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Brigham Minerals, Inc. Reports Third Quarter 2020 Operating and Financial Results

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Brigham Minerals, Inc. (NYSE:MNRL) ("Brigham Minerals," "Brigham," or the "Company"), a leading mineral and royalty interest acquisition company, today announced operating and financial results for the quarter ended September 30, 2020.

THIRD QUARTER 2020 OPERATIONAL AND FINANCIAL HIGHLIGHTS AND RECENT DEVELOPMENTS

  • Daily production volumes of 9,318 Boe/d (73% liquids, 53% oil)
    • Up 5% sequentially from Q2 2020 and up 19% from Q3 2019
    • Large portion of Q2 2020 SCOOP and Williston curtailed production volumes returned on-line
  • Mineral and royalty revenues totaling $21.6 million
    • Up 72% sequentially from Q2 2020 driven by 62% higher realized prices and 5% volume growth
    • Total revenues of $23.1 million inclusive of lease bonus totaling $1.5 million
  • Net loss totaling $13.0 million
    • Adjusted Net Income(1) of $5.9 million excluding $18.9 million impairment of oil and gas properties resulting from lower SEC pricing
    • Adjusted EBITDA(1) totaling $16.8 million up 184% sequentially from Q2 2020
  • Declared Q3 2020 dividend of $0.24 per share of Class A common stock
    • Up 71% sequentially from Q2 2020
    • Represents 95% payout ratio of Q3 2020 discretionary cash flow ex lease bonus(1) with retained cash utilized to fund mineral acquisitions
    • $1.5 million in lease bonus revenue also retained to fund mineral acquisitions
  • Acquired 1,125 net royalty acres deploying $16.2 million in mineral acquisition capital
    • Substantially all of capital deployed to Permian Basin with 80% to Loving County
    • Acquisition costs totaling $4.2 million per net location with 5% net DUCs and permits
    • Remaining highly disciplined with acquisitions given uncertain market conditions
  • 624 gross (3.8 net) drilled but uncompleted locations ("DUCs") as of September 30, 2020
    • Converted 143 (20%) gross and 1.2 (27%) net DUCs during Q3 2020
    • Approximately 74% of Q3 2020 net DUC inventory located in Permian Basin
    • Anticipate majority of DUCs to be completed by Exxon Mobil Corporation, Chevron Corporation, Royal Dutch Shell plc, Continental Resources, Inc. and PDC Energy, Inc
  • $8.2 million cash balance and revolver capacity of $130 million as of September 30, 2020
    • Associated with the Company's late-November semi-annual borrowing base redetermination under its revolving credit facility, the Administrative Agent has recommended a reaffirmation of the borrowing base at $135 million

(1) Non-GAAP measure. See "Non-GAAP Financial Measures" below.

Robert M. ("Rob") Roosa, Chief Executive Officer, commented, "Our acquisition teams delivered during the third quarter deploying $16.2 million of mineral acquisition capital via our ground game almost entirely to the Permian Basin and specifically 80% to Loving County. We believe our capital was deployed to some of the best geology in the United States and under well-capitalized operators including Royal Dutch Shell who has continued to be active throughout the down cycle. Further, our acquisition pace in the fourth quarter has continued to accelerate with approximately $17 million in acquisitions closed or currently under contract, 90% of which is deployed to the Permian Basin. Acquisition economics continue to provide our best rates of return relative to other capital allocation alternatives and their potential impact on our capital structure. Importantly, our balance sheet continues to remain strong with $138 million in liquidity as of September 30th, which provides us with substantial flexibility to continue to capitalize on acquisition opportunities well into 2021. While drilling and completion activity remains constrained with operators continuing to manage their balance sheets, we believe our strong DUC inventory, of which 30% appears to be frac'd and waiting to be turned in line to production, will provide resiliency and our production volumes will average in excess of 9,000 Boe/d over the next two quarters."

