Berry Petroleum Earns $1.16 Per Share in Second Quarter 2007

Berry Petroleum Company (NYSE:BRY) earned net income of $52 million, or $1.16 per diluted share, for the three months ending June 30, 2007, up from net income of $34.2 million, or $.76 per diluted share in the second quarter of 2006, according to Robert F. Heinemann, president and chief executive officer. Excluding a net gain related to the disposition of non-core assets, net income for the three months ended June 30, 2007 was $23.2 million or $.52 per diluted share. Revenues increased by 46% to $179 million for the second quarter of 2007 compared to the second quarter of 2006. Excluding the asset disposition gain of $50.4 million, revenues for the three months ended June 30, 2007 are $129 million, or a 5% increase. Discretionary cash flow totaled $59 million in the second quarter of 2007, down from $66 million in the comparable 2006 period, but higher than the $53 million achieved in the first quarter of 2007. (Discretionary cash flow is a non-GAAP measure; see reconciliation below.) For the second quarter of 2007, net production averaged a record 27,195 barrels of oil equivalent per day (BOE/D), an increase of 10% from the 24,768 BOE per day achieved in the second quarter of 2006 and an increase of 7% compared to first quarter 2007 production of 25,490 BOE/D. Natural gas production in the second quarter of 2007 was up 26% over the second quarter of 2006. Mr. Heinemann stated, "The crude marketing issues related to our Brundage Canyon black wax crude in Utah have been resolved and production there has increased to over 6,300 BOE/D in the second quarter, from a low of 3,800 BOE/D in January of 2007. We are now intensifying our focus on our western Colorado Piceance asset where we are making good progress on our mesa drilling program during the summer months. Drilling activities included 31 gross (8 net) wells in the Piceance during the quarter and production increased 31% over the first quarter of 2007 to 8.3 MMcf/D. Drilling performance on the vertical mesa wells has improved, and we are working to reduce drilling time on the directional holes. We continue to be encouraged by the reservoir productivity and are targeting third quarter net production of 12.5 MMcf/D as a significant number of wells are brought on-line. "In California we achieved a 50% production increase from the diatomite asset without drilling additional wells during the quarter. This is a result of more aggressive steam cycling and improved well performance. Average daily production was over 900 BOE/D in the second quarter of 2007, compared to 600 BOE/D in the first quarter. Production continues to increase and we anticipate producing over 1,000 BOE/D in the third quarter. We will begin a 50-well drilling program in the latter part of the third quarter and will add facilities as needed. "Based on encouraging results from our Poso Creek asset we continue with our accelerated drilling program there. We drilled 49 wells during the second quarter and we secured additional capacity to meet the demand for expanded steam requirements. In the DJ basin we have been able to increase production from our Niobrara natural gas assets over 10% from the first quarter to record levels with modest capital outlays.” The average realized sales price per barrel of oil equivalent (BOE), net of hedging, for the second quarter of 2007 was $45.43 per BOE, down 9% from the $49.75 per BOE received in the same 2006 period but was 4% higher than the $43.84 per BOE received in the first quarter of 2007. In the second quarter of 2007, Berry sold its non-core West Montalvo asset in Ventura County, California for a pre-tax gain of $50.4 million. Berry also incurred an impairment charge of $2.9 million to reduce the carrying value of its Bakken asset in the Williston Basin, North Dakota to estimated fair market value. Six Months Results Net income for the six months of 2007 was $70.8 million or $1.58 per diluted share, up 23% from $57.5 or $1.28 per diluted share in the comparable 2006 