Brigham Exploration Reports Third Quarter 2001 Financial Results, Including 42% Increase in Production and 119% Growth in Cash Flow.Business Editors & Energy Writers 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)--Nov. 6, 2001 Brigham Brigham may refer to the following: Place:
Brigham continues to post outstanding financial results, including significant growth in production volumes and cash flow from levels achieved in the third quarter 2000. Highlights of Brigham's financial performance for the third quarter include: -- Production volumes averaged 28.8 MMcfe per day for the third quarter 2001. This represents a 42% increase over 20.3 MMcfe per day in production for the same three month period a year ago; -- EBITDA increased 77% to $6.4 million from $3.6 million for the third quarter 2000 due to the combined effects of higher production volumes and improvement in realized natural gas prices; and -- Operating cash flow for the quarter more than doubled to $5.4 million from $2.5 million for the same period a year ago. THIRD QUARTER 2001 RESULTS Average net daily production volumes for the three-month period ended Sept. 30, 2001 were 28.8 Mmcfe. Average net daily production consisted of 19.9 MMcf of natural gas and 1,493 barrels of oil per day and was 42% higher than average net daily equivalent production volumes recorded for the same period last year. Natural gas and oil sales for the third quarter 2001 increased by $3.4 million to $8.8 million, representing an increase of 65% over sales for the same period last year. Of this net increase, 33% ($1.1 million) was attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to a 16% increase in the average realized equivalent oil and natural gas sales price and 67% ($2.3 million) was attributable to a 42% increase in net equivalent production volumes. In the third quarter 2001, 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. increased by 7% on a per unit of production basis to average $0.32 per Mcfe ($842,000) as compared to $0.30 per Mcfe ($541,000) in the third quarter 2000. The increase in lease operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. is primarily due to an increase in the number of producing wells in which the Company owns an interest and an increase in well repair and maintenance costs. Production taxes decreased 25% to $415,000 for the third quarter 2001 and decreased by 47% on a per unit of production basis to average $0.16 per Mcfe when compared to third quarter 2000 figures. The decrease in production taxes is primarily attributable to lower pre-hedge natural gas and crude oil prices for the third quarter 2001 as well as 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. On a per unit of production basis, net general and administrative expenses for the third quarter 2001 decreased 8% to average $0.36 per Mcfe ($934,000). The decrease in general and administrative expense per unit was principally due to growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. in production volumes that exceed the rate of increase in net general and administrative expense. 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 ($1.25 per Mcfe), or 3% higher than the $1.21 per Mcfe in the prior year quarter. Net interest expense decreased 52% to $1.6 million for the third quarter 2001 from $3.3 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 by 77% to $6.4 million for the third quarter 2001 from $3.6 million for the third quarter 2000. 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 third quarter 2001 was $5.4 million, a 119% increase over the $2.5 million achieved for the same period in 2000. Brigham reported net income of $2.9 million ($0.17 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 third quarter 2001 compared to a net loss of $5.3 million ($0.32 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 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. contracts, Brigham would have reported net income of $758,000 ($0.04 per diluted share) for the third quarter 2001 as compared to a loss of $2.1 million ($0.13 per diluted share) for the third quarter of 2000. Capital expenditures during the third quarter 2001 totaled $8.9 million, including $6.7 million related to drilling, $523,000 for land, geophysical ge·o·phys·ics n. (used with a sing. verb) The physics of the earth and its environment, including the physics of fields such as meteorology, oceanography, and seismology. and geological ge·ol·o·gy n. pl. ge·ol·o·gies 1. The scientific study of the origin, history, and structure of the earth. 2. The structure of a specific region of the earth's crust. 