Financial Data and Key Metrics Changes - Berry Corporation reported an average production of 27,400 barrels of oil equivalent per day in Q3, with production in September reaching 27,900 barrels per day, marking the highest for the year [17][18] - Capital expenditures (CapEx) in Q3 were $38 million, slightly lower than Q2, and the full-year capital outlook remains unchanged [22] - Operating expenses averaged $17.18 per barrel of oil equivalent (boe) in Q3, which is 1% lower than Q2 and consistently flat throughout 2021 [23] Business Line Data and Key Metrics Changes - The company focused its drilling activity on steam flood expansion projects in the Midway-Sunset field, with 54 producers and two delineation wells drilled in Q3 [18] - The development program yielded an unhedged rate of return in excess of 80% based on current pricing, with workover activities yielding returns greater than 100% [20][21] Market Data and Key Metrics Changes - The company is positioned to generate considerable levered free cash flow for many years, with projections indicating almost $250 million in levered free cash flow in 2022, representing more than 30% of the current market cap [25][26] Company Strategy and Development Direction - Berry Corporation announced a new shareholder return model aimed at providing significant returns, potentially exceeding 20% annually, through a mix of cash dividends, share repurchases, and debt retirement [11][12] - The company is focused on environmental, social, and governance (ESG) goals, including reducing greenhouse gas emissions by at least 15% by the end of 2021 and exploring carbon capture and storage (CCS) opportunities [37][39] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term demand for oil, citing limited supply due to underinvestment and delays in major projects [9][10] - The regulatory environment is being managed effectively, with expectations that proposed setback regulations will have minimal impact on operations in Kern County [49][50] Other Important Information - The acquisition of C&J Well Services was highlighted as a strategic move to enhance operational capabilities and align with ESG goals [35][36] - The company has gained additional access to the Kern River midstream natural gas line, which will significantly increase its gas supply capacity [28] Q&A Session Summary Question: Inquiry about the shareholder return model - Management confirmed that the model will be formulaic, using a predictable cost structure and hedged oil prices to determine returns, with a focus on quarterly assessments [41][42] Question: Regulatory updates and impact on operations - Management provided insights on the regulatory landscape, indicating that the proposed setback rules would likely take a year and a half to two years to finalize, with minimal expected impact on Kern County operations [46][49] Question: Details on the Placerita asset sale - The Placerita assets were sold for approximately $20,000 per flowing barrel, with a reduction in asset retirement obligations by about $20 million [53][56] Question: Well servicing business details - The closing price for the C&J Well Services acquisition was $43 million, with plans to transparently report its financial performance separately from Berry's oil and gas operations [65][67]

[Part I – Financial Information](index=3&type=section&id=Part%20I%20%E2%80%93%20Financial%20Information) [Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) Unaudited statements show a Q3 2021 net income of $9.8 million, a significant turnaround from the prior year's loss, while cash from operations decreased Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **$1,429,966** | **$1,419,810** | | Cash and cash equivalents | $38,161 | $80,557 | | Total oil and natural gas properties, net | $1,174,300 | $1,177,307 | | **Total Liabilities** | **$745,070** | **$705,774** | | Long-term debt | $394,285 | $393,480 | | **Total Stockholders' Equity** | **$684,896** | **$714,036** | Condensed Consolidated Statements of Operations Highlights (in thousands, except per share amounts) | Metric | Q3 2021 | Q3 2020 | 9 Months 2021 | 9 Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Total revenues and other | $143,414 | $89,749 | $336,864 | $462,467 | | Total expenses and other | $126,521 | $102,409 | $337,768 | $633,994 | | Net income (loss) | $9,836 | $(18,864) | $(24,367) | $(199,065) | | Diluted EPS | $0.12 | $(0.24) | $(0.30) | $(2.50) | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $82,258 | $144,419 | | Net cash used in investing activities | $(110,536) | $(74,522) | | Net cash used in financing activities | $(14,118) | $(22,277) | | **Net (decrease) increase in