Berry Petroleum Corp (NASDAQ:BRY) Q3 2019 Earnings Conference Call - Final Transcript
Nov 07, 2019 • 05:00 pm ET
and therefore production up or down to best maximize shareholder returns through all market conditions.
We've recognized our business model is distinct from most other E&P companies in the market. Unlike the resource plays in which each well starts off at a maximum production rates, IPs, a significant portion of Berry's California production ramps up over a period of time, reaching peak performance, sometimes four to six months after initial production. We have included type curves on slides 13 and 14 of our November investor presentation that illustrate the significant difference.
In addition to help you with your modeling, moving forward, we will provide capex projections a quarter in advance, as capex is not linear from quarter-to-quarter. For the fourth quarter, we expect to invest $35 million to $40 million, which will put total 2019 capex slightly below the midpoint of our guidance. In 2020, we expect to continue to deliver shareholder total returns in the mid-teens through production growth and return of capital to our shareholders by utilizing all the tools available to us, as outlined on Slide 22.
The regulatory landscape in California continues to be a topic of interest to our shareholder base. The California legislative session closed September 13, and will begin again on January 6 next year. However, our Berry First efforts continue. We're committed to protecting our assets. Our Corporate Affairs department, our government and regulatory teams and I, are all actively participating in the California regulatory process with various outreach strategies and programs. With our investments and focus in this area, we are now well positioned to respond to potential regulatory and legislative activities. So far, our approach has been effective and helping to minimize the impact of these actions on our business.
Last, this past quarter, we engaged a third-party consulting firm to conduct a perception study to gauge how the investment community views Berry's performance as a newly public company, as well as to better understand the Street's perception of the industry as a whole. Overall, one of the key takeaways from the study was that the investment community values strong free cash flow, a healthy capital return strategy, and a conservative leverage profile. And we believe Berry delivers on all of these points. Berry has lived within levered free cash flow through all market conditions, has consistently paid the dividends since going public, and maintains low leverage at 1.4 times its debt to EBITDA.
Additionally, Berry has grown low-risk production from the existing asset base, has production heavily weighted towards oil benefits from Brent-based pricing resulting in attractive margins, and has based on management estimates at least a 20-year inventory of future drilling locations. On top of that, we are well hedge for the remainder of 2019 and throughout 2020. Accordingly, Berry is in a strong position to continue to create and deliver top tier value in the space.
I'll now turn it over to Gary, who will give you greater insight into our operational performance for the third quarter.