##### 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 March 31, 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
    
    (Primary Standard Industrial
    
    (I.R.S. Employerof incorporation or organization)
    
    Classification Code Number)
    
    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
    
    Smaller Reporting Company o
 o þ
 Class
    
    
    OutstandingCommon Stock, par value $.01 per share as of May 5, 2009
    
    
    46,596,425




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##### 



Brigham Exploration Company
 First Quarter 2009 Form 10-Q Report
 TABLE OF CONTENTS
 PagePART I  FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTSConsolidated Balance Sheets  March 31, 2009 and December 31, 2008
    
    
    1Consolidated Statements of Operations  Three months ended March 31, 2009 and 2008
    
    
    2Consolidated Statement of Stockholders Equity  Three months ended March 31, 2009
    
    
    3Consolidated Statements of Cash Flows  Three months ended March 31, 2009 and 2008
    
    
    4Notes to the Consolidated Financial Statements
    
    
    5ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
    
    
    17ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    31ITEM 4. CONTROLS AND PROCEDURES
    
    
    33PART II  OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGS
    
    
    34ITEM 1A. RISK FACTORS
    
    
    34ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    34ITEM 3. DEFAULTS UPON SENIOR SECURITIES
    
    
    34ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS
    
    
    34ITEM 5. OTHER INFORMATION
    
    
    34ITEM 6. EXHIBITS
    
    
    34SIGNATURES
    
    
    35Exhibit 10.41Exhibit 10.42Exhibit 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)
 March 31,
    
    
    December 31,2009
    
    
    2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    27,031
    
    
    $
    40,598Accounts receivable
    
    
    21,396
    
    
    
    24,558Derivative assets
    
    
    2,512
    
    
    
    5,140Inventory
    
    
    7,582
    
    
    
    6,070Other current assets
    
    
    1,494
    
    
    
    2,154Total current assets
    
    
    60,015
    
    
    
    78,520Oil and natural gas properties, using the full cost method includingProved, net
    
    
    218,540
    
    
    
    298,833Unproved
    
    
    81,066
    
    
    
    106,006299,606
    
    
    
    404,839Other property and equipment, net
    
    
    1,788
    
    
    
    1,873Deferred loan fees
    
    
    2,908
    
    
    
    3,122Other noncurrent assets
    
    
    714
    
    
    
    702Total assets
    
    $
    365,031
    
    
    $
    489,056LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    16,131
    
    
    $
    14,297Royalties payable
    
    
    5,010
    
    
    
    6,859Accrued drilling costs
    
    
    11,673
    
    
    
    19,768Participant advances received
    
    
    674
    
    
    
    2,226Other current liabilities
    
    
    8,842
    
    
    
    5,065Total current liabilities
    
    
    42,330
    
    
    
    48,215Senior Notes
    
    
    158,789
    
    
    
    158,730Senior credit facility
    
    
    145,000
    
    
    
    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 March 31, 2009 and
December 31, 2008
    
    
    10,101
    
    
    
    10,101Deferred income taxes
    
    
    149
    
    
    
    149Other noncurrent liabilities
    
    
    5,849
    
    
    
    5,592Commitments and contingencies (Note 4)Stockholders equity:Common stock, $.01 par value, 90 million shares authorized,
45,879,777 and 45,829,277 shares issued and 45,725,364 and
45,686,295 shares outstanding at March 31, 2009 and December 31,
2008, respectively
    
    
    459
    
    
    
    458Additional paid-in capital
    
    
    213,123
    
    
    
    212,473Treasury stock, at cost; 154,413 and 142,982 shares at March 31,
2009 and December 31, 2008, respectively
    
    
    (1,238
    )
    
    
    (1,202
    )Retained earnings
    
    
    (209,531
    )
    
    
    (90,460
    )Total stockholders equity
    
    
    2,813
    
    
    
    121,269Total liabilities and stockholders equity
    
    $
    365,031
    
    
    $
    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 EndedMarch 31,2009
    
    
    2008Revenues:Oil and natural gas sales
    
    $
    13,809
    
    
    $
    30,510Gain (loss) on derivatives, net
    
    
    4,643
    
    
    
    (5,456
    )Other revenue
    
    
    34
    
    
    
    1718,486
    
    
    
    25,071Costs and expenses:Lease operating
    
    
    3,799
    
    
    
    2,986Production taxes
    
    
    814
    
    
    
    1,283General and administrative
    
    
    2,122
    
    
    
    2,593Depletion of oil and natural gas properties
    
    
    9,833
    
    
    
    12,443Impairment of oil and natural gas properties
    
    
    114,781
    
    
    
    Depreciation and amortization
    
    
    149
    
    
    
    147Accretion of discount on asset retirement obligations
    
    
    101
    
    
    
    91Loss on inventory valuation
    
    
    2,039
    
    
    
    133,638
    
    
    
    19,543Operating income (loss)
    
    
    (115,152
    )
    
    
    5,528Other income (expense):Interest income
    
    
    93
    
    
    
    75Interest expense, net
    
    
    (4,127
    )
    
    
    (3,419
    )Other income (expense)
    
    
    115
    
    
    
    307(3,919
    )
    
    
    (3,037
    )Income (loss) before income taxes
    
    
    (119,071
    )
    
    
    2,491Income tax expense:Current
    
    
    
