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Brigham Minerals, Inc. Reports Record Fourth Quarter and Full Year 2021 Operational and Financial Results, Recent Developments and Provides 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 and year-ended December 31, 2021, recent developments and provides 2022 guidance.

FOURTH QUARTER 2021 OPERATIONAL AND FINANCIAL HIGHLIGHTS

  • Daily production volumes of 9,170 Boe/d (71% liquids, 51% oil)
    • Production up 1% sequentially from Q3 2021
  • Record royalty revenues totaling $47.0 million
    • Up 16% sequentially from Q3 2021 driven by 15% higher realized prices and 1% higher volumes
  • Continued cost control efforts drive general and administrative costs (before share based compensation) below revised 2021 guidance
    • Full year 2021 general and administrative costs 5% below revised 2021 guidance and 17% below initial 2021 guidance
  • Record net income totaling $21.7 million
    • Record Adjusted EBITDA(1) totaling $39.6 million up 13% sequentially from Q3 2021
  • Declared Q4 2021 dividend of $0.45 per share of Class A common stock(2)
    • Base Dividend of $0.14 per share of Class A common stock
    • Variable Dividend increased 19% sequentially to $0.31 per share of Class A common stock
    • Represents 80% payout of Discretionary Cash Flow ex lease bonus (1)
  • Record 12.9 net (1,723 gross) activity wells at year-end comprised of 7.4 net (850 gross) DUCs and 5.5 net (873 gross) permits
    • 24% sequential increase in net DUCs to 7.4 net locations and 31% sequential increase in net permits to 5.5 net locations
    • Permian Basin net activity wells increased to a record 7.2 net locations
    • 24.5 net activity wells in inventory at year-end normalized to 5,000’ laterals
  • Acquired 8,855 net royalty acres deploying $104 million in mineral acquisition capital
    • Closed DJ Basin acquisition totaling 8,395 net royalty acres that is estimated to add 1,100 to 1,200 Boe/d to 2022 production (50% liquids)
    • Deployed $9.8 million in ground game acquisition capital adding 460 net royalty acres (93% to the Permian Basin)
      • 46% of acquired net locations comprised of PDP, DUCs and permits
      • Ground game acquisitions entirely funded via portfolio rationalization and retained cash
  • Undrawn revolver capacity of $137.0 million and $20.8 million cash balance as of December 31, 2021
    • Conservative leverage at 0.5x last quarter annualized Adjusted EBITDA(1)

RECENT DEVELOPMENTS

  • Subsequent to year-end, continued portfolio optimization with divestiture of $7.1 million
    • Divested undeveloped Anadarko Basin Merge minerals with estimated 2022 production totaling 40 Boe/d
  • Significant 2022 acquisition momentum with entry into $32 million Midland Basin acquisition with Echo Minerals
    • Acquiring approximately 1,800 net royalty acres with 2022 production totaling approximately 225 - 275 Boe/d
    • Anticipated to be developed by Pioneer Natural Resources and Endeavor Energy Resources with 0.4 net activity wells
    • Transaction expected to close in early-to-mid April 2022, subject to continued diligence and satisfaction of customary closing conditions

2022 GUIDANCE

  • Anticipate increasing Quarterly Base Dividend 14% to $0.16 per share ($0.64 per share annualized) beginning with Q1 2022 Dividend(2)
    • Accretive acquisitions and continued growth in PDP reserves per share underpins strong and sustainable cash flow profile
    • Continue to target 75 - 80% total payout ratio inclusive of Base plus Variable Dividend
  • Full Year 2022 production guidance of 11,300 to 12,000 Boe/d driving year-over-year production growth of greater than 25%
    • Anchored by current producing locations, record activity wells and anticipated 2022 ground game acquisitions
    • See additional detail in 2022 Guidance table below

(1)

 

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

(2)

 

