-----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, W2qIBZz0vq5SdS5HuHFSy0CfHbkqkHRLGGflg561Jb7M70dBkV4N1dw0YTB1cSvW jvMtVYofi9Rih4aU4TFDRQ== /in/edgar/work/0000778438-00-000012/0000778438-00-000012.txt : 20001109 0000778438-00-000012.hdr.sgml : 20001109 ACCESSION NUMBER: 0000778438-00-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001108 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: 755243 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 period ended September 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: 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 September 30, 2000 was 21,134,667 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 SEPTEMBER 30, 2000 INDEX PART I. Financial Information Page No. Item 1. Financial Statements Condensed Balance Sheets at September 30, 2000 and December 31, 1999 . . . . . . . . . . . . . 3 Condensed Statements of Operations for the Three Month Periods Ended September 30, 2000 and 1999 . . . . . . . . . . . . . . . . 4 Condensed Statements of Operations for the Nine Month Periods Ended September 30, 2000 and 1999 . . . . . . . . . . . . . . . . 5 Condensed Statements of Cash Flows for the Nine Month Periods Ended September 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 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) September 30, December 31, 2000 1999 (Unaudited) ASSETS Current Assets: Cash and cash equivalents $ 1,689 $ 980 Short-term investments available for sale 600 596 Accounts receivable 23,320 15,303 Prepaid expenses and other 2,244 2,080 _________ _________ Total current assets 27,853 18,959 Oil and gas properties (successful efforts basis), buildings and equipment, net 197,361 186,519 Other assets 1,842 2,171 _________ _________ $ 227,056 $ 207,649 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 18,925 $ 7,203 Accrued liabilities 4,700 1,999 Federal and state income taxes payable 348 1,322 _________ _________ Total current liabilities 23,973 10,524 Long-term debt 33,000 52,000 Deferred income taxes 32,917 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; 21,134,667 shares issued and outstanding at September 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 53,718 53,487 Retained earnings 83,228 62,506 _________ _________ Total shareholders' equity 137,166 116,213 _________ _________ $ 227,056 $ 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 Statements of Operations Three Month Periods Ended September 30, 2000 and 1999 (In Thousands, Except Per Share Data) (Unaudited) 2000 1999 Revenues: Sales of oil and gas $ 32,731 $ 19,143 Interest and other income (expense), net 118 217 _________ _________ 32,849 19,360 _________ _________ Expenses: Operating costs 14,177 5,887 Depreciation, depletion and amortization 3,542 3,090 General and administrative 1,695 1,427 Interest 784 1,028 _________ _________ 20,198 11,432 _________ _________ Income before income taxes 12,651 7,928 Provision for income taxes 3,073 1,829 _________ _________ Net income $ 9,578 $ 6,099 ========= ========= Basic net income per share $ .43 $ .28 ========= ========= Diluted net income per share $ .43 $ .28 ========= ========= Cash dividends per share $ .10 $ .10 ========= ========= Weighted average number of shares of capital stock outstanding used to calculate basic net income per share 22,033 22,011 Effect of dilutive securities: Stock options 246 85 Other 34 8 _________ _________ Weighted average number of shares of capital stock used to calculate diluted net income per share 22,313 22,104 ========= ========= The accompanying notes are an integral part of these financial statements. 4 BERRY PETROLEUM COMPANY Part I. Financial Information Item 1. Financial Statements Condensed Statements of Operations Nine Month Periods Ended September 30, 2000 and 1999 (In Thousands, Except Per Share Data) (Unaudited) 2000 1999 Revenues: Sales of oil and gas $ 85,235 $ 42,842 Interest and other income (expense), net 339 735 _________ _________ 85,574 43,577 _________ _________ Expenses: Operating costs 29,166 15,439 Depreciation, depletion and amortization 10,248 8,978 General and administrative 6,003 3,687 Interest 2,575 2,994 _________ _________ 47,992 31,098 _________ _________ Income before income taxes 37,582 12,479 Provision for income taxes 10,251 2,589 _________ _________ Net income $ 27,331 $ 9,890 ========= ========= Basic net income per share $ 1.24 $ .45 ========= ========= Diluted net income per share $ 1.23 $ .45 ========= ========= Cash dividends per share $ .30 $ .30 ========= ========= Weighted average number of shares of capital stock outstanding used to calculate basic net income per share 22,027 22,010 Effect of dilutive securities: Stock options 186 31 Other 26 7 _________ _________ Weighted average number of