Berry's Q2 2025: Contradictions Unveiled on EIR Rulings, Well Costs, and Production Strategies

Optimism regarding Kern County EIR ruling, Uinta Basin well cost performance, California production and EIR impact, Uinta pad well cost and improvement potential, and thermal diatomite sidetracks and production growth are the key contradictions discussed in Berry's latest 2025Q2 earnings call.



Strategic Growth in High-Return Assets:
- Berry Corporation reported successful execution of its 2025 plan, focusing on high-return development projects and capital and operational efficiencies.
- The company's strong hedge position, particularly with 71% of expected oil production hedged at approximately $75 per barrel of Brent, supports its production outlook and free cash flow generation expectations.

Operational Efficiency and Cost Reductions:
- Berry achieved significant cost savings in Utah, with an average of 64 stages per well, resulting in approximately $500,000 of savings per well.
- The savings were driven by fuel cost advantages and the use of a dual fuel fleet, along with the utilization of 50% produced water in fracs.

Regulatory Environment and Long-term Strategy:
- Berry anticipates a stabilizing regulatory environment in California, with Kern County expected to resume issuance of new drill permits, providing upside and optionality for future development projects.
- The company's inventory-rich position and strategic acquisitions, such as the Castle Peak well north of its acreage, are expected to unlock significant value and offer long-term capital allocation and growth opportunities.

Dividend and Balance Sheet Management:
- Berry declared a dividend of $0.03 per share, reflecting a 4% annualized dividend yield, and paid down $11 million of debt during the quarter.
- The dividend and debt reduction represent nearly 10% of the company's enterprise value, showcasing the company's commitment to generating shareholder value and maintaining a strong balance sheet.