##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2007
 OR
 o
    
    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: 000-22433
 Brigham Exploration Company
  Delaware
(State of other jurisdiction 
of incorporation or organization)
    
    1311
(Primary Standard Industrial
Classification Code Number)
    
    75-2692967
(I.R.S. Employer
Identification Number)
 6300 Bridge Point Parkway, Building 2, Suite 500, Austin, Texas 78730
 (512) 427-3300
  þ o
  Large Accelerated Filer o
    
    Accelerated Filer þ
    
    Non-Accelerated Filer o
  o þ
 Class
    
    OutstandingCommon Stock, par value $.01 per share as of August 3, 2007
    
    45,675,160




---



##### 



Brigham Exploration Company
 Second Quarter 2007 Form 10-Q Report
 TABLE OF CONTENTS
 PagePART I  FINANCIAL INFORMATIONITEM 1.
    
    FINANCIAL STATEMENTSConsolidated Balance Sheets  June 30, 2007 and December 31, 2006
    
    
    1Consolidated Statements of Operations  Three and six months ended June 30,
2007 and 2006
    
    
    2Consolidated Statement of Stockholders Equity  Six months ended June 30, 2007
    
    
    3Consolidated Statements of Cash Flows  Six months ended June 30, 2007 and 2006
    
    
    4Notes to the Consolidated Financial Statements
    
    
    5ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    16ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    35ITEM 4.
    
    CONTROLS AND PROCEDURES
    
    
    37PART II  OTHER INFORMATIONITEM 1.
    
    LEGAL PROCEEDINGS
    
    
    38ITEM 1.A.
    
    RISK FACTORS
    
    
    38ITEM 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    38ITEM 3.
    
    DEFAULTS UPON SENIOR SECURITIES
    
    
    38ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS
    
    
    38ITEM 5.
    
    OTHER INFORMATION
    
    
    39ITEM 6.
    
    EXHIBITS
    
    
    39SIGNATURES
    
    
    40Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




---



##### Table of Contents



ITEM 1.
    
    FINANCIAL STATEMENTS
 
 BRIGHAM EXPLORATION COMPANY
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
 June 30,
    
    
    December 31,2007
    
    
    2006ASSETSCurrent assets:Cash and cash equivalents
    
    $
    12,283
    
    
    $
    4,300Accounts receivable
    
    
    21,284
    
    
    
    18,352Derivative assets
    
    
    2,914
    
    
    
    5,676Other current assets
    
    
    2,070
    
    
    
    2,390Property held for sale
    
    
    
    
    
    
    500Total current assets
    
    
    38,551
    
    
    
    31,218Oil and natural gas properties, using the full cost method includingProved, net
    
    
    424,126
    
    
    
    410,474Unproved
    
    
    88,151
    
    
    
    75,051512,277
    
    
    
    485,525Other property and equipment, net
    
    
    1,178
    
    
    
    936Deferred loan fees
    
    
    3,993
    
    
    
    3,420Other noncurrent assets
    
    
    165
    
    
    
    1,488Total assets
    
    $
    556,164
    
    
    $
    522,587LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    16,879
    
    
    $
    19,464Royalties payable
    
    
    7,244
    
    
    
    5,012Accrued drilling costs
    
    
    13,301
    
    
    
    23,310Participant advances received
    
    
    3,205
    
    
    
    3,990Other current liabilities
    
    
    6,282
    
    
    
    5,677Total current liabilities
    
    
    46,911
    
    
    
    57,453Senior Notes
    
    
    158,372
    
    
    
    123,434Senior credit facility
    
    
    26,100
    
    
    
    25,900Series A Preferred Stock, mandatorily redeemable, $.01 par value,
$20 stated and redemption value, 2,250,000 shares authorized,
505,051 shares issued and outstanding at June 30, 2007 and December
31, 2006
    
    
    10,101
    
    
    
    10,101Deferred income taxes
    
    
    35,975
    
    
    
    34,609Other taxes payable
    
    
    2,149
    
    
    
    Other noncurrent liabilities
    
    
    5,497
    
    
    
    5,075Commitments and contingencies (Note 3)Stockholders equity:Common stock, $.01 par value, 90 million shares authorized,
45,200,398 and 45,090,398 shares issued and 45,103,399 and
44,011,362 shares outstanding at June 30, 2007 and December 31,
2006, respectively
    
    
    452
    
    
    
    451Additional paid-in capital
    
    
    205,393
    
    
    
    203,643Treasury stock, at cost; 96,999 and 79,036 shares at June 30,
2007 and December 31, 2006, respectively
    
    
    (796
    )
    
    
    (662
    )Accumulated other comprehensive income (loss)
    
    
    250
    
    
    
    1,006Retained earnings
    
    
    65,760
    
    
    
    61,577Total stockholders equity
    
    
    271,059
    
    
    
    266,015Total liabilities and stockholders equity
    
    $
    556,164
    
    
    $
    522,587
   1




---



##### Table of Contents



BRIGHAM EXPLORATION COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenues:Oil and natural gas sales
    
    $
    34,283
    
    
    $
    26,134
    
    
    $
    62,769
    
    
    $
    51,930Gain (loss) on derivatives, net
    
    
    2,264
    
    
    
    (358
    )
    
    
    (1,228
    )
    
    
    (586
    )Other revenue
    
    
    29
    
    
    
    52
    
    
    
    56
    
    
    
    3036,576
    
    
    
    25,828
    
    
    
    61,597
    
    
    
    51,374Costs and expenses:Lease operating
    
    
    3,325
    
    
    
    2,536
    
    
    
    5,894
    
    
    
    5,266Production taxes
    
    
    551
    
    
    
    1,052
    
    
    
    622
    
    
    
    2,196General and administrative
    
    
    2,281
    
    
    
    2,182
    
    
    
    4,459
    
    
    
    3,951Depletion of oil and natural gas properties
    
    
    16,612
    
    
    
    11,106
    
    
    
    30,571
    
    
    
    21,362Impairment of oil and natural gas properties
    
    
    6,505
    
    
    
    
    
    
    
    6,505
    
    
    
    Depreciation and amortization
    
    
    158
    
    
    
    121
    
    
    
    321
    
    
    
    236Accretion of discount on asset retirement obligations
    
    
    94
    
    
    
    79
    
    
    
    211
    
    
    
    14929,526
    
    
    
    17,076
    
    
    
    48,583
    
    
    
    33,160Operating income
    
    
    7,050
    
    
    
    8,752
    
    
    
    13,014
    
    
    
    18,214Other income (expense):Interest income
    
    
    134
    
    
    
    448
    
    
    
    265
    
    
    
    554Interest expense, net
    
    
    (3,678
    )
    
    
    (3,141
    )
    
    
    (7,095
    )
    
    
    (4,230
    )Other income (expense)
    
    
    712
    
    
    
    980
    
    
    
    902
    
    
    
    1,887(2,832
    )
    
    
    (1,713
    )
    
    
    (5,928
    )
    
    
    (1,789
    )Income before income taxes
    
    
    4,218
    
    
    
    7,039
    
    
    
    7,086
    
    
    
    16,425Income tax expense:Current
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Deferred
    
    
    (1,908
    )
    
    
    (3,373
    )
    
    
    (2,903
    )
    
    
    (6,884
    )(1,908
    )
    
    
    (3,373
    )
    
    
    (2,903
    )
    
    
    (6,884
    )Net income
    
    $
    2,310
    
    
    $
    3,666
    
    
    $
    4,183
    
    
    $
    9,541Net income per share available to common stockholders:Basic
    
    $
    0.05
    
    
    $
    0.08
    
    
    $
    0.09
    
    
    $
    0.21Diluted
    
    $
    0.05
    
    
    $
    0.08
    
    
    $
    0.09
    
    
    $
    0.21Weighted average shares outstanding:Basic
    
    
    45,080
    
    
    
    44,992
    
    
    
    45,067
    
    
    
    44,989Diluted
    
    
    45,455
    
    
    
    45,361
    
    
    
    45,478
    
    
    
    45,501
   2




---



##### Table of Contents



BRIGHAM EXPLORATION COMPANY
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
(In thousands)
(Unaudited)
 AccumulatedAdditional
    
    
    
    
    
    Other
    
    
    
    
    
    TotalCommon Stock
    
    
    Paid In
    
    
    Treasury
    
    
    Comprehensive
    
    
    Retained
    
    
    StockholdersShares
    
    
    Amounts
    
    
    Capital
    
    
    Stock
    
    
    Income (Loss)
    
    
    Earnings
    
    
    EquityBalance, December 31, 2006
    
    
    45,090
    
    
    $
    451
    
    
    $
    203,643
    
    
    $
    (662
    )
    
    $
    1,006
    
    
    $
    61,577
    
    
    $
    266,015Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,183
    
    
    
    4,183Net (gains) losses
included in net
income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,163
    )
    
    
    
    
    
    
    (1,163
    )Tax benefit (provision)
related to hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    407
    
    
    
    
    
    
    
    407Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,427Exercises of employee
stock options
    
