BRY - Earnings call transcript Q4 2020

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Operator

Thank you for standing by and welcome to the Berry Corporation Q4 and Full Year 2020 Earnings Call. [Operator Instructions] Thank you. Mr. Todd Crabtree of Investor Relations, you may begin.

Todd Crabtree

Thank you, Andrea and welcome to everyone. us teleconference. fourth joining full and for earnings year you for quarter Berry's XXXX Thank Berry an as afternoon, fourth to Yesterday issued COVID-XX quarter XXXX full the results, and year as well uncertainties. our response earnings ongoing release highlighting President. will Baetz, other and Board and Chief Araujo, Operating Financial morning Fernando Vice Executive Vice Trem Officer Smith, Officer Addressing these and this President; be and Chief issues Chair CEO; and Executive Cary Trem our expectations performance for well as our will as discuss XXXX XXXX. share will the Cary then details aspects on our addressing and Fernando are we further operational of how financial and business.

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

These certain Before may harbor that in and those within statements. and statements meaning factors and are want cause language materially to The subject or other actual other These implied I Laws. to from of we our the risks Federal in your the contain SEC. earnings release. differ these begin, this filings attention with projections in safe risks found and expressed earnings forward-looking to uncertainties to statements include the our release results Security call outlined today discussion

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

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

now Smith. the our this call website. call link over also will I the and of Trem We transcript the to replay on turn will post

Trem Smith

you everyone, Todd. and us for you, today. Thank morning, joining Good thank

XX% XXXX created difficult strong ever challenges, headwinds, all Berry know, as of OPEC+ made issues compared and was poised a the with in California evolving these for stakeholders We pandemic which budget. production the it remarkably than generated and XXXX delivered for our economic million we But XXXX, planned, fraught OpEx, currently, including would fully was we growth. by the reductions numerous which year energy OpEx, our XXXX, year. other. that the to more year significant in And you cash up faced reduce levered and flow Part on $XXX early for year-on-year and XXXX, was due $XXX position the to bank free into any its the as integrated the we the million of is this political to XXXX X% environment. commitment down flat essentially year. continue oversupply well in despite all sustainable COVID-XX enter down is production spurred As were in both no confident this in in achieved its about We debt. OpEx non-energy we will about have In as year-on-year. to unlike and a our was for We cost

incident our report importance highlighted TRIR future. our and thrilled in been the of rate, never year. critically not change recordable total in year, the safety we employees or Even last change living data-driven Quick As of barrel definitely the of is oil for our of per have to We throughout out our had health pandemic will more. hallmark did was its The and COVID-XX shutdown I'm than decision-making at in less XXXX free of a important. production making difficult always a the X.X. principle Brent. environment of OPEC+ flow of decision operations a the its even market nor And hedged slightly cash oversupply was fundamental it downturn Berry. to $XX March XXX% XXXX, remainder in levered this

rate ever. TRIR XXXX the of is below This Tuning X.X. is which all to lowest now. a States average for Our United industries, well

above Brent to Board financial that price adding drive beginning per a Operationally, we barrel oil in for value recently remain the value are well With and dividend $X.XX portfolio. tenant $XX Berry strip announce on to per Berry, approved the the share first shareholders, our California pleased our at to we reinstituting quarterly a our key return quarter. focused

keep strong We flat production rate fourth -- to very are planning strong year-over-year a company-wide compared quarter a and exit anticipate to XXXX.

the fall our following of Araujo. improvements production COO, month-to-month realized included new our addition reorganization have We then Fernando

our capital is highly Our Included capital is on our in extremely wells. workover a total that and XXXX. $XXX something activity efficient use renewed include in million $XXX California dollars. a on activity is current of judicious focus plans the existing is of budget to in budget million This

In I all of this on as confident continuing mentioned, the to addition, successful. a reduce costs we Fernando moment. am across are be will we will expand organization. in more

Finally, on increasing importantly, are focused and we our scale. laser

with to it assets cash continues flow. now to toward low over conventional strategy strong corporate directed Fernando. be Our growth turn decline I'll

