Berry Petroleum Corporation today reported net income attributable to common stockholders of $132 million, or $1.56 per diluted share, and adjusted net income of $35 million, or $0.41 per diluted share, for the fourth quarter of 2018. For the full year of 2018, Berry's net income attributable to common stockholders was $49 million, or $0.85 per diluted share, and adjusted net income was $100 million, or $1.26 per diluted share.

Highlights for the Quarter

• Adjusted EBITDA of $82 million and Unhedged Adjusted EBITDA of $73 million
• Capital Expenditures of $53 million with approximately 79% directed to development capital in California
• California production increased 11% over third quarter 2018
• Initiated share repurchase program with approximately 450,000 shares acquired in Q4 and nearly 2.4 million to date
• Completed divestiture of East Texas natural gas assets (approximately 0.7 MBoe/d) for $7 million
• Settlement of General Unsecured Stock Claims for 2.8 million shares of the 7.1 million initially reserved

Highlights for the Full Year

• Adjusted EBITDA of $258 million and Unhedged Adjusted EBITDA of $296 million
• Total company PV-10 increased by over $1.0 billion to $2.2 billion, including $2.0 billion for California
• Replaced 114% of total company reserves and 275% in California
• Capital Expenditures of $148 million with approximately 88% directed to development capital in California
• Drilled 224 wells in California to help grow production for California by 11% year over year
• Cash flows from operations of $230 million, which excludes $127 million for hedge early termination payment

Trem Smith, Berry President, Chief Executive Officer and Chairman of the Board stated, 
“Results for our fourth quarter and first full year of operations reinforce the new Berry story, namely how Berry’s business model is simple and unique to the industry and why we are substantially different from the Berry of yesteryear. The idea of managing by growing value and returning capital to shareholders while living within free cash flow is not new to us - we do it now. It has been our strategy since Day One and we plan to continue to do it consistently through the complete commodity price cycle. The Berry of today is focused. We now only operate in three states, down from five at the time of emergence, and California is our area of greatest value creation as seen in our production and reserves growth as well as significant increase in value in 2018.”

“As fiduciaries of the Company’s capital program, we focused our capital on our best long-term value, California. We grew daily production in California by 11% year-over-year and confidently expect to grow in the mid-teens for 2019. Replacing our reserves in California by almost 275% just gives us more confidence in value remaining in our fields. We saw our total company reserves grow to 143 million Boe while the PV-10 improved by over $1 billion to $2.2 billion. We did this while living within free cash flow, paying a top tier dividend, and generating additional free cash.”

“Our focus is on value through the cycle. Berry is capital efficient and doesn’t have long-term drilling contracts that drive inefficiency. We can drill and move capital to where it provides the best long-term value and do it quickly. We are very flexible and responsive to changing market conditions. As a result, we have decreased our 2019 capital spending by $35 million or 14% with only a little more than 3% reduction in company-wide projected production. The technical knowledge gained over the last year and a half on our assets gives us a high level of confidence in the cash generating capability of these assets for many years to come. At Berry, we are excited about the value creation opportunities in 2019 and beyond.”

Fourth Quarter 2018 Results

For the fourth quarter, Berry reported Adjusted EBITDA of $82 million, the same as the third quarter. Adjusted EBITDA, on an unhedged basis, was $73 million in the fourth quarter compared to $83 million in the third quarter, primarily due to lower oil prices, partially offset by increased production.

For the fourth quarter California oil prices before hedges averaged $62.65/Bbl which was 9% lower than the $69.13/Bbl realized in the third quarter. Realized oil prices for the Company before hedges of $61.48/Bbl were 9% lower than the third quarter.

Oil production averaged 23,700 barrels per day in the fourth quarter, while natural gas averaged 22,100 Mcf per day and NGLs averaged 600 barrels per day. California provided 21,700 Boe/d in the fourth quarter, an 11% increase over the third quarter, while the Rockies provided 5,800 Boe/d, down 19% from the third quarter due to continued marketing issues in Utah that impacted both sales and production. East Texas, the sale of which closed November 30, provided 700 Boe/d prior to the sale.