    
    
    
    Deferred
    
    
    
    
    
    
    (964
    )
    
    
    
    (964
    )Net income (loss)
    
    $
    (119,071
    )
    
    $
    1,527Net income (loss) per share available to common stockholders:Basic
    
    $
    (2.60
    )
    
    $
    0.03Diluted
    
    $
    (2.60
    )
    
    $
    0.03Weighted average shares outstanding:Basic
    
    
    45,726
    
    
    
    45,261Diluted
    
    
    45,726
    
    
    
    45,770
   2




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 
 CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
 (In thousands)
 (Unaudited)
 Additional
    
    
    
    
    
    
    
    
    
    
    TotalCommon Stock
    
    
    Paid In
    
    
    Treasury
    
    
    Retained
    
    
    StockholdersShares
    
    
    Amounts
    
    
    Capital
    
    
    Stock
    
    
    Earnings
    
    
    EquityBalance, December 31, 2008
    
    
    45,829
    
    
    $
    458
    
    
    $
    212,473
    
    
    $
    (1,202
    )
    
    $
    (90,460
    )
    
    $
    121,269Net income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (119,071
    )
    
    
    (119,071
    )Exercises of employee
stock options
    
    
    1
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1Vesting of restricted stock
    
    
    50
    
    
    
    1
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    Stock based compensation
    
    
    
    
    
    
    
    
    
    
    650
    
    
    
    
    
    
    
    
    
    
    
    650Repurchases of common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (36
    )
    
    
    
    
    
    
    (36
    )Balance, March 31, 2009
    
    
    45,880
    
    
    $
    459
    
    
    $
    213,123
    
    
    $
    (1,238
    )
    
    $
    (209,531
    )
    
    $
    2,813
   3




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
 (Unaudited)
 Three Months EndedMarch 31,2009
    
    
    2008Cash flows from operating activities:Net income (loss)
    
    $
    (119,071
    )
    
    $
    1,527Adjustments to reconcile net income to cash provided by operating
activities:Depletion of oil and natural gas properties
    
    
    9,833
    
    
    
    12,443Impairment of oil and natural gas properties
    
    
    114,781
    
    
    
    Depreciation and amortization
    
    
    149
    
    
    
    147Stock based compensation
    
    
    353
    
    
    
    414Amortization of deferred loan fees and debt issuance costs
    
    
    296
    
    
    
    255Market value adjustment for derivative instruments
    
    
    2,878
    
    
    
    5,394Accretion of discount on asset retirement obligations
    
    
    101
    
    
    
    91Deferred income taxes
    
    
    
    
    
    
    964Other noncash items
    
    
    36
    
    
    
    (28
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    3,162
    
    
    
    (5,803
    )Other current assets
    
    
    (852
    )
    
    
    (285
    )Accounts payable
    
    
    1,834
    
    
    
    7,691Royalties payable
    
    
    (1,849
    )
    
    
    3,753Participant advances received
    
    
    (1,552
    )
    
    
    (1,966
    )Other current liabilities
    
    
    3,351
    
    
    
    3,924Other noncurrent assets and liabilities
    
    
    (15
    )
    
    
    (186
    )Net cash provided by operating activities
    
    
    13,435
    
    
    
    28,335Cash flows from investing activities:Additions to oil and natural gas properties
    
    
    (27,007
    )
    
    
    (44,484
    )Decrease (increase) in restricted cash
    
    
    555
    
    
    
    Additions to other property and equipment
    
    
    (100
    )
    
    
    (157
    )Decrease (increase) in drilling advances paid
    
    
    163
    
    
    
    (393
    )Net cash provided (used) by investing activities
    
    
    (26,389
    )
    
    
    (45,034
    )Cash flows from financing activities:Increase in senior credit facility
    
    
    
    
    
    
    9,000Repayment of senior credit facility
    
    
    
    
    
    
    Deferred loan fees paid and equity costs
    
    
    (23
    )
    
    
    (11
    )Proceeds from exercise of employee stock options
    
    
    1
    
    
    
    134Repurchases of common stock
    
    
    (36
    )
    
    
    (121
    )Net cash provided (used) by financing activities
    
    
    (58
    )
    
    
    9,002Net increase (decrease) in cash and cash equivalents
    
    
    (13,012
    )
    
    
    (7,697
    )Cash and cash equivalents, beginning of year
    
    
    40,043
    
    
    
    13,863Cash and cash equivalents, end of period
    
    $
    27,031
    
    
    $
    6,166
   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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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  Three Months EndedMarch 31,2009
    
    
    2008Weighted average common shares outstanding  basic
    
    
    45,726
    
    
    
    45,261Plus: Potential common sharesStock options and restricted stock
    
    
    
    
    
    
    509Weighted average common shares outstanding  diluted
    
    
    45,726
    
    
    
    45,770Stock options excluded from diluted EPS due to the anti-dilutive effect
    
    
    3,757
    
    
    
    2,347
 6. Income Taxes
  March 31,
    
    
    March 31,2009
    
    
    2008Current income taxes:Federal
    
    $
    
    
    
    $
    State
    
    
    
    
    
    
    Deferred income taxes:Federal
    
    
    
    
    
    
    872State
    
    
    
    
    
    
    92$
    
    
    
    $
    964
    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
    
    
    
    
    
