Mail Stop 4628
August 14, 2018
Robert M. Roosa
Chief Executive Officer and Director
Brigham Minerals, Inc.
5914 W. Courtyard Drive, Suite 100
Austin, TX 78730
Re: Brigham Minerals, Inc.
Draft Registration Statement on Form S-1
Submitted July 17, 2018
CIK No. 0001745797
Dear Mr. Roosa:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so we may
better
understand your disclosure.
Please respond to this letter by providing the requested information and
either submitting
an amended draft registration statement or publicly filing your registration
statement on
EDGAR. If you do not believe our comments apply to your facts and circumstances
or do not
believe an amendment is appropriate, please tell us why in your response.
After reviewing the information you provide in response to these comments
and your
amended draft registration statement or filed registration statement, we may
have additional
comments.
General
1. Please supplementally provide us with copies of all written
communications, as defined
in Rule 405 under the Securities Act, that you, or anyone authorized to
do so on your
behalf, present to potential investors in reliance on Section 5(d) of
the Securities Act,
whether or not they retain copies of the communications.
Robert M. Roosa
Brigham Minerals, Inc.
August 14, 2018
Page 2
Summary, page 1
Prospective Undeveloped Horizontal Drilling Locations, page 6
2. Expand the disclosure here and elsewhere on page 85 relating to your
prospective
undeveloped horizontal drilling locations to clearly explain or
illustrate the mathematical
relationship between the number of gross drilling locations, number of
DSUs and
assumed gross wells per DSU.
Risk Factors, page 26
We have little to no control over the timing of future drilling..., page 31
3. Revise your disclosure to remove any figures based on an aggregation of
the individual
estimates of proved, probable and possible reserves. If you require
further guidance,
refer to Question 105.01 in the Compliance and Disclosure
Interpretations regarding Oil
and Gas Rules, available on our website at:
http://www.sec.gov/divisions/corpfin/guidance/oilandgas-interp.htm
Use of Proceeds, page 55
4. Please also quantify the net proceeds that you expect to receive if the
underwriters
exercise in full their option to purchase additional shares from you.
Dividend Policy, page 56
5. Disclosure here (payment of dividends "if any") and at page 49 regarding
the
determination "whether" to declare dividends appears to be inconsistent
with your
assertion at page 19 under the subheading "Dividend policy" where you
state that you
"expect to pay dividends...." We note also the related disclosure in the
risk factor which
begins "Brigham Inc. is a holding company" at page 43. Please revise to
reconcile the
various disclosures.
Management's Discussion and Analysis of Financial Condition and Results of
Operations, page
63
Quantitative and Qualitative Disclosure About Market Risk, page 74
Capital Requirements and Sources of Liquidity, page 71
6. Please quantify your anticipated capital expenditure requirements for
2018. Refer to Item
303(a) of Regulation S-K.
Robert M. Roosa
Brigham Minerals, Inc.
August 14, 2018
Page 3
Commodity Price Risk, page 74
7. You indicate that your credit agreement allows you to hedge up to 85% of
your
"reasonably anticipated projected production from proved developed
producing
reserves." We note also the disclosure at page 66 regarding results from
hedging during
the last two fiscal years. Please quantify the percentage of your
production that you
hedged during those two years.
Business, page 80
Proved, Probable and Possible Reserves, page 89
8. The discussion of probable and possible reserves refers to the various
circumstances
identified in the definitions under Rule 4-10(a)(18) and (a)(17) of
Regulation S-X,
respectively, where such reserves may be assigned. Expand your
disclosure to further
explain the extent that one or more of the factors you have identified
apply to the
probable and possible reserves disclosed in the prospectus. Refer to the
disclosure
requirements pursuant to Item 1202(a)(5) of Regulation S-K.
PUDs, page 93
9. The disclosure on page 94 relating to a discussion of your proved
undeveloped reserves
appears to indicate that you limit your proved "developed reserves" to
the quantities of
oil and gas that are reasonably certain to be recovered in the next five
years." Review
and revise your disclosure as may be necessary to be consistent with the
context of the
discussion.
