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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 March 31, 2022
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 52,321,848 shares of Class A common stock and 8,201,129 shares of Class B common stock outstanding as of April 30, 2022.


BRIGHAM MINERALS, INC.

FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2022
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 March 31, 2022 (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 potential future 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, 2021 (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;
rising interest rates and its effects on our cost of capital;
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;
the continued threat of terrorism and the impact of military and other action and armed conflict, such as the current conflict between Russia and Ukraine;
iv

global or national health events, including the ongoing COVID-19 pandemic and its resulting economic effects;
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;
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
(in thousands, except share data)
March 31,December 31,
20222021
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents$6,213 $20,819 
Restricted cash1 200 
Accounts receivable48,960 30,539 
Prepaid expenses and other3,301 3,145 
Total current assets58,475 54,703 
Oil and gas properties, at cost, using the full cost method of accounting:
Unevaluated property347,752 338,613 
Evaluated property668,952 633,138 
Less accumulated depreciation, depletion, and amortization(258,902)(239,612)
Oil and gas properties, net757,802 732,139 
Other property and equipment3,110 2,060 
Less accumulated depreciation(1,369)(1,280)
Other property and equipment, net1,741 780 
Operating lease right-of-use asset6,471 6,764 
Deferred tax asset30,468 25,308 
Other assets, net1,100 1,183 
Total assets$856,057 $820,877 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities$15,260 $20,473 
Current operating lease liability1,189 1,178 
Total current liabilities16,449 21,651 
Long-term bank debt93,000 93,000 
Non-current operating lease liability5,441 5,742 
Other non-current liabilities1,159 810 
Equity:
Preferred stock, $0.01 par value; 50,000,000 authorized; no shares issued and outstanding at March 31, 2022 and December 31, 2021
  
Class A common stock, $0.01 par value; 400,000,000 authorized, 51,785,576 shares issued and 51,348,946 shares outstanding at March 31, 2022; 400,000,000 authorized, 48,796,518 shares issued and 48,359,888 shares outstanding at December 31, 2021
518 488 
Class B common stock, $0.01 par value; 150,000,000 authorized, 9,181,517 shares issued and outstanding at March 31, 2022; 150,000,000 authorized, 11,371,517 shares issued and outstanding at December 31, 2021
  
Additional paid-in capital698,265 634,564 
Accumulated deficit(96,394)(105,096)
Treasury stock, at cost; 436,630 shares at March 31, 2022 and December 31, 2021
(3,527)(3,527)
Total equity attributable to Brigham Minerals, Inc. 598,862 526,429 
Non-controlling interests141,146 173,245 
Total equity
$740,008 $699,674 
Total liabilities and equity$856,057 $820,877 
The accompanying notes are an integral part of these condensed consolidated financial statements.
1

BRIGHAM MINERALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share data)

Three Months Ended March 31,
20222021
REVENUES
Mineral and royalty revenues$69,995 $32,176 
Lease bonus and other revenues1,433 1,597 
Total revenues71,428 33,773 
OPERATING EXPENSES
Gathering, transportation and marketing2,003 1,733 
Severance and ad valorem taxes4,331 1,833 
Depreciation, depletion, and amortization12,313 9,367 
General and administrative5,909 5,442 
Total operating expenses24,556 18,375 
INCOME FROM OPERATIONS46,872 15,398 
Interest expense, net(914)(267)
Other income, net20 13 
Income before income taxes45,978 15,144 
Income tax expense 6,913 3,073 
NET INCOME$39,065 $12,071 
Less: Net income attributable to non-controlling interest (8,083)(3,475)
Net income attributable to Brigham Minerals, Inc. stockholders$30,982 $8,596 
NET INCOME PER COMMON SHARE
Basic
$0.64 $0.20 
Diluted
$0.62 $0.20 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic
48,43943,515
Diluted
49,99043,754





















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)
(in thousands)
Class A
Common Stock
Class B
Common Stock
Additional Paid-In CapitalAccumulated DeficitTreasury StockNon-controlling InterestTotal Equity
SharesAmountSharesAmountSharesAmount
Balance - December 31, 202148,360 $488 11,372 $ $634,564 $(105,096)437 $(3,527)$173,245 $699,674 
Issuance of common stock800 8 — — 20,378 — — — — 20,386 
Conversion of shares of Class B Common Stock to Class A Common Stock2,190 22 (2,190)— 34,417 — — — (34,439) 
Deferred tax asset arising from conversion of shares of Class B Common Stock to Class A Common Stock— — — — 6,203 — — — — 6,203 
Share-based compensation— — — — 2,703 — — — — 2,703 
Restricted stock forfeitures(2)— — — — — — — — — 
Dividends and distributions declared— — — — — (22,280)— — (5,743)(28,023)
Issuance of common stock upon vesting of RSUs, net of shares withheld for income taxes1 — — — — — — — — — 
Net income — — — — 30,982 — — 8,083 39,065 
Balance - March 31, 202251,349 $518 9,182 $ $698,265 $(96,394)437 $(3,527)$141,146 $740,008 

