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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM 10-Q
____________________
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
or
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number: 001-38870
Brigham Minerals, Inc.
(Exact name of registrant as specified in its charter)
Delaware
83-1106283
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
 Identification No.)
5914 W. Courtyard Drive, Suite 200
Austin, Texas
78730
(Address of principal executive offices)
(Zip code)
(512) 220-6350
(Registrant’s telephone number, including area code)
___________________
Securities registered pursuant to section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Class A common stock, par value $0.01MNRLNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer 
Non-accelerated filer
Smaller reporting company 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No x
The registrant had 45,245,341 shares of Class A common stock and 11,541,211 shares of Class B common stock outstanding as of November 1, 2021.


BRIGHAM MINERALS, INC.
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2021
TABLE OF CONTENTS
Page
i

GLOSSARY OF OIL AND NATURAL GAS TERMS
The following are abbreviations and definitions of certain terms used in this document, which are commonly used in the oil and natural gas industry:
TermDefinition
BasinA depression in the Earth's crust formed from plate tectonics providing accommodation space for the accumulation of sedimentary rocks and organic material. When subjected to the appropriate depth and duration of burial, hydrocarbon generation can occur creating oil and natural gas bearing strata.
BblOne stock tank barrel of 42 U.S. gallons liquid volume used herein in reference to crude oil, condensate or NGLs.
BoeOne barrel of oil equivalent, calculated by converting natural gas to oil equivalent barrels at a ratio of six Mcf of natural gas to one Bbl of oil. This is an energy content correlation and does not reflect a value or price relationship between the commodities.
Boe/dOne Boe per day.
British thermal unit or BtuThe quantity of heat required to raise the temperature of a one-pound mass of water from 58.5 to 59.5 degrees Fahrenheit.
CompletionThe process of treating a drilled well followed by the installation of permanent equipment for the production of oil and natural gas, or in the case of a dry hole, the reporting of abandonment to the appropriate agency.
Development wellA well drilled within the proved area of an oil or natural gas reservoir to the depth of a stratigraphic horizon known to be productive.
DifferentialAn adjustment to the price of oil or natural gas from an established spot market price to reflect differences in the quality and/or location of oil or natural gas.
Drilled but Uncompleted Well (DUC)A well that an operator has spud but has not yet begun hydraulic fracturing or completion operations.
Gross acres or gross wellsThe total acres or wells, as the case may be, in which a mineral or royalty interest is owned.
MBblOne thousand barrels of crude oil, condensate or NGLs.
MBoeOne thousand Boe.
McfOne thousand cubic feet of natural gas.
Mcf/dOne Mcf per day.
MMBtuOne million British thermal units.
MMcfOne million cubic feet of natural gas.
Net royalty acreMineral ownership standardized to a 12.5%, or 1/8th, royalty interest.
Net wellThe percentage of net revenue interest an owner has out of a gross well. For example, an owner who has an 25% royalty interest in a single well owns 0.25 net wells.
NGLsNatural gas liquids. Hydrocarbons found in natural gas that may be extracted as liquefied petroleum gas and natural gasoline.
NYMEXThe New York Mercantile Exchange.
OperatorThe individual or company responsible for the development and/or production of an oil or natural gas well or lease.
Possible ReservesReserves that are less certain to be recovered than probable reserves.
Probable reservesReserves that are less certain to be recovered than proved reserves but that, together with proved reserves, are as likely as not to be recovered.
ProspectA specific geographic area that, based on supporting geological, geophysical or other data and also preliminary economic analysis using reasonably anticipated prices and costs, is deemed to have potential for the discovery of commercial hydrocarbons.
Proved developed reservesProved reserves that can be expected to be recovered through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared with the cost of a new well or through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving a well.

