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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the fiscal year ended December 31, 1995
Commission file number 1-9735
BERRY PETROLEUM COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 77-0079387
(State of incorporation or organization) (I.R.S. Employer Identification Number)
28700 Hovey Hills Road
Taft, California 93268
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (805) 769-8811
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Class A Common Stock, $.01 par value New York Stock Exchange
(including associated stock purchase rights)
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
As of March 4, 1996, the registrant had 21,033,055 shares of Class A
Common Stock outstanding and the aggregate market value of the voting stock
held by nonaffiliates was approximately $112,778,000. This calculation is
based on the closing price of the shares on the New York Stock Exchange on
March 4, 1996 of $9.625. The registrant also had 898,892 shares of Class B
Stock outstanding on March 4, 1996, all of which is held by an affiliate of
the registrant.
DOCUMENTS INCORPORATED BY REFERENCE
Part III is incorporated by reference from the registrant's definitive
Proxy Statement for its Annual Meeting of Shareholders to be filed, pursuant to
Regulation 14A, no later than 120 days after the close of the registrant's
fiscal year.
BERRY PETROLEUM COMPANY
TABLE OF CONTENTS
PART I
Items 1
and 2. Business and Properties. . . . . . . . . . . . . . . . . . . . .3
Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . .9
Item 4. Submission of Matters to a Vote of Security Holders. . . . . . 9
Executive Officers . . . . . . . . . . . . . . . . . . . . . . 10
PART II
Item 5. Market for the Registrant's Common Equity and
Related Stockholder Matters . . . . . . . . . . . . . . . . . 11
Item 6. Selected Financial Data. . . . . . . . . . . . . . . . . . . . 12
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . . 13
Item 8. Financial Statements and Supplementary Data. . . . . . . . . . 16
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure . . . . . . . . . . . 34
PART III
Item 10. Directors and Executive Officers of the Registrant . . . . . . 34
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . 34
Item 12. Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . . . . . . . . . . . . 34
Item 13. Certain Relationships and Related Transactions . . . . . . . . 34
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . 35
2
Part I
Items 1 and 2. Business and Properties
Introduction
Berry Petroleum Company ("Berry" or "Company"), is an independent energy
company engaged in the business of acquisition, exploration, exploitation,
development, production and marketing of crude oil and natural gas. The
Company was incorporated in Delaware in 1985 and has been a publicly held
company since 1987. Berry's principal reserves and producing properties are
located in Kern County and Ventura County, California. Information contained
in this report on Form 10-K reflects the business of the Company during the
year ended December 31, 1995. The Company's corporate headquarters are located
on its Berry and Ewing lease in the southern portion of the Midway-Sunset
field, and management believes the current facilities are adequate.
The Company's mission is to enhance shareholder value and achieve real
asset growth. To achieve this, Berry's corporate strategy is to acquire
primarily proved reserves with exploitation potential and to increase its
proved reserves and production through further development of its existing
properties by application of enhanced oil recovery (EOR) methods, advanced
reservoir management and developmental drilling. All of the Company's reserves
are located in the United States, and the Company continues to focus on
opportunities in California and several select basins in the United States.
While the Company has substantial working capital available for acquisitions,
the Company will, as necessary, consider long-term debt or issuance of capital
stock to finance future purchases.
Approximately 89% of the Company's proved reserves are located in the
Midway-Sunset field in the San Joaquin Valley in California. The majority of
these reserves are on properties owned in fee. Net production from this field
in 1995 was 3.0 million barrels of oil equivalent (BOE) or 87% of the Company's
total 1995 BOE production. The Midway-Sunset field contains predominantly
heavy crude oil (under 20 degrees API gravity), the production of which depends
substantially on steam injection. Berry utilizes primary, cyclic steaming and
steam flooding recovery methods in this field. Production from the Montalvo
field in Ventura County, California, which represents approximately 8% of the
proved reserves, utilizes primary recovery methods.
Berry operates all of its principal oil producing properties. Field
operations include the initial recovery of the crude oil and its transport
through treating facilities into storage tanks. After the treating process is
completed, which includes removal of water and solids by mechanical, thermal
and chemical processes, the crude oil is metered through L.A.C.T. (Lease
Automatic Custody Transfer) facilities and transferred into crude oil pipelines
owned by other oil companies.
Revenues
The percentage of revenues by source for the prior three years is as
follows:
1995 1994 1993
Sales of oil and gas 89% 95% 97%
Interest and other income 11% 5% 3%
See Berry's Statements of Operations and accompanying Notes thereto.
3
Marketing
The Company believes the market for its crude oil differs substantially
from the oil market in the remainder of the country. Two key factors are
responsible for lower crude prices in California versus the Mid-Continent. The
first is that the Company's crude oil is primarily lower gravity crude oil and
must be heated or blended for transport to refineries. In general, lower
gravity crude oil results in lower yields of light products, such as gasoline
and kerosene, in low conversion refineries. Additional processing, such as
coking and catalytic cracking, increases light product yields, but at a higher
capital cost per barrel of crude oil refined. The refiner or crude oil buyer
generally pays lower prices for such crude oil, as reflected in lower posted
and spot prices. The second factor, which may become less of a factor now that
Congress passed and the President signed Senate Bill S.395 to allow the export
of Alaskan North Slope (ANS) crude oil to foreign countries, was that all ANS
crude oil production was required to go to or by the West Coast which reduced
the price of both ANS and California crude oil. This federally mandated policy
prevented free market prices on the West Coast, making California heavy crude
price variations inconsistent with prevailing changes in market prices in other
parts of the country. The Company believes the repeal of the ban of ANS
exports may allow the Company and other West Coast producers to receive a fair
market price for their crude oil. In addition, increased refining capacity of
heavy crude oil has strengthened prices of heavy crude oil on the West Coast.
To provide additional market flexibility, the Company owns a blending
facility located near its homebase properties. The Company suspended the
blending operations in December 1993 due to the high cost of natural gasoline,
the improved demand for the Company's 13 degree heavy crude oil, and the
narrowing margin between the posted price of the blended crude oil and the
heavy crude oil. Up to approximately 5,000 barrels per day of the Company's
heavy crude oil can be blended with lighter crude oils and natural gasolines to
produce a blended crude oil of approximately 27 degree API gravity. At times,
this blending operation may allow the Company to improve the profit margin on
the sale of its heavy crude oil. Blending also allows the Company the option
to ship through common carrier pipelines and sell directly to refiners in the
Los Angeles basin, the San Francisco Bay area and the Mid-Continent. No
blending occurred during 1995 or 1994. The Company has the ability to resume
blending operations if warranted by market conditions.
Environmental and Other Regulations
The operations of Berry are affected in varying degrees by federal,
state, regional and local laws and regulations, including laws governing
allowable rates of production, well spacing, air emissions, water discharges,
endangered species, marketing, pricing, taxes and other laws relating to the
petroleum industry. Berry is further affected by changes in such laws and by
constantly changing administrative regulations.
Berry, as an owner and operator of oil and gas properties, is subject to
various federal, state, regional and local laws and regulations relating to
discharge of materials into, and protection of, the environment. These laws
and regulations may, among other things, impose liabilities on the owner or the
lessee in the case of leased properties for the cost of pollution clean-up
resulting from operations, subject the owner or lessee to liability for
pollution damages, require suspension or cessation of operations in affected
areas, and impose restrictions on the injection of liquids into subsurface
aquifers that may contaminate groundwater. Such regulation has increased the
length of time and cost of planning, designing, drilling, installing, operating
and abandoning the Company's oil and gas wells and other treating facilities.
The Company estimates that it spends approximately $.3 million on
technical and managerial time annually to comply with environmental
regulations. In addition, the Company spent approximately $.5 million for
capital projects, repairs and maintenance, and permits related to environmental
control facilities in 1995 and anticipates spending approximately $.5 million
for similar expenditures in 1996, with additional expenditures required in
future years. The Company believes these are necessary business costs in
the domestic oil and gas industry. Although environmental requirements do have
a substantial
4
impact upon the energy industry, generally these requirements do not appear
to affect Berry to any greater or lesser extent than other companies in
California and in the domestic industry as a whole. In most cases, foreign
produced crude oil enjoys a competitive advantage since foreign environmental
regulations of oil producing regions are not nearly as stringent or
comprehensive as in the United States and particularly California.
Berry's properties in the Montalvo field have greater environmental
risks due to their location near the Pacific Ocean. In Berry's case, a small
oil spill that endangers tidal waters could immediately involve significant
clean-up, regulatory investigation and penalties, any or all of which could
subject the Company to a significant financial burden. In addition to
purchasing insurance to cover certain environmental risks, the Company
mitigates this exposure by the development and implementation of emergency
response and major oil spill prevention and contingency plans. The Company
is also a contract associate member of Clean Seas, an organization with
significant experience and resources to contain and minimize the effects of
an oil spill.
The Company experienced an oil spill due to a ruptured pipe on its West
Montalvo field in December 1993 which required cleanup of the area directly
around the pipe, an agricultural runoff pond and the nearby beach and ocean.
Although 100% of the Montalvo field's wells and facilities are onshore, part of
the spilled crude oil was pumped into the ocean from the agricultural runoff
pond. The Company has initiated procedures and made operational improvements
to reduce the likelihood of a similar event. A regulatory investigation is
proceeding and the Company is potentially subject to fines and penalties (see
Item 3. "Legal Proceedings" and Note 12 to the Company's financial statements).
The Company is not aware of any unrecorded environmental claims existing
at December 31, 1995 which would have a material impact on the Company's
financial condition or results of operations.
