BRY - Earnings call transcript Q4 2019

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Operator

Good morning ladies and gentlemen and thank you for standing by. Welcome to the Berry Corporation Quarter Four and Full Year 2019 Earnings Call. [Operator Instructions]

I would now like to hand the call over to your host Ms. Todd Crabtree Manager of Investor Relations. begin. may you Todd

Todd Crabtree

an and this everyone. fourth teleconference XXXX Barry full Rusty these joining quarter you us year issued afternoon Yesterday on to results. release welcome you with Thank results. to for and earnings Thank discuss Berry's

some morning Chief Smith Board will will year Executive President. Financial highlights Grove Cary Officer CEO; Chair initiatives important President; Vice review from Trem operational discuss and fourth and the Trem works. will Officer then results. key and Operating strategic Executive be and full this are and and XXXX Gary the and Speaking our in and Chief that financial also quarter Cary Gary Baetz Vice discuss

remarks. Before will it turning to concluding questions over Trem few make a

I and the are These discussion today's within forward-looking want attention our the your federal in found meaning begin risks XX-K risks implied later These our the Form cause statements. other including safe laws. differ language be certain release. call to will The outlined statements these in release expressed results to earnings include of statements subject from SEC actual those today other our projections to materially filings and to we or factors XXXX in with earnings that harbor contains in Before filed that securities and uncertainties may

as Any date in call earnings call. reflect release most this analysis of recent our in this the and including investor made has earnings will made. that Our release the bry.com which be to the presentation contained website referenced link a forward-looking our are presentation and on information statements

today's and refer law. and in earnings the reconciliation GAAP our the except no all for mentioned plans have measures. related or We website our tables them during to measures update adjusted to on between a call as by required Please duty release

of also on and this replay the will call We transcript the link post website. our

Smith. CEO turn over to now call the our will Trem I

Trem Smith

today California on us taking steps and with for Earnings and address I update successful and you to year XXXX environment Todd Shortly everyone for Call. and the full Quarter regulatory Berry's state. are proactively the an Thank work collaboratively joining thanks we the Fourth provide will

will I for year matters we in results finished operating Berry strong and and we fourth that our our control successful a our and quarter. those about efforts quarter and first a XXXX program. was XXXX fourth great our However year great talk full it with financial XXXX planned

levered working. finished returns XX% production fourth delivered prior is year more Our fourth model production This we and our and quarter our shareholders strong than the more while business generating XXXX. of quarter by free to excess production which flow. as than demonstrated with cash quarter and XX% was Notably California total reserve growth profile robust we strong the is a

have We of in gained diversity for us being momentum and focus areas two inclusion industry and leader. critical great an

enhanced across addition the leadership senior the two leadership our we example exceptional female For our to of executives team. company with

what being reference by First. we me Secondly you've Barry as following often industry exemplified an leader heard

industry may the doing. principle not be in following the what is This leading others of

as Our pave help plan in accelerated way in one is conversations an a of the ongoing commitment to example participation fuels fact how to this greener the fossil is of idle well future. our

responsible we deployed than state's goals ago to year of are we a more XXXX partner. the a striving as and California. in promised we energy to with our As XX% capital and align remain committed In California responsive

year-over-year. we with Our total production assets XXXX California responded growing just as XX% expected year

produced the which our California reserves are entirely on the year-over-year oil production grew reserves that year. XXX% we XX% a during we nearly replaced before also basis. means of We This

levered free generating of proved We while produced nearly robust are in there flow. in opportunities inventory XXX% replaced undeveloped these cash total excess company that results also We California. our $XX confirming million

key our benchmark that paying financial capital. interest Our maintenance and dividends includes

returned of flow. million than our value shareholders to this IPO generously first the of have which dividends Since $XX We value-maximizing our create energy cycles and dividend are free cash dividends use to mechanisms during covered market during by approved in our quarterly marking the regular several XXXX shareholder year goal more quarter consecutive recently XXXX is throughout $X.XX capital seventh positioned we uniquely accomplish our to Board and quarter. million in form

of more our approximately We million. repurchased outstanding than shares X% have for $XX

repurchases. additional $XX an the Board And million opportunistic recently authorized of

enviable financial opportunistically We to repurchase our bonds. with well stated leverage debt-to-EBITDA within have outstanding at about our have And financial flexibility maintained policy. the X.Xx we

continuously and acquisition are targets value we strict meet and that strategic attractive criteria. looking Finally creation for financial returns-focused

