##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from __________ to __________
 Commission File Number: 001-34224
 Brigham Exploration Company
  Delaware
    
    75-2692967(State of other jurisdiction 
of incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 6300 Bridge Point Parkway, Building 2, Suite 500, Austin, Texas 78730
  (512) 427-3300
  þ o
  o o
  Large Accelerated Filer o
Accelerated
Filer þNon-Accelerated Filer o
(Do not check if smaller reporting company)
Smaller Reporting Company o  o þ
 Class
    
    OutstandingCommon Stock, par value $.01 per share as of
April 28, 2010
    
    116,392,920




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##### 



Brigham Exploration Company
 First Quarter 2010 Form 10-Q Report
 TABLE OF CONTENTS
 PagePART I  FINANCIAL INFORMATIONITEM 1.
    
    FINANCIAL STATEMENTSConsolidated Balance
Sheets  March 31, 2010 and December 31, 2009
    
    
    1Consolidated Statements of Operations  Three months ended March 31, 2010 and 2009
    
    
    2Consolidated Statement of Stockholders Equity  Three months ended March 31, 2010
    
    
    3Consolidated Statements of Cash Flows  Three months ended March 31, 2010 and 2009
    
    
    4Notes to the Consolidated Financial Statements
    
    
    5ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    17ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    32ITEM 4.
    
    CONTROLS AND PROCEDURES
    
    
    34PART II  OTHER INFORMATIONITEM 1.
    
    LEGAL PROCEEDINGS
    
    
    35ITEM 1A.
    
    RISK FACTORS
    
    
    35ITEM 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    35ITEM 3.
    
    DEFAULTS UPON SENIOR SECURITIES
    
    
    36ITEM 4.
    
    (REMOVED AND RESERVED)
    
    
    36ITEM 5.
    
    OTHER INFORMATION
    
    
    36ITEM 6.
    
    EXHIBITS
    
    
    36SIGNATURES
    
    
    
    
    38Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 
 BRIGHAM EXPLORATION COMPANY
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
 March 31,
    
    
    December 31,2010
    
    
    2009ASSETSCurrent assets:Cash and cash equivalents
    
    $
    24,476
    
    
    $
    40,781Accounts receivable
    
    
    32,316
    
    
    
    21,194Short-term investments
    
    
    83,005
    
    
    
    80,093Inventory
    
    
    14,226
    
    
    
    14,087Other current assets
    
    
    4,433
    
    
    
    2,284Total current assets
    
    
    158,456
    
    
    
    158,439Oil and natural gas properties, using the full cost method includingProved, net
of accumulated depletion of $374,707 and $365,496
    
    
    282,969
    
    
    
    254,424Unproved
    
    
    95,258
    
    
    
    76,309378,227
    
    
    
    330,733Other property and equipment, net
    
    
    3,066
    
    
    
    3,025Deferred loan fees
    
    
    4,766
    
    
    
    5,213Other noncurrent assets
    
    
    1,105
    
    
    
    846Total assets
    
    $
    545,620
    
    
    $
    498,256LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    25,125
    
    
    $
    19,251Royalties payable
    
    
    15,052
    
    
    
    8,268Accrued drilling costs
    
    
    32,455
    
    
    
    15,498Participant advances received
    
    
    8,006
    
    
    
    6,949Series A Preferred Stock, mandatorily redeemable, $.01 par
value, $20 stated and redemption value, 2,250,000 shares
authorized, 505,051 shares issued and outstanding at March 31,
2010 and December 31, 2009
    
    
    10,101
    
    
    
    10,101Other current liabilities
    
    
    11,974
    
    
    
    7,706Total current liabilities
    
    
    102,713
    
    
    
    67,773Senior Notes
    
    
    159,027
    
    
    
    158,968Senior Credit Facility
    
    
    
    
    
    
    Other noncurrent liabilities
    
    
    7,143
    
    
    
    7,232Commitments and contingencies (Note 4)Stockholders equity:Common stock, $.01 par value, 180 million shares authorized,
99,778,037 and 99,593,075 shares issued and 99,522,090 and
99,351,825 shares outstanding at March 31, 2010 and December 31,
2009, respectively
    
    
    998
    
    
    
    996Additional paid-in capital
    
    
    480,682
    
    
    
    479,077Treasury stock, at cost; 255,947 and 241,250 shares at March 31,
2010 and December 31, 2009, respectively
    
    
    (2,337
    )
    
    
    (2,133
    )Accumulated other comprehensive income (loss)
    
    
    (469
    )
    
    
    (205
    )Retained earnings (deficit)
    
    
    (202,137
    )
    
    
    (213,452
    )Total stockholders equity
    
    
    276,737
    
    
    
    264,283Total liabilities and stockholders equity
    
    $
    545,620
    
    
    $
    498,256
   1




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 ITEM 1. FINANCIAL STATEMENTS
 
 BRIGHAM EXPLORATION COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 Three Months EndedMarch 31,2010
    
    
    2009Revenues:Oil and natural gas sales
    
    $
    28,930
    
    
    $
    13,809Gain (loss) on derivatives, net
    
    
    3,634
    
    
    
    4,643Other revenue
    
    
    9
    
    
    
    3432,573
    
    
    
    18,486Costs and expenses:Lease operating
    
    
    4,349
    
    
    
    3,799Production taxes
    
    
    2,508
    
    
    
    814General and administrative
    
    
    3,086
    
    
    
    2,122Depletion of oil and natural gas properties
    
    
    9,211
    
    
    
    9,833Impairment of oil and natural gas properties
    
    
    
    
    
    
    114,781Depreciation and amortization
    
    
    233
    
    
    
    149Accretion of discount on asset retirement obligations
    
    
    105
    
    
    
    101Loss on inventory valuation
    
    
    
    
    
    
    2,03919,492
    
    
    
    133,638Operating income (loss)
    
    
    13,081
    
    
    
    (115,152
    )Other income (expense):Interest income
    
    
    453
    
    
    
    93Interest expense, net
    
    
    (2,904
    )
    
    
    (4,127
    )Other income (expense)
    
    
    685
    
    
    
    115(1,766
    )
    
    
    (3,919
    )Income (loss) before income taxes
    
    
    11,315
    
    
    
    (119,071
    )Income tax expense:Current
    
    
    
    
    
    
    Deferred
    
    
    
    
    
    
    
    
    
    
    Net income (loss)
    
    $
    11,315
    
    
    $
    (119,071
    )Net income (loss) per share available to common stockholders:Basic
    
    $
    0.11
    
    
    $
    (2.60
    )Diluted
    
    $
    0.11
    
    
    $
    (2.60
    )Weighted average shares outstanding:Basic
    
    
    99,444
    
    
    
    45,726Diluted
    
    
    101,357
    
    
    
    45,726
   2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 ITEM 1. FINANCIAL STATEMENTS
 
 BRIGHAM EXPLORATION COMPANY
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
(In thousands)
(Unaudited)
 AccumulatedAdditional
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    TotalCommon Stock
    
    
    Paid In
    
    
    Treasury
    
    
    Comprehensive
    
    
    Retained
    
    
    StockholdersShares
    
    
    Amounts
    
    
    Capital
    
    
    Stock
    
    
    Income (Loss)
    
    
    Earnings
    
    
    EquityBalance, December 31, 2009
    
    
    99,593
    
    
    $
    996
    
    
    $
    479,077
    
    
    $
    (2,133
    )
    
    $
    (205
    )
    
    $
    (213,452
    )
    
    $
    264,283Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,315
    
    
    
    11,315Unrealized gains (losses)
on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (264
    )
    
    
    
    
    
    
    (264
    )Tax benefit (provisions)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,051Exercises of employee stock
options
    
    
    130
    
    
    
    1
    
    
    
    843
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    844Vesting of restricted stock
    
    
    55
    
    
    
    1
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock based compensation
    
    
    
    
    
    
    
    
    
    
    763
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    763Repurchases of common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (204
    )
    
    
    
    
    
    
    
    
    
    
    (204
    )Balance, March 31, 2010
    
    
    99,778
    
    
    $
    998
    
    
    $
    480,682
    
    
    $
    (2,337
    )
    
    $
    (469
    )
    
    $
    (202,137
    )
    
    $
    276,737
   3




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 ITEM 1. FINANCIAL STATEMENTS
 
 BRIGHAM EXPLORATION COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Three Months EndedMarch 31,2010
    
    
    2009Cash flows from operating activities:Net income (loss)
    
    $
    11,315
    
    
    $
    (119,071
    )Adjustments to reconcile net income (loss) to cash provided by
operating activities:Depletion of oil and natural gas properties
    