For the fourth quarter, Operating Expenses ("OpEx") totaled $48 million or $18.77/Boe compared to $46 million or $18.10/Boe in the third quarter. OpEx consists of lease operating expenses ("LOE"), as well as expenses and third-party revenues from electricity generation, transportation and marketing activities and the effect of derivative settlements (received or paid) for gas purchases while excluding taxes other than income taxes. The fourth quarter OpEx per Boe increase compared to the third quarter was primarily driven by higher fuel gas prices, reductions in electricity capacity payment revenues and changes in inventory costs in Utah,  as well as the impact of selling our East Texas natural gas assets in November which had lower costs on a Boe basis compared to our other operations. We also mitigate a portion of our LOE with natural gas purchase hedges which offset a portion of the fourth quarter fuel costs.

Full Year 2018 Results

Full year comparisons to 2017 present 2017 results as a single amount for simplicity, but represent two distinct periods, the two months ended February 28, 2017 (associated with our predecessor) and the ten months ended December 31, 2017 (our results as successor).

For 2018, Berry reported Adjusted EBITDA of $258 million compared to $178 million for 2017. Adjusted EBITDA, on an unhedged basis, was $296 million in 2018 compared to $175 million in 2017, primarily due to higher oil prices and increased oil production, as well as the increased percentage oil represents of our production in 2018 due to the acquisition of oil assets and disposal of gas assets in 2017.

For 2018, California oil prices before hedges averaged $65.64/Bbl which was 37% higher than the $47.79/Bbl realized in 2017. Realized oil prices for the Company before hedges of $64.76/Bbl were 35% higher than 2017.

Oil production averaged 22,000 barrels per day in 2018, natural gas averaged 26,300 Mcf per day and NGLs averaged 600 barrels per day. California provided 19,700 Boe/d in 2018, an 11% increase over 2017, while the Rockies provided 6,600 Boe/d, down 11% from 2017 due to continued marketing issues in Utah that impacted both sales and production. East Texas, the sale of which closed November 30, 2018 provided 700 Boe/d prior to the sale. Included in these year-over-year changes was the impact of the 2017 asset transactions which increased daily oil production in California by approximately 1,500 barrels and reduced gas production in the Rockies by 5,600 Boe.

For 2018 OpEx totaled $181 million or $18.33/Boe compared to $195 million or $16.84/Boe in 2017. The OpEx per Boe increase was primarily driven by a 25% increase in LOE per Boe from $15.32 per Boe in 2017 to $19.16 in 2018 largely due to the change in the mix of our products from 64% oil to 82% driven by the July 2017 asset transactions, as well as the oil production growth from capital expenditures during 2018. LOE increased due to higher fuel gas costs (mainly higher volumes purchased), and increased facility maintenance, and well servicing activity. The OpEx per Boe increase was partially offset by a decrease in transportation expense in 2018 primarily due to the disposition of gas assets in 2017, which required significant transportation.

Board of Directors Changes

As the Company previously announced, Donald Paul has been added to the board as an independent director. In addition, the board appointed Trem Smith, Berry Petroleum President and CEO, as Chairman of the Board. Smith replaces previous Chairman Brent Buckley in that position, effective February 28, 2019, with Buckley continuing to serve as a director.

Brent Buckley of Benefit Street Partners served as board chairman from June 2017 and helped lead the company out of bankruptcy to a successful IPO in July 2018. Smith stated “The company is profoundly grateful for the primary role Brent took in leading Berry out of bankruptcy two years ago and helping, as Board Chairman, prepare us to be a public company. I am honored to work with him and greatly appreciate his intensity and commitment to making Berry what it is today. We are pleased that Brent will remain a director and member of the Audit and Compensation Committees continuing to provide valuable guidance to the Board.” Buckley noted, “I have always seen the potential of Berry’s assets and capital structure offer. Now that we’ve successfully taken Berry public and have added a number of capable directors, it is time to transition some of my responsibilities on the Board. I look forward to continuing to work with the team and welcome the new directors.”

Berry Petroleum added new board members Ms. Anne Marriuci and Mr. Kent Potter in September 2018. The addition of Donald Paul brings the total board membership to seven. Additionally, the company today announced Ms. Mariucci will assume the role of Lead Director for the Board further reflecting corporate best practices designed to ensure independent oversight of the company and its activities.

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