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Brigham Minerals, Inc. Reports Record Second Quarter 2022 Operational and Financial Results and Provides Updated 2022 Guidance

Brigham Minerals, Inc. (NYSE: MNRL) (“Brigham Minerals,” “Brigham,” or the “Company”), a leading mineral and royalty interest acquisition company, today announced record operational and financial results for the quarter ended June 30, 2022 and updated full year 2022 guidance.

RECORD SECOND QUARTER 2022 OPERATIONAL AND FINANCIAL HIGHLIGHTS

  • Record daily production volumes of 13,019 Boe/d (72% liquids, 52% oil)
    • Production up 8% sequentially from Q1 2022 including a 24% increase in Permian Basin volumes
  • Record royalty revenues of $90.4 million
    • Up 29% sequentially from Q1 2022 driven by 8% higher volumes and 18% higher realized prices
  • Record Net income totaling $50.2 million
    • Record Adjusted EBITDA(1) totaling $79.7 million up 31% sequentially from Q1 2022
  • Declared record Q2 2022 dividend of $0.77 per share of Class A common stock(2)
    • Base Dividend of $0.16 per share of Class A common stock
    • Variable Dividend increased 39% sequentially to $0.61 per share of Class A common stock
    • Represents 75% payout ratio of Discretionary Cash Flow ex lease bonus(1)
  • 11.0 net (1,792 gross) activity wells comprised of 6.8 net (1,008 gross) DUCs and 4.2 net (784 gross) permits
    • 2.4 net DUCs converted to PDP during Q2 2022
    • Record 253 gross wells spud during Q2 2022 (1.5 net locations)
    • Permian Basin activity wells totaling 6.7 net locations
  • Generated divestiture proceeds totaling $67.3 million from the sale of undeveloped Anadarko Basin assets
    • Divested largely undeveloped minerals with anticipated Q3 2022 production of 200 Boe/d
    • Asset monetization proceeds partially utilized to fund accretive Permian Basin acquisitions and reduce Net Debt(1) to approximately $49 million as of June 30, 2022
    • Permian Basin now makes up 48% of net royalty acres and 68% of net locations
  • Acquired 885 net royalty acres deploying $33.2 million in mineral acquisition capital
    • 100% of capital deployed to Permian Basin comprised of 95% PDP, DUC and permitted net locations with anticipated Q3 2022 production of 400 Boe/d
    • Locations to be converted by top tier operators including Endeavor Energy Resources, Chevron Corporation and Marathon Oil
  • $24.1 million cash balance and undrawn revolver capacity of $217.0 million as of June 30, 2022
    • Conservative leverage at 0.2x last quarter annualized Adjusted EBITDA(1)

FULL YEAR 2022 UPDATED GUIDANCE

  • Updated full year 2022 production guidance of 12,300 to 13,000 Boe/d
    • Production guidance raised 9% at the midpoint relative to February 2022 guidance
  • Mineral acquisition capital raised to $100 to $120 million
    • Includes impact of highly accretive Permian Basin acquisitions entered into during the first half 2022
  • See additional detail in Operational and Financial Guidance Update table below

(1)

Non-GAAP measure. See “Non-GAAP Financial Measures” below.

(2)

See Quarterly Cash Dividend section below regarding Board approval of future dividends.

Robert M. (“Rob”) Roosa, Chief Executive Officer, commented, “Our team once again generated record operational and financial results during the quarter including record production, revenue, EBITDA(1) and dividends. Our production volumes increased 8% sequentially to a record 13,019 Boe/d driven by continued strong DUC conversions, particularly conversions in the Permian Basin where production volumes grew by 24% sequentially. We also saw record drilling activity during the quarter with approximately 253 gross wells spud on our assets, and when combined with our acquisition efforts, we were able to maintain an almost constant DUC inventory level even with the aforementioned strong conversions. In total, we ended the second quarter with 11.0 net activity wells in inventory and anticipate our production volumes for the full year 2022 to average between 12,300 and 13,000 Boe/d, which represents a 9% increase relative to our original guidance provided in February.”

