Market Overview

Brigham Minerals, Inc. Reports First Quarter 2019 Results

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Brigham Minerals, Inc. (NYSE:MNRL) ("Brigham Minerals,"
"Brigham," "the Company," "we," "our" or "us"), a leading mineral and
royalty interest acquisition company, today announced operating and
financial results for the quarter ended March 31, 2019, as well as
recent developments.

OPERATING AND FINANCIAL HIGHLIGHTS AND RECENT DEVELOPMENTS

  • Record Q1 2019 production of 5,382 boe/d (70% liquids), up 18%
    sequentially from Q4 2018 and up 66% from Q1 2018.
  • Q1 2019 mineral and royalty revenue excluding lease bonus totaling
    $17.6 million, up 4% sequentially from Q4 2018 and up 48% from Q1 2018.
  • Q1 2019 net income of $4.2 million and Q1 2019 Adjusted EBITDA ex
    lease bonus totaling $13.1 million, which was up 54% from Q1 2018. See
    "Non-GAAP Financial Measures" below.
  • Acquired 2,700 net royalty acres (standardized to a 1/8th royalty
    interest) for $41.3 million, with 90% of the capital deployed to the
    Permian (51%) and SCOOP/STACK (39%).
  • Averaged a record 73 rigs running across the Company's diversified
    mineral portfolio during Q1 2019, 29 of which were in the Permian and
    22 of which were in the SCOOP/STACK.
  • Completed our initial public offering of Class A common stock ("IPO")
    in April 2019, raising approximately $277.4 million in net proceeds.
  • Repaid our existing credit facility and entered into a new $120
    million revolving credit facility.

Ben M. ("Bud") Brigham, Executive Chairman, commented, "We've utilized
our operator experience and the teams' technical expertise to acquire
tier-one minerals in the core of the very best liquids-rich resource
plays. Our minerals are unique, providing organic capex-free production
growth for years to come, which will be further supplemented by our
normal flow of mineral acquisitions. And now, as a public company, we
expect to make accretive acquisitions to scale up and become the
dominant public consolidator of tier-one liquids-rich minerals. Further,
our compensation is aligned with our fellow shareholders, and as such we
expect to deliver consistent growth in production, while distributing
growing cash flows to our shareholders. Finally, I believe minerals are
the advantaged asset class in the energy space and as a result I believe
our growth as a public company could be the most exciting and rewarding
in my 30 plus years in oil and gas."

Robert M. ("Rob") Roosa, Chief Executive Officer, commented, "Brigham
Minerals' highly disciplined approach to acquiring a diversified
portfolio of mineral and royalty interests in core, tier-one geology
under the best operators clearly outperformed with tremendous sequential
production growth in the first quarter of 2019. We entered 2019 with
over 800 gross drilled but uncompleted locations ("DUCs") across our
portfolio and saw tremendous conversion of those DUCs during the
quarter. We continued to backfill our DUC inventory with a record
average 73 rigs running across our minerals during the first quarter and
saw our DUC balance grow to approximately 860 gross locations by the end
of the first quarter. Finally, operators continued to actively permit
additional locations at a rate of approximately 90 new permits per month
over the past year across our portfolio enabling us to maintain a
relatively stable inventory of approximately 660 gross permitted
locations despite the conversion of our gross permitted locations during
the quarter."

Mr. Roosa continued, "Looking ahead, we are very excited about the
prospects for continued production growth for the remainder of 2019 as
we believe we are in two of the premier manufacturing mode development
areas in the United States. First, in our Loving County, Texas
development area, Anadarko Petroleum Corporation is actively developing
and permitting its Silvertip campaign area and Exxon Mobil Corporation
is actively drilling and completing wells just south of Silvertip.
Second, Continental Resources, Inc. is actively drilling its SpringBoard
development area in Grady County, Oklahoma, and we anticipate being in
30 of 31 drilling spacing units where Continental is drilling Springer,
Sycamore and Woodford wells. Finally, we are excited by the recently
announced acquisition of Anadarko by Occidental Petroleum Corporation
and believe the acquisition is an accretive event for Brigham Minerals
given the larger balance sheet that will drill our undeveloped inventory
locations in the Delaware and Denver-Julesburg ("DJ") Basins."