Blake C. Williams, Chief Financial Officer, added, "Our financial results for the third quarter showcase the strength of our high-margin royalty business model coupled with our clean capital structure allowing for a 71% sequential increase to our dividend as we continue to return capital to our shareholders on an accelerated basis. Additionally, we are encouraged by the highly compelling economics of our ground game acquisitions and are electing to retain 5% of our discretionary cash flow ex lease bonus(1) along with $1.5 million in lease bonus payments, which allowed us to internally fund approximately 14% of our third quarter acquisitions. As previously messaged, we plan to compound value for our shareholders through the reinvestment of a portion of our cash flow with a long term payout ratio target of 75% to 80% which we will gradually approach over the coming quarters. Finally, we continue to actively manage our general and administrative expenses with a $0.8 million reduction in costs to $3.2 million in the third quarter despite incurring $0.3 million in non-recurring expenses in September associated with our secondary offering."

(1) Non-GAAP measure. See "Non-GAAP Financial Measures" below.

OPERATIONAL UPDATE

Mineral and Royalty Interest Ownership Update

The Company accelerated acquisition activity in the third quarter 2020, closing 11 transactions and acquiring 1,125 net royalty acres (standardized to a 1/8th royalty interest) by deploying $16.2 million in capital to the Permian Basin. As of September 30, 2020, the Company had acquired roughly 84,700 net royalty acres, encompassing 13,218 gross (116.7 net) undeveloped horizontal locations, across 39 counties in what the Company views as the cores of the Permian Basin in West Texas and New Mexico, the SCOOP/STACK plays in the Anadarko Basin of Oklahoma, the Denver-Julesburg ("DJ") Basin in Colorado and Wyoming and the Williston Basin in North Dakota.

The table below summarizes the Company's approximate mineral and royalty interest ownership at the dates indicated.

 

 

Delaware

 

Midland

 

SCOOP

 

STACK

 

DJ

 

Williston

 

Other

 

Total

Net Royalty Acres

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2020

 

27,550

 

4,875

 

11,400

 

10,725

 

15,600

 

7,825

 

6,725

 

84,700

June 30, 2020

 

26,550

 

4,800

 

11,375

 

10,700

 

15,600

 

7,825

 

6,725

 

83,575

Acres Added (Sold) Q/Q

 

1,000

 

75

 

25

 

25

 

 

 

 

1,125

% Added (sold) Q/Q

 

3.8%

 

1.6%

 

0.2%

 

0.2%

 

0.0%

 

0.0%

 

0.0%

 

1.3%

DUC Conversions Updates

The Company identified approximately 143 gross (1.2 net) DUCs converted to production during the third quarter, which represented 20% of its gross DUC inventory (27% of net DUCs) at the end of second quarter of 2020. Third quarter conversions of gross and net wells by status are summarized in the table below:

Q3 2020 Wells Converted to Proved Developed Producing

 

 

Gross

 

Net

DUCs

 

143

 

87%

 

1.2

 

86%

Acquired

 

21

 

13%

 

0.2

 

14%

Total

 

164

 

100%

 

1.4

 

100%

Drilling Activity Update

During the third quarter 2020, the Company identified 57 gross (0.4 net) wells spud on its mineral position. In 2019 and 2018, respectively, the Company averaged 219 gross (1.4 net) and 135 gross (1.0 net) wells spud per quarter. Brigham's gross and net wells spud activity over the past 11 quarters is summarized in the table below:

 

Q1 18

 

Q2 18

 

Q3 18

 

Q4 18

 

Q1 19

 

Q2 19

 

Q3 19

 

Q4 19

 

Q1 20

 

Q2 20

 

Q3 20

Gross Wells Spud

82

 

99

 

208

 

150

 

230

 

248

 

214

 

185

 

209

 

36

 

57

Net Wells Spud

0.3

 

1.1

 

1.4

 

1.0

 

1.2

 

1.3

 

1.3

 

1.7

 

1.6

 

0.2

 

0.4

Four Quarter Rolling

Average Net Wells

Spud

 

 

 

 

 

 

1.0

 

1.2

 

1.2

 

1.2

 

1.4

 

1.5

 