    
    9,211
    
    
    
    9,833Impairment of oil and natural gas properties
    
    
    
    
    
    
    114,781Depreciation and amortization
    
    
    233
    
    
    
    149Stock based compensation
    
    
    427
    
    
    
    353Amortization of deferred loan fees and debt issuance costs
    
    
    506
    
    
    
    296Market value adjustment for derivative instruments
    
    
    (3,052
    )
    
    
    2,878Accretion of discount on asset retirement obligations
    
    
    105
    
    
    
    101Deferred income taxes
    
    
    
    
    
    
    Other noncash items
    
    
    (1
    )
    
    
    36Changes in operating assets and liabilities:Accounts receivable
    
    
    (11,122
    )
    
    
    3,162Other current assets
    
    
    212
    
    
    
    (852
    )Accounts payable
    
    
    5,874
    
    
    
    1,834Royalties payable
    
    
    6,784
    
    
    
    (1,849
    )Participant advances received
    
    
    1,057
    
    
    
    (1,552
    )Other current liabilities
    
    
    4,416
    
    
    
    3,351Other noncurrent assets and liabilities
    
    
    8
    
    
    
    (15
    )Net cash provided (used) by operating activities
    
    
    25,973
    
    
    
    13,435Cash flows from investing activities:Additions to oil and natural gas properties
    
    
    (39,360
    )
    
    
    (27,007
    )Decrease (increase) in restricted cash
    
    
    
    
    
    
    555Changes to inventory
    
    
    (275
    )
    
    
    Decrease (increase) in short term investments
    
    
    (3,176
    )
    
    
    Additions to other property and equipment
    
    
    (273
    )
    
    
    (100
    )Decrease (increase) in drilling advances paid
    
    
    174
    
    
    
    163Net cash provided (used) by investing activities
    
    
    (42,910
    )
    
    
    (26,389
    )Cash flows from financing activities:Deferred loan fees paid and equity costs
    
    
    (8
    )
    
    
    (23
    )Proceeds from exercise of employee stock options
    
    
    844
    
    
    
    1Repurchases of common stock
    
    
    (204
    )
    
    
    (36
    )Net cash provided (used) by financing activities
    
    
    632
    
    
    
    (58
    )Net increase (decrease) in cash and cash equivalents
    
    
    (16,305
    )
    
    
    (13,012
    )Cash and cash equivalents, beginning of year
    
    
    40,781
    
    
    
    40,043Cash and cash equivalents, end of period
    
    $
    24,476
    
    
    $
    27,031
   4




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##### Table of Contents



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




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  Three Months EndedMarch 31,2010
    
    
    2009Weighted average common shares outstanding  basic
    
    
    99,444
    
    
    
    45,726Plus: Potential common sharesStock options and restricted stock
    
    
    1,913
    
    
    
    Weighted average common shares outstanding  diluted
    
    
    101,357
    
    
    
    45,726Stock options excluded from diluted EPS due to the anti-dilutive effect
    
    
    164
    
    
    
    3,757
 5. Income Taxes
     6. Derivative Instruments and Hedging Activities
  Natural Gas and Crude Oil Derivative Contracts
   6




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  Natural
    
    
    
    
    
    
    Purchased
    
    
    WrittenGas
    
    
    Oil
    
    
    Put
    
    
    CallSettlement Period
    
    (MMBTU)
    
    
    (Barrels)
    
    
    Nymex
    
    
    NymexNatural Gas Costless Collars04/01/10 - 12/31/10
    
    
    630,000
    
    
    
    
    
    
    $
    5.15
    
    
    $
    7.0004/01/10 - 09/30/10
    
    
    420,000
    
    
    
    
    
    
    $
    5.75
    
    
    $
    7.3004/01/10 - 09/30/10
    
    
    240,000
    
    
    
    
    
    
    $
    5.75
    
    
    $
    7.0004/01/10 - 09/30/10
    
    
    300,000
    
    
    
    
    
    
    $
    5.50
    
    
    $
    6.6510/01/10 - 03/31/11
    
    
    240,000
    
    
    
    
    
    
    $
    6.50
    
    
    $
    8.2510/01/10 - 03/31/11
    
    
    420,000
    
    
    
    
    
    
    $
    6.40
    
    
    $
    7.8001/01/11 - 12/31/11
    
    
    360,000
    
    
    
    
    
    
    $
    5.75
    
    
    $
    7.6501/01/11 - 12/31/11
    
    
    480,000
    
    
    
    
    
    
    $
    5.75
    
    
    $
    7.4004/01/11 - 12/31/11
    
    
    360,000
    
    
    
    
    
    
    $
    5.00
    
    
    $
    6.55Oil Costless Collars04/01/10 - 05/31/10
    
    
    
    
    
    
    20,000
    
    
    $
    57.50
    
    
    $
    75.9504/01/10 - 06/30/10
    
    
    
    
    
    
    30,000
    
    
    $
    65.00
    
    
    $
    89.9004/01/10 - 06/30/10
    
    
    
    
    
    
    15,000
    
    
    $
    60.00
    
    
    $
    103.7504/01/10 - 08/31/10
    
    
    
    
    
    
    15,000
    
    
    $
    70.00
    
    
    $
    99.0004/01/10 - 09/30/10
    
    
    
    
    
    
    18,000
    
    
    $
    60.00
    
    
    $
    91.4004/01/10 - 12/31/10
    
    
    
    
    
    
    90,000
    
    
    $
    48.70
    
    
    $
    80.0004/01/10 - 12/31/10
    
    
    
    
    
    
    36,000
    
    
    $
    60.00
    
    
    $
    86.5004/01/10 - 12/31/10
    
    
    
    
    
    
    45,000
    
    
    $
    60.00
    
    
    $
    88.8004/01/10 - 12/31/10
    
    
    
    
    
    
    36,000
    
    
    $
    70.00
    
    
    $
    101.7504/01/10 - 12/31/10
    
    
    
    
    
    
    27,000
    
    
    $
    70.00
    
    
    $
    91.5004/01/10 - 12/31/10
    
    
    
    
    
    
    18,000
    
    
    $
    60.00
    
    
    $
    100.0004/01/10 - 12/31/10
    
    
    
    
    
    
    27,000
    
    
    $
    60.00
    
    
    $
    96.0005/01/10 - 11/30/10
    
    
    
    
    
    
    21,000
    
    
    $
    70.00
    
    
    $
    95.5006/01/10 - 12/31/10
    
    
    
    
    
    
    56,000
    
    
    $
    57.50
    
    
    $
    82.1507/01/10 - 09/30/10
    
    
    
    
    
    
    6,000
    
    
    $
    70.00
    
    
    $
    87.2507/01/10 - 12/31/10
    
    
    
    
    
    
    30,000
    
    
    $
    65.00
    
    
    $
    94.2507/01/10 - 12/31/10
    
    
    
    
    
    
    12,000
    
    
    $
    65.00
    
    
    $
    107.7010/01/10 - 12/31/10
    
    
    
    
    
    
    3,000
    
    
    $
    70.00
    
    
    $
    88.5001/01/11 - 02/28/11
    
    
    
    
    
    
    10,000
    
    
    $
    70.00
    
    
    $
    92.0001/01/11 - 03/31/11
    
    
    
    
    
    
    9,000
    
    
    $
    75.00
    
    
    $
    93.5001/01/11 - 06/30/11
    
    
    
    
    
    
    18,000
    
    
    $
    65.00
    
    
    $
    97.5001/01/11 - 06/30/11
    
    
    
    
    
    
    24,000
    
    
    $
    70.00
    
    
    $
    92.5001/01/11 - 07/31/11
    
    
    
    
    
    
    21,000
    
    
    $
    70.00
    
    
    $
    94.8001/01/11 - 12/31/11
    
    
    
    
    
    
    84,000
    
    
    $
    65.00
    
    
    $
    88.2501/01/11 - 12/31/11
    
    
    
    
    
    
    60,000
    
    
    $
    60.00
    
    
    $
    97.2501/01/11 - 12/31/11
    
    
    
    
    
    
    60,000
    
    
    $
    65.00
    
    
    $
    108.0001/01/11 - 12/31/11
    
    
    
    
    
    
    48,000
    
    
    $
    70.00
    
    
    $
    106.8001/01/11 - 12/31/11
    
    
    
    
    
    
    48,000
    
    
    $
    75.00
    
    
    $
    102.6007/01/11 - 09/30/11
    
    
    
    
    