Blake C. Williams, Chief Financial Officer, added, “Our results continue to excel and highlight the benefits of our high margin business model especially in the current inflationary environment. Our EBITDA(1) grew 31% sequentially and is up 159% year over year, leading to our $0.77 dividend at a 75% payout ratio. While many companies are seeing higher cost, we instead saw an increased EBITDA margin(1) due to our unhedged price realizations and largely fixed cost structure. Our team also took advantage of the supportive commodity price environment by successfully executing our largest, single asset monetization to date generating proceeds of approximately $67.3 million. The proceeds, along with our retained cash flow, were utilized to fully fund our second quarter ground game acquisitions as well as reduce our Net Debt(1) outstanding at the end of the quarter to approximately $49 million. With over $200 million of available liquidity, we plan to continue creating value for our shareholders through accretive acquisitions and our current and future return of capital program.”

(1)

Non-GAAP measure. See “Non-GAAP Financial Measures” below.

OPERATIONAL UPDATE

Mineral and Royalty Interest Ownership Update

During the second quarter 2022, the Company executed twenty transactions acquiring approximately 885 net royalty acres (standardized to a 1/8th royalty interest) and deployed $33.2 million in capital. The Company deployed all of its mineral acquisition capital in the second quarter to the Permian Basin. Second quarter acquisitions are expected to deliver near-term production and cash flow growth with the addition of 116 gross DUCs (0.8 net) and 27 gross permits (0.2 net) to inventory counts. The Company also divested 12,550 net royalty acres in the Anadarko Basin generating approximately $67.3 million in cash proceeds, net of customary closing adjustments.

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

 

 

Delaware

 

Midland

 

Anadarko

 

DJ

 

Williston

 

Total

Net Royalty Acres

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2022(1)

 

30,010

 

9,015

 

9,850

 

24,755

 

8,180

 

81,810

March 31, 2022

 

29,875

 

8,265

 

22,400

 

24,740

 

8,185

 

93,465

Acres Added and (Sold) Q/Q

 

135

 

750

 

(12,550)

 

15

 

(5)

 

(11,655)

% Added and (Sold) Q/Q

 

—%

 

9%

 

(56)%

 

—%

 

—%

 

(12)%

 

(1) June 30, 2022 NRA totals include Division Order Interest adjustments relative to prior quarters

DUC Conversions Updates

During the second quarter 2022, the Company identified approximately 223 gross (2.4 net) horizontal wells converted to production, which represented 33% of its net DUC inventory as of the first quarter 2022 (24% of gross DUCs). Well conversions to proved developed producing during second quarter are summarized in the table below:

Q2 2022 Wells Converted to Proved Developed Producing

 

 

Gross

 

Net

DUCs

 

223

 

2.4

Acquired Wells Net of Divestitures

 

(238)

 

(1.6)

Converted Permitted and Other

 

15

 

Total

 

 

0.8

Drilling Activity Update

During the second quarter 2022, the Company identified a record 253 gross (1.5 net) wells spud on its mineral position, which represents a 6% sequential increase from the first quarter 2022 on a gross well basis. Brigham’s average quarterly gross and net wells spud over 2019 to 2021 relative to the second quarter 2022 are summarized in the table below:

 

2019(1)

 

2020(1)

 

2021(1)

 

Q1 22

 

Q2 22

Gross Wells Spud

219

 

95

 

164

 

238

 

253

Net Wells Spud

1.4

 

0.7

 

1.3

 

2.1

 

1.5

 

(1) Amounts represent average quarterly numbers during the year.

DUC and Permit Inventory Update

The Company expects 2022 production volumes 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, 2022 by basin is outlined in the table below:

 

 

Development Inventory by Basin(1)

 

 

Delaware

 

Midland

 

Anadarko

 

DJ

 

Williston

 

Total

Gross Inventory

 

 

 

 

 

 

 

 

 

 

 

 

DUCs

 

231

 

373

 

35

 

205

 

164

 

1,008

Permits

 

274

 

146

 

5

 

173

 

186

 

784

Net Inventory

 

 

 

 

 

 

 

 

 

 

 

 

DUCs

 

2.1

 

1.9

 

0.1

 

2.3

 

0.4

 

6.8

Permits

 

2.0

 

0.7

 

 

1.1

 

0.4

 

4.2

 

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

FINANCIAL UPDATE

For the three months ended June 30, 2022, crude oil, natural gas and NGL production volumes increased 8% to 13,019 Boe/d as compared to the three months ended March 31, 2022 and increased 45% as compared to the same prior-year period.