1.1

 

1.0

DUC and Permit Inventory Update

Given the current challenges facing the global crude market and our operators, the near-term conversion of wells from DUCs or permits to proved developed producing was delayed and may continue to be deferred relative to historic conversion rates. Brigham's gross and net DUC and permit inventory as of September 30, 2020 by basin is outlined in the table below:

 

 

Development Inventory by Basin (1)

 

 

Delaware

 

Midland

 

SCOOP

 

STACK

 

DJ

 

Williston

 

Other

 

Total

Gross Inventory

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DUCs

 

185

 

144

 

72

 

3

 

100

 

112

 

8

 

624

Permits

 

154

 

105

 

16

 

9

 

213

 

213

 

6

 

716

Net Inventory

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DUCs

 

2.3

 

0.5

 

0.3

 

0.0

 

0.5

 

0.1

 

0.0

 

3.8

Permits

 

1.1

 

0.4

 

0.1

 

0.0

 

2.2

 

0.4

 

0.1

 

4.3

(1) Individual amounts may not add to totals due to rounding.

FINANCIAL UPDATE

For the three months ended September 30, 2020, crude oil, natural gas and NGL production volumes, increased 19% to 9,318 Boe/d as compared to the same prior year period, due to a 46% increase in Permian Basin volumes, which were partially offset by an 8% decrease in Anadarko Basin volumes.

Third quarter 2020 average realized prices were $36.34 per barrel of oil, $2.02 per Mcf of natural gas, and $12.84 per barrel of NGL, for a total equivalent price of $25.16 per Boe. This represents a 25% decrease relative to year ago levels and a 62% increase relative to second quarter 2020.

The Company saw a reduction in general and administrative costs before share-based compensation of 4% for the three months ended September 30, 2020 as compared to the same prior-year period and 21% as compared to the second quarter 2020. Brigham realized savings in nearly all expense categories and achieved a quarterly run rate of $3.0 million when adjusted for non-recurring expenses related to the September secondary offering.

The Company's net loss was $13.0 million for the three months ended September 30, 2020, inclusive of an $18.9 million impairment of oil and gas properties resulting from the continued reduction in the 12 month average rolling pricing used for reserves in accordance with SEC disclosure requirements. Adjusted EBITDA was $16.8 million for the three months ended September 30, 2020, down 13% relative to the same prior-year period. Adjusted EBITDA ex lease bonus was $15.3 million for the three months ended September 30, 2020, down 17% from the prior year. 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.

As previously announced, on September 15, 2020, the Company repurchased 436,630 shares of its Class A common stock from certain shareholders in a privately negotiated transaction at a price per share of $8.08, for a total of $3.5 million.

As of September 30, 2020, the Company had a cash balance of $8.2 million and $130.0 million of capacity under its revolving credit facility, providing the Company with total liquidity of $138.2 million. Associated with the Company's borrowing base redetermination that is expected to be finalized in late November 2020, the Administrative Agent has recommended a reaffirmation of the borrowing base at $135 million.

Results of Operations

Unaudited Financial and Operational Results

 

Three Months Ended September

30,

 

Nine Months Ended September

30,

($ in thousands, except per unit of production data)

 

2020

 

2019

 

2020

 

2019

Operating Revenues

 

 

 

 

 

 

 

 

Oil sales

 

$

16,586

 

 

$

20,799

 

 

$

49,941

 

 

$

53,514

 

Natural gas sales

 

2,770

 

 

2,132

 

 

7,115

 

 

7,028

 

NGL sales

 

2,212

 

 

1,204

 

 

5,429

 

 

4,232

 

Total mineral and royalty revenue

 

$

21,568

 

 

$

24,135

 

 

$

62,485

 

 

$

64,774

 

Lease bonus and other revenue

 

1,510

 

 

972

 

 

5,478

 

 

3,127

 

Total Revenues

 

$

23,078

 

 

$

25,107

 

 

$

67,963

 

 

$

67,901

 

Production

 

 

 

 

 

 

 

 

Oil (MBbls)

