Brigham Exploration Company Announces 1998 Results, 1999 Capital Budget and Recent Developments.AUSTIN Austin. 1 City (1990 pop. 21,907), seat of Mower co., SE Minn., on the Cedar River, near the Iowa line; inc. 1868. The commercial and industrial center of a rich farm region, it is noted as home to the Hormel meatpacking company, whose Spam Town museum , Texas--(BUSINESS WIRE)--March 31, 1999--Brigham Exploration Company (Nasdaq:BEXP) today announced its 1998 financial and operational results together with its planned 1999 capital budget and several recent developments. YEAR-END year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 1998 FINANCIAL RESULTS Natural gas and oil sales for the year ended December December: see month. 31, 1998, totaled $13.8 million compared to $9.2 million for the same period last year, an increase of 50%. On an equivalent basis, the Company's net production volumes increased 113% to 6.6 Bcfe in 1998 from 3.1 Bcfe in 1997. The Company estimates that its net equivalent production rate at year-end 1998 was approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 18.5 MMcfe MMcfe Millions of Cubic Feet Equivalent (Per Day; gas exploration) per day. Brigham's average realized natural gas and oil equivalent sales price decreased 29% to $2.08 per Mcfe in 1998 from $2.94 per Mcfe in the prior year. Average realized sales prices during 1998 were $2.04 per Mcf for natural gas and $12.85 per Bbl for oil compared with average realized sales prices during 1997 of $2.56 per Mcf and $19.40 per Bbl, respectively. The Company utilizes the full-cost method of accounting for oil and natural gas properties. At December 31, 1998, the net booked costs of the Company's proved reserves proved reserves The quantity of minerals expected to be recoverable under current economic and operating conditions. The amount of proved reserves is important in valuing the stock of a company with significant holdings in natural resources. exceeded the estimated aftertax present value of future net revenues from such reserves, due primarily to lower oil and natural gas prices in effect at year-end 1998 and revisions ReVisions is a 2004 anthology of alternate history short-stories. It is edited by Julie E. Czerneda and Isaac Szpindel. Contents Title Author The Resonance of Light James Alan Gardner Out of China Julie E. to previous reserve estimates. As a result, the Company recorded a non-cash capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. ceiling impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charge of $24.8 million in the fourth quarter 1998. Despite the Company's increased production volumes in 1998 over 1997, lower commodity prices and increased interest expenses negatively impacted Brigham's EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become , operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. and net income. EBITDA for 1998 increased 43% to $6.5 million from $4.6 million last year, while operating cash flow decreased to $1.0 million ($0.08 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share) in 1998, a 71% decrease from $3.5 million ($0.31 per diluted share) for 1997. The Company reported a net loss of $33.3 million ($2.64 per diluted share) for 1998 as compared to a loss of $1.1 million ($0.10 per diluted share) for 1997. Excluding the $24.8 million non-cash capitalized ceiling impairment charge recognized during the fourth quarter 1998, the Company would have reported a net loss of $8.5 million, or $0.67 per diluted share, for the full-year 1998. FOURTH QUARTER 1998 FINANCIAL RESULTS On an equivalent basis, Brigham's net production volumes in the fourth quarter 1998 totaled 1.4 Bcfe, or an increase of 27% over fourth quarter 1997 volumes. Fourth quarter 1998 volumes decreased approximately 25% from the third quarter 1998 primarily due to higher than anticipated production decline on certain high working interest wells coupled with disappointing drilling results late in the year. Natural gas comprised 79% of Brigham's equivalent fourth quarter 1998 production volumes. Offsetting the growth in year-over-year production volumes, the Company's average realized natural gas and oil equivalent sales price decreased 39% to $1.76 per Mcfe in the fourth quarter 1998 as compared to $2.88 per Mcfe in the prior year quarter. Brigham's average natural gas sales price for the fourth quarter 1998 was $1.65 per Mcf compared to $2.77 per Mcf in the prior year period (a 41% decrease), while the Company's average oil sales price for the fourth quarter 1998 was $13.06 per Bbl compared to $18.03 per Bbl in the prior year period (a 28% decrease). Natural gas hedging hedging, in commerce, method by which traders use two counterbalancing investment strategies so as to minimize any losses caused by price fluctuations. It is generally used by traders on the commodities market. gains of $280,640, or $0.25 per Mcf, contributed to the Company's average realized natural gas sales price during the fourth quarter 1998. Natural