    
    9,000
    
    
    $
    70.00
    
    
    $
    95.0007/01/11 - 12/31/11
    
    
    
    
    
    
    12,000
    
    
    $
    75.00
    
    
    $
    103.0007/01/11 - 12/31/11
    
    
    
    
    
    
    12,000
    
    
    $
    75.00
    
    
    $
    95.1510/01/11 - 12/31/11
    
    
    
    
    
    
    6,000
    
    
    $
    70.00
    
    
    $
    96.35
  7




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  Purchased
    
    
    WrittenOil
    
    
    Put
    
    
    CallSettlement Period
    
    (Barrels)
    
    
    Nymex
    
    
    NymexOil Collars06/01/10 - 07/31/10
    
    
    20,000
    
    
    $
    75.00
    
    
    $
    100.5006/01/10 - 12/31/10
    
    
    35,000
    
    
    $
    75.00
    
    
    $
    101.0008/01/10 - 10/31/10
    
    
    15,000
    
    
    $
    75.00
    
    
    $
    101.0001/01/11 - 02/28/11
    
    
    8,000
    
    
    $
    75.00
    
    
    $
    103.5001/01/11 - 12/31/11
    
    
    36,000
    
    
    $
    75.00
    
    
    $
    104.3003/01/11 - 04/30/11
    
    
    16,000
    
    
    $
    75.00
    
    
    $
    104.5001/01/12 - 06/30/12
    
    
    60,000
    
    
    $
    75.00
    
    
    $
    106.90
 Additional Disclosures about Derivative Instruments and Hedging Activities
  Mar 31, 2010
    
    
    Dec 31, 2009Estimated
    
    
    EstimatedType of Contract
    
    Balance Sheet Location
    
    
    Fair Value
    
    
    Fair Value(in thousands)
    
    
    (in thousands)Derivatives Not Designated as Hedging InstrumentsDerivative Assets:Natural gas and oil contracts
    
    Other current assets
    
    $
    3,369
    
    
    $
    1,152Natural gas and oil contracts
    
    Other non-current assets
    
    
    655
    
    
    
    186Total Derivative Assets
    
    
    
    
    
    $
    4,024
    
    
    $
    1,338Derivative Liabilities:Natural gas and oil contracts
    
    Other current liabilities
    
    $
    (2,257
    )
    
    $
    (2,404
    )Natural gas and oil contracts
    
    Other non-current liabilities
    
    
    (690
    )
    
    
    (909
    )Total Derivative Liabilities
    
    
    
    
    
    $
    (2,947
    )
    
    $
    (3,313
    )
  Mar 31, 2010
    
    
    Mar 31, 2009Statement of Operations
    
    
    Amount of
    
    
    Amount ofType of Contract
    
    Location of Gain (Loss)
    
    
    Gain (Loss)
    
    
    Gain (Loss)(in thousands)
    
    
    (in thousands)Derivatives Not Designated as Hedging InstrumentsNatural gas contracts
    
    Gain (loss) on derivatives, net
    
    $
    3,255
    
    
    $
    4,867Oil contracts
    
    Gain (loss) on derivatives, net
    
    
    379
    
    
    
    (224
    )Total Derivative Gain (loss)
    
    
    
    
    
    $
    3,634
    
    
    $
    4,643
   8




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 7. Fair Values
  
    
    Level 1  Unadjusted quoted prices are available in active markets for identical assets
or liabilities.
    
    Level 2  Pricing inputs, other than quoted prices within Level 1, that are either
directly or indirectly observable.
    
    Level 3  Pricing inputs that are unobservable requiring the use of valuation
methodologies that result in managements best estimate of fair value.
  Fair Value Measurements at March 31, 2010 UsingQuoted Prices in
    
    
    Significant Other
    
    
    SignificantActive Markets
    
    
    Observable
    
    
    UnobservableMarch 31,
    
    
    for Identical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    2010
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Other current liabilities
    
    $
    (2,257
    )
    
    $
    
    
    
    $
    (2,257
    )
    
    $
    Other non-current liabilities
    
    
    (690
    )
    
    
    
    
    
    
    (690
    )
    
    
    Current derivative assets
    
    
    3,369
    
    
    
    
    
    
    
    3,369
    
    
    
    Other non-current assets
    
    
    655
    
    
    
    
    
    
    
    655
    
    
    
    $
    1,077
    
    
    $
    
    
    
    $
    1,077
    
    
    $
    
 Fair Value Measurements at December 31, 2009 UsingQuoted Prices in
    
    
    Significant Other
    
    
    SignificantActive Markets
    
    
    Observable
    
    
    UnobservableDecember 31,
    
    
    for Identical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Other current liabilities
    
    $
    (2,404
    )
    
    $
    
    
    
    $
    (2,404
    )
    
    $
    Other non-current liabilities
    
    
    (909
    )
    
    
    
    
    
    
    (909
    )
    
    
    Current derivative assets
    
    
    1,152
    
    
    
    
    
    
    
    1,152
    
    
    
    Other non-current assets
    
    
    186
    
    
    
    
    
    
    
    186
    
    
    
    $
    (1,975
    )
    
    $
    
    
    
    $
    (1,975
    )
    
    $
    
  Fair Value Measurements at March 31, 2010 UsingQuoted Prices in
    
    
    Significant Other
    
    
    SignificantActive Markets
    
    
    Observable
    
    
    UnobservableMarch 31,
    
    
    for Identical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    2010
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Other non-current liabilities
    
    
    (6,452
    )
    
    
    
    
    
    
    
    
    
    
    (6,452
    )$
    (6,452
    )
    
    $
    
    
    
    $
    
    
    
    $
    (6,452
    )
  9




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 Fair Value Measurements at December 31, 2009 UsingQuoted Prices in
    
    
    Significant Other
    
    
    SignificantActive Markets
    
    
    Observable
    
    
    UnobservableDecember 31,
    
    
    for Identical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Other non-current liabilities
    
    
    (6,323
    )
    
    
    
    
    
    
    
    
    
    
    (6,323
    )$
    (6,323
    )
    
    $
    
    
    
    $
    
    
    
    $
    (6,323
    )
   Fair Value Measurements at March 31, 2010 UsingQuoted Prices in
    
    
    Significant Other
    
    
    SignificantActive Markets
    
    
    Observable
    
    
    UnobservableMarch 31,
    
    
    for Identical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    2010
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Investments
    
    
    83,005
    
    
    
    83,005
    
    
    
    
    
    
    
    $
    83,005
    
    
    $
    83,005
    
    
    $
    
    
    
    $
    
 Fair Value Measurements at December 31, 2009 UsingQuoted Prices in
    
    
    Significant Other
    
    
    SignificantActive Markets
    
    
    Observable
    
    
    UnobservableDecember 31,
    
    
    for Identical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Investments
    
    
    80,093
    
    
    
    80,093
    
    
    
    
    
    
    
    $
    80,093
    
    
    $
    80,093
    
    
    $
    
    
    
    $
    
  Less Than 12 Months
    
    
    12 Months or Greater
    
    
    TotalUnrealized
    
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    UnrealizedFair
    
    
    Gains
    
    
    Fair
    
    
    Gains
    
    
    Fair
    
    
    GainsDescription of Securities
    
    Value
    
    
    (Losses)
    
    
    Value
    
    
    (Losses)
    
    
    Value
    
    
    (Losses)Certificates of deposit
    
    $
    5,769
    
    
    $
    (2
    )
    
    $
    241
    
    
    $
    1
    
    
    $
    6,010
    
    
    $
    (1
    )Corporate bonds and notes
    
    
    35,659
    
    
    
    (202
    )
    
    
    3,048
    
    
    
    13
    
    
    
    38,707
    
    
    
    (189
    )Government securities
    
    
    38,288
    
    
    
    (279
    )
    
    
    
    
    
    
    
    
    
    
    38,288
    
    
    
    (279
    )Total
    
    $
    79,716
    
    
    $
    (483
    )
    
    $
    3,289
    
    
    $
    14
    
    
    $
    83,005
    
    
    $
    (469
    )
   10




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  March 31, 2010
    
    
    December 31, 2009(in thousands)
    
    
    (in thousands)Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairAmount
    
    
    Value
    
    
    Amount
    
    
    ValueSenior Notes
    
    $
    160,000
    
    
    $
    162,800
    
    
    $
    160,000
    
    
    $
    160,000Series A Preferred Stock
    
    $
    10,101
    
    
    $
    10,207
    
    
    $
    10,101
    
    
    $
    10,166
  8. Oil and Gas Properties
     9. Common Stock Offering
    11




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  10. Senior Notes
    11. Senior Credit Facility
    12. Asset Retirement Obligations
   12




