SOURCE: Brigham Exploration Company

May 06, 2008 20:31 ET

Brigham Exploration Reports First Quarter 2008 Results

AUSTIN, TX--(Marketwire - May 6, 2008) - Brigham Exploration Company (NASDAQ: BEXP) today announced financial results for the quarter ended March 31, 2008.

FIRST QUARTER 2008 RESULTS

Revenues from the sale of oil and natural gas including hedge settlements but excluding unrealized mark-to-market hedging gains and losses for the first quarter 2008 were up 2% to $30.4 million when compared to the first quarter 2007. Higher realized prices increased revenues by $8.1 million, while lower production volumes and lower hedging gains decreased revenues by $6.0 million and $1.5 million, respectively. Our average net daily production volumes for the first quarter 2008 were 32.2 MMcfe per day, down 22% when compared to the first quarter 2007.

Our average realized price for natural gas in the first quarter 2008 was $9.07 per Mcf, which included a $0.24 per Mcf gain associated with the settlement of our natural gas derivative contracts. This compares to an average realized price in the first quarter 2007 of $7.76 which included a $0.44 per Mcf gain due to the settlement of our natural gas derivative contracts. During the first quarter 2008, our average realized price for oil was $90.48 per barrel, which included a $5.02 per barrel loss due to the settlement of our oil derivative contracts. This compares to an average realized price in the first quarter 2007 of $55.68, which included a $0.93 per barrel gain due to the settlement of our oil derivative contracts.

Our first quarter production costs, which include costs for operating and maintaining (O&M expense) our producing wells, expensed workovers, ad valorem taxes and production taxes, were $1.47 per Mcfe compare to $0.71 per Mcfe in the first quarter 2007. This increase partially resulted from a $0.42 per Mcfe increase in production taxes related to a $1.3 million reduction in production tax abatements received in the first quarter 2008 versus that in the first quarter 2007. Production costs also increased because of a $0.32 per Mcfe increase in expensed workovers. Unanticipated workovers of two of our existing wells accounted for the bulk of the higher expensed workover costs.

Per unit general and administrative (G&A) expense for the first quarter 2008 was $0.90 per Mcfe compared to $0.59 per Mcfe in the first quarter 2007. Lower production volumes and higher compensation costs accounted for the bulk of the increase in per unit G&A expense.

Our depletion expense for the first quarter 2008 was $12.4 million ($4.30 per Mcfe) compared to $14.0 million ($3.76 per Mcfe) in the first quarter 2007. Our higher depletion rate increased depletion expense by $1.6 million while our lower production volumes decreased depletion expense by $3.1 million. The increase in our depletion rate was a result of an increase in the cost of reserve additions.

Our net interest expense for the first quarter 2008 was essentially flat with that in the first quarter 2007. Our weighted average debt outstanding for the first quarter 2008 was $182.8 million as compared to $171.7 million for the comparable period last year.

We recorded deferred income tax expense of $1.0 million in the first quarter of this year compared to deferred income tax expense of $1.0 million in the first quarter last year.

Our reported net income for the first quarter 2008 was $1.5 million ($0.03 per diluted share) versus net income of $1.9 million ($0.04 per diluted share) for the same period last year. Our after-tax earnings in the first quarter 2008 excluding the effect of our unrealized mark-to-market hedging losses were $4.8 million ($0.11 per diluted share) and our after-tax earnings in the first quarter 2007 excluding unrealized mark-to-market hedging losses were $5.1 million ($0.11 per diluted share). After-tax earnings excluding the above items is a non-GAAP measure and a reconciliation of GAAP net income to after-tax earnings excluding the above items is included in our accompanying financial tables found later in this release.

