Brigham Minerals (MNRL) Update - Dec 14

Post Reply
dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

Brigham Minerals (MNRL) Update - Dec 14

Post by dan_s »

On Monday morning, December 14th we will be publishing an update profile on Brigham Minerals Corp.; one of three minerals companies in our High Yield Income portfolio. The others are BSM and VNOM. We covered Viper (VNOM) in our Diamondback Energy (FANG) profile.

MNRL is the newest and smallest of the three minerals companies in our High Yield Income Portfolio. Revenues are heavily weighted to crude oil sales.

MNRL is a C-Corp., so it is appropriate for an IRA account. It pays variable quarterly dividends that go up and down with their operating cash flow. Based on the dividend paid in early December, the annual yield is 8.625%.

I expect them to increase their dividends to 75% of operating cash flow in 2021. Based on my forecast/valuation model (based on $50/bbl WTI oil and $3.00/mcf HH gas prices), the higher payout percentage should result in next year's dividends increasing to more than $1.55/share for annual yield of approximately 14% based on MNRL's closing price on December 11th of $11.13. I believe that oil prices may go much higher than $50/bbl in 2021, so there is significant upside for MNRL and for VNOM. Both of them distribute a high percentage of their operating cash flow.

Brigham Minerals had $138 million of liquidity on September 30, 2020. Although lower oil & gas prices reduced their quarterly dividends from $0.37/share in the first quarter to $0.14/share in the second quarter and $0.24/share in the third quarter, depressed commodity prices improved the market for minerals allowing them to acquire more acreage for less money. In the long run that will benefit shareholders.

Since the Company released 3rd quarter results TipRanks shows that four analyst have issued new reports on MNRL with price targets of $12.00 to $16.00.
Dan Steffens
Energy Prospectus Group
Post Reply