 

456

 

 

388

 

 

1,378

 

 

1,001

 

Natural gas (MMcf)

 

1,371

 

 

1,334

 

 

4,358

 

 

3,269

 

NGLs (MBbls)

 

172

 

 

110

 

 

505

 

 

274

 

Equivalents (MBoe)

 

857

 

 

720

 

 

2,609

 

 

1,820

 

Equivalents per day (Boe/d)

 

9,318

 

 

7,828

 

 

9,524

 

 

6,668

 

Realized Prices ($/Boe)

 

 

 

 

 

 

 

 

Oil ($/Bbl)

 

$

36.34

 

 

$

53.61

 

 

$

36.25

 

 

$

53.45

 

Natural gas ($/Mcf)

 

2.02

 

 

1.60

 

 

1.63

 

 

2.15

 

NGLs ($/Bbl)

 

12.84

 

 

10.96

 

 

10.74

 

 

15.43

 

Average Realized Price, without Derivatives

 

$

25.16

 

 

$

33.51

 

 

$

23.95

 

 

$

35.58

 

Average Realized Price, with Derivatives

 

$

25.16

 

 

$

33.68

 

 

$

23.95

 

 

$

35.78

 

Operating Expenses

 

 

 

 

 

 

 

 

Gathering, transportation and marketing

 

$

1,702

 

 

$

1,113

 

 

$

5,106

 

 

$

3,750

 

Severance and ad valorem taxes

 

1,393

 

 

1,377

 

 

4,179

 

 

4,206

 

Depreciation, depletion, and amortization

 

11,801

 

 

8,434

 

 

35,827

 

 

20,310

 

Impairment of oil and gas properties

 

18,905

 

 

 

 

18,905

 

 

 

General and administrative (before share-based compensation)

 

3,206

 

 

3,331

 

 

10,870

 

 

8,547

 

Total operating expenses (before share-based compensation)

 

$

37,007

 

 

$

14,255

 

 

$

74,887

 

 

$

36,813

 

General and administrative, share-based compensation

 

1,956

 

 

1,737

 

 

5,692

 

 

8,232

 

Total Operating Expenses

 

$

38,963

 

 

$

15,992

 

 

$

80,579

 

 

$

45,045

 

(Loss) Income From Operations

 

$

(15,885)

 

 

$

9,115

 

 

$

(12,616)

 

 

$

22,856

 

Other expenses:

 

 

 

 

 

 

 

 

Gain (loss) on derivative instruments

 

 

 

91

 

 

 

 

(521)

 

Interest expense, net

 

(118)

 

 

(65)

 

 

(695)

 

 

(5,160)

 

Loss on extinguishment of debt

 

 

 

 

 

 

 

(6,933)

 

Other income, net

 

4

 

 

130

 

 

29

 

 

165

 

(Loss) Income Before Taxes

 

$

(15,999)

 

 

$

9,271

 

 

$

(13,282)

 

 

$

10,407

 

Income tax (benefit) expense

 

(2,982)

 

 

807

 

 

(2,250)

 

 

1,114

 

Net (Loss) Income

 

$

(13,017)

 

 

$

8,464

 

 

$

(11,032)

 

 

$

9,293

 

Less: net income attributable to Predecessor

 

 

 

 

 

 

 

(5,092)

 

Less: net loss (income) attributable to temporary equity

 

3,552

 

 

(5,318)

 

 

2,223

 

 

(2,377)

 

Net (loss) income attributable to Brigham Minerals, Inc.