cash** | **$(42,396)** | **$47,620** | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Key notes detail the company's new $200 million credit facility, a $52.1 million net derivative liability, and the recent acquisition of C&J Well Services - On August 26, 2021, the company entered into a new 2021 RBL Facility with a **$500 million commitment** and an initial borrowing base of **$200 million**, maturing in 2025[34](index=34&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk) - The company utilizes derivatives to hedge a portion of its forecasted oil and gas production and gas purchases, with a fair value representing a **net liability of $52.1 million** as of September 30, 2021[47](index=47&type=chunk)[59](index=59&type=chunk) - For the nine months ended September 30, 2021, the company repurchased **471,022 shares for approximately $2 million**, with approximately **$48 million** remaining available for future repurchases[72](index=72&type=chunk) - Effective October 1, 2021, the company completed the acquisition of C&J Well Services for approximately **$43 million**, with financial results to be included starting in Q4 2021[22](index=22&type=chunk)[25](index=25&type=chunk)[91](index=91&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion highlights improved financial results from higher commodity prices and the strategic acquisition of C&J Well Services - The company is an independent upstream energy company focused on conventional, low geologic risk, long-lived oil reserves primarily in **California, Utah, and Colorado**[94](index=94&type=chunk)[95](index=95&type=chunk) - Effective October 1, 2021, the company acquired C&J Well Services for approximately **$43 million**, creating a strategic growth opportunity in well servicing and abandonment[97](index=97&type=chunk) - Management uses **'Levered Free Cash Flow'** as a primary metric for capital allocation, sustaining production, and funding growth[101](index=101&type=chunk) Average Benchmark Prices | Benchmark | Q3 2021 | Q3 2020 | | :--- | :--- | :--- | | Oil (bbl) – Brent | $73.23 | $43.34 | | Natural gas (mmbtu) – Kern, Delivered | $5.75 | $2.84 | [Results of Operations](index=34&type=section&id=Results%20of%20Operations) Operating results improved significantly due to a 75% rise in commodity sales, driving Q3 2021 net income despite higher costs and derivative losses Q3 2021 vs Q3 2020 Performance (in thousands) | Metric | Q3 2021 | Q3 2020 | % Change | | :--- | :--- | :--- | :--- | | Oil, natural gas and NGL sales | $161,058 | $92,239 | 75% | | Total revenues and other | $143,414 | $89,749 | 60% | | Net income (loss) | $9,836 | $(18,864) | 152% | 9 Months 2021 vs 9 Months 2020 Performance (in thousands) | Metric | 9 Months 2021 | 9 Months 2020 | % Change | | :--- | :--- | :--- | :--- | | Oil, natural gas and NGL sales | $444,098 | $284,852 | 56% | | (Losses) gains on derivatives | $(140,021) | $157,398 | n/a | | Net loss | $(24,367) | $(199,065) | (88)% | - Unhedged lease operating expenses per boe **increased 36%** in Q3 2021 vs Q3 2020, driven by a **109% increase** in the unhedged average fuel purchase price for California steam operations[192](index=192&type=chunk) - For the nine months ended Sep 30, 2020, the company recorded a non-cash pre-tax asset impairment charge of **$289 million** on properties in Utah and California, with no such impairment recorded in the 2021 period[223](index=223&type=chunk) [Liquidity and Capital Resources](index=50&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained total liquidity of $243 million, secured a new $200 million credit facility, and plans to fund capital expenditures with operating cash flow - Total liquidity as of September 30, 2021 was **$243 million**, consisting of **$43 million in cash** and **$200 million** available under the 2021 RBL Facility[246](index=246&type=chunk) - The planned 2021 capital expenditure budget is approximately **$120 to $130 million**, which is expected to be funded by Levered Free Cash Flow[137](index=137&type=chunk) - The company terminated its 2017 RBL Facility and entered into a new 2021 RBL Facility on August 26, 2021, with an initial borrowing base and elected commitment of **$200 million**, maturing in 2025[248](index=248&type=chunk)[258](index=258&type=chunk) - The company has an active commodity hedging program to protect cash flows, with significant volumes hedged for oil production and gas purchases through 2024[259](index=259&type=chunk)[262](index=262&type=chunk) [Non-GAAP Financial Measures](index=46&type=section&id=Non-GAAP%20Financial%20Measures) The company utilizes non-GAAP measures like Adjusted EBITDA and Levered Free Cash Flow to assess performance, showing