OPERATIONAL UPDATE

Mineral and Royalty Interest Ownership Update

During the first quarter of 2019, the Company deployed $41.3 million in
capital acquiring 2,700 net royalty acres (standardized to a 1/8th
royalty interest) in the Permian, SCOOP, DJ and Williston Basins. As of
March 31, 2019, the Company owned roughly 71,500 net royalty acres
across 38 counties that the Company views as the core of the Permian
Basin in West Texas and New Mexico, the SCOOP/STACK plays in the
Anadarko Basin of Oklahoma, the DJ Basin in Colorado and Wyoming and the
Williston Basin in North Dakota.

The table below summarizes the Company's mineral and royalty interest
ownership as of the dates indicated (excludes pending transactions where
we are conducting title due diligence).

                                 
Delaware     Midland     SCOOP     STACK     DJ     Williston     Other     Total
Net Royalty Acres
March 31, 2019 20,550 3,200 9,750 9,700 15,450 6,850 6,000 71,500
December 31, 2018 19,200 3,200 8,700 9,700 15,400 6,800 5,800 68,800
Acres Added 1,350 0 1,050 0 50 50 200 2,700
% Growth 7% 0% 12% 0% 1% 1% 3% 4%
 

Activity Update

The Company saw significant conversion of DUCs during the quarter, which
drove our sequential production growth. During the quarter ended March
31, 2019, we identified 196 gross (1.8 net) horizontal wells that had
been converted to production, representing 24% of our gross DUCs as of
year-end 2018 (29% of net DUCs). Conversions of gross wells by status
are summarized in the table below:

 
Q1 2019 Gross PDP Well Conversion
 
DUCs 196 74%
Permits 4 2%
Acquired

64

24%
264
 

During the first quarter of 2019, the Company averaged approximately 73
rigs running on its mineral and royalty interests with approximately
3,400 net royalty acres under development on average. Of those rigs, 29
were operating on the Company's Permian Basin minerals and 22 were
operating on the Company's SCOOP/STACK minerals. Leading operators
running rigs on Brigham's mineral interests included Continental
Resources, who on average ran 19 rigs across its minerals in SCOOP/STACK
and the Williston, ExxonMobil, who on average ran six rigs on its
minerals in the Delaware and Williston and Concho Resources Inc., who
ran on average six rigs on its minerals in the Delaware. Brigham's rig
activity by quarter is summarized in the table below:

     
Historical Rig Activity on Brigham Minerals
Q1 18     Q2 18     Q3 18     Q4 18     Q1 19
Total Rigs 25     31     51     64     73
NRA Under Development 941 1,326 3,249 3,820 3,383
% of Total NRA 2% 2% 5% 6% 5%
 

The Company expects near-term production growth will be driven by the
continued conversion of its DUC and permit inventory. Brigham's DUC and
permit inventory as of March 31, 2019 by basin is outlined in the table
below.

     
Development Inventory by Basin
Delaware     Midland     SCOOP     STACK     DJ     Williston     Other     Total
Gross Inventory                            
DUCs 193 30 107 78 219 214 19 860
Permits 174 31 28 41 213 165 8 660
 
Net Inventory
DUCs 1.9 0.1 1.0 0.7 1.3 0.6 0.0 5.6
Permits 1.2 0.1 0.1 0.2 2.3 0.2 0.0 4.1
 

FINANCIAL UPDATE

For the three months ended March 31, 2019, crude oil, natural gas and
NGL sales, excluding the impact of settled derivatives, increased 48% to
$17.6 million as compared to $11.9 million in the same prior-year
period, due to an increase in sales volumes.

Our first quarter average realized prices were $50.86 per barrel of oil,
$2.98 per Mcf, and $19.65 per barrel of NGL, for a total equivalent
price of $36.31 per Boe, excluding the effect of derivative instruments.
This represents a 10% decrease relative to the fourth quarter of 2018
and is 10% lower than year-ago levels of $40.54 per Boe.

Our net income was $4.2 million for the three months ended March 31,
2019. Adjusted EBITDA was $13.8 million for the three months ended March
31, 2019, up 28% relative to the same prior-year period. Adjusted EBITDA
excluding lease bonus ("Adjusted EBITDA ex lease bonus") was $13.1
million for the three months ended March 31, 2019. Adjusted EBITDA and
Adjusted EBITDA ex lease bonus are non-GAAP financial measures. For a
definition of Adjusted EBITDA and Adjusted EBITDA ex lease bonus and a
reconciliation to our most directly comparable measure calculated and
presented in accordance with GAAP, please read "Non-GAAP Financial
Measures" below.

