UNITED
STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
FORM 8-K
CURRENT
REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of
Report (Date of earliest event reported): December 28, 2008
BERRY PETROLEUM
COMPANY
(Exact
Name of Registrant as Specified in its Charter)
|
DELAWARE
(State
or Other Jurisdiction of
Incorporation
or Organization)
|
1-9735
(Commission
File Number)
|
77-0079387
(IRS
Employer
Identification
Number)
|
|
1999
BROADWAY, DENVER, CO
(Address
of Principal Executive Offices)
|
80220
(Zip
Code)
|
Registrant’s
telephone number, including area code: (303)
999-4400
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
1
Item
8.01 Other Events
Since
February 1, 2006 Berry Petroleum Company (“Company”) has been selling 100% of
its California oil production to Big West of California, LLC (“BWOC”) pursuant
to that certain crude oil purchase contract dated November 14, 2005
(“Agreement”). The Agreement provided for BWOC to purchase the
Company’s crude oil production at a per barrel price, calculated on a monthly
basis and blended across the various California producing locations, at the
higher of 1) the WTI NYMEX crude oil price less a fixed differential
approximating $8.15, or 2) heavy oil field postings plus a premium of
approximately $1.35. The initial term of the Agreement is for four years with a
one-year renewal at the Company’s option.
On the
morning of Monday, December 22, 2008, BWOC and two of its affiliates, who were
guarantors under the Agreement, filed for bankruptcy protection under Chapter 11
of the United States Bankruptcy Code. On the prior Friday afternoon,
December 19, 2008, BWOC had informed the Company that it would not be making the
approximate $26 million payment to the Company that was due that day for
November production. In addition to the invoiced amount for November,
BWOC’s bankruptcy filing also covers 21 days of production in December, payment
for which would have been due January 20, 2009. The amount for these
21 days of production is approximately $12 million for a total pre-petition
claim amount due to the Company of approximately $38 million.
On
December 23, 2008, BWOC advised the Company that due to interruptions in its
other business relationships, it was unable to receive the Company’s production
but was making efforts to re-establish its own operations. The
Company has been utilizing a variety of methods to manage its crude oil
production, including but not limited to, curtailing production at its various
California properties, expanding its storage capacity, entering into short term
sales arrangements and exploring additional sales arrangements.
As of
December 28, 2008 the Company is producing approximately 5,000 BOPD in
California, approximately 12,000 BOPD below its current average production of
approximately 17,000 BOPD. The Company anticipates increasing its
production during the week of December 28 as additional interim sales agreements
and additional storage are obtained.
While the
Company is proceeding to explore such interim sales arrangements, there can be
no assurance as to how much of the Company’s production will be able to be sold
while BWOC is seeking to resume regular business operations nor the terms of
such interim sales agreements. The Company also can not provide
assurance as to whether BWOC is going to be able to re-establish
operations.
On
December 26, 2008 BWOC executed a written acknowledgement that it would seek
bankruptcy court approval of “critical vendor” status for its contractual
relationship with the Company and confirmed the Company’s right under the
Agreement to mitigate its damages by seeking alternative sales outlets for the
Company’s California crude oil production
on an interim basis. The Company has not terminated the Agreement and
retains all of its rights under the Agreement. The
19,000 BOEPD of Company production outside of the state of California is
unaffected by the BWOC bankruptcy filing.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereto
duly authorized.
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BERRY
PETROLEUM COMPANY
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By:
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/s/ Kenneth A.
Olson
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Kenneth
A. Olson
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||||
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Corporate
Secretary
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Date:
December 28, 2008
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