ii

TermDefinition
Proved reservesThose quantities of oil, natural gas and NGLs that, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible-from a given date forward, from known reservoirs, and under existing economic conditions, operating methods and government regulations-prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time. For a complete definition of proved oil and natural gas reserves, refer to the SEC’s Regulation S-X, Rule 4-10(a)(22).
Proved undeveloped reserves or PUDsProved reserves that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion. The following rules apply to PUDs: (i) Reserves on undrilled acreage shall be limited to those directly offsetting development spacing areas that are reasonably certain of production when drilled, unless evidence using reliable technology exists that establishes reasonable certainty of economic producibility at greater distances; (ii) Undrilled locations can be classified as having undeveloped reserves only if a development plan has been adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances justify a longer time; and (iii) Under no circumstances shall estimates for proved undeveloped reserves be attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual projects in the same reservoir or an analogous reservoir, or by other evidence using reliable technology establishing reasonable certainty.
Realized priceThe cash market price less all applicable deductions such as quality, transportation and demand adjustments.
ReservesEstimated remaining quantities of oil and natural gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations. In addition, there must exist, or there must be a reasonable expectation that there will exist, the legal right to produce or a revenue interest in the production, installed means of delivering oil and natural gas or related substances to market and all permits and financing required to implement the project. Reserves should not be assigned to adjacent reservoirs isolated by major, potentially sealing, faults until those reservoirs are penetrated and evaluated as economically producible. Reserves should not be assigned to areas that are clearly separated from a known accumulation by a non-productive reservoir (i.e., absence of reservoir, structurally low reservoir or negative test results). Such areas may contain prospective resources (i.e., potentially recoverable resources from undiscovered accumulations).
ReservoirA porous and permeable underground formation containing a natural accumulation of producible oil and/or natural gas that is confined by impermeable rock or water barriers and is individual and separate from other reservoirs.
RoyaltyAn interest in an oil and natural gas lease that gives the owner the right to receive a portion of the production from the leased acreage (or of the proceeds from the sale thereof), but does not require the owner to pay any portion of the production or development costs on the leased acreage. Royalties may be either landowner’s royalties, which are reserved by the owner of the leased acreage at the time the lease is granted, or overriding royalties, which are usually reserved by an owner of the leasehold in connection with a transfer to a subsequent owner.
Spot market priceThe cash market price without reduction for expected quality, transportation and demand adjustments.
SpudCommenced drilling operations on an identified location.
Undeveloped acreageLease acreage on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of oil, natural gas or NGLs regardless of whether such acreage contains proved reserves.
iii

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
The information in this Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 (this "Quarterly Report") includes “forward-looking statements.” All statements, other than statements of historical fact, included in this Quarterly Report regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. In particular, our statements regarding the ongoing COVID-19 pandemic and its expected impact on our business, financial position, results of operations and cash flows are forward-looking statements. When used in this Quarterly Report, the words “may,” “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project” and similar expressions and the negative of such words and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on management’s current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. Such statements may be influenced by factors that could cause actual outcomes and results to differ materially from those projected. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements described under the heading “Risk Factors” included in this Quarterly Report and in our Annual Report on Form 10-K for the year ended December 31, 2020 (the "Annual Report"), as well as the risk factors and other cautionary statements contained in our other filings with the United States Securities and Exchange Commission (the "SEC").

The following important factors, in addition to those discussed elsewhere in this Quarterly Report, could affect the future results of the energy industry in general, and our company in particular, and could cause actual results to differ materially from those expressed in such forward-looking statements:

our ability to execute on our business objectives;
the effect of changes in commodity prices;
the level of production on our properties;
risks associated with the drilling and operation of oil and natural gas wells;
the availability or cost of rigs, equipment, raw materials, supplies, oilfield services or personnel;
legislative or regulatory actions pertaining to hydraulic fracturing, including restrictions on the use of water;
the availability of pipeline capacity and transportation facilities;
the effect of existing and future laws and regulatory actions;
the impact of derivative instruments;
conditions in the capital markets and our ability to obtain capital on favorable terms or at all;
the overall supply and demand for oil, natural gas and NGLs, and regional supply and demand factors, storage availability, delays, or interruptions of production, including voluntary shut-ins;
operator budget constraints and their ability to obtain capital on favorable terms or at all;
the actions of the Organization of Petroleum Exporting Countries ("OPEC") and other significant producers and governments and the ability of such producers to agree to and maintain oil price and production controls;
competition from others in the energy industry;
the impact of reduced drilling activity in our focus areas and uncertainty as to whether development projects will be pursued;
global or national health events, including the ongoing outbreak and resulting economic effects of the COVID-19 pandemic;
the effects of current or future litigation, including the recent U.S. Supreme Court ruling involving the Muscogee (Creek) Nation reservation in Eastern Oklahoma and similar rulings regarding reservations;
iv

uncertainty of estimates of oil and natural gas reserves and production;
the cost of developing the oil and natural gas underlying our properties;
our ability to replace our oil, natural gas and NGL reserves;
our ability to identify, complete and integrate acquisitions;
title defects in the properties in which we invest;
the cost of inflation;
technological advances;
weather conditions, natural disasters and other matters beyond our control;
general economic, business, political or industry conditions; and
certain factors discussed elsewhere in this Quarterly Report.
Should one or more of the risks or uncertainties described in this Quarterly Report, our Annual Report or any of our other SEC filings occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make in this Quarterly Report are reasonable, we can give no assurance that these plans, intentions or expectations will be achieved or occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

