Brigham Minerals, Inc. Reports Record Fourth Quarter 2019 and Full Year Operating and Financial Results

AUSTIN, Texas--()--Brigham Minerals, Inc. (NYSE: MNRL) (“Brigham Minerals,” “Brigham,” or the “Company”), a leading mineral and royalty interest acquisition company, today announced record operating and financial results for the quarter ended December 31, 2019, as well as recent developments.

FOURTH QUARTER 2019 OPERATING AND FINANCIAL HIGHLIGHTS

  • Record daily production volumes of 9,627 Boe/d (73% liquids, 58% oil)
    • Up 23% sequentially from Q3 2019 and up 110% from Q4 2018
    • Permian Basin production volumes up 45% from Q3 2019 to a record 5,054 Boe/d
  • Record mineral and royalty revenues totaling $33.1 million
    • Up 37% sequentially from Q3 2019
    • 12% increase in realized pricing from Q3 2019
  • Net income totaling $12.3 million
  • Adjusted EBITDA ex Lease Bonus(1) totaling $26.3 million
    • Up 44% sequentially from Q3 2019 and up 113% from Q4 2018
  • Declared Q4 2019 dividend of $0.38 per share of Class A common stock
    • Up 15% sequentially from Q3 2019 despite December 2019 follow-on offering
    • Dividend represents a 100% payout ratio
  • Closed 51 transactions acquiring approximately 3,000 net royalty acres deploying $37.8 million in mineral acquisition capital
    • Increased Permian Basin position by 1,150 net royalty acres, or 4% sequentially, from Q3 2019
    • During full year 2019, acquired 13,400 net royalty acres deploying $218 million
  • Averaged 60 rigs drilling approximately 2,500 net royalty acres across the Company's portfolio
  • 892 gross (5.9 net) drilled but uncompleted locations (“DUCs”) in inventory as of December 31, 2019
    • During Q4 2019, converted 376 (38%) gross and 2.6 (42%) net DUCs in inventory as of September 30, 2019
    • During 2019, converted 92% of net DUCs in inventory as of December 31, 2018

2020 GUIDANCE

  • Increased full year 2020 production guidance to 10,000 Boe/d to 11,000 Boe/d (greater than 56% oil cut), which excludes the impact of deploying 2020 mineral acquisition capital
    • Anchored by current proved developed producing locations and current DUC / permit inventory
    • Additional detail in 2020 Operational and Financial Guidance table

RECENT DEVELOPMENTS

  • Subsequent to quarter-end, increased borrowing base to $180 million from $150 million
    • December 31, 2019 liquidity of $201 million (excludes $30 million increase to RBL capacity)

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

Ben M. (“Bud”) Brigham, Executive Chairman commented, “Our 23% sequential production growth during the fourth quarter clearly demonstrates the resiliency of our “core-of-core” liquids weighted mineral position. Likewise, the 110% yearly production growth reaffirms the long-term strength of our diversified portfolio to deliver extended organic growth as well as our team’s ability to execute accretive ground game acquisitions. Our follow-on offering, executed in December, provides ample 2020 liquidity for our technical team to continue to execute upon our accretive ground game acquisitions. We are also excited to announce a 2020 mineral acquisition capital budget of $160 to $240 million, largely anticipated to be deployed to Permian Basin opportunities.”

Robert M. (“Rob”) Roosa, Chief Executive Officer, commented, “During the fourth quarter, we saw record DUC to PDP conversions across our assets. Our 376 gross DUCs converted to PDP this quarter were 53% greater than the 245 conversions last quarter. The ramp in our converted DUCs helped to fuel our 23% sequential production growth and record revenues. Even with the strong DUC conversions in the fourth quarter, we were able to reload 95% of our net DUC inventory and we remain excited about our continued forecasted production growth into 2020. Our 892 gross DUCs (5.9 net) in inventory as of year-end 2019 will be completed by well capitalized highly active operators including Continental Resources, Royal Dutch Shell, Occidental Petroleum and ExxonMobil. Furthermore, we saw a strong replenishment of gross and net permits during Q4 2019. Gross permits on our acreage increased to 715 (681 in Q3 2019) and net permits stayed steady at 4.4 (4.5 in Q3 2019). After the strong performance of our assets in Q4 2019, we are excited to raise our base production guidance for the full year 2020 to 10,000 - 11,000 Boe/d, which excludes production volumes associated with our ongoing 2020 acquisition ground game.”

