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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q

|/x/ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- | ---------------------------------------------------------------------------------------

For the quarterly period ended June 30, 2001

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

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

Delaware(State of other jurisdiction
of incorporation or organization)

1311(Primary Standard Industrial
Classification Code Number)

75-2692967(I.R.S. Employer
Identification Number)


6300 Bridgepoint Parkway
Building Two, Suite 500
Austin, Texas 78730
(512) 427-3300(Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices)

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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 for 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 August 9, 2001, 15,980,518 shares of Common Stock, $.01 per share, were outstanding.

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BRIGHAM EXPLORATION COMPANY    SECOND QUARTER 2001 FORM 10-Q REPORT

TABLE OF CONTENTS

|                             |  |                                                                                          |  | Page
|---------------------------- |  | ---------------------------------------------------------------------------------------- |  | ----
|PART IFINANCIAL INFORMATION
|ITEM 1.                      |  | FINANCIAL STATEMENTS                                                                     |  |     
|                             |  | Consolidated Balance Sheets  June 30, 2001 and December 31, 2000                        |  | 1   
|                             |  | Consolidated Statements of OperationsThree and six months ended June 30, 2001 and 2000  |  | 2   
|                             |  | Consolidated Statement of Changes in Stockholders' EquitySix months ended June 30, 2001 |  | 3   
|                             |  | Consolidated Statements of Cash FlowsSix months ended June 30, 2001 and 2000            |  | 4   
|                             |  | Notes to Consolidated Financial Statements                                               |  | 5   
|ITEM 2.                      |  | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS    |  | 9   
|ITEM 3.                      |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                               |  | 20  
|PART IIOTHER INFORMATION   
|ITEM 4.                      |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                      |  | 21  
|ITEM 5.                      |  | OTHER INFORMATION                                                                        |  | 22  
|ITEM 6.                      |  | EXHIBITS AND REPORTS ON FORM 8-K                                                         |  | 22  
|SIGNATURES                   |  | 23                                                                                      

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Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

BRIGHAM EXPLORATION COMPANY

CONSOLIDATED BALANCE SHEETS(in thousands)
(unaudited)

|                                                                                                                                                                                                                                              |                                                                                                                                                                                                           | June 30,
2001              |         | December 31, 2000 |       
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------- | ----------------- | ------
|ASSETS                                                                                                                                                                                                                                        |                                                                                                                                                                                                          
|Current assets:                                                                                                                                                                                                                               |                                                                                                                                                                                                           |                            |         |                   |       
|                                                                                                                                                                                                                                              | Cash and cash equivalents                                                                                                                                                                                 |                            | $       | 8,232             |       
|                                                                                                                                                                                                                                              | Accounts receivable                                                                                                                                                                                       |                            |         | 13,306            |       
|                                                                                                                                                                                                                                              | Other current assets                                                                                                                                                                                      |                            |         | 1,448             |       
|                                                                                                                                                                                                                                              |                                                                                                                                                                                                           |                            |         |                   |       
|                                                                                                                                                                                                                                              |                                                                                                                                                                                                           | Total current assets       |         |                   | 22,986
|                                                                                                                                                                                                                                              |                                                                                                                                                                                                           |                            |         |                   |       
|Oil and gas properties, at cost, net                                                                                                                                                                                                          |                                                                                                                                                                                                           |                            | 143,623 |                   |       
|Other property and equipment, at cost, net                                                                                                                                                                                                    |                                                                                                                                                                                                           |                            | 1,254   |                   |       
|Drilling advances paid                                                                                                                                                                                                                        |                                                                                                                                                                                                           |                            | 237     |                   |       
|Deferred loan fees                                                                                                                                                                                                                            |                                                                                                                                                                                                           |                            | 3,652   |                   |       
|Other noncurrent assets                                                                                                                                                                                                                       |                                                                                                                                                                                                           |                            | 100     |                   |       
|                                                                                                                                                                                                                                              |                                                                                                                                                                                                           |                            |         |                   |       
|                                                                                                                                                                                                                                              |                                                                                                                                                                                                           | $                          | 171,852 |                   | $     
|                                                                                                                                                                                                                                              |                                                                                                                                                                                                           |                            |         |                   |       
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                                                                                          |                                                                                                                                                                                                          
|Current liabilities:                                                                                                                                                                                                                          |                                                                                                                                                                                                           |                            |         |                   |       
|                                                                                                                                                                                                                                              | Accounts payable                                                                                                                                                                                          |                            | $       | 7,622             |       
|                                                                                                                                                                                                                                              | Accrued drilling costs                                                                                                                                                                                    |                            |         | 2,002             |       
|                                                                                                                                                                                                                                              | Participant advances received                                                                                                                                                                             |                            |         | 701               |       
|                                                                                                                                                                                                                                              | Other current liabilities                                                                                                                                                                                 |                            |         | 7,280             |       
|                                                                                                                                                                                                                                              |                                                                                                                                                                                                           |                            |         |                   |       
|                                                                                                                                                                                                                                              |                                                                                                                                                                                                           | Total current liabilities  |         |                   | 17,605
|                                                                                                                                                                                                                                              |                                                                                                                                                                                                           |                            |         |                   |       
|Notes payable                                                                                                                                                                                                                                 |                                                                                                                                                                                                           |                            | 75,000  |                   |       
|Senior subordinated notes                                                                                                                                                                                                                     |                                                                                                                                                                                                           |                            | 16,278  |                   |       
|Other noncurrent liabilities                                                                                                                                                                                                                  |                                                                                                                                                                                                           |                            | 264     |                   |       
|Commitments and contingencies                                                                                                                                                                                                                 |                                                                                                                                                                                                           |                            |         |                   |       
|Series A Preferred Stock, mandatorily redeemable, $.01 par value, $20 stated value, 2,250,000 shares authorized, 1,536,215 and 1,000,000 shares issued and outstanding at June 30, 2001 and December 31, 2000, redemption value $20 per
share |                                                                                                                                                                                                           |                            | 14,667  |                   |       
|Stockholders' equity:                                                                                                                                                                                                                         |                                                                                                                                                                                                           |                            |         |                   |       
|                                                                                                                                                                                                                                              | Preferred stock, $.01 par value, 10 million shares authorized, of which 2,250,000 shares are designated as Series A                                                                                       |                            |         |                  |       
|                                                                                                                                                                                                                                              | Common stock, $.01 par value, 50 million shares authorized, 17,049,350 and 17,030,176 shares issued and 15,964,718 and 15,977,544 shares outstanding at June 30, 2001 and December 31, 2000, respectively |                            |         | 171               |       
|                                                                                                                                                                                                                                              | Additional paid-in capital                                                                                                                                                                                |                            |         | 81,570            |       
|                                                                                                                                                                                                                                              | Unearned stock compensation                                                                                                                                                                               |                            |         | (1,020            | )     
|                                                                                                                                                                                                                                              | Accumulated deficit                                                                                                                                                                                       |                            |         | (28,548           | )     
|                                                                                                                                                                                                                                              | Treasury stock, at cost; 1,084,632 and 1,052,632 shares at June 30, 2001 and December 31, 2000                                                                                                            |                            |         | (4,051            | )     
|                                                                                                                                                                                                                                              | Accumulated other comprehensive income (loss)                                                                                                                                                             |                            |         | (84               | )     
|                                                                                                                                                                                                                                              |                                                                                                                                                                                                           |                            |         |                   |       
|                                                                                                                                                                                                                                              |                                                                                                                                                                                                           | Total stockholders' equity |         |                   | 48,038
|                                                                                                                                                                                                                                              |                                                                                                                                                                                                           |                            |         |                   |       
|                                                                                                                                                                                                                                              |                                                                                                                                                                                                           | $                          | 171,852 |                   | $     
|                                                                                                                                                                                                                                              |                                                                                                                                                                                                           |                            |         |                   |       

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

See
accompanying notes to the consolidated financial statements.

