EX-99.1 2 be4000ex991.txt EXHIBIT 99.1 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 /