Blake C. Williams, Chief Financial Officer, added, “We are extremely pleased with our financial performance in the fourth quarter, especially our record revenues, Adjusted EBITDA(1), and discretionary cash flow(1). The outperformance of our portfolio, anchored by continued strong completion and drilling activity across our Permian assets, allowed us to substantially raise our dividend by over 15% this quarter even after issuing 6 million new shares in our follow-on offering this December. Our discretionary cash flow per share of Class A common stock was $0.45 on a pre-tax basis, which was up 22% from the third quarter, and $0.38 per share on a post-tax basis, up 15% from the third quarter. Our ability to grow the dividend this quarter in a challenging market underscores the quality of our core asset position and resilience of the Brigham Minerals business model.”

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

OPERATIONAL UPDATE

Mineral and Royalty Interest Ownership Update

During the three months ended December 31, 2019, the Company executed 51 transactions acquiring 3,000 net royalty acres (standardized to a 1/8th royalty interest) and deployed $37.8 million in capital to the Permian, SCOOP/STACK, and Williston Basins. The Company deployed approximately 57% of its mineral acquisition capital in the fourth quarter to the Permian Basin (42% Delaware and 15% Midland), 20% to the Anadarko Basin, and 19% to the Williston Basin. Fourth quarter acquisitions are expected to deliver near-term production and cash flow growth with the addition of 87 gross DUCs (0.5 net DUCs) and 47 gross permits (0.2 net permits) to inventory counts.

During the twelve months ended December 31, 2019, the Company completed 216 transactions acquiring 13,400 net royalty acres (standardized to a 1/8th royalty interest) and deployed $218 million in capital to the Permian, SCOOP/STACK/Merge, Williston and DJ Basins. The Company deployed approximately 71% of its mineral acquisition capital in 2019 to the Permian Basin (62% Delaware and 9% Midland), 23% to the Anadarko Basin, 5% to the Williston Basin and 1% to the DJ Basin. The acquired minerals added 210 gross DUCs (2.0 net DUCs) and 99 gross permits (0.5 net permits) to its inventory counts over the year. As of December 31, 2019, the Company had acquired roughly 82,200 net royalty acres, encompassing 12,777 gross (112 net) undeveloped horizontal locations, across 39 counties in what 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 at the dates indicated.

 

 

Delaware

 

Midland

 

SCOOP

 

STACK

 

DJ

 

Williston

 

Other

 

Total

Net Royalty Acres (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2019

 

25,750

 

4,100

 

11,100

 

10,700

 

15,600

 

7,750

 

7,200

 

82,200

September 30, 2019

 

24,900

 

3,800

 

10,600

 

10,250

 

15,450

 

7,100

 

7,100

 

79,200

June 30, 2019

 

21,750

 

3,500

 

10,250

 

10,050

 

15,450

 

6,900

 

6,200

 

74,100

March 31, 2019

 

20,550

 

3,200

 

9,750

 

9,700

 

15,450

 

6,850

 

6,000

 

71,500

Acres Added Q/Q

 

850

 

300

 

500

 

450

 

150

 

650

 

100

 

3,000

% Added Q/Q

 

3%

 

8 %

 

5%

 

4%

 

1%

 

9%

 

1%

 

4%

December 31, 2018

 

19,200

 

3,200

 

8,700

 

9,700

 

15,400

 

6,800

 

5,800

 

68,800

Acres Added 2019

 

6,550

 

900

 

2,400

 

1,000

 

200

 

950

 

1,400

 

13,400

Acres Sold 2019

 

(100)

 

0

 

0

 

0

 

0

 

0

 

0

 

(100)

% Added 2019

 

34%

 

28%

 

28%

 

10%

 

1%

 

14%

 

24%

 

19%

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

DUC Conversions Updates

The Company saw significant conversion of its DUC inventory during the fourth quarter with over 376 gross (2.6 net) horizontal wells identified that had been converted to production, which represented 38% of its gross DUC inventory as of Q3 2019 (42% of net DUCs). During 2019, the Company converted 697 gross DUCs (5.6 net DUCs) to PDP, which represents 86% of its gross DUC inventory (92% of its net DUCs) as of year-end 2018. Conversions during 2019 are summarized in the table below:

2019 Wells Converted to Proved Developed Producing

 

 

Gross

 

Net

DUCs

 

697

 

45%

 

5.6

 

45%

Permits

 

134

 

9%

 

0.7

 

6%

Acquired

 

594

 

38%

 

5.2

 