Reserve engineering is a process of estimating underground accumulations of oil and natural gas that cannot be measured in an exact way. The accuracy of any reserve estimate depends on the quality of available data, the interpretation of such data and price and cost assumptions made by reserve engineers. In addition, the results of drilling, testing and production activities may justify revisions of estimates that were made previously. If significant, such revisions would change the schedule of any further production and development drilling. Accordingly, reserve estimates may differ significantly from the quantities of oil, natural gas and NGLs that are ultimately recovered.

All forward-looking statements, expressed or implied, included in this Quarterly Report are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this Quarterly Report.




    
v

PART I — FINANCIAL INFORMATION
Item 1. — Financial Statements (Unaudited)

BRIGHAM MINERALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30,December 31,
(In thousands, except share amounts)20212020
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents$14,294 $9,144 
Accounts receivable28,486 17,632 
Prepaid expenses and other5,447 3,693 
Total current assets48,227 30,469 
Oil and gas properties, at cost, using the full cost method of accounting:
Unevaluated property332,165 325,091 
Evaluated property535,795 488,301 
Less accumulated depreciation, depletion, and amortization(220,942)(189,546)
Total oil and gas properties, net647,018 623,846 
Other property and equipment5,614 5,587 
Less accumulated depreciation(4,806)(4,632)
Other property and equipment, net808 955 
Deferred tax asset23,913 24,920 
Other assets, net801 771 
Total assets$720,767 $680,961 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities$9,034 $7,905 
Total current liabilities9,034 7,905 
Long-term bank debt53,000 20,000 
Other non-current liabilities1,667 1,126 
Temporary equity 146,280 
Equity:
Preferred stock, $0.01 par value; 50,000,000 authorized; no shares issued and outstanding at September 30, 2021 and December 31, 2020
  
Class A common stock, $0.01 par value; 400,000,000 authorized, 45,681,971 shares issued and 45,245,341 outstanding at September 30, 2021; 400,000,000 authorized, 43,995,124 issued and 43,558,494 outstanding at December 31, 2020
457 440 
Class B common stock, $0.01 par value; 150,000,000 authorized, 11,541,211 shares issued and outstanding at September 30, 2021; 150,000,000 authorized, 13,167,687 shares issued and outstanding at December 31, 2020
  
Additional paid-in capital586,148 601,129 
Accumulated deficit(101,617)(92,392)
Treasury stock, at cost; 436,630 shares at September 30, 2021 and December 31, 2020
(3,527)(3,527)
Total equity attributable to Brigham Minerals, Inc. 481,461 505,650 
Non-controlling interest175,605  
Total equity
$657,066 $505,650 
Total liabilities and equity$720,767 $680,961 



The accompanying notes are an integral part of these condensed consolidated financial statements.
1


BRIGHAM MINERALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands, except per share data)2021202020212020
REVENUES
Mineral and royalty revenues$40,473 $21,568 $109,654 $62,485 
Lease bonus and other revenues1,491 1,510 3,894 5,478 
Total revenues41,964 23,078 113,548 67,963 
OPERATING EXPENSES
Gathering, transportation and marketing1,641 1,702 4,967 5,106 
Severance and ad valorem taxes2,372 1,393 6,505 4,179 
Depreciation, depletion, and amortization8,682 11,801 27,129 35,827 
Impairment of oil and gas properties 18,905  18,905 
General and administrative5,729 5,162 16,868 16,562 
Total operating expenses18,424 38,963 55,469 80,579 
INCOME (LOSS) FROM OPERATIONS23,540 (15,885)58,079 (12,616)
Interest expense, net(451)(118)(1,105)(695)
Other income, net36 4 51 29 
Income (loss) before income taxes23,125 (15,999)57,025 (13,282)
Income tax expense (benefit)4,214 (2,982)10,717 (2,250)
NET INCOME (LOSS)$18,911 $(13,017)$46,308 $(11,032)
Less: net (income) loss attributable to non-controlling interest(4,698)3,552 (12,311)2,223 
Net income (loss) attributable to Brigham Minerals, Inc. shareholders$14,213 $(9,465)$33,997 $(8,809)
NET INCOME (LOSS) PER COMMON SHARE
Basic
$0.31 $(0.24)$0.77 $(0.24)
Diluted
$0.31 $(0.24)$0.75 $(0.24)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic
45,19840,12444,21636,475
Diluted
45,88840,12445,05636,475



















