##### 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 September 30, 2009
 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: 001-34224
 Brigham Exploration Company
  Delaware
    
    1311
    
    75-2692967(State of other jurisdiction 
of incorporation or organization)
    
    (Primary Standard Industrial
Classification Code Number)
    
    (I.R.S. Employer
Identification Number)
 6300 Bridge Point Parkway, Building 2, Suite 500, Austin, Texas 78730
 (512) 427-3300
  þ o
  o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o(Do not check if a smaller reporting
company)
    
    Smaller reporting company o
  o þ
 Class
    
    OutstandingCommon Stock, par value $.01 per share as of November 3, 2009
    
    99,014,801




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##### 



Brigham Exploration Company
 Third Quarter 2009 Form 10-Q Report
 TABLE OF CONTENTS
 PagePART I  FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTSConsolidated Balance Sheets  September 30, 2009 and December 31, 2008
    
    
    1Consolidated Statements of Operations  Three and nine
months ended September 30, 2009 and 2008
    
    
    2Consolidated Statement of Stockholders Equity  Nine months ended September 30, 2009
    
    
    3Consolidated Statements of Cash Flows  Nine months ended September 30, 2009 and 2008
    
    
    4Notes to the Consolidated Financial Statements
    
    
    5ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
    
    
    19ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    37ITEM 4. CONTROLS AND PROCEDURES
    
    
    39PART II  OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGS
    
    
    40ITEM 1.A. RISK FACTORS
    
    
    40ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    41ITEM 3. DEFAULTS UPON SENIOR SECURITIES
    
    
    41ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS
    
    
    41ITEM 5. OTHER INFORMATION
    
    
    41ITEM 6. EXHIBITS
    
    
    42SIGNATURES
    
    
    44Exhibit 10.3Exhibit 10.4Exhibit 10.5Exhibit 10.6Exhibit 10.7Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY


CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
 September 30,
    
    
    December 31,2009
    
    
    2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    55,878
    
    
    $
    40,043Restricted cash
    
    
    10,019
    
    
    
    555Accounts receivable
    
    
    15,219
    
    
    
    24,558Derivative assets
    
    
    1,543
    
    
    
    5,140Investments
    
    
    8,852
    
    
    
    Inventory
    
    
    8,046
    
    
    
    6,070Other current assets
    
    
    1,203
    
    
    
    2,154Total current assets
    
    
    100,760
    
    
    
    78,520Oil and natural gas properties, using the full cost method includingProved, net
    
    
    236,542
    
    
    
    298,833Unproved
    
    
    72,858
    
    
    
    106,006309,400
    
    
    
    404,839Other property and equipment, net
    
    
    2,622
    
    
    
    1,873Deferred loan fees
    
    
    5,660
    
    
    
    3,122Other noncurrent assets
    
    
    374
    
    
    
    702Total assets
    
    $
    418,816
    
    
    $
    489,056LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    8,010
    
    
    $
    14,297Royalties payable
    
    
    5,586
    
    
    
    6,859Accrued drilling costs
    
    
    10,430
    
    
    
    19,768Participant advances received
    
    
    5,739
    
    
    
    2,226Other current liabilities
    
    
    11,094
    
    
    
    5,065Total current liabilities
    
    
    40,859
    
    
    
    48,215Senior Notes
    
    
    158,908
    
    
    
    158,730Senior Credit Facility
    
    
    110,000
    
    
    
    145,000Series 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 September 30, 2009 and
December 31, 2008
    
    
    10,101
    
    
    
    10,101Deferred income taxes
    
    
    444
    
    
    
    149Other noncurrent liabilities
    
    
    6,644
    
    
    
    5,592Commitments and contingencies (Note 4)Stockholders equity:Common stock, $.01 par value, 90 million shares authorized,
82,447,702 and 45,829,277 shares issued and 82,258,658 and
45,686,295 shares outstanding at September 30, 2009 and December
31, 2008, respectively
    
    
    824
    
    
    
    458Additional paid-in capital
    
    
    308,514
    
    
    
    212,473Treasury stock, at cost; 189,044 and 142,982 shares at September
30, 2009 and December 31, 2008, respectively
    
    
    (1,478
    )
    
    
    (1,202
    )Accumulated deficit
    
    
    (216,000
    )
    
    
    (90,460
    )Total stockholders equity
    
    
    91,860
    
    
    
    121,269Total liabilities and stockholders equity
    
    $
    418,816
    
    
    $
    489,056
  1




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY


CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenues:Oil and natural gas sales
    
    $
    18,747
    
    
    $
    31,731
    
    
    $
    45,765
    
    
    $
    101,112Gain (loss) on derivatives, net
    
    
    1,114
    
    
    
    15,435
    
    
    
    3,030
    
    
    
    (3,928
    )Other revenue
    
    
    6
    
    
    
    25
    
    
    
    72
    
    
    
    10419,867
    
    
    
    47,191
    
    
    
    48,867
    
    
    
    97,288Costs and expenses:Lease operating
    
    
    3,279
    
    
    
    3,092
    
    
    
    10,651
    
    
    
    8,626Production taxes
    
    
    1,551
    
    
    
    1,383
    
    
    
    3,196
    
    
    
    4,107General and administrative
    
    
    2,082
    
    
    
    2,502
    
    
    
    6,468
    
    
    
    7,691Depletion of oil and natural gas properties
    
    
    7,835
    
    
    
    11,718
    
    
    
    23,901
    
    
    
    36,566Impairment of oil and natural gas properties
    
    
    
    
    
    
    
    
    
    
    114,781
    
    
    
    Depreciation and amortization
    
    
    234
    
    
    
    159
    
    
    
    550
    
    
    
    464Accretion of discount on asset retirement obligations
    
    
    107
    
    
    
    83
    
    
    
    313
    
    
    
    263Loss on inventory valuation
    
    
    29
    
    
    
    
    
    
    
    2,196
    
    
    
    15,117
    
    
    
    18,937
    
    
    
    162,056
    
    
    
    57,717Operating income (loss)
    
    
    4,750
    
    
    
    28,254
    
    
    
    (113,189
    )
    
    
    39,571Other income (expense):Interest income
    
    
    157
    
    
    
    49
    
    
    
    361
    
    
    
    163Interest expense, net
    
    
    (4,521
    )
    
    
    (3,762
    )
    
    
    (12,899
    )
    
    
    (10,663
    )Other income (expense)
    
    
    400
    
    
    
    16
    
    
    
    482
    
    
    
    419(3,964
    )
    
    
    (3,697
    )
    
    
    (12,056
    )
    
    
    (10,081
    )Income (loss) before income taxes
    
    
    786
    
    
    
    24,557
    
    
    
    (125,245
    )
    
    
    29,490Income tax expense:Current
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Deferred
    
    
    (295
    )
    
    
    (9,297
    )
    
    
    (295
    )
    
    
    (11,186
    )(295
    )
    
    
    (9,297
    )
    
    
    (295
    )
    
    
    (11,186
    )Net income (loss)
    
    $
    491
    
    
    $
    15,260
    
    
    $
    (125,540
    )
    
    $
    18,304Net income (loss) per share available to common
stockholders:Basic
    
    $
    0.01
    
    
    $
    0.34
    
    
    $
    (2.00
    )
    
    $
    0.40Diluted
    
    $
    0.01
    
    
    $
    0.33
    
    
    $
    (2.00
    )
    
    $
    0.40Weighted average shares outstanding:Basic
    
    
    82,085
    
    
    
    45,481
    
    
    
    62,633
    
    
    
    45,358Diluted
    
    
    82,756
    
    
    
    46,632
    
    
    
    62,633
    
    
    
    46,334
  2




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BRIGHAM EXPLORATION COMPANY


CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
(In thousands)
(Unaudited)
 Additional
    
    
    
    
    
    
    
    
    
    
    TotalCommon Stock
    
    
    Paid In
    
    
    Treasury
    
    
    Accumulated
    
    
    StockholdersShares
    
    
    Amounts
    
    
    Capital
    
    
    Stock
    
    
    Deficit
    
    
    EquityBalance, December 31, 2008
    
    
    45,829
    
    
    $
    458
    
    
    $
    212,473
    
    
    $
    (1,202
    )
    
    $
    (90,460
    )
    
    $
    121,269Net income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (125,540
    )
    
    
    (125,540
    )Issuance of common stock
    
    
    36,292
    
    
    
    363
    
    
    
    93,044
    
    
    
    
    
    
    
    
    
    
    
    93,407Exercises of employee stock
options
    
    
    101
    
    
    
    1
    
    
    
    473
    
    
    
    
    
    
    
    
    
    
    
    474Vesting of restricted stock
    
    
    226
    
    
    
    2
    
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    Stock based compensation
    
    
    
    
    
    
    
    
    
    
    2,526
    
    
    
    
    
    
    
    
    
    
    
    2,526Repurchases of common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (276
    )
    
    
    
    
    
    
    (276
    )Balance, September 30, 2009
    
    
    82,448
    
    
    $
    824
    
    
    $
    308,514
    
    
    $
    (1,478
    )
    
    $
    (216,000
    )
    
    $
    91,860
  3




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY


CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Nine Months EndedSeptember 30,2009
    
    
    2008Cash flows from operating activities:Net income (loss)
    
    $
    (125,540
    )
    
    $
    18,304Adjustments to reconcile net income (loss) to cash provided by
operating activities:Depletion of oil and natural gas properties
    
    
    23,901
    
    
    
    36,566Impairment of oil and natural gas properties
    
    
    114,781
    
    
    