42%

Unpermitted

 

128

 

8%

 

0.9

 

7%

Total

 

1,553

 

100%

 

12.4

 

100%

Drilling Activity Update

During the fourth quarter 2019, the Company averaged approximately 60 rigs running on its mineral and royalty interests with approximately 2,500 net royalty acres under development as compared to 53 rigs and 2,540 net royalty acres under development on average over the prior seven quarters. The Company had 32 rigs operating on its Permian Basin minerals and 16 rigs on its SCOOP minerals. Key operators running rigs on Brigham’s mineral position included Continental (10 rigs), ExxonMobil (9 rigs), Occidental Petroleum (4 rigs), Marathon Oil (3 rigs) and Hess Corporation (3 rigs).

During 2019, the Company averaged 65 rigs running on its mineral and royalty interests with approximately 2,700 net royalty acres under development. During 2019, the Company had an average of 29 rigs operating on its Permian Basin minerals and 16 on its SCOOP minerals. Key operators running rigs on Brigham’s mineral position during 2019 included Continental (14 rigs), ExxonMobil (8 rigs), Occidental Petroleum (4 rigs), Marathon Oil (3 rigs) and Concho Resources (2 rigs). Brigham’s rig activity over the past eight quarters is summarized in the table below:

 

 

Q1 18

 

Q2 18

 

Q3 18

 

Q4 18

 

Q1 19

 

Q2 19

 

Q3 19

 

Q4 19

Total Rigs

 

25

 

31

 

51

 

64

 

73

 

62

 

63

 

60

NRA Under Development

 

941

 

1,326

 

3,249

 

3,820

 

3,383

 

2,284

 

2,796

 

2,467

% of Total NRA

 

2%

 

2%

 

5%

 

6%

 

5%

 

3%

 

4%

 

3%

DUC and Permit Inventory Update

The Company expects 2020 production growth will be driven by the continued conversion of its DUC and permit inventory. Brigham’s gross and net DUC and permit inventory as of December 31, 2019 by basin is outlined in the table below:

 

 

Development Inventory by Basin (1)

 

 

Delaware

 

Midland

 

SCOOP

 

STACK

 

DJ

 

Williston

 

Other

 

Total

Gross Inventory

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DUCs

 

255

 

136

 

118

 

19

 

181

 

155

 

28

 

892

Permits

 

168

 

119

 

15

 

10

 

201

 

198

 

4

 

715

Net Inventory

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DUCs

 

2.4

 

0.8

 

0.7

 

0.1

 

1.4

 

0.5

 

0.1

 

5.9

Permits

 

1.3

 

0.4

 

0.1

 

0.0

 

2.2

 

0.3

 

 

4.4

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

FINANCIAL UPDATE

For the three months ended December 31, 2019, crude oil, natural gas and NGL production volumes, increased 110% to 9,627 Boe/d (73% liquids) as compared to the same prior year period, largely due to a 132% increase in Permian Basin volumes and a 120% increase in Anadarko Basin volumes.

Fourth quarter 2019 average realized prices were $55.55 per barrel of oil, $1.88 per Mcf of natural gas, and $14.22 per barrel of NGL, for a total equivalent price of $37.39 per Boe, excluding the effect of derivative instruments. This represents a 12% increase relative to third quarter 2019 and is 7% lower than year-ago levels of $40.15 per Boe.

The Company’s net income was $12.3 million for the three months ended December 31, 2019, inclusive of $1.8 million of non-cash share-based compensation expense. Adjusted EBITDA was $26.8 million for the three months ended December 31, 2019, up 106% from the same prior-year period. Adjusted EBITDA ex lease bonus was $26.3 million for the three months ended December 31, 2019, up 113% 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.

For the twelve months ended December 31, 2019, crude oil, natural gas and NGL production volumes, increased 91% to 7,414 Boe/d (71% liquids) as compared to the prior year, due to a 138% increase in Permian Basin volumes and a 103% increase in Anadarko Basin volumes.

Full year 2019 average realized prices were $54.16 per barrel of oil, $2.07 per Mcf of natural gas, and $15.03 per barrel of NGL, for a total equivalent price of $36.17 per Boe, excluding the effect of derivative instruments. This represents a 14% decrease relative to 2018 realized prices of $42.19 per Boe.