Fernando Araujo

Thank Trem. you,

I priorities. As on my of emphasize quarter operational safety environment want I protection the remain Berry, excellence to full first completed the with our top

employees we XXXX, and recordable of to In incident. to all Trem will all to which dedicate optimizing excellent to environment, targets. to to current environment, and not of to of report and did the we the that incidents assets meet resources we the only incident protect continue safety the value performance single XXXX, have our conventional all growth rate of to necessary our contractors, X.X, predictable our I meaningful infrastructure. and commitments had by the of exceeding regulatory total guarantee In lost translates our results respect XXXX, integrity year. place. We am recordable a will health we noted, and in in safeguard continue generating two create proud our and achieved safety time

Moving production. start I'll with to performance.

in QX. We drilling for production constitutes QX up through from activity Our paused the last during resulted we XXXX California this our to reservoirs later We October in a which XX-well in quarter, production April was X.X% Drilling XX% from XXXX. about package XX oil production, big assumed drilled of all X.X% as wells, production, anticipate fourth of total in this which in year, by quarter. thermal sandstone decline California. versus

production the we XX,XXX in year producing XX,XXX QX average and Our day a exited nearly a was day. barrels barrels

plan Our keep in year-on-year, rate with a XXXX is to with to exit year California. production year-end growth positive last in flat compared continued

BOE. OpEx reduced XX% reduction Next, by XXXX. improvements a categories. steam major per X% we expenses. in a compared to let's expense with We an OpEx in averaged $X.XX XXXX, by operating per turn BOE by is XX% improvement $XX.XX of driven all to when operating non-energy This used energy rates. And we In

around achieved $XX this we operating to BOE Importantly, for be OpEx expected Non-energy expenses without affecting total XXXX. for a per are production. sustainable of

reduce dedicating facility field cost structure can resources. projects improve that through and are generating in We even the a from more the optimizing long-term. executing We combination our of ideas LOE contracts,

to determined are become operate. cost where We operator lowest the in basins the we

to XXXX. for turn for investments CapEx at was $XX reduced QX our year let's full in our with We plan in and in capital the $XX maintain plan line Now, capital. and million, respectively. million

our completion property in restarted on decline. want to QX our development than However, higher of I XX in drilling XX% and clear California. Hill the these drilled low in Peak wells pre-drill production in is sandstone October. reservoir as example This is wells XX with in for highlight before, campaign shallow below a a Tillery predictable the mentioned with drilling the mature estimates campaign. geology costs steam flood XXXX we

XX-year As at producing a a result, the high. field is currently

XXX million is to of the in $XXX workovers emphasis program in development the will to capital and workovers XXX in putting approximately on capital drill $XXX activity performed We're compared best be of roughly XXXX efficiency. investment a this capital and year some Workover recompletions. years. Our We'll range. terms the million previous strong wells

idle diatomite Livermore CalGEM. QX. cyclic operations and were end of for development. is the $XX future study steam We abandonment In committed our mandated of and obligations the Idle continue accelerate we XXXX, abandoned review not exceeded in thermal XXX to plug reservoir million. XXX new are the to to of XX do production. further required to well XXXX, Lawrence at We've intend CalGEM to complete Well been Remember, accelerate million plan. commandments fully abandon XXX be pressure will XXX anticipate include technical by in we the wells by our required under abandoned plans Similarly, be with by California work thermal permit wells. new this We wells operations. XX told $XX production our The are above the which cost spending total on under wells, to to XXXX to high a released diatomite wells, opportunity well study thermal Management The an approximately approvals additional obtain CalGEM diatomite

enter Our new California that, is only to it reservoirs the almost year I'll anticipated Cary. with permits over XXX with And and sandstone XXXX we program development in in turn for targeting hand. where

Cary Baetz

Thank you, Fernando.