mixed results compared to the prior year Adjusted EBITDA and Levered Free Cash Flow (in thousands) | Metric | Q3 2021 | Q3 2020 | 9 Months 2021 | 9 Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) | $9,836 | $(18,864) | $(24,367) | $(199,065) | | **Adjusted EBITDA** | **$59,324** | **$61,515** | **$151,751** | **$190,748** | | **Levered Free Cash Flow** | **$8,692** | **$47,206** | **$10,693** | **$92,876** | Adjusted Net Income (Loss) (in thousands) | Metric | Q3 2021 | Q3 2020 | 9 Months 2021 | 9 Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) | $9,836 | $(18,864) | $(24,367) | $(199,065) | | **Adjusted Net Income (Loss)** | **$11,536** | **$13,452** | **$10,868** | **$36,236** | [Quantitative and Qualitative Disclosures About Market Risk](index=59&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is commodity price volatility, which it mitigates through an active hedging program using derivative instruments - The company's primary market risk is from volatile oil, natural gas, and NGL prices[314](index=314&type=chunk) - As of September 30, 2021, the fair value of the company's hedge portfolio was a **net liability of $52 million**; a 10% price increase would raise the liability to $190 million, while a 10% decrease would create a net asset of $2 million[316](index=316&type=chunk) [Controls and Procedures](index=59&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2021, with no material changes to internal controls - Management concluded that the company's disclosure controls and procedures were **effective** as of September 30, 2021[318](index=318&type=chunk) - **No material changes** were made to the company's internal control over financial reporting during the third quarter of 2021[319](index=319&type=chunk) [Part II – Other Information](index=60&type=section&id=Part%20II%20%E2%80%93%20Other%20Information) [Legal Proceedings](index=60&type=section&id=Item%201.%20Legal%20Proceedings) The company is defending a securities class action lawsuit alleging false statements and cannot currently estimate a possible loss - The company is a defendant in the 'Torres Lawsuit,' a securities class action filed on November 20, 2020, alleging false and misleading statements related to business operations and permitting processes[322](index=322&type=chunk) - An amended complaint was filed on November 1, 2021, and the company **disputes the claims** and cannot estimate a possible loss or range of loss at this time[323](index=323&type=chunk)[324](index=324&type=chunk) [Risk Factors](index=60&type=section&id=Item%201A.%20Risk%20Factors) A key risk involves integrating the newly acquired C&J Well Services, a business line in which the company lacks direct prior experience - The company identifies risks associated with integrating acquired businesses, including potential for insufficient expertise, diversion of management attention, and assumption of liabilities[326](index=326&type=chunk)[328](index=328&type=chunk) - The October 1, 2021 acquisition of C&J Well Services presents specific risks as the company has **no prior experience** directly providing well servicing, completion, and water logistics services[330](index=330&type=chunk) [Issuer Purchases of Equity Securities](index=61&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company repurchased 471,022 shares in Q3 2021, with approximately $47.6 million remaining available under its buyback program Issuer Purchases of Equity Securities (Q3 2021) | Period | Total Shares Purchased | Average Price Paid per Share | Approx. Dollar Value Remaining in Program | | :--- | :--- | :--- | :--- | | July 2021 | — | — | $49,999,000 | | August 2021 | 471,022 | $5.18 | $47,564,000 | | September 2021 | — | — | $47,564,000 | | **Total** | **471,022** | **$5.18** | **$47,564,000** | [Exhibits](index=63&type=section&id=Item%206.%20Exhibits) This section lists filed exhibits, including required CEO/CFO certifications and the new credit agreement - Exhibits filed include CEO and CFO certifications under **Sarbanes-Oxley Sections 302 and 906**[334](index=334&type=chunk) - The new Credit Agreement dated August 26, 2021, is incorporated by reference[334](index=334&type=chunk)

Berry Corporation (NASDAQ:BRY) Q2 2021 Earnings Conference Call August 4, 2021 9:00 AM ET Company Participants Todd Crabtree - Manager, Investor Relations Trem Smith - Chairman and Chief Executive Officer Fernando Araujo - Chief Operating Officer and Executive Vice President Cary Baetz - Chief Financial Officer and Executive Vice President Conference Call Participants Leo Mariani - KeyBanc Charles Meade - Johnson Rice Nicholas Pope - Seaport Research Operator Ladies and gentlemen, thank you for standing by, ...

