Earnings call transcript Q1 2023

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Operator

Good day and thank you for standing by. Welcome to the Berry Corporation First Quarter 2023 Earnings Call. [Operator Instructions] As a reminder, today’s conference is being recorded.

I would like to now turn the conference over to your host, Todd Crabtree Investor Relations. Todd, please go ahead.

Todd Crabtree

welcome and Eric, you everyone. Thank for And quarter for first us earnings thank teleconference. you XXXX Berry’s joining Earlier issued results. today, first XXXX Berry an earnings highlighting release quarter

Executive our morning and this will Fernando our Speaking be Mike Financial Chief Chief Helm, Officer. Araujo, Officer;

federal statements and to actual and to or that results later the release Before SEC, These factors your uncertainties laws. the contain to and security in earnings these the our today’s attention expressed found with other meaning include including issued in was filed are projections call release today. those outlined we XX-K, risks subject discussion language filings would be that may Harbor in other this to within risks and I differ cause our begin, of materially implied forward-looking like statements our Safe morning. statements. from These certain The to

our presentation. website, has release a link to earnings the investor most and Our recent bry.com,

Any release call information, of made. including forward-looking in analysis that the reflect and the as date this our contained or presentation, statements, made on earning

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

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

to over call the turn Fernando. now will I

Fernando Araujo

today’s call a Welcome Todd. thank highlighting joining us. and by everyone, Thanks, start key will you takeaways. I few for

provided consistent with in First, deliver results expect with guidance we with first we expectations to for the quarter, we respect operational line in delivered generally results for and financial full-year February. the and

market on our Brent return for to or $XXX to in Assuming $XX XXXX. current investors almost approximately track XX% barrel we million XXXX, remain of cap per

in with us that is cash I most decline corporate apart visibility which of production and our to key amount that assets peers. quality advantage low public sets emphasize a future flows. we rates, want This a of place E&P high tremendous provide all have Second, for from

and the positioned an acquisition recover believe full-year we consolidation well severe weather are bolt-ons. In first conducive in to opportunistic production the producing in fully with to results the anticipate earlier to be downtime the line of quarter. Lastly, consolidator. caused both we We able March, our Berry experience current is environment in and be expectations. by California is Utah to

Approximately our production of call is from to production base XXXX our total expected come existing what wells, production. XX% we

with as is come through our in operations remaining areas expected approval. and drilling to optimizing from existing assets as activity, sidetrack Our CEQA well production workover

permits, continue receive with expect CEQA permits sidetrack We approval. areas drill workover to and to receive existing and we in fully new

focused operational within managing our remain on financial control. We variables and

and other for adjusted reduction QX, compared XXXX. cost-saving expenses implemented reduced approximate During to we G&A head should an in measures XX% in result count which XXXX

operating expenses, and $X also cost annualized housing in We including water savings of well-service million. reduced in result which should

Note be targeted these savings and the the realized that guidance, reflected annual of almost over coming already all the benefit on-going in an expect initiatives cost are we quarters. to of

continue will to and year, cost operational opportunities high-age the actively reduction identify throughout and our and maintaining standards. assessing on are excellence structure SNE execute We cost other while

in to slightly the of operations. due projects was CapEx than our the efficiency and planned timing quarter facility for improvements lower drilling

per horizontal four well. historical For a faster than example, and some their XX% we approximately drilled wells days half

greater as across efficiencies intend operations. of further our our improve we We pursue all to performance

for another $X annual to E&P million business guidance be expect our for $XX of Services to We within capital business. with Well C&J million $XXX million the our

variable share dividend dividend, XXXX in single high anticipate Our planned deliver cash a and of $X.XX to priority and returns expect delivering return our is shareholders significant digits. our we sustainable a the quarterly with per to fixed

flow generated the year will potential assets. cash intend to remaining used we and primarily repurchases reminder, well opportunistic be debt for a producing As during variable XX% The of stock for as adjusted the free acquisition use XX% our as of dividends.