    
    Unrecognized tax benefits at end of the quarter
    
    $
    
    
    
    $
    2,162
   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
   Three Months EndedMarch 31,2009
    
    
    2008Natural GasAverage price per Mcf realized excluding gas hedging results
    
    $
    4.27
    
    
    $
    8.83Average price per Mcf including gas hedging settlement results
    
    $
    7.76
    
    
    $
    9.07Increase (decrease) in revenue, in thousands
    
    $
    6,439
    
    
    $
    523Average price per Mcf including gas hedging settlement
results and any unrealized gains (losses)
    
    $
    6.91
    
    
    $
    6.71Increase (decrease) in revenue, in thousands
    
    $
    4,868
    
    
    $
    (4,633
    )OilAverage price per Bbl realized excluding oil hedging results
    
    $
    34.29
    
    
    $
    95.50Average price per Bbl including oil hedging settlement results
    
    $
    40.53
    
    
    $
    90.48Increase (decrease) in revenue, in thousands
    
    $
    1,082
    
    
    $
    (586
    )Average price per Bbl including oil hedging settlement
results and any unrealized gains (losses)
    
    $
    32.99
    
    
    $
    88.45Increase (decrease) in revenue, in thousands
    
    $
    (225
    )
    
    $
    (823
    )
   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 Collars04/01/09  04/30/09
    
    
    50,000
    
    
    
    
    
    
    $
    7.00
    
    
    $
    7.5004/01/09  04/30/09
    
    
    20,000
    
    
    
    
    
    
    $
    7.25
    
    
    $
    9.8004/01/09  04/30/09
    
    
    70,000
    
    
    
    
    
    
    $
    8.00
    
    
    $
    8.0004/01/09  04/30/09
    
    
    40,000
    
    
    
    
    
    
    $
    5.75
    
    
    $
    7.5010/01/09  03/31/10
    
    
    420,000
    
    
    
    
    
    
    $
    5.75
    
    
    $
    7.0504/01/10  09/30/10
    
    
    420,000
    
    
    
    
    
    
    $
    5.75
    
    
    $
    7.3004/01/10  09/30/10
    
    
    240,000
    
    
    
    
    
    
    $
    5.75
    
    
    $
    7.0010/01/10  03/31/11
    
    
    240,000
    
    
    
    
    
    
    $
    6.50
    
    
    $
    8.25Oil Costless Collars04/01/09  06/30/09
    
    
    
    
    
    
    9,000
    
    
    $
    62.00
    
    
    $
    81.75
 Natural
    
    
    Purchased
    
    
    Written
    
    
    WrittenGas
    
    
    Put
    
    
    Call
    
    
    PutSettlement Period
    
    (MMBTU)
    
    
    Nymex
    
    
    Nymex
    
    
    NymexNatural Gas Three Way
Costless Collars04/01/09  04/30/09
    
    
    70,000
    
    
    $
    6.25
    
    
    $
    8.80
    
    
    $
    4.7510/01/09  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 Swaps04/01/09  05/31/09
    
    
    80,000
    
    
    
    
    
    
    $
    5.8704/01/09
 06/30/09
    
    
    90,000
    
    
    
    
    
    
    $
    4.6404/01/09  08/31/09
    
    
    350,000
    
    
    
    
    
    
    $
    4.7510/01/09  12/31/09
    
    
    60,000
    
    
    
    
    
    
    $
    4.9005/01/09  12/31/09
    
    
    300,000
    
    
    
    
    
    
    $
    4.4405/01/09  09/30/09
    
    
    250,000
    
    
    
    
    
    
    $
    4.0905/01/09  09/30/09
    
    
    250,000
    
    
    
    
    
    
    $
    3.9605/01/09  09/30/09
    
    
    650,000
    
    
    
    
    
    
    $
    4.00Oil Swaps04/01/09  12/31/09
    
    
    
    
    
    
    90,000
    
    
    $
    50.75
  8




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 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
    
    $
    2,512Natural gas and oil contracts
    
    Other non-current assets
    
    
    377Total Derivative Assets
    
    
    
    $
    2,889Derivative Liabilities:Natural gas and oil contracts
    
    Other current liabilities
    
    $
    (431
    )Natural gas and oil contracts
    
    Other non-current liabilities
    
    
    1Total Derivative Liabilities
    
    
    
    $
    (430
    )
  Statement of Operations
    
    Amount ofType of Contract
    
    Location of Gain (Loss)
    
    Gain (Loss)(in thousands)Derivatives Not Designated as Hedging InstrumentsNatural gas contracts
    
    Gain (loss) on derivatives, net
    
    $
    4,868Oil contracts
    
    Gain (loss) on derivatives, net
    
    
    (225
    )Total Derivative Gain (loss)
    
    
    
    $
    4,643
   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 March 31, 2009 UsingQuoted Prices in
    
    
    Significant Other
    
    
    SignificantActive Markets
    
    
    Observable
    
    
    UnobservableMarch 31,
    
    
    for Identical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Other current liabilities
    
    $
    (431
    )
    
    $
    
    
    
    $
    (431
    )
    
    $
    Other non-current liabilities
    
    
    1
    
    
    
    
    
    
    
    1
    
    
    
    Current derivative assets
    
    
    2,512
    
    
    
    
    
    
    
    2,512
    
    
    
