-----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, C/QOCVbIHlwMHS+3BYnA9DhWahwfK3qx1gh8fagkhsyiSGMazFpmKj1ppSu1+YCs zM1+nKzoEpVF2FjnPx6klg== 0000778438-96-000018.txt : 19960807 0000778438-96-000018.hdr.sgml : 19960807 ACCESSION NUMBER: 0000778438-96-000018 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960806 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BERRY PETROLEUM CO CENTRAL INDEX KEY: 0000778438 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 770079387 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09735 FILM NUMBER: 96604309 BUSINESS ADDRESS: STREET 1: 28700 HOVEY HILLS RD STREET 2: P O BOX X CITY: TAFT STATE: CA ZIP: 93268 BUSINESS PHONE: 8057698811 MAIL ADDRESS: STREET 1: 28700 HOVEY HILLS ROAD STREET 2: P.O. BOX X CITY: TAFT STATE: CA ZIP: 93268 10-Q 1 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 June 30, 1996 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. Bin X, Taft, California 93268 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (805) 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 June 30, 1996 was 21,043,333 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, 1996 INDEX PART I. Financial Information Page No. Report of Coopers & Lybrand L.L.P., Independent Accountants . . . . . 3 Item 1. Financial Statements Condensed Balance Sheets at June 30, 1996 and December 31, 1995 . . . . . . . . . . . . . . . . 4 Condensed Income Statements for the Three Month Periods Ended June 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . 5 Condensed Income Statements for the Six Month Periods Ended June 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . 6 Condensed Statements of Cash Flows for the Six Month Periods Ended June 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . 7 Notes to Condensed Financial Statements . . . . . . . . . . . . . . . 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . 9 PART II. Other Information Item 4. Submission of Matters to a Vote of Security Holders . . . . . 11 Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . 12 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 2 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors Berry Petroleum Company We have reviewed the accompanying condensed balance sheet of Berry Petroleum Company as of June 30, 1996, the condensed statements of income for the three and six month periods ended June 30, 1996 and 1995, and the condensed statements of cash flows for the six month periods ended June 30, 1996 and 1995. These interim financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical review procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying condensed financial statements for them to be in conformity with generally accepted accounting principles. /s/ COOPERS & LYBRAND L.L.P. COOPERS & LYBRAND L.L.P. Los Angeles, California August 5, 1996 3 BERRY PETROLEUM COMPANY Part I. Financial Information Item 1. Financial Statements Condensed Balance Sheets (In Thousands Except Share Information) June 30, December 31, 1996 1995 (Unaudited) ASSETS Current Assets: Cash and cash equivalents $ 29,017 $ 18,759 Short-term investments - available for sale 7,505 15,695 Accounts receivable 8,524 8,414 Deferred income taxes 753 1,175 Prepaid expenses and other 1,641 1,157 _________ _________ Total current assets 47,440 45,200 Oil and gas properties (successful efforts basis), buildings and equipment, net 73,699 72,042 Other assets 507 480 _________ _________ $ 121,646 $ 117,722 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 2,736 $ 3,086 Accrued liabilities 3,522 3,912 Federal and state income taxes payable 1,321 1,696 _________ _________ Total current liabilities 7,579 8,694 Deferred income taxes 17,987 16,968 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; 21,043,333 shares issued and outstanding at June 30, 1996 (21,033,055 at December 31, 1995) 210 210 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 52,998 52,850 Retained earnings 42,863 38,991 _________ _________ Total shareholders' equity 96,080 92,060 _________ _________ $ 121,646 $ 117,722 ========= ========= 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 Three Month Periods Ended June 30, 1996 and 1995 (In Thousands Except Per Share Data) (Unaudited) 1996 1995 Revenues: Sales of oil and gas $ 13,219 $ 12,442 Interest and other income, net 507 526 ________ ________ 13,726 12,968 ________ ________ Expenses: Operating costs 3,748 4,935 Depreciation, depletion and amortization 1,688 1,576 Dry hole and abandonment costs 75 88 General and administrative 1,294 1,249 ________ ________ 6,805 7,848 ________ ________ Income before income taxes 6,921 5,120 Provision for income taxes 2,523 2,244 ________ ________ Net income $ 4,398 $ 2,876 ======== ======== Net income per share $ .20 $ .13 ======== ======== Weighted average number of shares of capital stock used to calculate earnings per share 21,939 21,932 ======== ======== Cash dividends per share $ .10 $ .10 ======== ======== The accompanying notes are an integral part of these financial statements. 