Berry Corp (bry) — Call Transcript 2025

Thank you for standing by. Welcome to the Berry Corporation's Second Quarter 2025 Earnings Conference Call. At this time, all participants are on 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 will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. Please note that today's conference may be recorded. I will now hand the conference over to your speaker host, Chris Denison, Director of Investor Relations. Please go ahead. Thank you, Livia, and welcome, everyone. Thank you for joining us for Berry's second quarter 2025 earnings call. Yesterday afternoon, Berry issued an earnings release highlighting our quarterly results. Speaking this morning will be Fernando Araujo, our CEO, Danielle Hunter, our President, and Jeff Magids, our CFO. Our website has a link to the earnings release and our updated investor presentation. I would like to call your attention to the safe harbor language found in the earnings release. The release, the presentation, and today's discussion contain 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 these statements. These include risks and other factors that are disclosed in our filings with the SEC, including our quarterly report on Form 10-Q, which will be filed shortly. We have no plans or duty to update our forward-looking statements except as required by law. Please refer to the tables in our earnings release and on our website for reconciliation between all adjusted measures mentioned in today's call and the related GAAP measures. We will also post the replay link of this call on our website. With that, I will turn the call over to Fernando. Thank you, Chris, and good morning, everyone. Welcome to our second quarter earnings call. We continue to successfully execute our 2025 plan. Our strategy is focused on balance sheet strength, high-return development projects, and delivering capital and operational efficiencies. Despite ongoing macro volatility, our 2025 guidance remains unchanged. Our business strategy is anchored by our high-return assets, stable production base, low-capital intensity projects, and inventory depth. We believe this unique combination of attributes provides a competitive advantage. Our ability to execute our strategy is supported by the fact that we have the permits in hand to fully support development projects into 2027. As Tier 1 inventory becomes increasingly scarce across the industry, I want to highlight that Berry is inventory rich. In California, we have thousands of locations across this high-return, low-capital intensity conventional basin, including approximately 500 pod locations with 200 site tracks. In Utah, our horizontal delineation program is progressing, and we expect to unlock upside across our position. Turning to our results, we are on track to generate meaningful free cash flow for the year. Our strong hedge position provides visibility and protects our production outlook. For the remainder of the year, we have 71% of our expected oil production hedged at approximately $75 per barrel of Brent. During the quarter, we paid down $11 million of debt, bringing our year-to-date debt reduction to $23 million. In California, activity continued to ramp with 16 wells drilled in the second quarter, up from 12 in the first quarter and 6 in the fourth quarter of last year. We expect full production to be brought online within the third quarter, which will increase California's production through the second half of the year. In Utah, we finished a significant portion of the completion activity earlier than expected for our horizontal pad in the second quarter. We successfully fracked 64 stages per well on average. We delivered meaningful cost savings of approximately $500,000 per well, supported by our fuel cost advantage and the use of a dual fuel fleet in drilling and fracking activities. We also utilized approximately 50% produced water in our fracks, which contributed to the savings. Our current cost outlook is approximately $680 per lateral foot, which is approximately 20% lower than the average of our six non-operated horizontal wells. We began flowback on our first two wells in August, and the remaining two wells are expected to be online later this month. For our non-operated wells, we continue to see strong results with production exceeding our pre-drilled estimates, pointing to an average EUR of about 55-60 barrels of oil per lateral foot and supporting further delineation of our acreage. We believe our 100,000-acre position with high working interest has significant upside and provides long-term optionality in capital allocation and growth. In the fourth quarter, we'll be participating in an additional non-operated well just north of our acreage to test the Castle Peak formation. This well is expected to be on production in November, and assuming success, we see longer-term potential for a multi-bench cube development. In summary, our priorities remain unchanged to generate sustainable free cash flow, reduce debt while returning dividends, and create long-term value by investing in our deep inventory of high-return portfolio. With that, I will turn the call over to Danny. Thanks, Fernando. Good morning, everyone. Thank you for joining us and for your interest in our company. First, I want to recognize the Berry team for delivering another quarter of zero recordable incidents and zero lost time incidents in our EMP operations. We are proud to live our commitment to HSC excellence. We are finalizing our 2025 sustainability report, which we expect to publish this quarter. In addition to enhanced disclosures, including TCFD alignment, we're excited to share highlights of how we demonstrate our commitment to responsible operations, environmental stewardship, stakeholder engagement, and community investment. On the regulatory front, we're seeing the most constructive tone in California in at least five years, and we're excited about what's on the horizon. On June 26, the Kern County Board of Supervisors approved the new oil and gas ordinance and certified a revised Environmental Impact Review, or EIR, required under CEQA for oil and gas activities. In terms of next steps, the county's request to resume permitting is now under review by the court, and we expect a decision prior to year-end. Court approval is required before Kern County can resume issuance of new drill permits in areas without an existing CEQA-compliant EIR. As Fernando mentioned, we already have the permits in hand to support development activity into 2027. Having the Kern County EIR back in effect provides additional upside and optionality, and we will streamline future development projects. In parallel, we are also encouraged by the California Energy Commission's response to Governor Newsom's directive focused on ensuring that all Californians have access to safe, reliable, and affordable energy through responsible in-state production. This includes permitting and regulatory reforms announced by the Newsom administration a few weeks ago, which aim to stabilize in-state production. Of particular importance is a proposal to codify the Kern County EIR into state law, which will improve the permitting process and de-risk the impact of continued litigation. These policies designed to support in-state production will also benefit our C&J Well Services business. As one of the largest and most reputable P&A providers across the state, C&J is well-positioned to capitalize on the potentially significant increase in demand for P&A services in connection with the proposed plug-to-drill requirements in effect outside of Kern County. Coupled with the increased P&A requirements for all operators that went into effect January 1 of this year, if this new measure passes, it should lead to a healthy ramp-up in activity and margin expansion for C&J in the near future. Of course, having access and price control over an increasingly important part of our supply chain is a competitive advantage to our E&P operations. The legislature reconvenes in mid-August to consider these proposals, and we are optimistic that these important policies will be adopted in the coming weeks. Regardless of timing, these efforts reinforce the growing consensus that in-state oil production is vital to California's energy security. As you've heard, Berry stands to benefit on multiple fronts from these reforms, including even greater ability to unlock value in our extensive inventory across our world-class asset base. We are not dependent on them. We have a proven ability to navigate California's complex environment, evidenced by a robust sidetrack program and having the permits in hand today to deliver over the next few years, irrespective of the Kern County EIR or other legislative measures. Additionally, having permanent uncertainty amongst other stabilizing factors from the proposed regulatory reforms should spur new investment in California's high-return reservoirs, and the timing couldn't be better as inventory is becoming increasingly scarce in areas outside of California. We applaud Governor Newsom's leadership to champion thoughtful solutions that support local businesses, protect local jobs, reduce foreign oil dependence, and ensure the critical energy needs of our communities. Jeff, over to you. Thanks, Danny. In my comments this morning, I will highlight our second quarter financial results, as well as our hedging program, operating costs, capital structure, and guidance. For more in-depth information, please refer to our earnings release issued yesterday afternoon and our Form 10-Q, which we expect to file shortly. Second quarter oil and gas sales were $126 