gas and oil sales for the fourth quarter 1998 were $2.5 million compared to $3.2 million for the same period last year, a decrease of 22% due primarily to lower average sales prices in the current year period which more than offset the year-over-year growth in production volumes. Earnings before interest, taxes, depreciation, depletion depletion n. when a natural resource (particularly oil) is being used up. The annual amount of depletion may, ironically, provide a tax deduction for the company exploiting the resource because if the resource they are exploiting runs out, they will no longer be able and amortization (EBITDA) decreased 71% to $490,000 in the fourth quarter 1998 from $1.7 million in the fourth quarter 1997. Operating cash flow for the fourth quarter 1998 was a $1.2 million deficit ($0.09 deficit per diluted share), a reduction from $1.2 million ($0.09 per diluted share) for the same period in 1997. The Company reported a net loss of $31.1 million ($2.34 per diluted share) for the fourth quarter 1998 compared to net income of $4.0 million ($0.32 per diluted share) for the prior year period. Excluding the $24.8 million non-cash capitalized ceiling impairment charge, the Company would have reported a net loss of $6.3 million, or $0.47 per diluted share, for the fourth quarter 1998. 1998 OPERATIONAL REVIEW AND CAPITAL EXPENDITURES During 1998, Brigham Brigham may refer to the following: Place:
References 1. and Gulf Coast provinces that target primarily natural gas objectives. As a result, the Company has acquired an inventory of over 5,200 gross square miles of onshore on·shore adj. 1. Moving or directed toward the shore: an onshore wind. 2. Located on the shore: an onshore beacon; an onshore patrol. adv. 3-D seismic data. The Company spud 72 gross and 37.6 net wells in its 1998 drilling program. Of these wells, Brigham completed 50 gross (26.3 net) wells and plugged 22 gross (11.3 net) wells, resulting in drilling success rates for 1998 of 69% gross and 70% net. The Company operated the drilling of 57% of the gross and 76% of the net wells it participated in during 1998. Brigham's average working interest retained in its wells drilled increased to 52% in 1998 from 39% in 1997. Capital expenditures in 1998 totaled approximately $85 million, consisting primarily of $41 million for land and 3-D seismic related to the assemblage assemblage: see collage. assemblage Three-dimensional construction made from household materials such as rope and newspapers or from any found materials. of exploration projects and $37 million for drilling. The remaining $7 million was related to small property acquisitions, capitalized G&A and other fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → . YEAR-END 1998 PROVED RESERVES AND DRILLING COSTS Brigham's estimated net proved reserve volumes at December 31, 1998, were 97.8 Bcfe, approximately 73% of which are natural gas and 57% are proved developed. During 1998, the Company added 58.6 Bcfe principally through its 3-D seismic-based drilling program. These reserve additions were offset in part by 27.4 Bcfe in aggregate negative revisions to previous reserve estimates, largely attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to disappointing drilling results on several proved undeveloped locations booked on two structures during 1997. Including these revisions, the Company's net proved reserve additions in 1998 totaled 31.2 Bcfe, resulting in a 35% increase in net proved reserves and the replacement of nearly 470% of net volumes produced during the year. While the Company experienced a number of drilling successes in 1998, these were partially offset by seven disappointing high working interest wells drilled late in 1998. Three of these wells were the proved undeveloped locations directly offsetting Brigham's late 1997 Christopher 84 No. 1 Lower Morrow mor·row n. 1. The following day: resolved to set out on the morrow. 2. The time immediately subsequent to a particular event. 3. Archaic The morning. discovery in the Anadarko Basin. The Company also had four relatively high potential exploration wells in the fourth quarter of 1998, in which it retained working interests in excess of 75%, which were either dry or that did not perform as anticipated subsequent to completion. Two of these wells were in the Wilcox Wilcox may refer to: Place names in the United States
See Wilcox (surname) Other