Class A
Common Stock
Class B
Common Stock
Additional Paid-In CapitalAccumulated DeficitTreasury StockNon-controlling InterestTotal Equity
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 


The accompanying notes are an integral part of these condensed consolidated financial statements.
3

BRIGHAM MINERALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)

Three Months Ended March 31,
20222021
CASH FLOWS FROM OPERATING ACTIVITIES
Net income$39,065 $12,071 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization12,313 9,367 
Share-based compensation expense1,481 2,300 
Amortization of debt issuance costs131 58 
Deferred income tax expense1,042 736 
Credit losses230  
Changes in operating assets and liabilities:
(Increase) in accounts receivable(18,651)(3,908)
(Increase) decrease in other current assets(156)1,941 
Increase (decrease) in accounts payable and accrued liabilities6,688 (484)
Increase in other long-term liabilities 8 
Net cash provided by operating activities$42,143 $22,089 
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to oil and gas properties(23,608)(21,935)
Additions to other fixed assets(1,050)(1)
Proceeds from sale of oil and gas properties, net7,065  
Net cash used in investing activities$(17,593)$(21,936)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowing of long-term debt 12,000 
Offering costs of Class A common stock (78) 
Dividends paid (23,979)(11,336)
Distribution to holders of non-controlling interest(5,707)(3,409)
Debt issuance costs(44)(1)
Payment of employee tax withholding for settlement of equity compensation awards(9,547)(991)
Net cash used in financing activities$(39,355)$(3,737)
Change in cash and cash equivalents and restricted cash(14,805)(3,584)
Cash and cash equivalents and restricted cash, beginning of period21,019 9,144 
Cash and cash equivalents and restricted cash, end of period$6,214 $5,560 
Supplemental disclosure of noncash activity:
Accrued capital expenditures$236 $61 
Capitalized share-based compensation cost$1,230 $1,633 
Issuance of Class A common stock for acquisitions of oil and gas properties$20,440 $ 
Temporary equity cumulative adjustment to redemption value$ $54,294 
Supplemental cash flow information:
Cash payments for loan commitment fees and interest$(803)$(213)
Tax refunds received$ $1,024 


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

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 an 84.8% 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 36 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 28, 2022 (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 months ended March 31, 2022 are not necessarily indicative of the results to be expected for the entire fiscal year ending December 31, 2022. 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 non-controlling interest, which will reduce net income attributable to the holders of Brigham Minerals' Class A common stock. For more information, see "Note 10—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 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.
5

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

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 financial statements and notes for the year ended December 31, 2021, presented in the Annual Report. There have been no changes in such policies or the application of such policies during the three months ended March 31, 2022.

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, using a current expected credit loss model. We recorded credit losses of $0.2 million for the three months ended March 31, 2022, which was included in general and administrative expenses. We did not record credit losses for the three months ended March 31, 2021.

As of March 31, 2022 and December 31, 2021, accounts receivable was comprised of the following (in thousands):

March 31, 2022December 31, 2021
Accounts receivable
Oil and gas sales$50,050 $30,485 
Reserve for credit losses(1,150)(995)
Other60 1,049 
Total accounts receivable$48,960 $30,539 
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.

Three Months Ended March 31,
20222021
Pioneer Natural Resources15 %5 %
Chevron12 %4 %
Occidental Petroleum Corp10 %12 %
Exxon Mobil Corp10 %16 %
ConocoPhillips Company6 %12 %

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 months ended March 31, 2022, we received revenues from over 140 operators with approximately 75% of revenues coming from the top ten operators on our properties. For the three months ended March 31, 2021, we received revenues from over 130 operators with approximately 69% of revenues coming from the top ten operators on our properties.

6

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

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 $3.0 million and $2.7 million for the three months ended March 31, 2022 and 2021, 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 consisted of the following (in thousands):

March 31, 2022December 31, 2021
Oil and gas properties, at cost, using the full cost method of accounting:
Unevaluated property$347,752 $338,613 
Evaluated property668,952 633,138 
Total oil and gas properties, at cost1,016,704 971,751 
Less accumulated depreciation, depletion, and amortization(258,902)(239,612)
Total oil and gas properties, net$757,802 $732,139 

Capitalized costs are depleted on a unit of production basis based on proved oil and natural gas reserves. Depletion expense was $12.2 million and $9.3 million for the three months ended March 31, 2022 and 2021, respectively. Average depletion of proved properties was $11.29 per Boe and $11.58 per Boe for the three months ended March 31, 2022 and 2021, 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 March 31, 2022 and March 31, 2021, the SEC oil price and SEC gas price used in the calculation of the ceiling test, adjusted by area for energy content, transportation fees and regional price differentials, was $75.24 and $40.01, respectively, per barrel of oil, and $4.11 and $2.18, respectively, per MMBtu of natural gas. There were no impairment charges during the three months ended March 31, 2022 or 2021.