I will call turn to now the Mike. over

Michael Helm

other a the takeaways Fernando. for financial you, few will quarter. Thank I highlight

refer to our in-depth more morning this please issued earnings later release information, filed our and be earlier to For today. XX-Q

steam Adjusted totaled which purchase have fuel compared a fuel well was XX% optimize due gas gas spikes, XXXX mitigate EBITDA reduction a usage million, price We to natural as as to prices and our higher managing do ways to lower oil including few $XX needs. gas QX volumes our to prices.

We historically where also through pipeline the to also lower physical Rockies utilize prices gas the in physical And -- we we access than financial have actively have been gas from River gas Kern have access California. to hedges.

the about We the summer per months. rest for about and that have XXXX the of retreated $X.XX expect the of second into hedged at to swaps XX% Gas quarter, purchases MMBtu. entering gas carry we prices with have

around and we Lease services related latter part operating the normal due XXXX and costs. first to $X recovering quarter. successfully, expenses to incurred increased to weather did in quarter the lease expenses costs, downtime of to higher we first the due which were operations, during The onetime production million fuel fields needed of return maintenance experienced

assuming just X%. planned track Last adjusted over expected return the to is -- the yield on week, under annualized $XXX over for price $XX Brent flow we the in per approved just million fixed Board million generate barrel of fixed paying free shareholders adjusted share XX% return year. variable to under dividend average dividend. to free dividends, model. $XXX an And per of cash of are our dividends cash today’s shareholder $X.XX flow, a fixed the at our stock After quarter first planned price, represents

of year. Slide is which seasonal as return flow, historically quarter which our our on annual in payments As capital of free such bonuses. deck, drives cash royalties investor shareholder working model, first X This our to adjusted due shown the is lowest include and uses, each

similar to a year. last issue, of under this timing In cash is allocation terms shareholder model, return the simply

for impacted as this not So total dividend dividend it while no be expected on calculated is cash flow is free the year. will cumulative adjusted distributed variable variable a XXXX for quarter, generated the

various that provide known return that XXXX, the the Over are for. become the will return shareholder course of has Berry top-tier confident model we shareholders

I’ll now Fernando. the And back turn to call

Fernando Araujo

Mike. Thanks

the call, the be are especially of we current cost our California expenses. hedging for employ consolidator. We’ll strategically the market, As where to a to maturing business. we to of prudent conditions M&A the cover and at opportunities, are mentioned positioned And us spend beginning the will favorable help fixed believe be we in industry we manage continue in how well

maintain over profile our leverage also long run. to We the low plan

regulatory our by technical and We reliably, oil produce have the environment capabilities creatively the demonstrated necessary to safely deploying and innovation ability to through current navigate affordable efficiently.

and are In closing, maximizing on higher and production, focused shareholder we optimizing returns. environmental while maintaining managing standards costs safety

We to strong strip the pricing. cash have investors Notably, we are market the dividends, in cap our XXXX. recent million generate including deliver ability our confident and shareholder significant to free on of $XXX based to current return XX% flow fixed returns almost about potential XXXX in in or

will that, With turn over call the the questions. I to operator for

Operator

first Our go open, with comes please Instructions] is Rice. your Charles, line Johnson [Operator Meade ahead. Charles question from

Charles Meade

the of to and to -- ask of Fernando and like over course the first like there. XXXX. production I’d progression Good I’d my about question, rest morning the quarterly Berry the Mike

is being the this, expect I back California QX? and well year? it the then increase February. in look for bounce Utah, the think what some be bigger or of But would in it snow guys -- right January thing rain You a in and rest the decrement significant XQ, I in and like you And sequential had would in to with the explained that

Fernando Araujo

we provided California noted, was worst winter Okay. QX No, production annual severely volumes. Utah. fully back And -- as our recover very to we of by in we our changing as in back remember that had expected And some not that in conditions did February. we’ve guidance production Charles. our by we and good the March affected But noted, are that question, in the our we

full what Now QX we year slightly quarterly production our than QX Obviously, year, be but well had within QX the for overall. guidance production to to we’re in to back. provide bounce going should don’t QX guidance, but in we QX be the for higher should

