Brigham Minerals, Inc. Reports Record Second Quarter 2021 Operating and Financial Results and Provides Updated Full Year 2021 Guidance

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 June 30, 2021.

SECOND QUARTER 2021 OPERATIONAL AND FINANCIAL HIGHLIGHTS AND RECENT DEVELOPMENTS

  • Daily production volumes of 8,988 Boe/d (70% liquids, 52% oil)
    • Production up 1% sequentially from Q1 2021 driven by a 7% increase in Permian volumes
  • Record royalty revenues of $37.0 million
    • Up 15% sequentially from Q1 2021 driven by 13% higher realized prices and 1% higher volumes
  • Continued record low general and administrative costs (before share based compensation) of $3.1 million
    • Generated through continued cost reduction efforts initiated in Q2 2020
    • See cost guidance reduction in Operational and Financial Guidance Update table below
  • Net income totaling $15.3 million
    • Record Adjusted EBITDA(1) totaling $30.8 million up 14% sequentially from Q1 2021
  • Declared Q2 2021 dividend of $0.35 per share of Class A common stock and implemented Base Plus Variable Dividend structure(2)
    • Comprised of Base Dividend of $0.14 per share of Class A common stock and Variable Dividend of $0.21 per share of Class A common stock, which in total represents a 9% sequential total dividend increase from Q1 2021
    • Represents 80% payout ratio of Discretionary Cash Flow ex lease bonus(1) with retained cash utilized to fund mineral acquisitions focused on activity wells
    • Sustainable Base Dividend supported by PDP base and multi decade, high quality inventory
  • 9.1 net (1,415 gross) activity wells at the end of Q2 2021 comprised of 5.0 net (732 gross) DUCs and 4.1 net (683 gross) permits
    • 14% increase in net DUCs to 5.0 net locations driven by a 31% increase in net wells spud
    • Permian Basin net activity wells increased to a record 5.4 net locations
  • Acquired 640 net royalty acres deploying $14.4 million in mineral acquisition capital
    • Deployed 96% of mineral acquisition capital to the Permian Basin
    • 63% of acquired net locations comprised of PDP, DUCs and permits
    • Approximately 40% of acquisitions internally funded
  • $6.4 million cash balance and undrawn revolver capacity of $92 million as of June 30, 2021
    • Conservative leverage at 0.3x last quarter annualized Adjusted EBITDA (1)
    • Borrowing base increased to $165 million effective July 7, 2021 resulting in pro-forma liquidity of $128.4 million
  • Portfolio optimization underway with anticipated Q3 2021 impact totaling approximately $6 million
    • Anticipate initial water royalty sales this month from Southern Delaware surface ownership with total potential water royalty revenue of $0.5 million to $1 million beginning in Q3 2021
    • In July, divested certain non-core Oklahoma minerals generating proceeds of $3.3 million (net royalty acres included in "Other" in ownership table below)
    • In July, sold 50% of mineral interest in five Stack/Merge sections as well as leased open minerals to private operator to accelerate development generating proceeds of $1.6 million

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

(2) See Quarterly Cash Dividend section below regarding Board approval of future dividends

2021 UPDATED GUIDANCE

  • Updated full year 2021 production guidance of 9,000 Boe/d to 9,500 Boe/d
    • See additional detail in Operational and Financial Guidance Update table below
    • General and administrative costs reduced 13% at the mid-point to $13.4 million from $15.4 million
    • Mineral acquisition capital reduced 35% at the mid-point to $65 million from $100 million
      • Maintaining discipline in environment with higher seller expectations and transitory competition
    • Mid-point of daily production volumes reduced 3% attributable to reduced mineral acquisitions

