Berry Corporation (bry)

Good day, and thank you for standing by, and welcome to Barry Corporation's Q2 2022 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'll need to press star 1-1 on your telephone. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your speaker today, Danny Hunter, General Counsel. You may begin.

Thank you. Welcome, everyone. Thanks for joining us for Barry's second quarter 2022 earnings teleconference. Earlier today, Barry issued an earnings release highlighting second quarter results. Speaking this morning will be Trump 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 in today's discussion contains 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 those statements. These include risks and other factors outlined in our filings with the SEC. Our website, vry.com, has a link to the earnings release and our most recent investor presentation. Any information, including forward-looking statements made on this call, are contained in the earnings release in 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 with all adjusted measures mentioned in today's call and the related gap measures. We'll file our 10-Q later today and also post the replay link of this call and the transcript on our website. I will now turn the call over to Trim Smith.

Welcome everyone and thank you for joining us this morning. We delivered solid results in the second quarter of 2022 and the year is trending in line with our expectations. Barrie continues to be a cash flow machine. We have a strong track record of returning capital to our shareholders as we remain on pace to deliver top tier returns going forward. Barrie is uniquely positioned to continue returning capital well beyond the current cycle. Last quarter, we delivered our first variable dividend through our new shareholder return model. We are excited to report that we are delivering an even larger dividend this quarter. For the quarter, our combined dividend, variable and fixed, is $0.62 per share, more than three times larger than last quarter's return. This positions us as one of the highest returners of capital in the industry. We still anticipate the cash dividends for the fiscal year 2022 will be in the range of $1.60 to $1.90 per share, based on the current plan and commodity strip prices. As a reminder, our shareholder return model is based on discretionary cash flow we generate, which is calculated after the payment of the regular fixed dividend and then allocates 60% of that discretionary cash flow primarily in the form of cash variable dividends. The remaining 40% is for discretionary capital to be used opportunistically, including in the form of share repurchases. We generated 74 million of discretionary cash flow in the second quarter, which means we are delivering 44 million or 56 cents per share to our shareholders for the variable dividend. On top of the fixed dividend, of $0.06 per share. In the second quarter, we also repurchased 2 million shares for $23 million, utilizing a portion of our board-approved share repurchase authorization of $150 million in aggregate. Over the last few years, we have repurchased more than 7.5 million shares, or almost 10% of Barry's outstanding shares. Since going public in July 2018 and inclusive of the 62 cents per share dividend that will be paid in August, we will have returned more than 225 million to shareholders in the form of dividends and share repurchases, which is more than two times the 110 million of net IPO proceeds. This includes the 92 million announced so far this year. Looking forward to the remainder of the year, we see our production holding relatively steady and our discretionary cash flow remaining strong. In addition, we expect full-year capital to be at the lower end of its guidance range due to a shift in our development plan to focus on reusing existing wellbores, further optimizing our use of capital. Fernando will expand on this further.