<PAGE>   1
===============================================================================


                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q

             [X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934


                 For the quarterly period ended March 31, 1999

                                       OR

             [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

              For the transition period from           to
                                             ---------    ---------

                        Commission File Number 000-22433

                          BRIGHAM EXPLORATION COMPANY
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                <C>                                <C>
         DELAWARE                             1311                          75-2692967
 (State of other jurisdiction       (Primary Standard Industrial         (I.R.S. Employer
of incorporation or organization)    Classification Code Number)       Identification Number)
</TABLE>

                           6300 BRIDGE POINT PARKWAY
                               BLDG. 2, SUITE 500
                              AUSTIN, TEXAS 78730
                                 (512) 427-3300

(Name, address, including zip code, and telephone number, including area code,
                 of Registrant's principal executive offices)


   Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months (or such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes  X .  No   .
    ---     ---
As of April 30, 1999, 14,309,071 shares of Common Stock, $.01 per share, were
outstanding.
===============================================================================

<PAGE>   2




                          BRIGHAM EXPLORATION COMPANY

                                     INDEX

<TABLE>
<CAPTION>

                                                                                                 PAGE
PART I.   FINANCIAL INFORMATION:                                                                NUMBER
                                                                                                ------
<S>                                                                                             <C>
Item 1.   Unaudited Financial Statements

              Condensed Consolidated Financial Statements of Brigham Exploration Company
                  Balance Sheets - December 31, 1998 and March 31, 1999............................1
                  Statements of Operations - Three months ended
                    March 31, 1998 and 1999........................................................2
                  Statements of Cash Flows - Three months ended
                    March 31, 1998 and 1999........................................................3
                  Statement of Changes in Stockholders' Equity - March 31, 1999....................4
                  Notes to Condensed Consolidated Financial Statements...........................5 - 6

              Condensed Financial Statements of Brigham Exploration Company Subsidiaries
                  Balance Sheets - March 31, 1999..................................................7
                  Balance Sheets - December 31, 1998...............................................8
                  Statements of Operations - Three months ended March 31, 1999.....................9
                  Statements of Operations - Three months ended March 31, 1998....................10
                  Statements of Cash Flows - Three months ended March 31, 1999....................11
                  Statements of Cash Flows - Three months ended March 31, 1998....................12
                  Statements of Changes in Equity - March 31, 1999................................13
                  Statements of Changes in Equity - March 31, 1998................................14
                  Notes to Condensed Financial Statements........................................15-16

          As all Brigham Exploration Company subsidiaries fully and
          unconditionally guarantee the Senior Subordinated Secured Notes and
          the Company has no significant assets other than its investments in
          its subsidiaries, the consolidated financial statements are
          substantially the same as the financial statements of the subsidiary
          guarantors and separate financial statements have been omitted as
          they would not be meaningful to investors.

Item 2.   Management's Discussion and Analysis of Results of
              Operations and Financial Condition................................................17 - 23


PART II.  OTHER INFORMATION:

Item 2.   Changes in Securities...................................................................24

Item 6.   Exhibits and Reports on Form 8-K........................................................24
</TABLE>


<PAGE>   3

PART I. FINANCIAL INFORMATION:

Item 1. Financial Statements

                          BRIGHAM EXPLORATION COMPANY

                            CONDENSED CONSOLIUDATED
                                BALANCE SHEETS
                                (in thousands)


<TABLE>
<CAPTION>

                                                                              December 31,         March 31,
                                                                                  1998               1999
                                                                              ------------         ---------
                                                                                                  (unaudited)
                                     ASSETS
<S>                                                                           <C>                  <C>      
 Currennt assets:
    Cash and cash equivalents                                                 $      2,569         $   7,018
    Accounts receivable                                                              7,938             4,599
    Prepaid expenses                                                                   290               257
                                                                              ------------         ---------
       Total current assets                                                         10,797            11,874
                                                                              ------------         ---------

 Natural gas and oil properties, at cost, net                                      134,317           133,283
 Other property and equipment, at cost, net                                          2,014             1,953
 Drilling advances paid                                                                230               310
 Deferred loan fees                                                                  3,146             3,632
 Other noncurrent assets                                                                12               181
                                                                              ------------         ---------
                                                                              $    150,516         $ 151,233
                                                                              ============         =========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

 Current liabilities:
    Accounts payable                                                          $     19,883         $  19,660
    Accrued drilling costs                                                           1,219             2,012
    Participant advances received                                                      764               661
    Other current liabilities                                                        1,647             1,505
                                                                              ------------         ---------
       Total current liabilities                                                    23,513            23,838
                                                                              ------------         ---------

 Notes payable                                                                      59,000            59,000
 Senior subordianted notes, net                                                     35,786            36,699
 Other noncurrent liabilities                                                        7,536             5,573

 Stockholders' equity:
    Preferred stock, $.01 par value, 10 million shares
       authorized, none issued and outstanding                                        --                --
    Common stock, $.01 par value, 30 million shares
       authorized, 13,306,206 and 14,309,071 issued and outstanding at                 133               143
       December 31, 1998 and March 31, 1999, respectively
    Additional paid-in capital                                                      58,838            62,817
    Unearned stock compensation                                                       (890)             (768)
    Accumulated deficit                                                            (33,400)          (36,069)
                                                                              ------------         ---------
        Total stockholders' equity                                                  24,681            26,123
                                                                              ------------         ---------
                                                                              $    150,516         $ 151,233
                                                                              ============         =========
</TABLE>



  See accompanying notes to the condensed consolitdated financial statements.

                                       1

<PAGE>   4


                          BRIGHAM EXPLORATION COMPANY

                             CONDENSED CONSOLIDATED
                            STATEMENTS OF OPERATIONS
                     (in thousands, except per share data)
                                  (unaudited)

<TABLE>
<CAPTION>

                                                               Three Months
                                                              Ended March 31,
                                                         ------------------------
                                                          1998             1999
                                                         -------         --------
<S>                                                        <C>           <C>     
 Revenues:
      Natural gas and oil sales                          $ 3,143         $  3,191
      Workstation revenue                                    114               90
                                                         -------         --------
                                                           3,257            3,281
                                                         -------         --------
 Costs and expenses:
      Lease operating                                        414              535
      Production taxes                                       188              169
      General and administrative                           1,154              918
      Depletion of natural gas and oil properties          1,270            1,350
      Depreciation and amortization                           83              127
      Amortization of stock compensation                     117               58
                                                         -------         --------
                                                           3,226            3,157
                                                         -------         --------
        Operating income (loss)                               31              124
                                                         -------         --------

 Other income (expense):
      Interest income                                         37               24
      Interest expense                                    (1,022)          (2,817)
                                                         -------         --------
                                                            (985)          (2,793)
                                                         -------         --------

 Net loss before income taxes                               (954)          (2,669)
 Income tax benefit                                          322             --
                                                         -------         --------
      Net loss                                           $  (632)        $ (2,669)
                                                         =======         ========

 Net loss per share:
      Basic / Diluted                                    $ (0.05)        $  (0.20)

 Weighted average common shares outstanding:
      Basic / Diluted                                     12,254           13,317
</TABLE>



   See accompanying notes to the condensed consolidated financial statements.

                                       2



<PAGE>   5


                          BRIGHAM EXPLORATION COMPANY

                             CONDENSED CONSOLIDATED
                            STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                  (unaudited)

<TABLE>
<CAPTION>

                                                                                         Three                Three
                                                                                      Months Ended        Months Ended
                                                                                         March 31,           March 31,
                                                                                           1998                1999
                                                                                        -----------         -----------
<S>                                                                                     <C>                 <C>         
 Cash flows from operating activities:
      Net loss                                                                          $      (632)        $    (2,669)
      Adjustments to reconcile net loss to cash (used)
      provided by operating activities:
          Depletion of natural gas and oil properties                                         1,270               1,350
          Depreciation and amortization                                                          83                 127
          Amortization of stock compensation                                                    117                  58
          Interest paid through issuance of additional senior subordinated notes               --                 1,300
          Amortization of deferred loan fees                                                    106                 262
          Amortization of discount on senior subordinated notes                                --                    92
          Changes in deferred income tax liability                                             (322)               --
          Changes in working capital and other items:
             (Increase) decrease in accounts receivable                                        (601)              3,339
             Decrease in prepaid expenses                                                        13                  33
             Increase (decrease) in accounts payable                                         (6,073)              2,543
             Increase (decrease) in participant advances received                             2,621                (103)
             Increase (decrease) in other current liabilities                                   648                (150)
             Other noncurrent assets                                                              4                (169)
             Other noncurrent liabilities                                                       (30)             (1,649)
                                                                                        -----------         -----------
             Net cash (used) provided by operating activities                                (2,796)              4,364
                                                                                        -----------         -----------

 Cash flows from investing activities:
      Additions to natural gas and oil properties                                           (12,993)             (9,459)
      Proceeds from sale of natural gas and oil properties                                     --                10,000
      Additions to other property and equipment                                                (159)                (15)
      (Increase) decrease in drilling advances paid                                              16                 (80)
                                                                                        -----------         -----------
             Net cash (used) provided by investing activities                               (13,136)                446
                                                                                        -----------         -----------

