##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10 Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number: 001-34224
 Brigham Exploration Company
  Delaware
    
    1311
    
    75-2692967(State of other jurisdiction
    
    (Primary Standard Industrial
    
    (I.R.S. Employerof incorporation or organization)
    
    Classification Code Number)
    
    Identification Number)
 6300 Bridge Point Parkway, Building 2, Suite 500, Austin, Texas 78730
 (512) 427-3300
 þ o
 o o
  Large Accelerated Filer o
    
    Accelerated Filer þ
    
    Non-Accelerated Filer o
    
    Small Reporting Company o
 o þ
 Class
    
    OutstandingCommon Stock, par value $.01 per share as of August 3, 2009
    
    82,957,972




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##### 



Brigham Exploration Company
 Second Quarter 2009 Form 10-Q Report
 TABLE OF CONTENTS
 PagePART I  FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTSConsolidated Balance Sheets  June 30, 2009 and December 31, 2008
    
    
    1Consolidated Statements of Operations  Three and six months ended June 30, 2009 and 2008
    
    
    2Consolidated Statement of Stockholders Equity  Six months ended June 30, 2009
    
    
    3Consolidated Statements of Cash Flows  Six months ended June 30, 2009 and 2008
    
    
    4Notes to the Consolidated Financial Statements
    
    
    5ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
    
    
    17ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    34ITEM 4. CONTROLS AND PROCEDURES
    
    
    36PART II  OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGS
    
    
    37ITEM 1.A. RISK FACTORS
    
    
    37ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    37ITEM 3. DEFAULTS UPON SENIOR SECURITIES
    
    
    37ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS
    
    
    37ITEM 5. OTHER INFORMATION
    
    
    38ITEM 6. EXHIBITS
    
    
    39SIGNATURES
    
    
    41Exhibit 10.48Exhibit 10.49Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 BRIGHAM EXPLORATION COMPANY
 
 CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
 June 30,
    
    
    December 31,2009
    
    
    2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    68,086
    
    
    $
    40,043Restricted cash
    
    
    
    
    
    
    555Investments
    
    
    5,268
    
    
    
    Accounts receivable
    
    
    13,751
    
    
    
    24,558Derivative assets
    
    
    1,638
    
    
    
    5,140Inventory
    
    
    7,276
    
    
    
    6,070Other current assets
    
    
    719
    
    
    
    2,154Total current assets
    
    
    96,738
    
    
    
    78,520Oil and natural gas properties, using the full cost method includingProved, net
    
    
    219,776
    
    
    
    298,833Unproved
    
    
    80,957
    
    
    
    106,006300,733
    
    
    
    404,839Other property and equipment, net
    
    
    2,359
    
    
    
    1,873Deferred loan fees
    
    
    3,647
    
    
    
    3,122Other noncurrent assets
    
    
    931
    
    
    
    702Total assets
    
    $
    404,408
    
    
    $
    489,056LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    9,996
    
    
    $
    14,297Royalties payable
    
    
    4,568
    
    
    
    6,859Accrued drilling costs
    
    
    5,862
    
    
    
    19,768Participant advances received
    
    
    515
    
    
    
    2,226Other current liabilities
    
    
    7,448
    
    
    
    5,065Total current liabilities
    
    
    28,389
    
    
    
    48,215Senior Notes
    
    
    158,849
    
    
    
    158,730Senior Credit Facility
    
    
    110,000
    
    
    
    145,000Series A Preferred Stock, mandatorily redeemable, $.01 par
value, $20 stated and redemption value, 2,250,000 shares authorized,
505,051 shares issued and outstanding at June 30, 2009 and December
31, 2008
    
    
    10,101
    
    
    
    10,101Deferred income taxes
    
    
    149
    
    
    
    149Other noncurrent liabilities
    
    
    6,783
    
    
    
    5,592Commitments and contingencies (Note 4)Stockholders equity:Common stock, $.01 par value, 90 million shares
authorized, 82,223,628 and 45,829,277 shares issued and 82,053,843 and
45,686,295 shares outstanding at June 30, 2009 and December 31,
2008, respectively
    
    
    822
    
    
    
    458Additional paid-in capital
    
    
    307,099
    
    
    
    212,473Treasury stock, at cost; 169,785 and 142,982 shares at
June 30, 2009 and December 31, 2008, respectively
    
    
    (1,293
    )
    
    
    (1,202
    )Retained earnings (deficit)
    
    
    (216,491
    )
    
    
    (90,460
    )Total stockholders equity
    
    
    90,137
    
    
    
    121,269Total liabilities and stockholders equity
    
    $
    404,408
    
    
    $
    489,056
   1




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##### Table of Contents



PART I  FINANCIAL INFORMATION  ITEM 1. FINANCIAL STATEMENTS
 BRIGHAM EXPLORATION COMPANY
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenues:Oil and natural gas sales
    
    $
    13,209
    
    
    $
    38,871
    
    
    $
    27,018
    
    
    $
    69,381Gain (loss) on derivatives, net
    
    
    (2,727
    )
    
    
    (13,907
    )
    
    
    1,916
    
    
    
    (19,363
    )Other revenue
    
    
    32
    
    
    
    62
    
    
    
    66
    
    
    
    7910,514
    
    
    
    25,026
    
    
    
    29,000
    
    
    
    50,097Costs and expenses:Lease operating
    
    
    3,573
    
    
    
    2,548
    
    
    
    7,372
    
    
    
    5,534Production taxes
    
    
    831
    
    
    
    1,441
    
    
    
    1,645
    
    
    
    2,724General and administrative
    
    
    2,264
    
    
    
    2,596
    
    
    
    4,386
    
    
    
    5,189Depletion of oil and natural gas properties
    
    
    6,233
    
    
    
    12,405
    
    
    
    16,066
    
    
    
    24,848Impairment of oil and natural gas properties
    
    
    
    
    
    
    
    
    
    
    114,781
    
    
    
    Depreciation and amortization
    
    
    167
    
    
    
    158
    
    
    
    316
    
    
    
    305Accretion of discount on asset retirement obligations
    
    
    105
    
    
    
    89
    
    
    
    206
    
    
    
    180Loss on inventory valuation
    
    
    128
    
    
    
    
    
    
    
    2,167
    
    
    
    13,301
    
    
    
    19,237
    
    
    
    146,939
    
    
    
    38,780Operating income (loss)
    
    
    (2,787
    )
    
    
    5,789
    
    
    
    (117,939
    )
    
    
    11,317Other income (expense):Interest income
    
    
    111
    
    
    
    39
    
    
    
    204
    
    
    
    114Interest expense, net
    
    
    (4,251
    )
    
    
    (3,482
    )
    
    
    (8,378
    )
    
    
    (6,901
    )Other income (expense)
    
    
    (33
    )
    
    
    96
    
    
    
    82
    
    
    
    403(4,173
    )
    
    
    (3,347
    )
    
    
    (8,092
    )
    
    
    (6,384
    )Income (loss) before income taxes
    
    
    (6,960
    )
    
    
    2,442
    
    
    
    (126,031
    )
    
    
    4,933Income tax expense:Current
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Deferred
    
    
    
    
    
    
    (925
    )
    
    
    
    
    
    
    (1,889
    )
    
    
    
    (925
    )
    
    
    
    
    
    
    (1,889
    )Net income (loss)
    
    $
    (6,960
    )
    
    $
    1,517
    
    
    $
    (126,031
    )
    
    $
    3,044Net income (loss) per share available to common
stockholders:Basic
    
    $
    (0.12
    )
    
    $
    0.03
    
    
    $
    (2.39
    )
    
    $
    0.07Diluted
    
    $
    (0.12
    )
    
    $
    0.03
    
    
    $
    (2.39
    )
    
    $
    0.07Weighted average shares outstanding:Basic
    
    
    59,687
    
    
    
    45,332
    
    
    
    52,745
    
    
    
    45,296Diluted
    
    
    59,687
    
    
    
    46,444
    
    
    
    52,745
    
    
    
    46,171
   2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
 BRIGHAM EXPLORATION COMPANY
 
 CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
(In thousands)
(Unaudited)
 Additional
    
    
    
    
    
    
    
    
    
    
    TotalCommon Stock
    
    
    Paid In
    
    
    Treasury
    
    
    
    
    
    
    StockholdersShares
    
    
    Amounts
    
    
    Capital
    
    
    Stock
    
    
    Retained Earnings
    
    
    EquityBalance, December 31, 2008
    
    
    45,829
    
    
    $
    458
    
    
    $
    212,473
    
    
    $
    (1,202
    )
    
    $
    (90,460
    )
    
    $
    121,269Net income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (126,031
    )
    
    
    (126,031
    )Issuance of common stock
    
    
    36,292
    
    
    
    363
    
    
    
    93,160
    
    
    
    
    
    
    
    
    
    
    
    93,523Exercises of
employee stock options
    
    
    1
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1Vesting of restricted stock
    
    
    102
    
    
    
    1
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    Stock based compensation
    
    
    
    
    
    
    
    
    
    
    1,466
    
    
    
    
    
    
    
    
    
    
    
    1,466Repurchases of common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (91
    )
    
    
    
    
    
    
    (91
    )Balance, June 30, 2009
    
    
    82,224
    
    
    $
    822
    
    
    $
    307,099
    
    
    $
    (1,293
    )
    
    $
    (216,491
    )
    
    $
    90,137
   3




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##### Table of Contents



PART I  FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
 BRIGHAM EXPLORATION COMPANY
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Six Months EndedJune 30,2009
    
