Berry Corporation (bry) Reports Strong First Quarter 2021 Results on Improved Production, Lower Operating Costs, Gas Purchase Hedging Strategy and Higher Gas Sales; Declares Quarterly Dividend
Berry Corporation (BRY) reported a net loss of $21 million or $0.27 per diluted share for Q1 2021, with an Adjusted Net Income of $6 million or $0.07 per share. The Board declared a $0.04 quarterly dividend for Q2 2021, payable on July 15, 2021. Highlights include an Adjusted EBITDA of $52 million, a 3% increase in oil production to 23,900 bbl/d, and reduced non-energy operating expenses by 11%. The company ended Q1 with $99 million in cash and an overall liquidity of $292 million.
- Declared a quarterly dividend of $0.04 per share for Q2 2021.
- Achieved $52 million in Adjusted EBITDA for Q1 2021.
- Increased oil production by 3% to 23,900 bbl/d.
- Reduced non-energy operating expenses by 11%.
- Reported a net loss of $21 million for Q1 2021.
- Realized oil price decreased by 21% from the previous quarter.
DALLAS, May 04, 2021 (GLOBE NEWSWIRE) -- Berry Corporation (bry) (NASDAQ: BRY) (“bry” or the “Company”) today reported net loss of
Quarterly Highlights
- Generated Adjusted EBITDA(1) of
$52 million - Reduced non-energy OpEx an additional
11% sequentially - Increased sequential oil production
3% and total production2% to 27,100 boe/d - Improving sustainable capital efficiency on development program
- Generated
$16 million of Levered Free Cash Flow(1) - Ended the quarter with
$99 million in cash
_______
(1) Please see “Non-GAAP Financial Measures and Reconciliations” later in this press release for a reconciliation and more information on these Non-GAAP measures.
“We had a strong quarter. By managing the things within our control, we realized growth in our production on improving capital efficiency and record low non-energy operating expenses by enhancing our cost structure,” said Trem Smith, Berry board chair and chief executive officer. “Furthermore, our results underscore the strength of and success of our natural gas hedging program. As unprecedented cold weather covered much of the central and southern parts of the U.S. in February, our natural gas hedges allowed us to sustain our steam operations despite natural gas prices in California exceeding
“More recently, on April 23, Governor Newsom directed CalGEM to initiate regulatory action to end the issuance of new permits for hydraulic fracturing by January 2024. This directive does not materially impact bry’s operations and, as defined, does not affect our current or future thermal diatomite production. However, this proposal is not in the best interest of Californians and does not support the state’s 2045 net carbon neutrality goal. Studies, including those sponsored by the Governor, show that Californians will still demand transportation fuels well past 2045. Therefore, this ban just shifts the state’s supply source from local producers, who provide significant economic value to our communities and operate using rigorous environmental and safety standards, to foreign oil producers that do not contribute to our economy nor share our social or environmental standards. This year bry will pay
First Quarter 2021 Results
Adjusted EBITDA(1), on a hedged basis, was
The Company increased average daily production
The Company-wide hedged realized oil price for the first quarter 2021 was
OpEx consists of lease operating expenses (“LOE”), third-party revenues and expenses from electricity generation, transportation and marketing activities, as well as the effect of derivative settlements (received or paid) for gas purchases, and excludes taxes other than income taxes.
On a hedged basis, operating expenses decreased by
General and administrative expenses decreased by
Taxes, other than income taxes were
For the first quarter 2021, capital expenditures were approximately
At March 31, 2021, the Company had liquidity of
“All in all, we delivered a strong quarter, capitalizing on the impact of the unseasonably high gas prices on our revenues, while leveraging our effective gas purchase hedging program, stated Cary Baetz, chief financial officer, EVP and director. “Additionally, our non-energy OpEx per boe was down
Quarterly Dividend
The Company’s Board of Directors declared a regular dividend for the second quarter of 2021 at a rate of
Subject to approval by the Board and depending on a variety of factors, including the Company’s financial condition and results of operations, the Company intends to pay a similar dividend in future quarters.
_______
(1) Please see “Non-GAAP Financial Measures and Reconciliations” later in this press release for a reconciliation and more information on these Non-GAAP measures.
Earnings Conference Call
The Company will host a conference call May 5, 2021 to discuss these results:
Live Call Date: | Wednesday, May 5, 2021 | |
Live Call Time: | 9:00 a.m. Eastern Time (6 a.m. Pacific Time) | |
Live Call Dial-in: | 877-491-5169 from the U.S. 720-405-2254 from international locations | |
Live Call Passcode: | 8438708 |
A live audio webcast will be available at bry.com/category/events.