1

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BRIGHAM EXPLORATION COMPANY

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

|                                                                 |                                     | Three Months Ended
June 30, |        | Six Months Ended
June 30, |  
|---------------------------------------------------------------- | ----------------------------------- | --------------------------- | ------ | ------------------------- | -
|
|Revenues:                                                        |                                     |                             |        |                           |  
|                                                                 | Oil and gas sales                   |                             | $      | 10,467                    |  
|                                                                 | Other                               |                             |        | 37                        |  
|                                                                 |                                     |                             |        |                           |  
|                                                                 |                                     |                             | 10,504 |                           |  
|                                                                 |                                     |                             |        |                           |  
|Costs and expenses:                                              |                                     |                             |        |                           |  
|                                                                 | Lease operating                     |                             |        | 784                       |  
|                                                                 | Production taxes                    |                             |        | 622                       |  
|                                                                 | General and administrative          |                             |        | 957                       |  
|                                                                 | Depletion of oil and gas properties |                             |        | 3,182                     |  
|                                                                 | Depreciation and amortization       |                             |        | 83                        |  
|                                                                 |                                     |                             |        |                           |  
|                                                                 |                                     |                             | 5,628  |                           |  
|                                                                 |                                     |                             |        |                           |  
|                                                                 | Operating income                    |                             |        | 4,876                     |  
|                                                                 |                                     |                             |        |                           |  
|Other income (expense):                                          |                                     |                             |        |                           |  
|                                                                 | Interest income                     |                             |        | 105                       |  
|                                                                 | Interest expense, net               |                             |        | (1,779                    | )
|                                                                 | Other income (expense)              |                             |        | 5,764                     |  
|                                                                 |                                     |                             |        |                           |  
|                                                                 |                                     |                             | 4,090  |                           |  
|                                                                 |                                     |                             |        |                           |  
|Income (loss) before income taxes                                |                                     |                             | 8,966  |                           |  
|Income tax benefit (expense)                                     |                                     |                             |       |                           |  
|                                                                 |                                     |                             |        |                           |  
|Net income (loss)                                                |                                     |                             | 8,966  |                           |  
|Less accretion and dividends on redeemable preferred stock       |                                     |                             | 639    |                           |  
|                                                                 |                                     |                             |        |                           |  
|Net income (loss) attributable to common stockholders            |                                     | $                           | 8,327  |                           | $
|                                                                 |                                     |                             |        |                           |  
|Net income (loss) per share attributable to common stockholders: |                                     |                             |        |                           |  
|                                                                 | Basic                               |                             | $      | 0.52                      |  
|                                                                 | Diluted                             |                             | $      | 0.46                      |  

See
accompanying notes to the consolidated financial statements.

2

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BRIGHAM EXPLORATION COMPANY    CONSOLIDATED  STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY  (in thousands)  (unaudited)

|                                                             |                                                     |        |   |   |     |   |   |        |   |   |        |   |   |         |   | Accumulated
Other
Compre-
hensive
Income
(Loss) |   |   |        |   |  
|------------------------------------------------------------ | --------------------------------------------------- | ------ | - | - | --- | - | - | ------ | - | - | ------ | - | - | ------- | - | ----------------------------------------------- | - | - | ------ | - | -
|
|
|
|
|Balance, December 31, 2000                                   |                                                     | 17,030 |   | $ | 170 |   | $ | 78,274 |   | $ | (1,321 | ) | $ | (38,416 | ) | (1,053                                          | ) | $ | (3,950 | ) | $
|Exercise of employee stock options                           |                                                     | 20     |   |   | 1   |   |   | 69     |   |   |       |   |   |        |   |                                                |   |   |       |   |  
|Forfeitures of employee stock options                        |                                                     |       |   |   |    |   |   | (139   | ) |   | 31     |   |   |        |   |                                                |   |   |       |   |  
|Forfeitures of restricted stock                              |                                                     |       |   |   |    |   |   | (17    | ) |   | 101    |   |   |        |   | (32                                             | ) |   | (101   | ) |  
|Issuance of warrants                                         |                                                     |       |   |   |    |   |   | 4,500  |   |   |       |   |   |        |   |                                                |   |   |       |   |  
|Dividends on mandatorily redeemable Series A Preferred Stock |                                                     |       |   |   |    |   |   | (1,071 | ) |   |       |   |   |        |   |                                                |   |   |       |   |  
|Accretion on mandatorily redeemable Series A Preferred Stock |                                                     |       |   |   |    |   |   | (46    | ) |   |       |   |   |        |   |                                                |   |   |       |   |  
|Amortization of unearned stock compensation                  |                                                     |       |   |   |    |   |   |       |   |   | 169    |   |   |        |   |                                                |   |   |       |   |  
|Net income                                                   |                                                     |       |   |   |    |   |   |       |   |   |       |   |   | 9,868   |   |                                                |   |   |       |   |  
|Other comprehensive income (loss):                           |                                                     |        |   |   |     |   |   |        |   |   |        |   |   |         |   |                                                 |   |   |        |   |  
|                                                             | Cumulative effect (loss) on the adoption of FAS 133 |        |  |   |     |  |   |        |  |   |        |  |   |         |  |                                                 |  |   |        |  |  
|                                                             | Change in fair value of cash flow hedges            |        |  |   |     |  |   |        |  |   |        |  |   |         |  |                                                 |  |   |        |  |  
|                                                             |                                                     |        |   |   |     |   |   |        |   |   |        |   |   |         |   |                                                 |   |   |        |   |  
|Comprehensive loss                                           |                                                     |        |   |   |     |   |   |        |   |   |        |   |   |         |   |                                                 |   |   |        |   |  
|                                                             |                                                     |        |   |   |     |   |   |        |   |   |        |   |   |         |   |                                                 |   |   |        |   |  
|Balance, June 30, 2001                                       |                                                     | 17,050 |   | $ | 171 |   | $ | 81,570 |   | $ | (1,020 | ) | $ | (28,548 | ) | (1,085                                          | ) | $ | (4,051 | ) | $
|                                                             |                                                     |        |   |   |     |   |   |        |   |   |        |   |   |         |   |                                                 |   |   |        |   |  

See accompanying notes to the consolidated financial statements.

3

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BRIGHAM EXPLORATION COMPANY    CONSOLIDATED  STATEMENTS OF CASH FLOWS  (in thousands)  (unaudited)