    Other non-current assets
    
    
    377
    
    
    
    
    
    
    
    377
    
    
    
    $
    2,459
    
    
    $
    
    
    
    $
    2,459
    
    
    $
    
 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 March 31, 2009 UsingQuoted Prices in
    
    
    Significant Other
    
    
    SignificantActive Markets
    
    
    Observable
    
    
    UnobservableMarch 31,
    
    
    for Identical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Other
non-current liabilities
    
    
    (5,850
    )
    
    
    
    
    
    
    
    
    
    
    (5,850
    )$
    (5,850
    )
    
    $
    
    
    
    $
    
    
    
    $
    (5,850
    )
  10




---



##### 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
    )
 9. Oil and Gas Properties
    10. Senior Notes
     11




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 11. Asset Retirement Obligations
   Three Months EndedMarch 31,2009
    
    
    2008Beginning asset retirement obligations
    
    $
    5,592
    
    
    $
    5,047Liabilities incurred for new wells placed on production
    
    
    172
    
    
    
    61Liabilities settled
    
    
    (15
    )
    
    
    (19
    )Accretion of discount on asset retirement obligations
    
    
    101
    
    
    
    91$
    5,850
    
    
    $
    5,180
 12. Stock Based Compensation
   2008Risk-free interest rate
    
    
    2.7
    %Expected life (in years)
    
    
    5.0Expected volatility
    
    
    44
    %Expected dividend yield
    
    
    Weighted average fair value per share of stock compensation
    
    $
    3.26
  12




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
     Three Months EndedMarch 31,2009
    
    
    2008Pre-tax stock based compensation expense
    
    $
    650
    
    
    $
    763Capitalized stock based compensation
    
    
    (297
    )
    
    
    (349
    )Tax benefit
    
    
    (124
    )
    
    
    (145
    )Stock based compensation expense, net
    
    $
    229
    
    
    $
    269
 Stock Based Plan Descriptions and Share Information
    13




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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
    
    
    
    
    
    $
    
    
    
    
    5,000
    
    
    $
    7.73Forfeited or cancelled
    
    
    
    
    
    $
    
    
    
    
    (37,800
    )
    
    $
    7.91Exercised
    
    
    
    
    
    $
    
    
    
    
    (33,500
    )
    
    $
    4.00Options outstanding at the end of the quarter
    
    
    3,128,651
    
    
    $
    7.00
    
    
    
    2,979,866
    
    
    $
    7.17Options exercisable at the end of the quarter
    
    
    1,969,851
    
    
    $
    7.18
    
    
    
    1,837,566
    
    
    $
    6.67
   Options Outstanding
    
    
    Options ExercisableNumber
    
    
    Weighted-
    
    
    
    
    
    Number
    
    
    Weighted-Outstanding at
    
    
    Average
    
    Weighted-
    
    
    Exercisable at
    
    
    Average
    
    Weighted-March 31,
    
    
    Remaining
    
    Average
    
    
    March 31,
    
    
    Remaining
    
    AverageExercise Price
    
    2009
    
    
    Contractual Life
    
    Exercise Price
    
    
    2009
    
    
    Contractual Life
    
    Exercise Price$3.11 to $3.41
    
    
    93,000
    
    
    3.9 years
    
    $
    3.24
    
    
    
    43,000
    
    
    0.5 years
    
    $
    3.413.66 to 5.08
    
    
    805,200
    
    
    4.0 years
    
    $
    4.75
    
    
    
    339,200
    
    
    0.5 years
    
    $
    4.296.10 to 6.73
    
    
    1,134,576
    
    
    2.6 years
    
    $
    6.49
    
    
    
    864,676
    
    
    2.1 years
    
    $
    6.607.22 to 8.84
    
    
    736,875
    
    
    3.0 years
    
    $
    8.45
    
    
    
    506,975
    
    
    2.7 years
    
    $
    8.598.93 to 12.31
    
    
    359,000
    
    
    3.5 years
    
    $
    11.64
    
    
    
    216,000
    
    
    3.4 years
    
    $
    11.52$3.11 to $12.31
    
    
    3,128,651
    
    
    3.2 years
    
    $
    7.00
    
    
    
    1,969,851
    
    
    2.0 years
    
    $
    7.18
   Restricted Stock
   14




---



##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  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
    
    
    85,000
    
    
    $
    3.15
    
    
    
    90,000
    
    
    $
    7.41Lapse of restrictions
    
    
    (50,000
    )
    
    $
    7.35
    
    
    
    (50,000
    )
    
    $
    5.23Forfeitures
    
    
    
    
    
    $
    
    
    
    
    (15,204
    )
    
    $
    6.34Shares outstanding at the end of the quarter
    
    
    628,260
    
    
    $
    7.00
    
    
    
    678,419
    
    
    $
    7.35
  13. Comprehensive Income
  Three Months EndedMarch 31,2009
    
    
    2008Net income (loss)
    
    $
    (119,071
    )
    
    $
    1,527Unrealized gains (losses) on cash flow hedges
    
    
    
    
    
    
    Net gains (losses) included in net income
    
    
    
    
    
    
    (177
    )Tax benefits (provisions) related to cash flow hedges
    
    
    
    
    
    
    62Reclassification adjustments for settled hedging positions
    
    
    
    
    
