BRIGHAM NEWS RELEASE
FOR IMMEDIATE RELEASE
BRIGHAM EXPLORATION REPORTS SECOND QUARTER 2000 FINANCIAL RESULTS
--------------------------------------------------------------------------------
Austin, TX -- (Business Wire) - August 3, 2000 -- Brigham Exploration
Company (NASDAQ:BEXP) today announced its financial results for the quarter
ended June 30, 2000. Significant highlights of Brigham's financial performance
during the second quarter include:
|X| Net equivalent production volumes increased 25% relative to the second
quarter of 1999, after adjusting for the sale of producing reserves in
mid-1999;
|X| Accelerating production volume growth leading into the third quarter - June
2000 average production rate of 21 MMcfe per day, a 45% increase over April
2000;
|X| Higher realized oil prices contributed to production revenue growth of 30%
in the current year quarter despite significant natural gas hedging losses
and the mid-1999 producing property sales; and
|X| Year-over-year cash flow growth - 32% higher EBITDA due to reduced unit
operating costs and improved realized sales prices.
SECOND QUARTER 2000 RESULTS
Average net daily production volumes for the second quarter 2000 were
17.6 million cubic feet of equivalent natural gas (MMcfe), or an increase of 2%
over volumes produced during the first quarter 2000. Excluding net production
attributable to properties sold in June 1999, Brigham's average net daily
production would have been 14.1 MMcfe for the second quarter 1999, resulting in
comparable year-over-year production growth of 25% over those adjusted volumes.
Although production was relatively flat to first quarter 2000 volumes,
several recently announced discoveries in the Anadarko Basin and Texas Gulf
Coast should contribute a full quarter of production beginning in the third
quarter of this year. In addition, the currently completing Palmer State #3 well
at Home Run Field and the Dinn #2 well in Brigham's Caliente Project are both
expected to begin producing to sales in August and should contribute a full
quarter of production beginning in the fourth quarter. Brigham estimates that
net production volumes were approximately 21 MMcfe per day in June and currently
expects net production volumes to reach 25 MMcfe per day by September.
Natural gas and oil sales for the second quarter of 2000 were $4.6
million, a 30% increase from the same period last year as significantly improved
realized oil prices ($28.71 vs. $16.24 per Bbl) more than offset lower realized
natural gas prices ($1.98 vs. $2.07 per Mcf) on relatively flat production
volumes. Realized natural gas prices during the second quarter of 2000 were
negatively impacted by losses on natural gas hedging transactions totaling $1.7
million ($1.66 per Mcf), as compared with natural gas hedging gains of $7,000
($0.01 per Mcf) in the prior year period. Brigham has fixed price natural gas
swap hedges covering a total of 15,000 MMBtu (or approximately 13.6 MMcf) per
day at an approximate average NYMEX price of $2.19 per MMBtu from July 2000
through April 2001.
Earnings before interest, taxes, depreciation, depletion and
amortization (EBITDA) increased 32% to $2.6 million in the second quarter of
2000 from $2.0 million in the second quarter of 1999, and decreased 19% from
$3.2 million in the first quarter of 2000. The decrease in EBITDA in the second
quarter relative to the first quarter 2000 was primarily attributable to an
increase in monthly settlements related to a crude oil hedging contract on 600
barrels per day at a fixed NYMEX swap price of $22.00 per barrel. Settlements
under this contract were accounted for as other expense rather than as a
reduction in revenues on the income statement. This crude oil hedging contract
expired in June and will therefore have no impact on future financial
performance. Brigham has a crude oil collar hedging contract on 600 barrels per
day from July 2000 through December 2000 with a NYMEX price cap of $31.75 per
barrel and a NYMEX price floor of $18.00 per barrel.
Operating cash flow for the second quarter of 2000 was $1.6 million
($0.10 per share), an increase from $1.4 million ($0.10 per share) for the same
period in 1999. Despite this improvement in cash flow, Brigham reported a net
loss of $4.3 million ($0.26 per share) for the second quarter of 2000 compared
to a net loss of $14.8 million ($1.04 per share) for the prior year period. The
net loss in the current year period was primarily the result of (i) $1.9 million
in non-cash expenses related to the change in fair market value of certain
outstanding oil and natural gas hedging contracts, (ii) higher net interest
expenses ($3.0 million vs. $2.4
<PAGE>
Page 2
million), (iii) $2.2 million in aggregate cash settlements on natural gas and
oil hedging contracts, and (iv) an increase in depletion of natural gas and oil
properties ($1.8 million vs. $1.5 million). The net loss in the prior year
period included a $12.2 million ($0.85 per share) non-cash loss on the sale of
oil and natural gas properties completed in June 1999.