The Company’s net income was $21.6 million for the twelve months ended December 31, 2019, inclusive of $6.9 million of loss on extinguishment of debt and $10.0 million of non-cash share-based compensation expense. Adjusted EBITDA was $78.2 million for the twelve months ended December 31, 2019, up 47% from the prior year. Adjusted EBITDA ex lease bonus was $74.6 million for the twelve months ended December 31, 2019, up 63% from the prior year.

As of December 31, 2019, the Company had a cash balance of $51.1 million and $150.0 million of capacity on its revolving credit facility, providing the Company with total liquidity of $201.1 million. As of February 27, 2020, the Company had increased its borrowing base under its revolving credit facility to $180.0 million from $150.0 million, adding additional capacity to execute on ground game acquisition opportunities.

Fourth Quarter and Full Year 2019 Results

Financial and Operational Results

 

Three Months Ended
December 31,

 

Twelve Months Ended
December 31,

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

 

2019

 

2018

 

2019

 

2018

Operating Revenues

 

 

 

 

 

 

 

 

Oil sales

 

$

28,534

 

 

$

12,881

 

 

$

82,048

 

 

$

47,040

 

Natural gas sales

 

2,697

 

 

2,195

 

 

9,724

 

 

7,014

 

NGL sales

 

1,881

 

 

1,836

 

 

6,114

 

 

5,704

 

Total mineral and royalty revenue

 

$

33,112

 

 

$

16,912

 

 

$

97,886

 

 

$

59,758

 

Lease bonus and other revenue

 

502

 

 

679

 

 

3,629

 

 

7,506

 

Total Revenue

 

$

33,614

 

 

$

17,591

 

 

$

101,515

 

 

$

67,264

 

Net Production

 

 

 

 

 

 

 

 

Oil (MBbls)

 

514

 

 

234

 

 

1,515

 

 

777

 

Natural Gas (MMcf)

 

1,438

 

 

711

 

 

4,707

 

 

2,507

 

NGLs (MBbls)

 

132

 

 

69

 

 

407

 

 

222

 

Total Net Production (MBoe)

 

886

 

 

421

 

 

2,706

 

 

1,417

 

Total Net Daily Production (Boe/d)

 

9,627

 

 

4,579

 

 

7,414

 

 

3,881

 

Realized Prices ($/Boe)

 

 

 

 

 

 

 

 

Oil ($/Bbl)

 

$

55.55

 

 

$

55.16

 

 

$

54.16

 

 

$

60.56

 

Natural gas ($/Mcf)

 

1.88

 

 

3.09

 

 

2.07

 

 

2.80

 

NGLs ($/Bbl)

 

14.22

 

 

26.50

 

 

15.03

 

 

25.72

 

Average Realized Price excluding Derivatives

 

$

37.39

 

 

$

40.15

 

 

$

36.17

 

 

$

42.19

 

Average Realized Price including Derivatives

 

$

37.52

 

 

$

39.95

 

 

$

36.35

 

 

$

41.66

 

Operating Expenses

 

 

 

 

 

 

 

 

Gathering, transporting and marketing

 

$

1,235

 

 

$

1,050

 

 

$

4,985

 

 

$

3,944

 

Severance and ad valorem taxes

 

2,203

 

 

937

 

 

6,409

 

 

3,536

 

Depreciation, depletion and amortization

 

10,630

 

 

4,306

 

 

30,940

 

 

13,915

 

General and administrative (excluding share-based compensation)

 

3,368

 

 

2,566

 

 

11,914

 

 

6,638

 

Total Operating Expenses (before share-based compensation)

 

$

17,436

 

 

$

8,859

 

 

$

54,248

 

 

$

28,033

 

General and administrative, share-based compensation

 

1,816

 

 

 

 

10,049

 

 

 

Total Operating Expenses

 

$

19,252

 

 

$

8,859

 

 

$

64,297

 

 

$

28,033

 

Income From Operations

 

$

14,362

 

 

$

8,732

 

 

$

37,218

 

 

$

39,231

 

Gain (loss) on derivative instruments, net

 

(47

)

 

1,618

 

 

(568

)

 

424

 

Interest expense, net

 

(449

)

 

(3,418

)

 

(5,609

)

 

(7,446

)

Loss on extinguishment of debt

 

41

 

 

 

 

(6,892

)

 

 

Gain on sale and distribution of equity securities

 

 

 

 

 

 

 

823

 

Other income, net

 

4

 

 

53

 

 

169

 

 

110

 

Income Before Taxes

 

$

13,911

 

 

$

6,985

 

 

$

24,318

 

 

$

33,142

 

Income tax expense

 

1,565

 