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  Three Months EndedMarch 31,2010
    
    

2009Beginning asset retirement obligations
    
    $
    6,323
    
    
    $
    5,592Liabilities incurred for new wells placed on production
    
    
    52
    
    
    
    172Liabilities settled
    
    
    (28
    )
    
    
    (15
    )Accretion of discount on asset retirement obligations
    
    
    105
    
    
    
    101$
    6,452
    
    
    $
    5,850
 13. Stock Based Compensation
   2010Risk-free interest rate
    
    
    2.63
    %Expected life (in years)
    
    
    5.0Expected volatility
    
    
    80
    %Expected dividend yield
    
    
    Weighted average fair value per share of stock compensation
    
    $
    9.74
    Three Months EndedMarch 31,2010
    
    
    2009Pre-tax stock based compensation expense
    
    $
    763
    
    
    $
    650Capitalized stock based compensation
    
    
    (336
    )
    
    
    (297
    )Tax benefit
    
    
    (149
    )
    
    
    (124
    )Stock based compensation expense, net
    
    $
    278
    
    
    $
    229
  13




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 Stock Based Plan Descriptions and Share Information
    2010
    
    
    2009Weighted-
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    PriceOptions outstanding at the beginning of the
year
    
    
    4,170,137
    
    
    $
    5.14
    
    
    
    3,128,651
    
    
    $
    7.00Granted
    
    
    14,000
    
    
    $
    14.89
    
    
    
    
    
    
    $
    Forfeited or cancelled
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    Exercised
    
    
    (129,962
    )
    
    $
    6.25
    
    
    
    
    
    
    $
    Options outstanding at the end of the quarter
    
    
    4,054,175
    
    
    $
    5.14
    
    
    
    3,128,651
    
    
    $
    7.00Options exercisable at the end of the quarter
    
    
    563,000
    
    
    $
    6.16
    
    
    
    1,969,851
    
    
    $
    7.18
   Options Outstanding
    
    
    Options ExercisableNumber
    
    
    Weighted-
    
    
    
    
    
    
    Number
    
    
    Weighted-Outstanding at
    
    
    Average
    
    
    Weighted-
    
    
    Exercisable at
    
    
    Average
    
    
    Weighted-March 31,
    
    
    Remaining
    
    
    Average
    
    
    March 31,
    
    
    Remaining
    
    
    AverageExercise Price
    
    2010
    
    
    Contractual Life
    
    
    Exercise Price
    
    
    2010
    
    
    Contractual Life
    
    
    Exercise Price$2.21 to $3.41
    
    
    1,214,500
    
    
    8.9 years
    
    $
    2.26
    
    
    
    24,500
    
    
    2.7 years
    
    $
    3.283.66 to 5.08
    
    
    594,600
    
    
    4.0 years
    
    $
    4.85
    
    
    
    226,600
    
    
    1.6 years
    
    $
    4.485.96 to 6.46
    
    
    1,820,975
    
    
    8.5 years
    
    $
    5.99
    
    
    
    138,800
    
    
    3.2 years
    
    $
    6.197.22 to 8.84
    
    
    173,100
    
    
    3.6 years
    
    $
    7.63
    
    
    
    99,100
    
    
    2.8 years
    
    $
    7.698.93 to 15.71
    
    
    251,000
    
    
    7.3 years
    
    $
    11.84
    
    
    
    74,000
    
    
    2.2 years
    
    $
    10.15$2.21 to
$15.71
    
    
    4,054,175
    
    
    7.7 years
    
    $
    5.14
    
    
    
    563,000
    
    
    2.3 years
    
    $
    6.16
   14




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  Restricted Stock
   2010
    
    
    2009Weighted-
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    PriceRestricted shares outstanding at the
beginning of the year
    
    
    556,990
    
    
    $
    7.04
    
    
    
    593,260
    
    
    $
    7.58Shares granted
    
    
    105,363
    
    
    $
    14.45
    
    
    
    85,000
    
    
    $
    3.15Lapse of restrictions
    
    
    (55,000
    )
    
    $
    8.59
    
    
    
    (50,000
    )
    
    $
    7.35Forfeitures
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    Shares outstanding at the end of the quarter
    
    
    607,353
    
    
    $
    8.19
    
    
    
    628,260
    
    
    $
    7.00
 14. Comprehensive Income
  Three Months EndedMarch 31,2010
    
    
    2009Net income (loss)
    
    $
    11,315
    
    
    $
    (119,071
    )Unrealized gains (losses) on investments
    
    
    (264
    )
    
    
    Tax benefits (provisions)
    
    
    
    
    
    
    Other comprehensive income (loss), net
    
    $
    11,051
    
    
    $
    (119,071
    )
 15. Subsequent Events
    15




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 16. Related Parties
  17. New Accounting Pronouncements and SEC Rulemaking
     16




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  General Overview
    
    
    Focus on Core Provinces and Trends;
    
    Leverage Our Engineering and Operational Expertise;
    
    Capitalize on Internally Generated Exploration Successes Through Disciplined Development
Activities; and
    
    Enhance Returns Through Operational Control.
 Overview of First Quarter 2010 Financial Results
     17




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##### Table of Contents



Overview of Operational Results
 Williston Basin
  Frac
    
    
    IP
    
    
    30 DayWell Name
    
    County
    
    
    Objective
    
    
    ~WI
    
    
    Stages
    
    
    (Boe/d)
    
    
    Average (Boe/d)**%Abelmann State 21-16 #1H
    
    McKenzie
    
    Bakken
    
    
    64
    %
    
    
    31
    
    
    
    3,301
    
    
    NAMortenson 5-32  #1H
    
    Williams
    
    Bakken
    
    
    77
    %
    
    
    23
    
    
    
    2,314
    
    
    NAArnson 13-24 #1H
    
    Williams
    
    Bakken
    
    
    93
    %
    
    
    30
    
    
    
    1,339
    
    
    NASorenson 29-32 #1H
    
    Mountrail
    
    Bakken
    
    
    95
    %
    
    
    27
    
    
    
    5,133
    
    
    NAJack Erickson 6-31 #1H
    
    Williams
    
    Bakken
    
    
    21
    %*
    
    
    30
    
    
    
    2,652
    
    
    833Jerome Anderson 15-10 #1H
    
    Mountrail
    
    Bakken
    
    
    50
    %
    
    
    30
    
    
    
    3,115
    
    
    1,146Papineau Trust 17-20 #1H
    
    Williams
    
    Bakken
    
    
    43
    %*
    
    
    29
    
    
    
    3,042
    
    
    971Kalil 25-36 #1H
    
    Williams
    
    Bakken
    
    
    38
    %*
    
    
    30
    
    
    
    1,586
    
    
    650Liffrig 29-20 #1H
    
    Mountrail
    
    Three Forks
    
    
    72
    %
    
    
    29
    
    
    
    2,477
    
    

    1,082Owan-Nehring 27-34
    
    Williams
    
    Bakken
    
    
    49
    %
    
    
    30
    
    
    
    2,513
    
    
    1,089Jackson 35-34 #1H
    
    Williams
    
    Bakken
    
    
    62
    %
    
    
    30
    
    
    
    3,540
    
    

    907State 36-1 #1H
    
    Williams
    
    Bakken
    
    
    16
    %*
    
    
    30
    
    
    
    3,807
    
    

    1,516Averages
    
    
    2,902
    
    

    1,024
 *
    
    Rough Rider drilling participation agreement wells where our working interest is anticipated to
increase upon payout.**
    
    Excludes any days well was down for remediation. Onshore Gulf Coast
 Vicksburg Trend
    18




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##### Table of Contents



Subsequent Events
     February
    
    
    Revised2010 Budget
    
    
    2010 Budget(In thousands)Drilling
    
    $
    183.7
    
    
    $
    229.1Field Level Production Infrastructure
    
    
    
    
    
    
    37.8Land and Seismic
    
    
    15.6
    
    
    
    27.0Exploration and Development Capital Budget
    
    $
    199.3
    
    
    $
    293.9
 First Quarter 2010 Results
 Comparison of the three-month periods ended March 31, 2010 and 2009.
 Three Months Ended March 31,Production Volumes
    
    2010
    
    
    % Change
    
    
    2009Crude oil (MBbls)(1)
    
    
    320
    
    
    
    84
    %
    
    
    174Natural gas (MMcf)
    
    
    1,009
    
    
    
    (45
    %)
    
    
    1,842Total (MBoe)(2)
    
    
    488
    
    
    