As XXXX. preserve a of We cut time, down-cycle we cash hedge and impacted industry. XXXX, At delivered to planned economy the in reduce to the promise costs, end capital last global the leverage our our two-year for planned pandemic that we made the to strong the bridge on successfully XXXX. in immediately to we effort for spring in position began

bank, continue cash -- cash were we and our year-end, we Our of XXXX. had build million to end more the At successful. at efforts $XX be the in continue than in and

than more have million flow the costs managing levered and $XXX million generated cash free bank. currently our of more we in mentioned, Trem XXXX. $XXX capital, than As By we for

benefits cash. we business results production proud we maintained is generated. unique was nearly generated extraordinary Our our these which California the and I'm Berry our our results the grew industry we the and for year-over-year, flat In highlight model. extremely the our total and of while production, we even times, XXXX team level, model of

an our redetermination, our On excellent capital in million. our borrowing year manage note, return position November, completed back and to we plans $XXX semi-annual the electric the RBL of which to base liquidity are resulted borrowing commitment We base another and scheduled in for development reaffirmed to company's in shareholders.

on borrowing we December the of XXXX, RBL of of hand million consisting liquidity As availability. XXst, and had $XXX cash

pricing, As RBL down. facility on primarily we no working lower were outstanding have reserves on SEC reminder, borrowing to capital the the XXXX our manage line use Due a the to today. fluctuations,

current XX% improvement reserves used prices want hold. for strip the we for I reserve prices anticipate our to than in prices substantial assuming more that calculate as SEC are higher calculations, the reaffirm see XXXX than current However, to a XXXX,

strip cash production day first with flow XXXX in going the Our second At should plans have $XXX million sells $XX our our relatively with of we a XXXX, barrels to a average of from million recent per rate of our half annual barrel in basins basis pricing, planned development We we recently growth expect barrel as improving QX. have XXXX and added the second the of in current California. attractive QX of our operations. see oil oil We we approximately approximately hedges in XXXX to fund in Like currently oil this year exit at $XX accelerated XXXX. to XX,XXX in on and this barrels XXXX, an flat the year, $XXX to keep nearly capital at half price X,XXX in XXXX. half positioned barrels to strengthened hedge $XX XX,XXX seen back

to will gas continue hedge usage. our We natural

shareholders $X.XX Returning and our will energy to of gas. dividend this to well for the year. throughout attractive XXXX dividend. fully through with fundamentals comfortable year, is our capital strengthened, environment oil oil Last build to quarter tenants the hedge in space. by financial well to of position are hedge position investor first and shown price As in demanded we the key we business the -- quarterly an as reestablishing we the within October share quarterly as approved latest when for our the a investors be for presentation, Board We look the revisit to our liquidity dividend one XXXX. long-term hedged being position prices week, natural of improving, continued promised opportunistically the feel And per

financials. back the filed now over if And XX-K you be to want dive final you, for Our remarks. will turn deeper later Trem, a into it today,

Trem Smith

I and Fernando. Cary operate. close we our about with political and in about the Thanks, legislative ESG want to speaking and efforts environment which

committed are and together social and developing very in be results, as governance report a our to environmental accomplished We ever lot we to will first continue of we in XXXX regards highlight this areas work report will will ESG. our a in report. serve as baseline putting show that Berry's initiatives to our be and First, as report part annual opportunity. The It progress spring. well for

affordable so office produced on level, in new to -- energy impact As are On we environmentally before, took all I've us a XXXX. providing low. on national federal The January is manner. administration know, far in January said a XXth, new committed we locally the XX an friendly administration of as

moratorium that XXXX no legislative While does bills On state there drilling is an uneventful not a state value impact fruitful Berry, goals exemplifying current to has that state permit on our Berry a it and had severely approach has all for temporary issuance, with the level, session. working created activity. the those impacted been our passed our federal and There great aligning were we with stakeholders. of

I continued affordable, XXXX of and prioritizes over growth. year session, Californians, efficiency, and through work policies, To for now support fully turn that cost questions. to expect continue improved value equitable legislative regulators the are creation the sources reductions, will conclude, into we dividend, accretive the to enter and state with we capital will it we ensure ideally for legislators be all that energy a XXXX reliable, As to

Operator

question Instructions] Leo of from [Operator the Your of first KeyBank. Mariani comes line

Leo Mariani

Hey, priority guys. here. for you follow-up Berry comments Morning. a being Wanted made about to M&A on

might able trying to you Just broader the just a you guys to have California been a sense potential versus trying in just yourself sense, wanted Are confining to identify to guys get to to any much of -- process? targets, start get you search? a if where be