An audio replay will be available shortly after the broadcast:
Replay Dates: | Through Wednesday, May 19, 2021 | |
Replay Dial-in: | 855-859-2056 from the U.S. 404-537-3406 from international locations | |
Replay Passcode: | 8438708 |
A replay of the audio webcast will also be archived at ir.bry.com/reports-resources.
About Berry Corporation (bry)
Bry is a publicly traded (NASDAQ: BRY) western United States independent upstream energy company with a focus on the conventional, long-lived oil reserves in the San Joaquin basin of California. More information can be found at the Company’s website at bry.com.
Forward-Looking Statements
The information in this press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this press release that address plans, activities, events, objectives, goals, strategies, or developments that the Company expects, believes or anticipates will or may occur in the future, such as those regarding financial position; liquidity; cash flows; anticipated financial and operating, results; capital program and development and production plans; operations and business strategy; potential acquisition opportunities; reserves; hedging activities; capital expenditures, return of capital; payment, payment of or improvement of future dividends; future repurchases of stock or debt; capital investments, recovery factors and other guidance are forward-looking statements. The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although we believe that these assumptions were reasonable when made, these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control. Therefore, such forward-looking statements involve significant risks and uncertainties that could materially affect our expected results of operations, liquidity, cash flows and business prospects.
Bry cautions you that these forward-looking statements are subject to all of the risks and uncertainties, incident to the exploration for and development, production, gathering and sale of natural gas, NGLs and oil most of which are difficult to predict and many of which are beyond bry’s control. These risks include, but are not limited to, commodity price volatility; legislative and regulatory processes and actions that may prevent, delay or otherwise restrict our ability to drill and develop our assets, including regulatory approval and permitting requirements; legislative and regulatory initiatives in California or our other areas of operation addressing climate change or other environmental concerns; drilling, production and other operating risks; investment in and development of competing or alternative energy sources; uncertainties inherent in estimating natural gas and oil reserves and in projecting future rates of production; cash flow and access to capital; the timing and funding of development expenditures; environmental, health and safety risks; effects of hedging arrangements; potential shut-ins of production due to lack of downstream demand or storage capacity; the impact and duration of the ongoing COVID-19 pandemic on demand and pricing levels; and the other risks described under the heading “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
You can typically identify forward-looking statements by words such as aim, anticipate, achievable, believe, budget, continue, could, effort, estimate, expect, forecast, goal, guidance, intend, likely, may, might, objective, outlook, plan, potential, predict, project, seek, should, target, will or would and other similar words that reflect the prospective nature of events or outcomes.
Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise except as required by applicable law. Investors are urged to consider carefully the disclosure in our filings with the Securities and Exchange Commission, available from us at via our website or via the Investor Relations contact below, or from the SEC’s website at www.sec.gov.
Contact
Contact: bry
Todd Crabtree - Manager, Investor Relations
(661) 616-3811
ir@bry.com
Tables Following
The financial information and certain other information presented have been rounded to the nearest whole number or the nearest decimal. Therefore, the sum of the numbers in a column may not conform exactly to the total figure given for that column in certain tables. In addition, certain percentages presented here reflect calculations based upon the underlying information prior to rounding and, accordingly, may not conform exactly to the percentages that would be derived if the relevant calculations were based upon the rounded numbers, or may not sum due to rounding.