 Cash flows from financing activities:
      Increase in notes payable                                                              52,800                --
      Repayment of notes payable                                                            (34,800)               --
      Principal payments on capital lease obligations                                           (58)                (63)
      Deferred loan fees paid                                                                (1,911)               (298)
                                                                                        -----------         -----------
             Net cash (used) provided by financing activities                                16,031                (361)
                                                                                        -----------         -----------

 Net increase in cash and cash equivalents                                                       99               4,449

 Cash and cash equivalents, beginning of period                                               1,701               2,569
                                                                                        -----------         -----------
 Cash and cash equivalents, end of period                                               $     1,800         $     7,018
                                                                                        ===========         ===========

 Supplemental disclosure of cash flow information:
      Cash paid during the period for interest                                          $       475         $     1,174
                                                                                        ===========         ===========

 Supplemental disclosure of noncash investing and financing activities:
      Capital lease asset additions                                                     $        59         $        51
                                                                                        ===========         ===========
      Decrease in accounts payable and other noncurrent liabilities in exchange
          for issuance of common stock                                                  $      --           $     3,510
                                                                                        ===========         ===========
      Increase in accounts payable for deferred loan fees to be
          paid in future periods                                                        $      --           $       450
                                                                                        ===========         ===========
</TABLE>


   See accompanying notes to the condensed consolidated financial statements.

                                       3


<PAGE>   6


                          BRIGHAM EXPLORATION COMPANY

                             CONDENSED CONSOLIDATED
                  STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                                 (in thousands)
                                  (unaudited)

<TABLE>
<CAPTION>

                                                                
                                          Common Stock            Additional        Unearned
                                      ---------------------         Paid-in           Stock              Accum.
                                        Shares      Amounts         Capital        Compensation          Deficit            Total
                                      ----------    -------        ----------      -------------        ----------         -------
<S>                                   <C>           <C>           <C>               <C>                <C>                <C>    
 Balance, December 31, 1998           13,306,206    $  133        $   58,838        $     (890)        $  (33,400)        $ 24,681

      Net loss for the period
          ended March 31, 1999          --            --                --                --               (2,669)          (2,669)
      Issuance of common stock         1,002,865        10             3,500              --                 --              3,510
      Revision in terms of
          warrants                      --            --                 479              --                 --                479
      Amortization of unearned
          stock compensation            --            --                --                 122               --                122
                                      ----------    ------        ----------        ----------         ----------         --------
 Balance, March 31, 1999              14,309,071    $  143        $   62,817        $     (768)        $  (36,069)        $ 26,123
                                      ==========    ======        ==========        ==========         ==========         ========
</TABLE>





   See accompanying notes to the condensed consolidated financial statements.

                                       4




<PAGE>   7



                          BRIGHAM EXPLORATION COMPANY

                             NOTES TO THE CONDENSED
                       CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)


1.     Organization and Nature of Operations

       Brigham Exploration Company (the "Company") is a Delaware corporation
       formed on February 25, 1997 for the purpose of exchanging its common
       stock for the common stock of Brigham, Inc. and the partnership
       interests of Brigham Oil & Gas, L.P. (the "Partnership"). Brigham, Inc.
       is a Nevada corporation whose only asset is its ownership interest in
       the Partnership. The Partnership was formed in May 1992 to explore and
       develop onshore domestic natural gas and oil properties using 3-D
       seismic imaging and other advanced technologies. Since its inception,
       the Partnership has focused its exploration and development of natural
       gas and oil properties primarily in West Texas, the Anadarko Basin and
       the onshore Gulf Coast.

       Pursuant to an exchange agreement dated February 26, 1997 (the "Exchange
       Agreement") and upon the initial filing on February 27, 1997 of a
       registration statement with the Securities and Exchange Commission (the
       "SEC") for the public offering of common stock (the "Offering"), the
       shareholders of Brigham, Inc. transferred all of the outstanding stock
       of Brigham, Inc. to the Company in exchange for 3,859,821 shares of
       common stock of the Company. Pursuant to the Exchange Agreement, the
       Partnership's other general partner and the limited partners also
       transferred all of their partnership interests to the Company in
       exchange for 3,314,286 shares of common stock of the Company.
       Furthermore, the holders of the Partnership's subordinated convertible
       notes transferred these notes to the Company in exchange for 1,754,464
       shares of common stock. These transactions are referred to as the
       "Exchange." In completing the Exchange, the Company issued 8,928,571
       shares of common stock to the stockholders of Brigham, Inc., the
       partners of the Partnership and the holder of the Partnership's
       subordinated notes payable. As a result of the Exchange, the Company now
       owns all the partnership interests in the Partnership. In May 1997, the
       Company sold 3,325,000 shares of its common stock in the Offering at a
       price of $8.00 per share.

2.     BASIS OF PRESENTATION

       The accompanying financial statements include the accounts of the
       Company and its wholly-owned subsidiaries, and its proportionate share
       of assets, liabilities and income and expenses of the limited
       partnerships in which the Company, or any of its subsidiaries has a
       participating interest. All significant intercompany accounts and
       transactions have been eliminated.

       The accompanying condensed consolidated financial statements are
       unaudited, and in the opinion of management, reflect all adjustments
       that are necessary for a fair presentation of the financial position and
       results of operations for the periods presented. All such adjustments
       are of a normal and recurring nature. The results of operations for the
       periods presented are not necessarily indicative of the results to be
       expected for the entire year. The unaudited condensed consolidated
       financial statements should be read in conjunction with the Company's
       1998 Annual Report on Form 10-K pursuant to Section 13 or 15(d) of the
       Securities Exchange Act of 1934.



                                       5

<PAGE>   8



                          BRIGHAM EXPLORATION COMPANY

                             NOTES TO THE CONDENSED
                       CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)


3.     SALE OF NATURAL GAS AND OIL PROPERTIES

       In February 1999, the Company entered into a project financing
       arrangement with Duke Energy Financial Services, Inc. ("Duke") to fund
       the continued exploration of five projects covered by approximately 200
       square miles of 3-D seismic data acquired in 1998. In this transaction,
       the Company conveyed 100% of its working interest in land and seismic in
       these project areas to a newly formed limited liability company (the
       "Duke LLC") for a total consideration of $10 million. The Company is the
       managing member of the Duke LLC with a 1% interest, and Duke is the sole
       remaining member with a 99% interest. Pursuant to the terms of the Duke
       LLC agreement, the Company pays 100% of the drilling and completion
       costs for all wells drilled by the Duke LLC in exchange for a 70%
       working interest in the wells and their associated drilling and spacing
       units and allocable seismic data. Upon 100% project payout, the Company
       has certain rights to back-in for up to a 94% effective working interest
       in the Duke LLC properties.

4.     ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

       In June 1998, the Financial Accounting Standards Board (the "FASB")
       issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging
       Activities." SFAS No. 133 requires that all derivative instruments be
       recorded on the balance sheet at fair value. Changes in the fair value
       of derivatives are recorded each period in current earnings or other
       comprehensive income, depending on whether a derivative is designated as
       part of a hedge transaction and, if it is, depending on the type of
       hedge transaction. For fair value hedge transactions in which the
       Company is hedging changes in an asset's, liability's, or firm
       commitment's fair value, changes in the fair value of the derivative
       instrument will generally be offset in the income statement by changes
       in the hedged item's fair value. For cash flow hedge transactions in
       which the Company is hedging the variability of cash flows related to a
       variable-rate asset, liability, or a forecasted transaction, changes in
       the fair value of the derivative instrument will be reported in other
       comprehensive income. The gains and losses on the derivative instrument
       that are reported in other comprehensive income will be reclassified as
       earnings in the periods in which earnings are impacted by the
       variability of the cash flows of the hedged item. The ineffective
       portion of all hedges will be recognized in current period earnings. The
       Company must adopt SFAS No. 133 effective January 1, 2000. The Company
       is in the process of analyzing the potential impact of this standard on
       its financial statement presentations.


