Berry (bry)(US:BRY)2021-05-09 06:34Financial 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]