    Depreciation and amortization
    
    
    550
    
    
    
    464Stock based compensation
    
    
    1,360
    
    
    
    1,223Amortization of deferred loan fees and debt issuance costs
    
    
    1,127
    
    
    
    810Market value adjustment for derivative instruments
    
    
    6,037
    
    
    
    (1,645
    )Accretion of discount on asset retirement obligations
    
    
    313
    
    
    
    263Deferred income taxes
    
    
    295
    
    
    
    11,186Other noncash items
    
    
    35
    
    
    
    4Changes in operating assets and liabilities:Accounts receivable
    
    
    9,339
    
    
    
    (13,827
    )Other current assets
    
    
    (1,123
    )
    
    
    (3,163
    )Accounts payable
    
    
    (6,287
    )
    
    
    18,648Royalties payable
    
    
    (1,273
    )
    
    
    1,684Participant advances received
    
    
    3,513
    
    
    
    (504
    )Other current liabilities
    
    
    4,199
    
    
    
    4,057Other noncurrent assets and liabilities
    
    
    (16
    )
    
    
    (432
    )Net cash provided (used) by operating activities
    
    
    31,211
    
    
    
    73,638Cash flows from investing activities:Additions to oil and natural gas properties
    
    
    (51,113
    )
    
    
    (136,822
    )Decrease (increase) in restricted cash
    
    
    (9,464
    )
    
    
    (2,562
    )Increase (decrease) in short term investments
    
    
    (8,852
    )
    
    
    Additions to other property and equipment
    
    
    (1,334
    )
    
    
    (806
    )Decrease (increase) in drilling advances paid
    
    
    171
    
    
    
    (3,061
    )Net cash provided (used) by investing activities
    
    
    (70,592
    )
    
    
    (143,251
    )Cash flows from financing activities:Proceeds from issuance of common stock, net of issuance costs
    
    
    93,407
    
    
    
    Increase in senior credit facility
    
    
    
    
    
    
    62,900Repayment of senior credit facility
    
    
    (35,000
    )
    
    
    Deferred loan fees paid and equity costs
    
    
    (3,389
    )
    
    
    (223
    )Proceeds from exercise of employee stock options
    
    
    474
    
    
    
    2,072Repurchases of common stock
    
    
    (276
    )
    
    
    (336
    )Net cash provided (used) by financing activities
    
    
    55,216
    
    
    
    64,413Net increase (decrease) in cash and cash equivalents
    
    
    15,835
    
    
    
    (5,200
    )Cash and cash equivalents, beginning of year
    
    
    40,043
    
    
    
    13,863Cash and cash equivalents, end of period
    
    $
    55,878
    
    
    $
    8,663
  4




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##### Table of Contents



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




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BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2009
    
    2008
    
    2009
    
    2008Weighted average common shares
outstanding  basic
    
    
    82,085
    
    
    
    45,481
    
    
    
    62,633
    
    
    
    45,358Plus: Potential common shares
Stock options and restricted stock
    
    
    671
    
    
    
    1,151
    
    
    
    
    
    
    
    976Weighted average common shares
outstanding  diluted
    
    
    82,756
    
    
    
    46,632
    
    
    
    62,633
    
    
    
    46,334Stock options excluded from diluted
EPS due to the anti-dilutive effect
    
    
    2,688
    
    
    
    64
    
    
    
    4,779
    
    
    
    341
 6. Income Taxes
  September 30,
    
    
    September 30,2009
    
    
    2008Current income taxes:Federal
    
    $
    
    
    
    $
    State
    
    
    
    
    
    
    Deferred income taxes:Federal
    
    
    
    
    
    
    10,269State
    
    
    295
    
    
    
    917$
    295
    
    
    $
    11,186
    2009
    
    
    2008(In thousands)
    
    
    (In thousands)Unrecognized tax benefits at beginning of the year
    
    $
    
    
    
    $
    2,162Increases (decreases) resulting from tax positions
taken in the current period
    
    
    
    
    
    
    (1,830
    )Unrecognized tax benefits at end of the quarter
    
    $
    
    
    
    $
    332
  6




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 7. Derivative Instruments and Hedging Activities
  Natural Gas and Crude Oil Derivative Contracts
  7




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##### 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 Collars10/01/09 - 03/31/10
    
    
    420,000
    
    
    
    
    
    
    $
    5.75
    
    
    $
    7.0511/01/09 - 12/31/10
    
    
    980,000
    
    
    
    
    
    
    $
    5.15
    
    
    $
    7.0004/01/10 - 09/30/10
    
    
    420,000
    
    
    
    
    
    
    $
    5.75
    
    
    $
    7.3004/01/10 - 09/30/10
    
    
    240,000
    
    
    
    
    
    
    $
    5.75
    
    
    $
    7.0004/01/10 - 09/30/10
    
    
    300,000
    
    
    
    
    
    
    $
    5.50
    
    
    $
    6.6510/01/10 - 03/31/11
    
    
    240,000
    
    
    
    
    
    
    $
    6.50
    
    
    $
    8.2510/01/10 - 03/31/11
    
    
    420,000
    
    
    
    
    
    
    $
    6.40
    
    
    $
    7.80Oil Costless Collars10/01/09 - 12/31/09
    
    
    
    
    
    
    30,000
    
    
    $
    60.00
    
    
    $
    81.0010/01/09 - 03/31/10
    
    
    
    
    
    
    18,000
    
    
    $
    60.00
    
    
    $
    91.7510/01/09 - 05/31/10
    
    
    
    
    
    
    80,000
    
    
    $
    57.50
    
    
    $
    75.9510/01/09 - 12/31/09
    
    
    
    
    
    
    30,000
    
    
    $
    49.00
    
    
    $
    70.0010/01/09 - 12/31/09
    
    
    
    
    
    
    11,000
    
    
    $
    62.50
    
    
    $
    76.7501/01/10 - 03/31/10
    
    
    
    
    
    
    6,000
    
    
    $
    65.00
    
    
    $
    87.5001/01/10 - 12/31/10
    
    
    
    
    
    
    120,000
    
    
    $
    48.70
    
    
    $
    80.0001/01/10 - 12/31/10
    
    
    
    
    
    
    54,000
    
    
    $
    60.00
    
    
    $
    86.5001/01/10 - 12/31/10
    
    
    
    
    
    
    60,000
    
    
    $
    60.00
    
    
    $
    88.8004/01/10 - 09/30/10
    
    
    
    
    
    
    18,000
    
    
    $
    60.00
    
    
    $
    91.4006/01/10 - 12/31/10
    
    
    
    
    
    
    56,000
    
    
    $
    57.50
    
    
    $
    82.1507/01/10 - 09/30/10
    
    
    
    
    
    
    6,000
    
    
    $
    70.00
    
    
    $
    87.2510/01/10 - 12/31/10
    
    
    
    
    
    
    3,000
    
    
    $
    70.00
    
    
    $
    88.5001/01/11 - 12/31/11
    
    
    
    
    
    
    84,000
    
    
    $
    65.00
    
    
    $
    88.2501/01/11 - 12/31/11
    
    
    
    
    
    
    60,000
    
    
    $
    60.00
    
    
    $
    97.25
 Natural
    
    Purchased
    
    Written
    
    WrittenGas
    
    Put
    
    Call
    
    PutSettlement Period
    
    (MMBTU)
    
    Nymex
    
    Nymex
    
    NymexNatural Gas Three
Way Costless Collars10/01/09 - 03/31/10
    
    
    420,000
    
    
    $
    8.00
    
    
    $
    10.00
    
    
    $
    5.5010/01/09 - 03/31/10
    
    
    360,000
    
    
    $
    5.75
    
    
    $
    7.00
    
    
    $
    3.50
 Natural
    
    
    
    
    
    WrittenGas
    
    Oil
    
    SwapSettlement Period
    
    (MMBTU)
    
    (Barrels)
    
    NymexNatural Gas Swaps10/01/09 - 12/31/09
    
    
    172,000
    
    
    
    
    
    
    $
    4.4410/01/09 - 10/31/09
    
    
    70,000
    
    
    
    
    
    
    $
    4.0310/01/09 - 12/31/09
    
    
    60,000
    
    
    
    
    
    
    $
    4.90Oil Swaps10/01/09 - 12/31/09
    
    
    
    
    
    
    30,000
    
    
    $
    50.75
 8




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  Purchased
    
    WrittenOil
    
    Put
    
    CallSettlement Period
    
    (Barrels)
    
    Nymex
    
    NymexOil Collars01/01/10 - 06/30/10
    
    
    30,000
    
    
    $
    60.00
    
    
    $
    103.7501/01/11 - 12/31/11
    
    
    60,000
    
    
    $
    65.00
    
    
    $
    108.00
 Additional Disclosures about Derivative Instruments and Hedging Activities
  EstimatedType of Contract
    
    Balance Sheet Location
    
    
    Fair Value(in thousands)Derivatives Not Designated as Hedging InstrumentsDerivative Assets:Natural gas and oil contracts
    
    Derivative assets  current
    
    $
    1,543Natural gas and oil contracts
    
    Other non-current assets
    
    
    45Total Derivative Assets
    
    
    
    
    
    $
    1,588Derivative Liabilities:Natural gas and oil contracts
    
    Other current liabilities
    
    $
    (1,835
    )Natural gas and oil contracts
    
    Other non-current liabilities
    
    
    (453
    )Total Derivative Liabilities
    
    
    
    
    
    $
    (2,288
    )
  Three Months
    
    
    Nine MonthsEnded Sept 30,
    
    
    Ended Sept 30,Statement of Operations
    
    
    Amount of
    
    
    Amount ofType of Contract
    
    Location of Gain (Loss)
    
    
    Gain (Loss)
    
    
    Gain (Loss)(in thousands)
    
    
    (in thousands)Derivatives Not Designated as Hedging InstrumentsNatural gas contracts
    
    Gain (loss) on derivatives, net
    
    $
    374
    
    
    $
    5,770Oil contracts
    
    Gain (loss) on derivatives, net
    
    
    740
    
    
    
    (2,740
    )Total Derivative Gain (loss)
    
    
    
    
    
    $
    1,114
    
    
    $
    3,030
  9




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 8. Fair Values
  
    
    Level 1  Unadjusted quoted prices are available in active markets for identical assets
or liabilities.
 