As a result, the Company's net drilling expenditures per Mcfe added in 1998 (including revisions) was $1.18, significantly higher than its historical drilling cost average of $0.64 per Mcfe achieved from inception INCEPTION. The commencement; the beginning. In making a will, for example, the writing is its inception. 3 Co. 31 b; Plowd. 343. Vide Consummation; Progression. in 1990 through 1997. Inclusive of inclusive of prep. Taking into consideration or account; including. its disappointing 1998 drilling results, the Company's inception-to-date net drilling cost average is $0.82 per Mcfe added overall, while Brigham's historical average net drilling costs in its Anadarko Basin and Gulf Coast provinces, where all of its planned 1999 drilling is concentrated, are $0.68 and $0.59 per Mcfe added, respectively. The present value of Brigham's estimated proved reserves, calculated in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with SEC guidelines guidelines, n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. ("PV10% Value"), increased 18% to $81.7 million at year-end 1998 from $69.2 million at year-end 1997. The Company's 1998 reserve report was based on a West Texas Intermediate oil price of $9.50 per barrel barrel: see English units of measurement. and a Henry Hub Henry Hub is the pricing point for natural gas futures contracts traded on the New York Mercantile Exchange (NYMEX). It is a point on the natural gas pipeline system in Erath, Louisiana. It is owned by Sabine Pipe Line LLC. natural gas price of $2.12 per MMBtu, which represent price declines of approximately 37% and 7%, respectively, from 1997 year-end prices. The Company estimated that its PV10% Value at year-end 1998 would have been approximately $102 million had it used oil and natural gas prices in effect at year-end 1997. PLANNED 1999 CAPITAL BUDGET The Company's current 1999 capital budget is estimated to be $17.5 million, which represents a significant reduction from 1998 expenditures and its previously anticipated 1999 levels in an effort to match Brigham's current and expected future capital resources. The Company's budgeted 1999 capital expenditures consist of approximately $10 million to drill an estimated 20 to 25 gross wells, $3.5 million for seismic and land costs (primarily previous commitments and obligations to acquire 3-D data and acreage), and $4 million for capitalized general and administrative expenses and other fixed asset expenditures. Brigham expects that its 1999 drilling expenditures will be allocated approximately 50% to its Anadarko Basin province and 50% to its Gulf Coast province, and such expenditures will be devoted to the drilling of the highest grade prospects in the Company's inventory of identified potential drilling locations. In addition, Brigham's 1999 drilling program will be concentrated within trends where the Company has experienced exploration success to date. Management believes that the Company has an attractive opportunity to profitably drill its highest-grade 3-D delineated de·lin·e·ate tr.v. de·lin·e·at·ed, de·lin·e·at·ing, de·lin·e·ates 1. To draw or trace the outline of; sketch out. 2. To represent pictorially; depict. 3. locations due to its historical drilling costs per Mcfe added and the currently low cost drilling environment. Therefore, management's goal is to access additional capital to further monetize Monetize 1. To convert into money. 2. To convert from securities into currency that can be used to purchase goods and services. Notes: For example, you'll often hear Internet marketers talk about "monetizing website visitors. its prospect inventory. As a result, the Company's actual capital expenditures in 1999 may increase or decrease significantly from these estimates based upon capital availability during the year. RECENT DEVELOPMENTS Brigham has recently implemented a number of strategic initiatives in an effort to improve its capital availability to fund its working capital needs and planned capital expenditures in 1999. The Company believes that the successful execution of these strategic initiatives will provide Brigham with sufficient capital resources to execute To run a program, which causes the computer to carry out its instructions. See executable code, instruction and EXE file. execute - execution its planned 1999 exploration program, and thereby position the Company to realize the substantial value it believes it has captured in its inventory of 3-D seismic projects and delineated drilling locations. Thus far in 1999 the Company has made significant progress on a number of its key strategic initiatives, having (i) added potentially significant additional reserve value, (ii) secured the ability to defer de·fer 1 v. de·ferred, de·fer·ring, de·fers v.tr. 1. To put off; postpone. 2. To postpone the induction of (one eligible for the military draft). v.intr. approximately $7.2 million in cash interest payment obligations otherwise due in 1999 and 2000, and (iii) raised approximately $15 million in project and corporate equity capital, as discussed below. In addition to these initiatives, Brigham is evaluating opportunities to raise additional equity capital either through the sales of interests in its 3-D seismic projects or the issuance of equity securities. Recent Drilling Activity In late 1998 and during the first quarter of 1999, Brigham participated in several important drilling discoveries in its Anadarko Basin and Gulf Coast provinces. Based on the results to date from its drilling activity during the first quarter of 1999, the Company believes it has more than replaced anticipated net production volumes