    
    2008Cash flows from operating activities:Net income (loss)
    
    $
    (126,031
    )
    
    $
    3,044Adjustments to reconcile net income (loss) to cash provided by
operating activities:Depletion of oil and natural gas properties
    
    
    16,066
    
    
    
    24,848Impairment of oil and natural gas properties
    
    
    114,781
    
    
    
    Depreciation and amortization
    
    
    316
    
    
    
    305Stock based compensation
    
    
    797
    
    
    
    818Amortization of deferred loan fees and debt issuance costs
    
    
    626
    
    
    
    528Market value adjustment for derivative instruments
    
    
    6,891
    
    
    
    15,944Accretion of discount on asset retirement obligations
    
    
    206
    
    
    
    180Deferred income taxes
    
    
    
    
    
    
    1,889Other noncash items
    
    
    35
    
    
    
    4Changes in operating assets and liabilities:Accounts receivable
    
    
    10,807
    
    
    
    (11,044
    )Other current assets
    
    
    36
    
    
    
    (1,303
    )Accounts payable
    
    
    (4,301
    )
    
    
    5,615Royalties payable
    
    
    (2,291
    )
    
    
    3,332Participant advances received
    
    
    (1,711
    )
    
    
    (581
    )Other current liabilities
    
    
    (265
    )
    
    
    (158
    )Other noncurrent assets and liabilities
    
    
    (15
    )
    
    
    (381
    )Net cash provided by operating activities
    
    
    15,947
    
    
    
    43,040Cash flows from investing activities:Additions to oil and natural gas properties
    
    
    (39,703
    )
    
    
    (83,956
    )Decrease (increase) in restricted cash
    
    
    555
    
    
    
    Decrease (increase) in short term investments
    
    
    (5,268
    )
    
    
    Additions to other property and equipment
    
    
    (1,245
    )
    
    
    (357
    )Decrease (increase) in drilling advances paid
    
    
    163
    
    
    
    (399
    )Net cash provided (used) by investing activities
    
    
    (45,498
    )
    
    
    (84,712
    )Cash flows from financing activities:Proceeds from issuance of common stock, net of issuance costs
    
    
    93,523
    
    
    
    Increase in Senior Credit Facility
    
    
    
    
    
    
    38,600Repayment of Senior Credit Facility
    
    
    (35,000
    )
    
    
    Deferred loan fees paid and equity costs
    
    
    (839
    )
    
    
    (188
    )Proceeds from exercise of employee stock options
    
    
    1
    
    
    
    552Repurchases of common stock
    
    
    (91
    )
    
    
    (142
    )Net cash provided (used) by financing activities
    
    
    57,594
    
    
    
    38,822Net increase (decrease) in cash and cash equivalents
    
    
    28,043
    
    
    
    (2,850
    )Cash and cash equivalents, beginning of year
    
    
    40,043
    
    
    
    13,863Cash and cash equivalents, end of period
    
    $
    68,086
    
    
    $
    11,013
   4




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##### Table of Contents



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




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Weighted average common
shares outstanding  basic
    
    
    59,687
    
    
    
    45,332
    
    
    
    52,745
    
    
    
    45,296Plus: Potential common sharesStock options and restricted stock
    
    
    
    
    
    
    1,112
    
    
    
    
    
    
    
    875Weighted average common shares
outstanding  diluted
    
    
    59,687
    
    
    
    46,444
    
    
    
    52,745
    
    
    
    46,171Stock options excluded from
diluted EPS due to the 
anti-dilutive effect
    
    
    4,915
    
    
    
    327
    
    
    
    4,915
    
    
    
    485
 6. Income Taxes
  June 30,
    
    
    June 30,2009
    
    
    2008Current income taxes:Federal
    
    $
    
    
    
    $
    State
    
    
    
    
    
    
    Deferred income taxes:Federal
    
    
    
    
    
    
    1,707State
    
    
    
    
    
    
    182$
    
    
    
    $
    1,889
    2009
    
    
    2008(In thousands)
    
    
    (In thousands)Unrecognized tax benefits at beginning of the year
    
    $
    
    
    
    $
    2,162Increases (decreases) resulting from tax positions taken in the current period
    
    
    
    
    
    
    Unrecognized tax benefits at end of the quarter
    
    $
    
    
    
    $
    2,162
   6




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 7. Derivative Instruments and Hedging Activities
  Natural Gas and Crude Oil Derivative Contracts
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Natural GasAverage price per Mcf realized excluding gas hedging results
    
    $
    3.50
    
    
    $
    11.93
    
    
    $
    3.93
    
    
    $
    10.29Average price per Mcf including gas hedging settlement results
    
    $
    4.53
    
    
    $
    11.03
    
    
    $
    6.33
    
    
    $
    9.99Increase (decrease) in revenue, in thousands
    
    $
    1,509
    
    
    $
    (1,756
    )
    
    $
    7,948
    
    
    $
    (1,231
    )Average
price per Mcf including gas hedging settlement results and any unrealized gains (losses)
    
    $
    3.86
    
    
    $
    7.61
    
    
    $
    5.56
    
    
    $
    7.14Increase (decrease) in revenue, in thousands
    
    $
    529
    
    
    $
    (8,409
    )
    
    $
    5,397
    
    
    $
    (13,041
    )OilAverage price per Bbl realized excluding oil hedging results
    
    $
    49.41
    
    
    $
    122.22
    
    
    $
    41.63
    
    
    $
    109.46Average price per Bbl including oil hedging settlement results
    
    $
    48.06
    
    
    $
    109.71
    
    
    $
    44.18
    
    
    $
    100.53Increase (decrease) in revenue, in thousands
    
    $
    (222
    )
    
    $
    (1,600
    )
    
    $
    860
    
    
    $
    (2,186
    )Average
price per Bbl including oil hedging settlement results and any unrealized gains (losses)
    
    $
    29.56
    
    
    $
    79.25
    
    
    $
    31.32
    
    
    $
    83.64Increase (decrease) in revenue, in thousands
    
    $
    (3,256
    )
    
    $
    (5,498
    )
    
    $
    (3,481
    )
    
    $
    (6,322
    )
   7




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  Natural
    
    
    
    
    
    
    Purchased
    
    
    WrittenGas
    
    
    Oil
    
    
    Put
    
    
    CallSettlement Period
    
    (MMBTU)
    
    
    (Barrels)
    
    
    Nymex
    
    
    NymexNatural Gas Costless Collars10/01/09 - 03/31/10
    
    
    420,000
    
    
    
    
    
    
    $
    5.75
    
    
    $
    7.0511/01/09 - 12/31/10
    
    
    980,000
    
    
    
    
    
    
    $
    5.15
    
    
    $
    7.0004/01/10 - 09/30/10
    
    
    420,000
    
    
    
    
    
    
    $
    5.75
    
    
    $
    7.3004/01/10 - 09/30/10
    
    
    240,000
    
    
    
    
    
    
    $
    5.75
    
    
    $
    7.0010/01/10 - 03/31/11
    
    
    240,000
    
    
    
    
    
    
    $
    6.50
    
    
    $
    8.25Oil Costless Collars07/01/09 - 05/31/10
    
    
    
    
    
    
    110,000
    
    
    $
    57.50
    
    
    $
    75.9507/01/09 - 12/31/09
    
    
    
    
    
    
    60,000
    
    
    $
    49.00
    
    
    $
    70.0007/01/09 - 12/31/09
    
    
    
    
    
    
    40,000
    
    
    $
    62.50
    
    
    $
    76.7501/01/10 - 03/31/10
    
    
    
    
    
    
    6,000
    
    
    $
    65.00
    
    
    $
    87.5001/01/10 - 12/31/10
    
    
    
    
    
    
    120,000
    
    
    $
    48.70
    
    
    $
    80.0001/01/10 - 12/31/10
    
    
    
    
    
    
    54,000
    
    
    $
    60.00
    
    
    $
    86.5006/01/10 - 12/31/10
    
    
    
    
    
    
    56,000
    
    
    $
    57.50
    
    
    $
    82.1507/01/10 - 09/30/10
    
    
    
    
    
    
    6,000
    
    
    $
    70.00
    
    
    $
    87.2510/01/10 - 12/31/10
    
    
    
    
    
    
    3,000
    
    
    $
    70.00
    
    
    $
    88.5001/01/11 - 12/31/11
    
    
    
    
    
    
    84,000
    
    
    $
    65.00
    
    
    $
    88.25
 Natural
    
    
    Purchased
    
    
    Written
    
    
    WrittenGas
    
    
    Put
    
    
    Call
    
    
    PutSettlement Period
    
    (MMBTU)
    
    
    Nymex
    
    
    Nymex
    
    
    NymexNatural Gas Three Way Costless Collars10/01/09 - 03/31/10
    
    
    420,000
    
    
    $
    8.00
    
    
    $
    10.00
    
    
    $
    5.5010/01/09 - 03/31/10
    
    
    360,000
    
    
    $
    5.75
    
    
    $
    7.00
    
    
    $
    3.50
 Natural
    
    
    
    
    
    
    WrittenGas
    
    
    Oil
    
    
    SwapSettlement Period
    
    (MMBTU)
    
    
    (Barrels)
    
    
    NymexNatural Gas Swaps07/01/09 - 08/31/09
    
    
    140,000
    
    
    
    
    
    
    $
    4.7507/01/09 - 09/30/09
    
    
    150,000
    
    
    
    
    
    
    $
    4.0907/01/09 - 09/30/09
    
    
    150,000
    
    
    
    
    
