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Equity | 12 Months Ended
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Dec. 31, 2019
Equity [Abstract] |
Equity | Equity On the Effective Date, Berry Corp. filed with the Secretary of State of the State of Delaware the Amended and Restated Certificate of Incorporation of Berry Corp. (the “Certificate of Incorporation”) and the Certificate of Designation of Series A Convertible Preferred Stock of Berry Corp. (the “Series A Certificate of Designation”). Berry Corp. also adopted the Amended and Restated Bylaws of Berry Corp. (the “Bylaws”) on the Effective Date. The Certificate of Incorporation provides that Berry Corp.’s authorized capital stock consists of 750,000,000 shares of common stock, par value $0.001 per share, and 250,000,000 shares of undesignated preferred stock, par value $0.001 per share. Cash Dividends Our board of directors approved a $0.12 per share quarterly cash dividend on our common stock each quarter in 2019 for a total of $0.48 per share. We paid the fourth quarter dividend in January 2020 and declared the first quarter dividend of $0.12 per share in February 2020, which is payable in April 2020. For the year ended December 31, 2019 we paid approximately $39 million in cash dividends on our common stock. For the year ended December 31, 2018, we declared cash dividends on our common stock beginning at our IPO, resulting in $0.21 per share. In 2018 we paid approximately $7 million in cash dividends on our common stock. Common Stock The Plan contemplated the distribution of 40,000,000 shares of common stock in Berry Corp. On the Effective Date, 32,920,000 shares of common stock were distributed, pro rata, to holders of Unsecured Notes claims. The holders of Unsecured Claims received a right to receive their pro rata share of either (i) 7,080,000 shares of common stock in Berry Corp. or (ii) in the event that such holder irrevocably elected to receive a cash recovery, cash distributions from the Cash Distribution Pool. Since the Effective Date we have negotiated with all claimants to settle their claims and in 2019 we issued approximately 2,770,000 shares instead of 7,080,000 to resolve these claims for approximately $20 million. Voting Rights. Each share of common stock is entitled to one vote with respect to each matter on which holders of common stock are entitled to vote. Holders of common stock do not have cumulative voting rights. Dividend Rights. Holders of common stock will be entitled to receive dividends, if any, as may be declared from time to time by our board of directors (the “Board”) out of legally available funds. Liquidation Rights. Upon liquidation, dissolution or winding up of the Company, subject to the rights of the holders of outstanding preferred stock, holders of our common stock will be entitled to share ratably in the assets of the Company that are legally available for distribution to holders of our common stock after payment of the Company’s debts and other liabilities. Holders of preferred stock that is outstanding may be entitled to dividend or liquidation preferences over holders of our common stock, which means that the Company would have to pay distributions to holders of preferred stock before paying any distributions to holders of our common stock. Preemptive and Conversion Rights. Holders of common stock have no preemptive, conversion or other rights to subscribe for additional shares. Preferred Stock On the Effective Date, we issued 35,845,001 shares of preferred stock to participants in the rights offerings extended by the Company to certain holders of claims and in satisfaction of a backstop commitment fee for proceeds of $335 million. In July 2018, all shares of our Series A Preferred Stock, approximately 37.7 million in total, were converted to approximately 39.6 million common shares and, as a result, there were no shares of our Series A Preferred Stock outstanding as of December 31, 2018 and December 31, 2019. Dividend Rights. Holders of Series A Preferred Stock were entitled to receive, when, as and if declared by the board of directors, cumulative dividends at a rate of 6.0% per annum either in cash or in additional shares of Series A Preferred Stock at the discretion of the board of directors. No dividends had been declared or paid as of December 31, 2017. The accreted cumulative and per share value of the dividends as of December 31, 2017 was approximately $18 million and $0.51, respectively. In 2018, the board of directors approved a 0.050907 per share cumulative paid-in-kind dividend on the Series A Preferred Stock of approximately 1,825,000 shares for the periods through December 31, 2017. Also in 2018, the board approved $0.308 per share, or approximately $11.3 million in cash dividends on the Series A Preferred Stock. A beneficial conversion feature exists when the effective conversion price of a convertible security is less than the fair value per share on the commitment date. The conversion price of the preferred stock on the date of issuance was less than the estimated fair value of the common stock distributable under the Plan. Since the preferred stock is not mandatorily redeemable and is immediately convertible, the entire amount of the beneficial conversion feature was recognized immediately. In accordance with GAAP, we recorded a non-cash deemed dividend and a corresponding increase to additional paid in capital of approximately $27 million that is attributable to this beneficial