Competition
The oil and gas industry is highly competitive. As an independent
producer, the Company does not own any refining or retail outlets. It has
little control over the price it receives for its crude oil, and higher costs,
fees and taxes assessed at the producer level cannot necessarily be passed
on to the Company's customers. In acquisition activities, significant
competition exists since integrated companies, independent companies and
individual producers and operators are active bidders for desirable oil and
gas properties. Although many of these competitors have greater financial
and other resources than the Company, Management believes that it is in a
position to compete effectively due to its low cost structure and strong
balance sheet.
Employees
The Company had 86 employees at December 31, 1995.
Oil and Gas Properties
The Company spent a total of $.5 million on property acquisitions, $14.0
million on development programs (including $5.2 million on the purchase of the
remaining 55% interest in the cogeneration facility) and $1.4 million on
exploration programs in 1995. The Company's 1996 budget for capital
expenditures on development and exploration activities is $9.4 million of which
99% is earmarked for development. As these activities are influenced by
numerous factors, many of which are outside the Company's control, the actual
expenditure level may vary considerably from budgeted levels.
In 1995, the Company sold its Rincon properties which comprised 1,631
acres and 15 producing wells, representing approximately 3% of its net daily
production and 2% of its reserves.
The principal oil and gas producing properties of Berry are located in
Kern County and Ventura County, California.
5
Development
Homebase - Berry owns and operates working interests in thirteen
properties containing 905 acres located in the southern portion of the Midway-
Sunset field. The Company estimates these properties account for approximately
76% of the Company's proved oil and gas reserves and approximately 78% of its
current daily production. The wells produce from an average depth of
approximately 1200'. These properties rely on thermally enhanced oil recovery
methods, primarily cyclic steaming. Nine of the thirteen properties are owned
in fee and are not burdened by royalties. These nine properties accounted for
approximately 73% of Berry's average daily production during 1995 and represent
70% of the Company's proved oil and gas reserves. Berry has a 100% working
interest in all the Midway-Sunset properties it operates except one, where the
Company owns a 96.875% working interest.
During 1995, a total of 41 development wells were drilled. The
objective of this work was to maintain productive capacity and develop
additional reserves in the Company's single largest asset. In December 1994,
the Company purchased the Alpine property and in 1995, 10 development wells
were drilled to exploit the undeveloped reserves of this property. On the
Ethel D property, two wells were drilled and followup potential was
established.
As of January 1, 1995, the Company owned a 45% interest in the
cogeneration plant located on the homebase properties. The purchase of the
remaining 55% interest was completed in August of 1995 for a total cost of
approximately $5.2 million. Total steam cost savings through December 1995
have exceeded $3 million due to favorable natural gas prices, operating
efficiences and other factors existing in the latter part of 1995. The
facility produces approximately 12,500 bbls/day of steam, all of which is
used in the steaming operations of the homebase properties.
Fairfield - Berry owns and operates approximately 1,824 acres in the
northern portion of the Midway-Sunset field which account for approximately 13%
of the Company's proved oil and gas reserves and approximately 9% of its daily
production. These properties rely on thermally enhanced oil recovery methods,
primarily cyclic steaming and steam flooding. Berry's interests consist of four
fee properties comprising 1,009 acres and seven leases comprising 815 acres.
The wells produce from an average depth of approximately 1200'.
During 1995, the Company drilled two wells in the Potter sand and one
well in the Mya sand reservoir. In addition, one evaluation well was drilled
and abandoned. The Mya sand cyclic steam program was successful with four
wells returned to production. An adjacent 480 acres, comprising the BLM
Sec 12 lease, was purchased in 1995 primarily for Mya development potential.
Montalvo - Berry owns 100% of the working interest in six leases in
Ventura County, California in the West Montalvo field. Two of the six leases
are owned by the State of California. The Company estimates current proved
reserves from West Montalvo account for approximately 8% of Berry's proved oil
and gas reserves. Total production from these leases, containing 8,563 acres,
represents approximately 10% of Berry's total current daily oil and gas
production. The wells produce from an average depth of approximately 12,500'.
Development, redrill and remedial well activities were postponed in 1994
while the Company assessed and implemented facility improvements. Facility
improvements were completed and five wells were reworked and returned to
production in 1995.
6
Exploration/Outside Operated
The Company participated in the drilling of four exploratory wells in
1995 in which it owned between 12.5% and 18.5% working interest in each well.
The Company also participated in two workovers on outside operated properties.
Texas - In the Tyler prospect, the Company drilled the M.L. Collins #1
well to 16,500' and encountered gas shows in three Wilcox intervals between
13,000' and total depth. Extensive testing of the three intervals did not
yield commercial production and the cost was written off as a dry hole in 1995.
The Company is presently attempting to farm out its remaining interest in the
prospect. The Company farmed out its interest in the remaining acreage in the
Lexi prospect.
Louisiana - The Earl Chauvin #1 well, a 1993 discovery in the East Lake
Boudreaux field, began producing water in the first quarter of 1995. A
workover was completed during the year that was successful in bringing the well
back on production, but at a much lower rate.
Nevada - In 1995, three exploratory wells were drilled and abandoned as
dry holes. The Company has one additional prospect well to drill to fulfill
its commitment in a six well multicompany exploratory program.
Oil and Gas Reserves
Reserve Reports - The Company engaged DeGolyer and MacNaughton to
estimate the proved oil and gas reserves of the Company for the years ended
December 31, 1995 and 1994 for all of the Company's properties and for the year
ended December 31, 1993 for the Midway-Sunset field and certain properties
located in other fields. The reserves for 1993 for the Rincon and Montalvo
fields were prepared by Babson and Sheppard. These two firms (the Petroleum
Engineers) were also asked to estimate the future net revenues to be derived
from such properties. Each of the Petroleum Engineers is an independent oil
and gas reserve engineering firm. In preparing their respective reports for
December 31, 1995, 1994 or 1993, each Petroleum Engineer reviewed and examined
such geological, economic, engineering and other data provided by the Company
as considered necessary under the circumstances applicable to each reserve
report. Each Petroleum Engineer also examined the reasonableness of certain
economic assumptions regarding estimated operating and development costs and
recovery rates in light of economic circumstances as of December 31, 1995,
1994 and 1993. For the Company's operated properties, reserve estimates are
filed annually with the U.S. Department of Energy. Refer to the Supplemental
information about oil and gas producing activities (unaudited) for the
Company's oil and gas reserve disclosures.
Production
The following table sets forth certain information regarding production
for the years ended December 31, as indicated:
1995 1994 1993
Net Annual Production(1):
Oil (Mbbls) 3,277 3,250 3,617
Gas (Mmcf) 611 793 771
Average Sales Price:
Oil (per bbl) $13.56 $11.61 $11.43
Gas (per mcf) 1.50 1.87 1.96
Average Production Cost (per BOE)(2) 5.41 6.28 6.35
(1) Net production represents production owned by Berry and produced to
its interest, less royalty and other similar interests. All oil
and gas produced, other than lease fuel needs, is sold at the well
site. Berry does not refine any of its production.
(2) Equivalent oil and gas information is at a ratio of 6,000 cubic
feet of natural gas to one barrel (bbl) of oil.
7
Acreage and Wells
At December 31, 1995, the Company's properties accounted for the
following developed and undeveloped acres:
Developed Acres Undeveloped Acres
Gross Net Gross Net
California 6,175 6,051 6,846 6,846
Nevada - - 55,920 9,247
Texas 840 277 9,120 2,889
Other 1,130 204 1,173 293
------ ------ ------ ------
8,145 6,532 73,059 19,275
====== ====== ====== ======
Gross acres represent all acres in which Berry has a working interest;
net acres represent Berry's aggregate working interests in the gross acres.
Berry currently has 1,551 gross oil wells (1,537 net) and 22 gross gas
wells (7 net). Gross wells represent the total number of wells in which Berry
has a working interest. Net wells represent the number of gross wells
multiplied by the percentages of the working interests owned by Berry. One or
more completions in the same bore hole are counted as one well. Any well in
which one of the multiple completions is an oil completion is classified as an
oil well.
Drilling Activity
The following table sets forth certain information regarding Berry's
drilling activities for the periods indicated:
1995 1994 1993
Gross Net Gross Net Gross Net
Exploratory Wells
Drilled:
Productive 0 0.0 0 0.0 3 0.7
Dry (1) 4 0.7 4 0.8 3 0.5
Development Wells
Drilled:
Productive 44 44.0 14 14.0 18 18.0
Dry (1) 1 1.0 0 0.0 0 0.0
Total Wells Drilled:
Productive 44 44.0 14 14.0 21 18.7
Dry (1) 5 1.7 4 0.8 3 0.5
(1) A dry well is a well found to be incapable of producing either oil or
gas in sufficient quantities to justify completion as an oil or gas
well.
As of March 4, 1996, no exploratory wells were being drilled.
8
Title and Insurance
The Company is not aware of any defect in the title to any of its
principal properties. Notwithstanding the absence of a recent title opinion or
title insurance policy, the Company believes it has satisfactory title to these
properties, subject to such exceptions as the Company believes are customary
and usual in the oil and gas industry and which the Company believes will not
materially impair its ability to recover the proved oil and gas reserves or to
obtain the resulting economic benefits.
The oil and gas business can be hazardous, involving unforeseen
circumstances such as blowouts or environmental damage. To address the hazards
inherent in the oil and gas business, the Company maintains a comprehensive
insurance program.
Item 3. Legal Proceedings
On December 25, 1993, a crude oil spill was discovered on the Company's
West Montalvo field in Ventura County, California. The Company estimates that
the total discharge was approximately 2,100 barrels. The Company is aware that
certain governmental authorities are currently investigating the circumstances
surrounding the spill. The Company paid $.6 million to settle all potential
state criminal claims against the Company in August 1994. The Company is
working on dealing with all other potential matters related thereto. As of the
date of this report, no actions have been filed against the Company in
connection with the spill.
