2008-08-30-2008-06-11-2008-07-15

Acquired 100% WI in 4,500 net acres in E. TX, gaining 335 Bcfe, 32 MMcfe/d.

Berry Petroleum Co., Bakersfield, Calif., (NYSE: BRY) has acquired interests in gas-producing properties in East Texas from O'Brien Resources LLC, Sepco II LLC, Liberty Energy LLC, Crow Horizons Co. and O'Brien II LP for approximately $653 million in cash. The properties are in Limestone County in which Houston-based Leor Energy sold its Deep Bossier discoveries in late 2007 and in Harrison County with Haynesville shale targets. The assets include 100% working interest in 4,500 net acres. According to Ryder Scott Co. proved reserves, adjusted for additional interests purchased by the company, are 335 billion cubic feet equivalent (29% proved developed). Production is approximately 32 million cubic feet equivalent per day from 100 producing wells. Upside includes more than 100 identified drilling locations targeting stacked pay in various productive zones including the Pettit, Travis Peak, Cotton Valley sands, Cotton Valley lime and Bossier sands as well as approximately 75 recompletion opportunities. Also included in the acquisition is a gathering system valued at $20 million that is expected to gather all current and future production from the acquired properties. Berry will continue testing two vertical wells drilled in the Bossier shale in Limestone County and three vertical wells drilled in the Haynesville shale in Harrison County. Robert Heinemann, Berry president and chief executive, says, "This is a tremendous opportunity for Berry to establish a new core area with another long-lived, low geologic risk natural gas asset with a growing production profile. We believe this is an excellent entry into the price-favored East Texas Basin given the concentrated asset base, identified drilling inventory with attractive economics and upside potential including the Haynesville and Bossier shale." Berry plans to transition a new East Texas-focused asset team to the properties over several months and the sellers have agreed to continue to operate the properties during the transition period, he says. The company will spend $425 million to develop the proved undeveloped and probable reserves and expects full-life finding and development costs will be approximately $2.77 per thousand cubic feet equivalent. Berry is increasing its 2008 capital budget by an additional $75 million to $370 million to develop this resource and plans to fund the additional capital from internally generated cash flow. Five rigs are currently running in the region and Berry expects the acquired properties to provide self-funded production growth over the coming years. Pro forma, Berry's reserves will be approximately 50% oil with 43% of its reserve base in California, 34% in the Rockies and 23% in East Texas. Production will be approximately 32,000 to 34,000 barrels of oil equivalent per day, an increase of 19% to 26% over 2007. Proved reserves year-end 2008 will be 235 to 245 million barrels of oil equivalent. Berry funded the acquisition with a $1.5-billion senior secured credit facility with a $1 billion borrowing base. Tudor, Pickering, Holt & Co. Securities Inc. is advisor to Berry. The effective date is Feb. 1. Berry operates in California, Utah and Colorado.