Second Quarter (2Q) Update

Berry Reaffirms FY25 Guidance; Uinta Wells Drive 2H Growth

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   |    Friday,August 08,2025

Berry Corporation delivered a steady second quarter update that reinforced the company’s core message for 2025: production is on plan, guidance is intact, and the hedge book is doing its job protecting liquidity and funding the program. While the quarter reflected the typical noise of timing-driven capital spending, the broader setup into the back half of the year points to sequential production growth and improving free cash flow momentum, supported by a favorable hedge position and continued debt reduction.

Production averaged 23.9 MBoe/d (92% oil) in the quarter, landing in-line with expectations. Financially, Berry reported net income of $34 million ($0.43 per diluted share) and generated $29 million in operating cash flow alongside $53 million of Adjusted EBITDA. Free cash flow was negative (-$26 million) primarily because the company pulled forward a portion of full-year capital spending into Q2 due to an early startup of frac operations, driving quarterly capex up to $54 million.

Management emphasized that full-year drilling activity is now complete, positioning Berry for sequential production growth through year-end. That story is being driven by two forces: continued execution across the California program and meaningful near-term catalysts in Utah. In the Uinta Basin, the company began flowback on its first horizontal well, with the second well completing operations and the remaining two wells expected online during August. These four Uinta horizontals are expected to support production growth throughout the second half of 2025. Berry also pointed to upside optionality from testing the Castle Peak play via a non-operated well north of its acreage, expected online in the fourth quarter.

From a balance sheet and capital allocation perspective, Berry continued to emphasize discipline. The company paid down approximately $11 million of debt in Q2, bringing total year-to-date debt reduction to ~$23 million, consistent with its stated target of at least $45 million of total debt reduction in 2025. Liquidity remains adequate, with $101 million of total liquidity at quarter-end, and management expects to fund the remainder of its 2025 capital program using operating cash flow based on current commodity prices.

Berry’s hedge position remains a central part of the investment story. The company highlighted that it has 71% of oil volumes hedged for the remainder of 2025 at $74.59/Bbl and 63% hedged for 2026 at $69.55/Bbl, with a crude oil mark-to-market hedge value of approximately $30 million as of July 31, 2025. Management also noted that year-to-date hedged LOE is trending 6% below the midpoint of full-year guidance, reinforcing the company’s ability to protect margins in a volatile macro.

The company reaffirmed its full-year 2025 outlook, including production guidance of 24,800 to 26,000 boe/d and capex guidance of $110 to $120 million, with roughly 60% allocated to California and 40% to Utah. And despite the company’s ongoing emphasis on debt reduction, Berry continues to return cash to shareholders — declaring a quarterly dividend of $0.03 per share, representing an implied 4% annualized yield based on the July 31 share price.