The Company was in a dispute with University Cogeneration Partners Ltd.,
1985-1, regarding certain costs related to the cogeneration facility
operations. The Company was a minority owner in this partnership of which
the major asset was the cogeneration facility located on the Company's homebase
properties. The Company purchased the remaining interest in the partnership
in August 1995 and, in connection therewith, both parties agreed to dismiss
all disputed claims.
The information related to certain issues which have been appealed to
the U.S. Court of Appeals (Ninth Circuit) is set forth in Note 9 to the
Company's financial statements.
Item 4. Submission of Matters to a Vote of Security Holders
None.
9
EXECUTIVE OFFICERS
Listed below are the names, ages (as of December 31, 1995) and positions
of the executive officers of Berry and their business experience during at
least the past five years.
JERRY V. HOFFMAN, 46, President and Chief Executive Officer since May
1994 and President and Chief Operating Officer from March 1992 until May 1994.
Mr. Hoffman was added to the Board of Directors in March 1992. Mr. Hoffman
held the Senior Vice President and Chief Financial Officer positions from
January 1988 until March 1992. Mr. Hoffman, CPA, has held a variety of other
positions with the Company and its prior subsidiaries or successors since
February 1985.
DONALD A. DALE, 49, Controller since December 1985. Mr. Dale, CPA, was
the Controller for Berry Holding Company from September 1985 to December 1985.
RALPH J. GOEHRING, 39, Chief Financial Officer since March 1992 and
Manager of Taxation from September 1987 until March 1992. Mr. Goehring, CPA,
is also the Assistant Secretary for Berry Petroleum Company.
CHESTER L. LOVE, 61, Vice President of Engineering since March 1994 and
Manager of Engineering from May 1992 to March 1994. Mr. Love, a registered
petroleum engineer, was previously a Vice President of Consulting for
Scientific Software-Intercomp from 1979 to 1992.
KENNETH A. OLSON, 40, Corporate Secretary since December 1985 and
Treasurer since August 1988. Mr. Olson, CPA, has held a variety of other
positions with the Company and its prior subsidiaries or successors since July
1985.
MICHAEL R. STARZER, 34, Manager of Corporate Development since April
1995. Mr. Starzer, a registered petroleum engineer, was with Unocal from
August 1983 to May 1991 and from August 1993 to April 1995. Mr. Starzer was
an engineering consultant and worked with the California State Lands Commission
from May 1991 to August 1993.
STEVEN J. THOMAS, 45, Manager of Production since March 1993, joined the
Company's engineering department in September 1992. Mr. Thomas, a registered
petroleum engineer, was an engineering and petroleum consultant from 1990 to
1992 and was employed by Chevron USA from 1979 to 1990 in various drilling,
production and facilities engineering positions.
10
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
Shares of Class A Common Stock (Common Stock) and Class B Stock,
referred to collectively as the "Capital Stock", are each entitled to one
vote and 95% of one vote, respectively. Each share of Class B Stock is
entitled to a $1.00 per share preference in the event of liquidation or
dissolution. Further, each share of Class B Stock is convertible into one
share of Common Stock at the option of the holder.
In 1989, the Company adopted a Stockholder Rights Agreement and declared
a dividend distribution of one such Right for each outstanding share of Capital
Stock on December 22, 1989. Each share of Capital Stock issued after December
22, 1989 includes one Right. The Rights expire on December 8, 1999. See
Note 7 of Notes to the Financial Statements.
The Company's Class A Common Stock is listed on the New York Stock
Exchange under the symbol "BRY". The Class B Stock is not publicly traded.
The market data and dividends for 1995 and 1994 are shown below:
Cash
Low High Dividends
1995
First Quarter $ 8 3/4 $ 10 $ .10
Second Quarter 9 10 7/8 .10
Third Quarter 9 3/8 10 5/8 .10
Fourth Quarter 9 7/8 10 7/8 .10
1994
First Quarter $ 8 $ 9 7/8 $ .10
Second Quarter 8 10 3/4 .10
Third Quarter 8 7/8 10 1/4 .10
Fourth Quarter 9 11 3/8 .10
The number of holders of record of the Company's Common Stock and Class
B Stock as of March 4, 1996 was approximately 1,048 and 1, respectively.
The Board of Directors' policy is to declare and pay dividends quarterly
in March, June, September and December. The dividend level may change as it
is subject to Board approval, and such approval is influenced by the price of
crude oil, capital commitments and satisfactory financial results.
Dividends declared on 4,366,400 shares of certain Common Stock are
restricted, whereby 37.5% of the dividends declared on these shares are paid by
the Company to the surviving member of a group of individuals, the B group, for
as long as this remaining member shall live.
11
Item 6. Selected Financial Data
The following table sets forth certain financial information with
respect to the Company and is qualified in its entirety by refrence to the
historical financial statements and notes thereto of the Company included
in Item 8, "Financial Statements and Supplementary Data". The statement of
operations and balance sheet data included in this table for each of the five
years in the period ended December 31, 1995 was derived from the audited
financial statements and the accompanying notes to those financial statements
(in thousands except per share and per barrel data):
1995 1994 1993 1992 1991
Statement of Operations Data:
Operating revenues:
Sales of oil and gas $ 45,773 $ 39,451 $ 42,843 $ 49,598 $ 43,439
Blending, net 12 87 265 (1,262) (1,156)
Operating costs
(excluding DD&A and
exploratory dry hole costs) 18,264 21,224 23,790 20,931 20,575
General and administrative
expenses (excluding DD&A) 4,578 5,118 5,999 5,511 3,840
Depletion, depreciation &
amortization (DD&A) 6,847 7,270 9,983 8,123 5,373
Net income (loss) 12,203 (1,129) 32 10,115 16,597
Net income (loss)
per share (1) .56 (.05) - .46 .77
Cash dividends per share .40 .40 .55 .60 .60
Weighted average number of
shares outstanding 21,932 21,932 21,926 21,915 21,539
Balance Sheet Data:
Working capital $ 36,506 $ 38,273 $ 40,418 $ 50,642 $ 54,420
Shareholders' equity 92,060 88,632 98,323 109,690 113,204
Total assets 117,722 118,254 135,159 140,140 145,594
Operating Data:
Cash flow from operations 17,070 14,579 10,957 22,169 18,521
Capital expenditures 15,072 6,934 13,983 12,180 14,028
Average sales price
per barrel of oil 13.56 11.61 11.43 12.83 12.44
Average production cost
per BOE 5.41 6.28 6.35 5.43 6.03
Production:
Oil (Bbls) 3,277 3,250 3,617 3,683 3,336
Gas (Mcf) 611 793 771 1,029 466
Total (BOE) 3,379 3,382 3,746 3,855 3,414
Proved reserves:
Oil (Bbls) 77,071 75,996 72,078 72,434 71,054
Gas (Mcf) 5,983 6,530 5,476 10,003 11,772
Total (BOE) 78,068 77,084 72,991 74,101 73,016
(1) Less than $.01 per share in 1993.
12
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion provides information on the results of
operations for the three years ended December 31, 1995 and the financial
condition, liquidity and capital resources as of December 31, 1995. The
financial statements and the notes thereto contain detailed information that
should be referred to in conjunction with this discussion.
The profitability of the Company's operations in any particular
accounting period will be directly related to the average realized prices of
oil and gas sold, the type and volume of oil and gas produced and the results
of acquisition, development and exploration activities. The average realized
prices of oil and gas will fluctuate from one period to another due to world
market conditions and other factors. The California crude oil prices are
especially sensitive since a significant portion of California's crude oil
needs are met by imports from Alaska. The aggregate amount of oil and gas
produced may fluctuate based on development and exploitation of oil and gas
reserves pursuant to current reservoir management plans. Production rates,
steam costs, labor and maintenance expenses are expected to be the principal
influences on operating costs. Accordingly, the results of operations of the
Company may fluctuate from period to period based on the foregoing principal
factors, among others.
Results of Operations
The Company returned to profitability in 1995, earning net income of
$12.2 million, up significantly from a net loss of $1.1 million in 1994 and net
income of $32,000 in 1993. This significant improvement was due primarily to
higher oil prices, lower steam costs due to the acquisition of the remaining
interest in the cogeneration facility, a 1995 gain on the sale of the Rincon
properties, the reduction of exploratory dry hole costs in 1995, and the
impairment of properties and oil spill costs recorded in 1994 and 1993 with no
comparable charge in 1995.
1995 1994 1993
Production - BOE Per Day 9,258 9,266 10,261
Average Sales Price - Per BOE $13.48 $11.60 $11.43
Operating Cost - Per BOE 5.41 6.28 6.35
DD&A - Per BOE 1.88 1.96 2.47
Operating income from producing operations was $21.2 million in 1995,
up 83% and 114% from $11.6 million and $9.9 million in 1994 and 1993,
respectively. This improvement was due primarily to higher oil prices and
reduced operating costs.
The average sales price received per BOE during 1995 of $13.48 was 16%
and 18% higher than the prices received in 1994 and 1993, respectively. Oil
and gas production in 1995 was comparable to 1994, but down 10% from 1993. On
November 1, 1995, the Company sold its Rincon properties which accounted for
approximately 283 BOE/day of production. In addition, the Company shut in a
number of marginal wells in 1994 and reduced steaming operations from 1993
levels on certain marginally economic properties.
To protect the Company's revenues from potential price declines,
effective August 1, 1995, the Company entered into a bracketed zero cost collar
hedge contract with a California refiner for a term of 18 months related to
approximately 22% of its crude oil production. The posted price of the
Company's 13 degree API gravity crude oil was used as the basis for the hedge.