    
    Other comprehensive income (loss), net
    
    $
    (119,071
    )
    
    $
    1,412
 14. New Accounting Pronouncements and SEC Rulemaking
    15




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
        16




---



##### 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; and
 
    
    Enhance Returns Through Operational Control.
 Overview of First Quarter 2009 Financial Results
     17




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##### Table of Contents



Overview of First Quarter 2009 Operational Results
 Rocky Mountain Province
 Williston Basin
    Onshore Gulf Coast Province
 Southern Louisiana
  Frio
   18




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##### Table of Contents



First Quarter 2009 Results
 Comparison of the three-month periods ended March 31, 2009 and 2008.
 Production volumes
 Three Months Ended March 31,2009
    
    
    % Change
    
    
    2008Oil (MBbls)
    
    
    174
    
    
    
    49
    %
    
    
    117Natural gas (MMcf)
    
    
    1,842
    
    
    
    (16
    %)
    
    
    2,193Total (MMcfe)(1)
    
    
    2,884
    
    
    
    (0
    %)
    
    
    2,894Average daily production (MMcfe/d) (2)
    
    
    32.0
    
    
    
    (1
    %)
    
    
    32.2
 
 (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 is calculated using 30 days per calendar month.   19




---



##### Table of Contents



Revenues, Commodity Prices and Hedging
  Three Months Ended March 31,2009
    
    
    % Change
    
    
    2008(In thousands)Oil revenue:Oil revenue
    
    $
    5,950
    
    
    
    (47
    %)
    
    $
    11,157Oil derivative settlement gains (losses)
    
    
    1,082
    
    
    NM
    
    
    
    (586
    )Oil revenue including derivative settlements
    
    $
    7,032
    
    
    
    (33
    %)
    
    $
    10,571Oil derivative unrealized gains (losses)
    
    
    (1,307
    )
    
    
    449
    %
    
    
    (238
    )Oil revenue including derivative settlements and unrealized gains (losses)
    
    $
    5,725
    
    
    
    (45
    %)
    
    $
    10,333Natural gas revenue:Natural gas revenue
    
    $
    7,859
    
    
    
    (59
    %)
    
    $
    19,353Natural gas derivative settlement gains (losses)
    
    
    6,439
    
    
    
    1,129
    %
    
    
    524Natural gas revenue including derivative settlements
    
    $
    14,298
    
    
    
    (28
    %)
    
    $
    19,877Natural gas derivative unrealized gains (losses)
    
    
    (1,571
    )
    
    
    (70
    %)
    
    
    (5,156
    )Natural gas revenue including derivative settlements and unrealized gains
(losses)
    
    $
    12,727
    
    
    
    (14
    %)
    
    $
    14,721Oil and natural gas revenue:Oil and natural gas revenue
    
    $
    13,809
    
    
    
    (55
    %)
    
    $
    30,510Oil and natural gas derivative settlement gains (losses)
    
    
    7,521
    
    
    NM
    
    
    
    (62
    )Oil and natural gas revenue including derivative settlements
    
    
    21,330
    
    
    
    (30
    %)
    
    
    30,448Oil and natural gas derivative unrealized gains (losses)
    
    
    (2,878
    )
    
    
    (47
    %)
    
    
    (5,394
    )Oil and natural gas revenue including derivative settlements and
unrealized gains (losses)
    
    
    18,452
    
    
    
    (26
    %)
    
    
    25,054Other revenue
    
    
    34
    
    
    
    100
    %
    
    
    17Total revenue
    
    $
    18,486
    
    
    
    (26
    %)
    
    $
    25,071Average oil prices:Oil price (per Bbl)
    
    $
    34.29
    
    
    
    (64
    %)
    
    $
    95.50Oil price including derivative settlement gains (losses) (per Bbl)
    
    
    40.53
    
    
    
    (55
    %)
    
    
    90.48Oil price including derivative settlements and unrealized gains (losses)
(per Bbl)
    
    
    32.99
    
    
    
    (63
    %)
    
    
    88.45Average natural gas prices:Natural gas price (per Mcf)
    
    $
    4.27
    
    
    
    (52
    %)
    
    $
    8.83Natural gas price including derivative settlement gains (losses) (per Mcf)
    
    
    7.76
    
    
    
    (14
    %)
    
    
    9.07Natural gas price including derivative settlements and unrealized gains
(losses) (per Mcf)
    
    $
    6.91
    
    
    
    3
    %
    
    $
    6.71Average equivalent prices:Natural gas equivalent price (per Mcfe)
    
    $
    4.79
    
    
    
    (55
    %)
    
    $
    10.54Natural gas equivalent price including derivative settlement gains (losses)
(per Mcfe)
    
    
    7.40
    
    
    
    (30
    %)
    
    
    10.52Natural gas equivalent price including derivative settlements and unrealized
gains (losses) (per Mcfe)
    
    $
    6.40
    
    
    
    (26
    %)
    
    $
    8.66
  20




---



##### Table of Contents



For the threemonth periodsended March 31,2009 and 2008(In thousands)Change in revenue from the sale of oil:Price variance impact
    
    $
    (10,622
    )Volume variance impact
    
    
    5,415Cash settlement of derivative hedging contracts
    
    
    1,668Unrealized gains (losses) due to derivative hedging contracts
    
    
    (1,069
    )Total change
    
    $
    (4,608
    )Change in revenue from the sale of natural gas:Price variance impact
    