See “Quarterly Cash Dividend” below regarding Board approval of future dividends

Robert M. (“Rob”) Roosa, Chief Executive Officer, commented, “We are entering 2022 from a position of strength with a record 12.9 net activity wells in inventory, significant accretive ground game acquisition momentum and continued portfolio optimization. Our record activity well inventory is being driven by both organic development on our assets with over 200 gross wells spud on our minerals during the fourth quarter as well as our technical team executing on our accretive acquisition thesis, which added 2.8 net activity wells to inventory during the quarter. Importantly, our acquisition momentum has continued to carry over into the first quarter of 2022 with our entry into our largest Midland Basin deal to date. This transaction is anticipated to add approximately 250 Boe/d of production in 2022 as well as to continue to provide organic development from large, highly active operators including Pioneer and Endeavor. In total, our team has executed over $135 million in acquisitions since the beginning of Q4 2021 that, when combined with the steady PDP growth on our assets, is anticipated to allow us to increase our Quarterly Base Dividend in 2022 by 14% to $0.16 per share(2). Finally, we have continued to execute on our portfolio optimization efforts and subsequent to year-end divested $7.1 million in Anadarko Basin Merge minerals, which will provide us incremental capital to redeploy to the Permian.”

Blake C. Williams, Chief Financial Officer, added, “Through our disciplined underwriting process, we’ve prudently deployed capital to high return assets across our operating areas. As a result of our diligence and patience, we were able to capitalize on recent opportunities and remain well positioned to aggressively consolidate the mineral space in 2022. Further, our active portfolio management resulted in divesting largely undeveloped Oklahoma assets, while acquiring core Midland assets for 6x 2022E EBITDA(1) , and allows us to continue to manage our net debt levels. We will continue to high grade our portfolio and will do so whenever we find opportunities to generate proceeds in excess of our internal view of value in order to redeploy the capital into higher return assets. Lastly, our significant improvements in cost structure have generated an anticipated year over year reduction in G&A per boe of roughly 17%, which underscores our ability to further leverage the platform we have built to optimize consolidation of the broader minerals space.”

(1)

 

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

(2)

 

See “Quarterly Cash Dividend” below regarding Board approval of future dividends

OPERATIONAL UPDATE

Mineral and Royalty Interest Ownership Update

During the three months ended December 31, 2021, the Company executed 15 ground game acquisition transactions acquiring approximately 460 net royalty acres (standardized to a 1/8th royalty interest) and deployed $9.8 million in capital. The Company focused approximately 93% of its ground game mineral acquisition capital in the fourth quarter on the Permian Basin. In addition, we closed the previously announced DJ Basin asset acquisition for $43.1 million in cash and 2.2 million shares of our Class A common stock. Together, these recent acquisitions are expected to deliver near-term production and cash flow growth with the addition of 138 gross DUCs (1.6 net DUCs) and 134 gross permits (1.2 net permits) to inventory counts.

As of December 31, 2021, the Company had acquired roughly 92,375 net royalty acres, encompassing 13,093 gross (109.4 net) undeveloped horizontal locations, across 36 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, 2021

 

29,735

 

 

6,335

 

 

11,435

 

 

8,195

 

 

24,740

 

 

8,155

 

 

3,780

 

 

92,375

 

September 30, 2021

 

29,635

 

 

6,105

 

 

11,415

 

 

10,220

 

 

16,345

 

 

8,045

 

 

3,810

 

 

85,575

 

Acres Added & (Sold) Q/Q

 

100

 

 

230

 

 

20

 

 

(2,025

)

 

8,395

 

 

110

 

 

(30

)

 

6,800

 

% Added & (Sold) Q/Q

 

%

 

4

%

 

%

 

(20

)%

 

51

%

 

1

%

 

(1

)%

 

8

%

December 31, 2020

 

28,330

 

 

5,220

 

 

11,400

 

 

10,725

 

 

15,890

 

 

7,950

 

 

6,770

 

 

86,285

 

Acres Added & (Sold) in 2021

 

1,405

 

 

1,115

 

 

35

 

 

(2,530

)

 

8,850

 

 

205

 

 

(2,990

)

 

6,090

 

% Added & (Sold) in 2021

 

5

%

 

21

%

 

%

 

(24

)%

 

56

%

 

3

%

 

(44

)%

 

7

%

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

DUC Conversions Updates

During the fourth quarter 2021, the Company identified approximately 178 gross (1.0 net) horizontal wells converted to production, which represented 24% of its gross DUC inventory as of the third quarter 2021 (18% of net DUCs). Well conversions to proved developed producing during the fourth quarter are summarized in the table below:

Q4 2021 Well Additions to Proved Developed Producing(1)

 

 

Gross

 

Net

Converted DUCs

 

178

 

9%

 

1.0

 

9%

Acquired Wells Net of Divestitures

 

1,824

 

90%

 

10.1

 

90%

Converted Permitted and Other

 

29

 

1%

 

0.1

 

1%

Total

 

2,031

 

100%

 

11.2

 

100%

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

Drilling Activity Update

During the fourth quarter 2021, 202 gross (1.0 net) wells were spud on the Company's mineral position, which represents a 20% sequential increase in gross wells spud from the third quarter 2021. Brigham’s quarterly gross and net wells spud since 2019 are 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

 

Q3 21

 

Q4 21

Gross Wells Spud

230

 

248

 

214

 

185

 

209

 

36

 

57

 

79

 

132

 

153

 

169

 

202

Net Wells Spud

1.2

 

1.3

 

1.3

 

1.7

 

1.6

 

0.2

 

0.4

 

0.4

 

1.0

 

1.3

 

1.7

 

1.0

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

 

1.1

 

1.2

DUC and Permit Inventory Update

The Company expects 2022 production growth to be driven by the continued conversion of its record DUC and permit inventory. Brigham’s gross and net DUC and permit inventory as of December 31, 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

 

221

 

218

 

25

 

11

 

221

 

139

 

15

 

850

Permits

 

298

 

57

 

18

 

6

 

248

 

232

 

14

 

873

Net Inventory

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DUCs

 

2.3

 

2.2

 

0.1

 

0.1

 

2.4

 

0.3

 

0.1

 

7.4

Permits

 

2.5

 

0.2

 

0.1

 

0.1

 

2.1

 

0.5

 

 

5.5

Net Activity Wells (2)

 

4.8

 

2.4

 

0.2

 

0.2

 

4.5

 

0.8

 

0.1

 

12.9

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

(2) Net Activity Wells normalized to a 5,000 foot lateral length = 24.5

FINANCIAL UPDATE

Fourth Quarter 2021 Financial Update

For the three months ended December 31, 2021, crude oil, natural gas and NGL production volumes increased 1% to 9,170 Boe/d (71% liquids) as compared to third quarter 2021. Our volumes are 2% lower than the same prior year period, largely due to divestitures in the Anadarko and Extended Woodford Basins, which were partially offset by a 2% increase in Permian Basin volumes and a 21% increase in DJ Basin volumes.

Fourth quarter 2021 average realized prices were $75.87 per barrel of oil, $5.28 per Mcf of natural gas, and $38.92 per barrel of NGL, for a total equivalent price of $55.76 per Boe. This represents a 15% increase relative to third quarter 2021 and is 102% higher than the same prior year period level of $27.59 per Boe.

The Company’s net income was $21.7 million for the three months ended December 31, 2021. Adjusted EBITDA was $39.6 million for the three months ended December 31, 2021, up 13% from the third quarter 2021 and up 130% from the same prior-year period. Adjusted EBITDA ex lease bonus was $38.9 million for the three months ended December 31, 2021, up 17% from the third quarter 2021 and up 126% 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 2021 Financial Update

For the year ended December 31, 2021, crude oil, natural gas and NGL production volumes decreased 5% to 9,040 Boe/d (70% liquids) as compared to the prior year, due to a 15% decrease in non-Permian Basin volumes which was partially offset by a 3% increase in Permian Basin volumes.

Full year 2021 average realized prices were $66.08 per barrel of oil, $4.60 per Mcf of natural gas, and $29.35 per barrel of NGL, for a total equivalent price of $47.49 per Boe. This represents a 91% increase relative to 2020 realized prices of $24.85 per Boe.

The Company’s net income was $68.0 million for the year ended December 31, 2021. Adjusted EBITDA was $132.3 million for the year ended December 31, 2021, up 103% from the prior year. Adjusted EBITDA ex lease bonus was $127.8 million for the year ended December 31, 2021, up 115% 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, 2021, the Company had a cash balance of $20.8 million and $137 million of capacity on its revolving credit facility, providing the Company with total liquidity of $157.8 million.