The accompanying notes are an integral part of these condensed consolidated financial statements.
2

BRIGHAM MINERALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited)
Class A
Common Stock
Class B
Common Stock
Additional Paid-In CapitalAccumulated DeficitTreasury StockNon-controlling InterestTotal Equity
(In thousands)SharesAmountSharesAmountSharesAmount
Balance - December 31, 202043,558 $440 13,168 $ $601,129 $(92,392)437 $(3,527)$ $505,650 
Adjustment of temporary equity to carrying value— — — — (54,294)— — — — (54,294)
Reclassification from temporary equity to non-controlling interest— — — — — — — — 202,496 202,496 
Conversion of shares of Class B Common Stock to Class A Common Stock112 1 (112)— 1,720 — — — (1,721) 
Reduction in deferred tax asset arising from conversion of shares of Class B Common Stock to Class A Common Stock— — — — (480)— — — — (480)
Share-based compensation— — — — 3,933 — — — — 3,933 
Restricted stock forfeitures(4)— — — — — — — — — 
Dividends and distributions declared— — — — — (11,788)— — (3,447)(15,235)
Net income— — — — — 8,596 — — 1,553 10,149 
Balance - March 31, 202143,666 $441 13,056 $ $552,008 $(95,584)437 $(3,527)$198,881 $652,219 
Conversion of shares of Class B Common Stock to Class A Common Stock1,403 14 (1,403)— 21,243 — — — (21,257) 
Deferred tax asset arising from conversion of shares of Class B Common Stock to Class A Common Stock— — — — 2,666 — — — — 2,666 
Share-based compensation— — — — 4,410 — — — — 4,410 
Restricted stock forfeitures(1)— — — — — — — — — 
Shares surrendered for tax withholdings on vested RSAs(9)   (145)—  — — (145)
Issuance of common stock upon vesting of RSUs, net of shares withheld for income taxes75 1   (1)—  — —  
Dividends and distributions declared     (14,907) — (4,449)(19,356)
Net income     11,188  — 4,138 15,326 
Balance - June 30, 202145,134 $456 11,653 $ $580,181 $(99,303)437 $(3,527)$177,313 $655,120 
Conversion of shares of Class B Common Stock to Class A Common Stock112 1 (112)— 1,697 — — — (1,698) 
Reduction in deferred tax asset arising from conversion of shares of Class B Common Stock to Class A Common Stock— — — — (399)— — — — (399)
Share-based compensation— — — — 4,669 — — — — 4,669 
Dividends and distributions declared— — — — — (16,527)— — (4,708)(21,235)
Net income— — — — — 14,213 — — 4,698 18,911 
Balance - September 30, 202145,246 $457 11,541 $ $586,148 $(101,617)437 $(3,527)$175,605 $657,066 

3

Class A
Common Stock
Class B
Common Stock
Additional Paid-In CapitalAccumulated DeficitTreasury StockTotal Equity
(In thousands)SharesAmountSharesAmountSharesAmount
Balance - December 31, 201934,041$340 22,847$ $323,578 $(6,599) $ $317,319 
Adjustment of temporary equity to carrying value— — — — 206,017 — — — 206,017 
Conversion of shares of Class B Common Stock to Class A Common Stock140 2 (140)— 1,524 — — — 1,526 
Deferred tax asset arising from conversion of shares of Class B Common Stock to Class A Common Stock— — — — 204 — — — 204 
Shares surrendered for tax withholdings on vested RSAs(7)— — — — — — — — 
Share-based compensation— — — — 3,402 — — — 3,402 
Dividends and distributions declared— — — — — (13,541)— — (13,541)
Net income— — — — — 4,706 — — 4,706 
Balance - March 31, 202034,174 $342 22,707 $ $534,725 $(15,434) $ $519,633 
Adjustment of temporary equity to redemption value— — — — (37,445)— — — (37,445)
Conversion of shares of Class B Common Stock to Class A Common Stock5,094 51 (5,094)— 51,518 — — — 51,569 
Reduction in deferred tax asset arising from conversion of shares of Class B Common Stock to Class A Common Stock— — — — (780)— — — (780)
Shares surrendered for tax withholdings on vested RSAs(11)— — — (185)— — — (185)
Share-based compensation50 — — — 3,332 — — — 3,332 
Restricted stock forfeitures(9)— — — — — — — — 
Dividends and distributions declared— — — — — (13,272)— — (13,272)
Net loss— — — — — (4,050)— — (4,050)
Balance - June 30, 202039,298 $393 17,613 $ $551,165 $(32,756) $ $518,802 
Adjustment of temporary equity to carrying value— — — — 37,445 — — — 37,445 
Conversion of shares of Class B Common Stock to Class A Common Stock4,445 45 (4,445)— 44,351 — — — 44,396 
Deferred tax asset arising from conversion of shares of Class B Common Stock to Class A Common Stock— — — — (2,845)— — — (2,845)
Purchase of treasury stock(437)— — — — — 437 (3,527)(3,527)
Share-based compensation10 — — — 3,518 — — — 3,518 
Dividends and distributions declared— — — — — (5,790)— — (5,790)
Net loss— — — — — (9,465)— — (9,465)
Balance - September 30, 202043,316 $438 13,168 $ $633,634 $(48,011)437 $(3,527)$582,534 





