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**FORM      10**
**Q**

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

**OR**

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

**000-22433**

**Brigham      Exploration Company**

| **Delaware**                                                                  |   | **1311**                                                                |   | **75-2692967**                                         |
|-------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------|--------|--------------------------------------------------------|
| (State                of other jurisdiction of incorporation or organization) |   | (Primary                Standard Industrial Classification Code Number) |   | (I.R.S.                Employer Identification Number) |

**6300      Bridge Point Parkway, Building 2, Suite 500, Austin, Texas      78730**

**(512)      427-3300**

| **Class**                                                                    | **Outstanding** |
|------------------------------------------------------------------------------|-----------------|
| Common                Stock, par value $.01 per share as of November 4, 2005 | 42,748,513      |

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**Brigham      Exploration Company**

**Third      Quarter 2005 Form 10-Q Report**

**TABLE      OF CONTENTS**

|                   |                                                                                                                          | **Page** |
|------------------------|-------------------------------------------------------------------------------------------------------------------------------|----------|
|                   | **PART                I - FINANCIAL INFORMATION**                                                                             |     |
|                   |                                                                                                                          |     |
| ITEM                1. | FINANCIAL                STATEMENTS                                                                                           |     |
|                   |                                                                                                                          |     |
|                   | Consolidated                Balance Sheets - September 30, 2005 and December                31, 2004                          | 1        |  |
|                   | Consolidated                Statements of Operations - Three and                nine months ended September 30, 2005 and 2004 | 2        |  |
|                   | Consolidated                Statement of Stockholders’ Equity                - Nine months ended September 30, 2005     | 3        |  |
|                   | Consolidated                Statements of Cash Flows - Nine months ended                September 30, 2005 and 2004           | 4        |  |
|                   | Notes                to the Consolidated Financial                Statements                                                  | 5        |  |
|                   |                                                                                                                          |     |
| ITEM              2.   | MANAGEMENT'S                  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION                  AND RESULTS OF OPERATIONS       | 14       |  |
|                   |                                                                                                                          |     |
| ITEM                3. | QUANTITATIVE                AND QUALITATIVE DISCLOSURES ABOUT MARKET                RISK                                      | 33       |  |
|                   |                                                                                                                          |     |
| ITEM                4. | CONTROLS                AND PROCEDURES                                                                                        | 34       |  |
|                   |                                                                                                                          |     |
|                   |                                                                                                                          |     |
|                   | **PART                II - OTHER INFORMATION**                                                                                |     |
|                   |                                                                                                                          |     |
| ITEM                1. | LEGAL                PROCEEDINGS                                                                                              | 35       |  |
|                   |                                                                                                                          |     |
| ITEM                2. | UNREGISTERED                SALES OF EQUITY SECURITIES                AND USE OF PROCEEDS                                     | 35       |  |
|                   |                                                                                                                          |     |
| ITEM                3. | DEFAULTS                UPON SENIOR SECURITIES                                                                                | 35       |  |
|                   |                                                                                                                          |     |
| ITEM                4. | SUBMISSION                OF MATTERS TO A VOTE OF SECURITY                HOLDERS                                             | 35       |  |
|                   |                                                                                                                          |     |
| ITEM                5. | OTHER                INFORMATION                                                                                              | 35       |  |
|                   |                                                                                                                          |     |
| ITEM                6. | EXHIBITS                                                                                                                      | 35       |  |
|                   |                                                                                                                          |     |
| SIGNATURES             |                                                                                                                          | 36       |  |

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Table          of Contents

**BRIGHAM      EXPLORATION COMPANY**

**CONSOLIDATED      BALANCE SHEETS**

**(In      thousands, except share data)**

**(Unaudited)**

|                                                                                                                                                                                                                                                                                                                                        |   | **September                30,** |    | **December                31,** |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|---------|---------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                        |   | **2005**                         |    | **2004**                        |   |
| **ASSETS**                                                                                                                                                                                                                                                                                                                                  |   |
| Current                assets:                                                                                                                                                                                                                                                                                                              |   |                             |    |                            |   |
| Cash                and cash equivalents                                                                                                                                                                                                                                                                                               |   | $                                | 5,873   |                            | $      | 2,281 |   |
| Accounts                receivable                                                                                                                                                                                                                                                                                                     |   |                             | 18,882  |                            |   | 17,573 |   |
| Deferred                income taxes                                                                                                                                                                                                                                                                                                   |   |                             | 2,324   |                            |   | 239 |   |
| Other                current assets                                                                                                                                                                                                                                                                                                    |   |                             | 1,251   |                            |   | 901 |   |
| Total                current assets                                                                                                                                                                                                                                                                                                         |   |                             | 28,330  |                            |   | 20,994 |   |
|                                                                                                                                                                                                                                                                                                                                        |   |                             |    |                            |   |   |   |
| Oil                and natural gas properties, net (full cost method)                                                                                                                                                                                                                                                                  |   |                             | 324,693 |                            |   | 261,979 |   |
| Other                property and equipment, net                                                                                                                                                                                                                                                                                       |   |                             | 997     |                            |   | 1,209 |   |
| Deferred                loan fees                                                                                                                                                                                                                                                                                                      |   |                             | 2,264   |                            |   | 1,745 |   |
| Other                noncurrent assets                                                                                                                                                                                                                                                                                                 |   |                             | 695     |                            |   | 380 |   |
| Total                assets                                                                                                                                                                                                                                                                                                                 |   | $                                | 356,979 |                            | $      | 286,307 |   |
|                                                                                                                                                                                                                                                                                                                                        |
| **LIABILITIES                AND STOCKHOLDERS' EQUITY**                                                                                                                                                                                                                                                                                     |
| Current                liabilities:                                                                                                                                                                                                                                                                                                         |   |                             |    |                            |   |   |   |
| Accounts                payable                                                                                                                                                                                                                                                                                                        |   | $                                | 16,837  |                            | $      | 22,465 |   |
| Royalties                payable                                                                                                                                                                                                                                                                                                       |   |                             | 6,461   |                            |   | 6,072 |   |
| Accrued                drilling costs                                                                                                                                                                                                                                                                                                  |   |                             | 6,634   |                            |   | 6,099 |   |
| Participant                advances received                                                                                                                                                                                                                                                                                           |   |                             | 1,798   |                            |   | 3,633 |   |
| Other                current liabilities                                                                                                                                                                                                                                                                                               |   |                             | 8,907   |                            |   | 2,225 |   |
| Total                current liabilities                                                                                                                                                                                                                                                                                               |   |                             | 40,637  |                            |   | 40,494 |   |
|                                                                                                                                                                                                                                                                                                                                        |   |                             |    |                            |   |   |   |
| Senior                credit facility                                                                                                                                                                                                                                                                                                  |   |                             | 58,100  |                            |   | 21,000 |   |
| Senior                subordinated notes                                                                                                                                                                                                                                                                                               |   |                             | 30,000  |                            |   | 20,000 |   |
| Series                A Preferred Stock, mandatorily redeemable, $.01 par value, $20 stated                and                redemption value, 2,250,000 shares authorized, 505,051                and 475,986 shares issued and outstanding at September                30,                2005 and December 31, 2004, respectively  |   |                             | 10,101  |                            |   | 9,520 |   |
| Deferred                income taxes                                                                                                                                                                                                                                                                                                   |   |                             | 17,524  |                            |   | 9,031 |   |
| Other                noncurrent liabilities                                                                                                                                                                                                                                                                                            |   |                             | 3,428   |                            |   | 2,986 |   |
|                                                                                                                                                                                                                                                                                                                                        |   |                             |    |                            |   |   |   |
| Commitments                and contingencies (Note 5)                                                                                                                                                                                                                                                                                       |   |                             |    |                            |   |   |   |
|                                                                                                                                                                                                                                                                                                                                        |   |                             |    |                            |   |   |   |
| Stockholders'                equity:                                                                                                                                                                                                                                                                                                        |   |                             |    |                            |   |   |   |
| Common                stock, $.01 par value, 50 million shares authorized,                43,513,978                and 43,231,499 shares issued and 42,295,601                and 42,034,351 shares outstanding at September                30,                2005 and December 31, 2004, respectively                          |   |                             | 435     |                            |   | 432 |   |
| Additional                paid-in capital                                                                                                                                                                                                                                                                                              |   |                             | 177,087 |                            |   | 175,270 |   |
| Treasury                stock, at cost; 1,218,377 and 1,197,148 shares at September 30, 2005                and                December 31, 2004, respectively                                                                                                                                                                         |   |                             | (4,897  | )                               |   | (4,707 | ) |
| Unearned                stock compensation                                                                                                                                                                                                                                                                                             |   |                             | (1,671  | )                               |   | (1,570 | ) |
| Accumulated                other comprehensive income (loss)                                                                                                                                                                                                                                                                           |   |                             | (3,655  | )                               |   | (503 | ) |
| Retained                earnings                                                                                                                                                                                                                                                                                                       |   |                             | 29,890  |                            |   | 14,354 |   |
| Total                stockholders’ equity                                                                                                                                                                                                                                                                                        |   |                             | 197,189 |                            |   | 183,276 |   |
| Total                liabilities and stockholders' equity                                                                                                                                                                                                                                                                                   |   | $                                | 356,979 |                            | $      | 286,307 |   |

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Table          of Contents

**BRIGHAM      EXPLORATION COMPANY**

**CONSOLIDATED      STATEMENTS OF OPERATIONS**

**(In      thousands, except per share data)**

**(Unaudited)**

|                                                                       |   | **Three                Months Ended** |    | **Nine                Months Ended** |   |
|----------------------------------------------------------------------------|--------|---------------------------------------|---------|--------------------------------------|--------|
|                                                                       |   | **September                30,**      |    | **September                30,**     |   |
|                                                                       |   | **2005**                              |    | **2004**                             |   | **2005** |   | **2004** |   |
|                                                                       |   |                                  |    | **Restated**                         |   |   |   | **Restated** |   |
| Revenues:                                                                  |   |                                  |    |                                 |   |   |   |   |   |
| Oil                and natural gas sales                              |   | $                                     | 25,189  |                                 | $      | 17,240 |   | $ | 60,326 |   | $ | 51,975 |   |
| Other                revenue                                          |   |                                  | 37      |                                 |   | 27 |   |   | 136 |   |   | 69 |   |
|                                                                       |   |                                  | 25,226  |                                 |   | 17,267 |   |   | 60,462 |   |   | 52,044 |   |
| Costs                and expenses:                                         |   |                                  |    |                                 |   |   |   |   |   |   |   |   |   |
| Lease                operating                                        |   |                                  | 1,541   |                                 |   | 1,648 |   |   | 5,149 |   |   | 4,362 |   |
| Production                taxes                                       |   |                                  | 741     |                                 |   | 675 |   |   | 1,909 |   |   | 2,434 |   |
| General                and administrative                             |   |                                  | 1,317   |                                 |   | 1,304 |   |   | 3,719 |   |   | 3,723 |   |
| Depletion                of oil and natural gas properties            |   |                                  | 7,953   |                                 |   | 5,860 |   |   | 21,612 |   |   | 16,508 |   |
| Depreciation                and amortization                          |   |                                  | 183     |                                 |   | 179 |   |   | 543 |   |   | 544 |   |
| Accretion                of discount on asset retirement obligations  |   |                                  | 44      |                                 |   | 40 |   |   | 126 |   |   | 117 |   |
|                                                                       |   |                                  | 11,779  |                                 |   | 9,706 |   |   | 33,058 |   |   | 27,688 |   |
| Operating                income                                            |   |                                  | 13,447  |                                 |   | 7,561 |   |   | 27,404 |   |   | 24,356 |   |
|                                                                       |   |                                  |    |                                 |   |   |   |   |   |   |   |   |   |
| Other                income (expense):                                     |   |                                  |    |                                 |   |   |   |   |   |   |   |   |   |
| Interest                income                                        |   |                                  | 62      |                                 |   | 26 |   |   | 153 |   |   | 55 |   |
| Interest                expense, net                                  |   |                                  | (1,138  | )                                    |   | (872 | ) |   | (2,645 | ) |   | (2,508 | ) |
| Other                income (expense)                                 |   |                                  | (497    | )                                    |   | (168 | ) |   | (851 | ) |   | (159 | ) |
|                                                                       |   |                                  | (1,573  | )                                    |   | (1,014 | ) |   | (3,343 | ) |   | (2,612 | ) |
| Income                before income taxes                             |   |                                  | 11,874  |                                 |   | 6,547 |   |   | 24,061 |   |   | 21,744 |   |
| Income                tax expense:                                         |   |                                  |    |                                 |   |   |   |   |   |   |   |   |   |
| Current                                                               |   |                                  | — |                                 |   | — |   |   | — |   |   | — |   |
| Deferred                                                              |   |                                  | (4,196  | )                                    |   | (2,056 | ) |   | (8,525 | ) |   | (7,190 | ) |
|                                                                       |   |                                  | (4,196  | )                                    |   | (2,056 | ) |   | (8,525 | ) |   | (7,190 | ) |
| Net                income                                             |   | $                                     | 7,678   |                                 | $      | 4,491 |   | $ | 15,536 |   | $ | 14,554 |   |
|                                                                       |   |                                  |    |                                 |   |   |   |   |   |   |   |   |   |
| Net                income per share available to common stockholders:      |   |                                  |    |                                 |   |   |   |   |   |   |   |   |   |
| Basic                                                                 |   | $                                     | 0.18    |                                 | $      | 0.11 |   | $ | 0.37 |   | $ | 0.37 |   |
| Diluted                                                               |   | $                                     | 0.18    |                                 | $      | 0.11 |   | $ | 0.36 |   | $ | 0.35 |   |
|                                                                       |   |                                  |    |                                 |   |   |   |   |   |   |   |   |   |
| Weighted                average shares outstanding:                        |   |                                  |    |                                 |   |   |   |   |   |   |   |   |   |
| Basic                                                                 |   |                                  | 42,236  |                                 |   | 41,227 |   |   | 42,175 |   |   | 39,921 |   |
| Diluted                                                               |   |                                  | 43,528  |                                 |   | 42,340 |   |   | 43,244 |   |   | 41,078 |   |