Charles Meade

could that how going. if about Thank you second ask it. Got then I workover is for detail. program question, your And just

mentioned been in it’s your it’s you but percentage up remarks, prepared of as understanding give that And bigger mix just is I any XXXX my past. curious that on is in if it. you bit can surprises popped think a that in there’s and some than a or CapEx the result about it for how of thoughts you I’m detail your have a out working if overall shift

Fernando Araujo

there’s surprises. No, no

XXXX dollars what in XXXX is going to and program terms very of in activity. in had for workover we similar of terms in Our California to be

We’ve strong for year major workovers workover strong a be have year, did about got, but I It’s we XX believe, lower going the as Utah, last Utah, surprises. a year. to budgeted quite or not last no in Now number is than campaign which year. this in planned

then are year Last well our to this sidetracks. And year. is heavily compared our complemented that’s wellbores. activity, going more drilling And existing have, drilling activity last utilizing going sidetracking program, sidetrack, we with new obviously, to the year, weighted which be to we

process. with just the think nature I going about the This because order on XX% the year it last of sidetracks permitting XX-XX percentage-wise flipped to was of be year. is of

did So year we’re last we going to be this doing more sidetracks than year.

Charles Meade

Okay.

a of to away in understand a it -- to shift shift being sidetracks workover, more instead I really shift from really more more it’s if of it’s more of So correct, XXXX.

Fernando Araujo

That’s correct. That’s That’s correct, Charles. correct.

Charles Meade

detail. Thanks that for

Fernando Araujo

Thanks.

Operator

comes go Our from Nicholas, you much. Seaport Thank ahead. Pope question very Instructions] with next Research. [Operator Nicholas

open. is line Your

Nicholas Pope

maybe over these what been curious hoping seems The to a does of set a that guess it make. that I takes the everyone. looking get maybe about last market? talked opportunity of kind opportunities, morning, But it’s M&A it’s the of few it kind that just to line it what I I acquisitions kind you’re some M&A to make guess of think Good to are challenge some for the of make in stuff the I the kind the at like expand. is, acquisitions the you of threshold know be market. looking could or and you’re interesting. that dynamic we’ve what quarters, to at challenge guess in I we guys more take potential

Fernando Araujo

opportunities, in the willing are especially in especially have they of California days, M&A No, whereas to interest that’s the conversation getting in lot and are a really seeing before. than these with A renewed we regulations past, much groups good a the the tighter very a Actually, question. didn’t.

And the activity SPR with past recent know, than Aera of that California year, fueled M&A we what the Seneca new was this which and in which was deal energy some had the as last more you good, well. in had by is as we deal with

California has be of future So we the to consolidation. truly believe that

as in I think be terms that synergies, the dollars we’re middle going operational of be in that. synergies, captured to millions everybody and understands of well. of right to synergies, There’s corporate

basically, And targeting was I some talking business, looking different talking we’re where bolt-on with opportunities of synergies our those we and accretive parties. operational to are that that But can achieve about. are we producing

yes. hopefully, So

So it we we’ll major do keep that working is hard, But takes us. where a and focus. see

Nicholas Pope

That’s great. deal? there’s any execute a... think you Or slowing part uncertainty think thought regulatory you sellers a does about necessarily potential with Is that’s environment would that not their California for they of clarity the do -- some there from kind that’s waiting do -- before that

Fernando Araujo

don’t the I necessarily think case. that’s No,

and think opposite that’s might they’re because I I we’re the right willing in -- to they’re there think that talk. negotiate, And seeing what regulations, now. be the of willing to it tight

Nicholas Pope

been could for And business services any curious you businesses. it. hoping assets fairly there opportunity was of that’s on expansion service here. the expect a should have hand? nice, talk have. I kind steady Got kind of state just a or about It’s bit steady a we on EBITDA Kind oil Or from run those little kind state the you opportunity of And in an is of all update I with there? just an Thanks. the on

Fernando Araujo

for demand is our strong a C&J’s business And business, in had a business. No, business, very very call. Good our business, service services Thanks. we steady QX. good Yes.

opportunities. QX, we And our P&A current equipment. in fact, as know, in to environment market. we you utilized it’s really the were conducive want and capture regulatory be additional P&A that California, to able In workover fully with to And with opportunities

we’re equipment. equipment, at looking fully because Like are of we utilized. I short we’re And P&A said, expanding

not come, expanding at to that business but opportunity grow looking trying are but firm only going yet. we to the in be So nothing there, because is year and to this to report years

Nicholas Pope

Thanks had. I all very That’s much.

