Brigham Minerals, Inc. Reports Fourth Quarter and Full Year 2020 Operating and Financial Results
Brigham Minerals, Inc. (NYSE: MNRL) (“Brigham Minerals,” “Brigham,” or the “Company”), a leading mineral and royalty interest acquisition company, today announced operating and financial results for the quarter and year ended December 31, 2020, as well as 2021 guidance.
FOURTH QUARTER 2020 OPERATING AND FINANCIAL HIGHLIGHTS
-
Daily production volumes of 9,361 Boe/d (72% liquids, 52% oil)
- Flat sequentially with Q3 2020
- Permian Basin production volumes up 7% from Q3 2020 to 5,432 Boe/d
-
Mineral and royalty revenues totaling $23.8 million
- Up 10% sequentially from Q3 2020 driven by 10% higher realized pricing of $27.59 per Boe
-
Net loss totaling $47.0 million
- Adjusted Net Income(1) of $2.7 million excluding $49.7 million after-tax impairment of oil and gas properties
- Adjusted EBITDA ex lease bonus(1) totaling $17.2 million up 13% sequentially from Q3 2020
-
Declared Q4 2020 dividend of $0.26 per share of Class A common stock
- Up 8% sequentially from Q3 2020
- Dividend represents a 90% payout of Discretionary Cash Flow(1) with retained cash utilized to fund mineral acquisitions
-
Closed 30 transactions acquiring approximately 1,585 net royalty acres deploying $20.5 million in mineral acquisition capital
- Deployed 86% of mineral acquisition capital to the Permian Basin
-
721 gross (3.6 net) drilled but uncompleted locations (“DUCs”) in inventory as of December 31, 2020
- During Q4 2020, converted 106 (17%) gross and 1.0 (25%) net DUCs in inventory as of September 30, 2020
- Approximately 67% of year-end 2020 net DUC inventory located in the Permian Basin and anticipate majority of DUCs to be converted by Exxon Mobil Corporation, Chevron Corporation, Occidental Petroleum Corporation, Continental Resources, Inc. and PDC Energy, Inc.
- $9.1 million cash balance and revolver capacity of $115 million as of December 31, 2020
(1) Non-GAAP measure. See “Non-GAAP Financial Measures” below.
2021 GUIDANCE
-
Full year 2021 production guidance of 9,200 Boe/d to 9,900 Boe/d
- Anchored by current producing locations, current DUC and permit inventory and acquisitions
- Includes an estimated five days, or 150 Boe/d, of down time attributable to the impact of Q1 weather events
- Additional detail in 2021 Operational and Financial Guidance table
Robert M. (“Rob”) Roosa, Chief Executive Officer, commented, “Brigham remains extremely well positioned to capitalize on the recent rebound in operator activity and positive momentum in commodity prices with all of our future production volumes unhedged. Furthermore, we enter 2021 with 721 gross DUCs (3.6 net) and 755 gross permits (4.2 net) that will drive near term production and cash flows with the majority of our DUCs anticipated to be completed by Exxon Mobil Corporation, Chevron Corporation, Occidental Petroleum Corporation, Continental Resources, Inc. and PDC Energy, Inc., who are currently running approximately 20 frac crews across our liquids rich basins. We are also continuing to gain momentum with our ground game acquisitions acquiring approximately 1,585 net royalty acres in the fourth quarter of 2020 at a cost of $5.5 million per net location with the assets comprised of 55% PDP, DUCs and permits. That momentum has continued into the first quarter of 2021 with closed and pending transactions totaling $21.6 million at an estimated cost per net location of $6.1 million. The assets are comprised of 50% PDP, DUCs and permits that are estimated to add over 1.6 net Permian DUCs and permits to inventory. With significant liquidity at year-end, our team remains confident that we will continue to grow shareholder value through highly accretive mineral acquisitions targeting asset level IRRs close to double our cost of capital. I could not be more excited about the current position of our Company to capitalize on market conditions through organic growth, acquisitions and prudent capital management.”
Blake C. Williams, Chief Financial Officer, added, “Our strong operating and financial results allowed us to raise our dividend by 8% this quarter to $0.26 per share while also increasing our retained cash flow from 5% to 10%, which we used to internally fund approximately 9% of our fourth quarter 2020 acquisitions. With the increase in commodity prices along with our low leverage, our Adjusted EBITDA ex lease bonus(1) increased by 13% this quarter and our Adjusted EBITDA margin(1) returned to the mid 70% range. Throughout the energy down cycle of 2020, we successfully captured opportunities while preserving our balance sheet and maintain $124 million of liquidity headed into 2021. Furthermore, we intend to continue increasing our cash flow retention over the next several quarters to 20-25% of Discretionary Cash Flow(1) to extend our liquidity. Finally, we are pleased to showcase the differentiation our business model provides from the broader energy space through production guidance of 9,200 – 9,900 Boe/d which represents modest growth in 2021 volumes over our current production. This range incorporates an estimated impact of five days of down time due to Q1 weather events, and emphasizes our ability to return substantial capital to shareholders in any environment given our diversified, resilient asset base.”
(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, 2020, the Company executed 30 transactions acquiring approximately 1,585 net royalty acres (standardized to a 1/8th royalty interest) and deployed $20.5 million in capital. The Company focused approximately 86% of its mineral acquisition capital in the fourth quarter towards the Permian Basin. Fourth quarter acquisitions are expected to deliver near-term production and cash flow growth with the addition of 128 gross DUCs (0.4 net DUCs) and 55 gross permits (0.1 net permits) to inventory counts.
