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Exhibit 99.1
     
(BRIGHAM LOGO)   NEWS RELEASE
FOR IMMEDIATE RELEASE
BRIGHAM EXPLORATION REPORTS FIRST QUARTER 2011 RESULTS
Austin, TX — May 3, 2011 — Brigham Exploration Company (NASDAQ:BEXP) today announced financial results for the quarter ended March 31, 2011.
FIRST QUARTER 2011 RESULTS
Our average daily production volumes for the first quarter 2011 were 11,314 barrels of crude oil equivalent (Boe) per day, up 109% from the first quarter 2010 and down 1% from the fourth quarter 2010.
Benefiting from both our operated and non-operated drilling activity in the Williston Basin, our high value crude oil production volumes for the first quarter 2011 averaged 9,211 barrels of crude oil per day, which represents a 159% increase from that in the first quarter 2010 and up 1% from that in the fourth quarter 2010. Our high value crude oil production volumes represented 81% of our total production volumes in the first quarter 2011, as compared to 66% in the first quarter 2010 and 80% in the fourth quarter 2010.
Our production volumes in the Williston Basin for the first quarter 2011 were 9,371 Boe per day, which represents a 190% increase from that in the first quarter 2010 and a slight increase from that in the fourth quarter 2010. During March 2011, our Williston Basin volumes exceeded 10,000 Boe per day for the first time in our history.
Our first quarter production volumes included approximately 732 barrels of crude oil produced during the first quarter 2011 and added to inventory. Adjusting our production volumes for amounts included in inventory resulted in first quarter 2011 daily sales volumes of 11,306 Boe per day.
Revenues from the sale of crude oil and natural gas, including cash hedge settlements for the first quarter 2011, were up 158% to $76.0 million as compared to that in the first quarter 2010. Higher crude oil sales volumes and crude oil prices increased revenues by $37.3 million and $9.4 million, respectively. Higher natural gas sales volumes also increased revenue by $0.8 million. Lower cash hedge settlements and natural gas prices decreased revenues by $0.5 million and $0.5 million, respectively.
During the first quarter 2011, our average realized price for crude oil was $82.76 per barrel, which included a $1.27 loss from the cash settlement of our crude oil derivative contracts. This compares to an average realized price in the first quarter 2010 of $72.39 per barrel, which included a $0.30 per barrel cash loss due to the settlement of our crude oil derivative contracts. Our average realized price for natural gas inclusive of natural gas liquids in the first quarter 2011 was $6.57 per Mcf, which included a $0.96 per Mcf cash gain due to the settlement of our natural gas derivative contracts. This compares to an average realized price in the first quarter 2010 of $6.68 per Mcf, which included a $0.67 per Mcf cash gain due to the settlement of our natural gas derivative contracts.
Our first quarter 2011 production costs, which include costs for operating and maintaining (O&M expense) our producing wells, expensed workovers, ad valorem taxes and production taxes, were up $0.95 per Boe when compared to that in the first quarter 2010. The increase was attributable to a $2.37 per Boe increase in production taxes, which was driven by higher commodity prices and higher levels of production in North Dakota, which are subject to an 11.5% tax rate. This increase was partially offset by a $1.48 per Boe decrease in expensed workovers due to fewer workovers.
Our general and administrative (G&A) expenses for the first quarter 2011 decreased by $3.07 per Boe as compared to the prior year’s quarter due to our higher production volumes. The per unit decrease associated with our higher production volumes was partially offset by an increase in employee compensation costs due to higher levels of employee salaries in 2011 to ensure competitive compensation levels with other oil and gas companies, and a higher number of employees due to our growth in activity in the Williston Basin.
Our depletion expense for the first quarter 2011 was $18.9 million ($18.61 per Boe) compared to $9.2 million ($19.07 per Boe) in the first quarter 2010. Our higher sales volumes increased depletion expense by $10.2 million while our lower depletion rate decreased depletion expense by $0.5 million.