Fourth Quarter and Full Year 2021 Financial and Operational Results

 

 

Three Months Ended December 31,

 

Years Ended December 31,

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

 

2021

 

2020

 

2021

 

2020

REVENUES

 

 

 

 

 

 

 

 

Oil sales

 

$

32,769

 

 

$

17,969

 

 

$

110,791

 

 

$

67,909

 

Natural gas sales

 

 

7,620

 

 

 

3,327

 

 

 

27,070

 

 

 

10,443

 

NGL sales

 

 

6,656

 

 

 

2,464

 

 

 

18,838

 

 

 

7,893

 

Total mineral and royalty revenues

 

$

47,045

 

 

$

23,760

 

 

$

156,699

 

 

$

86,245

 

Lease bonus and other revenue

 

 

624

 

 

 

 

 

 

4,518

 

 

 

5,478

 

Total revenues

 

$

47,669

 

 

$

23,760

 

 

$

161,217

 

 

$

91,723

 

PRODUCTION

 

 

 

 

 

 

 

 

Oil (MBbls)

 

 

432

 

 

 

445

 

 

 

1,677

 

 

 

1,823

 

Natural gas (MMcf)

 

 

1,445

 

 

 

1,451

 

 

 

5,886

 

 

 

5,809

 

NGLs (MBbls)

 

 

171

 

 

 

175

 

 

 

642

 

 

 

680

 

Equivalents (MBoe)

 

 

844

 

 

 

861

 

 

 

3,300

 

 

 

3,471

 

Equivalents per day (Boe/d)

 

 

9,170

 

 

 

9,361

 

 

 

9,040

 

 

 

9,483

 

REALIZED PRICES ($/Boe)

 

 

 

 

 

 

 

 

Oil ($/Bbl)

 

$

75.87

 

 

$

40.40

 

 

$

66.08

 

 

$

37.26

 

Natural gas ($/Mcf)

 

 

5.28

 

 

 

2.29

 

 

 

4.60

 

 

 

1.80

 

NGLs ($/Bbl)

 

 

38.92

 

 

 

14.11

 

 

 

29.35

 

 

 

11.61

 

Average Realized Price, without Derivatives

 

$

55.76

 

 

$

27.59

 

 

$

47.49

 

 

$

24.85

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

Gathering, transportation and marketing

 

$

1,851

 

 

$

1,879

 

 

$

6,818

 

 

$

6,985

 

Severance and ad valorem taxes

 

 

2,815

 

 

 

1,427

 

 

 

9,320

 

 

 

5,606

 

Depreciation, depletion, and amortization

 

 

9,548

 

 

 

12,411

 

 

 

36,677

 

 

 

48,238

 

Impairment of oil and gas properties

 

 

 

 

 

60,664

 

 

 

 

 

 

79,569

 

General and administrative (before share-based compensation)

 

 

3,441

 

 

 

3,220

 

 

 

12,772

 

 

 

14,090

 

Total Operating Expenses (before share-based compensation)

 

$

17,655

 

 

$

79,601

 

 

$

65,587

 

 

$

154,488

 

General and administrative, share-based compensation

 

 

2,166

 

 

 

1,837

 

 

 

9,703

 

 

 

7,529

 

Total operating expenses

 

$

19,821

 

 

$

81,438

 

 

$

75,290

 

 

$

162,017

 

INCOME (LOSS) FROM OPERATIONS

 

$

27,848

 

 

$

(57,678

)

 

$

85,927

 

 

$

(70,294

)

Other expenses:

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(596

)

 

 

(195

)

 

 

(1,701

)

 

 

(890

)

Other income, net

 

 

2

 

 

 

399

 

 

 

53

 

 

 

428

 

Income (loss) before income tax expense

 

$

27,254

 

 

$

(57,474

)

 

$

84,279

 

 

$

(70,756

)

Income tax expense (benefit)

 

 

5,536

 

 

 

(10,512

)

 

 

16,253

 

 

 

(12,762

)

NET INCOME (LOSS)

 

$

21,718

 

 

$

(46,962

)

 

$

68,026

 

 

$

(57,994

)

Less: net income attributable to predecessor

 

 

 

 

 

 

 

 

 

 

 

 