5 BERRY PETROLEUM COMPANY Part I. Financial Information Item 1. Financial Statements Condensed Income Statements Six Month Periods Ended June 30, 1996 and 1995 (In Thousands Except Per Share Data) (Unaudited) 1996 1995 Revenues: Sales of oil and gas $ 25,364 $ 22,881 Interest and other income, net 965 1,074 ________ ________ 26,329 23,955 ________ ________ Expenses: Operating costs 7,562 9,795 Depreciation, depletion and amortization 3,315 3,277 Dry hole and abandonment costs 75 131 General and administrative 2,393 2,365 ________ ________ 13,345 15,568 ________ ________ Income before income taxes 12,984 8,387 Provision for income taxes 4,725 3,301 ________ ________ Net income $ 8,259 $ 5,086 ======== ======== Net income per share $ .38 $ .23 ======== ======== Weighted average number of shares of capital stock used to calculate earnings per share 21,935 21,932 ======== ======== Cash dividends per share $ .20 $ .20 ======== ======== The accompanying notes are an integral part of these financial statements. 6 BERRY PETROLEUM COMPANY Part I. Financial Information Item 1. Financial Statements Condensed Statements of Cash Flows Six Month Periods Ended June 30, 1996 and 1995 (In Thousands) (Unaudited) 1996 1995 Cash flows from operating activities: Net income $ 8,259 $ 5,086 Adjustments to reconcile net income to net cash provided by operating activities: Depletion, depreciation and amortization 3,315 3,277 Increase (decrease) in deferred income tax liability 1,019 (1,869) Other, net 184 (52) _______ _______ Net working capital provided by operating activities 12,777 6,442 Decrease (increase) in accounts receivable, prepaid expenses and other (172) 3,841 Decrease in current liabilities (1,115) (3,213) _______ _______ Net cash provided by operating activities 11,490 7,070 Cash flows from investing activities: Capital expenditures (5,183) (6,010) Maturities of short-term investments 8,190 7,932 Purchase of short-term investments - (3,000) Other, net - (33) _______ _______ Net cash provided by (used in) provided by investing activities 3,007 (1,111) Cash flows from financing activities: Dividends paid (4,387) (4,387) Stock options exercised 148 - _______ _______ Net cash used in financing activities (4,239) (4,387) _______ _______ Net increase in cash and cash equivalents 10,258 1,572 Cash and cash equivalents at beginning of year 18,759 7,466 _______ _______ Cash and cash equivalents at end of period $29,017 $ 9,038 ======= ======= Supplemental disclosures of cash flow information: Income taxes paid $ 3,959 $ 2,885 ======= ======= The accompanying notes are an integral part of these financial statements. 7 BERRY PETROLEUM COMPANY Part I. Financial Information Item 1. Financial Statements Notes to Condensed Financial Statements June 30, 1996 (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, 1996 and December 31, 1995, results of operations and cash flows for the six month periods ended June 30, 1996 and 1995 and results of operations for the three month periods ended June 30, 1996 and 1995 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, 1995 financial statements. The December 31, 1995 Form 10-K and the Form 10-Q for the period ended March 31, 1996 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 generally accepted accounting principles. 3. On December 25, 1993, the Company experienced a crude oil spill on its PRC 735 State lease located in the West Montalvo field in Ventura County, California. The clean-up of the spill was substantially completed in January 1994. The Company negotiated a resolution of the state criminal investigation in August 1994. Governmental investigations continue regarding potential civil and federal criminal penalties, if any. Management believes the Company has an adequate amount of insurance coverage for the majority of the costs associated with the spill. The Company estimates the total cost of the spill, net of insurance reimbursement, to be a minimum of $3.3 million and a maximum of $5.1 million. The minimum amount was expensed by the Company ($1.3 million in 1994 and $2 million in 1993). The costs incurred and estimated to be incurred in connection with the spill not yet paid by the Company are included in current liabilities at June 30, 1996, and the probable remaining minimum insurance reimbursement is included in accounts receivable. As of June 30, 1996, the Company had received approximately $8.1 million under its insurance coverage as reimbursement for costs incurred and paid by the Company associated with the spill. 