The accompanying notes are an integral part of these condensed consolidated financial statements.
4

BRIGHAM MINERALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30,
(In thousands)20212020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)$46,308 $(11,032)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization 27,129 35,827 
Impairment of oil and gas properties 18,905 
Share-based compensation expense7,537 5,692 
Amortization of debt issuance costs217 545 
Deferred income tax expense (benefit)2,794 (1,351)
Bad debt expense144 299 
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable(10,999)10,312 
Increase in other current assets(1,753)(776)
Decrease in other deferred charges 45 
Increase (decrease) in accounts payable and accrued liabilities968 (4,269)
Increase (decrease) in other long-term liabilities20 (465)
Net cash provided by operating activities$72,365 $53,732 
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to oil and gas properties(49,203)(45,996)
Additions to other fixed assets(28)(340)
Proceeds from sale of oil and gas properties, net4,441 1,565 
Net cash used in investing activities$(44,790)$(44,771)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments of long-term debt(4,000) 
Borrowing of long-term debt37,000 5,000 
Purchase of treasury stock (3,527)
Dividends paid (41,374)(31,340)
Distribution to holders of non-controlling interest(12,668)(21,504)
Debt issuance costs(247)(203)
Payment of employee tax withholding for settlement of equity compensation awards(1,136) 
Net cash used in financing activities$(22,425)$(51,574)
Increase (decrease) in cash and cash equivalents and restricted cash5,150 (42,613)
Cash and cash equivalents and restricted cash, beginning of period9,144 51,133 
Cash and cash equivalents and restricted cash, end of period$14,294 $8,520 
Supplemental disclosure of noncash activity:
Accrued capital expenditures$36 $163 
Capitalized share-based compensation cost$5,475 $4,560 
Temporary equity cumulative adjustment to redemption value$54,294 $(206,017)
Supplemental cash flow information:
Cash payments for loan commitment fees and interest$(898)$(570)
Tax (payment) /refund received$(6,481)$113 




The accompanying notes are an integral part of these condensed consolidated financial statements.
5

BRIGHAM MINERALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.Business and Basis of Presentation

Description of the Business

Brigham Minerals, Inc. (together with its wholly owned subsidiaries, "Brigham Minerals," “we," "us," "our," or the "Company"), a Delaware corporation, is a holding company whose sole material asset consists of a 79.7% interest in Brigham Minerals Holdings, LLC (“Brigham LLC”), which indirectly owns Brigham Minerals, LLC and Rearden Minerals, LLC (collectively, the “Minerals Subsidiaries”). The Minerals Subsidiaries acquire and actively manage a portfolio of mineral and royalty interests in the core of what we view as the most active, highly economic, liquids-rich resource plays across the continental United States.

Our portfolio is comprised of mineral and royalty interests across six of the most highly economic, liquids-rich resource plays in the continental United States, including the Delaware and Midland Basins in West Texas and New Mexico, the SCOOP and STACK plays in the Anadarko Basin in Oklahoma, the Denver-Julesburg (“DJ”) Basin in Colorado and Wyoming and the Williston Basin in North Dakota. Our highly technical approach towards mineral acquisitions in the geologic core of top-tier resource plays has purposefully led to a concentrated portfolio covering 35 of the most highly active counties for horizontal drilling in the continental United States.