million, excluding derivatives, with a realized oil price of 92% of Brent. Based on our hedge book as of July 31 and using the midpoint of our 2025 production guidance, we have 71% of our expected oil production hedged for the remainder of 2025 at an average price of $75 per barrel of Brent. Assuming our production guidance is held flat for future periods, our expected oil production is 63% hedged for 2026 at an average price of $70 per barrel of Brent. Altogether, our hedge program protects returns and shields against price volatility. Second quarter adjusted EBITDA was $53 million and operating cash flow was $29 million. Capital expenditures on an accrual basis were $54 million for the quarter and elevated compared to the prior quarter, given the accelerated drilling and completion activity in Utah. The timing of lower capital and higher production over the second half of the year sets us up for strong free cash flow generation for the full year. As a reminder, our free cash flow calculation factors in working capital changes during the quarter. Looking at Q2 cost and expenses, total hedged LOE was $27.97 per BOE and lower than our annual guidance rate as we optimized steam injection volumes while sustaining production. Taxes other than income taxes were $5.95 per BOE and adjusted G&A for E&P and corporate was $7.44 per BOE. Turning to our balance sheet, our quarter-end total debt was $428 million. We paid down $11 million during the quarter and are on track to pay down at least $45 million for the year. Our liquidity position was $101 million at quarter-end, and working capital changes during the quarter were $11 million of cash outflow. Additionally, the board declared a dividend of $0.03 per share, or a 4% annualized dividend yield payable in the third quarter. Taken together, our annual debt reduction and dividend represent nearly 10% of our enterprise value, underscoring our commitment to generating shareholder value. At quarter-end, we were in full compliance with our financial covenants, and we have sufficient headroom to execute our strategy. With that, I will now turn the call over to Fernando to wrap up our prepared remarks. Thank you, Jeff. Berry continues to execute on its stated objectives. Our focus remains consistent: execute on our deep inventory of high-return development projects, generate sustainable free cash flow, reduce debt, and evaluate strategic opportunities. We are well-positioned to advance our goals and generate long-term value for our shareholders. We look forward to sharing our progress. I'll turn the call over to the operator for questions. Thank you. Ladies and gentlemen, to ask a question at this time, you will need to press star one one on your telephone and wait for your name to be announced. Please stand by while we compile the Q&A roster. The first question coming from the line of Charles Smith with Johnson Rice here in Melbourne. Yes, good morning, Fernando, Danielle, and Jeff. Thank you. I want to ask the first question about the changes, the positive changes, I guess, in the California regulatory situation. You guys talk about this hearing on the Kern County Environmental Impact Review and then ruling it in 4Q. That timeline seems positive, but I want to ask, how are you guys thinking about the probability of a favorable outcome there? I know certainly the recent trends have been positive, and I suppose we should be cautious, but how hopeful are you about that hearing and that ruling? Yeah, we feel very optimistic about it. I think there was a chance for objections to be filed when the Kern County Board of Supervisors approved recertified the EIR and no new objections were filed. There has been an objection filed related to the court process, but it's not bringing in new issues. It's a repeat of the same. We feel confident due to the great and very thoughtful and meticulous work done by the county, that the revised EIR addresses all of the deficiencies that were previously identified. We feel strong confidence that we're at the last step and the county will, or the court will have its hearing and issue its ruling shortly thereafter. Got it. Thank you for that, Danielle. I appreciate that. Fernando, perhaps this is for you. The well that you farmed into to test the Castle Peak just north of your acreage, I'm imagining that you looked at some other Castle Peak tests, perhaps nearby, as part of your decision to farm into that well. Can you kind of set some expectations or maybe just some guidelines on what we should expect there and what made you think that was a good well to farm into? Yeah, good question, Charles. As you know, industry is generally targeting where we are, the lower cube, what they call the lower cube, which includes the Castle Peak, includes the Ewden Butte, which is the main reservoir target so far for most operators, and then also the Wasatch. There have been some Castle Peak wells drilled, initial estimates of 40-50 barrels per foot EUR. We are really excited about the Castle Peak in our acreage because of the geology that we have. As we've discussed before, the geology is a combination of limestone and sandstone, but the sandstones get thicker as you go south. There is the potential that we have thicker Castle Peak in our acreage. It is going to be very interesting. It could really open up development potential, not only in the Castle Peak, but we have obviously potential in the Ewden Butte. You could start developing these fields with cube drilling, right? Drilling multiple layers at the same time from the same pad. Got it. Just to clarify, your four-well pad that you're just starting to flow back, that's an Ewden Butte pad? That's correct. The four wells are Ewden Butte. Great. Thanks, Fernando. Thanks, Charles. Thank you. Again, as someone who's asked a question, please press star one one. Our next question coming from the line of Nate Pendleton with Texas Capital. Your line is now open. Good morning. This is my first question. Hey, good morning, Nate. Good morning. My first question, I wanted to start off on the EIR and the costs that you laid out on slides 16 and 17. When we think about this development as Berry's first operated horizontal pad in the basin, your achievement of the 20% cost reduction is really encouraging. Based on your experience, can you speak to your ability to meet the targeted well costs in the $650-$670 per foot range over time? Yeah, very good question, Nate. Obviously, as you mentioned, for a first-time operator drilling three-mile laterals, we're really encouraged with the achievement of being 20% below the cost compared to the six non-operator wells that we have, and also actually compared to some of the other operators in the basin as well. In terms of improvements, I think there's still room to improve on that. One area of improvement is we could have slightly better performance from our GADS engines in drilling and fleck fleets. They suffered a little bit during the summer months. Instead of operating about 75% of the time during the operation, which is what we initially expected, they operated for about 50% of the time. There's some improvement potential there with the dual fuel fleets. Also, remember that we're cleaning out three-mile lateral wells, and these take some time, and we're trying to be extra careful on that. We're taking a bit longer than what we initially expected. That's another area of improvement as well. Another area of improvement that I can point to is water usage. We're utilizing 50% produced water, which is really good. If we can find a way to utilize more produced water and reduce water cost, that would be even better. It's really a few things added together where we can improve. We can definitely improve another 5% or a little bit more as we drill in the future. The more we drill, the better we'll get, and we're encouraged with the initial results. Absolutely. Thanks for that detail. Maybe shifting over to California, on slide nine, you highlight your fields within the San Joaquin Basin. While I know the near-term focus is understandably on the high-return sidetrack program, can you speak to some of the other opportunities within your California portfolio and how those fit into your strategy longer term? Yeah, we have a huge portfolio in California. We've been focusing here this year on the thermal dynamite sidetracks. Those tend to be our highest rate of return projects. We also have significant potential in the Monarch and South Midway Sunset, drilling those horizontal wells in the Monarch. They're short horizontals. I mean, they're not three milers like in Utah. They're 1,000 ft, 1,500 ft horizontals, but there's a lot of potential there. We have significant potential also in the Hill property up in Bellridge Field. Outside of that, we have significant workover potential as well on the east side of our acreage base in Round Mountain with our water flood. Really significant potential, you know, rate to return for even at current strip pricing for thermal dynamite, they're at 80%-100% rate of return projects. They're really, really good projects. Got it. Thanks for taking my questions. Thank you, Nate. Thank you. Again, just a quick reminder, if you'd like to ask a question, please press star one one. I'm showing no further questions in the queue at this time. I will now turn the call back over to Fernando Araujo for any closing remarks. Thank you so much for your interest in Berry. We'll keep you updated as to the progress in Utah and in California. Once again, thank you for joining the call. This concludes today's conference. Thank you for your participation, and you may now disconnect.