8 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 $8.3 million for the six months ended June 30, 1996 or $.38 per share, up 63% from net income of $5.1 million for the six months ended June 30, 1995 or $.23 per share. For the three months ended June 30, 1996, the Company had net income of $4.4 million or $.20 per share, up 13% from $3.9 million or $.18 per share earned during the first quarter of 1996 and up 52% from $2.9 million or $.13 per share earned in the second quarter of 1995. Three Months Ended Six Months Ended Jun 30 Mar 31 Jun 30 Jun 30 Jun 30 1996 1996 1995 1996 1995 Net Production (BOE/D) 9,465 9,101 9,344 9,276 9,136 Average Sales Price/BOE $15.27 $14.42 $14.63 $14.96 $13.84 Operating Costs/BOE 4.35 4.61 5.80 4.48 5.92 Depreciation/Depletion/ BOE 1.96 1.97 1.85 1.96 1.98 General and Administrative Expenses/BOE 1.50 1.33 1.47 1.42 1.43 Operating income from producing operations was $7.8 million in the second quarter of 1996, up 15% and 28% from $6.8 million and $6.1 million for the three months ended March 31, 1996 and June 30, 1995, respectively. The improvement in operating income in the second quarter of 1996 was primarily related to higher oil prices, lower operating expenses and higher production. Oil and gas production of 9,465 BOE/day in the second quarter of 1996 was up 364 BOE/day from the first quarter of 1996 and 121 BOE/day from the second quarter of 1995. The increase in production was primarily due to the benefits of the 1995 and 1996 drilling programs. After adjusting the 1995 period for production from the Rincon field which the Company sold in November 1995, production for the second quarter of 1996 was more than 400 BOE/day higher than the second quarter in 1995. The average sales price for the Company's oil and gas in the second quarter was $15.27/BOE, 6% and 4% higher than $14.42 received in the first quarter of 1996 and $14.63 in the second quarter of 1995, respectively. The average posted price of San Joaquin Valley heavy crude oil, the applicable price for the Company's homebase properties (88% of the Company's total production) began the quarter at $17.75/bbl, declined to a low of $13.75/bbl on June 6, 1996 and closed the quarter at $14.50/bbl. The price of heavy crude oil, the principal product of the Company, is influenced by many factors including world oil prices, the heating fuel and bunker fuel markets, levels of imports to California of like-kind 9 products and the condition and utilization of California's refineries. These factors in combination worked to the Company's favor in the first quarter, resulting in a differential between California heavy crude oil prices and West Texas Intermediate prices of $4.64/bbl in the first quarter. In the second quarter of 1996, these conditions deteriorated primarily due to lower demand for heavy crude oil caused by an unusually high amount of refinery downtime on the West Coast. This resulted in a differential of $6.19/bbl in the second quarter. Management believes that as the refinery throughput on the West Coast stabilizes and as Alaska North Slope crude oil is delivered to new markets, the differential should decrease. Operating costs of $4.35/BOE were 6% and 25% lower than $4.61/BOE in the first quarter of 1996 and $5.80/BOE in the second quarter of 1995, respectively. The decline from the first quarter was due primarily to lower fuel gas prices and higher production. When compared to the second quarter of 1995, the current quarter also benefited from lower steam costs resulting from the acquisition of the cogeneration plant in August 1995 and the sale of the Rincon field which experienced higher operating costs/BOE when compared to other Company operated properties. The Company drilled and completed 41 development wells on its Midway-Sunset properties during the first seven months of 1996, with plans to drill an additional five wells during the remainder of the year. The positive effect of this drilling program, combined with increased steaming operations, continues to be felt with current production at approximately 9,650 BOE/day, up approximately 10% since the beginning of the year. General and administrative expenses were $1.3 million in the second