• Total Production: Averaged 24,800 barrels of oil equivalent per day for Q3.
• Realized Crude Prices: $72.40 per barrel, down 7% for the quarter.
• Total Commodity Revenue: $154 million for Q3.
• Adjusted EBITDA: $67 million for the third quarter.
• Capital Expenditures: $26 million in Q3, bringing year-to-date to $85 million.
• Operating Cash Flow: $71 million in the third quarter.
• Free Cash Flow: $45 million for Q3, a 55% increase over Q2.
• New Term Loan Credit Facility: $545 million to refinance existing debt.
• Fixed Dividend Rate: $0.12 per share annually, with a $0.03 per share dividend declared for Q3 2024.

• Warning! GuruFocus has detected 5 Warning Signs with BRY.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Berry Corp (bry) (NASDAQ:BRY) delivered strong financial and operational results in Q3 2024, maintaining a focus on optimizing operations and managing assets to drive sustainable free cash flow.
• The company successfully refinanced its debt with a new $545 million term loan credit facility, positioning it well for strategic opportunities and long-term shareholder value.
• Production from drilling activities, particularly in the thermal diatomite reservoir, exceeded expectations with returns greater than 100%, highlighting the quality of Berry Corp (bry) (NASDAQ:BRY)'s assets.
• Berry Corp (bry) (NASDAQ:BRY) achieved its methane reduction goal over a year ahead of schedule, resulting in significant cost savings and environmental benefits.
• The company has a strong inventory of permits in California, ensuring stable production through 2026, and is actively pursuing opportunities in the Uinta Basin with promising results from horizontal wells.

Negative Points

• Total production for the quarter averaged 24,800 barrels of oil equivalent per day, a slight decrease from the prior quarter due to timing issues in connecting new wells.
• Realized crude prices were down 7% at $72.40 per barrel for the quarter, impacting total commodity revenue.
• The company's capital expenditure peaked mid-year, with Q3 CapEx at $26 million, reflecting a reduction but still impacting free cash flow.
• Berry Corp (bry) (NASDAQ:BRY) adjusted its dividend policy to a fixed rate of $0.12 per share annually, which is a reduction from previous levels.
• The company faces ongoing regulatory and permitting challenges in California, which could impact future drilling and production activities.

Q & A Highlights

Q: Can you discuss the strategy behind the second farm-out in the Uinta Basin and its impact on your capital budget? A: Fernando Araujo, CEO, explained that the second farm-out with Wasatch Energy Management aims to accelerate appraisal and derisk their acreage. The farm-out involves drilling 12 wells over 24 months, with the first two wells online by year-end. Berry's working interest is about 16%, minimizing capital requirements, and this is included in their capital outlook.

Q: Is there a significant change in the thermal diatomite results in California, or is it a continuation of previous successes? A: Fernando Araujo, CEO, noted that the thermal diatomite asset is world-class, with high oil in place per acre. Recent sidetrack wells have shown excellent results, exceeding 100% returns, enhancing production beyond previous workovers and steam adjustments.

Q: What are the priorities for cash use following the term loan and dividend change? A: Michael Helm, CFO, stated that the term loan allows Berry to deleverage the balance sheet while maintaining a dividend rate aligned with peers. The focus is on disciplined capital allocation to high-return projects in Utah and California.

Q: Can you provide an update on the conditional use permits (CUP) and their expected impact in 2025? A: Fernando Araujo, CEO, mentioned that while CUPs are being pursued, they are about 18 months away. Berry has sufficient inventory to maintain stable production through workovers and new wells in areas with prior CEQA approval.

Q: What is the status and impact of the $545 million term loan? A: Michael Helm, CFO, confirmed that the term loan is effective, with a commitment signed. It provides liquidity, and discussions for a new RBL are ongoing. The term loan includes a 10% annual amortization, and if an RBL is secured, it would replace the $95 million liquidity component of the term loan.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.