Robert M. (“Rob”) Roosa, Chief Executive Officer, commented, “Drilling activity continued to rebound in the second quarter with a 16% gross (31% net) increase in wells spud compared to the first quarter, which substantially outpaced the 9% industry-wide rig increase in our liquids rich basins. Drilling activity drove a 14% increase in net DUCs to 5.0 net locations, which we anticipate will be highly contributory to production volumes over the next twelve months as operators such as Chevron Corporation, Pioneer Natural Resources Inc., Exxon Mobil Corporation, PDC Energy, Inc. and Diamondback Energy, Inc. turn our DUCs in line to production. Collectively, these large, well-capitalized E&Ps operate 60% of our DUCs and are running an aggregate 19 frac crews in our basins. Driven by this high-quality DUC inventory, we anticipate our production volumes over the next twelve months, or the period from Q3 2021 through Q2 2022, will average between 9,000 Boe/d and 10,000 Boe/d. Our acquisition team remained highly disciplined as commodity prices increased throughout the second quarter targeting highly accretive acquisitions focused on activity wells and continued to deliver, deploying $14.4 million in mineral acquisition capital, almost entirely to the Permian Basin. As a result of higher seller price expectations and the desire to maintain discipline in the face of increased competition, which has historically proven to be transitory, we anticipate deploying $15 million of acquisition capital over the next two quarters, which will be majority funded by retained cash and our portfolio optimization and rationalization activities.”

Blake C. Williams, Chief Financial Officer, added, “Our high-quality asset base delivered strong second quarter results highlighted by both record revenues and Adjusted EBITDA(1). Realized pricing improved 13% over the first quarter, which along with our production uplift drove a 9% increase in our dividend to $0.35 per share this quarter. Further, we were able to internally fund approximately 40% of our second quarter mineral acquisition capital, which is up from 30% in the first quarter. Finally, we are excited to implement a base plus variable dividend structure(2) with a quarterly base dividend of $0.14 per share, which represents an attractive and sustainable fixed base yield relative to broader market indices. We believe the base dividend has been battle tested as it equates to our second quarter 2020 dividend, which incorporates the substantial commodity price, economic and activity disruptions attributable to the COVID-19 pandemic and the actions of OPEC +. In addition to the base dividend, our second quarter dividend includes a variable amount of $0.21 per share, bringing our total payout to 80% of Discretionary Cash Flow ex lease bonus(1) for the second quarter. The variable dividend represents an incremental 4.4% annualized yield for a total dividend yield of 7.3% to our Class A shareholders at our current stock price. In summary, the implementation of this dividend structure(2) represents the confidence in both our team and our assets’ ability to consistently return capital to shareholders regardless of commodity prices or activity.”

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

(2) See Quarterly Cash Dividend section below regarding Board approval of future dividends

OPERATIONAL UPDATE

Mineral and Royalty Interest Ownership Update

During the second quarter 2021, the Company executed 22 transactions acquiring approximately 640 net royalty acres (standardized to a 1/8th royalty interest) and deployed $14.4 million in capital. The Company focused approximately 96% of its mineral acquisition capital in the second quarter towards the Permian Basin. Second quarter acquisitions are expected to deliver near-term production and cash flow growth with the addition of 24 gross DUCs (0.3 net) and 28 gross permits (0.2 net) to inventory counts.

The table below summarizes the Company’s approximate mineral and royalty interest ownership as of the dates indicated.

 

 

Delaware

 

Midland

 

SCOOP

 

STACK

 

DJ

 

Williston

 

Other

 

Total

Net Royalty Acres

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2021

 

29,270

 

6,105

 

11,415

 

10,650

 

16,345

 

7,995

 

6,790

 

88,570

March 31, 2021

 

28,940

 

5,775

 

11,400

 

10,725

 

16,320

 

7,980

 

6,790

 

87,930

Acres Added (Revised) Q/Q

 

330

 

330

 

15

 

(75)

 

25

 

15

 

 

640

% Added Q/Q

 

1%

 

6%

 

—%

 

(1)%

 

—%

 

—%

 

—%

 

1%

DUC Conversions Updates

During the second quarter 2021, the Company identified approximately 204 gross (0.7 net) horizontal wells converted to production, which represented 26% of its gross DUC inventory as of the first quarter 2021 (16% of net DUCs). Well conversions to proved developed producing during second quarter are summarized in the table below:

Q2 2021 Wells Converted to Proved Developed Producing(1)

 

 

Gross

 

Net

DUCs

 

204

 

75%

 

0.7

 

61%

Acquired

 

59

 

22%

 

0.4

 

31%

Converted Permitted and Other

 

10

 

4%

 

0.1

 

8%

Total

 

273

 

100%

 

1.2

 

100%

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

Drilling Activity Update

During the second quarter 2021, the Company identified 153 gross (1.3 net) wells spud on its mineral position, which represents a 31% sequential increase from the first quarter 2021 on a net well basis. Brigham’s gross and net wells spud activity over the past ten quarters is summarized in the table below:

 

Q1 19

 

Q2 19

 

Q3 19

 

Q4 19

 

Q1 20

 

Q2 20

 

Q3 20

 

Q4 20

 

Q1 21

 

Q2 21

Gross Wells Spud

230

 

248

 

214

 

185

 

209

 

36

 

57

 

79

 

132

 

153

Net Wells Spud

1.2

 

1.3

 

1.3

 

1.7

 

1.6

 

0.2

 

0.4

 

0.4

 

1.0

 

1.3

Four Quarter Rolling Average Net Wells Spud

1.2

 

1.2

 

1.2

 

1.4

 

1.5

 

1.1

 

1.0

 

0.6

 

0.5

 

0.8

DUC and Permit Inventory Update

The Company expects 2021 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 June 30, 2021 by basin is outlined in the table below:

 

 

Development Inventory by Basin(1)

 

 

Delaware

 

Midland

 

SCOOP

 

STACK

 

DJ

 

Williston

 

Other

 

Total

Gross Inventory

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DUCs

 

176

 

232

 

50

 

10

 

124

 

123

 

17

 

732

Permits

 

162

 

99

 

5

 

 

149

 

258

 

10

 

683

Net Inventory

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DUCs

 

1.9

 

1.4

 

0.3

 

 

1.1

 

0.2

 

0.1

 

5.0

Permits

 

1.0

 

1.1

 

 

 

1.3

 

0.6

 

 

4.1

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

FINANCIAL UPDATE

For the three months ended June 30, 2021, crude oil, natural gas and NGL production volumes increased 1% to 8,988 Boe/d as compared to the three months ended March 31, 2021 and increased 2% as compared to the same prior-year period. The majority of the operator activity and production volumes affected by Winter Storm Uri in February 2021 returned over the course of the quarter resulting in flat production volumes relative to the first quarter 2021.

For the three months ended June 30, 2021, average realized prices were $63.11 per barrel of oil, $4.58 per Mcf of natural gas, and $23.77 per barrel of NGL, for a total equivalent price of $45.24 per Boe. This represents a 13% increase relative to the three months ended March 31, 2021 and a 191% increase relative to the same prior-year period.

The Company saw general and administrative costs (before share-based compensation) continue to remain at record lows of $3.1 million for the three months ended June 30, 2021 as compared to the three months ended March 31, 2021 and decrease 22% relative to the same prior-year period.

The Company's net income for the three months ended June 30, 2021 was $15.3 million. Adjusted EBITDA was $30.8 million for the three months ended June 30, 2021, up 14% from the three months ended March 31, 2021 and up 421% relative to the same prior-year period. Adjusted EBITDA ex lease bonus was $30.0 million for the three months ended June 30, 2021, up 18% from the three months ended March 31, 2021 and up 413% from the same prior-year period. 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 of June 30, 2021, the Company had a cash balance of $6.4 million and $92.0 million of undrawn revolver capacity under its credit facility, providing the Company with total liquidity of $98.4 million. In connection with the Company's semi-annual borrowing base redetermination, the Company's borrowing base was increased to $165.0 million effective July 7, 2021 resulting in pro forma liquidity of $128.4 million.

