Exhibit 99.1
BRIGHAM EXPLORATION REPORTS THIRD QUARTER RESULTS AND PROVIDES
FOURTH QUARTER FORECASTS
AUSTIN, Texas, Nov. 2 /PRNewswire-FirstCall/ -- Brigham Exploration
Company (Nasdaq: BEXP) today announced its financial results for the third
quarter and nine months ended September 30, 2005.
THIRD QUARTER 2005 RESULTS
Our average daily production volumes for the third quarter 2005 were 32
MMcfed/d, down 6% when compared to last year's third quarter volumes. The
natural decline of our existing production was only partially offset by
production from recently completed wells, causing an overall decline in our
third quarter 2005 production. Additionally, we estimate that approximately 0.5
MMcfe/d of our third quarter 2005 production was lost due to the need to shut-in
wells in preparation for Hurricane Rita.
Our revenues from the sale of oil and natural gas for the third quarter 2005
were up 46% when compared to the same period last year. A 49% improvement in the
sales price we received for our oil and natural gas combined with a 35% decrease
in losses from the settlement of derivative contracts were the primary reasons
for the increase in our third quarter 2005 revenues. These increases to revenue
were partially offset by a decrease in revenues due to lower production volumes.
Our production costs, which include costs for operating and maintaining (O&M
expenses) our producing wells, expensed workovers, ad valorem taxes and
production taxes, were down 2% when compared to the third quarter last year. The
primary reason for this decline was a decrease in expensed workovers. This
decrease was partially offset by increases in our production taxes, ad valorem
taxes and O&M expenses. The increases in our third quarter production taxes and
ad valorem taxes were due to higher commodity prices. An increase in production
tax credits totaling approximately $488,000 offset a portion of the increases
that would have been expected, given the 41% increase in our third quarter 2005
pre-hedge oil and natural gas revenues. Our O&M expenses for the third quarter,
which includes $254,000 of costs associated with new wells that were not
producing in the third quarter last year, were up 17% when compared to last
year. Excluding the costs associated with these new wells, our O&M expenses for
the third quarter 2005 decreased by 4% when compared to the third quarter last
year. On a unit of production basis, our third quarter 2005 production costs
were $0.79 per Mcfe, up 4% when compared to the third quarter of last year.
Our general and administrative expenses (G&A expenses) for the third quarter
2005 were up slightly when compared to our G&A expenses in the third quarter
last year. On a unit of production basis, our G&A expenses for the third quarter
2005 were up 7% when compared to last year due to lower production volumes.
Our depletion expense for the third quarter 2005 was $8 million ($2.76 per
Mcfe) compared to $5.9 million ($1.92 per Mcfe) in the third quarter last year.
An increase in our depletion rate resulted in a $2.4 million increase in our
third quarter 2005 depletion expense. This increase was partially offset by a
decrease of $328,000 due to lower production. Our operating income for the third
quarter 2005 was $13.4 million and was 78% higher than our operating income in
the third quarter 2004.
Our net interest expense for the third quarter 2005 was 31% higher than last
year. This increase was primarily due to a $591,000 increase in the amount of
interest expense that we paid on borrowings under both our senior credit
facility and subordinated credit agreement. An increase in the amounts we
borrowed under both our senior credit facility and subordinated credit agreement
and an increase in the rate that we paid on borrowings under our senior credit
facility due to an increase in the Eurodollar rate were the primary reasons for
this increase. Our weighted average debt outstanding for the third quarter 2005
was $92 million compared to $54.5 million last year.
Our reported net income for the third quarter was $7.7 million ($0.18 per
diluted share) compared to net income of $4.5 million ($0.11 per diluted share)
in the third quarter last year.
