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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of earliest event reported): MAY 11, 2000
BRIGHAM EXPLORATION COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 000-22433 75-2692967
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
6300 BRIDGEPOINT PARKWAY
BUILDING TWO, SUITE 500
AUSTIN, TEXAS 78730
(Address, including zip code, of principal executive offices)
Registrant's telephone number, including area code: (512) 427-3300
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<PAGE>
Item 5. OTHER EVENTS.
On May 11, 2000, Brigham Exploration Company (the "Company") provided
its quarterly overview of operational activity for the three month period ending
March 31, 2000, which was highlighted by a significant Springer natural gas
discovery in its Anadarko Basin province and a successful development well at
Brigham's Home Run Field in its Texas Gulf Coast province. On May 15, 2000, the
Company announced its financial results for the quarter ended March 31, 2000.
Copies of the Company's press releases that provided these
announcements are attached hereto as Exhibit 99.1 and 99.2.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
Item Number Exhibit
----------- -------------------------------------
99.1* Press Release dated May 11, 2000.
99.2* Press Release dated May 15, 2000.
- -------
* filed herewith.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BRIGHAM EXPLORATION COMPANY
Date: May 26, 2000 By: /s/ Curtis F. Harrell
------------------------
Curtis F. Harrell
Chief Financial Officer
<PAGE>
INDEX TO EXHIBITS
Item Number Exhibit
----------- ------------------------------------------
99.1 Press Release dated May 11, 2000.
99.2 Press Release dated May 15, 2000.
[X Logo] NEWS RELEASE
FOR IMMEDIATE RELEASE
BRIGHAM EXPLORATION FIRST QUARTER 2000 OPERATIONAL UPDATE
- --------------------------------------------------------------------------------
Austin, TX -- (Business Wire) - May 11, 2000 -- Brigham Exploration
Company (NASDAQ:BEXP) today provided its quarterly overview of operational
activity for the three month period ending March 31, 2000, which was highlighted
by a significant Springer natural gas discovery in its Anadarko Basin province
and a successful development well at Brigham's Home Run Field in its Texas Gulf
Coast province.
FIRST QUARTER 2000 OPERATIONAL RESULTS
Brigham spud a total of eight wells during the first quarter in which
it retained an aggregate average working interest of 34%. Seven of these wells
have been completed and one has been plugged. Brigham's first quarter drilling
was concentrated in its 3-D seismic projects in the Anadarko Basin and Gulf
Coast provinces and targeted primarily natural gas exploration and development
objectives. On a net basis, approximately 70% of these wells were located in the
Anadarko Basin and 30% were in the Texas Gulf Coast. Brigham operated 92% of the
net wells it participated in during the first quarter.
Since the end of the first quarter, Brigham has spud four additional
wells in which it has retained an aggregate average working interest of 59%. One
of these wells is currently being completed, one well has been plugged and two
wells are currently drilling.
Brigham estimates its average net daily production volumes during the
first quarter 2000 were approximately 17 million cubic feet of equivalent
natural gas (MMcfe), 61% of which was natural gas. Excluding producing
properties sold by the Company in mid-1999, Brigham's estimated net production
volumes for the first quarter of 2000 increased 20% from the adjusted net
volumes produced in the first quarter of 1999, and 4% over actual fourth quarter
1999 volumes. Net production growth in the first quarter 2000 was somewhat lower
than management expected primarily due to delays in first production and lower
stabilized rates from the Palmer State #2 confirmation well in the Home Run
Field in Brooks County, Texas, and declines in production volumes from a
recently completed Frio well in Brazoria County, Texas. As a result, Brigham
estimates that its average net daily production rate at the end of the first
quarter 2000 was approximately 18 MMcfe per day.
ANADARKO BASIN ACTIVITY
As previously announced, Brigham had a significant Springer discovery
in its Anadarko Basin core province during the first quarter. This Springer
discovery began producing to sales on May 2nd, and is currently producing at a
pipeline curtailed rate of approximately 3 million cubic feet (MMcf) of natural
gas and 310 barrels of oil per day. As pipeline capacity is increased over the
next two to four weeks, Brigham intends to produce the well at an unstimulated
rate of approximately 5 MMcf of natural gas and 400 barrels of oil per day, or
4.1 MMcfe per day net to the Company's approximate 56% revenue interest. Also in
the Anadarko Basin, Brigham is completing another Morrow discovery in its Arnett
Project, the Anne 5 #1, where the Company retains a 45% working interest.