Results of Operations

Unaudited Financial and Operational Results

 

Three Months Ended

 

Six Months Ended

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

 

June 30, 2021

 

March 31, 2021

 

June 30, 2021

 

June 30, 2020

Operating Revenues

 

 

 

 

 

 

 

 

Oil sales

 

$

26,729

 

 

$

22,813

 

 

$

49,542

 

 

$

33,353

 

Natural gas sales

 

 

6,704

 

 

 

5,437

 

 

 

12,141

 

 

 

4,346

 

NGL sales

 

 

3,572

 

 

 

3,926

 

 

 

7,498

 

 

 

3,218

 

Total mineral and royalty revenue

 

$

37,005

 

 

$

32,176

 

 

$

69,181

 

 

$

40,917

 

Lease bonus and other revenue

 

 

806

 

 

 

1,597

 

 

 

2,403

 

 

 

3,968

 

Total Revenues

 

$

37,811

 

 

$

33,773

 

 

$

71,584

 

 

$

44,885

 

Production

 

 

 

 

 

 

 

 

Oil (MBbls)

 

 

424

 

 

 

411

 

 

 

834

 

 

 

921

 

Natural gas (MMcf)

 

 

1,465

 

 

 

1,451

 

 

 

2,916

 

 

 

2,986

 

NGLs (MBbls)

 

 

150

 

 

 

151

 

 

 

301

 

 

 

333

 

Equivalents (MBoe)

 

 

818

 

 

 

804

 

 

 

1,621

 

 

 

1,752

 

Equivalents per day (Boe/d)

 

 

8,988

 

 

 

8,931

 

 

 

8,959

 

 

 

9,628

 

Realized Prices ($/Boe)

 

 

 

 

 

 

 

 

Oil ($/Bbl)

 

$

63.11

 

 

$

55.55

 

 

$

59.39

 

 

$

36.20

 

Natural gas ($/Mcf)

 

 

4.58

 

 

 

3.75

 

 

 

4.16

 

 

 

1.46

 

NGLs ($/Bbl)

 

 

23.77

 

 

 

25.97

 

 

 

24.88

 

 

 

9.66

 

Average Realized Price

 

$

45.24

 

 

$

40.03

 

 

$

42.66

 

 

$

23.35

 

Operating Expenses

 

 

 

 

 

 

 

 

Gathering, transportation and marketing

 

$

1,593

 

 

$

1,733

 

 

$

3,326

 

 

$

3,404

 

Severance and ad valorem taxes

 

 

2,300

 

 

 

1,833

 

 

 

4,133

 

 

 

2,786

 

Depreciation, depletion, and amortization

 

 

9,080

 

 

 

9,367

 

 

 

18,447

 

 

 

24,026

 

General and administrative (before share-based compensation)

 

 

3,142

 

 

 

3,142

 

 

 

6,284

 

 

 

7,664

 

Total operating expenses (before share-based compensation)

 

$

16,115

 

 

$

16,075

 

 

$

32,190

 

 

$

37,880

 

General and administrative, share-based compensation

 

 

2,555

 

 

 

2,300

 

 

 

4,855

 

 

 

3,736

 

Total Operating Expenses

 

$

18,670

 

 

$

18,375

 

 

$

37,045

 

 

$

41,616

 

Income from Operations

 

$

19,141

 

 

$

15,398

 

 

$

34,539

 

 

$

3,269

 

Other expenses:

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(387

)

 

 

(267

)

 

 

(654

)

 

 

(577

)

Other income, net

 

 

2

 

 

 

13

 

 

 

15

 

 

 

25

 

Income Before Taxes

 

$

18,756

 

 

$

15,144

 

 

$

33,900

 

 

$

2,717

 

Income tax expense

 

 

3,430

 

 

 

3,073

 

 

 

6,503

 

 

 

732

 

Net Income

 

$

15,326

 

 

$

12,071

 

 

$

27,397

 

 

$

1,985

 

Less: net income attributable to non-controlling interest

 

 

(4,138

)

 

 

(3,475

)

 

 

(7,613

)

 

 

(1,329

)