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. 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.

4. Acquisitions and Divestitures

Echo Acquisition

On March 31, 2022, the Company completed the acquisition of approximately 1,800 net royalty acres in the Midland Basin largely operated by Pioneer Natural Resources and Endeavor Energy Resources for $14.4 million in cash, net of $0.6 million of customary closing adjustments, and 800,000 shares of the Company's Class A common stock (the "Echo Acquisition"). The cash portion of the purchase price was funded by cash on hand.

7

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

The following table presents the acquisition consideration paid in the Echo Acquisition (in thousands, except the number of shares and price per share):

Shares of Brigham Minerals, Inc. Class A common stock issued at closing800,000 
Closing price per share of Brigham Minerals, Inc. Class A common stock on the closing date$25.55 
Fair value of Brigham Minerals, Inc. Class A common stock issued$20,440 
Cash consideration14,381 
Total consideration (including fair value of Brigham Minerals, Inc. Class A common stock issued)$34,821 

The Echo Acquisition has been accounted for as an asset acquisition and the allocation of the purchase price was $16.7 million to unevaluated properties and $18.1 million to evaluated properties.

Other Acquisitions

During the three months ended March 31, 2022 and 2021, 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 (in thousands).

Oil and Gas Properties AcquiredCash Consideration
EvaluatedUnevaluated
Quarter Ended March 31, 2022$4,562 $4,340 $8,902 
Quarter Ended March 31, 2021$9,073 $12,776 $21,849 

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 three months ended March 31, 2022 and 2021 were funded with our retained operating cash flow, proceeds from asset sales and our revolving credit facility (as hereinafter defined).

Divestitures

During the three months ended March 31, 2022, Brigham Minerals divested certain non-core, mostly undeveloped acreage in Oklahoma and received cash proceeds of $7.1 million, net of customary closing adjustments.

5. Revenue From Contracts With Customers

Mineral and royalty revenues

Mineral and royalty revenues are generally 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. All of the Company's oil, natural gas and NGL sales are made under contracts with customers (operators). The performance obligations for the Company's contracts with customers are satisfied at a point in time through the delivery of oil and natural gas to its customers. Accordingly, the Company’s contracts do not give rise to contract assets or liabilities. The Company typically receives payment for oil, natural gas and NGL sales within 60 days of the month of delivery, however this can extend approximately six months after initial production from the well as our team works with the operator to put us into pay status. The Company's contracts for oil, natural gas and NGL sales are standard industry contracts that include variable consideration based on the monthly index price and adjustments that may include counterparty-specific provisions related to volumes, price differentials, discounts and other adjustments and deductions. As each unit of product represents a separate performance obligation and the consideration is variable as it relates to oil and natural gas prices, Brigham Minerals recognizes revenue from oil and natural gas sales using the allocation exception for variable consideration in ASC 606.

8

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

During the three months ended March 31, 2022 and 2021, the disaggregated revenues from sales of oil, natural gas and NGLs are as follows (in thousands):

Three Months Ended
March 31,
20222021
Oil sales$50,688 $22,813 
Natural gas sales10,312 5,437 
NGL sales8,995 3,926 
Total mineral and royalty revenues$69,995 $32,176 

Lease bonus and other income

Brigham Minerals also earns revenue from lease bonuses, delay rentals, and right-of-way payments. We generate lease bonus revenue by leasing our mineral interests to exploration and production companies. A lease agreement represents our contract with a customer and generally transfers the rights to any oil or natural gas discovered, grants us a right to a specified royalty interest, and requires that drilling and completion operations commence within a specified time period. The Company recognizes lease bonus revenues when the lease agreement has been executed, payment has been received, and the Company has no further obligation to refund the payment. At the time Brigham Minerals executes the lease agreement, Brigham Minerals expects to receive the lease bonus payment within a reasonable time, though in no case more than one year, such that Brigham Minerals has not adjusted the expected amount of consideration for the effects of any significant financing component per the practical expedient in ASC 606. Brigham Minerals also recognizes revenue from delay rentals to the extent drilling has not started within the specified period, payment has been received, and we have no further obligation to refund the payment. Right-of-way payments are recorded by the Company when the agreement has been executed, payment is determined to be collectable, and the Company has no further obligation to refund the payment.

Allocation of transaction price to remaining performance obligations

Mineral and royalty revenues

Brigham Minerals’ right to royalty income does not originate until production occurs and, therefore, is not considered to exist beyond each day’s production. Therefore, there are no remaining performance obligations under any of our royalty income contracts.

