Robert F. Heinemann, Chairman, Interim President and Interim Chief Executive Officer, said, "Our strategy of growth through exploitation of our existing assets and the establishment of a sizeable new core area in the Rockies has given Berry a solid foundation for significant production increases for many more quarters. We are on target in the first quarter with a 23% production increase to an average of approximately 19,400 barrels of oil equivalent (BOE) per day. This record production, combined with strong crude prices, was the catalyst in achieving record quarterly net income of $12.1 million. Our Brundage Canyon asset is performing beyond our expectations as we continue to define the productive extent of the field. At Brundage Canyon, we averaged approximately 3,200 BOE per day in the first quarter and are currently producing in excess of 3,700 BOE per day."
The Company's production of oil and gas (BOE per day) in the first quarter of 2004 improved to 19,395, up 23% from 15,736 in the first quarter of 2003 and up 5% from 18,550 in the fourth quarter of 2003. Increased production is due primarily to the acquisition of the Brundage Canyon property in Utah in August 2003 and its subsequent development. At Brundage Canyon, the Company drilled 27 new wells during 2003 and 14 new wells during the first quarter of 2004. The Company plans to drill, at a minimum, an additional 30 wells at Brundage Canyon during 2004. Production from the Company's California properties in the first quarter of 2004 remained strong and was within 1% of the record production of 16,164 BOE per day achieved in the fourth quarter of 2003. The Company plans to drill a total of 44 wells on its California properties during 2004. With production increases projected for both the Company's Brundage Canyon and California properties, management is targeting total production in 2004 to exceed 20,500 BOE per day, which is approximately a 24% increase over 2003.
Revenues for the first quarter were $57.3 million, up $10.5 million or 22% from $46.8 million in the first quarter of 2003. The average realized sales price, net of hedges, for the first quarter of 2004 was $25.58 per BOE, a 6% gain over the $24.23 per BOE received in the same 2003 period. Total operating costs from oil and gas operations, on a per BOE basis for the first quarter of 2004, increased 10% to $10.21 from $9.31 in the same 2003 period. This was primarily due to higher steam costs resulting from a 10% increase in injected steam volumes. General and administrative costs per BOE rose 18% in the first quarter of 2004 to $1.87 from $1.59 in the first quarter of 2003, due primarily to higher compensation-related costs.
As of March 31, 2004, the Company has spent $18.4 million or 35% of its projected 2004 capital budget of approximately $53 million. Activity through March includes 21 wells drilled and 9 workovers performed in California, and 14 wells drilled and 8 workovers performed in Utah.
Ralph J. Goehring, Senior Vice President and Chief Financial Officer, stated, "We are reviewing our drilling opportunities for acceleration into 2004 to capture the benefits of the current strong crude price environment. We intend to put our excess cash flow to work via acquisitions and additional drilling opportunities. On the acquisition front, we continue to pursue acreage opportunities in the Rockies that will either complement our existing operations or establish a new core area for our continued growth."
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