| --- | --- | --- | --- | --- | |-----------------------|---------------------------------------|-------|-------|----------------------------------| | FOCUSED | | | | | | A Responsible | | | | | | California | | | | | | Energy Partner | | | | | | | | | | | | JULY 2021 | Scan with phone camera to browse to | | | | | INVESTOR PRESENTATION | IR Reports Page | | | | | | | | | bry.com ir@bry.com 661-616-3811 | 1 Disclaimer The information in this presentation includes forward-looking statements within the meanin ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from_______________ to _______________ Commission file number 001-38606 Berry Corporation (bry) (Exact name of registrant as specified in its charter) Delaware (State of incor ...

Financial Data and Key Metrics Changes - The company generated $16 million in levered free cash flow and had nearly $100 million cash on hand at the end of the quarter [7][31] - EBITDA for the quarter was reported at $52 million, despite the unfavorable impact from oil hedges [30] - Operating expenses averaged $14.40 per BOE, a $4.11 per BOE improvement compared to the 2020 annual average [21][30] Business Line Data and Key Metrics Changes - Production in Q1 averaged 27,100 barrels equivalent per day, which is 2% higher than Q4 2020 [16] - California oil production, constituting 81% of total production, increased by 3% quarter-on-quarter [16] - The company completed 46 workovers in Q1 and plans to complete about 200 throughout the year [41] Market Data and Key Metrics Changes - Brent oil prices averaged $61 per barrel in Q1 [29] - The company expects almost 90% of total production in 2021 to be oil [14] Company Strategy and Development Direction - The company is focused on optimizing its current asset base and generating growth from oil-rich conventional plays [14] - Plans to increase scale through M&A and has quantified over three decades of inventory in sandstone reservoirs [13] - The company aims to eliminate foreign oil imports into California to boost local employment and tax revenues [75] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to manage costs and maintain production levels despite regulatory challenges [9][10] - The company is actively monitoring legislative developments and believes there are currently no significant oil production-impacting legislations in process [47] - Management expects production to remain flat in Q2 but anticipates growth in the second half of the year [33][41] Other Important Information - The company restarted its dividend in Q1 and expects it to continue and grow at current price levels [8] - The company is committed to environmental, social, and governance (ESG) initiatives, focusing on measurable and achievable goals [35][36] Q&A Session Summary Question: Could you provide more detail on second quarter production? - Management expects Q2 production to remain flat due to planned downtime and workover activities, with growth anticipated in Q3 [39] Question: Any updates on the Lawrence Livermore study and potential regulatory impacts? - Management indicated active discussions with CalGEM regarding permitting and does not foresee significant impacts from current regulations [43][46] Question: Is M&A still a focus for the company in 2021? - Management confirmed that finding scale through M&A remains a top priority and they are actively seeking opportunities [48] Question: Clarification on the impact of Governor Newsom's proposal on operations? - Management clarified that the proposal does not impact their sandstone operations, which are the bulk of their plans [51][52] Question: Insights on operating expenses and workover costs? - Management noted that workovers are primarily capitalized and that the increase in lease operating expenses is largely due to unhedged fuel costs [61][62]

| --- | --- | --- | --- | --- | |-----------------------|--------------------------------------------------------|-------|-------|-------| | FOCUSED | | | | | | A Responsible | | | | | | California | | | | | | Energy Partner | | | | | | | | | | | | MAY 2021 | Scan with phone camera to browse to IR Reports Page | | | | | INVESTOR PRESENTATION | | | | | | | | | | | 1 Disclaimer The information in this presentation includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1 ...