    $
    (8,409
    )Volume variance impact
    
    
    (3,085
    )Cash settlement of derivative hedging contracts
    
    
    5,915Unrealized gains (losses) due to derivative hedging contracts
    
    
    3,585Total change
    
    $
    (1,994
    )Change in revenue from the sale of oil and natural gas:Price variance impact
    
    $
    (19,031
    )Volume variance impact
    
    
    2,330Cash settlement of derivative hedging contracts
    
    
    7,583Unrealized gains (losses) due to derivative hedging contracts
    
    
    2,516Total change
    
    $
    (6,602
    )
  
    
    a 55% decrease in pre-hedge per Mcfe sales prices resulted in a $19.0 million decrease
in revenues;
 
    
    an increase in oil production, which was partially offset by a decrease in our natural
gas volumes, resulted in a $2.3 million increase in oil and natural gas revenues;
 
    
    a $7.5 million gain from the settlement of derivative contracts in the first quarter
2009 (includes $3.2 million from the monetization of a portion of our natural gas hedges
which would have settled from May through September, 2009) versus a $0.1 million loss from the
settlement of derivative contracts in first quarter 2008 increased revenues by $7.6
million; and
 
    
    a $2.9 million unrealized derivative loss in first quarter 2009 versus a $5.4 million
unrealized derivative loss in first quarter 2008 increased revenues by $2.5 million.
 Hedging.
  21




---



##### Table of Contents



Three months ended March 31,2009
    
    
    % Change
    
    
    2008Oil collarsVolumes (Bbls)
    
    
    30,000
    
    
    
    (34
    %)
    
    
    45,500Average floor price ($  per Bbl)
    
    $
    79.15
    
    
    
    28
    %
    
    $
    61.68Average ceiling price ($  per Bbl)
    
    $
    108.53
    
    
    
    27
    %
    
    $
    85.59Gain (loss) upon settlement ($ in thousands)
    
    $
    1,082
    
    
    NM
    
    
    $
    (586
    )Natural gas collars and Three WaysVolumes (MMbtu)
    
    
    970,000
    
    
    
    (36
    %)
    
    
    1,520,000Average floor price ($  per MMbtu)
    
    $
    7.96
    
    
    
    1
    %
    
    $
    7.87Average ceiling price ($  per MMbtu)
    
    $
    9.73
    
    
    
    (22
    %)
    
    $
    12.44Gain (loss) upon settlement ($ in thousands)
    
    $
    6,270
    
    
    
    1,097
    %
    
    $
    524Natural gas swapsVolumes (MMbtu)
    
    
    180,000
    
    
    NM
    
    
    
    Average swap price ($  per MMbtu)
    
    $
    5.23
    
    
    NM
    
    
    $
    Gain (loss) upon settlement ($ in thousands)
    
    $
    183
    
    
    NM
    
    
    $
    Natural Gas CapsVolumes (MMbtu)
    
    
    250,000
    
    
    NM
    
    
    
    Average price ($  per MMbtu)
    
    $
    9.73
    
    
    NM
    
    
    $
    Gain (loss) upon settlement ($ in thousands)
    
    $
    (14
    )
    
    NM
    
    
    $
    Total Natural Gas Gain (loss) upon settlement ($ in thousands)
    
    $
    6,439
    
    
    
    1,129
    %
    
    $
    524
 Other revenue
 Operating costs and expenses
 Production costs.
 Unit-of-Production
    
    
    Amount(Per Mcfe)
    
    
    (In thousands)Three months ended March 31,
    
    
    Three months ended March 31,2009
    
    
    % Change
    
    
    2008
    
    
    2009
    
    
    % Change
    
    
    2008Production costs:Operating & maintenance
    
    $
    0.99
    
    
    
    57
    %
    
    $
    0.63
    
    
    $
    2,844
    
    
    
    56
    %
    
    $
    1,822Expensed workovers
    
    
    0.24
    
    
    
    (14
    %)
    
    
    0.28
    
    
    
    680
    
    
    
    (16
    %)
    
    
    814Ad valorem taxes
    
    
    0.10
    
    
    
    (17
    %)
    
    
    0.12
    
    
    
    275
    
    
    
    (21
    %)
    
    
    350Lease operating expenses
    
    $
    1.33
    
    
    
    29
    %
    
    $
    1.03
    
    
    $
    3,799
    
    
    
    27
    %
    
    $
    2,986Production taxes
    
    
    0.28
    
    
    
    (36
    %)
    
    
    0.44
    
    
    
    814
    
    
    
    (37
    %)
    
    
    1,283Production costs
    
    $
    1.61
    
    
    
    10
    %
    
    $
    1.47
    
    
    $
    4,613
    
    
    
    8
    %
    
    $
    4,269
  
    
    O&M expense increased $0.36 per Mcfe, or 57%, due to an increase in compressor rental
and maintenance, electricity, salt water disposal and well service and repair; offset by
 
    
    production taxes decreased $0.16 per Mcfe, or 36%, due to lower commodity prices.
  22




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##### Table of Contents



General and administrative expenses.
 Three months ended March 31,2009
    
    
    % Change
    
    
    2008(In thousands, except per unit measurements)General and administrative costs
    
    $
    3,672
    
    
    