    
    55
    
    
    
    
    
    
    
    223
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    223Vesting of restricted stock
    
    
    55
    
    
    
    1
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock based compensation
    
    
    
    
    
    
    
    
    
    
    1,528
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,528Repurchases of common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (134
    )
    
    
    
    
    
    
    
    
    
    
    (134
    )Balance, June 30, 2007
    
    
    45,200
    
    
    $
    452
    
    
    $
    205,393
    
    
    $
    (796
    )
    
    $
    250
    
    
    $
    65,760
    
    
    $
    271,059
   3




---



##### Table of Contents



BRIGHAM EXPLORATION COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Six Months EndedJune 30,2007
    
    
    2006Cash flows from operating activities:Net income
    
    $
    4,183
    
    
    $
    9,541Adjustments to reconcile net income to cash provided by operating
activities:Depletion of oil and natural gas properties
    
    
    30,571
    
    
    
    21,362Impairment of oil and natural gas properties
    
    
    6,505
    
    
    
    Depreciation and amortization
    
    
    321
    
    
    
    236Stock based compensation
    
    
    838
    
    
    
    843Write-off of deferred loan costs
    
    
    
    
    
    
    965Amortization of deferred loan fees and debt issuance costs
    
    
    461
    
    
    
    303Market value adjustment for derivative instruments
    
    
    2,658
    
    
    
    (490
    )Accretion of discount on asset retirement obligations
    
    
    211
    
    
    
    149Deferred income taxes
    
    
    2,903
    
    
    
    6,884Other noncash items
    
    
    
    
    
    
    64Changes in operating assets and liabilities:Accounts receivable
    
    
    (2,932
    )
    
    
    5,631Other current assets
    
    
    816
    
    
    
    (750
    )Accounts payable
    
    
    (2,585
    )
    
    
    11,176Royalties payable
    
    
    2,232
    
    
    
    (214
    )Participant advances received
    
    
    (785
    )
    
    
    1,427Other current liabilities
    
    
    1,478
    
    
    
    2,548Other noncurrent assets
    
    
    514
    
    
    
    Other noncurrent liabilities
    
    
    (113
    )
    
    
    (221
    )Net cash provided by operating activities
    
    
    47,276
    
    
    
    59,454Cash flows from investing activities:Additions to oil and natural gas properties
    
    
    (72,919
    )
    
    
    (74,929
    )Purchases of short term investments
    
    
    
    
    
    
    (45,150
    )Sales and redemptions of short term investments
    
    
    
    
    
    
    7,550Additions to other property and equipment
    
    
    (563
    )
    
    
    (293
    )Decrease (increase) in drilling advances paid
    
    
    (8
    )
    
    
    (45
    )Net cash used by investing activities
    
    
    (73,490
    )
    
    
    (112,867
    )Cash flows from financing activities:Proceeds from senior notes offering
    
    
    34,825
    
    
    
    123,286Increase in senior credit facility
    
    
    42,700
    
    
    
    24,200Repayment of senior credit facility
    
    
    (42,500
    )
    
    
    (57,300
    )Repayment of senior subordinated notes
    
    
    
    
    
    
    (30,000
    )Deferred loan fees paid and equity costs
    
    
    (917
    )
    
    
    (2,765
    )Proceeds from issuance of stock, net of issuance costs
    
    
    
    
    
    
    37Proceeds from exercise of employee stock options
    
    
    223
    
    
    
    239Repurchases of common stock
    
    
    (134
    )
    
    
    (211
    )Net cash provided by financing activities
    
    
    34,197
    
    
    
    57,486Net increase (decrease) in cash and cash equivalents
    
    
    7,983
    
    
    
    4,073Cash and cash equivalents, beginning of year
    
    
    4,300
    
    
    
    3,975Cash and cash equivalents, end of period
    
    $
    12,283
    
    
    $
    8,048
   4




---



##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 1.
    
    Organization and Nature of Operations
  2.
    
    Basis of Presentation
    3.
    
    Commitments and Contingencies
   4.
    
    Net Income Available Per Common Share
   5




---



##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Weighted average common shares
outstanding  basic
    
    
    45,080
    
    
    
    44,992
    
    
    
    45,067
    
    
    
    44,989Plus: Potential common sharesStock options and restricted stock
    
    
    375
    
    
    
    369
    
    
    
    411
    
    
    
    512Weighted average common shares
outstanding  diluted
    
    
    45,455
    
    
    
    45,361
    
    
    
    45,478
    
    
    
    45,501Stock options excluded from diluted
EPS due to the anti-dilutive effect
    
    
    2,617
    
    
    
    1,426
    
    
    
    2,547
    
    
    
    1,246
 5.
    
    Income Taxes
  June 30,
    
    
    June 30,2007
    
    
    2006Current income taxes:Federal
    
    $
    
    
    
    $
    State
    
    
    
    
    
    
    Deferred income taxes:Federal
    
    
    2,761
    
    
    
    5,543State
    
    
    142
    
    
    
    1,341$
    2,903
    
    
    $
    6,884
    6




---



##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  (In thousands)Increases (decreases) resulting from adoption of FIN 48
    
    $
    2,149Increases (decreases) resulting from tax positions taken in the current period
    
    
    Decreases relating to settlements with taxing authorities
    
    
    Reductions resulting from the lapse of applicable statutes of limitations
    
    
    Unrecognized tax benefits at 06/30/2007
    
    $
    2,149
   6.
    
    Derivative Instruments and Hedging Activities
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Natural GasAverage price per Mcf realized excluding gas hedging results
    
    $
    7.80
    
    
    $
    6.56
    
    
    $
    7.58
    
    
    $
    6.94Average price per Mcf including gas hedging settlement results
    
    $
    7.80
    
    
    $
    7.04
    
    
    $
    7.78
    
    
    $
    7.19Increase (decrease) in revenue, in thousands
    
    $
    6
    
    
    $
    1,268
    
    
    $
    1,317
    
    
    $
    1,291Average price per Mcf including gas hedging settlement
results and any unrealized gains (losses)
    
    $
    8.49
    
    
    $
    6.94
    
    
    $
    7.44
    
    
    $
    7.11Increase (decrease) in revenue, in thousands
    
    $
    2,405
    
    
    $
    1,000
    
    
    $
    (846
    )
    
    $
    880OilAverage price per Bbl realized excluding oil hedging results
    
    $
    62.25
    
    
    $
    68.88
    
    
    $
    58.44
    
    
    $
    65.05Average price per Bbl including oil hedging settlement results
    
    $
    62.25
    
    
    $
    68.88
    
    
    $
    58.91
    
    
    $
    64.83Increase (decrease) in revenue, in thousands
    
    $
    
    
    
    $
    
    
    
    $
    113
    
    
    $
    (50
    )Average price per Bbl including oil hedging settlement
results and any unrealized gains (losses)
    
    $
    61.05
    
    
    $
    68.88
    
    
    $
    56.85
    
    
    $
    64.93Increase (decrease) in revenue, in thousands
    
    $
    (142
    )
    
    $
    2
    
    
    $
    (382
    )
    
    $
    (25
    )
  7




---



##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Increase (decrease) in earnings due to ineffectiveness
    
    $
    
    
    
    $
    42
    
    
    $
    
    
    
    $
    877
 Natural Gas and Crude Oil Derivative Contracts
 Cash-flow hedges
    June 30,2007
    
    
    2006Fair value of undesignated written put options
    
    $
    
    
    
    $
    (408
    )
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Increase (decrease) in
earnings due to changes in
fair value of written put
options
    
    $
    
    
    
    $
    (163
    )
    
    $
    
    
    
    $
    (283
    )
  8




---



##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  Natural
    
    
    
    
    
    
    Purchased
    
    
    WrittenGas
    
    
    Oil
    
    
    Put
    
    
    CallSettlement Period
    
    (MMBTU)
    
    
    (Barrels)
    
    
    Nymex
    
    
    NymexNatural Gas Costless Collars07/01/07 - 08/31/07
    
    
    140,000
    
    
    
    
    
    
    $
    7.00
    
    
    $
    8.0007/01/07 - 08/31/07
    
    
    50,000
    
    
    
    
    
    
    $
    7.00
    
    
    $
    10.0007/01/07 - 10/31/07
    
    
    600,000
    
    
    
    
    
    
    $
    7.00
    
    
    $
    10.2007/01/07 - 10/31/07
    
    
    160,000
    
    
    
    
    
    
    $
    7.00
    
    
    $
    15.4507/01/07 - 10/31/07
    
    
    160,000
    
    
    
    
    
    
    $
    7.25
    
    
    $
    15.2507/01/07 - 10/31/07
    
    
    160,000
    
    
    
    
    
    
    $
    7.00
    
    
    $
    14.8507/01/07 - 10/31/07
    
    
    400,000
    
    
    
    
    
    
    $
    7.50
    
    
    $
    11.0007/01/07 - 10/31/07
    
    
    200,000
    
    
    
    
    
    
    $
    7.00
    
    
    $
    11.6007/01/07 - 10/31/07
    
    
    200,000
    
    
    