quarter, up from $1.1 million in the first quarter of 1996 and $1.2 million in the second quarter of 1995. The increase was primarily related to higher payroll, medical and general insurance costs experienced in the quarter. General and administrative expenses represented approximately $1.50/BOE for the second quarter, up from $1.33/BOE in the first quarter of 1996 and comparable to $1.47/BOE in the second quarter of 1995. The Company's effective tax rate in the six month period ended June 30, 1996 was 36%, down from 39% in the first six months of 1995. The higher rate experienced in 1995 resulted from an adverse U.S. Tax Court decision which was rendered in May of 1995. Liquidity & Capital Resources Working capital at June 30, 1996 was $39.9 million, up from $38.1 million at March 31, 1996 and $36.5 million at December 31, 1995. Net cash provided by operating activities was $11.5 million for the first six months of 1996, 62% higher than $7.1 million provided in the first six months of 1995 due to higher production, higher oil prices and lower operating costs. The 1995 cash flow was also lower due to the payment of approximately $2 million for federal taxes and accrued interest resulting from a U.S. Tax Court decision rendered in May 1995. Funds were used in the 1996 period to finance capital expenditures of $5.2 million and to pay dividends of $4.4 million. 10 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 17, 1996, one new director was elected and eleven incumbent directors were re-elected. Also, the firm of Coopers & Lybrand L.L.P. was ratified as the Company's independent accountants for 1996. The results of voting as reported by the inspector of elections are noted below: 1. There were 21,931,879 shares of the Company's common stock issued, outstanding and entitled to vote as of the record date, March 25, 1996. 2. There were present at the meeting, in person or by proxy, the holders of 19,332,888 shares, representing 88.15% of the total number of shares outstanding and entitled to vote at the meeting, such percentage representing a quorum. PROPOSAL ONE: Election of Directors VOTES FOR PERCENT WITHHELD Benton Bejach 18,845,702 85.93% 487,186 William F. Berry 19,225,988 87.66% 106,900 Gerry A. Biller 19,314,289 88.06% 18,599 Harvey L. Bryant 19,290,243 87.96% 42,645 Ralph B. Busch, III 19,314,362 88.07% 18,526 William E. Bush, Jr. 18,957,778 86.44% 375,110 William B. Charles 18,953,304 86.42% 379,584 Richard F. Downs 19,309,088 88.04% 23,800 John A. Hagg 19,314,865 88.07% 18,023 Jerry V. Hoffman 19,221,791 87.64% 111,097 Thomas J. Jamieson 19,313,567 88.06% 19,321 Roger G. Martin 19,313,188 88.06% 19,700 PROPOSAL TWO: Ratify the selection of Coopers & Lybrand L.L.P. as the independent accountants for the year 1996. VOTES FOR 19,292,458 87.97% AGAINST 10,588 .05% ABSTAIN 29,842 .13% BROKER NON-VOTE 0 .00% 11 Item 6. Exhibits and Reports on Form 8-K Exhibit 15 - Accountants' Awareness Letter 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 President and Chief Executive Officer /s/ Ralph J. Goehring Ralph J. Goehring Chief Financial Officer (Principal Financial Officer) /s/ Donald A. Dale Donald A. Dale Controller (Principal Accounting Officer) Date: August 6, 1996 12 EX-15 2 EXHIBIT 15. ACCOUNTANTS AWARENESS LETTER COOPERS 350 South Grand Avenue telephone (213) 356-6000 & LYBRAND L.L.P. Los Angeles, CA 90071-3405 facsimile (213) 356-6363 August 5, 1996 Securities and Exchange Commission 450 Fifth Street, N.W. Washington D.C. 20549 Re: Berry Petroleum Company Commission File No. 1-9735 We are aware that our report dated August 5, 1996 on our review of the interim condensed financial statements of Berry Petroleum Company for the three and six-month periods ended June 30, 1996, and included in the Company's quarterly report on Form 10-Q for the quarter then ended, is incorporated by reference in the registration statements on Form S-8 (File No. 33-23326 and 33-61337). Pursuant to Rule 436(c) under the Securities Act of 1933, this report should not be considered a part of the registration statements prepared or certified by us within the meaning of Sections 7 and 11 of that Act. /s/ Coopers & Lybrand L.L.P. Coopers & Lybrand L.L.P., a registered limited liability partnership, is a member firm of Coopers & Lybrand (International) 13 EX-27 3
5 0000778438 BERRY PETROLEUM COMPANY 1,000 3-MOS DEC-31-1996 JUN-30-1996 29,017 7,505 8,524 0 0 47,440 143,062 69,363 121,646 7,579 0 0 0 219 96,080 121,646 13,219 13,726 0 5,511 1,294 0 0 6,921 2,523 4,398 0 0 0 4,398 .20 .20
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