July 19–Berry Petroleum Corp. continues its rise from ashes with news this week that the Bakersfield-based oil producer has launched an initial public offering that could bolster its finances following the bankruptcy of its former Texas parent company.
Berry, a significant and growing player in Taft- and McKittrick-area oilfields, announced Monday it plans to sell 12.2 million shares for between $15 and $17 each. Two of Berry’s private equity stockholders expect to piggyback on the transaction by offering an additional 6.5 million shares they own in the newly independent company.
In a recent filing with the U.S. Securities and Exchange Commission, Berry said it will spend some proceeds from the IPO on picking up 4.2 million in outstanding shares of its own common stock. Such buy-back moves are commonly used to boost a company’s stock price.
The roughly $300 million IPO could help the company consolidate control over its own future, while also allowing it to keep investing heavily in California oil production and, to a lesser degree, in the oil and gas properties it owns in Colorado, Texas and Utah.
The stock sale moves Berry, founded in 1909, closer to the stature it once enjoyed as one of California’s leading publicly traded oil producers. Its shares will trade on the Nasdaq stock exchange under the symbol “BRY.”
After moving its headquarters from Bakersfield to Denver in 2008, Berry agreed in early 2013 to a purchase bid by Houston-based Linn Energy LLC in a stock-for-stock deal valued at $4.6 billion after assumption of debt.
Things went south after the purchase, as global oil prices plunged in mid-2014. With its stock way below previous highs and its credit tapped out, Linn filed for Chapter 11 bankruptcy reorganization in 2016.
The upshot for Berry was that on Feb. 28, 2017, the assets Linn had organized as Berry LLC were transferred to the newly independent Berry Corp. One result was that Berry emerged from bankruptcy with $1.3 billion less debt, and $76 million per year less in interest costs. Another result: It was able to cancel or renegotiate unfavorable transportation and oil sales contracts.
Since then, Berry has raised money, secured credit and greatly ramped up investment in oil assets. In July of 2017, it negotiated a $1.5 billion lending facility based on its petroleum reserves, and in February closed a deal for $400 million in private financing.
Its capital expenditures this year are listed in the $140-160 million range, more than double last year’s spending. It said in a recent SEC filing it plans to spend up to $230 million next year.
In April, the company bought from Linn two oilfield leases on 214 acres, plus lease options on another 490 acres, of Chevron USA land in the northern part of the Midway-Sunset oilfield near Taft. Berry agreed to drill wells in the area at an estimated cost of $34.5 million; that work is supposed to be complete by April 1, 2022.
The company says that within the next five to 10 years, it hopes to drill nearly 3,400 wells — 2,945 of them in California, not including the work on Chevron property at north Midway-Sunset.
Berry’s SEC filings indicate the company may continue to acquire leases in areas where it already has production work, and that it wants to explore deeper oil reserves beyond where it now pumps oil.
A Berry spokesman did not respond to a request for comment Thursday.
John Cox can be reached at 661-395-7404. Follow him on Twitter: @TheThirdGraf.
(c)2018 The Bakersfield Californian (Bakersfield, Calif.)
Visit The Bakersfield Californian (Bakersfield, Calif.) at www.bakersfield.com
Distributed by Tribune Content Agency, LLC.