Turning our work building augment and key primarily XXXX ahead now to are focus the we on in from areas. excited three to XXXX year through the momentum

execution and and and operational capital two regulatory or social initiatives. focus One three environmental ESG discipline; engagement; governance on

focused for planning financial remain operational First intently strategies. we on and executing and

commitment Our and disciplined creation. to XXXX value capital reflects and program returns-focused approach our

current million million require greater or and in the million noting worth that is development down Given high-pressure our challenging plans It volatility in are $XXX environment a to XXXX. to the stimulation. weakness primarily and of sandstone does cyclic for expectations range prices from the $XXX shareholder hydraulic capital steam market which returns our moderating not we XXXX anticipate commodity XXXX $XXX

changing principles. year evolving Our California environment budget to to adapt planning of or financial regulatory and the two opportunities enables value abundant inventory our without in rolling us creation

our producing flow. levered We growth while XXXX generate attractive free production expect year-over-year cash to excess plan

Regulatory Brent-based focus California the production engagement. with is second pricing me in year-over-year. oil expect double to We low grow digits entirely key brings our This which area. to

issue Let moratorium on new This on our temporary cyclic "high-pressure me moratorium only puts California drilling. a diatomite the hold on XXXX of November steam most announced Governor in projects." The thermal mines. of our address

also I development not comprised diatomite or as our does impact which However it bulk It XXXX does mentioned not our our thermal impact plans. production sandstone of approved projects just permits. the existing

and California state remaining in steadfast safeguarding citizens' commitment process engaged to its the legislative well-being. production in We in are in and proactively energy the our regulatory both

with gaining and progress levels By and at the XXXX idle regulators all effectively of impact imposed have and process on delays. minimizing government of and new the the making regulations the end regulators working front and In well state insight California legislation of the of we risk regular management mitigating new the regulatory legislators legislators permitting are regulations.

We have we comply with these and will continue new to regulations.

our we abandoned required wells also addition In earlier of as part than certain development reservoirs. in planned

our key third area. $XX focus a and me leads of conscientious these for responsible and activity. being approximately spending reasons in producer. to Barry include Accordingly initiatives. This XXXX increased similar both and plugging committed XXXX ESG million our plans to is we abandonment area to our level

important slide presentation we are performance investor and on our our of on formalizing issues. ESG manage seen As our seven stakeholders with how we monitor these and engage

its oil affordable to comes producing and California's and means remain and and environmental principles. the of from in social energy and that will believe that in prosperous important gas is future reliable reliance part locally an the countries reducing fact supplying healthy share energy safe disregard industry communities do ensure foreign We specifically that California and our landscape oil for a and that not upon imported and justice

roll details via out our We about initiatives our will website and performance we which new will ESG in more mid-March. provide

Cary. I will now it turn over to

Gary Grove

us. everyone for and joining Thank you thanks Trem

plan. XXXX few are quarter principally XXXX and in focus in in details our production I'd the performance particular. in our Our but third the strong of was the the final on operational full with line Full we XX-K like quarter in a year results to contained continued achieved items

First results. production our

time period and growth of concentrate rates We than just a over more on focus longer creating long-term on sequentially quarter-to-quarter. value

our the Our of capital the quarter XXXXX fourth large XXXX California fourth we with company quarter over production of specifically property of expect focused day of BOE than greater XX% of a XX% XXXXX was majority In XXXX. quarter total day what set. exactly grew fourth this on BOE is quarter California fourth our program per production per from

our added In significantly to executing plan addition our we've of opportunities. inventory on to

to making and we high-margin up to total our XXX% California mix projects the in gas our production. the oil of As on oil-producing majority XX% quarter X% continue only NGLS fourth XX% XX% production rose with California invest of capital

the For was production XX% mix entire oil. our year

capital. to Turning

Our in three wells wells. diatomite producers wells million were wells delineation a the XXXX the continuous quarter were spending XX $XXX during California fourth quarter. which thermal were two a total quarter In of the for sandstone as and fourth the the planned thermal XX $XX wells of spent also injectors XXXX. total are with year of drilled of we drilled in Utah XX two and XX And along we we for in full quarter and was million capex for

wells sandstone during XXX drilled aggregate and In we of consisting three in of in total XXX XXX California wells a thermal thermal Utah. diatomite wells XXXX and