3. A book on geology. ("G&G") activities and $1.6 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 $21.7 million in its drilling program, $2.4 million for land and G&G activities and $4.7 million for capitalized interest, overhead expenses and other property and equipment. Capital expenditures for the year are now forecast to total $38 million, including $28 million for drilling and $4 million for land and G&G. FOURTH QUARTER 2001 RESULTS GUIDANCE The following forecasts and estimates of Brigham's fourth quarter 2001 results 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. subject to the risks and uncertainties identified in the "Forward-Looking Statements Disclosure" at the end of this release. Brigham currently expects fourth quarter 2001 production volumes to average between 25 and 28 MMcfe per day, 70% of which consists of natural gas. For the fourth quarter 2001, lease operating expenses are projected to be $0.33 per Mcfe, production taxes are projected to be 5% of pre-hedge oil and gas revenues, and net general and administrative expenses are projected to be $1.0 million ($0.40 to $0.44 per Mcfe). Based on these production and cost estimates, assumed average NYMEX See New York Mercantile Exchange. NYMEX See New York Mercantile Exchange (NYM). prices of $2.75 per MMBtu for natural gas and $21.50 per barrel barrel: see English units of measurement. for oil, and taking into account current hedging contracts outstanding, Brigham forecasts revenue of between $6.3 and $7.1 million and EBITDA of between $4.2 million and $4.9 million for the fourth quarter 2001. 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, "Our Company is experiencing a dramatic year of growth in production volumes and cash flow, driven primarily by our drilling successes early in 2001. Beginning in the third quarter, due to the significant drop in natural gas prices and the extremely high costs for drilling rigs and services, we slowed our remaining 2001 drilling program. Despite that slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. we've we've Contraction of we have. we've have had significant recent drilling successes, including our Triple Crown Field discovery, that have yet to materially impact our production volumes." Bud Brigham further stated, "These discoveries should have a substantial impact on our year end reserves, but their impact on our fourth quarter production volumes is dependent on how quickly we can get these wells producing to sales. Regardless, these discoveries are expected to fully impact our first quarter 2002 production, and should provide us with a substantial developmental drilling program for several years to come." CONFERENCE CALL INFORMATION Brigham management will host a conference call to discuss the company's third quarter 2001 operational and financial results with investors, analysts and other interested parties on Wednesday Wednesday: see week. , November November: see month. 7th, at 9:00 a.m. Central time. To participate in the call, please dial 800/355-7995 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 19885151). 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 11:00 a.m. Central time on Tuesday Tuesday: see week. , November 13th. 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 a leading 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 IR 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. -0-
BRIGHAM EXPLORATION COMPANY
SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data) (unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
2000 2001 2000 2001
---- ---- ---- ----
Revenues:
Natural gas and oil sales $ 5,362 $ 8,848 $ 14,502 $ 26,220
Other revenue 3 23 52 198
-------- -------- -------- --------
$ 5,365 $ 8,871 $ 14,554 $ 26,418
Costs and expenses:
Lease operating 541 842 1,502 2,332
Production taxes 554 415 1,253 1,503
General and administrative 718 934 2,166 2,708
Depletion of natural gas and
oil properties 2,207 3,244 5,791 8,903
Depreciation and amortization 147 140 430 375
-------- -------- -------- --------
$ 4,167 $ 5,575 $ 11,142 $ 15,821
-------- -------- -------- --------
Operating income $ 1,198 $ 3,296 $ 3,412 $ 10,597
Interest expense, net (3,291) (1,595) (9,097) (5,180)
Interest income 24 63 80 230
Other income (expense) (a) (3,276) 1,842 (6,266) 7,827
-------- -------- -------- --------
Income (loss) before income
taxes ($ 5,345) $ 3,606 ($ 11,871) $ 13,474
Income tax expense -- -- -- --
-------- -------- -------- --------
Net income (loss) ($ 5,345) $ 3,606 ($ 11,871) $ 13,474
Preferred stock dividend &
accretion -- 659 -- 1,776
-------- -------- -------- --------
Net income (loss) to common ($ 5,345) $ 2,947 ($ 11,871) $ 11,698
======== ======== ======== ========
Net income (loss) to common per share:
Basic ($ 0.32) $ 0.18 ($ 0.73) $ 0.73
Diluted (0.32) 0.17 (0.73) 0.67
Wt. avg. common shares outstanding:
Basic 16,713 15,984 16,237 15,983
Diluted 16,713 17,036 16,237 17,469
(a) Includes non-cash income
(expenses) related to
changes in the fair market
value of certain hedging
contracts of: ($ 3,316) $ 2,189 ($ 5,683) $ 9,217
PRODUCTION, SALES PRICES AND OTHER FINANCIAL DATA
(unaudited)
Three Months Nine Months
Ended Ended
September 30, September 30,
-------------- --------------
2000 2001 2000 2001
------ ------ ------ ------
Avg. net daily production:
Natural gas (MMcf) 14.1 19.9 12.1 19.5
Oil (Bbls) 1,027 1,493 1,039 1,262
Equivalent natural gas (MMcfe) (6:1) 20.3 28.8 18.3 27.1
Total net production:
Natural gas (MMcf) 1,270 1,790 3,257 5,266
Oil (MBbls) 92 134 281 341
Equivalent natural gas (MMcfe) (6:1) 1,824 2,596 4,941 7,311
% Natural gas 70% 69% 66% 72%
Sales prices:
Natural gas ($/Mcf) (a) $ 1.99 $ 3.05 $ 1.97 $ 3.30
Oil ($/Bbl) (a) 30.62 25.26 28.79 25.91
Equivalent natural gas ($/Mcfe) (6:1) 2.94 3.41 2.94 3.59
Other financial data:
EBITDA ($000) (b) $3,616 $6,396 $9,410 $18,715
Operating cash flow before changes in
working capital ($000) 2,451 5,364 6,548 15,062
(a) Includes the effects of hedging
gains (losses) of:
Natural gas ($/Mcf) ($ 2.27) $ 0.00 ($ 1.58)($ 1.52)
Oil ($/Bbl) (0.41) (0.21) (0.14) (0.45)
(b) Net income (loss) plus interest expense, DD&A expenses, deferred
income taxes and other non-cash items.