Less: net (income) loss attributable to non-controlling interests and temporary equity

 

 

(5,432

)

 

 

13,359

 

 

 

(17,743

)

 

 

15,582

 

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

 

$

16,286

 

 

$

(33,603

)

 

$

50,283

 

 

$

(42,412

)

 

 

 

 

 

 

 

 

 

Unit Expenses ($/Boe)

 

 

 

 

 

 

 

 

Gathering, transportation and marketing

 

$

2.19

 

 

$

2.18

 

 

$

2.07

 

 

$

2.01

 

Severance and ad valorem taxes

 

 

3.34

 

 

 

1.66

 

 

 

2.82

 

 

 

1.62

 

Depreciation, depletion and amortization

 

 

11.31

 

 

 

14.41

 

 

 

11.12

 

 

 

13.90

 

General and administrative (before share-based compensation)

 

 

4.08

 

 

 

3.74

 

 

 

3.87

 

 

 

4.06

 

General and administrative, share-based compensation

 

 

2.57

 

 

 

2.13

 

 

 

2.94

 

 

 

2.17

 

Interest expense, net

 

 

0.71

 

 

 

0.23

 

 

 

0.52

 

 

 

0.26

 

QUARTERLY CASH DIVIDEND

The Company’s Board of Directors (the “Board”) has declared a quarterly cash dividend for the fourth quarter 2021 of $0.45 per share of Class A common stock, to be paid on March 25, 2022 to holders of record as of March 18, 2022. This brings total capital returned through dividends to shareholders of $1.52 per share based on financial results for the full year 2021.

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.

2022 OPERATIONAL AND FINANCIAL GUIDANCE

Guidance Ranges

 

Low

 

High

Capital Allocation

 

 

 

 

Quarterly Base Dividend (Annualized)(1)

 

$0.16 ($0.64)

Payout Ratio (Base + Variable Dividend)

 

75%

80%

 

 

 

 

 

Daily Net Production (Boe/d)

 

11,300

12,000

Oil Cut (%)

 

48%

52%

Lease Bonus ($ millions)

 

$1.0

$3.0

 

 

 

 

 

Expenses

 

 

 

 

Cash G&A Expense ($ millions)

 

$13.3

$13.8

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

 

$ 3.20 Midpoint

Share Based Compensation Expense ($ millions)

 

$9.2

$10.0

Gathering, Transportation, and Marketing ($/Boe)

 

$2.75

$3.25

Production Taxes (% of Revenue)

 

7%

9%

 

 

 

 

 

Taxes

 

 

 

 

Tax Depletion ($/Boe)

 

$11.50

$13.50

Percent of Dividend Expected to be Return of Capital

 

20%

40%

 

 

 

 

 

Mineral Acquisition Capital

 

 

 

 

Ground Game Acquisition Budget ($ millions)(2)

 

$60

$80

(1) Subject to Board Approval

(2) Inclusive of $32 million Midland Basin acquisition

BRIGHAM MINERALS FOURTH QUARTER 2021 EARNINGS CONFERENCE CALL

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

  • February 28-March 2, 2022: Credit Suisse Energy Summit
  • March 21-23, 2022: Simmons Energy Conference

NON-GAAP FINANCIAL MEASURES

Adjusted Net Income, 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 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. 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 Net Income, 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, 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, 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, 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, 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 Net Income, Adjusted EBITDA and Adjusted EBITDA ex lease bonus

 

 

Three Months Ended December 31,

 

Years Ended December 31,

(In thousands, except for margin % data)

 

2021

 

2020

 

2021

 

2020

Net (Loss) Income

 

$

21,718

 

$

(46,962

)

 

$

68,026

 

$

(57,994

)

Add:

 

 

 

 

 

 

 

 

Impairment of oil and gas properties, after tax (1)

 

 

 

 

49,664

 

 

 

 

 

65,132

 

Adjusted Net Income

 

$

21,718

 

$

2,702

 

 

$

68,026

 

$

7,138

 

Add:

 

 

 

 

 

 

 

 

Depreciation, depletion, and amortization

 

 

9,548

 

 

12,411

 

 

 

36,677

 

 

48,238

 

Share-based compensation expense

 

 

2,166

 

 

1,836

 

 