For the three months ended June 30, 2022, average realized prices were $108.37 per barrel of oil, $6.95 per Mcf of natural gas, and $42.31 per barrel of NGL, for a total equivalent price of $76.31 per Boe. This represents a 18% increase relative to the three months ended March 31, 2022 and a 69% increase relative to the same prior-year period.

The Company's net income for the three months ended June 30, 2022 was $50.2 million, up 28% from the three months ended March 31, 2022 and up 227% relative to the same prior-year period.

Adjusted EBITDA was $79.7 million for the three months ended June 30, 2022, up 31% from the three months ended March 31, 2022 and up 159% relative to the same prior-year period. Adjusted EBITDA ex lease bonus was $79.2 million for the three months ended June 30, 2022, up 34% from the three months ended March 31, 2022 and up 164% 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, 2022, the Company had a cash balance of $24.1 million and $217.0 million of undrawn revolver capacity under its credit facility, providing the Company with total liquidity of $241.1 million.

Results of Operations

 

Unaudited Financial and Operational Results

 

Three Months Ended

 

Six Months Ended

($ in thousands, except for realized prices and unit expenses)

 

June 30, 2022

 

March 31, 2022

 

June 30, 2022

 

June 30, 2021

Operating Revenues

 

 

 

 

 

 

 

 

Oil sales

 

$

66,415

 

 

$

50,688

 

 

$

117,103

 

 

$

49,542

 

Natural gas sales

 

 

13,968

 

 

 

10,312

 

 

 

24,280

 

 

 

12,141

 

NGL sales

 

 

10,020

 

 

 

8,995

 

 

 

19,015

 

 

 

7,498

 

Total mineral and royalty revenue

 

$

90,403

 

 

$

69,995

 

 

$

160,398

 

 

$

69,181

 

Lease bonus and other revenue

 

 

476

 

 

 

1,433

 

 

 

1,909

 

 

 

2,403

 

Total Revenues

 

$

90,879

 

 

$

71,428

 

 

$

162,307

 

 

$

71,584

 

Production

 

 

 

 

 

 

 

 

Oil (MBbls)

 

 

612

 

 

 

552

 

 

 

1,164

 

 

 

834

 

Natural gas (MMcf)

 

 

2,011

 

 

 

1,868

 

 

 

3,879

 

 

 

2,916

 

NGLs (MBbls)

 

 

237

 

 

 

220

 

 

 

457

 

 

 

301

 

Equivalents (MBoe)

 

 

1,185

 

 

 

1,083

 

 

 

2,268

 

 

 

1,621

 

Equivalents per day (Boe/d)

 

 

13,019

 

 

 

12,031

 

 

 

12,528

 

 

 

8,959

 

Realized Prices ($/Boe)

 

 

 

 

 

 

 

 

Oil ($/Bbl)

 

$

108.37

 

 

$

91.90

 

 

$

100.57

 

 

$

59.39

 

Natural gas ($/Mcf)

 

 

6.95

 

 

 

5.52

 

 

 

6.26

 

 

 

4.16

 

NGLs ($/Bbl)

 

 

42.31

 

 

 

40.90

 

 

 

41.63

 

 

 

24.88

 

Average Realized Price

 

$

76.31

 

 

$

64.64

 

 

$

70.74

 

 

$

42.66

 

Operating Expenses

 

 

 

 

 

 

 

 

Gathering, transportation and marketing

 

$

2,246

 

 

$

2,003

 

 

$

4,249

 

 

$

3,326

 

Severance and ad valorem taxes

 

 

5,361

 

 

 

4,331

 

 

 

9,692

 

 

 

4,133

 

Depreciation, depletion, and amortization

 

