EX-99.2 3 be5648ex992.htm EXHIBIT 99.2

Exhibit 99.2

BRIGHAM EXPLORATION REPORTS FIRST QUARTER 2006 RESULTS

          AUSTIN, Texas, May 2 /PRNewswire-FirstCall/ -- Brigham Exploration Company (Nasdaq: BEXP) today announced its financial results for the quarter ended March 31, 2006.

          Highlights from our performance from the first quarter of 2006 include:

 

*

20% growth in first quarter production to 35.9 MMcfe per day over first quarter 2005 production;

 

 

 

 

*

63% growth in operating income to $9.7 million over operating income in the first quarter 2005 of $6 million; and

 

 

 

 

*

93% growth in net income to $5.9 million in the first quarter of 2006 over $3 million in the first quarter of 2005.

          FIRST QUARTER 2006 RESULTS

          Our net daily production volumes for the first quarter of 2006 were 35.9 MMcfe, up 20% when compared to our volumes in last year’s first quarter.  Revenues from the sale of oil and natural gas for the first quarter of 2006 were up 54% when compared to that in the first quarter last year.  A $1.56 per Mcfe increase in the average sales price we received from the sale of our oil and natural gas and the increase in our first quarter 2006 production volumes increased our first quarter 2006 revenue by $5.4 million and $3.1 million, respectively.

          During the first quarter of 2006, our average realized price for oil, which included a $0.43 loss associated with the settlement of derivative contracts, was $61.03 per barrel. This compares to an average realized price of $43.74 and a loss of $4.59 in the first quarter last year.  Our average realized price for natural gas during the first quarter of 2006 was $7.38 per Mcf and included a $0.05 gain associated with the settlement of derivative contracts.  This compares to an average realized price of $5.80 and a loss of less than $0.01 in last year’s first quarter.

          Our production costs for the first quarter of 2006 were 28% higher and on a unit basis were 7% higher than our production costs in the first quarter last year.  This increase in our production costs includes a 48% increase in our O&M expenses.  Approximately 65% of the increase in our O&M expenses was associated with new wells that were not producing in the first quarter last year, while 32% was due to O&M expense recognized in the first quarter to account for actual fourth quarter cash expense that came in higher that what was estimated at year end 2005.  Higher commodity prices led to an 86% increase in our ad valorem taxes and a 43% increase in our production taxes.

          Our general and administrative expenses for the first quarter 2006 were $0.51 per Mcfe and were up $0.10 on a per unit basis when compared to the first quarter of last year.  Our general and administrative expense for the first quarter 2006 included $182,000 ($0.06 per Mcfe) of non-cash charge for stock-based compensation expense associated with our adoption of FAS 123(R).

          Our depletion expense for the first quarter 2006 was $10.3 million ($3.17 per Mcfe) compared to $6.5 million ($2.39 per Mcfe) in the first quarter of last year.  Approximately $2.5 million of the increase in our first quarter 2006 depletion expense was due to an increase in our depletion rate, while the remaining $1.3 million of the increase was due to an increase in our production volumes.

          Our net interest expense for the first quarter of 2006 was $1.1 million compared to $741,000 in the first quarter of last year.  The increase in our net interest expense was primarily due to an increase in the amounts borrowed under both our senior and subordinated credit agreements, combined with an increase in the interest rate that we paid on those borrowings due to an increase in Libor.  Our weighted average debt outstanding for the first quarter 2006 was $81.6 million compared to $61.5 million in the first quarter of last year.

          We recorded deferred income tax expenses of $3.5 million in the first quarter of this year, compared to deferred income tax expenses of $1.7 million in the first quarter last year.  Our reported net income for the first quarter of 2006 was $5.9 million ($0.13 per diluted share) versus net income of $3 million ($0.07 per diluted share) for the first quarter last year.


          For the first quarter of 2006, net cash provided by operating activities funded approximately 78% of our cash used by investing activities and we borrowed an additional $11.2 million of debt, net of repayments, under our senior credit agreement.

          At March 31, 2006, we had $7.8 million in cash, total assets of $410 million and a debt to book capitalization ratio of 25%.