Lease bonus and other income

Given that 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, Brigham Minerals does not record revenue for unsatisfied or partially unsatisfied performance obligations as of the end of the reporting period.

Prior-period performance obligations

Brigham Minerals records revenue in the month production is delivered to the purchaser. As a non-operator, Brigham Minerals has limited visibility into the timing of when new wells start producing and production statements may not be received for 30 to 90 days or more after the date production is delivered. As a result, Brigham Minerals 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 expected sales volumes and prices for these properties are estimated and recorded within the accounts receivable line item in the accompanying condensed consolidated balance sheets. 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 months ended March 31, 2022 and 2021, revenue recognized in the reporting periods related to performance obligations satisfied in prior reporting periods was immaterial.

9

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

6. Fair Value Measurements

We classify financial assets and liabilities that are measured and reported at fair value on a recurring basis using a hierarchy based on the inputs used in measuring fair value. GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). We classify the inputs used to measure fair value into the following hierarchy:

•    Level 1: Inputs based on quoted market prices in active markets for identical assets or liabilities at the measurement date.

•    Level 2: Inputs based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active or other inputs that are observable and can be corroborated by observable market data.

•    Level 3: Inputs that reflect management’s best estimates and assumptions of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the valuation of the instruments.

Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another. In such instances, the transfer would be reported at the beginning of the period in which the change occurs.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

We had no financial assets and liabilities that were accounted for at fair value on a recurring basis at March 31, 2022 and December 31, 2021.

Brigham Minerals had no transfers into or out of Level 1 and no transfers into or out of Level 2 for the three months ended March 31, 2022 and March 31, 2021.

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

Certain non-financial assets and liabilities, such as assets and liabilities acquired in a business combination, are measured at fair value on a nonrecurring basis on the acquisition date and are subject to fair value adjustments under certain circumstances. The inputs used to determine such fair value are primarily based upon internally developed cash flow models and include factors such as estimates of economic reserves, future commodity prices and risk-adjusted discount rates, and are classified within Level 3.

Fair Value of Other Financial Instruments

The carrying value of cash, trade and other receivables and trade payables are considered to be representative of their respective fair values due to the short-term nature of these instruments. The carrying amount of debt outstanding pursuant to our revolving credit facility approximates fair value as interest rates on the revolving credit facility approximate current market rates. We categorized our long-term debt within Level 2 of the fair value hierarchy.

7. Long-Term Debt

Revolving Credit Facility

On May 16, 2019, Brigham Resources, LLC ("Brigham Resources"), a wholly-owned subsidiary of Brigham LLC, entered into a credit agreement with Wells Fargo Bank, N.A., as administrative agent (the "Administrative Agent") for the various lenders from time to time party thereto, providing for a revolving credit facility (our "revolving credit facility"). Our revolving credit facility is guaranteed by Brigham Resources’ domestic subsidiaries and is collateralized by a lien on a substantial portion of Brigham Resources and its domestic subsidiaries’ assets, including a substantial portion of their respective royalty and mineral properties.

10

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

On July 7, 2021, Brigham Resources entered into the Third Amendment to the credit agreement (the "Third Amendment"). The Third Amendment, among other things, evidenced an increase of the borrowing base and elected commitments under the prior credit agreement from $135.0 million to $165.0 million and the addition of leverage (maximum 3.00x) and liquidity (minimum 10% of total net revolving commitments) conditions to Brigham Resources’ ability to pay dividends or distributions (other than permitted tax distributions) to the owners of its equity interests.

On December 15, 2021, Brigham Resources entered into the Fourth Amendment to the credit agreement (the “Fourth Amendment”). The Fourth Amendment, among other things, evidenced a further increase of the borrowing base and elected commitments under the prior credit agreement from $165.0 million to $230.0 million.

Availability under our revolving credit facility is governed by a borrowing base, which is subject to redetermination semi-annually. In addition, lenders holding two-thirds of the aggregate commitments may request one additional redetermination each year. Brigham Resources can also request one additional redetermination each year, and such other redeterminations as appropriate when significant acquisition opportunities arise. The borrowing base is subject to further adjustments for asset dispositions, material title deficiencies, certain terminations of hedge agreements and issuances of permitted additional indebtedness. Increases to the borrowing base require unanimous approval of the lenders, while decreases only require approval of lenders holding two-thirds of the aggregate commitments at such time. The weighted average interest rate for the three months ended March 31, 2022 was 2.96%. As of March 31, 2022, the borrowing base on our revolving credit facility was $230.0 million, with outstanding borrowings of $93.0 million, resulting in $137.0 million available for future borrowings.