 

13,449

 

 

 

12,313

 

 

 

25,762

 

 

 

18,447

 

General and administrative (before share-based compensation)

 

 

3,587

 

 

 

4,428

 

 

 

8,015

 

 

 

6,284

 

Total operating expenses (before share-based compensation)

 

$

24,643

 

 

$

23,075

 

 

$

47,718

 

 

$

32,190

 

General and administrative, share-based compensation

 

 

1,959

 

 

 

1,481

 

 

 

3,440

 

 

 

4,855

 

Total Operating Expenses

 

$

26,602

 

 

$

24,556

 

 

$

51,158

 

 

$

37,045

 

Income from Operations

 

$

64,277

 

 

$

46,872

 

 

$

111,149

 

 

$

34,539

 

Other expenses:

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(1,154

)

 

 

(914

)

 

 

(2,068

)

 

 

(654

)

Other income, net

 

 

14

 

 

 

20

 

 

 

34

 

 

 

15

 

Income Before Taxes

 

$

63,137

 

 

$

45,978

 

 

$

109,115

 

 

$

33,900

 

Income tax expense

 

 

12,957

 

 

 

6,913

 

 

 

19,870

 

 

 

6,503

 

Net Income

 

$

50,180

 

 

$

39,065

 

 

$

89,245

 

 

$

27,397

 

Less: Net income attributable to non-controlling interest

 

 

(7,931

)

 

 

(8,083

)

 

 

(16,014

)

 

 

(7,613

)

Net income attributable to Brigham Minerals, Inc. stockholders

 

$

42,249

 

 

$

30,982

 

 

$

73,231

 

 

$

19,784

 

 

 

Three Months Ended

 

Six Months Ended

Unit Expenses ($/Boe)

 

June 30, 2022

 

March 31, 2022

 

June 30, 2022

 

June 30, 2021

Gathering, transportation and marketing

 

$

1.90

 

$

1.85

 

$

1.87

 

$

2.05

Severance and ad valorem taxes

 

 

4.52

 

 

4.00

 

 

4.27

 

 

2.55

Depreciation, depletion and amortization

 

 

11.35

 

 

11.37

 

 

11.36

 

 

11.38

General and administrative (before share-based compensation)

 

 

3.03

 

 

4.09

 

 

3.53

 

 

3.87

General and administrative, share-based compensation

 

 

1.65

 

 

1.37

 

 

1.52

 

 

2.99

Interest expense, net

 

 

0.97

 

 

0.84

 

 

0.91

 

 

0.40

Quarterly Cash Dividend

The Company’s Board of Directors (the “Board”) has declared a quarterly cash dividend incorporating results for the second quarter 2022 of $0.77 per share of Class A common stock at a 75% payout ratio. This represents a 28% increase in payout compared to the dividend declared for the first quarter of 2022. The second quarter dividend represents a base dividend of $0.16 per share and a variable dividend of $0.61 per share and will be paid on August 26, 2022 to holders of record as of August 19, 2022. 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 2022:

 

 

Original

2022 Guidance

 

Updated

2022 Guidance

 

Change %

Guidance Ranges

 

Low

 

High

 

Low

 

High

 

 

Capital Allocation

 

 

 

 

 

 

 

 

 

 

Quarterly Base Dividend (Annualized)(1)

 

$0.16 ($0.64)

 

$0.16 ($0.64)

 

 

Payout Ratio (Base + Variable Dividend)

 

75%

80%

 

70%

80%

 

 

 

 

 

 

 

 

 

 

 

 

 

Daily Net Production (Boe/d)

 

11,300

12,000

 

12,300

13,000

 

+9%

Oil Cut (%)

 

48%

52%

 

48%

52%

 

 

Lease Bonus ($ millions)

 

$1.0

$3.0

 

$1.5

$3.5

 

+25%

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

Cash G&A Expense ($ millions)

 

$13.3

13.8(2)

 

$15.3

15.8(2)

 

+15%

Cash G&A Expense Unit Cost ($/Boe)

 

$3.20 midpoint

 

$3.36 midpoint

 