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Table          of Contents

**BRIGHAM      EXPLORATION COMPANY**

**CONSOLIDATED      STATEMENT OF STOCKHOLDERS' EQUITY**

**(In      thousands)**

**(Unaudited)**

|                                                                |   | **Common                Stock** |    | **Additional****Paid                In** |   | **Treasury** |   | **Unearned****Stock** |    | **Accumulated****Other****Comprehensive** |   | **Retained**                     |   | **Total****Stockholders'** |    |
|---------------------------------------------------------------------|--------|---------------------------------|---------|------------------------------------------|--------|--------------|--------|-----------------------|---------|-------------------------------------------|--------|----------------------------------|--------|----------------------------|---------|
|                                                                |   | **Shares**                      |    | **Amounts**                              |   | **Capital**  |   | **Stock**             |    | **Compensation**                          |   | **Income                (Loss)** |   | **Earnings**               |    | **Equity** |   |
| Balance,                December 31, 2004                           |   |                            | 43,231  |                                     | $      | 432          |   | $                     | 175,270 |                                      | $      | (4,707                           | )      | $                          | (1,570  | ) | $ | (503 | ) | $ | 14,354 |   | $ | 183,276 |   |
| Comprehensive                income:                                |   |                            |    |                                     |   |         |   |                  |    |                                      |   |                             |   |                       |    |   |   |   |   |   |   |   |   |   |   |
| Net                income                                      |   |                            | — |                                     |   | —      |   |                  | — |                                      |   | —                          |   |                       | — |   |   | — |   |   | 15,536 |   |   | 15,536 |   |
| Unrealized                gain (losses) on cash flow hedges    |   |                            | — |                                     |   | —      |   |                  | — |                                      |   | —                          |   |                       | — |   |   | (5,738 | ) |   | — |   |   | (5,738 | ) |
| Tax                benefits related to cash flow hedges        |   |                            | — |                                     |   | —      |   |                  | — |                                      |   | —                          |   |                       | — |   |   | 1,696 |   |   | — |   |   | 1,696 |   |
| Net                losses realized and included in net income  |   |                            | — |                                     |   | —      |   |                  | — |                                      |   | —                          |   |                       | — |   |   | 890 |   |   | — |   |   | 890 |   |
| Comprehensive                income                                 |   |                            |    |                                     |   |         |   |                  |    |                                      |   |                             |   |                       |    |   |   |   |   |   |   |   |   | 12,384 |   |
| Exercises                of employee stock options             |   |                            | 218     |                                     |   | 2            |   |                  | 795     |                                      |   | —                          |   |                       | — |   |   | — |   |   | — |   |   | 797 |   |
| Vesting                of restricted stock                     |   |                            | 65      |                                     |   | 1            |   |                  | (1      | )                                         |   | —                          |   |                       | — |   |   | — |   |   | — |   |   | — |   |
| Issuance                of restricted stock                    |   |                            | — |                                     |   | —      |   |                  | 602     |                                      |   | —                          |   |                       | (602    | ) |   | — |   |   | — |   |   | — |   |
| Tax                benefit from the exercise of stock options  |   |                            | — |                                     |   | —      |   |                  | 421     |                                      |   | —                          |   |                       | — |   |   | — |   |   | — |   |   | 421 |   |
| Repurchases                of common stock                |   |                            | — |                                     |   | —      |   |                  | — |                                      |   | (190                             | )      |                       | — |   |   | — |   |   | — |   |   | (190 | ) |
| Amortization                of unearned stock compensation     |   |                            | — |                                     |   | —      |   |                  | — |                                      |   | —                          |   |                       | 501     |   |   | — |   |   | — |   |   | 501 |   |
| Balance,                September 30, 2005                     |   |                            | 43,514  |                                     | $      | 435          |   | $                     | 177,087 |                                      | $      | (4,897                           | )      | $                          | (1,671  | ) | $ | (3,655 | ) | $ | 29,890 |   | $ | 197,189 |   |

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Table          of Contents

**BRIGHAM      EXPLORATION COMPANY**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

**(In      thousands)**

**(Unaudited)**

|                                                                                                              |   | **Nine                Months Ended** |    |
|-------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|---------|
|                                                                                                              |   | **September                30,**     |    |
|                                                                                                              |   | **2005**                             |    | **2004** |   |
|                                                                                                              |   |                                 |    | **Restated                (1)** |   |
| Cash                flows from operating activities:                                                              |   |                                 |    |   |   |
| Net                income                                                                                    |   | $                                    | 15,536  |   | $ | 14,554 |   |
| Adjustments                to reconcile net income to cash provided by operating activities:                 |   |                                 |    |   |   |   |   |
| Depletion                of oil and natural gas properties                                                        |   |                                 | 21,612  |   |   | 16,508 |   |
| Depreciation                and amortization                                                                      |   |                                 | 543     |   |   | 544 |   |
| Interest                paid through issuance of additional mandatorily redeemable preferred                stock |   |                                 | 581     |   |   | 538 |   |
| Amortization                of deferred loan fees and debt issuance costs                                         |   |                                 | 373     |   |   | 574 |   |
| Market                value adjustment for derivative instruments                                                 |   |                                 | 995     |   |   | 227 |   |
| Accretion                of discount on asset retirement obligations                                         |   |                                 | 126     |   |   | 117 |   |
| Deferred                income taxes                                                                              |   |                                 | 8,525   |   |   | 7,190 |   |
| Other                noncash items                                                                                |   |                                 | 103     |   |   | — |   |
| Changes                in operating assets and liabilities:                                                       |   |                                 |    |   |   |   |   |
| Accounts                receivable                                                                                |   |                                 | (1,320  | ) |   | (48 | ) |
| Other                current assets                                                                               |   |                                 | (459    | ) |   | 2,427 |   |
| Accounts                payable                                                                                   |   |                                 | (5,628  | ) |   | (3,249 | ) |
| Royalties                payable                                                                                  |   |                                 | 389     |   |   | 614 |   |
| Participant                advances received                                                                      |   |                                 | (1,835  | ) |   | (628 | ) |
| Other                current liabilities                                                                          |   |                                 | 543     |   |   | (1,737 | ) |
| Other                noncurrent assets and liabilities                                                            |   |                                 | (22     | ) |   | (126 | ) |
| Net                cash provided by operating activities                                                          |   |                                 | 40,062  |   |   | 37,505 |   |
|                                                                                                              |   |                                 |    |   |   |   |   |
| Cash                flows from investing activities:                                                              |   |                                 |    |   |   |   |   |
| Additions                to oil and natural gas properties                                                   |   |                                 | (83,306 | ) |   | (61,160 | ) |
| Additions                to other property and equipment                                                     |   |                                 | (184    | ) |   | (186 | ) |
| Decrease                (increase) in drilling advances paid                                                 |   |                                 | 205     |   |   | (137 | ) |
| Net                cash used by investing activities                                                              |   |                                 | (83,285 | ) |   | (61,483 | ) |
|                                                                                                              |   |                                 |    |   |   |   |   |
| Cash                flows from financing activities:                                                              |   |                                 |    |   |   |   |   |
| Increase                in senior credit facility                                                                 |   |                                 | 49,100  |   |   | 28,000 |   |
| Repayment                of senior credit facility                                                                |   |                                 | (12,000 | ) |   | (23,500 | ) |
| Increase                in senior subordinated notes                                                              |   |                                 | 10,000  |   |   | — |   |
| Proceeds                from the issuance of common stock, net of issuance costs                                  |   |                                 | — |   |   | 22,132 |   |
| Deferred                loan fees paid and equity costs                                                           |   |                                 | (892    | ) |   | (10 | ) |
| Proceeds                from exercise of employee stock options                                                   |   |                                 | 797     |   |   | 684 |   |
| Repurchases                of common stock                                                                        |   |                                 | (190    | ) |   | (156 | ) |
| Net                cash provided by financing activities                                                          |   |                                 | 46,815  |   |   | 27,150 |   |
| Net                increase (decrease) in cash and cash equivalents                                               |   |                                 | 3,592   |   |   | 3,172 |   |
| Cash                and cash equivalents, beginning of year                                                       |   |                                 | 2,281   |   |   | 5,779 |   |
| Cash                and cash equivalents, end of period                                                           |   | $                                    | 5,873   |   | $ | 8,951 |   |
|                                                                                                              |   |                                 |    |   |   |   |   |

|   | (1) | Only                  individual line items in cash flows from operating activities have                  been                  restated. Total cash flows from operating, investing and financing                  activities were unaffected. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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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** |
|--------|------------------------------------------|