There is no initial cost to the Company and there will be no material financial
impact unless crude oil prices increase or decrease significantly from current
levels. A similar contract for an additional 11% of the Company's crude
production with a 12 month term was entered into in early 1996.
Operating costs per BOE in 1995 declined 14% from 1994 to $5.41 due
largely to a reduction in steam costs which have historically represented the
largest component of operating costs to the Company. As part of the Company's
continuing effort to reduce operating costs, the Company purchased the
remaining 55% interest in the cogeneration plant which provides steam to the
Company's homebase properties located in the Midway-Sunset field. In addition,
the Company increased production from the Montalvo field during 1995 and sold
its Rincon properties on November 1, 1995, both of which incurred higher
operating costs relative to the other properties operated by the Company.
Due to these events and the Company's ongoing cost reduction program, operating
costs per BOE continued to decline to $4.63 in the fourth quarter of 1995
from $5.19 and $5.80 in the third and second quarters of 1995, respectively.
13
DD&A per BOE declined to $1.88 in 1995 from $1.96 and $2.47 in 1994 and
1993, respectively. This decline was due primarily to the lower depletable
basis of the Company's assets resulting from the impairment, dry hole and
abandonment charges recorded in 1994.
On November 1, 1995, the Company sold its Rincon properties located in
Ventura County, California for approximately $5.8 million plus certain
reimbursements, which resulted in a pre-tax gain of approximately $3.1 million.
Net daily production from the six leases represented approximately 3% of the
Company's 1995 production levels. This property was considered non-core, was
expensive to operate and would have required significant capital outlays to
maximize the property's value.
General
Interest income in 1995 was $2 million, up from $1.6 million and $1.9
million in 1994 and 1993, respectively, due primarily to higher average
interest rates on invested cash balances in 1995.
General and administrative expenses were $4.6 million in 1995, down 10%
and 23% from $5.1 million and $6 million incurred in 1994 and 1993,
respectively. The Company is focused on cost reduction and incurred lower
payroll related costs due to attrition, the consolidation of certain
administrative functions and lower medical costs.
The Company's effective income tax rate in 1995 was 37%. The pre-tax
losses incurred in 1994 and 1993 resulted in effective tax benefits of 42% and
102%, respectively. The most important factor affecting 1994 and 1993 was the
impact of certain tax benefits, primarily enhanced oil recovery credits and
percentage depletion, as applied to the pre-tax losses in those years.
In the fourth quarter of 1995, the Company adopted Financial Accounting
Standard (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of". This adoption resulted in no
charges to the Company's financial statements for 1995, and is not
significantly different than the Company's impairment policy in effect prior
to the adoption.
Financial Condition, Liquidity and Capital Resources
Working capital at December 31, 1995 was $36.5 million, down from $38.3
million and $40.4 million at December 31, 1994 and 1993, respectively. Cash
flow provided by operating activities of $17.1 million was up 17% and 55% from
$14.6 million and $11.0 million in 1994 and 1993, respectively. Cash flow was
higher in 1995 due to higher oil prices and lower operating costs due primarily
to the purchase of the cogeneration facility in 1995. The Company sold its
Rincon properties in 1995 for an additional $5.8 million in cash plus certain
reimbursements. However, working capital declined 5% due to capital
expenditures of $15.1 million incurred during the year, which included
approximately $5.2 million on the purchase of the remaining 55% interest in the
Company's cogeneration facility, $4.8 million on the further development of the
homebase properties, including the drilling of 45 additional development wells,
and $1.9 million on the further development of the Montalvo field, including
the conversion of two wells to a long-stroke rod pump system and the return to
production of four wells on the PRC 735 lease. In 1995, the Company paid $8.8
million in dividends to its shareholders. In addition, $2.9 million was paid
in federal and state income taxes resulting from an adverse judgment by the
U.S. Tax Court against the Company (see Note 9 to the Company's financial
statements).
14
The Company had a $1 million Revolving Credit and Term Loan Agreement
with a major California bank until early 1996. There were no outstanding
borrowings under this line. The Company is working on obtaining a new Revolving
Credit/Term Loan Facility which, when completed, may be used for future
acquisitions or other corporate purposes.
The total proved reserves at December 31, 1995 were 78.1 million BOE, up
from 77.1 million BOE at December 31, 1994 and 73.0 million BOE at December 31,
1993. Although the Company produced 3.4 million BOE during the year and sold
its Rincon properties, the Company saw an increase in reserves due primarily to
the further development of the Company's PRC 735 lease, the development of the
Alpine lease purchased in the fourth quarter of 1994, the acquisition of the
USL 12 lease in the Midway-Sunset field, higher oil prices and lower estimated
future operating costs. The 1995 development program (excluding the purchase
of the remaining interest in the cogeneration facility) and USL 12 lease
acquisition were successful in adding proved reserves, replacing 182% of
production at an average cost of $1.71 per BOE. The Company's estimated future
pre-tax discounted cash flow, using a 10% discount rate, increased 17% and 516%
to $308.4 million at December 31, 1995 from $263.9 million at December 31, 1994
and $50.1 million at December 31, 1993, respectively.
Future Developments
In 1996, the Company plans to adopt the disclosure option of SFAS No.
123, "Accounting for Stock-Based Compensation".
Senate Bill S.395 allowing the export of ANS crude oil has been passed
by Congress and signed by the President, and is currently undergoing limited
public hearings. Because of this legislation, the Company expects that a
larger portion of this crude oil will be sold in markets other than California
beginning in the second quarter of 1996. The long term impact may be to reduce
the differential between crude oil prices on the West Coast and other parts of
the country.
The Company currently sells the electricity produced by its cogeneration
facility to a large California-based utility under a contract (Standard
Offer 2) which determines the electricity payment based upon electrical
capacity and by energy provided. This contract will expire on January 15,
1997. Under current law, the Company has the right to enter into a similar
contract (Standard Offer 1) upon expiration with the same utility at the same
energy payment but a lower capacity payment. The Company is analyzing its
options with respect to future electricity sales. Management believes that
the deregulation in the electrical utility industry (currently targeted for
1998 in California) may provide opportunities for the Company to maximize the
benefits of its cogeneration facility. However, failure to achieve a similar
or better contract than the existing contract will likely result in higher
operating costs related to steam generation than exist currently.
A portion of the natural gas purchases made by the Company for use
primarily in its steaming operations is subject to an existing long-term
transportion agreement with a California utility. The resulting transportation
charges related to the gas obtained are significantly above current prevailing
market rates. The agreement will expire in April 1997 and the Company expects
to realize a reduction in operating costs related to this event in 1997 and
beyond.
On February 10, 1996, the President signed into law a bill which
authorizes the sale, within two years, of the Elk Hills Naval Petroleum Reserve
located in Kern County, California. The Company believes the sale may result
in a significant concentration of the ownership of the light crude oil used as
blending stock for the heavy crude oil produced in the San Joaquin Valley. If
such concentration were to occur, it is possible that the lack of light oil
availability could have an adverse impact on the marketability and prices
received for this heavy crude oil.
Impact of Inflation
The impact of inflation on the Company has not been significant in
recent years because of the relatively low rates of inflation experienced
in the United States.
15
Item 8. Financial Statements and Supplementary Data
BERRY PETROLEUM COMPANY
Index to Financial Statements and
Supplementary Data
Page
Report of Coopers & Lybrand L.L.P., Independent Accountants . . . 17
Balance Sheets at December 31, 1995 and 1994 . . . . . . . . . . . .18
Statements of Operations for the
Years Ended December 31, 1995, 1994 and 1993 . . . . . . . . . .19
Statements of Shareholders' Equity
for the Years Ended December 31, 1995, 1994 and 1993 . . . . . . .20
Statements of Cash Flows for the
Years Ended December 31, 1995, 1994 and 1993 . . . . . . . . . . .21
Notes to the Financial Statements. . . . . . . . . . . . . . . . . .22
Supplemental Information About Oil & Gas Producing Activities. . . .32
Financial statement schedules have been omitted since they are either not
required, are not applicable, or the required information is shown in the
financial statements and related notes.
16
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Berry Petroleum Company
We have audited the accompanying balance sheets of Berry Petroleum Company as
of December 31, 1995 and 1994, and the related statements of operations,
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 1995. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Berry Petroleum Company as of
December 31, 1995 and 1994, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
/s/ Coopers & Lybrand L.L.P.
February 21, 1996
Los Angeles, California
17
BERRY PETROLEUM COMPANY
Balance Sheets
December 31, 1995 and 1994
(In Thousands Except Share Information)
1995 1994
ASSETS
Current assets:
Cash and cash equivalents $ 18,759 $ 7,466
Short-term investments available for sale 15,695 27,617
Accounts receivable 8,414 9,471
Deferred income taxes 1,175 3,315
Prepaid expenses and other 1,157 1,073
------- -------
Total current assets 45,200 48,942
Oil and gas properties (successful efforts basis),
buildings and equipment, net 72,042 66,915
Other assets 480 2,397
------- -------
$ 117,722 $ 118,254
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,086 $ 5,913
Accrued liabilities 3,912 4,637
Federal and state income taxes payable 1,696 119
------- -------
Total current liabilities 8,694 10,669
Deferred income taxes 16,968 18,953
Contingencies (Note 12)
Shareholders' equity:
Preferred stock, $.01 par value;
2,000,000 shares authorized;
no shares outstanding
Capital stock, $.01 par value: - -
Class A Common Stock,
50,000,000 shares authorized;
21,033,055 shares issued and outstanding 210 210
Class B Stock, 1,500,000 shares authorized;
898,892 shares issued and outstanding
(liquidation preference of $899) 9 9
Capital in excess of par value 52,850 52,852
Retained earnings 38,991 35,561
------- -------
Total shareholders' equity 92,060 88,632
------- -------
$ 117,722 $ 118,254
======= =======
The accompanying notes are an integral part of these financial statements.
