Brigham Minerals Inc. recently agreed to a cash-and-stock mineral acquisition in the Midland Basin largely operated by Pioneer Natural Resources and Endeavor Energy Resources.

The transaction, estimated by Tudor, Pickering, Holt & Co. (TPH) analysts to be valued around $32.5 million, checks all the boxes Brigham Mineral requires for “large deals” including both near-term cash flow per share and NAV accretion, according to CEO Robert M. (Rob) Roosa.

“We remain extremely focused on capturing and creating value through consolidation and are pleased that our disciplined underwriting has been rewarded with acquisitions of over $120 million in the past three months,” Roosa commented in a company release on Feb. 10.

Based in Austin, Texas and founded in 2012 by Bud Brigham, Brigham Minerals is focused on acquiring oil and gas mineral rights across the U.S.

In December, Brigham Minerals closed on the purchase of royalty acreage in Colorado’s Weld County within the Denver-Julesburg (D-J) Basin for $95.6 million in cash and stock, which marked its largest transaction to date. The company’s portfolio also currently includes mineral and royalty interests in the SCOOP and STACK plays, the Williston Basin and elsewhere in core areas of the Permian Basin.

In its latest acquisition, Brigham Minerals will pick up roughly 1,800 net royalty acres in the Midland Basin and production of 225,000-275,000 boe/d of production estimated for 2022.

Commenting on the transaction, TPH analysts said they liked the deal “at first blush” as it overall highlights the continued focus in the Permian Basin.

“Big picture, upstream companies prioritizing return of capital has made for competition for yield investors given E&P total return yields averaging ~10% in FY’22 in many cases, but minerals companies like Brigham remain competitive as viable investments down the market cap spectrum (~$1.3 billion currently) with advantages being insulation from service cost inflation, production and cash flow growth with exposure to private E&P operators, and unhedged exposure to upside in commodity prices,” the analysts wrote in a Feb. 11 research note.

Brigham Minerals intends to finance the $15 million cash portion of the purchase price through a combination of cash on hand and borrowings under the company’s revolving credit facility. Closing of the transaction, which has a Dec. 1 effective date, is anticipated in early- to mid-April, according to the company release.

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