    (26
    %)
    
    $
    4,956Capitalized general and administrative costs
    
    
    (1,550
    )
    
    
    (34
    %)
    
    
    (2,363
    )General and administrative expenses
    
    $
    2,122
    
    
    
    (18
    %)
    
    $
    2,593General and administrative expense ($  per Mcfe)
    
    $
    0.74
    
    
    
    (18
    %)
    
    $
    0.90
  Depletion of oil and natural gas properties
 Three months ended March 31,2009
    
    
    % Change
    
    
    2008(In thousands, except per unit measurements)Depletion of oil and natural gas properties
    
    $
    9,833
    
    
    
    (21
    %)
    
    $
    12,443Depletion of oil and natural gas properties ($  per Mcfe)
    
    $
    3.41
    
    
    
    (21
    %)
    
    $
    4.30
  Impairment of oil and natural gas properties
   Inventory Valuation.
  23




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##### Table of Contents



Net interest expense.
 Three months ended March 31,2009
    
    
    % Change
    
    
    2008(In thousands)Interest on Senior Notes
    
    $
    3,850
    
    
    
    0
    %
    
    $
    3,850Interest on senior credit facility
    
    
    1,005
    
    
    
    557
    %
    
    
    153Commitment fees
    
    
    21
    
    
    
    (68
    %)
    
    
    65Dividend on mandatorily redeemable preferred stock
    
    
    149
    
    
    
    (1
    %)
    
    
    151Amortization of deferred loan and debt issuance cost
    
    
    275
    
    
    
    12
    %
    
    
    246Other general interest expense
    
    
    17
    
    
    NM
    
    
    
    0Capitalized interest expense
    
    
    (1,190
    )
    
    
    14
    %
    
    
    (1,046
    )Net interest expense
    
    $
    4,127
    
    
    
    21
    %
    
    $
    3,419Weighted average debt outstanding
    
    $
    315,101
    
    
    
    72
    %
    
    $
    182,821Average interest rate on outstanding indebtedness (a)
    
    
    6.5
    %
    
    
    
    
    
    
    9.4
    %
 
 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 March 31,2009
    
    
    % Change
    
    
    2008(In thousands)Other income (expense):Non-cash gain (loss)
    
    $
    21
    
    
    
    2000
    %
    
    $
    1Income (expense)
    
    
    94
    
    
    
    (69
    %)
    
    
    306Total other income (expense)
    
    $
    115
    
    
    
    (63
    %)
    
    $
    307
 Income taxes.
 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;
  24




---



##### Table of Contents




    
    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.
   Amount2009
    
    
    Spent Through
    
    
    AmountBudget
    
    
    March 31, 2009
    
    
    Remaining (a)(In millions)Drilling
    
    $
    26.7
    
    
    $
    22.9
    
    
    $
    3.8Net land and seismic (b)
    
    
    (2.4
    )
    
    
    (6.5
    )
    
    NMCapitalized costs (c)
    
    
    12.5
    
    
    
    2.7
    
    
    
    9.8Asset retirement obligation
    
    
    0.3
    
    
    
    0.2
    
    
    
    0.1Total oil and gas capital expenditures (d)
    
    $
    37.1
    
    
    $
    19.3
    
    
    $
    13.7
 
 (a)
    
    Calculated based on the 2009 capital expenditure budget included with our Form 10-K for 2008 less amounts spent through March 31, 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.
   25




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##### 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 under our senior credit agreement.
   Senior Credit Agreement
     26




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##### Table of Contents



Percent of
    
    EurodollarBorrowing Base
    
    Rate
    
    
    Base RateUtilized
    
    Advances
    
    
    Advances(1)< 50%
    
    
    1.500
    %
    
    
    0.000
    %>50% and < 75%
    
    
    1.750
    %
    
    
    0.250
    %>75% and < 90%
    
    
    2.000
    %
    
    
    0.500
    %>90%
    
    
    2.250
    %
    
    
    0.750
    %
 
 (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< 50%
    
    
    0.300
    %>50% and < 75%
    
    
    0.375
    %>75% and < 90%
    
    
    0.500
    %> 90%
    
    
    0.500
    %
   Mandatorily Redeemable Preferred Stock
   27




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##### Table of Contents



Access to Capital Markets
  Off Balance Sheet Arrangements
  Analysis of Changes in Cash and Cash Equivalents
  Three months ended March 31,2009
    
    
    %Change
    
    
    2008(In thousands)Net income (loss)
    
    $
    (119,071
    )
    
    NM
    
    
    $
    1,527Non-cash items
    
    
    128,427
    
    
    
    553
    %
    
    
    19,680Changes in working capital and other items
    
    
    4,079
    
    
    
    (43
    %)
    
    
    7,128Cash flows provided by operating activities
    
    $
    13,435
    
    
    
    (53
    %)
    
    $
    28,335Cash flows used by investing activities
    
    
    (26,389
    )
    
    
    (41
    %)
    
    
    (45,034
    )Cash flows provided by financing activities
    
    
    (58
    )
    
    NM
    
    
    
    9,002Net increase in cash and cash equivalents
    
    $
    (13,012
    )
    
    
    69
    %
    
    $
    (7,697
    )
 Analysis of net cash provided by operating activities
   Analysis of changes in cash flows used in investing activities
 Three months ended March 31,2009
    
