Exhibit 99.1
Brigham Exploration Reports First Quarter 2005 Results
AUSTIN, Texas, May 3 /PRNewswire-FirstCall/ -- Brigham Exploration Company (Nasdaq: BEXP) today announced its financial results for the quarter ended March 31, 2005.
FIRST QUARTER 2005 RESULTS
Average net daily production volumes for the first quarter 2005 were 30 MMcfe per day compared to 33.9 MMcfe per day in last year’s first quarter. Revenues from the sale of oil and natural gas, net of hedging, in the first quarter 2005 were $16.7 million compared to $16.8 million last year. Lower production volumes during the first quarter 2005 were the primary reason for the 1% decrease in revenue. The decline in revenues due to lower production volumes was partially offset by an increase in our average sales price for oil and a decrease in total losses associated with the cash settlement of derivative contracts. Our average realized prices for the first quarter 2005 were $43.74 per barrel for oil and $5.80 per Mcf for natural gas, compared to $30.84 per barrel and $5.69 per Mcf in the first quarter last year. Our average realized price for oil in the first quarter 2005 includes a loss of $4.59 per barrel related to the settlement of oil derivative contracts and our average realized price for natural gas includes a loss of less than $0.01 per Mcf related to the cash settlement of natural gas derivative contracts. This compares to losses of $3.17 and $0.10 for oil and natural gas, respectively, in the first quarter last year.
Production cost, which includes lease operating expenses and production taxes, were up 33% and 51% on a unit basis in the first quarter 2005. This increase was due to a 57% increase in our lease operating expenses, which was partially offset by lower production taxes. An increase in the number of producing wells, combined with increases in costs for compressor rental and maintenance, saltwater disposal, contract labor and measurement services, treating and miscellaneous operating expenses represented approximately 49% of the increase in lease operating expenses. Other costs that contributed to higher lease operating expenses were increases in cost for expensed workovers, which represented 37% of the increase in lease operating expenses and higher ad valorem taxes, which represented 14% of the increase.
General and administrative expenses for the first quarter 2005 were down 10% due to decreases in costs for employee payroll and payroll taxes, rent, travel and entertainment and financial reporting. Despite the decrease in general and administrative expenses, our unit general and administrative expenses increased 3% to $0.41 per Mcfe due to lower production volumes.
Depletion of oil and natural gas properties for the first quarter 2005 was $6.4 million ($2.39 per Mcfe) compared to $5.1 million ($1.68 per Mcfe) in the first quarter last year. An increase in our depletion rate resulted in a $1.9 million increase in our first quarter 2005 depletion and was partially offset by a $600,000 decrease in depletion due to lower production volumes.
Interest expenses for the first quarter 2005 were down 5% to $741,000. The primarily reasons for the decrease in interest were due to a decrease in the interest rate that we paid on our subordinated notes, a decrease in the amount of deferred loan cost amortized and a decrease in commitment fees paid on unused borrowings under our senior credit facility.
We recorded deferred income tax expenses of $1.7 million in the first quarter 2005 compared to deferred income tax expenses of $2.4 million in the first quarter last year. Net income for the first quarter 2005 was $3 million ($0.07 diluted earnings per share) compared to net income of $4.9 million ($0.12 diluted earnings per share) in the first quarter last year.
Our capital expenditures for oil and natural gas activities in the first quarter of 2005 and 2004 were:
| | (In thousands) | |
| | 2005 | | 2004 | |
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Drilling | | $ | 17,458 | | $ | 12,568 | |
Land and G&G | | | 4,815 | | | 2,817 | |
Capitalized Cost | | | 1,601 | | | 1,587 | |
Capitalized FAS 143 ARO | | | 26 | | | 101 | |
Net capital expenditures | | $ | 23,900 | | $ | 17,073 | |
FULL YEAR 2005 PRODUCTION AND SECOND QUARTER 2005 FORECAST
The following forecasts and estimates of our full year 2005 production volumes and second quarter 2005 results are forward looking statements subject to the risks and uncertainties identified in the “Forward Looking Statements Disclosure” at the end of this release.
In addition to providing guidance for the second quarter 2005, we have elected to provide full year production guidance for 2005. We currently expect to grow production volumes in 2005 by 10% to 15% relative to our 2004 production. This would result in average daily production of between 37.5 and 39.2 MMcfe per day (78% natural gas) for 2005.