    
    $
    3.9607/01/09 - 09/30/09
    
    
    390,000
    
    
    
    
    
    
    $
    4.0007/01/09 - 12/31/09
    
    
    258,000
    
    
    
    
    
    
    $
    4.4407/01/09 - 10/31/09
    
    
    280,000
    
    
    
    
    
    
    $
    4.0310/01/09 - 12/31/09
    
    
    60,000
    
    
    
    
    
    
    $
    4.90Oil Swaps07/01/09 - 12/31/09
    
    
    
    
    
    
    60,000
    
    
    $
    50.75
  8




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 Additional Disclosures about Derivative Instruments and Hedging Activities
  EstimatedType of Contract
    
    Balance Sheet Location
    
    
    Fair Value(in thousands)Derivatives Not
Designated as Hedging
InstrumentsDerivative Assets:Natural gas and oil contracts
    
    Derivative assets  current
    
    $
    1,638Natural gas and oil contracts
    
    Other non-current assets
    
    
    186Total Derivative Assets
    
    
    
    
    
    $
    1,824Derivative Liabilities:Natural gas and oil contracts
    
    Other current liabilities
    
    $
    (2,653
    )Natural gas and oil contracts
    
    Other non-current liabilities
    
    
    (725
    )Total Derivative Liabilities
    
    
    
    
    
    $
    (3,378
    )
  Three Months
    
    
    Six MonthsEnded June 30th
    
    
    Ended June 30thStatement of Operations
    
    
    Amount of
    
    
    Amount ofType of Contract
    
    Location of Gain (Loss)
    
    
    Gain (Loss)
    
    
    Gain (Loss)(in thousands)
    
    
    (in thousands)Derivatives Not
Designated as Hedging
InstrumentsNatural gas contracts
    
    Gain (loss) on derivatives, net
    
    $
    529
    
    
    $
    5,397Oil contracts
    
    Gain (loss) on derivatives, net
    
    
    (3,256
    )
    
    
    (3,481
    )Total Derivative Gain (loss)
    
    
    
    
    
    $
    (2,727
    )
    
    $
    1,916
  8. Fair Values
  
    
    Level 1  Unadjusted quoted prices are available in active markets for identical assets
or liabilities.
 
    
    Level 2  Pricing inputs, other than quoted prices within Level 1, that are either
directly or indirectly observable.
 
    
    Level 3  Pricing inputs that are unobservable requiring the use of valuation
methodologies that result in managements best estimate of fair value.
  9




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 
  Fair Value Measurements at June 30, 2009 UsingQuoted Prices in
    
    
    Significant Other
    
    
    SignificantActive Markets
    
    
    Observable
    
    
    UnobservableJune 30,
    
    
    for Identical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Other current liabilities
    
    $
    (2,653
    )
    
    $
    
    
    
    $
    (2,653
    )
    
    $
    Other non-current liabilities
    
    
    (725
    )
    
    
    
    
    
    
    (725
    )
    
    
    Current derivative assets
    
    
    1,638
    
    
    
    
    
    
    
    1,638
    
    
    
    Other non-current assets
    
    
    186
    
    
    
    
    
    
    
    186
    
    
    
    $
    (1,554
    )
    
    $
    
    
    
    $
    (1,554
    )
    
    $
    
 Fair Value Measurements at December 31, 2008 UsingQuoted Prices in
    
    
    Significant Other
    
    
    SignificantActive Markets
    
    
    Observable
    
    
    UnobservableDecember 31,
    
    
    for Identical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Other current liabilities
    
    $
    (5
    )
    
    $
    
    
    
    $
    (5
    )
    
    $
    Other non-current liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Current derivative assets
    
    
    5,140
    
    
    
    
    
    
    
    5,140
    
    
    
    Other non-current assets
    
    
    202
    
    
    
    
    
    
    
    202
    
    
    
    $
    5,337
    
    
    $
    
    
    
    $
    5,337
    
    
    $
    
  Fair Value Measurements at June 30, 2009 UsingQuoted Prices in
    
    
    Significant Other
    
    
    SignificantActive Markets
    
    
    Observable
    
    
    UnobservableJune 30,
    
    
    for Identical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Other non-current liabilities
    
    
    (6,058
    )
    
    
    
    
    
    
    
    
    
    
    (6,058
    )$
    (6,058
    )
    
    $
    
    
    
    $
    
    
    
    $
    (6,058
    )
 Fair Value Measurements at December 31, 2008 UsingQuoted Prices in
    
    
    Significant Other
    
    
    SignificantActive Markets
    
    
    Observable
    
    
    UnobservableDecember 31,
    
    
    for Identical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Other non-current liabilities
    
    
    (5,592
    )
    
    
    
    
    
    
    
    
    
    
    (5,592
    )$
    (5,592
    )
    
    $
    
    
    
    $
    
    
    
    $
    (5,592
    )
   Fair Value Measurements at June 30, 2009 UsingQuoted Prices in
    
    
    Significant Other
    
    
    SignificantActive Markets
    
    
    Observable
    
    
    UnobservableJune 30,
    
    
    for Identical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Investments
    
    
    5,268
    
    
    
    5,268
    
    
    
    
    
    
    
    $
    5,268
    
    
    $
    5,268
    
    
    $
    
    
    
    $
    
  June 30, 2009
    
    

December 31,
2008(in millions)
    
    
    (in millions)Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairAmount
    
    
    Value
    
    
    Amount
    
    
    ValueSenior Notes
    
    $
    160,000
    
    
    $
    109,600
    
    
    $
    160,000
    
    
    $
    84,000Series A
Preferred Stock
    
    $
    10,101
    
    
    $
    10,114
    
    
    $
    10,101
    
    
    $
    10,032
   10




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 9. Oil and Gas Properties
     10. Common Stock Offering
  11. Senior Notes
     11




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 12. Senior Credit Facility
    13. Asset Retirement Obligations
   Six Months EndedJune 30,2009
    
    
    2008Beginning asset retirement obligations
    
    $
    5,592
    
    
    $
    5,047Liabilities incurred for new wells placed on production
    
    
    275
    
    
    
    132Liabilities settled
    
    
    (15
    )
    
    
    (50
    )Accretion of discount on asset retirement obligations
    
    
    206
    
    
    
    180$
    6,058
    
    
    $
    5,309
  12




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 14. Stock Based Compensation
   2009
    
    
    2008Risk-free interest rate
    
    
    2.52
    %
    
    
    3.0
    %Expected life (in years)
    
    
    5.0
    
    
    
    5.0Expected volatility
    
    
    77
    %
    
    
    47
    %Expected dividend yield
    
    
    
    
    
    
    Weighted average fair value per share of stock compensation
    
    $
    2.19
    
    
    $
    4.70
     Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Pre-tax stock based compensation expense
    
    $
    816
    
    
    $
    744
    
    
    $
    1,466
    
    
    $
    1,507Capitalized stock based compensation
    
    
    (372
    )
    
    
    (340
    )
    
    
    (669
    )
    
    
    (689
    )Tax benefit
    
    
    (155
    )
    
    
    (141
    )
    
    
    (279
    )
    
    
    (286
    )Stock based compensation expense, net
    
    $
    289
    
    
    $
    263
    
    
    $
    518
    
    
    $
    532
  13




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 Stock Based Plan Descriptions and Share Information
    2009
    
    
    2008Weighted-
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    PriceOptions outstanding at the beginning of the
year
    
    
    3,128,651
    
    
    $
    7.00
    
    
    
    3,046,166
    
    
    $
    7.14Granted
    
    
    1,150,000
    
    
    $
    2.21
    
    
    
    18,000
    
    
    $
    10.56Forfeited or cancelled
    
    
    (10,000
    )
    
    $
    3.73
    
    
    
    (64,800
    )
    
    $
    7.83Exercised
    
    
    
    
    
    $
    
    
    
    
    (126,566
    )
    
    $
    4.36Options outstanding at the end of the quarter
    
    
    4,268,651
    
    
    $
    5.71
    
    
    
    2,872,800
    
    
    $
    7.27Options exercisable at the end of the quarter
    
    
    1,976,451
    
    
    $
    7.21
    
    
    
    1,760,000
    
    
    $
    6.79
   Options Outstanding
    
    
    Options ExercisableNumber
    
    
    Weighted-
    
    
    
    
    
    
    Number
    
    
    Weighted-Outstanding at
    
    
    Average
    
    
    Weighted-
    
    
    Exercisable at
    
    
    Average
    
    
    Weighted-June 30,
    
    
    Remaining
    
    
    Average
    
    
    June 30,
    
    
    Remaining
    
    
    AverageExercise Price
    
    2009
    
    
    Contractual Life
    
    
    Exercise Price
    
    
    2009
    
    
    Contractual Life
    
    
    Exercise Price$2.21 to $3.41
    
    
    1,243,000
    
    
    9.4 years
    
    $
    2.28
    
    
    
    43,000
    
    
    1.2 years
    
    $
    3.413.66 to 5.08
    
    
    795,200
    
    
    4.0 years
    
    $
    4.76
    
    
    
    329,200
    
    
    0.8 years
    
    $
    4.306.10 to 6.73
    
    
    1,134,576
    
    
    2.4 years
    
    $
    6.49
    
    
    
    869,676
    
    
    1.8 years
    
    $
    6.597.22 to 8.84
    
    
    736,875
    
    
    2.7 years
    
    $
    8.45
    
    
    
    515,975
    
    
    2.4 years
    
    $
    8.588.93 to 12.31
    
    
    359,000
    
    
    3.3 years
    
    $
    11.64
    
    
    
