By: Reuters – Brigham Minerals Inc (MNRL.N), a company that owns the rights to extract oil and natural gas from land across numerous U.S. shale basins, is exploring options that include a sale or a merger, people familiar with the matter said on Wednesday.
Brigham’s shares have risen more than 20% this year as it benefited from elevated energy prices, prompting founder and Chief Executive Bud Brigham to consider a sale, the sources said.
The Austin, Texas-headquartered company, which has a market capitalization of $1.6 billion, is working with an investment bank as it evaluates its strategic alternatives, the sources added, cautioning that no deal is certain.
Brigham, which is scheduled to report quarterly earnings on Thursday, did not immediately respond to a request for comment.
Brigham Minerals is a royalty company, meaning it invests in wells and in return receives a percentage of the revenue that companies generate from selling oil from those wells. But because it doesn’t actually operate any wells, Brigham Minerals isn’t on the hook for many of the expenses incurred in the oil field, such as the cost of drilling and completing wells or any environmental cleanup.
Brigham Minerals said its holdings are clustered in four areas — the Permian Basin in West Texas and New Mexico, the Anadarko Basin in Oklahoma, the DJ Basin in Wyoming and Colorado and the Williston Basin mostly in North Dakota.
Brigham owns such rights in four of the main U.S. shale basins, with around two-thirds of its acreage in the Permian Basin of Texas and New Mexico, and the Denver-Julesburg formation of Colorado and Wyoming, according to a company presentation.
The company filed its IPO in 2019, and its initial offering price was $18.00 per share compared to its current price of $26.83 per share.