Berry (bry)(US:BRY)2021-11-03 19:23Financial 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]