We're the XXXX. said we plan the additional XXXX up capital to rigs rig to currently California one two decrease year. to plan and in add three last As running compared quarters of to in during Trem

plan. over to submitted requirements management the to surface are desired well plug-in California million well year that as plan multiyear our or $X fourth obligations actively the we ARO as our adhere on and full the million asset in retirement abandonments for abandonments spent development thermal We've in our To executing $XX diatomite quarter. necessary abandon we and implemented Cogen idle in and that

on Next I'll touch expenses.

per Our BOE increase fourth an $XX.XX quarter of BOE $XX.XX X%. quarter third was the in versus per OpEx

BOE up Our $XX.XX per annual from in OpEx BOE XXXX. for XXXX was per $XX.XX

increased and was mix mainly optimize increased mature higher to our to oil activities generally assets. year-to-year higher and maintain properties from increase infrastructure of goals the idle state's spending have of gas expected to proactively while accelerating cost related or fuel pricing the managing due which hedge properties and than As our

properties We highest our are levels. committed to operating the at

inherited rolled quarter system in maintenance to example our new our ensure million delayed and some the to of $X.X approximately reliability all maintenance equipment spent we of fourth management on long-term computerized of additionally equipment forward. moving For some our we the out address

to rate third usage from by the fuel to per from XXXXX increased gas MMbtu day natural MMBtu XXXXX approximately day quarter per day. Our fourth XXXX the per MMbtu quarter

the properties Cost focused us SOR diatomite on on control operating we a mainly focus as of we quarter. for bringing is item remain a key as forward. of our part or is during and reducing ratios more on our Again This thermal cost. margin result wells move across

Even meet as we believe the control of We we opportunities. on XXX% OpEx both future operational a in to to ESG can we being and operations production goals committed state more focus and move collectively. top-tier operator oil remain our

plans looking million XXX capital XXXX $XXX to $XXX Finally our XXXX of are sandstone wells new forward million. to using drill to for approximately to XXX

average targeting And XX.X the million we're range production daily to day day. of per BOE per XXXXX in BOE

the production in thermal XXXX XX year. diatomite are of on As to the expected XXXX plan we during be part wells placed drilled

I'll some it financial now turn results. over Cary for to

Cary Baetz

won't I in of and and it The our so explanation financials release are here. be in Thanks available variances Gary. today will located rehash the later XX-K press

Gary As reserves. we've have value at right. created out and Trim expected substantial our in up assets California seen are things to and capital to the as respond moving We've Berry and both pointed the we seen

Our continues provide portfolio to with hedging cash to XXXX. flow for us our clarity

production portfolio XXXX another hedge at and brent of now day barrels oil WTI. of through per Our XXXXX our hedged $XX.XX April at XXXX $XX.XX barrels hedged has per XXXX day

OpEx adding investor XXXX have begun February release through the presentation our XXXX and budget. are In also to we On hedged more about XX this at earnings our October the well gas highlights our gave details. on XX and of see MMBtu slides position side to range. of XX Please some our $X.XX for we XX year

to California growth XX% in growth are our half the of should XXXX. Most We first XXXX second the the of XX%. quarters range as this of solid expecting in three started of again production XXXX in in growth oil come growth

One expected exit quarter capital. should similar we And few a at are of I'd year-over-year. spending to up $XXX fourth be quarter looking and numbers XXXX. are between achieve is other to fourth million like highlight. rates on as million items in the We $XXX these There XXXX OpEx

