-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PKOw6qFlu8FC0MT3dU+sy68N+VLydSKOOB5ob00mhHWwVQd31qXKFojYggRz9CTa cn9T8Y/epIbNKcPsClRTlw== /in/edgar/work/20000809/0000778438-00-000009/0000778438-00-000009.txt : 20000921 0000778438-00-000009.hdr.sgml : 20000921 ACCESSION NUMBER: 0000778438-00-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000809 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BERRY PETROLEUM CO CENTRAL INDEX KEY: 0000778438 STANDARD INDUSTRIAL CLASSIFICATION: [1311 ] IRS NUMBER: 770079387 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09735 FILM NUMBER: 689104 BUSINESS ADDRESS: STREET 1: P O BIN X CITY: TAFT STATE: CA ZIP: 93268 BUSINESS PHONE: 8057698811 MAIL ADDRESS: STREET 1: BERRY PETROLEUM CO STREET 2: P.O. BOX X CITY: TAFT STATE: CA ZIP: 93268 10-Q 1 0001.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly report ended June 30, 2000 Commission file number 1-9735 BERRY PETROLEUM COMPANY (Exact name of registrant as specified in its charter) DELAWARE 77-0079387 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 28700 Hovey Hills Road, P.O. Box 925, Taft, California 93268-0925 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (661) 769-8811 Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report: 28700 Hovey Hills Road, P.O. Bin X, Taft, California 93268 NONE Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES (X) NO ( ) The number of shares of each of the registrant's classes of capital stock outstanding as of June 30, 2000 was 21,130,291 shares of Class A Common Stock ($.01 par value) and 898,892 shares of Class B Stock ($.01 par value). All of the Class B Stock is held by a shareholder who owns in excess of 5% of the outstanding stock of the Registrant. BERRY PETROLEUM COMPANY JUNE 30, 2000 INDEX Page No. PART I. Financial Information Item 1. Financial Statements Condensed Balance Sheets at June 30, 2000 and December 31, 1999 . . . . . . . . . . . . . . . . . . 3 Condensed Income Statements for the Three Month Periods Ended June 30, 2000 and 1999 . . . . . . . . . . . . . . . . . . . . . 4 Condensed Income Statements for the Six Month Periods Ended June 30, 2000 and 1999 . . . . . . . . . . . . . . . . . . . . . 5 Condensed Statements of Cash Flows for the Six Month Periods Ended June 30, 2000 and 1999 . . . . . . . . . . . . . . . . . . . . . 6 Notes to Condensed Financial Statements . . . . . . . . . . . . . . . . . 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . 8 PART II. Other Information Item 4. Submission of Matters to a Vote of Security Holders . . . . . . 10 Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . 11 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 2 BERRY PETROLEUM COMPANY Part I. Financial Information Item 1. Financial Statements Condensed Balance Sheets (In Thousands, Except Share Information) June 30, December 31, 2000 1999 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 1,179 $ 980 Short-term investments available for sale 598 596 Accounts receivable 21,160 15,303 Prepaid expenses and other 2,306 2,080 _________ _________ Total current assets 25,243 18,959 Oil and gas properties (successful efforts basis), buildings and equipment, net 192,996 186,519 Other assets 1,944 2,171 _________ _________ $ 220,183 $ 207,649 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 13,600 $ 7,203 Accrued liabilities 2,769 1,999 Federal and state income taxes payable 549 1,322 _________ _________ Total current liabilities 16,918 10,524 Long-term debt 42,000 52,000 Deferred income taxes 31,568 28,912 Shareholders' equity: Preferred stock, $.01 par value; 2,000,000 shares authorized; no shares outstanding - - Capital stock, $.01 par value: Class A Common Stock, 50,000,000 shares authorized; 21,130,291 shares issued and outstanding at June 30, 2000 (21,112,334 at December 31, 1999) 211 211 Class B Stock, 1,500,000 shares authorized; 898,892 shares issued and outstanding (liquidation preference of $899) 9 9 Capital in excess of par value 53,624 53,487 Retained earnings 75,853 62,506 _________ _________ Total shareholders' equity 129,697 116,213 _________ _________ $ 220,183 $ 207,649 ========= ========= The accompanying notes are an integral part of these financial statements. 