Cary Baetz

to Trem and is has The The to the -- that important. work want we've had Leo, this at on fill always we've little answer continue identified out targets. assets in and is Scale there is, been wide look I'll we bid/ask managing always Cary a on that. had opportunities we let holes. very

for They're is with secure larger As you companies more know looking for looking floats, liquidity. the market looking sheet. larger. They're balance for

So Identify got list. our on Berry. I'd TBB say to work on it's But for yes. it's again, Opportunity, yes. very priority execution. targets, high

Leo Mariani

Okay.

Trem Smith

we as decline, it good at, geography, conventional, a maintain of our with Leo, continue conventional corporate matter focused basically of strategy, not is to And It's then, low that. much -- which a assets strong flow. cash what we're on as is oily matter

Okay?

Leo Mariani

Got it.

Okay. And a contemplating legislative that recently I I that bill wanted to I in the been in ban Senate about just session potential saw a the California. new guess, ask there's current that's state. then, frac proposed

cyclic I think operations there contemplating, theme language there eventually some around as also was banning that was well.

the in And heard having what guys office. bill from of, you California may think sense a get to wanting Just real you legs? this have locally and or legislators governor's

Trem Smith

the very Trem. not was bill this let much this intended. broader -- he move impact bill minimal say groups is but bill. industry legislative going it proposing bill industry answer to we Leo, than in that as through is Berry to process and California. a sure all anticipated. significantly the It time I'm has the we for be because long amended going And is Wiener this that The with was on whole the groups to is ourselves we The he it expect take will that fully had telegraphed make that get a extensive. labor maybe just obviously, originally surprise to forward. also Senator working be to are me And early such question. and

Leo Mariani

Gotcha.

have when Do any in the other helpful. That's coming ones or of you due talking more And I from still next Okay. and them here. early terms about mode receive in you you're see guess, directly here? will month it steady, guys office, just like sounds you or wait indications that the governor's are

Trem Smith

at the what will -- been quarter. CalGEM first the be we've that of by end Leo, released we told

in But to don't developing on them. process be expect on least know contacted on are that a told they that we've we'll operators fully terms stand see I those list, to hopefully assets by been and those troublesome also where they're think they'll We And make Fernando list Does -- of CalGEM. deliver high by we that evaluate that that. CalGEM being -- said to we sense? but the that.

Leo Mariani

for Thanks the sure. for Yes, color.

Cary Baetz

Thanks, Leo.

Operator

next Johnson line the of Your from Charles comes Instructions] Meade [Operator with Rice. question

Cary Baetz

Charles. morning, Good

Charles Meade

because to written But I couple had on up the ask of a there. to Leo's ask say just whole paper Livermore. I to questions following my on let really morning down I you of liked me Good and team also. your questions have piece

the you would is back we should enough, the And can it question. a for if that you XXXX? On currently that have it look of of kind more that if can is, to it's of sandstone two-part with compete to projects or that into attractive be One, doing it question thermal would possibly Livermore forward go your attractive something -- XXXX? some Berry XXXX, slot guess is slated assuming I assume enough some would development, diatomite not

Fernando Araujo

No. the in very, a terms very good a with is our of of diatomite rate our return. question. thermal development well portfolio. competes That's of And rest very very it And attractive

some the So, in diatomite second you thermal XXXX diatomite the I've include if do our development of the in have comments XXXX, the that But but by -- as we do in in heard thermal a call we not work in ability currently made, would. half development XXXX. year, have any do to we the to in expect plans the

Charles Meade

follow-up, And you a that. maybe derivation that, as then, Thank Okay. perhaps Fernando. off for my

months we've that to a the A&D and last seems makes have think as a like certainly the in to done what it, is wider happy over -- that rise, and A&D and the wisdom conventional month and fit the seen bid see last prices ask I it it oil but half, is for little they market. in XX we're get the

have have maybe you on receding California the you And in with way of if might might dealing -- and dynamics some CalGEM particularly the troublesome that at might A&D possibilities guys maybe of this shake and assets it that out -- side. another that that, plays like operators think way Trem, troublesome opportunity? an some of operator's seeing more wondered be other I aren't you of that are one so, like if market, that and And auditors of that mentioned if there less hands, out with play, these I some dealing if if that loose