 

(129

)

 

2,679

 

 

327

 

Net Income

 

$

12,346

 

 

$

7,114

 

 

$

21,639

 

 

$

32,815

 

Less: net income attributable to predecessor

 

 

 

(6,166

)

 

(5,092

)

 

(30,976

)

Less: net income attributable to temporary equity

 

(7,269

)

 

 

 

(9,646

)

 

 

Net income attributable to Brigham Minerals, Inc. Stockholders

 

$

5,077

 

 

$

948

 

 

$

6,901

 

 

$

1,839

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unit Expenses ($/Boe)

 

 

 

 

 

 

 

 

Gathering, transportation and marketing

 

$

1.40

 

 

$

2.49

 

 

$

1.84

 

 

$

2.78

 

Severance and ad valorem taxes

 

2.49

 

 

2.22

 

 

2.37

 

 

2.50

 

Depreciation, depletion and amortization

 

12.00

 

 

10.22

 

 

11.43

 

 

9.82

 

General and administrative (before share-based compensation)

 

3.80

 

 

6.09

 

 

4.40

 

 

4.69

 

General and administrative, share-based compensation

 

2.05

 

 

 

 

3.71

 

 

 

Interest expense, net

 

0.51

 

 

8.11

 

 

2.07

 

 

5.25

 

QUARTERLY CASH DIVIDEND

The Company’s Board of Directors (the “Board”) has declared a quarterly cash dividend incorporating results for the fourth quarter 2019 of $0.38 per share of Class A common stock, to be paid on March 19, 2020 to holders of record as of March 12, 2020.

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.

2020 OPERATIONAL AND FINANCIAL GUIDANCE

 

Guidance Ranges

 

Low

 

High

Daily Net Production (Boe/d) Sans Acquisitions

 

10,000

11,000

Oil Cut (%)

 

56%

59%

Lease Bonus ($ millions)

 

$4.5

$6.0

 

 

 

 

 

Unit Costs ($/Boe)

 

 

 

 

Cash G&A Expense Plus Share Based Compensation Expense ($/Boe)

 

$5.25

$6.35

Cash G&A Expense ($/Boe)

 

$3.60

$4.10

Share Based Compensation Expense ($/Boe)

 

$1.65

$2.25

Gathering, Transportation, and Marketing ($/Boe)

 

$1.65

$2.25

Production Taxes (% of Revenue)

 

7%

9%

 

 

 

 

 

Taxes

 

 

 

 

Tax Depletion ($/Boe)

 

$9.00

$11.50

Percent of Dividend Expected to be Return of Capital (Low: $55.00/Bbl and High: $50.00 Flat Pricing)

 

50%

70%

 

 

 

 

 

Mineral Acquisition Capital

 

 

 

 

Ground Game Acquisition Budget ($ millions)

 

$160

$240

BRIGHAM MINERALS FOURTH QUARTER 2019 EARNINGS CONFERENCE CALL

  • Friday, February 28, 2020 at 12:00 p.m. Eastern Time (11:00 a.m. Central Time)
  • Pre-register by visiting http://dpregister.com/10138905
  • Listen to a live audio webcast of the call by visiting the Company’s website
  • A recording of the webcast will be available on the Company’s website after the call

Additionally, Brigham Minerals plans to participate in the following events and conferences

  • March 2-3: Credit Suisse Energy Summit – Vail
    • The Company is presenting on March 3 at 12:10 p.m. Mountain Time
  • March 24-25: Simmons Energy Conference – Vegas
    • The Company is presenting in a panel on March 25 at 9:45 a.m. Pacific Time

NON-GAAP FINANCIAL MEASURES

Adjusted Net Income, Adjusted EBITDA, Adjusted EBITDA ex lease bonus, Adjusted EBITDA margin and Discretionary Cash Flow 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 as net income (loss) before loss on extinguishment of debt. We define Adjusted EBITDA as adjusted net income (loss) before depreciation, depletion and amortization, share based compensation expense, 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. We define Adjusted EBITDA margin as Adjusted EBITDA divided by revenue. We define Discretionary Cash Flow as Adjusted EBITDA, less cash interest expense and cash taxes.