    
    Level 2  Pricing inputs, other than quoted prices within Level 1, that are either
directly or indirectly observable.
 
    
    Level 3  Pricing inputs that are unobservable requiring the use of valuation
methodologies that result in managements best estimate of fair value.
  Fair Value Measurements at September 30, 2009 UsingQuoted Prices in
    
    
    Significant Other
    
    
    SignificantActive Markets
    
    
    Observable
    
    
    UnobservableSeptember 30,
    
    
    for Identical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Other current liabilities
    
    $
    (1,835
    )
    
    $
    
    
    
    $
    (1,835
    )
    
    $
    Other non-current liabilities
    
    
    (453
    )
    
    
    
    
    
    
    (453
    )
    
    
    Current derivative assets
    
    
    1,543
    
    
    
    
    
    
    
    1,543
    
    
    
    Other non-current assets
    
    
    45
    
    
    
    
    
    
    
    45
    
    
    
    $
    (700
    )
    
    $
    
    
    
    $
    (700
    )
    
    $
    
 Fair Value Measurements at December 31, 2008 UsingQuoted Prices in
    
    
    Significant Other
    
    
    SignificantActive Markets
    
    
    Observable
    
    
    UnobservableDecember 31,
    
    
    for Identical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Other current liabilities
    
    $
    (5
    )
    
    $
    
    
    
    $
    (5
    )
    
    $
    Other non-current liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Current derivative assets
    
    
    5,140
    
    
    
    
    
    
    
    5,140
    
    
    
    Other non-current assets
    
    
    202
    
    
    
    
    
    
    
    202
    
    
    
    $
    5,337
    
    
    $
    
    
    
    $
    5,337
    
    
    $
    
  Fair Value Measurements at September 30, 2009 UsingQuoted Prices in
    
    
    Significant Other
    
    
    SignificantActive Markets
    
    
    Observable
    
    
    UnobservableSeptember 30,
    
    
    for Identical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Other non-current liabilities
    
    
    (6,193
    )
    
    
    
    
    
    
    
    
    
    
    (6,193
    )$
    (6,193
    )
    
    $
    
    
    
    $
    
    
    
    $
    (6,193
    )
 10




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 Fair Value Measurements at December 31, 2008 UsingQuoted Prices in
    
    
    Significant Other
    
    
    SignificantActive Markets
    
    
    Observable
    
    
    UnobservableDecember 31,
    
    
    for Identical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Other non-current liabilities
    
    
    (5,592
    )
    
    
    
    
    
    
    
    
    
    
    (5,592
    )$
    (5,592
    )
    
    $
    
    
    
    $
    
    
    
    $
    (5,592
    )
   Fair Value Measurements at September 30, 2009 UsingQuoted Prices in
    
    
    Significant Other
    
    
    SignificantActive Markets
    
    
    Observable
    
    
    UnobservableSeptember 30,
    
    
    for Identical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Investments
    
    
    8,852
    
    
    
    8,852
    
    
    
    
    
    
    
    $
    8,852
    
    
    $
    8,852
    
    
    $
    
    
    
    $
    
  September 30, 2009
    
    December 31, 2008(in millions)
    
    (in millions)Carrying
    
    Fair
    
    Carrying
    
    FairAmount
    
    Value
    
    Amount
    
    ValueSenior Notes
    
    $
    160,000
    
    
    $
    144,800
    
    
    $
    160,000
    
    
    $
    84,000Series A Preferred Stock
    
    $
    10,101
    
    
    $
    10,163
    
    
    $
    10,101
    
    
    $
    10,032
  9. Oil and Gas Properties
   11




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
    10. Common Stock Offering
  11. Senior Notes
    12. Senior Credit Facility
   12




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
   13. Asset Retirement Obligations
   Nine Months EndedSeptember 30,2009
    
    
    2008Beginning asset retirement obligations
    
    $
    5,592
    
    
    $
    5,047Liabilities incurred for new wells placed on production
    
    
    303
    
    
    
    267Liabilities settled
    
    
    (15
    )
    
    
    (102
    )Accretion of discount on asset retirement obligations
    
    
    313
    
    
    
    263$
    6,193
    
    
    $
    5,475
 14. Stock Based Compensation
  13




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  2009
    
    2008Risk-free interest rate
    
    
    2.65
    %
    
    
    3.0
    %Expected life (in years)
    
    
    5.0
    
    
    
    5.0Expected volatility
    
    
    78
    %
    
    
    47
    %Expected dividend yield
    
    
    
    
    
    
    Weighted average fair value per share of stock compensation
    
    $
    3.14
    
    
    $
    4.70
    Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Pre-tax stock based compensation expense
    
    $
    1,060
    
    
    $
    746
    
    
    $
    2,526
    
    
    $
    2,253Capitalized stock based compensation
    
    
    (497
    )
    
    
    (341
    )
    
    
    (1,166
    )
    
    
    (1,030
    )Tax benefit
    
    
    (197
    )
    
    
    (142
    )
    
    
    (476
    )
    
    
    (428
    )Stock based compensation expense, net
    
    $
    366
    
    
    $
    263
    
    
    $
    884
    
    
    $
    795
 Stock Based Plan Descriptions and Share Information
   14




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  2009
    
    2008Weighted-
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    ExerciseShares
    
    Price
    
    Shares
    
    PriceOptions outstanding at the beginning of the
year
    
    
    3,128,651
    
    
    $
    7.00
    
    
    
    3,046,166
    
    
    $
    7.14Granted
    
    
    2,686,975
    
    
    $
    4.35
    
    
    
    18,000
    
    
    $
    10.56Forfeited or cancelled
    
    
    (1,549,675
    )
    
    $
    8.30
    
    
    
    (64,800
    )
    
    $
    7.83Exercised
    
    
    (99,800
    )
    
    $
    4.73
    
    
    
    (385,715
    )
    
    $
    5.36Options outstanding at the end of the quarter
    
    
    4,166,151
    
    
    $
    4.86
    
    
    
    2,613,651
    
    
    $
    7.41Options exercisable at the end of the quarter
    
    
    694,876
    
    
    $
    5.95
    
    
    
    1,685,951
    
    
    $
    7.04
   Options Outstanding
    
    Options ExercisableNumber
    
    Weighted-
    
    
    
    
    
    Number
    
    Weighted-Outstanding at
    
    Average
    
    Weighted-
    
    Exercisable at
    
    Average
    
    Weighted-September 30,
    
    Remaining
    
    Average
    
    September 30,
    
    Remaining
    
    AverageExercise Price
    
    2009
    
    Contractual Life
    
    Exercise Price
    
    2009
    
    Contractual Life
    
    Exercise Price$2.21 to $3.41
    
    
    1,227,000
    
    
    9.3 years
    
    $
    2.27
    
    
    
    27,000
    
    
    1.0 years
    
    $
    3.413.66 to 5.08
    
    
    718,200
    
    
    4.1 years
    
    $
    4.78
    
    
    
    258,200
    
    
    0.6 years
    
    $
    4.245.96 to 6.73
    
    
    1,949,851
    
    
    8.5 years
    
    $
    6.01
    
    
    
    256,576
    
    
    3.1 years
    
    $
    6.277.22 to 8.84
    
    
    189,100
    
    
    3.8 years
    
    $
    7.71
    
    
    
    97,100
    
    
    2.7 years
    
    $
    7.948.93 to 11.74
    
    
    82,000
    
    
    2.8 years
    
    $
    10.31
    
    
    
    56,000
    
    
    2.7 years
    
    $
    10.13$2.21 to $11.74
    
    
    4,166,151
    
    
    7.7 years
    
    $
    4.86
    
    
    
    694,876
    
    
    2.0 years
    
    $
    5.95
    15




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 Restricted Stock
   2009
    
    2008Weighted-
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    ExerciseShares
    
    Price
    
    Shares
    
    PriceRestricted shares outstanding at the
beginning of the year
    
    
    593,260
    
    
    $
    7.58
    
    
    
    653,623
    
    
    $
    7.16Shares granted
    
    
    247,074
    
    
    $
    2.62
    
    
    
    109,000
    
    
    $
    8.40Lapse of restrictions
    
    
    (226,008
    )
    
    $
    4.27
    
    
    
    (128,813
    )
    
    $
    5.98Forfeitures
    
    
    (1,000
    )
    
    $
    9.49
    
    
    
    (29,940
    )
    
    $
    6.58Shares outstanding at the end of the quarter
    
    
    613,326
    
    
    $
    6.80
    
    
    
    603,870
    
    
    $
    7.67
 15. Comprehensive Income
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net income (loss)
    
    $
    491
    
    
    $
    15,260
    
    
    $
    (125,540
    )
    
