Berry (bry)(BRY) - 2025 Q3 - Quarterly Report

Merger and Acquisition - Berry Corp. entered into a Merger Agreement with California Resources Corporation, with an exchange ratio of 0.0718 shares of CRC for each share of Berry Corp. common stock[22] - The Merger is expected to close in the first quarter of 2026, pending shareholder and regulatory approvals[22] - Berry Corp. incurred approximately $3 million in transaction costs related to the Merger for the three and nine months ended September 30, 2025[23] Debt and Liquidity - As of September 30, 2025, Berry Corp. had approximately $416 million of borrowings outstanding under the 2024 Term Loan[44] - The 2024 Term Loan has an initial principal amount of $450 million, with a maturity date of December 24, 2027[36] - The interest rate for the 2024 Term Loan is either a base rate plus an applicable margin of 6.50% or a term SOFR reference rate plus an applicable margin of 7.50%[39] - Berry Corp. is required to maintain a minimum liquidity of $25 million and a total net leverage ratio not exceeding 2.5 to 1.0 under the 2024 Term Loan[40] - The 2024 Revolver provides a revolving credit facility of up to $500 million, with a borrowing base of $95 million as of September 30, 2025[45] - As of September 30, 2025, the company had no outstanding borrowings, $14 million in letters of credit, and approximately $49 million of available borrowing capacity under the 2024 Revolver[54] - The 2024 Revolver includes financial covenants such as a minimum liquidity requirement of $25 million and a total net leverage ratio not exceeding 2.5 to 1.0[49] - The company must ensure that the Consolidated Cash Balance does not exceed $35 million when borrowing[50] - The 2024 Revolver is secured by a first lien on substantially all assets of the company and its wholly owned material subsidiaries[53] Commodity Hedging - The company is required to maintain commodity hedges covering at least 75% of projected crude oil production from PDP reserves for the first 24 months following December 24, 2024[56] - The weighted-average price for crude oil production hedges in Q4 2025 is $74.69 per barrel, with a hedged volume of 1,610,000 barrels[67] - The company has added collars for 2025 to 2028, with calls ranging from $68.75 to $70.96 per barrel and a floor of $60.00 per barrel[68] - As of September 30, 2025, the total net fair value of commodity derivatives presented in the balance sheet was $44,585,000, compared to $8,520,000 as of December 31, 2024[69] - Realized gains on oil sales derivatives for the three months ended September 30, 2025, were $10,282,000, while realized losses on natural gas purchase derivatives were $6,200,000, resulting in total realized gains of $4,082,000[71] - Unrealized losses on oil sales derivatives for the three months ended September 30, 2025, amounted to $14,948,000, leading to total unrealized losses of $24,797,000 for the same period[71] Financial Performance - For the three months ended September 30, 2025, total revenues were $151.1 million, a decrease of 42.3% compared to $261.7 million for the same period in 2024[112] - Oil sales for the three months ended September 30, 2025, were $124.9 million, down 17.7% from $151.7 million in the prior year[112] - The company reported a net loss of $26.0 million for the three months ended September 30, 2025, compared to a net income of $69.9 million for the same period in 2024[108] - Basic loss per share for the three months ended September 30, 2025, was $(0.34), compared to earnings per share of $0.91 in the same period of 2024[108] - For the nine months ended September 30, 2025, total revenues were $543,871,000, compared to $1,000,000,000 in the same period of 2024, indicating a decrease of approximately 45.6%[132][134] - The company reported a loss before income taxes of $124,057,000 for the nine months ended September 30, 2025[134] - The company experienced a segment loss of $21,088,000 for the nine months ended September 30, 2025, compared to a profit in the same period of 2024[134] Capital Expenditures and Investments - Capital expenditures for the three months ended September 30, 2025, totaled $17,021,000, compared to $25,874,000 in 2024, a reduction of about 34.1%[126][130] - The company executed a farm-in agreement for a 30% working interest in a horizontal well in the Uinta Basin, with expected capital expenditures of approximately $3 million[101] - Capital expenditures for the nine months were $85,135,000, with $81,945,000 allocated to E&P and $2,298,000 to Well Servicing[138] Shareholder Returns - The company declared cash dividends of $0.03 per share in March, May, August, and November 2025, with total dividends expected to be paid in December 2025[82] - As of September 30, 2025, the company had a remaining total share repurchase authority of $190 million, with no shares repurchased during the nine months ended September 30, 2025[84] Legal and Regulatory Matters - The company is currently unable to estimate the probability of outcomes related to pending legal proceedings and the range of reasonably possible losses[80] - The company has limited its exposure to any single counterparty in derivative instruments to minimize credit risk[70] Market Conditions and Expectations - The company expects the adoption of new accounting standards to impact disclosures but not results of operations or cash flows[27][28] - The One Big Beautiful Bill Act is expected to result in increased tax deductions and credits for Berry Corp.[30] - Management expects energy prices to remain unpredictable and potentially volatile, impacting revenues and cash flows[368]