Stockholders

 

$

(9,465)

 

 

3,146

 

 

$

(8,809)

 

 

1,824

 

 

 

 

 

 

 

 

 

 

Unit Expenses ($/Boe)

 

 

 

 

 

 

 

 

Gathering, transportation and marketing

 

$

1.99

 

 

$

1.55

 

 

$

1.96

 

 

$

2.06

 

Severance and ad valorem taxes

 

1.63

 

 

1.91

 

 

1.60

 

 

2.31

 

Depreciation, depletion and amortization

 

13.77

 

 

11.71

 

 

13.73

 

 

11.16

 

General and administrative (before share-based compensation)

 

3.74

 

 

4.63

 

 

4.17

 

 

4.69

 

General and administrative, share-based compensation

 

2.28

 

 

2.41

 

 

2.18

 

 

4.52

 

Interest expense, net

 

0.14

 

 

0.09

 

 

0.27

 

 

2.83

 

QUARTERLY CASH DIVIDEND

The Company's Board of Directors (the "Board") has declared a quarterly cash dividend incorporating results for the third quarter 2020 of $0.24 per share of Class A common stock, to be paid on December 7, 2020 to holders of record as of November 30, 2020. An amount equal to the cash dividend per share will also be set aside for each outstanding award granted under the long-term incentive plan for payment upon the vesting of such awards in accordance with their terms.

Future declarations of dividends are subject to approval by the Board and to the Board's continuing determination that the declarations of dividends are in the best interests of the Company and its stockholders. Future dividends may be adjusted at the Board's discretion based on market conditions and capital availability.

BRIGHAM MINERALS THIRD QUARTER 2020 EARNINGS CONFERENCE CALL

  • A recording of the webcast will be available on the Company's website after the call

NON-GAAP FINANCIAL MEASURES

Adjusted Net Income (Loss), Adjusted EBITDA, Adjusted EBITDA ex lease bonus, Discretionary Cash Flow and Discretionary Cash Flow 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 Net Income (Loss) as net income (loss) before impairment of oil and gas properties and loss on extinguishment of debt. We define Adjusted EBITDA as Adjusted Net Income (loss) before depreciation, depletion and amortization, impairment of oil and gas properties, share based compensation expense, interest expense, 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. We define Discretionary Cash Flow as Adjusted EBITDA, less cash interest expense and cash taxes. We define Discretionary Cash Flow ex lease bonus as Discretionary Cash Flow further adjusted to eliminate the impacts of lease bonus revenue.

Adjusted Net Income (Loss), Adjusted EBITDA, Adjusted EBITDA ex lease bonus, Discretionary Cash Flow, and Discretionary Cash Flow 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 Net Income (Loss), Adjusted EBITDA, Adjusted EBITDA ex lease bonus, Discretionary Cash Flow, and Discretionary Cash Flow 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, Adjusted EBITDA ex lease bonus, Discretionary Cash Flow, and Discretionary Cash Flow ex lease bonus may differ from computations of similarly titled measures of other companies.

The following tables present a reconciliation of Adjusted Net Income (Loss), Adjusted EBITDA, Adjusted EBITDA ex lease bonus, Discretionary Cash Flow, and Discretionary Cash Flow ex lease bonus to the most directly comparable GAAP financial measure for the periods indicated.

SUPPLEMENTAL SCHEDULES

Reconciliation of Adjusted Net Income, Adjusted EBITDA and Adjusted EBITDA ex Lease Bonus

 

 

Three Months Ended

($ In thousands)

 

September 30, 2020

 

June 30, 2020

 

September 30, 2019

Net (Loss) Income

 

$

(13,017)

 

 

$

(6,816)

 

 

$

8,464

 

Add:

 

 

 

 

 

 

Impairment of oil and gas properties

 

18,905

 

 

 

 

 

Adjusted Net Income (Loss)

 

$

5,888

 

 

$

(6,816)

 

 

$

8,464

 

Add:

 

 

 

 

 

 

Depreciation, depletion, and amortization

 

11,801

 

 

11,200

 

 

8,434

 

Share based compensation expense

 

1,956

 

 

1,853

 

 

1,737

 

Interest expense

 

118

 

 

545

 

 

65

 

Income tax expense

 

 

 

 

 

807

 

Less:

 

 

 

 

 

 

Gain on derivative instruments, net

 

 

 

 

 

91

 

Other income, net

 

4

 

 

23

 

 

130

 

Income tax benefit

 

2,982

 

 

850

 

 

 

Adjusted EBITDA

 