18
BERRY PETROLEUM COMPANY
Statements of Operations
Years ended December 31, 1995, 1994 and 1993
(In Thousands Except Per Share Data)
1995 1994 1993
Revenues:
Sales of oil and gas $ 45,773 $ 39,451 $ 42,843
Interest 2,040 1,616 1,893
Gain (loss) on sale of assets 3,073 113 (1,100)
Other income, net 304 155 460
------- ------- -------
51,190 41,335 44,096
------- ------- -------
Expenses:
Operating costs 18,264 21,224 23,790
Depreciation, depletion & amortization 6,847 7,270 9,983
Impairment of properties - 2,915 2,911
Oil spill costs - 1,344 2,004
Exploratory dry hole costs 2,012 5,414 788
General and administrative 4,578 5,118 5,999
------- ------- -------
31,701 43,285 45,475
------- ------- -------
Income (loss) before income taxes 19,489 (1,950) (1,379)
Provision (benefit) for income taxes 7,286 (821) (1,411)
------- ------- -------
Net income (loss) $ 12,203 $ (1,129) $ 32
======= ======= =======
Net income (loss) per share $ .56 $ (.05) $ -
======= ======= =======
Weighted average number of shares
of capital stock used to calculate
earnings per share 21,932 21,932 21,926
======= ======= =======
The accompanying notes are an integral part of these financial statements.
19
BERRY PETROLEUM COMPANY
Statements of Shareholders' Equity
Years Ended December 31, 1995, 1994 and 1993
(In Thousands Except Per Share Data)
Capital Stock Capital in
Excess of Retained Shareholders'
Class A Class B Par Value Earnings Equity
Balances at
January 1, 1993 $ 210 $ 9 $ 51,977 $ 57,494 $ 109,690
Stock options
exercised - - 664 - 664
Cash dividends
declared -
$.55 per share - - - (12,063) (12,063)
Net income - - - 32 32
------ ------ ------- ------- -------
Balances at
December 31, 1993 210 9 52,641 45,463 98,323
Stock options
expired - - 211 - 211
Cash dividends
declared -
$.40 per share - - - (8,773) (8,773)
Net loss - - - (1,129) (1,129)
------ ------ ------- ------- -------
Balances at
December 31, 1994 210 9 52,852 35,561 88,632
Stock retired - - (2) - (2)
Cash dividends
declared -
$.40 per share - - - (8,773) (8,773)
Net income - - - 12,203 12,203
------ ------ ------- ------- -------
Balances at
December 31, 1995 $ 210 $ 9 $ 52,850 $ 38,991 $ 92,060
====== ====== ======= ======= =======
The accompanying notes are an integral part of these financial statements.
20
BERRY PETROLEUM COMPANY
Statements of Cash Flows
Years Ended December 31, 1995, 1994 and 1993
(In Thousands)
Cash flows from operating activities: 1995 1994 1993
Net income (loss) $ 12,203 $ (1,129) $ 32
Depletion, depreciation and amortization 6,847 7,270 9,983
(Gain) loss on sale of assets (3,073) (113) 1,100
Exploratory dryhole costs 1,990 5,090 170
Impairment of properties - 2,915 2,911
Increase (decrease) in deferred income
tax liability (1,985) (762) 1,536
Other, net (50) 504 (377)
------- ------- -------
Net working capital provided by
operating activities 15,932 13,775 15,355
Decrease (increase) in current assets
other than cash, cash equivalents and
short-term investments 3,113 7,256 (9,248)
Increase (decrease) in current liabilities (1,975) (6,452) 4,850
------- ------- -------
Net cash provided by operating activities 17,070 14,579 10,957
------- ------- -------
Cash flows from investing activities:
Capital expenditures (15,072) (6,934) (13,983)
Proceeds from sale of assets 6,242 327 413
Purchase of short-term investments (3,078) (30,524) (15,560)
Maturities of short-term investments 15,000 29,874 30,290
Other, net (96) (540) (610)
------- ------- -------
Net cash provided by (used in)
investing activities 2,996 (7,797) 550
------- ------- -------
Cash flows from financing activities:
Dividends paid (8,773) (8,773) (12,063)
Proceeds from exercise of stock options - - 664
------- ------- -------
Net cash used in financing activities (8,773) (8,773) (11,399)
------- ------- -------
Net increase (decrease) in cash and
cash equivalents 11,293 (1,991) 108
Cash and cash equivalents at
beginning of year 7,466 9,457 9,349
------- ------- -------
Cash and cash equivalents at
end of year $ 18,759 $ 7,466 $ 9,457
======= ======= =======
Supplemental disclosures of
cash flow information:
Interest paid $ 12 $ 5 $ 8
======= ======= =======
Income taxes paid $ 5,554 $ 484 $ 765
======= ======= =======
The accompanying notes are an integral part of these financial statements.
21
BERRY PETROLEUM COMPANY
Notes to the Financial Statements
1. General
The Company is an independent energy company engaged in the acquisition,
exploration, exploitation, development, production, and marketing of crude oil
and natural gas. All of the Company's oil and gas reserves are located in the
United States, with 89% of the reserves located in the Midway-Sunset field in
the San Joaquin Valley in California. Approximately 97% of the Company's
production is crude oil, which is principally sold to other oil companies for
processing in refineries located in California.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
2. Summary of significant accounting policies
Cash and cash equivalents
Cash equivalents consist principally of commercial paper and money
market funds. The Company considers all highly liquid investments purchased
with a remaining maturity of three months or less to be cash equivalents. Cash
equivalents of $13.4 million and $6.0 million at December 31, 1995 and 1994,
respectively, are stated at cost, which approximates market.
Short-term investments
All short-term investments are classified as available for sale. Short-
term investments consist principally of United States treasury notes, corporate
notes, state and local municipal bonds and auction market preferred stock with
remaining maturities of more than three months at date of acquisition. Such
investments are stated at cost, which approximates market. The Company
utilizes specific identification in computing realized gains and losses on
investments sold. For the three years ended December 31, 1995, realized and
unrealized gains and losses were insignificant to the financial statements.
United States treasury notes with an aggregate market value of $.6 million are
pledged as collateral to the California State Lands Commission as a performance
bond on the Company's Montalvo properties.
Oil and gas properties, buildings and equipment
The Company accounts for its oil and gas exploration and development
costs using the successful efforts method. Under this method, costs to acquire
mineral interests in oil and gas properties, to drill and complete development
wells and drill and complete exploratory wells that find proved reserves are
capitalized. Exploratory dryhole costs and other exploratory costs, including
geological and geophysical costs, are charged to expense when incurred. The
costs of carrying and retaining unproved properties are also expensed when
incurred. Depletion of oil and gas producing properties is computed using the
units-of-production method. The estimated costs, net of salvage value, of
plugging and abandoning oil and gas wells and related facilities are accrued
using the units-of-production method and are taken into account in determining
depletion, depreciation and amortization expense.
Buildings and equipment are recorded at cost. Depreciation is provided
on a straight-line basis over estimated useful lives ranging from 5 to 30 years
for buildings and improvements and 3 to 10 years for machinery and equipment.
When assets are sold, the applicable costs and accumulated depreciation are
removed from the accounts and any gain or loss is included in income.
Expenditures for maintenance and repairs are expensed as incurred.
22
BERRY PETROLEUM COMPANY
Notes to the Financial Statements
2. Summary of significant accounting policies (cont'd)
In the fourth quarter of 1995, the Company adopted Statement of
Financial Account Standards (SFAS) No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." This change
had no effect on the Company's financial statements. Pursuant to this
standard, assets are grouped at the lowest level for which there are
identifiable cash flows. If it is determined that the book value of long-lived
assets cannot be recovered by estimated future undiscounted cash flows, they
will be written down to fair value.
Steam Costs
The costs of producing steam by the cogeneration plant are recorded as
an operating expense of the Company. Proceeds received from the sale of
electricity produced by the plant are reported as a reduction to operating
costs in the Company's financial statements.
Income Taxes
Income taxes are provided based on the liability method of accounting
pursuant to SFAS No. 109, "Accounting for Income Taxes". The provision for
income taxes is based on pretax financial accounting income. Deferred tax
assets and liabilities are recognized for the future expected tax consequences
of temporary differences between income tax and financial reporting and
principally relate to differences in the tax bases of assets and liabilities
and their reported amounts, using enacted tax rates in effect for the year
in which differences are expected to reverse. If it is more likely than not
that some portion or all of a deferred tax asset will not be realized, a
valuation allowance is recognized.
Earnings per share
Earnings per share is computed by dividing net income by the weighted
average number of capital shares and dilutive common stock equivalents, if any,
outstanding during the year.
Reclassifications
Certain reclassifications have been made to the 1994 and 1993 financial
statements to conform with the 1995 presentation.
3. Fair value of financial instruments
Financial instruments consist of cash and short-term investments, whose
carrying amounts are not materially different from their fair values because of
the short maturity of those instruments. The Company's short-term investments
available for sale at December 31, 1995 consist primarily of United States
treasury notes (71%) and corporate notes (29%). All of the short-term
investments at December 31, 1995 mature in one year or less.
To protect the Company's revenues from potential price declines,
effective August 1, 1995, the Company entered into a bracketed zero cost collar
hedge contract with a California refiner for a term of 18 months related to
approximately 22% of its crude oil production. The posted price of the
Company's 13 degree API gravity crude oil was used as the basis for the hedge.