***Stock      Based Compensation***

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Table          of Contents

**BRIGHAM      EXPLORATION COMPANY**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS**

|                                                                                                                                                            |   | **Three                Months Ended****September                30,** |   | **Nine                Months Ended****September                30,** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|--------|----------------------------------------------------------------------|--------|
|                                                                                                                                                            |   | **2005**                                                              |   | **2004**                                                             |   | **2005** |   | **2004** |   |
|                                                                                                                                                            |   | (In                thousands, except per share amounts)               |   |
|                                                                                                                                                            |   |                                                                  |   |
| Net                income, as reported (as restated for 2004)                                                                                              |   | $                                                                     | 7,678  |                                                                 | $      | 4,491 |   | $ | 15,536 |   | $ | 14,554 |   |
| Add                back: Stock compensation expense previously included in net                income                                                       |   |                                                                  | 111    |                                                                 |   | 103 |   |   | 333 |   |   | 340 |   |
| Effect                of total employee stock-based compensation expense, determined under                fair                value method for all awards  |   |                                                                  | (355   | )                                                                    |   | (916 | ) |   | (1,036 | ) |   | (1,908 | ) |
| Pro                forma                                                                                                                                   |   | $                                                                     | 7,434  |                                                                 | $      | 3,678 |   | $ | 14,833 |   | $ | 12,986 |   |
|                                                                                                                                                            |   |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   |
| Net                income per share:                                                                                                                            |   |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   |
| Basic,                as reported                                                                                                                          |   | $                                                                     | 0.18   |                                                                 | $      | 0.11 |   | $ | 0.37 |   | $ | 0.37 |   |
| Basic,                pro forma                                                                                                                            |   |                                                                  | 0.18   |                                                                 |   | 0.09 |   |   | 0.35 |   |   | 0.33 |   |
|                                                                                                                                                            |   |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   |
| Diluted,                as reported                                                                                                                        |   | $                                                                     | 0.18   |                                                                 | $      | 0.11 |   | $ | 0.36 |   | $ | 0.35 |   |
| Diluted,                pro forma                                                                                                                          |   |                                                                  | 0.17   |                                                                 |   | 0.09 |   |   | 0.34 |   |   | 0.32 |   |

| **3.** | **Restatement** |
|--------|-----------------|

|                                                                         |   | **Three                months ended****September 30, 2004** |   | **Nine                months ended****September                30, 2004** |   |
|------------------------------------------------------------------------------|--------|-------------------------------------------------------------|--------|---------------------------------------------------------------------------|--------|
|                                                                         |   | **As****Reported**                                          |   | **Restated**                                                              |   | **As****Reported** |   | **Restated** |   |
|                                                                         |   |                                                        |   |                                                                      |   |   |   |   |   |
| Consolidated                Statements of Operations:                        |   |                                                        |   |                                                                      |   |   |   |   |   |
| Depletion                of oil and natural gas properties                   |   | $                                                           | 5,871  |                                                                      | $      | 5,860 |   | $ | 16,374 |   | $ | 16,508 |   |
| Deferred                income tax benefit (expense)                         |   |                                                        | (2,051 | )                                                                         |   | (2,056 | ) |   | (7,234 | ) |   | (7,190 | ) |
| Net                income                                                    |   |                                                        | 4,485  |                                                                      |   | 4,491 |   |   | 14,644 |   |   | 14,554 |   |
| Net                income (loss) per share available to common stockholders: |   |                                                        |   |                                                                      |   |   |   |   |   |   |   |   |   |
| Basic                                                                        |   | $                                                           | 0.11   |                                                                      | $      | 0.11 |   | $ | 0.37 |   | $ | 0.37 |   |
| Diluted                                                                      |   | $                                                           | 0.11   |                                                                      | $      | 0.11 |   | $ | 0.36 |   | $ | 0.35 |   |

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Table          of Contents

**BRIGHAM      EXPLORATION COMPANY**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS**

| **4.** | **Senior                Credit Facility and Senior Subordinated                Notes** |
|--------|----------------------------------------------------------------------------------------|

***Senior      Credit Facility***

***Senior      Subordinated Notes***

| **5.** | **Commitments                and Contingencies** |
|--------|--------------------------------------------------|

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Table          of Contents

**BRIGHAM      EXPLORATION COMPANY**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS**

| **6.** | **Earnings                Per Common Share** |
|--------|----------------------------------------------|

|                                                                                                        |   | **Three                Months Ended****September                30,** |    | **Nine                Months Ended****September                30,** |   |
|-------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|---------|----------------------------------------------------------------------|--------|
|                                                                                                        |   | **2005**                                                              |    | **2004**                                                             |   | **2005** |   | **2004** |   |
|                                                                                                        |   |                                                                  |    |                                                                 |   |   |   |   |   |
| Weighted                average common shares outstanding - basic                                 |   |                                                                  | 42,236  |                                                                 |   | 41,227 |   |   | 42,175 |   |   | 39,921 |   |
| Plus:                Potential common shares                                                                |   |                                                                  |    |                                                                 |   |   |   |   |   |   |   |   |   |
| Stock                options and restricted stock                                                      |   |                                                                  | 1,292   |                                                                 |   | 1,113 |   |   | 1,069 |   |   | 1,157 |   |
| Weighted                average common shares outstanding - diluted                                    |   |                                                                  | 43,528  |                                                                 |   | 42,340 |   |   | 43,244 |   |   | 41,078 |   |
|                                                                                                        |   |                                                                  |    |                                                                 |   |   |   |   |   |   |   |   |   |
| Stock                options excluded from diluted EPS due to the anti-dilutive                effect  |   |                                                                  | — |                                                                 |   | 656 |   |   | 10 |   |   | 676 |   |

| **7.** | **Derivative                Instruments and Hedging                Activities** |
|--------|---------------------------------------------------------------------------------|

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Table          of Contents

**BRIGHAM      EXPLORATION COMPANY**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS**

|                                                                         |   | **Three                Months Ended September 30,** |   | **Nine                Months Ended September 30,** |   |
|------------------------------------------------------------------------------|--------|-----------------------------------------------------|--------|----------------------------------------------------|--------|
|                                                                         |   | **2005**                                            |   | **2004**                                           |   | **2005** |   | **2004** |   |
| ***Natural                Gas***                                             |   |                                                |   |                                               |   |   |   |   |   |
| Average                price per Mcf as reported (including hedging results) |   | $                                                   | 8.45   |                                               | $      | 5.44 |   | $ | 7.01 |   | $ | 5.68 |   |
| Average                price per Mcf realized (excluding hedging results)    |   | $                                                   | 8.71   |                                               | $      | 5.62 |   | $ | 7.14 |   | $ | 5.87 |   |
| Decrease                in revenue (in thousands)                            |   | $                                                   | (590   | )                                                  | $      | (390 | ) | $ | (831 | ) | $ | (1,250 | ) |
| ***Oil***                                                                    |   |                                                |   |                                               |   |   |   |   |   |   |   |   |   |
| Average                price per Bbl as reported (including hedging results) |   | $                                                   | 58.51  |                                               | $      | 36.82 |   | $ | 49.87 |   | $ | 33.51 |   |
| Average                price per Bbl realized (excluding hedging results)    |   | $                                                   | 60.44  |                                               | $      | 42.50 |   | $ | 53.32 |   | $ | 38.01 |   |
| Decrease                in revenue (in thousands)                            |   | $                                                   | (208   | )                                                  | $      | (843 | ) | $ | (1,134 | ) | $ | (2,018 | ) |

|                                                                        |   | **Three                Months Ended September 30,** |   | **Nine                Months Ended September 30,** |   |
|-----------------------------------------------------------------------------|--------|-----------------------------------------------------|--------|----------------------------------------------------|--------|
|                                                                        |   | **2005**                                            |   | **2004**                                           |   | **2005** |   | **2004** |   |
| Increase                (decrease) in earnings due to ineffectiveness  |   | $                                                   | (477   | )                                                  | $      | (146 | ) | $ | (890 | ) | $ | (206 | ) |

***Natural      Gas and Crude Oil Derivative Contracts***

***Cash-flow      hedges***

|                                                        |   | **September                30,****2005** |   | **December                31, 2004** |   |
|-------------------------------------------------------------|--------|------------------------------------------|--------|--------------------------------------|--------|
| Fair                value of undesignated derivatives  |   | $                                        | (137   | )                                    | $      | — |   |

|                                                                                                                         |   | **Three                Months Ended September 30,** |   | **Nine                Months Ended September 30,** |   |
|------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|--------|----------------------------------------------------|--------|
|                                                                                                                         |   | **2005**                                            |   | **2004**                                           |   | **2005** |   | **2004** |   |
| Increase                (decrease) in earnings due to changes in fair value of undesignated                derivatives  |   | $                                                   | (52    | )                                                  | $      | (21 | ) | $ | (105 | ) | $ | (21 | ) |

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Table          of Contents

**BRIGHAM      EXPLORATION COMPANY**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS**

|                                            |   |                               |                         |                                    |       | **Notional                Amount** |       |                 |       |
|-------------------------------------------------|--------|------------------------------------|------------------------------|-----------------------------------------|------------|------------------------------------|------------|----------------------|------------|
| **Settlement                Period**            |   | **Derivative****Instrument ** | ** **                   | **Hedge                Strategy ** | ** ** | **Gas****(MMBTU)**                 | ** ** | **Oil****(Barrels)** | ** ** | **Nymex****Reference****Price**  |   |
| ***Costless                Collars***           |   |                               |                         |                                    |       |                               |       |                 |       |   |   |
| 10/01/05                - 10/31/05              |   |                               | Purchased                put |                                    |       | Cash                flow           |       |                 | 60,000     |   |   |   |   | $ | 5.45 |   |
|                                            |   |                               | Written                call  |                                    |       | Cash                flow           |       |                 | 60,000     |   |   |   |   |   | 8.00 |   |
| 01/01/06                - 03/31/06              |   |                               | Purchased                put |                                    |       | Cash                flow           |       |                 |       |   |   | 7,500 |       | $ | 62.00 |   |
|                                            |   |                               | Written                call  |                                    |       | Cash                flow           |       |                 |       |   |   | 7,500 |   |   | 74.50 |   |
| 04/01/06                - 06/30/06              |   |                               | Purchased                put |                                    |       | Cash                flow           |       |                 |       |   |   | 16,500 |   | $ | 54.80 |   |
|                                            |   |                               | Written                call  |                                    |       | Cash                flow           |       |                 |       |   |   | 16,500 |   |   | 75.00 |   |
| ***Three                Way Costless Collars*** |   |                               |                         |                                    |       |                               |       |                 |       |   |   |   |   |   |   |   |
| 10/01/05                - 03/31/06              |   |                               | Purchased                put |                                    |       | Cash                flow           |       |                 |       |   |   | 36,000 |   | $ | 48.00 |   |
|                                            |   |                               | Written                call  |                                    |       | Cash                flow           |       |                 |       |   |   | 36,000 |   |   | 60.70 |   |
|                                            |   |                               | Written                put   |                                    |       | Undesignated                       |       |                 |       |   |   | 36,000 |   |   | 38.00 |   |
| 10/01/05                - 10/31/05              |   |                               | Purchased                put |                                    |       | Cash                flow           |       |                 | 100,000    |   |   |   |   | $ | 6.00 |   |
|                                            |   |                               | Written                call  |                                    |       | Cash                flow           |       |                 | 100,000    |   |   |   |   |   | 7.20 |   |
|                                            |   |                               | Written                put   |                                    |       | Undesignated                       |       |                 | 100,000    |   |   |   |   |   | 5.00 |   |
| 10/01/05                - 12/31/05              |   |                               | Purchased                put |                                    |       | Cash                flow           |       |                 |       |   |   | 15,000 |   | $ | 40.00 |   |
|                                            |   |                               | Written                call  |                                    |       | Cash                flow           |       |                 |       |   |   | 15,000 |   |   | 53.00 |   |
|                                            |   |                               | Written                put   |                                    |       | Undesignated                       |       |                 |       |   |   | 15,000 |   |   | 30.00 |   |
| 10/01/05                - 10/31/05              |   |                               | Purchased                put |                                    |       | Cash                flow           |       |                 | 60,000     |   |   |   |   | $ | 7.00 |   |
|                                            |   |                               | Written                call  |                                    |       | Cash                flow           |       |                 | 60,000     |   |   |   |   |   | 7.76 |   |
|                                            |   |                               | Written                put   |                                    |       | Undesignated                       |       |                 | 60,000     |   |   |   |   |   | 5.75 |   |
| 11/01/05                - 03/31/06              |   |                               | Purchased                put |                                    |       | Cash                flow           |       |                 | 250,000    |   |   |   |   | $ | 6.75 |   |
|                                            |   |                               | Written                call  |                                    |       | Cash                flow           |       |                 | 250,000    |   |   |   |   |   | 8.80 |   |
|                                            |   |                               | Written                put   |                                    |       | Undesignated                       |       |                 | 250,000    |   |   |   |   |   | 5.50 |   |
| 11/01/05                - 03/31/06              |   |                               | Purchased                put |                                    |       | Cash                flow           |       |                 | 350,000    |   |   |   |   | $ | 8.00 |   |
|                                            |   |                               | Written                call  |                                    |       | Cash                flow           |       |                 | 350,000    |   |   |   |   |   | 9.75 |   |
|                                            |   |                               | Written                put   |                                    |       | Undesignated                       |       |                 | 350,000    |   |   |   |   |   | 6.50 |   |
| 11/01/05                - 03/31/06              |   |                               | Purchased                put |                                    |       | Cash                flow           |       |                 | 400,000    |   |   |   |   | $ | 10.00 |   |
|                                            |   |                               | Written                call  |                                    |       | Cash                flow           |       |                 | 400,000    |   |   |   |   |   | 13.08 |   |
|                                            |   |                               | Written                put   |                                    |       | Undesignated                       |       |                 | 400,000    |   |   |   |   |   | 8.50 |   |
| 04/01/06                - 06/30/06              |   |                               | Purchased                put |                                    |       | Cash                flow           |       |                 |       |   |   | 7,500 |   | $ | 63.00 |   |
|                                            |   |                               | Written                call  |                                    |       | Cash                flow           |       |                 |       |   |   | 7,500 |   |   | 75.25 |   |
|                                            |   |                               | Written                put   |                                    |       | Undesignated                       |       |                 |       |   |   | 7,500 |   |   | 48.00 |   |
| 07/01/06                - 09/30/06              |   |                               | Purchased                put |                                    |       | Cash                flow           |       |                 |       |   |   | 15,000 |   | $ | 63.00 |   |
|                                            |   |                               | Written                call  |                                    |       | Cash                flow           |       |                 |       |   |   | 15,000 |   |   | 75.65 |   |
|                                            |   |                               | Written                put   |                                    |       | Undesignated                       |       |                 |       |   |   | 15,000 |   |   | 48.00 |   |
| 04/01/06                - 10/31/06              |   |                               | Purchased                put |                                    |       | Cash                flow           |       |                 | 420,000    |   |   |   |   | $ | 7.50 |   |
|                                            |   |                               | Written                call  |                                    |       | Cash                flow           |       |                 | 420,000    |   |   |   |   |   | 9.15 |   |
|                                            |   |                               | Written                put   |                                    |       | Undesignated                       |       |                 | 420,000    |   |   |   |   |   | 6.25 |   |
| 04/01/06                - 10/31/06              |   |                               | Purchased                put |                                    |       | Cash                flow           |       |                 | 490,000    |   |   |   |   | $ | 8.50 |   |
|                                            |   |                               | Written                call  |                                    |       | Cash                flow           |       |                 | 490,000    |   |   |   |   |   | 9.96 |   |
|                                            |   |                               | Written                put   |                                    |       | Undesignated                       |       |                 | 490,000    |   |   |   |   |   | 7.00 |   |