Part I – Financial Information [Item 1. Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the company's unaudited condensed consolidated financial statements for Q1 2021, including Balance Sheets, Statements of Operations, Stockholders' Equity, and Cash Flows, with notes on accounting, debt, derivatives, and equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Total Current Assets** | $178,041 | $154,491 | | **Total Assets** | $1,436,831 | $1,419,810 | | **Total Current Liabilities** | $212,565 | $175,306 | | **Long-term Debt** | $393,741 | $393,480 | | **Total Liabilities** | $745,037 | $705,774 | | **Total Stockholders' Equity** | $691,794 | $714,036 | Condensed Consolidated Statements of Operations Highlights (in thousands) | Account | Three Months Ended Mar 31, 2021 | Three Months Ended Mar 31, 2020 | | :--- | :--- | :--- | | **Total Revenues and Other** | $94,201 | $339,265 | | **Total Expenses and Other** | $107,271 | $419,290 | | **Loss Before Income Taxes** | $(21,698) | $(88,951) | | **Net Loss** | $(21,322) | $(115,300) | | **Diluted Loss Per Share** | $(0.27) | $(1.45) | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Three Months Ended Mar 31, 2021 | Three Months Ended Mar 31, 2020 | | :--- | :--- | :--- | | **Net Cash Provided by Operating Activities** | $38,430 | $44,483 | | **Net Cash Used in Investing Activities** | $(19,937) | $(43,038) | | **Net Cash Used in Financing Activities** | $(1,688) | $(1,444) | | **Net Increase in Cash** | $16,805 | $1 | - The company's debt consists of a Revolving Credit Facility (RBL Facility) and **$400 million** in 7.0% senior unsecured notes due 2026, with no borrowings outstanding under the RBL Facility as of March 31, 2021, which had an available capacity of approximately **$193 million**[26](index=26&type=chunk)[35](index=35&type=chunk) - The company utilizes derivative instruments, primarily swaps, to hedge a portion of its forecasted oil and gas production and natural gas purchases to reduce exposure to price fluctuations[39](index=39&type=chunk) - For Q1 2021, the Board of Directors approved a regular dividend of **$0.04 per share**, and the company also has a stock repurchase program with **$50 million** remaining authorization and a bond repurchase program for up to **$75 million** of its 2026 Notes[57](index=57&type=chunk)[58](index=58&type=chunk)[36](index=36&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's Q1 2021 financial condition and operational results, covering the business environment, operating results analysis, liquidity, capital resources, and non-GAAP financial measure reconciliations [Business Environment, Market Conditions and Outlook](index=18&type=page&id=Business%20Environment,%20Market%20Conditions%20and%20Outlook) Management discusses the impact of COVID-19, oil price recovery, Winter Storm Uri's effect on natural gas prices, and the evolving regulatory environment in California, including new rules on wells and potential extraction restrictions - Oil prices improved in early 2021, but the business environment remains uncertain due to the ongoing COVID-19 pandemic and actions by OPEC+[91](index=91&type=chunk)[93](index=93&type=chunk) Average Benchmark Prices | Benchmark | Q1 2021 | Q4 2020 | Q1 2020 | | :--- | :--- | :--- | :--- | | Oil (bbl) – Brent | $61.32 | $45.26 | $50.82 | | Natural gas (mmbtu) – Kern, Delivered | $7.99 | $3.38 | $1.97 | - Winter Storm Uri in February 2021 caused a dramatic increase in natural gas demand and prices, with the Kern, Delivered Index briefly exceeding **$100 per mmbtu**[98](index=98&type=chunk) - The company is subject to increasingly stringent regulations in California, including new rules for idle wells, underground injection control (UIC), and executive orders aiming to phase out fossil fuels and establish setbacks for oil and gas operations[109](index=109&type=chunk)[110](index=110&type=chunk)[116](index=116&type=chunk) [Results of Operations](index=24&type=page&id=Results%20of%20Operations) This section analyzes the company's operational and financial results, highlighting increased production, significant revenue growth in Q1 2021 versus Q4 2020 due to higher commodity prices, and a substantial negative swing in derivative results compared to Q1 2020 Average Daily Production (mboe/d) | Period | Q1 2021 | Q4 2020 | Q1 2020 | | :--- | :--- | :--- | :--- | | **Total (mboe/d)** | 27.1 | 26.6 | 30.8 | - **Q1 2021 vs Q4 2020:** - Oil, gas, and NGL sales increased by **$41 million (44%)** due to higher unhedged prices[147](index=147&type=chunk)[148](index=148&type=chunk) - Electricity sales increased **50%** due to higher natural gas prices from Winter Storm Uri - Total operating expenses per boe (hedged basis) decreased **24%** to **$14.40**, driven by favorable gas purchase hedge settlements[156](index=156&type=chunk) - **Q1 2021 vs Q1 2020:** - Oil, gas, and NGL sales increased by **$13 million (11%)** due to higher prices, partially offset by lower volumes[172](index=172&type=chunk) - A significant