    $
    18,304Net (gains) losses included in net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (177
    )Tax benefits (provisions) related to
cash flow hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    62Other Comprehensive Income, net
    
    $
    491
    
    
    $
    15,260
    
    
    $
    (125,540
    )
    
    $
    18,189
 16. Subsequent Events
  16




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
   17. New Accounting Pronouncements and SEC Rulemaking
     17




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
    18




---



##### Table of Contents



ITEM 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
  General Overview
    
    
    Focus on Provinces;
    
    Leverage Our Engineering and Operational Expertise;
    
    Capitalize on Exploration Successes Through Disciplined Development Activities;
    
    Enhance Returns Through Operational Control; and
    
    Internally Generate an Inventory of High Quality Exploratory Prospects.
 Overview of Third Quarter 2009 Financial Results
    19




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##### Table of Contents



Overview of Operational Results  July 1, 2009 to November 5, 2009
 Rocky Mountain Province  Williston Basin
 Recently Completed Wells and Drilling Participation Agreement
 Strobeck 27-34 #1H.
 Anderson 28-33 #1H.
 Figaro 29-32 #1H.
 Brad Olson 9-16 #1H.
 BCD Farms 16-21 #1H
 Rough Rider Drilling Participation Agreement.
 20




---



##### Table of Contents



Subsequent Events
 Universal Shelf Registration Statement Declared Effective
  Amendment to Certificate of Incorporation
  October 2009 Equity Offering
   2009 and 2010 Capital Budgets
  21




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##### Table of Contents



Results for the Three and Nine months Ended September 30, 2009
 Comparison of the three month and nine month periods ended September 30, 2009 and 2008.
 Production volumes
 Three months ended September 30,
    
    Nine months ended September 30,2009
    
    %Change
    
    2008
    
    2009%
    
    Change
    
    2008Oil (MBo)
    
    
    235
    
    
    
    84
    %
    
    
    128
    
    
    
    572
    
    
    
    53
    %
    
    
    373Natural gas (MMcf)
    
    
    1,401
    
    
    
    (19
    %)
    
    
    1,722
    
    
    
    4,703
    
    
    
    (20
    %)
    
    
    5,861Total (MBoe)(1)
    
    
    468
    
    
    
    13
    %
    
    
    415
    
    
    
    1,356
    
    
    
    1
    %
    
    
    1,349Average daily production (Boe/d)(2)
    
    5,200
    
    
    
    13
    %
    
    
    4,611
    
    
    
    5,022
    
    
    
    1
    %
    
    
    4,996Average daily production (MMcfe/d)(2)

    31.2
    
    
    
    13
    %
    
    
    27.6
    
    
    
    30.1
    
    
    
    1
    %
    
    
    30.0
 
 (1)
    
    MBoe is defined as one thousand barrels of oil equivalent, determined using the ratio
of six MMcf of natural gas to one MBoe of crude oil, condensate or natural gas liquids.(2)
    
    Average daily production is calculated using 30 days per calendar month.  22




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##### Table of Contents



Revenues, Commodity Prices and Hedging
  Three months ended September 30,
    
    
    Nine months ended September 30,2009
    
    
    %Change
    
    
    2008
    
    
    2009
    
    
    %Change
    
    
    2008Oil revenue:Oil revenue
    
    $
    14,010
    
    
    
    (3
    %)
    
    $
    14,381
    
    
    $
    28,065
    
    
    
    (32
    %)
    
    $
    41,178Oil derivative settlement gains (losses)
    
    
    (538
    )
    
    
    (49
    %)
    
    
    (1,050
    )
    
    
    322
    
    
    NM
    
    
    (3,237
    )Oil revenue including derivative settlements
    
    $
    13,472
    
    
    
    1
    %
    
    $
    13,331
    
    
    $
    28,387
    
    
    
    (25
    %)
    
    $
    37,941Oil derivative unrealized gains (losses)
    
    
    1,278
    
    
    
    (75
    %)
    
    
    5,055
    
    
    
    (3,063
    )
    
    NM
    
    
    920Oil revenue including derivative settlements
and unrealized gains (losses)
    
    $
    14,750
    
    
    
    (20
    %)
    
    $
    18,386
    
    
    $
    25,324
    
    
    
    (35
    %)
    
    $
    38,861Natural gas revenue:Natural gas revenue
    
    $
    4,737
    
    
    
    (73
    %)
    
    $
    17,350
    
    
    $
    17,700
    
    
    
    (70
    %)
    
    $
    59,934Natural gas derivative settlement gains (losses)
    
    
    798
    
    
    NM
    
    
    (1,104
    )
    
    
    8,745
    
    
    NM
    
    
    (2,336
    )Natural gas revenue including derivative
settlements
    
    $
    5,535
    
    
    
    (66
    %)
    
    $
    16,246
    
    
    $
    26,445
    
    
    
    (54
    %)
    
    $
    57,598Natural gas derivative unrealized gains (losses)
    
    
    (424
    )
    
    NM
    
    
    12,534
    
    
    
    (2,974
    )
    
    NM
    
    
    725Natural gas revenue including derivative
settlements and unrealized gains (losses)
    
    $
    5,111
    
    
    
    (82
    %)
    
    $
    28,780
    
    
    $
    23,471
    
    
    
    (60
    %)
    
    $
    58,323Oil and natural gas revenue:Oil and natural gas revenue
    
    $
    18,747
    
    
    
    (41
    %)
    
    $
    31,731
    
    
    $
    45,765
    
    
    
    (55
    %)
    
    $
    101,112Oil and natural gas derivative settlement gains
(losses)
    
    
    260
    
    
    NM
    
    
    (2,154
    )
    
    
    9,067
    
    
    NM
    
    
    (5,573
    )Oil and natural gas revenue including
derivative settlements
    
    
    19,007
    
    
    
    (36
    %)
    
    
    29,577
    
    
    
    54,832
    
    
    
    (43
    %)
    
    
    95,539Oil and natural gas derivative unrealized gains
(losses)
    
    
    854
    
    
    
    (95
    %)
    
    
    17,589
    
    
    
    (6,037
    )
    
    NM
    
    
    1,645Oil and natural gas revenue including
derivative settlements and unrealized gains
(losses)
    
    
    19,861
    
    
    
    (58
    %)
    
    
    47,166
    
    
    
    48,795
    
    
    
    (50
    %)
    
    
    97,184Other revenue
    
    
    6
    
    
    
    (76
    %)
    
    
    25
    
    
    
    72
    
    
    
    (31
    %)
    
    
    104Total revenue
    
    $
    19,867
    
    
    
    (58
    %)
    
    $
    47,191
    
    
    $
    48,867
    
    
    
    (50
    %)
    
    $
    97,288
 23




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##### Table of Contents



Three months ended September 30,
    
    
    Nine months ended September 30,2009
    
    
    %Change
    
    
    2008
    
    
    2009
    
    
    %Change
    
    
    2008Average oil prices:Oil price (per Bo)
    
    $
    59.74
    
    
    
    (47
    %)
    
    $
    112.60
    
    
    $
    49.06
    
    
    
    (56
    %)
    
    $
    110.54Oil price including
derivative settlement gains
(losses) (per Bo)
    
    
    57.45
    
    
    
    (45
    %)
    
    
    104.38
    
    
    
    49.62
    
    
    
    (51
    %)
    
    
    101.85Oil price including
derivative settlements and
unrealized gains (losses)
(per Bo)
    
    $
    62.90
    
    
    
    (56
    %)
    
    $
    143.96
    
    
    $
    44.27
    
    
    
    (58
    %)
    
    $
    104.32Average natural gas prices:Natural gas price (per Mcf)
    
    $
    3.38
    
    
    
    (66
    %)
    
    $
    10.08
    
    
    $
    3.76
    
    
    
    (63
    %)
    
    $
    10.23Natural gas price including
derivative settlement gains
(losses) (per Mcf)
    
    
    3.95
    
    
    
    (58
    %)
    
    
    9.44
    
    
    
    5.62
    
    
    
    (43
    %)
    
    
    9.83Natural gas price including
derivative settlements and
unrealized gains (losses)
(per Mcf)
    
    $
    3.65
    
    
    
    (78
    %)
    
    $
    16.72
    
    
    $
    4.99
    
    
    
    (50
    %)
    
    $
    9.95Average oil equivalent prices:Oil equivalent price (per Boe)
    
    $
    40.06
    
    
    
    (48
    %)
    
    $
    76.46
    
    
    $
    33.75
    
    
    
    (55
    %)
    
    $
    74.95Oil equivalent price
including derivative
settlement gains (losses)
(per Boe)
    
    
    40.61
    
    
    
    (43
    %)
    
    
    71.27
    
    
    
    40.44
    
    
    
    (43
    %)
    
    
    70.82Oil equivalent price
including derivative
settlements and unrealized
gains (losses) (per Boe)
    
    $
    42.44
    
    
    
    (63
    %)
    
    $
    113.65
    
    
    $
    35.98
    
    
    
    (50
    %)
    
    $
    72.04
 For the three
    
    
    For the ninemonth periods
    
    
    month periodsended September 30,
    
    
    ended September2009 and 2008
    
    

30, 2009 and 2008Change in revenue from the sale of oilVolume variance impact
    
    $
    12,025
    
    
    $
    22,061Price variance impact
    
    
    (12,396
    )
    
    
    (35,174
    )Cash settlement of hedging contracts
    
    
    512
    
    
    
    3,559Unrealized hedge gain or loss
    
    
    (3,777
    )
    