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Table          of Contents

**BRIGHAM      EXPLORATION COMPANY**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS**

|                                  |   |                               |                         |                                    |   | **Notional                Amount** |   |                 |    |
|---------------------------------------|--------|------------------------------------|------------------------------|-----------------------------------------|--------|------------------------------------|--------|----------------------|---------|
| **Settlement                Period**  |   | **Derivative****Instrument**  |                         | **Hedge                Strategy**  |   | **Gas****(MMBTU)**                 |   | **Oil****(Barrels)** |    | **Nymex****Reference****Price** |   |
| ***Costless                Collars*** |   |                               |                         |                                    |   |                               |   |                 |    |   |   |
| 04/01/06                - 10/31/06    |   |                               | Purchased                put |                                    |   | Cash                flow           |   |                 | 490,000 |   |   |   |   | $ | 8.00 |   |
|                                  |   |                               | Written                call  |                                    |   | Cash                flow           |   |                 | 490,000 |   |   |   |   |   | 14.85 |   |
| 11/01/06                - 03/31/07    |   |                               | Purchased                put |                                    |   | Cash                flow           |   |                 | 450,000 |   |   |   |   | $ | 8.00 |   |
|                                  |   |                               | Written                call  |                                    |   | Cash                flow           |   |                 | 450,000 |   |   |   |   |   | 21.20 |   |

***Interest      rate swap***

***Fair      values***

|                                        |   | **September                30, ****2005** |   | **December                31, 2004** |   |
|---------------------------------------------|--------|------------------------------------------------|--------|--------------------------------------|--------|
|                                        |   | (In                thousands)                  |   |
|                                        |   |                                           |   |                                 |   |
| Other                current liabilities    |   | $                                              | (6,872 | )                                    | $      | (870 | ) |
| Other                noncurrent liabilities |   |                                           | (115   | )                                    |   | (1 | ) |
| Other                current assets         |   |                                           | 33     |                                 |   | 142 |   |
| Other                noncurrent assets      |   |                                           | 523    |                                 |   | 3 |   |
|                                        |   | $                                              | (6,431 | )                                    | $      | (726 | ) |

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Table          of Contents

**BRIGHAM        EXPLORATION COMPANY**

**NOTES        TO THE CONSOLIDATED FINANCIAL STATEMENTS**

| **8.** | **Asset                Retirement Obligations** |
|--------|-------------------------------------------------|

|                                                                   |   | **Nine                Months Ended****September                30,** |   |
|------------------------------------------------------------------------|--------|----------------------------------------------------------------------|--------|
|                                                                   |   | **2005**                                                             |   | **2004** |   |
|                                                                   |   |                                                                 |   |   |   |
| Beginning                asset retirement obligations                  |   | $                                                                    | 2,896  |   | $ | 2,320 |   |
| Liabilities                incurred for new wells placed on production |   |                                                                 | 244    |   |   | 394 |   |
| Liabilities                settled                                     |   |                                                                 | (10    | ) |   | (92 | ) |
| Accretion                of discount on asset retirement obligations   |   |                                                                 | 126    |   |   | 117 |   |
|                                                                   |   | $                                                                    | 3,256  |   | $ | 2,739 |   |

| **9.** | **Accounting                Pronouncements** |
|--------|----------------------------------------------|

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Table          of Contents

**BRIGHAM      EXPLORATION COMPANY**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS**

| **10.** | **Subsequent                Event** |
|---------|-------------------------------------|

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Table          of Contents

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

**Overview      of Third Quarter and First Nine Months of 2005**

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Table          of Contents

**Capital      Commitments**

***Capital      Expenditures***

|   | · | cost                of acquiring and maintaining our lease acreage position and our seismic                resources; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------|

|   | · | cost                of drilling and completing new oil and natural gas                wells; |
|--------|--------|----------------------------------------------------------------------------------------------|

|   | · | cost                of installing new production                infrastructure; |
|--------|--------|---------------------------------------------------------------------------------|

|   | · | cost                of enhancing existing oil and natural gas wells and the associated                infrastructure; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------|

|   | · | cost                related to plugging and abandoning unproductive or uneconomic wells;                and, |
|--------|--------|--------------------------------------------------------------------------------------------------------------|

|   | · | indirect                costs related to our exploration activities, including payroll and                other                expenses attributable our exploration professional                staff. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                            |   | **Revised                2005 Budget** |    | **Amount                Spent Through****09/30/05** |   | **Amount****Remaining****(1)** |   |
|-------------------------------------------------|--------|----------------------------------------|---------|-----------------------------------------------------|--------|--------------------------------|--------|
|                                            |   | **(In                thousands)**      |    |
| Drilling                                        |   | $                                      | 95,823  |                                                | $      | 66,172                         |   | $ | 29,651 |   |
| Net                land and seismic             |   |                                   | 16,354  |                                                |   | 12,754                         |   |   | 3,600 |   |
| Capitalized                interest and G&A |   |                                   | 6,654   |                                                |   | 5,156                          |   |   | 1,498 |   |
| Asset                retirement obligation      |   |                                   | — |                                                |   | 244                            |   |   | — |   |
| Other                PP&E                   |   |                                   | 313     |                                                |   | 184                            |   |   | 129 |   |
| Total                                           |   | $                                      | 119,144 |                                                | $      | 84,510                         |   | $ | 34,878 |   |

| (1) | Represents                amount of our revised 2005 budget that remains to be spent. Calculated                as                the amount budgeted for 2005 less amount spent through September                30, 2005. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table          of Contents

**Province      Breakout**

|                              |   | **Revised****Budget** |   | **Original****Budget** |   | **Change**      |   |
|-----------------------------------|--------|-----------------------|--------|------------------------|--------|-----------------|--------|
|                              |   | **Gross****Well**     |   | **Net****Well**        |   | **Avg.****WI%** |   | **Gross****Well** |   | **Net****Well** |   | **Avg.****WI%** |   | **Gross****Well** |   | **Net****Well** |   | **Avg.****WI%** |   |
| Onshore                Gulf Coast |   |                  | 18     |                   |   | 13.2            |   |   | 73 | %   |   | 17 |   |   | 11.0 |   |   | 65 | %   |   | 1 |   |   | 2.2 |   |   | 8 | % |
| Anadarko                Basin     |   |                  | 15     |                   |   | 7.1             |   |   | 47 | % |   | 17 |   |   | 6.9 |   |   | 40 | % |   | (2 | ) |   | 0.2 |   |   | 7 | % |
| West                Texas         |   |                  | 3      |                   |   | 2.5             |   |   | 83 | % |   | 3 |   |   | 2.4 |   |   | 82 | % |   | - |   |   | 0.1 |   |   | 1 | % |
| Total                             |   |                  | 36     |                   |   | 22.8            |   |   | 63 | % |   | 37 |   |   | 20.3 |   |   | 55 | % |   | (1 | ) |   | 2.5 |   |   | 8 | % |

**Onshore      Gulf Coast**

**Anadarko      Basin**

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Table          of Contents

**West      Texas**

|   | · | commodity                prices; |
|--------|--------|----------------------------------|

|   | · | production                from our existing producing wells; |
|--------|--------|--------------------------------------------------------------|

|   | · | the                results of our current exploration and development drilling                efforts; |
|--------|--------|--------------------------------------------------------------------------------------------------------|

|   | · | economic                and industry conditions at the time of drilling, including the                availability of drilling equipment;                and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                availability of more economically attractive prospects. |
|--------|--------|----------------------------------------------------------------------------|

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Table          of Contents

***Senior      Credit Facility***

***Senior      Subordinated Notes***

***Mandatorily      Redeemable Preferred Stock***

**Capital      Resources**

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Table          of Contents

**Net      cash provided by operating activities**

***Senior      Credit Facility***

***Senior      Subordinated Notes***

***Access      to Capital Markets***

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Table          of Contents

**Results      of Operations**

*Comparison      of the three and nine month periods ended September 30, 2005 and      2004.*

***Revenues***

**Production      volumes**

|                                              |   | **Three                months ended Sept. 30,** |   | **Nine                months ended Sept 30,** |   |
|---------------------------------------------------|--------|-------------------------------------------------|--------|-----------------------------------------------|--------|
|                                              |   | **2005**                                        |   | **%                Change**                   |   | **2004** |   | **2005** |   | **%                Change** |   | **2004** |   |
|                                              |   |                                            |   |                                          |   |   |   |   |   |   |   |   |   |
| Oil                (MBbls)                        |   |                                            | 108    |                                          |   | (27 | %) |   | 148 |   |   | 329 |   |   | (27 | %) |   | 449 |   |
| Natural                gas (MMcf)                 |   |                                            | 2,233  |                                          |   | 3 | % |   | 2,167 |   |   | 6,268 |   |   | (4 | %) |   | 6,506 |   |
| Total                (MMcfe)(1)                   |   |                                            | 2,881  |                                          |   | (6 | %) |   | 3,057 |   |   | 8,240 |   |   | (10 | %) |   | 9,199 |   |
| Average                daily production (MMcfe/d) |   |                                            | 32.0   |                                          |   |   |   |   | 34.0 |   |   | 30.5 |   |   |   |   |   | 34.1 |   |

----

| (1) | Mcfe                is defined one million cubic feet equivalent of natural gas, determined                using the ratio of six Mcf of natural gas to one Bbl of crude oil,                condensate or natural gas liquids. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table          of Contents