 

9,703

 

 

7,529

 

Interest expense, net

 

 

596

 

 

195

 

 

 

1,701

 

 

890

 

Loss on derivative instruments, net

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

5,536

 

 

488

 

 

 

16,253

 

 

1,675

 

Less:

 

 

 

 

 

 

 

 

Other income, net

 

 

2

 

 

399

 

 

 

53

 

 

428

 

Adjusted EBITDA

 

$

39,562

 

$

17,233

 

 

$

132,307

 

$

65,042

 

Less:

 

 

 

 

 

 

 

 

Lease bonus and other revenue

 

 

624

 

 

 

 

 

4,518

 

 

5,478

 

Adjusted EBITDA ex lease bonus

 

$

38,938

 

$

17,233

 

 

$

127,789

 

$

59,564

 

(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.

Reconciliation of Discretionary Cash Flow and Discretionary Cash Flow ex lease bonus

 

 

Three Months Ended

(In thousands, except per share amounts)

 

December 31,

2021

 

September 30,

2021

 

June 30,

2021

 

March 31,

2021

Adjusted EBITDA (1)

 

$

39,562

 

 

$

34,904

 

 

$

30,776

 

 

$

27,065

 

Less:

 

 

 

 

 

 

 

 

Adjusted EBITDA attributable to non-controlling interest

 

 

(7,532

)

 

 

(7,094

)

 

 

(6,315

)

 

 

(6,230

)

Adjusted EBITDA attributable to Class A common stock

 

$

32,030

 

 

$

27,810

 

 

$

24,461

 

 

$

20,835

 

Less:

 

 

 

 

 

 

 

 

Cash interest expense

 

 

340

 

 

 

368

 

 

 

178

 

 

 

206

 

Cash taxes

 

 

3,125

 

 

 

3,238

 

 

 

3,200

 

 

 

1,800

 

Dividend equivalent rights

 

 

857

 

 

 

645

 

 

 

616

 

 

 

384

 

Discretionary cash flow to Class A common stock

 

$

27,708

 

 

$

23,559

 

 

$

20,467

 

 

$

18,445

 

Less:

 

 

 

 

 

 

 

 

Lease bonus

 

 

505

 

 

 

1,188

 

 

 

641

 

 

 

1,229

 

Discretionary cash flow ex lease bonus to Class A common stock

 

$

27,203

 

 

$

22,371

 

 

$

19,826

 

 

$

17,216

 

Payout Ratio:

 

 

80

%

 

 

80

%

 

 

80

%

 

 

80

%

Distributed cash flow to Class A common stock

 

$

21,762

 

 

$

17,897

 

 

$

15,861

 

 

$

13,773

 

 

 

 

 

 

 

 

 

 

Shares of Class A common stock

 

 

48,360

 

 

 

45,245

 

 

 

45,134

 

 

 

43,666

 

 

 

 

 

 

 

 

 

 

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

 

$

0.45

 

 

$

0.40

 

 

$

0.35

 

 

$

0.32

 

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

Common Stock Outstanding as of December 31, 2021:

Common stock by type

 

Share count

 

Percent of Total

Class A common stock

 

48,359,888

 

81.0

%

Class B common stock

 

11,371,517

 

19.0

%

Total

 

59,731,405

 

100

%

CONSOLIDATED BALANCE SHEETS

 

 

December 31,

(In thousands, except share data)

 

2021

 

2020

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

20,819

 

 

$

9,144

 

Restricted cash

 

 

200

 

 

 

 

Accounts receivable

 

 

30,539

 

 

 

17,632

 

Prepaid expenses and other

 

 

3,145

 

 

 

3,693

 

Total current assets

 

 

54,703

 

 

 

30,469

 

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

 

 

 

 

Unevaluated property

 

 

338,613

 

 

 

325,091

 

Evaluated property

 

 

633,138

 

 

 

488,301

 

Less accumulated depreciation, depletion, and amortization

 

 

(239,612

)

 

 

(189,546

)

Oil and gas properties, net

 

 

732,139

 

 

 

623,846

 

Other property and equipment

 

 

2,060

 

 

 

5,587

 

Less accumulated depreciation

 

 

(1,280

)

 

 

(4,632

)