    
    (3,983
    )Total change
    
    $
    (3,636
    )
    
    $
    (13,537
    )Change in revenue from the sale of natural gasVolume variance impact
    
    $
    (3,227
    )
    
    $
    (11,818
    )Price variance impact
    
    
    (9,386
    )
    
    
    (30,416
    )Cash settlement of hedging contracts
    
    
    1,902
    
    
    
    11,081Unrealized hedge gain or loss
    
    
    (12,958
    )
    
    
    (3,699
    )Total change
    
    $
    (23,669
    )
    
    $
    (34,852
    )Change in revenue from the sale of oil and natural gasVolume variance impact
    
    $
    8,798
    
    
    $
    10,242Price variance impact
    
    
    (21,782
    )
    
    
    (65,589
    )Cash settlement of hedging contracts
    
    
    2,414
    
    
    
    14,640Unrealized hedge gain or loss
    
    
    (16,735
    )
    
    
    (7,682
    )Total change
    
    $
    (27,305
    )
    
    $
    (48,389
    )
 24




---



##### Table of Contents




    
    a 48% decrease in pre-hedge sales prices per Boe resulted in a $21.8 million decrease in
revenues;
 
    
    a $0.9 million unrealized derivative gain in third quarter 2009 versus a $17.6 million
unrealized derivative gain in third quarter 2008 decreased revenues by $16.7 million;
 
    
    an increase in oil production, which was partially offset by a decrease in our natural
gas volumes, resulted in a $8.8 million increase in oil and natural gas revenues; and
 
    
    a $0.3 million gain from the settlement of derivative contracts in the third quarter
2009 versus a $2.1 million loss from the settlement of derivative contracts in third
quarter 2008 increased revenues by $2.4 million.
  
    
    a 55% decrease in pre-hedge sales prices per Boe resulted in a $65.6 million decrease in
revenues;
 
    
    a $6.1 million unrealized derivative loss in first nine months 2009 versus a $1.6
million unrealized derivative gain in first nine months 2008 decreased revenues by $7.7
million;
 
    
    an increase in oil production, which was partially offset by a decrease in our natural
gas volumes, resulted in a $10.2 million increase in oil and natural gas revenues; and
 
    
    a $9.0 million gain from the settlement of derivative contracts in the first nine months
2009 versus a $5.6 million loss from the settlement of derivative contracts in first nine
months 2008 increased revenues by $14.6 million.
 Hedging.
  25




---



##### Table of Contents



Three months ended September 30,
    
    Nine months ended September 30,2009
    
    %Change
    
    2008
    
    2009
    
    %Change
    
    2008Oil collarsVolumes (Bbls)
    
    
    92,000
    
    
    
    88
    %
    
    
    49,000
    
    
    
    141,000
    
    
    
    0
    %
    
    
    141,500Average floor price ($  per Bo)
    
    $
    56.39
    
    
    
    (25
    %)
    
    $
    74.92
    
    
    $
    61.67
    
    
    
    (10
    %)
    
    $
    68.42Average ceiling price ($  per Bo)
    
    $
    74.78
    
    
    
    (25
    %)
    
    $
    100.07
    
    
    $
    82.49
    
    
    
    (11
    %)
    
    $
    92.37Gain (loss) upon settlement ($ in thousands)
    
    $
    (11
    )
    
    
    (99
    %)
    
    $
    (1,050
    )
    
    $
    1,115
    
    
    NM
    
    $
    (3,237
    )Oil swapsVolumes (Bbls)
    
    
    30,000
    
    
    NM
    
    
    
    
    
    
    60,000
    
    
    NM
    
    
    Average swap price ($  per Bo)
    
    $
    50.75
    
    
    NM
    
    $
    
    
    
    $
    50.75
    
    
    NM
    
    $
    Gain (loss) upon settlement ($ in thousands)
    
    $
    (527
    )
    
    NM
    
    $
    
    
    
    $
    (793
    )
    
    NM
    
    $
    Total oilGain (loss) upon settlement ($ in thousands)
    
    $
    (538
    )
    
    
    (49
    %)
    
    $
    (1,050
    )
    
    $
    322
    
    
    NM
    
    $
    (3,237
    )Natural gas collarsVolumes (MMbtu)
    
    
    
    
    
    NM
    
    
    1,130,000
    
    
    
    1,000,000
    
    
    
    (75
    %)
    
    
    4,020,000Average floor price ($  per MMbtu)
    
    $
    
    
    
    NM
    
    $
    7.42
    
    
    $
    7.808
    
    
    
    4
    %
    
    $
    7.494Average ceiling price ($  per MMbtu)
    
    $
    
    
    
    NM
    
    $
    9.95
    
    
    $
    9.321
    
    
    
    (13
    %)
    
    $
    10.751Gain (loss) upon settlement ($ in thousands)
    
    $
    
    
    
    NM
    
    $
    (1,104
    )
    
    $
    5,936
    
    
    NM
    
    $
    (2,336
    )Natural gas three waysVolumes (MMbtu)
    
    
    
    
    
    NM
    
    
    
    
    
    
    220,000
    
    
    NM
    
    
    Average floor price ($  per MMbtu)
    
    $
    
    
    
    NM
    
    $
    
    
    
    $
    7.44
    
    
    NM
    
    $
    Average ceiling price ($  per MMbtu)
    
    $
    
    
    
    NM
    
    $
    
    
    
    $
    9.86
    
    
    NM
    
    $
    Average price  written puts ($  per MMbtu)
    
    $
    
    
    
    NM
    
    $
    
    
    
    $
    4.58
    
    
    NM
    
    $
    Gain (loss) upon settlement ($ in thousands)
    
    $
    
    
    
    NM
    
    $
    
    
    
    $
    996
    
    
    NM
    
    $
    Natural gas swapsVolumes (MMbtu)
    
    
    1,126,000
    
    
    NM
    
    
    
    
    
    
    2,188,000
    
    
    NM
    
    
    Average swap price ($  per MMbtu)
    
    $
    4.138
    
    
    NM
    
    $
    
    
    
    $
    4.349
    
    
    NM
    
    $
    Gain (loss) upon settlement ($ in thousands)
    
    $
    798
    
    
    NM
    
    $
    
    
    
    $
    1,813
    
    
    NM
    
    $
    Total gasGain (loss) upon settlement ($ in thousands)
    
    $
    798
    
    
    NM
    
    $
    (1,104
    )
    
    $
    8,745
    
    
    NM
    
    $
    (2,336
    )
 Other revenue
 Operating costs and expenses
 Production costs.
 Unit-of-Production
    
    
    Amount(Per Boe)
    
    
    (In thousands)Three months ended September 30,
    
    
    Three months ended September 30,2009
    
    
    %Change
    
    
    2008
    
    
    2009
    
    
    %Change
    
    
    2008Production costs:Operating & maintenance
    
    $
    5.59
    
    
    
    (14
    %)
    
    $
    6.47
    
    
    $
    2,616
    
    
    
    (3
    %)
    
    $
    2,684Expensed workovers
    
    
    0.75
    
    
    
    241
    %
    
    
    0.22
    
    
    
    351
    
    
    
    282
    %
    
    
    92Ad valorem taxes
    
    
    0.67
    
    
    
    (12
    %)
    
    
    0.76
    
    
    
    312
    
    
    
    (1
    %)
    
    
    316Lease operating expenses
    
    $
    7.01
    
    
    
    (6
    %)
    
    $
    7.45
    
    
    $
    3,279
    
    
    
    6
    %
    
    $
    3,092Production taxes
    
    
    3.31
    
    
    
    (1
    %)
    
    
    3.33
    
    
    
    1,551
    
    
    
    12
    %
    
    
    1,383Production costs
    
    $
    10.32
    
    
    
    (4
    %)
    
    $
    10.78
    
    
    $
    4,830
    
    
    
    8
    %
    
    $
    4,475
 26




---



##### Table of Contents




    
    O&M expense decreased $0.88 per Boe, or 14%, due to a decrease in compressor rental and
maintenance, salt water disposal, and well service and repair; and
 
    
    workover expense increased $0.53 per Boe due to an increase in workover activity.
 Unit-of-Production
    
    
    Amount(Per Boe)
    
    
    (In thousands)Nine months ended September 30,
    
    
    Nine months ended September 30,2009
    
    
    %Change
    
    
    2008
    
    
    2009
    
    
    %Change
    
    
    2008Production costs:Operating & maintenance
    
    $
    6.13
    
    
    
    26
    %
    
    $
    4.85
    
    
    $
    8,313
    
    
    
    27
    %
    
    $
    6,542Expensed workovers
    
    
    1.09
    
    
    
    11
    %
    
    
    0.98
    
    
    
    1,476
    
    
    
    12
    %
    
    
    1,316Ad valorem taxes
    
    
    0.64
    
    
    
    12
    %
    
    
    0.57
    
    
    
    862
    
    
    
    12
    %
    
    
    768Lease operating expenses
    
    $
    7.85
    
    
    
    23
    %
    
    $
    6.39
    
    
    $
    10,651
    
    
    
    23
    %
    
    $
    8,626Production taxes
    
    
    2.36
    
    
    
    (22
    %)
    
    
    3.04
    
    
    
    3,196
    
    
    
    (22
    %)
    
    
    4,107Production costs
    
    $
    10.21
    
    
    
    8
    %
    
    $
    9.43
    
    
    $
    13,847
    
    
    