**Hedging      Results**

|                                                         |   | **Three                months ended Sept. 30,** |    | **Nine                months ended Sept 30,** |   |
|--------------------------------------------------------------|--------|-------------------------------------------------|---------|-----------------------------------------------|--------|
|                                                         |   | **2005**                                        |    | **%                Change**                   |   | **2004** |   | **2005** |   | **%                Change** |   | **2004** |   |
|                                                         |   |                                            |    |                                          |   |   |   |   |   |   |   |   |   |
| ***Oil                swaps***                               |   |                                            |    |                                          |   |   |   |   |   |   |   |   |   |
| Volumes                (Bbls)                                |   |                                            | — |                                          |   | (100 | %)    |   | 13,800 |   |   | — |   |   | (100 | %)   |   | 63,850 |   |
| Average                swap price ($ per Bbl)                |   | $                                               | — |                                          |   | (100 | %)     | $ | 23.91 |   | $ | — |   |   | (100 | %)     | $ | 24.77 |   |
| Gain                /(loss) upon settlement ($ in thousands) |   | $                                               | — |                                          |   | (100 | %) | $ | (275 | )      | $ | — |   |   | (100 | %) | $ | (848 | ) |
|                                                         |   |                                            |    |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ***Oil                collars***                             |   |                                            |    |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Volumes                (Bbls)                                |   |                                            | 33,000  |                                          |   | (32 | %) |   | 48,760 |   |   | 85,105 |   |   | (41 | %) |   | 144,310 |   |
| Average                floor price ($ per Bbl)               |   | $                                               | 44.36   |                                          |   | 68 | % | $ | 26.34 |   | $ | 34.71 |   |   | 42 | % | $ | 24.51 |   |
| Average                ceiling price ($ per Bbl)             |   | $                                               | 57.20   |                                          |   | 78 | % | $ | 32.20 |   | $ | 43.32 |   |   | 39 | % | $ | 31.09 |   |
| Gain                /(loss) upon settlement ($ in thousands) |   | $                                               | (208    | )               |   | (63 | %) | $ | (568 | ) | $ | (1,134 | )        |   | (3 | %) | $ | (1,170 | ) |
|                                                         |   |                                            |    |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ***Total                oil***                          |   |                                            |    |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Volumes                (Bbls)                                |   |                                            | 33,000  |                                          |   | (47 | %) |   | 62,560 |   |   | 85,105 |   |   | (59 | %) |   | 208,160 |   |
| Gain                /(loss) upon settlement ($ in thousands) |   | $                                               | (208    | )                                             |   | (75 | %) | $ | (843 | ) | $ | (1,134 | ) |   | (44 | %) | $ | (2,018 | ) |
|                                                         |   |                                            |    |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                         |   |                                            |    |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ***Natural                gas swaps***                       |   |                                            |    |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Volumes                (MMbtu)                               |   |                                            | — |                                          |   | (100 | %) |   | 138,000 |   |   | — |   |   | (100 | %) |   | 661,250 |   |
| Average                swap price ($ per MMbtu)              |   | $                                               | — |                                          |   | (100 | %) | $ | 4.18 |   | $ | — |   |   | (100 | %) | $ | 4.56 |   |
| Gain                /(loss) upon settlement ($ in thousands) |   | $                                               | — |                                          |   | (100 | %) | $ | (230 | ) | $ | — |   |   | (100 | %) | $ | (836 | ) |
|                                                         |   |                                            |    |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ***Natural                gas collars***                     |   |                                            |    |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Volumes                (MMbtu)                               |   |                                            | 660,000 |                                          |   | (9 | %) |   | 722,200 |   |   | 2,022,500 |   |   | 14 | % |   | 1,777,800 |   |
| Average                floor price ($ per MMbtu)             |   | $                                               | 6.12    |                                          |   | 33 | % | $ | 4.61 |   | $ | 5.40 |   |   | 25 | % | $ | 4.32 |   |
| Average                ceiling price ($ per MMbtu)           |   | $                                               | 7.57    |                                          |   | 17 | % | $ | 6.48 |   | $ | 7.30 |   |   | 7 | % | $ | 6.85 |   |
| Gain                /(loss) upon settlement ($ in thousands) |   | $                                               | (590    | )                                             |   | 269 | % | $ | (160 | ) | $ | (831 | ) |   | 101 | % | $ | (414 | ) |
|                                                         |   |                                            |    |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ***Total                natural gas***                       |   |                                            |    |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Volumes                (MMbtu)                               |   |                                            | 660,000 |                                          |   | (23 | %) |   | 860,200 |   |   | 2,022,500 |   |   | (17 | %) |   | 2,439,050 |   |
| Gain                /(loss) upon settlement ($ in thousands) |   | $                                               | (590    | )                                             |   | 51 | % | $ | (390 | ) | $ | (831 | ) |   | (34 | %) | $ | (1,250 | ) |

----

Table          of Contents

**Commodity      prices and revenues**

|                                                                          |   | **Three                      months ended Sept. 30,**                 |   | **Nine                      months ended Sept 30,** |   |
|-------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|--------|-----------------------------------------------------|--------|
|                                                                          |   | **2005**                                                              |   | **%                      Change**                   |   | **2004** |   | **2005** |   | **%                      Change** |   | **2004** |   |
|                                                                          |   |                                                                  |   |
|                                                                          |   | **(In                      thousands, except per unit measurements)** |   |
| **Revenue                      from the sale of oil and natural gas:**        |   |                                                                  |   |                                                |   |   |   |   |   |   |   |   |   |
| Oil                      sales                                           |   | $                                                                     | 6,529  |                                                |   | 4% |     | $ | 6,304 |   | $ | 17,531 |   |   | 3% |   | $ | 17,058 |   |
| Gain                      (loss) due to hedging                          |   |                                                                  | (208   | )                                                   |   | (75%) |   |   | (843 | )     |   | (1,134 | ) |   | (44%) |    |   | (2,018 | ) |
| Total                      revenue from the sale of oil                  |   | $                                                                     | 6,321  |                                                |   | 16% |   | $ | 5,461 |   | $ | 16,397 |   |   | 9% |   | $ | 15,040 |   |
|                                                                          |   |                                                                  |   |                                                |   |   |  |   |   |   |   |   |   |   |   |  |   |   |   |
| Natural                      gas sales                                   |   | $                                                                     | 19,458 |                                                |   | 60% |   | $ | 12,169 |   | $ | 44,760 |   |   | 17% |   | $ | 38,185 |   |
| Gain                      (loss) due to hedging                          |   |                                                                  | (590   | )                                                   |   | 51% |   |   | (390 | ) |   | (831 | ) |   | (34%) |   |   | (1,250 | ) |
| Total                      revenue from the sale of natural gas          |   | $                                                                     | 18,868 |                                                |   | 60% |   | $ | 11,779 |   | $ | 43,929 |   |   | 19% |   | $ | 36,935 |   |
|                                                                          |   |                                                                  |   |                                                |   |   |  |   |   |   |   |   |   |   |   |  |   |   |   |
| Oil                      and natural gas sales                           |   | $                                                                     | 25,987 |                                                |   | 41% |   | $ | 18,473 |   | $ | 62,291 |   |   | 13% |   | $ | 55,243 |   |
| Gain                      (loss) due to hedging                          |   |                                                                  | (798   | )                                                   |   | (35%) |   |   | (1,233 | ) |   | (1,965 | ) |   | (40%) |   |   | (3,268 | ) |
| Total                      revenue from the sale of oil and natural gas  |   | $                                                                     | 25,189 |                                                |   | 46% |   | $ | 17,240 |   | $ | 60,326 |   |   | 16% |   | $ | 51,975 |   |
|                                                                          |   |                                                                  |   |                                                |   |   |  |   |   |   |   |   |   |   |   |  |   |   |   |
| **Average                      prices:**                                      |   |                                                                  |   |                                                |   |   |  |   |   |   |   |   |   |   |   |  |   |   |   |
| Oil                      sales price (per Bbl)                           |   | $                                                                     | 60.44  |                                                |   | 42% |   | $ | 42.50 |   | $ | 53.32 |   |   | 40% |   | $ | 38.01 |   |
| Gain                      (loss) due to hedging (per Bbl)                |   |                                                                  | (1.93  | )                                                   |   | (66%) |   |   | (5.68 | ) |   | (3.45 | ) |   | (23%) |   |   | (4.50 | ) |
| Realized                      oil price (per Bbl)                        |   | $                                                                     | 58.51  |                                                |   | 59% |   | $ | 36.82 |   | $ | 49.87 |   |   | 49% |   | $ | 33.51 |   |
|                                                                          |   |                                                                  |   |                                                |   |   |  |   |   |   |   |   |   |   |   |  |   |   |   |
| Natural                      gas sales price (per Mcf)                   |   | $                                                                     | 8.71   |                                                |   | 55% |   | $ | 5.62 |   | $ | 7.14 |   |   | 22% |   | $ | 5.87 |   |
| Gain                      (loss) due to hedging (per Mcf)                |   |                                                                  | (0.26  | )                                                   |   | 44% |   |   | (0.18 | ) |   | (0.13 | ) |   | (32%) |   |   | (0.19 | ) |
| Realized                      natural gas price (per Mcf)                |   | $                                                                     | 8.45   |                                                |   | 55% |   | $ | 5.44 |   | $ | 7.01 |   |   | 23% |   | $ | 5.68 |   |
|                                                                          |   |                                                                  |   |                                                |   |   |  |   |   |   |   |   |   |   |   |  |   |   |   |
| Natural                      gas equivalent sales price (per Mcfe)       |   | $                                                                     | 9.02   |                                                |   | 49% |   | $ | 6.04 |   | $ | 7.56 |   |   | 26% |   | $ | 6.01 |   |
| Gain                      (loss) due to hedging (per Mcfe)               |   |                                                                  | (0.28  | )                                                   |   | (30%) |   |   | (0.40 | ) |   | (0.24 | ) |   | (33%) |   |   | (0.36 | ) |
| Realized                      natural gas equivalent (per Mcfe)          |   | $                                                                     | 8.74   |                                                |   | 55% |   | $ | 5.64 |   | $ | 7.32 |   |   | 30% |   | $ | 5.65 |   |

|                                                              |   | **For                the three ****month                periods ****ended                Sept 30****2005                and 2004** |   | **For                the nine month periods****ended                Sept 30****2005 and 2004** |   |
|-------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------|--------|
|                                                              |   |                                                                                                                                         |   |                                                                                           |   |
|                                                              |   |                                                                                                                                         |   |                                                                                           |   |
| **Change                in revenue from the sale of oil**         |   |                                                                                                                                         |   |                                                                                           |   |
| Price                variance impact                              |   | $                                                                                                                                            | 1,938  |                                                                                           | $      | 5,034 |   |
| Volume                variance impact                             |   |                                                                                                                                         | (1,713 | )                                                                                              |   | (4,561 | ) |
| Cash                settlement of hedging contracts               |   |                                                                                                                                         | 635    |                                                                                           |   | 884 |   |
| Total                change                                       |   | $                                                                                                                                            | 860    |                                                                                           | $      | 1,357 |   |
| **Change                in revenue from the sale of natural gas** |   |                                                                                                                                         |   |                                                                                           |   |   |   |
| Price                variance impact                              |   | $                                                                                                                                            | 6,909  |                                                                                           | $      | 7,969 |   |
| Volume                variance impact                             |   |                                                                                                                                         | 380    |                                                                                           |   | (1,394 | ) |
| Cash                settlement of hedging contracts               |   |                                                                                                                                         | (200   | )                                                                                              |   | 419 |   |
| Total                change                                       |   | $                                                                                                                                            | 7,089  |                                                                                           | $      | 6,994 |   |

|   | · | A                49% increase in the sales price we received for our oil and natural                gas                combined with a 35% decrease in losses from the cash settlement of                derivative commodity contracts led to increases of $8.8 million and                $435,000, respectively, to our revenue from the sale of oil and natural                gas during the third quarter 2005. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | A                decrease in this year’s third quarter production partially offset these                increases and reduced our third quarter 2005 revenue from the sale                of oil                and natural gas by $1.3 million. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table          of Contents

|   | · | A                26% increase in the sales price we received for our oil and natural                gas                combined with a 40% decrease in losses from the cash settlement of                derivative commodity contracts led to increases of $13 million and                $1.3                million, respectively, to our revenue from the sale of oil and natural                gas                during the first nine months of                2005. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | A                decrease in our production for the first nine months of 2005 partially                offset these increases and reduced our revenue for the first nine                months                of 2005 by $6 million. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Other      revenue*