    218,600
    
    
    3.2 years
    
    $
    11.53$3.11 to $12.31
    
    
    4,268,651
    
    
    4.9 years
    
    $
    5.71
    
    
    
    1,976,451
    
    
    2.0 years
    
    $
    7.21
   14




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  Restricted Stock
   2009
    
    
    2008Weighted-
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    PriceRestricted
shares outstanding at the beginning of the year
    
    
    593,260
    
    
    $
    7.58
    
    
    
    653,623
    
    
    $
    7.16Shares granted
    
    
    155,018
    
    
    $
    2.62
    
    
    
    109,000
    
    
    $
    8.40Lapse of restrictions
    
    
    (101,734
    )
    
    $
    5.10
    
    
    
    (58,000
    )
    
    $
    5.39Forfeitures
    
    
    
    
    
    $
    
    
    
    
    (29,940
    )
    
    $
    6.58Shares outstanding at the end of the quarter
    
    
    646,544
    
    
    $
    6.78
    
    
    
    674,683
    
    
    $
    7.54
 15. Comprehensive Income
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net income (loss)
    
    $
    (6,960
    )
    
    $
    1,517
    
    
    $
    (126,031
    )
    
    $
    3,044Net (gains) losses included in net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (177
    )Tax benefits
(provisions) related to cash flow hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    62Other Comprehensive Income, net
    
    $
    (6,960
    )
    
    $
    1,517
    
    
    $
    (126,031
    )
    
    $
    2,929
 16. Subsequent Events
   15




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##### Table of Contents



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




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
  General Overview
    
    
    Focus on Provinces;
 
    
    Leverage Our Engineering and Operational Expertise;
 
    
    Capitalize on Exploration Successes Through Disciplined Development Activities;
 
    
    Enhance Returns Through Operational Control; and
 
    
    Internally Generate an Inventory of High Quality Exploratory Prospects.
 Overview of Second Quarter 2009
    17




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##### Table of Contents



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




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##### Table of Contents



Subsequent Events
  Results for the Three and Six Months Ended June 30, 2009
 Comparison of the three month and six month periods ended June 30, 2009 and 2008.
 Production volumes
 Three months ended June 30,
    
    
    Six months ended June 30,2009
    
    
    % Change
    
    
    2008
    
    
    2009
    
    
    % Change
    
    
    2008Oil (MBbls)
    
    
    164
    
    
    
    28
    %
    
    
    128
    
    
    
    338
    
    
    
    38
    %
    
    
    245Natural gas (MMcf)
    
    
    1,460
    
    
    
    (25
    %)
    
    
    1,947
    
    
    
    3,302
    
    
    
    (20
    %)
    
    
    4,139Total (MMcfe)(1)
    
    
    2,444
    
    
    
    (10
    %)
    
    
    2,715
    
    
    
    5,328
    
    
    
    (5
    %)
    
    
    5,609Average daily production (MMcfe/d)(2)
    
    
    27.2
    
    
    
    (10
    %)
    
    
    30.2
    
    
    
    29.6
    
    
    
    (5
    %)
    
    
    31.2Average daily production (Boe/d)(2)
    
    
    4,526
    
    
    
    (10
    %)
    
    
    5,027
    
    
    
    4,933
    
    
    
    (5
    %)
    
    
    5,193
 
 (1)
    
    MMcfe is defined as one million cubic feet equivalent of natural gas, determined using
the ratio of six MMcf of natural gas to one MBbl of crude oil, condensate or natural gas
liquids.(2)
    
    Average daily production is calculated using 30 days per calendar month.   19




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##### Table of Contents



Revenues, Commodity Prices and Hedging
  Three months ended June 30,
    
    
    Six months ended June 30,2009
    
    
    % Change
    
    
    2008
    
    
    2009
    
    
    % Change
    
    
    2008Oil revenue:Oil revenue
    
    $
    8,105
    
    
    
    (48
    %)
    
    $
    15,640
    
    
    $
    14,055
    
    
    
    (48
    %)
    
    $
    26,797Oil derivative settlement gains (losses)
    
    
    (222
    )
    
    
    (86
    %)
    
    
    (1,601
    )
    
    
    860
    
    
    NM
    
    
    
    (2,187
    )Oil revenue including oil derivative settlements
    
    $
    7,883
    
    
    
    (44
    %)
    
    $
    14,039
    
    
    $
    14,915
    
    
    
    (39
    %)
    
    $
    24,610Oil derivative unrealized gains (losses)
    
    
    (3,034
    )
    
    
    (22
    %)
    
    
    (3,897
    )
    
    
    (4,341
    )
    
    
    5
    %
    
    
    (4,135
    )Oil revenue including derivative settlements
and unrealized gains (losses)
    
    $
    4,849
    
    
    
    (52
    %)
    
    $
    10,142
    
    
    $
    10,574
    
    
    
    (48
    %)
    
    $
    20,475Natural gas revenue:Natural gas revenue
    
    $
    5,104
    
    
    
    (78
    %)
    
    $
    23,231
    
    
    $
    12,963
    
    
    
    (70
    %)
    
    $
    42,584Natural gas derivative settlement gains (losses)
    
    
    1,508
    
    
    NM
    
    
    
    (1,756
    )
    
    
    7,947
    
    
    NM
    
    
    
    (1,232
    )Natural gas revenue including derivative
settlements
    
    $
    6,612
    
    
    
    (69
    %)
    
    $
    21,475
    
    
    $
    20,910
    
    
    
    (49
    %)
    
    $
    41,352Natural gas derivative unrealized gains (losses)
    
    
    (979
    )
    
    
    (85
    %)
    
    
    (6,653
    )
    
    
    (2,550
    )
    
    
    (78
    %)
    
    
    (11,809
    )Natural gas revenue including derivative
settlements and unrealized gains (losses)
    
    $
    5,633
    
    
    
    (62
    %)
    
    $
    14,822
    
    
    $
    18,360
    
    
    
    (38
    %)
    
    $
    29,543Oil and natural gas revenue:Oil and natural gas revenue
    
    $
    13,209
    
    
    
    (66
    %)
    
    $
    38,871
    
    
    $
    27,018
    
    
    
    (61
    %)
    
    $
    69,381Oil and natural gas derivative settlement gains
(losses)
    
    
    1,286
    
    
    NM
    

    
    
    (3,357
    )
    
    
    8,807
    
    
    NM
    

    
    
    (3,419
    )Oil and natural gas revenue including
derivative settlement gains (losses)
    
    
    14,495
    
    
    
    (59
    %)
    
    
    35,514
    
    
    
    35,825
    
    
    
    (46
    %)
    
    
    65,962Oil and natural gas derivative unrealized gains
(losses)
    
    
    (4,013
    )
    
    
    (62
    %)
    
    
    (10,550
    )
    
    
    (6,891
    )
    
    
    (57
    %)
    
    
    (15,944
    )Oil and natural gas revenue including
derivative settlements and unrealized gains
(losses)
    
    
    10,482
    
    
    
    (58
    %)
    
    
    24,964
    
    
    
    28,934
    
    
    
    (42
    %)
    
    
    50,018Other revenue
    
    
    32
    
    
    
    (48
    %)
    
    
    62
    
    
    
    66
    
    
    
    (16
    %)
    
    
    79Total revenue
    
    $
    10,514
    
    
    
    (58
    %)
    
    $
    25,026
    
    
    $
    29,000
    
    
    
    (42
    %)
    
    $
    50,097
  20




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##### Table of Contents



Three months ended June 30,
    
    
    Six months ended June 30,2009
    
    
    % Change
    
    
    2008
    
    
    2009
    
    
    % Change
    
    
    2008Average oil prices:Oil price (per Bbl)
    
    $
    49.41
    
    
    
    (60
    %)
    
    $
    122.22
    
    
    $
    41.63
    
    
    
    (62
    %)
    
    $
    109.46Oil price including derivative
settlement gains (losses) (per Bbl)
    
    
    48.06
    
    
    
    (56
    %)
    
    
    109.71
    
    
    
    44.18
    
    
    
    (56
    %)
    
    
    100.53Oil price including derivative
settlements and unrealized gains
(losses) (per Bbl)
    
    $
    29.56
    
    
    
    (63
    %)
    
    $
    79.25
    
    
    $
    31.32
    
    
    
    (63
    %)
    
    $
    83.64Average natural gas prices:Natural gas price (per Mcf)
    
    $
    3.50
    
    
    
    (71
    %)
    
    $
    11.93
    
    
    $
    3.93
    
    
    
    (62
    %)
    
    $
    10.29Natural gas price including derivative
settlement gains (losses) (per Mcf)
    
    
    4.53
    
    
    
    (59
    %)
    
    
    11.03
    
    
    
    6.33
    
    
    
    (37
    %)
    
    
    9.99Natural gas price including derivative
settlements and unrealized gains
(losses) (per Mcf)
    
    $
    3.86
    
    
    
    (49
    %)
    
    $
    7.61
    
    
    $
    5.56
    
    
    
    (22
    %)
    
    $
    7.14Average equivalent prices:Natural gas equivalent price (per Mcfe)
    
    $
    5.40
    
    
    
    (62
    %)
    
    $
    14.32
    
    
    $
    5.07
    
    
    
    (59
    %)
    
    $
    12.37Natural gas equivalent price including
derivative settlement gains (losses)
(per Mcfe)
    
    
    5.93
    
    
    
    (55
    %)
    
    
    13.08
    
    
    
    6.72
    
    
    
    (43
    %)
    