swing in derivative results occurred, from a **$211.2 million gain** in Q1 2020 to a **$53.5 million loss** in Q1 2021[174](index=174&type=chunk) - Total operating expenses per boe (hedged basis) decreased **27%** to **$14.40**, largely due to favorable gas purchase hedge settlements[181](index=181&type=chunk) [Liquidity and Capital Resources](index=39&type=page&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2021, the company had **$292 million** in liquidity, with 2021 capital expenditures of **$120-$130 million** expected to be funded by operations, alongside details on its RBL facility, hedging strategy, and capital return programs - Total liquidity was **$292 million** as of March 31, 2021, consisting of **$99 million** in cash and **$193 million** in RBL Facility availability[211](index=211&type=chunk) - The 2021 capital expenditure budget is planned at **$120 to $130 million**, expected to be funded by cash flow from operations[126](index=126&type=chunk)[211](index=211&type=chunk) Hedging Position as of March 31, 2021 | Instrument | Period | Hedged Volume | Weighted-Average Price | | :--- | :--- | :--- | :--- | | **Fixed Price Oil Swaps (Brent)** | Q2-Q4 2021 | 4,364 mbbls | ~$47.50/bbl | | **Fixed Price Oil Swaps (Brent)** | FY 2022 | 1,095 mbbls | $60.00/bbl | | **Fixed Price Gas Purchase Swaps** | Q2-Q4 2021 | 11,692,500 mmbtu | ~$2.85/mmbtu | - The company paid a **$0.04 per share** dividend for Q1 2021 and declared the same for Q2 2021, with **$50 million** remaining on its stock repurchase authorization and **$75 million** on its bond repurchase authorization, and no repurchases made under either program in Q1 2021[224](index=224&type=chunk)[225](index=225&type=chunk)[226](index=226&type=chunk) [Non-GAAP Financial Measures](index=36&type=page&id=Non-GAAP%20Financial%20Measures) This section defines and reconciles non-GAAP financial measures, including Adjusted EBITDA, Levered Free Cash Flow, and Adjusted General and Administrative Expenses, to their most directly comparable GAAP counterparts Adjusted EBITDA and Levered Free Cash Flow Reconciliation (in thousands) | Metric | Q1 2021 | Q4 2020 | Q1 2020 | | :--- | :--- | :--- | :--- | | Net Loss | $(21,322) | $(63,830) | $(115,300) | | **Adjusted EBITDA** | **$51,829** | **$53,682** | **$71,800** | | Capital Expenditures | $(23,569) | $(14,159) | $(39,703) | | Interest Expense | $(8,485) | $(8,308) | $(8,920) | | Cash Dividends Declared | $(3,474) | $0 | $(9,564) | | **Levered Free Cash Flow** | **$16,301** | **$31,215** | **$13,613** | Adjusted Net Income Reconciliation (in thousands) | Metric | Q1 2021 | Q4 2020 | Q1 2020 | | :--- | :--- | :--- | :--- | | Net Loss | $(21,322) | $(63,830) | $(115,300) | | **Adjusted Net Income** | **$5,627** | **$8,580** | **$18,175** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk stems from volatile commodity prices, mitigated by hedging strategies, with its hedge portfolio showing a **$47 million** net liability as of March 31, 2021, subject to sensitivity analysis for price fluctuations - The most significant market risk is from unpredictable and volatile energy prices[261](index=261&type=chunk) - As of March 31, 2021, the fair value of the company's hedge positions was a net liability of approximately **$47 million**[264](index=264&type=chunk) - A **10% increase** in oil and natural gas index prices would result in a net liability of approximately **$89 million**; a **10% decrease** would result in a net liability of approximately **$29 million**[264](index=264&type=chunk) [Item 4. Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's disclosure controls and procedures were effective as of March 31, 2021, with no material changes to internal control over financial reporting during Q1 2021 - The President and CEO and the Executive VP and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2021[266](index=266&type=chunk) - There were no material changes to the company's internal control over financial reporting during the first quarter of 2021[267](index=267&type=chunk) Part II – Other Information [Item 1. Legal Proceedings](index=49&type=section&id=Item%201.%20Legal%20Proceedings) This section discloses the company's involvement in legal proceedings, including a securities class action lawsuit and a **$409,650** Notice of Violation from the San Joaquin Valley Air Pollution Control District - A securities class action lawsuit was filed against the company and certain officers, alleging false and misleading statements, which the company disputes and intends to defend vigorously[270](index=270&type=chunk)[271](index=271&type=chunk) - The company received a Notice of Violation from the San Joaquin Valley Air Pollution Control District with a proposed civil penalty of **$409,650**, which it is currently negotiating[272](index=272&type=chunk) [Item 1A. Risk Factors](index=49&type=section&id=Item%201A.