    1
    %
    
    
    481Average daily production (Boe/d) (3)
    
    
    5,420
    
    
    
    1
    %
    
    
    5,344
 
 (1)
    
    Includes approximately 5,012 barrels of crude oil produced in the Williston Basin
during the first quarter 2010 and added to crude oil inventory during the first quarter
2010. Ending inventory at the first quarter 2009 was not material.(2)
    
    Boe is defined as one barrel equivalent of crude oil, determined using the ratio of six
Mcf of natural gas to one Bbl of crude oil, condensate or natural gas liquids.(3)
    
    Average daily production is calculated using 30 days per calendar month.  19




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##### Table of Contents



Sales Volumes (Production volumesless the Incremental Change in
    
    Three Months Ended March 31,Inventory)
    
    2010
    
    
    % Change
    
    
    2009Crude oil (MBbls)(1)
    
    
    315
    
    
    
    81
    %
    
    
    174Natural gas (MMcf)
    
    
    1,009
    
    
    
    (45
    %)
    
    
    1,842Total (MBoe)(2)
    
    
    483
    
    
    
    0
    %
    
    
    481Average daily production (Boe/d) (3)
    
    
    5,364
    
    
    
    0
    %
    
    
    5,340
 
 (1)
    
    Excludes approximately 5,012 barrels of crude oil produced in the Williston Basin
during the first quarter 2010 and added to crude oil inventory at the end of the first
quarter 2010. Ending inventory at the first quarter 2009 was not material.(2)
    
    Boe is defined as one barrel equivalent of crude oil, determined using the ratio of six
Mcf of natural gas to one Bbl of crude oil, condensate or natural gas liquids.(3)
    
    Average daily production is calculated using 30 days per calendar month.   20




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##### Table of Contents



Revenues, Commodity Prices and Hedging
  Three Months Ended March 31,2010
    
    
    % Change
    
    
    2009(In thousands)Crude Oil revenue:Crude oil revenue
    
    $
    22,870
    
    
    
    284
    %
    
    $
    5,950Crude oil derivative settlement gains (losses)
    
    
    (96
    )
    
    NM
    
    
    
    1,082Crude oil revenue including derivative settlements
    
    $
    22,774
    
    
    
    224
    %
    
    $
    7,032Crude oil derivative unrealized gains (losses)
    
    
    475
    
    
    NM
    
    
    
    (1,307
    )Crude oil revenue including derivative settlements and unrealized
gains (losses)
    
    $
    23,249
    
    
    
    306
    %
    
    $
    5,725Natural gas revenue:Natural gas revenue
    
    $
    6,060
    
    
    
    (23
    %)
    
    $
    7,859Natural gas derivative settlement gains (losses)
    
    
    678
    
    
    
    (89
    %)
    
    
    6,439Natural gas revenue including derivative settlements
    
    $
    6,738
    
    
    
    (53
    %)
    
    $
    14,298Natural gas derivative unrealized gains (losses)
    
    
    2,577
    
    
    NM
    
    
    
    (1,571
    )Natural gas revenue including derivative settlements and unrealized
gains (losses)
    
    $
    9,315
    
    
    
    (27
    %)
    
    $
    12,727Crude oil and natural gas revenue:Crude oil and natural gas revenue
    
    $
    28,930
    
    
    
    110
    %
    
    $
    13,809Crude oil and natural gas derivative settlement gains (losses)
    
    
    582
    
    
    
    (92
    %)
    
    
    7,521Crude oil and natural gas revenue including derivative settlements
    
    
    29,512
    
    
    
    38
    %
    
    
    21,330Crude oil and natural gas derivative unrealized gains (losses)
    
    
    3,052
    
    
    NM
    
    
    
    (2,878
    )Crude oil and natural gas revenue including derivative settlements and
unrealized gains (losses)
    
    
    32,564
    
    
    
    76
    %
    
    
    18,452Other revenue
    
    
    9
    
    
    
    (74
    %)
    
    
    34Total revenue
    
    $
    32,573
    
    
    
    76
    %
    
    $
    18,486Average crude oil prices (based on sales volumes):Crude oil price (per Bbl)
    
    $
    72.69
    
    
    
    112
    %
    
    $
    34.29Crude oil price including derivative settlement gains (losses) (per Bbl)
    
    
    72.39
    
    
    
    79
    %
    
    
    40.53Crude oil price including derivative settlements and unrealized gains
(losses) (per Bbl)
    
    
    73.90
    
    
    
    124
    %
    
    
    32.99Average natural gas prices:Natural gas price (per Mcf)
    
    $
    6.01
    
    
    
    41
    %
    
    $
    4.27Natural gas price including derivative settlement gains (losses) (per Mcf)
    
    
    6.68
    
    
    
    (14
    %)
    
    
    7.76Natural gas price including derivative settlements and unrealized gains
(losses) (per Mcf)
    
    $
    9.23
    
    
    
    34
    %
    
    $
    6.91Average equivalent prices (based on sales volumes):Crude oil equivalent price (per Bbl)
    
    $
    59.93
    
    
    
    109
    %
    
    $
    28.74Crude oil equivalent price including derivative settlement gains (losses)
(per Bbl)
    
    
    61.13
    
    
    
    38
    %
    
    
    44.40Crude oil equivalent price including derivative settlements and
unrealized gains (losses) (per Bbl)
    
    $
    67.45
    
    
    
    76
    %
    
    $
    38.40
  21




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##### Table of Contents



For the threemonth periodsended March 31,2010 and 2009(In thousands)Change in revenue from the sale of crude oil:Price variance impact
    
    $
    12,081Volume variance impact
    
    
    4,839Cash settlement of derivative hedging contracts
    
    
    (1,178
    )Unrealized gains (losses) due to derivative hedging contracts
    
    
    1,782Total change
    
    $
    17,524Change in revenue from the sale of natural gas:Price variance impact
    
    $
    1,752Volume variance impact
    
    
    (3,551
    )Cash settlement of derivative hedging contracts
    
    
    (5,761
    )Unrealized gains (losses) due to derivative hedging contracts
    
    
    4,148Total change
    
    $
    (3,412
    )Change in revenue from the sale of crude oil and natural gas:Price variance impact
    
    $
    13,833Volume variance impact
    
    
    1,288Cash settlement of derivative hedging contracts
    
    
    (6,939
    )Unrealized gains (losses) due to derivative hedging contracts
    
    
    5,930Total change
    
    $
    14,112
  
    
    an increase in pre-hedge crude oil and natural gas prices of 112% and 41%, respectively,
increased revenue $13.8 million;
    
    an 81% increase in crude oil sales volumes, which was partially offset by a 45% decrease
in our natural gas sales volumes, resulted in a $1.3 million increase in crude oil and
natural gas revenue;
    
    a $3.0 million unrealized derivative gain in first quarter 2010 versus a $2.9 million
unrealized derivative loss in first quarter 2009 increased revenues by $5.9 million; and
    
    a $0.6 million gain from the settlement of derivative contracts in the first quarter
2010 versus a $7.5 million gain from the settlement of derivative contracts in the first
quarter 2009 (includes $3.2 million from the monetization of a portion of our natural gas
hedges which would have settled from May through September 2009) decreased revenues by $6.9
million.
 Hedging.
   22




---



##### Table of Contents



Three months ended March 31,2010
    
    
    % Change
    
    
    2009Crude oil collarsVolumes (Bbls)
    
    
    145,000
    
    
    
    383
    %
    
    
    30,000Average floor price (per Bbl)
    
    $
    57.83
    
    
    
    (27
    %)
    
    $
    79.15Average ceiling price (per Bbl)
    
    $
    87.19
    
    
    
    (20
    %)
    
    $
    108.53Gain (loss) upon settlement (in thousands)
    
    $
    (96
    )
    
    NM
    
    
    $
    1,082Natural gas collars and Three WaysVolumes (MMbtu)
    
    
    810,000
    
    
    
    (16
    %)
    
    
    970,000Average floor price (per MMbtu)
    
    $
    6.18
    
    
    
    (22
    %)
    
    $
    7.96Average ceiling price (per MMbtu)
    
    $
    7.79
    
    
    
    (20
    %)
    
    $
    9.73Gain (loss) upon settlement (in thousands)
    
    $
    678
    
    
    
    (89
    %)
    
    $
    6,270Natural gas swapsVolumes (MMbtu)
    
    
    
    
    
    NM
    
    
    
    180,000Average swap price (per MMbtu)
    
    $
    
    
    
    NM
    
    
    $
    5.23Gain (loss) upon settlement (in thousands)
    