We currently expect second quarter 2005 production volumes to average between 31 and 36 MMcfe per day (77% natural gas). For the second quarter 2005, our lease operating expenses are projected to be $2.1 million ($0.76 to $0.66 per Mcfe), production taxes are projected to be approximately 5.5% of pre-hedge oil and gas revenues, and general and administrative expenses are projected to be $1.3 million ($0.47 to $0.40 per Mcfe). Based on these production and cost estimates, assumed average NYMEX prices of $6.94 per MMBtu for natural gas and $52.52 per barrel for oil, and taking into account our current outstanding hedging contracts, we forecast that our second quarter revenue will be between $19.8 and $23 million and operating income will be between $8.3 and $10.4 million.
MANAGEMENT COMMENTS
Gene Shepherd, Brigham’s Chief Financial Officer, commented, “Given that we had no significant wells reach total depth and come on line during the first quarter to materially contribute to production, consistent with our first quarter production guidance our first quarter production volumes declined sequentially relative to those in the fourth quarter 2004. However, as announced in our recent operational press release, we’ve either completed, or are currently completing seven wells, which will at least partially impact the second quarter. Furthermore, the second quarter is the most active, in terms of drilling expenditures, in our company’s history. We have a total of eleven wells that could materially impact production as we commence the third quarter of 2005.”
CONFERENCE CALL INFORMATION
Brigham management will host a conference call to discuss its operational and financial results for the first quarter 2005 with investors, analysts and other interested parties on Wednesday, May 4th, at 9:00 a.m. Central time. To participate in the call, participants within the U.S. please dial 800.237.9752 and participants outside the U.S. please dial 617.847.8706. The participant passcode for the call is 59607622. A telephone recording of the conference call will be available to interested parties approximately two hours after the call is completed through 11:59 p.m. EDT on Wednesday, May 18th. To access the recording, domestic callers dial 888.286.8010 and international callers dial 617.80136888. The passcode for the conference call playback is 70109653. In addition, a live and archived web cast of the conference call will be available over the Internet at either http://www.bexp3d.com or http://www.streetevents.com . 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 May 4, 2005, will be available on our website. To access the press release go to http://www.bexp3d.com and click on News Releases. The file with a copy of the press release is named Brigham Exploration Reports First Quarter 2005 Results and is dated May 3, 2005. To access the other financial and statistical information that will be covered by the conference call that will take place on May 4, 2005, go to http://www.bexp3d.com and click on Event Calendar. The file with the other financial and statistical information is named Financial and Statistical Information for the First Quarter 2005 Conference Call and is dated May 4, 2005.
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 domestic natural gas and oil provinces. For more information about Brigham Exploration, please visit our website at http://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 Private Securities Litigation Reform Act 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 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.
| Contact: | John Turner, Director of Finance & Business Development (512) 427-3300 |
BRIGHAM EXPLORATION COMPANY
SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
| | Three Months Ended March 31, | |
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| |
| | 2005 | | 2004 | |
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| | (unaudited) | | (unaudited) | |
Revenues: | | | | | | | |
Oil and natural gas sales | | $ | 16,703 | | $ | 16,819 | |
Other | | | 43 | | | 1 | |
| | $ | 16,746 | | $ | 16,820 | |
Costs and expenses: | | | | | | | |
Lease operating | | | 2,218 | | | 1,409 | |
Production taxes | | | 802 | | | 863 | |