During the year ended December 31, 2020, the Company completed 81 transactions acquiring 4,635 net royalty acres (standardized to a 1/8th royalty interest) for $66.5 million in capital. The Company deployed approximately 92% of its mineral acquisition capital in 2020 to the Permian Basin. The acquired minerals added 165 gross DUCs (0.6 net DUCs) and 97 gross permits (0.3 net permits) to its inventory counts over the year. As of December 31, 2020, the Company had acquired roughly 86,285 net royalty acres, encompassing 13,496 gross (116.3 net) undeveloped horizontal locations, across 37 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, 2020 |
|
28,330 |
|
5,220 |
|
11,400 |
|
10,725 |
|
15,890 |
|
7,950 |
|
6,770 |
|
86,285 |
||||||||
|
September 30, 2020 |
|
27,550 |
|
4,875 |
|
11,400 |
|
10,725 |
|
15,600 |
|
7,825 |
|
6,725 |
|
84,700 |
||||||||
|
Acres Added Q/Q |
|
780 |
|
345 |
|
— |
|
— |
|
290 |
|
125 |
|
45 |
|
1,585 |
||||||||
|
% Added Q/Q |
|
3% |
|
7% |
|
—% |
|
—% |
|
2% |
|
2% |
|
1% |
|
2% |
||||||||
|
December 31, 2019 |
|
25,750 |
|
4,100 |
|
11,100 |
|
10,700 |
|
15,600 |
|
7,750 |
|
7,200 |
|
82,200 |
||||||||
|
Acres Added in 2020 |
|
2,580 |
|
1,120 |
|
300 |
|
25 |
|
290 |
|
200 |
|
120 |
|
4,635 |
||||||||
|
Acres Sold in 2020 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(550) |
|
(550) |
||||||||
|
% Added in 2020 |
|
10% |
|
27% |
|
3% |
|
—% |
|
2% |
|
3% |
|
(6)% |
|
5% |
||||||||
|
(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 106 gross (1.0 net) horizontal wells identified that had been converted to production, which represented 17% of its gross DUC inventory as of Q3 2020 (25% of net DUCs). During 2020, the Company identified the conversion of 628 gross DUCs (4.7 net DUCs) to PDP, which represents 70% of its gross DUC inventory (79% of its net DUCs) as of year-end 2019. Well conversions to proved developed producing during 2020 are summarized in the table below:
|
2020 Well Additions to Proved Developed Producing |
||||||||
|
|
|
Gross |
|
Net |
||||
|
DUCs |
|
628 |
|
59% |
|
4.7 |
|
62% |
|
Acquired |
|
424 |
|
39% |
|
2.5 |
|
33% |
|
Converted Permitted and Other |
|
25 |
|
2% |
|
0.4 |
|
5% |
|
Total |
|
1,077 |
|
100% |
|
7.6 |
|
100% |
Drilling Activity Update
During the fourth quarter 2020, the Company identified 79 gross (0.4 net) wells spud on its mineral position, which represents a 39% sequential increase from the third quarter 2020. Brigham’s gross and net wells spud activity over the past 12 quarters is summarized in the table below:
|
|
Q1 18 |
|
Q2 18 |
|
Q3 18 |
|
Q4 18 |
|
Q1 19 |
|
Q2 19 |
|
Q3 19 |
|
Q4 19 |
|
Q1 20 |
|
Q2 20 |
|
Q3 20 |
|
Q4 20 |
|
Gross Wells Spud |
82 |
|
99 |
|
208 |
|
150 |
|
230 |
|
248 |
|
214 |
|
185 |
|
209 |
|
36 |
|
57 |
|
79 |
|
Net Wells Spud |
0.3 |
|
1.1 |
|
1.4 |
|
1.0 |
|
1.2 |
|
1.3 |
|
1.3 |
|
1.7 |
|
1.6 |
|
0.2 |
|
0.4 |
|
0.4 |
|
Four Quarter Rolling Average Net Wells Spud |
|
|
|
|
|
|
1.0 |
|
1.2 |
|
1.2 |
|
1.2 |
|
1.4 |
|
1.5 |
|
1.1 |
|
1.0 |
|
0.6 |
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 December 31, 2020 by basin is outlined in the table below:
|
|
|
Development Inventory by Basin (1) |
||||||||||||||
|
|
|
Delaware |
|
Midland |
|
SCOOP |
|
STACK |
|
DJ |
|
Williston |
|
Other |
|
Total |
|
Gross Inventory |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DUCs |
|
187 |
|
218 |
|
62 |
|
3 |
|
111 |
|
124 |
|
16 |
|
721 |
|
Permits |
|
159 |
|
97 |
|
11 |
|
6 |
|
222 |
|
252 |
|
8 |
|
755 |
|
Net Inventory |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DUCs |
|
1.8 |
|
0.7 |
|
0.3 |
|
— |
|
0.7 |
|
0.1 |
|
0.1 |
|
3.6 |
|
Permits |
|
0.9 |
|
0.4 |
|
— |
|
— |
|
2.2 |
|
0.5 |
|
0.1 |
|
4.2 |
| (1) Individual amounts may not add to totals due to rounding. | ||||||||||||||||
FINANCIAL UPDATE
Fourth Quarter 2020 Financial Update
For the three months ended December 31, 2020, crude oil, natural gas and NGL production volumes were 9,361 Boe/d (72% liquids), which is flat relative to third quarter 2020. Our volumes are 3% lower than the same prior year period, largely due to a decrease in Anadarko and Williston Basin volumes, which were partially offset by a 7% increase in Permian Basin volumes.