|                                                     |                                                                                             | Six Months Ended
June 30,                                                  |                                                     
|---------------------------------------------------- | ------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------- | ----------------------------------------------------
|
|Cash flows from operating activities:                |                                                                                             |                                                                            |                                                     
|                                                     | Net income (loss)                                                                           |                                                                            | $                                                   
|                                                     | Adjustments to reconcile net income (loss) to cash provided (used) by operating activities: |                                                                            |                                                     
|                                                     |                                                                                             | Depletion of oil and gas properties                                        |                                                     
|                                                     |                                                                                             | Depreciation and amortization                                              |                                                     
|                                                     |                                                                                             | Interest paid through the issuance of additional senior subordinated notes |                                                     
|                                                     |                                                                                             | Amortization of deferred loan fee and debt issuance costs                  |                                                     
|                                                     |                                                                                             | Amortization of discount on senior subordinated notes                      |                                                     
|                                                     |                                                                                             | Amortization of deferred loss on derivative instruments                    |                                                     
|                                                     |                                                                                             | Market value adjustment for derivative instruments                         |                                                     
|                                                     |                                                                                             | Changes in working capital and other items:                                |                                                     
|                                                     |                                                                                             |                                                                            | Increase in accounts receivable                     
|                                                     |                                                                                             |                                                                            | Increase in other current assets                    
|                                                     |                                                                                             |                                                                            | Decrease in accounts payable                        
|                                                     |                                                                                             |                                                                            | Increase (decrease) in participant advances received
|                                                     |                                                                                             |                                                                            | Increase in other current liabilities               
|                                                     |                                                                                             |                                                                            | Decrease (increase) in other noncurrent assets      
|                                                     |                                                                                             |                                                                            | Increase (decrease) in other noncurrent liabilities 
|                                                     |                                                                                             |                                                                            |                                                     
|                                                     |                                                                                             |                                                                            |                                                     
|                                                     |                                                                                             |                                                                            |                                                     
|Cash flows from investing activities:                |                                                                                             |                                                                            |                                                     
|                                                     | Additions to oil and natural gas properties                                                 |                                                                            |                                                     
|                                                     | Additions to other property and equipment                                                   |                                                                            |                                                     
|                                                     | (Increase) decrease in drilling advances paid                                               |                                                                            |                                                     
|                                                     |                                                                                             |                                                                            |                                                     
|                                                     |                                                                                             |                                                                            |                                                     
|                                                     |                                                                                             |                                                                            |                                                     
|Cash flows from financing activities:                |                                                                                             |                                                                            |                                                     
|                                                     | Proceeds from issuance of common stock                                                      |                                                                            |                                                     
|                                                     | Proceeds from exercise of employee stock options                                            |                                                                            |                                                     
|                                                     | Proceeds from issuance of preferred stock and warrants, net                                 |                                                                            |                                                     
|                                                     | Proceeds from issuance of senior subordinated notes and warrants                            |                                                                            |                                                     
|                                                     | Increase in notes payable                                                                   |                                                                            |                                                     
|                                                     | Principal payments on notes payable                                                         |                                                                            |                                                     
|                                                     | Principal payments on capital lease obligations                                             |                                                                            |                                                     
|                                                     | Deferred loan fees paid                                                                     |                                                                            |                                                     
|                                                     |                                                                                             |                                                                            |                                                     
|                                                     |                                                                                             |                                                                            |                                                     
|                                                     |                                                                                             |                                                                            |                                                     
|Net increase (decrease) in cash and cash equivalents |                                                                                             |                                                                            | 7,395                                               
|Cash and cash equivalents, beginning of period       |                                                                                             |                                                                            | 837                                                 
|                                                     |                                                                                             |                                                                            |                                                     
|Cash and cash equivalents, end of period             |                                                                                             | $                                                                          | 8,232                                               
|                                                     |                                                                                             |                                                                            |                                                     

See
accompanying notes to the consolidated financial statements.

4

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BRIGHAM EXPLORATION COMPANY        NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS        (unaudited)

1. Organization and Nature of Operations

Brigham Exploration Company ("Brigham"), a Delaware corporation formed on February 25, 1997, explores and develops onshore domestic oil and natural gas
properties using 3-D seismic imaging and other advanced technologies. Brigham focuses its exploration and development of onshore oil and natural gas properties primarily in the Anadarko Basin, the
Texas Gulf Coast and West Texas.

2. Basis of Presentation

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

The
accompanying 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 Brigham's 2000 Annual Report on Form 10-K
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

3. Private Placement of Preferred Stock

In March 2001, Brigham issued 500,000 additional shares of mandatorily redeemable Series A Preferred Stock and 2,105,263 additional warrants to
purchase Brigham's common stock (the "Additional Series A Warrants") for $10 million.

The
Additional Series A Warrants have a term of ten years, an exercise price of $4.75 per share and must be exercised, if Brigham so requires, in the event that the market
price of Brigham's common stock averages at least 150% of the exercise price ($7.125 per share) for 60 consecutive trading days. The exercise price of the Additional Series A Warrants is
payable either in cash or in shares of Series A Preferred Stock, valued at liquidation value plus accrued dividends. If Brigham requires exercise of the Additional Series A Warrants,
proceeds will be used to fund the redemption of a similar value of then outstanding Series A Preferred Stock. The Additional Series A Warrants were valued at approximately $4.5 million
using the Black-Scholes valuation model and were recorded as additional paid-in capital.

4. Net Income (Loss) Per Share

Basic earnings per common share ("EPS") are computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period.
Diluted EPS reflects the potential dilution that could occur if securities were exercised for or converted into common stock.

5

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The following table reconciles the numerators and denominators of the basic and diluted earning per common share computations for net income (loss) available to common stockholders
for the three and six months ended June 30, 2001 and 2000:

|             |                                                        | Three Months Ended
June 30,                           |   | Six Months Ended
June 30, |      
|------------ | ------------------------------------------------------ | ----------------------------------------------------- | - | ------------------------- | -----
|
|Basic EPS:   |                                                        |                                                       |   |                           |      
|             | Income (loss) available to common stockholders         |                                                       | $ | 8,327                     |      
|             |                                                        |                                                       |   |                           |      
|             | Common shares outstanding                              |                                                       |   | 15,983                    |      
|             |                                                        |                                                       |   |                           |      
|             | Basic EPS                                              |                                                       | $ | 0.52                      |      
|             |                                                        |                                                       |   |                           |      
|Diluted EPS: |                                                        |                                                       |   |                           |      
|             | Income (loss) available to common stockholdersbasic   |                                                       | $ | 8,327                     |      
|             | Effect of assumed conversions:                         |                                                       |   |                           |      
|             |                                                        | Amortization of compensation expense on stock options |   |                           | 4    
|             |                                                        | Interest on convertible debt                          |   |                           |     
|             |                                                        | Mandatorily redeemable preferred stock dividends      |   |                           | 399  
|             |                                                        |                                                       |   |                           |      
|             | Assumed conversions                                    |                                                       |   | 403                       |      
|             |                                                        |                                                       |   |                           |      
|             | Income (loss) available to common stockholdersdiluted |                                                       | $ | 8,730                     |      
|             |                                                        |                                                       |   |                           |      
|             | Common shares outstanding                              |                                                       |   | 15,983                    |      
|             | Effect of dilutive securities:                         |                                                       |   |                           |      
|             |                                                        | Warrants                                              |   |                           | 2,521
|             |                                                        | Stock options                                         |   |                           | 331  
|             |                                                        |                                                       |   |                           |      
|             | Potentially dilutive common shares                     |                                                       |   | 2,852                     |      
|             |                                                        |                                                       |   |                           |      
|             | Adjusted common shares outstandingdiluted             |                                                       |   | 18,835                    |      
|             |                                                        |                                                       |   |                           |      
|             | Diluted EPS                                            |                                                       | $ | 0.46                      |      
|             |                                                        |                                                       |   |                           |      

At
June 30, 2001 and 2000, options and warrants to purchase 5.1 million and 8.8 million shares of common stock, respectively, were outstanding but were not included in the
computation of diluted EPS because the effects would have been anitdilutive.

5. Derivative Instruments

Brigham utilizes various commodity swap and option contracts to (i) reduce the effects of volatility in price changes on the oil and natural gas
commodities it produces and sells, (ii) support its capital budgeting plans, and (iii) lock-in prices to protect the economics related to certain capital projects.

6

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On January 1, 2001, Brigham adopted Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("FAS 133") which
establishes accounting and reporting standards for derivative instruments and for hedging activities. In accordance with FAS 133, all derivative instruments are recorded on the balance sheet at fair
value and 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. Brigham's hedge contracts consist primarily of cash flow hedge transactions in which Brigham is hedging the variability of cash
flows related to forecasted transactions. Changes in the fair value of these derivative instruments are reported in other comprehensive income and are recognized 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 is recognized in current period earnings.

On
January 1, 2001, Brigham recorded a net of tax cumulative effect adjustment of $(11.8) million to other comprehensive income (loss) to recognize the fair value (liability)
of all derivative instruments that qualify for hedge accounting treatment in accordance with FAS 133. In the first six months of
2001, Brigham recognized losses of $8.1 million from hedging contracts, which were recorded as a reduction of oil and gas sales, and $11.7 million of gains related to changes in the fair value, which
were recorded as a reduction of the liability with a corresponding offset recorded in other comprehensive income.

Derivative
instruments that do not qualify as hedging contracts are recorded at fair value on the balance sheet. At each balance sheet date, the value of these derivative instruments
is adjusted to reflect current fair value and any gains or losses are recognized as other income or expense. At June 30, 2001 and December 31, 2000, the fair value of these derivative
instruments included in other liabilities was $3.0 million and $10.1 million, respectively. In the first six months of 2001, Brigham recognized $7.0 in non-cash gains related to changes in the fair
values of these derivative contracts and $(1.0) in cash losses related to the cash settlement payments made by the Company to the counterparty.