during the period. During the fourth quarter 1998, the Company made a potentially significant Lower Vicksburg Vicksburg, city (1990 pop. 20,908), seat of Warren co., W Miss., on bluffs above the Mississippi River at the mouth of the Yazoo; inc. 1825. An important port, it is the commercial, processing, and shipping center for a cotton, timber, and livestock area. discovery in its Gulf Coast province with the completion of the Brigham-operated Palmer palmer: see pilgrim. State No. 1 well (33% working interest) in Brooks County, Texas Brooks County is a county located in the U.S. state of Texas. As of 2000, the population is 7,976. Its county seat is Falfurrias6. Brooks is named for James Abijah Brooks, a Texas Ranger and legislator. Geography According to the U.S. . The Palmer State No. 1 was successfully completed in three of five possible Lower Vicksburg pay zones at depths ranging from 9,600 to 12,800 feet and initially tested at a rate of 2.8 MMcf of natural gas and 668 Bbls of condensate condensate, matter in the form of a gas of atoms, molecules, or elementary particles that have been so chilled that their motion is virtually halted and as a consequence they lose their separate identities and merge into a single entity. per day. This well discovered 10.5 gross Bcfe of proved reserves and appears to be located on the downdip flank flank (flank) the side of the body between ribs and ilium. flank n. 1. The side of the body between the pelvis or hip and the last rib; the side. 2. of a structure which exceeds 800 acres in closure and contains potential reserves exceeding 50 Bcfe. A minimum of five potential development locations have been identified on the crest crest, in feudal livery, an ornament of the headpiece that afforded protection against a blow. The term is incorrectly used to mean family coat of arms. Crests were widely used in the 13th cent. of the structure which are updip to the Palmer State No. 1 discovery well, the first of which is expected to spud in the late second or early third quarter of 1999. Brigham has completed two significant wells, both of which were spud near year-end 1998, in its Anadarko Basin province. In the Company's Arnett Arnett as a personal name can refer to:
a North American term commonly used to describe heifers close to term with their first calf. sands. In addition to these completed wells, the Company is also in the process of testing two additional potentially significant wells in its Anadarko Basin and Gulf Coast provinces. In the Anadarko Basin, the Company spud an exploratory well near year-end 1998 in its Arnett Project to test a dual objective Morrow and Hunton Hunton, as a person, may refer to:
A river of southern Texas flowing about 354 km (220 mi) south and southeast to the Nueces River. well in its Southwest Southwest or south west is the ordinal direction halfway between south and west, the opposite of northeast. Southwest or south west may also refer to:
 d'), in physics, maximum displacement from a zero value or rest position. that
appears to be larger than Brigham's nearby Nold Gas Unit No. 1
discovery that has produced an average of 2.6 MMcf of natural gas per
day since August 1998. The Company expects to receive test results from
these two wells during the next several weeks.
Debt Amendments In late March 1999, the Company entered into separate agreements with its senior and subordinated Subordinated A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. lenders to amend certain terms and covenants of the Company's revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility (the "Credit Facility") and Senior Subordinated Secured Notes due 2003 (the "Subordinated Notes"). These amendments improve the Company's liquidity to fund its working capital and planned 1999 capital expenditures and enable the Company to comply with the financial covenants of its debt agreements. Pursuant to the amendment to the Credit Facility, the current $65 million borrowing availability under the Credit Facility has been extended from January January: see month. 31, 1999, to June June: see month. 1, 1999, when the borrowing availability will be redetermined by the lenders based on the Company's then proved reserve value and cash flow. In addition, certain financial and other covenants of the Credit Facility have been amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. or added. At March 31, 1999, the Company had $59 million in borrowings outstanding under the Credit Facility. The recent amendment to the terms of the Subordinated Notes provides the Company with the option to pay interest due on the Subordinated Notes in kind (or through the issuance of additional notes), for any reason, through the second quarter of 2000. If the Company exercises this option for each of the next six quarterly interest payments, it would defer cash interest payment obligations of approximately $4.8 million in 1999 and $2.4 million in 2000. In addition, certain financial and other covenants were amended. The amendment also