 

 


 

Our net interest expense for the first quarter 2011 was $0.5 million higher than that in the first quarter 2010. Interest expense increased due to the September 2010 issuance of our $300 million Senior Notes due 2018 and was partially offset by an increase in our capitalized interest associated with our higher level of drilling activity in the Williston Basin.
We recorded deferred income tax expense of $0.2 million in the first quarter 2011, which consists of $0.1 million in deferred federal income tax expense and $0.1 million in deferred North Dakota state income tax expense.
Our reported net income for the first quarter 2011 was $1.6 million ($0.01 per diluted share) versus net income of $11.3 million ($0.11 per diluted share) for the same period last year. Our after-tax earnings in the first quarter 2011 excluding unrealized mark-to-market hedging losses were $33.8 million ($0.29 per diluted share) as compared to our after-tax earnings in the first quarter 2010 excluding our unrealized mark-to-market hedging gains were $8.3 million ($0.08 per diluted share). After-tax earnings excluding the above items is a non-GAAP measure and a reconciliation of GAAP net income to after-tax earnings excluding the above items is included in our accompanying financial tables found later in this release.
Through March 31, 2011, we spent $122.8 million in oil and gas capital expenditures. Capital expenditures for the first three months of 2011 and 2010 were:
                 
    Three months ended March 31,  
    2011     2010  
    (in thousands)  
 
               
Drilling
  $ 110,778     $ 43,606  
Support infrastructure
    5,264        
Land
    6,770       8,477  
 
           
Oil and gas capital expenditures
  $ 122,812     $ 52,083  
Capitalized costs
    6,641       4,569  
Capitalized FAS 143 ARO
    178       52  
 
           
Total capital expenditures
  $ 129,631     $ 56,704  
 
           
SECOND QUARTER 2011 FORECASTS
The following forecasts and estimates of our second quarter 2011 production volumes are forward-looking statements subject to the risks and uncertainties identified in the “Forward-Looking Statements Disclosure” at the end of this release. We are forecasting that our second quarter 2011 production volumes to average between 12,000 Boe per day and 14,000 Boe per day and that our crude oil volumes will comprise approximately 82% of our second quarter production volumes.
For the second quarter 2011, lease operating expenses are projected to be $7.40 per Boe based on the mid-point of our production guidance, production taxes are projected to be approximately 10.0 to 10.5% of pre-hedge crude oil and natural gas revenues, and general and administrative expenses are projected to be $3.5 million ($2.99 per Boe).
MANAGEMENT COMMENTS
Gene Shepherd, Brigham’s Chief Financial Officer, commented, “As we have demonstrated over the last two years, the consistency of our drilling results continues to give us excellent visibility as to the growth in production volumes and reserves that we expect to achieve in 2011. In addition to continuing to grow our inventory of development drilling locations in western North Dakota and eastern Montana, we expect 2011 to be a year where the company benefits from significant efficiencies in our drilling and completion techniques that should positively impact our costs in the second half of 2011 and in 2012. We expect these efficiencies to help offset the higher drilling and completion costs that we have experienced in 2011. Despite the increased costs, the 10% overage factor that was part of our February budget provides adequate protection against cost overruns such that we believe that we are still operating within our original 2011 budget.”
Mr. Shepherd continued, “Given our record first quarter financial performance, strong balance sheet and accelerating level of drilling activity as we enter the second quarter, we look forward to 2011 being one of the most exciting years in our company’s history.”

 