Fourth quarter 2020 average realized prices were $40.40 per barrel of oil, $2.29 per Mcf of natural gas, and $14.11 per barrel of NGL, for a total equivalent price of $27.59 per Boe. This represents a 10% increase relative to third quarter 2020 and is 26% lower than the same prior year period level of $37.39 per Boe, excluding the effect of derivative instruments.
The Company’s net loss was $47.0 million for the three months ended December 31, 2020, inclusive of a $49.7 million after-tax impairment of oil and gas properties resulting from the continued reduction in commodity prices as well as certain reclassification of proved undeveloped reserves to probable and possible reserves, as a result of a slowdown in operator activity. Adjusted EBITDA was $17.2 million for the three months ended December 31, 2020, up 3% from the third quarter 2020 and down 36% from the same prior-year period. Adjusted EBITDA ex lease bonus was $17.2 million for the three months ended December 31, 2020, up 13% from the third quarter 2020 and down 34% 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.
Full Year 2020 Financial Update
For the year ended December 31, 2020, crude oil, natural gas and NGL production volumes increased 28% to 9,483 Boe/d (72% liquids) as compared to the prior year, due to a 56% increase in Permian Basin volumes.
Full year 2020 average realized prices were $37.26 per barrel of oil, $1.80 per Mcf of natural gas, and $11.61 per barrel of NGL, for a total equivalent price of $24.85 per Boe. This represents a 31% decrease relative to 2019 realized prices of $36.17 per Boe, excluding the effect of derivative instruments.
The Company’s net loss was $58.0 million for the year ended December 31, 2020, inclusive of a $65.1 million after-tax impairment of oil and gas properties resulting from the continued reduction in commodity prices as well as certain reclassification of proved undeveloped reserves to probable and possible reserves, as a result of a slowdown in operator activity. Adjusted EBITDA was $65.0 million for the year ended December 31, 2020, down 17% from the prior year. Adjusted EBITDA ex lease bonus was $59.6 million for the year ended December 31, 2020, down 20% from the prior year. Adjusted EBITDA and Adjusted EBITDA ex lease bonus are non-GAAP financial measures. For a definition of Adjusted EBITDA and Adjusted EBITDA ex lease bonus and a reconciliation to our most directly comparable measure calculated and presented in accordance with GAAP, please read "Non-GAAP Financial Measures” below.
As of December 31, 2020, the Company had a cash balance of $9.1 million and $115 million of capacity on its revolving credit facility, providing the Company with total liquidity of $124.1 million.
Fourth Quarter and Full Year 2020 Financial and Operational Results
|
|
Three Months Ended |
|
Years Ended |
||||||||||||
|
($ in thousands, except per unit of production data) |
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
|
REVENUES |
|
|
|
|
|
|
|
||||||||
|
Oil sales |
$ |
17,969 |
|
|
$ |
28,534 |
|
|
$ |
67,909 |
|
|
$ |
82,048 |
|
|
Natural gas sales |
3,327 |
|
|
2,697 |
|
|
10,443 |
|
|
9,724 |
|
||||
|
NGL sales |
2,464 |
|
|
1,881 |
|
|
7,893 |
|
|
6,114 |
|
||||
|
Total mineral and royalty revenues |
$ |
23,760 |
|
|
$ |
33,112 |
|
|
$ |
86,245 |
|
|
$ |
97,886 |
|
|
Lease bonus and other revenue |
— |
|
|
502 |
|
|
5,478 |
|
|
3,629 |
|
||||
|
Total revenues |
$ |
23,760 |
|
|
$ |
33,614 |
|
|
$ |
91,723 |
|
|
$ |
101,515 |
|
|
PRODUCTION |
|
|
|
|
|
|
|
||||||||
|
Oil (MBbls) |
445 |
|
|
514 |
|
|
1,823 |
|
|
1,515 |
|
||||
|
Natural gas (MMcf) |
1,451 |
|
|
1,438 |
|
|
5,809 |
|
|
4,707 |
|
||||
|
NGLs (MBbls) |
175 |
|
|
132 |
|
|
680 |
|
|
407 |
|
||||
|
Equivalents (MBoe) |
861 |
|
|
886 |
|
|
3,471 |
|
|
2,706 |
|
||||
|
Equivalents per day (Boe/d) |
9,361 |
|
|
9,627 |
|
|
9,483 |