Net income attributable to Brigham Minerals, Inc. shareholders

 

$

11,188

 

 

$

8,596

 

 

$

19,784

 

 

$

656

 

 

 

 

Three Months Ended

 

Six Months Ended

Unit Expenses ($/Boe)

 

June 30, 2021

 

March 31, 2021

 

June 30, 2021

 

June 30, 2020

Gathering, transportation and marketing

 

$

1.95

 

 

$

2.16

 

 

$

2.05

 

 

$

1.94

 

Severance and ad valorem taxes

 

 

2.81

 

 

 

2.28

 

 

 

2.55

 

 

 

1.59

 

Depreciation, depletion and amortization

 

 

11.10

 

 

 

11.65

 

 

 

11.38

 

 

 

13.71

 

General and administrative (before share-based compensation)

 

 

3.84

 

 

 

3.91

 

 

 

3.87

 

 

 

4.37

 

General and administrative, share-based compensation

 

 

3.12

 

 

 

2.86

 

 

 

2.99

 

 

 

2.13

 

Interest expense, net

 

 

0.47

 

 

 

0.33

 

 

 

0.40

 

 

 

0.33

 

 

Quarterly Cash Dividend

The Company’s Board of Directors (the “Board”) has declared a quarterly cash dividend incorporating results for the second quarter 2021 of $0.35 per share of Class A common stock. This represents a 9% increase in payout compared to the dividend declared for the first quarter of 2021. The second quarter dividend represents a base dividend of $0.14 per share and a variable dividend of $0.21 per share and will be paid on August 27, 2021 to holders of record as of August 20, 2021. 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 shareholders. Future dividends may be adjusted at the Board’s discretion based on market conditions and capital availability.

OPERATIONAL AND FINANCIAL GUIDANCE UPDATE

Below is Brigham's updated guidance for the full year 2021.

 

 

Original

2021 Guidance

 

Updated

2021 Guidance

 

Change

Guidance Ranges

 

Low

 

High

 

Low

 

High

 

 

Daily Net Production (Boe/d)

 

9,200

9,900

 

9,000

9,500

 

(3.0)%

Oil Cut (%)

 

52%

55%

 

No Change

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

Cash G&A Expense ($ millions)

 

$14.40

$16.40

 

$12.40

$14.40

 

(13.0)%

Share Based Compensation Expense ($ millions)

 

$9.20

$10.00

 

No Change

 

 

Gathering, Transportation, and Marketing ($/Boe)

 

$1.65

$2.25

 

No Change

 

 

Production Taxes (% of Revenue)

 

7%

9%

 

No Change

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxes

 

 

 

 

 

 

 

 

 

 

Tax Depletion ($/Boe)

 

$10.00

$12.50

 

No Change

 

 

Percent of Dividend Expected to be Return of Capital

 

70%

90%

 

No Change

 

 

 

 

 

 

 

 

 

 

 

 

 

Mineral Acquisition Capital

 

 

 

 

 

 

 

 

 

 

Ground Game Acquisition Budget ($ millions)

 

$90

$110

 

$55

$75

 

(35.0)%

Brigham Minerals Second Quarter 2021 Earnings Conference Call

Non-GAAP Financial Measures

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 EBITDA as Net Income (Loss) before depreciation, depletion and amortization, share-based compensation expense, interest expense, and income tax expense, less other income. We define Adjusted EBITDA ex lease bonus as Adjusted EBITDA further adjusted to eliminate the impacts of lease bonus and other revenues 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 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 or any other measure of financial performance presented in accordance with GAAP as measures of our financial performance. 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 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 EBITDA and Adjusted EBITDA ex Lease Bonus

 

 

Three Months Ended

 

Six Months Ended

($ In thousands)

 

June 30, 2021

 

March 31, 2021

 

June 30, 2020

 

June 30, 2021

 

June 30, 2020

Net Income (Loss)

 

$

15,326

 

$

12,071

 

$

(6,816

)

 

$

27,397

 

$

1,985

Add:

 

 

 

 