          Our capital expenditures for oil and natural gas activities for the first quarter of 2006 were up 68% when compared to last year’s first quarter.  Our net capital expenditures for oil and natural gas activities in the first quarter of 2006 and 2005 were as follows:

 

 

Three Months Ended December 31,

 

 

 

 

 

 

2006

 

2005

 

 

 

 

 

 

 

(in thousands)

 

Drilling

 

$

30,807

 

$

17,458

 

Land and seismic

 

 

7,172

 

 

4,815

 

Capitalized costs

 

 

2,057

 

 

1,601

 

Capitalized FAS 143 ARO

 

 

105

 

 

26

 

Total capital expenditures

 

$

40,141

 

$

23,900

 

          SECOND QUARTER 2006 FORECAST

          The following forecasts our second quarter 2006 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 second quarter 2006 production volumes to average between 35 and 39 MMcfe per day (79% natural gas).  For the second quarter of 2006, our lease operating expenses are projected to be $2.6 million ($0.74 to $0.83 per Mcfe), production taxes are projected to be approximately 5.3% of pre-hedge oil and gas revenues, and general and administrative expenses are projected to be $1.6 million ($0.45 to $0.50 per Mcfe).  Based on these production and cost estimates, assumed average NYMEX prices of $7.07 per MMBtu for natural gas and $73.28 per barrel for oil, and taking into account our current outstanding hedging contracts, we forecast that our second quarter revenue will be between $25.1 and $27.8 million and operating income will be between $9.3 and $10.7 million.

          In addition, we currently expect to grow production volumes in 2006 by 10% to 25% relative to our 2005 production. This would result in average daily production of between 36.4 and 41.4 MMcfe per day (79% natural gas) for 2006. 

          MANAGEMENT COMMENTS

          Gene Shepherd, Brigham’s Chief Financial Officer, commented, “Given our first quarter production volumes and assuming we realize the mid-point of our second quarter guidance, our production volumes through the first two quarters of 2006 would be running ahead of our 2005 volumes by roughly 22%, so we are currently on pace to be in the upper end of our full year guidance range.  With the steps that we have taken recently to strengthen the balance sheet, particularly our recently completed $125 million notes offering, we feel the company is in an excellent position to execute on its 2006 cap-ex plan.”


          CONFERENCE CALL INFORMATION

          Brigham management will host a conference call to discuss its operational and financial results for the first quarter 2006 with investors, analysts and other interested parties on Wednesday, May 3rd, at 9:00 a.m. Central time. To participate in the call, participants within the U.S. please dial 800-798-2884 and participants outside the U.S. please dial 617-614-6207. The participant passcode for the call is 75078300.  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 Saturday, June 3rd, 2006.  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 90091909. 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 3rd, 2006, 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 2006 Results and is dated May 2nd, 2006.  To access the other financial and statistical information that will be covered by the conference call that will take place on May 3rd, 2006, 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 2006 Conference Call and is dated May 3rd, 2006.

          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 federal securities laws. Important factors that could cause our actual results to differ materially from those contained in the forward looking statements including 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 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:

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,

 

 

 

 

 

 

2006

 

2005

 

 

 

 

 

 

 

(unaudited)

 

(unaudited)

 

Revenues:

 

 

 

 

 

 

 

Oil and natural gas sales

 

$

25,796

 

$

16,703

 

Other

 

 

(22

)

 

43

 

 

 

$

25,774

 

$

16,746

 

Costs and expenses:

 

 

 

 

 

 

 

Lease operating

 

 

2,730

 

 

2,218

 

Production taxes

 

 

1,144

 

 

802

 

General and administrative

 

 

1,642

 

 

1,098

 

Depletion of natural gas and oil properties

 

 

10,256

 

 

6,453

 

Depreciation and amortization

 

 

242

 

 

182

 

Accretion of discount on ARO

 

 

70

 

 

39

 

 

 

$

16,084

 

$

10,792

 

Operating income

 

$

9,690

 

$

5,954

 

Interest expense, net

 

 

(1,089

)

 

(741

)

Interest income

 

 

106

 

 

39

 

Other income (expense) (a)

 

 

679

 

 

(531

)

Income before income taxes

 

$

9,386

 

$

4,721

 

Income tax expense

 

 

(3,511

)

 

(1,673

)

Net income

 

$

5,875

 

$

3,048

 

Net income to common per share:

 

 

 

 

 

 

 

Basic

 

$

0.13

 

$

0.07

 

Diluted

 

$

0.13

 

$

0.07

 

Wt. Avg. common shares outstanding:

 

 

 

 

 

 

 

Basic

 

 

44,986

 

 

42,124

 

Diluted

 

 

45,579

 

 

43,166

 

(a)  Includes non-cash gains/(losses) related to our derivative contracts:

 

$

715

 

$

(606

)

BRIGHAM EXPLORATION COMPANY
PRODUCTION, SALES PRICES AND OTHER FINANCIAL DATA

 

 

Three Months Ended March 31,

 

 

 

 

 

 

2006

 

2005

 

 

 

 

 

 

 

(unaudited)

 

(unaudited)

 

Avg. net daily production:

 

 

 

 

 

 

 

Natural gas (MMcf)

 