conversion feature. The financial statement impact of the deemed dividend is eliminated in the consolidated statement of equity as adopting fresh-start accounting results in an entity with no beginning retained earnings or accumulated deficit. Registration Rights Agreement On the Effective Date, Berry Corp. entered into a registration rights agreement (the “Registration Rights Agreement”) with certain holders of the Unsecured Notes. Subsequently, the registration rights agreement was amended and restated in connection with our IPO. In accordance with the Registration Rights Agreement, Berry Corp. filed a shelf registration statement with the SEC subsequent to the Effective Date. The shelf registration statement registered the resale, on a delayed or continuous basis, of all Registrable Securities that have been timely designated for inclusion by specified Holders (as defined in the Registration Rights Agreement). Generally, “Registrable Securities” includes (i) common stock issued or to be issued by Berry Corp. under the Plan, (ii) preferred stock that was purchased by the participants in the Berry Rights Offerings and (iii) common stock into which the preferred stock converts, except that “Registrable Securities” does not include securities that have been sold under an effective registration statement or Rule 144 under the Securities Act. The Registration Rights Agreement will terminate when there are no longer any Registrable Securities outstanding. Initial Public Offering of Common Stock In July 2018, we completed our IPO and as a result, on July 26, 2018, our common stock began trading on the NASDAQ under the ticker symbol BRY. We received approximately $110 million of net proceeds, after deducting underwriting discounts and offering expenses payable by us, for the 8,695,653 shares of common stock issued for our benefit in the IPO, net of the shares sold for the benefit of certain selling stockholders. The price to the public for the shares sold in our IPO was $14.00 per share. See “—Use of IPO proceeds” below for additional information. In connection with the IPO, each of the 37.7 million shares of our Series A Preferred Stock was automatically converted into 1.05 shares of our common stock or 39.6 million shares in aggregate and the right to receive a cash payment of $1.75 (the “Series A Preferred Stock Conversion”). The cash payment was reduced in respect of any cash dividend paid by the Company on such share of Series A Preferred Stock for any period commencing on or after April 1, 2018. Because we paid the second quarter preferred dividend of $0.15 per share in June, the cash payment for the conversion was reduced to $1.60 per share, or approximately $60 million. In connection with the IPO, we assigned the additional 1.9 million shares of common stock issued in the Series A Preferred Stock Conversion a value of $14.00 per share, which was equal to the value of shares sold in the IPO. This approximate $27 million value and the $60 million conversion cash payment reduced the income attributable to common stockholders by approximately $87 million for the year ended December 31, 2018. Shares Outstanding As of December 31, 2019, there were 79,542,976 shares of common stock outstanding. Up to an additional 2,348,334 shares were issuable for unvested restricted stock units and performance restricted stock units under the Company's 2017 Omnibus Incentive Plan as of December 31, 2019. Stock Repurchase Program In December 2018, our Board of Directors adopted a program for the opportunistic repurchase of up to $100 million of our common stock. Based on the Board’s evaluation of current market conditions for our common stock they authorized current repurchases of up to $50 million under the program. Purchases may be made from time to time in the open market, in privately negotiated transactions or otherwise. The manner, timing and amount of any purchases will be determined based on our evaluation of market conditions, stock price, compliance with outstanding agreements and other factors, may be commenced or suspended at any time without notice and does not obligate Berry Corp. to purchase shares during any period or at all. Any shares acquired will be available for general corporate purposes. In 2019 the Company repurchased 4,609,021 shares at an average price of $9.99. Since 2018 the Company has repurchased a total of 5,057,682 shares at an average price of $9.88 per share under the Stock Repurchase Program, which is reflected as treasury stock. In February 2020, the Board of Directors authorized the remaining $50 million of our $100 million repurchase program. Stock-Based Compensation The RSUs awarded are service based awards. The performance-based restricted stock units PSUs awarded include (i) awards that vest if the Company's stock price reaches certain levels over defined periods of time and (ii) awards with a market objective measured against both absolute total stockholder return (“Absolute TSR”) and total stockholder return relative (“Relative TSR”), to the Vanguard World Fund - Vanguard Energy ETF index (the “Index”) over the performance period, assuming the reinvestment of dividends. Depending on the results achieved during the two or three year performance period, the actual number of shares that a grant recipient receives at the end of the period may range from 0% to 200% of the Target Shares granted. The fair value of the PSUs was determined using a Monte Carlo simulation analysis to estimate the total