8-K: Berry Corporation (BRY) Announces First Quarter 2025 Results, Reaffirms Guidance, and Declares Dividend

Berry Corporation (BRY) reported its Q1 2025 financial results, reaffirmed its full-year guidance, and announced a quarterly dividend of $0.03 per share.

Summary

• Berry Corporation (BRY) announced its Q1 2025 financial and operational results on May 8, 2025.
• The company reaffirmed its FY25 guidance due to a favorable hedge position.
• Q1 2025 production was 24.7 MBoe/d, with 93% oil.
• Hedged LOE was reported at $26.40/Boe, 9% below the midpoint of FY25 guidance.
• Berry returned $2 million to shareholders through a $0.03 per share dividend, representing a 5% annual dividend yield.
• The company paid down $11 million of total debt and increased liquidity to $120 million.
• The leverage ratio improved to 1.37x quarter-over-quarter.
• A net loss of $97 million, or $1.25 per diluted share, was reported, including a non-cash impairment of $113 million (after tax).
• Adjusted Net Income was $9 million, or $0.12 per diluted share.
• Operating cash flow was $46 million, Adjusted EBITDA was $68 million, and Free Cash Flow was $17 million.
• 73% of oil volumes are hedged for the remainder of 2025 at $74.69/Bbl, and 63% for 2026 at $69.42/Bbl.
• The mark-to-market hedge value was $129 million as of May 2, 2025.
• Drilling of a 4-well horizontal pad in the Uinta Basin was completed, with first production expected in Q3.
• The Board of Directors approved a quarterly cash dividend of $0.03 per share, payable on May 29, 2025, to shareholders of record as of May 19, 2025.
• Approximately 60% of Berry's 2025 capital program is expected to be directed to California, with 40% allocated to Utah.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While the company reported a net loss, it reaffirmed its guidance, reduced debt, and maintained a strong hedge position. Management's comments are optimistic, but the impairment charge is a concern.

Positives

• Berry reaffirmed its FY25 guidance.
• The company has a strong hedge position, protecting cash flows and liquidity.
• Debt was reduced by $11 million during the quarter.
• Liquidity increased to $120 million.
• The leverage ratio improved to 1.37x.
• A quarterly dividend of $0.03 per share was declared, representing a 5% annual dividend yield.
• The company completed drilling a 4-well horizontal pad in the Uinta Basin ahead of schedule and on budget.
• Berry reported zero recordable incidents, zero lost-time incidents, and no reportable spills in its E&P operations.

Negatives

• A net loss of $97 million, or $1.25 per diluted share, was reported for Q1 2025.
• The net loss included a non-cash impairment of $113 million (after tax).

Risks

• The company acknowledges current market volatility.
• The report mentions factors that could cause actual results to differ from management's expectations, including regulatory changes, commodity price volatility, and geopolitical risks.
• The company recorded a non-cash pre-tax asset impairment charge of $158 million ($113 million after-tax) on one of its non-thermal diatomite proved properties in California for the three months ended March 31, 2025.

Future Outlook

Berry reaffirms its full-year 2025 guidance and expects to fund the remainder of its 2025 capital development program with cash flow from operations based on current forward commodity prices.

Management Comments

• Fernando Araujo, Berry's Chief Executive Officer, said they delivered strong financial and operating results in the first quarter, highlighting the strengths of their business model and strategy.
• Mr. Araujo noted that production decreased slightly due to planned downtime, as they drilled twice as many California wells compared to last quarter.
• Mr. Araujo stated that their California drilling program is focused on their thermal diatomite assets, building on their success in 2024 with exceptional results, and that at recent strip pricing, rates of return here exceed 100%.
• Mr. Araujo mentioned that in Utah, they recently finished drilling their 4-well horizontal pad ahead of schedule and on budget, with first production expected in the third quarter.
• Mr. Araujo stated that they are confident in their ability to navigate current market volatility and their 2025 outlook remains unchanged.
• Mr. Araujo stated that their cash flow is protected by their strong hedge position, and their strategy is anchored by their shallow decline rate, low capital intensity assets and high rate of return development.
• Mr. Araujo stated that they have a resilient business with low breakeven prices and expect to fully fund their 2025 plan at prices well below current levels.

Industry Context

Berry's focus on hedging and low-breakeven assets is a common strategy among smaller E&P companies to mitigate risk in a volatile commodity price environment. The company's emphasis on thermal diatomite assets in California reflects a focus on mature, long-lived fields with predictable production profiles.

Comparison to Industry Standards

• Berry's leverage ratio of 1.37x is relatively conservative compared to some of its peers in the E&P industry.
• Many E&P companies target leverage ratios below 2.0x to maintain financial flexibility.
• The company's hedging strategy is in line with industry best practices for managing commodity price risk.
• Berry's focus on low-decline assets is similar to strategies employed by companies like California Resources Corporation (CRC) and Aera Energy, which also operate in mature basins.

Stakeholder Impact

• Shareholders will receive a quarterly dividend of $0.03 per share.
• Employees are likely to be impacted by the company's focus on cost control and efficiency.
• The company's hedging strategy aims to protect cash flows, which benefits all stakeholders.
• The company's commitment to sustainability may positively impact its reputation with environmentally conscious stakeholders.

Next Steps

• First production is expected in the third quarter from the 4-well horizontal pad in the Uinta Basin.
• A Sustainability Report is planned for the third quarter.

Key Dates

Keywords

Berry Corporation, BRY, financial results, Q1 2025, guidance, dividend, production, hedging, debt reduction, liquidity, EBITDA, Free Cash Flow, oil and gas