Speaker 4: Thank you for standing by. Welcome to the Berry Corporation's Second Quarter 2025 Earnings Conference Call. At this time, all participants are on 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 will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. Please note that today's conference may be recorded. I will now hand the conference over to your speaker host, Chris Denison, Director of Investor Relations. Please go ahead. Thank you for standing by. thank you for standing by Welcome to the Berry Corporation's Second Quarter 2025 Earnings Conference Call. welcome to the berry corporation's second quarter 2025 earnings conference call At this time, all participants are on a listen-only mode. at this time all participants are on a listen-only mode After the speaker's presentation, there will be a question- and- answer session. after the speaker's presentation there will be a question- and- answer session To ask a question during the session, you will need to press star one one on your telephone. to ask a question during the session you will need to press star one one on your telephone You will then hear an automated message advising your hand is raised. you will then hear an automated message advising your hand is raised Please note that today's conference may be recorded. please note that today's conference may be recorded I will now hand the conference over to your speaker host, Chris Denison, Director of Investor Relations. i will now hand the conference over to your speaker host chris denison director of investor relations Please go ahead. please go ahead

Speaker 3: Thank you, Livia, and welcome, everyone. Thank you for joining us for Berry's second quarter 2025 earnings call. Yesterday afternoon, Berry issued an earnings release highlighting our quarterly results. Speaking this morning will be Fernando Araujo, our CEO, Danielle Hunter, our President, and Jeff Magids, our CFO. Our website has a link to the earnings release and our updated investor presentation. I would like to call your attention to the safe harbor language found in the earnings release. The release, the presentation, and today's discussion contain 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 these statements. These include risks and other factors that are disclosed in our filings with the SEC, including our quarterly report on Form 10-Q, which will be filed shortly. Thank you, Livia, and welcome, everyone. thank you livia and welcome everyone Thank you for joining us for Berry's second quarter 2025 earnings call. thank you for joining us for berry's second quarter 2025 earnings call Yesterday afternoon, Berry issued an earnings release highlighting our quarterly results. yesterday afternoon berry issued an earnings release highlighting our quarterly results Speaking this morning will be Fernando Araujo, our CEO, Danielle Hunter, our President, and Jeff Magids, our CFO. speaking this morning will be fernando araujo our ceo danielle hunter our president and jeff magids our cfo Our website has a link to the earnings release and our updated investor presentation. our website has a link to the earnings release and our updated investor presentation I would like to call your attention to the safe harbor language found in the earnings release. i would like to call your attention to the safe harbor language found in the earnings release The release, the presentation, and today's discussion contain certain projections and other forward-looking statements within the meaning of federal securities laws. the release the presentation and today's discussion contain 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 these statements. these statements are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied in these statements These include risks and other factors that are disclosed in our filings with the SEC, including our quarterly report on Form 10-Q, which will be filed shortly. these include risks and other factors that are disclosed in our filings with the sec including our quarterly report on form 10-q which will be filed shortly We have no plans or duty to update our forward-looking statements except as required by law. Please refer to the tables in our earnings release and on our website for reconciliation between all adjusted measures mentioned in today's call and the related GAAP measures. We will also post the replay link of this call on our website. With that, I will turn the call over to Fernando. We have no plans or duty to update our forward-looking statements except as required by law. we have no plans or duty to update our forward-looking statements except as required by law Please refer to the tables in our earnings release and on our website for reconciliation between all adjusted measures mentioned in today's call and the related GAAP measures. please refer to the tables in our earnings release and on our website for reconciliation between all adjusted measures mentioned in today's call and the related gaap measures We will also post the replay link of this call on our website. we will also post the replay link of this call on our website With that, I will turn the call over to Fernando. with that i will turn the call over to fernando

