Berry (bry)(US:BRY)2021-02-24 17:23Financial 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]