There is no initial cost to the Company and there will be no material financial
impact unless crude oil prices increase or decrease significantly from current
levels. A similar contract for an additional 11% of the Company's crude oil
production with a 12 month term was entered into in early 1996.
23
BERRY PETROLEUM COMPANY
Notes to the Financial Statements
4. Concentration of Credit Risks
The Company sells oil, gas and natural gas liquids to pipelines and
refineries. Credit is extended based on an evaluation of the customer's
financial condition. For the three years ended December 31, 1995, the Company
has experienced no credit losses on the sale of oil, gas and natural gas
liquids.
The Company places its temporary cash investments with high credit
quality financial institutions and limits the amount of credit exposure to any
one financial institution. For the three years ended December 31, 1995, the
Company has not incurred losses related to these investments.
The following summarizes the accounts receivable balances at December
31, 1995 and sales activity with significant customers for each of the years
ended December 31, 1995, 1994 and 1993 (in thousands):
Accounts Sales
Receivable For the Year Ended December 31,
Customer December 31, 1995 1995 1994 1993
A $ 1,372 $ 12,641 $ 16,027 $ 16,747
B 961 12,918 11,319 11,686
C 724 9,214 - -
D - 5,265 - -
------- ------- ------- -------
$ 3,057 $ 40,038 $ 27,346 $ 28,433
======= ======= ======= =======
The loss of any of these customers could have a temporarily adverse
impact on the Company's revenues.
5. Oil and gas properties, buildings and equipment
Oil and gas properties, buildings and equipment consist of the following
at December 31 (in thousands):
1995 1994
Oil and gas:
Proved properties:
Producing properties, including
intangible drilling costs $ 55,202 $ 56,216
Lease and well equipment 75,470 67,232
Unproved properties 162 383
------- -------
130,834 123,831
Less accumulated depletion, depreciation
and amortization 61,456 59,909
------- -------
69,378 63,922
------- -------
Commercial and other:
Land 151 151
Buildings and improvements 3,734 3,806
Machinery and equipment 4,026 3,969
------- -------
7,911 7,926
Less accumulation depreciation 5,247 4,933
------- -------
2,664 2,993
------- -------
$ 72,042 $ 66,915
======= =======
24
BERRY PETROLEUM COMPANY
Notes to the Financial Statements
5. Oil and gas properties, buildings and equipment (cont'd)
The following sets forth costs incurred for oil and gas property
acquisition, exploration and development activities, whether capitalized or
expensed (in thousands):
1995 1994 1993
Acquisition of properties $ 503 $ 1,023 $ -
Exploration 1,420 1,701 3,336
Development 14,034 4,678 10,958
------- ------- -------
$ 15,957 $ 7,402 $ 14,294
======= ======= =======
Results of operations from oil and gas producing and exploration activities
The results of operations from oil and gas producing and exploration
activities (excluding blending operations, corporate overhead and interest
costs) for the three years ended December 31 are as follows (in thousands):
1995 1994 1993
Sales to unaffiliated parties $ 45,773 $ 39,451 $ 42,843
Production costs (18,264) (21,224) (23,790)
Exploration expenses (2,012) (5,414) (788)
Depletion, depreciation and
amortization (6,354) (6,627) (9,143)
------- ------- -------
19,143 6,186 9,122
Income tax expenses (6,433) (1,723) (2,225)
------- ------- -------
Results of operations from producing
and exploration activities $ 12,710 $ 4,463 $ 6,897
======= ======= =======
In 1994, the Company recorded an impairment writedown of $2.9 million
related to its Poso Creek and Kern Front properties and a producing well at
Rincon. Similarly, in 1993 the Company recorded an impairment writedown of
$2.9 million related to certain properties in East Texas which were
subsequently assigned to another company in December 1994.
6. Debt obligations
The Company had a $1 million Revolving Credit and Term Loan Agreement
(Agreement) with a major California bank which was terminated in early 1996.
At December 31, 1995, the Company had no outstanding borrowings or letters of
credit under the Agreement.
25
BERRY PETROLEUM COMPANY
Notes to the Financial Statements
7. Shareholders' equity
Shares of Class A Common Stock (Common Stock) and Class B Stock,
referred to collectively as the "Capital Stock" are each entitled to one vote
and 95% of one vote, respectively. Each share of Class B Stock is entitled
to a $1.00 per share preference in the event of liquidation or dissolution.
Further, each share of Class B Stock is convertible into one share of Common
Stock at the option of the holder.
In December 1989, the Company adopted a Stockholder Rights Agreement and
declared a dividend distribution of one Right for each outstanding share of
Capital Stock. Each Right, when exercisable, entitles the holder to purchase
one one-hundredth of a share of a Series A Junior Participating Preferred
Stock, or in certain cases other securities, for $38.00. The exercise price
and number of shares issuable are subject to adjustment to prevent dilution.
The Rights would become exercisable, unless earlier redeemed by the Company,
10 days following a public announcement that a person or group has acquired,
or obtained the right to acquire, 20% or more of the outstanding shares of
Common Stock or, 10 business days following the commencement of a tender or
exchange offer for such outstanding shares which would result in such person
or group acquiring 20% or more of the outstanding shares of Common Stock,
either event occurring without the prior consent of the Company.
The Rights will expire in December 1999 or may be redeemed by the
Company at 1 cent per Right prior to that date unless they have theretofore
become exercisable. The Rights do not have voting or dividend rights, and
until they become exercisable, have no diluting effect on the earnings of the
Company. 250,000 shares of the Company's Preferred Stock have been designated
Series A Junior Participating Preferred Stock and reserved for issuance upon
exercise of the Rights.
The Company issued no shares in 1995 or 1994 through its stock option
plans. During 1993, 44,536 shares were issued through these plans.
Dividends declared on 4,366,400 shares of certain Common Stock are
restricted, whereby 37.5% of the dividends declared on these shares are paid by
the Company to the surviving member of a group of individuals, the B Group, as
long as this remaining member shall live.
8. Transactions with affiliates
The University Cogeneration Partners, Ltd. 1985-1, a limited
partnership, was formed in 1985 to finance the construction of a cogeneration
plant on the Company's properties. The Company also committed to purchase
the steam generated by the plant and supply the natural gas to fuel the plant.
At December 31, 1994 the receivable due from the Cogeneration Partnership for
natural gas purchases, net of the steam sales to the Company, was $.8 million.
The Company owned approximately 45% of the partnership and its investment of
$1.9 million was accounted for at cost. On August 1, 1995, the Company
purchased the remaining 55% interest in the cogeneration plant for
approximately $5.2 million. The total cost of the cogeneration plant is
included in lease and well equipment at December 31, 1995. Amounts paid by
the Company for the steam in 1995 (through July), 1994 and 1993 were
$2.6 million, $4.6 million and $4.3 million, respectively.
26
BERRY PETROLEUM COMPANY
Notes to the Financial Statements
9. Income taxes
The provision (benefit) for income taxes consists of the following (in
thousands):
1995 1994 1993
Current:
Federal $ 5,089 $ 158 $ (873)
State 2,042 (56) (74)
------- ------- -------
7,131 102 (947)
------- ------- -------
Deferred:
Federal 828 (1,077) (369)
State (673) 154 (95)
------- ------- -------
155 (923) (464)
------- ------- -------
$ 7,286 $ (821) $(1,411)
======= ======= =======
The current deferred tax assets and liabilities are offset and presented
as a single amount in the financial statements. Similarly, the noncurrent
deferred tax assets and liabilities are presented in the same manner. The
following table summarizes the components of the total deferred tax assets and
liabilities before such financial statement offsets. The components of the net
deferred tax liability are as follows (in thousands):
Dec. 31, Dec. 31,
1995 1994
Deferred tax asset
Federal benefit of state taxes $ 1,756 $ 1,334
Differences between financial reporting
and tax bases of assets acquired - 3,226
Net operating loss carryforwards 171 1,470
Credit/deduction carryforwards 634 3,037
Other, net 368 712
Valuation allowance - (3,089)
------- -------
2,929 6,690
------- -------
Deferred tax liability (15,195) (16,567)
Depreciation and depletion (3,122) (3,795)
State taxes, net (405) (1,966)
------- -------
Other, net (18,722) (22,328)
------- -------
Net deferred tax liability $(15,793) $(15,638)
======= =======
27
BERRY PETROLEUM COMPANY
Notes to the Financial Statements
9. Income taxes (cont'd)
Income taxes computed by applying U.S. statutory federal rates to income
(loss) before income taxes are reconciled to the provision (benefit) for income
taxes as follows (in thousands):
1995 1994 1993
Tax (benefit) computed at statutory
federal rate $ 6,821 $ (663) $ (469)
Increase (decrease) in taxes
resulting from:
Asset acquisition/sale differences 1,315 394 637
Nontaxable income (28) (171) (323)
Percentage depletion (402) (290) (286)
State taxes, net 888 98 (113)
Enhanced oil recovery, nonconventional
fuel tax and alternative minimum
tax credits (1,115) (406) (1199)
Other, net (193) 217 342
------- ------- -------
$ 7,286 $ (821) $ (1,411)
======= ======= =======
Effective tax rate 37.4% (42.1)% (102.3)%
The Company has $.5 million of loss carryforwards which may be utilized
in future years to reduce the Company's federal income taxes. These loss
carryforwards expire in the year 2000. The Company also has approximately $.6
million of various tax credit carryforwards available to reduce future federal
income taxes. If not fully utilized, certain enhanced oil recovery tax credits
of $.5 million will expire in the year 2009. The other credits may be carried
forward indefinitely.
The Company went to trial in April 1993 before the U.S. Tax Court on
certain unresolved federal tax issues relating to the years 1987 through 1989.