 

 

 

 

 

 

Depreciation, depletion, and amortization

 

 

9,080

 

 

 

9,367

 

 

 

11,200

 

 

 

18,447

 

 

 

24,026

 

Share-based compensation expense

 

 

2,555

 

 

 

2,300

 

 

 

1,853

 

 

 

4,855

 

 

 

3,736

 

Interest expense, net

 

 

387

 

 

 

267

 

 

 

545

 

 

 

654

 

 

 

577

 

Income tax expense

 

 

3,430

 

 

 

3,073

 

 

 

 

 

 

6,503

 

 

 

732

 

Less:

 

 

 

 

 

 

 

 

 

 

Other income, net

 

 

2

 

 

 

13

 

 

 

23

 

 

 

15

 

 

 

25

 

Income tax benefit

 

 

 

 

 

 

 

 

850

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

30,776

 

 

$

27,065

 

 

$

5,909

 

 

$

57,841

 

 

$

31,031

 

Less:

 

 

 

 

 

 

 

 

 

 

Lease bonus and other revenue

 

 

806

 

 

 

1,597

 

 

 

62

 

 

 

2,403

 

 

 

3,968

 

Adjusted EBITDA ex Lease Bonus

 

$

29,970

 

 

$

25,468

 

 

$

5,847

 

 

$

55,438

 

 

$

27,063

 

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

 

 

Three Months Ended

($ In thousands, except per share amounts)

 

June 30, 2021

 

March 31, 2021

 

December 31, 2020

 

September 30, 2020

Adjusted EBITDA(1)

 

$

30,776

 

 

$

27,065

 

 

$

17,233

 

 

$

16,777

 

Less:

 

 

 

 

 

 

 

 

Adjusted EBITDA attributable to non-controlling interest

 

 

(6,315

)

 

 

(6,230

)

 

 

(4,000

)

 

 

(3,912

)

Adjusted EBITDA attributable to Class A common stock

 

$

24,461

 

 

$

20,835

 

 

$

13,233

 

 

$

12,865

 

Less:

 

 

 

 

 

 

 

 

Cash interest expense

 

 

178

 

 

 

206

 

 

 

111

 

 

 

437

 

Cash taxes

 

 

3,200

 

 

 

1,800

 

 

 

 

 

 

 

Dividend equivalent rights

 

 

616

 

 

 

384

 

 

 

316

 

 

 

192

 

Discretionary cash flow to Class A common stock

 

$

20,467

 

 

$

18,445

 

 

$

12,806

 

 

$

12,236

 

Less:

 

 

 

 

 

 

 

 

Lease bonus

 

 

641

 

 

 

1,229

 

 

 

 

 

 

1,158

 

Discretionary cash flow ex lease bonus to Class A common stock

 

$

19,826

 

 

$

17,216

 

 

$

12,806

 

 

$

11,078

 

Payout Ratio:

 

 

80

%

 

 

80

%

 

 

90

%

 

 

95

%

Distributed cash flow to Class A common stock

 

$

15,861

 

 

$

13,773

 

 

$

11,483

 

 

$

10,524

 

 

 

 

 

 

 

 

 

 

Shares of Class A common stock

 

 

45,134

 

 

 

43,666

 

 

 

43,558

 

 

 

43,316

 

 

 

 

 

 

 

 

 

 

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

 

$

0.35

 

 

$

0.32

 

 

$

0.26

 

 

$

0.24

 

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

Unaudited Condensed Consolidated Balance Sheets

 

 

June 30,

 

December 31,

(In thousands, except share amounts)

 

2021

 

2020

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

6,414

 

 

$

9,144

 

Accounts receivable

 

 

25,672

 

 

 

17,632

 

Prepaid expenses and other

 

 

3,075

 

 

 

3,693

 

Total current assets

 

 

35,161

 

 

 

30,469

 

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

 

 

 

 

Unevaluated property

 

 

333,082

 

 

 

325,091

 

Evaluated property

 

 

520,082

 

 

 