                                       6

<PAGE>   9


                    BRIGHAM EXPLORATION COMPANY SUBSIDIARIES

                            CONDENSED BALANCE SHEETS
                              AS OF MARCH 31, 1999
                                 (in thousands)
                                  (unaudited)

<TABLE>
<CAPTION>

                                                                     BRIGHAM                           BRIGHAM        BRIGHAM
                                                                       OIL &          BRIGHAM,        HOLDINGS        HOLDINGS
                                                                     GAS, L.P.          INC.           I, LLC         II, LLC
<S>                                                                  <C>             <C>               <C>            <C>    
                                                          ASSETS
 Current assets:
      Cash and cash equivalents                                      $  6,998        $   7,013         $     5        $     6
      Accounts receivable                                               4,599            4,599            --             --
      Prepaid expenses                                                    257              257            --             --
                                                                     --------        ---------         -------        -------
         Total current assets                                          11,854           11,869               5              6
                                                                     --------        ---------         -------        -------

 Natural gas and oil properties, at cost, net                         133,283          133,283            --             --
 Other property and equipment, at cost, net                             1,953            1,953            --             --
 Investment in subsidiaries
      and intercompany advances                                            25               16          12,417         48,543
 Drilling advances paid                                                   310              310            --             --
 Deferred loan fees                                                     1,978            1,978            --             --
 Other noncurrent assets                                                  181              181            --             --
                                                                     --------        ---------         -------        -------
                                                                     $149,584        $ 149,590         $12,422        $48,549
                                                                     ========        =========         =======        =======

                                                   LIABILITIES AND EQUITY
 Current liabilities:
      Accounts payable                                               $ 19,660        $  19,660         $  --          $  --
      Accrued drilling costs                                            2,012            2,012            --             --
      Participant advances received                                       661              661            --             --
      Other current liabilities                                         1,488            1,488            --             --
                                                                     --------        ---------         -------        -------
         Total current liabilities                                     23,821           23,821            --             --
                                                                     --------        ---------         -------        -------

 Notes payable                                                         59,000           59,000            --             --
 Other noncurrent liabilities                                           5,573            5,573            --             --
 Intercompany accounts payable                                          1,740            1,757            --            1,724
 Intercompany notes payable                                            41,300           41,300            --           41,300

 Minority interest                                                       --             12,433            --             --

 Equity
      Partners' capital                                                18,150             --            12,422          5,525
      Common stock, $1.00 par value, 1,000 shares
        authorized, issued and outstanding                               --                  1            --             --
      Additional paid-in capital                                         --             17,215            --             --
      Accumulated deficit                                                --            (11,510)           --             --
                                                                     --------        ---------         -------        -------
         Total equity                                                  18,150            5,706          12,422          5,525
                                                                     --------        ---------         -------        -------
                                                                     $149,584        $ 149,590         $12,422        $48,549
                                                                     ========        =========         =======        =======
</TABLE>



  Natural gas and oil properties are accounted for using the full cost method.
         See accompanying notes to the condensed financial statements.

                                       7


<PAGE>   10

                    BRIGHAM EXPLORATION COMPANY SUBSIDIARIES

                            CONDENSED BALANCE SHEETS
                            AS OF DECEMBER 31, 1998
                                 (in thousands)

<TABLE>
<CAPTION>

                                                                    BRIGHAM                           BRIGHAM         BRIGHAM
                                                                     OIL &           BRIGHAM,         HOLDINGS        HOLDINGS
                                                                    GAS, L.P.         INC.             I, LLC         II, LLC
<S>                                                                  <C>             <C>               <C>            <C>    
                                                          ASSETS
 Current assets:
      Cash and cash equivalents                                      $  2,549        $   2,563         $     5        $     6
      Accounts receivable                                               7,938            7,938            --             --
      Prepaid expenses                                                    290              290            --             --
                                                                     --------        ---------         -------        -------
         Total current assets                                          10,777           10,791               5              6
                                                                     --------        ---------         -------        -------

 Natural gas and oil properties, at cost, net                         134,317          134,317            --             --
 Other property and equipment, at cost, net                             2,014            2,014            --             --
 Investment in subsidiaries
      and intercompany advances                                           115               16          11,714         46,913
 Drilling advances paid                                                   231              231            --             --
 Deferred loan fees                                                     1,397            1,397            --             --
 Other noncurrent assets                                                   12               12            --             --
                                                                     --------        ---------         -------        -------
                                                                     $148,863        $ 148,778         $11,719        $46,919
                                                                     ========        =========         =======        =======

                                                   LIABILITIES AND EQUITY
 Current liabilities:
      Accounts payable                                               $ 19,883        $  19,883         $  --          $  --
      Accrued drilling costs                                            1,219            1,219            --             --
      Participant advances received                                       764              764            --             --
      Other current liabilities                                         1,647            1,647            --             --
                                                                     --------        ---------         -------        -------
        Total current liabilities                                      23,513           23,513            --             --
                                                                     --------        ---------         -------        -------

 Notes payable                                                         59,000           59,000            --             --
 Other noncurrent liabilities                                           7,536            7,536            --             --
 Intercompany accounts payable                                          1,690            1,616            --            1,707
 Intercompany notes payable                                            40,000           40,000            --           40,000

 Minority interest                                                       --             11,730            --             --

 Equity
      Partners' capital                                                17,124             --            11,719          5,212
      Common stock, $1.00 par value, 1,000 shares
        authorized, issued and outstanding                               --                  1            --             --
      Additional paid-in capital                                         --             16,109            --             --
      Accumulated deficit                                                --            (10,727)           --             --
                                                                     --------        ---------         -------        -------
        Total equity                                                   17,124            5,383          11,719          5,212
                                                                     --------        ---------         -------        -------
                                                                     $148,863        $ 148,778         $11,719        $46,919
                                                                     ========        =========         =======        =======
</TABLE>

  Natural gas and oil properties are accounted for using the full cost method.

         See accompanying notes to the condensed financial statements.

                                       8

<PAGE>   11


                    BRIGHAM EXPLORATION COMPANY SUBSIDIARIES

                       CONDENSED STATEMENTS OF OPERATIONS
                   FOR THE THREE MONTHS ENDED MARCH 31, 1999
                                 (in thousands)
                                  (unaudited)

<TABLE>
<CAPTION>

                                                 BRIGHAM                        BRIGHAM         BRIGHAM
                                                  OIL &         BRIGHAM,        HOLDINGS        HOLDINGS
                                                 GAS, L.P.        INC.          I, LLC           II, LLC
<S>                                              <C>             <C>             <C>             <C>  
 Revenues:
      Natural gas and oil sales                  $ 3,191         $ 3,191         $  --           $  --
      Workstation revenue                             90              90            --              --
                                                 -------         -------         -------         -------
                                                   3,281           3,281            --              --
                                                 -------         -------         -------         -------
 Costs and expenses:
      Lease operating                                535             535            --              --
      Production taxes                               169             169            --              --
      General and administrative                     918             918            --              --
      Depletion of natural gas and oil properties  1,350           1,350            --              --
      Depreciation and amortization                  127             127            --              --
      Amortization of stock compensation              58              58            --              --
                                                 -------         -------         -------         -------
                                                   3,157           3,157            --              --
                                                 -------         -------         -------         -------
        Operating income                             124             124            --              --
                                                 -------         -------         -------         -------

 Other income (expense):
      Interest income                                 24              24            --              --
      Interest expense                            (1,315)         (1,315)           --              --
      Interest expense - intercompany             (1,317)         (1,317)           --            (1,317)
                                                 -------         -------         -------         -------
                                                  (2,608)         (2,608)           --            (1,317)
                                                 -------         -------         -------         -------

 Minority interest in net loss                      --            (1,701)           --              --

                                                 -------         -------         -------         -------
 Net loss before income taxes                     (2,484)           (783)           --            (1,317)

 Equity in net income (loss) of investee            --              --            (1,701)            559
                                                 -------         -------         -------         -------
      Net loss                                   $(2,484)        $  (783)        $(1,701)        $  (758)
                                                 =======         =======         =======         =======
</TABLE>



         See accompanying notes to the condensed financial statements.

                                       9

<PAGE>   12

                    BRIGHAM EXPLORATION COMPANY SUBSIDIARIES

                       CONDENSED STATEMENTS OF OPERATIONS
                   FOR THE THREE MONTHS ENDED MARCH 31, 1998
                                 (in thousands)
                                  (unaudited)

<TABLE>
<CAPTION>

                                                 BRIGHAM                       BRIGHAM      BRIGHAM
                                                 OIL &           BRIGHAM,      HOLDINGS     HOLDINGS
                                                GAS, L.P.          INC.         I, LLC       II, LLC
<S>                                              <C>             <C>             <C>           <C>
 Revenues:
      Natural gas and oil sales                  $ 3,143         $ 3,143         $--           $--
      Workstation revenue                            114             114          --            --
                                                 -------         -------         -----         -----
                                                   3,257           3,257          --            --
                                                 -------         -------         -----         -----
 Costs and expenses:
      Lease operating                                414             414          --            --
      Production taxes                               188             188          --            --
      General and administrative                   1,154           1,154          --            --
      Depletion of natural gas and oil properties  1,270           1,270          --            --
      Depreciation and amortization                   83              83          --            --
      Amortization of stock compensation             117             117          --            --
                                                 -------         -------         -----         -----
                                                   3,226           3,226          --            --
                                                 -------         -------         -----         -----
        Operating income                              31              31          --            --
                                                 -------         -------         -----         -----

 Other income (expense):
      Interest income                                 37              37          --            --
      Interest expense                            (1,022)         (1,022)         --            --
                                                 -------         -------         -----         -----
                                                    (985)           (985)         --            --
                                                 -------         -------         -----         -----

 Minority interest in net loss                      --              (653)         --            --
                                                 -------         -------         -----         -----
 Net loss before income taxes                       (954)           (301)         --            --

 Income tax benefit                                 --                94          --            --
 Equity in net loss of investee                     --              --            (653)         (291)
                                                 -------         -------         -----         -----
      Net loss                                   $  (954)        $  (207)        $(653)        $(291)
                                                 =======         =======         =====         =====
</TABLE>


         See accompanying notes to the condensed financial statements.