Drilled to a total depth of 11,000 feet, this Morrow discovery is expected to be
tested and completed within the next 30 days.
Brigham plans to spud four wells in its Anadarko Basin projects during
the second quarter, including a deep Hunton test that offsets a currently
producing well that has produced over 15 Bcfe to date. Brigham currently retains
a 69% working interest in this proved undeveloped location, which would confirm
a large 3-D imaged fault block with over 50 Bcfe of gross unrisked reserve
potential.
GULF COAST ACTIVITY
In its Texas Gulf Coast province, completion operations have recently
begun on the Brigham-operated Palmer State #3 development well, which is an
offset to the Company's successful Home Run Field confirmation well, the Palmer
State #2. The Palmer State #3 encountered the prospective Vicksburg objectives
approximately 130 structural feet high to the Palmer State #2. Recently acquired
wireline logs and rotary sidewall cores indicate that the Palmer State #3
encountered 113 feet of net pay with greater than 18% porosity in the Lower
Vicksburg.
<PAGE>
Page 2
These results compare favorably to the currently producing Palmer State #2 well,
which encountered 44 feet of net pay with greater than 18% porosity in the Lower
Vicksburg. The Palmer State #2 is currently producing at a stabilized rate of
approximately 9 MMcfe, or 2.6 MMcfe net to Brigham's revenue interest, at a
flowing tubing pressure of 3,900 pounds per square inch.
Brigham expects to begin production testing of the Palmer State #3
within the next ten days, followed by fracture stimulation operations on
productive intervals in the well. Brigham anticipates that the next development
well in the Home Run Field will spud by July.
Brigham plans to spud six wells in its Texas Gulf Coast projects during
the second quarter, including the Dinn #2 in its Caliente Project in Duval
County, Texas, where the Company retains a 50% working interest. Based on
dip-meter and 3-D seismic data analysis, this well is an updip proved
undeveloped offset to the Brigham's 1998 Dinn #1 Wilcox discovery, and will test
a structure with approximately 50 Bcfe of gross unrisked reserve potential.
MANAGEMENT COMMENT
Bud Brigham, the Company's Chairman, CEO and President, stated, "Soon
after the close of our financing transactions in late February, we began in
earnest our 2000 drilling program. Results to date are encouraging, highlighted
by our recently completed Springer discovery in the Anadarko Basin and our
currently completing Palmer State #3 development well in the Home Run Field.
While we experienced disappointing results in two of our bright spot tests
during the quarter, these are trends that have experienced significant recent
3-D seismic-driven drilling successes. We therefore remain optimistic about our
deep inventory of amplitude-related prospects in the Texas Gulf Coast."
Mr. Brigham continued, "We are early in our 2000 drilling program, and
our recent successes are just beginning to impact our production volumes. The
currently producing Palmer State #2 will fully impact our second quarter
production, and our Springer discovery and Palmer State #3 well will fully
impact our third quarter volumes. In addition, we plan to spud ten wells in our
Anadarko Basin and Gulf Coast projects during the second quarter. Based on our
recent and current well completions, combined with our accelerating 2000
drilling program, we expect to deliver sequential growth in quarterly production
volumes during the remainder of 2000."
ABOUT BRIGHAM EXPLORATION
Brigham Exploration Company (www.bexp3d.com) 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.
FORWARD LOOKING STATEMENTS DISCLOSURE
Except for the historical information contained herein, the matters
discussed in this news release are forward looking statements 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.