    
    
    
    $
    7.00
    
    
    $
    9.1007/01/07 - 10/31/07
    
    
    200,000
    
    
    
    
    
    
    $
    7.25
    
    
    $
    9.6007/01/07 - 10/31/07
    
    
    400,000
    
    
    
    
    
    
    $
    7.00
    
    
    $
    9.5509/01/07 - 10/31/07
    
    
    70,000
    
    
    
    
    
    
    $
    7.00
    
    
    $
    9.3511/01/07 - 03/31/08
    
    
    250,000
    
    
    
    
    
    
    $
    8.00
    
    
    $
    13.4011/01/07 - 03/31/08
    
    
    300,000
    
    
    
    
    
    
    $
    8.85
    
    
    $
    15.0011/01/07 - 03/31/08
    
    
    300,000
    
    
    
    
    
    
    $
    9.30
    
    
    $
    15.0011/01/07 - 03/31/08
    
    
    500,000
    
    
    
    
    
    
    $
    7.50
    
    
    $
    13.3011/01/07 - 03/31/08
    
    
    150,000
    
    
    
    
    
    
    $
    8.00
    
    
    $
    10.2011/01/07 - 03/31/08
    
    
    250,000
    
    
    
    
    
    
    $
    8.00
    
    
    $
    12.6511/01/07 - 03/31/08
    
    
    250,000
    
    
    
    
    
    
    $
    8.00
    
    
    $
    13.1504/01/08 - 09/30/08
    
    
    420,000
    
    
    
    
    
    
    $
    6.75
    
    
    $
    9.7504/01/08 - 09/30/08
    
    
    540,000
    
    
    
    
    
    
    $
    7.00
    
    
    $
    9.6804/01/08 - 10/31/08
    
    
    350,000
    
    
    
    
    
    
    $
    7.25
    
    
    $
    10.40Oil Costless Collars07/01/07 - 04/30/08
    
    
    
    
    
    
    20,000
    
    
    $
    60.00
    
    
    $
    74.7507/01/07 - 12/31/07
    
    
    
    
    
    
    6,000
    
    
    $
    55.00
    
    
    $
    79.0007/01/07 - 09/30/07
    
    
    
    
    
    
    15,000
    
    
    $
    50.00
    
    
    $
    81.5007/01/07 - 09/30/07
    
    
    
    
    
    
    6,000
    
    
    $
    56.00
    
    
    $
    92.5007/01/07 - 12/31/07
    
    
    
    
    
    
    11,000
    
    
    $
    60.00
    
    
    $
    76.0007/01/07 - 12/31/07
    
    
    
    
    
    
    17,000
    
    
    $
    55.00
    
    
    $
    80.3007/01/07 - 08/31/07
    
    
    
    
    
    
    4,000
    
    
    $
    65.00
    
    
    $
    80.0007/01/07 - 10/31/07
    
    
    
    
    
    
    10,000
    
    
    $
    58.00
    
    
    $
    90.5010/01/07 - 12/31/07
    
    
    
    
    
    
    9,000
    
    
    $
    59.20
    
    
    $
    90.0010/01/07 - 03/31/08
    
    
    
    
    
    
    18,000
    
    
    $
    56.00
    
    
    $
    89.9510/01/07 - 03/31/08
    
    
    
    
    
    
    6,000
    
    
    $
    65.00
    
    
    $
    80.2511/01/07 - 03/31/08
    
    
    
    
    
    
    10,000
    
    
    $
    68.40
    
    
    $
    90.0001/01/08 - 03/31/08
    
    
    
    
    
    
    7,500
    
    
    $
    57.60
    
    
    $
    90.0001/01/08 - 12/31/08
    
    
    
    
    
    
    24,000
    
    
    $
    57.50
    
    
    $
    75.5004/01/08 - 06/30/08
    
    
    
    
    
    
    9,000
    
    
    $
    62.00
    
    
    $
    81.6004/01/08 - 10/31/08
    
    
    
    
    
    
    21,000
    
    
    $
    65.70
    
    
    $
    90.0004/01/08 - 12/31/08
    
    
    
    
    
    
    18,000
    
    
    $
    57.50
    
    
    $
    76.0011/01/08 - 06/30/09
    
    
    
    
    
    
    24,000
    
    
    $
    62.00
    
    
    $
    81.75
  9




---



##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  Purchased
    
    
    WrittenOil
    
    
    Put
    
    
    CallSettlement Period
    
    (Barrels)
    
    
    Nymex
    
    
    NymexOil Costless Collars10/01/07 - 02/28/08
    
    
    12,000
    
    
    $
    65.00
    
    
    $
    82.10
 Interest rate swap
   Fair values
  March 31,
    
    
    December 31,2007
    
    
    2006(In thousands)Other current liabilities
    
    $
    (151
    )
    
    $
    (5
    )Other noncurrent liabilities
    
    
    (96
    )
    
    
    Current derivative assets
    
    
    2,914
    
    
    
    5,676Other noncurrent assets
    
    
    87
    
    
    
    904$
    2,754
    
    
    $
    6,575
 7.
    
    Senior Notes
   10




---



##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  8.
    
    Oil and Gas Properties
    9.
    
    Asset Retirement Obligations
   11




---



##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  Six Months EndedJune 30,2007
    
    
    2006Beginning asset retirement obligations
    
    $
    5,002
    
    
    $
    4,389Liabilities incurred for new wells placed on production
    
    
    228
    
    
    
    358Liabilities settled
    
    
    (40
    )
    
    
    (196
    )Accretion of discount on asset retirement obligations
    
    
    211
    
    
    
    149$
    5,401
    
    
    $
    4,700
 10.
    
    Stock Based Compensation
   2007
    
    
    2006Risk-free interest rate
    
    
    4.6
    %
    
    
    4.6
    %Expected life (in years)
    
    
    5.0
    
    
    
    5.0Expected volatility
    
    
    49
    %
    
    
    74 - 87
    %Expected dividend yield
    
    
    
    
    
    
    Weighted average fair value per share of stock compensation
    
    $
    2.97
    
    
    $
    6.54
    12




---



##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Pre-tax stock based compensation expense
    
    $
    758
    
    
    $
    943
    
    
    $
    1528
    
    
    $
    1,556Capitalized stock based compensation
    
    
    (341
    )
    
    
    (408
    )
    
    
    (690
    )
    
    
    (713
    )Tax benefit
    
    
    (146
    )
    
    
    (187
    )
    
    
    (293
    )
    
    
    (295
    )Stock based compensation expense, net
    
    $
    271
    
    
    $
    348
    
    
    $
    545
    
    
    $
    548
  Stock Based Plan Descriptions and Share Information
    2007
    
    
    2006Weighted-
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    PriceOptions outstanding at the beginning of the
year
    
    
    3,243,566
    
    
    $
    7.08
    
    
    
    2,946,333
    
    
    $
    6.96Granted
    
    
    35,000
    
    
    $
    6.17
    
    
    
    20,000
    
    
    $
    9.73Forfeited or cancelled
    
    
    (124,300
    )
    
    $
    8.23
    
    
    
    (194,067
    )
    
    $
    4.84Exercised
    
    
    (26,000
    )
    
    $
    4.06
    
    
    
    (48,600
    )
    
    $
    5.99Options outstanding at the end of the quarter
    
    
    3,099,266
    
    
    $
    7.07
    
    
    
    2,723,666
    
    
    $
    7.15Options exercisable at the end of the quarter
    
    
    1,439,866
    
    
    $
    6.18
    
    
    
    1,021,733
    
    
    $
    5.58
  13




---



##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
   Options Outstanding
    
    
    Options ExercisableWeighted-
    
    
    
    
    
    
    
    
    
    
    Weighted-Number
    
    
    Average
    
    
    Weighted-
    
    
    Number
    
    
    Average
    
    
    Weighted-Outstanding at
    
    
    Remaining
    
    
    Average
    
    
    Exercisable at
    
    
    Remaining
    
    
    AverageJune 30,
    
    
    Contractual
    
    
    Exercise
    
    
    June 30,
    
    
    Contractual
    
    
    ExerciseExercise Price
    
    
    2007
    
    
    Life
    
    
    Price
    
    
    2007
    
    
    Life
    
    
    Price$
    3.05
    
    
    to
    
    $
    3.41
    
    
    
    220,566
    
    
    1.4 years
    
    $
    3.35
    
    
    
    205,366
    
    
    1.4 years
    
    $
    3.343.66
    
    
    to
    
    
    5.08
    
    
    
    446,400
    
    
    2.1 years
    
    $
    4.22
    
    
    
    406,200
    
    
    2.0 years
    
    $
    4.226.10
    
    
    to
    
    
    6.73
    
    
    
    1,272,000
    
    
    4.4 years
    
    $
    6.50
    
    
    
    458,000
    
    
    3.3 years
    
    $
    6.697.22
    
    
    to
    
    
    8.84
    
    
    
    780,300
    
    
    4.5 years
    
    $
    8.54
    
    
    
    280,300
    
    
    4.1 years
    
    $
    8.688.93
    
    
    to
    
    
    12.31
    
    
    
    380,000
    
    
    5.3 years
    
    $
    11.50
    
    
    
    90,000
    
    
    5.2 years
    
    $
    11.12$
    3.05
    
    
    to
    
    $
    12.31
    
    
    
    3,099,266
    
    
    4.0 years
    
    $
    7.07
    
    
    
    1,439,866
    
    
    2.9 years
    
    $
    6.18
   Restricted Stock
   2007
    
    
    2006Weighted-
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    PriceRestricted shares outstanding at the
beginning of the year
    
    
    391,367
    
    
    $
    8.60
    
    
    
    397,650
    
    
    $
    7.37Shares granted
    
    
    105,000
    
    
    $
    7.13
    
    
    
    129,595
    
    
    $
    10.84Lapse of restrictions
    
    
    (55,000
    )
    
    $
    8.12
    
    
    
    (65,000
    )
    
    $
    5.23Forfeitures
    
    
    (25,320
    )
    
    $
    5.23
    
    
    
    (27,500
    )
    
    $
    8.05Shares outstanding at the end of the quarter
    
    
    416,047
    
    
    $
    8.71
    
    
    
    434,745
    
    
    $
    8.68
  14




---



##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 11.
    