    $
    
    
    
    NM
    
    
    $
    183Natural Gas CapsVolumes (MMbtu)
    
    
    
    
    
    NM
    
    
    
    250,000Average price (per MMbtu)
    
    $
    
    
    
    NM
    
    
    $
    9.73Gain (loss) upon settlement (in thousands)
    
    $
    
    
    
    NM
    
    
    $
    (14
    )Total Natural Gas Gain (loss) upon settlement (in thousands)
    
    $
    678
    
    
    
    (89
    %)
    
    $
    6,439
 Other revenue
 Operating costs and expenses
 Production costs.
 Unit-of-Production
    
    
    Amount(Per Boe)
    
    
    (In thousands)Three months ended March 31,
    
    
    Three months ended March 31,2010
    
    
    % Change
    
    
    2009
    
    
    2010
    
    
    % Change
    
    
    2009Production costs:Operating & maintenance
    
    $
    5.43
    
    
    
    (9
    %)
    
    $
    5.94
    
    
    $
    2,624
    
    
    
    (8
    %)
    
    $
    2,844Expensed workovers
    
    
    3.05
    
    
    
    112
    %
    
    
    1.44
    
    
    
    1,475
    
    
    
    117
    %
    
    
    680Ad valorem taxes
    
    
    0.52
    
    
    
    (13
    %)
    
    
    0.60
    
    
    
    250
    
    
    
    (9
    %)
    
    
    275Lease operating expenses
    
    $
    9.00
    
    
    
    13
    %
    
    $
    7.98
    
    
    $
    4,349
    
    
    
    14
    %
    
    $
    3,799Production taxes
    
    
    5.19
    
    
    
    209
    %
    
    
    1.68
    
    
    
    2,508
    
    
    
    208
    %
    
    
    814Production costs
    
    $
    14.19
    
    
    
    47
    %
    
    $
    9.66
    
    
    $
    6,857
    
    
    
    49
    %
    
    $
    4,613
  
    
    production taxes increased $3.51 per Boe, or 209%, due to higher sales prices and higher
crude oil sales volumes in North Dakota;
    
    expensed workovers increased $1.61 per Boe, or 112%, due to workovers of our
conventional natural gas wells; and
    
    operating and maintenance expenses decreased $0.51 per Boe, or 9%, due to lower
compressor rental and equipment rental expenses.
  23




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##### Table of Contents



General and administrative expenses.
 Three months ended March 31,2010
    
    
    % Change
    
    
    2009(In thousands, except per unit measurements)General and administrative costs
    
    $
    5,916
    
    
    
    61
    %
    
    $
    3,672Capitalized general and administrative costs
    
    
    (2,830
    )
    
    
    83
    %
    
    
    (1,550
    )General and administrative expenses
    
    $
    3,086
    
    
    
    45
    %
    
    $
    2,122General and administrative expense ($  per Boe)
    
    $
    6.39
    
    
    
    44
    %
    
    $
    4.44
  Depletion of crude oil and natural gas properties
 Three months ended March 31,2010
    
    
    % Change
    
    
    2009(In thousands, except per unit measurements)Depletion of crude oil and natural gas properties
    
    $
    9,211
    
    
    
    (6
    %)
    
    $
    9,833Depletion of crude oil and natural gas
properties ($  per Boe)
    
    $
    19.07
    
    
    
    (7
    %)
    
    $
    20.46
  Impairment of crude oil and natural gas properties
    24




---



##### Table of Contents



Inventory Valuation.
 Net interest expense.
 Three months ended March 31,2010
    
    
    % Change
    
    
    2009(In thousands)Interest on Senior Notes
    
    $
    3,850
    
    
    
    0
    %
    
    $
    3,850Interest on Senior Credit Facility
    
    
    
    
    
    NM
    
    
    
    1,005Commitment fees
    
    
    163
    
    
    
    676
    %
    
    
    21Dividend on mandatorily redeemable preferred stock
    
    
    149
    
    
    
    0
    %
    
    
    149Amortization of deferred loan and debt issuance cost.
    
    
    482
    
    
    
    75
    %
    
    
    275Other general interest expense
    
    
    
    
    
    NM
    
    
    
    17Capitalized interest expense
    
    
    (1,740
    )
    
    
    46
    %
    
    
    (1,190
    )Net interest expense
    
    $
    2,904
    
    
    
    (30
    %)
    
    $
    4,127Weighted average debt outstanding
    
    $
    170,101
    
    
    
    (46
    %)
    
    $
    315,101Average interest rate on outstanding indebtedness (a)
    
    
    9.9
    %
    
    
    
    
    
    
    6.5
    %
 
 a)
    
    Calculated as the sum of the interest expense on our outstanding indebtedness, commitment
fees that we pay on our unused borrowing capacity and the dividend on our mandatorily
redeemable preferred stock divided by our weighted average debt and preferred stock
outstanding for the period.  Other income (expense).
  Three months ended March 31,2010
    
    
    % Change
    
    
    2009(In thousands)Other income (expense):Non-cash gain (loss)
    
    $
    
    
    
    NM
    
    
    $
    21Income (expense)
    
    
    685
    
    
    
    629
    %
    
    
    94Total other income (expense)
    
    $
    685
    
    
    
    496
    %
    
    $
    115
  Income taxes.
  25




---



##### Table of Contents



Capital Expenditures
  
    
    cost of acquiring and maintaining our lease acreage position and our seismic resources;
    
    cost of drilling and completing new crude oil and natural gas wells;
    
    cost of installing new production infrastructure;
    
    cost of maintaining, repairing and enhancing existing crude oil and natural gas wells;
    
    cost related to plugging and abandoning unproductive or uneconomic wells; and
    
    indirect costs related to our exploration activities, including payroll and other
expenses attributable to our exploration professional staff.
   
    
    commodity prices;
    
    production from our existing producing wells;
    
    the results of our current exploration and development drilling efforts;
    
    economic conditions at the time of drilling;
    
    industry conditions at the time of drilling, including the availability of drilling and
completion equipment;
    
    our liquidity and the availability of external sources of financing; and
    
    the availability of more economically attractive prospects.
      26




---



##### Table of Contents



AmountSpent Through
    
    
    Amount2010 Budget (a)
    
    
    March 31, 2010
    
    
    Remaining (b)(In millions)Drilling
    
    $
    229.1
    
    
    $
    43.6
    
    
    $
    185.5Field level infrastructure
    
    
    37.8
    
    
    
    0.0
    
    
    
    37.8Land and seismic
    
    
    27.0
    
    
    
    8.5
    
    
    
    18.5Exploration and development capital budget
    
    $
    293.9
    
    
    $
    52.1
    
    
    $
    241.8
 
 (a)
    
    Capital budget announced April 2010 in conjunction with our April 2010 common stock offering.(b)
    
    Calculated based on the 2010 exploration and development capital budget less amounts spent
through March 31, 2010. Liquidity and Capital Resources
 Sources of Capital
  9 5/8% Senior Notes Due 2014
   
    
    rank equally in right of payment with all our existing and future senior indebtedness;
    
    rank senior to all of our future subordinated indebtedness; and
    
    are effectively junior in right of payment to all of our and the Guarantors existing and
future secured indebtedness, including debt of our Senior Credit Facility.
   Senior Credit Facility
   27




---



##### Table of Contents



Percent of
    
    EurodollarBorrowing Base
    
    Rate
    
    
    Base RateUtilized
    
    Advances
    
    
    Advances(1)< 25%
    
    
    2.50
    %
    
    
    1.50
    %25% and < 50%
    
    
    2.75
    %
    
    
    1.75
    %50% and < 75%
    
    
    3.00
    %
    
    
    2.00
    %75% and < 90%
    
    
    3.25
    %
    
    
    2.25
    %3 90%
    
    
    3.50
    %
    
    
    2.50
    %
 
 (1)
    
    Base rate is defined as for any day a fluctuating rate per annum equal to the highest of the
following, in each case, to the extent determinable by the Administrative Agent: (a) the
Federal Funds Rate plus 1/2 of 1%, (b) the Eurodollar Rate with respect to Interest Periods of
one month determined as of approximately 11:00 a.m. (London time) on such day plus 1.50% and
(c) the rate of interest in effect for such day as publicly announced from time to time by
Bank of America as its prime rate. The prime rate is a rate set by Bank of America based
upon various factors including Bank of Americas costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing some loans, which
may be priced at, above, or below such announced rate. Any change in such rate announced by
Bank of America shall take effect at the opening of business on the day specified in the
public announcement of such change.  Percent ofBorrowing Base
    
    AnnualUtilized
    
    Commitment Fee< 25%
    
    
    0.500
    %25% and < 50%
    
    
    0.500
    %50% and < 75%
    
    
    0.500
    %75% and < 90%
    
    
    0.500
    %3 90%
    
    
    0.500
    %
  28




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##### Table of Contents



Mandatorily Redeemable Preferred Stock
  Access to Capital Markets
  Off Balance Sheet Arrangements
  Analysis of Changes in Cash and Cash Equivalents
  Three months ended March 31,2010
    
    
    %Change
    
    
    2009(In thousands)Net income (loss)
    
    $
    11,315
    
    
    NM
    
    
    $
    (119,071
    )Non-cash items
    
    
    7,429
    
    
    
    (94
    %)
    
    
    128,427Changes in working capital and other items.
    