                                       10


<PAGE>   13


                    BRIGHAM EXPLORATION COMPANY SUBSIDIARIES

                       CONDENSED STATEMENTS OF CASH FLOWS
                   FOR THE THREE MONTHS ENDED MARCH 31, 1999
                                 (in thousands)
                                  (unaudited)

<TABLE>
<CAPTION>

                                                                        BRIGHAM                          BRIGHAM          BRIGHAM
                                                                          OIL &          BRIGHAM,        HOLDINGS         HOLDINGS
                                                                        GAS, L.P.          INC.           I, LLC          II, LLC
<S>                                                                     <C>              <C>              <C>             <C>     
 Cash flows from operating activities:
      Net loss                                                          $ (2,484)        $   (783)        $(1,701)        $  (758)
      Adjustments to reconcile net loss to cash
      provided by operating activities:
          Depletion of natural gas and oil properties                      1,350            1,350            --              --
          Depreciation and amortization                                      127              127            --              --
          Amortization of stock compensation                                  58               58            --              --
          Amortization of deferred loan fees and debt issuance costs         168              168            --              --
          Minority interest in net loss                                     --             (1,701)           --              --
          Equity in net (income) loss of investee                           --               --             1,701            (559)
          Changes in working capital and other items:
             Decrease in accounts receivable                               3,339            3,339            --              --
             Decrease in prepaid expenses                                     33               33            --              --
             Increase in accounts payable                                  2,543            2,543            --              --
             Decrease in participant advances received                      (103)            (103)           --              --
             Decrease in other current liabilities                          (167)            (167)           --              --
             Increase in intercompany accounts payable                        17               18            --                17
             Other noncurrent assets                                        (169)            (169)           --              --
             Other noncurrent liabilities                                 (1,649)          (1,649)           --              --
                                                                        --------         --------         -------         -------
                                                                           3,063            3,064            --            (1,300)
                                                                        --------         --------         -------         -------
 Cash flows from investing activities:
      Additions to natural gas and oil properties                         (9,459)          (9,459)           --              --
      Proceeds from sale of natural gas and oil properties                10,000           10,000            --              --
      Additions to other property and equipment                              (15)             (15)           --              --
      Change in drilling advances paid                                       (79)             (79)           --              --
                                                                        --------         --------         -------         -------
                                                                             447              447            --              --
                                                                        --------         --------         -------         -------
 Cash flows from financing activities:
      Increase in intercompany notes payable                               1,300            1,300            --             1,300
      Principal payments on capital lease obligations                        (63)             (63)           --              --
      Deferred loan fees                                                    (298)            (298)           --              --
                                                                        --------         --------         -------         -------
                                                                             939              939            --             1,300
                                                                        --------         --------         -------         -------

 Net increase in cash and cash equivalents                                 4,449            4,450            --              --

 Cash and cash equivalents, beginning of period                            2,549            2,563               5               6
                                                                        --------         --------         -------         -------
 Cash and cash equivalents, end of period                               $  6,998            7,013         $     5         $     6
                                                                        ========         ========         =======         =======

 Supplemental disclosure of cash flow information:
      Cash paid during the period for interest                          $  1,343         $  1,343         $  --           $  --

 Supplemental disclosure of noncash investing and
      financing activities:
      Capital lease asset additions                                     $     51         $     51         $  --           $  --
      Increase in accounts payable for deferred loan fees to be
          paid in future periods                                        $    450         $    450         $  --           $  --
      Capital contribution received in exchange for accounts
          payable and other noncurrent liabilities                      $  3,510         $   --           $  --           $  --
      Intercompany capital contributions                                $   --           $  1,106         $ 2,404         $ 1,071
</TABLE>


         See accompanying notes to the condensed financial statements.

                                       11


<PAGE>   14

                    BRIGHAM EXPLORATION COMPANY SUBSIDIARIES

                       CONDENSED STATEMENTS OF CASH FLOWS
                   FOR THE THREE MONTHS ENDED MARCH 31, 1998
                                 (in thousands)
                                  (unaudited)

<TABLE>
<CAPTION>

                                                                         BRIGHAM                          BRIGHAM          BRIGHAM
                                                                          OIL &          BRIGHAM,         HOLDINGS         HOLDINGS
                                                                         GAS, L.P.         INC.            I, LLC           II, LLC
<S>                                                                     <C>              <C>              <C>              <C>      
 Cash flows from operating activities:
      Net loss                                                          $   (954)        $   (207)        $   (653)        $   (291)
      Adjustments to reconcile net loss to cash
      provided by operating activities:
          Depletion of natural gas and oil properties                      1,270            1,270             --               --
          Depreciation and amortization                                       83               83             --               --
          Amortization of stock compensation                                 117              117             --               --
          Amortization of deferred loan fees and debt issuance costs         106              106             --               --
          Minority interest in net loss                                     --               (653)            --               --
          Equity in net loss of investee                                    --               --                653              291
          Changes in working capital and other items:
             Increase in accounts receivable                                (601)            (601)            --               --
             Decrease in prepaid expenses                                     13               13             --               --
             Decrease in accounts payable                                 (6,073)          (6,073)            --               --
             Increase in participant advances received                     2,621            2,621             --               --
             Increase in other current liabilities                           648              648             --               --
             Decrease in deferred income tax liability                      --                (94)            --               --
             Other noncurrent assets                                           3                3             --               --
             Other noncurrent liabilities                                    (29)             (29)            --               --
                                                                        --------         --------         --------         --------
                                                                          (2,796)          (2,796)            --               --
                                                                        --------         --------         --------         --------
 Cash flows from investing activities:
      Additions to natural gas and oil properties                        (12,993)         (12,993)            --               --
      Additions to other property and equipment                             (159)            (159)            --               --
      Change in drilling advances paid                                        16               16             --               --
                                                                        --------         --------         --------         --------
                                                                         (13,136)         (13,136)            --               --
                                                                        --------         --------         --------         --------
 Cash flows from financing activities:
      Increase in notes payable                                           52,800           52,800             --               --
      Repayment of notes payable                                         (34,800)         (34,800)            --               --
      Principal payments on capital lease obligations                        (58)             (58)            --               --
      Deferred loan fees                                                  (1,911)          (1,911)            --               --
                                                                        --------         --------         --------         --------
                                                                          16,031           16,031             --               --
                                                                        --------         --------         --------         --------

 Net increase in cash and cash equivalents                                    99               99             --               --

 Cash and cash equivalents, beginning of period                            1,701            1,701             --               --
                                                                        --------         --------         --------         --------
 Cash and cash equivalents, end of period                               $  1,800         $  1,800         $   --           $   --   
                                                                        ========         ========         ========         ========

 Supplemental disclosure of cash flow information:
      Cash paid during the period for interest                          $    475         $    475         $   --           $   --   

 Supplemental disclosure of noncash investing and
      financing activities:
      Capital lease asset additions                                     $     51         $     51         $   --           $   --
      Intercompany capital contributions                                $   --           $   --           $ 29,911         $ 13,318
</TABLE>



         See accompanying notes to the condensed financial statements.

                                       12



<PAGE>   15


                    BRIGHAM EXPLORATION COMPANY SUBSIDIARIES

                   CONDENSED STATEMENTS OF CHANGES IN EQUITY
                         (in thousands, except shares)
                                  (unaudited)

<TABLE>
<CAPTION>

                                                                                   
                                                                                  Retained
                                             Common Stock          Additional     Earnings/
                                        -----------------------     Paid-in      Accumulated     Partners'
                                          Shares        Amounts      Capital       Deficit        Capital        Total
                                        ------------   ---------   -----------   -------------   -----------    ----------
<S>                                    <C>            <C>          <C>           <C>            <C>            <C>
BRIGHAM OIL & GAS, L.P.
     Balance,
      December 31, 1998                            -   $       -   $         -   $           -   $    17,124    $   17,124  
     Capital contribution                          -           -             -               -         3,510         3,510
     Net loss                                      -           -             -               -        (2,484)       (2,484)
                                        ------------   ---------   -----------   -------------   -----------    ----------
     Balance,
      March 31, 1999                               -   $       -   $         -   $           -   $    18,150    $   18,150 
                                        ============   =========   ===========   =============   ===========    ==========

BRIGHAM INC.
     Balance,
      December 31, 1998                        1,000    $      1   $    16,109   $     (10,727)  $         -    $    5,383 
     Capital contribution                          -           -         1,106               -             -         1,106
     Net loss                                      -           -             -            (783)            -          (783)
                                        ------------   ---------   -----------   -------------   -----------    ----------
     Balance,
       March 31, 1999                          1,000   $       1   $    17,215   $     (11,510)  $         -    $    5,706 
                                        ============   =========   ===========   =============   ===========    ==========

BRIGHAM HOLDING I, LLC
     Balance,
      December 31, 1998                            -   $       -   $         -   $           -   $    11,719    $   11,719 
     Capital contribution                          -           -             -               -         2,404         2,404
     Net loss                                      -           -             -               -        (1,701)       (1,701)
                                        ------------   ---------   -----------   -------------   -----------    ----------
     Balance,
      March 31, 1999                               -   $       -   $         -   $           -   $    12,422    $   12,422 
                                        ============   =========   ===========   =============   ===========    ==========

BRIGHAM HOLDINGS II, LLC
     Balance,
      December 31, 1998                            -   $       -   $         -   $           -   $     5,212   $     5,212 
     Capital contribution                          -           -             -               -         1,071         1,071
     Net loss                                      -           -             -               -          (758)         (758)
                                        ------------   ---------   -----------   -------------   -----------    ----------
     Balance,
      March 31, 1999                             -     $     -     $         -   $           -   $     5,525   $     5,525 
                                        ============   =========   ===========   =============   ===========    ==========

</TABLE>



         See accompanying notes to the condensed financial statements.