**Operating      costs and expenses**

*Production      costs. *

|                                             |   | **Three                months ended Sept. 30,**                 |   | **Nine                months ended Sept 30,** |   |
|--------------------------------------------------|--------|-----------------------------------------------------------------|--------|-----------------------------------------------|--------|
|                                             |   | **2005**                                                        |   | **%                Change**                   |   | **2004** |   | **2005** |   | **%                Change** |   | **2004** |   |
|                                             |   |                                                            |   |
|                                             |   | **(In                thousands, except per unit measurements)** |   |
| **Production                costs:**             |   |                                                            |   |                                          |   |   |   |   |   |   |   |   |   |
| Operating                & maintenance       |   | $                                                               | 1,410  |                                          |   | 17% |   | $ | 1,201 |   | $ | 4,221 |   |   | 30% |   | $ | 3,248 |   |
| Expensed                workovers                |   |                                                            | (73    | )                                             |   | NM |   |   | 278 |   |   | 238 |   |   | (61%) |    |   | 617 |   |
| Ad                valorem taxes                  |   |                                                            | 204    |                                          |   | 21% |   |   | 169 |   |   | 690 |   |   | 39% |   |   | 497 |   |
| Lease                operating expenses          |   | $                                                               | 1,541  |                                          |   | (6%) |    | $ | 1,648 |   | $ | 5,149 |   |   | 18% |   | $ | 4,362 |   |
|                                             |   |                                                            |   |                                          |   |   |   |   |   |   |   |   |   |   |   |  |   |   |   |
| Production                taxes                  |   |                                                            | 741    |                                          |   | 10% |   |   | 675 |   |   | 1,909 |   |   | (22%) |   |   | 2,434 |   |
| Production                costs                  |   | $                                                               | 2,282  |                                          |   | (2%) |   | $ | 2,323 |   | $ | 7,058 |   |   | 4% |   | $ | 6,796 |   |
|                                             |   |                                                            |   |                                          |   |   |   |   |   |   |   |   |   |   |   |  |   |   |   |
| **Production                cost ($ per Mcfe):** |   |                                                            |   |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                & maintenance       |   | $                                                               | 0.49   |                                          |   | 26% |   | $ | 0.39 |   | $ | 0.51 |   |   | 46% |   | $ | 0.35 |   |
| Expensed                workovers                |   |                                                            | (0.03  | )                                             |   | NM |   |   | 0.09 |   |   | 0.03 |   |   | (57%) |   |   | 0.07 |   |
| Ad                valorem taxes                  |   |                                                            | 0.07   |                                          |   | 17% |   |   | 0.06 |   |   | 0.08 |   |   | 60% |   |   | 0.05 |   |
| Lease                operating expenses          |   | $                                                               | 0.53   |                                          |   | (2%) |   | $ | 0.54 |   | $ | 0.62 |   |   | 32% |   | $ | 0.47 |   |
|                                             |   |                                                            |   |                                          |   |   |  |   |   |   |   |   |   |   |   |  |   |   |   |
| Production                taxes                  |   |                                                            | 0.26   |                                          |   | 18% |   |   | 0.22 |   |   | 0.23 |   |   | (12%) |   |   | 0.26 |   |
| Production                costs                  |   | $                                                               | 0.79   |                                          |   | 4% |   | $ | 0.76 |   | $ | 0.85 |   |   | 16% |   | $ | 0.73 |   |

|   | · | A                decrease in expensed workovers during the third quarter 2005. This                decrease is a result of less workover activity and actual costs associated                with expensed workovers that were lower than estimated costs previously                accrued. This decrease was partially offset by the following increases. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | An                increase in operating and maintenance expenses due to cost associated                with                our new wells that were not producing in the third quarter last year.                Our                third quarter 2005 operating and maintenance expenses include $254,000                related to these new wells. Excluding costs associated with these                new                wells our operating and maintenance expenses for the third quarter                2005                decreased by 4% when compared to the third quarter last year. In                the                future we anticipate that our operating and maintenance expenses                and total                production costs will increase as we add new wells and production                facilities and continue to maintain production from existing maturing                properties. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table          of Contents

|   | · | An                increase in our third quarter ad valorem taxes due to an increase                in                property values due to higher oil and natural gas prices during                2004. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | An                increase in production taxes due to an increase in commodity prices                partially offset by a reduction in production taxes due to lower                production volumes and production tax credits of approximately $517,000                related to six high cost gas wells. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | An                increase in operating and maintenance expenses due to cost associated                with                our new wells that were not producing during the first nine months                of last                year. Our operating and maintenance expenses for the first nine months                of                2005 included $610,000 related to these new wells. Excluding costs                associated with these new wells, our operating and maintenance expenses                for the first nine months of this year increased by 11% when compared                to                last year. Other expenses that contributed to the increase in our                operating and maintenance expenses were increases in costs for saltwater                disposal, compressor rental and maintenance, third party overhead                fees,                water treating, contract service and labor, equipment rental and                miscellaneous lease operating expenses. In the future we anticipate                that                our operating and maintenance costs and total production costs will                increase as we add new wells and production facilities and continue                to                maintain production from existing maturing                properties. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | An                increase in our ad valorem taxes due to an increase in property values                due                to higher oil and natural gas prices during                2004. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | These                increases were partially offset by a decrease in production taxes                and                expensed workovers. A reduction in production for the first nine                months of                2005 combined with production tax credits of approximately $1.1                million related to 12 high cost gas wells were the primary reasons                for the decrease in our production taxes for the first nine months                of                2005. These decreases were partially offset by increases in the sales                price we received from the sale of our oil and natural                gas. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Our                unit O&M expenses for the third quarter were up $0.10 per Mcfe when                compared to last year. Approximately 90% of this increase was due                to new                wells that were not producing during the third quarter last year.                The                remainder of the increase was due to a decrease in our third quarter                2005                production volumes. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Our                unit ad valorem taxes for the third quarter 2005 were up $0.01 per                Mcfe                when compared to last year. This increase is primarily due to an                increase                in total ad valorem taxes due to an increase in property values due                to                higher oil and natural gas prices in 2004 combined with a decrease                in our                third quarter 2005 production volumes. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Our                unit production taxes for the third quarter 2005 were up $0.04 per                Mcfe                when compared to last year. This increase is primarily due to an                increase                in the sales price that we received from the sale of our oil and                natural                gas partially offset by production tax credits of approximately $517,000                related to six high cost gas                wells.  |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | These                increases were partially offset by a $0.12 per Mcfe decrease in our                third                quarter 2005 unit expensed workover costs. This                decrease is a result of less workover activity and actual costs associated                with expensed workovers that were lower than estimated costs previously                accrued. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table          of Contents

|   | · | Our                unit O&M expenses for the first nine months of 2005 were up $0.16 per                Mcfe when compared to last year. Approximately 44% of this increase                was                due to an increase in costs related to new wells that were not producing                during the first nine months of last year. Increases in our unit                costs for                saltwater disposal, compressor rental and maintenance, third party                overhead fees, water treating, contract service and labor, equipment                rental and miscellaneous expense combined with a decrease in production                volumes were the primary reasons for the remaining increase. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Our                unit ad valorem taxes for the first nine months of 2005 were up $0.03                per                Mcfe when compared to last year. This increase is primarily due to                higher                ad valorem taxes due to an increase property values due to higher                oil and                natural gas prices in 2004 combined with a decrease in our production                volumes. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | These                increases were partially offset by a $0.03 per Mcfe decrease in our                unit                production taxes and $0.04 decrease in our unit workover expenses.                The                decrease in our production taxes was primarily due to a decrease                in                production for the first nine months of 2005 and production tax credits                of                approximately $1.1 million related to 12 high cost gas wells. The                decrease                in our unit workover expense for the first nine months of 2005 was                due to                a result of less workover activity and actual costs associated with                expensed workovers that were lower than estimated costs previously                accrued. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*General      and administrative expenses. *

|                                                           |   | **Three                months ended Sept. 30,**                 |   | **Nine                months ended Sept 30,** |   |
|----------------------------------------------------------------|--------|-----------------------------------------------------------------|--------|-----------------------------------------------|--------|
|                                                           |   | **2005**                                                        |   | **%                Change**                   |   | **2004** |   | **2005** |   | **%                Change** |   | **2004** |   |
|                                                           |   |                                                            |   |
|                                                           |   | **(In                thousands, except per unit measurements)** |   |
| General                and administrative costs                |   | $                                                               | 2,551  |                                          |   | 5% |   | $ | 2,441 |   | $ | 7,355 |   |   | 0% |   | $ | 7,334 |   |
| Capitalized                general and administrative costs    |   |                                                            | (1,234 | )                                             |   | 9% |   |   | (1,137 | )   |   | (3,636 | ) |   | 1% |   |   | (3,611 | ) |
| General                and administrative expenses             |   | $                                                               | 1,317  |                                          |   | 1% |   | $ | 1,304 |   | $ | 3,719 |   |   | (0%) |    | $ | 3,723 |   |
|                                                           |   |                                                            |   |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| General                and administrative expense ($ per Mcfe) |   | $                                                               | 0.46   |                                          |   | 7% |   | $ | 0.43 |   | $ | 0.45 |   |   | 13% |   | $ | 0.40 |   |

|   | · | A                7% increase in compensation expense, primarily due to increases in                salaries and wages, represented approximately 61% of the total increase                in                our third quarter 2005 general and administrative costs. Other costs                that                contributed to the increase of our third quarter 2005 general and                administrative costs were increases in costs for financial reporting,                office expenses, travel and miscellaneous expenses. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | These                increases were partially offset by decreases in costs for contract                employees and outside consultants, office rent and equipment rental                and                maintenance cost. Together, these cost decreases represented approximately                95% of the total decrease in our third quarter 2005 general and                administrative costs. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table          of Contents

|   | · | A                decrease in costs for incentive compensation, legal expenses, third                party                reserve engineering, office rent, financial reporting, advertising                and                franchise taxes. Together, these decreases represented approximately                92%                of the total decrease in our general and administrative costs for                the                first nine months of 2005. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | These                decreases were partially offset by increases in costs for salaries                and                wages, third party consultants, audit and tax fees, office expenses,                corporate insurance, travel, continuing education and miscellaneous                general and administrative costs. Together these increases represented                approximately 92% of the total increase in our general and administrative                costs for the first nine months of 2005. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Depletion      of oil and natural gas properties. *

|                                                                    |   | **Three                months ended Sept. 30,**                 |   | **Nine                months ended Sept 30,** |   |
|-------------------------------------------------------------------------|--------|-----------------------------------------------------------------|--------|-----------------------------------------------|--------|
|                                                                    |   | **2005**                                                        |   | **%                Change**                   |   | **2004** |   | **2005** |   | **%                Change** |   | **2004** |   |
|                                                                    |   |                                                            |   |                                          |   | **(Restated)** |   |   |   |   |   | **(Restated)** |   |
|                                                                    |   | **(In                thousands, except per unit measurements)** |   |
|                                                                    |   |                                                            |   |
| Depletion                of oil and natural gas properties              |   | $                                                               | 7,953  |                                          |   | 36% |    | $ | 5,860 |   | $ | 21,612 |   |   | 31% |   | $ | 16,508 |   |
| Depletion                of oil and natural gas properties ($ per Mcfe) |   | $                                                               | 2.76   |                                          |   | 44% |   | $ | 1.92 |   | $ | 2.62 |   |   | 46% |   | $ | 1.79 |   |

