Berry Corporation (bry)

Ladies and gentlemen, thank you for standing by, and welcome to the Berry Corporation Q1 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's number is being recorded. If you require any further assistance, please press star then 0. I would now like to hand the conference over to your speaker today, Todd Crabtree, Manager of Investor Relations. Thank you, and please go ahead.

Thank you, Brandi, and welcome to everyone. Thank you for joining us for BERI's first quarter 2021 earnings teleconference. Yesterday afternoon, BERI issued an earnings release highlighting full first quarter results. Speaking this morning will be Trem Smith, Board Chair and CEO, Fernando Araujo, Chief Operating Officer and Executive Vice President, and Kerry Bates, Chief Financial Officer and Executive Vice President. Tram will discuss our first quarter performance as well as our expectations for the remainder of 2021. Fernando and then Kerry will share further details on how we are addressing the operational financial aspects of our business. Before turning it over to questions, Tram 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, dry.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 reconciliation between all adjusted measures mentioned in today's call and related gap 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 Trem Smith.

Thank you, Todd. Good morning, everyone, and thanks for joining us today. Despite the dynamic environment in which we are operating, we are executing as promised and continue to focus on the fundamentals that create value. We had a great quarter. Production was up. OPEX was down. EBITDA and capital spending were better than expected. We generated $16 million in levered free cash flow, and we had nearly $100 million on cash on hand at the end of the quarter. Our liquidity position gives us flexibility on growth and returning capital to our shareholders. We restarted our dividend in the first quarter. It has been approved for the second, and we expect it to continue and grow at these price levels. I want to quickly address Governor Newsom's proposal to ban hydraulic fracturing in California as of 2024. This ban does not materially impact Berry's operations, and as defined, it does not affect our thermal diatomite production or future operations. However, this type of unilateral action by the governor is not in the best interest of Californians and does not bring the state closer to its goal of being net carbon neutral by 2045. Studies, including those overseen by the Governor's California Air Resources Board, otherwise known as CARB, have shown that Californians will still demand transportation fuels from hydrocarbons well past 2045. Therefore, this ban just shifts the state supply source from local producers who provide significant economic value locally and statewide through taxes, employment, etc., and operate using California's rigorous environmental and safety standards to foreign oil producers that do not share our social or environmental standards, nor contribute to the economy of the state. It is important to recall that this year, Berry will pay $40 million in greenhouse gas credits, and the industry as a whole pays more than $1 billion annually to help fund California's greenhouse gas reduction programs. We all want a clean and sustainable environment, and we support the state's goal of carbon neutrality by 2045. But to achieve this, we need to work together and find solutions that are equitable for everyone. Additionally, the California legislature continues to do its work. It is our belief that we can be part of the solution to provide equitable, affordable, and reliable energy by working with others. We have built relationships through the Western States Petroleum Association and developed coalitions with labor, as well as other industries, including lumber, agriculture, and water. This collaborative approach helped us successfully defeat Senate Bill 467, Senator Weiner's wide-ranging anti-oil bill. There are other proposed bills which we are actively monitoring that could impact our industry. More details can be found on slide 25 of our investor presentation. BERI is and will be a part of the energy solution. We continue discussions to increase our scale through M&A, and we have quantified more than three decades of inventory in our sandstone reservoirs alone that will help meet California's long-term energy demand and provide value to all stakeholders for decades to come. I will now turn it over to Fernando.