The
following tables summarize Brigham's outstanding oil and natural gas derivative instruments as of June 30, 2001:

7

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Natural Gas Derivative Contracts

|                  |  |              |  |                           |  | 2001      |  | 2002
|----------------- |  | ------------ |  | ------------------------- |  | --------- |  | ----
|
|Fixed Price Cap   |  | ANR
Oklahoma |  | July 2001 -
June 2002     |  | 1,840,000 |  | $   
|Fixed Price Floor |  | ANR
Oklahoma |  | July 2001 -
December 2001 |  | 460,000   |  | $   

Crude Oil Derivative Contracts

|                  |  |       |  |                           |  | 2001   |  | 2002
|----------------- |  | ----- |  | ------------------------- |  | ------ |  | ----
|
|Fixed Price Cap   |  | NYMEX |  | July 2001 -
December 2001 |  | 36,800 |  | $   
|Fixed Price Floor |  | NYMEX |  | July 2001 -
December 2001 |  | 36,800 |  | $   

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

Comparison of the three month periods ended June 30, 2001 and 2000

Oil and natural gas sales.Oil and natural gas sales increased 126% from $4.6 million for the second quarter of 2000 to
$10.5 million for the second quarter of 2001. Of this net increase, $3.0 million was attributable to a 35% increase in the average realized equivalent oil and natural gas sales price and $2.8 million
was attributable to a 68% increase in net equivalent production volumes. Net natural gas production volumes increased 78% from 1,047 MMcf for the second quarter of 2000 to 1,867 MMcf for the second
quarter of 2001. This increase was principally due to the completion of wells drilled during the first and second quarters of 2001 and recompletion and workover projects performed on certain producing
wells. The average price received for natural gas increased 91% from $1.98 per Mcf for the second quarter of 2000 to $3.78 per Mcf for the second quarter of 2001. Included in these realized prices are
natural gas hedging losses of $1.7 million ($1.66 per Mcf) for the second quarter of 2000 and $1.4 million ($.77 per Mcf) for the second quarter of 2001. Net oil production volumes increased 47% from
89 MBbls for the second quarter of 2000 to 131 MBbls for the second quarter of 2001. This increase was principally due to the completion of wells drilled during the first and second quarters of 2001
and recompletion and workover projects performed on certain producing wells. The average price received for oil decreased 9% from $28.71 per Bbl for the second quarter of 2000 to $26.09 per Bbl for
the second quarter of 2001. Oil hedging losses reduced realized average oil prices received by $50,000 ($.38 per Bbl) for the second quarter of 2001.

Other revenue.Other revenue increased 131% from $16,000 for the second quarter of 2000 to $37,000 for the second
quarter of 2001. This increase is primarily attributable to higher natural gas pipeline transportation revenue offset in part by lower workstation revenue due to a reduction in the volume of 3-D
seismic interpretation activity billable to industry participants as compared to the second quarter 2000.

Lease operating expenses.Lease operating expenses increased 56% from $502,000 for the second quarter of 2000 to
$784,000 for the second quarter of 2001, and, on a per unit of production basis, lease operating expenses for the same period decreased 6% from $0.32 per Mcfe to $0.30 per Mcfe. The increase in lease
operating expenses for second quarter of 2001 is primarily due to an increase in the number of producing wells and an increase in well repair and maintenance cost.

Production taxes.Production taxes increased 57% from $395,000 for the second quarter of 2000 to $622,000 for the
second quarter of 2001, and, on a per unit of production basis, production taxes for the same period decreased 8% from $0.25 per Mcfe to $0.23 per Mcfe primarily as a result of (i) a 68%
increase in net equivalent production volumes, and (ii) a 12% increase in the average equivalent price received for oil and natural gas sales before the effects of hedging gains and losses,
each of which was offset by the recording of a $247,000 reimbursement of previously incurred production taxes related to certain wells that qualify for severance tax refunds. Of the $247,000 total
production tax reimbursements recorded for the second quarter of 2001, $156,000 related to volumes produced during the second quarter of 2001 and $91,000 related to volumes produced during prior
periods in 1999 and 2000.

General and administrative expenses.General and administrative expenses increased 35% from $708,000 for the second
quarter of 2000 to $957,000 for the second quarter of 2001 primarily due to higher employee payroll and benefits expenses. On a per unit of production basis, general and administrative expenses
decreased 20% from $0.45 per Mcfe for the second quarter of 2000 to $0.36 per Mcfe for the second quarter of 2001 as increased production volumes more than offset higher aggregate general and
administrative expenses.

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Depletion of oil and natural gas properties.Depletion of oil and natural properties increased 75% from $1.8 million
($1.15 per Mcfe) for the second quarter of 2000 to $3.2 million ($1.20 per Mcfe) for the second quarter of 2001. Of this increase, $1.3 million was due to higher production volumes and $79,000 was due
to an increase in the depletion rate per unit of production. The increase in the per unit depletion rate resulted primarily from the estimated additions of proved oil and natural gas reserves at
higher average capital costs during the second quarter of 2001 as compared with estimated amounts for the second quarter of 2000.

Net interest expense.Net interest expense decreased 41% from $3.0 million for the second quarter of 2000 to $1.8
million for the second quarter of 2001. This decrease was due to a lower average debt balance and lower interest rates on outstanding borrowings for the second quarter of 2001 compared to the second
quarter of 2000. These reductions were principally due to Brigham's debt refinancing transactions that were completed during the fourth quarter of 2000 (see "Liquidity and Capital
ResourcesRefinancing Transactions"). The weighted average outstanding debt balance decreased from $112.5 million for the second quarter of 2000 to $91.3 million for the second quarter of
2001. The
average effective annual interest rate on borrowings outstanding during the second quarter of 2000 was 12.6% compared to 9.7% for the second quarter of 2001. Net interest expense is reflected net of
capitalized interest of $655,000 and $440,000 for the second quarter 2000 and 2001, respectively. See "Liquidity and Capital ResourcesCredit Facility;Subordinated Notes".

Other income (expense).Other income (expense) increased $8.2 million from an expense of $2.4 million for the second
quarter of 2000 to income of $5.8 million for the second quarter of 2001. Brigham recognizes other income or expense associated with changes in the fair market values and the related cash flows of
certain oil and natural gas derivative contracts that do not qualify for hedge accounting treatment. In the second quarter of 2000, other income (expense) included (i) $1.9 million of non-cash
expenses related to the changes in the fair market values of these derivative contracts during the period, and (ii) $471,000 of expenses related to cash settlements incurred during the period
pursuant to these derivative contracts. In the second quarter of 2001, other income (expense) included (i) $6.8 million of non-cash income related to the changes in the fair market values of
these derivative contracts during the period, and (ii) $1.0 million of expenses related to cash settlements incurred during the period pursuant to these derivative contracts.

Comparison of the six month periods ended June 30, 2001 and 2000

Oil and natural gas sales.Oil and natural gas sales increased 90% from $9.1 million for the first six months of 2000
to $17.4 million for the first six months of 2001. Of this net increase, $3.4 million was attributable to a 26% increase in the average realized equivalent oil and natural gas sales price and $4.8
million was attributable to a 51% increase in net equivalent production volumes. Net natural gas production volumes increased 75% from 1,987 MMcf for the first six months of 2000 to 3,477 MMcf for the
first six months of 2001. This increase was principally due to the completion of wells drilled during the first and second quarters of 2001 and recompletion and workover projects performed on certain
producing wells. The average price received for natural gas increased 75% from $1.96 per Mcf for the first six months of 2000 to $3.43 per Mcf for the first six months of 2001. Included in these
realized prices are natural gas hedging losses of $2.3 million ($1.13 per Mcf) for the first six months of 2000, and natural gas hedging losses of $8.0 million ($2.30 per Mcf) for the first six months
of 2001. Net oil production volumes increased 10% from 188 MBbls for the first six months of 2000 to 206 MBbls for the first six months of 2001. This increase was principally due to the completion of
wells drilled during the first and second quarters of 2001 and recompletion and workover projects performed on certain producing wells. The average price received for oil decreased from $27.89 per Bbl
for the first six months of 2000 to $26.33 per Bbl for the first six months of 2001. Oil hedging losses reduced realized average oil prices received for the first six months of 2001 by $125,000 ($.61
per Bbl) versus a reduction of $2,000 ($.01 per Bbl) for the first six months on 2000.