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

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

SUPPLEMENTAL SCHEDULES

Note: Items reconciled below may also pertain to non-GAAP financial items that may be discussed in the earnings call

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

 

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

($ In thousands)

 

2019

 

2018

 

2019

 

2018

Net Income

 

$

12,346

 

$

7,114

 

$

21,639

 

$

32,815

Add:

 

 

 

 

 

 

 

 

Loss on extinguishment of debt

 

(41)

 

 

6,892

 

Adjusted Net Income

 

$

12,305

 

$

7,114

 

$

28,531

 

$

32,815

Add:

 

 

 

 

 

 

 

 

Depreciation, depletion and amortization

 

10,630

 

4,306

 

30,940

 

13,915

Share-based compensation expense

 

1,816

 

 

10,049

 

Interest expense

 

449

 

3,418

 

5,609

 

7,446

Loss on derivative instruments, net

 

47

 

 

568

 

Income tax expense

 

1,565

 

 

2,679

 

327

Less:

 

 

 

 

 

 

 

 

Gain on derivative instruments, net

 

 

1,618

 

 

424

Income tax benefit

 

 

129

 

 

Other income, net

 

4

 

53

 

169

 

110

Gain on sale and distribution of equity securities

 

 

 

 

823

Adjusted EBITDA

 

$

26,808

 

$

13,038

 

$

78,207

 

$

53,146

Lease bonus

 

502

 

679

 

3,629

 

7,506

Adjusted EBITDA ex Lease Bonus

 

$

26,306

 

$

12,359

 

$

74,578

 

$

45,640

Memo: Adjusted EBITDA Margin

 

 

 

 

 

 

 

 

Revenue

 

$

33,614

 

$

17,591

 

$

101,515

 

$

67,264

Adjusted EBITDA

 

$

26,808

 

$

13,038

 

$

78,207

 

$

53,146

Adjusted EBITDA Margin

 

80%

 

74%

 

77%

 

79%

Reconciliation of Discretionary Cash Flow

 

 

Three Months Ended

($ In thousands, except per share amounts)

 

December 31, 2019

 

September 30, 2019

 

June 30, 2019

Adjusted EBITDA (1)

 

$

26,808

 

 

$

19,286

 

 

$

18,289

 

Less:

 

 

 

 

 

 

Adjusted EBITDA attributable to non-controlling interest

 

(10,700

)

 

(10,931

)

 

(10,366

)

Adjusted EBITDA attributable to Class A Common Stock

 

$

16,108

 

 

$

8,355

 

 

$

7,923

 

Less:

 

 

 

 

 

 

Cash interest expense

 

421

 

 

72

 

 

550

 

Cash taxes

 

2,568

 

 

731

 

 

117

 

Dividend equivalent rights

 

248

 

 

224

 

 

 

Retained cash flow

 

 

 

 

 

 

Less:

 

 

 

 

 

 

Lease bonus attributable to Class A Common Stock

 

300

 

 

421

 

 

641

 

Discretionary cash flow to Class A Common Stock ex Lease Bonus

 

$

12,571

 

 

$

6,907

 

 

$

6,615

 

Plus:

 

 

 

 

 

 

Lease bonus attributable to Class A Common Stock

 

300

 

 

421

 

 

641

 

Discretionary cash flow to Class A Common Stock

 

$

12,871

 

 

$

7,328

 

 

$

7,256

 

Plus:

 

 

 

 

 

 

Cash taxes

 

2,568

 

 

731

 

 

117

 

Discretionary cash flow to Class A Common Stock Pre-Tax

 

15,439

 

 

8,059

 

 

7,373

 

 

 

 

 

 

 

 

Shares of Class A Common Stock

 

34,181

 

 

21,997

 

 

21,997

 

 

 

 

 

 

 

 

Discretionary cash flow per share of Class A Common Stock ex. Lease Bonus

 

$

0.37

 

 

$

0.31

 

 

$

0.30

 

Discretionary cash flow per share of Class A Common Stock - Dividend

 

$

0.38

 

 

$

0.33

 

 

$

0.33

 

Discretionary cash flow per share of Class A Common Stock Pre-Tax

 

$

0.45

 

 

$

0.37

 

 

$

0.34

 

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

CONSOLIDATED AND COMBINED BALANCE SHEET

 

 

December 31,

(In thousands, except share data)

 

2019

 

2018

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

51,133

 

 

$

31,985

 

Restricted cash

 

 

 

474

 

Accounts receivable

 

30,291

 

 

20,695

 

Prepaid expenses and other

 

1,688

 

 

7,103

 

Short-term derivative assets

 

 

 

1,057

 

Total current assets

 

83,112

 

 

61,314

 

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

 

 

 

 

Unevaluated property

 

291,664

 

 

228,151

 