    
    11.76Natural gas equivalent price including
derivative settlements and unrealized
gains (losses) (per Mcfe)
    
    $
    4.29
    
    
    
    (53
    %)
    
    $
    9.19
    
    
    $
    5.43
    
    
    
    (39
    %)
    
    $
    8.92
 For the three
    
    
    For the sixmonth periods
    
    
    month periodsended June 30,
    
    
    ended June 30, 2009 and2009 and 2008
    
    
    2008Change in revenue from the sale of oilVolume variance impact
    
    $
    4,410
    
    
    $
    10,154Price variance impact
    
    
    (11,945
    )
    
    
    (22,896
    )Cash settlement of hedging contracts
    
    
    1,379
    
    
    
    3,047Unrealized hedge gain or loss
    
    
    863
    
    
    
    (206
    )Total change
    
    $
    (5,293
    )
    
    $
    (9,901
    )Change in revenue from the sale of natural gasVolume variance impact
    
    $
    (5,813
    )
    
    $
    (8,603
    )Price variance impact
    
    
    (12,314
    )
    
    
    (21,018
    )Cash settlement of hedging contracts
    
    
    3,264
    
    
    
    9,179Unrealized hedge gain or loss
    
    
    5,674
    
    
    
    9,259Total change
    
    $
    (9,189
    )
    
    $
    (11,183
    )Change in revenue from the sale of oil and natural gasVolume variance impact
    
    $
    (1,403
    )
    
    $
    1,551Price variance impact
    
    
    (24,259
    )
    
    
    (43,914
    )Cash settlement of hedging contracts
    
    
    4,643
    
    
    
    12,226Unrealized hedge gain or loss
    
    
    6,537
    
    
    
    9,053Total change
    
    $
    (14,482
    )
    
    $
    (21,084
    )
  21




---



##### Table of Contents




    
    a 62% decrease in pre-hedge per Mcfe sales prices resulted in a $24.3 million decrease
in revenues;
 
    
    a decrease in natural gas production, which was partially offset by an increase in our
oil volumes, resulted in a $1.4 million decrease in oil and natural gas revenues;
 
    
    a $1.3 million gain from the settlement of derivative contracts in the second quarter
2009 versus a $3.3 million loss from the settlement of derivative contracts in second
quarter 2008 increased revenues by $4.6 million; and
 
    
    a $4.0 million unrealized derivative loss in second quarter 2009 versus a $10.5 million
unrealized derivative loss in second quarter 2008 increased revenues by $6.5 million.
  
    
    a 59% decrease in pre-hedge per Mcfe sales prices resulted in a $43.9 million decrease
in revenues;
 
    
    an increase in oil production, which was partially offset by a decrease in our natural
gas volumes, resulted in a $1.6 million increase in oil and natural gas revenues;
 
    
    an $8.8 million gain from the settlement of derivative contracts in the first six months
2009 versus a $3.4 million loss from the settlement of derivative contracts in first six
months 2008 increased revenues by $12.2 million; and
 
    
    a $6.8 million unrealized derivative loss in first six months 2009 versus a $15.9
million unrealized derivative loss in first six months 2008 increased revenues by $9.1
million.
 Hedging.
  22




---



##### Table of Contents



Three months ended June 30,
    
    
    Six months ended June 30,2009
    
    

% Change
    
    
    2008
    
    
    2009
    
    

% Change
    
    
    2008Oil collarsVolumes (Bbls)
    
    
    19,000
    
    
    
    (60
    %)
    
    
    47,000
    
    
    
    49,000
    
    
    
    (47
    %)
    
    
    92,500Average floor price ($  per Bbl)
    
    $
    59.63
    
    
    
    (13
    %)
    
    $
    68.18
    
    
    $
    71.58
    
    
    
    10
    %
    
    $
    64.98Average ceiling price ($  per Bbl)
    
    $
    78.70
    
    
    
    (13
    %)
    
    $
    90.91
    
    
    $
    96.96
    
    
    
    10
    %
    
    $
    88.29Gain (loss) upon settlement ($ in thousands)
    
    $
    45
    
    
    NM
    
    
    $
    (1,601
    )
    
    $
    1,127
    
    
    NM
    
    
    $
    (2,187
    )Oil swapsVolumes (Bbls)
    
    
    30,000
    
    
    NM
    
    
    
    
    
    
    
    30,000
    
    
    NM
    
    
    
    Average swap price ($  per Bbl)
    
    $
    50.75
    
    
    NM
    
    
    $
    
    
    
    $
    50.75
    
    
    NM
    
    
    $
    Gain (loss) upon settlement ($ in thousands)
    
    $
    (267
    )
    
    NM
    
    
    $
    
    
    
    $
    (267
    )
    
    NM
    
    
    $
    Total oilGain (loss) upon settlement ($ in thousands)
    
    $
    (222
    )
    
    
    (86
    %)
    
    $
    (1,601
    )
    
    $
    860
    
    
    NM
    
    
    $
    (2,187
    )Natural gas collarsVolumes (MMbtu)
    
    
    250,000
    
    
    
    (82
    %)
    
    
    1,370,000
    
    
    
    1,220,000
    
    
    
    (58
    %)
    
    
    2,890,000Average floor price ($  per MMbtu)
    
    $
    6.89
    
    
    
    (3
    %)
    
    $
    7.14
    
    
    $
    7.74
    
    
    
    3
    %
    
    $
    7.52Average ceiling price ($  per MMbtu)
    
    $
    8.19
    
    
    
    (14
    %)
    
    $
    9.54
    
    
    $
    9.42
    
    
    
    (15
    %)
    
    $
    11.06Gain (loss) upon settlement ($ in thousands)
    
    $
    676
    
    
    NM
    
    
    $
    (1,756
    )
    
    $
    6,931
    
    
    NM
    
    
    $
    (1,232
    )Natural gas swapsVolumes (MMbtu)
    
    
    882,000
    
    
    NM
    
    
    
    
    
    
    
    1,062,000
    
    
    NM
    
    
    
    Average swap price ($  per MMbtu)
    
    $
    4.438
    
    
    NM
    
    
    $
    
    
    
    $
    4.572
    
    
    NM
    
    
    $
    Gain (loss) upon settlement ($ in thousands)
    
    $
    832
    
    
    NM
    
    
    $
    
    
    
    $
    1,016
    
    
    NM
    
    
    $
    Total gasGain (loss) upon settlement ($ in thousands)
    
    $
    1,508
    
    
    NM
    
    
    $
    (1,756
    )
    
    $
    7,947
    
    
    NM
    
    
    $
    (1,232
    )
 Other revenue
 Operating costs and expenses
 Production costs.
 Unit-of-Production
    
    
    Amount(Per Mcfe)
    
    
    (In thousands)Three months ended June 30,
    
    
    Three months ended June 30,2009
    
    

% Change
    
    
    2008
    
    
    2009
    
    

%
Change
    
    
    2008Production costs:Operating & maintenance
    
    $
    1.17
    
    
    
    56
    %
    
    $
    0.75
    
    
    $
    2,853
    
    
    
    40
    %
    
    $
    2,036Expensed workovers
    
    
    0.18
    
    
    
    20
    %
    
    
    0.15
    
    
    
    445
    
    
    
    9
    %
    
    
    410Ad valorem taxes
    
    
    0.11
    
    
    
    175
    %
    
    
    0.04
    
    
    
    275
    
    
    
    170
    %
    
    
    102Lease operating expenses
    
    $
    1.46
    
    
    
    55
    %
    
    $
    0.94
    
    
    $
    3,573
    
    
    
    40
    %
    
    $
    2,548Production taxes
    
    
    0.34
    
    
    
    (36
    %)
    
    
    0.53
    
    
    
    831
    
    
    
    (42
    %)
    
    
    1,441Production costs
    
    $
    1.80
    
    
    
    22
    %
    
    $
    1.47
    
    
    $
    4,404
    
    
    
    10
    %
    
    $
    3,989
  23




---



##### Table of Contents




    
    O&M expense increased $0.42 per Mcfe, or 56%, due to an increase in compressor rental
and maintenance, electricity, salt water disposal, surface equipment repair and well
service and repair; and
 
    
    production taxes decreased $0.19 per Mcfe, or 36%, due to lower commodity prices.
 Unit-of-Production
    
    
    Amount(Per Mcfe)
    
    
    (In thousands)Six months ended June 30,
    
    
    Six months ended June 30,2009
    
    

% Change
    
    
    2008
    
    
    2009
    
    

% Change
    
    
    2008Production costs:Operating & maintenance
    
    $
    1.07
    
    
    
    55
    %
    
    $
    0.69
    
    
    $
    5,697
    
    
    
    48
    %
    
    $
    3,858Expensed workovers
    
    
    0.21
    
    
    
    (5
    %)
    
    
    0.22
    
    
    
    1,125
    
    
    
    (8
    %)
    
    
    1,224Ad valorem taxes
    
    
    0.10
    
    
    
    25
    %
    
    
    0.08
    
    
    
    550
    
    
    
    22
    %
    
    
    452Lease operating expenses
    
    $
    1.38
    
    
    
    39
    %
    
    $
    0.99
    
    
    $
    7,372
    
    
    
    33
    %
    
    $
    5,534Production taxes
    
    
    0.31
    
    
    
    (37
    %)
    
    
    0.49
    
    
    
    1,645
    
    
    
    (40
    %)
    
    
    2,724Production costs
    
    $
    1.69
    
    
    
    14
    %
    
    $
    1.48
    
    
    $
    9,017
    
    
    
