Berry Petroleum blames California electricity crisis for profit drop
Berry Petroleum Co., Taft, Calif., said first-quarter net income dropped 44% from last year because of an after-tax charge of $4.2 million related to non-payment from Berry's electricity customers. Berry reported net income for the quarter ended Mar. 31 of $5 million, or 23¢/share, down from $8.9 million, or 40¢/share.
By the OGJ Online Staff
HOUSTON, May 8 -- Berry Petroleum Co., Taft, Calif., said Tuesday its first-quarter net income dropped 44% from last year because of an after-tax charge of $4.2 million related to non-payment from Berry's power-generation customers for electricity.
Berry reported net income for the quarter ended Mar. 31 of $5 million, or 23¢/share, down from $8.9 million, or 40¢/share, for the same period last year.
The $4.2 million after-tax charge represented 25%, or $6.6 million, of the Mar, 31 receivables for power production since November 2000. Excluding this charge, Berry would have earned $9.2 million, or 42¢/share.
The after-tax charge stemmed from the bankruptcy filing of Pacific Gas and Electric Co. (PG&E) on Apr. 6, the possibility of a similar filing by Southern California Edison Co. (Edison), and the inability of the various entities of the state of California to resolve its electricity crisis, Berry executives said.
Berry has said is is owned $27.1 million from PG&E and Edison for electricity sales dating back to November 2000 (OGJ Online, Apr. 18, 2001).
Jerry Hoffman, chairman, president, and CEO, said, "As a result of the breach of the contracts by the two utilities, the unwillingness of Gov. [Gray] Davis to raise rates, and actions taken by the California Public Utilities Commission, the economical operation of the company's cogeneration facilities was destroyed, and we were forced to shut down our cogeneration plants, representing approximately 98 Mw of electricity capacity."
Berry's short-term goal is to re-initiate power generation and steam production from its cogeneration plants. Berry has terminated its electricity sales contracts with both utilities.
"We are hopeful that these actions will result in the start-up of electrical power and steam generation from these facilities in the upcoming few weeks," Hoffman said.
Oil and gas revenues were $30.7 million in the first quarter compared with $26 million for the same time last year. The higher revenues stemmed from bigger production volumes and higher oil prices. Berry received $22.19/bbl in the 2001 first quarter compared with $19.99/bbl from the same period last year.