KeyBanc Upgrades Berry Petroleum On Improved Regulatory Environment

Berry Petroleum Corp’s (NASDAQ: BRY) prospects seem to have improved, with an increase in the pace of drilling permit issuance in California as well as the passing of an assembly bill in the state that could prove to be an “incremental positive” for the company, according to KeyBanc Capital Markets.

The Analyst

KeyBanc’s Leo Mariani upgraded Berry Petroleum from Underweight to Sector Weight.

The Thesis

There has been a recovery in the pace of drilling permit issuance in California, averaging around 33 per week over the last three weeks, Mariani said in the note.

Of these, Berry Petroleum has received 14 new drilling permits in the weeks ended January 20 and January 27, the analyst mentioned. He added that this upturn in the pace of drilling permit issuance reduces the chances of a major impact on the company’s production.

A recently passed bill in California, which initially required 2,500 feet setbacks, has now been amended to allow smaller safety areas depending on location, mitigation and other factors.

Mariani wrote, “We think this is an incremental positive for BRY as it indicates that the new regulations may not be as draconian as initially proposed and would affect far less of its operations.”

Price Action

Shares of Berry Petroleum were up 1.39% to $7.31 at time of publication Friday.

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