Our revolving credit facility bears interest at a rate per annum equal to, at our option, the adjusted base rate or the adjusted LIBOR rate plus an applicable margin. The applicable margin is based on utilization of our revolving credit facility and ranges from (a) in the case of adjusted base rate loans, 1.500% to 2.500% and (b) in the case of adjusted LIBOR rate loans, 2.500% to 3.500%. Brigham Resources may elect an interest period of one, two, three, six, or if available to all lenders, twelve months. Interest is payable in arrears at the end of each interest period, but no less frequently than quarterly. A commitment fee is payable quarterly in arrears on the daily undrawn available commitments under our revolving credit facility in an amount ranging from 0.375% to 0.500% based on utilization of our borrowing base. Our revolving credit facility is subject to other customary fee, interest and expense reimbursement provisions.

Our revolving credit facility matures on May 16, 2024. Loans drawn under our revolving credit facility may be prepaid at any time without premium or penalty (other than customary LIBOR breakage) and must be prepaid in the event that exposure exceeds the lesser of the borrowing base and the elected availability at such time. The principal amount of loans that are prepaid are required to be accompanied by accrued and unpaid interest and fees on such amounts. Loans that are prepaid may be reborrowed. In addition, Brigham Resources may permanently reduce or terminate in full the commitments under our revolving credit facility prior to maturity. Any excess exposure resulting from such permanent reduction or termination must be prepaid. Upon the occurrence of an event of default under our revolving credit facility, the Administrative Agent acting at the direction of the lenders holding a majority of the aggregate commitments at such time may accelerate outstanding loans and terminate all commitments under our revolving credit facility, provided that such acceleration and termination occurs automatically upon the occurrence of a bankruptcy or insolvency event of default.

Our revolving credit facility contains customary affirmative and negative covenants, including, without limitation, reporting obligations, restrictions on asset sales, restrictions on additional debt and lien incurrence and restrictions on making distributions (subject to Consolidated Total Leverage Ratio and liquidity thresholds) and investments. In addition, our revolving credit facility requires us to maintain (a) a current ratio of not less than 1.00 to 1.00 and (b) a ratio of total net funded debt to consolidated EBITDA of not more than 3.50 to 1.00. As of March 31, 2022, we were in compliance with all covenants in accordance with our revolving credit facility.

11

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


8. Leases

The Company enters into leasing transactions in which the Company is the lessee. The Company's lease contracts are generally for office buildings, and office equipment. The Company performed evaluations of its contracts and determined it has only operating leases.

In July 2019, the Company entered into a lease agreement for its corporate headquarters located in Austin, TX (the “Bridgepoint Lease”). The Bridgepoint Lease includes approximately 29,546 square feet and commenced in July 2019, with an expiration on June 30, 2027. The Bridgepoint Lease includes lease and non-lease components that we account for as a single lease component as an accounting policy election. The Bridgepoint Lease requires monthly lease payments that may be subject to annual increases throughout the lease term and also includes renewal options at the election of the Company to renew or extend the lease for two, consecutive, five-year lease terms. This optional period has not been included in the lease term in the determination of the operating lease right-of-use-assets or operating lease liabilities associated with these leases as the Company did not consider it reasonably certain it would exercise the options. Since the Bridgepoint Lease does not contain an implicit rate, the Company used the incremental borrowing rate of 2% as the discount rate to calculate present value of lease payments. Rent expense on operating leases is recognized over the term of the lease on a straight-line basis. Rent expense for the three months ended March 31, 2022 and 2021 was $0.3 million in each period.

The Company also enters into leasing transactions in which the Company is the lessor, primarily through land easements. The Company performed evaluations on all term-based land easement payments received during the three months ended March 31, 2022 and determined that all such payments were immaterial in the aggregate.

The following table summarizes the Company’s recognition of its operating lease (in thousands):
ClassificationMarch 31, 2022
Assets
      OperatingOperating lease right-of-use assets$6,471 
Liabilities
Current:
      OperatingCurrent operating lease liability$1,189 
Non-current:
     OperatingNon-current operating lease liability$5,441 

The table below presents the maturity of the Company’s liabilities under the Bridgepoint Lease as of March 31, 2022 (in thousands):

Commitment
2022 (remainder of)$975 
20231,319 
20241,340 
20251,360 
20261,383 
Thereafter 582 
Total lease payments6,959 
Less imputed interest(329)
Total lease liabilities$6,630 

12

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

9. Equity

Class A Common Stock

Brigham Minerals had approximately 51.3 million shares of its Class A common stock outstanding as of March 31, 2022. Holders of Class A common stock are entitled to one vote per share on all matters to be voted upon by the stockholders and are entitled to ratably receive dividends when and if declared by the Company’s Board of Directors. Upon liquidation, dissolution, distribution of assets or other winding up, the holders of Class A common stock are entitled to receive ratably the assets available for distribution to the stockholders after payment of liabilities.

