Brigham Exploration Reports Record Second Quarter 2001 Financial Results and 68% Growth in Production Volumes.Business Editors & Energy WritersAUSTIN 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)--Aug. 8, 2001 Brigham Brigham may refer to the following: Place:
Brigham continues to post record results, including significant growth in production volumes and cash flow from levels achieved in the second quarter 2000. Highlights of Brigham's financial performance during the second quarter include: -- Production volumes averaged 29.5 MMcfe per day, a 68% increase over 17.6 MMcfe per day for the same three month period a year ago and 28% over 22.9 MMcfe per day for the first quarter 2001; -- EBITDA increased 178% to $7.2 million from $2.6 million for the second quarter 2000 and 41% from $5.1 million for the first quarter 2001, due to the combined effects of higher production volumes and improvement in realized natural gas sales prices; and -- Operating cash flow more than tripled to $6.0 million from $1.6 million for the same period a year ago and increased 60% from first quarter 2001 levels. SECOND QUARTER 2001 RESULTS Average net daily production volumes for the second quarter 2001 were 29.5 MMcfe MMcfe Millions of Cubic Feet Equivalent (Per Day; gas exploration) , an increase of 68% from the second quarter 2000. For the second quarter, Brigham produced an average 20.7 MMcf of natural gas and 1453 barrels of oil per day. Natural gas and oil sales for the second quarter 2001 increased 126% to $10.5 million from $4.6 million for the same period last year. Of this net increase, $3.0 million was attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to a 35% increase in the average realized equivalent oil and natural gas sales price and $2.8 million was attributable to a 68% increase in net equivalent production volumes. Cash settlements on natural gas and crude oil 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. transactions of $1.5 million ($0.56 per Mcfe) negatively impacted Brigham's net realized natural gas equivalent sales price and revenues for the second quarter 2001, while natural gas and crude oil hedging settlements of $1.7 million ($1.10 per Mcfe) reduced its average realized natural gas equivalent sales price and revenues for the three month period ended June June: see month. 30, 2000. Beginning in May 2001, Brigham's natural gas derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. contracts decreased from 15 MMBtu per day to 10 MMBtu per day and its ceiling price increased from an effective NYMEX See New York Mercantile Exchange. NYMEX See New York Mercantile Exchange (NYM). price of $2.20 per MMBtu to $2.60 per MMBtu. Brigham's outstanding commodity price hedging contracts as of June 30, 2001, are summarized in a table at the end of this release. Lease operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. for the second quarter 2001 were $784,000, representing a 56% increase from the second quarter 2000. These increases are primarily due to an increase in the number of producing wells in which the Company owns an interest, higher production volumes and increased well repair and maintenance costs. On a per unit basis, lease operating expenses declined for the second quarter 2001 to $0.30 per Mcfe as compared to $0.32 per Mcfe for the second quarter 2000. Production taxes increased 57% to $622,000 in the second quarter 2001 yet declined $0.02 on a per unit basis to average $0.23 per Mcfe. These increases were primarily attributable to increased production volumes and higher pre-hedge oil and natural gas prices, offset in part by production tax reimbursements related to wells that qualify for severance tax severance tax n. A tax imposed by a state on the extraction of natural resources, such as oil, coal, or gas, that will be used in other states. refunds. Net general and administrative expenses were $957,000. This represents a 35% increase from the second quarter 2000 and was principally due to higher employee payroll payroll a list of employees, their salary rates, tax deductions, amounts paid, payroll tax, long service leave entitlements. and benefits expenses and several one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. charges. However, on a per unit basis, net general administrative expenses were down 20% to $0.36 per Mcfe for the second quarter 2001 from $0.45 per Mcfe for the second quarter 2000. 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 expenses were $3.2 million ($1.20 per Mcfe), or 75% higher than the prior year quarter primarily due to increased production volumes. Net interest expense decreased 41% to $1.8 million for the second quarter 2001 from $3.0 million for the prior year period as a result of reduced borrowings and lower interest rates that resulted largely from the refinancing Refinancing An extension and/or increase in amount of existing debt. of Brigham's senior subordinated Subordinated A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. notes during the fourth quarter 2000. Earnings before interest, taxes, depreciation, depletion and amortization (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 ) increased 178% to $7.2 million for the second quarter 2001 from $2.6 million for the second quarter 2000, while 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. for the second quarter 2001 was $6.0 million, representing a 267% increase from $1.6 million for the same period in 2000. Brigham reported net income of $8.3 million ($0.46 