reasonably predict certain items included in or excluded from the GAAP financial measures without unreasonable efforts. This is due to the inherent difficulty of forecasting the timing or amount of various items that have not yet occurred and are out of the Company's control or cannot be reasonably predicted. Non-GAAP forward-looking measures provided without the most directly comparable GAAP financial measures may vary materially from the corresponding GAAP financial measures. See further discussion and reconciliation in "Non-GAAP Financial Measures and Reconciliations”. |
The Company's Board of Directors declared fixed dividends totaling $0.03 per share on the Company's outstanding common stock. The dividends are payable on November 25, 2024 to shareholders of record at the close of business on November 15, 2024.
Earnings Conference Call
The Company will host a conference call to discuss these results:
| Call Date: | Thursday, November 7, 2024 |
| Call Time: | 11:00 a.m. Eastern Time / 10:00 am a.m. Central Time / 8:00 a.m. Pacific Time |
| Join the live listen-only audio webcast at https://edge.media-server.com/mmc/p/tysxczje
or at https://bry.com/category/events | |
https://register.vevent.com/register/BIe48b23e273834c71bc53e0d17114932f.
Once registered, you will receive the dial-in numbers and a unique PIN number. You may then dial-in or have a call back. When you dial in, you will input your PIN and be placed into the call. If you register and forget your PIN or lose your registration confirmation email, you may simply re-register and receive a new PIN.
A web based audio replay will be available shortly after the broadcast and will be archived at https://ir.bry.com/reports-resources or visit https://edge.media-server.com/mmc/p/tysxczje or https://bry.com/category/events.
About Berry Corporation (bry)
Berry is a publicly traded (NASDAQ: BRY) western United States independent upstream energy company with a focus on onshore, low geologic risk, low decline, long-lived oil and gas reserves. We operate in two business segments: (i) exploration and production ("E&P”) and (ii) well servicing and abandonment. Our E&P assets are located in California and Utah, are characterized by high oil content and are predominantly located in rural areas with low population. Our California assets are in the San Joaquin basin (100% oil), while our Utah assets are in the Uinta basin (60% oil and 40% gas). We operate our well servicing and abandonment segment in California. More information can be found at the Company's website at bry.com.
Forward-Looking Statements
The information in this press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. You can typically identify forward-looking statements by words such as aim, anticipate, achievable, believe, budget, continue, could, effort, estimate, expect, forecast, goal, guidance, intend, likely, may, might, objective, outlook, plan, potential, predict, project, seek, should, target, will or would and other similar words that reflect the prospective nature of events or outcomes. All statements, other than statements of historical facts, included in this press release that address plans, activities, events, objectives, goals, strategies, or developments that the Company expects, believes or anticipates will or may occur in the future, such as those regarding our financial position; liquidity; our ability to refinance our indebtedness; our ability to satisfy our debt obligations and comply with all covenants, agreements and conditions under our 2024 Term Loan Agreement; cash flows (including, but not limited to, Free Cash Flow); financial and operating results; capital program and development and production plans and expectations (including about potential results and impact); operations and business strategy; potential acquisition and other strategic opportunities; reserves; hedging activities; capital expenditures; return of capital; the payment of future dividends; future repurchases of stock; capital investments; our ESG strategy and the initiation of new projects or business in connection therewith, recovery factors; and other guidance are forward-looking statements. Actual results may differ from anticipated results, sometimes materially, and reported results should not be considered an indication of future performance. For any such forward-looking statement that includes a statement of the assumptions or bases underlying such forward-looking statement, we caution that while we believe such assumptions or bases to be reasonable and make them in good faith, assumed facts or bases almost always vary from actual results, sometimes materially.
Berry cautions you that these forward-looking statements are subject to all of the risks and uncertainties incident to acquisition transactions and the exploration for and development, production, gathering and sale of natural gas, NGLs and oil most of which are difficult to predict and many of which are beyond Berry's control. These risks include, but are not limited to, commodity price volatility; legislative and regulatory actions that may prevent, delay or otherwise restrict our ability to drill and develop our assets, including with respect to existing and/or new requirements in the regulatory approval and permitting process; legislative and regulatory initiatives in California or our other areas of operation addressing climate change or other environmental concerns; investment in and development of competing or alternative energy sources; drilling, production and other operating risks; effects of competition; uncertainties inherent in estimating natural gas and oil reserves and in projecting future rates of production; our ability to replace our reserves through exploration and development activities or strategic transactions; cash flow and access to capital; the timing and funding of development expenditures; environmental, health and safety risks; effects of hedging arrangements; potential shut-ins of production due to lack of downstream demand or storage capacity; disruptions to, capacity constraints in, or other limitations on the third-party transportation and market takeaway infrastructure (including pipeline systems) that deliver our oil and natural gas and other processing and transportation considerations; the ability to effectively deploy our ESG strategy and risks associated with initiating new projects or business in connection therewith; our ability to successfully integrate the Macpherson assets into our operations; we fail to identify risks or liabilities related to Macpherson, its operations or assets; our inability to achieve anticipated synergies; our ability to successfully execute other strategic bolt-on acquisitions; overall domestic and global political and economic conditions; inflation levels, including increased interest rates and volatility in financial markets and banking; changes in tax laws and the other risks described under the heading "Item 1A. Risk Factors” in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 and subsequent filings with the SEC.
Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no responsibility to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise except as required by applicable law. Investors are urged to consider carefully the disclosure in our filings with the Securities and Exchange Commission, available from us at via our website or via the Investor Relations contact below, or from the SEC's website at www.sec.gov.
Tables Following
The financial information and certain other information presented have been rounded to the nearest whole number or the nearest decimal. Therefore, the sum of the numbers in a column may not conform exactly to the total figure given for that column in certain tables. In addition, certain percentages presented here reflect calculations based upon the underlying information prior to rounding and, accordingly, may not conform exactly to the percentages that would be derived if the relevant calculations were based upon the rounded numbers, or may not sum due to rounding.
SUMMARY OF RESULTS
| Three Months Ended | ||||||||||||
| September 30, 2024 | June 30, 2024 | September 30, 2023 | ||||||||||
| (unaudited) ($ and shares in thousands, except per share amounts) | ||||||||||||
| Consolidated Statement of Operations Data: | ||||||||||||
| Revenues and other: | ||||||||||||
| Oil, natural gas and natural gas liquids sales | $ | 154,438 | $ | 168,781 | $ | 172,611 | ||||||
| Service revenue | 25,465 | 31,155 | 45,511 | |||||||||
| Electricity sales | 4,410 | 3,691 | 3,849 | |||||||||
| Gains (losses) on oil and gas sales derivatives | 75,434 | (5,844 | ) | (103,282 | ) | |||||||
| Other revenues | 37 | 36 | 113 | |||||||||
| Total revenues and other | 259,784 | 197,819 | 118,802 | |||||||||
| Expenses and other: | ||||||||||||
| Lease operating expenses | 54,801 | 53,989 | 59,842 | |||||||||
| Cost of services | 22,911 | 25,021 | 35,806 | |||||||||
| Electricity generation expenses | 1,245 | 552 | 1,479 | |||||||||
| Transportation expenses | 1,332 | 1,039 | 1,089 | |||||||||
| Acquisition costs | 971 | 1,394 | 2,082 | |||||||||
| General and administrative expenses | 19,111 | 18,881 | 20,987 | |||||||||
| Depreciation, depletion and amortization | 42,749 | 42,843 | 39,729 | |||||||||
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