+5%

Share Based Compensation Expense ($ millions)(2)

 

$9.2

$10.0(2)

 

$7.2

$8.0(2)

 

-21%

Total G&A Expense ($ millions)

 

$22.5

$23.8

 

$22.5

$23.8

 

0%

Total G&A Expense Unit Cost ($/Boe)

 

$5.44 midpoint

 

$5.01 midpoint

 

-8%

 

 

 

 

 

 

 

 

 

 

 

Gathering, Transportation, and Marketing ($/Boe)

 

$2.75

$3.25

 

$2.00

$2.50

 

-25%

Production Taxes (% of Revenue)

 

7%

9%

 

7%

9%

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxes

 

 

 

 

 

 

 

 

 

 

Tax Depletion ($/Boe)

 

$11.50

$13.50

 

$11.50

$13.50

 

 

Percent of Dividend Expected to be Return of Capital

 

20%

40%

 

20%

40%

 

 

 

 

 

 

 

 

 

 

 

 

 

Mineral Acquisition Capital

 

 

 

 

 

 

 

 

 

 

Ground Game Acquisition Budget ($ millions)

 

$60

$80

 

$100

$120

 

+57%

 

(1) Subject to future board approval

(2) Original 2022 Guidance modified in May 2022 to reflect subsequent implementation of short term incentive plan, which re-allocated approximately $2 million from share based compensation to cash G&A

Brigham Minerals Second Quarter 2022 Earnings Conference Call

Non-GAAP Financial Measures

Adjusted EBITDA, Adjusted EBITDA ex lease bonus, Adjusted EBITDA Margin, Discretionary Cash Flow, Discretionary Cash Flow ex lease bonus, and Net Debt 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 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 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. We define Net Debt as total debt less cash and cash equivalents.

Adjusted EBITDA, Adjusted EBITDA ex lease bonus, Adjusted EBITDA Margin, Discretionary Cash Flow, Discretionary Cash Flow ex lease bonus, and Net Debt 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, 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. Net Debt should not be considered an alternative to, or more meaningful than, total debt, the most directly comparable GAAP measure. Our computation of Adjusted EBITDA, Adjusted EBITDA ex lease bonus, Adjusted EBITDA Margin, Discretionary Cash Flow, Discretionary Cash Flow ex lease bonus, and Net Debt 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, Adjusted EBITDA Margin, Discretionary Cash Flow, Discretionary Cash Flow ex lease bonus, and Net Debt to the most directly comparable GAAP financial measure for the periods indicated.

SUPPLEMENTAL SCHEDULES

Reconciliation of Adjusted EBITDA, Adjusted EBITDA ex Lease Bonus and Adjusted EBITDA Margin

 

 

 

Three Months Ended

 

Six Months Ended

($ In thousands)

 

June 30,

2022

 

March 31,

2022

 

June 30,

2021

 

June 30,

2022

 

June 30,

2021

Net Income

 

$

50,180

 

 

$

39,065

 

 

$

15,326

 

 

$

89,245

 

 

$

27,397

 

Add:

 

 

 

 

 

 

 

 

 

 

Depreciation, depletion, and amortization

 

 

13,449

 

 

 

12,313

 

 

 

9,080

 

 

 

25,762

 

 

 

18,447

 

Share-based compensation expense

 

 

1,959

 

 

 

1,481

 

 

 

2,555

 

 

 

3,440

 

 

 

4,855

 

Interest expense, net

 

 

1,154

 

 

 

914

 

 

 

387

 

 

 

2,068

 

 

 

654

 

Income tax expense

 

 

12,957

 

 

 

6,913

 

 

 

3,430

 

 

 

19,870

 

 

 

6,503

 

Less:

 

 

 

 

 

 

 

 

 

 

Other income, net

 

 

14

 

 

 

20

 

 

 

2

 

 

 

34

 

 

 

15

 

Adjusted EBITDA

 

$

79,685

 

 

$

60,666

 

 

$

30,776

 

 

$

140,351

 

 

$

57,841

 

Less:

 

 

 

 

 

 

 

 

 

 

Lease bonus and other revenue

 