|
|
7,414 |
|
||||
|
REALIZED PRICES ($/Boe) |
|
|
|
|
|
|
|
||||||||
|
Oil ($/Bbl) |
$ |
40.40 |
|
|
$ |
55.55 |
|
|
$ |
37.26 |
|
|
$ |
54.16 |
|
|
Natural gas ($/Mcf) |
2.29 |
|
|
1.88 |
|
|
1.80 |
|
|
2.07 |
|
||||
|
NGLs ($/Bbl) |
14.11 |
|
|
14.22 |
|
|
11.61 |
|
|
15.03 |
|
||||
|
Average Realized Price, without Derivatives |
$ |
27.59 |
|
|
$ |
37.39 |
|
|
$ |
24.85 |
|
|
$ |
36.17 |
|
|
Average Realized Price, with Derivatives |
$ |
27.59 |
|
|
$ |
37.52 |
|
|
$ |
24.85 |
|
|
$ |
36.35 |
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
||||||||
|
Gathering, transportation and marketing |
$ |
1,879 |
|
|
$ |
1,235 |
|
|
$ |
6,985 |
|
|
$ |
4,985 |
|
|
Severance and ad valorem taxes |
1,427 |
|
|
2,203 |
|
|
5,606 |
|
|
6,409 |
|
||||
|
Depreciation, depletion, and amortization |
12,411 |
|
|
10,630 |
|
|
48,238 |
|
|
30,940 |
|
||||
|
Impairment of oil and gas properties |
60,664 |
|
|
— |
|
|
79,569 |
|
|
— |
|
||||
|
General and administrative (before share-based compensation) |
3,220 |
|
|
3,368 |
|
|
14,090 |
|
|
11,914 |
|
||||
|
Total Operating Expenses (before share-based compensation) |
$ |
79,601 |
|
|
$ |
17,436 |
|
|
$ |
154,488 |
|
|
$ |
54,248 |
|
|
Share-based compensation |
1,837 |
|
|
1,816 |
|
|
7,529 |
|
|
10,049 |
|
||||
|
Total operating expenses |
$ |
81,438 |
|
|
$ |
19,252 |
|
|
$ |
162,017 |
|
|
$ |
64,297 |
|
|
(LOSS) INCOME FROM OPERATIONS |
$ |
(57,678 |
) |
|
$ |
14,362 |
|
|
$ |
(70,294 |
) |
|
$ |
37,218 |
|
|
Other expenses: |
|
|
|
|
|
|
|
||||||||
|
Loss on derivative instruments, net |
— |
|
|
(47 |
) |
|
— |
|
|
(568 |
) |
||||
|
Interest expense, net |
(195 |
) |
|
(449 |
) |
|
(890 |
) |
|
(5,609 |
) |
||||
|
Loss on extinguishment of debt |
— |
|
|
41 |
|
|
— |
|
|
(6,892 |
) |
||||
|
Other income, net |
399 |
|
|
4 |
|
|
428 |
|
|
169 |
|
||||
|
(Loss) income before income tax expense |
$ |
(57,474 |
) |
|
$ |
13,911 |
|
|
$ |
(70,756 |
) |
|
$ |
24,318 |
|
|
Income tax (benefit) expense |
(10,512 |
) |
|
1,565 |
|
|
(12,762 |
) |
|
2,679 |
|
||||
|
NET (LOSS) INCOME |
$ |
(46,962 |
) |
|
$ |
12,346 |
|
|
$ |
(57,994 |
) |
|
$ |
21,639 |
|
|
Less: net income attributable to predecessor |
— |
|
|
— |
|
|
— |
|
|
(5,092 |
) |
||||
|
Less: net loss (income) attributable to temporary equity |
13,359 |
|
|
(7,269 |
) |
|
15,582 |
|
|
(9,646 |
) |
||||
|
Net (loss) income attributable to Brigham Minerals, Inc. shareholders |
$ |
(33,603 |
) |
|
$ |
5,077 |
|
|
$ |
(42,412 |
) |
|
$ |
6,901 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Unit Expenses ($/Boe) |
|
|
|
|
|
|
|
||||||||
|
Gathering, transportation and marketing |
$ |
2.18 |
|
|
$ |
1.40 |
|
|
$ |
2.01 |
|
|
$ |
1.84 |
|
|
Severance and ad valorem taxes |
1.66 |
|
|
2.49 |
|
|
1.62 |
|
|
2.37 |
|
||||
|
Depreciation, depletion and amortization |
14.41 |
|
|
12.00 |
|
|
13.90 |
|
|
11.43 |
|
||||
|
General and administrative (before share-based compensation) |
3.74 |
|
|
3.80 |
|
|
4.06 |
|
|
4.40 |
|
||||
|
General and administrative, share-based compensation |
2.13 |
|
|
2.05 |
|
|
2.17 |
|
|
3.71 |
|
||||
|
Interest expense, net |
0.23 |
|
|
0.51 |
|
|
0.26 |
|
|
2.07 |
|
||||
QUARTERLY CASH DIVIDEND
The Company’s Board of Directors (the “Board”) has declared a quarterly cash dividend for the fourth quarter 2020 of $0.26 per share of Class A common stock, to be paid on March 26, 2021 to holders of record as of March 19, 2021. This brings total capital returned through dividends to shareholders of $1.01 per share based on financial results for the full year 2020.
Future declarations of dividends are subject to approval by the Board and to the Board’s continuing determination that the declarations of dividends are in the best interests of the Company and its stockholders. Future dividends may be adjusted at the Board’s discretion based on market conditions and capital availability.