Class B Common Stock

Brigham Minerals had approximately 9.2 million shares of its Class B common stock outstanding as of March 31, 2022. Holders of the Class B common stock are entitled to one vote per share on all matters to be voted upon by the stockholders. Holders of Class A common stock and Class B common stock generally vote together as a single class on all matters presented to Brigham Minerals’ stockholders for their vote or approval. Holders of Class B common stock do not have any right to receive dividends or distributions upon a liquidation or winding up of Brigham Minerals.

Treasury Stock

As of March 31, 2022, there were 436,630 shares of Class A common stock held in treasury.

Earnings per Share

Basic earnings per share (“EPS”) measures the performance of an entity over the reporting period. Diluted earnings per share measures the performance of an entity over the reporting period while giving effect to all potentially dilutive common shares that were outstanding during the period. Brigham Minerals uses the “if-converted” method to determine the potential dilutive effect of exchanges of outstanding shares of Class B common stock (and corresponding units of Brigham LLC ("Brigham LLC Units")), and the treasury stock method to determine the potential dilutive effect of vesting of its outstanding RSAs, RSUs, PSUs (each as defined in "Note 11—Share-Based Compensation") and unvested Incentive Units. Brigham Minerals does not use the two-class method because the Class B common stock and the unvested share-based awards are nonparticipating securities.

For the three months ended March 31, 2022 and 2021, the Incentive Units and shares of Class B common stock were not recognized in dilutive EPS calculations as the effects would have been antidilutive. As of March 31, 2021, there were 1,187,811 shares related to PSUs (based on target), that could vest in the future dependent on predetermined market conditions. These units were not included in the computation of EPS for the three months ended March 31, 2021, because the performance goals had not been met, assuming the end of the reporting period was the end of the contingency period.

13

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

The following table reflects the allocation of net income to common stockholders and EPS computations for the period indicated based on a weighted average number of common stock outstanding for the period (in thousands, except per share data):

Three Months Ended March 31,
20222021
Basic EPS
Numerator:
Basic net income attributable to Brigham Minerals, Inc. stockholders$30,982 $8,596 
Denominator:
Basic weighted average shares outstanding
48,439 43,515 
Basic EPS attributable to Brigham Minerals, Inc. stockholders$0.64 $0.20 
Diluted EPS
Numerator:
Basic net income attributable to Brigham Minerals, Inc. stockholders $30,982 $8,596 
Diluted net income attributable to Brigham Minerals, Inc. stockholders$30,982 $8,596 
Denominator:
Basic weighted average shares outstanding48,439 43,515 
Effects of dilutive securities:
Unvested equity awards1,551 239 
Diluted weighted average shares outstanding
49,990 43,754 
Diluted EPS attributable to Brigham Minerals, Inc. stockholders$0.62 $0.20 

10. Non-controlling interest

Non-controlling interest represents the 15.2% interest in the units of Brigham LLC not owned by Brigham Minerals, as of March 31, 2022. Each share of Class B common stock does not have any economic rights but entitles its holder to one vote on all matters to be voted on by our stockholders generally, and holders of Brigham LLC Units (and Class B common stock) have a redemption right into shares of Class A common stock. Under the Brigham LLC Agreement, each Brigham LLC Unit Holder, subject to certain limitations, has a right (the "Redemption Right") to cause Brigham LLC to acquire all or a portion of its Brigham LLC Units for, at Brigham LLC’s election, (i) shares of our Class A common stock at a redemption ratio of one share of Class A common stock for each Brigham LLC Unit redeemed, subject to conversion rate adjustments for stock splits, stock dividends and reclassification and other similar transactions or (ii) an equivalent amount of cash. We will determine whether to issue shares of Class A common stock or cash based on facts in existence at the time of the decision, which we expect would include the relative value of the Class A common stock (including trading prices for the Class A common stock at the time), the cash purchase price, the availability of other sources of liquidity (such as an issuance of preferred stock) to acquire the Brigham LLC Units and alternative uses for such cash. Alternatively, upon the exercise of the Redemption Right, Brigham Minerals (instead of Brigham LLC) will have a call right to, for administrative convenience, acquire each tendered Brigham LLC Unit directly from the redeeming Brigham LLC Unit Holder for, at its election, (x) one share of Class A common stock or (y) an equivalent amount of cash (the "Call Right"). The decision to make a cash payment upon a Brigham LLC Unit Holder's exercise of its Redemption Right is required to be made by the Company's directors who are independent under Section 10A-3 of the Securities Act and do not hold any Brigham LLC Units subject to such redemption. In connection with any redemption of Brigham LLC Units pursuant to the Redemption Right or acquisition pursuant to our Call Right, the corresponding number of shares of Class B common stock will be cancelled.