period. Excluding an asset sale and impairment of an asset held for sale for a combined net after-tax gain of $28.8 million, net income for the six months ended June 30, 2007 was $42.0 million or $.94 per diluted share, compared to $57.5 million or $1.28 per diluted share for the first six months of 2006. This decrease is due to lower realized oil and gas prices and higher operating costs, increased depreciation, depletion & amortization (DD&A) charges related to increased development activity and increased interest expense. Discretionary cash flow totaled $112 million for the first six months of 2007, down from $121 million in the comparable 2006 period. For the six months ended June 30, 2007, net production averaged 26,332 BOE/D, an increase of 9% from the 24,118 BOE/D achieved in the same period in 2006. The average realized sales price per BOE, net of hedging, for the six months ended June 30, 2007 was $44.72 per BOE, down 9% from the $48.92 per BOE received in the 2006 period. Mr. Heinemann continued, "Although we are enjoying strong crude oil prices for our increasing California production, Rockies gas prices continue to be volatile due to various factors, including takeaway pipeline capacity, supply volumes, and regional demand issues. We expect the Colorado Interstate Gas (CIG) basis differential to narrow upon the startup of the Rockies Express Pipeline (REX) which is anticipated in 2008. We have contracted 10,000 MMBtu/D on this pipeline to provide assurance of gas delivery. The CIG basis differential per MMBtu, based upon first-of-month values, averaged $3.78 below Henry Hub (HH) and ranged from $2.92 to $4.37 below HH in the second quarter.” Operations During the second quarter of 2007 the Company drilled 123 gross (88 net) wells with a success rate of 98 percent. For the second quarter of 2007 and 2006, average net production in BOE per day from each of Berry’s operating regions was as follows: Second Quarter by Region 2007 Production 2006 Production California 16,214 60% 15,617 63% Rocky Mountain Region 10,981 40% 9,151 37% Total BOE per day 27,195 100% 24,768 100% The mix of average net oil and natural gas production was as follows: Second Quarter by Mix 2007 Production 2006 Production Oil (Bbls) 20,163 74% 19,593 79% Natural Gas (BOE) 7,032 26% 5,175 21% Total BOE per day 27,195 100% 24,768 100% Ralph J. Goehring, executive vice president and chief financial officer, stated, "We expect development capital to total from $250 million to $280 million for 2007 and for the first six months of 2007 we have spent $151 million of that amount. We also paid $54 million for the third and final payment of the Piceance acquisition out of the proceeds of the sale of our West Montalvo asset. At June 30, 2007, our debt level was $475 million, essentially flat from the end of the first quarter of 2007.” Explanation and Reconciliation of Non-GAAP Financial Measures Three Months Ended Six Months Ended 06/30/07   06/30/06   03/31/07 6/30/07 6/30/06 Net cash provided by operating activities $ 80.4 $ 58.8 $ 11.6 $ 92.0 $ 84.1 Add back: Net increase (decrease) in current assets (8.2 ) 16.7 13.3 5.1 18.6 Add back: Net decrease (increase) in current liabilities (13.5 ) (9.6 ) 28.1 14.6 18.7 Discretionary cash flow $ 58.7 $ 65.9 $ 53.0 $111.7 $ 121.4 Teleconference Call An earnings conference call will be held Wednesday, August 1, 2007 at 1:30 p.m. Eastern Time (10:30 a.m. Pacific Time). Dial 1-866-713-8307 to participate, using passcode 18450946. International callers may dial 617-597-5307. For a digital replay available through August 15, 2007 dial 1-888-286-8010 (passcode 70245564). Listen live or via replay on the web at www.bry.com. Transcripts of this and previous calls may be viewed at www.bry.com in the "Investor Center.” About Berry Petroleum Company Berry Petroleum Company is a publicly traded independent oil and gas production and exploitation company with its headquarters in Bakersfield, California. Safe harbor under the "Private Securities Litigation Reform Act of 1995” Any statements in this