Lease operating expenses for the second quarter of 2000 were $502,000
($0.32 per Mcfe), or 19% lower than the second quarter of 1999. Also lower in
the current year quarter, net general and administrative expenses were $708,000
($0.45 per Mcfe), or a 21% reduction from the second quarter of 1999 and a 4%
reduction from the first quarter of 2000.
Net capital expenditures incurred in exploration and development
operations during the second quarter of 2000 totaled $7.5 million, including
$3.7 million for drilling projects, $1.8 million for land and G&G activities and
$1.5 million for capitalized G&A and interest expenses.
MANAGEMENT COMMENT
Curtis Harrell, Brigham's Chief Financial Officer, stated, "Our
financial results in the second quarter were negatively impacted by two
principal factors, $2.2 million in cash settlements on our outstanding hedging
contracts and lower production volume growth than anticipated due to delays
experienced in bringing to sales certain wells completed during the second
quarter. Though we've been frustrated by the delays in adding production from a
few of our recent discoveries, this additional production should be flowing to
sales early in the third quarter. Fortunately, we have added new production
volumes from our 2000 drilling program and ended the quarter on a strong note by
achieving an average net production rate of 21 MMcfe per day in June. Wells
currently completing should further increase our volumes to 25 MMcfe per day by
September, and an exciting inventory of drilling projects scheduled for the
third quarter should further contribute to production volume growth during the
remainder of 2000."
Harrell further stated, "With our current and expected third quarter
production volume growth, we are now positioned to benefit from improved natural
gas prices for the first time in 2000. Higher price realizations, growing
production volumes and a lower cost structure should all contribute to improved
financial performance in the third quarter of 2000."
CONFERENCE CALL INFORMATION
Management will host a conference call to discuss Brigham's financial
and operational results for the second quarter 2000 with investors, analysts and
other interested parties on Friday, August 4th, at 9:00 a.m. Central time. To
participate in the call, please dial 800-675-9347 and ask for the Brigham
Exploration conference call (conference identification number 15787752). A
replay of the conference call will be available to interested parties at
www.streetevents.com through 5:00 p.m. Central time on Friday, August 11th.
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 June 30, Six Months Ended June 30,
---------------------------------- ---------------------------------
1999 2000 1999 2000
--------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C>
Revenues:
Natural gas and oil sales $ 3,553 $ 4,635 $ 6,744 $ 9,140
Workstation revenue 71 16 161 49
-------- -------- -------- --------
3,624 4,651 6,905 9,189
Costs and expenses:
Lease operating 619 502 1,154 961
Production taxes 216 395 385 699
General and administrative 891 708 1,809 1,448
Depletion of natural gas and oil properties 1,514 1,820 2,875 3,584
Depreciation and amortization 139 124 266 247
Amortization of stock compensation 55 24 113 36
-------- -------- -------- --------
3,434 3,573 6,602 6,975
-------- -------- -------- --------
Operating income 190 1,078 303 2,214
Interest expense, net (2,377) (3,031) (4,458) (5,806)
Interest income 70 19 94 56
Loss on sale of natural gas and oil properties (12,195) - (12,195) -
Other expense (a) (527) (2,394) (527) (2,990)
-------- -------- -------- --------
Net loss before income taxes (14,839) (4,328) (16,783) (6,526)
Income tax expense - - - -
-------- -------- -------- --------
Net loss $(14,839) $ (4,328) $(16,783) $ (6,526)
======== ======== ======== ========
Net loss per share:
Basic / Diluted $ (1.04) $ (0.26) $ (1.21) $ (0.41)
Wt. avg. common shares outstanding:
Basic / Diluted 14,309 16,713 13,816 15,996
</TABLE>
(a) Includes non-cash expenses related to changes in the fair
market value of certain hedging contracts of $529,000 and $1.9
million in the first quarter 1999 and 2000, respectively, and
$529,000 and $2.4 million in the first six months 1999 and
2000, respectively.