    Comprehensive Income
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net income
    
    $
    2,310
    
    
    $
    3,666
    
    
    $
    4,183
    
    
    $
    9,541Unrealized gains (losses) on cash flow
hedges
    
    
    
    
    
    
    27
    
    
    
    
    
    
    
    4,488Net (gains) losses included in net income
    
    
    (69
    )
    
    
    
    
    
    
    (1,163
    )
    
    
    Tax benefits (provisions) related to
cash flow hedges
    
    
    24
    
    
    
    5
    
    
    
    407
    
    
    
    (1,264
    )Reclassification adjustments for settled
hedging positions
    
    
    
    
    
    
    (42
    )
    
    
    
    
    
    
    (835
    )Other Comprehensive Income, net
    
    $
    2,265
    
    
    $
    3,656
    
    
    $
    3,427
    
    
    $
    9,541
 12.
    
    New Accounting Pronouncements
     15




---



##### Table of Contents



ITEM 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
  General Overview
    
    
    focus on core provinces and trends;
    
    internally generate inventory of high quality exploratory prospects;
    
    leverage our operational expertise;
    
    evaluate and selectively pursue new potential plays;
    
    capitalize on exploration successes through development of our field discoveries;
    
    continue to actively drill our multi-year prospect inventory; and
    
    enhance returns through operational control.
 Overview of Second Quarter and First Six Months 2007 Financial Results
 th
  16




---



##### Table of Contents



Overview of Second Quarter 2007 Operational Results
 Onshore Gulf Coast
 Vicksburg
     Southern Louisiana
   17




---



##### Table of Contents



Anadarko Basin
  Rocky Mountains
 Powder River Basin
    Williston Basin
   Subsequent Events
    18




---



##### Table of Contents



Second Quarter and First Six Months 2007 Results
 Comparison of the three-month and six month periods ended June 30, 2007 and 2006.
 Production volumes
 Three months ended June 30,
    
    
    Six months ended June 30,2007
    
    
    % Change
    
    2006
    
    
    2007
    
    
    % Change
    
    2006Oil (MBbls)
    
    
    118
    
    
    
    8
    %
    
    
    109
    
    
    
    239
    
    
    
    6
    %
    
    
    225Natural gas (MMcf)
    
    
    3,457
    
    
    
    31
    %
    
    
    2,629
    
    
    
    6,439
    
    
    
    24
    %
    
    
    5,174Total (MMcfe)(1)
    
    
    4,163
    
    
    
    27
    %
    
    
    3,286
    
    
    
    7,875
    
    
    
    21
    %
    
    
    6,521Average daily production (MMcfe/d)
    
    
    46.3
    
    
    
    
    
    
    
    36.5
    
    
    
    43.8
    
    
    
    
    
    
    
    36.2
 
 (1)
    
    MMcfe is defined as one million cubic feet equivalent of natural gas, determined using the ratio of six
MMcf of natural gas to one MBbl of crude oil, condensate or natural gas liquids.(2)
    
    Average daily production calculated using 30 days per calendar month.
  Revenue, Commodity Prices and Hedging
   19




---



##### Table of Contents



Three months ended June 30,
    
    
    Six months ended June 30,2007
    
    
    % Change
    
    2006
    
    
    2007
    
    
    % Change
    
    2006Oil revenue:Oil revenue
    
    $
    7,328
    
    
    
    (3
    %)
    
    $
    7,541
    
    
    $
    13,991
    
    
    
    (4
    %)
    
    $
    14,609Oil derivative settlement gains (losses)
    
    
    
    
    
    NM
    
    
    
    
    
    
    
    113
    
    
    NM
    
    
    
    (50
    )Oil revenue including oil derivative settlements
    
    $
    7,328
    
    
    
    (3
    %)
    
    $
    7,541
    
    
    $
    14,104
    
    
    
    (3
    %)
    
    $
    14,559Oil derivative unrealized gains (losses)
    
    
    (141
    )
    
    NM
    
    
    
    
    
    
    
    (494
    )
    
    NM
    
    
    
    23Oil revenue including derivative settlements
and unrealized gains (losses)
    
    $
    7,187
    
    
    
    (5
    %)
    
    $
    7,541
    
    
    $
    13,610
    
    
    
    (7
    %)
    
    $
    14,582Natural gas revenue:Natural gas revenue
    
    $
    26,955
    
    
    
    56
    %
    
    $
    17,234
    
    
    $
    48,778
    
    
    
    36
    %
    
    $
    35,881Natural gas derivative settlement gains (losses)
    
    
    6
    
    
    
    (100
    %)
    
    
    1,268
    
    
    
    1,317
    
    
    
    2
    %
    
    
    1,291Natural gas revenue including derivative
settlements
    
    $
    26,961
    
    
    
    46
    %
    
    $
    18,502
    
    
    $
    50,095
    
    
    
    35
    %
    
    $
    37,172Natural gas derivative unrealized gains (losses)
    
    
    2,399
    
    
    NM
    
    
    
    (267
    )
    
    
    (2,164
    )
    
    
    428
    %
    
    
    (410
    )Natural gas revenue including derivative
settlements and unrealized gains (losses)
    
    $
    29,360
    
    
    
    61
    %
    
    $
    18,235
    
    
    $
    47,931
    
    
    
    30
    %
    
    $
    36,762Oil and natural gas revenue:Oil and natural gas revenue
    
    $
    34,283
    
    
    
    38
    %
    
    $
    24,775
    
    
    $
    62,769
    
    
    
    24
    %
    
    $
    50,490Oil and natural gas derivative settlement gains
(losses)
    
    
    6
    
    
    
    (100
    %)
    
    
    1,268
    
    
    
    1,430
    
    
    
    15
    %
    
    
    1,241Oil and natural gas revenue including
derivative settlement gains (losses)
    
    
    34,289
    
    
    
    32
    %
    
    
    26,043
    
    
    
    64,199
    
    
    
    24
    %
    
    
    51,731Oil and natural gas derivative unrealized gains
(losses)
    
    
    2,258
    
    
    NM
    
    
    
    (267
    )
    
    
    (2,658
    )
    
    
    587
    %
    
    
    (387
    )Oil and natural gas revenue including
derivative settlements and unrealized gains
(losses)
    
    
    36,547
    
    
    
    42
    %
    
    
    25,776
    
    
    
    61,541
    
    
    
    20
    %
    
    
    51,344Other revenue
    
    
    29
    
    
    
    (44
    %)
    
    
    52
    
    
    
    56
    
    
    
    87
    %
    
    
    30Total revenue
    
    $
    36,576
    
    
    
    42
    %
    
    $
    25,828
    
    
    $
    61,597
    
    
    
    20
    %
    
    $
    51,374
  20




---



##### Table of Contents



Three months ended June 30,
    
    
    Six months ended June 30,2007
    
    
    % Change
    
    2006
    
    
    2007
    
    
    % Change
    
    2006Average oil prices:Oil price (per Bbl)
    
    $
    62.25
    
    
    
    (10
    %)
    
    $
    68.88
    
    
    $
    58.44
    
    
    
    (10
    %)
    
    $
    65.05Oil price including derivative
settlement gains (losses) (per Bbl)
    
    
    62.25
    
    
    
    (10
    %)
    
    
    68.88
    
    
    
    58.91
    
    
    
    (9
    %)
    
    
    64.83Oil price including derivative
settlements and unrealized gains
(losses) (per Bbl)
    
    
    61.05
    
    
    
    (11
    %)
    
    
    68.88
    
    
    
    56.85
    
    
    
    (12
    %)
    
    
    64.93Average natural gas prices:Natural gas price (per Mcf)
    
    $
    7.80
    
    
    
    19
    %
    
    $
    6.56
    
    
    $
    7.58
    
    
    