Gary As stay in dollars proactive are program OpEx we spending our and ahead problems. discussed to being of additional maintenance potential any

from In see gas. And X% get costs with basis just higher get XX% per to oilier. XXXX should short costs Oil also also more more in but see it's higher slightly on higher a we oilier barrel prices be as continue as should we We higher margins. cost roughly XXXX. equate prices up We higher slightly better math. production than oil to we coupled than realized OpEx slightly

is items Second non-reoccurring our be stock the excludes with $X is our which at adjusted This and about barrel range. to expected G&A annual number. a comp line noncash mid in XXXX

below G&A the around rest components are planning be or well should some areas expenses adjusted for regulatory in and at XXXX We increased our legislative system permitting including our as of enhancements. run as The rate.

the goal Third XXXX for levered today's our expect dividend our in value one building of is generate solid pricing to to flow. to best cash while focus production to pay shareholders continue expect we our on growth generate we At and remains yields. industry's free

have or a we optionality acquisitions of with the debt should but dividend of special our stock bolt-on excess cash not and And or building regular to repurchases increase limited lot a including cash. in dividend

out pointed current XXXX we between share over capital. In aren't and market upon about XX% Trem repurchases returning the value. As returned we shy based dividends

program. last In we the reserves. move excess free with already staying margins in My our our a year disciplined financial by flow on and we coming are cash oil stated plan proactive financial committed as our I've performance on after to capital our policy. to comments growth and return-focused the continued And being market expect our focusing

highlights in XX% on barrels were production a basis. where Trim year-over-year to growth California up XX.X reserve before million reserves some gave our or

we and assets creating XXX% increased long-term PX to locations PX saw to reserve PX we at capital also approximately respond that exemplifying to XXX% addition grew and value locations inventory from In ratio replacement our our Berry. XXXXX California are our drilling nearly

I'll back and over you to it you Trem. Thank turn

Trem Smith

in by of production on flow a its million before digits cash I'd like light it grew returned $XX Berry Berry a make market and comment importance to turning of is sentiment and the to sector. questions In budget back energy XXXX this XXXX. of and double Summarizing for the over oil machine. the capital shareholders.

level budget part the large on budget depends year state last permits. evolved process The and our do meet in so. to permitting timing of the our over our to has ability continues the at First

of is ruling adverse the to this county's very first this respond I to impacts highlight county of Berry. how industry pre-XXXX the permits requiring the decides companies an court received The approach revert ability on current issue because Regardless country moving to their mitigate with on process. develop permitting the to Tuesday counsel and county groups to are next steps. that we to with our forward working issue impact

awareness and are We permits. permitting county issues timely to are working and and proactively with confident to the have credibility we the Cogen we receive mitigate ability

of see quarter fourth However Remember cash quarter only as our we permit won't must recognize certain decline lower that we capital XX%. generate fourth does more out corporate and If things we is spend will control. down slow much are Berry's will a indeed rate. timing rate to we exit

on Second sentiment. market

by the We capital compete crude space production know of growth. sweet created global oil. for heavy markets and actually in several That industry the capital years thirst that requires we the accountability in been discipline an market light in United States lack demands of last a driven has a surplus that and has in a the over

XXX well the in years. our oil short model conventional on Our demonstrated to manage value not term for clearly does long-term over heavy has have for focuses producing been as XXXX. but creating we California shareholders

not clear decline and our flat to know required has creation curves sustain is value understand changing flow. reinvestment free We long-term that And generate cash to costs to visibility capital anytime as we the how Berry production. soon.

the Look as to we understand mix. supports thing the renewable and globe on and part a sector. that Berry California energy Now is growth energy good whole the for its heartedly of energy

that and in oil did particular in and world the is more term. yesterday isn't than it today near the change to California using Over likely

their environment too. is reality have the renewables And the impact on

and to Mills of In only million or to the oil demand. about EVs without of that Manhattan pack requires raw pound XXX significant materials Mark XXXx processing number on battery by us than of the costs. XXXX up more come digging would of fact displace global Further the electric moving vehicles pounds not electric vehicle on somewhere Fabricate the X% do XXXXXX to planet. according XXXX Mills Institute to grow reminds environmental road a

an environmentally We oil to sources that and all balanced means anywhere. best sensitive going affordable solution everyone. This energy strategy a of isn't create the for need environmental leverages achievable

that declines producers the and particular Berry. local rate in usage like means the needs this aware California until environmentally substantially For state socially

leadership imports being OPEC is to oil which a not about. and Berry environment solution for the our therefore producer the support great on for less keeping California. respect It waterborne grow from measures does nations our Berry looking our taking needs opportunities what social is mentality all with goals proactively communities to goals. energy This very reduce of footprint safe. long-term these while do part and business First for the share California's to and Berry environmental to is is justice rely committed carbon

it turn now will over for questions. I

Operator

from line from KeyBanc. Our the Mariani Instructions] comes question of Leo [Operator first

line is Your now open.