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CONFERENCE CALL INFORMATION
Our management will host a conference call to discuss operational and financial results for the first quarter 2011 with investors, analysts and other interested parties on Wednesday, May 4, at 11:00 a.m. Eastern Time. To participate in the call, participants within the U.S./Canada please dial 877-398-9480 and participants outside the U.S./Canada please dial 708-290-1157. The conference ID number for the call is 62089416. A telephone recording of the conference call will be available approximately two hours after the call is completed through 11:59 p.m. Eastern Time on Wednesday, May 11, 2011. To access the recording, U.S./Canada callers dial 800-642-1687 and international callers dial 706-645-9291. The conference ID number for the call is 62089416. In addition, a live and archived web cast of the conference call will be available over the Internet at www.bexp3d.com.
We will be updating our corporate presentation prior to our conference call and will reference information contained therein. We encourage you to access the presentation in advance of the conference call. To access the presentation, go to www.bexp3d.com and click on Corporate Presentation along the left side of our home page. In addition, a copy of this press release and other financial and statistical information about the periods covered by this press release and by the conference call that will take place on Wednesday, May 4, 2011, will be available on our website. To access the press release, go to www.bexp3d.com, click on Investor Relations and then click on Press Releases. The file with a copy of the press release is named Brigham Exploration Reports First Quarter 2011 Results and is dated Tuesday, May 3, 2011. To access the other financial and statistical information that will be covered by the conference call that will take place on Wednesday, May 4, 2011, go to www.bexp3d.com, click on Investor Relations and then click on Events & Presentations. The file with the other financial and statistical information is named Financial and Statistical Information for the First Quarter 2011 Conference Call and is dated Wednesday, May 4, 2011.
ABOUT BRIGHAM EXPLORATION
Brigham Exploration Company is an independent exploration, development and production company that utilizes advanced exploration, drilling and completion technologies to systematically explore for, develop and produce domestic onshore oil and natural gas reserves. For more information about Brigham Exploration, please visit our website at www.bexp3d.com or contact Investor Relations 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 federal securities laws. Important factors that could cause our actual results to differ materially from those contained in the forward-looking statements include early initial production rates which decline steeply over the early life of wells, particularly our Williston basin horizontal wells for which we estimate the average monthly production rates may decline by approximately 70% in the first twelve months of production, our growth strategies, our ability to successfully and economically explore for and develop oil and gas resources, anticipated trends in our business, our liquidity and ability to finance our exploration and development activities, market conditions in the oil and gas industry, our ability to make and integrate acquisitions, the impact of governmental regulation and other risks more fully described in the company’s filings with the Securities and Exchange Commission. Forward-looking statements are typically identified by use of terms such as “may,” “will,” “expect,” “anticipate,” “estimate” and similar words, although some forward-looking statements may be expressed differently. 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.
     
Contact:
  Rob Roosa, Director of Finance & Investor Relations
 
  (512) 427-3300

 

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BRIGHAM EXPLORATION COMPANY
SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data) (unaudited)
                 
    Three Months Ended  
    March 31,  
    2011     2010  
 
               
Revenues:
               
Crude oil sales
  $ 69,596     $ 22,870  
Natural gas sales
    6,367       6,060  
Hedging settlements
    50       582  
 
           
 
    76,013       29,512  
Unrealized hedging gains (losses)
    (36,008 )     3,052  
 
           
 
    40,005       32,564  
Support infrastructure
    594        
Other revenue
    2       9  
 
           
Total Revenue
    40,601       32,573  
 
           
 
               
Costs and expenses:
               
Lease operating
    7,720       4,349  
Production taxes
    7,698       2,508  
Support infrastructure
    190        
General and administrative
    3,382       3,086  
Depletion of oil and natural gas properties
    18,940       9,211  
Depreciation and amortization
    971       233  
Accretion of discount on asset retirement obligations
    110       105  
 
           
 
    39,011       19,492  
 
           
Operating income (loss)
    1,590       13,081  
 
           
 
               
Other income (expense):
               
Interest expense, net Interest income
    (3,378 )     (2,904 )
Interest income
    367       453  
Other income (expense)
    3,154       685  
 
           
 
               
 
    143       (1,766 )
 
           
Income (loss) before income taxes
  $ 1,733     $ 11,315  
Income tax (expense) benefit:
               
Current
           
Deferred
    (179 )      
 
           
 
    (179 )      
 
           
 
               
Net income (loss)
  $ 1,554     $ 11,315  
 
           
 
               
Net income (loss) per share available to common stockholders:
               
Basic
  $ 0.01     $ 0.11  
 
           
Diluted
  $ 0.01     $ 0.11  
 
           
 
               
Weighted average shares outstanding:
               
