Berry Corp. Swings to $89M Loss Amid Impairments, Merger Costs

TL;DR

**BRY is bleeding cash and getting acquired by CRC; don't expect a turnaround, just a conversion.**

AI Summary

Berry Corp. (BRY) reported a significant net loss of $89.093 million for the nine months ended September 30, 2025, a stark contrast to the net income of $21.010 million in the prior year period. This downturn was primarily driven by a $157.910 million impairment of oil and gas properties in 2025, compared to $43.980 million in 2024, and a substantial increase in interest expense to $47.115 million from $28.176 million. Total revenues and other decreased to $543.871 million from $597.422 million, largely due to a decline in oil, natural gas, and natural gas liquids sales from $489.537 million to $401.988 million. However, the company experienced a $57.232 million gain on oil and gas sales derivatives in 2025, reversing a $1.610 million loss in 2024. A key strategic development is the pending merger with California Resources Corporation (CRC), announced on September 14, 2025, where each BRY share will convert into 0.0718 shares of CRC common stock. Berry Corp. incurred approximately $3 million in acquisition and other transaction costs related to this merger during the period.

Why It Matters

This 10-Q reveals Berry Corp.'s substantial financial deterioration, marked by a significant net loss and declining revenues, which directly impacts investor confidence and the company's valuation. The pending merger with California Resources Corporation is a critical event, offering a potential exit for BRY shareholders but also introducing integration risks and regulatory hurdles. For employees, the merger could mean job changes or consolidation, while customers might see shifts in service offerings or pricing post-acquisition. In the broader market, this consolidation in the Western U.S. independent upstream energy sector could reduce competition and influence regional oil and gas dynamics.

Risk Assessment

Risk Level: high — The company reported a net loss of $89.093 million for the nine months ended September 30, 2025, a significant decline from a $21.010 million net income in the prior year. This is exacerbated by a $157.910 million impairment of oil and gas properties and a substantial increase in interest expense to $47.115 million, indicating operational and financial stress.

Analyst Insight

Investors should carefully evaluate the terms of the pending merger with California Resources Corporation, specifically the 0.0718 exchange ratio, and consider the implications for their portfolio. Given the net loss and impairment charges, existing shareholders might consider exiting their position or hedging against further declines if the merger faces unexpected delays or complications.

Financial Highlights

debt To Equity

0.55

revenue

$543,871,000

operating Margin

N/A

total Assets

$1,386,998,000

total Debt

$400,000,000

net Income

-$89,093,000

eps

N/A

gross Margin

N/A

cash Position

$13,364,000

revenue Growth

-9.0%

Revenue Breakdown

Key Numbers

• $89.093M — Net Loss (for the nine months ended September 30, 2025, compared to $21.010M net income in 2024)
• $157.910M — Impairment of oil and gas properties (for the nine months ended September 30, 2025, significantly higher than $43.980M in 2024)
• $47.115M — Interest expense (for the nine months ended September 30, 2025, up from $28.176M in 2024)
• $543.871M — Total revenues and other (for the nine months ended September 30, 2025, down from $597.422M in 2024)
• $401.988M — Oil, natural gas and natural gas liquids sales (for the nine months ended September 30, 2025, a decrease from $489.537M in 2024)
• $57.232M — Gains on oil and gas sales derivatives (for the nine months ended September 30, 2025, a reversal from a $1.610M loss in 2024)
• $3M — Acquisition and other transaction costs (incurred for the three and nine months ended September 30, 2025, related to the CRC merger)
• 0.0718 — Exchange Ratio (shares of CRC common stock per Berry Corp. common stock in the pending merger)
• 77,607,094 — Common shares outstanding (as of October 31, 2025)
• $416.250M — 2024 Term Loan outstanding (as of September 30, 2025, with an 11.82% interest rate)

Key Players & Entities

• Berry Corp. (company) — registrant of the 10-Q filing
• California Resources Corporation (company) — acquiring company in the pending merger
• Dornoch Merger Sub, LLC (company) — wholly-owned subsidiary of CRC merging with Berry Corp.
• Breakwall Credit Management LLC (company) — administrative agent for the 2024 Term Loan
• SEC (regulator) — U.S. Securities and Exchange Commission
• FASB (regulator) — Financial Accounting Standards Board
• Nasdaq Global Select Market (market) — exchange where BRY common stock is registered
• Delaware (location) — state of incorporation for Berry Corp. and CRC
• Dallas, Texas (location) — principal executive offices of Berry Corp.
• San Joaquin Basin (location) — location of Berry Corp.'s California E&P assets