news release that are not historical facts are forward-looking statements that involve risks and uncertainties. Words such as "targeting,” "will,” "anticipate,” "expect,” and forms of those words and others indicate forward-looking statements. Important factors which could affect actual results are discussed in PART 1, Item 1A. Risk Factors of our 2006 Form 10-K filed with the Securities and Exchange Commission on February 28, 2007 and all material changes are updated in Part II, Item 1A within our Form 10-Qs filed subsequent to that date. CONDENSED STATEMENTS OF INCOME (In thousands) (unaudited)   Three Months Six Months   06/30/07   06/30/06     06/30/07   06/30/06   Revenues Sales of oil and gas $ 113,426 $ 110,641 $ 215,200 $ 212,575 Sales of electricity 13,867 11,715 28,463 26,884 Gain on sale of assets 50,400 - 50,398 - Interest and other income, net   1,536   803     2,647   1,296   Total   179,229   123,159     296,708   240,755   Expenses Operating costs – oil & gas 35,725 27,074 69,335 52,813 Operating costs – electricity 11,083 10,626 25,254 24,958 Production taxes 4,139 3,373 7,954 6,606 Depreciation, depletion & amortization - oil & gas 23,397 16,263 42,122 29,359 Depreciation, depletion & amortization - electricity 961 807 1,723 1,701 General and administrative 9,651 7,877 19,958 16,192 Interest 4,976 2,460 9,267 4,038 Commodity derivatives - (5,563 ) - (736 ) Dry hole, abandonment & impairment, exploration   3,519   3,045     4,168   10,543   Total   93,451   65,962     179,781   145,474     Income before income taxes 85,778 57,197 116,927 95,281 Provision for income taxes   33,821   22,994     46,115   37,827     Net income $ 51,957 $ 34,203   $ 70,812 $ 57,454     Basic net income per share $ 1.18 $ 0.78 $ 1.61 $ 1.31 Diluted net income per share $ 1.16 $ 0.76 $ 1.58 $ 1.28 Cash dividends per share $ 0.075 $ 0.065 $ 0.150 $ 0.130   Weighted average common shares: Basic   44,029   44,053     43,973   44,020   Diluted   44,895   44,939     44,754   44,955   CONDENSED BALANCE SHEETS (In thousands) (unaudited)     06/30/07   12/31/06 Assets Current assets $ 108,094 $ 98,809 Properties, buildings & equipment, net 1,193,252 1,080,631 Other assets   16,485   19,557 $ 1,317,831 $ 1,198,997 Liabilities & Shareholders’ Equity Current liabilities $ 157,022 $ 215,403 Deferred income taxes 127,385 103,515 Long-term debt 465,000 390,000 Other long-term liabilities 89,070 62,379 Shareholders’ equity   479,354   427,700 $ 1,317,831 $ 1,198,997 CONDENSED STATEMENTS OF CASH FLOWS (In thousands) (unaudited)   Six Months   06/30/07     06/30/06   Cash flows from operating activities: Net income $ 70,812 $ 57,454 Depreciation, depletion & amortization (DD&A) 43,845 31,060 Dry hole, abandonment & impairment 2,922 6,375 Commodity derivatives 675 (674 ) Stock-based compensation 3,779 2,199 Deferred income taxes 39,695 25,068 Gain on sale (50,398 ) - Other, net 415 (64 ) Net changes in operating assets and liabilities   (19,701 )   (37,322 )   Net cash provided by operating activities 92,044 84,096   Net cash used in investing activities (153,717 ) (271,431 ) Net cash provided by financing activities   61,572     185,971     Net decrease in cash and cash equivalents (101 ) (1,364 )   Cash and cash equivalents at beginning of year   416     1,990     Cash and cash equivalents at end of period $ 315   $ 626   COMPARATIVE OPERATING STATISTICS (unaudited)   Three Months Six Months 06/30/07 06/30/06 Change 06/30/07 06/30/06 Change Oil and gas: Net production-BOE per day 27,195 24,768 +10 % 26,332 24,118 +9 % Per BOE: Average sales price before hedges $44.72 $52.46 -15 % $44.25 $51.08 -13 % Average sales price after hedges 45.43 49.75 -9 % 44.72 48.92 -9 %   Operating costs - oil and gas 14.44 12.01 +20 % 14.55 12.10 +20 % Production taxes 1.67 1.50 +11 % 1.67 1.51 +11 % Total operating costs 16.11 13.51 + 19 % 16.22 13.61 + 19 %   DD&A - oil and gas 9.45 7.22 +31 % 8.84 6.73 +31 % General & administrative expenses 3.90 3.49 +12 % 4.19 3.71 +13 %   Interest expense $ 2.01 $ 1.09 +84 % $ 1.94 $ 0.92 +111 %