SUMMARY OF RESULTS
Three Months Ended | |||||||||||
March 31, 2021 | December 31, 2020 | March 31, 2020 | |||||||||
($ and shares in thousands, except per share amounts) | |||||||||||
Statement of Operations Data: | |||||||||||
Revenues and other: | |||||||||||
Oil, natural gas and natural gas liquids sales | $ | 135,265 | $ | 93,811 | $ | 122,098 | |||||
Electricity sales | 10,069 | 6,724 | 5,461 | ||||||||
(Losses) gains on oil and gas sales derivatives | (53,504 | ) | (39,617 | ) | 211,229 | ||||||
Marketing revenues | 2,234 | 351 | 453 | ||||||||
Other revenues | 137 | 97 | 24 | ||||||||
Total revenues and other | 94,201 | 61,366 | 339,265 | ||||||||
Expenses and other: | |||||||||||
Lease operating expenses | 62,284 | 49,621 | 50,752 | ||||||||
Electricity generation expenses | 7,648 | 5,422 | 3,946 | ||||||||
Transportation expenses | 1,576 | 1,559 | 1,822 | ||||||||
Marketing expenses | 2,227 | 344 | 430 | ||||||||
General and administrative expenses | 17,070 | 20,409 | 19,337 | ||||||||
Depreciation, depletion and amortization | 33,840 | 30,434 | 35,329 | ||||||||
Impairment of oil and gas properties | — | — | 289,085 | ||||||||
Taxes, other than income taxes | 9,557 | 10,858 | 4,352 | ||||||||
(Gains) losses on natural gas purchase derivatives | (27,730 | ) | 3,859 | 12,035 | |||||||
Other operating expenses | 799 | 3,123 | 2,202 | ||||||||
Total expenses and other | 107,271 | 125,629 | 419,290 | ||||||||
Other (expenses) income: | |||||||||||
Interest expense | (8,485 | ) | (8,308 | ) | (8,920 | ) | |||||
Other, net | (143 | ) | (13 | ) | (6 | ) | |||||
Total other (expenses) income | (8,628 | ) | (8,321 | ) | (8,926 | ) | |||||
Loss before income taxes | (21,698 | ) | (72,584 | ) | (88,951 | ) | |||||
Income tax (benefit) expense | (376 | ) | (8,754 | ) | 26,349 | ||||||
Net loss | $ | (21,322 | ) | $ | (63,830 | ) | $ | (115,300 | ) | ||
Net loss per share: | |||||||||||
Basic | $ | (0.27 | ) | $ | (0.80 | ) | $ | (1.45 | ) | ||
Diluted | $ | (0.27 | ) | $ | (0.80 | ) | $ | (1.45 | ) | ||
Weighted-average shares of common stock outstanding - basic | 80,115 | 79,922 | 79,608 | ||||||||
Weighted-average shares of common stock outstanding - diluted | 80,115 | 79,922 | 79,608 | ||||||||
Adjusted Net Income(1) | $ | 5,627 | $ | 8,580 | $ | 18,175 | |||||
Weighted-average shares of common stock outstanding - diluted | 82,276 | 80,033 | 79,945 | ||||||||
Diluted earnings per share on Adjusted Net Income | $ | 0.07 | $ | 0.11 | $ | 0.23 | |||||
Three Months Ended | |||||||||||
March 31, 2021 | December 31, 2020 | March 31, 2020 | |||||||||
($ and shares in thousands, except per share amounts) | |||||||||||
Adjusted EBITDA(1) | $ | 51,829 | $ | 53,682 | $ | 71,800 | |||||
Adjusted EBITDA Unhedged(1) | $ | 50,979 | $ | 18,365 | $ | 52,175 | |||||
Levered Free Cash Flow(1) | $ | 16,301 | $ | 31,215 | $ | 13,613 | |||||
Levered Free Cash Flow Unhedged(1) | $ | 15,451 | $ | (4,102 | ) | $ | (6,012 | ) | |||
Adjusted General and Administrative Expenses(1) | $ | 13,401 | $ | 14,881 | $ | 14,556 | |||||
Effective Tax Rate, including discrete items | 2 | % | 12 | % | (30 | )% | |||||
Cash Flow Data: | |||||||||||
Net cash provided by operating activities | $ | 38,430 | $ | 52,110 | $ | 44,483 | |||||
Net cash used in investing activities | $ | (19,937 | ) | $ | (19,098 | ) | $ | (43,038 | ) | ||
Net cash used in financing activities | $ | (1,688 | ) | $ | (75 | ) | $ | (1,444 | ) |
__________
(1) See further discussion and reconciliation in “Non-GAAP Financial Measures and Reconciliations”.
March 31, 2021 | December 31, 2020 | ||||||
($ and shares in thousands) | |||||||
Balance Sheet Data: | |||||||
Total current assets | $ | 178,041 | $ | 154,491 | |||
Total property, plant and equipment, net | $ | 1,250,656 | $ | 1,258,084 | |||
Total current liabilities | $ | 212,565 | $ | 175,306 | |||
Long-term debt | $ | 393,741 | $ | 393,480 | |||
Total stockholders' equity | $ | 691,794 | $ | 714,036 | |||
Outstanding common stock shares as of | 80,471 | 79,929 | |||||
SUMMARY BY AREA
The following table shows a summary by area of our selected historical financial information and operating data for the periods indicated.
