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Berry Corp (bry) (BRY)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered a mixed but improving profile: GAAP net income of $33.6M ($0.43 diluted EPS) on total revenues of $210.1M; adjusted EPS was $0.00 and adjusted EBITDA was $52.9M, with higher derivative gains offsetting weaker realized oil prices and elevated capex pulled forward to Utah .
  • Versus Wall Street consensus, revenue materially beat ($155.5M consensus vs $210.1M actual), adjusted EBITDA was above consensus ($58.0M consensus vs $52.9M company-reported, but S&P shows actual of $97.97M); adjusted EPS was below low expectations ($0.02 consensus vs $0.00 actual)*. Values retrieved from S&P Global.
  • Guidance reaffirmed for FY25 across production, LOE, taxes, G&A and capex; Berry reiterated strong hedge protection (71% of H2-25 oil at ~$74.6 Brent; ~80% of gas purchases hedged) and targeted at least $45M of 2025 debt reduction .
  • Strategic catalysts: constructive California regulatory developments (Kern County EIR recertification and potential state-level codification) and first operated Uinta horizontal pad flowback in August with 20% lower well costs, positioning 2H for sequential production growth and stronger FCF .

What Went Well and What Went Wrong

  • What Went Well

    • Hedge program cushioned price volatility: 71% of remaining 2025 oil hedged at $74.59 Brent and ~80% of gas purchases hedged; Q2 showed $53.3M total gains on derivatives supporting earnings .
    • Uinta horizontal execution ahead of plan: four-well pad fracked earlier with ~20% lower average well cost vs non-op wells; dual-fuel fleets and ~50% produced water further reduced costs; flowback starting August to drive 2H production growth .
    • Regulatory momentum in California: Kern County’s new ordinance and revised EIR approved; management “optimistic” about court approval to resume permitting by year-end, adding optionality beyond permits already in hand through 2027 .

  • What Went Wrong

    • Lower realized oil pricing pressured top line: oil without hedge fell to $61.26/bbl (from $69.48 in Q1 and $78.18 in Q2’24), compressing “oil, gas & NGL” revenues to $125.6M (Q1: $147.9M; Q2’24: $168.8M) .
    • Hedged LOE improved YTD but increased sequentially: LOE-hedged rose to $27.97/boe from $26.40/boe in Q1, though still below prior-year $27.48/boe; energy LOE-hedged increased q/q reflecting timing and volumes .
    • Free cash flow turned negative (-$25.6M) on accelerated Utah capex ($54.2M), pulling spend forward; operating cash flow declined q/q to $28.6M (Q1: $45.9M) .

Financial Results

  • Consolidated performance vs prior periods
MetricQ2 2024Q1 2025Q2 2025
Total Revenues & Other ($USD Millions)$199.6 $182.7 $210.1
Oil, Gas & NGL Sales ($USD Millions)$168.8 $147.9 $125.6
GAAP Net Income ($USD Millions)$(8.8) $(96.7) $33.6
GAAP Diluted EPS ($USD)$(0.11) $(1.25) $0.43
Adjusted Net Income ($USD Millions)$14.2 $9.4 $(0.4)
Adjusted Diluted EPS ($USD)$0.18 $0.12 $0.00
Adjusted EBITDA ($USD Millions)$74.3 $68.5 $52.9
Operating Cash Flow ($USD Millions)$70.9 $45.9 $28.6
Free Cash Flow ($USD Millions)$28.6 $17.5 $(25.6)
  • Segment breakdown (Q2 2025)
SegmentRevenues ($USD Millions)Pre-tax Income ($USD Millions)Capex ($USD Millions)Total Assets ($USD Millions)
E&P$130.8 $81.0 $53.4 $1,429.1
Well Servicing & Abandonment Services$31.1 $(0.3) $0.3 $43.5
Corporate/Eliminations$(8.3) $(33.9) $0.6 $(44.4)
Consolidated$153.7 $46.8 $54.2 $1,428.1
  • KPIs and costs
KPIQ2 2024Q1 2025Q2 2025
Production (MBoe/d)25.3 24.7 23.9
Oil % of Production92% (22.0/23.9) 93% (23.0/24.7) 92% (22.0/23.9)
Oil Realized Price w/o Hedge ($/bbl)$78.18 $69.48 $61.26
Oil With Hedge ($/bbl)$73.58 $69.56 $67.54
LOE - Hedged ($/boe)$27.48 $26.40 $27.97
Energy LOE - Hedged ($/boe)$13.57 $12.49 $13.86
Taxes Other Than Income Taxes ($/boe)—$—$5.95 (derived from tables; value embedded in CFO remarks)
Effective Tax Rate (%)28% 29% 28%

  • Balance sheet and capital returns (Q2 2025)

    • Liquidity: $101M; term loan outstanding $428M; long-term debt $364.6M as of June 30 .
    • Dividend: $0.03 per share, payable Aug 28 to holders of record Aug 18 .
    • Debt reduction: ~$11M in Q2; ~$23M YTD toward ≥$45M full-year target .

  • Actual vs Consensus (S&P Global)

    • Revenue: Actual $210.1M vs consensus $155.5M* . Values retrieved from S&P Global.
    • Adjusted EBITDA: Company reported $52.9M; consensus $58.0M; S&P shows actual $97.97M* (methodology differences likely reflect derivative classification). Values retrieved from S&P Global.
    • Primary EPS (Adjusted EPS): Actual $0.00 vs consensus $0.02* . Values retrieved from S&P Global.

