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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version on businesswire.com: https://www.businesswire.com/news/home/20190520005194/en/
At the Company:Brigham Minerals, Inc.Blake C. WilliamsChief
Financial Officer(512) 220-6350
Or
For Investor and Media Inquiries:Lincoln Churchill AdvisorsJulie
D. Baughman(512) 220-1500InvestorRelations@brighamminerals.com
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