    
    7,229
    
    
    
    77
    %
    
    
    4,079Cash flows provided by operating activities
    
    $
    25,973
    
    
    
    93
    %
    
    $
    13,435Cash flows used by investing activities
    
    
    (42,910
    )
    
    
    63
    %
    
    
    (26,389
    )Cash flows provided by financing activities
    
    
    632
    
    
    NM
    
    
    
    (58
    )Net increase in cash and cash equivalents
    
    $
    (16,305
    )
    
    
    25
    %
    
    $
    (13,012
    )
 Analysis of net cash provided by operating activities
   29




---



##### Table of Contents



Analysis of changes in cash flows used in investing activities
 Three months ended March 31,2010
    
    
    %Change
    
    
    2009(In thousands)Capital expenditures for oil and natural gas activities:Drilling
    
    $
    43,606
    
    
    
    90
    %
    
    $
    22,940Land and seismic
    
    
    8,477
    
    
    NM
    
    
    
    (6,471
    )Capitalized cost
    
    
    4,569
    
    
    
    67
    %
    
    
    2,740Capitalized asset retirement obligation
    
    
    52
    
    
    
    (70
    %)
    
    
    172Total
    
    $
    56,704
    
    
    
    193
    %
    
    $
    19,381Reconciling Items:Change in accrued drilling costs
    
    $
    (16,957
    )
    
    NM
    
    
    $
    8,095Change in investments
    
    
    2,912
    
    
    NM
    
    
    
    Other
    
    
    251
    
    
    NM
    
    
    
    (1,087
    )Total Reconciling Items
    
    
    (13,794
    )
    
    NM
    
    
    
    7,008Net cash used in investing activities
    
    $
    42,910
    
    
    
    63
    %
    
    $
    26,389
  
    
    drilling expenditures increased by $20.7 million due to higher levels of drilling
activity in the Williston Basin;
    
    net land and seismic expenditures increased by $14.9 million due to additional leasing in
the Williston Basin and the sale of mineral interests in the Williston Basin in the first
quarter 2009;
    
    capitalized costs increased by $1.8 million due to higher levels of drilling activity;
and
    
    the change in accrued drilling costs decreased cash used in investing activities by $25.1
million.
 Analysis of changes in cash flows from financing activities
  Common Stock Transactions
  Shares Issued
    
    
    Net Proceeds(In thousands, except share data)2010 common stock transactions:Exercise of employee stock options
    
    
    129,962
    
    
    $
    8442009 common stock transactions:Exercise of employee stock options
    
    
    500
    
    
    $
    1
  30




---



##### Table of Contents



Other Matters
 Derivative Instruments
  Effects of Inflation and Changes in Prices
  Environmental and Other Regulatory Matters
  New Accounting Pronouncements and SEC Rulemaking
     31




---



##### Table of Contents



Forward-looking Information
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Management Opinion Concerning Derivative Instruments
  Derivative Instruments and Hedging Activities
       32




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##### Table of Contents



Crude
    
    
    Purchased
    
    
    WrittenCrude Oil
    
    
    Put
    
    
    CallSettlement Period
    
    (Bbls)
    
    
    (Nymex)
    
    
    (Nymex)Crude Oil Costless Collars04/01/10 - 12/31/10
    
    
    90,000
    
    
    $
    48.70
    
    
    $
    80.0004/01/10 - 05/31/10
    
    
    20,000
    
    
    $
    57.50
    
    
    $
    75.9506/01/10 - 12/31/10
    
    
    56,000
    
    
    $
    57.50
    
    
    $
    82.1504/01/10 - 12/31/10
    
    
    36,000
    
    
    $
    60.00
    
    
    $
    86.5001/01/11 - 12/31/11
    
    
    84,000
    
    
    $
    65.00
    
    
    $
    88.2507/01/10 - 09/30/10
    
    
    6,000
    
    
    $
    70.00
    
    
    $
    87.2510/01/10 - 12/31/10
    
    
    3,000
    
    
    $
    70.00
    
    
    $
    88.5004/01/10 - 09/30/10
    
    
    18,000
    
    
    $
    60.00
    
    
    $
    91.4004/01/10 - 12/31/10
    
    
    45,000
    
    
    $
    60.00
    
    
    $
    88.8001/01/11 - 12/31/11
    
    
    60,000
    
    
    $
    60.00
    
    
    $
    97.2504/01/10 - 06/30/10
    
    
    15,000
    
    
    $
    60.00
    
    
    $
    103.7501/01/11 - 12/31/11
    
    
    60,000
    
    
    $
    65.00
    
    
    $
    108.0001/01/11 - 06/30/11
    
    
    18,000
    
    
    $
    65.00
    
    
    $
    97.5004/01/10 - 12/31/10
    
    
    27,000
    
    
    $
    60.00
    
    
    $
    96.0004/01/10 - 12/31/10
    
    
    18,000
    
    
    $
    60.00
    
    
    $
    100.0007/01/10 - 12/31/10
    
    
    12,000
    
    
    $
    65.00
    
    
    $
    107.7001/01/11 - 12/31/11
    
    
    48,000
    
    
    $
    70.00
    
    
    $
    106.8004/01/10 - 12/31/10
    
    
    36,000
    
    
    $
    70.00
    
    
    $
    101.7504/01/10 - 08/31/10
    
    
    15,000
    
    
    $
    70.00
    
    
    $
    99.0001/01/11 - 12/31/11
    
    
    48,000
    
    
    $
    75.00
    
    
    $
    102.6007/01/11 - 12/31/11
    
    
    12,000
    
    
    $
    75.00
    
    
    $
    103.0004/01/10 - 06/30/10
    
    
    30,000
    
    
    $
    65.00
    
    
    $
    89.9007/01/10 - 12/31/10
    
    
    30,000
    
    
    $
    65.00
    
    
    $
    94.2501/01/11 - 06/30/11
    
    
    24,000
    
    
    $
    70.00
    
    
    $
    92.5007/01/11 - 09/30/11
    
    
    9,000
    
    
    $
    70.00
    
    
    $
    95.0010/01/11 - 12/31/11
    
    
    6,000
    
    
    $
    70.00
    
    
    $
    96.3501/01/11 - 02/28/11
    
    
    10,000
    
    
    $
    70.00
    
    
    $
    92.0004/01/10 - 12/31/10
    
    
    27,000
    
    
    $
    70.00
    
    
    $
    91.5001/01/11 - 07/31/11
    
    
    21,000
    
    
    $
    70.00
    
    
    $
    94.8005/01/10 - 11/30/10
    
    
    21,000
    
    
    $
    70.00
    
    
    $
    95.5001/01/11 - 03/31/11
    
    
    9,000
    
    
    $
    75.00
    
    
    $
    93.5007/01/11 - 12/31/11
    
    
    12,000
    
    
    $
    75.00
    
    
    $
    95.15
  33




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##### Table of Contents



Natural
    
    
    Purchased
    
    
    WrittenGas
    
    
    Put
    
    
    CallSettlement Period
    
    (MMbtu)
    
    
    (Nymex)
    
    
    (Nymex)Natural Gas Costless Collars04/01/10 - 09/30/10
    
    
    420,000
    
    
    $
    5.75
    
    
    $
    7.3010/01/10 - 03/31/11
    
    
    240,000
    
    
    $
    6.50
    
    
    $
    8.2504/01/10 - 09/30/10
    
    
    240,000
    
    
    $
    5.75
    
    
    $
    7.0004/01/10 - 12/31/10
    
    
    630,000
    
    
    $
    5.15
    
    
    $
    7.0004/01/10 - 09/30/10
    
    
    300,000
    
    
    $
    5.50
    
    
    $
    6.6510/01/10 - 03/31/11
    
    
    420,000
    
    
    $
    6.40
    
    
    $
    7.8001/01/11 - 12/31/11
    
    
    360,000
    
    
    $
    5.75
    
    
    $
    7.6501/01/11 - 12/31/11
    
    
    480,000
    
    
    $
    5.75
    
    
    $
    7.4004/01/11 - 12/31/11
    
    
    360,000
    
    
    $
    5.00
    
    
    $
    6.55
  Crude
    
    
    Purchased
    
    
    WrittenOil
    
    
    Put
    
    
    CallSettlement Period
    
    (Bbls)
    