The Court's decision was rendered in May of 1995, resulting in an approximate
$.5 million charge in the second quarter of 1995 and the payment of
approximately $2.9 million in federal and state taxes. Due to this decision,
the Company no longer has benefit of certain loss carryforwards and asset
bases. Therefore, these deferred tax assets, as well as the valuation
allowance provided against these assets, have been removed. All federal and
state taxes and accrued interest owed with respect to these issues have been
paid. The Company is pursuing an appeal of the Court's decision with respect
to certain issues to the U.S. Court of Appeals (Ninth Circuit).
28
BERRY PETROLEUM COMPANY
Notes to the Financial Statements
10. Stock option and stock appreciation rights plans
The Company has a 1987 Nonstatutory Stock Option Plan (the NSO Plan) and
a 1987 Stock Appreciation Rights Plan (the SAR Plan). The NSO Plan provided
for the granting of options (Options) to purchase up to an aggregate of 700,000
shares of Common Stock. The SAR Plan originally authorized a maximum of
700,000 shares of Common Stock subject to stock appreciation rights (SARs).
Holders of SARs have the right upon exercise to receive a payment, payable at
the discretion of the Compensation Committee in cash or in shares of Common
Stock, equal to the amount by which the market price exceeds the Base Price (as
defined) with respect to the shares subject to such SARs on the date of
exercise. In December 1994, the Board of Directors adopted a resolution to
terminate the 1987 Stock Appreciation Rights Plan without utilizing the 307,860
SARs which were still available for issuance. The 39,740 currently outstanding
SARs are still available for exercise under the original terms of issuance.
On December 2, 1994, the Board of Directors of the Company adopted the
Berry Petroleum Company 1994 Stock Option Plan (the 1994 Plan). The 1994 Plan
was approved by the shareholders in May 1995 and provides for the granting of
stock options to purchase up to an aggregate of 1,000,000 shares of Common
Stock. All Options, with the exception of the formula grants to non-employee
directors, will be granted at the discretion of the Compensation Committee of
the Board of Directors. The term of each Option may not exceed ten years from
the date the Option is granted.
On December 2, 1994, 300,000 Options were issued to certain key
employees at an exercise price of $10.75 per share, which was the closing
market price of the Company's Class A Common Stock on the New York Stock
Exchange on that date. The Options vest 25% per year for four years.
The Options granted on December 2, 1994 utilized all 193,800 remaining
Options from the 1987 Nonstatutory Stock Option Plan and 106,200 shares
from the 1994 Plan. The 1994 Plan also allows for Option grants to the
Board of Directors under a formula plan whereby all non-employee directors
are eligible to receive Options. 33,000 Options were issued on December 2,
1994 and 1995, (3,000 Options to each of the eleven non-employee directors
each year) at an exercise price of $10.75 and $10.625 per share,
respectively. The Options granted to the non-employee directors vest
immediately. The formula plan provides for the annual grant of 3,000 Options
to each non-employee director holding office on each December 2nd at the fair
market value on the date of grant.
Included in general and administrative expenses is $9,000 in 1995, $0 in
1994 and $(18,000) in 1993 for compensation expense related to the Options and
SARs granted to date. The credit in 1993 was due to the decline in the
Company's stock price during that year. Because the options issued on December
2, 1994 and 1995 were all issued at current market value, there was no
accounting charge to the Company in connection with the Option grants. The
accrued liabilities for the NSO and SAR Plans are $.2 million at December 31,
1995 and 1994.
In 1996, the Company plans to adopt the disclosure option of SFAS No.
123, "Accounting for Stock-Based Compensation".
29
BERRY PETROLEUM COMPANY
Notes to the Financial Statements
10. Stock option and stock appreciation rights plans (cont'd)
1995 1994
Options SARs Options SARs
Balance outstanding, January 1 398,141 39,740 142,941 69,020
Granted 33,000 - 333,000 -
Exercised - - - (5,380)
Canceled/expired - - (77,800) (23,900)
------- ------- ------- -------
Balance outstanding, December 31 431,141 39,740 398,141 39,740
======= ======= ======= =======
Balance exercisable at December 31 223,941 39,740 65,141 39,740
======= ======= ======= =======
Available for future grant 827,800 - 860,800 -
======= ======= ======= =======
Exercise Price $ 9.80 $ 9.80 $ 9.80 $ 9.80
to 10.75 to 10.00 to 10.75 to 10.00
======= ======= ======= =======
$ 10.50
Market price at date of exercise $ - $ - $ - to 10.875
======= ======= ======= =======
During 1993, 270,961 Options and 142,980 SARs were exercised at an
exercise price ranging from $9.80 to $10.00 and a market price ranging from
$11.63 to $13.13.
11. Retirement Plan
The Company sponsors a defined contribution retirement or thrift plan
(401(k) Plan) to assist all employees in providing for retirement or other
future financial needs. Employee contributions (up to 6% of their earnings)
are matched by the Company dollar for dollar. Effective November 1, 1992, the
401(k) Plan was modified to provide for increased Company matching of employee
contributions whereby the monthly Company matching contributions will range
from 6% to 9% of eligible participating employee earnings, if certain financial
results are achieved. Due to improved financial results, the monthly matching
contributions ranged from 6% to 9% during 1995. For 1994 and 1993, all
matching contributions were at the 6% rate. The Company's contributions to
the 401(k) Plan were $.2 million in 1995, $.2 million in 1994 and $.3 million
in 1993. Total contributions in 1995 were lower than in 1993 due to a decline
in the number of employees at the Company.
12. Oil Spill
On December 25, 1993, the Company experienced a crude oil spill on its
PRC 735 State lease located in the West Montalvo field in Ventura County,
California. The spill required clean-up of the area directly around the pipe
as well as the nearby ocean and an agricultural runoff pond. Working closely
with the United States Coast Guard, the California Department of Fish and Game,
and other regulatory agencies, the Company substantially completed the clean-up
of the spill in January 1994. The Company negotiated a resolution of the state
criminal investigation for a total of $.6 million in August 1994. Governmental
investigations continue regarding potential civil and federal criminal
penalties, if any.
Management believes the Company has an adequate amount of insurance
coverage for the majority of the costs associated with the spill and has
received preliminary coverage letters from its insurance carriers tendering
coverage, subject to certain reservations. Definitive determination will not
become known until some time in the future. The Company estimates the total
cost of the spill, net of insurance reimbursement, to be a minimum of $3.3
million and a maximum of $5.1 million. Since no other amount in the range is
more likely to occur, the minimum amount was expensed by the Company ($1.3
million in the second quarter of 1994 and $2 million in 1993). The costs
incurred and estimated to be incurred in connection with the
30
BERRY PETROLEUM COMPANY
Notes to the Financial Statements
12. Oil Spill (cont'd)
spill not yet paid by the Company are included in accrued liabilities at
December 31, 1995, and the probable remaining minimum insurance reimbursement
is included in accounts receivable. As of December 31, 1995, the Company had
received approximately $8.1 million under its insurance coverage as
reimbursement for costs incurred and paid by the Company associated with the
spill.
13. Quarterly financial data (unaudited)
The following is a tabulation of unaudited quarterly operating results
for 1995 and 1994 (in thousands).
Net Income
Operating Gross Net Income (Loss)
1995 Revenues (A) Profit (A) (Loss) Per Share
First Quarter $ 10,445 $ 3,872 $ 2,210 $ .10
Second Quarter 12,436 5,933 2,876 .13
Third Quarter 12,172 5,688 3,374 .16
Fourth Quarter 10,732 3,394 3,743 .17
------- ------- ------- -------
$ 45,785 $ 18,887 $ 12,203 $ .56
======= ======= ======= =======
1994
First Quarter $ 7,205 $ (18) $ (598) $ (.03)
Second Quarter 9,827 (5,916)(B) (4,665)(B) (.21)
Third Quarter 11,640 4,602 2,609 .12
Fourth Quarter 10,866 3,141 1,525 .07
------- ------- ------- -------
$ 39,538 $ 1,809 $ (1,129) $ (.05)
======= ======= ======= =======
(A) Includes sales of oil and gas and blending, net.
(B) Includes property impairment of $2.9 million and additional oil spill
costs accrual of $1.3 million.
31
BERRY PETROLEUM COMPANY
Supplemental Information About Oil & Gas Producing Activities (Unaudited)
The following estimates of proved oil and gas reserves, both developed
and undeveloped, represent interests owned by the Company located solely within
the United States. Proved reserves represent estimated quantities of crude oil
and natural gas which geological and engineering data demonstrate with
reasonable certainty to be recoverable in future years from known reservoirs
under existing economic and operating conditions. Proved developed oil and gas
reserves are the quantities expected to be recovered through existing wells
with existing equipment and operating methods. Proved undeveloped oil and gas
reserves are reserves that are expected to be recovered from new wells on
undrilled acreage, or from existing wells for which relatively major
expenditures are required for completion.
Disclosures of oil and gas reserves which follow are based on estimates
prepared primarily by independent engineering consultants for the three years
ended December 31, 1995. Such estimates are subject to numerous uncertainties
inherent in the estimation of quantities of proved reserves and in the
projection of future rates of production and the timing of development
expenditures. These estimates do not include probable or possible reserves.