Contact: Christopher A. Phelps, Vice President - Finance & Strategic Planning
(512) 427-3300 / [email protected]
<PAGE>
Page 3
BRIGHAM EXPLORATION COMPANY
DRILLING ACTIVITY BY REGION
Gross Net WI%
----- --- ---
ANADARKO BASIN Wells Completed 3 1.9 63%
P&A Wells 0 0.0 0%
Wells Drilling 0 0.0 0%
----- ---- ---
Total Wells Spud 3 1.9 63%
===== ==== ===
Completion Rate 100% 100%
GULF COAST Wells Completed (a) 4 0.4 10%
P&A Wells 1 0.5 46%
Wells Drilling 0 0.0 0%
----- ---- ---
Total Wells Spud 5 0.9 17%
===== ==== ===
Completion Rate 80% 46%
WEST TEXAS Wells Completed 0 0.0 0%
P&A Wells 0 0.0 0%
Wells Drilling 0 0.0 0%
----- ---- ---
Total Wells Spud 0 0.0 0%
===== ==== ===
Completion Rate 0% 0%
OVERALL Wells Completed 7 2.3 33%
P&A Wells 1 0.5 46%
Wells Drilling 0 0.0 0%
----- ---- ---
Total Wells Spud 8 2.7 34%
===== ==== ===
Completion Rate 88% 83%
- ----------------------
(a) Includes three wells drilled and completed in the Esperson Dome Project in
which Brigham retains an approximate 1.5% net profit interest before
project payout and a variable 12%-20% back-in working interest after
project payout depending upon attainment of certain investment return
thresholds.
[X Logo] NEWS RELEASE
FOR IMMEDIATE RELEASE
BRIGHAM EXPLORATION REPORTS FIRST QUARTER 2000 FINANCIAL RESULTS
- --------------------------------------------------------------------------------
Austin, TX -- (Business Wire) - May 15, 2000 -- Brigham Exploration
Company (NASDAQ:BEXP) today announced its financial results for the quarter
ended March 31, 2000. Significant highlights of Brigham's financial performance
during the first quarter include:
o Net equivalent production volumes increased 20% relative to the first
quarter of 1999, after adjusting for the sale of producing reserves
completed in mid-1999;
o Higher realized oil and gas sales prices contributed to production revenue
growth of 41% in the current year quarter despite the mid-1999 producing
property sales; and
o Year-over-year cash flow growth - 90% higher EBITDA and 97% higher
operating cash flow - due to improved realized sales prices and reduced
unit operating costs.
FIRST QUARTER 2000 RESULTS
Average net daily production volumes for the first quarter 2000 were 17
million cubic feet of equivalent natural gas (MMcfe), or an increase of 4% over
volumes produced during the fourth quarter 1999. Excluding net production
attributable to properties sold in June 1999, Brigham's average net daily
production would have been 14.2 MMcfe for the first quarter 1999, resulting in
comparable year-over-year production growth of 20% over those adjusted volumes.
Drilling discoveries made late in 1999 are not expected to contribute a full
quarter of production until the second quarter of 2000 and drilling success thus
far this year will not contribute fully until the third quarter of 2000.
The currently producing Palmer State #2 well in the Home Run Field in
Brooks County, Texas, began flowing to sales from four commingled Lower
Vicksburg intervals in late February and is currently producing approximately 9
MMcfe per day, or 2.6 MMcfe net to Brigham. Brigham's recently announced
Springer discovery in its Anadarko Basin province began flowing to sales in
early May at a rate of 4.9 MMcfe per day (2.7 MMcfe net) and is expected to be
increased to over 7 MMcfe per day (3.9 MMcfe net) once pipeline capacity is
increased. Lastly, the first development well to Brigham's late 1999 Home Run
Field discovery, the Palmer State #3, is currently completing with commingled
production from multiple Lower Vicksburg intervals expected some time in June.
Natural gas and oil sales for the first quarter of 2000 were $4.5
million, or a 41% increase from the same period last year as significantly
improved realized oil prices ($27.16 vs. $11.39 per Bbl) and 12% higher oil
production offset lower realized natural gas prices ($1.93 vs. $2.09 per Mcf)
and 10% lower natural gas production. Realized natural gas prices during the
first quarter of 2000 were negatively impacted by losses on natural gas hedging
transactions totaling $514,000, or $0.55 per Mcf, as compared with natural gas
hedging gains of $559,000, or $0.53 per Mcf, in the prior year period.