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) for the second quarter 2001 compared to a net loss of $4.3 million ($0.26 per diluted share) for the prior year period. Excluding the non-cash income (expense) associated with the change in fair market value of certain hedging contracts, Brigham would have reported net income of $1.5 million ($0.10 per diluted share) for the second quarter 2001 as compared to a loss of $2.4 million ($0.14 per diluted share) for the second quarter of 2000. Capital expenditures during the second quarter 2001 totaled $9.2 million, including $7.0 million related to drilling, $759,000 for land and G&G activities and $1.4 million for capitalized interest Capitalized interest Interest that is not immediately expensed, but rather is considered as an asset and is then amortized through the income statement over time. In the context of project financing, interest that is paid by additional borrowing. , overhead expenses and other property and equipment. Thus far in 2001, Brigham has invested $15 million in its drilling program, $1.8 million for land and G&G activities and $3.0 million for capitalized interest, overhead expenses and other property and equipment. Capital expenditures for the year are now forecast to total $37 million, including $28 million for drilling and $3 million for land and G&G. THIRD QUARTER 2001 RESULTS GUIDANCE The following forecasts and estimates of Brigham's third quarter 2001 results are forward looking statements subject to the risks and uncertainties identified in the "Forward Looking Statements Disclosure" at the end of this release. Brigham currently expects third quarter 2001 production volumes to average between 30 and 32 MMcfe per day, 75% of which consists of natural gas. For the third quarter 2001, lease operating expenses are projected to be $0.30 per Mcfe, production taxes are projected to be 5.5% of pre-hedge oil and gas revenues, and net general and administrative expenses are projected to be $900,000 ($0.31 to $0.33 per Mcfe). Based on these production and cost estimates, assumed average NYMEX prices of $3.00 per MMBtu for natural gas and $25.00 per barrel barrel: see English units of measurement. for oil, and taking into account current hedging contracts outstanding, Brigham forecasts revenue of between $8.5 and $9.0 million and EBITDA of between $6.2 million and $6.7 million for the third quarter 2001. Management Comment Curtis Harrell Harrell can refer to: People
Contraction of we are. we're we are extremely pleased with the growth in production volumes demonstrated thus far in 2001. EBITDA exceeded $7.0 million this quarter and reached $12.3 million for the six months ended June 2001, which is greater than our Company's EBITDA for the full year 2000. Growth in production volumes, an improved hedge position and a stronger balance sheet have all combined to powerfully impact our operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: . In the second quarter, we generated $2.25 in operating cash flow for every Mcfe we produced. Looking forward, we expect continued growth in production volumes as we complete and begin producing our six new discoveries and continue our 2001 drilling program." Conference Call Information Brigham management will host a conference call to discuss the company's second quarter 2001 operational and financial results with investors, analysts and other interested parties on Thursday Thursday: see week. , August 9, at 9:00 a.m. Central time. To participate in the call, please dial 888/343-7167 and ask for the Brigham Exploration conference call (conference reservation A clause in a deed of real property whereby the grantor, one who transfers property, creates and retains for the grantor some right or interest in the estate granted, such as rent or an Easement ,a right of use over the land of another. number 19447498). A telephone recording of the conference call will be available to interested parties approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. one hour after the call is completed through 5:00 p.m. Central time on Tuesday Tuesday: see week. , August 14. To access the recording, please dial 800/633-8284. In addition, a live and archived Web cast of the conference call will be available over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at either www.bexp3d.com or www.streetevents.com. About Brigham Exploration Brigham Exploration Company is an independent exploration and production company that applies 3-D seismic imaging and other advanced technologies to systematically explore and develop 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. domestic natural gas and oil provinces. For more information about Brigham Exploration, please visit our Web site at www.bexp3d.com or contact Investor Relations Investor relations The process by which the corporation communicates with its investors. at 512/427-3444. Forward Looking Statements Disclosure Except for the historical information contained herein, the matters discussed in this news release are forward looking statements within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 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. All forward looking statements contained in this release, including any forecasts and estimates, are based on management's outlook only as of the date of this release, and we undertake no obligation to update or revise these forward looking statements, whether as a result of subsequent developments or otherwise.