3 BERRY PETROLEUM COMPANY Part I. Financial Information Item 1. Financial Statements Condensed Income statements Three Month Periods Ended June 30, 2000 and 1999 (In Thousands, Except Per Share Data) (Unaudited) 2000 1999 Revenues: Sales of oil and gas $ 26,477 $ 14,474 Interest and other income, net 110 87 _________ _________ 26,587 14,561 _________ _________ Expenses: Operating costs 8,283 5,090 Depreciation, depletion and amortization 3,393 3,046 General and administrative 1,598 1,148 Interest expense 857 1,039 _________ _________ 14,131 10,323 _________ _________ Income before income taxes 12,456 4,238 Provision for income taxes 3,562 991 _________ _________ Net income $ 8,894 $ 3,247 ========= ========= Basic net income per share $ .40 $ .15 ========= ========= Diluted net income per share $ .40 $ .15 ========= ========= Cash dividends per share $ .10 $ .10 ========= ========= Weighted average number of shares of capital stock outstanding (used to calculate basic net income per share) 22,029 22,009 Effect of dilutive securities: Stock options 155 39 Other 11 6 _________ _________ Weighted average number of shares of capital stock used to calculate diluted net income per share 22,195 22,054 ========= ========= The accompanying notes are an integral part of these financial statements. 4 BERRY PETROLEUM COMPANY Part I. Financial Information Item 1. Financial Statements Condensed Income Statements Six Month Periods Ended June 30, 2000 and 1999 (In Thousands, Except Per Share Data) (Unaudited) 2000 1999 Revenues: Sales of oil and gas $ 52,503 $ 23,699 Interest and other income, net 221 518 _________ _________ 52,724 24,217 _________ _________ Expenses: Operating costs 14,988 9,552 Depreciation, depletion and amortization 6,705 5,888 General and administrative 4,308 2,260 Interest expense 1,792 1,966 _________ _________ 27,793 19,666 _________ _________ Income before income taxes 24,931 4,551 Provision for income taxes 7,178 760 _________ _________ Net income $ 17,753 $ 3,791 ========= ========= Basic net income per share $ .81 $ .17 ========= ========= Diluted net income per share $ .80 $ .17 ========= ========= Cash dividends per share $ .20 $ .20 ========= ========= Weighted average number of shares of capital stock outstanding (used to calculate basic net income per share) 22,024 22,009 Effect of dilutive securities: Stock options 151 14 Other 27 5 _________ _________ Weighted average number of shares of capital stock used to calculate diluted net income per share 22,202 22,028 ========= ========= The accompanying notes are an integral part of these financial statements. 5 BERRY PETROLEUM COMPANY Part I. Financial Information Item 1. Financial Statements Condensed Statements of Cash Flows Six Month Periods Ended June 30, 2000 and 1999 (In Thousands) (Unaudited) 2000 1999 Cash flows from operating activities: Net income $ 17,753 $ 3,791 Depreciation, depletion and amortization 6,705 5,888 Increase (decrease) in deferred income taxes 2,656 (461) Other, net (63) (83) _________ _________ Net working capital provided by operating activities 27,051 9,135 Increase in accounts receivable, prepaid expenses and other (6,083) (5,360) Increase in current liabilities 6,394 982 _________ _________ Net cash provided by operating activities 27,362 4,757 Cash flows from investing activities: Capital expenditures (9,767) (4,011) Property acquisitions (3,034) (34,692) Maturities of short-term investments - 727 Purchase of short-term investments - (611) Other, net 45 (7) _________ _________ Net cash used in investing activities (12,756) (38,594) Cash flows from financing activities: Dividends paid (4,406) (4,402) Payment of long-term debt (10,000) - Proceeds from issuance of long-term debt - 34,598 Other, net (1) (1) _________ _________ Net cash (used in) provided by financing activities (14,407) 30,195 _________ _________ Net increase (decrease) in cash and cash equivalents 199 (3,642) Cash and cash equivalents at beginning of year 980 7,058 _________ _________ Cash and cash equivalents at end of period $ 1,179 $ 3,416 ========= ========= The accompanying notes are an integral part of these financial statements. 6 BERRY PETROLEUM COMPANY Part I. Financial Information Item 1. Financial Statements Notes to Condensed Financial Statements June 30, 2000 (Unaudited) 1. All adjustments which are, in the opinion of management, necessary for a fair presentation of the Company's financial position at June 30, 2000 and December 31, 1999 and results of operations for the three and six month periods ended June 30, 2000 and 1999 and cash flows for the six month periods ended June 30, 2000 and 1999 have been included. All such adjustments are of a normal recurring nature. The results of operations and cash flows are not necessarily indicative of the results for a full year. 2. The accompanying unaudited financial statements have been prepared on a basis consistent with the accounting principles and policies reflected in the December 31, 1999 financial statements. The December 31, 1999 Form 10-K and the Form 10-Q for the period ended March 31, 2000 should be read in conjunction herewith. The year-end condensed balance sheet was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States. 