    9
    %
    
    $
    6.94Natural gas price including derivative
settlement gains (losses) (per Mcf)
    
    
    7.80
    
    
    
    11
    %
    
    
    7.04
    
    
    
    7.78
    
    
    
    8
    %
    
    
    7.19Natural gas price including derivative
settlements and unrealized gains
(losses) (per Mcf)
    
    $
    8.49
    
    
    
    22
    %
    
    $
    6.94
    
    
    $
    7.44
    
    
    
    5
    %
    
    $
    7.11Average equivalent prices:Natural gas equivalent price (per Mcfe)
    
    $
    8.24
    
    
    
    9
    %
    
    $
    7.54
    
    
    $
    7.97
    
    
    
    3
    %
    
    $
    7.74Natural gas equivalent price including
derivative settlement gains (losses)
(per Mcfe)
    
    
    8.24
    
    
    
    4
    %
    
    
    7.93
    
    
    
    8.15
    
    
    
    3
    %
    
    
    7.93Natural gas equivalent price including
derivative settlements and unrealized
gains (losses) (per Mcfe)
    
    $
    8.78
    
    
    
    12
    %
    
    $
    7.84
    
    
    $
    7.81
    
    
    
    (1
    %)
    
    $
    7.87
 For the three
    
    
    For the sixmonth periods
    
    
    month periodsended June 30,
    
    
    ended June 30,2007 and 2006
    
    
    2007 and 2006Change in revenue from the sale of oilVolume variance impact
    
    $
    567
    
    
    $
    965Price variance impact
    
    
    (780
    )
    
    
    (1,583
    )Cash settlement of hedging contracts
    
    
    
    
    
    
    163Unrealized hedge gain or loss
    
    
    (141
    )
    
    
    (517
    )Total change
    
    $
    (354
    )
    
    $
    (972
    )Change in revenue from the sale of natural gasVolume variance impact
    
    $
    5,445
    
    
    $
    8,808Price variance impact
    
    
    4,276
    
    
    
    4,089Cash settlement of hedging contracts
    
    
    (1,262
    )
    
    
    26Unrealized hedge gain or loss
    
    
    2,666
    
    
    
    (1,754
    )Total change
    
    $
    11,125
    
    
    $
    11,169Change in revenue from the sale of oil and natural gasVolume variance impact
    
    $
    6,012
    
    
    $
    9,773Price variance impact
    
    
    3,496
    
    
    
    2,506Cash settlement of hedging contracts
    
    
    (1,262
    )
    
    
    189Unrealized hedge gain or loss
    
    
    2,525
    
    
    
    (2,271
    )Total change
    
    $
    10,771
    
    
    $
    10,197
  21




---



##### Table of Contents




    
    a 27% increase in production volumes for the second quarter resulted in a $6.0 million increase in oil and natural gas
revenue;
    
    a 9% increase in the sales prices we received for our oil and natural gas resulted in a $3.5 million increase in
oil and natural gas revenue;
    
    a $2.3 million unrealized derivative gain in second quarter 2007 versus a $0.2 million unrealized derivative
loss in second quarter 2006 increased revenue by $2.5 million; and
    
    a minimal derivative cash settlement gain in the second quarter 2007 versus a $1.3 million derivative cash
settlement gain in second quarter 2006 decreased revenue by $1.3 million.
  
    
    a 21% increase in production volumes resulted in a $9.8 million increase in oil and natural gas revenue;
    
    a 3% increase in the sales price we received for our oil and natural gas resulted in a $2.5 million increase in
oil and natural gas revenue;
    
    a $1.4 million gain from the settlement of derivative contracts in the first half 2007 versus a $1.2 million
derivative settlement gain in second quarter 2006 increased revenue by $0.2 million from hedging settlements; and
    
    a $2.7 million unrealized derivative loss in first six months 2007 versus a $0.4 million unrealized derivative
loss in the first half 2006 decreased revenue by $2.3 million.
 Hedging.
   22




---



##### Table of Contents



Three months ended June 30,
    
    
    Six months ended June 30,2007
    
    
    % Change
    
    2006
    
    
    2007
    
    
    % Change
    
    2006Oil collarsVolumes (Bbls)
    
    
    73,000
    
    
    
    62
    %
    
    
    45,000
    
    
    
    149,000
    
    
    
    111
    %
    
    
    70,500Average floor price ($  per Bbl)
    
    $
    56.29
    
    
    
    4
    %
    
    $
    53.93
    
    
    $
    56.02
    
    
    
    5
    %
    
    $
    53.27Average ceiling price ($  per Bbl)
    
    $
    81.84
    
    
    
    9
    %
    
    $
    75.32
    
    
    $
    80.42
    
    
    
    12
    %
    
    $
    71.50Gain (loss) upon settlement ($ in thousands)
    
    $
    
    
    
    NM
    
    
    $
    
    
    
    $
    113
    
    
    NM
    
    
    $
    (50
    )Oil written putsVolumes (Bbl)
    
    
    
    
    
    
    (100
    %)
    
    
    7,500
    
    
    
    
    
    
    
    (100
    %)
    
    
    25,500Average price ($  per Bbl)
    
    $
    
    
    
    
    (100
    %)
    
    $
    48.00
    
    
    $
    
    
    
    
    (100
    %)
    
    $
    40.94Gain (loss) upon settlement ($ in thousands)
    
    $
    
    
    
    NM
    
    
    $
    
    
    
    $
    
    
    
    NM
    
    
    $
    Total oilGain (loss) upon settlement ($ in thousands)
    
    $
    
    
    
    NM
    
    
    $
    
    
    
    $
    113
    
    
    NM
    
    
    $
    (50
    )Natural gas collarsVolumes (MMbtu)
    
    
    1,990,000
    
    
    
    75
    %
    
    
    1,140,000
    
    
    
    3,795,000
    
    
    
    118
    %
    
    
    1,740,000Average floor price ($  per MMbtu)
    
    $
    7.11
    
    
    
    (11
    %)
    
    $
    8.01
    
    
    $
    7.33
    
    
    
    (10
    %)
    
    $
    8.18Average ceiling price ($  per MMbtu)
    
    $
    10.70
    
    
    
    (22
    %)
    
    $
    13.74
    
    
    $
    13.29
    
    
    
    4
    %
    
    $
    12.74Gain (loss) upon settlement ($ in thousands)
    
    $
    6
    
    
    
    (100
    %)
    
    $
    1,359
    
    
    $
    1,317
    
    
    
    (12
    %)
    
    $
    1,490Natural gas written putsVolumes (MMbtu)
    
    
    
    
    
    
    (100
    %)
    
    
    390,000
    
    
    
    
    
    
    
    (100
    %)
    
    
    990,000Average price ($  per MMbtu)
    
    $
    
    
    
    
    (100
    %)
    
    $
    6.65
    
    
    $
    
    
    
    
    (100
    %)
    
    $
    6.89Gain (loss) upon settlement ($ in thousands)
    
    $
    
    
    
    
    (100
    %)
    
    $
    (91
    )
    
    $
    
    
    
    
    (100
    %)
    
    $
    (199
    )Total gasGain (loss) upon settlement ($ in thousands)
    
    $
    6
    
    
    
    (100
    %)
    
    $
    1,268
    
    
    $
    1,317
    
    
    
    2
    %
    
    $
    1,291
 Other revenue
 Operating costs and expenses
 Production costs.
 Unit-of-Production
    
    
    Amount(Per Mcfe)
    
    
    (In thousands)Three months ended June 30,
    
    
    Three months ended June 30,2007
    
    
    % Change
    
    2006
    
    
    2007
    
    
    % Change
    
    2006Production costs:Operating & maintenance
    
    $
    0.59
    
    
    
    0
    %
    
    $
    0.59
    
    
    $
    2,434
    
    
    
    25
    %
    
    $
    1,953Expensed workovers
    
    
    0.11
    
    
    
    120
    %
    
    
    0.05
    
    
    
    466
    
    
    
    207
    %
    
    
    152Ad valorem taxes
    
    
    0.10
    
    
    
    (23
    %)
    
    
    0.13
    
    
    
    425
    
    
    
    (1
    %)
    
    
    431Lease operating expenses
    
    $
    0.80
    
    
    
    4
    %
    
    $
    0.77
    
    
    $
    3,325
    
    
    
    31
    %
    
    $
    2,536Production taxes
    
    
    0.13
    
    
    
    (59
    %)
    
    
    0.32
    
    
    
    551
    
    
    
    (48
    %)
    
    
    1,052Production costs
    
    $
    0.93
    
    
    
    (15
    %)
    
    $
    1.09
    
    
    $
    3,876
    
    
    
    8
    %
    
    $
    3,588
  
    
    production tax expense decreased $0.19 per Mcfe, or 59%, from the second quarter 2006. The decrease was
attributable to recording production tax expense credits for our Vicksburg and Mill Ranch wells. To date, we have
successfully received production tax expense credits on all 33 of our wells in these areas and are therefore
booking credits
immediately upon commencing production as opposed to deferring recording credits until receiving approval from the
relevant governmental authority.
  23




