Brigham Minerals Inc. is exploring options that include a sale or a merger, people familiar with the matter said on Aug. 3, but during an earnings call a day later, Brigham CEO Rob Roosa said the company wouldn’t comment on “rumors or speculation.”
Roosa disclosed an active A&D campaign in the second quarter.
“Our team was able to divest Oklahoma assets, generating a mid-teens next 12 months cash flow multiple, and redeploy those proceeds into immediately cash flow generating Permian Basin assets at six times next 12 months cash flow multiple, while reducing our debt balance, which will provide runway for future accretive acquisitions and our return of capital program,” he said.
In the second quarter, Brigham sold largely undeveloped mineral interests in the Anadarko Basin for net proceeds of $67.3 million, “our largest single asset divestiture to date,” Roosa said. The assets were anticipated to produce 200 boe/d in third-quarter 2022.
Brigham partially redeployed the proceeds into debt reduction and its acquisition ground game in the Permian Basin.
Deals valued at $33.2 million added 885 net royalty acres in the Permian Basin, with 95% of capital paying for PDP, DUC and permitted net locations with anticipated third-quarter 2022 production of 400 boe/d.
The locations will be “converted” by operators including Endeavor Energy Resources LP, Chevron Corp. and Marathon Oil Corp. Roosa said the Anadarko sale also enables the company to reduce its net debt to $49 million at the end of June, a 44% reduction compared to the $87 million owed at the end of March.
On March 31, the company completed a previously announced acquisition of about 1,800 net royalty acres in the Midland Basin, which are largely operated by Pioneer Natural Resources Co. and Endeavor Energy for $34.8 million. The transaction consisted of $14.4 million in cash, net of $600,000 in customary closing adjustments, and 800,000 shares of the company's Class A common stock valued at $20.4 million.
Brigham’s shares have risen more than 20% this year as it benefited from elevated energy prices, prompting founder and executive chairman Bud Brigham to consider a sale, Reuters reported.
The company, based in Austin, Texas, has a market cap of about $1.6 billion. Sources said the company is working with an investment bank as it evaluates its strategic alternatives but cautioned that no deal is certain.
Brigham Minerals owns mineral and royalty rights in four U.S. shale basins, with around two-thirds of its acreage in the Permian along with the Denver-Julesburg Basin. The company was listed on the stock market in 2019.
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