488,301

 

Less accumulated depreciation, depletion, and amortization

 

 

(207,875

)

 

 

(189,546

)

Total oil and gas properties, net

 

 

645,289

 

 

 

623,846

 

Other property and equipment

 

 

5,614

 

 

 

5,587

 

Less accumulated depreciation

 

 

(4,750

)

 

 

(4,632

)

Other property and equipment, net

 

 

864

 

 

 

955

 

Deferred tax asset

 

 

25,821

 

 

 

24,920

 

Other assets, net

 

 

688

 

 

 

771

 

Total assets

 

$

707,823

 

 

$

680,961

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable and accrued liabilities

 

$

8,200

 

 

$

7,905

 

Total current liabilities

 

 

8,200

 

 

 

7,905

 

Long-term bank debt

 

 

43,000

 

 

 

20,000

 

Other non-current liabilities

 

 

1,503

 

 

 

1,126

 

Temporary equity

 

 

 

 

 

146,280

 

Equity:

 

 

 

 

Preferred stock, $0.01 par value; 50,000,000 authorized; no shares issued and outstanding at June 30, 2021 and December 31, 2020

 

 

 

 

 

 

Class A common stock, $0.01 par value; 400,000,000 authorized, 45,570,421 shares issued and 45,133,791 shares outstanding at June 30, 2021; 43,995,124 issued and 43,558,494 outstanding at December 31, 2020

 

 

456

 

 

 

440

 

Class B common stock, $0.01 par value; 150,000,000 authorized, 11,652,761 shares issued and outstanding at June 30, 2021; 13,167,687 shares issued and outstanding at December 31, 2020

 

 

 

 

 

 

Additional paid-in capital

 

 

580,181

 

 

 

601,129

 

Accumulated deficit

 

 

(99,303

)

 

 

(92,392

)

Treasury stock, at cost; 436,630 shares at June 30, 2021 and December 31, 2020

 

 

(3,527

)

 

 

(3,527

)

Total equity attributable to Brigham Minerals, Inc.

 

 

477,807

 

 

 

505,650

 

Non-controlling interest

 

 

177,313

 

 

 

 

Total equity

 

$

655,120

 

 

$

505,650

 

Total liabilities and equity

 

$

707,823

 

 

$

680,961

 

 

Unaudited Condensed Consolidated Statements Of Operations

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

(In thousands, except per share data)

 

2021

 

2020

 

2021

 

2020

REVENUES

 

 

 

 

 

 

 

 

Mineral and royalty revenues

 

$

37,005

 

 

$

12,543

 

 

$

69,181

 

 

$

40,917

 

Lease bonus and other revenues

 

 

806

 

 

 

62

 

 

 

2,403

 

 

 

3,968

 

Total revenues

 

 

37,811

 

 

 

12,605

 

 

 

71,584

 

 

 

44,885

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

Gathering, transportation and marketing

 

 

1,593

 

 

 

1,625

 

 

 

3,326

 

 

 

3,404

 

Severance and ad valorem taxes

 

 

2,300

 

 

 

1,034

 

 

 

4,133

 

 

 

2,786

 

Depreciation, depletion, and amortization

 

 

9,080

 

 

 

11,200

 

 

 

18,447

 

 

 

24,026

 

General and administrative

 

 

5,697

 

 

 

5,890

 

 

 

11,139

 

 

 

11,400

 

Total operating expenses

 

 

18,670

 

 

 

19,749

 

 

 

37,045

 

 

 

41,616

 

INCOME (LOSS) FROM OPERATIONS

 

 

19,141

 

 

 

(7,144

)

 

 

34,539

 

 

 

3,269

 

Interest expense, net

 

 

(387

)

 

 

(545

)

 

 

(654

)

 

 

(577

)

Other income, net

 

 

2

 

 

 

23

 

 

 

15

 

 

 

25

 

Income (loss) before income taxes

 

 

18,756

 

 

 

(7,666

)

 

 

33,900

 

 

 

2,717

 

