Berry Corporation (bry)

Good day and thank you for standing by. Welcome to the Berry Corporation's first quarter 2022 earnings 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 conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to our speaker today, Mr. Todd Grabtree, Investor Relations. Please go ahead, sir.

Thank you, Renz, and welcome to everyone. Thank you for joining us for Barrie's first quarter 2022 earnings teleconference. Earlier today, Barrie issued an earnings release highlighting first quarter results. Speaking this morning would 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. Before we begin, I want to call your attention to the safe harbor language found in our earnings release. The release and today's discussion contain certain projections and other forward-looking statements within the meaning 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 reconciliation between all adjusted measures mentioned in today's call and the related gap measures. We will file our 10-Q later today. 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.

Welcome, everyone, and thank you for joining us this morning. We are pleased with our performance in the first quarter of 2022, and we are well positioned for a good year. As our results once again demonstrated, we are a cash-generating machine. With our new shareholder return model in place and current oil and stock prices, we are excited to report that we are on track to deliver top-tier returns just as we promised when we announced our new shareholder return model. With our new variable dividend that started with the first quarter 2022 results, plus our regular fixed dividend, we are delivering record returns totaling 19 cents per share or three times prior quarter returns, positioning us as one of the highest returners of capital amongst our peers. For 2022, we anticipate we will deliver a cash return equaling 120 to 150 percent of the approximately $100 million of dividends we have returned to our shareholders since our IPO in July of 2018. This translates to approximately $1.60 to $1.90 per share and a return in the mid to high teens. Our new return model is predictable, transparent, and simple, just like our business model. It allocates 60 percent of our discretionary free cash flow primarily in the form of cash variable dividends. The remaining 40 percent is for discretionary capital to be used opportunistically, including in the form of share repurchases. Last week, the Board increased the share repurchase authorization to $150 million in aggregate. Furthermore, we are executing the operations side of our business with excellence. We are hitting our production target, which, as a reminder, is to maintain production flat year on year. I'll explain how we do this. The foundation of our business model is our base production, which is the production that comes from our existing producing wells and, on average, accounts for 90% of our total production year in and year out before we ever have to drill a new well. It is predictable and does not require new permits. This is why our business can be modeled like a manufacturing or industrial business. We plan to fill the 10% gap to keep our production flat from year to year by drilling new wells for 6% of that production gap, and completing workovers in the existing wells for the remaining 4%. In other words, 90% of our cash flows comes from production out of existing producing wells. Fernando will share more details about our production activities, including the better than expected performance that we are seeing out of our Utah assets. We have steadily reduced our carbon footprint, and we are continuing to do so. As a reminder, through the end of 2021 and in early 2022, we reduced our carbon footprint by 13%, which is more than 205,000 metric tons, and reduced our operating costs by $14 million, mainly due to our focus on operational efficiencies and A&D activity, as well as ESG initiatives. We are continuing to reduce non-energy operating costs, Gas costs continue to rise due to various market factors. To address this situation, we recently improved our 2022 gas purchase hedging positions. And as we have mentioned previously, our access to the Kern River gas line from the Rockies to California increased on May 1st, this past Sunday, to provide up to 80% of our daily gas needs. further enhancing our ability to obtain gas from markets that have historically been cheaper and more reliable than California. Additionally, our oil production accounts for 91% of our current total production. Our oil production is well hedged, giving us visibility of our levered free cash flow over the next two plus years. C&J Well Services, our recent acquisition that provides standard well services to the industry in California and accelerates the reduction of fugitive emissions by plugging idle and orphan wells, has been fully integrated into the company. It is on track to plug approximately 2,000 third-party idle wells in California in 2022. Plugging wells reduces actual and potential methane emissions as well as other potential health and environmental hazards. According to the United Nations Environment Program and the Climate and Clean Air Coalition, methane is a powerful greenhouse gas, and over a 20-year period, it is 80 times more potent at warming than carbon dioxide. It also reports that methane has accounted for about 30% of global warming since pre-industrial times and is proliferating faster than at any other time since record keeping began in the 1980s. With C&J Well Services, we have the capability to address this urgent environmental issue today with technology that exists today. I will come back to highlight other ESG activities and initiatives as well as give an update on legislative activities in my concluding remarks. Now I will turn it over to Fernando, who will highlight the operational results of the quarter.