2021 OPERATIONAL AND FINANCIAL GUIDANCE
|
Guidance Ranges |
|
Low |
|
High |
|
Daily Net Production (Boe/d) |
|
9,200 |
— |
9,900 |
|
Oil Cut (%) |
|
52% |
— |
55% |
|
Lease Bonus ($ millions) |
|
$2.0 |
— |
$4.0 |
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
Cash G&A Expense Plus Share Based Compensation Expense ($ millions) |
|
$23.60 |
— |
$26.40 |
|
Cash G&A Expense ($ millions) |
|
$14.40 |
— |
$16.40 |
|
Share Based Compensation Expense ($ millions) |
|
$9.20 |
— |
$10.00 |
|
Gathering, Transportation, and Marketing ($/Boe) |
|
$1.65 |
— |
$2.25 |
|
Production Taxes (% of Revenue) |
|
7% |
— |
9% |
|
|
|
|
|
|
|
Taxes |
|
|
|
|
|
Tax Depletion ($/Boe) |
|
$10.00 |
— |
$12.50 |
|
Percent of Dividend Expected to be Return of Capital |
|
70% |
— |
90% |
|
|
|
|
|
|
|
Mineral Acquisition Capital |
|
|
|
|
|
Ground Game Acquisition Budget ($ millions) |
|
$90 |
— |
$110 |
BRIGHAM MINERALS FOURTH QUARTER 2020 EARNINGS CONFERENCE CALL
- Thursday, February 25, 2021 at 10:00 a.m. Eastern Time (9:00 a.m. Central Time)
- Pre-register by visiting https://dpregister.com/sreg/10152416/e2c1055900
- 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 1-3: Credit Suisse Energy Summit
- March 22-23, 2021: Simmons Energy Conference
NON-GAAP FINANCIAL MEASURES
Adjusted Net Income, Adjusted EBITDA, Adjusted EBITDA ex lease bonus, Adjusted EBITDA Margin, Discretionary Cash Flow and Discretionary Cash Flow ex lease bonus are non-GAAP supplemental financial measures used by our management and by external users of our financial statements such as investors, research analysts and others to assess the financial performance of our assets and their ability to sustain dividends over the long term without regard to financing methods, capital structure or historical cost basis.
We define Adjusted Net Income as net income (loss) before impairment of oil and gas properties, after tax, and loss on extinguishment of debt, after tax. We define Adjusted EBITDA as Adjusted Net Income before depreciation, depletion and amortization, share based compensation expense, interest expense, gain or loss on derivative instruments and income tax expense, less other income, gain on sale of oil and gas properties and income tax benefit. 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 Total Revenue. We define Discretionary Cash Flow as Adjusted EBITDA, less cash interest expense and cash taxes. We define Discretionary Cash Flow ex lease bonus as Discretionary Cash Flow further adjusted to eliminate the impacts of lease bonus revenue.
Adjusted Net Income, Adjusted EBITDA, Adjusted EBITDA ex lease bonus, Adjusted EBITDA Margin, Discretionary Cash Flow, and Discretionary Cash Flow ex lease bonus do not represent and should not be considered alternatives to, or more meaningful than, net income, income from operations, cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP as measures of our financial performance. Adjusted Net Income, Adjusted EBITDA, Adjusted EBITDA ex lease bonus, Adjusted EBITDA Margin, 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 Net Income, Adjusted EBITDA, Adjusted EBITDA ex lease bonus, Adjusted EBITDA Margin, Discretionary Cash Flow, and Discretionary Cash Flow ex lease bonus may differ from computations of similarly titled measures of other companies.
The following tables present a reconciliation of Adjusted Net Income, Adjusted EBITDA, Adjusted EBITDA ex lease bonus, Adjusted EBITDA Margin, Discretionary Cash Flow, and Discretionary Cash Flow ex lease bonus 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, Adjusted EBITDA ex lease bonus and Adjusted EBITDA Margin
|
|
Three Months Ended December 31, |
|
Years Ended December 31 |
||||||||||||
|
(In thousands, except for margin % data) |
2020 |
|
2019 |
2020 |
|
2019 |
|||||||||
|
Net (Loss) Income |
$ |
(46,962 |
) |
$ |
12,346 |
|
|
$ |
(57,994 |
) |
|
$ |
21,639 |
|
|
|
Add: |
|
|
|
|
|
|
|
||||||||
|
Impairment of oil and gas properties, after tax (1) |
49,664 |
|
|
— |
|
|
65,132 |
|
|
— |
|
||||
|
Loss on extinguishment of debt, after tax (2) |
— |
|
|
(41 |
) |
|
— |
|
|
6,134 |