SECOND QUARTER 2008 FORECASTS

The following forecasts and estimates of our second quarter 2008 production volumes are forward-looking statements subject to the risks and uncertainties identified in the "Forward-Looking Statements Disclosure" at the end of this release. Heavy rainfalls have resulted in flooding conditions in Southern Louisiana, including the Atchafalaya Basin where our Bayou Postillion project is located. These unfavorable conditions have necessitated shutting in two wells that we were previously forecasting would have averaged net production of approximately 5 MMcfe per day in the second quarter. We are currently estimating that from the date these two wells went off line until production is reestablished that we will lose 36 days of second quarter production volumes. Including this impact, we currently expect our second quarter 2008 production volumes to average between 30 MMcfe per day and 34 MMcfe per day.

For the second quarter 2008, lease operating expenses are projected to be $0.95 per Mcfe based on the mid-point of our production guidance, production taxes are projected to be approximately 3.85% to 3.95% of pre-hedge oil and natural gas revenues, and general and administrative expenses are projected to be $2.5 million ($0.93 to $0.82 per Mcfe).

MANAGEMENT COMMENTS

Gene Shepherd, Brigham's Chief Financial Officer, commented, "With our continuous rig line in the Bakken, combined with up to two new Vicksburg wells and one new southern Louisiana well impacting our second quarter volumes, we believe we have the opportunity to resume sequential quarterly production growth in the second quarter of 2008, despite the temporary shut in of some of our Southern Louisiana production. Furthermore, the second quarter of 2008 will be our first opportunity to see the benefits from both our unconventional Williston Basin activities and our conventional Gulf Coast activities enhancing and complementing one another.

CONFERENCE CALL INFORMATION

Our management will host a conference call to discuss operational and financial results for the first quarter 2008 with investors, analysts and other interested parties on Wednesday, May 7, at 10:00 a.m. Eastern Time. To participate in the call, participants within the U.S. please dial 888-713-4215 and participants outside the U.S. please dial 617-213-4867. The participant passcode for the call is 12965380. Participants may pre-register for the call at https://www.theconferencingservice.com/prereg/key.process?key=P8FVW9W8F. Pre-registrants will be issued a pin number to use when dialing into the live call which will provide quick access to the conference by bypassing the operator upon connection. 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, June 7, 2008. 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 74228745. 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 Wednesday, May 7, 2008, 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 First Quarter 2008 Results and is dated Tuesday, May 6, 2008. To access the other financial and statistical information that will be covered by the conference call that will take place on Wednesday, May 7, 2008, 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 First Quarter 2008 Conference Call and is dated Tuesday, May 6, 2008.

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

                        BRIGHAM EXPLORATION COMPANY
               SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS
             (in thousands, except per share data) (unaudited)

                                                        Three Months Ended
                                                            March 31,
                                                        ------------------
                                                          2008      2007
                                                        --------  --------

Revenues:
  Oil and natural gas sales                             $ 30,510  $ 28,486
  Hedging settlements                                        (62)    1,424
                                                        --------  --------
                                                          30,448    29,910
  Unrealized hedging gains (losses)                       (5,394)   (4,916)
                                                        --------  --------
                                                          25,054    24,994
  Other revenue                                               17        27
                                                        --------  --------
      Total Revenue                                       25,071    25,021
                                                        --------  --------

Costs and expenses:
  Lease operating                                          2,986     2,569
  Production taxes                                         1,283        71
  General and administrative                               2,593     2,178
  Depletion of oil and natural gas properties             12,443    13,959
  Depreciation and amortization                              147       163
  Accretion of discount on asset retirement obligations       91       117
                                                        --------  --------
                                                          19,543    19,057
                                                        --------  --------
      Operating income                                     5,528     5,964
                                                        --------  --------

Other income (expense):
  Interest expense, net                                   (3,419)   (3,417)
  Interest income                                             75       131
  Other income (expense)                                     307       190
                                                        --------  --------
                                                          (3,037)   (3,096)
                                                        --------  --------
Income before income taxes                              $  2,491  $  2,868
Income tax expense:
 Current                                                      --        --
 Deferred                                                   (964)     (995)
                                                        --------  --------
                                                            (964)     (995)
                                                        --------  --------
Net income                                              $  1,527  $  1,873
                                                        ========  ========