    
    (Nymex)
    
    
    (Nymex)Crude Oil Costless Collars06/01/10 - 12/31/10
    
    
    35,000
    
    
    $
    75.00
    
    
    $
    101.0001/01/11 - 12/31/11
    
    
    36,000
    
    
    $
    75.00
    
    
    $
    104.3006/01/10 - 07/31/10
    
    
    20,000
    
    
    $
    75.00
    
    
    $
    100.5001/01/12 - 06/30/12
    
    
    60,000
    
    
    $
    75.00
    
    
    $
    106.9008/01/10 - 10/31/10
    
    
    15,000
    
    
    $
    75.00
    
    
    $
    101.0001/01/11 - 02/28/11
    
    
    8,000
    
    
    $
    75.00
    
    
    $
    103.5003/01/11 - 04/30/11
    
    
    16,000
    
    
    $
    75.00
    
    
    $
    104.50
 
 ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
   34




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##### Table of Contents



PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  The proposed United States federal budgets for fiscal years 2010 and 2011 and other pending
legislation contain certain provisions that, if passed as originally submitted, will have an
adverse effect on our financial position, results of operations, and cash flows.
  Certain of our undeveloped leasehold acreage is subject to leases that will expire over the next
several years unless production is established on units containing the acreage or the leases are
extended.
   
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 Issuer Purchases of Equity Securities
  Total Number of
    
    
    Average PricePeriod
    

Shares Purchased
    
    
    Paid per ShareJanuary 2010
    
    
    14,697
    
    
    $
    13.855
  35




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##### Table of Contents



ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM
4. (REMOVED AND RESERVED)
  
 ITEM 5. OTHER INFORMATION
  
 ITEM 6. EXHIBITS
 3.1
    
    Certificate of Incorporation (filed as Exhibit 3.1 to Brighams Registration Statement on
Form S-1 (Registration No. 333-22491), and incorporated herein by reference)
 3.2
    
    Certificates of Amendment to Certificate of Incorporation (filed as Exhibit 3.1.1 to
Brighams Registration Statement on Form S-3 (Registration No. 333-37558), and incorporated
herein by reference)
 3.3
    
    Bylaws, as amended through May 28, 2009 (incorporated by reference to Exhibit 3.5 to
Brighams Current Report on Form 8-K filed May 28, 2009)
 3.4
    
    Certificate of Amendment to Certificate of Incorporation of Brigham Exploration Company dated
June 14, 2006 (filed as Exhibit 3.4 to Brighams Annual Report on Form 10-K for the year ended
December 31, 2008 and incorporated herein by reference)
 3.5
    
    Certificate of Amendment to Certificate of Incorporation of Brigham Exploration Company dated
October 7, 2009 (filed as Exhibit 3.5 to Brighams Current
Report on Form 8-K  (dated October 13, 2009) and incorporated herein by reference)
 4.1
    
    Form of Common Stock Certificate (filed as Exhibit 4.1 to Brighams Registration Statement on
Form S-1 (Registration No. 333-22491), and incorporated herein by reference)
 4.2
    
    Certificate of Designations of Series A Preferred Stock (Par Value $.01 Per Share) of Brigham
Exploration Company filed October 31, 2000 (filed as Exhibit 4.1 to Brighams Current Report
on Form 8-K, as amended (filed November 8, 2000), and incorporated herein by reference)
 4.3
    
    Certificate of Amendment of Certificate of Designations of Series A Preferred Stock (Par
Value $.01 Per Share) of Brigham Exploration Company, filed March 2, 2001 (filed as Exhibit
4.2.1 to Brighams Annual Report on Form 10-K for the year ended December 31, 2000 (filed
March 23, 2001), and incorporated herein by reference)
 4.4
    
    Certificate of Designations of Series B Preferred Stock (Par Value $.01 Per Share) of Brigham
Exploration Company filed December 20, 2002 (filed as Exhibit 4.4 to Brighams Annual Report
on Form 10-K for the year ended December 31, 2002 (filed March 31, 2003) and incorporated
herein by reference)
 4.5
    
    Certificate of Elimination of Certificate of Designations of Series B Preferred Stock of
Brigham Exploration Company, dated June 4, 2004, (filed as Exhibit 99.2 to Brighams Current
Report on Form 8-K (filed July 20, 2004), and incorporated herein by reference)
 4.6
    
    Indenture, dated April 20, 2006, among Brigham Exploration Company, the Guarantors named
therein and Wells Fargo Bank, N.A., as trustee (filed as Exhibit 4.1 to Brighams Current
Report on Form 8-K, as amended (filed April 24, 2006), and incorporated herein by reference)
 4.7
    
    Notations of Guarantees, dated April 20, 2006, among Brigham Exploration Company, the
Guarantors named therein and Wells Fargo Bank, N.A., as trustee, (filed as Exhibit 4.2 to
Brighams Current Report on Form 8-K, as amended (filed April 24, 2006), and incorporated
herein by reference)
 4.8
    
    Rule 144A 9 5/8% Senior Notes due 2014, dated April 20, 2006 (filed as Exhibit 4.3 to
Brighams Current Report on Form 8-K, as amended (filed April 24, 2006), and incorporated
herein by reference)
  36




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##### Table of Contents



4.9
    
    Reg S 9 5/8% Senior Notes due 2014, dated April 20, 2006 (filed as Exhibit 4.4 to Brighams
Current Report on Form 8-K, as amended (filed April 24, 2006), and incorporated herein by
reference)
 4.10
    
    Notations of Guarantees dated as of April 9, 2007, among Brigham Exploration Company, the
Guarantors named therein and Wells Fargo Bank, N.A., as trustee (filed as Exhibit 4.2 to
Brighams Current Report on Form 8-K filed on April 13, 2007 and incorporated in by reference)
 4.11
    
    Rule 144A 9 5/8% Senior Notes due 2014 (filed as Exhibit 4.3 to Brighams Current Report on
Form 8-K filed on April 13, 2007 and incorporated in by reference)
 4.12
    
    Reg S 9 5/8% Senior Notes due 2014 (filed as Exhibit 4.4 on Form 8-K filed to Brighams
Current Report on April 13, 2007 and incorporated in by reference)
 4.13
    
    Rights Agreement, dated as of December 10, 2008, between Brigham Exploration Company and
American Stock Transfer & Trust Company, LLC, as Rights Agent (filed as Exhibit 4.1 to
Brighams Current Report on Form 8-K (filed December 11, 2008) and incorporated herein by
reference)
 4.14
    
    Certificate of Designations of Series C Junior Preferred Stock of Brigham Exploration Company
effective as of December 10, 2008 (filed as Exhibit 3.1 to Brighams Current Report on Form
8-K (filed December 11, 2008) and incorporated herein by reference)
 4.15
    
    Certificate of Elimination of Certificate of Designations of Series C Junior Preferred
Stock of Brigham Exploration Company
effective March 10, 2010 (filed as Exhibit 3.6 to Brighams Current Report on Form
8-K (filed March 15, 2010) and incorporated herein by reference)
 *10.46
    
    Amendment to 1997 Incentive Plan of Brigham Exploration Company effective March 9, 2010 (filed as Exhibit 10.46 to
Brighams Current Report on Form 8-K (filed March 15, 2010) and
incorporated herein by reference)
 31.1
    
    Certification of Chief Executive Officer of the Company pursuant to Rule 13a-14(a) of the
Securities Exchange Act of 1934
 31.2
    
    Certification of Chief Financial Officer of the Company pursuant to Rule 13a-14(a) of the
Securities Exchange Act of 1934
   
 *
    
    Management or compensatory plan
  37




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##### Table of Contents



SIGNATURES
  BRIGHAM EXPLORATION COMPANYApril 30, 2010
    By:

/s/
Ben M. BrighamBen M. BrighamChief Executive Officer, President
and Chairman of the BoardApril 30, 2010
    By:

/s/
Eugene B. Shepherd, Jr.Eugene B. Shepherd, Jr.

Executive Vice President and
Chief Financial Officer  38