General and administrative | | | 1,098 | | | 1,220 | |
Depletion of natural gas and oil properties (as restated for 2004) | | | 6,453 | | | 5,124 | |
Depreciation and amortization | | | 182 | | | 181 | |
Accretion of discount on ARO | | | 39 | | | 37 | |
| | $ | 10,792 | | $ | 8,834 | |
Operating income (as restated for 2004) | | $ | 5,954 | | $ | 7,986 | |
Interest expense, net | | | (741 | ) | | (782 | ) |
Interest income | | | 39 | | | 14 | |
Other income (expense) (A) | | | (531 | ) | | 127 | |
Income before income taxes (as restated for 2004) | | $ | 4,721 | | $ | 7,345 | |
Income tax expense (as restated for 2004) | | | (1,673 | ) | | (2,420 | ) |
Net income (loss) (as restated for 2004) | | $ | 3,048 | | $ | 4,925 | |
Net income (loss) to common per share (as restated for 2004): | | | | | | | |
Basic | | $ | 0.07 | | $ | 0.13 | |
Diluted | | $ | 0.07 | | $ | 0.12 | |
Wt. Avg. common shares outstanding: | | | | | | | |
Basic | | | 42,124 | | | 39,166 | |
Diluted | | | 43,166 | | | 40,211 | |
(A) Includes non-cash gains/(losses) related to our derivative contracts: | | $ | (606 | ) | $ | 127 | |
BRIGHAM EXPLORATION COMPANY
PRODUCTION, SALES PRICES AND OTHER FINANCIAL DATA
| | Three Months Ended March 31, | |
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| | 2005 | | 2004 | |
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| | (unaudited) | | (unaudited) | |
Avg. net daily production: | | | | | | | |
Natural gas (MMcf) | | | 22.2 | | | 23.3 | |
Oil (Bbls) | | | 1,308 | | | 1,773 | |
Equivalent natural gas (MMcfe) (6:1) | | | 30.0 | | | 33.9 | |
Total net production: | | | | | | | |
Natural gas (MMcf) | | | 1,994 | | | 2,093 | |
Oil (MBbls) | | | 118 | | | 160 | |
Equivalent natural gas (MMcfe) (6:1) | | | 2,700 | | | 3,050 | |
% Natural gas | | | 74 | % | | 69 | % |
Sales prices (Before hedging): | | | | | | | |
Natural gas ($/Mcf) | | $ | 5.80 | | $ | 5.79 | |
Oil ($/Bbl) | | | 48.33 | | | 34.01 | |
Equivalent natural gas ($/Mcfe) (6:1) | | | 6.39 | | | 5.75 | |
Realized prices (Post hedging): | | | | | | | |
Natural gas ($/Mcf) (a) | | $ | 5.80 | | $ | 5.69 | |
Oil ($/Bbl) (a) | | | 43.74 | | | 30.84 | |
Equivalent natural gas ($/Mcfe) (6:1) (A) | | | 6.19 | | | 5.51 | |
(A) Includes the effects of hedging gains (losses) of: | | | | | | | |
Natural gas ($/Mcf) | | $ | (0.00 | ) | $ | (0.10 | ) |
Oil ($/Bbl) | | | (4.59 | ) | | (3.17 | ) |
SUMMARY CONSOLIDATED BALANCE SHEETS
(in thousands)
| | March 31,
2005 | | December 31,
2004 | |
| |
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| | (unaudited) | | | | |
Assets: | | | | | | | |
Current assets | | $ | 22,524 | | $ | 20,994 | |
Natural gas and oil properties, net (full cost method) | | | 279,424 | | | 261,979 | |
Other property and equipment, net | | | 1,171 | | | 1,209 | |
Other non-current assets | | | 2,720 | | | 2,125 | |
Total assets | | $ | 305,839 | | $ | 286,307 | |
Liabilities and stockholders’ equity: | | | | | | | |
Current liabilities | | $ | 37,516 | | $ | 40,494 | |
Notes payable | | | 38,100 | | | 21,000 | |
Senior subordinated notes | | | 20,000 | | | 20,000 | |
Redeemable preferred stock, Series A | | | 9,708 | | | 9,520 | |
Deferred income tax liability | | | 10,772 | | | 9,031 | |
Other non-current liabilities | | | 3,040 | | | 2,986 | |
Total liabilities | | $ | 119,136 | | $ | 103,031 | |
Stockholders’ equity | | | 186,703 | | | 183,276 | |
Total liabilities and stockholders’ equity | | $ | 305,839 | | $ | 286,307 | |
BRIGHAM EXPLORATION COMPANY
SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| | Three Months Ended March 31, | |
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| | 2005 | | 2004 | |
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| | (unaudited) | | (unaudited) | |
Cash flows from operating activities: | | | | | | | |
Net income (as restated for 2004) | | $ | 3,048 | | $ | 4,925 | |
Depletion, depreciation and amortization (as restated for 2004) | | | 6,635 | | | 5,305 | |
Accretion of discount on ARO | | | 39 | | | 37 | |
Interest paid through issuance of add’l redeemable preferred stock | | | 188 | | | 175 | |
Amortization of deferred loan fees | | | 126 | | | 192 | |
Market value adjustments for derivatives instruments | | | 606 | | | (127 | ) |
