Berry Petroleum Q2 2025 slides: Low-decline assets drive consistent cash flow, Utah expansion

Published 07/08/2025, 08:22
Berry Petroleum Q2 2025 slides: Low-decline assets drive consistent cash flow, Utah expansion

Berry Corporation (NASDAQ:BRY) presented its Q2 2025 investor update on August 7, 2025, highlighting its position as a Western U.S. independent upstream energy company focused on conventional oil assets in California and Utah. The presentation emphasized the company’s low-decline production profile, financial discipline, and growth opportunities in the emerging Uinta Basin play.

Executive Summary

Berry reported Q2 2025 production of 23.9 MBoe/d (92% oil), generating $53 million in Adjusted EBITDA and $29 million in operating cash flow. The company maintains a conservative leverage ratio of 1.51x and continues to return capital to shareholders through a quarterly dividend of $0.03 per share, representing an annualized yield of approximately 4%.

As shown in the following company overview, Berry’s enterprise value stands at $642 million, with a proved PV-10 value of $2.3 billion and last twelve months (LTM) free cash flow of $61 million ($0.78 per share):

The company’s strategy centers on generating sustainable free cash flow from low capital intensity projects while maintaining balance sheet strength. Recent achievements include reducing debt by $23 million since year-end 2024, putting Berry on track with its 10% annual debt reduction target, and optimizing steam injection rates to reduce operating expenses.

Strategic Initiatives

Berry’s California assets form the backbone of its portfolio, characterized by low decline rates, high returns, and extensive inventory. The company highlighted the advantages of its thermal diatomite assets, which deliver 100% oil production with attractive economics.

As illustrated in the following slide, these wells demonstrate stable production profiles with low decline rates of approximately 11%, capital costs of around $0.8 million per well, and IRRs exceeding 100% at $60/Bbl oil prices:

The company emphasized the structural advantages of operating in California, which it describes as an "energy island" with no crude oil pipelines connecting to the rest of the United States. California refineries consume approximately 1.45 million barrels of oil per day, with more than 75% imported via waterborne tankers.

Berry also highlighted the comparative advantages of its California assets versus typical U.S. shale plays, including higher net revenue interests, lower capital intensity, and greater operational flexibility:

In Utah’s Uinta Basin, Berry is pursuing growth opportunities through horizontal drilling. The company recently completed a four-well horizontal pad targeting the Uteland Butte reservoir, with one well already on flowback and the remaining wells expected to come online in August 2025.

The following slide details Berry’s position in the Uinta Basin, where recent industry activity has accelerated with over $4.6 billion in transaction value during 2024:

Berry highlighted its operational execution on the Uinta 4-well horizontal pad, achieving cost savings through faster drilling times, dual-fuel equipment, and produced water usage:

Detailed Financial Analysis

Berry’s financial strategy centers on maintaining a conservative balance sheet while generating sustainable free cash flow. The company targets a net debt to EBITDA ratio of approximately 1.5x or lower and employs an active hedging program to manage commodity price risk.

As shown in the following financial discipline overview, Berry has generated $1.5 billion in cash flow from operations since its July 2018 IPO:

The company’s Q2 2025 financial results demonstrate stable performance despite commodity price volatility. Berry realized an average oil price of $61.26 per barrel, representing 92% of Brent benchmark prices, while maintaining cost discipline:

Berry presented its valuation as attractive compared to peers, with an EV/2025E EBITDA multiple of 2.7x and a 2025E free cash flow yield of 10%:

This valuation perspective aligns with recent market performance. According to the Q1 2025 earnings report, Berry’s stock surged 13.54% following better-than-expected results, with EPS of $0.12 exceeding the forecast of $0.105 and revenue of $182.65 million surpassing expectations of $174.25 million. However, the stock has experienced significant volatility over the past year, with a 52-week range of $2.11 to $6.645.

Forward-Looking Statements

Berry provided guidance for fiscal year 2025, projecting average daily production between 24,800 and 26,000 Boe/d and capital expenditures of $110-120 million:

The company highlighted its ability to sustain production over time, contrasting with declining production profiles among peers:

Environmental initiatives were also addressed, with Berry committing to reduce methane intensity by 80% compared to 2022 levels. The company invested $2.5 million in 2024 to replace natural gas pneumatic devices, expected to result in approximately 10% reduction in total Scope 1 emissions:

Berry’s management expressed optimism about regulatory developments in California, noting that Kern County adopted a revised Environmental Impact Report and Oil & Gas Ordinance in June 2025, potentially enabling new drilling once permitting resumes. The company indicated it has permits in hand to execute its California drilling program into 2027.

In the Q1 2025 earnings call, CEO Fernando Arajo highlighted Berry’s "advantaged position, thanks to our strong hedge book and high-quality assets," while emphasizing the company’s focus on executing high-return projects and generating sustainable free cash flow.

As Berry navigates the remainder of 2025, investors will be watching closely to see if the company can continue to deliver on its promises of disciplined capital allocation, debt reduction, and shareholder returns while pursuing growth opportunities in Utah and maintaining its strong position in California.

Full presentation:

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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