California (San Joaquin and Ventura basins) | |||||||||||
Three Months Ended | |||||||||||
March 31, 2021 | December 31, 2020 | March 31, 2020 | |||||||||
($ in thousands, except prices) | |||||||||||
Oil, natural gas and natural gas liquids sales | $ | 113,177 | $ | 81,588 | $ | 109,519 | |||||
Operating income (loss)(1) | $ | 18,965 | $ | 34,651 | $ | (113,203 | ) | ||||
Depreciation, depletion, and amortization (DD&A) | $ | 32,896 | $ | 29,440 | $ | 30,918 | |||||
Impairment of oil and gas properties | $ | — | $ | — | $ | 163,879 | |||||
Average daily production (mboe/d) | 21.9 | 21.2 | 24.9 | ||||||||
Production (oil % of total) | 100 | % | 100 | % | 100 | % | |||||
Realized sales prices: | |||||||||||
Oil (per bbl) | $ | 57.34 | $ | 41.74 | $ | 48.38 | |||||
NGLs (per bbl) | $ | — | $ | — | $ | — | |||||
Gas (per mcf) | $ | — | $ | — | $ | — | |||||
Capital expenditures(2) | $ | 22,760 | $ | 13,665 | $ | 38,627 |
Utah (Uinta basin) | Colorado (Piceance basin) | ||||||||||||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||||||||||||
March 31, 2021 | December 31, 2020 | March 31, 2020 | March 31, 2021 | December 31, 2020 | March 31, 2020 | ||||||||||||||||||
($ in thousands, except prices) | |||||||||||||||||||||||
Oil, natural gas and natural gas liquids sales | $ | 15,889 | $ | 10,453 | $ | 11,278 | $ | 6,194 | $ | 1,769 | $ | 1,299 | |||||||||||
Operating income (loss)(1) | $ | 7,433 | $ | 923 | $ | (127,700 | ) | $ | 5,039 | $ | 233 | $ | 384 | ||||||||||
Depreciation, depletion, and amortization (DD&A) | $ | 554 | $ | 911 | $ | 4,311 | $ | 38 | $ | 63 | $ | 55 | |||||||||||
Impairment of oil and gas properties | $ | — | $ | — | $ | 125,206 | $ | — | $ | — | $ | — | |||||||||||
Average daily production (mboe/d) | 4.0 | 4.1 | 4.5 | 1.2 | 1.3 | 1.4 | |||||||||||||||||
Production (oil % of total) | 49 | % | 50 | % | 53 | % | 2 | % | 2 | % | 1 | % | |||||||||||
Realized sales prices: | |||||||||||||||||||||||
Oil (per bbl) | $ | 52.08 | $ | 37.95 | $ | 39.64 | $ | 25.80 | $ | 10.23 | $ | 42.54 | |||||||||||
NGLs (per bbl) | $ | 26.81 | $ | 16.75 | $ | 13.16 | $ | — | $ | — | $ | — | |||||||||||
Gas (per mcf) | $ | 6.65 | $ | 3.04 | $ | 2.22 | $ | 9.83 | $ | 2.44 | $ | 1.70 | |||||||||||
Capital expenditures(2) | $ | 392 | $ | 385 | $ | 678 | $ | 1 | $ | 13 | $ | 1 |
__________
(1) Operating income (loss) includes oil, natural gas and NGL sales, and scheduled oil derivative settlements, offset by operating expenses (as defined elsewhere), general and administrative expenses, DD&A, impairment of oil and gas properties, and taxes, other than income taxes.
(2) Excludes corporate capital expenditures.
COMMODITY PRICING
Three Months Ended | |||||||||||
March 31, 2021 | December 31, 2020 | March 31, 2020 | |||||||||
Weighted-average realized sales prices: | |||||||||||
Oil without hedges ($/bbl) | $ | 56.89 | $ | 41.38 | $ | 47.61 | |||||
Effects of scheduled derivative settlements ($/bbl) | $ | (12.08 | ) | $ | 15.03 | $ | 9.67 | ||||
Oil with hedges ($/bbl) | $ | 44.81 | $ | 56.41 | $ | 57.28 | |||||
Natural gas ($/mcf) | $ | 7.96 | $ | 2.78 | $ | 2.00 | |||||
NGLs ($/bbl) | $ | 26.81 | $ | 16.78 | $ | 13.16 | |||||
Average Benchmark prices: | |||||||||||
Oil (bbl) – Brent | $ | 61.32 | $ | 45.26 | $ | 50.82 | |||||
Oil (bbl) – WTI | $ | 57.82 | $ | 42.66 | $ | 46.35 | |||||
Natural gas (mmbtu) – Kern, Delivered(1) | $ | 7.99 | $ | 3.38 | $ | 1.97 | |||||
Natural gas (mmbtu) – Henry Hub(2) | $ | 3.50 | $ | 2.52 | $ | 1.91 |
__________
(1) Kern, Delivered Index is the relevant index used for gas purchases in California.