shares of capital stock used to calculate diluted net income per share 22,239 22,048 ========= ========= 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 Nine Month Periods Ended September 30, 2000 and 1999 (In Thousands) (Unaudited) 2000 1999 Cash flows from operating activities: Net income $ 27,331 $ 9,890 Depreciation, depletion and amortization 10,248 8,978 Increase (decrease) in deferred income taxes 4,005 (97) Other, net (102) (198) _________ _________ Net working capital provided by operating activities 41,482 18,573 Increase in accounts receivable,prepaid expenses and other (8,181) (5,944) Increase in current liabilities 13,449 2,495 _________ ________ Net cash provided by operating activities 46,750 15,124 Cash flows from investing activities: Property acquisitions (3,034) (34,692) Capital expenditures (17,439) (6,801) Proceeds from sale of short-term investments - 727 Purchase of short-term investments - (611) Other, net 42 (9) _________ _________ Net cash used in investing activities (20,431) (41,386) Cash flows from financing activities: Dividends paid (6,609) (6,603) Proceeds from issuance of long-term debt - 34,598 Payment of long-term debt (19,000) (5,000) Other, net (1) (87) _________ _________ Net cash provided by (used in) financing activities (25,610) 22,908 _________ _________ Net increase (decrease) in cash and cash equivalents 709 (3,354) Cash and cash equivalents, beginning of year 980 7,058 _________ _________ Cash and cash equivalents, end of period $ 1,689 $ 3,704 ========= ========= 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 September 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 September 30, 2000 and December 31, 1999 and results of operations for the three and nine month periods ended September 30, 2000 and 1999 and cash flows for the nine month periods ended September 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's for the periods ended June 30 and 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 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's financial condition or liquidity. 4. The Company entered into a sales agreement with a major oil company which took effect in the second quarter of 2000. Due to this agreement, the Company's sales and accounts receivable have become concentrated as follows: For the three and nine month periods ended September 30, 2000, oil and gas sales to this company represented 89% and 65% of the Company's total oil and gas sales, respectively. As of September 30, 2000, this same company accounted for 48% of the total accounts receivable balance. 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 $27.3 million, or $1.24 per share (basic), for the first nine months of 2000, 176% higher than $9.9 million, or $.45 per share, in the first nine months of 1999. For the third quarter of 2000, the Company earned $9.6 million, or $.43 per share, up 57% from $6.1 million, or $.28 per share, in the third quarter of 1999 and up 8% from $8.9 million, or $.40 per share, earned in the second quarter of 2000. Three Months Ended Nine Months Ended Sept 30, June 30, Sept 30, Sept 30, Sept 30, 2000 2000 1999 2000 1999 Net production-BOEPD* 15,244 14,494 14,267 14,680 13,681 Per BOE data: Average sales price $23.28 $20.19 $14.58 $21.22 $11.46 Operating costs 9.67 5.80 4.01 6.80 3.49 Production taxes .43 .48 .48 .45 .55 Total operating costs 10.10 6.28 4.49 7.25 4.04 Depreciation/Depletion (DD&A) 2.53 2.57 2.35 2.55 2.40 General & administrative expenses (G&A) 1.21 1.21 1.09 1.49 .99 Interest expense .56 .65 .78 .64 .80 *Barrel of oil equivalent per day Operating income for the third quarter of 2000 was $15.1 million, up from $14.9 million earned in the second quarter of 2000 and $10.2 million earned in the third quarter of 1999. For the first nine months of 2000, operating income was $46.1 million, or 148% higher than $18.6 million generated in the first nine months of 1999. These improvements reflect strong increases in oil prices from 1999 to 2000 and the Company's success in increasing production from our core producing properties, partially offset by higher operating costs primarily associated with increased steam volumes and higher steam costs. The Company's average sales price in the third quarter and the first nine months of 2000 was $23.28/BOE and $21.22/BOE, respectively. These prices were 69% and 85% higher than $14.58/BOE received in the third quarter of 1999 and $11.46/BOE for the first nine months of 1999. As a result of the Company's 2000 development program and increased volume of steam injected, average companywide BOEPD increased to 15,244 for the third quarter of 2000, up 7% from 14,267 in the third quarter of 1999. Year-to-date production of 14,680 was also 7% higher than 13,681 achieved in the first nine months of 1999. The Company continues to see positive results from its 2000 development program with current production at approximately 15,600. 