Evaluated property

 

449,061

 

 

289,851

 

Less accumulated depreciation, depletion, and amortization

 

(61,103

)

 

(27,628

)

Oil and gas properties - net

 

679,622

 

 

490,374

 

Other property and equipment

 

5,095

 

 

5,408

 

Less accumulated depreciation

 

(3,703

)

 

(3,115

)

Other property and equipment - net

 

1,392

 

 

2,293

 

Deferred tax asset

 

18,823

 

 

 

Other assets, net

 

1,213

 

 

45

 

Total assets

 

$

784,162

 

 

$

554,026

 

LIABILITIES AND SHAREHOLDERS'/MEMBERS' EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable and accrued liabilities

 

$

11,533

 

 

$

5,662

 

Current portion of debt

 

 

 

2,188

 

Total current liabilities

 

11,533

 

 

7,850

 

Long-term debt

 

 

 

168,517

 

Deferred tax liability

 

 

 

3,684

 

Other non-current liabilities

 

803

 

 

27

 

Temporary equity

 

454,507

 

 

 

Shareholders' and members' equity:

 

 

 

 

Members' contributed capital

 

 

 

208,728

 

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

 

 

 

 

Class A common stock, $0.01 par value; 400,000,000 authorized, 34,040,934 shares issued and outstanding at December 31, 2019

 

340

 

 

 

Class B common stock, $0.01 par value; 150,000,000 authorized, 22,847,045 shares issued and outstanding at December 31, 2019

 

 

 

 

Additional paid-in capital

 

323,578

 

 

(3,057

)

Accumulated (deficit) earnings

 

(6,599

)

 

168,277

 

Total shareholders' equity attributable to Brigham Minerals, Inc. and members' equity

 

317,319

 

 

373,948

 

Total liabilities and shareholders' and members' equity

 

$

784,162

 

 

$

554,026

 

CONSOLIDATED AND COMBINED STATEMENT OF OPERATIONS

 

 

Years Ended December 31,

(In thousands, except per share data)

 

2019

 

2018

 

2017

REVENUES

 

 

 

 

 

 

Mineral and royalty revenues

 

$

97,886

 

 

$

59,758

 

 

$

30,066

 

Lease bonus and other revenues

 

3,629

 

 

7,506

 

 

10,842

 

Total revenues

 

$

101,515

 

 

$

67,264

 

 

$

40,908

 

OTHER OPERATING INCOME:

 

 

 

 

 

 

Gain on sale of oil and gas properties, net

 

 

 

 

 

94,551

 

OPERATING EXPENSES

 

 

 

 

 

 

Gathering, transportation and marketing

 

4,985

 

 

3,944

 

 

1,754

 

Severance and ad valorem taxes

 

6,409

 

 

3,536

 

 

1,601

 

Depreciation, depletion, and amortization

 

30,940

 

 

13,915

 

 

6,955

 

General and administrative

 

21,963

 

 

6,638

 

 

3,935

 

Total operating expenses

 

$

64,297

 

 

$

28,033

 

 

$

14,245

 

NET INCOME FROM OPERATIONS

 

$

37,218

 

 

$

39,231

 

 

$

121,214

 

(Loss) gain on derivative instruments, net

 

(568

)

 

424

 

 

(121

)

Interest expense, net

 

(5,609

)

 

(7,446

)

 

(556

)

Loss on extinguishment of debt

 

(6,892

)

 

 

 

 

Gain (loss) on sale and distribution of equity securities

 

 

 

823

 

 

(4,222

)

Other income, net

 

169

 

 

110

 

 

305

 

Income before income taxes

 

$

24,318

 

 

$

33,142

 

 

$

116,620

 

Income tax expense

 

2,679

 

 

327

 

 

1,008

 

NET INCOME

 

$

21,639

 

 

$

32,815

 

 

$

115,612

 

Less: Net income attributable to Predecessor

 

(5,092

)

 

(30,976

)

 

(115,612

)

Less: Net income attributable to temporary equity

 

(9,646

)

 

 

 

 

Net income attributable to common shareholders

 

$

6,901

 

 

$

1,839

 

 

$

 

 

 

 

 

 

 

 

NET INCOME PER COMMON SHARE

 

 

 

 

 

 

Basic

 

$

0.26

 

 

$

 

 

$

 

Diluted

 

$

0.26

 

 

$

 

 

$

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

 

 

 

 

 

 

Basic

 

22,870

 

 

 

 

 

Diluted

 