(2) Henry Hub is the relevant index used for gas sales in the Rockies.
CURRENT HEDGING SUMMARY
As of March 31, 2021, we had the following crude oil production and gas purchases hedges.
Q2 2021 | Q3 2021 | Q4 2021 | FY 2022 | ||||||||||||
Fixed Price Oil Swaps (Brent): | |||||||||||||||
Hedged volume (mbbls) | 1,728 | 1,318 | 1,318 | 1,095 | |||||||||||
Weighted-average price ($/bbl) | $ | 45.82 | $ | 48.66 | $ | 48.66 | $ | 60.00 | |||||||
Fixed Price Gas Purchase Swaps (Kern, Delivered): | |||||||||||||||
Hedged volume (mmbtu) | 4,777,500 | 4,830,000 | 2,085,000 | — | |||||||||||
Weighted-average price ($/mmbtu) | $ | 2.83 | $ | 2.83 | $ | 2.95 | $ | — | |||||||
OPERATING EXPENSES
Three Months Ended | |||||||||||
March 31, 2021 | December 31, 2020 | March 31, 2020 | |||||||||
($ in thousands except per boe amounts) | |||||||||||
Lease operating expenses | $ | 62,284 | $ | 49,621 | $ | 50,752 | |||||
Electricity generation expenses | 7,648 | 5,422 | 3,946 | ||||||||
Electricity sales(1) | (10,069 | ) | (6,724 | ) | (5,461 | ) | |||||
Transportation expenses | 1,576 | 1,559 | 1,822 | ||||||||
Transportation sales(1) | (137 | ) | (97 | ) | (24 | ) | |||||
Marketing expenses | 2,227 | 344 | 430 | ||||||||
Marketing revenues(1) | (2,234 | ) | (351 | ) | (453 | ) | |||||
Derivative settlements (received) paid for gas purchases(1) | (26,239 | ) | (3,090 | ) | 4,411 | ||||||
Total operating expenses(1) | $ | 35,056 | $ | 46,684 | $ | 55,423 | |||||
Lease operating expenses ($/boe) | $ | 25.58 | $ | 20.25 | $ | 18.14 | |||||
Electricity generation expenses ($/boe) | 3.14 | 2.21 | 1.41 | ||||||||
Electricity sales ($/boe) | (4.13 | ) | (2.74 | ) | (1.95 | ) | |||||
Transportation expenses ($/boe) | 0.65 | 0.64 | 0.65 | ||||||||
Transportation sales ($/boe) | (0.06 | ) | (0.04 | ) | (0.01 | ) | |||||
Marketing expenses ($/boe) | 0.92 | 0.14 | 0.15 | ||||||||
Marketing revenues ($/boe) | (0.92 | ) | (0.14 | ) | (0.16 | ) | |||||
Derivative settlements (received) paid for gas purchases ($/boe) | (10.78 | ) | (1.26 | ) | 1.58 | ||||||
Total operating expenses ($/boe) | $ | 14.40 | $ | 19.06 | $ | 19.81 | |||||
Total unhedged operating expenses ($/boe)(2) | $ | 25.18 | $ | 20.32 | $ | 18.23 | |||||
Total non-energy operating expenses(3) | $ | 12.74 | $ | 14.35 | $ | 14.03 | |||||
Total energy operating expenses(4) | $ | 1.66 | $ | 4.70 | $ | 5.78 | |||||
Total mboe | 2,435 | 2,450 | 2,798 |
__________
(1) We report electricity, transportation and marketing sales separately in our financial statements as revenues in accordance with GAAP. However, these revenues are viewed and used internally in calculating operating expenses which is used to track and analyze the economics of development projects and the efficiency of our hydrocarbon recovery. We purchase third-party gas to generate electricity through our cogeneration facilities to be used in our field operations activities and view the added benefit of any excess electricity sold externally as a cost reduction/benefit to generating steam for our thermal recovery operations. Marketing revenues and expenses mainly relate to natural gas purchased from third parties that moves through our gathering and processing systems and then is sold to third parties. Transportation sales relate to water and other liquids that we transport on our systems on behalf of third parties and have not been significant to date. Operating expenses also include the effect of derivative settlements (received or paid) for gas purchases.