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Other revenue.Other revenue increased 257% from $49,000 for the first six months of 2000 to $175,000 for the first six
months of 2001. This increase is primarily attributable to higher natural gas pipeline transportation revenue offset in part by lower workstation revenue due to a reduction in the volume of 3-D
seismic interpretation activity billable to industry participants as compared with the first six months of 2000.

Lease operating expenses.Lease operating expenses increased 55% from $961,000 for the first six months of 2000 to $1.5
million for the first six months of 2001 and, on a per unit of production basis, lease operating expenses for the same periods increased 3% from $.31 per Mcfe to $.32 per Mcfe. The overall increase in
lease operating expenses was primarily due to an increase in the number of producing wells as compared with the same period in 2000. The increase in lease operating expenses per unit of production
volume for the first six months of 2001 relative to the first six months of 2000 was primarily due to increased well maintenance and repair cost for the first six months of 2001.

Production taxes.Production taxes increased 56% from $699,000 ($.22 per Mcfe) for the first six months of 2000 to
$1.1 million ($.23 per Mcfe) for the first six months of 2001, primarily as a result of (i) a 48% increase in the average equivalent price received for oil and natural gas sales before
the effects of hedging gains and losses, and (ii) a 51% increase in net equivalent production volumes, each of which was offset by the recording of a $709,000 reimbursement of previously
incurred production taxes related to certain wells that qualify for severance tax refunds. Of the $709,000 total production tax reimbursements recorded for the first six months of 2001, $374,000
related to volumes produced during the first six months of 2001 and $335,000 related to volumes produced during prior periods in 1999 and 2000.

General and administrative expenses.Net general and administrative expenses increased 23% from $1.5 million for the
first six months of 2000 to $1.8 million for the first six months of 2001 primarily due to higher employee payroll and benefits expenses. On a per unit of production basis, net general and
administrative decreased 17% from $0.47 per Mcfe for the first six months of 2000 to $0.38 per Mcfe for the first six months of 2001 as increased production volumes more than offset higher aggregate
general and administrative expenses.

Depletion of oil and natural gas properties.Depletion of oil and natural gas properties increased 58% from $3.6
million ($1.15 per Mcfe) for the first six months of 2000 to $5.7 million ($1.20 per Mcfe) for the first six months of 2001. Of this increase, $1.9 million was due to higher production volumes and
$156,000 was due to an increase in the depletion rate per unit of production. The increase in the per unit depletion rate was principally the result of estimated additions of proved natural gas and
oil reserves at higher average capital costs during the first six months of 2001 as compared with estimated amounts for the first six months of 2000.

Net interest expense.Net interest expense decreased 38% from $5.8 million for the first six months of 2000 to $3.6
million for the first six months of 2001. This decrease was due to a lower average debt balance and lower interest rates on outstanding borrowings during the first six months of 2001 compared with the
same period in 2000. These reductions were principally due to Brigham's debt refinancing transactions that were completed during the fourth quarter of 2000 (see "Liquidity and
Capital ResourcesRefinancing Transactions"). The weighted average outstanding debt balance decreased from $108.8 million for the first six months of 2000 to $89.7 million for the first
six months 2001. The average effective annual interest rate on borrowings outstanding during the first six months of 2000 was 12.8% compared to 10.3% for the first six months of 2001. Net interest
expense is reflected net of capitalized interest of $1.3 million and $1.0 million for the first six months of 2000 and 2001, respectively. See "Liquidity and Capital ResourcesCredit
Facility;Subordinated Notes".

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Other income (expense).Other income (expense) increased $9.0 million from an expense of $3.0 million for the six
months of 2000 to income of $6.0 million for the first six months of 2001. Brigham recognizes other income or expense associated with changes in the fair market values and the related cash flows of
certain oil and natural gas derivative contracts that do not qualify for hedge accounting treatment. For the first six months of 2000, other income (expense) included (i) $2.4 million of
non-cash expenses related to the changes in the fair market values of these derivative contracts during the period, and (ii) $620,000 of expenses related to cash settlements incurred during the
period pursuant to these derivative contracts. For the first six months of 2001, other income (expense) included (i) $7.0 million of non-cash income related to the changes in the fair market
values of these derivative contracts during the period, and (ii) $1.0 million of expenses related to cash settlements incurred during the period pursuant to these derivative contracts.

Liquidity and Capital Resources

Brigham's primary sources of capital are its Senior Credit Facility and its Subordinated Notes Facility, public and private equity financings, the sale of
interests in projects and properties and funds generated by operations. Brigham's primary capital requirements are 3-D seismic acquisition, processing and interpretation costs, land acquisition costs
and drilling expenditures.

Credit Facility

In January 1998, Brigham entered into a revolving credit agreement (as amended, the "Senior Credit Facility"), which provided for an initial borrowing
availability of $75 million. The Senior Credit Facility was amended in March 1999, July 1999, February 2000 and October 2000. The amended and restated Senior Credit
Facility provides Brigham with $75 million in borrowing availability for a three-year term that expires on December 31, 2002.

As
a result of the February 2000 amendments, $30 million of the Senior Credit Facility held by one of the lenders is convertible into shares of Brigham common stock (the
"Convertible Notes") in the following amounts and prices: (i) $10 million is convertible at $3.90 per share, (ii) $10 million is convertible at $6.00 per share and (iii) $10
million is convertible at $8.00 per share. As of June 30, 2001 and August 9, 2001, Brigham had $75 million in borrowings outstanding under the Senior Credit Facility, of which the
Convertible Notes are $30 million.

In
connection with Brigham's refinancing of its subordinated notes due 2003 (see "Subordinated Notes" and "Refinancing Transactions") in October 2000,
Brigham entered into an amendment to the Senior Credit Facility that, among other things, permitted the issuance of new subordinated notes and new preferred stock to provide funding for the repurchase
of the subordinated notes due 2003 and equity interests in Brigham held by affiliates of Enron Corp. In addition, the minimum interest coverage ratio (as defined) tests of the Senior Credit Facility
were amended to reflect Brigham's expected cash flow and interest expense beginning in the fourth quarter of 2000 subsequent to the Refinancing Transactions (as defined), and Brigham conditionally
waived certain rights to force conversion of the portion of the borrowings under the Senior Credit Facility that are convertible at $3.90 per share.

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If the Senior Credit Facility is repaid at maturity or is prepaid prior to maturity without payment of cash premiums, the warrants to purchase Brigham common stock issued to the new
participant in the Senior Credit Facility become exercisable. Further, to the extent Brigham chooses to prepay any of the Convertible Notes without the warrants becoming exercisable, and also assuming
the lender chooses not to convert to equity upon notice of such prepayment, Brigham will be required to a pay a premium above the face value of the Convertible Notes to the lender. Such premium
amounts would range from 150% to 110%, depending upon the timing of the prepayment. Such prepayment, however, would require prior approval of the original lenders to the Senior Credit Facility. In
addition, certain financial covenants of the Senior Credit Facility were amended or added in the July 1999, February 2000 and October 2000 amendments. In connection with the
February 2000 amendment, Brigham reset the price of the warrants previously issued to its existing senior lenders to purchase one million shares of Brigham common stock from the then current
exercise price of $2.25 per share to $2.02 per share.

