Brigham Minerals Inc. recently announced an acquisition of acreage with top producers in the Denver-Julesburg (D-J) Basin that marked the company’s biggest transaction since its IPO in 2019.
“I’m extremely pleased to announce our largest transaction to date, which is anticipated to provide significant near-term cash flow per share accretion that continues to grow into 2023 as 3.1 net DUCs and permits are turned in line to production,” Brigham Minerals CEO Robert M. (Rob) Roosa commented in a company release on Nov. 4.
Based in Austin, Texas and founded in 2012 by Bud Brigham, Brigham Minerals is focused on acquiring oil and gas mineral rights across the U.S. The company’s portfolio currently includes mineral and royalty interests in the core of the Permian Basin, the SCOOP and STACK plays, the D-J Basin in and the Williston Basin.
According to the Nov. 4 release, Brigham entered an agreement with an undisclosed company to acquire 8,400 net royalty acres primarily in Colorado’s Weld County operated by top D-J Basin producers—PDC Energy Inc., Chevron Corp., Occidental Petroleum Corp. and Civitas Resources Inc.
Brigham said it agreed to acquire the assets for $44 million cash and the issuance of about 2.2 million Class A common shares, which represents the company’s initial utilization of equity directly to the seller in an acquisition, according to CFO Blake C. Williams.
“Given approximately 50% of it is being financed with equity, it provides us with nearly $150 million of post-close pro forma liquidity to continue to execute upon our ground game acquisition strategy and other large scale consolidation opportunities,” Williams added in the release.
Enverus estimates the total purchase price of the transaction at $95.6 million based on the company’s prior-day closing price of $23.44 per share, the firm said in a Nov. 9 note. Brigham intends to finance the cash portion of the purchase price through a combination of cash on hand and borrowings under its revolving credit facility.
In total, the Brigham Minerals D-J acquisition includes 10.37 net producing wells, 1.6 net PUDs and 1.5 net drilling permits, according to the Enverus note.
The acquired assets are expected to generate 2022 production of 1,100-1,200 boe/d (50% liquids) for Brigham, supporting an anticipated quarterly base dividend increase of 7% to $0.15 per share post-close. Brigham Minerals also expects the borrowing base of its revolving credit facility to increase to $230 million upon closing.
“Pro forma for our D-J acquisition, it’s estimated that we have 13.3 net activity wells in inventory as of September 30th that will be turned in line to production over the next 12 to 24 months providing us with industry leading foresight into near term activity,” Roosa continued in the company release. “Further, the D-J acquisition is anticipated to provide high teens EBITDA yield at 2022 strip pricing.”
Closing of the D-J acquisition is anticipated in mid to late December subject to continued diligence and closing conditions. The transaction has an effective date of Aug. 1.
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