    9
    %
    
    $
    12,733
  
    
    O&M expense increased $1.28 per Boe, or 26%, due to an increase in compressor rental and
maintenance, electricity, and salt water disposal;
 
    
    workover expense increased $0.11 per Boe due to an increase in workover activity; and
 
    
    production taxes decreased $0.68 per Boe, or 22%, due to lower commodity prices.
 General and administrative expenses.
 Three months ended September 30,
    
    
    Nine months ended September 30,2009
    
    
    %Change
    
    
    2008
    
    
    2009
    
    
    %Change
    
    
    2008(In thousands, except per unit measurements)General and administrative costs
    
    $
    3,901
    
    
    
    (16
    %)
    
    $
    4,650
    
    
    $
    11,660
    
    
    
    (19
    %)
    
    $
    14,403Capitalized general and administrative costs
    
    
    (1,819
    )
    
    
    (15
    %)
    
    
    (2,148
    )
    
    
    (5,192
    )
    
    
    (23
    %)
    
    
    (6,712
    )General and administrative expenses
    
    $
    2,082
    
    
    
    (17
    %)
    
    $
    2,502
    
    
    $
    6,468
    
    
    
    (16
    %)
    
    $
    7,691General and administrative expense ($  per Boe)
    
    $
    4.45
    
    
    
    (26
    %)
    
    $
    6.03
    
    
    $
    4.77
    
    
    
    (16
    %)
    
    $
    5.70
   Depletion of oil and natural gas properties
 27




---



##### Table of Contents



Three months ended September 30,
    
    Nine months ended September 30,2009
    
    %Change
    
    2008
    
    2009
    
    %Change
    
    2008(In thousands, except per unit measurements)Depletion of oil and natural gas properties
    
    $
    7,835
    
    
    
    (33
    %)
    
    $
    11,718
    
    
    $
    23,901
    
    
    
    (35
    %)
    
    $
    36,566Depletion of oil and natural gas
properties ($  per Boe)
    
    $
    16.74
    
    
    
    (41
    %)
    
    $
    28.24
    
    
    $
    17.63
    
    
    
    (35
    %)
    
    $
    27.11
   Impairment of oil and natural gas properties
    Inventory Valuation.
 Net interest expense.
 28




---



##### Table of Contents



Three months ended September 30,
    
    
    Nine months ended September 30,2009
    
    
    %Change
    
    
    2008
    
    
    2009
    
    
    %Change
    
    
    2008(In thousands)Interest on Senior Notes
    
    $
    3,850
    
    
    
    (0
    %)
    
    $
    3,851
    
    
    $
    11,550
    
    
    
    (0
    %)
    
    $
    11,551Interest on Senior Credit Facility
    
    
    1,063
    
    
    
    74
    %
    
    
    612
    
    
    
    3,089
    
    
    
    178
    %
    
    
    1,112Commitment fees
    
    
    26
    
    
    
    (59
    %)
    
    
    64
    
    
    
    71
    
    
    
    (64
    %)
    
    
    198Dividend on mandatorily redeemable preferred stock
    
    
    153
    
    
    
    0
    %
    
    
    153
    
    
    
    453
    
    
    
    (0
    %)
    
    
    455Amortization of deferred loan and debt issuance cost
    
    
    475
    
    
    
    82
    %
    
    
    261
    
    
    
    1,056
    
    
    
    39
    %
    
    
    759Other general interest expense
    
    
    14
    
    
    NM
    
    
    
    
    
    
    30
    
    
    NM
    
    
    Capitalized interest expense
    
    
    (1,060
    )
    
    
    (10
    %)
    
    
    (1,179
    )
    
    
    (3,350
    )
    
    
    (2
    %)
    
    
    (3,412
    )Net interest expense
    
    $
    4,521
    
    
    
    20
    %
    
    $
    3,762
    
    
    $
    12,899
    
    
    
    21
    %
    
    $
    10,663Weighted average debt outstanding
    
    $
    280,101
    
    
    
    21
    %
    
    $
    231,399
    
    
    $
    298,819
    
    
    
    45
    %
    
    $
    206,676Average interest rate on outstanding indebtedness (a)
    
    
    7.2
    %
    
    
    
    
    
    
    8.0
    %
    
    
    6.8
    %
    
    
    
    
    
    
    8.6
    %
 
 a)
    
    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 September 30,
    
    
    Nine months ended September 30,2009
    
    
    %Change
    
    
    2008
    
    
    2009
    
    
    %Change
    
    
    2008(In thousands)Other income (expense):Total other income
    
    $
    400
    
    
    
    2400
    %
    
    $
    16
    
    
    $
    482
    
    
    
    15
    %
    
    $
    419
  Income taxes.
 Capital Expenditures
  29




---



##### Table of Contents




    
    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 to our exploration professional staff.
  AmountRevised 2009
    
    
    Spent Through
    
    
    AmountBudget
    
    
    September 30, 2009
    
    
    Remaining (a)(In millions)Drilling
    
    $
    55.1
    
    
    $
    37.6
    
    
    $
    17.5Net land and seismic (b)
    
    
    (3.6
    )
    
    
    (3.2
    )
    
    
    (0.4
    )Capitalized costs (c)
    
    
    11.4
    
    
    
    8.5
    
    
    
    2.9Asset retirement obligation
    
    
    0.4
    
    
    
    0.3
    
    
    
    0.1Total oil and gas capital expenditures (d)
    
    $
    63.3
    
    
    $
    43.2
    
    
    $
    20.1
 
 (a)
    
    Calculated based on the revised 2009 capital expenditure budget announced in October 2009
in conjunction with our equity offering, less amounts spent through September 30, 2009.(b)
    
    Net land and seismic expenditures include $6 million in proceeds from the sale of our
Mountrail County mineral interests and $0.5 million in reimbursements in connection with our
G&G activity.(c)
    
    Capitalized costs include capitalized interest expense, general and administrative expense
and stock compensation expense.(d)
    
    Excludes other property capital expenditures. Determination of Capital Expenditure Budget
   
    
    commodity prices;
    
    production from our existing producing wells;
    
    the results of our current exploration and development drilling efforts;
    
    economic conditions at the time of drilling;
    
    industry conditions at the time of drilling, including the availability of drilling and
completion equipment;
    
    our liquidity and the availability of external sources of financing; and
    
    the availability of more economically attractive prospects.
  30




---



##### Table of Contents



Liquidity and Capital Resources
 Sources of Capital
  9 5/8% Senior Notes Due 2014
   
    
    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 Facility.
   Senior Credit Facility
    31




---



##### Table of Contents



Percent of
    
    EurodollarBorrowing Base
    
    Rate
    
    Base RateUtilized
    
    Advances
    
    Advances(1)< 25%
    
    2.500%
    
    1.500%25% and < 50%
    
    2.750%
    
    1.750%50% and < 75%
    
    3.000%
    
    2.000%75% and < 90%
    
    3.250%
    
    2.250%> 90%
    
    3.500%
    
    2.500%
 
 (1)
    
    Base rate is defined as for any day a fluctuating rate per annum equal to the highest of
the following, in each case, to the extent determinable by the Administrative Agent: (a) the
Federal Funds Rate plus 1/2 of 1%, (b) the Eurodollar Rate with respect to Interest Periods of
one month determined as of approximately 11:00 a.m. (London time) on such day plus 1.50% and
(c) 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< 25%
    
    0.500%25% and < 50%
    
    0.500%50% and < 75%
    
    0.500%75% and < 90%
    
    0.500%> 90%
    
    0.500%
  32




---



##### Table of Contents



Mandatorily Redeemable Preferred Stock
  Access to Capital Markets
  Off Balance Sheet Arrangements
  Analysis of Changes in Cash and Cash Equivalents
  Nine months ended September 30,2009
    
    

%Change
    
    
    2008(In thousands)Net income (loss)
    
    $
    (125,540
    )
    
    NM
    
    $
    18,304Non-cash items
    
    
    148,399
    
    
    
    204
    %
    
    
    48,871Changes in working capital and other items
    
    
    8,352
    
    
    
    29
    %
    
    
    6,463Cash flows provided by operating activities
    
    $
    31,211
    
    
    
    (58
    %)
    
    $
    73,638Cash flows used by investing activities
    
    
    (70,592
    )
    
    
    (51
    %)
    
    
    (143,251
    )Cash flows provided by financing activities
    
    
    55,216
    
    
    
    (14
    %)
    
    
    64,413Net increase in cash and cash equivalents
    
    $
    15,835
    
    
    NM
    
    $
    (5,200
    )
 Analysis of net cash provided by operating activities
   33




---



##### Table of Contents



Analysis of changes in cash flows used in investing activities
 Nine months ended September 30,2009
    
    

%Change
    
    
    2008(In thousands)Capital expenditures for oil and natural gas activities:Drilling
    
    $
    37,610
    
    
    
    (62
    %)
    
    $
    99,433Land and seismic
    
    
    (3,212
    )
    
    NM
    
    
    28,230Capitalized cost
    
    
    8,543
    
    
    
    (16
    %)
    
    
    10,128Capitalized asset retirement obligation
    
    
    302
    
    
    
    13
    %
    
    
    267Total
    
    $
    43,243
    
    
    
    (69
    %)
    
    $
    138,058Reconciling Items:Change in accrued drilling costs
    
    $
    9,338
    
    
    NM
    
    $
    59Change in drilling advances paid
    
    
    (171
    )
    
    NM
    
    
    3,061Change in restricted cash
    
    
    9,464
    
    
    
    269
    %
    
    
    2,562Change in short term investments
    
    
    8,852
    
    
    NM
    
    
    Other
    
    
    (134
    )
    