Principal
outstanding under the Senior Credit Facility is due at maturity on December 31, 2002, with interest due monthly for base rate tranches or periodically as LIBOR
tranches mature. The annual interest rate for borrowings under the Senior Credit Facility is either the lender's base rate or LIBOR plus 3.00%, at Brigham's option. Obligations under the Senior Credit
Facility are secured by substantially all of Brigham's oil and natural gas properties and other tangible assets. On August 9, 2001, Brigham had $75 million in borrowings outstanding under the
Senior Credit Facility, which bear interest at an annual rate of approximately 6.8%.

The
Senior Credit Facility has certain financial covenants, including current and interest coverage ratios, (as defined). Brigham and its senior lenders effected the amendments to the
Senior Credit Facility described above in part to enable Brigham to comply with certain financial covenants of the Senior Credit Facility, including the minimum current ratio (as defined), minimum
interest coverage ratio (as defined), and the limitation on capital expenditures related to seismic and land activities. Should Brigham be unable to comply with certain of the financial or other
covenants, its senior lenders may be unwilling to waive compliance or amend the covenants in the future. In such instance, Brigham's liquidity may be adversely affected, which could in turn have an
adverse impact on its future financial position and results of operations. At June 30, 2001, Brigham was in compliance with its financial covenants.

Subordinated Notes

In August 1998, Brigham issued $50 million of debt and equity securities to affiliates of Enron Corp. The securities issued by Brigham in connection
with this financing transaction included: (i) $40 million of subordinated notes due 2003, (ii) warrants to purchase an aggregate of one million shares of Brigham common stock at a price
of $10.45 per share, and (iii) 1,052,632 shares of Brigham common stock at a price of $9.50 per share.

As
described below, Brigham repurchased the subordinated notes due 2003, together with all equity interests in Brigham held by the affiliates of Enron Corp., for $20 million in cash
in November 2000 (see "Refinancing Transactions").

Refinancing Transactions

On October 31, 2000 and November 1, 2000, Brigham entered into a series of financing agreements to provide funding (i) to repurchase all
the debt and equity securities in Brigham held by affiliates of Enron Corp. at a substantial discount, and (ii) to continue and expand Brigham's planned drilling program into 2001.

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Financing and Repurchase Transactions.Brigham raised an aggregate of $40 million in these financing transactions
through the issuance of (i) $20 million in new subordinated notes and warrants to purchase Brigham common stock to Shell Capital Inc., and (ii) $20 million in new mandatorily redeemable
preferred stock and warrants to purchase Brigham common stock to affiliates of Credit Suisse First Boston (USA), Inc. (the "CSFB Affiliates"). With a portion of the proceeds from these two
financing transactions, Brigham purchased all of the interests in Brigham held by affiliates of Enron Corp., which included (i) $51.2 million of outstanding subordinated notes due 2003 and
associated accrued interest obligations, (ii) warrants to purchase one million shares of common stock at $2.43 per share, and (iii) 1,052,632 shares of common stock (collectively, the
"Enron Securities"), for total cash consideration of $20 million. The remaining approximate $17.5 million in net capital availability raised from these financing transactions, after the repurchase of
the Enron Securities and the payment of fees and expenses, was available for Brigham to fund its planned drilling program into 2001.

Subordinated Notes Facility.The $20 million of new subordinated notes issued to Shell Capital Inc. (the "SCI Notes")
bear an interest of 10.75% per annum and have no principal repayment obligations until maturity in 2005. The SCI Notes are issued pursuant to a multi-draw facility (the "Subordinated Notes Facility")
at borrowing increments of at least $1 million, and such funds cannot be redrawn once they have been repaid. At Brigham's option, up to 50% of the interest payments on the SCI Notes during the first
two years can be satisfied by payment-in-kind ("PIK") through the issuance of additional SCI Notes in lieu of cash. The SCI Notes are secured obligations ranking junior to Brigham's existing $75
million Senior Credit Facility. The SCI Notes have a five-year maturity, are redeemable at Brigham's option for face value at anytime, and have certain financial and other covenants. The warrants to
purchase an aggregate of 1,250,000 shares of Brigham common stock issued to Shell Capital Inc. (the "SCI Warrants") have a term of seven years, an exercise price of $3.00 per share and a cashless
exercise feature. For financial reporting purposes, the SCI Warrants were valued using the Black-Scholes valuation model and the estimated value of $2.9 million was recorded as deferred loan costs
that will be amortized over the five year term of the SCI Notes. As of June 30, 2001 and August 9, 2001, Brigham had $16.3 million and $16.5 million, respectively, of borrowings
outstanding under the Subordinated Notes Facility.

Series A Preferred Stock.The $20 million of mandatorily redeemable preferred stock (the "Series A
Preferred Stock") issued to the CSFB Affiliates bears dividends at a rate of 6% per annum if paid in cash and 8% per annum if paid-in-kind through the issuance of additional Series A Preferred
Stock in lieu of cash. At Brigham's option, up to 100% of the dividend payments on the Series A Preferred Stock during the first five years can be satisfied through the issuance of PIK
dividends. The Series A Preferred Stock has a ten-year maturity and is redeemable at Brigham's option at 100% or 101% of par value (depending upon certain conditions) at any time prior to
maturity. The warrants to purchase an aggregate of 6,666,667 shares of Brigham common stock issued to the CSFB Affiliates (the "Series A Warrants") have a term of ten years, an exercise price
of $3.00 per share and must be exercised, if Brigham so requires, in the event that Brigham common stock trades at or above $5.00 per share for 60 consecutive trading days. The exercise price of the
Series A Warrants is payable either in cash or in shares of Series A Preferred Stock, valued at liquidation value plus accrued dividends. If Brigham requires exercise of the
Series A Warrants, proceeds from the exercise of the Series A Warrants will be used to fund the redemption of a similar value of then outstanding Series A Preferred Stock. For
financial reporting purposes, the Series A Warrants were valued at $11.5 million using the Black-Scholes valuation model and were recorded as additional paid-in capital in the year ended
December 31, 2000. Pursuant to the terms of the securities purchase agreement related to the Series A Preferred Stock, Brigham agreed to nominate one representative of one of the CSFB
Affiliates to serve as a member of Brigham's board of directors so long as the CSFB Affiliates or their affiliates own at least 10% of the Series A Preferred Stock issued in
November 2000, or at least 5% of the outstanding shares of Brigham common stock.

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In March 2001, Brigham sold an additional $10 million of Series A Preferred Stock to affiliates of CSFB (see "Equity PlacementsPrivate
Placement of Preferred Stock"). As of June 30, 2001 and August 9, 2001, Brigham had $30.7 million and $31.3 million (liquidation value), respectively, of Series A Preferred Stock
outstanding.

Sales of Interests in Projects and Oil and Natural Gas Properties

Duke Project Financing.In February 1999, Brigham entered into a project financing arrangement with Duke Energy
Financial Services, Inc. ("Duke") to fund the continued exploration of five Anadarko Basin projects covered by approximately 200 square miles of 3-D seismic data acquired in 1998. In this
transaction, Brigham conveyed 100% of its working interest (land and seismic) in these project areas to a newly formed limited liability company (the "Brigham-Duke LLC") for total consideration of $10
million. Brigham entered into this project financing arrangement to enable it to recoup substantially all of its pre-seismic land and seismic data acquisition costs incurred in these project areas and
to provide the capital to fund the drilling of the first six wells within these projects. Brigham served as the managing member of the Brigham-Duke LLC with a 1% interest, and Duke was the sole
remaining member with a 99% interest. Pursuant to the terms of the Brigham-Duke LLC agreement, Brigham paid 100% of the drilling and completion costs for all wells drilled by the Brigham-Duke LLC
within the designated project areas in exchange for a 70% working interest in the wells (and their allocable drilling and spacing units), with the remaining 30% working interest remaining in the
Brigham-Duke LLC, subject in each instance to proportionate reduction by any ownership rights held by third parties. Upon 100% project payout, Brigham had the right to back-in for 80% of the
Brigham-Duke LLC's working interest in all of the then producing wells (and their allocable drilling and spacing units) and a 94% working interest in any wells (and their allocable drilling and
spacing units) drilled after payout within the designated project areas governed by the Brigham-Duke LLC agreement, thereby increasing Brigham's effective working interest in the Brigham-Duke LLC
wells from 70% to 94%. In February 2001, Duke, as majority member of the Brigham-Duke LLC, assumed management of the Brigham-Duke LLC and initiated the process of its dissolution. As a result,
any ownership of remaining undeveloped land and/or seismic data within the Brigham-Duke LLC project areas will be transferred to Duke following dissolution of the Brigham-Duke LLC.