    
    %Change
    
    
    2008(In thousands)Capital expenditures for oil and natural gas activities:Drilling
    
    $
    22,940
    
    
    
    (26
    %)
    
    $
    31,200Land and seismic
    
    
    (6,471
    )
    
    NM
    
    
    
    10,833Capitalized cost
    
    
    2,740
    
    
    
    (20
    %)
    
    
    3,410Capitalized asset retirement obligation
    
    
    172
    
    
    
    182
    %
    
    
    61Total
    
    $
    19,381
    
    
    
    (57
    %)
    
    $
    45,504Reconciling Items:Change in accrued drilling costs
    
    $
    8,095
    
    
    NM
    
    
    $
    (609
    )Other
    
    
    (1,087
    )
    
    NM
    
    
    
    139Total Reconciling Items
    
    
    7,008
    
    
    NM
    
    
    
    (470
    )Net cash used in investing activities
    
    $
    26,389
    
    
    
    (41
    %)
    
    $
    45,034
  28




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##### Table of Contents




    
    net land and seismic expenditures decreased by $17.3 million;
    
    drilling expenditures decreased by $8.3 million;
    
    capitalized costs decreased by $0.7 million; and
    
    the change in accrued drilling costs increased cash used in investing activities by $8.7
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:Exercise of employee stock options
    
    
    500
    
    
    $
    12008 common stock transactions:Exercise of employee stock options
    
    
    33,500
    
    
    $
    134
 Other Matters
 Derivative Instruments
  Effects of Inflation and Changes in Prices
  Environmental and Other Regulatory Matters
   29




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##### Table of Contents



New Accounting Pronouncements
        30




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##### Table of Contents



SEC Rulemaking
  Forward-looking Information
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Management Opinion Concerning Derivative Instruments
  Derivative Instruments and Hedging Activities
    31




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##### Table of Contents



Natural
    
    
    Purchased
    
    
    WrittenGas
    
    
    Put
    
    
    CallSettlement Period
    
    (MMbtu)
    
    
    (Nymex)
    
    
    (Nymex)Natural Gas Costless Collars04/01/09  04/30/09
    
    
    50,000
    
    
    $
    7.00
    
    
    $
    7.5004/01/09  04/30/09
    
    
    20,000
    
    
    $
    7.25
    
    
    $
    9.8004/01/09  04/30/09
    
    
    70,000
    
    
    $
    8.00
    
    
    $
    8.0004/01/09  04/30/09
    
    
    40,000
    
    
    $
    5.75
    
    
    $
    7.5010/01/09  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
    
    
    $
    7.00
 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
    
    
    $
    5.5004/01/09  04/30/09
    
    
    70,000
    
    
    $
    6.25
    
    
    $
    8.80
    
    
    $
    4.7510/01/09  03/31/10
    
    
    360,000
    
    
    $
    5.75
    
    
    $
    7.00
    
    
    $
    3.50
 Natural
    
    
    SwapGas
    
    
    PriceSettlement Period
    
    (MMbtu)
    
    
    (Nymex)Natural Gas Swaps04/01/09  05/31/09
    
    
    80,000
    
    
    $
    5.86504/01/09  06/30/09
    
    
    90,000
    
    
    $
    4.64004/01/09  08/31/09
    
    
    350,000
    
    
    $
    4.74510/01/09  12/31/09
    
    
    60,000
    
    
    $
    4.90005/01/09  12/31/09
    
    
    300,000
    
    
    $
    4.44005/01/09  09/30/09
    
    
    250,000
    
    
    $
    4.09005/01/09  09/30/09
    
    
    250,000
    
    
    $
    3.96005/01/09  09/30/09
    
    
    650,000
    
    
    $
    4.000
  32




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##### Table of Contents



Crude
    
    
    Purchased
    
    
    WrittenOil
    
    
    Put
    
    
    CallSettlement Period
    
    (Bbls)
    
    
    (Nymex)
    
    
    (Nymex)Oil Costless Collars04/01/09  06/30/09
    
    
    9,000
    
    
    $
    62.00
    
    
    $
    81.75
 Crude
    
    
    SwapOil
    
    
    PriceSettlement Period
    
    (Bbls)
    
    
    (Nymex)Oil Swaps04/01/09  12/31/09
    
    
    90,000
    
    
    $
    50.75
 
 ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
   33




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##### Table of Contents



PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  The
proposed United States federal budget for fiscal year 2010 and other
pending legislation contain certain provisions that, if passed as
originally submitted, will have an adverse effect on our financial
position, results of operations, and cash flows.
  
 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 ShareJanuary 2009
    
    
    11,431
    
    
    $
    3.105
 
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSON OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. OTHER INFORMATION
  
 ITEM 6. EXHIBITS
 10.41*
    
    Agreement terminating the Consulting Agreement dated May 1, 1997, by and between Brigham Oil & Gas, L.P. and Harold D. Carter10.42*
    
    Form of Amendment to Option Agreement31.1
    
    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.  34




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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  35




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description10.41*
    
    Agreement terminating the Consulting Agreement dated May 1, 1997, by and between Brigham
Oil & Gas, L.P. and Harold D. Carter10.42*
    
    Form of Amendment to Option Agreement31.1
    
    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.