    
    (73
    %)
    
    
    (489
    )Total Reconciling Items
    
    
    27,349
    
    
    
    427
    %
    
    
    5,193Net cash used in investing activities
    
    $
    70,592
    
    
    
    (51
    %)
    
    $
    143,251
  
    
    drilling expenditures decreased by $61.8 million;
    
    net land and seismic expenditures decreased by $31.4 million;
    
    capitalized costs decreased by $1.6 million;
    
    the change in accrued drilling costs increased cash used in investing activities by $9.3
million;
    
    the change in restricted cash increased cash used in investing activities by $6.9
million; and
    
    the change in short term investments increased cash used in investing activities by $8.9
million.
 Analysis of changes in cash flows from financing activities
  Common Stock Transactions
  Shares Issued
    
    Net Proceeds(In thousands, except share data)2009 common stock transactions:Common stock offering
    
    
    36,292,117
    
    
    $
    93,523Exercise of employee stock options
    
    
    100,300
    
    
    $
    4742008 common stock transactions:Exercise of employee stock options
    
    
    385,715
    
    
    $
    2,072
 34




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##### Table of Contents



Other Matters
 Derivative Instruments
  Effects of Inflation and Changes in Prices
  Environmental and Other Regulatory Matters
  New Accounting Pronouncements and SEC Rulemaking
    35




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##### Table of Contents



Forward-looking Information
  36




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##### Table of Contents



ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Management Opinion Concerning Derivative Instruments
  Derivative Instruments and Hedging Activities
        37




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##### Table of Contents



Crude
    
    Purchased
    
    WrittenOil
    
    Put
    
    CallSettlement Period
    
    (Bo)
    
    (Nymex)
    
    (Nymex)Oil Costless Collars10/01/09 - 12/31/09
    
    
    30,000
    
    
    $
    49.00
    
    
    $
    70.0001/01/10 - 12/31/10
    
    
    120,000
    
    
    $
    48.70
    
    
    $
    80.0010/01/09 - 05/31/10
    
    
    80,000
    
    
    $
    57.50
    
    
    $
    75.9506/01/10 - 12/31/10
    
    
    56,000
    
    
    $
    57.50
    
    
    $
    82.1501/01/10 - 12/31/10
    
    
    54,000
    
    
    $
    60.00
    
    
    $
    86.5001/01/11 - 12/31/11
    
    
    84,000
    
    
    $
    65.00
    
    
    $
    88.2510/01/09 - 12/31/09
    
    
    11,000
    
    
    $
    62.50
    
    
    $
    76.7501/01/10 - 03/31/10
    
    
    6,000
    
    
    $
    65.00
    
    
    $
    87.5007/01/10 - 09/30/10
    
    
    6,000
    
    
    $
    70.00
    
    
    $
    87.2510/01/10 - 12/31/10
    
    
    3,000
    
    
    $
    70.00
    
    
    $
    88.5010/01/09 - 03/31/10
    
    
    18,000
    
    
    $
    60.00
    
    
    $
    91.7504/01/10 - 09/30/10
    
    
    18,000
    
    
    $
    60.00
    
    
    $
    91.4010/01/09 - 12/31/09
    
    
    30,000
    
    
    $
    60.00
    
    
    $
    81.0001/01/10 - 12/31/10
    
    
    60,000
    
    
    $
    60.00
    
    
    $
    88.8001/01/11 - 12/31/11
    
    
    60,000
    
    
    $
    60.00
    
    
    $
    97.25
 Crude
    
    SwapOil
    
    PriceSettlement Period
    
    (Bo)
    
    (Nymex)Oil Swaps10/01/09 - 12/31/09
    
    
    30,000
    
    
    $
    50.75
 Natural
    
    Purchased
    
    WrittenGas
    
    Put
    
    CallSettlement Period
    
    (MMbtu)
    
    (Nymex)
    
    (Nymex)Natural Gas Costless Collars10/01/09 - 03/31/10
    
    
    420,000
    
    
    $
    5.75
    
    
    $
    7.0504/01/10 - 09/30/10
    
    
    420,000
    
    
    $
    5.75
    
    
    $
    7.3010/01/10 - 03/31/11
    
    
    240,000
    
    
    $
    6.50
    
    
    $
    8.2504/01/10 - 09/30/10
    
    
    240,000
    
    
    $
    5.75
    
    
    $
    7.0011/01/09 - 12/31/10
    
    
    980,000
    
    
    $
    5.15
    
    
    $
    7.0004/01/10 - 09/30/10
    
    
    300,000
    
    
    $
    5.50
    
    
    $
    6.6510/01/10 - 03/31/11
    
    
    420,000
    
    
    $
    6.40
    
    
    $
    7.80
 Natural
    
    Purchased
    
    Written
    
    WrittenGas
    
    Put
    
    Call
    
    PutSettlement Period
    
    (MMbtu)
    
    (Nymex)
    
    (Nymex)
    
    (Nymex)Natural Gas Three Way Costless Collars10/01/09 - 03/31/10
    
    
    420,000
    
    
    $
    8.00
    
    
    $
    10.00
    
    
    $
    5.5010/01/09 - 03/31/10
    
    
    360,000
    
    
    $
    5.75
    
    
    $
    7.00
    
    
    $
    3.50
 Natural
    
    SwapGas
    
    PriceSettlement Period
    
    (MMbtu)
    
    (Nymex)Natural Gas Swaps10/01/09 - 12/31/09
    
    
    60,000
    
    
    $
    4.9010/01/09 - 12/31/09
    
    
    172,000
    
    
    $
    4.4410/01/09 - 10/31/09
    
    
    70,000
    
    
    $
    4.03
  Crude
    
    Purchased
    
    WrittenOil
    
    Put
    
    CallSettlement Period
    
    (Bo)
    
    (Nymex)
    
    (Nymex)Oil Costless Collars01/01/10 - 06/30/10
    
    
    30,000
    
    
    $
    60.00
    
    
    $
    103.7501/01/11 - 12/31/11
    
    
    60,000
    
    
    $
    65.00
    
    
    $
    108.00
 38




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##### Table of Contents



ITEM 4.
    
    CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
  39




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##### Table of Contents



PART II  OTHER INFORMATION
 
 ITEM 1.
    
    LEGAL PROCEEDINGS
  
 ITEM 1A.
    
    RISK FACTORS
  Certain of our undeveloped leasehold acreage is subject to leases that will expire over the
next several years unless production is established on units containing the acreage or the leases
are extended.
   The results of our planned exploratory drilling in the Bakken and Three Forks objectives, an
emerging play with limited drilling and production history, are subject to more uncertainties than
our drilling program in the more established formations and may not meet our expectations for
reserves or production.
  We are subject to various governmental regulations and environmental risks that may cause us
to incur substantial costs.
   40




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##### Table of Contents



ITEM 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 Issuer Purchases of Equity Securities
  Total Number of
    
    Average PricePeriod
    
    Shares Purchased
    
    Paid per ShareSeptember 2009
    
    
    19,258
    
    
    $
    9.662TOTAL
    
    
    19,258
    
    
    $
    9.662
 
 ITEM 3.
    
    DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4.
    
    SUBMISSON OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5.
    
    OTHER INFORMATION
  41




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##### Table of Contents



ITEM 6.
    
    EXHIBITS
 3.1
    
    Certificate of Incorporation (filed as Exhibit 3.1 to Brighams Registration Statement on
Form S-1 (Registration No. 333-22491), and incorporated herein by reference)3.2
    
    Certificates of Amendment to Certificate of Incorporation (filed as Exhibit 3.1.1 to
Brighams Registration Statement on Form S-3 (Registration No. 333-37558), and incorporated
herein by reference)3.3
    
    Bylaws, as amended through May 28, 2009 (incorporated by reference to Exhibit 3.5 to
Brighams Current Report on Form 8-K filed May 28, 2009)3.4
    
    Certificate of Amendment to Certificate of Incorporation of Brigham Exploration Company dated
June 14, 2006 (filed as Exhibit 3.4 to Brighams Annual Report on Form 10-K for the year ended
December 31, 2008 and incorporated herein by reference)4.1
    
    Form of Common Stock Certificate (filed as Exhibit 4.1 to Brighams Registration Statement on
Form S-1 (Registration No. 333-22491), and incorporated herein by reference)4.2
    
    Certificate of Designations of Series A Preferred Stock (Par Value $.01 Per Share) of Brigham
Exploration Company filed October 31, 2000 (filed as Exhibit 4.1 to Brighams Current Report
on Form 8-K, as amended (filed November 8, 2000), and incorporated herein by reference)4.3
    
    Certificate of Amendment of Certificate of Designations of Series A Preferred Stock (Par
Value $.01 Per Share) of Brigham Exploration Company, filed March 2, 2001 (filed as Exhibit
4.2.1 to Brighams Annual Report on Form 10-K for the year ended December 31, 2000 (filed
March 23, 2001), and incorporated herein by reference)4.4
    
    Certificate of Designations of Series B Preferred Stock (Par Value $.01 Per Share) of Brigham
Exploration Company filed December 20, 2002 (filed as Exhibit 4.4 to Brighams Annual Report
on Form 10-K for the year ended December 31, 2002 (filed March 31, 2003) and incorporated
herein by reference)4.5
    
    Certificate of Elimination of Certificate of Designations of Series B Preferred Stock of
Brigham Exploration Company, dated June 4, 2004, (filed as Exhibit 99.2 to Brighams Current
Report on Form 8-K (filed July 20, 2004), and incorporated herein by reference)4.6
    