$

16,777

 

 

$

5,909

 

 

$

19,286

 

Less:

 

 

 

 

 

 

Lease bonus and other revenue

 

1,510

 

 

62

 

 

972

 

Adjusted EBITDA ex Lease Bonus

 

$

15,267

 

 

$

5,847

 

 

$

18,314

 

Reconciliation of Discretionary Cash Flow and Discretionary Cash Flow ex Lease Bonus

 

 

Three Months Ended

($ In thousands, except per share amounts)

 

September 30, 2020

 

June 30, 2020

Adjusted EBITDA (1)

 

$

16,777

 

 

$

5,909

 

Less:

 

 

 

 

Adjusted EBITDA attributable to non-controlling interest

 

(3,912)

 

 

(1,829)

 

Adjusted EBITDA attributable to Class A common stock

 

$

12,865

 

 

$

4,080

 

Less:

 

 

 

 

Cash interest expense

 

437

 

 

165

 

Cash taxes (2)

 

 

 

(2,036)

 

Dividend equivalent rights

 

192

 

 

462

 

Discretionary cash flow to Class A common stock

 

$

12,236

 

 

$

5,489

 

Less:

 

 

 

 

Lease bonus

 

1,158

 

 

43

 

Discretionary cash flow ex lease bonus to Class A common stock

 

$

11,078

 

 

$

5,446

 

Add:

 

 

 

 

Lease Bonus

 

 

 

43

Less:

 

 

 

 

Retained cash flow

 

554

 

 

 

Distributed cash flow to Class A common stock

 

$

10,524

 

 

$

5,489

 

 

 

 

 

 

Shares of Class A common stock

 

43,316

 

 

39,297

 

 

 

 

 

 

Distributed cash flow per share of Class A common stock - Dividend

 

$

0.24

 

 

$

0.14

 

(1) Refer to Reconciliation of Adjusted EBITDA from Net Income (Loss) above.

(2) The Company does not expect to incur federal income taxes for income related to results for the nine months ended September 30, 2020.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

September 30,

 

December 31,

(In thousands, except share amounts)

 

2020

 

2019

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

8,182

 

 

$

51,133

 

Restricted cash

 

338

 

 

 

Accounts receivable

 

19,680

 

 

30,291

 

Prepaid expenses and other

 

2,464

 

 

1,688

 

Total current assets

 

30,664

 

 

83,112

 

Oil and gas properties, at cost, using the full cost method of accounting:

 

 

 

 

Unevaluated property

 

318,693

 

 

291,664

 

Evaluated property

 

472,687

 

 

449,061

 

Less accumulated depreciation, depletion, and amortization

 

(116,532)

 

 

(61,103)

 

Total oil and gas properties, net

 

674,848

 

 

679,622

 

Other property and equipment

 

5,435

 

 

5,095

 

Less accumulated depreciation

 

(4,570)

 

 

(3,703)

 

Other property and equipment, net

 

865

 

 

1,392

 

Deferred tax asset

 

16,750

 

 

18,823

 

Other assets, net

 

825

 

 

1,213

 

Total assets

 

$

723,952

 

 

$

784,162

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable and accrued liabilities

 

$

7,423

 

 

$

11,533

 

Total current liabilities

 

7,423

 

 

11,533

 

Long-term bank debt

 

5,000

 

 

 

Other non-current liabilities

 

1,813

 

 

803

 

Temporary equity

 

127,182

 

 

454,507

 

Shareholders' equity:

 

 

 

 

Preferred stock, $0.01 par value; 50,000,000 authorized; no shares issued and outstanding at

September 30, 2020 and December 31, 2019

 

 

 

 

Class A common stock, $0.01 par value; 400,000,000 authorized, 43,752,493 shares issued and

43,315,863 shares outstanding at September 30, 2020; 34,040,934 issued and outstanding at

December 31, 2019

 

438

 

 

340

 

Class B common stock, $0.01 par value; 150,000,000 authorized, 13,167,687 shares issued and

outstanding at September 30, 2020; 22,847,045 shares issued and outstanding at

December 31, 2019

 

 

 

 

Additional paid-in capital

 

633,634

 

 

323,578

 

Accumulated deficit

 

(48,011)

 

 

(6,599)

 

Treasury stock, at cost; 436,630 shares at September 30, 2020 and no shares at December 31, 2019

 

(3,527)

 

 

 

Total shareholders' equity attributable to Brigham Minerals, Inc.