8 Operating costs increased to $14.2 million, or $10.10/BOE, in the third quarter of 2000, up 141% from $5.9 million, or $4.49/BOE in the third quarter of 1999. During the first nine months of 2000, operating costs were $29.2 million, or $7.25/BOE, up from $15.4 million, or $4.04/BOE, for the first nine months of 1999. The increase is primarily related to sharply higher natural gas fuel costs and the firing of extra field generators (which have a higher cost per barrel of steam produced than cogeneration steam) in order to maximize production in this period of attractive oil prices. For the third quarter of 2000, delivered natural gas costs averaged $5.34/MMBTU, up 57% from $3.40/MMBTU in the second quarter of 2000 and 97% from $2.71/MMBTU in the third quarter of 1999. The Company also incurred higher and unexpected contract services costs related to maintenance of the Company's cogeneration plants and lease facilities and recorded an accrual for a potential environmental settlement. G&A expenses in the third quarter were $1.7 million, or $1.21/BOE, comparable to $1.6 million, or $1.21/BOE, in the second quarter of 2000 and up 21% from $1.4 million, or $1.09/BOE, in the third quarter of 1999. The increase in the third quarter of 2000 from the same quarter in 1999 was primarily related to higher compensation expenses caused by salary increases and the hiring of additional employees to handle the technical aspects of the Company's growth opportunities. The Company experienced an effective tax rate of 27% for the nine month period ending September 30, 2000, up from 21% for the same period in 1999. Income before income taxes was higher due to the increase in oil prices. While the Company continues to invest in qualifying enhanced oil recovery projects (EOR), the increase in the effective tax rate was due to the decrease in EOR credits as a percentage of income before income taxes. The Company anticipates that the effective tax rate will trend upward if oil prices maintain their current levels or improve. Liquidity and Capital Resources Working capital at September 30, 2000 was $3.9 million, down from $8.3 million in the second quarter of 2000 and $8.4 million at December 31, 2000. The Company generated cash from operations of $46.8 million for the first nine months of 2000, up sharply from $15.1 million for the same period of 1999. Cash was used to retire $19 million in long-term debt, pay $17.4 million in capital development, pay dividends of $6.6 million and make a lease acquisition of $3 million. Long-term debt at September 30, 2000 was $33 million, with the retirement of an additional $6 million so far in the fourth quarter. Future Developments The Company currently has two bracketed zero cost collar hedge contracts with two refiners as part of its oil price protection program on a total of 6,500 B/D of its crude oil production. These contracts expire at year-end 2000. While the Company has not yet replaced them with any new hedging arrangements, the Company may elect to do so in the future. During 2000, it has been apparent that there has been a shortfall between the supply of electricity produced and the increasing demand for power in California. This, combined with the phase-in of the deregulation of the electricity market in California, has resulted in political turmoil between regulatory agencies, electricity producers, electrical transmission companies 9 and the retail customers. The Company presently has Standard Offer #1 and Standard Offer #2 contracts for selling its electricity production to major transmission companies which begin to expire in 2002. The Company can opt to sell any or all of its electricity on the open market at any time. Although the prices available on the open market are presently attractive, there can be no guarantee that this condition will continue based upon certain future political and market supply/demand conditions. 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, the prices of goods and services, the availability of drilling rigs and other support services, Y2k non-compliance by key vendors, customers, the Company, etc., legislative and/or California Public Utilities Commission decisions and government regulation. 10 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: November 8, 2000 11 EX-27 2 0002.txt FINANCIAL DATA SCHEDULE
5 0000778438 BERRY PETROLEUM COMPANY 1,000 9-MOS DEC-31-2000 SEP-30-2000 1,689 600 23,320 0 0 27,853 299,342 101,981 227,056 23,973 0 0 0 220 136,946 227,056 85,235 85,574 0 39,414 6,003 0 2,575 37,582 10,251 27,331 0 0 0 27,331 1.24 1.23
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