                                       13

<PAGE>   16

                    BRIGHAM EXPLORATION COMPANY SUBSIDIARIES


                   CONDENSED STATEMENTS OF CHANGES IN EQUITY
                         (in thousands, except shares)
                                  (unaudited)

<TABLE>
<CAPTION>

                                                                                  Retained
                                             Common Stock           Additional    Earnings/
                                       --------------------------   Paid-in      Accumulated     Partners'
                                          Shares        Amounts      Capital       Deficit        Capital        Total
                                       -------------   ----------  -----------  -------------  ------------  ------------
<S>                                   <C>             <C>          <C>         <C>            <C>          <C>
BRIGHAM OIL & GAS, L.P.
     Balance,
      December 31, 1997                            -   $        -  $         -  $           -  $     43,665  $     43,665
     Net loss                                      -            -            -              -          (954)         (954)
                                       -------------   ----------  -----------  -------------  ------------  ------------
     Balance,
      March 31, 1998                               -   $        -  $         -  $           -  $     42,711  $     42,711
                                       =============   ==========  ===========  =============  ============  ============

BRIGHAM INC.
     Balance,
      December 31, 1997                        1,000   $       1   $    13,732  $      (5,066) $         -   $      8,667
     Net loss                                      -           -             -           (207)           -           (207)
                                       -------------   ----------  -----------  -------------  ------------  ------------
     Balance,
      March 31, 1998                           1,000   $        1  $    13,732  $      (5,273) $          -  $      8,460
                                       =============   ==========  ===========  =============  ============  ============

BRIGHAM HOLDING I, LLC
     Balance,
       December 31, 1997                           -    $       -  $         -  $           -  $          -  $         -
     Partnership interest
       contributed                                 -            -            -              -        29,911        29,911
     Net loss                                      -            -            -              -          (653)         (653)
                                       -------------   ----------  -----------  -------------  ------------  ------------
     Balance,
      March 31, 1998                               -   $        -  $         -  $           -  $     29,258  $     29,258
                                       =============   ==========  ===========  =============  ============  ============

BRIGHAM HOLDINGS II, LLC
     Balance,
      December 31, 1997                            -   $        -  $         -  $           -  $          -  $          -
     Partnership interest
      contributed                                  -            -            -              -        13,318        13,318
     Net loss                                      -            -            -              -          (291)         (291)
                                       -------------   ----------  -----------  -------------  ------------  ------------
     Balance,
      March 31, 1998                               -   $        -  $         -  $           -  $     13,027  $     13,027
                                       =============   ==========  ===========  =============  ============  ============
</TABLE>


         See accompanying notes to the condensed financial statements.

                                       14


<PAGE>   17



                          BRIGHAM EXPLORATION COMPANY

                             NOTES TO THE CONDENSED
                       CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)


1.     ORGANIZATION AND BACKGROUND

       In August 1998, upon the filing of a registration statement with the
       SEC, Brigham Exploration Company, a Delaware corporation, (the
       "Company") issued $50 million of debt and equity securities to two
       affiliated institutional investors. The financing transaction consisted
       of the issuance of $40 million of senior subordinated secured notes (the
       "Notes"). The Notes are fully and unconditionally guaranteed, on a joint
       and several basis, by each of the Company's directly or indirectly
       wholly-owned subsidiaries which are Brigham Oil & Gas, L.P. (the
       "Partnership"), Brigham Inc., Brigham Holdings I LLC ("Holdings I"), and
       Brigham Holdings II LLC ("Holdings II"). Furthermore, these subsidiaries
       have pledged their respective stock and partnership interests as
       collateral for the Notes. These financial statements include the
       financial statements for the wholly owned subsidiaries whose securities
       and partnership interests comprise substantially all of the collateral
       pledged for the Notes.

       The Partnership was formed in May 1992 to explore and develop onshore
       domestic natural gas and oil properties using 3-D seismic imaging and
       other advanced technologies. Since its inception, the Partnership has
       focused its exploration and development of natural gas and oil
       properties primarily in West Texas, the Anadarko Basin and the
       onshore Gulf Coast. Brigham, Inc. is a Nevada corporation whose only
       asset prior to the Exchange was its less than 1% ownership interest
       in the Partnership. Brigham, Inc. is the managing general partner of
       the Partnership.

       On February 25, 1997, the Company was formed for the purpose of
       exchanging its common stock for the common stock of Brigham, Inc. and
       the partnership interests of the Partnership.

       Pursuant to an exchange agreement dated February 26, 1997 (the "Exchange
       Agreement") and upon the initial filing on February 27, 1997 of a
       registration statement with the Securities and Exchange Commission (the
       "SEC") for the public offering of common stock (the "Offering"), the
       shareholders of Brigham, Inc. transferred all of the outstanding stock
       of Brigham, Inc. to the Company in exchange for 3,859,821 shares of
       common stock of the Company. Pursuant to the Exchange Agreement, the
       Partnership's other general partner and the limited partners also
       transferred all of their partnership interests to the Company in
       exchange for 3,314,286 shares of common stock of the Company.
       Furthermore, the holders of the Partnership's subordinated convertible
       notes transferred these notes to the Company in exchange for 1,754,464
       shares of common stock. These transactions are referred to as "the
       Exchange." In completing the Exchange, the Company issued 8,928,571
       shares of common stock to the stockholders of Brigham, Inc., the
       partners of the Partnership and the holder of the Partnership's
       subordinated notes payable. In May 1997, the Company sold 3,325,000
       shares of its common stock in the Offering at a price of $8.00 per
       share. As a result of the Exchange and the Offering, the Company owns a
       68.5% partnership interest in the Partnership and all of the outstanding
       shares of Brigham, Inc. Brigham, Inc. owns the remainder of the
       Partnership interest in the Partnership. The proceeds of the Offering
       were contributed to the Partnership by the Company.

       Subsequent to the Exchange and the Offering, the Company owned a 68.5%
       interest in the Partnership and Brigham, Inc. owned a 31.50% interest in
       the Partnership. Effective January 1, 1998, Brigham, Inc. contributed
       30.5% of its 31.5% interest in the Partnership to Holdings II, a newly
       formed Nevada LLC and wholly owned subsidiary of Brigham, Inc., whose
       only asset is its investment in the Partnership. Also effective January
       1, 1998 the Company contributed its 68.5% interest in the Partnership to
       Brigham Holdings I, a newly formed Nevada LLC and wholly owned
       subsidiary of the Company whose only asset is its investment in the
       Partnership.



                                       15

<PAGE>   18

                   BRIGHAM EXPLORATION COMPANY SUBSIDIARIES

                    NOTES TO CONDENSED FINANCIAL STATEMENTS
                                 (unauditied)


2.     BASIS OF PRESENTATION

       The accompanying financial condensed financial statements are unaudited,
       and in the opinion of management, reflect all adjustments that are
       necessary for a fair presentation of the financial position and results
       of operations for the periods presented. All such adjustments are of a
       normal and recurring nature. The results of operations for the periods
       presented are not necessarily indicative of the results to be expected
       for the entire year. The unaudited condensed financial statements should
       be read in conjunction with the Company's 1998 Annual Report on Form
       10-K pursuant to Section 13 or 15(d) of the Securities and Exchange Act
       of 1934.

3.     SALE OF NATURAL GAS AND OIL PROPERTIES

       In February 1999, the Partnership entered into a project financing
       arrangement with Duke Energy Financial Services, Inc. ("Duke") to fund
       the continued exploration of five projects covered by approximately 200
       square miles of 3-D seismic data acquired in 1998. In this transaction,
       the Partnership conveyed 100% of its working interest in land and
       seismic in these project areas to a newly formed limited liability
       company (the "Duke LLC") for a total consideration of $10 million. The
       Partnership is the managing member of the Duke LLC with a 1% interest,
       and Duke is the sole remaining member with a 99% interest. Pursuant to
       the terms of the Duke LLC agreement, the Partnership pays 100% of the
       drilling and completion costs for all wells drilled by the Duke LLC in
       exchange for a 70% working interest in the wells and their associated
       drilling and spacing units and allocable seismic data. Upon 100% project
       payout, the Partnership has certain rights to back-in for up to a 94%
       effective working interest in the Duke LLC properties.