Income tax expense (benefit)

 

 

3,430

 

 

 

(850

)

 

 

6,503

 

 

 

732

 

NET INCOME (LOSS)

 

$

15,326

 

 

$

(6,816

)

 

$

27,397

 

 

$

1,985

 

Less: net (income) loss attributable to non-controlling interest

 

 

(4,138

)

 

 

2,766

 

 

 

(7,613

)

 

 

(1,329

)

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

 

$

11,188

 

 

$

(4,050

)

 

$

19,784

 

 

$

656

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS) PER COMMON SHARE

 

 

 

 

 

 

 

Basic

 

$

0.25

 

 

$

(0.11

)

 

$

0.45

 

 

$

0.02

 

Diluted

 

$

0.25

 

 

$

(0.11

)

 

$

0.44

 

 

$

0.02

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

 

 

 

 

 

 

 

 

Basic

 

 

43,916

 

 

 

35,282

 

 

 

43,717

 

 

 

34,631

 

Diluted

 

 

45,281

 

 

 

35,282

 

 

 

45,091

 

 

 

34,631

 

Unaudited Condensed Consolidated Statement of Cash Flows

 

 

Six Months Ended June 30,

(In thousands)

 

2021

 

2020

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

Net income

 

$

27,397

 

 

$

1,985

 

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

 

 

 

 

Depreciation, depletion and amortization

 

 

18,447

 

 

 

24,026

 

Share-based compensation expense

 

 

4,855

 

 

 

3,736

 

Amortization of debt issuance costs

 

 

141

 

 

 

485

 

Deferred income taxes

 

 

1,286

 

 

 

463

 

Bad debt expense

 

 

 

 

 

299

 

Changes in operating assets and liabilities:

 

 

 

 

(Increase) decrease in accounts receivable

 

 

(8,040

)

 

 

11,980

 

Decrease (increase) in other current assets

 

 

581

 

 

 

(592

)

Increase (decrease) in accounts payable and accrued liabilities

 

 

448

 

 

 

(3,509

)

Increase (decrease) in other long-term liabilities

 

 

16

 

 

 

(256

)

Net cash provided by operating activities

 

$

45,131

 

 

$

38,617

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

Additions to oil and gas properties

 

 

(36,331

)

 

 

(28,755

)

Additions to other fixed assets

 

 

(27

)

 

 

(286

)

Proceeds from sale of oil and gas properties, net

 

 

 

 

 

1,565

 

Net cash used in investing activities

 

$

(36,358

)

 

$

(27,476

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

Payments of long-term debt

 

 

(4,000

)

 

 

 

Borrowing of long-term debt

 

 

27,000

 

 

 

 

Dividends paid

 

 

(25,537

)

 

 

(25,772

)

Distribution to holders of non-controlling interest

 

 

(7,809

)

 

 

(19,834

)

Debt issuance costs

 

 

(21

)

 

 

(203

)

Payment of employee tax withholding for settlement of equity compensation awards

 

 

(1,136

)

 

 

 

Net cash used in financing activities

 

$

(11,503

)

 

$

(45,809

)

Decrease in cash and cash equivalents and restricted cash

 

 

(2,730

)

 

 

(34,668

)

Cash and cash equivalents and restricted cash, beginning of period

 

 

9,144

 

 

 

51,133

 

Cash and cash equivalents and restricted cash, end of period

 

$

6,414

 

 

$

16,465

 

Supplemental disclosure of non-cash activity:

 

 

 

 

Accrued capital expenditures

 

$

100

 

 

$

23

 

Capitalized share-based compensation cost

 

$

3,487

 

 

$

2,998

 

Temporary equity cumulative adjustment to carrying value

 

$

54,294

 

 

$

(168,572

)

Supplemental cash flow information:

 

 

 

 

Cash payments for loan commitment fees and interest

 

$

(437

)

 

$

(442

)

Tax (payment) /refund received

 

$

(2,881

)

 

$

113

 

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 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 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 and competition for 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, 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, 2020, 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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