Hedging | Capital Markets

Berry's Cali Ops Fuel Production Growth in Q3; Bolsters Hedge Position

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Berry Petroleum Corp. reported preliminary third quarter production results in line with its full-year production guidance.

Q3 Production Growth Fueled by California Ops

• Third quarter production of 29,600 boe/d up 7.7% compared to last quarter

• Third quarter September exit rate up 15.8% compared to the June exit rate

• California production of 22,900 bbl/day for the quarter up more than 10.4% compared to last quarter and 17.7% year-over-year

• Layered on additional 2019, 2020 and 2021 oil hedges making our oil production coverage more than 60% for the remainder of 2019 and more than 50% for 2020

• No changes to annual guidance for production or capital spending

Trem Smith, Berry's chairman of the board and CEO, said: "The production growth we have seen in the third quarter is in line with our plan and validates the potential of our quality assets. Our production performance reinforces our confidence that our fields respond to capital and have a long future of manageable, high-returning, low-risk oil production growth, with a well inventory that we believe is at least 20 years. Berry's management team's focus since 2017 has been on creating and delivering shareholder value. Berry is committed to protecting the base, growing production at a deliberate long-term rate, returning capital to our shareholders, and doing it all out of levered free cash flow throughout the cycle."

Production Details

Berry's third quarter production growth is in line with the plan and prior quarterly statements. This growth also highlights Berry's strong capital efficiency with a 7.9% and 17.7% increase in production compared to the third quarter of 2018 for the Company and California, respectively. The monthly production exit rate for the Company's third quarter was 15.8% higher in September than the June exit rate for the prior quarter.

Preliminary total Company production for the third quarter ended September 30, 2019 averaged 29,600 boe/d with the month of September averaging 31,700 boe/d, compared to June's average of 27,400. The month of September production is nearly 88% oil, an increase from 86% in the second quarter of 2019.

This improvement is primarily attributed to Berry's capital deployment to grow its California production. Preliminary California production, consisting of 100% Brent-based oil, for the quarter is approximately 22,900 bbl/d, an increase of 10.4% compared with last quarter and 17.7% with the third quarter 2018.

Increased Hedges

Berry also increased its hedge position as highlighted in the table below.

Full-year production and capital spending for 2019 are expected to be at the mid-point of Berry's original guidance of 28,000 to 31,000 boe/day and $195 million to $225 million, respectively.