Fernando Araujo

Thanks Nicholas.

Operator

Thank by Stand our you. for caller. next

open. is your question with next from ahead. Our Busch line comes ERI. Please Steve go Steve,

Steve Busch

call. my taking guys, Good thanks Fernando morning for

Fernando Araujo

Hey Steve. good morning

Steve Busch

a Just on follow-up that last question.

to So we does that down translate but what -- you? percent XX-odd CJ utilized. in exactly fully that QX, was were Is

Fernando Araujo

No. business, And the They like C&J of into work able by couldn’t execute the and to slightly affected was just Yes, locations side get down E&P quarter. be also numbers. rigs, to that during the revenue. we’re the on weather the affected the with

fully they up the that’s were some of the and the made even That’s expectation. though revenue, in because utilized, some weather So quarters. coming the work of be going to the but activity delayed

Steve Busch

we a So above normal steady? should quarter have this to then boost back

Fernando Araujo

They should QX. be boost a above

Steve Busch

Right.

Okay.

Our plan XXXX range? that is the at we in $XX, for Where strip stays $XX Brent plan? How on if price. $XX it affect are does now our

Michael Helm

start is that one. this I’ll Mike. Steve,

good there sooner. down that go $XX. few A now. in We’ll don’t prices year, ago, see economy on basis. we’ve certainly the come towards strip right did few we a recession, was all weeks back what plan chance indicates with that’s the that. second will We the We’ve support come that the but last half and a Saudi the day-to-day and the seen $XX. the unknown when So plan, the Everything if is it at global read have happens of back it or adjust days. $XX not was that to roughly

Fernando Araujo

our And we comments, just the promised. cash same do Mike’s to complement deliver to target want then or to at on is flows, deliver time, as

our that operating reductions campaign got We’ve very already OpEx as which well, for year. also have We -- and going G&A the reduced going and We’ve we are reduction levers significant several control on field, we’ve do a mentioned. that. -- we a reduced, in expect got our is expenses this there

has capital And also, our efficiency improved.

cash the Mike of very So flow as the we’re our doing in But returns everything pricing. spite again, pricing said. that current in we volatile can is

where the see the it we’ll of rest for So goes year.

Michael Helm

purchase we’re the side. gas on oil significantly also both hedged And and the

Steve Busch

Right.

know. to good That’s Okay.

shares Just plan, the to the in on quarter. kind repurchase any of first general shareholders. We return didn’t buy

second the lot we buybacks of a got looking that is at from that We’re shareholders the now well price our into all that’s in for double And here back I given you. digits? quarter. Are under X, shares we bought other

Michael Helm

Yes Yes. situationally. for largely the the, question. that by we at Yes, now seem Steve look driven thanks oil those prices right prices. low

If at look Slide our -- X pointed you we to in IR deck.

capital. every is year, it’s lowest our The our first -- quarter lowest working

much the the We we the the working That’s to as free the don’t of likely significant of We do just every the rolls on be flow. have year more usage We capital rest the plan year. adjusted utilization in year. significant first still quarter. as and on, as generate cash cash we’ll year cash focused generate rest of more

Steve Busch

good enough, guys. Fair Okay. luck

Fernando Araujo

Steve. Thanks

Operator

closing back answers. it And our concludes Executive now to and remarks. to would question Araujo, Fernando turn I that Officer, for like Chief

Fernando Araujo

Thank Yes. everyone. much, very you

next strong a forward a look have And to quarter. talking to hoping lot. We’re QX. we you to Thanks

Operator

the This program. does conclude

disconnect. now may You

Berry (BRY) 3 May 232023 Q1 Earnings call transcript