reduced the exercise price per share of the warrants to purchase one million shares of the Company's common stock that were issued in connection with the placement of the Subordinated Notes. The amended exercise price for these warrants is $3.50 per share as compared with the original $10.45 per share exercise price. At March 31, 1999, the Company had $41.3 million (principal amount) of Subordinated Notes outstanding. Seismic Project Sales The Company believes its 3-D seismic projects, which represent investments of more than $60 million in 1997 and 1998 alone, have substantial value, a portion of which Brigham plans to monetize in 1999. Thus far, Brigham has raised $11.5 million during the first quarter through the sale of interests in six 3-D seismic projects in two separate transactions. In January 1999, the Company sold a 15% working interest in its 160 square mile Hawkins Ranch ranch, large farm devoted chiefly to raising and breeding cattle, horses, sheep, and goats. The cattle ranch was introduced from Latin America to Texas and the plains of the W United States and Canada. Project located in Matagorda County, Texas Matagorda County is a county located in the U.S. state of Texas. As of 2000, the population was 37,957. Its county seat is Bay City6. Matagorda County is named for the canebrakes which once grew along the coast (Matagorda is a Spanish word meaning "thick bush"). , to an industry participant Participant A party of a funding. It usually refers to the lowest rank or smallest level of funding. for $1.5 million. As a result, Brigham currently retains a 60% working interest in this project and expects drilling activity to commence in 1999. In February February: see month. 1999, Brigham entered into a project financing Project financing A form of asset-based financing in which a firm finances a discrete set of assets on a stand-alone basis. arrangement with Duke Energy Financial Services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. , Inc. ("Duke") to fund the continued exploration of five projects covered by approximately 200 square miles of 3-D seismic data acquired in 1998 as part of its Anadarko Basin Alliance II program. In this transaction, the Company initially conveyed 100% of its working interest (land and seismic) in these project areas to a newly formed limited liability company (the "Duke LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control ") for total consideration of $10 million. The Company is the managing member of the Duke LLC with a 1% interest, and Duke is the sole remaining member with a 99% interest. Pursuant to the terms of the Duke LLC agreement, Brigham pays 100% of the drilling and completion costs for all wells drilled by the Duke LLC within the designated project areas in exchange for a 70% working interest in the wells, with the remaining 30% working interest remaining in the Duke LLC, subject in each instance to proportionate pro·por·tion·ate adj. Being in due proportion; proportional. tr.v. pro·por·tion·at·ed, pro·por·tion·at·ing, pro·por·tion·ates To make proportionate. reduction by any ownership rights held by third parties. Upon 100% project payout pay·out n. 1. The act or an instance of paying out. 2. A percentage of corporate earnings that is paid as dividends to shareholders. , the Company has the right to back-in for 80% of the Duke LLC's 30% working interest in all of the then producing wells, thereby increasing the Company's effective working interest in the Duke LLC wells from 70% to 94%. After project payout Brigham would have a 94% working interest in any subsequently drilled wells within the designated project areas governed gov·ern v. gov·erned, gov·ern·ing, gov·erns v.tr. 1. To make and administer the public policy and affairs of; exercise sovereign authority in. 2. by the Duke LLC agreement. The Company considers this project financing arrangement to be beneficial as it enabled Brigham to recoup recoup To sell an asset at a price sufficient to recover the original outlay or to offset a previous loss. substantially all of its pre-seismic land and seismic data acquisition costs incurred in these projects areas. Furthermore, it enabled Brigham to retain a significant working interest in the future exploration of these projects and provided the Company with the capital to drill the first six wells in this program. Potential Property Divestitures As part of its strategic initiatives to improve its capital resources and liquidity in 1999, Brigham has engaged Randall Randall may refer to the following: In places:
Divest is usually used in reference to the relinquishment of authority, power, property, or title. If, for example, an individual is disinherited, he or she is divested of the right to inherit money. all or a portion of these reserves, depending primarily upon the offers received during the marketing process. Brigham anticipates receiving bids from potential purchasers for these properties in late April 1999. Equity Placement On March 30, 1999, the Company entered into an agreement with Veritas Ver´i`tas n. 1. The Bureau Veritas. See under Bureau. DGC DGC Directors Guild of Canada DGC Distributed Garbage Collector DGC Dystrophin-associated Glycoprotein Complex DGC Data General Corporation DGC Dakota Gasification Company DGC Dirección General de Caminos (Guatemala) Land, Inc. ("Veritas") to exchange 1,002,865 shares of newly issued Brigham common stock valued at $3.50 per share for approximately $3.5 million of payment obligations due to Veritas in 1999 for certain seismic acquisition and processing services previously performed. In addition, this agreement provides for the payment by Brigham of up to $1 million in future seismic processing services to be performed by Veritas in newly issued shares of Brigham common stock valued at $3.50 per share, in the event that the Company does not elect to pay for such services in cash. The settlement of these future seismic processing services will be determined on a quarterly basis through December 31, 1999. Brigham considers this arrangement to be beneficial as it will enable the Company to reduce its working capital commitments and preserve additional cash flow and capital availability to fund its 1999 drilling program. The Company believes this equity transaction represents a significant commitment to Brigham's long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. growth strategy by one of its most significant service providers. Overhead Reduction Initiatives The Company has implemented a number of measures to reduce its overhead costs overhead costs see fixed costs. , including a Company-wide salary reduction and the elimination or reduction of various discretionary administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. . Brigham will continue to optimize optimize - optimisation its personnel and allocate To reserve a resource such as memory or disk. See memory allocation. its resources to improve efficiency and the execution of its business strategy during 1999. MANAGEMENT COMMENT Bud Brigham, the Company's Chairman, CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. and President, stated, "1998 was challenging for several reasons. First, we are disappointed in our overall 1998 drilling results. Our 1998 net drilling cost of $1.18 per Mcfe added is significantly higher than our historical results and our expectations. Second, while our business model has proven to be effective, optimizing it in 1998 proved to be quite difficult. Had we had better vision regarding commodity prices and the changing industry and capital markets environment, we certainly would have moderated our significant investments in 3-D seismic and land in 1997 and 1998. Of fundamental long-term importance, however, our business model generates low drilling costs, as evidenced by our inception-to-date average net drilling cost of $0.82 per Mcfe. Furthermore, our 1999 drilling program is focused on those plays and projects where we've we've Contraction of we have. we've have enjoyed good results to date. All of our planned 1999 drilling is concentrated in the Anadarko Basin and the onshore Gulf Coast, where we've achieved lower average inception-to-date drilling costs of $0.68 and $0.59 per Mcfe, respectively." Brigham further added, "Our Company is presented with a compelling opportunity to further monetize our multi-year drilling inventory in this remarkably low cost drilling environment. This inventory is easily our best resource, as evidenced by the fact that we have raised $11.5 million in the first quarter through the sale of minority equity interests in our 3-D projects. The initiatives we've undertaken are a reflection of our determination to leverage our outstanding assets and to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. the significant opportunities to deliver improved profitability and value creation for our Company and our shareholders in 1999." Except for the historical information contained herein, the matters discussed in this news release are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that are based upon current expectations. Important factors that could cause actual results to differ materially from those in the forward-looking statements include risks inherent in exploratory drilling activities, the timing and extent of changes in commodity prices, unforeseen engineering and mechanical or technological difficulties in drilling wells, availability of drilling rigs, land issues, federal and state regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. developments and other risks more fully described in the company's filings with the Securities and Exchange Commission. Brigham Exploration Company (www.bexp3d.com) is an independent exploration and production company that applies 3-D seismic imaging and other advanced technologies to systematically explore and develop onshore domestic natural gas and oil provinces. For further information, please contact Investor Relations Investor relations The process by which the corporation communicates with its investors. at 512/427-3444 or mail requests to 6300 Bridge Point Parkway, Building Two, Suite 500, Austin, TX 78730. -0-