 

28.3

 

 

22.2

 

Oil (Bbls)

 

 

1,278

 

 

1,308

 

Equivalent natural gas (MMcfe) (6:1)

 

 

35.9

 

 

30.0

 

Total net production:

 

 

 

 

 

 

 

Natural gas (MMcf)

 

 

2,545

 

 

1,994

 

Oil (MBbls)

 

 

115

 

 

118

 

Equivalent natural gas (MMcfe) (6:1)

 

 

3,235

 

 

2,700

 

% Natural gas

 

 

79

%

 

74

%

Sales prices (Before hedging):

 

 

 

 

 

 

 

Natural gas ($/Mcf)

 

$

7.33

 

$

5.80

 

Oil ($/Bbl)

 

 

61.46

 

 

48.33

 

Equivalent natural gas ($/Mcfe) (6:1)

 

 

7.95

 

 

6.39

 

Realized prices (Post hedging):

 

 

 

 

 

 

 

Natural gas ($/Mcf) (a)

 

$

7.38

 

$

5.80

 

Oil ($/Bbl) (a)

 

 

61.03

 

 

43.74

 

Equivalent natural gas ($/Mcfe) (6:1) (a)

 

 

7.97

 

 

6.19

 

(a) Includes the effects of hedging gains (losses) of:

 

 

 

 

 

 

 

Natural gas ($/Mcf)

 

$

0.05

 

$

(0.00

)

Oil ($/Bbl)

 

 

(0.43

)

 

(4.59

)


SUMMARY CONSOLIDATED BALANCE SHEETS
(in thousands)

 

 

March 31,
2006

 

December 31,
2005

 

 

 

 

 

 

 

 

(unaudited)

 

 

 

 

Assets:

 

 

 

 

 

 

 

Current assets

 

$

28,259

 

$

28,325

 

Natural gas and oil properties, net (full cost method)

 

 

377,214

 

 

347,329

 

Other property and equipment, net

 

 

1,011

 

 

1,027

 

Other non-current assets

 

 

3,500

 

 

3,746

 

Total assets

 

$

409,984

 

$

380,427

 

Liabilities and stockholders’ equity:

 

 

 

 

 

 

 

Current liabilities

 

$

43,364

 

$

37,467

 

Senior credit agreement

 

 

44,300

 

 

33,100

 

Senior subordinated notes

 

 

30,000

 

 

30,000

 

Redeemable preferred stock, Series A

 

 

10,101

 

 

10,101

 

Deferred income tax liability

 

 

27,115

 

 

23,563

 

Other non-current liabilities

 

 

4,678

 

 

4,556

 

Total liabilities

 

$

159,558

 

$

138,787

 

Stockholders’ equity

 

 

250,426

 

 

241,640

 

Total liabilities and stockholders’ equity

 

$

409,984

 

$

380,427

 

 

BRIGHAM EXPLORATION COMPANY
SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

 

 

Three Months Ended March 31,

 

 

 

 

 

 

2006

 

2005

 

 

 

 

 

 

 

(unaudited)

 

(unaudited)

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income

 

$

5,875

 

$

3,048

 

Depletion, depreciation and amortization

 

 

10,498

 

 

6,635

 

Accretion of discount on ARO

 

 

70

 

 

39

 

Interest paid through issuance of additional redeemable preferred stock

 

 

—  

 

 

188

 

Amortization of deferred loan fees

 

 

119

 

 

126

 

Market value adjustments for derivatives instruments

 

 

(715

)

 

606

 

Deferred income tax expense

 

 

3,511

 

 

1,673

 

Stock-based compensation

 

 

364

 

 

—  

 

Other non-cash loss

 

 

42

 

 

12

 

Changes in working capital and other items

 

 

6,424

 

 

(6,083

)

Cash flows provided by operating activities

 

$

26,188

 

$

6,244

 

Cash flows used by investing activities

 

 

(33,492

)

 

(20,644

)

Cash flows provided by financing activities

 

 

11,082

 

 

16,760

 

Net increase in cash and cash equivalents

 

$

3,778

 

$

2,360

 


SUMMARY PER MCFE DATA

 

 

Three Months Ended March 31,

 

 

 

 

 

 

 

2006

 

 

2005

 

 

 

 

 

 

 

 

(unaudited)

 

 

(unaudited)

 

Revenues:

 

 

 

 

 

 

 

Natural gas and oil sales

 

$

7.97

 

$

6.19

 

Other revenue

 

 

(0.01

)

 

0.02

 

 

 

$

7.96

 

$

6.21

 

Costs and expenses:

 

 

 

 

 

 

 

Lease operating

 

 

0.84

 

 

0.82

 