|
||||
|
Adjusted Net Income |
$ |
2,702 |
|
|
$ |
12,305 |
|
|
$ |
7,138 |
|
|
$ |
27,773 |
|
|
Add: |
|
|
|
|
|
|
|
||||||||
|
Depreciation, depletion, and amortization |
12,411 |
|
|
10,630 |
|
|
48,238 |
|
|
30,940 |
|
||||
|
Share-based compensation expense |
1,836 |
|
|
1,816 |
|
|
7,529 |
|
|
10,049 |
|
||||
|
Interest expense, net |
195 |
|
|
449 |
|
|
890 |
|
|
5,609 |
|
||||
|
Loss on derivative instruments, net |
— |
|
|
47 |
|
|
— |
|
|
568 |
|
||||
|
Income tax expense |
488 |
|
|
1,565 |
|
|
1,675 |
|
|
3,437 |
|
||||
|
Less: |
|
|
|
|
|
|
|
||||||||
|
Other income, net |
399 |
|
|
4 |
|
|
428 |
|
|
169 |
|
||||
|
Adjusted EBITDA |
$ |
17,233 |
|
|
$ |
26,808 |
|
|
$ |
65,042 |
|
|
$ |
78,207 |
|
|
Lease bonus |
— |
|
|
502 |
|
|
5,478 |
|
|
3,629 |
|
||||
|
Adjusted EBITDA ex lease bonus |
$ |
17,233 |
|
|
$ |
26,306 |
|
|
$ |
59,564 |
|
|
$ |
74,578 |
|
|
Memo: Adjusted EBITDA Margin |
|
|
|
|
|
|
|
||||||||
|
Total Revenue |
$ |
23,760 |
|
|
$ |
33,614 |
|
|
$ |
91,723 |
|
|
$ |
101,515 |
|
|
Adjusted EBITDA |
$ |
17,233 |
|
|
$ |
26,808 |
|
|
$ |
65,042 |
|
|
$ |
78,207 |
|
|
Adjusted EBITDA Margin |
73 |
% |
|
80 |
% |
|
71 |
% |
|
77 |
% |
||||
|
(1) Tax effect of $11.0 million tax benefit for the three months ended December 31, 2020 and $14.4 million tax benefit for the year ended December 31, 2020. |
|||||||||||||||
|
(2) Tax effect of $0.8 million tax benefit for the year ended December 31, 2019 |
|||||||||||||||
Reconciliation of Discretionary Cash Flow and Discretionary Cash Flow ex lease bonus
|
|
|
Three Months Ended |
||||||||||||||
|
(In thousands, except per share amounts) |
December 31, 2020 |
|
September 30, 2020 |
June 30, 2020 |
|
March 31, 2020 |
||||||||||
|
Adjusted EBITDA (1) |
|
$ |
17,233 |
|
|
$ |
16,777 |
|
|
$ |
5,909 |
|
|
$ |
25,123 |
|
|
Less: |
|
|
|
|
|
|
|
|
||||||||
|
Adjusted EBITDA attributable to non-controlling interest |
|
(4,000 |
) |
|
(3,912 |
) |
|
(1,829 |
) |
|
(10,029 |
) |
||||
|
Adjusted EBITDA attributable to Class A common stock |
|
$ |
13,233 |
|
|
$ |
12,865 |
|
|
$ |
4,080 |
|
|
$ |
15,094 |
|
|
Less: |
|
|
|
|
|
|
|
|
||||||||
|
Cash interest expense |
|
111 |
|
|
437 |
|
|
165 |
|
|
152 |
|
||||
|
Cash taxes (2) |
|
— |
|
|
— |
|
|
(2,036 |
) |
|
2,036 |
|
||||
|
Dividend equivalent rights |
|
316 |
|
|
192 |
|
|
462 |
|
|
360 |
|
||||
|
Discretionary cash flow to Class A common stock |
|
$ |
12,806 |
|
|
$ |
12,236 |
|
|
$ |
5,489 |
|
|
$ |
12,546 |
|
|
Less: |
|
|
|
|
|
|
|
|
||||||||
|
Lease bonus |
|
— |
|
|
1,158 |
|
|
43 |
|
|
2,348 |
|
||||
|
Discretionary cash flow ex lease bonus to Class A common stock |
|
$ |
12,806 |
|
|
$ |
11,078 |
|
|
$ |
5,446 |
|
|
$ |
10,198 |
|
|
Add: |
|
|
|
|
|
|
|
|
||||||||
|
Lease bonus |
|
— |
|
|
— |
|
|
43 |
|
|
2,348 |
|
||||
|
Less: |
|
|
|
|
|
|
|
|
||||||||
|
Retained cash flow |
|
1,323 |
|
|
554 |
|
|
— |
|
|
— |
|
||||
|
Distributed cash flow to Class A common stock |
|
$ |
11,483 |
|
|
$ |
10,524 |
|
|
$ |
5,489 |
|
|
$ |
12,546 |
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Shares of Class A common stock |
|
43,558 |
|
|
43,316 |
|
|
39,297 |
|
|
34,174 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Distributed cash flow per share of Class A common stock - Dividend |
|
$ |
0.26 |
|
|
$ |
0.24 |
|
|
$ |
0.14 |
|
|
$ |
0.37 |
|
|
(1) Refer to Reconciliation of Adjusted EBITDA from Net (Loss) Income above. |
||||||||||||||||
|
(2) The Company does not expect to incur federal income taxes for income related to results for the year ended December 31, 2020. |
||||||||||||||||
Common Stock Outstanding as of December 31, 2020:
|
Common stock by type |
|
Share count |
|
Percent of Total |
||
|
Class A common stock |
|
43,558,494 |
|
|
76.8 |
% |
|
Class B common stock |
|
13,167,687 |
|
|
23.2 |
% |
|
Total |
|
56,726,181 |
|
|
100 |
% |
CONSOLIDATED BALANCE SHEETS
|
|
December 31, |
||||||
|
(In thousands, except share data) |
2020 |
|
2019 |
||||
|
ASSETS |
|
|
|
||||
|
Current assets: |
|
|
|
||||
|
Cash and cash equivalents |
$ |
9,144 |
|
|
$ |
51,133 |
|
|
Accounts receivable |
17,632 |
|
|
30,291 |
|
||
|