Our net capital expenditures for oil and natural gas activities in the third
quarter 2005 were $25.3 million. Net capital expenditures for the third quarter
2005 and 2004 were:
Three Months Ended
September 30,
-----------------------------
2005 2004
------------- -------------
(in thousands)
Drilling $ 20,934 $ 17,448
Net land and G&G 2,508 5,828
Capitalized costs 1,775 1,136
Capitalized FAS 143 ARO 84 57
Total capital expenditures $ 25,301 $ 24,469
FIRST NINE MONTHS 2005 RESULTS
Average daily production volumes for the first nine months of 2005 were 30.5
MMcfed/d, down 11% when compared to the first nine months last year. The natural
decline of our existing production was only partially offset by production from
recently completed wells, causing an overall decline in our production during
the first nine months of 2005. Additionally, we estimate that approximately 0.2
MMcfe/d of our production during the first nine months of 2005 was lost due the
need to shut-in wells in preparation for Hurricane Rita.
Our revenues from the sale of oil and natural gas for the first nine months
2005 were 16% higher than our revenues last year. A 26% improvement in the sales
price we received for our oil and natural gas and a 40% decrease in losses from
the settlement of derivative contracts were the primary reasons for this
increase. These increases to revenue were partially offset by a decrease in
revenue due to lower production volumes.
Our production costs for the first nine months of 2005 were $7.1 million, up
4% when compared to the same period last year. The primary reasons for the
increase were increases in our O&M expenses and ad valorem taxes. Our O&M
expenses for the first nine months of 2005 includes $610,000 of costs associated
with new wells that were not producing during the first nine months of last
year. Excluding the costs associated with these new wells, our O&M expenses for
the first nine months of this year were up 11% when compared to the first nine
months of last year. The increase in our ad valorem taxes was due to higher
commodity prices. These increases were partially offset by decreases in our
production taxes and expensed workovers. An increase in production tax credits
totaling approximately $995,000 for the first nine months of 2005 offset a
portion of the increases that would have been expected, given the 13% increase
in our pre-hedge oil and natural gas revenues for the nine month period ended
September 30, 2005. Our production taxes for the first nine months of 2005 were
also lower due to lower production for the period. On a unit of production
basis, our production costs for the first nine months of 2005 were $0.85 per
Mcfe, up 16% when compared to the same period last year.
General and administrative expenses for the first nine months of 2005 were
slightly lower than our G&A expenses during the first nine months of last year.
However, when compared to the first nine months of last year, our G&A expenses
on a unit of production basis for the first nine months of this year were up 13%
to $0.45 per Mcfe due to lower production volumes.
Our depletion expense for the first nine months of 2005 was $21.6 million
($2.62 per Mcfe) compared to $16.5 million ($1.79 per Mcfe) in the first nine
months last year. An increase in our depletion rate increased our depletion
expense for the first nine months of 2005 by $6.9 million. This increase was
partially offset by a decrease of $1.8 million due to lower production. The
increase in our depletion rate was primarily the result of increased costs of
reserve additions during the first nine months of 2005. Our operating income for
the first nine months of this year was $27.4 million, up 13% when compared to
operating income during the first nine months of last year.
Our net interest expense for the first nine months of 2005 was 5% higher
than last year. This increase was primarily due to an $889,000 increase in the
amount of interest that we paid on borrowings under our senior credit facility.
An increase in the amount we borrowed under our senior credit facility combined
with an increase in the rate that we paid on those borrowings due to an increase
in the Eurodollar rate were the primary reasons for this increase. Our weighted
average debt outstanding for the first nine months of this year was $76.2
million compared to $57.3 million last year. The increase in interest expense
was partially offset by a $515,000 increase in the amount of interest that we
capitalized during the first three quarters of this year.
Our reported net income for the first nine months of 2005 was $15.5 million
($0.36 per diluted share) versus net income of $14.6 million ($0.35 per diluted
share) for the same period last year.
Our year to date through September 30, 2005 net capital expenditures for oil
and natural gas activities were $84.3 million. Net capital expenditures for the
first nine months of 2005 and 2004 were:
Nine Months Ended
Sept 30,
-----------------------------
2005 2004
------------- -------------
(in thousands)
Drilling $ 66,172 $ 48,710
Net land and G&G 12,754 10,749
Capitalized costs 5,156 4,595
Capitalized FAS 143 ARO 244 392
Total capital expenditures $ 84,326 $ 64,446
FOURTH QUARTER 2005 FORECAST
The following forecasts and estimates of our fourth 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.