Other property and equipment, net

 

 

780

 

 

 

955

 

Operating lease right-of-use asset

 

 

6,764

 

 

 

 

Deferred tax asset

 

 

25,308

 

 

 

24,920

 

Other assets, net

 

 

1,183

 

 

 

771

 

Total assets

 

$

820,877

 

 

$

680,961

 

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable and accrued liabilities

 

$

20,473

 

 

$

7,905

 

Current operating lease liability

 

 

1,178

 

 

 

 

Total current liabilities

 

 

21,651

 

 

 

7,905

 

Long-term bank debt

 

 

93,000

 

 

 

20,000

 

Non-current operating lease liability

 

 

5,742

 

 

 

 

Other non-current liabilities

 

 

810

 

 

 

1,126

 

Temporary equity

 

 

 

 

 

146,280

 

Equity:

 

 

 

 

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

 

 

 

 

 

 

Class A common stock, $0.01 par value; 400,000,000 authorized, 48,796,518 shares issued and 48,359,888 shares outstanding at December 31, 2021; 43,995,124 shares issued and 43,558,494 shares outstanding at December 31, 2020

 

 

488

 

 

 

440

 

Class B common stock, $0.01 par value; 150,000,000 authorized, 11,371,517 shares issued and outstanding at December 31, 2021; 13,167,687 shares issued and outstanding at December 31, 2020

 

 

 

 

 

 

Additional paid-in capital

 

 

634,564

 

 

 

601,129

 

Accumulated deficit

 

 

(105,096

)

 

 

(92,392

)

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

 

 

(3,527

)

 

 

(3,527

)

Total equity attributable to Brigham Minerals, Inc.

 

 

526,429

 

 

 

505,650

 

Non-controlling interests

 

 

173,245

 

 

 

 

Total equity

 

 

699,674

 

 

 

505,650

 

Total liabilities and equity

 

$

820,877

 

 

$

680,961

 

CONSOLIDATED AND COMBINED STATEMENT OF OPERATIONS

 

 

Years Ended December 31,

(In thousands, except per share data)

 

2021

 

2020

 

2019

REVENUES

 

 

 

 

 

 

Mineral and royalty revenues

 

$

156,699

 

 

$

86,245

 

 

$

97,886

 

Lease bonus and other revenues

 

 

4,518

 

 

 

5,478

 

 

 

3,629

 

Total revenues

 

$

161,217

 

 

$

91,723

 

 

$

101,515

 

OPERATING EXPENSES

 

 

 

 

 

 

Gathering, transportation and marketing

 

 

6,818

 

 

 

6,985

 

 

 

4,985

 

Severance and ad valorem taxes

 

 

9,320

 

 

 

5,606

 

 

 

6,409

 

Depreciation, depletion, and amortization

 

 

36,677

 

 

 

48,238

 

 

 

30,940

 

Impairment of oil and gas properties

 

 

 

 

 

79,569

 

 

 

 

General and administrative

 

 

22,475

 

 

 

21,619

 

 

 

21,963

 

Total operating expenses

 

$

75,290

 

 

$

162,017

 

 

$

64,297

 

INCOME (LOSS) FROM OPERATIONS

 

$

85,927

 

 

$

(70,294

)

 

$

37,218

 

Loss on derivative instruments, net

 

 

 

 

 

 

 

 

(568

)

Interest expense, net

 

 

(1,701

)

 

 

(890

)

 

 

(5,609

)

Loss on extinguishment of debt

 

 

 

 

 

 

 

 

(6,892

)

Other income, net

 

 

53

 

 

 

428

 

 

 

169

 

Income (loss) before income tax expense

 

$

84,279

 

 

$

(70,756

)

 

$

24,318

 

Income tax expense (benefit)

 

 

16,253

 

 

 

(12,762

)

 

 

2,679

 

NET INCOME (LOSS)

 

$

68,026

 

 

$

(57,994

)

 

$

21,639

 

Less: Net income attributable to Predecessor

 

 

 

 

 

 

 

 

(5,092

)

Less: net (income) loss attributable to non-controlling interests and temporary equity

 

 

(17,743

)

 

 

15,582

 

 

 

(9,646

)

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

 

$

50,283

 