 

476

 

 

 

1,433

 

 

 

806

 

 

 

1,909

 

 

 

2,403

 

Adjusted EBITDA ex Lease Bonus

 

$

79,209

 

 

$

59,233

 

 

$

29,970

 

 

$

138,442

 

 

$

55,438

 

 

 

 

 

 

 

 

 

 

 

 

Memo: Adjusted EBITDA Margin

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

90,879

 

 

$

71,428

 

 

$

37,811

 

 

$

162,307

 

 

$

71,584

 

Adjusted EBITDA

 

$

79,685

 

 

$

60,666

 

 

$

30,776

 

 

$

140,351

 

 

$

57,841

 

Adjusted EBITDA Margin

 

 

88

%

 

 

85

%

 

 

81

%

 

 

86

%

 

 

81

%

 

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

 

 

 

Three Months Ended

($ In thousands, except per share amounts)

 

June 30, 2022

 

March 31, 2022

 

June 30, 2021

Adjusted EBITDA(1)

 

$

79,685

 

 

$

60,666

 

 

$

30,776

 

Less:

 

 

 

 

 

 

Adjusted EBITDA attributable to non-controlling interest

 

 

(8,869

)

 

 

(8,220

)

 

 

(6,315

)

Adjusted EBITDA attributable to Class A common stock

 

$

70,816

 

 

$

52,446

 

 

$

24,461

 

Less:

 

 

 

 

 

 

Cash interest expense

 

 

989

 

 

 

694

 

 

 

178

 

Cash taxes

 

 

13,500

 

 

 

8,200

 

 

 

3,200

 

Dividend equivalent rights

 

 

887

 

 

 

647

 

 

 

616

 

Discretionary cash flow to Class A common stock

 

$

55,440

 

 

$

42,905

 

 

$

20,467

 

Less:

 

 

 

 

 

 

Lease bonus

 

 

423

 

 

 

1,239

 

 

 

641

 

Discretionary cash flow ex lease bonus to Class A common stock

 

$

55,017

 

 

$

41,666

 

 

$

19,826

 

Payout Ratio:

 

 

75

%

 

 

75

%

 

 

80

%

Distributed cash flow to Class A common stock

 

$

41,263

 

 

$

31,250

 

 

$

15,861

 

 

 

 

 

 

 

 

Shares of Class A common stock

 

 

53,721

 

 

 

52,322

 

 

 

45,134

 

 

 

 

 

 

 

 

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

 

$

0.77

 

 

$

0.60

 

 

$

0.35

 

 

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

 

Reconciliation of Net Debt

 

($ In thousands)

 

June 30, 2022

 

March 31, 2022

 

December 31, 2021

Total Debt

 

$

73,000

 

$

93,000

 

$

93,000

Less: Cash and Cash Equivalents

 

 

24,103

 

 

6,213

 

 

20,819

Net Debt

 

$

48,897

 

$

86,787

 

$

72,181

 

Condensed Consolidated Balance Sheets

 

 

June 30,

 

December 31,

(In thousands, except share amounts)

 

 

2022

 

 

 

2021

 

ASSETS

 

(Unaudited)

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

24,103

 

 

$

20,819

 

Restricted cash

 

 

 

 

 

200

 

Accounts receivable

 

 

72,947

 

 

 

30,539

 

Prepaid expenses and other

 

 

4,967

 

 

 

3,145

 

Total current assets

 

 

102,017

 

 

 

54,703

 

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

 

 

 

 

Unevaluated property

 

 

307,451

 

 

 

338,613

 

Evaluated property

 

 

744,018

 

 

 

633,138

 

Less accumulated depreciation, depletion, and amortization

 

 

(339,513

)

 

 

(239,612

)

Oil and gas properties, net

 

 

711,956

 

 

 

732,139

 

Other property and equipment

 

 

3,357

 

 

 

2,060

 

Less accumulated depreciation

 

 

(1,512

)

 

 

(1,280

)

Other property and equipment, net

 

 

1,845

 

 

 

780

 

Operating lease right-of-use asset

 

 

6,178

 