Equity Placements

Private Placement of Common Stock.On February 22, 2000, Brigham entered into an agreement to issue 2,195,122
shares of common stock and 731,707 warrants to purchase common stock for total consideration of $4.5 million in a private placement to a group of institutional investors led by affiliates of two
members of Brigham's board of directors. The equity sale consisted of units that include one share of common stock priced at $2.0525 per share and one-third of a warrant to purchase Brigham common
stock at an exercise price of $2.5625 per share with a three-year term. Pricing of this private equity placement was based on the average market price of Brigham common stock during a twenty trading
day period prior to issuance. Net proceeds from this equity placement were used to fund a portion of Brigham's capital expenditures and working capital obligations during 2000.

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Private Placement of Preferred Stock.On March 5, 2001, Brigham sold $10 million of additional Series A
Preferred Stock and warrants (the "New CSFB Warrants") to affiliates of CSFB in a private placement transaction. The New CSFB Warrants to purchase an aggregate of 2,105,263 shares of Brigham common
stock have a term of ten years, an exercise price of $4.75 per share and must be exercised, if Brigham so requires, in the event that the market price of Brigham common stock trades averages at least
150% of the exercise price ($7.125 per share) for 60 consecutive trading days. The exercise price of the New CSFB Warrants is payable either in cash or in shares of Series A Preferred Stock,
valued at liquidation value plus accrued dividends. If Brigham requires exercise of the New CSFB Warrants, proceeds from the exercise of the New CSFB Warrants will be used to fund the redemption of a
similar value of then outstanding Series A Preferred Stock. For financial reporting purposes, the New CSFB Warrants were valued at approximately $4.5 million using the Black-Scholes valuation
model and were recorded as additional paid-in capital in March 2001.

Cash Flow Analysis

Cash Flows from Operating Activities.Cash flows provided by operating activities were $6.5 million in the first six
months of 2001, which consisted of $9.7 million in net operating cash flow (net cash provided by operating activities before changes in operating assets and liabilities) and a net $3.2 million used
for working capital items. This compares to cash flows used by operating activities of $3.8 million in the first six months of 2000, which consisted of $4.1 million in net operating cash flow and a
net $7.9 million used for working capital items.

Cash Flows from Investing Activities.Cash flows used by investing activities were $18.0 million in the first six
months of 2001 as compared with $11.7 million used by investing activities in the first six months of 2000. Capital expenditures increased $8.2 million, or 70.0%, to $19.9 million in the first six
months of 2001 compared to $11.7 million for the comparable period in 2000.

Cash Flows from Financing Activities.Cash flows provided by financing activities were $18.8 million in the first six
months of 2001 as compared with cash flows provided by financing activities of $12.8 million in the first six months of 2000. The cash flows provided by financing activities during the first six
months of 2001 resulted primarily from $9.0 million in borrowings under the Subordinated Notes Facility and the March 2001 placement of additional Series A Preferred Stock and warrants
that generated proceeds of $9.8 million after transaction expenses. The cash flows provided by financing activities during the first six months of 2000 resulted primarily from a $9.0 million increase
in borrowings under the Senior Credit Facility and the February 2000 placement of common stock and warrants that generated proceeds of $4.5 million before transaction expenses.

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Capital Expenditures

Continuing its strategy initiated in 1999 to harvest its prior 3-D seismic project investments, Brigham intends to focus substantially all of its efforts and
available capital resources in 2001 to the drilling and monetization of its highest grade prospects within its over 5,000 square mile inventory of 3-D seismic data. Brigham's original 2001 capital
budget was approximately $32 million, which included approximately $22 million for drilling projects, $4 million for acreage leasing and G&G activities, and $6 million for capitalized overhead,
capitalized interest costs and other property and equipment. However, given the success of its drilling program thus far in 2001, an increase in the number of wells planned for the year, and higher
cost on certain wells, Brigham now expects its capital spending to approximate $37 million for 2001. Brigham's revised capital budget includes $28 million for drilling projects; $3 million for land
and G&G, and $6 million for capitalized overhead, capitalized interest costs and other property and equipment. Brigham's 2001 drilling program remains balanced with a blend of higher potential
exploration tests and lower risk development drilling projects, driven to a large extent by the development of several significant exploratory discoveries completed during 2000 and the first half of
2001. Approximately 47% of budgeted 2001 drilling expenditures are targeted for exploratory prospects and the remaining 53% are budgeted for development prospects. Additionally Brigham continues to
focus over 80% of its budgeted drilling expenditures in five core project areas in the Springer and Hunton trends of the Anadarko Basin, the Vicksburg and Frio trends of the Texas Gulf Coast and West
Texas. Brigham intends to fund its budgeted capital expenditures through a combination of cash flow from operations, available borrowings under its Subordinated Notes Facility and the net proceeds
from its private placements of Series A Preferred Stock in November 2000 and March 2001. Additionally, Brigham will continue to seek opportunities to supplement its available capital
resources through selective sales of interests in non-producing assets, including interests in its 3-D seismic projects and promoted interests in future drilling prospects or locations.

Due
to its active exploration and development activities, Brigham has experienced and expects to continue to experience substantial working capital requirements. While Brigham
believes that cash flow from operations, cash on its balance sheet and borrowings under its Subordinated Notes Facility should allow it to finance its planned operations through 2001 based on current
conditions and expectations, additional financing may be required in the future to fund Brigham's exploration and development activities. In the event additional financing is not available, Brigham
may be required to curtail or delay its planned activities.

Other Matters

Derivative Instruments

Brigham believes that hedging, although not free of risk, allows it to reduce its exposure to oil and natural gas sales price fluctuations and thereby to
achieve more predictable cash flows. However, hedging arrangements, when utilized, may limit the benefit to Brigham of increases in the prices of the hedged commodity. Moreover, Brigham's hedging
arrangements generally do not apply to all of its production and thus provide only partial price protection against declines in commodity prices. Brigham expects that the amount of its hedges will
vary from time to time.

In
1998, Brigham began using natural gas swap arrangements in an attempt to reduce its sensitivity to volatile commodity prices as its production base became increasingly weighted
toward natural gas. Pursuant to these arrangements, Brigham exchanges a floating market price for a fixed contract price. Brigham makes payments when the floating price exceeds the fixed price for a
contract month, and Brigham receives payments when the fixed price exceeds the floating price. Settlements of these swaps are based on the difference between regional market index prices for a
contract month and the fixed contract price for the same month.

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In September 1999, Brigham sold call options on a portion of its future oil and natural gas production. Brigham applied the proceeds from the sale of these call options to
increase the effective fixed swap price on its then existing natural gas hedging contracts during the months of October 1999 through January 2000 by an average of $0.57 per MMBtu. For
accounting purposes, the improvement in Brigham's fixed natural gas swap price attributable to these transactions was not reflected in reported revenues. Rather, it was reflected in (i) other
income (expense) on the income statement, and (ii) amortization of deferred loss on derivatives instruments and market value adjustment for derivatives instruments on the cash flow statement.

In
March 2000, Brigham purchased put options on a portion of its future oil and natural gas production. These transactions effectively converted a portion of its existing call
options into collars, thus providing a hedge to future changes in oil and natural gas prices. Brigham also entered into costless collars on additional future oil and natural gas production thus
providing further protection to Brigham's exposure to potential oil and natural gas price declines.