We currently expect our fourth quarter 2005 production volumes to average
between 39 MMcfe/d and 41 MMcfe/d (78% natural gas). For the fourth quarter
2005, lease operating expenses are projected to be $0.53 per Mcfe based on the
mid-point of our production guidance, production taxes are projected to be
approximately 5.6% of pre-hedge oil and natural gas revenues, and general and
administrative expenses are projected to be $1.4 million ($0.38 to $0.40 per
Mcfe).
Based on these production and cost estimates, assumed average NYMEX prices
of $12.98 per MMbtu for natural gas and $61.01 per barrel for oil, and taking
into account current derivative contracts outstanding, we forecast that our
fourth quarter 2005 revenue will be between $40.6 and $42.8 million and
operating income will be between $25 and $26.6 million.
CONFERENCE CALL INFORMATION
Our management will host a conference call to discuss its operational and
financial results for the third quarter 2005 with investors, analysts and other
interested parties on Thursday, November 3, 2005, at 10:00 a.m. eastern time. To
participate in the call, participants within the U.S. please dial 866-203-3436
and participants outside the U.S. please dial 617-213-8849. The participant
passcode for the call is 39890587. A telephone recording of the conference call
will be available to interested parties approximately two hours after the call
is completed through 12:00 p.m. eastern time on Saturday, December 3, 2005. To
access the recording, domestic callers dial 888-286-8010 and international
callers dial 617-801-6888. The passcode for the conference call playback is
48740729. In addition, a live and archived web cast of the conference call will
be available over the Internet at either www.bexp3d.com or 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 November 3, 2005, will be available on our website. To access
the press release: go to www.bexp3d.com and click on News Releases. The file
with a copy of the press release is named Brigham Exploration Reports Third
Quarter Results and Provides Fourth Quarter Forecasts and is dated November 2,
2005. To access the other financial and statistical information that will be
covered by the conference call that will take place on November 3, 2005, go to
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 Third Quarter 2005 Conference Call and is dated November 3, 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 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) (unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
Restated Restated
Revenues:
Oil and natural gas sales $ 25,189 $ 17,240 $ 60,326 $ 51,975
Other revenue 37 27 136 69
25,226 17,267 60,462 52,044
Costs and expenses:
Lease operating 1,541 1,648 5,149 4,362
Production taxes 741 675 1,909 2,434
General and administrative 1,317 1,304 3,719 3,723
Depletion of oil and natural
gas properties 7,953 5,860 21,612 16,508
Depreciation and amortization 183 179 543 544
Accretion of discount on asset
retirement obligations 44 40 126 117
11,779 9,706 33,058 27,688
Operating income 13,447 7,561 27,404 24,356
Other income (expense):
Interest income 62 26 153 55
Interest expense, net (1,138) (872) (2,645) (2,508)
Other income (expense) (497) (168) (851) (159)
(1,573) (1,014) (3,343) (2,612)
Income before income taxes 11,874 6,547 24,061 21,744
Income tax expense:
Current --- --- --- ---
Deferred (4,196) (2,056) (8,525) (7,190)
(4,196) (2,056) (8,525) (7,190)
Net income $ 7,678 $ 4,491 $ 15,536 $ 14,554
Net income per share available
to common stockholders:
Basic $ 0.18 $ 0.11 $ 0.37 $ 0.37
Diluted $ 0.18 $ 0.11 $ 0.36 $ 0.35
Weighted average shares
outstanding:
Basic 42,236 41,227 42,175 39,921
Diluted 43,528 42,340 43,244 41,078
BRIGHAM EXPLORATION COMPANY
PRODUCTION, SALES PRICES AND OTHER FINANCIAL DATA
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
Average net daily production:
Natural gas (MMcf) 24.8 24.1 23.2 24.1
Oil (Bbls) 1,200 1,648 1,218 1,662
Equivalent natural gas
(MMcfe) (6:1) 32.0 34.0 30.5 34.1