Cary Baetz

prices, scale. resource all cash even say again, the cash tide the think a boats. of the that are importance of again, understand go having rising with people will importance the route. But I living -- lifts on Yeah. People flow, guys understand oil I flow, Charles, to

there -- for where regardless I get to still to combinations of prices So is some are willingness think larger.

don't So, the A&D for market an perspective, this lower at point you as cost And I think impacting in time. see from bigger, that companies that's we as are again, gets investors and scaled far are there. looking

So.

Trem Smith

a Charles, to are example. over financial difficulty into Trem. add consolidation And entities that price. production to The is XXX available the requirement. Many And I'll is that of as that. survive of consolidation really themselves regardless year report remember, last is there's gotten have companies in California, long-term an -- those operator This for industry and

So, the to price going it. rising is sure impact I'm not

a I people table. brought the think of it's lot to

Charles Meade

comments. Thank your you, Cary Got Trem. Thank you, it. for

Cary Baetz

Thanks, Charles.

Trem Smith

Charles. Thanks,

Fernando Araujo

Thanks.

Operator

Your comes from next Shelton question the line FRC [ph]. Michael with of

Cary Baetz

Michael. Hi,

Trem Smith

Hi, Michael.

Unidentified Analyst

guys. Good morning, Hey.

to to discounts I'm for the So, from trying out that's I'm And previous yesterday And RSUs though how board Berry. looks going your for process. forward a dividend distribution approval just stock the to in I stake office billion of team. want for you team, many in in and take and exec And just a looks the guys reconcile to figure the things. $X.X you about few have shareholders wondering And that $X.X space have your to to deployed your be try buyback this to sort about still that value do executive reconcile outstanding It their million amount and a family I know, compensation. want companies the for allocation oil period. in the capital offered as

do what just I those that going in initiatives? you talk terms of So could all on to appreciate if to you're understanding

Cary Baetz

reduction associated The in LTIP. question. see that a the is with Year-over-year, going XX% Yeah. plan. were again, were it about we're LTIP, annual shares that -- issued Good the LTIP to

under that contractual obligations a under is contracts. question. below good And employment So requirements actually

is LTIP from coming compensation So down.

the think the as far As a attractive downturn. had we dividend, attractive to today. prior I It's very dividend still

bullish. we we'll RBL and on debt get overall, company into manage market be looking in like did back current we again, around upon into good a we'd past Don't the we position in dividend. at But think we put has back XXXX. limitation also to and debt, see we a -- the But We good through But that dividends. more that, position do before it's our build through to we room we capital. covenants forward. looking to the looked a at were returning XXXX, we I the past were all XXXX. have shareholder were hole. But restricted at look I our think value running in It's forget just with for and very we've ways, more value not gotten sustainable able And well. black demonstrated want recently to awhile return bought again, we this also turned go back to that little based a as again, the when as shares -- lot to a manage other that in heads removed hedges at in

prior investors. back over million $XXX to I to the had over cutting think returned of we dividend, capital

will our and -- forward to again, we think So, for size, a that something that's that move been attractive it's continue something it's financial with. for and that a Does company fairly answer? us I tenant

Unidentified Analyst

Cary, that Hey, I Cary -- was think right?

Cary Baetz

Yeah, it was.