*Net      interest expense. *

|                                                                 |   | **Three                months ended Sept. 30,** |   | **Nine                months ended Sept 30,** |   |
|----------------------------------------------------------------------|--------|-------------------------------------------------|--------|-----------------------------------------------|--------|
|                                                                 |   | **2005**                                        |   | **%                Change**                   |   | **2004** |   | **2005** |   | **%                Change** |   | **2004** |   |
|                                                                 |   | **(In                thousands)**               |   |
|                                                                 |   |                                            |   |
| Interest                on senior credit facility                    |   | $                                               | 668    |                                          |   | 211% |   | $ | 215 |   | $ | 1,538 |   |   | 137% |   | $ | 649 |   |
| Interest                on senior subordinated notes                 |   |                                            | 574    |                                          |   | 32% |   |   | 436 |   |   | 1,333 |   |   | 1% |   |   | 1,320 |   |
| Commitment                fees                                       |   |                                            | 36     |                                          |   | (44%) |    |   | 64 |   |   | 92 |   |   | (46%) |    |   | 171 |   |
| Dividend                on mandatorily redeemable preferred stock    |   |                                            | 200    |                                          |   | 9% |   |   | 184 |   |   | 581 |   |   | 8% |   |   | 538 |   |
| Amortization                of deferred loan and debt issuance cost  |   |                                            | 120    |                                          |   | (37%) |   |   | 191 |   |   | 373 |   |   | (35%) |   |   | 574 |   |
| Other                general interest expense                        |   |                                            | 1      |                                          |   | (83%) |   |   | 6 |   |   | 7 |   |   | (65%) |   |   | 20 |   |
| Capitalized                interest expense                          |   |                                            | (461   | )                                             |   | 106% |   |   | (224 | ) |   | (1,279 | ) |   | 67% |   |   | (764 | ) |
| Net                interest expense                                  |   | $                                               | 1,138  |                                          |   | 31% |   | $ | 872 |   | $ | 2,645 |   |   | 5% |   | $ | 2,508 |   |
|                                                                 |   |                                            |   |                                          |   |   |  |   |   |   |   |   |   |   |   |  |   |   |   |
| Weighted                average debt outstanding                     |   | $                                               | 91,985 |                                          |   | 69% |   | $ | 54,508 |   | $ | 76,241 |   |   | 33% |   | $ | 57,275 |   |
| Average                interest rate on outstanding indebtedness (a) |   |                                            | 6.4    | %                                             |   |   |  |   | 6.6 | %   |   | 6.2 | % |   |   |  |   | 6.2 | % |

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| · | An                increase in the total interest expense related to our senior credit                facility. An increase in the amounts borrowed under our senior credit                facility and the rate that we paid on those borrowings were the primary                reasons for this increase. Our weighted average borrowings outstanding                under our senior credit facility during the third quarter 2005 were                $52.1                million which represented 65% of our available borrowing base during                the                quarter. This compares to $25.4 million representing 37% of our available                borrowing base during the third quarter last year. The increase in                the                interest rate that we paid on those borrowings was primarily due                to an                increase in the Eurodollar rate. A decrease in the commitment fees                we paid                on the unused portion of our borrowing base and a decrease amortized                deferred loan costs for the third quarter 2005 partially offset the                increases due to additional borrowings and higher interest                rates. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | An                increase in the total interest expense related to our subordinated                notes.                An increase in the amount borrowed under our subordinated credit                agreement                and an increase in commitment fees paid on the unused portion of                the                subordinated credit agreement were the primary reasons for this increase.                In the second quarter 2005, we increased our borrowings under our                senior                credit agreement from $20 million to $30 million and expanded the                agreement to provide up to $40 million of total borrowings. A decrease                amortized deferred loan costs for the third quarter 2005 partially                offset                the increases due to increased borrowings and commitment                fees. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | A                $237,000 increase in the amount of interest that we capitalized during                the                third quarter partially offset the increases discussed above. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | An                increase in the total interest expense related to our senior credit                facility. An increase in the amounts borrowed under our senior credit                facility and an increase in the rate that we paid on those borrowings                were                primary reason for the increase. Our weighted average borrowings                outstanding under our senior credit facility during the first nine                months                of 2005 were $43.1 million which represented 59% of our available                borrowing during that period. This compares to $28.3 million outstanding                representing 41% of our available borrowing base during the first                nine                months last year. An increase in the Eurodollar rate was the primary                reason for the increase in the interest rate that we paid on those                borrowings. A decrease in the commitment fees paid on the unused                portion                of our senior credit facility and a decrease in amortized deferred                loan                costs for first nine months of 2005 partially offset the increases                due to                additional borrowings and higher interest                rates. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | A                $515,000 increase in the amount of interest that we capitalized during                the                first nine months of 2005 partially offset the increases discussed                above. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Other      income (expense*

|                                                                                                                                                            |   | **Three                months ended Sept. 30,** |   | **Nine                months ended Sept 30,** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------|--------|-----------------------------------------------|--------|
|                                                                                                                                                            |   | **2005**                                        |   | **%                Change**                   |   | **2004** |   | **2005** |   | **%                Change** |   | **2004** |   |
|                                                                                                                                                            |   |                                            |   |                                          |   |
|                                                                                                                                                            |   | **(In                thousands)**               |   |
| Non-cash                gain (loss) due to change in fair market value of derivative contracts                not                designated as cash flow hedges |   | $                                               | (52    | )                                             |   | 148% |   | $ | (21 | )    | $ | (105 | ) |   | 400% |   | $ | (21 | ) |
| Non-cash                gain (loss) for ineffective portion of cash flow hedges                                                                                 |   |                                            | (477   | )                                             |   | 227% |   |   | (146 | ) |   | (890 | ) |   | 332% |   |   | (206 | ) |
| Other                non-cash gain (loss)                                                                                                                       |   |                                            | (44    | )                                             |   | NM |   |   | — |   |   | (103 | ) |   | NM |   |   | — |   |
| Other                cash income (expense)                                                                                                                      |   |                                            | 76     |                                          |   | NM |   |   | (1 | ) |   | 247 |   |   | 263% |   |   | 68 |   |
| Other                income (loss)                                                                                                                              |   | $                                               | (497   | )                                             |   | 196% |   | $ | (168 | ) | $ | (851 | ) |   | 435% |   | $ | (159 | ) |

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Table          of Contents

|                                                         |   | **Three                months ended Sept. 30,** |    | **Nine                months ended Sept 30,** |   |
|--------------------------------------------------------------|--------|-------------------------------------------------|---------|-----------------------------------------------|--------|
|                                                         |   | **2005**                                        |    | **%                Change**                   |   | **2004** |   | **2005** |   | **%                Change** |   | **2004** |   |
|                                                         |   |                                            |    |                                          |   |   |   |   |   |   |   |   |   |
| ***Written                puts***                            |   |                                            |    |                                          |   |   |   |   |   |   |   |   |   |
|                                                         |   |                                            |    |                                          |   |   |   |   |   |   |   |   |   |
| ***Oil***                                                    |   |                                            |    |                                          |   |   |   |   |   |   |   |   |   |
| Volumes                (Bbl)                                 |   |                                            | 33,000  |                                          |   | NM |   |   | — |   |   | 39,000 |   |   | NM |   | $ | — |   |
| Average                price ($ per Bbl)                     |   | $                                               | 34.36   |                                          |   | NM |   | $ | — |   | $ | 34.92 |   |   | NM |   | $ | — |   |
| Gain                /(loss) upon settlement ($ in thousands) |   | $                                               | — |                                          |   | NM |   | $ | — |   | $ | — |   |   | NM |   | $ | — |   |
|                                                         |   |                                            |    |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ***Natural                gas***                             |   |                                            |    |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Volumes                (MMbtu)                               |   |                                            | 480,000 |                                          |   | NM |   |   | — |   |   | 690,000 |   |   | NM |   | $ | — |   |
| Average                price ($ per MMbtu)                   |   | $                                               | 5.28    |                                          |   | NM |   | $ | — |   | $ | 5.35 |   |   | NM |   | $ | — |   |
| Gain                /(loss) upon settlement ($ in thousands) |   | $                                               | — |                                          |   | NM |   | $ | — |   | $ | — |   |   | NM |   | $ | — |   |

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**Analysis      of Changes In Cash and Cash Equivalents**

|                                                       |   | **Nine                months ended Sept 30,** |    |
|------------------------------------------------------------|--------|-----------------------------------------------|---------|
|                                                       |   | **2005**                                      |    | **%                Change** |   | **2004** |   |
|                                                       |   | **(In                thousands)**             |    |
| Net                income                                  |   | $                                             | 15,536  |   |   | 7% |   | $ | 14,554 |   |
| Non-cash                items                              |   |                                          | 32,858  |   |   | 28% |   |   | 25,698 |   |
| Changes                in working capital and other items  |   |                                          | (8,332  | ) |   | 203% |   |   | (2,747 | ) |
| Cash                flows provided by operating activities |   | $                                             | 40,062  |   |   | 7% |   | $ | 37,505 |   |
| Cash                flows used by investing activities     |   |                                          | (83,285 | ) |   | 35% |   |   | (61,483 | ) |
| Cash                flows provided by financing activities |   |                                          | 46,815  |   |   | 72% |   |   | 27,150 |   |
| Net                increase in cash and cash equivalents   |   | $                                             | 3,592   |   |   | 13% |   | $ | 3,172 |   |

***Analysis      of net cash provided by operating activities***

| · | Our                total revenues for the first nine months of 2005 increased $14.3                million                due to an increase in the prices we received for our oil and natural                gas                and a decrease in the amounts we lost upon the settlement of our                derivative contracts. These changes were partially offset by a $6                million                decrease to our total revenue due to a decrease in our production                volumes                for the first nine months of 2005. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Increases                in our production costs and cash interest expense during the first                nine                months of 2005 resulted in decreases to cash flows provided by operating                activities of $262,000 and $295,000 respectively. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | The                payment of accounts payable in excess of the collection of accounts                receivable during the first nine months of 2005 reduced our cash                flows                provided by operating activities by $3.6                million. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | An                increase in the amount of royalties we paid during the first nine                months                of 2005 decreased our cash flows provided by operating activities                by                $225,000. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | A                decrease in the amount of participant advances during the first nine                months of 2005 resulted in a $1.2 million decrease to our cash flows                provided by operating activities. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Working      Capital**

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***Capital      expenditures for oil and natural gas activities***

|                                |   | **Nine                months ended Sept 30,** |   |
|-------------------------------------|--------|-----------------------------------------------|--------|
|                                |   | **2005**                                      |   | **%                Change** |   | **2004** |   |
|                                |   |                                          |   |   |   |   |   |
|                                |   | **(In                thousands)**             |   |
|                                |   |                                          |   |   |   |   |   |
| Drilling                (1)         |   | $                                             | 66,172 |   |   | 36% |   | $ | 48,710 |   |
| Land                and seismic     |   |                                          | 12,754 |   |   | 19% |   |   | 10,749 |   |
| Capitalized                cost (2) |   |                                          | 5,156  |   |   | 12% |   |   | 4,595 |   |
| Capitalized                ARO      |   |                                          | 244    |   |   | (38%) |   |   | 392 |   |
| Total                               |   | $                                             | 84,326 |   |   | 31% |   | $ | 64,446 |   |

|   | (1) | Includes                $6.6 million and $6.5 million of accrued drilling costs for 2005                and 2004,                respectively. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | For                2005 includes $3.6 million in capitalized general and administrative                cost,                $1.3 million in capitalized interest cost and $241,000 of capitalized                stock compensation expense. For 2004 includes $3.6 million in capitalized                general and administrative cost, $764,000 in capitalized interest                cost and                $220,000 of capitalized stock compensation                expense. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Analysis      of changes in cash flows from financing activities***