Total net production:
Natural gas (MMcf) 2,233 2,167 6,268 6,506
Oil (MBbls) 108 148 329 449
Equivalent natural gas
(MMcfe) (6:1) 2,881 3,057 8,240 9,199
% Natural gas 78% 71% 76% 71%
Sales prices (Before hedging):
Natural gas ($/Mcf) $ 8.71 $ 5.62 $ 7.14 $ 5.87
Oil ($/Bbl) 60.44 42.50 53.32 38.01
Equivalent natural gas
($/Mcfe) (6:1) 9.02 6.04 7.56 6.01
Realized prices (Post hedging):
Natural gas ($/Mcf) (a) $ 8.45 $ 5.44 $ 7.01 $ 5.68
Oil ($/Bbl) (a) 58.51 36.82 49.87 33.51
Equivalent natural gas
($/Mcfe) (6:1) (a) 8.74 5.64 7.32 5.65
(a) Includes the effects of
hedging gains (losses) of:
Natural gas ($/Mcf) $ (0.26) $ (0.18) $ (0.13) $ (0.19)
Oil ($/Bbl) (1.93) (5.68) (3.45) (4.50)
SUMMARY CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, December 31,
2005 2004
------------- -------------
(unaudited)
Assets:
Current assets $ 28,330 $ 20,994
Oil and natural gas properties,
net (full cost method) 324,693 261,979
Other property and equipment, net 997 1,209
Other non-current assets 2,959 2,125
Total assets $ 356,979 $ 286,307
Liabilities and stockholders' equity:
Current liabilities $ 40,637 $ 40,494
Senior credit facility 58,100 21,000
Senior subordinated notes 30,000 20,000
Mandatorily redeemable preferred stock,
Series A 10,101 9,520
Deferred income tax liability 17,524 9,031
Other non-current liabilities 3,428 2,986
Total liabilities $ 159,790 $ 103,031
Stockholders' equity 197,189 183,276
Total liabilities and stockholders'
equity $ 356,979 $ 286,307
BRIGHAM EXPLORATION COMPANY
SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) (unaudited)
Three Months Ended Nine months Ended
September 30, September 30,
----------------------- -----------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
Cash flows from operating activities:
Net income $ 7,678 $ 4,491 $ 15,536 $ 14,554
Depletion, depreciation and
amortization 8,136 6,039 22,155 17,052
Accretion of discount on ARO 44 40 126 117
Interest paid through issuance
of add'l redeemable preferred
stock 200 184 581 538
Amortization of deferred
loan fees 120 191 373 574
Market value adjustments for
derivatives instruments 529 167 995 227
Deferred income tax expense 4,196 2,056 8,525 7,190
Other noncash items 44 --- 103 ---
Changes in operating assets
and liabilities (9,086) (1,013) (8,332) (2,747)
Cash flows provided by
operating activities $ 11,861 $ 12,155 $ 40,062 $ 37,505
Cash flows used by
investing activities (26,472) (23,375) (83,285) (61,483)
Cash flows (used) provided
by financing activities 14,059 9,061 46,815 27,150
Net increase (decrease) in
cash and cash equivalents $ (552) $ (2,159) $ 3,592 $ 3,172
SUMMARY PER MCFE DATA
(unaudited)
Three Months Ended Nine months Ended
September 30, September 30,
----------------------- -----------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
Revenues:
Oil and natural gas sales $ 8.74 $ 5.64 $ 7.32 $ 5.65
Other revenue 0.01 0.01 0.02 0.01
$ 8.75 $ 5.65 $ 7.34 $ 5.66
Costs and expenses:
Lease operating 0.53 0.54 0.62 0.47
Production taxes 0.26 0.22 0.23 0.26
General and administrative 0.46 0.43 0.45 0.40
Depletion of natural gas and
oil properties 2.76 1.92 2.62 1.79
Depreciation and amortization 0.06 0.06 0.07 0.06
Accretion of discount on ARO 0.02 0.01 0.02 0.01
$ 4.09 $ 3.18 $ 4.01 $ 2.99
Operating income $ 4.66 $ 2.47 $ 3.33 $ 2.67
Interest expense, net of
interest income (a) (0.37) (0.28) (0.30) (0.27)
Other income (expense) (b) 0.01 0.00 0.02 0.01
Adjusted income $ 4.30 $ 2.19 $ 3.05 $ 2.41
(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 NOVEMBER 2, 2005
(unaudited)
We use derivative instruments to manage risks associated with natural gas
and crude oil price volatility. Derivative instruments that meet the hedge
criteria in SFAS No. 133 are designated as cash-flow hedges. Derivative
instruments that do not meet the hedge criteria in SFAS No. 133 are not
designated as hedges. We used derivative instruments designated as cash-flow
hedges to mitigate the risk of variability in cash flows from oil and natural
gas sales due to changes in market prices.