 

 

6,764

 

Deferred tax asset

 

 

37,918

 

 

 

25,308

 

Other assets, net

 

 

1,356

 

 

 

1,183

 

Total assets

 

$

861,270

 

 

$

820,877

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable and accrued liabilities

 

$

18,990

 

 

$

20,473

 

Current operating lease liability

 

 

1,200

 

 

 

1,178

 

Total current liabilities

 

 

20,190

 

 

 

21,651

 

Long-term bank debt

 

 

73,000

 

 

 

93,000

 

Non-current operating lease liability

 

 

5,138

 

 

 

5,742

 

Other non-current liabilities

 

 

1,711

 

 

 

810

 

Equity:

 

 

 

 

Preferred stock, $0.01 par value; 50,000,000 authorized; no shares issued and outstanding at June 30, 2022 and December 31, 2021

 

 

 

 

 

 

Class A common stock, $0.01 par value; 400,000,000 authorized, 54,138,411 shares issued and 53,579,712 shares outstanding at June 30, 2022; 400,000,000 authorized, 48,796,518 shares issued and 48,359,888 shares outstanding at December 31, 2021

 

 

541

 

 

 

488

 

Class B common stock, $0.01 par value; 150,000,000 authorized, 6,866,430 shares issued and outstanding at June 30, 2022; 150,000,000 authorized, 11,371,517 shares issued and outstanding at December 31, 2021

 

 

 

 

 

 

Additional paid-in capital

 

 

746,022

 

 

 

634,564

 

Accumulated deficit

 

 

(86,783

)

 

 

(105,096

)

Treasury stock, at cost; 558,699 shares at June 30, 2022 and 436,630 shares at December 31, 2021

 

 

(6,338

)

 

 

(3,527

)

Total equity attributable to Brigham Minerals, Inc.

 

 

653,442

 

 

 

526,429

 

Non-controlling interests

 

 

107,789

 

 

 

173,245

 

Total equity

 

$

761,231

 

 

$

699,674

 

Total liabilities and equity

 

$

861,270

 

 

$

820,877

 

 

Unaudited Condensed Consolidated Statements of Operations

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

(In thousands, except per share data)

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

REVENUES

 

 

 

 

 

 

 

 

Mineral and royalty revenues

 

$

90,403

 

 

$

37,005

 

 

$

160,398

 

 

$

69,181

 

Lease bonus and other revenues

 

 

476

 

 

 

806

 

 

 

1,909

 

 

 

2,403

 

Total revenues

 

 

90,879

 

 

 

37,811

 

 

 

162,307

 

 

 

71,584

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

Gathering, transportation and marketing

 

 

2,246

 

��

 

1,593

 

 

 

4,249

 

 

 

3,326

 

Severance and ad valorem taxes

 

 

5,361

 

 

 

2,300

 

 

 

9,692

 

 

 

4,133

 

Depreciation, depletion, and amortization

 

 

13,449

 

 

 

9,080

 

 

 

25,762

 

 

 

18,447

 

General and administrative

 

 

5,546

 

 

 

5,697

 

 

 

11,455

 

 

 

11,139

 

Total operating expenses

 

 

26,602

 

 

 

18,670

 

 

 

51,158

 

 

 

37,045

 

INCOME FROM OPERATIONS

 

 

64,277

 

 

 

19,141

 

 

 

111,149

 

 

 

34,539

 

Interest expense, net

 

 

(1,154

)

 

 

(387

)

 

 

(2,068

)

 

 

(654

)

Other income, net

 

 

14

 

 

 

2

 

 

 

34

 

 

 

15

 

Income before income taxes

 

 

63,137

 

 

 

18,756

 

 

 

109,115

 

 

 

33,900

 

Income tax expense

 

 

12,957

 

 

 

3,430

 

 

 

19,870

 

 

 

6,503

 

NET INCOME

 

$

50,180

 

 

$

15,326

 

 

$

89,245

 

 

$

27,397

 

Less: Net income attributable to non-controlling interest

 

 

(7,931

)

 

 

(4,138

)

 

 

(16,014

)

 

 