Speaker 5: Thank you, Chris, and good morning, everyone. Welcome to our second quarter earnings call. We continue to successfully execute our 2025 plan. Our strategy is focused on balance sheet strength, high-return development projects, and delivering capital and operational efficiencies. Despite ongoing macro volatility, our 2025 guidance remains unchanged. Our business strategy is anchored by our high-return assets, stable production base, low-capital intensity projects, and inventory depth. We believe this unique combination of attributes provides a competitive advantage. Our ability to execute our strategy is supported by the fact that we have the permits in hand to fully support development projects into 2027. As Tier 1 inventory becomes increasingly scarce across the industry, I want to highlight that Berry is inventory rich. In California, we have thousands of locations across this high-return, low-capital intensity conventional basin, including approximately 500 pod locations with 200 site tracks. Thank you, Chris, and good morning, everyone. thank you chris and good morning everyone Welcome to our second quarter earnings call. welcome to our second quarter earnings call We continue to successfully execute our 2025 plan. we continue to successfully execute our 2025 plan Our strategy is focused on balance sheet strength, high-return development projects, and delivering capital and operational efficiencies. our strategy is focused on balance sheet strength high-return development projects and delivering capital and operational efficiencies Despite ongoing macro volatility, our 2025 guidance remains unchanged. despite ongoing macro volatility our 2025 guidance remains unchanged Our business strategy is anchored by our high-return assets, stable production base, low-capital intensity projects, and inventory depth. our business strategy is anchored by our high-return assets stable production base low-capital intensity projects and inventory depth We believe this unique combination of attributes provides a competitive advantage. we believe this unique combination of attributes provides a competitive advantage Our ability to execute our strategy is supported by the fact that we have the permits in hand to fully support development projects into 2027. our ability to execute our strategy is supported by the fact that we have the permits in hand to fully support development projects into 2027 As Tier 1 inventory becomes increasingly scarce across the industry, I want to highlight that Berry is inventory rich. as tier 1 inventory becomes increasingly scarce across the industry i want to highlight that berry is inventory rich In California, we have thousands of locations across this high-return, low-capital intensity conventional basin, including approximately 500 pod locations with 200 site tracks. in california we have thousands of locations across this high-return low-capital intensity conventional basin including approximately 500 pod locations with 200 site tracks In Utah, our horizontal delineation program is progressing, and we expect to unlock upside across our position. Turning to our results, we are on track to generate meaningful free cash flow for the year. Our strong hedge position provides visibility and protects our production outlook. For the remainder of the year, we have 71% of our expected oil production hedged at approximately $75 per barrel of Brent. During the quarter, we paid down $11 million of debt, bringing our year-to-date debt reduction to $23 million. In California, activity continued to ramp with 16 wells drilled in the second quarter, up from 12 in the first quarter and 6 in the fourth quarter of last year. We expect full production to be brought online within the third quarter, which will increase California's production through the second half of the year. In Utah, our horizontal delineation program is progressing, and we expect to unlock upside across our position. in utah our horizontal delineation program is progressing and we expect to unlock upside across our position Turning to our results, we are on track to generate meaningful free cash flow for the year. turning to our results we are on track to generate meaningful free cash flow for the year Our strong hedge position provides visibility and protects our production outlook. our strong hedge position provides visibility and protects our production outlook For the remainder of the year, we have 71% of our expected oil production hedged at approximately $75 per barrel of Brent. for the remainder of the year we have 71% of our expected oil production hedged at approximately $75 per barrel of brent During the quarter, we paid down $11 million of debt, bringing our year-to-date debt reduction to $23 million. during the quarter we paid down $11 million of debt bringing our year-to-date debt reduction to $23 million In California, activity continued to ramp with 16 wells drilled in the second quarter, up from 12 in the first quarter and 6 in the fourth quarter of last year. in california activity continued to ramp with 16 wells drilled in the second quarter up from 12 in the first quarter and 6 in the fourth quarter of last year We expect full production to be brought online within the third quarter, which will increase California's production through the second half of the year. we expect full production to be brought online within the third quarter which will increase california's production through the second half of the year In Utah, we finished a significant portion of the completion activity earlier than expected for our horizontal pad in the second quarter. We successfully fracked 64 stages per well on average. We delivered meaningful cost savings of approximately $500,000 per well, supported by our fuel cost advantage and the use of a dual fuel fleet in drilling and fracking activities. We also utilized approximately 50% produced water in our fracks, which contributed to the savings. Our current cost outlook is approximately $680 per lateral foot, which is approximately 20% lower than the average of our six non-operated horizontal wells. We began flowback on our first two wells in August, and the remaining two wells are expected to be online later this month. In Utah, we finished a significant portion of the completion activity earlier than expected for our horizontal pad in the second quarter. in utah we finished a significant portion of the completion activity earlier than expected for our horizontal pad in the second quarter We successfully fracked 64 stages per well on average. we successfully fracked 64 stages per well on average We delivered meaningful cost savings of approximately $500,000 per well, supported by our fuel cost advantage and the use of a dual fuel fleet in drilling and fracking activities. we delivered meaningful cost savings of approximately $500,000 per well supported by our fuel cost advantage and the use of a dual fuel fleet in drilling and fracking activities We also utilized approximately 50% produced water in our fracks, which contributed to the savings. we also utilized approximately 50% produced water in our fracks which contributed to the savings Our current cost outlook is approximately $680 per lateral foot, which is approximately 20% lower than the average of our six non-operated horizontal wells. our current cost outlook is approximately $680 per lateral foot which is approximately 20% lower than the average of our six non-operated horizontal wells We began flowback on our first two wells in August, and the remaining two wells are expected to be online later this month. we began flowback on our first two wells in august and the remaining two wells are expected to be online later this month For our non-operated wells, we continue to see strong results with production exceeding our pre-drilled estimates, pointing to an average EUR of about 55-60 barrels of oil per lateral foot and supporting further delineation of our acreage. We believe our 100,000-acre position with high working interest has significant upside and provides long-term optionality in capital allocation and growth. In the fourth quarter, we'll be participating in an additional non-operated well just north of our acreage to test the Castle Peak formation. This well is expected to be on production in November, and assuming success, we see longer-term potential for a multi-bench cube development. In summary, our priorities remain unchanged to generate sustainable free cash flow, reduce debt while returning dividends, and create long-term value by investing in our deep inventory of high-return portfolio. With that, I will turn the call over to Danny. For our non-operated wells, we continue to see strong results with production exceeding our pre-drilled estimates, pointing to an average EUR of about 55 - 60 barrels of oil per lateral foot and supporting further delineation of our acreage. for our non-operated wells we continue to see strong results with production exceeding our pre-drilled estimates pointing to an average eur of about 55 - 60 barrels of oil per lateral foot and supporting further delineation of our acreage We believe our 100,000-acre position with high working interest has significant upside and provides long-term optionality in capital allocation and growth. we believe our 100,000-acre position with high working interest has significant upside and provides long-term optionality in capital allocation and growth In the fourth quarter, we'll be participating in an additional non-operated well just north of our acreage to test the Castle Peak formation. in the fourth quarter we'll be participating in an additional non-operated well just north of our acreage to test the castle peak formation This well is expected to be on production in November, and assuming success, we see longer-term potential for a multi-bench cube development. this well is expected to be on production in november and assuming success we see longer-term potential for a multi-bench cube development In summary, our priorities remain unchanged to generate sustainable free cash flow, reduce debt while returning dividends, and create long-term value by investing in our deep inventory of high-return portfolio. in summary our priorities remain unchanged to generate sustainable free cash flow reduce debt while returning dividends and create long-term value by investing in our deep inventory of high-return portfolio With that, I will turn the call over to Danny. with that i will turn the call over to danny

