DALLAS, April 01, 2020 (GLOBE NEWSWIRE) — Berry Corporation (bry) (NASDAQ:BRY) (the “Company” or “Berry”) today provided updated guidance in response to current market conditions. As of March 31, 2020, the Company has:
Reduced planned 2020 capital expenditures by approximately 50% from original 2020 budget midpoint of guidance, which is a nearly 70% reduction from 2019 actualTargeted 2020 production as being flat to down 2% from 2019, which is consistent with our low corporate decline rateTemporarily suspended its regular quarterly dividend until oil prices recoverReduced non-employee annualized General and Administrative expenses by more than $5 millionEnhanced its hedge portfolio with nearly 100% of California oil hedged in 2020 and additional 2021 hedge positions, resulting in a total hedge book worth more than $187 millionVisibility to an estimated 2020 year-end cash balance, based on March 23, 2020 strip and current differentials, of $90-$110 millionIn addition, as of March 31, 2020, the Company has:Continued to file for and receive CalGEM drilling, abandonment and workover permits, increasing its available inventoryContinued to satisfy the Idle Well Management Plan required by California regulations, with plans and ability to continue to do so going forwardAmple liquidity with no near-term debt maturities, reasonable financial covenant requirements and $382 million available under its $400 million revolver“We believe Berry has the balance sheet and operational flexibility to successfully manage through the current oil price environment and we have taken immediate and decisive action to protect our cash flow and liquidity position. We have a track-record of generating free cash flow and delivering value to our shareholders, and our long-term business model remains based on living within Levered Free Cash Flow¹ while protecting our base production and our balance sheet, generating value from capital investments, and returning capital to our shareholders,” stated Trem Smith, Berry board chair and chief executive officer.“Our current near-term plans anticipate a significantly challenging couple of years, which we are confident Berry will successfully weather.  We have a strong balance sheet; we are well hedged through 2020 and into 2021; we can scale up and down quickly with no long-term operational commitments; and, most importantly, we are committed and able to live within Levered Free Cash Flow.  Our priority is on maximizing our cash position and maintaining substantial liquidity, which are tremendously valuable in these times. We will continue to judiciously manage ours to ensure Berry is strongly positioned to capitalize on the eventual market improvements. We will continue to seek additional, sustainable cost savings and efficiency improvements, thus managing the risk of an extended period of weaker commodity prices, while maintaining our sharp focus on safety and mechanical integrity.”2020 CAPITAL EXPENDITURE BUDGETThe updated capital expenditure guidance for 2020 is now approximately $65 million, with approximately 65% of the capital spend weighted toward the first half of 2020. Berry’s focus will be on the capital needed to sustain annual production levels for the Company’s California operations. The updated capital budget assumes contracting one drilling rig no earlier than September 2020, primarily for sandstone development.  Although, the timing and planning of drilling the targeted 45 to 55 wells is contingent on multiple factors, including price.  Additionally, Berry plans to spend approximately $15 million on plugging and abandonment activities to satisfy our obligations under the California mandated Idle Well Management Plan.HEDGING UPDATE AND LIQUIDITYAs of March 31, 2020, Berry has 24,000 bbls of oil hedged at approximately $59.85 Brent through 2020, with an additional 9,500 bbls hedged at approximately $47.19 Brent for 2021.Berry faces no near-term debt maturities, as its revolving credit facility matures in July 2022, and its senior unsecured notes mature in February 2026. As of March 31, 2020, Berry had $[382] million of availability under its $400 million revolving credit facility.“Looking out to the next two years, our current strategy is one of continuous focus on increasing our cash position. The recent adjustment of our 2020 budget and the actions we have taken should ensure we maintain ample flexibility in 2021.  Even in the current depressed environment, our commitment is to maximizing shareholder value and we believe there will be future opportunities to return capital to shareholders, potentially in the form of debt repurchases or special dividends.  However, currently we believe it is in the best interest of our shareholders that we suspend the quarterly dividend at this time.  We plan to re-establish it fully when oil strip for Brent returns to $50 per barrel Brent,” stated Cary Baetz, executive vice president and chief financial officer.  “We will operate efficiently, safely, and at the lowest possible cost during these challenging times.  While we don’t know when markets will improve, we are working to ensure that Berry is in the best position for success when that day comes.”^[1] “Levered Free Cash Flow” is a non-GAAP financial measure defined as Adjusted EBITDA less capital expenditures, interest expense and dividends. “Adjusted EBITDA” is also a non-GAAP financial measure defined as earnings before interest expense; income taxes; depreciation, depletion, and amortization; derivative gains or losses net of cash received or paid for scheduled derivative settlements; impairments; stock compensation expense; and other unusual, out-of-period and infrequent items, including restructuring costs and reorganization items.  Please see our website, https://ir.bry.com/non-gaap-reconciliations-to-gaap, for reconciliations of Levered Free Cash Flow and Adjusted EBITDA to net cash provided by operating activities and of Adjusted EBITDA to net income (loss), our most directly comparable financial measure calculated and presented in accordance with GAAP.
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