    Indenture, dated April 20, 2006, among Brigham Exploration Company, the Guarantors named
therein and Wells Fargo Bank, N.A., as trustee (filed as Exhibit 4.1 to Brighams Current
Report on Form 8-K, as amended (filed April 24, 2006), and incorporated herein by reference)4.7
    
    Notations of Guarantees, dated April 20, 2006, among Brigham Exploration Company, the
Guarantors named therein and Wells Fargo Bank, N.A., as trustee, (filed as Exhibit 4.2 to
Brighams Current Report on Form 8-K, as amended (filed April 24, 2006), and incorporated
herein by reference)4.8
    
    Rule 144A 9 5/8% Senior Notes due 2014, dated April 20, 2006 (filed as Exhibit 4.3 to
Brighams Current Report on Form 8-K, as amended (filed April 24, 2006), and incorporated
herein by reference)4.9
    
    Reg S 9 5/8% Senior Notes due 2014, dated April 20, 2006 (filed as Exhibit 4.4 to Brighams
Current Report on Form 8-K, as amended (filed April 24, 2006), and incorporated herein by
reference)4.10
    
    Notations of Guarantees dated as of April 9, 2007, among Brigham Exploration Company, the
Guarantors named therein and Wells Fargo Bank, N.A., as trustee (filed as Exhibit 4.2 to
Brighams Current Report on Form 8-K filed on April 13, 2007 and incorporated in by reference)4.11
    
    Rule 144A 9 5/8% Senior Notes due 2014 (filed as Exhibit 4.3 to Brighams Current Report on
Form 8-K filed on April 13, 2007 and incorporated in by reference)
 
 42




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##### Table of Contents



4.12
    
    Reg S 9 5/8% Senior Notes due 2014 (filed as Exhibit 4.4 on Form 8-K filed to Brighams
Current Report on April 13, 2007 and incorporated in by reference)4.13
    
    Rights Agreement, dated as of December 10, 2008, between Brigham Exploration Company and
American Stock Transfer & Trust Company, LLC, as Rights Agent (filed as Exhibit 4.1 to
Brighams Current Report on Form 8-K (filed December 11, 2008) and incorporated herein by
reference)4.14
    
    Certificate of Designations of Series C Junior Preferred Stock of Brigham Exploration Company
effective as of December 10, 2008 (filed as Exhibit 3.1 to Brighams Current Report on Form
8-K (filed December 11, 2008) and incorporated herein by reference)10.1
    
    Fifth Amendment to the Fourth Amended and Restated Credit Agreement (incorporated by
reference to Exhibit 10.45 to Brighams Current Report on Form 8-K filed July 27, 2009)10.2*
    
    1997 Incentive Plan, as amended through August 19, 2009 (incorporated by reference to
Exhibit 10.50 to Brighams Current Report on Form 8-K filed October 13, 2009)10.3*
    
    Form of Non-Qualified Stock Option
Agreement Under the Brigham Exploration Company 1997 Director Stock Option Plan10.4*
    
    Form of Non-Qualified Stock Option Agreement10.5*
    
    Amendment to Non-Qualified Stock Option Agreements10.6*
    
    Amendment to Brigham Exploration Company 1997 Director Stock Option Plan10.7*
    
    Amendment to Non-Qualified Stock Option
Agreements Under the Brigham Exploration Company 1997 Director Stock Option Plan31.1
    
    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
 
 *
    
    Management contract or compensatory plan. 43




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##### Table of Contents



SIGNATURES
  BRIGHAM EXPLORATION COMPANYBy:
    /s/  BEN M. BRIGHAMBen M. BrighamChief Executive Officer, President

and Chairman of the Board By:
    /s/  EUGENE B. SHEPHERD, JR.Eugene B. Shepherd, Jr.Executive Vice President and

Chief Financial Officer 44




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description3.1
    
    Certificate of Incorporation (filed as Exhibit 3.1 to Brighams Registration Statement on
Form S-1 (Registration No. 333-22491), and incorporated herein by reference)3.2
    
    Certificates of Amendment to Certificate of Incorporation (filed as Exhibit 3.1.1 to
Brighams Registration Statement on Form S-3 (Registration No. 333-37558), and incorporated
herein by reference)3.3
    
    Bylaws, as amended through May 28, 2009 (incorporated by reference to Exhibit 3.5 to
Brighams Current Report on Form 8-K filed May 28, 2009)3.4
    
    Certificate of Amendment to Certificate of Incorporation of Brigham Exploration Company dated
June 14, 2006 (filed as Exhibit 3.4 to Brighams Annual Report on Form 10-K for the year ended
December 31, 2008 and incorporated herein by reference)4.1
    
    Form of Common Stock Certificate (filed as Exhibit 4.1 to Brighams Registration Statement on
Form S-1 (Registration No. 333-22491), and incorporated herein by reference)4.2
    
    Certificate of Designations of Series A Preferred Stock (Par Value $.01 Per Share) of Brigham
Exploration Company filed October 31, 2000 (filed as Exhibit 4.1 to Brighams Current Report
on Form 8-K, as amended (filed November 8, 2000), and incorporated herein by reference)4.3
    
    Certificate of Amendment of Certificate of Designations of Series A Preferred Stock (Par
Value $.01 Per Share) of Brigham Exploration Company, filed March 2, 2001 (filed as Exhibit
4.2.1 to Brighams Annual Report on Form 10-K for the year ended December 31, 2000 (filed
March 23, 2001), and incorporated herein by reference)4.4
    
    Certificate of Designations of Series B Preferred Stock (Par Value $.01 Per Share) of Brigham
Exploration Company filed December 20, 2002 (filed as Exhibit 4.4 to Brighams Annual Report
on Form 10-K for the year ended December 31, 2002 (filed March 31, 2003) and incorporated
herein by reference)4.5
    
    Certificate of Elimination of Certificate of Designations of Series B Preferred Stock of
Brigham Exploration Company, dated June 4, 2004, (filed as Exhibit 99.2 to Brighams Current
Report on Form 8-K (filed July 20, 2004), and incorporated herein by reference)4.6
    
    Indenture, dated April 20, 2006, among Brigham Exploration Company, the Guarantors named
therein and Wells Fargo Bank, N.A., as trustee (filed as Exhibit 4.1 to Brighams Current
Report on Form 8-K, as amended (filed April 24, 2006), and incorporated herein by reference)4.7
    
    Notations of Guarantees, dated April 20, 2006, among Brigham Exploration Company, the
Guarantors named therein and Wells Fargo Bank, N.A., as trustee, (filed as Exhibit 4.2 to
Brighams Current Report on Form 8-K, as amended (filed April 24, 2006), and incorporated
herein by reference)4.8
    
    Rule 144A 9 5/8% Senior Notes due 2014, dated April 20, 2006 (filed as Exhibit 4.3 to
Brighams Current Report on Form 8-K, as amended (filed April 24, 2006), and incorporated
herein by reference)4.9
    
    Reg S 9 5/8% Senior Notes due 2014, dated April 20, 2006 (filed as Exhibit 4.4 to Brighams
Current Report on Form 8-K, as amended (filed April 24, 2006), and incorporated herein by
reference)4.10
    
    Notations of Guarantees dated as of April 9, 2007, among Brigham Exploration Company, the
Guarantors named therein and Wells Fargo Bank, N.A., as trustee (filed as Exhibit 4.2 to
Brighams Current Report on Form 8-K filed on April 13, 2007 and incorporated in by reference)4.11
    
    Rule 144A 9 5/8% Senior Notes due 2014 (filed as Exhibit 4.3 to Brighams Current Report on
Form 8-K filed on April 13, 2007 and incorporated in by reference)




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##### Table of Contents



Exhibit No.
    
    Description4.12
    
    Reg S 9 5/8% Senior Notes due 2014 (filed as Exhibit 4.4 on Form 8-K filed to Brighams
Current Report on April 13, 2007 and incorporated in by reference)4.13
    
    Rights Agreement, dated as of December 10, 2008, between Brigham Exploration Company and
American Stock Transfer & Trust Company, LLC, as Rights Agent (filed as Exhibit 4.1 to
Brighams Current Report on Form 8-K (filed December 11, 2008) and incorporated herein by
reference)4.14
    
    Certificate of Designations of Series C Junior Preferred Stock of Brigham Exploration Company
effective as of December 10, 2008 (filed as Exhibit 3.1 to Brighams Current Report on Form
8-K (filed December 11, 2008) and incorporated herein by reference)10.1
    
    Fifth Amendment to the Fourth Amended and Restated Credit Agreement (incorporated by
reference to Exhibit 10.45 to Brighams Current Report on Form 8-K filed July 27, 2009)10.2*
    
    1997 Incentive Plan, as amended through August 19, 2009 (incorporated by reference to
Exhibit 10.50 to Brighams Current Report on Form 8-K filed October 13, 2009)10.3*
    
    Form of Non-Qualified Stock Option Agreement Under the Brigham Exploration Company 1997 Director Stock Option Plan10.4*
    
    Form of Non-Qualified Stock Option Agreement10.5*
    
    Amendment to Non-Qualified Stock Option Agreements10.6*
    
    Amendment to Brigham Exploration Company 1997 Director Stock Option Plan10.7*
    
    Amendment to Non-Qualified Stock Option
Agreements Under the Brigham Exploration Company 1997 Director Stock Option Plan31.1
    
    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
 
 *
    
    Management contract or compensatory plan.