Speaker 1: Thanks, Fernando. Good morning, everyone. Thank you for joining us and for your interest in our company. First, I want to recognize the Berry team for delivering another quarter of zero recordable incidents and zero lost time incidents in our EMP operations. We are proud to live our commitment to HSC excellence. We are finalizing our 2025 sustainability report, which we expect to publish this quarter. In addition to enhanced disclosures, including TCFD alignment, we're excited to share highlights of how we demonstrate our commitment to responsible operations, environmental stewardship, stakeholder engagement, and community investment. On the regulatory front, we're seeing the most constructive tone in California in at least five years, and we're excited about what's on the horizon. Thanks, Fernando. thanks fernando Good morning, everyone. good morning everyone Thank you for joining us and for your interest in our company. thank you for joining us and for your interest in our company First, I want to recognize the Berry team for delivering another quarter of zero recordable incidents and zero lost time incidents in our EMP operations. first i want to recognize the berry team for delivering another quarter of zero recordable incidents and zero lost time incidents in our emp operations We are proud to live our commitment to HSC excellence. we are proud to live our commitment to hsc excellence We are finalizing our 2025 sustainability report, which we expect to publish this quarter. we are finalizing our 2025 sustainability report which we expect to publish this quarter In addition to enhanced disclosures, including TCFD alignment, we're excited to share highlights of how we demonstrate our commitment to responsible operations, environmental stewardship, stakeholder engagement, and community investment. in addition to enhanced disclosures including tcfd alignment we're excited to share highlights of how we demonstrate our commitment to responsible operations environmental stewardship stakeholder engagement and community investment On the regulatory front, we're seeing the most constructive tone in California in at least five years, and we're excited about what's on the horizon. on the regulatory front we're seeing the most constructive tone in california in at least five years and we're excited about what's on the horizon On June 26, the Kern County Board of Supervisors approved the new oil and gas ordinance and certified a revised Environmental Impact Review, or EIR, required under CEQA for oil and gas activities. In terms of next steps, the county's request to resume permitting is now under review by the court, and we expect a decision prior to year-end. Court approval is required before Kern County can resume issuance of new drill permits in areas without an existing CEQA-compliant EIR. As Fernando mentioned, we already have the permits in hand to support development activity into 2027. Having the Kern County EIR back in effect provides additional upside and optionality, and we will streamline future development projects. In parallel, we are also encouraged by the California Energy Commission's response to Governor Newsom's directive focused on ensuring that all Californians have access to safe, reliable, and affordable energy through responsible in-state production. On June 26, the Kern County Board of Supervisors approved the new oil and gas ordinance and certified a revised Environmental Impact Review, or EIR, required under CEQA for oil and gas activities. on june 26 the kern county board of supervisors approved the new oil and gas ordinance and certified a revised environmental impact review or eir required under ceqa for oil and gas activities In terms of next steps, the county's request to resume permitting is now under review by the court, and we expect a decision prior to year-end. in terms of next steps the county's request to resume permitting is now under review by the court and we expect a decision prior to year-end Court approval is required before Kern County can resume issuance of new drill permits in areas without an existing CEQA-compliant EIR. court approval is required before kern county can resume issuance of new drill permits in areas without an existing ceqa-compliant eir As Fernando mentioned, we already have the permits in hand to support development activity into 2027. as fernando mentioned we already have the permits in hand to support development activity into 2027 Having the Kern County EIR back in effect provides additional upside and optionality, and we will streamline future development projects. having the kern county eir back in effect provides additional upside and optionality and we will streamline future development projects In parallel, we are also encouraged by the California Energy Commission's response to Governor Newsom's directive focused on ensuring that all Californians have access to safe, reliable, and affordable energy through responsible in-state production. in parallel we are also encouraged by the california energy commission's response to governor newsom's directive focused on ensuring that all californians have access to safe reliable and affordable energy through responsible in-state production This includes permitting and regulatory reforms announced by the Newsom administration a few weeks ago, which aim to stabilize in-state production. Of particular importance is a proposal to codify the Kern County EIR into state law, which will improve the permitting process and de-risk the impact of continued litigation. These policies designed to support in-state production will also benefit our C&J Well Services business. As one of the largest and most reputable P&A providers across the state, C&J is well-positioned to capitalize on the potentially significant increase in demand for P&A services in connection with the proposed plug-to-drill requirements in effect outside of Kern County. Coupled with the increased P&A requirements for all operators that went into effect January 1 of this year, if this new measure passes, it should lead to a healthy ramp-up in activity and margin expansion for C&J in the near future. This includes permitting and regulatory reforms announced by the Newsom administration a few weeks ago, which aim to stabilize in-state production. this includes permitting and regulatory reforms announced by the newsom administration a few weeks ago which aim to stabilize in-state production Of particular importance is a proposal to codify the Kern County EIR into state law, which will improve the permitting process and de-risk the impact of continued litigation. of particular importance is a proposal to codify the kern county eir into state law which will improve the permitting process and de-risk the impact of continued litigation These policies designed to support in-state production will also benefit our C&J Well Services business. these policies designed to support in-state production will also benefit our c&j well services business As one of the largest and most reputable P&A providers across the state, C&J is well-positioned to capitalize on the potentially significant increase in demand for P&A services in connection with the proposed plug-to-drill requirements in effect outside of Kern County. as one of the largest and most reputable p&a providers across the state c&j is well-positioned to capitalize on the potentially significant increase in demand for p&a services in connection with the proposed plug-to-drill requirements in effect outside of kern county Coupled with the increased P&A requirements for all operators that went into effect January 1 of this year, if this new measure passes, it should lead to a healthy ramp-up in activity and margin expansion for C&J in the near future. coupled with the increased p&a requirements for all operators that went into effect january 1 of this year if this new measure passes it should lead to a healthy ramp-up in activity and margin expansion for c&j in the near future Of course, having access and price control over an increasingly important part of our supply chain is a competitive advantage to our E&P operations. The legislature reconvenes in mid-August to consider these proposals, and we are optimistic that these important policies will be adopted in the coming weeks. Regardless of timing, these efforts reinforce the growing consensus that in-state oil production is vital to California's energy security. As you've heard, Berry stands to benefit on multiple fronts from these reforms, including even greater ability to unlock value in our extensive inventory across our world-class asset base. We are not dependent on them. We have a proven ability to navigate California's complex environment, evidenced by a robust sidetrack program and having the permits in hand today to deliver over the next few years, irrespective of the Kern County EIR or other legislative measures. Of course, having access and price control over an increasingly important part of our supply chain is a competitive advantage to our E&P operations. of course having access and price control over an increasingly important part of our supply chain is a competitive advantage to our e&p operations The legislature reconvenes in mid-August to consider these proposals, and we are optimistic that these important policies will be adopted in the coming weeks. the legislature reconvenes in mid-august to consider these proposals and we are optimistic that these important policies will be adopted in the coming weeks Regardless of timing, these efforts reinforce the growing consensus that in-state oil production is vital to California's energy security. regardless of timing these efforts reinforce the growing consensus that in-state oil production is vital to california's energy security As you've heard, Berry stands to benefit on multiple fronts from these reforms, including even greater ability to unlock value in our extensive inventory across our world-class asset base. as you've heard berry stands to benefit on multiple fronts from these reforms including even greater ability to unlock value in our extensive inventory across our world-class asset base We are not dependent on them. we are not dependent on them We have a proven ability to navigate California's complex environment, evidenced by a robust sidetrack program and having the permits in hand today to deliver over the next few years, irrespective of the Kern County EIR or other legislative measures. we have a proven ability to navigate california's complex environment evidenced by a robust sidetrack program and having the permits in hand today to deliver over the next few years irrespective of the kern county eir or other legislative measures Additionally, having permanent uncertainty amongst other stabilizing factors from the proposed regulatory reforms should spur new investment in California's high-return reservoirs, and the timing couldn't be better as inventory is becoming increasingly scarce in areas outside of California. We applaud Governor Newsom's leadership to champion thoughtful solutions that support local businesses, protect local jobs, reduce foreign oil dependence, and ensure the critical energy needs of our communities. Jeff, over to you. Additionally, having permanent uncertainty amongst other stabilizing factors from the proposed regulatory reforms should spur new investment in California's high-return reservoirs, and the timing couldn't be better as inventory is becoming increasingly scarce in areas outside of California. additionally having permanent uncertainty amongst other stabilizing factors from the proposed regulatory reforms should spur new investment in california's high-return reservoirs and the timing couldn't be better as inventory is becoming increasingly scarce in areas outside of california We applaud Governor Newsom's leadership to champion thoughtful solutions that support local businesses, protect local jobs, reduce foreign oil dependence, and ensure the critical energy needs of our communities. we applaud governor newsom's leadership to champion thoughtful solutions that support local businesses protect local jobs reduce foreign oil dependence and ensure the critical energy needs of our communities Jeff, over to you. jeff over to you