 

582,534

 

 

317,319

 

Total liabilities and shareholders' equity

 

$

723,952

 

 

$

784,162

 

UNAUDITED CONDENSED CONSOLIDATED AND COMBINED STATEMENT OF OPERATIONS

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

(In thousands, except per share data)

 

2020

 

2019

 

2020

 

2019

REVENUES

 

 

 

 

 

 

 

 

Mineral and royalty revenues

 

$

21,568

 

 

$

24,135

 

 

$

62,485

 

 

$

64,774

 

Lease bonus and other revenues

 

1,510

 

 

972

 

 

5,478

 

 

3,127

 

Total revenues

 

23,078

 

 

25,107

 

 

67,963

 

 

67,901

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

Gathering, transportation and marketing

 

1,702

 

 

1,113

 

 

5,106

 

 

3,750

 

Severance and ad valorem taxes

 

1,393

 

 

1,377

 

 

4,179

 

 

4,206

 

Depreciation, depletion, and amortization

 

11,801

 

 

8,434

 

 

35,827

 

 

20,310

 

Impairment of oil and gas properties

 

18,905

 

 

 

 

18,905

 

 

 

General and administrative, excluding share-

based compensation

 

3,206

 

 

3,331

 

 

10,870

 

 

8,547

 

Total operating expenses (excluding

share-based compensation)

 

37,007

 

 

14,255

 

 

74,887

 

 

36,813

 

General and administrative, share-based

compensation

 

1,956

 

 

1,737

 

 

5,692

 

 

8,232

 

Total operating expenses

 

38,963

 

 

15,992

 

 

80,579

 

 

45,045

 

(LOSS) INCOME FROM OPERATIONS

 

(15,885)

 

 

9,115

 

 

(12,616)

 

 

22,856

 

Gain (loss) on derivative instruments, net

 

 

 

91

 

 

 

 

(521)

 

Interest expense, net

 

(118)

 

 

(65)

 

 

(695)

 

 

(5,160)

 

Loss on extinguishment of debt

 

 

 

 

 

 

 

(6,933)

 

Other income, net

 

4

 

 

130

 

 

29

 

 

165

 

(Loss) income before income taxes

 

(15,999)

 

 

9,271

 

 

(13,282)

 

 

10,407

 

Income tax (benefit) expense

 

(2,982)

 

 

807

 

 

(2,250)

 

 

1,114

 

NET (LOSS) INCOME

 

$

(13,017)

 

 

$

8,464

 

 

$

(11,032)

 

 

$

9,293

 

Less: net income attributable to Predecessor

 

 

 

 

 

 

 

(5,092)

 

Less: net loss (income) attributable to temporary

equity

 

3,552

 

 

(5,318)

 

 

2,223

 

 

(2,377)

 

Net (loss) income attributable to Brigham

Minerals, Inc. shareholders

 

$

(9,465)

 

 

$

3,146

 

 

$

(8,809)

 

 

$

1,824

 

 

 

 

 

 

 

 

 

 

NET (LOSS) INCOME PER COMMON SHARE

 

 

 

 

 

 

 

Basic

 

$

(0.24)

 

 

$

0.14

 

 

$

(0.24)

 

 

$

0.07

 

Diluted

 

$

(0.24)

 

 

$

0.14

 

 

$

(0.24)

 

 

$

0.07

 

WEIGHTED AVERAGE COMMON SHARES

OUTSTANDING

 

 

 

 

 

 

 

 

Basic

 

40,124

 

 

21,838

 

 

36,475

 

 

13,299

 

Diluted

 

40,124

 

 

21,926

 

