Berry Corporation (bry)

Good day and thank you for standing by. Welcome to the Berry Corporation Q3 2021 Earnings Conference call. At this time, all participants are in a 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 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Mr. Todd Crabtree, Manager of Investor Relations. Please go ahead.

Thank you, Kathleen, and welcome to everyone. And thank you for joining us for Barry's third quarter 2021 earnings teleconference. Yesterday afternoon, Barry issued an earnings release highlighting third quarter results. Speaking this morning will be Trem Smith, Chairman and CEO, Fernando Araujo, Chief Operating Officer and Executive Vice President, and Kerry Bates, Chief Financial Officer and Executive Vice President. Trem will discuss our third 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 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 projections and other forward-looking statements within the meetings of federal securities 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 in today's call and the related GAAP measures. We will also post a repay 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. We continue to execute our core business, which is the production and sale of affordable energy, primarily in California, successfully. The most recent upturn in oil prices presents an exceptional opportunity for Berry as we believe it is different than previous cycles. It is our view that and possibly fundamental change for the industry for several key reasons. First, while demand for oil is continuing to grow globally and is expected to continue increasing over decades, the long-term supply is and will continue to be limited after years of global underinvestment. In fact, Bloomberg reported last week that Saudi Aramco's CEO said, oil output capacity across the world is dropping quickly and companies need to invest more in production. It is now getting to a situation where there's limited supply. Second, numerous major projects have been delayed or canceled. And third, exploration is as low as it has been in at least the last few decades. The delays in major projects and the lack of new discoveries means there are very few new sources of oil coming onto the market in the next few years. For some time now, we have been working on an outside-the-box approach to return even more value to our shareholders. We are excited to announce that the Board approved a shareholder return model that will continue to position Barry as a top-tier returner of capital to shareholders. In fact, it should put Barry firmly in the top tier of E&P companies of all sizes. We are creating a model that provides significant returns which could be more than 20 percent annually based on our stock price and the current strip. The model will consist of a mix of returns through variable cash dividends in addition to our current dividend, share repurchases and debt retirement, while keeping a portion available for organic growth and bolt-on acquisitions. Barrie is uniquely positioned to implement this new model successfully. We already have all the critical elements in place in our proven simple business model, such as low corporate decline rate, a predictable cost structure, an abundance of inventory, Brent pricing, and a simple, clean balance sheet, which collectively, with the increased pricing we are currently enjoying, generates extensive levered free cash flows. Based on current industry fundamentals, we should generate considerable levered free cash flow for many years to come. Again, we define levered free cash flow as cash flow after paying all of our costs, including our interest, our fixed dividend, and the cost to keep production flat. This is an exciting development for Barry and our shareholders, and is an obvious extension of our business model, which is unique in the industry. We look forward to unveiling the full details of the model later this quarter and implementing it beginning in 2022. I will come back to highlight some additional strategic items in my concluding remarks. Now I will turn it over to Fernando, who will highlight the operational results of a highly successful quarter.