Speaker 6: Thanks, Danny. In my comments this morning, I will highlight our second quarter financial results, as well as our hedging program, operating costs, capital structure, and guidance. For more in-depth information, please refer to our earnings release issued yesterday afternoon and our Form 10-Q, which we expect to file shortly. Second quarter oil and gas sales were $126 million, excluding derivatives, with a realized oil price of 92% of Brent. Based on our hedge book as of July 31 and using the midpoint of our 2025 production guidance, we have 71% of our expected oil production hedged for the remainder of 2025 at an average price of $75 per barrel of Brent. Assuming our production guidance is held flat for future periods, our expected oil production is 63% hedged for 2026 at an average price of $70 per barrel of Brent. Thanks, Danny. thanks danny In my comments this morning, I will highlight our second quarter financial results, as well as our hedging program, operating costs, capital structure, and guidance. in my comments this morning i will highlight our second quarter financial results as well as our hedging program operating costs capital structure and guidance For more in-depth information, please refer to our earnings release issued yesterday afternoon and our Form 10-Q, which we expect to file shortly. for more in-depth information please refer to our earnings release issued yesterday afternoon and our form 10-q which we expect to file shortly Second quarter oil and gas sales were $126 million, excluding derivatives, with a realized oil price of 92% of Brent. second quarter oil and gas sales were $126 million excluding derivatives with a realized oil price of 92% of brent Based on our hedge book as of July 31 and using the midpoint of our 2025 production guidance, we have 71% of our expected oil production hedged for the remainder of 2025 at an average price of $75 per barrel of Brent. based on our hedge book as of july 31 and using the midpoint of our 2025 production guidance we have 71% of our expected oil production hedged for the remainder of 2025 at an average price of $75 per barrel of brent Assuming our production guidance is held flat for future periods, our expected oil production is 63% hedged for 2026 at an average price of $70 per barrel of Brent. assuming our production guidance is held flat for future periods our expected oil production is 63% hedged for 2026 at an average price of $70 per barrel of brent Altogether, our hedge program protects returns and shields against price volatility. Second quarter adjusted EBITDA was $53 million and operating cash flow was $29 million. Capital expenditures on an accrual basis were $54 million for the quarter and elevated compared to the prior quarter, given the accelerated drilling and completion activity in Utah. The timing of lower capital and higher production over the second half of the year sets us up for strong free cash flow generation for the full year. As a reminder, our free cash flow calculation factors in working capital changes during the quarter. Looking at Q2 cost and expenses, total hedged LOE was $27.97 per BOE and lower than our annual guidance rate as we optimized steam injection volumes while sustaining production. Taxes other than income taxes were $5.95 per BOE and adjusted G&A for E&P and corporate was $7.44 per BOE. Altogether, our hedge program protects returns and shields against price volatility. altogether our hedge program protects returns and shields against price volatility Second quarter adjusted EBITDA was $53 million and operating cash flow was $29 million. second quarter adjusted ebitda was $53 million and operating cash flow was $29 million Capital expenditures on an accrual basis were $54 million for the quarter and elevated compared to the prior quarter, given the accelerated drilling and completion activity in Utah. capital expenditures on an accrual basis were $54 million for the quarter and elevated compared to the prior quarter given the accelerated drilling and completion activity in utah The timing of lower capital and higher production over the second half of the year sets us up for strong free cash flow generation for the full year. the timing of lower capital and higher production over the second half of the year sets us up for strong free cash flow generation for the full year As a reminder, our free cash flow calculation factors in working capital changes during the quarter. as a reminder our free cash flow calculation factors in working capital changes during the quarter Looking at Q2 cost and expenses, total hedged LOE was $27.97 per BOE and lower than our annual guidance rate as we optimized steam injection volumes while sustaining production. looking at q2 cost and expenses total hedged loe was $27.97 per boe and lower than our annual guidance rate as we optimized steam injection volumes while sustaining production Taxes other than income taxes were $5.95 per BOE and adjusted G&A for E&P and corporate was $7.44 per BOE. taxes other than income taxes were $5.95 per boe and adjusted g&a for e&p and corporate was $7.44 per boe Turning to our balance sheet, our quarter-end total debt was $428 million. We paid down $11 million during the quarter and are on track to pay down at least $45 million for the year. Our liquidity position was $101 million at quarter-end, and working capital changes during the quarter were $11 million of cash outflow. Additionally, the board declared a dividend of $0.03 per share, or a 4% annualized dividend yield payable in the third quarter. Taken together, our annual debt reduction and dividend represent nearly 10% of our enterprise value, underscoring our commitment to generating shareholder value. At quarter-end, we were in full compliance with our financial covenants, and we have sufficient headroom to execute our strategy. With that, I will now turn the call over to Fernando to wrap up our prepared remarks. Turning to our balance sheet, our quarter-end total debt was $428 million. turning to our balance sheet our quarter-end total debt was $428 million We paid down $11 million during the quarter and are on track to pay down at least $45 million for the year. we paid down $11 million during the quarter and are on track to pay down at least $45 million for the year Our liquidity position was $101 million at quarter-end, and working capital changes during the quarter were $11 million of cash outflow. our liquidity position was $101 million at quarter-end and working capital changes during the quarter were $11 million of cash outflow Additionally, the board declared a dividend of $0.03 per share, or a 4% annualized dividend yield payable in the third quarter. additionally the board declared a dividend of $0.03 per share or a 4% annualized dividend yield payable in the third quarter Taken together, our annual debt reduction and dividend represent nearly 10% of our enterprise value, underscoring our commitment to generating shareholder value. taken together our annual debt reduction and dividend represent nearly 10% of our enterprise value underscoring our commitment to generating shareholder value At quarter-end, we were in full compliance with our financial covenants, and we have sufficient headroom to execute our strategy. at quarter-end we were in full compliance with our financial covenants and we have sufficient headroom to execute our strategy With that, I will now turn the call over to Fernando to wrap up our prepared remarks. with that i will now turn the call over to fernando to wrap up our prepared remarks

Speaker 5: Thank you, Jeff. Berry continues to execute on its stated objectives. Our focus remains consistent: execute on our deep inventory of high-return development projects, generate sustainable free cash flow, reduce debt, and evaluate strategic opportunities. We are well-positioned to advance our goals and generate long-term value for our shareholders. We look forward to sharing our progress. I'll turn the call over to the operator for questions. Thank you, Jeff. thank you jeff Berry continues to execute on its stated objectives. berry continues to execute on its stated objectives Our focus remains consistent: execute on our deep inventory of high-return development projects, generate sustainable free cash flow, reduce debt, and evaluate strategic opportunities. our focus remains consistent execute on our deep inventory of high-return development projects generate sustainable free cash flow reduce debt and evaluate strategic opportunities We are well-positioned to advance our goals and generate long-term value for our shareholders. we are well-positioned to advance our goals and generate long-term value for our shareholders We look forward to sharing our progress. we look forward to sharing our progress I'll turn the call over to the operator for questions. i'll turn the call over to the operator for questions

Speaker 4: Thank you. Ladies and gentlemen, to ask a question at this time, you will need to press star one one on your telephone and wait for your name to be announced. Please stand by while we compile the Q&A roster. The first question coming from the line of Charles Smith with Johnson Rice here in Melbourne. Thank you. thank you Ladies and gentlemen, to ask a question at this time, you will need to press star one one on your telephone and wait for your name to be announced. ladies and gentlemen to ask a question at this time you will need to press star one one on your telephone and wait for your name to be announced Please stand by while we compile the Q&A roster. please stand by while we compile the q&a roster The first question coming from the line of Charles Smith with Johnson Rice here in Melbourne. the first question coming from the line of charles smith with johnson rice here in melbourne

Speaker 2: Yes, good morning, Fernando, Danielle, and Jeff. Thank you. I want to ask the first question about the changes, the positive changes, I guess, in the California regulatory situation. You guys talk about this hearing on the Kern County Environmental Impact Review and then ruling it in 4Q. That timeline seems positive, but I want to ask, how are you guys thinking about the probability of a favorable outcome there? I know certainly the recent trends have been positive, and I suppose we should be cautious, but how hopeful are you about that hearing and that ruling? Yes, good morning, Fernando, Danielle, and Jeff. yes good morning fernando danielle and jeff Thank you. thank you I want to ask the first question about the changes, the positive changes, I guess, in the California regulatory situation. i want to ask the first question about the changes the positive changes i guess in the california regulatory situation You guys talk about this hearing on the Kern County Environmental Impact Review and then ruling it in 4Q. you guys talk about this hearing on the kern county environmental impact review and then ruling it in 4q That timeline seems positive, but I want to ask, how are you guys thinking about the probability of a favorable outcome there? that timeline seems positive but i want to ask how are you guys thinking about the probability of a favorable outcome there I know certainly the recent trends have been positive, and I suppose we should be cautious, but how hopeful are you about that hearing and that ruling? i know certainly the recent trends have been positive and i suppose we should be cautious but how hopeful are you about that hearing and that ruling