PRODUCTION, SALES PRICES AND OTHER FINANCIAL DATA
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
---------------------------------- ----------------------------------
1999 2000 1999 2000
--------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
Avg. net daily production:
Natural gas (MMcf) 11.2 11.6 11.4 11.0
Oil (Bbls) 1,005 992 992 1,046
Equivalent natural gas (MMcfe) (6:1) 17.2 17.6 17.4 17.3
Total net production:
Natural gas (MMcf) 1,005 1,047 2,053 1,987
Oil (MBbls) 90 89 178 188
Equivalent natural gas (MMcfe) (6:1) 1,548 1,582 3,123 3,116
% Natural gas 65% 66% 66% 64%
Sales prices:
Natural gas ($/Mcf) (a) $ 2.07 $ 1.98 $ 2.08 $ 1.96
Oil ($/Bbl) (a) $ 16.24 $ 28.71 $ 13.85 $ 27.89
Equivalent natural gas ($/Mcfe) (6:1) $ 2.30 $ 2.93 $ 2.16 $ 2.93
Other financial data:
EBITDA ($000) (b) $ 1,970 $ 2,595 $ 3,653 $ 5,794
Operating cash flow ($000) (c) $ 1,437 $ 1,625 $ 2,693 $ 4,097
Operating cash flow per share (c) $ 0.10 $ 0.10 $ 0.19 $ 0.26
(a) Includes the effects of hedging gains (losses) of:
Natural gas ($/Mcf) $0.01 ($1.66) $0.28 ($1.13)
Oil ($/Bbl) $0.00 $0.00 $0.00 ($0.01)
(b) Net income (loss) plus interest expense, DD&A expenses, deferred
income taxes and other non-cash items.
(c) 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>
December 31, June 30,
1999 2000
-------------- ------------
<S> <C> <C>
Assets:
Current assets $ 8,264 $ 7,308
Natural gas and oil properties, at cost, net 112,066 120,320
Other property and equipment, at cost, net 1,686 1,487
Other non-current assets 3,667 3,543
-------- --------
Total assets $125,683 $132,658
======== ========
Liabilities and stockholders' equity:
Current liabilities $ 17,744 $ 10,706
Notes payable 56,000 65,000
Senior subordinated notes, net 41,341 44,437
Other non-current liabilities 1,600 5,523
-------- --------
Total liabilities 116,685 125,666
Stockholders' equity 8,998 6,992
-------- --------
Total liabilities and stockholders' equity $125,683 $132,658
======== ========
</TABLE>
SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) (unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
---------------------------------- ------------------------------
1999 2000 1999 2000
--------------- -------------- ------------ --------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss $(14,839) $ (4,328) $(16,783) $ (6,526)
Depletion, depreciation and amortization 1,653 1,944 3,141 3,831
Interest paid through issuance of add'l senior sub. notes 1,342 1,526 2,642 3,003
Amortization of deferred stock compensation 55 24 113 36
Amortization of deferred loan fees 366 298 628 689
Amortization of discount on senior subordinated notes 136 237 228 417
Amortization of deferred loss on derivatives instruments - - - 280
Market value adjustment for derivatives instruments 529 1,924 529 2,367
Loss on sale of natural gas and oil properties 12,195 - 12,195 -
Changes in deferred income tax liability - - - -
-------- -------- -------- --------
Operating cash flow 1,437 1,625 2,693 4,097
Changes in working capital and other items (5,465) (2,420) (2,357) (7,864)
-------- -------- -------- --------
Cash flows provided (used) by operating activities (4,028) (795) 336 (3,767)
Cash flows (used) provided by investing activities 10,759 (7,519) 11,205 (11,676)
Cash flows (used) provided by financing activities (10,997) 6,728 (11,358) 12,774
-------- -------- -------- --------
Net increase (decrease) in cash and cash equivalents $ (4,266) $ (1,586) $ 183 $ (2,669)
======== ======== ======== ========
</TABLE>
SUMMARY PER MCFE DATA
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
---------------------------------- ------------------------------
1999 2000 1999 2000
--------------- -------------- ------------ --------------
<S> <C> <C> <C> <C>
Revenues:
Natural gas and oil sales $ 2.29 $ 2.93 $ 2.16 $ 2.93
Workstation revenue 0.05 0.01 0.05 0.02
-------- -------- -------- --------
2.34 2.94 2.21 2.95
Costs and expenses:
Lease operating 0.40 0.32 0.37 0.31
Production taxes 0.14 0.25 0.12 0.22
General and administrative 0.58 0.45 0.58 0.46
Depletion of natural gas and oil properties 0.98 1.15 0.92 1.15
Depreciation and amortization 0.09 0.08 0.09 0.08
Amortization of stock compensation 0.04 0.02 0.04 0.01
-------- -------- -------- --------
2.23 2.27 2.12 2.23
-------- -------- -------- --------
Operating income $ 0.11 $ 0.67 $ 0.09 $ 0.72
======== ======== ======== ========
</TABLE>