BRIGHAM EXPLORATION COMPANY
SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data) (unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2000 2001 2000 2001
-------- --------- -------- ---------
Revenues:
Natural gas and oil sales $ 4,635 $ 10,467 $ 9,140 $ 17,372
Other revenue 16 37 49 175
-------- --------- -------- ---------
$ 4,651 $ 10,504 $ 9,189 $ 17,547
Costs and expenses:
Lease operating 502 784 961 1,490
Production taxes 395 622 699 1,088
General and administrative 708 957 1,448 1,774
Depletion of natural gas
and oil properties 1,820 3,182 3,584 5,659
Depreciation and
amortization 148 83 283 235
-------- --------- -------- ---------
$ 3,573 $ 5,628 $ 6,975 $ 10,246
-------- --------- -------- ---------
Operating income $ 1,078 $ 4,876 $ 2,214 $ 7,301
Interest expense, net (3,031) (1,779) (5,806) (3,585)
Interest income 19 105 56 167
Other income (expense) (a) (2,394) 5,764 (2,990) 5,985
-------- --------- -------- ---------
Income (loss) before
income taxes $ (4,328) $ 8,966 $ (6,526) $ 9,868
Income tax expense -- -- -- --
-------- --------- -------- ---------
Net income (loss) $ (4,328) $ 8,966 $ (6,526) $ 9,868
Preferred stock dividend &
accretion -- 639 -- 1,117
-------- --------- -------- ---------
Net income (loss) to
common $ (4,328) $ 8,327 $ (6,526) $ 8,751
======== ========= ======== =========
Net income (loss) to common per share:
Basic $ (0.26) $ 0.52 $ (0.41) $ 0.55
Diluted (0.26) 0.46 (0.41) 0.51
Wt. avg. common shares outstanding:
Basic 16,713 15,983 15,996 15,983
Diluted 16,713 18,835 15,996 19,734
(a) Includes non-cash income
(expenses) related to
changes in the fair market
value of certain hedging
contracts of: $ (1,924) $ 6,807 $ (2,367) $ 7,028
BRIGHAM EXPLORATION COMPANY
PRODUCTION, SALES PRICES AND OTHER FINANCIAL DATA
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2000 2001 2000 2001
-------- --------- -------- ---------
Avg. net daily production:
Natural gas (MMcf) 11.6 20.7 11.0 19.3
Oil (Bbls) 992 1,453 1,046 1,147
Equivalent natural gas
(MMcfe) (6:1) 17.6 29.5 17.3 26.2
Total net production:
Natural gas (MMcf) 1,047 1,867 1,987 3,477
Oil (MBbls) 89 131 188 206
Equivalent natural gas
(MMcfe) (6:1) 1,582 2,652 3,116 4,716
% Natural gas 66% 70% 64% 74%
Sales prices:
Natural gas ($/Mcf) (a) $ 1.98 $ 3.78 $ 1.96 $ 3.43
Oil ($/Bbl) (a) 28.71 26.09 27.89 26.33
Equivalent natural gas
($/Mcfe) (6:1) 2.93 3.95 2.93 3.68
Other financial data:
EBITDA ($000) (b) $ 2,595 $ 7,203 $ 5,794 $ 12,319
Operating cash flow before
changes in working capital
($000) 1,625 5,970 4,097 9,698
(a) Includes the effects of hedging gains (losses) of:
Natural gas ($/Mcf) $ (1.66) $ (0.77) $ (1.13) $ (2.30)
Oil ($/Bbl) -- (0.38) (0.01) (0.61)
(b) Net income (loss) plus interest expense, DD&A expenses, deferred
income taxes and other non-cash items.