First Quarter 2019 Results

   
Unaudited Consolidated Results

Three Months Ended March 31,

($ In thousands, except per unit of production data) 2019     2018
 
Operating revenues
Mineral and royalty revenues $ 17,590 11,864
Lease bonus revenues 675 2,219
Total revenues 18,265 14,083
Production
Oil (MBbls) 267 151
Natural gas (MMcf) 869 555
NGLs (MBbls) 73 49
Total net production (MBoe) 485 293
Total net production (Boe/d) 5,382 3,252
Realized prices ($/Boe)
Oil ($/Bbl) $ 50.86 59.14
Natural gas ($/Mcf) 2.98 2.92
NGLs ($/Bbl) 19.65 26.34
Average realized price excl. derivatives 36.31 40.54
Average realized price incl. derivatives 36.72 40.13
Operating expenses
Gathering, transportation and marketing $ 1,114 1,095
Severance and ad valorem taxes 1,379 760
Depreciation, depletion and amortization 5,116 2,545
General and administrative 1,949 1,464
Interest expense, net 3,825 474
Loss on derivative instruments, net 685 359
Net income 4,195 8,196
Adjusted EBITDA $ 13,823 10,764
Adjusted EBITDA ex lease bonus 13,148 8,545
Unit expenses ($/Boe)
Gathering, transportation and marketing $ 2.30 3.74
Severance and ad valorem taxes 2.85 2.59
Depreciation, depletion and amortization 10.56 8.70
General and administrative 4.02 5.00
Interest expense, net 7.90 1.62
Loss on derivative instruments, net 1.41 1.23
 

INITIAL PUBLIC OFFERING AND LIQUIDITY

On April 23, 2019, Brigham Minerals successfully closed its IPO of
16,675,000 shares of Class A common stock at a public offering price of
$18.00 per share. The Company raised $277.4 million in proceeds, net of
underwriting discounts and commissions, from the IPO and used a portion
of the proceeds to repay all outstanding indebtedness under the
Company's credit facility. To further increase liquidity and financial
flexibility, the Company entered into a new revolving credit facility
with a bank syndicate and Wells Fargo Bank, N.A. acting as
administrative agent. The new revolving credit facility has an undrawn
borrowing base of $120 million. The Company had $215 million of
liquidity as of May 17, 2019.

INITIAL DIVIDEND

The Company expects to issue a dividend with respect to the quarter
ended June 30, 2019 by early September. The declaration of the dividend
and the amount of such dividend is subject to approval by the Board of
Directors.

Presentation

This press release presents historical results, for the periods
presented, of Brigham Resources, LLC, the predecessor of Brigham
Minerals, Inc. for financial reporting purposes. The financial results
of Brigham Minerals, Inc. have not been included in this press release
as it is a newly incorporated entity and had not completed the
reorganization steps during the periods presented. Accordingly, these
historical results do not purport to reflect what the results of
operations of Brigham Minerals, Inc. would have been had the IPO and
related transactions occurred prior to such periods. For example, these
historical results do not reflect the termination of the credit
facility, attribution of net income to non-controlling interests, nor
the provision for corporate income taxes on the income attributable to
Brigham Minerals, Inc. that it expects to recognize in future periods.

Upcoming Investor Conference

The Company will present at the UBS Global Oil and Gas Conference in
Austin, Texas on May 21st. The presentation will be available
for download on the Company's website on the date of the event.

About Brigham Minerals, Inc.

Brigham Minerals is an Austin, Texas based company that acquires and
actively manages a portfolio of mineral and royalty interests in the
core of some of the most active, highly-economic, liquids-rich resource
basins across the continental United States, including the Permian Basin
in Texas and New Mexico, the SCOOP and STACK plays in the Anadarko Basin
of Oklahoma, the DJ Basin in Colorado and Wyoming, and the Williston
Basin in North Dakota. Brigham Minerals' primary business objective is
to maximize risk-adjusted total return to its shareholders by both
capturing organic growth in free cash flow from the continued
development of its existing portfolio of undeveloped horizontal drilling
locations unburdened by development capital expenditures or lease
operating expenses, as well as leveraging its highly experienced
technical evaluation team to continue to execute upon its scalable
business model of sourcing, methodically evaluating and integrating
accretive minerals acquisitions in the core of these top-tier,
liquids-rich resource plays.