shareholder return ranking of the Company, including a comparison against the Index over the performance periods. The expected volatility of the Company’s common stock at the date of grant was estimated based on blended historical average volatility rates for the Company and selected guideline public companies. The dividend yield assumption was based on the current annualized declared dividend. The risk-free interest rate assumption was based on observed interest rates consistent with the approximate two and three year performance measurement period. As of July 2018, the fair value of our common stock underlying our stock-based compensation awards granted will no longer be based on complex models using inputs and assumptions, but will be based on the price of our stock at the date of grant. On June 27, 2018, our board of directors adopted the second amended and restated 2017 Omnibus Incentive Plan, as amended and restated (our “Restated Incentive Plan”). This plan constitutes an amendment and restatement of the plan (the “Prior Plan”) as in effect immediately prior to the adoption of the Restated Incentive Plan. The Prior Plan constituted an amendment and restatement of the plan originally adopted as of June 15, 2017 (the “2017 Plan”). The Restated Incentive Plan provides for the grant, from time to time, at the discretion of the board of directors or a committee thereof, of stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units, stock awards, dividend equivalents, other stock-based awards, cash awards and substitute awards. The maximum number of shares of common stock that may be issued pursuant to an award under the Restated Incentive Plan is 10,000,000 inclusive of the number of shares of common stock previously issued pursuant to awards granted under the Prior Plan or the 2017 Plan. The maximum number of shares remaining that may be issued is 6,954,454 as of December 31, 2019. For the year ended December 31, 2019, year ended December 31, 2018, ten months ended December 31, 2017 and two months ended February 28, 2017 the stock-based compensation expense was approximately $9 million, $7 million, $2 million and zero, respectively. For the years ended December 31, 2019 and year ended December 31, 2018 the stock-based compensation had an income tax benefit of approximately zero and $1.5 million, respectively. The table below summarizes the activity relating RSUs issued under the Restated Incentive Plan during the year ended December 31, 2019. The RSUs vest ratably over three years. Unrecognized compensation cost associated with the RSUs at December 31, 2019 was approximately $8 million which will be recognized over a weighted-average period of approximately two years.
| Number of shares |  | Weighted-average Grant Date Fair Value
| (shares in thousands)
Non-vested at December 31, 2018 | 641 |  |  | $ | 10.82 |
Granted | 767 |  |  | $ | 12.62 |
Vested | (308 | ) |  | $ | 10.87 |
Forfeited | (86 | ) |  | $ | 12.19 |
Non-vested at December 31, 2019 | 1,014 |  |  | $ | 12.05 |
The table below summarizes the activity relating to the PSUs issued under the Revised Incentive Plan during the year ended December 31, 2019. Unrecognized compensation cost associated with the PSUs at December 31, 2019 is approximately $5 million which will be recognized over a weighted-average period of approximately two years.
| Number of shares |  | Weighted-average Grant Date Fair Value
| (shares in thousands)
Non-vested at December 31, 2018 | 282 |  |  | $ | 6.73 |
Granted | 554 |  |  | $ | 12.75 |
Vested | — |  |  | $ | — |
Forfeited | (38 | ) |  | $ | 9.69 |
Non-vested at December 31, 2019 | 798 |  |  | $ | 10.77 |
Use of IPO Proceeds Of the approximately $110 million of net proceeds received by us in the IPO, we used approximately $105 million to repay borrowings under our RBL Facility. This included the $60 million we borrowed on the RBL Facility to make the payment due to the holders of our Series A Preferred Stock in connection with the conversion of preferred stock to common stock. We used the remainder for general corporate purposes. In connection with the IPO, on July 17, 2018, we entered into stock purchase agreements with certain funds affiliated with Oaktree Capital Management and Benefit Street Partners, pursuant to which we purchased an aggregate of 410,229 and 1,391,967 shares of our common stock, respectively, or 1,802,196 in total. In addition to the 8,695,653 shares of common stock issued and sold for our benefit in the IPO, we simultaneously received $24 million for selling 1,802,196 shares to the public and paid $24 million to purchase 1,802,196 shares under the stock purchase agreements. We purchased the shares immediately following the closing of the IPO and retired and returned them to the status of authorized but unissued shares. The selling stockholders also directly sold an additional 2,545,630 shares at a price to the public of $14.00 per share for which we did not receive any proceeds.

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- Definition The entire disclosure for shareholders' equity and share-based payment arrangement. Includes, but is not limited to, disclosure of policy and terms of share-based payment arrangement, deferred compensation arrangement, and employee stock purchase plan (ESPP). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI http://asc.fasb.org/topic&trid=2208762 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 + Details
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