Basic
    116,359       99,444  
 
           
Diluted
    118,522       101,357  
 
           

 

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BRIGHAM EXPLORATION COMPANY
PRODUCTION VOLUMES, SALES VOLUMES, SALES PRICES AND OTHER FINANCIAL DATA

(unaudited)
                 
    Three Months Ended March 31,  
    2011     2010  
Average net daily production volumes:
               
Crude oil (Bbls)
    9,211       3,552  
Natural gas (MMcf)
    12.6       11.2  
Equivalent crude oil (Boe) (6:1)
    11,314       5,420  
 
               
Total net production volumes:
               
Crude oil (MBbls)
    829       320  
Natural gas (MMcf)
    1,136       1,009  
Equivalent oil (MBoe) (6:1)
    1,018       488  
% Crude oil
    81 %     66 %
 
               
Increase in inventory:
               
Crude oil (Bbls)
    732       5,012  
Natural gas (MMcf)
           
Equivalent crude oil (Boe) (6:1)
    732       5,012  
 
               
Average net daily sales volumes (Average net production volumes less average net daily increase in inventory):
               
Crude oil (Bbls)
    9,203       3,496  
Natural gas (MMcf)
    12.6       11.2  
Equivalent crude oil (Boe) (6:1)
    11,306       5,364  
 
               
Total net sales volumes (Total net production volumes less increase in inventory):
               
Crude oil (MBbls)
    828       315  
Natural gas (MMcf)
    1,136       1,009  
Equivalent crude oil (MBoe) (6:1)
    1,018       483  
% Crude oil
    81 %     65 %
 
               
Sales price:
               
Crude oil ($/Bbl)
  $ 84.03     $ 72.69  
Natural gas ($/Mcf)
    5.61       6.01  
Equivalent crude oil ($/Boe) (6:1)
    74.65       59.93  
 
               
Sales price including derivative settlement gains (losses):
               
Crude oil ($/Bbl)
  $ 82.76     $ 72.39  
Natural gas ($/Mcf)
    6.57       6.68  
Equivalent crude oil ($/Boe) (6:1)
    74.70       61.13  
 
               
Sales price including derivative settlement gains (losses) and unrealized gains (losses):
               
Crude oil ($/Bbl)
  $ 40.48     $ 73.90  
Natural gas ($/Mcf)
    5.70       9.23  
Equivalent crude oil ($/Boe) (6:1)
    39.31       67.45  

 

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SUMMARY CONSOLIDATED BALANCE SHEETS
(in thousands)
                 
    March 31, 2011     December 31, 2010  
Assets:
               
Current assets
  $ 323,306     $ 360,857  
Oil and natural gas properties, net (full cost method)
    774,557       669,356  
Other property and equipment, net
    47,984       42,837  
Other non-current assets
    15,451       12,351  
 
           
Total assets
  $ 1,161,298     $ 1,085,401  
 
           
 
               
Liabilities and stockholders’ equity:
               
Current liabilities
  $ 236,747     $ 176,545  
Senior notes
    300,000       300,000  
Other non-current liabilities
    28,634       15,586  
 
           
Total liabilities
  $ 565,381     $ 492,131  
Stockholders’ equity
    595,917       593,270  
 
           
Total liabilities and stockholders’ equity
  $ 1,161,298     $ 1,085,401  
 
           
BRIGHAM EXPLORATION COMPANY
SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands) (unaudited)
                 
    Three Months Ended March 31,  
    2011     2010  
 
Cash flows from operating activities:
               
Net income (loss)
  $ 1,554     $ 11,315  
Depletion, depreciation and amortization
    19,911       9,444  
Accretion of discount on ARO
    110       105  
Amortization of deferred loan fees and debt issuance costs
    526       506  
Non-cash stock compensation
    747       427  
Market value adjustments for derivatives instruments
    36,008       (3,052 )
Deferred income tax expense
    179        
Provision for doubtful accounts
    (2 )      
Other noncash items
          (1 )
Changes in operating assets and liabilities
    7,178       7,229  
 