3. The Company is a party to various legal proceedings arising in the normal course of business, none of which, in management's opinion, should result in judgments which would have a material adverse effect on the Company. In addition, the Company received a notice in April 2000 from the EPA that the Company may have potential successor liability for waste material disposed at the Casmalia Superfund Site ("Site"), located on a 252-acre parcel in Santa Barbara County, California. Over 10,000 separate parties disposed of waste at the Site while it was operational from 1973 to 1989. The EPA has stated that federal, state and local government agencies along with the numerous private entities that used the Site for waste disposal will be expected to pay for the clean-up costs which could total as much as several hundred million dollars. The EPA is also pursuing the former operator(s) of the Site to pay for remediation. The total amount of environmental investigation, legal and clean-up costs that the Company may incur with respect to the foregoing is not known at this time. While the potential impact to the quarterly or annual financial results may be material, management does not believe it would materially impact the Company's financial position or liquidity. 7 BERRY PETROLEUM COMPANY Part I. Financial Information Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations The Company had net income of $8.9 million, or $.40 per share (basic), for the three months ended June 30, 2000, up 178% from $3.2 million, or $.15 per share, earned in the three months ended June 30, 1999. For the six months ended June 30, 2000, the Company had net income of $17.8 million, or $.81 per share (basic), up 368% from $3.8 million, or $.17 per share, earned in the first six months of 1999. Three Months Six Months June 30 March 31 June 30 June 30 June 30 2000 2000 1999 2000 1999 Net production - BOE/day 14,494 14,297 13,982 14,396 13,383 Per BOE Data: Average sales price $20.19 $19.99 $11.37 $20.09 $ 9.64 Operating costs 5.80 4.70 3.55 5.26 3.39 Production taxes .48 .45 .45 .46 .55 ----- ----- ----- ----- ----- Total operating costs 6.28 5.15 4.00 5.72 3.94 Depletion & depreciation (DD&A) 2.57 2.48 2.39 2.56 2.43 General & administrative (G&A) expenses 1.21 2.08 .90 1.64 .93 Interest expense .65 .72 .82 .69 .81 Operating income was $14.9 million for the second quarter of 2000, down 7% from $16.1 million in the first quarter of 2000, but up 133% from $6.4 million earned in the second quarter of 1999. For the first six months of 2000, operating income climbed 269% to $31.0 million from $8.4 million generated in the first half of 1999. These increases in operating income from the 1999 periods were a direct result of an improvement in oil prices and increased production volumes. The average price received of $20.19 and $20.09 for the three and six months ended June 30, 2000 were up 78% and 108%, respectively, from $11.37 and $9.64 received in the comparable 1999 periods. The production levels also benefited from the Company's acquisition of its Placerita properties in the first quarter of 1999 and its 1999 and 2000 drilling and workover programs. Production averaged 14,494 barrels of oil equivalent per day (BOEPD) in the second quarter of 2000 compared to 14,297 and 13,982 BOEPD in the first quarter of 2000 and second quarter of 1999, respectively. Production in the first six months of 2000 of 14,396 BOEPD was up from 13,383 BOEPD in the same 1999 six month period. The Company has drilled 51 new wells to date of a total of 87 budgeted to be drilled by the end of 2000 with 28 of these wells producing as of June 30, 2000. Production levels have increased to approximately 15,276 BOEPD as of July 31, 2000 and as all of these wells are drilled, steamed and brought on production, the Company anticipates receiving the full benefit of the drilling program through additional production increases in the second half of the year and into 2001. 8 Operating costs increased to $8.3 million, or $6.28/BOE, in the second quarter of 2000, up 24% from $6.7 million, or $5.15/BOE, in the first quarter of 2000 and were 63% higher than $5.1 million, or $4.00/BOE, incurred in the second quarter of 1999. The largest factor contributing to the increase in operating costs was higher steam costs. The cost of natural gas, which is used to fire the Company's cogeneration facilities and steam generators, rose significantly in the second quarter. In addition, the Company increased steam injection volumes during the periods by firing additional conventional steam generators which have a higher operating cost than the Company's other steam sources. G&A expenses were $1.6 million, or $1.21/BOE, in the second quarter of 2000, down 41% from $2.7 million, or $2.08/BOE, in the first quarter of 2000, but up 45% from $1.1 million, or $.90/BOE, in the second quarter of 1999. The 2000 periods