Leo Mariani

wanted M&A a guys. could flow. you Certainly of talking in including these like in were about guys number potential And of this likely some on what cash morning, free what dividend you on uses of there'll be free in a hoping I Hey, oil guys in it initiatives flow XXXX. terms kind you rank budget you think buybacks mentioned significant stabilizes to be terms bond looks and were of of based follow-up buybacks. I if cash just XXXX. special maybe was priorities stock potentially to the of guys

Cary Baetz

if is ranks this I Leo other. than one say don't the better I'd know Cary.

are shareholders we it times very time. at seen return Berry's debt I to If best back trades the be always than And feel attractive well. is think about really debt way to We've at fundamental. should share as it's upon the us based trade what down. the the buybacks lower opportunistic

easy an So well. way it's to delever as

table. on think special a On everything the dividend. So I is

again point But the ability we're pointing have could a is think to that's to to a you're generate what's we consistent I best like lot it's lot a view out basis that again from it. of kind on for to us the will to repeat pull And at get our for gives Berry which need those we we think options highlighting going trigger. value has something determined a when options. I of of use to cash of decide really visibility time be what be

Leo Mariani

ruling Tuesday's a of in the generally environment And guess regulatory just state sense from helpful. from county been to That's legal progressing. there I how wanted perspective the has Okay. a get apart current regulatory just and

far just regular cyclic you on permits? that moratorium current XXXX? of in of could have in just that in and how started starting you to the more February? guys think see wanted going And January. steam kind permits permits get how kind guys thoughts I have thus long to sandstone on I any And last year updated was WST

Trem Smith

Leo this with is Trem. the start I'll to answer that.

First we Silva us spent a aware network focused call Megan very we're our what and build particular the Sacramento and and group and and has off and in know runs what's money as on our platform given Livermore you affairs as amount the as keeps how in respond. group. to building company in that to fair the XXXX relationships And that and any of us on going we of county launched corporate

We've building approach do. we're of First through also say credibility our say in California. our with We going terms I enough true to Berry Berry do can't First what done we our it as partner a

we are for we That is in are that So the the moratorium. the participate well just we you're talking participating said the so about we foundation conversation know believe around discussions that established.

beginning are communicated are understood. be well to well processes and Our

exactly it the the confident progress. study lifted that environment. for of truly I safe will cannot lift moratorium that also is state to the am intent to when anticipate of and with being the the that but communities I fully goal project I So be

today. you far so as go our coming in as R&D pretty that And pointed sandstones out permits And as those I'm through. confident

lived have state truly to and up the said I'm appreciative they that in Cogen for the that. words So

inventory that his adapt has goodness Gary have of to comments huge few us opportunity last well couple that. teams that over demonstrated I So think the and Gary thank add to a and allows years. to of a we've

Gary Grove

Yes Leo.

things. other of couple a just So

our this not do recognize anything that we have plan. So we don't thermal WST. in And plan our that just year diatomite for wells have to requires also any

hydraulic fracturing have don't we're well. year that during anything as we requiring the So

at looking So sandstone year. for development as Trem this particular mentioned calendar we are

if being and for those to when that us lifted Now that make change changes the said ready we and as be moratorium move might to enough be we're forward is opportunity plans able for continuing some nimble and to it that when arrives. we're

Trem Smith

of a occurs that wells be in for when And to thermal fact we've diatomite built Leo. permitted

Leo Mariani

guess And of It like just Utah. color. sounds good wells couple That's I have you on recently. a maybe drilled guys lastly there

kind of on color seeing there? some of the get performance of some to well in wanted new you're what Just terms

Gary Grove

the in there the performance we're and This side From the very line From way the day historically. end actually I'm is pleased. seen it's I'm than by seeing the a Gary performance side better At of very results Leo. we've pleased top event. Utah

that have area to little so associated And against pricing WTI. It we need it. trade with a bit just predominantly does better

things have when so California in we do slight And across board that we the opportunities tick those out the here. compare we to what under just a they're

capital looking we the always value as we're spend So create will think again where dollars very happy company there. see most generate the technically time. any at given what the most can for we But to with we the value we and

Leo Mariani

Excellent.