4.     ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

       In June 1998, the Financial Accounting Standards Board (the "FASB")
       issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging
       Activities." SFAS No. 133 requires that all derivative instruments be
       recorded on the balance sheet at fair value. Changes in the fair value
       of derivatives are recorded each period in current earnings or other
       comprehensive income, depending on whether a derivative is designated as
       part of a hedge transaction and, if it is, depending on the type of
       hedge transaction. For fair value hedge transactions in which the
       Partnership is hedging changes in an asset's, liability's, or firm
       commitment's fair value, changes in the fair value of the derivative
       instrument will generally be offset in the income statement by changes
       in the hedged item's fair value. For cash flow hedge transactions in
       which the Partnership is hedging the variability of cash flows related
       to a variable-rate asset, liability, or a forecasted transaction,
       changes in the fair value of the derivative instrument will be reported
       in other comprehensive income. The gains and losses on the derivative
       instrument that are reported in other comprehensive income will be
       reclassified as earnings in the periods in which earnings are impacted
       by the variability of the cash flows of the hedged item. The ineffective
       portion of all hedges will be recognized in current period earnings. The
       Partnership must adopt SFAS No. 133 effective January 1, 2000. The
       Partnership is in the process of analyzing the potential impact of this
       standard on its financial statement presentations.


                                      16


<PAGE>   19



Item 2. Management's Discussion and Analysis of Results of Operations and
        Financial Condition

RESULTS OF OPERATIONS

Comparison of three month periods ended March 31, 1998 and March 31, 1999

      Natural gas and oil sales. Natural gas and oil sales increased 2% from
$3.1 million in the first quarter of 1998 to $3.2 million in the first quarter
of 1999. Of this net increase, $249,000 was attributable to an increase in
production, offset by $201,000 attributable to a decrease in the average sales
price for natural gas and oil. Production volumes for natural gas increased 42%
from 740 MMcf in the first quarter of 1998 to 1,047 MMcf in the first quarter
of 1999. The average price received for natural gas increased 2% from $2.05 per
Mcf in the first quarter of 1998 to $2.09 per Mcf in the first quarter of 1999.
Production volumes for oil decreased 24% from 115 MBbls in the first quarter of
1998 to 88 MBbls in the first quarter of 1999. This decrease in net oil
production volumes was primarily due to the natural decline of existing
producing oil wells coupled with the Company's strategic decision to reduce its
drilling for oil prospects during 1998 and the curtailment of certain producing
oil wells, both in response to low oil prices. The average price received for
oil decreased 20% from $14.15 per Bbl in the first quarter of 1998 to $11.39
per Bbl in the first quarter of 1999. Natural gas and oil sales were increased
by production from wells completed since the end of the first quarter of 1998,
partially offset by the natural decline of existing producing wells. As a
result of hedging activities, natural gas revenues increased $559,220, or $0.53
per Mcf, in the first quarter of 1999.

      Workstation revenue. Workstation revenue decreased 21% from $114,000 in
the first quarter of 1998 to $90,000 in the first quarter of 1999. Brigham
recognizes workstation revenue as industry participants in the Company's
seismic programs are charged an hourly rate for the work performed by Brigham
on its 3-D seismic interpretation workstations. This decrease is primarily
attributable to the Company's increased working interests in its recently
acquired 3-D seismic data, which reduces the amount of workstation
interpretation costs that Brigham can bill to its project participants. The
Company expects workstation revenue to continue to decline in 1999 due to the
Company's increased working interests in the square miles of 3-D seismic it
acquired in 1997 and 1998.

      Lease operating expenses. Lease operating expenses increased 29% from
$414,000 for the first quarter of 1998 to $535,000 for the first quarter of
1999, while, on a per unit of production basis, lease operating expenses for
the same periods increased 17% from $0.29 per Mcfe to $0.34 per Mcfe. The
increase in lease operating expenses was primarily due to an increase in the
number of producing wells in the first quarter of 1999 as compared with the
same period in 1998.

      Production taxes. Production taxes decreased 10% from $188,000 ($0.13 per
Mcfe) for the first quarter of 1998 to $169,000 ($0.11 per Mcfe) for the first
quarter of 1999, primarily as a result of reduced average natural gas and oil
sales prices. The effective average production tax rate increased from 6.0% of
natural gas and oil sales revenues (before the effect of hedging activities) to
6.4% for the first quarters of 1998 and 1999, respectively, due to the increase
in natural gas production as a percentage of total equivalent production as
natural gas is typically burdened with higher production tax rates than oil
production.

      General and administrative expenses. General and administrative expenses
decreased 20% from $1.2 million for the first quarter of 1998 to $918,000 for
the first quarter of 1999 primarily due to an increase in overhead fees billed
to working interest participants on Company-operated wells and the reduction of
various administrative costs. On a per unit of production basis, general and
administrative expenses decreased 28% from $0.81 per Mcfe for the first quarter
of 1998 to $0.58 per Mcfe for the first quarter of 1999.

                                       17

<PAGE>   20




      Depletion of natural gas and oil properties. Depletion of natural gas and
oil properties increased 6% from $1.3 million ($0.89 per Mcfe) in the first
quarter of 1998 to $1.4 million ($0.86 per Mcfe) in the first quarter of 1999.
Of this net increase, $124,000 was due to the increase in production volumes,
which was offset in part by $43,000 due to a 3% decrease in the depletion rate
per unit of production.

      Interest expense. Net interest expense increased 184% from $985,000 in
the first quarter of 1998 to $2.8 million in the first quarter of 1999. This
increase was primarily due to a higher average debt balance with a higher
average interest rate in the first quarter of 1999 as compared with the first
quarter of 1998 resulting from increased capital expenditures related to the
Company's exploration activities during the twelve months ended March 31, 1999.
The weighted average outstanding debt balance increased from $42.8 million in
the first quarter of 1998 to $99.6 million in the first quarter of 1999. The
average effective annual interest rate on borrowings outstanding during the
first quarter 1999 was 11.4% as compared to 9.5% for the first quarter 1998.
Interest expense in the first quarter of 1999 included $1.7 million of non-cash
charges, including (i) $1.3 million of interest expense related to the
Subordinated Notes that was paid through the issuance of additional
Subordinated Notes (or "paid-in-kind"), (ii) $262,000 for amortization of
deferred financing fees, and (iii) $91,000 for amortization of debt discounts
related to the issuance of the Subordinated Notes. In connection with issuance
of the Subordinated Notes in August 1998, the Company recorded the Subordinated
Notes at a discount of $4.5 million to reflect the estimated value of the
warrants to purchase common stock that were issued in connection with the
issuance of the Subordinated Notes. This discount was increased by $478,697 in
March 1999 to adjust the estimated value of the warrants based on the amendment
of certain terms of the warrants, including a decrease in the exercise price
per share and an increase in the term of the warrants. The Company amortizes
this debt discount over the five-year term of the Subordinated Notes based on
the interest method of amortization and includes such amortization in interest
expense.

LIQUIDITY

      Despite the Company's success in building its inventory of 3-D seismic
data and potential drilling locations, a number of key factors have contributed
to significantly limit the Company's capital resources available to fund its
continued long-term growth-oriented exploration strategy. Management believes
these principal factors include: (i) lower commodity sales prices, which
reduced revenues and cash flow from the Company's production volumes, (ii)
reduced access to public, private and industry sources of capital on
cost-effective terms due to the continuing low commodity price environment and
outlook, (iii) less than anticipated success in placing working interests with
industry or financial participants in certain of its high equity interest
projects, resulting in lower levels of project cost recoupment than budgeted,
(iv) high levels of expenditures for 3-D seismic and land activities that do
not generate proved reserves and cash flow until the drilling stage of the
project cycle, (v) the utilization of high levels of debt to fund its
accelerating exploration expenditures, and (vi) disappointing drilling results
during 1998 on a number of high equity interest exploratory and development
wells, several of which were completed and subsequently plugged and abandoned
or otherwise performed below expectations.

