LETTER TO SHAREHOLDERS, continued

2008 — SIGNIFICANT GROWTH

We have positioned the Company for another strong year in 2008 with goals of increasing annual production by at least 10% to between 29,500 and 30,500 BOE/D. We expect to increase our proved reserves to a range between 180 and 190 million BOE, developing those reserves with a finding and development cost of $10 to $12 per BOE. We expect to be able to generate internal cash flow of $315 to $335 million based on an oil price of $75 per barrel West Texas Intermediate (WTI) and a Henry Hub (HH) natural gas price of $7.50 per MMBTU. Our expected cash flow exceeds our budgeted development capital of $295 million and the $13 million for our annual dividend paid at $.30 per share. As market conditions change we have the flexibility to adjust our capital program and will utilize hedging and other long-term contracts to minimize risk.

Although we made no significant acquisitions in 2007, in 2008 Berry will continue to look for acquisitions that fit our preferred profile of repeatable developments with low geological risk. We will focus on oil consolidation and “bolt-on” type opportunities near our existing assets and look for assets that would establish Berry in a new “price-favorable” domestic basin with growth potential.