BRIGHAM EXPLORATION COMPANY
SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three Months Ended December 31,
---------------------------------
1997 1998
-------------- --------------
(unaudited)
Revenues:
Natural gas and oil sales $ 3,233 $ 2,507
Workstation revenue 180 68
-------------- --------------
3,413 2,575
Costs and expenses:
Lease operating 364 630
Production taxes 210 145
General and administrative 1,120 1,310
Depletion of natural gas
and oil properties 631 3,930
Capitalized ceiling impairment -- 24,847
Depreciation and amortization 75 125
Amortization of stock compensation 116 74
-------------- --------------
2,516 31,061
-------------- --------------
Operating income (loss) 897 (28,486)
Interest expense, net (535) (2,687)
-------------- --------------
Net income (loss) before
income taxes 362 (31,173)
Income tax benefit (expense) 3,591 51
-------------- --------------
Net income (loss) $ 3,953 $ (31,122)
============== ==============
Net income (loss) per share:
Basic $ 0.32 $ (2.34)
Diluted $ 0.32 $ (2.34)
Wt. avg. common shares outstanding:
Basic 12,254 13,306
Diluted 12,475 13,403
Years Ended December 31,
----------------------------------
1997 1998
-------------- --------------
Revenues:
Natural gas and oil sales $ 9,184 $ 13,799
Workstation revenue 637 390
-------------- --------------
9,821 14,189
Costs and expenses:
Lease operating 1,151 2,172
Production taxes 549 850
General and administrative 3,570 4,672
Depletion of natural gas
and oil properties 2,743 8,410
Capitalized ceiling impairment -- 24,847
Depreciation and amortization 306 413
Amortization of stock
compensation 388 372
-------------- --------------
8,707 41,736
-------------- --------------
Operating income (loss) 1,114 (27,547)
Interest expense, net (1,045) (6,984)
-------------- --------------
Net income (loss) before
income taxes 69 (34,531)
Income tax benefit (expense) (1,186)(a) 1,186
-------------- --------------
Net income (loss) $ (1,117) $ (33,345)
============== ==============
Net income (loss) per share:
Basic $ (0.10) $ (2.64)
Diluted $ (0.10) $ (2.64)
Wt. avg. common shares outstanding:
Basic 11,081 12,626
Diluted 11,198 12,832
PRODUCTION, SALES PRICES AND OTHER FINANCIAL DATA
Three Months Ended December 31,
--------------------------------
1997 1998
-------------- ------------
(unaudited)
Avg. net daily production:
Natural gas (MMcf) 6.6 12.5
Oil (Bbls) 972 551
Equivalent natural gas (MMcfe) (6:1) 12.4 15.8
Total net production:
Natural gas (MMcf) 594 1,125
Oil (MBbls) 88 50
Equivalent natural gas (MMcfe) (6:1) 1,120 1,422
% Natural gas 53% 79%
Sales prices:
Natural gas ($/Mcf) (b) $ 2.77 $ 1.65
Oil ($/Bbl) $ 18.03 $ 13.06
Equivalent natural gas ($/Mcfe) (6:1) $ 2.88 $ 1.76
Other financial data:
EBITDA ($000) $ 1,719 $ 490
Operating cash flow ($000) (c) $ 1,184 $ (1,215)
Operating cash flow per diluted
share (c) $ 0.09 $ (0.09)
Years Ended December 31,
--------------------------------
1997 1998
-------------- -------------
Avg. net daily production:
Natural gas (MMcf) 3.8 11.9
Oil (Bbls) 807 1,100
Equivalent natural gas (MMcfe) (6:1) 8.7 18.5
Total net production:
Natural gas (MMcf) 1,382 4,269
Oil (MBbls) 291 396
Equivalent natural gas (MMcfe) (6:1) 3,126 6,644
% Natural gas 44% 64%
Sales prices:
Natural gas ($/Mcf) (b) $ 2.56 $ 2.04
Oil ($/Bbl) $ 19.40 $ 12.85
Equivalent natural gas ($/Mcfe) (6:1) $ 2.94 $ 2.08
Other financial data:
EBITDA ($000) $ 4,551 $ 6,495
Operating cash flow ($000) (c) $ 3,506 $ 1,030
Operating cash flow per diluted
share (c) $ 0.31 $ 0.08
(a) Includes a net $1.2 million, or $0.10 per basic and diluted
share, non-cash deferred income tax charge related to the
Company's conversion from a partnership to a corporation in the
year ended December 31, 1997.
(b) Includes the effects of natural gas hedging gains of $280,640, or
$0.25 per Mcf, in the three months ended December 31, 1998, and
$555,340, or $0.13 per Mcf, in the year ended December 31, 1998.
(c) Net income (loss) plus DD&A expenses, deferred income taxes and
other non-cash items.
BRIGHAM EXPLORATION COMPANY
SUMMARY CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31, December 31,
1997 1998
-------------- --------------
Assets:
Current assets $ 6,890 $ 10,797
Natural gas and oil properties,
at cost, net 84,294 134,317
Other property and equipment,
at cost, net 1,239 2,014
Other non-current assets 96 3,388
-------------- --------------
Total assets $ 92,519 $ 150,516
============== ==============
Liabilities and stockholders'
equity:
Current liabilities $ 15,513 $ 23,513
Notes payable 32,000 59,000
Senior subordinated notes, net -- 35,786
Deferred income tax liability 1,186 --
Other non-current liabilities 507 7,536
-------------- --------------
Total liabilities 49,206 125,835
Stockholders' equity 43,313 24,681
-------------- --------------
Total liabilities and
stockholders' equity $ 92,519 $ 150,516
============== ==============
SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended December 31,
--------------------------------
1997 1998
-------------- -------------
(unaudited)
Cash flows from operating
activities:
Net loss $ 3,953 $ (31,122)
Depletion, depreciation and
amortization 706 4,055
Capitalized ceiling impairment -- 24,847
Amortization of deferred stock
compensation 116 74
Amortization of deferred loan fees -- 263
Amortization of discount on senior
subordinated notes -- 212
Non-cash interest expense on senior
subordinated notes -- 507
Changes in deferred income tax
liability (3,591) (51)
-------------- -------------
Operating cash flow 1,184 (1,215)
Changes in working capital and
other items 5,712 12,144
-------------- -------------
Cash flows from operating activities 6,896 10,929
Cash flows used by investing
activities (34,554) (31,456)
Cash flows provided by financing
activities 23,949 21,845
-------------- -------------
Net increase (decrease) in cash
and cash equivalents $ (3,709) $ 1,318
============== =============
Years Ended December 31,
--------------------------------
1997 1998
-------------- -------------
Cash flows from operating
activities:
Net loss $ (1,117) $ (33,345)
Depletion, depreciation and
amortization 3,049 8,823
Capitalized ceiling impairment -- 24,847
Amortization of deferred stock
compensation 388 372
Amortization of deferred loan fees -- 726
Amortization of discount on senior
subordinated notes -- 286
Non-cash interest expense on senior
subordinated notes -- 507
Changes in deferred income tax
liability 1,186 (1,186)
-------------- ------------
Operating cash flow 3,506 1,030
Changes in working capital and
other items 6,300 12,592
-------------- ------------
Cash flows from operating activities 9,806 13,622
Cash flows used by investing
activities (57,300) (85,075)
Cash flows provided by financing
activities 47,748 72,321
-------------- ------------
Net increase (decrease) in cash
and cash equivalents $ 254 $ 868
============== ============
SUMMARY PER MCFE DATA
Three Months Ended December 31,
--------------------------------
1997 1998
-------------- -------------
(unaudited)
Revenues:
Natural gas and oil sales $ 2.89 $ 1.76
Workstation revenue 0.16 0.05
-------------- -------------
3.05 1.81
Costs and expenses:
Lease operating 0.33 0.44
Production taxes 0.19 0.10
General and administrative 1.00 0.92
Depletion of natural gas and oil
properties 0.56 2.76
Capitalized ceiling impairment -- 17.47
Depreciation and amortization 0.07 0.09
Amortization of stock compensation 0.10 0.05
-------------- -------------
2.25 21.83
-------------- -------------
Operating income (loss) $ 0.80 $ (20.02)
============== =============
Years Ended December 31,
--------------------------------
1997 1998
-------------- -------------
(unaudited)
Revenues:
Natural gas and oil sales $ 2.94 $ 2.08
Workstation revenue 0.20 0.06
-------------- -------------
3.14 2.14
Costs and expenses:
Lease operating 0.37 0.33
Production taxes 0.18 0.13
General and administrative 1.14 0.70
Depletion of natural gas and oil
properties 0.88 1.27
Capitalized ceiling impairment -- 3.74
Depreciation and amortization 0.10 0.06
Amortization of stock compensation 0.12 0.06
-------------- -------------
2.79 6.29
-------------- -------------
Operating income (loss) $ 0.35 $ (4.15)
============== =============
BRIGHAM EXPLORATION COMPANY
DRILLING AND 3-D SEISMIC ACTIVITY BY REGION
(unaudited)
Q4 1998
-------------------------
Gross Net WI%
Anadarko Basin Wells Spud:
Completed 6 3.2 54%
P&A 8 4.0 50%
Drilling 0 0.0 0%
---- ---- ----
Total 14 7.2 52%
==== ==== ====
Success Rate 43% 45%
Sq. Miles Seismic Acquired 165 109 66%
Gulf Coast Wells Spud:
Completed 5 4.2 84%
P&A 2 0.9 47%
Drilling 0 0.0 0%
---- --- ---
Total 7 5.1 73%
==== === ===
Success Rate 71% 82%
Sq. Miles Seismic Acquired 0 0 0%
West Texas Wells Spud:
Completed 1 0.4 39%
P&A 0 0.0 0%
Drilling 0 0.0 0%
---- ---- ----
Total 1 0.4 39%
==== ==== ====
Success Rate 100% 100%
Sq. Miles Seismic Acquired 0 0 0%
Overall Wells Spud:
Completed 12 7.8 65%
P&A 10 4.9 49%
Drilling 0 0.0 0%
---- ----- ----
Total 22 12.7 58%
==== ===== ====
Success Rate 55% 61%
Sq. Miles Seismic Acquired 165 109 66%
Q1 - Q4 1998
-------------------------
Gross Net WI%
Anadarko Basin Wells Spud:
Completed 27 13.6 50%
P&A 13 5.9 45%
Drilling 0 0.0 0%
---- ---- ----
Total 40 19.5 49%
==== ===== ====
Success Rate 68% 70%
Sq. Miles Seismic Acquired 583 511 88%
Gulf Coast Wells Spud:
Completed 17 10.0 59%
P&A 4 1.9 48%
Drilling 0 0.0 0%
---- ---- ----
Total 21 11.9 57%
==== ==== ====
Success Rate 81% 84%
Sq. Miles Seismic Acquired 590 417 71%
West Texas Wells Spud:
Completed 6 2.7 45%
P&A 5 3.5 70%
Drilling 0 0.0 0%
---- ---- ----
Total 11 6.2 57%
==== ==== ====
Success Rate 55% 43%
Sq. Miles Seismic Acquired 40 40 100%
Overall Wells Spud:
Completed 50 26.3 53%
P&A 22 11.3 51%
Drilling 0 0.0 0%
---- ---- ----
Total 72 37.6 52%
==== ===== ====
Success Rate 69% 70%
Sq. Miles Seismic Acquired 1,213 968 80%
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