 

36,475

 

 

13,346

 

UNAUDITED CONDENSED CONSOLIDATED AND COMBINED STATEMENT OF CASH FLOWS

 

 

Nine Months Ended September 30,

(In thousands)

 

2020

 

2019

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

Net (loss) income

 

$

(11,032)

 

 

$

9,293

 

Adjustments to reconcile net earnings to net cash provided by operating activities:

 

 

 

 

Depreciation, depletion and amortization

 

35,827

 

 

20,310

 

Impairment of oil and gas properties

 

18,905

 

 

 

Share-based compensation expense

 

5,692

 

 

8,232

 

Loss on extinguishment of debt

 

 

 

6,933

 

Amortization of debt issuance costs

 

545

 

 

354

 

Deferred income taxes

 

(1,351)

 

 

2

 

Loss on derivative instruments, net

 

 

 

521

 

Net cash received for derivative settlements

 

 

 

356

 

Bad debt expense

 

299

 

 

293

 

Changes in operating assets and liabilities:

 

 

 

 

Decrease (increase) in accounts receivables

 

10,312

 

 

(2,612)

 

(Increase) decrease in other current assets

 

(776)

 

 

970

 

Decrease in other deferred charges

 

45

 

 

 

(Decrease) increase in accounts payables and accrued liabilities

 

(4,269)

 

 

1,827

 

(Decrease) increase in other long-term liabilities

 

(465)

 

 

46

 

Net cash provided by operating activities

 

$

53,732

 

 

$

46,525

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

Additions to oil and gas properties

 

(45,996)

 

 

(181,484)

 

Additions to other fixed assets

 

(340)

 

 

(400)

 

Proceeds from sale of oil and gas properties, net

 

1,565

 

 

2,001

 

Net cash used in investing activities

 

$

(44,771)

 

 

$

(179,883)

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

Payments of short-term debt

 

 

 

(4,596)

 

Payments of long-term debt

 

 

 

(195,404)

 

Borrowing of long-term debt

 

5,000

 

 

70,000

 

Payment of debt extinguishment fees

 

 

 

(2,091)

 

Proceeds from issuance of Class A common stock

 

 

 

277,075

 

Purchase of treasury stock

 

(3,527)

 

 

 

Dividends paid

 

(31,340)

 

 

(7,206)

 

Distribution to holders of temporary equity

 

(21,504)

 

 

(9,379)

 

Debt issuance costs

 

(203)

 

 

(1,211)

 

Net cash (used in) provided by financing activities

 

$

(51,574)

 

 

$

127,188

 

Decrease in cash and cash equivalents and restricted cash

 

(42,613)

 

 

(6,170)

 

Cash and cash equivalents and restricted cash, beginning of period

 

51,133

 

 

32,018

 

Cash and cash equivalents and restricted cash, end of period

 

$

8,520

 

 

$

25,848

 

Supplemental disclosure of non-cash activity:

 

 

 

 

Accrued capital expenditures

 

$

163

 

 

$

286

 

Capitalized share-based compensation cost

 

$

4,560

 

 

$

2,425

 

Temporary equity cumulative adjustment to carrying value

 

$

(206,017)

 

 

$

93,546

 

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. Brigham Minerals' assets are located in 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. The Company's primary business objective is to maximize risk-adjusted total return to its shareholders by both capturing organic growth in its existing assets as well as leveraging its highly experienced technical evaluation team to continue acquiring minerals.

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 production and other guidance included within 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, continued downturns or delays in resuming in operator activity due to commodity price fluctuations, 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 and storage facilities, uncertainties regarding environmental regulations or litigation, global or national health events, including the ongoing spread and economic effects of the ongoing COVID-19 pandemic, potential future pandemics, the actions of the Organization of Petroleum Exporting Countries and other significant producers and governments and the ability of such producers to agree to and maintain oil price and production controls and other legal or regulatory developments affecting the Company's business and other important factors. These and other applicable uncertainties, factors and risks are described more fully in the Company's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2019, and any subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. 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.

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