Prepaid expenses and other |
3,693 |
|
|
1,688 |
|
||
|
Total current assets |
30,469 |
|
|
83,112 |
|
||
|
Oil and gas properties, at cost, using the full cost method of accounting: |
|
|
|
||||
|
Unevaluated property |
325,091 |
|
|
291,664 |
|
||
|
Evaluated property |
488,301 |
|
|
449,061 |
|
||
|
Less accumulated depreciation, depletion, and amortization |
(189,546 |
) |
|
(61,103 |
) |
||
|
Oil and gas properties—net |
623,846 |
|
|
679,622 |
|
||
|
Other property and equipment |
5,587 |
|
|
5,095 |
|
||
|
Less accumulated depreciation |
(4,632 |
) |
|
(3,703 |
) |
||
|
Other property and equipment—net |
955 |
|
|
1,392 |
|
||
|
Deferred tax asset |
24,920 |
|
|
18,823 |
|
||
|
Other assets, net |
771 |
|
|
1,213 |
|
||
|
Total assets |
$ |
680,961 |
|
|
$ |
784,162 |
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
||||
|
Current liabilities: |
|
|
|
||||
|
Accounts payable and accrued liabilities |
$ |
7,905 |
|
|
$ |
11,533 |
|
|
Total current liabilities |
7,905 |
|
|
11,533 |
|
||
|
Long-term debt |
20,000 |
|
|
— |
|
||
|
Other non-current liabilities |
1,126 |
|
|
803 |
|
||
|
Temporary equity |
146,280 |
|
|
454,507 |
|
||
|
Shareholders' equity: |
|
|
|
||||
|
Preferred stock, $0.01 par value; 50,000,000 authorized; no shares issued and outstanding at December 31, 2020 and December 31, 2019 |
— |
|
|
— |
|
||
|
Class A common stock, $0.01 par value; 400,000,000 authorized, 43,995,124 shares issued and 43,558,494 shares outstanding at December 31, 2020; 34,040,934 issued and outstanding at December 31, 2019 |
440 |
|
|
340 |
|
||
|
Class B common stock, $0.01 par value; 150,000,000 authorized, 13,167,687 shares issued and outstanding at December 31, 2020; 22,847,045 shares issued and outstanding at December 31, 2019 |
— |
|
|
— |
|
||
|
Additional paid-in capital |
601,129 |
|
|
323,578 |
|
||
|
Accumulated deficit |
(92,392 |
) |
|
(6,599 |
) |
||
|
Treasury stock, at cost; 436,630 shares at December 31, 2020 and no shares at December 31, 2019 |
(3,527 |
) |
|
— |
|
||
|
Total shareholders' equity attributable to Brigham Minerals, Inc. |
505,650 |
|
|
317,319 |
|
||
|
Total liabilities, temporary equity and shareholders' equity |
$ |
680,961 |
|
|
$ |
784,162 |
|
CONSOLIDATED AND COMBINED STATEMENT OF OPERATIONS
|
|
|
Years Ended December 31, |
||||||||||
|
(In thousands, except per share data) |
|
2020 |
|
2019 |
|
2018 |
||||||
|
REVENUES |
|
|
|
|
|
|
||||||
|
Mineral and royalty revenues |
|
$ |
86,245 |
|
|
$ |
97,886 |
|
|
$ |
59,758 |
|
|
Lease bonus and other revenues |
|
5,478 |
|
|
3,629 |
|
|
7,506 |
|
|||
|
Total revenues |
|
$ |
91,723 |
|
|
$ |
101,515 |
|
|
$ |
67,264 |
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
||||||
|
Gathering, transportation and marketing |
|
6,985 |
|
|
4,985 |
|
|
3,944 |
|
|||
|
Severance and ad valorem taxes |
|
5,606 |
|
|
6,409 |
|
|
3,536 |
|
|||
|
Depreciation, depletion, and amortization |
|
48,238 |
|
|
30,940 |
|
|
13,915 |
|
|||
|
Impairment of oil and gas properties |
|
79,569 |
|
|
— |
|
|
— |
|
|||
|
General and administrative |
|
21,619 |
|
|
21,963 |
|
|
6,638 |
|
|||
|
Total operating expenses |
|
$ |
162,017 |
|
|
$ |
64,297 |
|
|
$ |
28,033 |
|
|
(LOSS) INCOME FROM OPERATIONS |
|
$ |
(70,294 |
) |
|
$ |
37,218 |
|
|
$ |
39,231 |
|
|
(Loss) gain on derivative instruments, net |
|
— |
|
|
(568 |
) |
|
424 |
|
|||
|
Interest expense, net |
|
(890 |
) |
|
(5,609 |
) |
|
(7,446 |
) |
|||
|
Loss on extinguishment of debt |
|
— |
|
|
(6,892 |
) |
|
— |
|
|||
|
Gain on sale and distribution of equity securities |
|
— |
|
|
— |
|
|
823 |
|
|||
|
Other income, net |
|
428 |
|
|
169 |
|
|
110 |
|
|||
|
(Loss) income before income tax expense |
|
$ |
(70,756 |
) |
|
$ |
24,318 |
|
|
$ |
33,142 |
|
|
Income tax (benefit) expense |
|
(12,762 |
) |
|
2,679 |
|
|
327 |
|
|||
|
NET (LOSS) INCOME |
|
$ |
(57,994 |
) |
|
$ |
21,639 |
|
|
$ |
32,815 |
|
|
Less: Net income attributable to Predecessor |
|
— |
|
|
(5,092 |
) |
|
(30,976 |
) |
|||
|
Less: net loss (income) attributable to temporary equity |
|
15,582 |
|
|
(9,646 |
) |
|
— |
|
|||
|