 

$

(42,412

)

 

$

6,901

 

 

 

 

 

 

 

 

NET INCOME (LOSS) PER COMMON SHARE

 

 

 

 

 

 

Basic

 

$

1.13

 

 

$

(1.11

)

 

$

0.26

 

Diluted

 

$

1.10

 

 

$

(1.11

)

 

$

0.26

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

 

 

 

 

 

 

Basic

 

 

44,576

 

 

 

38,178

 

 

 

22,870

 

Diluted

 

 

45,632

 

 

 

38,178

 

 

 

22,870

 

CONSOLIDATED AND COMBINED STATEMENT OF CASH FLOWS

 

 

Years Ended December 31,

(In thousands)

 

2021

 

2020

 

2019

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net income (loss)

 

$

68,026

 

 

$

(57,994

)

 

$

21,639

 

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation, depletion and amortization

 

 

36,677

 

 

 

48,238

 

 

 

30,940

 

Impairment of oil and gas properties

 

 

 

 

 

79,569

 

 

 

 

Share-based compensation expense

 

 

9,703

 

 

 

7,529

 

 

 

10,049

 

Loss on extinguishment of debt

 

 

 

 

 

 

 

 

6,892

 

Amortization of debt issue costs

 

 

313

 

 

 

605

 

 

 

433

 

Deferred income tax expense/(benefit)

 

 

5,766

 

 

 

(9,942

)

 

 

665

 

Loss on derivative instruments, net

 

 

 

 

 

 

 

 

568

 

Net cash received for derivative settlements

 

 

 

 

 

 

 

 

470

 

Credit losses

 

 

475

 

 

 

299

 

 

 

669

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

(Increase) decrease in accounts receivables

 

 

(13,382

)

 

 

12,359

 

 

 

(10,246

)

Decrease (increase) in other current assets

 

 

442

 

 

 

(2,005

)

 

 

1,787

 

Decrease in other deferred charges

 

 

 

 

 

45

 

 

 

 

Increase (decrease) in accounts payables and accrued liabilities

 

 

1,288

 

 

 

(3,608

)

 

 

5,112

 

(Decrease) increase in other long-term liabilities

 

 

(109

)

 

 

165

 

 

 

47

 

Net cash provided by operating activities

 

$

109,199

 

 

$

75,260

 

 

$

69,025

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

Additions to oil and gas properties

 

 

(103,547

)

 

 

(66,498

)

 

 

(219,481

)

Additions to other fixed assets

 

 

(56

)

 

 

(492

)

 

 

(474

)

Proceeds from sale of oil and gas properties, net

 

 

13,620

 

 

 

1,565

 

 

 

3,123

 

Net cash used in investing activities

 

$

(89,983

)

 

$

(65,425

)

 

$

(216,832

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

Payments of short-term debt

 

 

 

 

 

 

 

 

(4,596

)

Payments of long-term debt

 

 

(4,000

)

 

 

 

 

 

(275,404

)

Borrowing of long-term debt

 

 

77,000

 

 

 

20,000

 

 

 

105,000

 

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 distributions

 

 

 

 

 

 

 

 

(441

)

Purchase of treasury stock

 

 

 

 

 

(3,527

)

 

 

 

Dividends paid

 

 

(60,614

)

 

 

(42,216

)

 

 

(14,663

)

Distributions to holders of non-controlling interest and temporary equity

 

 

(17,864

)

 

 

(24,670

)

 

 

(19,731

)

Debt issuance cost

 

 

(727

)

 

 

(208

)

 

 

(1,348

)

Payment of employee tax withholding for settlement of equity compensation awards

 

 

(1,136

)

 

 

(1,203

)

 

 

 

Net cash (used in) provided by financing activities

 

$

(7,341

)

 

$

(51,824

)

 

$

166,481

 

Change in cash and cash equivalents and restricted cash

 

 

11,875

 

 

 

(41,989

)

 

 

18,674

 

Cash and cash equivalents and restricted cash, beginning of period

 

 

9,144

 

 

 

51,133

 

 

 

32,459

 

Cash and cash equivalents and restricted cash, end of period

 

$

21,019

 

 

$

9,144

 

 

$

51,133

 

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 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, 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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