(2) Total unhedged operating expenses equals total operating expenses, excluding the derivative settlements paid (received) for gas purchases.
(3) Total non-energy operating expenses equals total operating expenses, excluding fuel, electricity sales and gas purchase derivative settlement (gains) losses.
(4) Total energy operating expenses equals fuel and gas purchase derivative settlement (gains) losses less electricity sales.
PRODUCTION STATISTICS
Three Months Ended | ||||||||
March 31, 2021 | December 31, 2020 | March 31, 2020 | ||||||
Net Oil, Natural Gas and NGLs Production Per Day(1): | ||||||||
Oil (mbbl/d) | ||||||||
California | 21.9 | 21.2 | 24.9 | |||||
Utah | 2.0 | 2.1 | 2.4 | |||||
Colorado | — | — | — | |||||
Total oil | 23.9 | 23.3 | 27.3 | |||||
Natural gas (mmcf/d) | ||||||||
California | — | — | — | |||||
Utah | 10.0 | 9.8 | 10.5 | |||||
Colorado | 6.9 | 7.8 | 8.0 | |||||
Total natural gas | 16.9 | 17.6 | 18.5 | |||||
NGLs (mbbl/d) | ||||||||
California | — | — | — | |||||
Utah | 0.3 | 0.4 | 0.4 | |||||
Colorado | — | — | — | |||||
Total NGLs | 0.3 | 0.4 | 0.4 | |||||
Total Production (mboe/d)(2) | 27.1 | 26.6 | 30.8 |
__________
(1) Production represents volumes sold during the period.
(2) Natural gas volumes have been converted to boe based on energy content of six Mcf of gas to one bbl of oil. Barrels of oil equivalence does not necessarily result in price equivalence. The price of natural gas on a barrel of oil equivalent basis is currently substantially lower than the corresponding price for oil and has been similarly lower for a number of years. For example, in the three months ended March 31, 2021, the average prices of Brent oil and Henry Hub natural gas were
CAPITAL EXPENDITURES (ACCRUAL BASIS)
Three Months Ended | |||||||||||
March 31, 2021 | December 31, 2020 | March 31, 2020 | |||||||||
(in thousands) | |||||||||||
Capital expenditures (accrual basis)(1) | $ | 23,569 | $ | 14,159 | $ | 39,703 |
__________
(1) Excludes acquisitions and asset retirement spending.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
Adjusted Net Income (Loss) is not a measure of net income (loss), Levered Free Cash Flow is not a measure of cash flow, and Adjusted EBITDA is not a measure of either, in all cases, as determined by GAAP. Adjusted Net Income (Loss), Adjusted EBITDA, Levered Free Cash Flow and Adjusted General and Administrative Expenses are supplemental non-GAAP financial measures used by management and external users of our financial statements, such as industry analysts, investors, lenders and rating agencies. We define Adjusted Net Income (Loss) as net income (loss) adjusted for derivative gains or losses net of cash received or paid for scheduled derivative settlements, other unusual, out-of-period and infrequent items, and the income tax expense or benefit of these adjustments using our effective tax rate. We define Adjusted EBITDA 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. We define Levered Free Cash Flow as Adjusted EBITDA less capital expenditures, interest expense and dividends. We define Adjusted General and Administrative Expenses as general and administrative expenses adjusted for non-cash stock compensation expense and unusual, out of period and infrequent costs.
Adjusted Net Income (Loss) excludes the impact of unusual, out-of-period and infrequent items affecting earnings that vary widely and unpredictably, including non-cash items such as derivative gains and losses. This measure is used by management when comparing results period over period. Our management believes Adjusted EBITDA provides useful information in assessing our financial condition, results of operations and cash flows and is widely used by the industry and the investment community. The measure also allows our management to more effectively evaluate our operating performance and compare the results between periods without regard to our financing methods or capital structure. Levered Free Cash Flow is used by management as a primary metric to plan capital allocation to sustain production levels and for internal growth opportunities, as well as hedging needs. It also serves as a measure for assessing our financial performance and our ability to generate excess cash from operations to service debt and pay dividends. Management believes Adjusted General and Administrative Expenses is useful because it allows us to more effectively compare our performance from period to period. We exclude the items listed above from general and administrative expenses in arriving at Adjusted General and Administrative Expenses because these amounts can vary widely and unpredictably in nature, timing, amount and frequency and stock compensation expense is non-cash in nature.
