DALLAS - Berry Corporation (NASDAQ: BRY), an independent upstream energy company, has reported a solid liquidity position with $94 million in available borrowing capacity under its reserve-based lending (RBL) facility and $11 million in cash on hand as of last Thursday. The company also announced a significant reduction in debt, with outstanding borrowings under its RBL facility down by approximately 57% since the first quarter of 2024.
The reduction in debt includes the final payment of $20 million made in July on the Macpherson transaction. This leaves Berry with $125 million in available borrowing capacity until the RBL facility's maturity on August 26, 2025. Berry's Chief Financial Officer, Mike Helm, stated that the company is actively engaged in discussions to extend or refinance its RBL facility to further address its debt obligations.
Berry's financial strategy focuses on maintaining a strong balance sheet and generating sustainable free cash flow. Helm highlighted that the second half of the year typically sees better free cash flow due to lower working capital usage and that capital expenditures are expected to remain below cash flow from operations during this period. The company is on track to meet its annual production goals and has the necessary permits to support its drilling program for 2024 and into 2025.
The company's operations remain steady, with production in line with annual guidance. Berry maintains a vision of keeping production flat and sustaining free cash flow into 2026, assuming that permits continue to be issued at the current rate. Helm emphasized the company's commitment to prudent investment in its business and returning capital to shareholders when appropriate.
Berry Corporation operates in the western United States, with exploration and production assets in California and Utah, and a well servicing and abandonment segment in California. Its assets are characterized by high oil content and are predominantly located in areas with low population density.
This news update is based on a press release statement from Berry Corporation.
In other recent news, Berry Corporation reported a significant reduction in its borrowing base from $200 million to $125 million, following the semi-annual redetermination under its Credit Agreement. Additionally, the company has demonstrated strong financial and operational results for the second quarter of 2024. Berry's adjusted EBITDA was a substantial $74 million, and daily production reached 25,300 barrels of oil equivalent.
The company reduced its revolver balance to $36 million by the end of the second quarter. Berry Corporation has also obtained the necessary permits for its 2024 drilling program and already received new permits for 2025. Furthermore, the company is exploring deeper reservoirs beyond the Uinta, such as the Douglas Creek and Wasatch.
Among other recent developments, Berry Corporation is in discussions for bolt-on acquisition opportunities in Kern County, California, with small private companies. These recent developments reflect Berry Corporation's commitment to strategic growth and financial resilience.
InvestingPro Insights
Berry Corporation (NASDAQ: BRY) has been navigating the energy market with a strategy that emphasizes financial prudence and shareholder returns. As the company works towards maintaining a strong balance sheet, several key metrics from InvestingPro provide insights into its current financial health and future prospects.
InvestingPro Data highlights a market capitalization of $486.25 million, indicating the size and scale of Berry's operations within the industry. Despite a challenging period, the company's gross profit margin remains robust at 55.93% for the last twelve months as of Q2 2024, reflecting its ability to manage costs effectively in a volatile market. However, it's important to note the company's negative revenue growth of -9.26% during the same period, which may warrant attention from investors monitoring the company's top-line performance.
One of the notable InvestingPro Tips for Berry Corporation is its commitment to returning capital to shareholders, as evidenced by its significant dividend yield of 12.03% as of the last dividend ex-date in August 2024. This aligns with the company's announcement of its focus on generating sustainable free cash flow and its history of maintaining dividend payments for seven consecutive years.
Furthermore, Berry's P/E ratio stands at -14.85, which suggests that the market has factored in some challenges. Nevertheless, analysts predict the company will turn profitable this year, an optimism that is also reflected in the company's price being 70.69% of its 52-week high.
For investors seeking a deeper analysis, InvestingPro offers additional insights, including more InvestingPro Tips and real-time metrics for Berry Corporation. There are currently a total of 8 InvestingPro Tips available, which can provide further guidance on the company's financial health and investment potential. Access these valuable tips by visiting https://www.investing.com/pro/BRY.
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