Speaker 1: Yeah, we feel very optimistic about it. I think there was a chance for objections to be filed when the Kern County Board of Supervisors approved recertified the EIR and no new objections were filed. There has been an objection filed related to the court process, but it's not bringing in new issues. It's a repeat of the same. We feel confident due to the great and very thoughtful and meticulous work done by the county, that the revised EIR addresses all of the deficiencies that were previously identified. We feel strong confidence that we're at the last step and the county will, or the court will have its hearing and issue its ruling shortly thereafter. Yeah, we feel very optimistic about it. yeah we feel very optimistic about it I think there was a chance for objections to be filed when the Kern County Board of Supervisors approved recertified the EIR and no new objections were filed. i think there was a chance for objections to be filed when the kern county board of supervisors approved recertified the eir and no new objections were filed There has been an objection filed related to the court process, but it's not bringing in new issues. there has been an objection filed related to the court process but it's not bringing in new issues It's a repeat of the same. it's a repeat of the same We feel confident due to the great and very thoughtful and meticulous work done by the county, that the revised EIR addresses all of the deficiencies that were previously identified. we feel confident due to the great and very thoughtful and meticulous work done by the county that the revised eir addresses all of the deficiencies that were previously identified We feel strong confidence that we're at the last step and the county will, or the court will have its hearing and issue its ruling shortly thereafter. we feel strong confidence that we're at the last step and the county will or the court will have its hearing and issue its ruling shortly thereafter

Speaker 2: Got it. Thank you for that, Danielle. I appreciate that. Fernando, perhaps this is for you. The well that you farmed into to test the Castle Peak just north of your acreage, I'm imagining that you looked at some other Castle Peak tests, perhaps nearby, as part of your decision to farm into that well. Can you kind of set some expectations or maybe just some guidelines on what we should expect there and what made you think that was a good well to farm into? Got it. got it Thank you for that, Danielle. thank you for that danielle I appreciate that. i appreciate that Fernando, perhaps this is for you. fernando perhaps this is for you The well that you farmed into to test the Castle Peak just north of your acreage, I'm imagining that you looked at some other Castle Peak tests, perhaps nearby, as part of your decision to farm into that well. the well that you farmed into to test the castle peak just north of your acreage i'm imagining that you looked at some other castle peak tests perhaps nearby as part of your decision to farm into that well Can you kind of set some expectations or maybe just some guidelines on what we should expect there and what made you think that was a good well to farm into? can you kind of set some expectations or maybe just some guidelines on what we should expect there and what made you think that was a good well to farm into

Speaker 5: Yeah, good question, Charles. As you know, industry is generally targeting where we are, the lower cube, what they call the lower cube, which includes the Castle Peak, includes the Ewden Butte, which is the main reservoir target so far for most operators, and then also the Wasatch. There have been some Castle Peak wells drilled, initial estimates of 40-50 barrels per foot EUR. We are really excited about the Castle Peak in our acreage because of the geology that we have. As we've discussed before, the geology is a combination of limestone and sandstone, but the sandstones get thicker as you go south. There is the potential that we have thicker Castle Peak in our acreage. It is going to be very interesting. It could really open up development potential, not only in the Castle Peak, but we have obviously potential in the Ewden Butte. Yeah, good question, Charles. yeah good question charles As you know, industry is generally targeting where we are, the lower cube, what they call the lower cube, which includes the Castle Peak, includes the Ewden Butte, which is the main reservoir target so far for most operators, and then also the Wasatch. as you know industry is generally targeting where we are the lower cube what they call the lower cube which includes the castle peak includes the ewden butte which is the main reservoir target so far for most operators and then also the wasatch There have been some Castle Peak wells drilled, initial estimates of 40 - 50 barrels per foot EUR. there have been some castle peak wells drilled initial estimates of 40 - 50 barrels per foot eur We are really excited about the Castle Peak in our acreage because of the geology that we have. we are really excited about the castle peak in our acreage because of the geology that we have As we've discussed before, the geology is a combination of limestone and sandstone, but the sandstones get thicker as you go south. as we've discussed before the geology is a combination of limestone and sandstone but the sandstones get thicker as you go south There is the potential that we have thicker Castle Peak in our acreage. there is the potential that we have thicker castle peak in our acreage It is going to be very interesting. it is going to be very interesting It could really open up development potential, not only in the Castle Peak, but we have obviously potential in the Ewden Butte. it could really open up development potential not only in the castle peak but we have obviously potential in the ewden butte You could start developing these fields with cube drilling, right? Drilling multiple layers at the same time from the same pad. You could start developing these fields with cube drilling, right? you could start developing these fields with cube drilling right Drilling multiple layers at the same time from the same pad. drilling multiple layers at the same time from the same pad

Speaker 2: Got it. Just to clarify, your four-well pad that you're just starting to flow back, that's an Ewden Butte pad? Got it. got it Just to clarify, your four-well pad that you're just starting to flow back, that's an Ewden Butte pad? just to clarify your four-well pad that you're just starting to flow back that's an ewden butte pad

Speaker 5: That's correct. The four wells are Ewden Butte. That's correct. that's correct The four wells are Ewden Butte. the four wells are ewden butte

Speaker 2: Great. Thanks, Fernando. Great. great Thanks, Fernando. thanks fernando

Speaker 5: Thanks, Charles. Thanks, Charles. thanks charles

Speaker 4: Thank you. Again, as someone who's asked a question, please press star one one. Our next question coming from the line of Nate Pendleton with Texas Capital. Your line is now open. Thank you. thank you Again, as someone who's asked a question, please press star one one. again as someone who's asked a question please press star one one Our next question coming from the line of Nate Pendleton with Texas Capital. our next question coming from the line of nate pendleton with texas capital Your line is now open. your line is now open

Speaker 7: Good morning. This is my first question. Good morning. good morning This is my first question. this is my first question

Speaker 5: Hey, good morning, Nate. Hey, good morning, Nate. hey good morning nate

Speaker 7: Good morning. My first question, I wanted to start off on the EIR and the costs that you laid out on slides 16 and 17. When we think about this development as Berry's first operated horizontal pad in the basin, your achievement of the 20% cost reduction is really encouraging. Based on your experience, can you speak to your ability to meet the targeted well costs in the $650-$670 per foot range over time? Good morning. good morning My first question, I wanted to start off on the EIR and the costs that you laid out on slides 16 and 17. my first question i wanted to start off on the eir and the costs that you laid out on slides 16 and 17 When we think about this development as Berry's first operated horizontal pad in the basin, your achievement of the 20% cost reduction is really encouraging. when we think about this development as berry's first operated horizontal pad in the basin your achievement of the 20% cost reduction is really encouraging Based on your experience, can you speak to your ability to meet the targeted well costs in the $650 - $670 per foot range over time? based on your experience can you speak to your ability to meet the targeted well costs in the $650 - $670 per foot range over time