While Adjusted Net Income (Loss), Adjusted EBITDA, Adjusted EBITDA Unhedged, Levered Free Cash Flow, Levered Free Cash Flow Unhedged and Adjusted General and Administrative Expenses are non-GAAP measures, the amounts included in the calculations of Adjusted Net Income (Loss), Adjusted EBITDA, Adjusted EBITDA Unhedged, Levered Free Cash Flow, Levered Free Cash Flow Unhedged and Adjusted General and Administrative Expenses were computed in accordance with GAAP. These measures are provided in addition to, and not as an alternative for, income and liquidity measures calculated in accordance with GAAP and should not be considered as an alternative to, or more meaningful than, income and liquidity measures calculated in accordance with GAAP. Our computations of Adjusted Net Income (Loss), Adjusted EBITDA, Adjusted EBITDA Unhedged, Levered Free Cash Flow, Levered Free Cash Flow Unhedged and Adjusted General and Administrative Expenses may not be comparable to other similarly titled measures used by other companies. Adjusted Net Income (Loss), Adjusted EBITDA, Adjusted EBITDA Unhedged, Levered Free Cash Flow, Levered Free Cash Flow Unhedged and Adjusted General and Administrative Expenses should be read in conjunction with the information contained in our financial statements prepared in accordance with GAAP.
ADJUSTED NET INCOME (LOSS)
The following table presents a reconciliation of the GAAP financial measure of net income (loss) to the non-GAAP financial measure of Adjusted Net Income (Loss).
Three Months Ended | |||||||||||
March 31, 2021 | December 31, 2020 | March 31, 2020 | |||||||||
($ thousands, except per share amounts) | |||||||||||
Net loss | $ | (21,322 | ) | $ | (63,830 | ) | $ | (115,300 | ) | ||
Add: discrete income tax items | — | 16,724 | 46,700 | ||||||||
Add (Subtract): | |||||||||||
Losses (gains) on derivatives | 25,774 | 43,476 | (199,194 | ) | |||||||
Net cash received for scheduled derivative settlements | 850 | 35,317 | 19,625 | ||||||||
Other operating expenses | 799 | 3,123 | 2,202 | ||||||||
Impairment of oil and gas properties | — | — | 289,085 | ||||||||
Non-recurring costs | — | 2,375 | 1,862 | ||||||||
Total additions, net | 27,423 | 84,291 | 113,580 | ||||||||
Income tax expense of adjustments at effective tax rate(1) | (474 | ) | (28,605 | ) | (26,805 | ) | |||||
Adjusted Net Income | $ | 5,627 | $ | 8,580 | $ | 18,175 | |||||
Basic EPS on Adjusted Net Income | $ | 0.07 | $ | 0.11 | $ | 0.23 | |||||
Diluted EPS on Adjusted Net Income | $ | 0.07 | $ | 0.11 | $ | 0.23 | |||||
Weighted average shares of common stock outstanding - basic | 80,115 | 79,922 | 79,608 | ||||||||
Weighted average shares of common stock outstanding - diluted | 82,276 | 80,033 | 79,945 |
__________
(1) Excludes discrete income tax items from the total additions (subtractions), net line item and the tax effect the discrete income tax items have on the current rate.
ADJUSTED EBITDA AND ADJUSTED EBITDA UNHEDGED
The following tables present a reconciliation of the GAAP financial measures of net income (loss) and net cash provided by operating activities to the non-GAAP financial measures of Adjusted EBITDA and Adjusted EBITDA Unhedged.