**Senior      Credit Facility**

**Senior      Subordinated Notes**

**Common      Stock Transactions**

|                                                                                                |   | **Shares                Issued** |      | **Net                Proceeds**   |   |
|-----------------------------------------------------------------------------------------------------|--------|----------------------------------|-----------|-----------------------------------|--------|
|                                                                                                |   |                             |      | **(In                thousands)** |   |
| ***2005                common stock transactions:***                                                |   |                             |      |                              |   |
| Exercise                of employee stock options                                                   |   |                             | 217,479   |                              | $      | 797 |   |
|                                                                                                |   |                             |      |                              |   |   |   |
| ***2004                common stock transactions:***                                                |   |                             |      |                              |   |   |   |
| Exercise                of employee stock options                                                   |   |                             | 235,581   |                              | $      | 684 |   |
| Sale                of common stock under universal shelf registration statement                (a) |   |                             | 2,598,500 |                              | $      | 22,132 |   |

| (a) | The                net proceeds from the sale were used to repay outstanding indebtedness                under our senior credit facility. 2,300,000 shares were sold in July                2004                and 298,500 shares were sold in August 2004 when the underwriter                exercised                its over-allotment option. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table          of Contents

**Other      Matters**

*Effects      of Inflation and Changes in Prices*

*Environmental      and Other Regulatory Matters*

*New      Accounting Pronouncements*

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Table          of Contents

*Forward      Looking Information*

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Table          of Contents

**ITEM      3.**
**QUANTITATIVE      AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK**

**Derivative      Contracts**

|                                            |   |                         |                         |                              |   | **Notional                Amount** |   |                 |    |
|-------------------------------------------------|--------|------------------------------|------------------------------|-----------------------------------|--------|------------------------------------|--------|----------------------|---------|
| **Settlement                Period**            |   | **Derivative****Instrument** |                         | **Hedge                Strategy** |   | **Gas****(MMBTU)**                 |   | **Oil****(Barrels)** |    | **NYMEX****Reference****Price**  |   |
| ***Costless                Collars***           |   |                         |                         |                              |   |                               |   |                 |    |   |   |
| 10/01/05                - 10/31/05              |   |                         | Purchased                put |                              |   | Cash                flow           |   |                 | 60,000  |   |   |   |      | $ | 5.45 |   |
|                                            |   |                         | Written                call  |                              |   | Cash                flow           |   |                 | 60,000  |   |   |   |   |   | 8.00 |   |
| 01/01/06                - 03/31/06              |   |                         | Purchased                put |                              |   | Cash                flow           |   |                 |    |   |   | 7,500 |   | $ | 62.00 |   |
|                                            |   |                         | Written                call  |                              |   | Cash                flow           |   |                 |    |   |   | 7,500 |   |   | 74.50 |   |
| 04/01/06                - 06/30/06              |   |                         | Purchased                put |                              |   | Cash                flow           |   |                 |    |   |   | 16,500 |   | $ | 54.80 |   |
|                                            |   |                         | Written                call  |                              |   | Cash                flow           |   |                 |    |   |   | 16,500 |   |   | 75.00 |   |
|                                            |   |                         |                         |                              |   |                               |   |                 |    |   |   |   |   |   |   |   |
| ***Three                Way Costless Collars*** |   |                         |                         |                              |   |                               |   |                 |    |   |   |   |   |   |   |   |
| 10/01/05                - 10/31/05              |   |                         | Purchased                put |                              |   | Cash                flow           |   |                 | 100,000 |   |   |   |   | $ | 6.00 |   |
|                                            |   |                         | Written                call  |                              |   | Cash                flow           |   |                 | 100,000 |   |   |   |   |   | 7.20 |   |
|                                            |   |                         | Written                put   |                              |   | Undesignated                       |   |                 | 100,000 |   |   |   |   |   | 5.00 |   |
| 10/01/05                - 10/31/05              |   |                         | Purchased                put |                              |   | Cash                flow           |   |                 | 60,000  |   |   |   |   | $ | 7.00 |   |
|                                            |   |                         | Written                call  |                              |   | Cash                flow           |   |                 | 60,000  |   |   |   |   |   | 7.76 |   |
|                                            |   |                         | Written                put   |                              |   | Undesignated                       |   |                 | 60,000  |   |   |   |   |   | 5.75 |   |
| 10/01/05                - 12/31/05              |   |                         | Purchased                put |                              |   | Cash                flow           |   |                 |    |   |   | 15,000 |   | $ | 40.00 |   |
|                                            |   |                         | Written                call  |                              |   | Cash                flow           |   |                 |    |   |   | 15,000 |   |   | 53.00 |   |
|                                            |   |                         | Written                put   |                              |   | Undesignated                       |   |                 |    |   |   | 15,000 |   |   | 30.00 |   |
| 10/01/05                - 03/31/06              |   |                         | Purchased                put |                              |   | Cash                flow           |   |                 |    |   |   | 36,000 |   | $ | 48.00 |   |
|                                            |   |                         | Written                call  |                              |   | Cash                flow           |   |                 |    |   |   | 36,000 |   |   | 60.70 |   |
|                                            |   |                         | Written                put   |                              |   | Undesignated                       |   |                 |    |   |   | 36,000 |   |   | 38.00 |   |
| 11/01/05                - 03/31/06              |   |                         | Purchased                put |                              |   | Cash                flow           |   |                 | 250,000 |   |   |   |   | $ | 6.75 |   |
|                                            |   |                         | Written                call  |                              |   | Cash                flow           |   |                 | 250,000 |   |   |   |   |   | 8.80 |   |
|                                            |   |                         | Written                put   |                              |   | Undesignated                       |   |                 | 250,000 |   |   |   |   |   | 5.50 |   |
| 11/01/05                - 03/31/06              |   |                         | Purchased                put |                              |   | Cash                flow           |   |                 | 350,000 |   |   |   |   | $ | 8.00 |   |
|                                            |   |                         | Written                call  |                              |   | Cash                flow           |   |                 | 350,000 |   |   |   |   |   | 9.75 |   |
|                                            |   |                         | Written                put   |                              |   | Undesignated                       |   |                 | 350,000 |   |   |   |   |   | 6.50 |   |
| 11/01/05                - 03/31/06              |   |                         | Purchased                put |                              |   | Cash                flow           |   |                 | 400,000 |   |   |   |   | $ | 10.00 |   |
|                                            |   |                         | Written                call  |                              |   | Cash                flow           |   |                 | 400,000 |   |   |   |   |   | 13.08 |   |
|                                            |   |                         | Written                put   |                              |   | Undesignated                       |   |                 | 400,000 |   |   |   |   |   | 8.50 |   |
| 04/01/06                - 06/30/06              |   |                         | Purchased                put |                              |   | Cash                flow           |   |                 |    |   |   | 7,500 |   | $ | 63.00 |   |
|                                            |   |                         | Written                call  |                              |   | Cash                flow           |   |                 |    |   |   | 7,500 |   |   | 75.25 |   |
|                                            |   |                         | Written                put   |                              |   | Undesignated                       |   |                 |    |   |   | 7,500 |   |   | 48.00 |   |
| 07/01/06                - 09/30/06              |   |                         | Purchased                put |                              |   | Cash                flow           |   |                 |    |   |   | 15,000 |   | $ | 63.00 |   |
|                                            |   |                         | Written                call  |                              |   | Cash                flow           |   |                 |    |   |   | 15,000 |   |   | 75.65 |   |
|                                            |   |                         | Written                put   |                              |   | Undesignated                       |   |                 |    |   |   | 15,000 |   |   | 48.00 |   |
| 04/01/06                - 10/31/06              |   |                         | Purchased                put |                              |   | Cash                flow           |   |                 | 420,000 |   |   |   |   | $ | 7.50 |   |
|                                            |   |                         | Written                call  |                              |   | Cash                flow           |   |                 | 420,000 |   |   |   |   |   | 9.15 |   |
|                                            |   |                         | Written                put   |                              |   | Undesignated                       |   |                 | 420,000 |   |   |   |   |   | 6.25 |   |
| 04/01/06                - 10/31/06              |   |                         | Purchased                put |                              |   | Cash                flow           |   |                 | 490,000 |   |   |   |   | $ | 8.50 |   |
|                                            |   |                         | Written                call  |                              |   | Cash                flow           |   |                 | 490,000 |   |   |   |   |   | 9.96 |   |
|                                            |   |                         | Written                put   |                              |   | Undesignated                       |   |                 | 490,000 |   |   |   |   |   | 7.00 |   |

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Table          of Contents

|                                  |   |                               |                         |                              |   | **Notional                Amount** |   |                 |    |
|---------------------------------------|--------|------------------------------------|------------------------------|-----------------------------------|--------|------------------------------------|--------|----------------------|---------|
| **Settlement                Period**  |   | **Derivative****Instrument**  |                         | **Hedge                Strategy** |   | **Gas****(MMBTU)**                 |   | **Oil****(Barrels)** |    | **NYMEX****Reference****Price**  |   |
| ***Costless                Collars*** |   |                               |                         |                              |   |                               |   |                 |    |   |   |
| 04/01/06                - 10/31/06    |   |                               | Purchased                put |                              |   | Cash                flow           |   |                 | 490,000 |   |   |   |      | $ | 8.00 |   |
|                                  |   |                               | Written                call  |                              |   | Cash                flow           |   |                 | 490,000 |   |   |   |   |   | 14.85 |   |
| 11/01/06                - 03/31/07    |   |                               | Purchased                put |                              |   | Cash                flow           |   |                 | 450,000 |   |   |   |   | $ | 8.00 |   |
|                                  |   |                               | Written                call  |                              |   | Cash                flow           |   |                 | 450,000 |   |   |   |   |   | 21.20 |   |

**ITEM      4.**
**CONTROLS      AND PROCEDURES**

**Material      Control Weakness Previously Disclosed**

**Evaluation      of Disclosure Controls and Procedures**

**Changes      in Internal Control over Financial Reporting**

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Table          of Contents

**PART      II - OTHER INFORMATION**

**ITEM      1.**
**LEGAL      PROCEEDINGS**

**ITEM      2.**
**UNREGISTERD      SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**

| **Period**                                       |   | **Total                Number of Shares Purchased** |   | **Average                Price Paid per Share** |   |
|--------------------------------------------------|--------|-----------------------------------------------------|--------|-------------------------------------------------|--------|
|                                             |   |                                                |   |                                            |   |
| July                1, 2005 - September 30, 2005 |   |                                                | 0      |                                            | $      | -                - |   |

**ITEM      3.**
**DEFAULTS      UPON SENIOR SECURITIES**

**ITEM      4.**
**SUBMISSION      OF MATTERS TO A VOTE OF SECURITYHOLDERS**

**ITEM      5.**
**OTHER      INFORMATION**

**ITEM      6.**
**EXHIBITS      **

| **Number**   |    | **Description**                                                                                                                                                   |
|--------------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.1*† | — | Form                of Restricted Stock Agreement                                                                                                                      |
|         |    |                                                                                                                                                                   |
| 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 |
|         |    |                                                                                                                                                                   |
| 32.1†  | — | Certification                of Chief Executive Officer of the Company pursuant to 18 U.S.C. §                1350                                                |
|         |    |                                                                                                                                                                   |
| 32.2†  | — | Certification                of Chief Financial Officer of the Company pursuant to 18 U.S.C. §                1350                                                |
|         |    |                                                                                                                                                                   |

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Table          of Contents

**SIGNATURES**

|   | **BRIGHAM                EXPLORATION COMPANY** |                                                                        |
|--------|------------------------------------------------|-----------------------------------------------------------------------------|
|   |                                           |                                                                        |   |
|   |                                           |                                                                        |   |
|   | By:                                            | /s/                BEN M. BRIGHAM                                           |   |
|   |                                           | Ben                M. Brigham                                               |   |
|   |                                           | Chief                Executive Officer, President and Chairman of the Board |   |
|   |                                           |                                                                        |   |
|   |                                           |                                                                        |   |
|   | By:                                            | /s/                EUGENE B. SHEPHERD, JR.                                  |   |
|   |                                           | Eugene                B. Shepherd, Jr.                                      |   |
|   |                                           | Executive                Vice President and Chief Financial Officer         |   |

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