10. The disclosure on page 94 indicates that "we generally do not have
evidence of approval
of our operators' development plans, however we use a probabilistic
approach to define
and allocate locations to proved reserves." Furthermore, the disclosure
in Exhibit 99.2
states "The drill schedules for each basin were completed based on spud
and completion
rates within each basin. First, undeveloped wells with a registered API
number were
scheduled, followed by wells waiting on completion. Next, wells were
arranged by
reserve category, with PDNP properties scheduled first, followed by PUD,
PROB and
POSS properties. Within each reserve category, wells were ordered by
decreasing EUR,
with the highest EUR wells scheduled first."
Provide us with a reasonably detailed explanation of the methodology you
use for
defining and allocating locations to proved reserves. As part of your
explanation, tell us
how this methodology and the procedure to schedule undeveloped wells as
noted in
Exhibit 99.2 meet the requirements for proved reserves and reasonable
certainty under
Rule 4-10(a)(22) and (a)(24), the requirements for an adopted plan and
development
schedule and the funding for such activities, e.g. by the operator,
under Rule 4-
Robert M. Roosa
Brigham Minerals, Inc.
August 14, 2018
Page 4
10(a)(31)(ii) and Rule 4-10(a)(26) of Regulation S-X, respectively, and
the guidance in
C&DI 131.04.
Productive Wells, page 95
11. Tell us how you considered the requirement to disclose the total number
of net productive
wells. Refer to the disclosure requirements under Item 1208(a) of
Regulation S-K. This
comment also applies to your disclosure of net wells under the section
"Drilling Results"
pursuant to the disclosure requirements under Item 1205(a) of Regulation
S-K.
Management, page 103
Committees of the Board of Directors, page 105
Audit Committee, page 105
12. Once known, please update the disclosure in this section to identify the
audit committee
members and audit committee financial expert.
Executive Compensation, page 106
13. Please include the information required by Item 402 of Regulation S-K
with your next
amendment.
14. Describe the material terms of any employment agreements or arrangements
with your
named executive officers and file the individual agreements, if any, as
exhibits. For
guidance, please refer to Item 601(b)(10)(iii)(A) and Instruction 1 to
Item 601(b)(10) of
Regulation S-K.
Description of Capital Stock, page 122
15. We note that your description of your capital stock and your charter and
bylaws "is
qualified in its entirely by reference to the provisions of applicable
law...." You may not
qualify your disclosure by reference to the "provisions of applicable
law" or other
information not filed as an exhibit. Please revise your disclosure
accordingly.
Class A Common Stock, page 122
16. Please revise to identify counsel and attribute to counsel the legal
conclusions that all
outstanding shares and shares of Class A common stock to be issued upon
completion of
this offering, are, and will be, "fully paid and non-assessable."
Robert M. Roosa
Brigham Minerals, Inc.
August 14, 2018
Page 5
Financial Statements, page F-1
17. You will need to update the historical and pro forma financial
statements prior to the
effective date of your registration statement to comply with Rule 3-12
and Article 11 of
Regulation S-X.
Note 3 Oil and Gas Properties, page F-18
18. Please expand your disclosure regarding the cost of unevaluated
properties to include a
description of the current status of the significant properties or
projects involved, and the
anticipated timing of the inclusion of the costs in the amortization
computation, to
comply with Rule 4-10 (c)(7)(ii) of Regulation S-X.
Oil and Natural Gas Reserves, page F-23
19. The production figures by individual product type presented for 2016 and
2017 appear to
be inconsistent with the comparable figures presented elsewhere on pages
69 and 94,
respectively. Review and revise your disclosure as may be necessary to
resolve this
inconsistency.
20. Expand the tabular disclosure of proved reserves to additionally provide
the net quantities
by individual product type of proved developed and proved undeveloped
reserves at the
beginning of each of the periods presented, e.g. December 31, 2015.
Refer to the
disclosure requirements under FASB ASC 932-235-50-4.