Deferred income tax expense | | | | | | | |
(as restated for 2004) | | | 1,676 | | | 2,420 | |
Other non-cash loss | | | 9 | | | — | |
Changes in working capital and other items | | | (6,083 | ) | | (4,333 | ) |
Cash flows provided by operating activities | | $ | 6,244 | | $ | 8,594 | |
Cash flows used by investing activities | | | (20,644 | ) | | (17,057 | ) |
Cash flows (used) provided by financing activities | | | 16,760 | | | 10,343 | |
Net increase (decrease) in cash and cash equivalents | | $ | 2,360 | | $ | 1,880 | |
SUMMARY PER MCFE DATA
| | Three Months Ended March 31, | |
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| | 2005 | | | 2004 | |
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| | (unaudited) | | (unaudited) | |
Revenues: | | | | | | | |
Natural gas and oil sales | | $ | 6.19 | | $ | 5.51 | |
Other revenue | | | 0.02 | | | 0.00 | |
$6.21 | | $ | 5.51 | | | | |
Costs and expenses: | | | | | | | |
Lease operating | | | 0.82 | | | 0.46 | |
Production taxes | | | 0.30 | | | 0.28 | |
General and administrative | | | 0.41 | | | 0.40 | |
Depletion of natural gas and oil properties | | | | | | | |
(as restated for 2004) | | | 2.39 | | | 1.68 | |
Depreciation and amortization | | | 0.07 | | | 0.06 | |
Accretion of discount on ARO | | | 0.01 | | | 0.01 | |
$4.00 | | $ | 2.89 | | | | |
Operating income (as restated for 2004) | | $ | 2.21 | | $ | 2.62 | |
Interest expense, net (A) | | | (0.26 | ) | | (0.25 | ) |
Other income (expense) (B) | | | 0.03 | | | 0.00 | |
Adjusted income before taxes | | | | | | | |
(as restated for 2004) | | $ | 1.98 | | $ | 2.37 | |
(A) Calculated as interest expense minus interest income divided by production for period. | | | | | | | |
(B) Excludes non-cash gains/(losses) arising from hedge accounting for certain of our oil and natural gas hedges | | | | | | | |
BRIGHAM EXPLORATION COMPANY
SUMMARY OF COMMODITY PRICE HEDGES OUTSTANDING AS OF MAY 3, 2005
(unaudited)
| | | | | FY 2005 | | FY 2006 | |
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| | Strategy | | Q2 | | Q3 | | Q4 | | Q1 | | Q2 | |
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Natural Gas Collars: | | | | | | | | | | | | | | | | | | | |
Daily volumes | | | MMBtu/d | | | 6,978 | | | 1,957 | | | 652 | | | — | | | — | |
Floor (Purchased put) | | | $/MMBtu Cash flow | | $ | 4.931 | | $ | 5.450 | | $ | 5.450 | | | — | | | — | |
Cap (Written call) | | | $/MMBtu Cash flow | | $ | 7.077 | | $ | 8.000 | | $ | 8.000 | | | — | | | — | |
Natural Gas Three Way Costless Collars: | | | | | | | | | | | | | | | | |
Daily volumes | | | MMBtu/d | | | — | | | 5,217 | | | 4,348 | | | 4,000 | | | — | |
Floor (Purchased put) | | | $/MMBtu Cash flow | | | — | | $ | 6.375 | | $ | 7.038 | | $ | 7.479 | | | — | |
Cap (Written call) | | | $/MMBtu Cash flow | | | — | | $ | 7.410 | | $ | 8.577 | | $ | 9.354 | | | — | |
Written put | | | $/MMBtu Undesignated | | | — | | $ | 5.281 | | $ | 5.763 | | $ | 6.083 | | | — | |
Crude Oil Collars: | | | | | | | | | | | | | | | | | | | |
Daily volumes | | | Bbls/d | | | 205 | | | — | | | — | | | — | | | — | |
Floor (Purchased put) | | | $/Bbl Cash flow | | $ | 26.80 | | | — | | | — | | | — | | | — | |
Cap (Written call) | | | $/Bbl Cash flow | | $ | 32.51 | | | — | | | — | | | — | | | — | |
Crude Oil Three Way Costless Collars: | | | | | | | | | | | | | | | | |
Daily volumes | | | Bbls/d | | | 66 | | | 359 | | | 359 | | | 200 | | | — | |
Floor (Purchased put) | | | $/Bbl Cash flow | | $ | 48.00 | | $ | 44.36 | | $ | 44.36 | | $ | 48.00 | | | — | |
Cap (Written call) | | | $/Bbl Cash flow | | $ | 60.70 | | $ | 57.20 | | $ | 57.20 | | $ | 60.70 | | | — | |
Written put | | | $/Bbl Undesignated | | $ | 38.00 | | $ | 34.36 | | $ | 34.36 | | $ | 38.00 | | | — | |
| Note: | Hedged volumes and prices reflected in this table represent average contract amounts for the quarterly periods presented; natural gas hedge prices and crude oil hedge contract prices are based on NYMEX pricing. |
SOURCE Brigham Exploration Company
-0- 05/03/2005
/CONTACT: John Turner, Director of Finance & Business Development of
Brigham Exploration Company, +1-512-427-3300/
/Web site: http://www.streetevents.com /
/Web site: http://www.bexp3d.com /
_