(7,613

)

Net income attributable to Brigham Minerals, Inc. stockholders

 

$

42,249

 

 

$

11,188

 

 

$

73,231

 

 

$

19,784

 

 

 

 

 

 

 

 

 

 

NET INCOME PER COMMON SHARE

 

 

 

 

 

 

 

Basic

 

$

0.80

 

 

$

0.25

 

 

$

1.45

 

 

$

0.45

 

Diluted

 

$

0.78

 

 

$

0.25

 

 

$

1.40

 

 

$

0.44

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

 

 

 

 

 

 

 

 

Basic

 

 

52,547

 

 

 

43,916

 

 

 

50,505

 

 

 

43,717

 

Diluted

 

 

54,398

 

 

 

45,281

 

 

 

52,205

 

 

 

45,091

 

 

Unaudited Condensed Consolidated Statement of Cash Flows

 

 

 

Six Months Ended June 30,

(In thousands)

 

 

2022

 

 

 

2021

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

Net income

 

$

89,245

 

 

$

27,397

 

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

 

 

 

 

Depreciation, depletion and amortization

 

 

25,762

 

 

 

18,447

 

Share-based compensation expense

 

 

3,440

 

 

 

4,855

 

Amortization of debt issuance costs

 

 

280

 

 

 

141

 

Deferred income tax expense

 

 

2,272

 

 

 

1,286

 

Credit losses

 

 

274

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

(Increase) in accounts receivable

 

 

(42,682

)

 

 

(8,040

)

(Increase) decrease in other current assets

 

 

(1,818

)

 

 

581

 

Increase in accounts payable and accrued liabilities

 

 

10,175

 

 

 

448

 

Increase in other long-term liabilities

 

 

 

 

 

16

 

Net cash provided by operating activities

 

$

86,948

 

 

$

45,131

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

Additions to oil and gas properties

 

 

(59,800

)

 

 

(36,331

)

Additions to other fixed assets

 

 

(1,229

)

 

 

(27

)

Proceeds from sale of oil and gas properties, net

 

 

74,370

 

 

 

 

Net cash provided by (used in) investing activities

 

$

13,341

 

 

$

(36,358

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

Payments of long-term debt

 

 

(70,000

)

 

 

(4,000

)

Borrowing of long-term debt

 

 

50,000

 

 

 

27,000

 

Offering costs of Class A common stock

 

 

(78

)

 

 

 

Dividends paid

 

 

(55,768

)

 

 

(25,537

)

Distribution to holders of non-controlling interest

 

 

(11,163

)

 

 

(7,809

)

Debt issuance costs

 

 

(453

)

 

 

(21

)

Payment of employee tax withholding for settlement of equity compensation awards

 

 

(9,743

)

 

 

(1,136

)

Net cash used in financing activities

 

$

(97,205

)

 

$

(11,503

)

Change in cash and cash equivalents and restricted cash

 

 

3,084

 

 

 

(2,730

)

Cash and cash equivalents and restricted cash, beginning of period

 

 

21,019

 

 

 

9,144

 

Cash and cash equivalents and restricted cash, end of period

 

$

24,103

 

 

$

6,414

 

Supplemental disclosure of non-cash activity:

 

 

 

 

Accrued capital expenditures

 

$

62

 

 

$

100

 

Capitalized share-based compensation cost

 

$

2,855

 

 

$

3,487

 

Issuance of Class A common stock for acquisitions of oil and gas properties, net

 

$

17,629

 

 

$

 

Temporary equity cumulative adjustment to carrying value

 

$

 

 

$

54,294

 

Supplemental cash flow information:

 

 

 

 

Cash payments for loan commitment fees and interest

 

$

(1,916

)

 

$

(437

)

Tax payments, net of refunds

 

$

(11,564

)

 

$

(2,881

)

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 Delaware and Midland Basins in West Texas and New Mexico, 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, operator capital discipline and inflation impacts on their cash flows, 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, economic and competitive conditions, including those resulting from the current conflict between Russia and Ukraine and elevated inflation levels resulting from global supply and demand imbalances, 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, 2021, 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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