Cautionary Statement Concerning Forward-Looking Statements

This press release contains forward-looking statements. All
statements, other than statements of historical facts, included in this
press release that address activities, events or developments that the
Company expects, believes or anticipates will or may occur in the future
are forward-looking statements. Without limiting the generality of the
foregoing, forward-looking statements contained in this press release
specifically include the expectations of plans, strategies, objectives
and anticipated financial and operating results of the Company,
including the Company's capital expenditure levels and other guidance
included in this press release. These statements are based on certain
assumptions made by the Company based on management's experience and
perception of historical trends, current conditions, anticipated future
developments and other factors believed to be appropriate. Such
statements are subject to a number of assumptions, risks and
uncertainties, many of which are beyond the control of the Company,
which may cause actual results to differ materially from those implied
or expressed by the forward-looking statements. These include, but are
not limited to, the Company's ability to integrate acquisitions into its
existing business, changes in oil, natural gas and NGL prices, weather
and environmental conditions, the timing of planned capital
expenditures, availability of acquisitions, operational factors
affecting the commencement or maintenance of producing wells on the
Company's properties, the condition of the capital markets generally, as
well as the Company's ability to access them, the proximity to and
capacity of transportation facilities, and uncertainties regarding
environmental regulations or litigation and other legal or regulatory
developments affecting the Company's business and other important
factors. Should one or more of these risks or uncertainties occur, or
should underlying assumptions prove incorrect, the Company's actual
results and plans could differ materially from those expressed in any
forward-looking statements.

Any forward-looking statement speaks only as of the date on which
such statement is made and the Company undertakes no obligation to
correct or update any forward-looking statement, whether as a result of
new information, future events or otherwise, except as required by
applicable law.

     
Brigham Resources, LLC
(Predecessor)
Condensed Consolidated Statement of Operations
(Unaudited)
 
Three Months Ended March 31,
2019     2018
(In thousands)
Revenues:
Mineral and royalty revenues $ 17,590 $ 11,864
Lease bonus and other revenues   675     2,219  
Total revenues 18,265 14,083
 
Operating Expenses:
Gathering, transportation and marketing 1,114 1,095
Severance and ad valorem taxes 1,379 760
Depreciation, depletion and amortization 5,116 2,545
General and administrative   1,949     1,464  
Total operating expenses   9,558     5,864  
Income from operations   8,707     8,219  
Loss on derivative instruments, net (685 ) (359 )
Interest expense, net (3,825 ) (474 )
Gain on sale and distribution of equity securities 823
Other income, net   29     3  
Income before income taxes   4,226     8,212  
Income tax expense 31 16
Net income $ 4,195   $ 8,196  
 

Non-GAAP Financial Measures

Adjusted EBITDA and Adjusted EBITDA ex lease bonus are non-GAAP
supplemental financial measures used by our management and by external
users of our financial statements such as investors, research analysts
and others to assess the financial performance of our assets and their
ability to sustain dividends over the long term without regard to
financing methods, capital structure or historical cost basis.

We define Adjusted EBITDA as net income (loss) before depreciation,
depletion and amortization, interest expense, gain or loss on sale and
distribution of equity securities, gain or loss on derivative
instruments and income tax expense, less other income and gain or loss
on sale of oil and gas properties. We define Adjusted EBITDA ex lease
bonus as Adjusted EBITDA further adjusted to eliminate the impacts of
lease bonus revenue we receive due to the unpredictability of timing and
magnitude of the revenue.

Adjusted EBITDA and Adjusted EBITDA ex lease bonus do not represent and
should not be considered alternatives to, or more meaningful than, net
income, income from operations, cash flows from operating activities or
any other measure of financial performance presented in accordance with
GAAP as measures of our financial performance. Adjusted EBITDA and
Adjusted EBITDA ex lease bonus have important limitations as analytical
tools because they exclude some but not all items that affect net
income, the most directly comparable GAAP financial measure. Our
computation of Adjusted EBITDA and Adjusted EBITDA ex lease bonus may
differ from computations of similarly titled measures of other companies.

The following table presents a reconciliation of Adjusted EBITDA and
Adjusted EBITDA ex lease bonus to the most directly comparable GAAP
financial measure for the periods indicated.

     
Three Months Ended March 31,
2019   2018
Reconciliation of Adjusted EBITDA and Adjusted EBITDA ex lease
bonus to net income:
(in thousands)
Net income $ 4,195 $ 8,196
Add:
Depreciation, depletion, and amortization 5,116 2,545
Interest expense 3,825 474
Loss on commodity derivative instruments 685 359
Income tax expense 31 16
Less:
Other income, net 29 3
Gain on sale and distribution of equity securities     823
Adjusted EBITDA $ 13,823 $ 10,764
Less:
Lease bonus revenues   675   2,219
Adjusted EBITDA ex lease bonus $ 13,148 $ 8,545

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