      As a result of these limiting factors and an expectation for continuing
difficult industry and capital markets conditions, Brigham has substantially
reduced its planned capital budget for 1999 and has undertaken a number of
strategic initiatives in an effort to improve and preserve its capital
liquidity in the current environment. While the Company remains focused on its
long-term growth objectives and the continuation of its established business
model for 3-D seismic-based exploration, Brigham has adapted its business
strategy in the near-term in an effort to maximize value for its shareholders
on a long-term basis through the implementation of the following principal
strategic initiatives: (i) focusing all of the Company's planned exploration
efforts in 1999 toward the drilling of its highest-grade 3-D prospects
identified in its Anadarko

                                       18

<PAGE>   21




Basin and Gulf Coast projects, concentrated primarily in trends where Brigham
has achieved exploration success, (ii) eliminating substantially all planned
seismic and land expenditures for new projects until its capital resources can
support such additional activity, (iii) seeking to divest certain producing
natural gas and oil properties in an effort to raise capital to reduce debt
borrowings and to redirect capital to drilling projects that have the potential
to generate higher investment returns, (iv) restructuring its outstanding
senior and subordinated debt agreements to provide the Company with flexibility
needed to preserve cash flow to fund its expected near-term exploration
activities, (v) implementing an overhead reduction plan to reduce general and
administrative expenses, and (vi) evaluating opportunities to raise additional
equity capital either through the sales of interests in certain of its seismic
projects or the issuance of equity securities. The Company believes that the
successful execution of these strategic initiatives will provide Brigham with
sufficient capital resources to execute its planned 1999 exploration program
and position the Company to realize the significant value it believes it has
captured in its inventory of 3-D seismic projects and delineated drilling
locations. While the Company has initiated each of these strategic directives
in late 1998 and early 1999, and has effected certain of them to date, the
successful completion of any or all of these efforts to improve the Company's
capital availability within the expected timeframe is uncertain and will likely
have a material impact on the Company's near-term capital expenditure levels
and growth profile.

      On March 30, 1999, the Company entered into an agreement with Veritas DGC
Land, Inc. ("Veritas") to exchange 1,002,865 shares of newly issued Brigham
common stock valued at $3.50 per share for approximately $3.5 million of
payment obligations due to Veritas in 1999 for certain seismic acquisition and
processing services previously performed. In addition, this agreement provides
for the payment by Brigham of up to $1 million in future seismic processing
services to be performed by Veritas in newly issued shares of Brigham common
stock valued at $3.50 per share, in the event that the Company does not elect
to pay for such services in cash. The settlement of these future seismic
processing services will be determined on a quarterly basis through December
31, 1999. Brigham considers this arrangement to be beneficial as it will enable
the Company to reduce its working capital commitments and preserve additional
cash flow and capital availability to fund its 1999 drilling program.

CAPITAL RESOURCES

      The Company's primary sources of capital have been revolving credit
facility and other debt borrowings, public and private equity financings, the
sale of interests in projects and funds generated by operations. The Company's
primary capital requirements are 3-D seismic acquisition, processing and
interpretation costs, land acquisition costs and drilling expenditures. During
May 1997, the Company completed an initial public offering of common stock of
the Company that generated proceeds of approximately $24 million, net of
offering costs, that were used to repay all outstanding debt ($13.3 million)
under the Company's then existing revolving credit facility and to fund capital
expenditures. In January 1998, the Company entered into a new revolving credit
facility that provided for borrowing availability of $75 million that was used
to repay its then outstanding borrowings under its previous credit facility and
to fund capital expenditures. In August 1998, the Company issued $50 million of
debt and equity securities, including $40 million of Subordinated Notes, that
generated proceeds of approximately $47.5 million, net of offering costs, that
were used to repay a portion of then outstanding borrowings under the Credit
Facility, thereby increasing the Company's borrowing availability under its
Credit Facility to fund capital expenditures.

Cash Flow Analysis

      In the first three months of 1999, cash flow provided by operations was
$4.4 million primarily as a result of the combined effects of increased natural
gas and oil revenues, net of lease operating expenses, production

                                       19

<PAGE>   22




taxes and general and administrative expenses, and increases in interest paid
and working capital components. Cash flow provided by investing activities was
$446,000 in the first three months of 1999 primarily as a net result of $9.5
million of capital expenditures related to exploration activities and $10
million of proceeds received from the sale of interests in certain seismic
projects. Cash flow used in financing activities was $361,000 in the first
three months of 1999 resulting from the payment of deferred loan fees and
principal payments made on capital lease obligations.

Revolving Credit Facility

      In January 1998, the Company entered into a revolving credit agreement
(the "Credit Facility"), which provided for borrowing availability of $75
million. The Company used a portion of the funds available under the Credit
Facility to repay the $32 million in borrowings outstanding at December 31,
1997 under its previous commercial bank credit facility. Principal outstanding
under the Credit Facility is due at maturity on January 26, 2001 with interest
due monthly for base rate tranches or periodically as LIBOR tranches mature.
The annual interest rate for borrowings under the Credit Facility was initially
either the lender's base rate or LIBOR plus 2.25%, at the Company's option. The
Credit Facility's borrowing availability was subsequently reduced from $75
million to $65 million upon the Company's issuance of the Subordinated Notes in
August 1998.

      In March 1999, the Company and its lenders entered into an amendment to
the Credit Facility. Pursuant to this amendment, the borrowing availability
under the Credit Facility will remain at $65 million until June 1, 1999, when
the borrowing availability will be redetermined by the lenders based on the
Company's then proved reserve value and cash flows. In addition, certain
financial covenants of the Credit Facility have been amended, additional
covenants have been included that place significant restrictions on the
Company's ability to incur certain capital expenditures, the annual interest
rate for borrowings under the Credit Facility has been amended to the lender's
base rate or LIBOR plus 3.00%, and the Company will pay the lenders a $500,000
transaction fee over a ten month period. The Company's obligations under the
Credit Facility are secured by substantially all of the natural gas and oil
properties and other tangible assets of the Company. At May 13, 1999, the
Company had $61 million in borrowings outstanding under the Credit Facility,
which bear interest at an annual rate of 8.34%.

      The Credit Facility has certain financial covenants including current and
interest coverage ratios, as defined. The Company and its lenders effected the
recent amendment to the Credit Facility to enable the Company to comply with
certain financial covenants of the Credit Facility, including the minimum
current ratio, minimum interest coverage ratio and the limitation on capital
expenditures related to seismic and land activities. The Company believes this
most recent amendment is indicative of its lenders' cooperation in the current
oil and natural gas pricing environment. If this pricing environment continues
or deteriorates further beyond the date of redetermination of borrowing
availability, the Company believes its lenders will expect the Company to
substantially reduce its level of borrowing under the Credit Facility. With
this in mind, the Company has initiated the business strategy noted above.
Should the Company be unable to comply with certain of the financial covenants,
its lenders may be unwilling to waive compliance or amend the covenants in the
future. In such instance, the Company's liquidity may be adversely affected,
which could in turn have an adverse impact on the Company's future financial
position and results of operations.

Subordinated Notes

      In August 1998, the Company issued $50 million of debt and equity 
securities to affiliates of Enron Corp. ("Enron"). Securities issued by the
Company in connection with this financing transaction included: (i) $40 million
of Subordinated Notes, (ii) warrants to purchase 1,000,000 shares of the
Company's common stock

                                       20

<PAGE>   23




at a price of $10.45 per share (the "Warrants"), and (iii) 1,052,632 shares of
the Company's common stock at a price of $9.50 per share. The approximate $47.5
million in net proceeds received by the Company from this financing transaction
were used to repay a portion of outstanding borrowings under its Credit
Facility, which increased the Company's borrowing availability under its Credit
Facility to fund capital expenditures.

      Principal outstanding under the Subordinated Notes is due at maturity on
August 20, 2003. Interest on the Subordinated Notes is payable quarterly at
rates that vary depending upon whether accrued interest is paid in cash or "in
kind" through the issuance of additional Subordinated Notes ("PIK Interest").
Interest shall be paid in cash at interest rates of 12%, 13% and 14% per annum
during years one through three, year four and year five, respectively, of the
term of the Subordinated Notes; provided, however, that the Company may pay PIK
Interest for a cumulative total of six quarterly interest payments at interest
rates of 13%, 14% and 15% per annum during years one through three, year four
and year five, respectively, of the term of the Notes.

      The Subordinated Notes rank subordinate in right of payment to Senior
Indebtedness (as defined) and senior to all other financings (other than any
allowed capital leases and purchase money financings) of the Company. The
Subordinated Notes are secured by a second lien against substantially all of
the natural gas and oil properties and other tangible assets of the Company.
The Subordinated Notes may be prepaid at any time, in whole or in part, without
premium or penalty, provided that all partial prepayments must be pro rata to
the various holders of the Subordinated Notes. The Subordinated Notes were
issued pursuant to an indenture (the "Indenture") that contains certain
covenants that, among other things, limit the ability of the Company and its
subsidiaries to incur additional indebtedness, pay dividends, make
distributions, enter into certain sale and leaseback transactions, enter into
certain transactions with affiliates, dispose of certain assets, incur liens,
and engage in mergers and consolidations.

      In March 1999, the Company and Chase Bank of Texas, National Association,
as trustee (the "Trustee") for the holders of the Subordinated Notes, entered
into an amendment to the Indenture. This amendment provides the Company with
the option to pay interest due on the Subordinated Notes in kind, for any
reason, through the second quarter of 2000. In addition, certain financial and
other covenants were amended. The amendment also provides for a reduction in
the exercise price per share of the Warrants from $10.45 per share to $3.50 per
share and extended the term of the Warrants from seven to ten years.