Operator

comes from from the Our Rice. question of Charles Johnson line Meade next

is now line Your open.

Charles Meade

Jim whole to Is you team your they're. morning good and

Trem Smith

Good morning.

Charles Meade

but you this $XXX I I up comments I sandstone Was If us have planned you guys your gave think right? wells number you but just million could that this in year. pick Yes. prepared said

Trem Smith

No little more than it's bit a that.

out. Let me the pull back number

Charles Meade

I guys. guess obvious But guess programming reasons Okay. while the of question for I that up you're bulk pulling I it's you understand so the that

Cary Baetz

And range XXX. at million Charles million XXX is is number $XXX to that million to the Yes. $XXX

Charles Meade

Yes. Got it.

that's So bulk program. XX. on I curious I'm think the I your of slide guess it's

sandstone total where what to is what of you XX. the what your is slide after And inventory think of wells? of update many it's total right sandstone you it in really that inventory? might on I how lower alluded your those have? just You Yes I'm gave years us But

Cary Baetz

point total that count around time. in at let's XXXX a that I sandstone of XXXX you're think in you're when at say looking at right looking So

Charles Meade

it. Got

Okay.

So Got it. runway plenty of there.

Cary Baetz

Yes. Absolutely.

In that. it's there. You're looking accounts the at roughly almost a bulk California of

remainder split thermal So would sandstones that XXXX it's the at the and diatomite diatomite thermal XXXX That's in XXXX the sits then the XXXXX. roughly non-thermal XXXX be in hill.

Charles Meade

I in and but then if wanted out you that to that guys on I could the a I know it. have back bigger ask picture just go And question Got past touch broken again. Trem.

you think guys idea market. one if this maintenance year I really flow a of year. want You you period have it And that's I think get cash welcomed to the capex the long an strong doesn't free our time at really of by really assets But to picture nature isn't what really sufficiently is. look

but so you number could a multiyear capex to a us on And an give maintenance you what idea kind alluded year before is? idea if of us of two plan you give an you could think

Trem Smith

let I'm start going Carry to that. with

Cary Baetz

my and I'll operations at on one-time Charles. finance Yes here put

heavier somewhere diatomite into So I if hold reason a historically we're between say say curves there. decline $XX operations little to production thermal my to the And $XX had steeper the flat.

the you move closer $XX would range. that So to

you're a mean I doing stones. just thermal. If just sandstones lot more of

probably You're $XX to to the going range. $XX

year somewhere it depending we've where just you on $XX So to call developed $XX before. the

Trem Smith

year. Not just last

Gary Grove

Yes.

And that a I'll little so is add to we this bit. just Gary. Charles

of or the beyond impact have because drill occurs. especially two type steam couple see of same moving So of that we far to can average the has nice we've when nature month and that a of the forward. blended is That's a average. some branded giving because you're over three The we years flooding well. assets our right that to numbers date average we quarter carries had you a That

Charles Meade

Okay.

not to capex I'm that is thinking Forgive $XX understanding me number. the that $XX not that's what's

Cary Baetz

our to flat. a production barrel $XX $XX per it's yes But to hold

Trem Smith

further clear the just of It's it one are mentioned Yes And year. Charles It's company we're that in you that's One you make data the company. XXXX. inception public full giving a this true. year. since is just Trem. to one These

of a it's So year plus public.

those in numbers. confident very there's So

Operator

any don't Berry's over phone. Smith CEO. would to call have Trem I like back We hand now to the questions the

Trem Smith

day. forward today and if thank look a us to and questions further everybody participating I call to want you. everyone nice up for have you later any Thank

Operator

this concludes thank gentlemen, have for a your day. you participation, and wonderful Ladies conference, today’s

may disconnect. all You

Berry (BRY) 28 Feb 202019 Q4 Earnings call transcript