14

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

Non-controlling interest is recorded at its carrying value. For the period from December 31, 2021 to March 31, 2022, the Company recorded adjustments to the value of non-controlling interest as presented in the table below (in thousands):

Non-controlling interest
Balance - December 31, 2021$173,245 
Conversion of Class B common stock to Class A common stock(34,439)
Net income attributable to non-controlling interest 8,083 
Distribution to holders of non-controlling interest declared(5,743)
Balance - March 31, 2022$141,146 

11. Share-Based Compensation

Long Term Incentive Plan

In connection with the IPO, Brigham Minerals adopted the Brigham Minerals, Inc. 2019 Long Term Incentive Plan (“LTIP”) for employees, consultants and directors who perform services for Brigham Minerals. The LTIP provides for issuance of awards based on shares of Class A common stock. Brigham Minerals has issued restricted stock awards ("RSAs"), restricted stock units subject to time-based vesting ("RSUs") and restricted stock units subject to performance-based vesting ("PSUs") under the LTIP. The shares to be delivered under the LTIP shall be made available from (i) authorized but unissued shares, (ii) shares held as treasury stock or (iii) previously issued shares reacquired by Brigham Minerals including shares purchased on the open market. A total of 5,999,600 shares of Class A common stock have been authorized for issuance under the LTIP. At March 31, 2022, 2,501,017 shares of Class A common stock remained available for future grants. Currently, all RSAs, RSUs and PSUs granted under the LTIP are entitled to receive dividends (in the case of RSAs) or have dividend equivalent rights (“DERs”), which entitle holders of RSUs and PSUs to the same dividend value per share as holders of the Company's Class A common stock. Such dividends and DERs are subject to the same vesting and other terms and conditions as the corresponding unvested RSAs, RSUs, and PSUs. Dividends and DERs are accumulated and paid when the underlying shares vest. The fair value of the RSA awards granted with the right to receive dividends and RSU awards granted with the right to receive DERs are generally based on the trading price of the Company’s Class A common stock as of the date of grant. Brigham Minerals accounts for the awards granted under the LTIP as compensation cost measured at the fair value of the award on the date of grant. Brigham Minerals accounts for forfeitures as they occur.

The Company has granted RSAs to certain employees, which are grants of shares of Class A common stock subject to a risk of forfeiture and restrictions on transferability. The share-based compensation expense of such RSAs was determined using the closing price of Class A common stock on April 23, 2019, the date of grant, of $21.25. On April 23, 2019, 312,189 RSAs were granted and 152,742 RSAs held by former employees of the Company vested immediately. The RSAs generally vested in one-third increments on each of April 23, 2020, 2021 and 2022.

The following table summarizes activity related to RSAs for the three months ended March 31, 2022.

Restricted Stock Awards
Number of RSAsGrant Date Fair Value
Unvested at January 1, 202230,433 $21.25 
Forfeited(1,723)$21.25 
Unvested at March 31, 202228,710 $21.25 

The Company has granted RSUs to certain employees and directors, which represent the right to receive shares of Class A common stock at the end of the vesting period in an amount equal to the number of RSUs that vest. The RSUs issued to employees generally vest in one-third increments over a three-year period and RSUs issued to directors vest in one year from the date of grant. RSUs are subject to restrictions on transfer and are generally subject to a risk of forfeiture if the award recipient ceases providing services to Brigham Minerals prior to the date the award vests. The share-based compensation cost of such RSUs was determined using the closing price on the applicable date of grant, which is then applied to the total number of RSUs granted. Brigham Minerals accounts for forfeitures as they occur. During the three months ended March 31, 2022, the Company granted
15

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

345,624 RSUs. The share-based compensation expense of such RSUs was determined using the weighted-average grant date fair value of $24.26.

The following table summarizes activity related to RSUs for the three months ended March 31, 2022.

Restricted Stock Units
Number of RSUsWeighted-Average Grant Date Fair Value
Unvested at January 1, 2022553,976 $16.55 
Granted345,624 $24.26 
Vested(781)$16.49 
Forfeited(67,942)$16.62 
Unvested at March 31, 2022830,877 $19.75 

The Company has granted PSUs to certain officers and managers, which vest based on continuous employment and satisfaction of a market condition based on the absolute total stockholder return of the Company’s common stock, including paid dividends, over an approximate three-year performance period. The terms and conditions of the PSUs allow for vesting of the awards ranging between 0% (or forfeiture) and 200% of target. In addition, the number of PSUs earned may be adjusted based on our relative TSR as compared to a benchmarking peer group over the three-year performance period. Expense related to these PSUs is recognized on a straight-line basis over the length of the applicable performance period. All compensation cost related to the market-based awards will be recognized if the requisite service period is fulfilled, even if the market condition is not achieved. The grant date fair value of such PSUs was determined using a Monte Carlo simulation model that utilizes multiple input variables that determine the probability of satisfying the market condition stipulated in the award to calculate the fair value of the award. Expected volatilities in the model were estimated on the basis of historical volatility of a group of publicly traded oil and gas companies with a performance period of approximately three years. The risk-free interest rate was based on the United States Treasury rate for a term commensurate with the expected life of the grant.