Basis of Presentation

The accompanying unaudited condensed consolidated interim financial statements of Brigham Minerals have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), except that, in accordance with the instructions to Form 10-Q, they do not include all of the notes required for financial statements prepared in conformity with U.S. GAAP. Accordingly, the accompanying unaudited interim financial statements should be read in conjunction with our audited financial statements included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "SEC") on February 25, 2021 (the "Annual Report"). The unaudited interim financial statements reflect all normal recurring adjustments that, in the opinion of management, are necessary for a fair representation. The results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results to be expected for the entire fiscal year ending December 31, 2021. Brigham Minerals operates in one segment: oil and natural gas exploration and production.

As the primary beneficiary, Brigham Minerals consolidates the financial results of Brigham LLC and its subsidiaries and reports the interest related to the portion of the units in Brigham LLC not owned by Brigham Minerals as temporary equity at December 31, 2020 and as non-controlling interest at March 31, 2021 and thereafter, which will reduce net income attributable to the holders of Brigham Minerals' Class A common stock. For more information, see "Note 9—Temporary equity and Non-controlling interest.”



2.Summary of Significant Accounting Policies    

Use of Estimates

These condensed consolidated financial statements and related notes are presented in accordance with GAAP. Preparation in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in the condensed consolidated financial statements and accompanying notes. Although management believes these estimates are reasonable, actual results could differ from these estimates. Changes in estimates are recorded prospectively.

The accompanying condensed consolidated financial statements are based on a number of significant estimates including quantities of oil, natural gas and NGL reserves that are the basis for the calculations of depreciation, depletion, amortization (“DD&A”) and impairment of oil and natural gas properties. Reservoir engineering is a subjective process of estimating underground accumulations of oil and natural gas and there are numerous uncertainties inherent in estimating quantities of proved oil and natural gas reserves. The accuracy of any reserve estimate is a function of the quality of available data and of engineering
6

BRIGHAM MINERALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

and geological interpretation and judgment. As a result, reserve estimates may differ from the quantities of oil and natural gas that are ultimately recovered. Brigham Minerals’ year-end reserve estimates are audited by Cawley, Gillespie & Associates, Inc., an independent petroleum engineering firm. Quarterly reserve estimates are internally generated by our in-house engineering staff. Other items subject to significant estimates and assumptions include the carrying amount of oil and natural gas properties, share-based compensation costs, and revenue accruals.

Significant Accounting Policies

Significant accounting policies are disclosed in Brigham Minerals' audited consolidated and combined financial statements and notes for the year ended December 31, 2020, presented in the Annual Report. There have been no changes in such policies or the application of such policies during the three and nine months ended September 30, 2021, except for under the heading "—Non-Controlling Interest" below.

Non-Controlling Interest

As of February 19, 2021 and thereafter, the holders of Class B common stock no longer control a majority of the votes of the Company's board of directors (the "Board of Directors") through direct representation on the Board of Directors, and no longer control the determination of whether to make a cash payment upon each holder of Brigham LLC Unit's (each a "Brigham LLC Unit Holder") exercise of its Redemption Right (as hereinafter defined). As such, at September 30, 2021, Brigham Minerals accounts for Brigham LLC Unit Holders' 20.3% interest in Brigham LLC not owned by Brigham Minerals as non-controlling interest. For further discussion, see “Note 9—Temporary equity and Non-controlling interest.”

Accounts Receivable

Brigham Minerals routinely reviews outstanding balances, assesses the financial strength of its operators and records a reserve for amounts not expected to be fully recovered. We calculate bad debt expense using the allowance method. We recorded bad debt expense of $0.1 million for the three and nine months ended September 30, 2021, which was included in general and administrative expenses. We did not record bad debt expense for the three months ended September 30, 2020 and recorded $0.3 million for the nine months ended September 30, 2020.

As of September 30, 2021 and December 31, 2020, accounts receivable was comprised of the following:

(In thousands)September 30, 2021December 31, 2020
Accounts receivable
              Oil and gas sales$27,947 $17,413 
              Reserve for bad debt(762)(855)
              Other1,301 1,074 
Total accounts receivable$28,486 $17,632 

Concentration of Credit Risk and Significant Customers

Financial instruments that potentially subject Brigham Minerals to concentrations of credit risk consist of cash, accounts receivable, and its revolving credit facility. Cash and cash equivalents are held in a few financial institutions in amounts that may, at times, exceed federally insured limits. However, no losses have been incurred and management believes that counterparty risks are minimal based on the reputation and history of the institutions selected. Accounts receivable are concentrated among operators and purchasers engaged in the energy industry within the United States. Management periodically assesses the financial condition of these entities and institutions and considers any possible credit risk to be minimal. Concentrations of oil and gas sales to significant customers (operators) are presented in the table below.