%20Risk%20Factors) This section notes no material changes to previously disclosed risk factors and directs readers to the comprehensive discussion in the company's most recent Annual Report on Form 10-K - The company is subject to various risks and uncertainties, which are discussed in the "Item 1A. Risk Factors" section of its most recent Annual Report[274](index=274&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds and Issuer Purchases of Equity Securities](index=50&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds%20and%20Issuer%20Purchases%20of%20Equity%20Securities) This section updates on the company's stock repurchase program, noting **$50 million** remaining authorization and no repurchases made during Q1 2021 - The company has a stock repurchase program with approximately **$50 million** remaining authorized for purchases[276](index=276&type=chunk) - No shares were repurchased under the program during the first quarter of 2021[276](index=276&type=chunk) [Item 6. Exhibits](index=51&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including corporate governance documents, executive compensation agreements, CEO/CFO certifications, and Inline XBRL data files - The report includes various exhibits, such as the CEO/CFO certifications (Section 302 and 906) and Inline XBRL documents[278](index=278&type=chunk)

| --- | --- | --- | --- | --- | |-----------------------|---------------------------------------|-------|-------|-------| | FOCUSED | | | | | | A Responsible | | | | | | California | | | | | | Energy Partner | | | | | | | | | | | | FEBRUARY 2021 | Scan with phone camera to browse to | | | | | INVESTOR PRESENTATION | IR Reports Page | | | | | | | | | | 1 Disclaimer The information in this presentation includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Sect ...

Financial Data and Key Metrics Changes - In 2020, the company generated $131 million in levered free cash flow and ended the year with over $100 million in cash and no debt [8][28] - Operating expenses decreased, with non-energy OpEx down about 9% year-on-year and energy OpEx down about 13% [8][19] - The average operating expense in 2020 was $18.51 per BOE, a $1.81 improvement compared to 2019 [19] Business Line Data and Key Metrics Changes - California oil production, which constitutes about 80% of total production, increased by 1.3% in 2020 compared to 2019 [17] - The average production in Q4 was 26,600 barrels a day, with an exit rate of nearly 27,000 barrels a day [18] - The company plans to keep production flat year-on-year in 2021, with a focus on workover activities [12][23] Market Data and Key Metrics Changes - The company has hedged approximately 19,000 barrels a day at nearly $46 per barrel for the first half of 2021 and 14,000 barrels in the second half [33] - Current oil prices are well above $50 per barrel, which supports the decision to reinstate a quarterly dividend of $0.04 per share [11][35] Company Strategy and Development Direction - The growth strategy focuses on conventional low corporate decline assets with strong cash flow [14] - The capital budget for 2021 is set between $120 million and $130 million, emphasizing workover activities and drilling approximately 185 development wells [13][23] - The company is committed to its obligations under California's Idle Well Management plan, with plans to abandon approximately 280 wells in 2021 [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in entering 2021 in a strong position despite challenges from the COVID-19 pandemic and OPEC+ oversupply [7] - The company anticipates a substantial improvement in reserves for 2021 due to higher current strip prices compared to SEC pricing used for 2020 [31] - Management is focused on increasing scale and returning value to shareholders through dividends and capital efficiency [11][35] Other Important Information - The company achieved a total recordable incident rate (TRIR) of 0.5 in 2020, the lowest rate ever, significantly below the U.S. average of 3.0 [10] - The Lawrence Livermore technical study on high-pressure cyclic steam operations is complete and under review, with expectations for new permit approvals [25] Q&A Session Summary Question: M&A priorities and potential targets - Management confirmed they have identified potential targets and are focused on scale, but execution remains a priority [41][43] Question: Legislative session in California regarding fracking - Management acknowledged the proposed bill and indicated it is expected to be amended significantly during the legislative process [44] Question: Thermal diatomite development attractiveness - Management stated that thermal diatomite development is attractive but currently not included in 2021 plans, with potential for 2022 [48] Question: Reserves numbers and PDP drop - Management explained that the drop in reserves was primarily due to SEC pricing rules and that they expect a recovery as prices improve [66][68] Question: Debt structure and refinancing opportunities - Management indicated that the current unsecured debt at 7% is still attractive, and they prefer to keep the balance sheet simple [62]