Earnings before interest, taxes, depreciation, depletion and
amortization (EBITDA) increased 90% to $3.2 million in the first quarter of 2000
from $1.7 million in the first quarter of 1999, while operating cash flow for
the first quarter of 2000 was $2.5 million ($0.16 per share), an increase from
$1.3 million ($0.09 per share) for the same period in 1999. Despite these
significant improvements in cash flow, Brigham reported a net loss of $2.2
million ($0.14 per share) for the first quarter of 2000 compared to a net loss
of $1.9 million ($0.15 per share) for the prior year period. The increased net
loss in the current year period was primarily the result of: (i) higher net
interest expenses, (ii) an increase in depletion of natural gas and oil
properties, and (iii) expenses related to the change in fair market value of
certain outstanding oil and natural gas hedging contracts.
Lease operating expenses for the first quarter of 2000 were $459,000
($0.30 per Mcfe), or 14% lower than the first quarter of 1999 and 21% lower than
the fourth quarter of 1999. Also lower in the current year quarter, net general
and administrative expenses were $740,000 ($0.48 per Mcfe) in the first quarter
of 2000, or a 19% reduction from the first quarter of 1999 and a 4% reduction
from the fourth quarter of 1999.
Net capital expenditures incurred in exploration and development
operations during the first quarter of 2000 totaled $4.4 million, including $2.7
million for drilling projects, $314,000 for land and G&G activities and $1.5
million for capitalized G&A and interest expenses.
<PAGE>
MANAGEMENT COMMENT
Curtis Harrell, Brigham's Chief Financial Officer, stated, "We are
pleased to report improved cash flow growth in the first quarter of 2000 despite
the sale of producing properties in mid-1999 that represented almost 20% of our
first quarter 1999 net production. Our 41% revenue growth in the current year
quarter reflects both the benefit that we realized from significantly higher
year-over-year realized oil prices and the negative impact of losses on our
natural gas hedges. Efforts to improve our cost structure continue to benefit
our financial performance through lower field operating and general overhead
expenses. Brigham's goal this year remains to cost effectively add to our
reserve base through the execution of our $20 million drilling budget, and to
deliver consistent quarterly improvement in overall profitability. Based on the
wells recently completed and currently completing, we anticipate continued
growth in quarterly production and cash flow for the remainder of 2000."
ABOUT BRIGHAM EXPLORATION
Brigham Exploration Company (www.bexp3d.com) 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.
FORWARD LOOKING STATEMENTS DISCLOSURE
Except for the historical information contained herein, the matters
discussed in this news release are forward looking statements that are based
upon current expectations. The Company's actual capital expenditures in 2000 may
differ from the estimates discussed herein. 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, availability of sufficient capital resources by the Company and its
project participants, federal and state regulatory developments and other risks
more fully described in the Company's filings with the Securities and Exchange
Commission.
Contact: Christopher A. Phelps, Vice President - Finance and Strategic Planning
(512) 427-3300 / [email protected]
<PAGE>
Page 3
BRIGHAM EXPLORATION COMPANY
SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data) (unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1999 2000
------------ ------------
<S> <C> <C>
Revenues:
Natural gas and oil sales $ 3,191 $ 4,505
Workstation revenue 90 33
--------- ---------
3,281 4,538
Costs and expenses:
Lease operating 535 459
Production taxes 169 304
General and administrative 918 740
Depletion of natural gas and oil properties 1,361 1,764
Depreciation and amortization 127 123
Amortization of stock compensation 58 12
--------- ---------
3,168 3,402
--------- ---------
Operating income 113 1,136
Interest expense, net (2,081) (2,775)
Interest income 24 37
Other expense (a) -- (596)
--------- ---------
Net loss before income taxes (1,944) (2,198)
Income tax expense -- --
--------- ---------
Net loss $ (1,944) $ (2,198)
========= =========
Net loss per share:
Basic / Diluted $ (0.15) $ (0.14)
Wt. avg. common shares outstanding:
Basic / Diluted 13,317 15,279
</TABLE>
(a) Includes $443,000 of non-cash expenses related to changes in the fair market
value of certain hedging contracts in the first quarter 2000.