    9
    %
    
    $
    8,258
  
    
    O&M expense increased $0.38 per Mcfe, or 55%, due to an increase in compressor rental
and maintenance, electricity, and salt water disposal; and
 
    
    production taxes decreased $0.18 per Mcfe, or 37%, due to lower commodity prices.
 General and administrative expenses.
 Three months ended June 30,
    
    
    Six months ended June 30,2009
    
    

% Change
    
    
    2008
    
    
    2009
    
    

% Change
    
    
    2008(In thousands, except per unit measurements)General and administrative costs
    
    $
    4,087
    
    
    
    (15
    %)
    
    $
    4,799
    
    
    $
    7,759
    
    
    
    (20
    %)
    
    $
    9,755Capitalized general and administrative costs
    
    
    (1,823
    )
    
    
    (17
    %)
    
    
    (2,203
    )
    
    
    (3,373
    )
    
    
    (26
    %)
    
    
    (4,566
    )General and administrative expenses
    
    $
    2,264
    
    
    
    (13
    %)
    
    $
    2,596
    
    
    $
    4,386
    
    
    
    (15
    %)
    
    $
    5,189General and administrative expense ($  per Mcfe)
    
    $
    0.93
    
    
    
    (3
    %)
    
    $
    0.96
    
    
    $
    0.82
    
    
    
    (12
    %)
    
    $
    0.93
   Depletion of oil and natural gas properties
 Three months ended June 30,
    
    
    Six months ended June 30,2009
    
    

% Change
    
    
    2008
    
    
    2009
    
    

% Change
    
    
    2008(In thousands, except per unit measurements)Depletion of oil and natural gas properties
    
    $
    6,233
    
    
    
    (50
    %)
    
    $
    12,405
    
    
    $
    16,066
    
    
    
    (35
    %)
    
    $
    24,848Depletion of oil and natural gas properties ($
per Mcfe)
    
    $
    2.55
    
    
    
    (44
    %)
    
    $
    4.57
    
    
    $
    3.02
    
    
    
    (32
    %)
    
    $
    4.43
  24




---



##### Table of Contents



Impairment of oil and natural gas properties
   Inventory Valuation.
 Net interest expense.
  25




---



##### Table of Contents



Three months ended June 30,
    
    
    Six months ended June 30,2009
    
    

% Change
    
    
    2008
    
    
    2009
    
    

% Change
    
    
    2008(In thousands)Interest on Senior Notes
    
    $
    3,850
    
    
    
    
    
    
    
    0
    %
    
    $
    3,850
    
    
    $
    7,700
    
    
    
    
    
    
    
    0
    %
    
    $
    7,700Interest on Senior Credit Facility
    
    
    1,021
    
    
    
    
    
    
    
    194
    %
    
    
    347
    
    
    
    2,026
    
    
    
    
    
    
    
    305
    %
    
    
    500Commitment fees
    
    
    24
    
    
    
    
    
    
    
    (65
    %)
    
    
    69
    
    
    
    45
    
    
    
    
    
    
    
    (66
    %)
    
    
    134Dividend on mandatorily redeemable preferred stock
    
    
    151
    
    
    
    
    
    
    
    0
    %
    
    
    151
    
    
    
    300
    
    
    
    
    
    
    
    (1
    %)
    
    
    302Amortization of deferred loan and debt issuance cost
    
    
    306
    
    
    
    
    
    
    
    21
    %
    
    
    252
    
    
    
    581
    
    
    
    
    
    
    
    17
    %
    
    
    498Other general interest expense
    
    
    (1
    )
    
    
    
    

    NM
    
    
    
    
    
    
    
    16
    
    
    
    
    

    NM
    
    
    
    Capitalized interest expense
    
    
    (1,100
    )
    
    
    
    
    
    
    (7
    %)
    
    
    (1,187
    )
    
    
    (2,290
    )
    
    
    
    
    
    
    3
    %
    
    
    (2,233
    )Net interest expense
    
    $
    4,251
    
    
    
    
    
    
    
    22
    %
    
    $
    3,482
    
    
    $
    8,378
    
    
    
    
    
    
    
    21
    %
    
    $
    6,901Weighted average debt outstanding
    
    $
    301,640
    
    
    
    
    
    
    
    47
    %
    
    $
    205,536
    
    
    $
    308,333
    
    
    
    
    
    
    
    59
    %
    
    $
    194,178Average interest rate on outstanding indebtedness (a)
    
    
    6.7
    %
    
    
    
    
    
    
    
    
    
    
    8.6
    %
    
    
    6.6
    %
    
    
    
    
    
    
    
    
    
    
    8.9
    %
 
 (a)
    
    Calculated as the sum of the interest expense on our outstanding indebtedness, commitment
fees that we pay on our unused borrowing capacity and the dividend on our mandatorily
redeemable preferred stock divided by our weighted average debt and preferred stock
outstanding for the period.  Other income (expense)
  Three months ended June 30,
    
    
    Six months ended June 30,2009
    
    

% Change
    
    
    2008
    
    
    2009
    
    

% Change
    
    
    2008(In thousands)Other income (expense):Total other income
    
    $
    (33
    )
    
    NM
    
    
    $
    96
    
    
    $
    82
    
    
    
    (79
    %)
    
    $
    403
  Income
taxes.
 Capital Expenditures
  
    
    cost of acquiring and maintaining our lease acreage position and our seismic resources;
 
    
    cost of drilling and completing new oil and natural gas wells;
 
    
    cost of installing new production infrastructure;
  26




---



##### Table of Contents




    
    cost of maintaining, repairing and enhancing existing oil and natural gas wells;
 
    
    cost related to plugging and abandoning unproductive or uneconomic wells; and
 
    
    indirect costs related to our exploration activities, including payroll and other
expenses attributable to our exploration professional staff.
  AmountRevised 2009
    
    
    Spent Through
    
    
    AmountBudget
    
    
    June 30, 2009
    
    
    Remaining (a)(In millions)Drilling
    
    $
    57.2
    
    
    $
    26.5
    
    
    $
    30.7Net land and seismic (b)
    
    
    (4.1
    )
    
    
    (5.7
    )
    
    
    1.6Capitalized costs (c)
    
    
    11.0
    
    
    
    5.6
    
    
    
    5.4Asset retirement obligation
    
    
    0.4
    
    
    
    0.3
    
    
    
    0.1Total oil and gas capital expenditures (d)
    
    $
    64.5
    
    
    $
    26.7
    
    
    $
    37.8
 
 (a)
    
    Calculated based on the revised 2009 capital expenditure budget announced in May 2009 in
conjunction with our equity offering less amounts spent through June 30, 2009.(b)
    
    Net land and seismic expenditures include $6 million in proceeds from the sale of our
Mountrail County mineral interests and $0.5 million in reimbursements in connection with our
G&G activity.(c)
    
    Capitalized costs include capitalized interest expense, general and administrative expense
and stock compensation expense.(d)
    
    Excludes other property capital expenditures. Determination of Capital Expenditure Budget
   
    
    commodity prices;
 
    
    production from our existing producing wells;
 
    
    the results of our current exploration and development drilling efforts;
 
    
    economic conditions at the time of drilling;
 
    
    industry conditions at the time of drilling, including the availability of drilling and
completion equipment;
 
    
    our liquidity and the availability of external sources of financing; and
 
    
    the availability of more economically attractive prospects.
  Liquidity and Capital Resources
 Sources of Capital
   27




---



##### Table of Contents



9 5/8% Senior Notes Due 2014
   
    
    rank equally in right of payment with all our existing and future senior indebtedness;
 
    
    rank senior to all of our future subordinated indebtedness; and
 
    
    are effectively junior in right of payment to all of our and the Guarantors existing and
future secured indebtedness, including debt of our Senior Credit Facility.
   Senior Credit Facility
     28




---



##### Table of Contents



Percent of
    
    EurodollarBorrowing Base
    
    Rate
    
    
    Base RateUtilized
    
    Advances
    
    
    Advances(1)< 25%
    
    
    2.500
    %
    
    
    1.500
    %25% and < 50%
    
    
    2.750
    %
    
    
    1.750
    %50% and < 75%
    
    
    3.000
    %
    
    
    2.000
    %75% and < 90%
    
    
    3.250
    %
    
    
    2.250
    %3 90%
    
    
    3.500
    %
    
    
    2.500
    %
 
 (1)
    
    Base rate is defined as for any day a fluctuating rate per annum equal to the highest of
the following, in each case, to the extent determinable by the Administrative Agent: (a) the
Federal Funds Rate plus 1/2 of 1%, (b) the Eurodollar Rate with respect to Interest Periods of
one month determined as of approximately 11:00 a.m. (London time) on such day plus 1.50% and
(c) the rate of interest in effect for such day as publicly announced from time to time by
Bank of America as its prime rate. The prime rate is a rate set by Bank of America based
upon various factors including Bank of Americas costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing some loans, which
may be priced at, above, or below such announced rate. Any change in such rate announced by
Bank of America shall take effect at the opening of business on the day specified in the
public announcement of such change.  Percent ofBorrowing Base
    
    QuarterlyUtilized
    
    Commitment Fee< 25%
    
    
    0.500
    %25% and < 50%
    
    
    0.500
    %50% and < 75%
    
    
    0.500
    %75% and < 90%
    
    
    0.500
    %3 90%
    
    
    0.500
    %
  Mandatorily Redeemable Preferred Stock
   29




---



##### Table of Contents



Off Balance Sheet Arrangements
  Analysis of Changes in Cash and Cash Equivalents
  Six months ended June 30,2009
    
