Berry Corporation (bry)

Ladies and gentlemen, thank you for standing by and welcome to the Berry Corporation Q3 2020 earnings call. At this time, all participant lines are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 in your telephone keypad. And please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Manager of Investor Relations, Todd Crabtree. Thank you. Please go ahead, sir.

Thank you, Suzanne, and welcome to everyone this morning. Thank you for joining us for BERI's Third Quarter Earnings Teleconference. Yesterday afternoon, BERI issued an earnings release highlighting 2020 Third Quarter results and our continued response to the financial and operating uncertainties caused by COVID-19. Addressing these and other issues, will be Trem Smith, Board Chair and CEO, Fernando Araujo, Barrie's new Chief Operating Officer and Executive Vice President, and Kerry Bates, Chief Financial Officer and Executive Vice President. Trem will discuss Barrie's continued response to these unprecedented times and the company's plans for the remainder of the year. Fernando and then Kerry will share further details on how we are addressing the operational and financial aspects of our business. Before turning it over to questions, Trem will make a few concluding remarks. Before we begin, I want to call your attention to the safe harbor language found in our earnings release. The earnings release and today's discussion contain certain projections and other forward-looking statements within the meaning of federal security laws. These statements are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied in these statements. These include risks and other factors outlined in our filings with the SEC. Our website, bry.com, has a link to the earnings release and our most recent investor presentation. Any information, including forward-looking statements made on this call or contained in the earnings release and that presentation, reflect our analysis as of the date made. We have no plans or duty to update them except as required by law. Please refer to the tables in our earnings release and on our website for a reconciliation between all adjusted measures mentioned during today's call and the related GAAP measures. We will also post the replay link of this call and the transcript on our website. I will now turn the call over to Tram Smith.

Thank you, Todd. Good morning, everyone, and thank you for joining us today. I would be remiss if I didn't acknowledge that yesterday the United States held a critically important election for our nation and our industry. I can't tell you what the election results will mean to the industry, nor Barry specifically. But I can tell you that we have designed Berry to grow value in various political and economic environments, and despite whatever headwinds we may face. We are resolutely focused on the business, producing energy efficiently and in an environmentally sensitive manner, managing our financials to ensure we will prosper, and building our vision for the future, which includes our part in the energy transition. I'm proud and humbled to say that the Berry team has done an exceptional job executing our plan without being distracted and ensuring we come out of this cycle in a strong position for growth. We are fully confident that oil and gas, especially locally produced oil and gas, will be a long-term component of any reliable, affordable, and equitable energy future. In short, oil as an energy source is not irrelevant in both the developed and developing economies of the world. We continue to operate in all the ways I discussed in Barry's first and second quarter earnings calls since the onset of COVID-19. First, our employees and the communities where we operate remain a top priority. We employ strict COVID-19 protocols in keeping with CDC guidelines. We have not had a workplace outbreak, and our offices have been open for business for more than five months. Our employees and the workplaces remain safe, healthy, and productive. Second, Barry is unique in the oil and gas business for several reasons. Our fundamental principle of living out of levered free cash flow has never changed, nor will it. We still expect to generate more than $100 million in levered free cash flow this year. We continue to create value, as we always have, even in this downturn. We will end the year with a strong cash position. Our OPEX cost structure is down more than $3 per BOE since the end of last year, and we believe most of this is sustainable for the long term. Finally, we have entered the newest chapter of Barry's evolution into a top value generator in the oil and gas space. I am truly excited about this and extremely confident Barry will be successful in achieving it. The remainder of my comments will be around this vision and looking forward into 2021. Most recently, we hired our new COO, Fernando Araujo, whose career and character demonstrates our core values of leadership, entrepreneurship, accountability, ownership, and communication. He comes to us from the great energy technology firm, Schlumberger, where he managed more than 260,000 barrels of oil per day in seven countries in the Western Hemisphere. Prior to Schlumberger, he managed Apache's assets in Egypt, Argentina, and Canada for more than 18 years. His breadth of international and technical experience and his experience managing hundreds of thousands of barrels of production per day are perfect for achieving our vision. You will hear from Fernando in a few minutes. Simply put, our vision is to be part of the energy transition in whatever form it may take. We have been aligning ourselves with the goals of each state where we operate since our emergence in 2017. We know that any success towards an energy transition will require all parties to come to the table to work together for that transition. It will require a diversified energy market, including renewables and oil and gas, and it must be reliable, affordable, and equitable for all citizens of California, Colorado, and Utah where we currently operate. Oil and gas are and will continue to be a significant relevant part of the solution. At Berry, we believe that homegrown production is a much more environmentally and socially favorable source of energy than imported tankered oil from foreign countries including OPEC+, where today more than 60% of California's substantial oil needs per day are sourced to the disadvantage of its citizens. For our industry, and Barry specifically, it is my strong view that the industry can no longer take a business-as-usual approach. Barry is convinced that alignment with the state's environmental goals, such as those in California, makes sense and is required by all parties. Similarly, governments must recognize that oil and gas can be safely produced locally and without harming citizens' health. We are aligned with the current leadership of CalGEM, who is driving the effort to find the critical balance between the immediate energy demands of today and the path forward to a more sustainable future. Our goals for the energy transition are, first, Grow local oil and gas production while reducing dependence on OPEC Plus and other foreign countries, which currently make up more than 60% of the more than 1.8 million barrels of oil California uses every day. Second, grow diverse sources of affordable energy, including renewables. And third, promote California's climate objectives to increase zero-emission vehicles and electrification. And finally, do all of this safely. By achieving these goals through operational excellence, innovation, and application of technology, and utilizing joint ventures and public-private partnerships as appropriate, we'll be supporting the social goals of the state as well. For example, we will help address homelessness and poverty by providing great paying and stable jobs, along with other social benefits we can and will contribute. What is BERI doing to prepare for the energy transition? Earlier this year, we created a strategic initiative and partnership role, which has the sole purpose of helping us develop the partnerships, both public and private, necessary to achieve our goals and success. Some of these include strategies for best use of produced water, well abandonment programs to reduce GHG gases such as methane leakage into the atmosphere, as well as making land available in mature areas for appropriate land use such as habitat, housing, et cetera, the electrification of our vehicle fleet, and the use of renewable power to enhance our oil producing operations. To capture our progress in these areas, we have created a proactive working group to provide much more clarity and transparency to our ESG reporting. The first task at hand, which is well underway, is to establish our baseline everywhere we operate. We are driven to, obligated to, and can reduce our CO2 footprint. We must grow the size of Berry to have a more effective seat at the table with state and local governments and to grow shareholder value. We are actively reviewing all opportunities to grow the company. For example, with more than 400 operators in California, consolidation is key for the state and BERI to achieve our mutual goals. We are only looking at transactions that are value-adding and accretive to our shareholders, while also providing benefit to our many stakeholders, including the state. Finally, to do any of this, we must take care of our core business. We will continue to develop and strengthen relationships with all government, regulatory, and political stakeholders, as we have been doing over the past two years. And we will continue to focus relentlessly on operational excellence. We will strive to flawlessly execute our strategic plan and show the world that oil and gas can be produced safely and economically, bringing benefits without harm to our communities and the state. We are committed to the future of affordable energy and have a vision for how we participate meaningfully in the energy transition. I will now turn it over to our new COO, Fernando.