7

BRIGHAM MINERALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Three Months Ended September 30,Nine Months Ended September 30,
Customer (Operator) Name2021202020212020
Exxon Mobil Corp12 %10 %14 %9 %
Continental Resources Inc.11 %12 %11 %9 %
Occidental Petroleum Corp10 %11 %11 %13 %
Royal Dutch Shell PLC6 %9 %8 %13 %

Management does not believe that the loss of any customer would have a long-term material adverse effect on our financial position or the results of operations. For the three and nine months ended September 30, 2021, we received revenues from over 140 operators with approximately 66% of revenues coming from the top ten operators on our properties. For the three and nine months ended September 30, 2020, we received revenues from over 150 operators with approximately 63% of revenues coming from the top ten operators on our properties.

Recently Issued Accounting Standards Not Yet Adopted

Brigham Minerals’ status as an emerging growth company ("EGC") under Section 107 of the Jumpstart Our Business Startups Act of 2012 permits it to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. Brigham Minerals originally chose to take advantage of this extended transition period. Brigham Minerals will become a large accelerated filer as of December 31, 2021 and cease to be an EGC. As a result, Brigham Minerals will be required to accelerate the adoption of new or revised accounting standards as indicated on the dates below.

In February 2016, the Financial Accounting Standards Board (the "FASB") issued ASU 2016-02 Leases (Topic 842), which requires all leasing arrangements to be presented in the balance sheet as liabilities along with a corresponding asset. ASU 2016-02 does not apply to leases of mineral rights to explore for or use crude oil and natural gas. The ASU will replace most existing lease guidance in GAAP when it becomes effective. In January 2018, the FASB issued ASU 2018-01, Land Easement Practical Expedient for Transition to Topic 842, to provide an optional practical expedient to not evaluate existing or expired land easements that were not previously accounted for as leases under Topic 840. In July 2018, the FASB issued ASU 2018-11 Leases (Topic 842): Targeted Improvements, which provides for another transition method, in addition to the existing transition method, by allowing entities to initially apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption (i.e. comparative periods presented in the financial statements will continue to be in accordance with current GAAP (Topic 840, Leases)). The new standard becomes effective for us during the fiscal year ending December 31, 2021 and we will use January 1, 2021, the beginning of the period of adoption, as the date of initial application.

We will adopt ASU 2016-02 using a modified retrospective approach and will recognize a right-of-use ("ROU") asset and lease liability on the date of initial application. We are applying the following practical expedients as provided in the standards update:

an accounting policy election to not apply the recognition requirements in the new standards update to short-term leases (a lease that at commencement date has a lease term of twelve months or less) and not to separate non-lease components from lease components for all asset classes; and
a package of practical expedients to not reassess whether a contract contains a lease, lease classification and initial direct costs prior to January 1, 2021; and
a practical expedient to not reassess certain land easements in existence prior to January 1, 2021.

We have determined that the extent of the cumulative impact of adoption in the opening balance of retained earnings as of January 1, 2021 was immaterial and we expect to record a ROU asset and a corresponding lease liability of approximately $8.0 million in the condensed consolidated balance sheets at the date of adoption.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses. In May 2019, ASU 2016-13 was subsequently amended by ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses and ASU 2019-05, Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief. ASU 2016-13, as amended, affects trade receivables, financial assets and certain other instruments that are not measured at fair value through net income. This ASU
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BRIGHAM MINERALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

will replace the currently required incurred loss approach with an expected loss model for instruments measured at amortized cost. The new standard becomes effective for us during the fiscal year ending December 31, 2021 and interim periods within the fiscal year ending December 31, 2022. ASU 2016-13 will be applied using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. Although we are still evaluating the impact, we do not expect it to be material.