FAQ

Risk Factors

• Significant Net Loss and Impairment Charges [high — financial]: Berry Corp reported a net loss of $89.093 million for the nine months ended September 30, 2025, a sharp decline from a $21.010 million net income in the prior year. This was heavily influenced by a $157.910 million impairment of oil and gas properties, a substantial increase from $43.980 million in 2024.
• Increased Interest Expense [medium — financial]: Interest expense rose to $47.115 million for the nine months ended September 30, 2025, from $28.176 million in the comparable period of 2024. This increase puts additional pressure on the company's profitability.
• Commodity Price Volatility [high — market]: Revenues from oil, natural gas, and natural gas liquids sales decreased to $401.988 million from $489.537 million, indicating sensitivity to fluctuations in energy prices and production volumes.
• Pending Merger with CRC [medium — financial]: The pending merger with California Resources Corporation (CRC) introduces integration risks and transaction costs. Berry Corp incurred approximately $3 million in acquisition costs related to this merger.
• Asset Impairment [high — operational]: The significant impairment of oil and gas properties ($157.910 million) suggests a potential overvaluation of assets or a reassessment of future economic viability of these properties.
• Derivative Instrument Impact [medium — financial]: While the company experienced a $57.232 million gain on oil and gas sales derivatives in 2025, reversing a $1.610 million loss in 2024, the volatility of these instruments can impact earnings unpredictably.

Industry Context

The oil and gas industry is characterized by high capital intensity, significant price volatility for commodities, and increasing regulatory scrutiny. Companies like Berry Corp are navigating challenges related to production costs, environmental regulations, and the transition towards cleaner energy sources. Consolidation through mergers and acquisitions, such as the pending deal with CRC, is a common strategy to achieve economies of scale and enhance market position.

Regulatory Implications

Berry Corp faces ongoing regulatory risks related to environmental protection, emissions standards, and land use policies in its operating regions. Compliance with these regulations requires significant investment and can impact operational flexibility and costs. Changes in government policy regarding energy production and climate change could also materially affect the company's future prospects.

What Investors Should Do

1. Monitor the progress and terms of the CRC merger.
2. Analyze the impact of commodity price fluctuations on future earnings.
3. Evaluate the sustainability of the current debt levels.
4. Assess the reasons behind the substantial impairment charges.

Key Dates

• 2025-09-30: Nine months ended September 30, 2025 — Period marked by significant net loss, increased impairments, and rising interest expenses, contrasting sharply with the prior year.
• 2025-09-14: Merger with California Resources Corporation (CRC) announced — Represents a major strategic shift for Berry Corp, with implications for future operations and shareholder value, though it also incurs transaction costs.
• 2025-10-31: Common shares outstanding reported — Provides an updated share count for per-share calculations and understanding of ownership structure.

Glossary

Impairment of oil and gas properties

A reduction in the carrying value of oil and gas assets on the balance sheet when their fair value or future economic benefit falls below their book value. (A significant $157.910 million impairment charge heavily impacted Berry Corp's net loss for the period.)

Derivative instruments

Financial contracts whose value is derived from an underlying asset, index, or rate, often used for hedging price fluctuations. (Berry Corp recorded a $57.232 million gain on these instruments, a positive swing from a loss in the prior year, but indicative of market volatility.)

Accumulated deficit

The cumulative net losses of a company that have not been offset by net income. (Berry Corp has an accumulated deficit of $32.731 million as of September 30, 2025, reflecting its recent profitability challenges.)

Common stock par value

A nominal value assigned to a share of stock, often very low (e.g., $0.001), with little relation to market value. (Indicates the legal capital associated with the common stock, with 750,000,000 shares authorized.)

Treasury stock

Shares of a company's own stock that it has repurchased from the open market. (Berry Corp holds 12,003,811 shares of treasury stock, reducing the number of outstanding shares available to the public.)

Asset retirement obligations

The costs associated with the retirement or disposal of tangible long-lived assets, such as oil and gas wells. (Berry Corp has $177.585 million in these obligations, representing future costs for site restoration.)

Year-Over-Year Comparison

Berry Corp has experienced a significant downturn compared to the prior year. Total revenues decreased by 9.0% to $543.871 million for the nine months ended September 30, 2025, primarily due to a decline in oil, natural gas, and natural gas liquids sales. The company swung from a net income of $21.010 million to a substantial net loss of $89.093 million, heavily impacted by a more than threefold increase in impairment charges on oil and gas properties and higher interest expenses. While gains on derivative instruments provided some offset, the overall financial performance has deteriorated considerably.