---



##### Table of Contents




    
    ad valorem taxes decreased $0.03 per Mcfe, or 23%, due to a decrease in estimated property valuations for our
oil and natural gas properties;
    
    per unit O&M expense remained unchanged from corresponding period last year; and
    
    expensed workovers increased $0.06 per Mcfe, or 120%, due to an increase in workover activity as compared to
the second quarter 2006.
 Unit-of-Production
    
    
    Amount(Per Mcfe)
    
    
    (In thousands)Six months ended June 30,
    
    
    Six months ended June 30,2007
    
    
    % Change
    
    2006
    
    
    2007
    
    
    % Change
    
    2006Production costs:Operating & maintenance
    
    $
    0.60
    
    
    
    (3
    %)
    
    $
    0.62
    
    
    $
    4,738
    
    
    
    17
    %
    
    $
    4,051Expensed workovers
    
    
    0.04
    
    
    
    0
    %
    
    
    0.04
    
    
    
    324
    
    
    
    17
    %
    
    
    277Ad valorem taxes
    
    
    0.11
    
    
    
    (27
    %)
    
    
    0.15
    
    
    
    832
    
    
    
    (11
    %)
    
    
    938Lease operating expenses
    
    $
    0.75
    
    
    
    (7
    %)
    
    $
    0.81
    
    
    $
    5,894
    
    
    
    12
    %
    
    $
    5,266Production taxes
    
    
    0.08
    
    
    
    (76
    %)
    
    
    0.34
    
    
    
    622
    
    
    
    (72
    %)
    
    
    2,196Production costs
    
    $
    0.83
    
    
    
    (28
    %)
    
    $
    1.15
    
    
    $
    6,516
    
    
    
    (13
    %)
    
    $
    7,462
  
    
    production taxes decreased $0.26 per Mcfe, or 76%, due to the aforementioned production tax
expense credits recorded during the second quarter 2007 and production tax credits recorded on four of our wells approved
for abatement during the first quarter 2007;
    
    ad valorem taxes decreased $0.04 per Mcfe, or 27%, due to a decrease in estimated property valuations for our
oil and natural gas properties; and
    
    O&M expense decreased $0.02 per Mcfe, or 3%.
 General and administrative expenses.
 Three months ended June 30,
    
    
    Six months ended June 30,2007
    
    
    % Change
    
    2006
    
    
    2007
    
    
    % Change
    
    2006(In thousands, except per unit measurements)General and administrative costs
    
    $
    4,298
    
    
    
    11
    %
    
    $
    3,882
    
    
    $
    8,527
    
    
    
    19
    %
    
    $
    7,176Capitalized general and administrative costs
    
    
    (2,017
    )
    
    
    19
    %
    
    
    (1,700
    )
    
    
    (4,068
    )
    
    
    26
    %
    
    
    (3,225
    )General and administrative expenses
    
    $
    2,281
    
    
    
    5
    %
    
    $
    2,182
    
    
    $
    4,459
    
    
    
    13
    %
    
    $
    3,951General and administrative expense ($  per Mcfe)
    
    $
    0.55
    
    
    
    (17
    %)
    
    $
    0.66
    
    
    $
    0.57
    
    
    
    (7
    %)
    
    $
    0.61
   24




---



##### Table of Contents



Depletion of oil and natural gas properties
 Three months ended June 30,
    
    
    Six months ended June 30,2007
    
    
    % Change
    
    2006
    
    
    2007
    
    
    % Change
    
    2006(In thousands, except per unit measurements)Depletion of oil and natural gas properties
    
    $
    16,612
    
    
    
    50
    %
    
    $
    11,106
    
    
    $
    30,571
    
    
    
    43
    %
    
    $
    21,362Depletion of oil and natural gas
properties ($  per Mcfe)
    
    $
    3.99
    
    
    
    18
    %
    
    $
    3.38
    
    
    $
    3.88
    
    
    
    18
    %
    
    $
    3.28
  Impairment of oil and natural gas properties
   Net interest expense.
  25




---



##### Table of Contents



Three months ended June 30,
    
    
    Six months ended June 30,2007
    
    
    % Change
    
    2006
    
    
    2007
    
    
    % Change
    
    2006(In thousands)Interest on Senior Notes
    
    $
    3,775
    
    
    
    61
    %
    
    $
    2,339
    
    
    $
    6,783
    
    
    
    190
    %
    
    $
    2,339Interest on senior credit facility
    
    
    585
    
    
    
    312
    %
    
    
    142
    
    
    
    1,348
    
    
    
    81
    %
    
    
    743Interest on
senior subordinated notes (a)
    
    
    
    
    
    
    (100
    %)
    
    
    121
    
    
    
    
    
    
    
    (100
    %)
    
    
    699Commitment fees
    
    
    52
    
    
    
    49
    %
    
    
    35
    
    
    
    100
    
    
    
    20
    %
    
    
    83Dividend on mandatorily redeemable preferred stock
    
    
    151
    
    
    
    0
    %
    
    
    151
    
    
    
    300
    
    
    
    0
    %
    
    
    300Amortization of deferred loan and debt issuance cost
    
    
    238
    
    
    
    (79
    %)
    
    
    1,149
    
    
    
    443
    
    
    
    (65
    %)
    
    
    1,268Other general interest expense
    
    
    
    
    
    
    (100
    %)
    
    
    2
    
    
    
    1
    
    
    
    (80
    %)
    
    
    5Capitalized interest expense
    
    
    (1,123
    )
    
    
    41
    %
    
    
    (798
    )
    
    
    (1,880
    )
    
    
    56
    %
    
    
    (1,207
    )Net interest expense
    
    $
    3,678
    
    
    
    17
    %
    
    $
    3,141
    
    
    $
    7,095
    
    
    
    68
    %
    
    $
    4,230Weighted average debt outstanding
    
    $
    191,063
    
    
    
    53
    %
    
    $
    124,918
    
    
    $
    181,451
    
    
    
    76
    %
    
    $
    103,376Average interest rate on outstanding indebtedness (b)
    
    
    9.7
    %
    
    
    
    
    
    
    9.1
    %
    
    
    9.5
    %
    
    
    
    
    
    
    8.1
    %
 
 (a)
    
    Includes the effects of interest rate swaps.(b)
    
    Calculated as the sum of the interest expense on our outstanding indebtedness, commitment fees that
we pay on our unused borrowing capacity and the dividend on our mandatorily redeemable preferred stock
divided by our weighted average debt and preferred stock outstanding for the period.   Other income (expense).
  Three months ended June 30,
    
    
    Six months ended June 30,2007
    
    
    % Change
    
    2006
    
    
    2007
    
    
    % Change
    
    2006(In thousands)Other income (expense):Non-cash gain (loss)
for the ineffective
portion of cash flow
hedges
    
    $
    
    
    
    
    (100
    %)
    
    $
    42
    
    
    $
    
    
    
    
    (100
    %)
    
    $
    877Non-cash gain (loss)
    
    
    
    
    
    NM
    
    
    
    
    
    
    
    40
    
    
    NM
    
    
    
    Cash income (expense)
    
    
    712
    
    
    
    (24
    %)
    
    
    938
    
    
    
    862
    
    
    
    (15
    %)
    
    
    1,010Total other income
    
    $
    712
    
    
    
    (27
    %)
    
    $
    980
    
    
    $
    902
    
    
    
    (52
    %)
    
    $
    1,887
  26




---



##### Table of Contents



Income taxes.
    Six months endedJune 30, 2007
    
    
    Tax Rate(In thousands)Reconciliation to effective tax rate:Tax at the statutory rate
    
    $
    2,480
    
    
    
    35.00
    %Add the effect of:Non-deductible expenses
    
    
    3
    
    
    
    0.01
    %Preferred stock dividends
    
    
    105
    
    
    
    1.49
    %Incentive stock options not exercised
    
    
    66
    
    
    
    0.94
    %State taxes (after-tax)
    
    
    92
    
    
    
    1.31
    %Other
    
    
    157
    
    
    
    2.22
    %Total
    
    $
    2,903
    
    
    
    40.97
    %
 Capital Expenditures
  
    
    cost of acquiring and maintaining our lease acreage position and our seismic resources;
    
    cost of drilling and completing new oil and natural gas wells;
    
    cost of installing new production infrastructure;
    
    cost of maintaining, repairing and enhancing existing oil and natural gas wells;
    
    cost related to plugging and abandoning unproductive or uneconomic wells; and
    
    indirect costs related to our exploration activities, including payroll and other expenses attributable
our exploration professional staff.
  27




---



##### Table of Contents



Amount2007
    
    
    Spent Through
    
    
    AmountBudget
    
    
    June 30, 2007
    
    
    Remaining (a)(In millions)Drilling
    
    $
    91.2
    
    
    $
    52.2
    
    
    $
    39.0Net land and seismic
    
    
    11.2
    
    
    
    5.4
    
    
    
    5.8Capitalized costs (b)
    
    
    11.5
    
    
    