Speaker 5: Yeah, very good question, Nate. Obviously, as you mentioned, for a first-time operator drilling three-mile laterals, we're really encouraged with the achievement of being 20% below the cost compared to the six non-operator wells that we have, and also actually compared to some of the other operators in the basin as well. In terms of improvements, I think there's still room to improve on that. One area of improvement is we could have slightly better performance from our GADS engines in drilling and fleck fleets. They suffered a little bit during the summer months. Instead of operating about 75% of the time during the operation, which is what we initially expected, they operated for about 50% of the time. There's some improvement potential there with the dual fuel fleets. Yeah, very good question, Nate. yeah very good question nate Obviously, as you mentioned, for a first-time operator drilling three-mile laterals, we're really encouraged with the achievement of being 20% below the cost compared to the six non-operator wells that we have, and also actually compared to some of the other operators in the basin as well. obviously as you mentioned for a first-time operator drilling three-mile laterals we're really encouraged with the achievement of being 20% below the cost compared to the six non-operator wells that we have and also actually compared to some of the other operators in the basin as well In terms of improvements, I think there's still room to improve on that. in terms of improvements i think there's still room to improve on that One area of improvement is we could have slightly better performance from our GADS engines in drilling and fleck fleets. one area of improvement is we could have slightly better performance from our gads engines in drilling and fleck fleets They suffered a little bit during the summer months. they suffered a little bit during the summer months Instead of operating about 75% of the time during the operation, which is what we initially expected, they operated for about 50% of the time. instead of operating about 75% of the time during the operation which is what we initially expected they operated for about 50% of the time There's some improvement potential there with the dual fuel fleets. there's some improvement potential there with the dual fuel fleets Also, remember that we're cleaning out three-mile lateral wells, and these take some time, and we're trying to be extra careful on that. We're taking a bit longer than what we initially expected. That's another area of improvement as well. Another area of improvement that I can point to is water usage. We're utilizing 50% produced water, which is really good. If we can find a way to utilize more produced water and reduce water cost, that would be even better. It's really a few things added together where we can improve. We can definitely improve another 5% or a little bit more as we drill in the future. The more we drill, the better we'll get, and we're encouraged with the initial results. Also, remember that we're cleaning out three-mile lateral wells, and these take some time, and we're trying to be extra careful on that. also remember that we're cleaning out three-mile lateral wells and these take some time and we're trying to be extra careful on that We're taking a bit longer than what we initially expected. we're taking a bit longer than what we initially expected That's another area of improvement as well. that's another area of improvement as well Another area of improvement that I can point to is water usage. another area of improvement that i can point to is water usage We're utilizing 50% produced water, which is really good. we're utilizing 50% produced water which is really good If we can find a way to utilize more produced water and reduce water cost, that would be even better. if we can find a way to utilize more produced water and reduce water cost that would be even better It's really a few things added together where we can improve. it's really a few things added together where we can improve We can definitely improve another 5% or a little bit more as we drill in the future. we can definitely improve another 5% or a little bit more as we drill in the future The more we drill, the better we'll get, and we're encouraged with the initial results. the more we drill the better we'll get and we're encouraged with the initial results

Speaker 7: Absolutely. Thanks for that detail. Maybe shifting over to California, on slide nine, you highlight your fields within the San Joaquin Basin. While I know the near-term focus is understandably on the high-return sidetrack program, can you speak to some of the other opportunities within your California portfolio and how those fit into your strategy longer term? Absolutely. absolutely Thanks for that detail. thanks for that detail Maybe shifting over to California, on slide nine, you highlight your fields within the San Joaquin Basin. maybe shifting over to california on slide nine you highlight your fields within the san joaquin basin While I know the near-term focus is understandably on the high-return sidetrack program, can you speak to some of the other opportunities within your California portfolio and how those fit into your strategy longer term? while i know the near-term focus is understandably on the high-return sidetrack program can you speak to some of the other opportunities within your california portfolio and how those fit into your strategy longer term

Speaker 5: Yeah, we have a huge portfolio in California. We've been focusing here this year on the thermal dynamite sidetracks. Those tend to be our highest rate of return projects. We also have significant potential in the Monarch and South Midway Sunset, drilling those horizontal wells in the Monarch. They're short horizontals. I mean, they're not three milers like in Utah. They're 1,000 ft, 1,500 ft horizontals, but there's a lot of potential there. We have significant potential also in the Hill property up in Bellridge Field. Outside of that, we have significant workover potential as well on the east side of our acreage base in Round Mountain with our water flood. Really significant potential, you know, rate to return for even at current strip pricing for thermal dynamite, they're at 80%-100% rate of return projects. They're really, really good projects. Yeah, we have a huge portfolio in California. yeah we have a huge portfolio in california We've been focusing here this year on the thermal dynamite sidetracks. we've been focusing here this year on the thermal dynamite sidetracks Those tend to be our highest rate of return projects. those tend to be our highest rate of return projects We also have significant potential in the Monarch and South Midway Sunset, drilling those horizontal wells in the Monarch. we also have significant potential in the monarch and south midway sunset drilling those horizontal wells in the monarch They're short horizontals. they're short horizontals I mean, they're not three milers like in Utah. i mean they're not three milers like in utah They're 1,000 ft, 1,500 ft horizontals, but there's a lot of potential there. they're 1,000 ft 1,500 ft horizontals but there's a lot of potential there We have significant potential also in the Hill property up in Bellridge Field. we have significant potential also in the hill property up in bellridge field Outside of that, we have significant workover potential as well on the east side of our acreage base in Round Mountain with our water flood. outside of that we have significant workover potential as well on the east side of our acreage base in round mountain with our water flood Really significant potential, you know, rate to return for even at current strip pricing for thermal dynamite, they're at 80% - 100% rate of return projects. really significant potential you know rate to return for even at current strip pricing for thermal dynamite they're at 80% - 100% rate of return projects They're really, really good projects. they're really really good projects

Speaker 7: Got it. Thanks for taking my questions. Got it. got it Thanks for taking my questions. thanks for taking my questions

Speaker 5: Thank you, Nate. Thank you, Nate. thank you nate

Speaker 4: Thank you. Again, just a quick reminder, if you'd like to ask a question, please press star one one. I'm showing no further questions in the queue at this time. I will now turn the call back over to Fernando Araujo for any closing remarks. Thank you. thank you Again, just a quick reminder, if you'd like to ask a question, please press star one one. again just a quick reminder if you'd like to ask a question please press star one one I'm showing no further questions in the queue at this time. i'm showing no further questions in the queue at this time I will now turn the call back over to Fernando Araujo for any closing remarks. i will now turn the call back over to fernando araujo for any closing remarks

Speaker 5: Thank you so much for your interest in Berry. We'll keep you updated as to the progress in Utah and in California. Once again, thank you for joining the call. Thank you so much for your interest in Berry. thank you so much for your interest in berry We'll keep you updated as to the progress in Utah and in California. we'll keep you updated as to the progress in utah and in california Once again, thank you for joining the call. once again thank you for joining the call

Speaker 4: This concludes today's conference. Thank you for your participation, and you may now disconnect. This concludes today's conference. this concludes today's conference Thank you for your participation, and you may now disconnect. thank you for your participation and you may now disconnect