Key Financial Figures

• $0.001 — of each class Common Stock, par value $0.001 per share Trading Symbol BRY Name of

Filing Documents

• bry-20250930.htm (10-Q) — 2467KB
• arnon-employeedirectorcomp.htm (EX-10.5) — 6KB
• ex311q32025-ceo302certific.htm (EX-31.1) — 10KB
• ex312q32025-cfo302certific.htm (EX-31.2) — 10KB
• ex321q32025-906certificati.htm (EX-32.1) — 9KB
• 0001705873-25-000076.txt ( ) — 9005KB
• bry-20250930.xsd (EX-101.SCH) — 43KB
• bry-20250930_cal.xml (EX-101.CAL) — 76KB
• bry-20250930_def.xml (EX-101.DEF) — 275KB
• bry-20250930_lab.xml (EX-101.LAB) — 569KB
• bry-20250930_pre.xml (EX-101.PRE) — 426KB
• bry-20250930_htm.xml (XML) — 1459KB

– Financial Information

Part I – Financial Information

Financial Statements

Item 1. Financial Statements Condensed Consolidated Balance Sheets 1 Condensed Consolidated Statements of Operations 2 Condensed Consolidated Statements of Stockholders' Equity 3 Condensed Consolidated Statements of Cash Flows 5 Notes to Condensed Consolidated Financial Statements 6

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 25

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 71

Controls and Procedures

Item 4. Controls and Procedures 72

– Other Information

Part II – Other Information

Legal Proceedings

Item 1. Legal Proceedings 73

Risk Factors

Item 1A. Risk Factors 74

Unregistered Sales of Equity Securities and Use of Proceeds and Issuer Purchases of Equity Securities

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds and Issuer Purchases of Equity Securities 79

Other Information

Item 5. Other Information 79

Exhibits

Item 6. Exhibits 80 Glossary of Terms 81

Signatures

Signatures 88 The financial information and certain other information presented in this report have been rounded to the nearest whole number or the nearest decimal. Therefore, the sum of the numbers in a column may not conform exactly to the total figure given for that column in certain tables in this report. In addition, certain percentages presented in this report reflect calculations based upon the underlying information prior to rounding and, accordingly, may not conform exactly to the percentages that would be derived if the relevant calculations were based upon the rounded numbers, or may not sum due to rounding. Table of Contents

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements BERRY CORPORATION (bry) CONDENSED CONSOLIDATED BALANCE SHEETS September 30, 2025 December 31, 2024 (in thousands, except share amounts) Unaudited ASSETS Current assets: Cash and cash equivalents $ 13,364 $ 15,336 Restricted cash 250 14,700 Accounts receivable, net of allowance for doubtful accounts of $ 655 at September 30, 2025 and December 31, 2024 68,565 77,630 Derivative instruments 25,687 4,526 Other current assets 35,914 37,451 Total current assets 143,780 149,643 Noncurrent assets: Oil and natural gas properties 2,073,474 1,975,456 Accumulated depletion and amortization ( 979,831 ) ( 735,304 ) Total oil and natural gas properties, net 1,093,643 1,240,152 Other property and equipment 173,854 171,303 Accumulated depreciation ( 109,901 ) ( 91,075 ) Total other property and equipment, net 63,953 80,228 Deferred income taxes 57,647 26,779 Derivative instruments 18,898 11,697 Other noncurrent assets 9,077 9,187 Total assets $ 1,386,998 $ 1,517,686 LIABILITIES AND EQUITY Current liabilities: Accounts payable and accrued expenses $ 133,214 $ 133,809 Derivative instruments — 7,703 Current portion of long-term debt, net 45,000 45,000 Income taxes payable — 1,368 Total current liabilities 178,214 187,880 Noncurrent liabilities: Long-term debt, net 354,469 384,633 Deferred income taxes — 1,612 Asset retirement obligations 177,585 185,283 Other noncurrent liabilities 37,748 27,642 Commitments and Contingencies - Note 4 Stockholders' equity: Common stock ($ 0.001 par value; 750,000,000 shares authorized; 89,605,653 and 88,942,805 shares issued; and 77,601,842 and 76,938,994 shares outstanding, at September 30, 2025 and December 31, 2024, respectively) 90 89 Additional paid-in-capital 785,391 787,953 Treasury stock, at cost ( 12,003,811 shares at September 30, 2025 and December 31, 2024, respectively) ( 113,768 ) ( 113,768 ) (Accumulated deficit) retained earnings ( 32,731 ) 56,362 Total

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View this 10-Q filing on SEC EDGAR