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The following tables summarize Brigham's outstanding oil and natural gas derivative contracts as of June 30, 2001:

Natural Gas Derivative Contracts

|                  |  |              |  |                           |  | 2001      |  | 2002
|----------------- |  | ------------ |  | ------------------------- |  | --------- |  | ----
|
|Fixed Price Cap   |  | ANR
Oklahoma |  | July 2001 -
June 2002     |  | 1,840,000 |  | $   
|Fixed Price Floor |  | ANR
Oklahoma |  | July 2001 -
December 2001 |  | 460,000   |  | $   

Crude Oil Derivative Contracts

|                  |  |       |  |                           |  | 2001   |  | 2002
|----------------- |  | ----- |  | ------------------------- |  | ------ |  | ----
|
|Fixed Price Cap   |  | NYMEX |  | July 2001 -
December 2001 |  | 36,800 |  | $   
|Fixed Price Floor |  | NYMEX |  | July 2001 -
December 2001 |  | 36,800 |  | $   

Effects of Inflation and Changes in Prices

Brigham's results of operations and cash flows are affected by changing oil and gas prices. If the price of oil and natural gas increases (decreases), there
could be a corresponding increase (decrease) in revenues as well as the operating costs that Brigham is required to bear for operations. Inflation has had a minimal effect on Brigham.

Environmental and Other Regulatory Matters

Brigham's business is subject to certain federal, state and local laws and regulations relating to the exploration for and the development, production and
marketing of oil and natural gas, as well as environmental and safety matters. Many of these laws and regulations have become more stringent in recent years, often imposing greater liability on a
larger number of potentially responsible parties. Although Brigham believes it is in substantial compliance with all applicable laws and regulations, the requirements imposed by laws and regulations
are frequently changed and subject to interpretation, and Brigham is unable to predict the ultimate cost of compliance with these requirements or their effect on its operations. Any suspensions,
terminations or inability to meet applicable bonding requirements could materially adversely affect Brigham's financial condition and operations. Although significant expenditures may be required to
comply with governmental laws and regulations applicable to Brigham, compliance has not had a material adverse effect on the earnings or competitive position of Brigham. Future regulations may add to
the cost of, or significantly limit, drilling activity.

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Forward Looking Information

Brigham or its representatives may make forward looking statements, oral or written, including statements in this report, press releases and filings with the
SEC, regarding estimated future net revenues from oil and natural gas reserves and the present value thereof, planned capital expenditures (including the amount and nature thereof), increases in oil
and gas production, the number of wells it anticipates drilling during 2001 and Brigham's financial position, business strategy and other plans and objectives for future operations. Although Brigham
believes that the expectations reflected in these forward looking statements are reasonable, there can be no assurance that the actual results or developments anticipated by Brigham will be realized
or, even if substantially realized, that they will have the expected effects on its business or operations. Among the factors that could cause actual results to differ materially from Brigham's
expectations are general economic conditions, inherent uncertainties in interpreting engineering data, operating hazards, delays or cancellations of drilling operations for a variety of reasons,
competition, fluctuations in oil and gas prices, availability of sufficient capital resources to Brigham and its project participants, government regulations and other factors set forth among the risk
factors noted below or in the description of Brigham's business in Item 1 of this report. All subsequent oral and written forward looking statements attributable to Brigham or persons acting on its
behalf are expressly qualified in their entirety by these factors. Brigham assumes no obligation to update any of these statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In Part II, Item 7A of Brigham's Form 10-K report for the year ended December 31, 2000 (see page 43 of Brigham's 2000 Form 10-K), Brigham
provided a discussion of its market risk. See Note 6 to the Consolidated Financial Statements regarding Brigham's market risk associated with its derivative instruments at June 30, 2001. There
were no material changes during the second quarter of 2001 in Brigham's exposures to loss from possible future changes in the prices of oil and natural gas or in interest rates, other than those
described in Brigham 2000 Form 10-K report.

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PART IIOTHER INFORMATION

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS



| |  | Nominee              |  | Number of Shares
Voting for Election as Director |  | Number of Shares
Withholding Authority to
Vote for Election as
Director |  | 
| |  | -------------------- |  | ------------------------------------------------ |  | ----------------------------------------------------------------------- |  | 
| |  | Ben M. "Bud" Brigham |  | 11,811,849                                       |  | 248,200                                                                 |  | 
| |  | Anne L. Brigham      |  | 11,811,849                                       |  | 248,200                                                                 |  | 
| |  | Harold D. Carter     |  | 11,811,849                                       |  | 248,200                                                                 |  | 
| |  | Alexis M. Cranberg   |  | 11,811,849                                       |  | 248,200                                                                 |  | 
| |  | Curtis F. Harrell    |  | 11,811,849                                       |  | 248,200                                                                 |  | 
| |  | Stephen P. Reynolds  |  | 11,811,849                                       |  | 248,200                                                                 |  | 
| |  | Steven A. Webster    |  | 11,811,849                                       |  | 248,200                                                                 |  | 



| |  | For     |  | 12,037,849 |  | 
| |  | ------- |  | ---------- |  | 
| |  | Against |  | 13,000     |  | 
| |  | Abstain |  | 9,200      |  | 



| |  | For     |  | 11,906,689 |  | 
| |  | ------- |  | ---------- |  | 
| |  | Against |  | 58,460     |  | 
| |  | Abstain |  | 94,900     |  | 



| |  | For     |  | 8,932,387 |  | 
| |  | ------- |  | --------- |  | 
| |  | Against |  | 1,094,110 |  | 
| |  | Abstain |  | 9,300     |  | 
| |  | Unvoted |  | 2,024,252 |  | 

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ITEM 5. OTHER INFORMATION

Effective June 1, 2001, Brigham appointed R. Graham Whaling to its Board of Directors increasing the size of its board to eight members.

Mr. Whaling
is Chairman of Michael Petroleum. Mr. Whaling has spent his entire career in the energy industry, as a petroleum engineer, an energy investment banker, a
chief financial officer and a chief executive officer of energy companies.

Mr. Whaling
worked as a petroleum engineer for nine years in the beginning of his career primarily with Ryder Scott Company, an oil and gas consulting firm. Mr. Whaling
then spent seven years as an investment banker focusing on the energy industry with Lazard Freres & Co. and CS First Boston. Mr. Whaling then became the Chief Financial Officer for Santa
Fe Energy where he managed the initial public offering and the spin-off of Santa Fe's western division, a company called Monterey Resources. Mr. Whaling was Chairman and Chief Executive Officer
of Monterey Resources from its inception until it was acquired by Texaco in 1997, in a very successful transaction to the shareholders of both Santa Fe Energy and Monterey Resources. Prior to joining
Michael Petroleum, Mr. Whaling was a Managing Director with Credit Suisse First Boston's Global Energy Partners, which specializes in private equity investments in energy businesses world wide.

Mr. Whaling
received a Bachelor of Science degree in Petroleum Engineering from the University of Texas and an M.B.A. with Distinction from the Wharton Business School.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits:



(b) Reports
on Form 8-K:

Brigham
filed a report on Form 8-K on April 11, 2001, to provide guidance on its anticipated financial results for the quarter ended March 31, 2001. The Form 8-K
included a copy of Brigham's press release that provided these announcements.

Brigham
filed a report on Form 8-K on April 16, 2001, to announce its third consecutive Frio bright spot discovery, other recent drilling discoveries, and the spud of a high
impact test offsetting its Home Run Field in Brooks County, Texas. The Form 8-K included a copy of Brigham's press release that provided these announcements.

Brigham
filed a report on Form 8-K on May 9, 2001, to announce its financial results for the first quarter ended March 31, 2001, and provided an update on recent
operational activity and guidance on second quarter financial results. The Form 8-K included a copy of Brigham's press release that provided these announcements.

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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 on August 14, 2001.

| |  | BRIGHAM EXPLORATION COMPANY
| |  | ---------------------------
| |  | By:                        
| |  | By:                        

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INDEX TO EXHIBITS

|Exhibit
No. | Description                                                                           
|----------- | --------------------------------------------------------------------------------------
|10.1        | 1997 Incentive Plan of Brigham Exploration Company, as amended through March 6, 2001.

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