 Net income per share available to common stockholders:
  Basic                                                 $   0.03  $   0.04
                                                        ========  ========
  Diluted                                               $   0.03  $   0.04
                                                        ========  ========

Weighted average shares outstanding:
  Basic                                                   45,261    45,051
                                                        ========  ========
  Diluted                                                 45,770    45,430
                                                        ========  ========




                        BRIGHAM EXPLORATION COMPANY
            PRODUCTION, SALES PRICES AND OTHER FINANCIAL DATA
                                (unaudited)

                                                        Three Months Ended
                                                            March 31,
                                                        ------------------
                                                          2008      2007
                                                        --------  --------
Average net daily production:
  Natural gas (MMcf)                                        24.4      33.1
  Oil (Bbls)                                               1,298     1,352
    Equivalent natural gas (MMcfe) (6:1)                    32.2      41.2

Total net production:
  Natural gas (MMcf)                                       2,193     2,982
  Oil (MBbls)                                                117       122
    Equivalent natural gas (MMcfe) (6:1)                   2,894     3,712
    % Natural gas                                             76%       80%

Sales price:
  Natural gas ($/Mcf)                                   $   8.83  $   7.32
  Oil ($/Bbl)                                              95.50     54.75
    Equivalent natural gas ($/Mcfe) (6:1)                  10.54      7.67

Sales price including derivative settlement gains
 (losses):
  Natural gas ($/Mcf)                                   $   9.07  $   7.76
  Oil ($/Bbl)                                              90.48     55.68
    Equivalent natural gas ($/Mcfe) (6:1)                  10.52      8.05

Sales price including derivative settlement gains
 (losses) and unrealized gains (losses):
  Natural gas ($/Mcf)                                   $   6.71  $   6.23
  Oil ($/Bbl)                                              88.45     52.78
    Equivalent natural gas ($/Mcfe) (6:1)                   8.66      6.73




                    SUMMARY CONSOLIDATED BALANCE SHEETS
                              (in thousands)

                                                  March 31,   December 31,
                                                    2008          2007
                                                ------------- -------------
Assets:
 Current assets                                 $      29,562 $      32,505
 Oil and natural gas properties, net (full cost
  method)                                             543,267       510,207
 Other property and equipment, net                      1,072         1,034
 Other non-current assets                               5,038         4,682
                                                ------------- -------------
  Total assets                                  $     578,939 $     548,428
                                                ============= =============

Liabilities and stockholders' equity:
 Current liabilities                            $      59,657 $      41,718
 Senior notes                                         158,551       158,492
 Senior credit facility                                19,000        10,000
 Mandatorily redeemable preferred stock,
  Series A                                             10,101        10,101
 Deferred income tax liability                         42,609        41,625
 Other non-current liabilities                          7,806         7,465
                                                ------------- -------------
  Total liabilities                             $     297,724 $     269,401
 Stockholders' equity                                 281,215       279,027
                                                ------------- -------------
  Total liabilities and stockholders' equity    $     578,939 $     548,428
                                                ============= =============




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

                                                        Three Months Ended
                                                            March 31,
                                                        ------------------
                                                          2008      2007
                                                        --------  --------

Cash flows from operating activities:
Net income                                              $  1,527  $  1,873
Depletion, depreciation and amortization                  12,590    14,122
Accretion of discount on ARO                                  91       117
Amortization of deferred loan fees and debt issuance
 costs                                                       255       214
Non-cash stock compensation                                  414       421
Market value adjustments for derivatives instruments       5,394     4,916
Deferred income tax expense                                  964       995
Other noncash items                                          (28)       --
Changes in operating assets and liabilities                7,128    (7,074)
                                                        --------  --------
  Cash flows provided by operating activities           $ 28,335  $ 15,584

  Cash flows used by investing activities                (45,034)  (48,222)
  Cash flows (used) provided by financing activities       9,002    35,489
                                                        --------  --------
  Net increase (decrease) in cash and cash equivalents  $ (7,697) $  2,851
                                                        ========  ========