Cash-Flow Hedges
Our cash-flow hedges consisted of fixed-price swaps and costless collars
(purchased put options and written call options). The fixed-price swap
agreements are used to fix the prices of anticipated future oil and natural gas
production. The costless collars are used to establish floor and ceiling prices
on anticipated future oil and natural gas production. There were no net premiums
received when we entered into these option agreements.
Derivatives Not Designated as Hedges
Our derivative positions included option contracts that are not designated
as hedges. These positions were entered into to offset the cost of other option
positions that are designated as hedges.
The following table summarizes our commodity related derivative contracts
outstanding at November 2, 2005. The volumes and prices reflected in the table
represent average daily contract amounts for the quarterly periods presented and
the corresponding NYMEX reference price.
2005 2006 2007
-------- ----------------------------------------- --------
Strategy Q4 Q1 Q2 Q3 Q4 Q1
-------------- -------- -------- -------- -------- -------- --------
Natural Gas
Costless
Collars:
Avg.
daily
volumes MMBtu/d 652 --- 2,308 2,283 2,717 3,000
Floor
(Pur-
chased
put) $/MMBtu Cash flow $ 5.45 --- $ 8.00 $ 8.00 $ 8.00 $ 8.00
Cap
(Sold
call) $/MMBtu Cash flow $ 8.00 --- $ 14.85 $ 14.85 $ 19.42 $ 21.20
Natural Gas
Three-way
Structures:
Avg.
daily
volumes MMBtu/d 6,087 6,667 4,286 4,239 1,413 ---
Floor
(Pur-
chased
put) $/MMBtu Cash flow $ 7.88 $ 8.49 $ 8.04 $ 8.04 $ 8.04 ---
Cap
(Sold
call) $/MMBtu Cash flow $ 9.86 $ 10.84 $ 9.59 $ 9.59 $ 9.59 ---
Sold
put $/MMBtu Undesignated $ 6.54 $ 7.05 $ 6.65 $ 6.65 $ 6.65 ---
Crude Oil
Costless
Collars:
Avg.
daily
volumes Bbls/d --- 83 181 --- -- ---
Floor
(Pur-
chased
put) $/Bbl Cash flow --- $ 62.00 $ 54.80 --- --- ---
Cap
(Sold
call) $/Bbl Cash flow --- $ 74.50 $ 75.00 --- --- ---
Crude Oil
Three-way
Structures:
Avg.
daily
volumes Bbls/d 359 200 82 163 -- --
Floor
(Pur-
chased
put) $/Bbl Cash flow $ 44.36 $ 48.00 $ 63.00 $ 63.00 -- --
Cap
(Sold
call) $/Bbl Cash flow $ 57.20 $ 60.70 $ 75.25 $ 75.65 -- --
Sold
put $/Bbl Undesignated $ 34.36 $ 38.00 $ 48.00 $ 48.00 -- --
SOURCE Brigham Exploration Company
-0- 11/02/2005
/CONTACT: John Turner, Director of Finance & Business Development of
Brigham Exploration Company, +1-512-427-3300/
/Web site: http://www.bexp3d.com /