Unidentified Analyst

that detailed response. Yeah. for Thanks

leads that So follow-up. one to just other

opposed better the call, in out -- your lump And That's an sitting it's at got in I restructure interest million time this that you rate. $XXX don't this rate? available a at debt due it is of so, and debt out X% you at sum to of earlier think as having there -- took I mentioned In which to I outstanding. XXXX? one that a approximately know debt? context, structure Trem but And And time. terms Is point about of it was opportunity guys debt if it had there can in no refinanceable structure,

Cary Baetz

simple. the hesitant names, Again, balance been There for some keep it's high a point The still were probably for yielding a I attractive today. attractive. But rate sector still wildly debt is X%, fairly the out the market's unsecured there at focus think yield sheet a us high very to highest attractive. still is industry yield of view. not Obviously, E&P from

I story, gives out of very point keep think as keep balance we unsecured from nature the our major and our you I was that do balance forward, high look keep going there it -- there, if opportunity for at again, to of view, the a to always simple, the the simple clean. the the sheet transaction as simple. But sheet something structure and us. want it attractive unsecured different yields with and

Unidentified Analyst

All Thank you guys. right.

Cary Baetz

it. Appreciate Thanks.

Operator

question of Seaport next the from Global. Your Pope comes with Nicholas line

Nicholas Pope

Good morning, guys.

Cary Baetz

Good morning, Nick.

Nicholas Pope

K, year's reserves had number. detail Morning. K. PDP production. dropped little numbers more looked on seems maybe it maybe going I the But trying the -- had taken in year's was to And there's the know to or it this last a I'm I to like bit be had than included understand quick me and kind of that's at PDP a not some reserves question looking on out, like been and I more P

bit little a get to from from -- trying was help I drop -- little a the just on reconciliation the year-over-year. of PDP So,

Cary Baetz

there come off returns that that Rockies challenging it any Obviously, out on We on -- PUD at the and pricing. based in fell And under was expect pricing some moratorium drop, only thermal really but that's California, some were upon was of the the where -- requirements area it part diatomite within the challenging we is PUD SEC be PDP most if and the that upon would loss think associated five-year in of were the to guidelines. current based PUDs SEC there the -- pricing the lose the with the -- did pricing I back. and put location. it

bit back If it's Livermore turns pricing as and back. of think positive, of Lawrence substantial to amount a come study PUDs those time Lawrence a we back I little as -- So, out Liver come comes see obviously just reserves the be

I help am that Nick? … does sorry So,

Nicholas Pope

Yeah.

Trem Smith

Nick. Hey,

Let me -- Nick, This is Trem.

Let reserves price, add color please. The me SEC to was the rule. of XX% due some to -- in drop our just that, pricing

clear, Just trailing to which a bit the that's us drives average, little XX-month nuts. of be some

rule spend what And the to period. the out that's Rockies over a capital commitment that's remember impacted is Okay? then other there And in our but five-year -- particular.

Okay? So, California. we we're were as in -- focused

So with over price rule. to commitment have the won't the it well But that given we comeback. expect complete be five-year of XX%

Cary Baetz

because guides And moratorium. years thermal what of is the the also five the diatomite, just

Trem Smith

Yeah. Does that help?

Nicholas Pope

I'll Yeah. That's helpful. with out tomorrow. comes probably follow up whenever K the

Trem Smith

And Yeah. us. questions, call more have you if

Nicholas Pope

number? couple quarters item. each think the much left of other a as component of that the a two we've -- think you've of that expect how item, one several kind should I quarters you that million all up G&A. non-recurring And is just a had which two How of categorizing non-recurring? of seen Because long past clean non-recurring And last G&A, I in The we changes. was part just management are

Cary Baetz

Yeah.

minimal this quarter, amount of -- it. in all a just that But should contractual those up. obligations are I there'll think finished be as be it

Nicholas Pope

had. all I Okay. That's

Cary Baetz

it. Appreciate Thanks.

Nicholas Pope

Thanks for the time.

Operator

[Operator line next Instructions] Your Robinson comes Research of question Water the from [ph]. Jeff of Tower

Trem Smith

Hi, Jeff. Jeff?

Operator

is line your open. Jeff,

Cary Baetz

Must've dropped.

Operator

over [Operator questions. I time, this it would management back like to to there for are no remarks. closing Instructions] turn At audio

Trem Smith

in company. really Thank and and today interest XX-K Bye. appreciate will you The be for out you further the everyone the very look forward Thanks. much. questions. listening shortly any to Thank

Operator

Thank concludes your participation. This you today's for call.

now disconnect. may You

Berry (BRY) 24 Feb 212020 Q4 Earnings call transcript