      The Indenture governing the Subordinated Notes has certain financial
covenants including current and interest coverage ratios, as defined. The
Company and the holders of the Subordinated Notes effected the recent amendment
to the Indenture to enable the Company to comply with certain financial
covenants of the Indenture that parallel those of the Credit Facility,
including the minimum current ratio and the minimum interest coverage ratio.
Should the Company be unable to comply with certain of the financial covenants,
the holders of the Subordinated Notes may be unwilling to waive compliance or
amend the covenants in the future. In such instance, the Company's liquidity
may be adversely affected, which could in turn have an adverse impact on the
Company's future financial position and results of operations.

Capital Expenditures

      As a result of the Company's limited available capital resources, Brigham
has significantly reduced its planned capital expenditure budget for 1999 from
the Company's previously anticipated levels in an effort to match the its
current and expected future capital resources. The Company's current 1999
capital budget is estimated to be $17.5 million, or approximately 21% of 1998
expenditures. The Company's budgeted 1999 capital expenditures consist of
approximately $10 million to drill an estimated 20 to 25 gross wells, $3.5
million for seismic and land costs, consisting primarily of previous year
commitments and obligations to

                                       21

<PAGE>   24




acquire 3-D data and acreage, and $4 million for capitalized general and
administrative expenses and other fixed asset expenditures. Brigham expects
that its 1999 drilling expenditures will be allocated approximately 50% to its
Anadarko Basin province and 50% to its Gulf Coast province, and such
expenditures will be devoted to the drilling of the highest grade prospects in
the Company's inventory of identified potential drilling locations. The Company
intends to fund these budgeted capital expenditures through a combination of
cash flow from operations, available borrowings under its Credit Facility and
the sales of certain assets and equity interests (including the potential
divestitures of certain producing property packages from among its Anadarko
Basin properties and interests in certain 3-D seismic projects). In addition to
these sources of capital, the Company is also evaluating opportunities to raise
additional capital to enable it to increase its planned capital expenditures
for drilling in 1999. However, since the Company's capital availability during
1999 will depend to a large extent on the Company's success raising additional
financing through its planned and potential strategic initiatives, the
Company's actual 1999 capital expenditures may differ from its current
estimates. In the event additional financing is not available in the amounts or
timing needed, the Company may be required to curtail its planned exploration
activities in 1999 and take further measures to reduce the size and scope of
its business.

OTHER MATTERS

Year 2000 Issues

      Many computer software systems, as well as certain hardware and equipment
using date-sensitive data, were structured to use a two-digit date field
meaning that they may not be able to properly recognize dates in the year 2000.
The Company has developed a plan to address this issue and is taking steps to
review its information technology systems, such as computer hardware and
software, as well as non information technology systems, including computer
controlled equipment and electronic devices used to operate equipment involved
in processing and interpreting 3-D seismic data.

      The Company has completed the initial phases of its plan by identifying
all computerized systems and substantially completing an inventory of its
equipment and component parts. Both information technology and non information
technology systems may contain embedded technology, which complicates the
Company's Year 2000 identification, assessment, remediation and testing
efforts. The Company continues to inventory its equipment and facilities to
determine if they contain embedded date-sensitive technology. The Company is
currently reviewing all of its systems to determine which are not Year 2000
compliant and will need to be replaced or modified. This current phase includes
comparisons of inventory to manufacturer's information and/or performance
testing. If problems are identified, the Company will undertake remediation,
replacement or alternative procedures for non-compliant equipment or facilities
on a business priority basis. The Company's identification and assessment
efforts to date have not identified any computer equipment or software it
currently uses which will require replacement or modification, except that one
of the word processing software programs the Company uses may be non-compliant
and may need to be discontinued or upgraded. In addition, in the ordinary
course of replacing computer equipment and software, the Company attempts to
obtain replacements that are Year 2000 compliant. The Company currently
anticipates that its identification, assessment, remediation and testing
efforts will continue and, depending upon the results of the assessment
efforts, be completed by September 30, 1999.

      As of March 31, 1999, all costs incurred by the Company in connection
with its Year 2000 compliance efforts were included within the Company's normal
general and administrative expenses (for example, regular maintenance of
software programs). The Company is currently expensing as incurred all costs
related to the assessment and remediation of the Year 2000 issue, and these
costs are being funded through operating cash

                                       22

<PAGE>   25



flow. However, in certain instances the Company may determine that replacing
existing equipment may be appropriate and may capitalize such replacements. The
Company is unable currently to estimate the amount of its total out-of-pocket
costs to become Year 2000 compliant, but the Company currently expects that
such costs will not have a material adverse effect on the Company's financial
condition, operations or liquidity.

      The foregoing timetable and assessment of costs to become Year 2000
compliant reflect management's current best estimates. These estimates are
based on many assumptions, including assumptions about the cost, availability
and ability of resources to locate, remediate and modify affected systems,
equipment and facilities. Based upon its activities to date, the Company does
not currently believe that these factors will cause results to differ
significantly from those estimated. However, the Company cannot reasonably
estimate the potential impact on its financial condition and operations if key
third parties including, among others, suppliers, contractors, joint venture
participants, financial institutions, customers and governments do not become
Year 2000 compliant on a timely basis. The Company is currently identifying
third parties whose business significantly impacts the Company, has contacted
some significant third parties to determine the extent to which interfaces with
such entities are vulnerable to Year 2000 issues, and will contact others as it
completes the identification phase.

      In the event that the Company is unable to complete the remediation or
replacement of its critical systems, facilities and equipment, establish
alternative procedures in a timely manner, or if those with whom the Company
conducts business are unsuccessful in implementing timely solutions, Year 2000
issues could have a material adverse effect on the Company's liquidity and
results of operations. At this time, the potential effect in the event the
Company and/or third parties are unable to timely resolve their Year 2000
problems is not determinable. A contingency plan has not been developed for
dealing with the most reasonably likely worst case scenario, and such scenario
has not yet been clearly identified. However, the Company currently believes
that it will be able to resolve its own Year 2000 issues in a timely manner.

      The disclosure set forth in this section is provided pursuant to
Securities Act Release No. 33-7558. As such it is protected as a
forward-looking statement under the Private Securities Litigation Reform Act of
1995. See "Forward-Looking Information." This disclosure is also subject to
protection under the Year 2000 Information and Readiness Disclosure Act of
1998, Public Law 105-271, as a "Year 2000 Statement" and "Year 2000 Readiness
Disclosure" as defined therein.

Forward Looking Information

      The Company may make forward looking statements, oral or written,
including statements in this report, press releases and other filings with the
SEC, relating to the Company's drilling plans, its potential drilling
locations, capital expenditures, use of offering proceeds, the ability of
expected sources of liquidity to support working capital and capital
expenditure requirements and the Company's financial position, business
strategy and other plans and objectives for future operations. Such statements
involve risks and uncertainties, including those relating to the Company's
dependence on exploratory drilling activities, the volatility of natural gas
and oil prices, the risks associated with growth (including the risk of reduced
availability of seismic gathering and drilling services in the face of growing
demand), the substantial capital requirements of the Company's exploration and
development projects, operating hazards and uninsured risks and other factors
detailed in the Company's registration statement and other filings with the
SEC. All subsequent oral and written forward looking statements attributable to
the Company are expressly qualified in their entirety by these factors. The
Company assumes no obligation to update these statements.

                                      23

<PAGE>   26

PART II.  OTHER INFORMATION:

Item 2.   Changes in Securities

          On March 30, 1999, the Company entered into an agreement with Veritas
          DGC Land, Inc. ("Veritas") to exchange 1,002,865 shares of newly
          issued Brigham Exploration Company common stock valued at $3.50 per
          share for approximately $3.5 million of payment obligations due to
          Veritas in 1999 for certain seismic acquisition and processing
          services previously performed. These shares were issued pursuant to
          the exemption provided by Section 4(2) of the Securities Act of 1933,
          as amended. Veritas represented its intention to acquire the shares
          for investment purposes only and not for the purpose of resale or
          distribution, and appropriate legends were affixed to the certificate
          issued in such transaction. Veritas was given access to information
          about the Company.

Item 6.   Exhibits and Reports on Form 8-K

          (a)     Exhibits

                      27   Financial Data Schedule


                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto, duly authorized, in the City of Austin, State of Texas,
on the 17th day of May, 1999.

                                        BRIGHAM EXPLORATION COMPANY


                                    By: /s/ BEN M. BRIGHAM
                                        --------------------------------------
                                        Ben M. Brigham
                                        Chief Executive Officer, President and
                                         Chairman of the Board



                                    By: /s/ CRAIG M. FLEMING
                                        --------------------------------------
                                        Craig M. Fleming
                                        Chief Financial Officer



                                       24

<PAGE>   27



<TABLE>
<CAPTION>

                                                            SEQUENTIALLY
    EXHIBIT                                                   NUMBERED
      NO.                 INDEX TO EXHIBITS                     PAGE
      ---                 -----------------                     ----
<S>               <C>                                       <C>
      27            Financial Data Schedule                   Tabbed by
                                                              Exhibit No.
</TABLE>