include the effect of a number of new employees hired to support the Company's property development and growth activities. The first quarter of 2000 was unusually high due to legal fees related to litigation settled in March 2000. The Company anticipates G&A/BOE to decline for the remainder of 2000 due to the projected increase in production resulting from the Company's development activities. The Company experienced an effective tax rate of 29% for both the second quarter and first six months of 2000 compared to 23% and 17% in the same 1999 periods, respectively. This higher effective rate was due primarily to the increase in oil prices in 2000 compared to the 1999 periods. However, the Company anticipates that its effective tax rate will remain well below the combined federal and state statutory rate due to the Company's significant investment in numerous enhanced oil recovery projects in 2000. Liquidity and Capital Resources Working capital at June 30, 2000 was $8.3 million, comparable to $8.4 million at December 31, 1999. The Company generated cash from operations of $27.4 million in the first six months of 2000 compared to $4.8 million generated in the same 1999 period. Cash was used to retire $10 million of long-term debt, fund development activities of $9.8 million, pay dividends of $4.4 million and purchase the Castruccio lease in the Placerita field for $3 million. Long-term debt at June 30, 2000 was $42 million. Forward Looking Statements "Safe harbor under the Private Securities Litigation Reform Act of 1995": With the exception of historical information, the matters discussed in this Form 10-Q are forward-looking statements 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, competition, environmental risks, litigation uncertainties, drilling, development and operating risks, uncertainties about the estimates of reserves, Y2k non-compliance by the vendors, customers, the Company, etc. and government regulation. 9 BERRY PETROLEUM COMPANY Part II. Other Information Item 4. Submission of Matters to a Vote of Security Holders At the annual meeting, which was held at the Company's corporate offices on May 19, 2000, nine incumbent directors were re-elected. The results of voting as reported by the inspector of elections are noted below: 1. There were 21,128,819 shares of the Company's capital stock issued, outstanding and entitled to vote as of the record date, March 13, 2000. 2. There were present at the meeting, in person or by proxy, the holders of 20,120,978 shares, representing 91.34% of the total number of shares outstanding and entitled to vote at the meeting, such percentage representing a quorum. PROPOSAL ONE: Election of Directors WITHHELD NOMINEE FOR VOTES PERCENTAGE AUTHORITY W. Berry 20,055,964 99.68% 65,014 R. Busch 20,055,700 99.68% 65,278 W. Bush 20,055,915 99.68% 65,063 J. Gaul 20,045,104 99.62% 75,874 J. Hagg 20,056,304 99.68% 64,674 J. Hoffman(1) 18,113,965 90.03% 2,007,013 T. Jamieson 20,055,404 99.67% 65,574 R. Martin 20,055,404 99.67% 65,574 M. Young 20,056,304 99.68% 64,674 Percentages are based on the shares represented and voting at the meeting in person or by proxy. (1) The large number of withheld authority votes for J. Hoffman were largely the result of institutional votes based on the recommendation to withhold authority for Mr. Hoffman from the proxy service firm, Institutional Shareholder Services (ISS). ISS recommended that the votes for Mr. Hoffman be withheld based solely on the fact of his membership on the Nominating and Corporate Governance Committee as an insider. A large institutional shareholder has confirmed to the Company that they fully support Mr. Hoffman, cast their votes in error and would recast their votes in favor of Mr. Hoffman, if that were possible. The results with those shares voted for Mr. Hoffman rather than withheld would be as follows: WITHHELD FOR VOTES PERCENTAGE AUTHORITY 19,581,365 97.32% 539,613 10 BERRY PETROLEUM COMPANY Part II. Other Information Item 6. Exhibits and Reports on Form 8-K None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BERRY PETROLEUM COMPANY /s/ Jerry V. Hoffman________________ Jerry V. Hoffman Chairman, President and Chief Executive Officer /s/ Ralph J. Goehring_______________ Ralph J. Goehring Senior Vice President and Chief Financial Officer (Principal Financial Officer) /s/ Donald A. Dale__________________ Donald A. Dale Controller (Principal Accounting Officer) Date: August 8, 2000 11 EX-27 2 0002.txt FINANCIAL DATA SCHEDULE
5 0000778438 BERRY PETROLEUM COMPANY 1,000 6-MOS DEC-31-2000 JUN-30-2000 1,179 598 21,160 0 0 25,243 292,178 99,182 220,183 16,918 0 0 0 220 129,477 220,183 52,503 52,724 0 21,693 4,308 0 1,792 24,931 7,178 17,753 0 0 0 17,753 .81 .80
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