3.Oil and Gas Properties
Brigham Minerals uses the full cost method of accounting for its oil and natural gas properties. Under this method, all acquisition costs incurred for the purpose of acquiring mineral and royalty interests are capitalized into a full cost pool. In addition, certain internal costs (or "capitalized general and administrative costs"), are also included in the full cost pool. Capitalized general and administrative costs were $3.1 million and $2.6 million for the three months ended September 30, 2021 and 2020, respectively, and $8.8 million and $7.6 million for the nine months ended September 30, 2021 and 2020, respectively. Capitalized costs do not include any costs related to general corporate overhead or similar activities, which are expensed in the period incurred. Oil and gas properties as of the dates shown consisted of the following:
(In thousands)September 30, 2021December 31, 2020
Oil and gas properties, at cost, using the full cost method of accounting:
Unevaluated property$332,165 $325,091 
Evaluated property535,795 488,301 
Total oil and gas properties, at cost867,960 813,392 
Less accumulated depreciation, depletion, and amortization(220,942)(189,546)
Total oil and gas properties, net$647,018 $623,846 

Capitalized costs are depleted on a unit of production basis based on proved oil and natural gas reserves. Depletion expense was $8.6 million and $11.6 million for the three months ended September 30, 2021 and 2020, respectively, and $27.0 million and $35.0 million for the nine months ended September 30, 2021 and 2020, respectively. Average depletion of proved properties was $10.34 per Boe and $13.58 per Boe for the three months ended September 30, 2021 and 2020, respectively, and $10.98 and $13.40 for the nine months ended September 30, 2021 and 2020, respectively.
Under the full cost method of accounting, total capitalized costs of oil and natural gas properties, net of accumulated depletion and related deferred income taxes, may not exceed an amount equal to the present value of future net revenues from proved reserves, discounted at 10% per annum ("PV-10"), plus the cost of unevaluated properties, less related income tax effects (the "ceiling test"). A write-down of the carrying value of the full cost pool ("impairment charge") is a noncash charge that reduces earnings and impacts equity in the period of occurrence and typically results in lower depletion expense in future periods. A ceiling test is calculated at each reporting period. The ceiling test calculation is prepared using an unweighted arithmetic average of oil prices ("SEC oil price") and natural gas prices ("SEC gas price") as of the first day of each month for the trailing 12-month period ended, adjusted by area for energy content, transportation fees and regional price differentials, as required under the guidelines established by the SEC. At September 30, 2021 and September 30, 2020, the SEC oil price and SEC gas price used in the calculation of the ceiling test were $57.69 and $43.55, respectively, per barrel of oil, and $3.00 and $1.98, respectively, per MMBtu of natural gas. There were no impairment charges during the three and nine months ended September 30, 2021. At September 30, 2020, the net book value of oil and natural gas properties exceeded the ceiling limitation resulting in an impairment charge of $18.9 million to oil and gas properties, net during the three and nine months ended September 30, 2020.
A decline in the SEC oil price or the SEC gas price could lead to impairment charges in the future and such impairment charges could be material, such as occurred in the third and fourth quarters of 2020. In addition to the impact of lower prices, any future changes to assumptions of drilling and completion activity, development timing, acquisitions or divestitures of oil and gas properties, proved undeveloped locations, and production and other estimates may require revisions to estimates of total proved reserves which would impact the amount of any impairment charge.


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BRIGHAM MINERALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

4. Acquisitions and Divestitures
During the nine months ended September 30, 2021 and 2020, Brigham Minerals entered into a number of acquisitions of mineral and royalty interests from various sellers in Texas, Oklahoma, Colorado, New Mexico, and North Dakota, as reflected in the tables below. The change in the oil and natural gas property balance is comprised of payments for acquisitions of minerals, land brokerage costs and capitalized general and administrative expenses that for the nine months ended September 30, 2021 were funded with our retained operating cash flow, proceeds from asset sales and our revolving credit facility (as hereinafter defined). The changes in the oil and natural gas property balance for the nine months ended September 30, 2020 were partially funded with proceeds from the December 2019 Offering as well as our retained cash flow and our revolving credit facility.
During the three and nine months ended September 30, 2021, Brigham Minerals divested certain non-core, undeveloped acreage in Oklahoma and received cash of $4.4 million.
Oil and Gas Properties AcquiredCash Consideration Paid
(In thousands)EvaluatedUnevaluated
Quarter Ended March 31, 2021$9,073 $12,776 $21,849 
Quarter Ended June 30, 2021$8,842 $5,594 $14,436 
Quarter Ended September 30, 2021$2,732 $10,077 $12,809 
$20,647 $28,447 $49,094 
Oil and Gas Properties AcquiredCash Consideration Paid
(In thousands)EvaluatedUnevaluated
Quarter Ended March 31, 2020$9,471 $15,947 $25,418 
Quarter Ended June 30, 2020$805 $2,493 $3,298 
Quarter Ended September 30, 2020$6,881 $