                          SUMMARY PER MCFE DATA
                                (unaudited)

                                                        Three Months Ended
                                                            March 31,
                                                        ------------------
                                                          2008      2007
                                                        --------  --------
Revenues:
  Oil and natural gas sales                             $  10.54  $   7.67
   Hedging Settlements                                     (0.02)     0.38
   Unrealized Hedging Gains / (Losses)                     (1.86)    (1.32)
   Other revenue                                            0.00      0.01
                                                        --------  --------
                                                        $   8.66  $   6.74
                                                        ========  ========
Costs and expenses:
  Lease operating                                           1.03      0.69
  Production taxes                                          0.44      0.02
  General and administrative                                0.90      0.59
  Depletion of natural gas and oil properties               4.30      3.76
  Depreciation and amortization                             0.05      0.04
  Accretion of discount on ARO                              0.03      0.03
                                                        --------  --------
                                                        $   6.75  $   5.13
                                                        --------  --------
Operating income                                        $   1.91  $   1.61
                                                        ========  ========

Interest expense, net of interest income (a)               (1.16)    (0.89)
Other income (expense) (b)                                  0.11      0.05
                                                        --------  --------
  Adjusted income                                       $   0.86  $   0.77
                                                        ========  ========

(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
          RECONCILIATION OF GAAP NET INCOME TO AFTER-TAX EARNINGS
                  EXCLUDING THE EFFECT OF CERTAIN ITEMS
                              (in thousands)

                                                           Three months
                                                          ended March 31,
                                                        ------------------
                                                          2008      2007
                                                        --------  --------

Net income (loss) as reported                           $  1,527  $  1,873
  Unrealized derivative (gains) losses                     5,394     4,916
  Tax impact                                              (2,087)   (1,706)
                                                        --------  --------
  Earnings excluding the effect of certain items        $  4,834  $  5,083
                                                        ========  ========


Earnings without the effect of certain items represents net income
excluding the following:  unrealized gains and losses on derivative
contracts; unrealized gains and losses related to ineffectiveness on our
derivatives that were previously classified as cash flow hedges; and our
non-cash impairment charge on our oil and gas properties.  Management
believes that exclusion of these items enhances comparability of operating
results between periods.



                       BRIGHAM EXPLORATION COMPANY
      SUMMARY OF COMMODITY PRICE HEDGES OUTSTANDING AS OF MAY 6, 2008
                                (unaudited)

                                     2008                    2009
                            ----------------------- -----------------------
                              Q2      Q3      Q4      Q1      Q2      Q3
                            ------- ------- ------- ------- ------- -------
Natural Gas Costless Collars:
  Daily volumes     MMBtu/d  15,055  12,283   7,391   6,778   4,615   4,565
  Floor             $/MMBtu $ 7.135 $ 7.418 $ 8.507 $ 8.750 $ 7.536 $ 7.536
  Cap               $/MMBtu $ 9.536 $ 9.952 $10.810 $11.092 $10.225 $10.225

Natural Gas Three Way Costless
 Collars:
  Daily volumes     MMBtu/d      --      --   1,630   1,667      --      --
  Floor             $/MMBtu $    -- $    -- $  8.00 $  8.00 $    -- $    --
  Written Put       $/MMBtu $    -- $    -- $  5.50 $  5.50 $    -- $    --
  Cap               $/MMBtu $    -- $    -- $ 10.35 $ 10.35 $    -- $    --

Oil Costless Collars:
  Daily volumes     Bbls/d      516     533     446     333      99      --
  Floor             $/Bbl   $ 68.18 $ 74.92 $ 73.44 $ 79.15 $ 62.00 $    --
  Cap               $/Bbl   $ 90.91 $100.07 $ 98.82 $108.53 $ 81.75 $    --

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.

Contact Information

  • Contact:
    Rob Roosa
    Finance Manager
    (512) 427-3300