Revenue from contracts with customers

9 Months Ended

Sep. 30, 2020

Revenue from Contract with Customer [Abstract]

Revenue from contracts with customers

Revenue from contracts with customers

Contract Balances

Oil, natural gas and NGLs sales revenues are recognized when control of the product is transferred to the customer, the performance obligations under the terms of the contracts with customers are satisfied and collectability is reasonably assured. Lease bonus and other revenues are recognized when the lease agreement has been executed, payment has been received, and the Company has no further obligation to refund the payment. Accordingly, the Company’s contracts do not give rise to contract assets or liabilities. As of September 30, 2020, accounts receivable from oil and gas sales of $17.7 million represent rights to payment for which Brigham Minerals has satisfied its obligations under contracts with customers.

Prior-period performance obligations

As a non-operator, Brigham Minerals has limited visibility into the timing of when new wells start producing and is required to estimate the amount of production delivered to the purchaser and the price that will be received for the sale of the product. The amount of production delivered to the purchaser is estimated on the basis of state-reported production data or production statements from operators. The difference between the Company’s estimates and the actual amounts received for oil and natural gas sales is recorded in the month that payment is received from the third party. For the three and nine months ended September 30, 2020 and 2019, revenue recognized in the reporting periods related to performance obligations satisfied in prior reporting periods was immaterial.

Allocation of transaction price to remaining performance obligations

Brigham Minerals’ right to royalty income does not originate until production occurs and, therefore, is not considered to exist beyond each day’s production. Brigham Minerals does not recognize lease bonus or other income until a lease agreement has been executed, at which point its performance obligation has been satisfied, and payment is received. Accordingly, there are no remaining performance obligations under any of our royalty income or lease bonus contracts.