SUMMARY CONSOLIDATED BALANCE SHEETS
(in thousands) (unaudited)
December 31, June 30,
2000 2001
---------------- ----------------
Assets:
Current assets $ 10,673 $ 22,986
Natural gas and oil properties,
at cost, net 129,490 143,623
Other property and equipment, at
cost, net 1,341 1,254
Other non-current assets 5,407 3,989
---------------- ----------------
Total assets $ 146,911 $ 171,852
================ ================
Liabilities and stockholders' equity:
Current liabilities $ 17,899 $ 17,605
Notes payable 75,000 75,000
Senior subordinated notes, net 7,000 16,278
Other non-current liabilities 3,697 264
---------------- ----------------
Total liabilities $ 103,596 $ 109,147
Redeemable preferred stock, net
8,558 14,667
Stockholders' equity
34,757 48,038
---------------- ----------------
Total liabilities and
stockholders' equity $ 146,911 $ 171,852
================ ================
BRIGHAM EXPLORATION COMPANY
SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) (unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
2000 2001 2000 2001
------------------ ----------------
Cash flows from operating
activities:
Net income (loss) $(4,328) $ 8,966 $(6,526) $ 9,868
Depletion, depreciation
and amortization 1,968 3,265 3,867 5,894
Interest paid through
issuance of add'l senior
sub. notes 1,526 203 3,003 278
Amortization of deferred
loan fees 298 343 689 686
Amortization of discount
on senior subordinated
notes 237 -- 417 --
Amortization of deferred
loss on derivatives
instruments -- -- 280 --
Market value adjustment
for derivatives
instruments 1,924 (6,807) 2,367 (7,028)
-------- -------- -------- --------
Operating cash flow $ 1,625 $ 5,970 $ 4,097 $ 9,698
Changes in working
capital and other items (2,420) (703) (7,864) (3,179)
-------- -------- -------- --------
Cash flows provided
(used) by operating
activities $(795) $ 5,267 $(3,767) $ 6,519
Cash flows (used)
provided by investing
activities (7,519) (9,045) (11,676) (17,963)
Cash flows (used)
provided by financing
activities 6,728 (19) 12,774 18,839
-------- -------- -------- --------
Net increase (decrease)
in cash and cash
equivalents $(1,586) $(3,797) $(2,669) $ 7,395
======== ======== ======== ========
SUMMARY PER MCFE DATA
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
---------------- ----------------
2000 2001 2000 2001
---------------- ----------------
Revenues:
Natural gas and oil sales $ 2.93 $ 3.95 $ 2.93 $ 3.68
Other revenue 0.01 0.01 0.02 0.04
----- ----- ----- -----
$ 2.94 $ 3.96 $ 2.95 $ 3.72
Costs and expenses:
Lease operating 0.32 0.30 0.31 0.32
Production taxes 0.25 0.23 0.22 0.23
General and administrative 0.45 0.36 0.46 0.38
Depletion of natural gas and
oil properties 1.15 1.20 1.15 1.20
Depreciation and amortization 0.09 0.03 0.09 0.05
----- ----- ----- -----
$ 2.26 $ 2.12 $ 2.24 $ 2.17
----- ----- ----- -----
Operating income $ 0.68 $ 1.84 $ 0.71 $ 1.55
Interest expense, net (1.90) (0.63) (1.85) (0.72)
Other income (expense) (a) (0.30) (0.39) (0.20) (0.22)
----- ----- ----- -----
Adjusted net income before
preferred stock dividend
& accretion $(1.52) $ 0.81 $(1.33) $ 0.60
===== ===== ===== =====
(a) Adjusted to exclude non-cash income (expense) related to changes
in the fair market value of certain hedge contracts.
BRIGHAM EXPLORATION COMPANY
SUMMARY OF COMMODITY PRICE HEDGES OUTSTANDING AS OF JUNE 30, 2001
(unaudited)
Q3 2001 Q4 2001 Q1 2002 Q2 2002
------- ------- ------- -------
Natural Gas Collar: Cap - MMBtu/d 10,000 10,000 10,000 10,000
Cap - $/MMBtu $2.60 $2.73 $2.80 $2.67
Floor - MMBtu/d 2,500 2,500 -- --
Floor - $/MMBtu $1.90 $1.90 -- --
Crude Oil Collar: Cap - Bbls/d 200 200 -- --
Cap - $/Bbl $25.25 $25.25 -- --
Floor - Bbls/d 200 200 -- --
Floor - $/Bbl $16.10 $16.10 -- --
Note: Hedged volumes and prices reflected in this table represent
average contract amounts for the quarterly periods presented;
natural gas hedge prices reflect estimated NYMEX equivalent
prices since the actual contract prices are based on various
regional index prices, while the crude oil hedge contract
prices are based on NYMEX pricing.
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