    

% Change
    
    
    2008(In thousands)Net income (loss)
    
    $
    (126,031
    )
    
    NM
    
    
    $
    3,044Non-cash items
    
    
    139,718
    
    
    
    214
    %
    
    
    44,516Changes in working capital and other items
    
    
    2,260
    
    
    NM
    
    
    
    (4,520
    )Cash flows provided by operating activities
    
    $
    15,947
    
    
    
    (63
    %)
    
    $
    43,040Cash flows used by investing activities
    
    
    (45,498
    )
    
    
    (46
    %)
    
    
    (84,712
    )Cash flows provided by financing activities
    
    
    57,594
    
    
    
    48
    %
    
    
    38,822Net increase in cash and cash equivalents
    
    $
    28,043
    
    
    NM
    
    
    $
    (2,850
    )
 Analysis of net cash provided by operating activities
    30




---



##### Table of Contents



Analysis of changes in cash flows used in investing activities
 Six months ended June 30,2009
    
    

% Change
    
    
    2008(In thousands)Capital expenditures for oil and natural gas activities:Drilling
    
    $
    26,492
    
    
    
    (58
    %)
    
    $
    62,689Land and seismic
    
    
    (5,687
    )
    
    NM
    
    
    
    19,029Capitalized cost
    
    
    5,663
    
    
    
    (17
    %)
    
    
    6,799Capitalized asset retirement obligation
    
    
    275
    
    
    
    108
    %
    
    
    132Total
    
    $
    26,743
    
    
    
    (70
    %)
    
    $
    88,649Reconciling Items:Change in accrued drilling costs
    
    $
    13,906
    
    
    NM
    
    
    $
    (3,872
    )Change in short term investments
    
    
    5,268
    
    
    NM
    
    
    
    Other
    
    
    (419
    )
    
    
    545
    %
    
    
    (65
    )Total Reconciling Items
    
    
    18,755
    
    
    NM
    
    
    
    (3,937
    )Net cash used in investing activities
    
    $
    45,498
    
    
    
    (46
    %)
    
    $
    84,712
  
    
    net land and seismic expenditures decreased by $24.7 million;
 
    
    drilling expenditures decreased by $36.2 million;
 
    
    capitalized costs decreased by $1.1 million;
 
    
    the change in accrued drilling costs increased cash used in investing activities by $17.8
million; and
 
    
    the change in short term investments increased cash used in investing activities by $5.3
million.
 Analysis of changes in cash flows from financing activities
  Common Stock Transactions
  Shares Issued
    
    
    Net Proceeds(In thousands, except share data)2009 common stock transactions:Common stock offering
    
    
    36,292,117
    
    
    $
    93,523Exercise of employee stock options
    
    
    500
    
    
    $
    12008 common stock transactions:Exercise of employee stock options
    
    
    126,566
    
    
    $
    552
 Other Matters
 Derivative Instruments
   31




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Effects of Inflation and Changes in Prices
  Environmental and Other Regulatory Matters
  New Accounting Pronouncements and SEC Rulemaking
     32




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Forward-looking Information
   33




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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Management Opinion Concerning Derivative Instruments
  Derivative Instruments and Hedging Activities
        34




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##### Table of Contents



Natural
    
    
    Purchased
    
    
    WrittenGas
    
    
    Put
    
    
    CallSettlement Period
    
    (MMbtu)
    
    
    (Nymex)
    
    
    (Nymex)Natural Gas Costless Collars10/01/09 - 03/31/10
    
    
    420,000
    
    
    $
    5.75
    
    
    $
    7.0504/01/10 - 09/30/10
    
    
    420,000
    
    
    $
    5.75
    
    
    $
    7.3010/01/10 - 03/31/11
    
    
    240,000
    
    
    $
    6.50
    
    
    $
    8.2504/01/10 - 09/30/10
    
    
    240,000
    
    
    $
    5.75
    
    
    $
    7.0011/01/09 - 12/31/10
    
    
    980,000
    
    
    $
    5.15
    
    
    $
    7.00
 Natural
    
    
    Purchased
    
    
    Written
    
    
    WrittenGas
    
    
    Put
    
    
    Call
    
    
    PutSettlement Period
    
    (MMbtu)
    
    
    (Nymex)
    
    
    (Nymex)
    
    
    (Nymex)Natural Gas Three Way Costless Collars10/01/09 - 03/31/10
    
    
    420,000
    
    
    $
    8.00
    
    
    $
    10.00
    
    
    $
    5.5010/01/09 - 03/31/10
    
    
    360,000
    
    
    $
    5.75
    
    
    $
    7.00
    
    
    $
    3.50
 Natural
    
    
    SwapGas
    
    
    PriceSettlement Period
    
    (MMbtu)
    
    
    (Nymex)Natural Gas Swaps07/01/09 - 08/31/09
    
    
    140,000
    
    
    $
    4.74510/01/09 - 12/31/09
    
    
    60,000
    
    
    $
    4.90007/01/09 - 12/31/09
    
    
    258,000
    
    
    $
    4.44007/01/09 - 09/30/09
    
    
    150,000
    
    
    $
    4.09007/01/09 - 09/30/09
    
    
    150,000
    
    
    $
    3.96007/01/09 - 09/30/09
    
    
    390,000
    
    
    $
    4.00007/01/09 - 10/31/09
    
    
    280,000
    
    
    $
    4.030
 Crude
    
    
    Purchased
    
    
    WrittenOil
    
    
    Put
    
    
    CallSettlement Period
    
    (Bbls)
    
    
    (Nymex)
    
    
    (Nymex)Oil Costless Collars07/01/09 - 12/31/09
    
    
    60,000
    
    
    $
    49.00
    
    
    $
    70.0001/01/10 - 12/31/10
    
    
    120,000
    
    
    $
    48.70
    
    
    $
    80.0007/01/09 - 05/31/10
    
    
    110,000
    
    
    $
    57.50
    
    
    $
    75.9506/01/10 - 12/31/10
    
    
    56,000
    
    
    $
    57.50
    
    
    $
    82.1501/01/10 - 12/31/10
    
    
    54,000
    
    
    $
    60.00
    
    
    $
    86.5001/01/11 - 12/31/11
    
    
    84,000
    
    
    $
    65.00
    
    
    $
    88.2507/01/09 - 12/31/09
    
    
    40,000
    
    
    $
    62.50
    
    
    $
    76.7501/01/10 - 3/31/10
    
    
    6,000
    
    
    $
    65.00
    
    
    $
    87.5007/01/10 - 9/30/10
    
    
    6,000
    
    
    $
    70.00
    
    
    $
    87.2510/01/10 - 12/31/10
    
    
    3,000
    
    
    $
    70.00
    
    
    $
    88.50
 Crude
    
    
    SwapOil
    
    
    PriceSettlement Period
    
    (Bbls)
    
    
    (Nymex)Oil Swaps07/01/09 - 12/31/09
    
    
    60,000
    
    
    $
    50.75
  35




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ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
   36




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##### Table of Contents



PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
 The adoption of climate change legislation by Congress could result in increased operating costs
and reduced demand for the oil and natural gas we produce.
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 Issuer Purchases of Equity Securities
  Total Number of
    
    
    Average PricePeriod
    
    Shares Purchased
    
    
    Paid per ShareMay 2009
    
    
    3,201
    
    
    $
    3.642June 2009
    
    
    12,170
    
    
    $
    3.595TOTAL
    
    
    15,371
    
    
    $
    3.605
 
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSON OF MATTERS TO A VOTE OF SECURITY HOLDERS
 (a)
    
    We convened our Annual Stockholders meeting on Thursday, May 28, 2009, in Austin, Texas at
9:00 a.m. local time. Subsequent to the approval of Proposals One, Two, and Three, we
adjourned the meeting and the vote on Proposal Four until June 19, 2009. On June 19, 2009, we
reconvened the Annual Stockholders meeting.
  37




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##### Table of Contents



(b)
    
    Proxies were solicited by our Board of Directors pursuant to Regulation 14A under the
Securities Exchange Act of 1934. There were no solicitations in opposition to the Board of
Directors nominees as listed in the proxy statement and all of such nominees were duly
elected.
 (c)
    
    Out of the total 46,596,425 shares of our common stock outstanding and entitled to vote,
42,295,913 shares were present in person or by proxy at the original
annual meeting, representing approximately 91% of our
common stock outstanding, and 42,687,853 shares were present in
person or by proxy at the reconvened annual meeting, representing
approximately 92% of our common stock outstanding. The only matters voted on by our stockholders, as fully described
in the definitive proxy materials for the annual meeting, are set forth below. The results
were as follows:
 1.
    
    To elect seven directors to serve until the Annual Meeting of Stockholders in 2010.
 Number of sharesNumber of shares
    
    
    Number of shares
    
    
    withholding authorityvoting for election as
    
    
    voting against
    
    
    to vote for election asNominee
    
    director
    
    
    election as director
    
    
    directorBen M. Bud Brigham
    
    
    38,103,665
    
    
    
    
    
    
    
    4,192,247David T. Brigham
    
    
    38,262,336
    
    
    
    
    
    
    
    4,033,576Harold D. Carter
    
    
    31,999,180
    
    
    
    
    
    
    
    10,296,732Stephen C. Hurley
    
    
    38,294,290
    
    
    
    
    
    
    
    4,001,622Stephen P. Reynolds
    
    
    38,282,630
    
    
    
    
    
    
    
    4,013,282Hobart A. Smith
    
    
    37,771,348
    
    
    
    
    
    
    
    4,524,564Scott W. Tinker, Ph.D.
    