    6.0
    
    
    
    5.5Asset retirement obligation
    
    
    1.0
    
    
    
    0.2
    
    
    
    0.8Total oil and gas capital expenditures (c)
    
    $
    114.9
    
    
    $
    63.8
    
    
    $
    51.1
 
 (a)
    
    Calculated based on the 2007 capital expenditure budget announced in February 2007 less amount
spent through June 30, 2007.(b)
    
    Capitalized costs include capitalized interest expense, general and administrative expense and
stock compensation expense.(c)
    
    Excludes other property capital expenditures. Determination of Capital Expenditure Budget
   
    
    changes in commodity prices;
    
    variances in forecasted production and the resulting production of our newly drilled wells;
    
    variances in our production levels from our existing oil and gas properties;
    
    variances in a prospects risked reserve size;
    
    variances in drilling and completion costs, service costs and the availability of drilling equipment;
    
    variances in the availability and timing of drilling and completion services;
    
    economic and industry conditions at the time of drilling; and
    
    the availability of more economically attractive prospects.
  Liquidity and Capital Resources
 Sources of Capital
  9 5/8% Senior Notes Due 2014
   28




---



##### Table of Contents




    
    rank equally in right of payment with all our existing and future senior indebtedness;
    
    rank senior to all of our future subordinated indebtedness; and
    
    are effectively junior in right of payment to all of our and the Guarantors existing and future
secured indebtedness, including debt of our senior credit agreement.
   Senior Credit Agreement
     29




---



##### Table of Contents



Percent of
    
    EurodollarBorrowing Base
    
    Rate
    
    Base RateUtilized
    
    Advances
    
    Advances(1)<50%
    
    1.250%
    
    0.000%50% and < 75%
    
    1.500%
    
    0.000%75% and < 90%
    
    1.750%
    
    0.250%90%
    
    2.000%
    
    0.500%
 
 (1)
    
    Base rate is defined as for any day a fluctuating rate per annum equal to the higher of: (a) the Federal Funds
Rate plus 1/2 of 1% or (b) the rate of interest in effect for such day as publicly announced from time to time by
Bank of America as its prime rate. The prime rate is a rate set by Bank of America based upon various factors
including Bank of Americas costs and desired return, general economic conditions and other factors, and is used
as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any
change in such rate announced by Bank of America shall take effect at the opening of business on the day specified
in the public announcement of such change.  Percent ofBorrowing Base
    
    QuarterlyUtilized
    
    Commitment Fee<50%
    
    0.250%50% and < 75%
    
    0.250%75% and < 90%
    
    0.375%90%
    
    0.375%
   Mandatorily Redeemable Preferred Stock
  Access to Capital Markets
   30




---



##### Table of Contents



Off Balance Sheet Arrangements
  Analysis of Changes in Cash and Cash Equivalents
  Six months ended June 30,2007
    
    
    % Change
    
    
    2006(In thousands)Net income
    
    $
    4,183
    
    
    
    (56
    %)
    
    $
    9,541Non-cash items
    
    
    44,468
    
    
    
    47
    %
    
    
    30,316Changes in working capital and other items
    
    
    (1,375
    )
    
    NM
    
    
    
    19,597Cash flows provided by operating activities
    
    $
    47,276
    
    
    
    (20
    %)
    
    $
    59,454Cash flows used by investing activities
    
    
    (73,490
    )
    
    
    (35
    %)
    
    
    (112,867
    )Cash flows provided by financing activities
    
    
    34,197
    
    
    
    (41
    %)
    
    
    57,486Net increase in cash and cash equivalents
    
    $
    7,983
    
    
    
    96
    %
    
    $
    4,073
 Analysis of net cash provided by operating activities
    31




---



##### Table of Contents



Analysis of changes in cash flows used in investing activities
 Six months ended June 30,2007
    
    
    % Change
    
    
    2006(In thousands)Capital expenditures for oil and natural gas activities:Drilling
    
    $
    52,227
    
    
    
    (23
    %)
    
    $
    67,617Land and seismic
    
    
    5,424
    
    
    
    (53
    %)
    
    
    11,554Capitalized cost
    
    
    5,948
    
    
    
    24
    %
    
    
    4,781Capitalized asset retirement obligation
    
    
    228
    
    
    
    (36
    %)
    
    
    358Total
    
    $
    63,827
    
    
    
    (24
    %)
    
    $
    84,310Reconciling Items:Change in accrued drilling costs
    
    $
    10,009
    
    
    NM
    
    
    $
    (8,307
    )Change in short-term investments
    
    
    
    
    
    
    (100
    %)
    
    
    37,600Other
    
    
    (346
    )
    
    
    (53
    %)
    
    
    (736
    )Total Reconciling Items
    
    
    9,663
    
    
    
    (66
    %)
    
    
    28,557Net cash used in investing activities
    
    $
    73,490
    
    
    
    (35
    %)
    
    $
    112,867
  
    
    drilling capital expenditures decreased by $15.4 million because of an overall decrease in our level of
drilling activity in the first six months 2007 versus the corresponding period last year;
    
    land and seismic expenditures decreased by $6.1 million due to a reduction in the level our acreage
acquisitions;
    
    in the second quarter 2006, we invested $37.6 million of the proceeds raised in our April 2006 Senior Notes
issuance in short-term investments while no such investments were made in the second quarter 2007;
    
    offsetting the above reductions was a $18.3 million change in our accrued drilling costs, which resulted from a
decrease in our drilling activity; and
    
    capitalized costs increased by $1.2 million because of both an increase in the level of our debt outstanding
and a higher interest rate associated with our Senior Notes.
 Analysis of changes in cash flows from financing activities
  Common Stock Transactions
  Shares Issued
    
    Net Proceeds(In thousands, except share data)2007 common stock transactions:Exercise of employee stock options
    
    
    55,000
    
    
    $
    2232006 common stock transactions:Exercise of employee stock options
    
    
    48,600
    
    
    $
    238
  32




---



##### Table of Contents



Other Matters
 Derivative Instruments
   Effects of Inflation and Changes in Prices
  Environmental and Other Regulatory Matters
  New Accounting Pronouncements
    33




---



##### Table of Contents



Forward Looking Information
   34




---



##### Table of Contents



ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
 Management Opinion Concerning Derivative Instruments
  Derivative Instruments and Hedging Activities
         35




---



##### Table of Contents



Natural
    
    
    Purchased
    
    
    WrittenGas
    
    
    Put
    
    
    CallSettlement Period
    
    (MMbtu)
    
    
    (Nymex)
    
    
    (Nymex)Natural Gas Costless Collars07/01/07 - 07/31/07
    
    
    30,000
    
    
    $
    7.00
    
    
    $
    10.0007/01/07 - 07/31/07
    
    
    80,000
    
    
    $
    7.00
    
    
    $
    8.0007/01/07 - 10/31/07
    
    
    160,000
    
    
    $
    7.00
    
    
    $
    15.4507/01/07 - 10/31/07
    
    
    160,000
    
    
    $
    7.25
    
    
    $
    15.2507/01/07 - 10/31/07
    
    
    160,000
    
    
    $
    7.00
    
    
    $
    14.8507/01/07 - 10/31/07
    
    
    400,000
    
    
    $
    7.50
    
    
    $
    11.0007/01/07 - 10/31/07
    
    
    200,000
    
    
    $
    7.00
    
    
    $
    11.6007/01/07 - 10/31/07
    
    
    200,000
    
    
    $
    7.00
    
    
    $
    9.1007/01/07 - 10/31/07
    
    
    200,000
    
    
    $
    7.25
    
    
    $
    9.6007/01/07 - 10/31/07
    
    
    400,000
    
    
    $
    7.00
    
    
    $
    9.5507/01/07 - 10/31/07
    
    
    600,000
    
    
    $
    7.00
    
    
    $
    10.2008/01/07 - 08/31/07
    
    
    20,000
    
    
    $
    7.00
    
    
    $
    10.0008/01/07 - 08/31/07
    
    
    60,000
    
    
    $
    7.00
    
    
    $
    8.0009/01/07 - 09/30/07
    
    
    40,000
    
    
    $
    7.00
    
    
    $
    9.3510/01/07 - 10/31/07
    
    
    30,000
    
    
    $
    7.00
    
    
    $
    9.3511/01/07 - 11/30/07
    
    
    50,000
    
    
    $
    8.00
    
    
    $
    10.2011/01/07 - 03/31/08
    
    
    250,000
    
    
    $
    8.00
    
    
    $
    13.4011/01/07 - 03/31/08
    
    
    300,000
    
    
    $
    8.85
    
    
    $
    15.0011/01/07 - 03/31/08
    
    
    300,000
    
    
    $
    9.30
    
    
    $
    15.0011/01/07 - 03/31/08
    
    
    500,000
    
    
    $
    7.50
    
    
    $
    13.3011/01/07 - 03/31/08
    
    
    250,000
    
    
    $
    8.00
    
    
    $
    12.6511/01/07 - 03/31/08
    
    
    250,000
    
    
    $
    8.00
    
    
    $
    13.1512/01/07 - 12/31/07
    
    
    40,000
    
    
    $
    8.00
    
    
    $
    10.2001/01/08 - 01/31/08
    
    
    30,000
    
    
    $
    8.00
    
    
    $
    10.2002/01/08 - 02/29/08
    
    
    20,000
    
    
    $
    8.00
    
    
    $
    10.2003/01/08 - 03/31/08
    
    
    10,000
    
    
    $
    8.00
    
    
    $
    10.2004/01/08 - 09/30/08
    
    
    420,000
    
    
    $
    6.75
    
    
    $
    9.7504/01/08 - 09/30/08
    
    
    540,000
    
    
    $
    7.00
    
    
    $
    9.6804/01/08 - 10/31/08
    
    
    350,000
    
    
    $
    7.25
    
    
    $
    10.40
 Crude
    
    
    Purchased
    
    
    WrittenOil
    
    
    Put
    
    
    CallSettlement Period
    
    (Bbls)
    