Production taxes

 

 

0.35

 

 

0.30

 

General and administrative

 

 

0.51

 

 

0.41

 

Depletion of natural gas and oil properties

 

 

3.17

 

 

2.39

 

Depreciation and amortization

 

 

0.07

 

 

0.07

 

Accretion of discount on ARO

 

 

0.02

 

 

0.01

 

 

 

$

4.96

 

$

4.00

 

Operating income

 

$

3.00

 

$

2.21

 

Interest expense, net (a)

 

 

(0.30

)

 

(0.26

)

Other income (expense) (b)

 

 

(0.01

)

 

0.03

 

Adjusted income before taxes

 

$

2.69

 

$

1.98

 

(a)

Calculated as interest expense minus interest income divided by production for period.

(b)

Excludes non-cash gains/(losses) associated with market value adjustments for derivative contracts.

BRIGHAM EXPLORATION COMPANY
SUMMARY OF COMMODITY PRICE HEDGES OUTSTANDING AS OF MAY 2, 2006
(unaudited)

 

 

 

 

 

 

Hedge
Strategy

 

 

Q2

 

 

2006
Q3

 

 

Q4

 

 

 

 

 

 

 

 

 

 

Natural Gas Collars:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Daily volumes

 

 

MMBtu/d

 

 

 

 

 

8,242

 

 

6,848

 

 

7,935

 

Floor (Purchased put)

 

$

/MMBtu

 

 

Cash flow

 

$

8.000

 

$

8.000

 

$

8.000

 

Cap (Written call)

 

$

/MMBtu

 

 

Cash flow

 

$

15.894

 

$

15.950

 

$

20.854

 

Natural Gas Three Way Costless Collars:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Daily volumes

 

 

MMBtu/d

 

 

 

 

 

4,286

 

 

4,239

 

 

1,413

 

Floor (Purchased put) 

 

$

/MMBtu

 

 

Cash flow

 

$

8.040

 

$

8.040

 

$

8.040

 

Cap (Written call)

 

$

/MMBtu

 

 

Cash flow

 

$

9.590

 

$

9.590

 

$

9.590

 

Written put

 

$

/MMBtu

 

 

Undesignated

 

$

6.650

 

$

6.650

 

$

6.650

 

Oil Collars:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Daily volumes

 

 

Bbls/d

 

 

 

 

 

412

 

 

228

 

 

293

 

Floor (Purchased put)

 

$

/Bbl

 

 

Cash flow

 

$

52.11

 

$

50.00

 

$

50.00

 

Cap (Written call)

 

$

/Bbl

 

 

Cash flow

 

$

75.34

 

$

75.60

 

$

77.50

 

Oil Three Way Costless Collars:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Daily volumes

 

 

Bbls/d

 

 

 

 

 

82

 

 

163

 

 

—  

 

Floor (Purchased put)

 

$

/Bbl

 

 

Cash flow

 

$

63.00

 

$

63.00

 

 

—  

 

Cap (Written call)

 

$

/Bbl

 

 

Cash flow

 

$

75.25

 

$

75.65

 

 

—  

 

Written put

 

$

/Bbl

 

 

Undesignated

 

$

48.00

 

$

48.00

 

 

—  

 


    

 

 

2007

 

2008

 

 

 

 

 

 

 

Q1

 

Q2

 

Q3

 

Q4

 

Q1

 

 

 

 

 

 

 

 

Natural Gas Collars:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Daily volumes

 

 

8,333

 

 

2,637

 

 

2,609

 

 

870

 

 

—  

 

Floor (Purchased put)

 

$

8.000

 

$

7.125

 

$

7.125

 

$

7.125

 

 

—  

 

Cap (Written call)

 

 

23.512

 

$

15.350

 

$

15.350

 

$

15.350

 

 

—  

 

Natural Gas Three Way Costless Collars:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Daily volumes

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

Floor (Purchased put)

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

Cap (Written call)

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

Written put

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

Oil Collars:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Daily volumes

 

 

267

 

 

231

 

 

228

 

 

98

 

 

99

 

Floor (Purchased put)

 

$

50.00

 

$

51.71

 

 

51.71

 

 

56.00

 

 

56.00

 

Cap (Written call)

 

$

78.25

 

$

84.64

 

 

84.64

 

 

89.95

 

 

89.95

 

Oil Three Way Costless Collars:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Daily volumes

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

Floor (Purchased put)

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

Cap (Written call)

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

Written put

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

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-                                                            05/02/2006
          /CONTACT:  John Turner, Director of Finance & Business Development of Brigham Exploration Company, +1-512-427-3300/
          /Web site:  http://www.bexp3d.com /
          (BEXP)