           
Cash flows provided by operating activities
  $ 66,211     $ 25,973  
 
               
Cash flows provided (used) by investing activities
    (65,525 )     (42,910 )
Cash flows provided (used) by financing activities
    (3,843 )     632  
 
           
Net increase (decrease) in cash and cash equivalents
  $ (3,157 )   $ (16,305 )
 
           

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SUMMARY PER BOE DATA
(unaudited)
                 
    Three Months Ended March 31,  
    2011     2010  
Revenues:
               
Crude oil and natural gas sales
  $ 74.65     $ 59.93  
Hedging settlements
    0.05       1.20  
Unrealized hedging gains (losses)
    (35.39 )     6.32  
Support infrastructure
    0.58        
Other revenue
          0.02  
 
           
 
  $ 39.89     $ 67.47  
 
           
Costs and expenses:
               
Lease operating
    7.58       9.00  
Production taxes
    7.56       5.19  
Support infrastructure
    0.19        
General and administrative
    3.32       6.39  
Depletion of oil and natural gas properties
    18.61       19.07  
Depreciation and amortization
    0.95       0.48  
Accretion of discount on ARO
    0.11       0.22  
 
           
 
  $ 38.32     $ 40.35  
 
           
Operating income (loss)
  $ 1.57     $ 27.12  
 
           
 
               
Interest expense, net of interest income (a)
    (2.96 )     (5.07 )
Other income (expense)
    3.10       1.42  
 
           
Adjusted income (loss)
  $ 1.71     $ 23.47  
 
           
     
(a)  
Calculated as interest expense minus interest income divided by production for period.
BRIGHAM EXPLORATION COMPANY
RECONCILIATION OF GAAP NET INCOME TO AFTER-TAX EARNINGS
EXCLUDING THE EFFECTS OF CERTAIN ITEMS

(in thousands)
                 
    Three months  
    ended March 31,  
    2011     2010  
Net income (loss) as reported
  $ 1,554     $ 11,315  
Unrealized derivative (gains) losses
    36,008       (3,052 )
Tax impact
    (3,720 )      
 
           
Earnings excluding the effects of certain items
  $ 33,842     $ 8,263  
 
           
Earnings without the effects of certain items represent net income excluding unrealized gains and losses on derivative contracts. Management believes that exclusion of these items enhances comparability of operating results between periods.

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BRIGHAM EXPLORATION COMPANY
SUMMARY OF COMMODITY PRICE HEDGES OUTSTANDING AS OF MAY 3, 2011

(unaudited)
                                                                                 
            2011     2012     2013  
            Q2     Q3     Q4     Q1     Q2     Q3     Q4     Q1     Q2  
 
                                                                               
Crude Oil Costless Collars:                                                                        
Daily volumes
  Bbls/d     6,110       7,587       9,207       8,239       8,580       10,168       10,000       9,000       1,341  
Floor
  $/Bbl   $ 65.68     $ 67.69     $ 70.84     $ 69.03     $ 69.46     $ 71.71     $ 73.99     $ 80.38     $ 85.00  
Cap
  $/Bbl   $ 98.83     $ 103.57     $ 109.45     $ 109.07     $ 110.07     $ 114.56     $ 116.11     $ 125.25     $ 134.00  
 
                                                                               
Crude Oil Floors:                                                                        
Daily volumes
  Bbls/d                       1,500       1,500       1,500       1,500              
Floor
  $/Bbl   $     $     $     $ 65.00     $ 65.00     $ 80.00     $ 80.00     $     $  
 
                                                                               
Natural Gas Costless Collars:                                                                        
Daily volumes
  MMBtu/d     3,626       3,587       3,587                                      
Floor
  $/MMBtu   $ 5.48     $ 5.48     $ 5.48     $     $     $     $     $     $  
Cap
  $/MMBtu   $ 7.16     $ 7.16     $ 7.16     $     $     $     $     $     $  
Hedged volumes and prices reflected in this table represent average contract amounts for the quarterly periods presented; crude oil hedge contract prices and natural gas hedge prices are based on NYMEX pricing.

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