PRODUCTION, SALES PRICES AND OTHER FINANCIAL DATA
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1999 2000
------------ ------------
<S> <C> <C>
Avg. net daily production:
Natural gas (MMcf) 11.6 10.4
Oil (Bbls) 978 1,100
Equivalent natural gas (MMcfe) (6:1) 17.5 17.0
Total net production:
Natural gas (MMcf) 1,047 940
Oil (MBbls) 88 99
Equivalent natural gas (MMcfe) (6:1) 1,575 1,534
% Natural gas 66% 61%
Sales prices:
Natural gas ($/Mcf) (a) $ 2.09 $ 1.93
Oil ($/Bbl) (b) $ 11.39 $ 27.16
Equivalent natural gas ($/Mcfe) (6:1) $ 2.03 $ 2.94
Other financial data:
EBITDA ($000)(c) $ 1,683 $ 3,199
Operating cash flow ($000) (d) $ 1,256 $ 2,472
Operating cash flow per share (d) $ 0.09 $ 0.16
(a) Includes the effects of natural gas hedging gains of $559,000 ($0.53 per
Mcf) in the first quarter 1999, and losses of $514,000 ($0.55 per Mcf) in
the first quarter 2000.
(b) Includes the effects of oil hedging losses of $2,000 ($0.02 per Bbl) in
the first quarter 2000.
(c) Net income (loss) plus interest expense, DD&A expenses, deferred income
taxes and other non-cash items.
(d) Net income (loss) plus DD&A expenses, deferred income taxes and other
non-cash items.
</TABLE>
<PAGE>
Page 4
BRIGHAM EXPLORATION COMPANY
SUMMARY CONSOLIDATED BALANCE SHEETS
(in thousands) (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
December 31, March 31,
1999 2000
-------------- --------------
Assets:
Current assets $ 8,264 $ 7,212
Natural gas and oil properties, at cost, net 112,066 114,675
Other property and equipment, at cost, net 1,686 1,572
Other non-current assets 3,667 4,002
-------------- --------------
Total assets $ 125,683 $ 127,461
============== ==============
Liabilities and stockholders' equity:
Current liabilities $ 17,744 $ 13,532
Notes payable 56,000 58,000
Senior subordinated notes, net 41,341 42,898
Other non-current liabilities 1,600 1,741
-------------- --------------
Total liabilities $ 116,685 $ 116,171
Stockholders' equity 8,998 11,290
-------------- --------------
Total liabilities and stockholders' equity $ 125,683 $ 127,461
============== ==============
SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) (unaudited)
Three Months Ended March 31,
---------------------------------------
1999 2000
-------------- --------------
Cash flows from operating activities:
Net loss $ (1,944) $ (2,198)
Depletion, depreciation and amortization 1,488 1,887
Interest paid through issuance of add'l senior
sub. notes 1,300 1,477
Amortization of deferred stock compensation 58 12
Amortization of deferred loan fees 262 391
Amortization of discount on senior subordinated notes 92 180
Amortization of deferred loss on derivatives
instruments - 280
Market value adjustment for derivatives instruments - 443
Changes in deferred income tax liability - -
-------------- --------------
Operating cash flow 1,256 2,472
Changes in working capital and other items 3,844 (5,444)
-------------- --------------
Cash flows provided (used) by operating activities 5,100 (2,972)
Cash flows (used) provided by investing activities (290) (4,157)
Cash flows (used) provided by financing activities (361) 6,046
-------------- --------------
Net increase (decrease) in cash and cash
equivalents $ 4,449 $ (1,083)
============== ==============
SUMMARY PER MCFE DATA
(unaudited)
Three Months Ended March 31,
---------------------------------------
1999 2000
-------------- --------------
Revenues:
Natural gas and oil sales $ 2.03 $ 2.94
Workstation revenue 0.06 0.02
-------------- --------------
2.09 2.96
Cost and expenses:
Lease operating 0.34 0.30
Production taxes 0.11 0.20
General and administrative 0.58 0.48
Depletion of natural gas and oil properties 0.86 1.15
Depreciation and amortization 0.08 0.08
Amortization of stock compensation 0.04 0.01
-------------- --------------
2.01 2.22
-------------- --------------
Operating income $ 0.08 $ 0.74
-------------- --------------
</TABLE>