22,870

 

 

 

 

 

CONSOLIDATED AND COMBINED STATEMENT OF CASH FLOWS

 

 

Years Ended December 31,

(In thousands)

 

2019

 

2018

 

2017

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net income

 

$

21,639

 

 

$

32,815

 

 

$

115,612

 

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

 

 

 

 

 

 

Depreciation and amortization

 

30,940

 

 

13,915

 

 

6,955

 

Share-based compensation expense

 

10,049

 

 

 

 

 

Loss on extinguishment of debt

 

6,892

 

 

 

 

 

Amortization of debt issue costs

 

433

 

 

690

 

 

121

 

Deferred income taxes

 

665

 

 

237

 

 

295

 

Loss (gain) on derivative instruments, net

 

568

 

 

(424

)

 

121

 

Net cash received (paid) for derivative settlements

 

470

 

 

(754

)

 

 

(Gain) loss on sale and distribution of equity securities

 

 

 

(823

)

 

4,222

 

Bad debt expense

 

669

 

 

382

 

 

 

(Gain) on sale of oil and gas properties

 

 

 

 

 

(94,551

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

(Increase)/Decrease in accounts receivable

 

(10,246

)

 

(8,022

)

 

(6,787

)

(Increase)/Decrease in other current assets

 

1,787

 

 

(6,116

)

 

(44

)

Increase/(Decrease) in accounts payable and accrued liabilities

 

5,112

 

 

(484

)

 

3,956

 

Increase/(Decrease) in other long-term liabilities

 

47

 

 

28

 

 

 

Other operating

 

 

 

 

 

(499

)

Net cash provided by (used in) operating activities

 

$

69,025

 

 

$

31,444

 

 

$

29,401

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

Additions to oil and gas properties

 

(219,481

)

 

(195,603

)

 

(101,437

)

Additions to other fixed assets

 

(474

)

 

(723

)

 

(1,311

)

Proceeds from sale of oil and gas properties, net

 

3,123

 

 

125

 

 

111,024

 

Proceeds from sale of equity securities

 

 

 

933

 

 

17,896

 

Net cash provided by (used in) investing activities

 

$

(216,832

)

 

$

(195,268

)

 

$

26,172

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

Payments of short-term related party loan

 

 

 

(7,000

)

 

 

Borrowing of short-term related party loan

 

 

 

7,000

 

 

 

Payments of short-term debt

 

(4,596

)

 

 

 

 

Payments of long-term debt

 

(275,404

)

 

(70,000

)

 

(15,000

)

Borrowing of long-term debt

 

105,000

 

 

218,000

 

 

27,000

 

Payment of debt extinguishment fees

 

(2,091

)

 

 

 

 

Proceeds from issuance of Class A common stock sold in initial public offering, net of offering costs

 

277,075

 

 

 

 

 

Proceeds from issuance of Class A common stock, net of offering costs

 

102,680

 

 

 

 

 

Capital contributions

 

 

 

46,011

 

 

37,000

 

Capital distributions

 

(441

)

 

 

 

(131,544

)

Dividends paid

 

(14,663

)

 

 

 

 

Distributions to holders of temporary equity

 

(19,731

)

 

 

 

 

Loan closing costs

 

(1,348

)

 

(4,614

)

 

(103

)

Net cash provided by (used in) financing activities

 

$

166,481

 

 

$

189,397

 

 

$

(82,647

)

Increase/Decrease in cash, cash equivalents and restricted cash

 

18,674

 

 

25,573

 

 

(27,074

)

Cash, cash equivalents and restricted cash, beginning of period

 

32,459

 

 

6,886

 

 

33,960

 

Cash, cash equivalents and restricted cash end of period

 

$

51,133

 

 

$

32,459

 

 

$

6,886

 


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 the Company's guidance 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, downturns 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, including the outbreak of pandemic or contagious disease, 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.

Contacts

At the Company:
Brigham Minerals, Inc.
Blake C. Williams
Chief Financial Officer
(512) 220-6350

Or

For Investor and Media Inquiries:
Lincoln Churchill Advisors
Julie D. Baughman
(512) 220-1500
InvestorRelations@brighamminerals.com

Contacts

At the Company:
Brigham Minerals, Inc.
Blake C. Williams
Chief Financial Officer
(512) 220-6350

Or

For Investor and Media Inquiries:
Lincoln Churchill Advisors
Julie D. Baughman
(512) 220-1500
InvestorRelations@brighamminerals.com