21. There appears to be a lack of correlation between the changes in your
proved
undeveloped reserves due to extensions and discoveries of 4,708 MBoe and
revisions of
previous estimates of (1,367) MBoe, as disclosed on page 93, and the
changes in your
total proved reserves due to extensions and discoveries of 3,259 MBoe
and revisions of
previous estimates of 172 MBoe, as disclosed on page F-23, for the year
ended December
31, 2017. Tell us the reason for the apparent inconsistencies in your
disclosure.
22. Expand the disclosure relating to the changes in total net proved
reserves for each of the
periods presented to provide an appropriate narrative explanation for
the significant
changes relating to each line item entry within your reconciliation,
such as revisions of
previous estimates, improved recovery, extensions and discoveries,
acquisitions and
divestitures. Your explanation should address the change for the line
item by separately
identifying and quantifying each factor, including offsetting factors,
that contributed to a
significant change so that the change in net reserves between periods is
fully explained.
To the extent that two or more factors contribute to a significant
change, indicate the net
amount attributable to each factor accompanied by a narrative
explanation. Your
disclosure of revisions in the previous estimates of reserves in
particular should identify
such factors as changes caused by commodity prices, well performance,
unsuccessful
Robert M. Roosa
Brigham Minerals, Inc.
August 14, 2018
Page 6
and/or uneconomic proved undeveloped locations or the removal of proved
undeveloped
locations due to changes in a previously adopted development plan.
Exhibits
23. You indicate that your revolving credit facility will remain in place
following the
offering. Please file the governing credit agreement as an exhibit to
your registration
statement. Refer to Item 601(b)(10) of Regulation S-K.
Exhibit 99.1, 99.2
24. The reserves reports do not appear to include all of the information
that is required by
Item 1202(a)(8) of Regulation S-K. Please obtain and file revised
reserves reports to
address the following points:
State the purpose for which the report was prepared, e.g. for
inclusion as an
exhibit in a filing made with the U.S. Securities and Exchange
Commission
(SEC). Refer to the disclosure requirements under Item
1202(a)(8)(i).
Present the figures for the average realized prices after
adjustments for location
and quality differentials such as transportation, quality,
gravity and Btu content by
product type for the reserves included in the report as part of
the primary
economic assumptions to comply with Item 1202(a)(8)(v).
Separately present the net quantities, by individual product
type, relating to the
probable developed and probable undeveloped reserves. Refer to
the
requirements regarding the optional disclosure of probable
reserves under Item
1202(a)(2)(iv) and (v) of Regulation S-K.
Separately present the net quantities, by individual product
type, relating to the
possible developed and probable undeveloped reserves. Refer to
the requirements
regarding the optional disclosure of probable reserves under Item
1202(a)(2)(vi)
and (vii) of Regulation S-K.
25. Tell us the extent that the 497 gross proved developed non-producing
wells presented in
"Table I-PDNP" are related to drilled but uncompleted wells ("DUCs"). If
a material
amount of these reserves are related to DUCs, refer to the definition of
developed oil and
gas reserves under Rule 4-10(a)(6) of Regulation S-X and tell us how you
determined
the dollar amount of the remaining development costs in support of the
classification of
such wells as developed.
Robert M. Roosa
Brigham Minerals, Inc.
August 14, 2018
Page 7
Closing Comments
You may contact John Cannarella, Staff Accountant, at (202) 551-3337 or
Karl Hiller,
Accounting Branch Chief, at (202) 551-3686 if you have questions regarding
comments on the
financial statements and related matters. For questions regarding comments on
engineering
matters, you may contact John Hodgin, Petroleum Engineer, at (202) 551-3699.
Please contact
Anuja A. Majmudar, Attorney-Advisor, at (202) 551-3844 or, in her absence,
Timothy S.
Levenberg, Special Counsel, at (202) 551-3707 with any other questions.
Sincerely,
/s/ John Reynolds
John Reynolds
Assistant Director
Office of Natural
Resources