    
    (Nymex)
    
    
    (Nymex)Oil Costless Collars07/01/07 - 12/31/07
    
    
    6,000
    
    
    $
    55.00
    
    
    $
    79.0007/01/07 - 09/30/07
    
    
    15,000
    
    
    $
    50.00
    
    
    $
    81.5007/01/07 - 09/30/07
    
    
    6,000
    
    
    $
    56.00
    
    
    $
    92.5007/01/07 - 07/31/07
    
    
    4,000
    
    
    $
    55.00
    
    
    $
    80.3007/01/07 - 08/31/07
    
    
    4,000
    
    
    $
    65.00
    
    
    $
    80.0007/01/07 - 08/31/07
    
    
    4,000
    
    
    $
    60.00
    
    
    $
    76.0007/01/07 - 10/31/07
    
    
    10,000
    
    
    $
    58.00
    
    
    $
    90.5007/01/07 - 04/31/08
    
    
    20,000
    
    
    $
    60.00
    
    
    $
    74.7508/01/07 - 10/31/07
    
    
    9,000
    
    
    $
    55.00
    
    
    $
    80.3009/01/07 - 09/30/07
    
    
    3,000
    
    
    $
    60.00
    
    
    $
    76.0010/01/07 - 10/31/07
    
    
    2,000
    
    
    $
    60.00
    
    
    $
    76.0010/01/07 - 12/31/07
    
    
    9,000
    
    
    $
    59.20
    
    
    $
    90.0010/01/07 - 03/31/08
    
    
    18,000
    
    
    $
    56.00
    
    
    $
    89.9510/01/07 - 03/31/08
    
    
    6,000
    
    
    $
    65.00
    
    
    $
    80.2511/01/07 - 12/31/07
    
    
    4,000
    
    
    $
    55.00
    
    
    $
    80.3011/01/07 - 12/31/07
    
    
    2,000
    
    
    $
    60.00
    
    
    $
    76.00
  36




---



##### Table of Contents



Crude
    
    
    Purchased
    
    
    WrittenOil
    
    
    Put
    
    
    CallSettlement Period
    
    (Bbls)
    
    
    (Nymex)
    
    
    (Nymex)Oil Costless Collars (continued)11/01/07 - 03/31/08
    
    
    10,000
    
    
    $
    68.40
    
    
    $
    90.0001/01/08 - 03/31/08
    
    
    7,500
    
    
    $
    57.60
    
    
    $
    90.0004/01/08 - 06/31/08
    
    
    9,000
    
    
    $
    62.00
    
    
    $
    81.6001/01/08 - 12/31/08
    
    
    24,000
    
    
    $
    57.50
    
    
    $
    75.5004/01/08 - 10/31/08
    
    
    21,000
    
    
    $
    65.70
    
    
    $
    90.0004/01/08 - 12/31/08
    
    
    18,000
    
    
    $
    57.50
    
    
    $
    76.0004/01/08 - 06/31/08
    
    
    9,000
    
    
    $
    62.00
    
    
    $
    81.6011/01/08 - 06/31/09
    
    
    24,000
    
    
    $
    62.00
    
    
    $
    81.75
  Crude
    
    
    Purchased
    
    
    WrittenOil
    
    
    Put
    
    
    CallSettlement Period
    
    (Bbls)
    
    
    (Nymex)
    
    
    (Nymex)Oil Costless Collars10/01/07 - 10/31/07
    
    
    3,000
    
    
    $
    65.00
    
    
    $
    82.1011/01/07 - 11/30/07
    
    
    3,000
    
    
    $
    65.00
    
    
    $
    82.1012/01/07 - 12/31/07
    
    
    2,000
    
    
    $
    65.00
    
    
    $
    82.1001/01/08 - 01/31/08
    
    
    3,000
    
    
    $
    65.00
    
    
    $
    82.1002/01/08 - 02/29/08
    
    
    1,000
    
    
    $
    65.00
    
    
    $
    82.10
  
 ITEM 4.
    
    CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
   37




---



##### Table of Contents



PART II  OTHER INFORMATION
 
 ITEM 1.
    
    LEGAL PROCEEDINGS
  
 ITEM 1A.
    
    RISK FACTORS
  
 ITEM 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3.
    
    DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4.
    
    SUBMISSON OF MATTERS TO A VOTE OF SECURITY HOLDERS
 (a)
    
    We held our Annual Stockholders meeting on Thursday, May 31, 2007, in Austin, Texas at 10:00 a.m. local time.(b)
    
    Proxies were solicited by our Board of Directors pursuant to Regulation 14A under the Securities Exchange Act of
1934. There were no solicitations in opposition to the Board of Directors nominees as listed in the proxy
statement and all of such nominees were duly elected.(c)
    
    Out of the total 45,533,514 shares of our common stock outstanding and entitled to vote, 41,649,368 shares were
present in person or by proxy, representing approximately 91.5%. The only matters voted on by our stockholders,
as fully described in the definitive proxy materials for the annual meeting, are set forth below. The results
were as follows:
 1.
    
    To elect seven directors to serve until the Annual Meeting of
Stockholders in 2008.
 Number of shares
    
    Number of sharesNumber of shares
    
    voting against
    
    withholdingvoting for election
    
    election as
    
    authority to vote forNominee
    
    as director
    
    director
    
    election as directorBen M. Bud Brigham
    
    
    37,936,423
    
    
    
    
    
    3,712,945David T. Brigham
    
    
    37,769,323
    
    
    
    
    
    3,880,045Harold D. Carter
    
    
    31,979,158
    
    
    
    
    
    9,670,210Stephen C. Hurley
    
    
    38,368,227
    
    
    
    
    
    3,281,141Stephen P. Reynolds
    
    
    38,144,565
    
    
    
    
    
    3,504,803Hobart A. Smith
    
    
    38,029,330
    
    
    
    
    
    3,620,038R. Graham Whaling
    
    
    38,399,251
    
    
    
    
    
    3,250,117
 2.
    
    To approve the appointment of KPMG LLP for the year ending December 31, 2007.
 For
    
    
    41,379,757Against
    
    
    228,910Abstained
    
    
    40,700
  38




---



##### Table of Contents



3.
    
    To approve the amendment of Brighams 1997 Director Stock Option Plan to increase the number of shares of
common stock available under the plan from 430,000 to 1,000,000 and to extend the termination date from March
4, 2007 to March 4, 2017.
 For
    
    
    29,324,721Against
    
    
    1,981,830Abstained
    
    
    258,001
 
 ITEM 5.
    
    OTHER INFORMATION
  
 ITEM 6.
    
    EXHIBITS
 31.1
    
    Certification of Chief Executive Officer of the Company pursuant to Rule 13a-14(a) of the Securities Exchange Act
of 193431.2
    
    Certification of Chief Financial Officer of the Company pursuant to Rule 13a-14(a) of the Securities Exchange Act
of 193432.1
    
    Certification of Chief Executive Officer of the Company pursuant to 18 U.S.C. § 135032.2
    
    Certification of Chief Financial Officer of the Company pursuant to 18 U.S.C. § 1350
  39




---



##### Table of Contents



SIGNATURES
  BRIGHAM EXPLORATION COMPANYBy:
    /s/ BEN M. BRIGHAMBen M. BrighamChief Executive Officer, President
and Chairman of the BoardBy:
    /s/ EUGENE B. SHEPHERD, JR.Eugene B. Shepherd, Jr.Executive Vice President and
Chief Financial Officer  40




---



##### Table of Contents



EXHIBIT INDEX
 ExhibitNo.
    
    Desciption31.1
    
    Certification of Chief Executive Officer of the Company pursuant to Rule 13a-14(a) of the Securities Exchange Act
of 193431.2
    
    Certification of Chief Financial Officer of the Company pursuant to Rule 13a-14(a) of the Securities Exchange Act
of 193432.1
    
    Certification of Chief Executive Officer of the Company pursuant to 18 U.S.C. § 135032.2
    
    Certification of Chief Financial Officer of the Company pursuant to 18 U.S.C. § 1350
  41