Changes in estimated reserve quantities
The net interest in estimated quantities of proved developed and
undeveloped reserves of crude oil and natural gas at December 31, 1995, 1994
and 1993, and changes in such quantities during each of the years then ended
were as follows (in thousands):
1995 1994 1993
Oil Gas Oil Gas Oil Gas
Mbbls Mmcf Mbbls Mmcf Mbbls Mmcf
Proved developed and
undeveloped reserves:
Beginning of year 75,996 6,530 72,078 5,476 72,434 10,003
Revision of previous
estimates 5,266 803 6,002 1,847 3,203 (5,735)
Production (3,277) (611) (3,250) (793) (3,617) (771)
Discoveries - - - - 58 1,979
Sale of reserves
in place (1,698) (739) - - - -
Purchase of reserves
in place 784 - 1,166 - - -
------ ------ ------ ------ ------ ------
End of year 77,071 5,983 75,996 6,530 72,078 5,476
====== ====== ====== ====== ====== ======
Proved developed reserves:
Beginning of year 62,718 4,727 62,261 4,810 65,516 6,797
====== ====== ====== ====== ====== ======
End of year 62,856 3,380 62,718 4,727 62,261 4,810
====== ====== ====== ====== ====== ======
32
BERRY PETROLEUM COMPANY
Supplemental Information About Oil & Gas
Producing Activities (Unaudited)(Cont'd)
Standardized measure of discounted future net cash flows from estimated
production of proved oil and gas reserves (in thousands):
The standardized measure has been prepared assuming year-end sales
prices adjusted for fixed and determinable contractual price changes, year-end
costs and statutory income tax rates previously legislated, and a ten percent
annual discount rate. No deduction has been made for depletion, depreciation
or any indirect costs such as general corporate overhead or interest expense.
1995 1994 1993
Future cash inflows $1,039,150 $ 960,412 $ 607,137
Future production and development costs 311,955 317,735 473,903
Future income tax expenses 245,416 213,225 37,332
--------- -------- --------
Future net cash flows 481,779 429,452 95,902
10% annual discount for estimated timing
of cash flows 273,478 248,499 59,276
--------- -------- --------
Standardized measure of discounted future
net cash flows $ 208,301 $ 180,953 $ 36,626
========= ======== ========
Pre-tax standardized measure of discounted
future net cash flows $ 308,370 $ 263,890 $ 50,124
========= ======== ========
Average sales prices at December 31:
Oil ($/Bbl) $ 13.39 $ 12.49 $ 8.25
Gas ($/Mcf) 1.45 1.78 2.18
Changes in standardized measure of discounted future net cash flows from proved
oil and gas reserves (in thousands):
1995 1994 1993
Standardized measure - beginning of year $ 180,953 $ 36,626 $ 101,054
-------- -------- --------
Sales of oil and gas produced,
net of production costs (27,509) (18,227) (18,697)
Revisions to estimates of proved reserves:
Net changes in sales prices and
production costs 41,726 194,099 (110,914)
Revisions of previous quantity estimates 23,584 24,315 2,261
Change in estimated future development
costs (14,234) (5,470) 6,751
Extensions, discoveries and improved recovery
less related costs - - 2,929
Purchases of reserves in place 2,316 3,815 -
Sale of reserves in place (8,645) - -
Development costs incurred during the period 14,034 4,678 10,958
Accretion of discount 2,639 4,602 15,555
Income taxes (13,126) (68,416) 36,920
Other 6,563 4,931 (10,191)
-------- -------- --------
Net increase (decrease) 27,348 144,327 (64,428)
-------- -------- --------
Standardized measure - end of year $ 208,301 $ 180,953 $ 36,626
======== ======== ========
33
BERRY PETROLEUM COMPANY
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Registrant
The information called for by Item 10 is incorporated by reference from
information under the caption "Election of Directors" in the Company's
definitive proxy statement to be filed pursuant to Regulation 14A no later than
120 days after the close of its fiscal year. The information on Executive
Officers is contained in Part I of this Form 10-K.
Item 11. Executive Compensation
The information called for by Item 11 is incorporated by reference from
information under the caption "Executive Compensation" in the Company's
definitive proxy statement to be filed pursuant to Regulation 14A no later than
120 days after the close of its fiscal year.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information called for by Item 12 is incorporated by reference from
information under the caption "Voting Securities" and "Principal Shareholders
and Ownership by Management" in the Company's definitive proxy statement to be
filed pursuant to Regulation 14A no later than 120 days after the close of its
fiscal year.
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors and persons beneficially owning
greater than ten percent of the outstanding Shares to file reports of ownership
and changes in ownership with the Securities and Exchange Commission. Based
solely on a review of the copies of such forms furnished to the Company, or
written representations that no Form 5 was required, the Company believes that
all Section 16(a) filing requirements were complied with, except that one
report for one transaction was filed late by Mr. Chester L. Love.
Item 13. Certain Relationships and Related Transactions
The information called for by Item 13 is incorporated by reference from
information under the caption "Certain Relationships and Related Transactions"
in the Company's definitive proxy statement to be filed pursuant to Regulation
14A no later than 120 days after the close of its fiscal year.
34
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
A. Financial Statements and Schedules
See Index to Financial Statements and Supplementary Data in Item 8.
B. Reports on Form 8-K
None
C. Exhibits
Exhibit No. Description of Exhibit Page
3.1* Registrant's Restated Certificate of Incorporation
(filed as Exhibit 3.1 to the Registrant's Registration
Statement on Form S-1 filed on June 7, 1989, File No. 33-29165)
3.2* Registrant's Restated Bylaws (filed as Exhibit 3.2 to the
Registrant's Registration Statement on Form S-1 on June 7,
1989, File No. 33-29165)
3.3* Registrant's Certificate of Designation, Preferences and Rights
of Series A Junior Participating Preferred Stock (filed as
Exhibit 3.3 to the Annual Report on Form 10-K for the year
ended December 31, 1989, File No. 0-11708)
4.1* Rights Agreement between Registrant and Bank of America dated as
of December 8, 1989 (filed as Exhibit 1 to Form 8-K filed on
December 20, 1989, File No. 0-11708)
10.1* Description of Cash Bonus Plan of Berry Petroleum Company (filed
as Exhibit 10.7 to the Annual Report on Form 10-K for the year
ended December 31, 1990, File No. 1-9735)
10.2* Salary Continuation Agreement dated as of March 20, 1987, as
amended August 28, 1987, by and between Registrant and Jerry V.
Hoffman (filed as Exhibit 10.11 to the Registration Statement
on Form S-1 filed on June 7, 1989, File No. 33-29165)
10.3* Form of Salary Continuation Agreements dated as of March 20,
1987, as amended August 28, 1987, by and between Registrant and
selected employees of the Company (filed as Exhibit 10.12 to
the Registration Statement on Form S-1 filed on June 7, 1989,
File No. 33-29165)
10.4* Instrument for Settlement of Claims and Mutual Release by and
among Registrant, Victory Oil Company, the Crail Fund and
Victory Holding Company effective October 31, 1986 (filed as
Exhibit 10.13 to Amendment No. 1 to the Registrant's
Registration Statement on Form S-4 filed on May 22, 1987, File
No. 33-13240)
10.5* 1987 Nonstatutory Stock Option Plan and 1987 Stock Appreciation
Rights Plan as amended March 18, 1988 (filed as Exhibit 10.14
in Registrant's Registration Statement on Form S-8 filed on
July 28, 1988, File No. 33-23326)
10.6* Service Contract by and between Registrant and Pride Petroleum
Services, Inc. dated November 1, 1989 (filed as Exhibit 10.23
to the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1989, File No. 0-11708)
35
C. Exhibits (cont'd)
Exhibit No. Description of Exhibit Page
10.7* 1994 Stock Option Plan (filed as Exhibit 10.8 in Registrant's
Annual Report on Form 10-K for the year ended December 31,
1994, File No. 1-9735)
10.8 Standard Offer #2 Power Purchase Agreement dated May 1984, as 38
amended by and between Registrant and Pacific Gas and Electric
Company
23.1 Consent of Coopers & Lybrand L.L.P. 119
23.2 Consent of Babson and Sheppard 120
23.3 Consent of DeGolyer and MacNaughton 121
27. ** Financial Data Schedule 122
99.1 Undertaking for Form S-8 Registration Statements 123
99.2* Form of Indemnity Agreement of Registrant (filed as Exhibit 28.2
in Registrant's Registration Statement on Form S-4 filed on
April 7, 1987, File No. 33-13240)
99.3* Form of "B" Group Trust (filed as Exhibit 28.3 to Amendment
No. 1 to Registrant's Registration Statement on Form S-4 filed
on May 22, 1987, File No. 33-13240)
* Incorporated by reference
** Included in the Company's electronic filing on EDGAR
36
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereto duly authorized on March 15, 1996.
BERRY PETROLEUM COMPANY
/s/ JERRY V. HOFFMAN /s/ RALPH J. GOEHRING /s/ DONALD A. DALE
JERRY V. HOFFMAN RALPH J. GOEHRING DONALD A. DALE
President and Chief Chief Financial Officer Controller (Principal
Executive Officer (Principal Financial Officer) Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities on the dates so indicated.
Name Office Date
/s/ Harvey L. Bryant Chairman of the Board and March 15, 1996
Harvey L. Bryant Director
/s/ Jerry V. Hoffman President, Chief Executive March 15, 1996
Jerry V. Hoffman Officer and Director
/s/ Benton Bejach Director March 15, 1996
Benton Bejach
/s/ William F. Berry Director March 15, 1996
William F. Berry
/s/ Gerry A. Biller Director March 15, 1996
Gerry A. Biller
/s/ Ralph B. Busch, Jr. Director March 15, 1996
Ralph B. Busch, Jr.
/s/ William E. Bush, Jr. Director March 15, 1996
William E. Bush, Jr.
/s/ William B. Charles Director March 15, 1996
William B. Charles
/s/ Richard F. Downs Director March 15, 1996
Richard F. Downs
/s/ John A. Hagg Director March 15, 1996
John A. Hagg
/s/ Thomas J. Jamieson Director March 15, 1996
Thomas J. Jamieson
/s/ Roger G. Martin Director March 15, 1996
Roger G. Martin
37