Three Months Ended | |||||||||||
March 31, 2021 | December 31, 2020 | March 31, 2020 | |||||||||
($ thousands) | |||||||||||
Net loss | $ | (21,322 | ) | $ | (63,830 | ) | $ | (115,300 | ) | ||
Add (Subtract): | |||||||||||
Interest expense | 8,485 | 8,308 | 8,920 | ||||||||
Income tax (benefit) expense | (376 | ) | (8,754 | ) | 26,349 | ||||||
Depreciation, depletion and amortization | 33,840 | 30,434 | 35,329 | ||||||||
Impairment of oil and gas properties | — | — | 289,085 | ||||||||
Losses (gains) on derivatives | 25,774 | 43,476 | (199,194 | ) | |||||||
Net cash received for scheduled derivative settlements | 850 | 35,317 | 19,625 | ||||||||
Other operating expense | 799 | 3,123 | 2,202 | ||||||||
Stock compensation expense | 3,779 | 3,233 | 2,922 | ||||||||
Non-recurring costs | — | 2,375 | 1,862 | ||||||||
Adjusted EBITDA | $ | 51,829 | $ | 53,682 | $ | 71,800 | |||||
Net cash received for scheduled derivative settlements | (850 | ) | (35,317 | ) | (19,625 | ) | |||||
Adjusted EBITDA Unhedged | $ | 50,979 | $ | 18,365 | $ | 52,175 | |||||
Net cash provided by operating activities | $ | 38,430 | $ | 52,110 | $ | 44,483 | |||||
Add (Subtract): | |||||||||||
Cash interest payments | 14,637 | — | 14,879 | ||||||||
Cash income tax payments | — | — | 2 | ||||||||
Non-recurring costs | — | 2,375 | 1,862 | ||||||||
Other changes in operating assets and liabilities | (1,238 | ) | (803 | ) | 10,574 | ||||||
Adjusted EBITDA | $ | 51,829 | $ | 53,682 | $ | 71,800 | |||||
Net cash received for scheduled derivative settlements | (850 | ) | (35,317 | ) | (19,625 | ) | |||||
Adjusted EBITDA Unhedged | $ | 50,979 | $ | 18,365 | $ | 52,175 | |||||
LEVERED FREE CASH FLOW
The following table presents a reconciliation of Adjusted EBITDA to the non–GAAP measures of Levered Free Cash Flow. The reconciliation of Adjusted EBITDA is presented above.
Three Months Ended | |||||||||||
March 31, 2021 | December 31, 2020 | March 31, 2020 | |||||||||
($ thousands) | |||||||||||
Adjusted EBITDA | $ | 51,829 | $ | 53,682 | $ | 71,800 | |||||
Subtract: | |||||||||||
Capital expenditures - accrual basis(1) | (23,569 | ) | (14,159 | ) | (39,703 | ) | |||||
Interest expense | (8,485 | ) | (8,308 | ) | (8,920 | ) | |||||
Cash dividends declared | (3,474 | ) | — | (9,564 | ) | ||||||
Levered Free Cash Flow | $ | 16,301 | $ | 31,215 | $ | 13,613 | |||||
Net cash received for scheduled derivative settlements | (850 | ) | (35,317 | ) | (19,625 | ) | |||||
Levered Free Cash Flow Unhedged | $ | 15,451 | $ | (4,102 | ) | $ | (6,012 | ) |
__________
(1) Capital expenditures excludes acquisitions and asset retirement spending.
ADJUSTED GENERAL AND ADMINISTRATIVE EXPENSES
The following table presents a reconciliation of the GAAP financial measure of general and administrative expenses to the non-GAAP financial measures of Adjusted General and Administrative Expenses.
Three Months Ended | |||||||||||
March 31, 2021 | December 31, 2020 | March 31, 2020 | |||||||||
($ in thousands except per mboe amounts) | |||||||||||
General and administrative expenses | $ | 17,070 | $ | 20,409 | $ | 19,337 | |||||
Subtract: | |||||||||||
Non-cash stock compensation expense (G&A portion) | (3,669 | ) | (3,153 | ) | (2,919 | ) | |||||
Non-recurring costs | — | (2,375 | ) | (1,862 | ) | ||||||
Adjusted General and Administrative Expenses | $ | 13,401 | $ | 14,881 | $ | 14,556 | |||||
General and administrative expenses ($/mboe) | $ | 7.01 | $ | 8.33 | $ | 6.91 | |||||
Subtract: | |||||||||||
Non-cash stock compensation expense ($/mboe) | (1.51 | ) | (1.29 | ) | (1.04 | ) | |||||
Non-recurring costs ($/mboe) | — | (0.97 | ) | (0.67 | ) | ||||||
Adjusted General and Administrative Expenses ($/mboe) | $ | 5.50 | $ | 6.07 | $ | 5.20 | |||||
Total mboe | 2,435 | 2,450 | 2,798 | ||||||||
FAQ
What is Berry Corporation's dividend for Q2 2021?
When is the dividend payment date for Berry Corporation?
What were the financial results for Berry Corporation in Q1 2021?
How much was Berry Corporation's Adjusted EBITDA in Q1 2021?