BRIGHAM EXPLORATION COMPANY
SUMMARY CONSOLIDATED BALANCE SHEETS
(in thousands) (unaudited)
Dec. 31, Sept. 30,
2000 2001
--------- ---------
Assets:
Current assets $ 10,673 $ 22,455
Natural gas and oil properties, at cost,
net 129,490 149,174
Other property and equipment, at cost,
net 1,341 1,295
Other non-current assets 5,407 3,406
-------- --------
Total assets $146,911 $176,330
======== ========
Liabilities and stockholders' equity:
Current liabilities $ 17,899 $ 18,009
Notes payable 75,000 75,000
Senior subordinated notes, net 7,000 16,498
Other non-current liabilities 3,697 253
-------- --------
Total liabilities $103,596 $109,760
Redeemable preferred stock, net 8,558 15,308
Stockholders' equity 34,757 51,262
-------- --------
Total liabilities and stockholders'
equity $146,911 $176,330
======== ========
SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) (unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
2000 2001 2000 2001
------- ------- ------- -------
Cash flows from operating
activities:
Net income (loss) ($ 5,345) $ 3,606 ($11,871) $ 13,474
Depletion, depreciation
and amortization 2,354 3,384 6,221 9,278
Interest paid through
issuance of add'l senior
sub. notes 1,572 220 4,575 498
Amortization of deferred
loan fees 298 343 987 1,029
Amortization of discount
on senior subordinated
notes 256 -- 673 --
Amortization of deferred
loss on derivatives
instruments -- -- 280 --
Market value adjustment
for derivatives
instruments 3,316 (2,189) 5,683 (9,217)
-------- -------- -------- --------
Operating cash flow $ 2,451 $ 5,364 $ 6,548 $ 15,062
Changes in working
capital and other items (818) 1,982 (8,682) (1,197)
-------- -------- -------- --------
Cash flows provided
(used) by operating
activities $ 1,633 $ 7,346 ($ 2,134) 13,865
Cash flows (used) provided
by investing activities (7,412) (8,355) (19,088) (26,318)
Cash flows (used) provided
by financing activities 5,766 93 18,540 18,932
-------- -------- -------- --------
Net increase (decrease)
in cash and cash
equivalents ($ 13) ($ 916) ($ 2,682) $ 6,479
======== ======== ======== ========
SUMMARY PER MCFE DATA
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
2000 2001 2000 2001
---- ---- ---- ----
Revenues:
Natural gas and oil sales $ 2.94 $ 3.41 $ 2.94 $ 3.59
Other revenue 0.00 0.01 0.01 0.03
----- ----- ----- -----
$ 2.94 $ 3.42 $ 2.95 $ 3.61
Costs and expenses:
Lease operating 0.30 0.32 0.30 0.32
Production taxes 0.30 0.16 0.25 0.21
General and administrative 0.39 0.36 0.44 0.37
Depletion of natural gas and
oil properties 1.21 1.25 1.17 1.22
Depreciation and amortization 0.08 0.05 0.09 0.05
----- ----- ----- -----
$ 2.28 $ 2.15 $ 2.26 $ 2.16
----- ----- ----- -----
Operating income $ 0.66 $ 1.27 $ 0.69 $ 1.45
Interest expense, net (a) (1.79) (0.59) (1.83) (0.68)
Other income (expense) (b) 0.02 (0.13) (0.12) (0.19)
----- ----- ----- -----
Adjusted net income before
preferred stock dividend &
accretion ($ 1.11) $ 0.55 ($ 1.25) $ 0.58
===== ===== ===== =====
(a) Net of capitalized interest and interest income.
(b) Adjusted to exclude non-cash income (expense) related to changes
in the fair market value of certain hedge contracts.
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