Guidance Changes

  • FY2025 guidance reaffirmed; no changes vs Q1 outlook
MetricPeriodPrevious Guidance (Q1 2025)Current Guidance (Q2 2025)Change
Avg Daily Production (boe/d)FY202524,800 – 26,000 24,800 – 26,000 Maintained
Non-energy LOE ($/boe)FY2025$13.00 – $15.00 $13.00 – $15.00 Maintained
Energy LOE (unhedged) ($/boe)FY2025$12.70 – $14.50 $12.70 – $14.50 Maintained
Nat Gas Purchase Hedge Settlements ($/boe)FY2025$1.00 – $1.60 $1.00 – $1.60 Maintained
Taxes Other Than Income Taxes ($/boe)FY2025$5.50 – $6.50 $5.50 – $6.50 Maintained
Adjusted G&A ($/boe)FY2025$6.35 – $6.75 $6.35 – $6.75 Maintained
Capital Expenditures ($M)FY2025$110 – $120 $110 – $120 Maintained
DividendFY2025$0.03 per quarter (fixed) $0.03 declared for Q3 payment Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024)Previous Mentions (Q1 2025)Current Period (Q2 2025)Trend
California RegulatoryBaseline constraints; pivot to sidetracks; strong thermal diatomite returns; refinancing to support plan Strategy unchanged; hedges protect cash; permits underpin development Kern County ordinance & revised EIR approved; optimism on court approval; potential codification to stabilize in-state production Improving
Utah Uinta ProgramExpanded position (100k acres); farm-ins providing technical data; peak rates up to 2,000 Boe/d on non-op wells Completed drilling four-well operated pad; first production expected Q3 Early frac start; ~20% lower well costs; flowback started; Castle Peak test in Q4 Executing/Scaling
Hedge & Risk ManagementRequired hedges under new term loan; ~75% 2025 PDP hedged Raised average oil hedge price via collar-to-swap conversion; 73% remainder of 2025 hedged 71% of H2-25 oil and ~80% gas purchases hedged; $30M MTM value Stable/Supportive
Cost Structure & LOELOE hedged 24.81–27.30 $/boe in Q4/Q3; initiatives reduced G&A and methane emissions Hedged LOE $26.40/boe; adjusted G&A/boe $7.19 Hedged LOE $27.97/boe; adjusted G&A/boe $7.44; taxes other $5.95/boe Mixed (seq. higher LOE)
Capital Allocation & LeverageLeverage 1.49x; dividend initiated; debt reduction priority Liquidity $120M; leverage 1.37x; FCF $17M; dividend $0.03 Liquidity $101M; leverage 1.51x (TTM adj EBITDA); paid down $11M in Q2; dividend $0.03 Neutral to Improving (debt down)

Management Commentary

  • CEO: “Our full year drilling activity is now complete and we are positioned for sequential production growth through the end of the year… we have the permits in hand today to execute our multi-year development plans.”
  • CEO on Utah: “Our Uinta wells should help drive production growth over the second half… our average well cost is approximately 20% below the average cost of our non-op wells.”
  • President on California: “We’re seeing the most constructive tone in California in at least five years… we expect a [court] decision prior to year end.”
  • CFO: “Total hedged LOE was $27.97 per BOE… we paid down $11 million during the quarter and are on track to pay down at least $45 million for the year.”

Q&A Highlights

  • California permitting outlook: Management “feels very optimistic” on Kern County EIR court approval; no new objections raised beyond process issues; recertified EIR addresses prior deficiencies .
  • Utah Castle Peak: Early tests indicate 40–50 bbl/ft EUR possible; Berry sees thicker Castle Peak potential and longer-term multi-bench cube development optionality if successful .
  • Uinta cost trajectory: Achieved ~20% cost reduction on first operated three-mile laterals; identified further improvements in dual-fuel performance and produced water use (targeting $6.50–$6.70/ft) .

Estimates Context

  • Q2 2025 consensus vs actuals (S&P Global):
    • Primary EPS Consensus Mean: $0.02 vs actual $0.00 (adjusted) → slight miss*. Values retrieved from S&P Global.
    • Revenue Consensus Mean: $155.5M vs actual $210.1M (company-reported total revenues & other) → significant beat*. Values retrieved from S&P Global.
    • EBITDA Consensus Mean: $58.0M vs company-reported adjusted EBITDA $52.9M; S&P shows actual $97.97M*, suggesting different treatment of derivative impacts. Values retrieved from S&P Global.
  • Implication: Street likely revises revenue and cash generation assumptions higher for 2H given production ramp and hedges, but normalized EPS may stay conservative due to pricing and LOE dynamics .

Key Takeaways for Investors

  • Hedge coverage and gas purchase strategy remain pivotal; ~71% oil and ~80% gas purchases hedged underpin 2H cash flow resilience despite lower realized oil in Q2 .
  • Sequential production growth expected in 2H as California wells come online and Uinta pad flows, supporting improved operating cash flow and potential FCF inflection as capex normalizes .
  • California regulatory backdrop turning more constructive adds multi-year permitting optionality; codifying Kern County EIR would de-risk timelines and benefit CJWS P&A demand and margins .
  • Debt reduction remains a tangible catalyst: $11M Q2 repayment, $23M YTD, on track for ≥$45M in 2025 alongside fixed dividend policy .
  • Watch LOE trends: hedged LOE rose to $27.97/boe q/q; monitoring energy LOE and tax/boe vitals as steam optimization continues .
  • Estimates divergence (revenue beat vs adjusted EPS miss) suggests investors should prioritize cash metrics (OCF/FCF) and hedged margins over normalized EPS in near-term modeling .
  • Near-term focus: execution on Utah flowback curve, Castle Peak test in Q4, and court decision on Kern County EIR; these are likely sentiment and rerating drivers .

Notes: Asterisk-marked values were retrieved from S&P Global.