The following table summarizes activity related to PSUs for the three months ended March 31, 2022:

Performance-Based Restricted Stock Units
Target PSUsGrant Date Fair Value
Unvested at January 1, 2022906,643 $11.94 
Granted 295,846 $11.93 
Forfeited(58,938)$13.41 
Unvested at March 31, 20221,143,551 $11.86 

During the three months ended March 31, 2022, the Company granted 295,846 PSUs. The share-based compensation expense of such PSUs was determined using the valuation date of March 20, 2022, the date of grant, with a fair value of $11.93. In addition, no PSUs became vested during the three months ended March 31, 2022.

Short Term Incentive Plan

During 2022, the Company implemented a short term incentive plan (the “STIP”) for executives and certain other employees who perform services for the Company. The STIP is based on quantitative and qualitative metrics that are key drivers of shareholder value.

Each STIP participant was assigned a target award opportunity expressed as a percentage of base salary and the awards allow for attainment ranging between 0% and 150% of target. Award attainment is based on the achievement of various financial, operational and other strategic metrics.

If earned, the STIP awards will be paid in cash at the completion of the plan year for all employees other than the CEO. The CEO's STIP awards will be paid out in the form of shares of our Class A common stock, rather than cash, with such award subject
16

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

to a one-year vesting period. As the STIP awards to be settled in shares of our Class A common stock will consist of a variable number of shares based on the award attainment at the completion of the plan year and the fair market value of our Class A common stock, we will initially account for these awards as liabilities with performance conditions. Once the number of shares to be issued has been fixed, the awards will be reclassified to equity.

Expense for awards with performance conditions is only recognized when achievement of the performance target is deemed probable. The expense to be recognized is based on the Company’s best estimate of probable attainment at the end of each reporting period prorated for the portion of the requisite service period rendered.

The target attainment for the STIP awards for the year ended December 31, 2022 is $2.4 million, of which $0.5 million is expected to be settled in shares of the Company's Class A common stock. During the three months ended March 31, 2022, the Company accrued $0.5 million related to the STIP awards.

Share-Based Compensation Expense

Share-based compensation expense is included in general and administrative expense in the Company's condensed consolidated statements of operations included within this Quarterly Report. Share-based compensation expense recorded for each type of share-based compensation award for the three months ended March 31, 2022 and 2021 is summarized in the table below (in thousands).

Three Months Ended March 31,
20222021
Incentive units (1)$178 $178 
RSAs (1)125 134 
RSUs (1)1,426 2,542 
PSUs (2) 974 1,079 
STIP awards (3)8  
Capitalized share-based compensation (4)(1,230)(1,633)
Total share-based compensation expense$1,481 $2,300 
(1)Share-based compensation expense relating to Incentive Units, RSAs and RSUs with ratable vesting is recognized on a straight-line basis over the requisite service period for the entire award.
(2)Share-based compensation expense relating to PSUs with cliff-vesting is recognized on a straight-line basis over the performance period for the entire award.
(3)Share-based compensation expense relating to STIP awards to be settled in shares of our Class A common stock is recognized on a straight-line basis over the requisite service period for the entire award.
(4)During the three months ended March 31, 2022, Brigham Minerals capitalized $0.6 million of share-based compensation cost to unevaluated property and $0.6 million of share-based compensation cost to evaluated property. During the three months ended March 31, 2021, Brigham Minerals capitalized $0.9 million of share-based compensation cost to unevaluated property and $0.7 million and of share-based compensation cost to evaluated property.

Future Share-Based Compensation Expense

The following table reflects the future share-based compensation expense expected to be recorded for the share-based compensation awards that were outstanding at March 31, 2022, a portion of which will be capitalized (in thousands):

Incentive UnitsRSAsRSUsPSUsSTIP AwardsTotal
2022$356 $38 $5,844 $3,548 $202 $9,988 
2023  5,257 3,877 268 9,402 
2024  2,769 1,179 57 4,005 
2025  598 254  852 
Total$356 $38 $14,468 $8,858 $527 $24,247 

17

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

12. Income Taxes

The Company evaluates and updates its annual effective income tax rate on a quarterly basis under the effective tax rate method based on applying an anticipated annual effective rate to its year-to-date income, except for discrete items. Consequently, based upon the mix and timing of our actual earnings compared to annual projections, our effective tax rate may vary quarterly and may make comparisons not meaningful. Income taxes for discrete items are computed and recorded in the period that the specific transaction occurs.

Income tax expense was as follows for the periods indicated (in thousands, except for tax rate):

Three Months Ended March 31,
20222021
Income tax expense $6,913 $3,073 
Effective tax rate15.0 %20.3 %

Total income tax expense for the three months ended March 31, 2022 and 2021 differed from amounts computed by applying the U