Net (loss) income attributable to Brigham Minerals, Inc. shareholders |
|
$ |
(42,412 |
) |
|
$ |
6,901 |
|
|
$ |
1,839 |
|
|
|
|
|
|
|
|
|
||||||
|
NET INCOME PER COMMON SHARE |
|
|
|
|
|
|
||||||
|
Basic |
|
$ |
(1.11 |
) |
|
$ |
0.26 |
|
|
$ |
— |
|
|
Diluted |
|
$ |
(1.11 |
) |
|
$ |
0.26 |
|
|
$ |
— |
|
|
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING |
|
|
|
|
|
|
||||||
|
Basic |
|
38,178 |
|
|
22,870 |
|
|
— |
|
|||
|
Diluted |
|
38,178 |
|
|
22,870 |
|
|
— |
|
|||
CONSOLIDATED AND COMBINED STATEMENT OF CASH FLOWS
|
|
|
Years Ended December 31, |
||||||||||
|
(In thousands) |
|
2020 |
|
2019 |
|
2018 |
||||||
|
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
||||||
|
Net (loss) income |
|
$ |
(57,994 |
) |
|
$ |
21,639 |
|
|
$ |
32,815 |
|
|
Adjustments to reconcile net earnings to net cash provided by operating activities: |
|
|
|
|
|
|
||||||
|
Depreciation and amortization |
|
48,238 |
|
|
30,940 |
|
|
13,915 |
|
|||
|
Impairment of oil and gas properties |
|
79,569 |
|
|
— |
|
|
— |
|
|||
|
Share-based compensation expense |
|
7,529 |
|
|
10,049 |
|
|
— |
|
|||
|
Loss on extinguishment of debt |
|
— |
|
|
6,892 |
|
|
— |
|
|||
|
Amortization of debt issue costs |
|
605 |
|
|
433 |
|
|
690 |
|
|||
|
Deferred income tax (benefit)/expense |
|
(9,942 |
) |
|
665 |
|
|
237 |
|
|||
|
Loss (gain) on derivative instruments, net |
|
— |
|
|
568 |
|
|
(424 |
) |
|||
|
Net cash received (paid) for derivative settlements |
|
— |
|
|
470 |
|
|
(754 |
) |
|||
|
Gain on sale and distribution of equity securities |
|
— |
|
|
— |
|
|
(823 |
) |
|||
|
Bad debt expense |
|
299 |
|
|
669 |
|
|
382 |
|
|||
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||||||
|
Decrease (increase) in accounts receivables |
|
12,359 |
|
|
(10,246 |
) |
|
(8,022 |
) |
|||
|
(Increase) decrease in other current assets |
|
(2,005 |
) |
|
1,787 |
|
|
(6,116 |
) |
|||
|
Decrease in other deferred charges |
|
45 |
|
|
— |
|
|
— |
|
|||
|
(Decrease) increase in accounts payables and accrued liabilities |
|
(3,608 |
) |
|
5,112 |
|
|
(484 |
) |
|||
|
Increase in other long-term liabilities |
|
165 |
|
|
47 |
|
|
28 |
|
|||
|
Net cash provided by operating activities |
|
$ |
75,260 |
|
|
$ |
69,025 |
|
|
$ |
31,444 |
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
||||||
|
Additions to oil and gas properties |
|
(66,498 |
) |
|
(219,481 |
) |
|
(195,603 |
) |
|||
|
Additions to other fixed assets |
|
(492 |
) |
|
(474 |
) |
|
(723 |
) |
|||
|
Proceeds from sale of oil and gas properties, net |
|
1,565 |
|
|
3,123 |
|
|
125 |
|
|||
|
Proceeds from sale of equity securities |
|
— |
|
|
— |
|
|
933 |
|
|||
|
Net cash used in investing activities |
|
$ |
(65,425 |
) |
|
$ |
(216,832 |
) |
|
$ |
(195,268 |
) |
|
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 |
) |
|||
|
Borrowing of long-term debt |
|
20,000 |
|
|
105,000 |
|
|
218,000 |
|
|||
|
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 |
|
|||
|
Capital distributions |
|
— |
|
|
(441 |
) |
|
— |
|
|||
|
Purchase of treasury stock |
|
(3,527 |
) |
|
— |
|
|
— |
|
|||
|
Dividends paid |
|
(42,216 |
) |
|
(14,663 |
) |
|
— |
|
|||
|
Distributions to holders of temporary equity |
|
(24,670 |
) |
|
(19,731 |
) |
|
— |
|
|||
|
Debt issuance cost |
|
(208 |
) |
|
(1,348 |
) |
|
(4,614 |
) |
|||
|
Employee tax withholding for settlement of equity compensation awards |
|
(1,203 |
) |
|
— |
|
|
— |
|
|||
|
Net cash (used in) provided by financing activities |
|
$ |
(51,824 |
) |
|
$ |
166,481 |
|
|
$ |
189,397 |
|
|
(Decrease) increase in cash and cash equivalents and restricted cash |
|
(41,989 |
) |
|
18,674 |
|
|
25,573 |
|
|||
|
Cash, cash equivalents and restricted cash, beginning of period |
|
51,133 |
|
|
32,459 |
|
|
6,886 |
|
|||
|
Cash, cash equivalents and restricted cash end of period |
|
$ |
9,144 |
|
|
$ |
51,133 |
|
|
$ |
32,459 |
|
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 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 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, 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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20210224006048/en/