    
    34,953,279
    
    
    
    
    
    
    
    7,342,633
 2.
    
    To approve the appointment of KPMG LLP for the year ending December 31, 2009.
 For
    
    
    41,450,505Against
    
    
    759,475Abstained
    
    
    85,927
 3.
    
    To consider and vote on a proposal to approve an amendment to the 1997 Incentive Plan
to increase the number of shares of common stock available under the plan.
 For
    
    
    27,212,939Against
    
    
    2,636,151Abstained
    
    
    71,247Broker non-votes
    
    
    12,375,576
 4.
    
    To consider and vote on a proposal to approve and ratify certain non-plan stock options
granted to non-employee directors.
 For
    
    
    20,732,779Against
    
    
    9,532,223Abstained
    
    
    182,272Broker non-votes
    
    
    12,240,579
 
 ITEM 5. OTHER INFORMATION




38



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##### Table of Contents



ITEM 6. EXHIBITS
 3.1
    
    Certificate of Incorporation (filed as Exhibit 3.1 to Brighams Registration Statement on
Form S-1 (Registration No. 333-22491), and incorporated herein by reference)
 3.2
    
    Certificates of Amendment to Certificate of Incorporation (filed as Exhibit 3.1.1 to
Brighams Registration Statement on Form S-3 (Registration No. 333-37558), and incorporated
herein by reference)
 3.3
    
    Bylaws, as amended through May 28, 2009 (incorporated by reference to Exhibit 3.5 to
Brighams Current Report on Form 8-K filed May 28, 2009)
 3.4
    
    Certificate of Amendment to Certificate of Incorporation of Brigham Exploration Company dated
June 14, 2006 (filed as Exhibit 3.4 to Brighams
Annual Report on Form 10-K for the year ended December 31,
2008 and incorporated herein by reference)
 4.1
    
    Form of Common Stock Certificate (filed as Exhibit 4.1 to Brighams Registration Statement on
Form S-1 (Registration No. 333-22491), and incorporated herein by reference)
 4.2
    
    Certificate of Designations of Series A Preferred Stock (Par Value $.01 Per Share) of Brigham
Exploration Company filed October 31, 2000 (filed as Exhibit 4.1 to Brighams Current Report
on Form 8-K, as amended (filed November 8, 2000), and incorporated herein by reference)
 4.3
    
    Certificate of Amendment of Certificate of Designations of Series A Preferred Stock (Par
Value $.01 Per Share) of Brigham Exploration Company, filed March 2, 2001 (filed as Exhibit
4.2.1 to Brighams Annual Report on Form 10-K for the year ended December 31, 2000 (filed
March 23, 2001), and incorporated herein by reference)
 4.4
    
    Certificate of Designations of Series B Preferred Stock (Par Value $.01 Per Share) of Brigham
Exploration Company filed December 20, 2002 (filed as Exhibit 4.4 to Brighams Annual Report
on Form 10-K for the year ended December 31, 2002 (filed March 31, 2003) and incorporated
herein by reference)
 4.5
    
    Certificate of Elimination of Certificate of Designations of Series B Preferred Stock of
Brigham Exploration Company, dated June 4, 2004, (filed as Exhibit 99.2 to Brighams Current
Report on Form 8-K (filed July 20, 2004), and incorporated herein by reference)
 4.6
    
    Indenture, dated April 20, 2006, among Brigham Exploration Company, the Guarantors named
therein and Wells Fargo Bank, N.A., as trustee (filed as Exhibit 4.1 to Brighams Current
Report on Form 8-K, as amended (filed April 24, 2006), and incorporated herein by reference)
 4.7
    
    Notations of Guarantees, dated April 20, 2006, among Brigham Exploration Company, the
Guarantors named therein and Wells Fargo Bank, N.A., as trustee, (filed as Exhibit 4.2 to
Brighams Current Report on Form 8-K, as amended (filed April 24, 2006), and incorporated
herein by reference)
 4.8
    
    Rule 144A 9 5/8% Senior Notes due 2014, dated April 20, 2006 (filed as Exhibit 4.3 to
Brighams Current Report on Form 8-K, as amended (filed April 24, 2006), and incorporated
herein by reference)
 4.9
    
    Reg S 9 5/8% Senior Notes due 2014, dated April 20, 2006 (filed as Exhibit 4.4 to Brighams
Current Report on Form 8-K, as amended (filed April 24, 2006), and incorporated herein by
reference)
 4.10
    
    Notations of Guarantees dated as of April 9, 2007, among Brigham Exploration Company, the
Guarantors named therein and Wells Fargo Bank, N.A., as trustee (filed as Exhibit 4.2 to
Brighams Current Report on Form 8-K filed on April 13, 2007 and incorporated in by reference)
 4.11
    
    Rule 144A 9 5/8% Senior Notes due 2014 (filed as Exhibit 4.3 to Brighams Current Report on
Form 8-K filed on April 13, 2007 and incorporated in by reference)
 4.12
    
    Reg S 9 5/8% Senior Notes due 2014 (filed as Exhibit 4.4 on Form 8-K filed to Brighams
Current Report on April 13, 2007 and incorporated in by reference)
 4.13
    
    Rights Agreement, dated as of December 10, 2008, between Brigham Exploration Company and
American Stock Transfer & Trust Company, LLC, as Rights Agent (filed as Exhibit 4.1 to
Brighams Current Report on Form 8-K (filed December 11, 2008) and incorporated herein by
reference)
  39




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##### Table of Contents



4.14
    
    Certificate of Designations of Series C Junior Preferred Stock of Brigham Exploration Company
effective as of December 10, 2008 (filed as Exhibit 3.1 to Brighams Current Report on Form
8-K (filed December 11, 2008) and incorporated herein by reference)10.46
    
    Fourth Amendment to the Fourth Amended and Restated Credit Agreement (incorporated by
reference to Exhibit 10.43 to Brighams Current Report on Form 8-K filed May 28, 2009)10.47*
    
    1997 Incentive Plan, as amended through May 28, 2009 (incorporated by reference to Exhibit
10.44 to Brighams Current Report on Form 8-K filed May 28, 2009)10.48*
    
    Amendment to Options Agreement10.49*
    
    Form of Non-qualified Stock Option Grant for Non-employee
Directors31.1
    
    Certification of Chief Executive Officer of the Company pursuant to Rule 13a-14(a) of the
Securities Exchange Act of 193431.2
    
    Certification of Chief Financial Officer of the Company pursuant to Rule 13a-14(a) of the
Securities Exchange Act of 193432.1
    
    Certification of Chief Executive Officer of the Company pursuant to 18 U.S.C. § 135032.2
    
    Certification of Chief Financial Officer of the Company pursuant to 18 U.S.C. § 1350
 *
    
    Management contract or compensatory plan.
  40




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##### Table of Contents



SIGNATURES
  BRIGHAM EXPLORATION COMPANYBy:
    /s/  BEN M. BRIGHAMBen M. BrighamChief Executive Officer, President
and Chairman of the BoardBy:
    /s/  EUGENE B. SHEPHERD, JR.Eugene B. Shepherd, Jr.Executive Vice President and

Chief Financial Officer  41




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description3.1
    
    Certificate of Incorporation (filed as Exhibit 3.1 to Brighams Registration Statement on
Form S-1 (Registration No. 333-22491), and incorporated herein by reference)3.2
    
    Certificates of Amendment to Certificate of Incorporation (filed as Exhibit 3.1.1 to
Brighams Registration Statement on Form S-3 (Registration No. 333-37558), and incorporated
herein by reference)3.3
    
    Bylaws, as amended through May 28, 2009 (incorporated by reference to Exhibit 3.5 to
Brighams Current Report on Form 8-K filed May 28, 2009)3.4
    
    Certificate of Amendment to Certificate of Incorporation of Brigham Exploration Company dated
June 14, 2006 (filed as Exhibit 3.4 to Brighams
Annual Report on Form 10-K for the year ended December 31,
2008 and incorporated herein by reference)4.1
    
    Form of Common Stock Certificate (filed as Exhibit 4.1 to Brighams Registration Statement on
Form S-1 (Registration No. 333-22491), and incorporated herein by reference)4.2
    
    Certificate of Designations of Series A Preferred Stock (Par Value $.01 Per Share) of Brigham
Exploration Company filed October 31, 2000 (filed as Exhibit 4.1 to Brighams Current Report
on Form 8-K, as amended (filed November 8, 2000), and incorporated herein by reference)4.3
    
    Certificate of Amendment of Certificate of Designations of Series A Preferred Stock (Par
Value $.01 Per Share) of Brigham Exploration Company, filed March 2, 2001 (filed as Exhibit
4.2.1 to Brighams Annual Report on Form 10-K for the year ended December 31, 2000 (filed
March 23, 2001), and incorporated herein by reference)4.4
    
    Certificate of Designations of Series B Preferred Stock (Par Value $.01 Per Share) of Brigham
Exploration Company filed December 20, 2002 (filed as Exhibit 4.4 to Brighams Annual Report
on Form 10-K for the year ended December 31, 2002 (filed March 31, 2003) and incorporated
herein by reference)4.5
    
    Certificate of Elimination of Certificate of Designations of Series B Preferred Stock of
Brigham Exploration Company, dated June 4, 2004, (filed as Exhibit 99.2 to Brighams Current
Report on Form 8-K (filed July 20, 2004), and incorporated herein by reference)4.6
    
    Indenture, dated April 20, 2006, among Brigham Exploration Company, the Guarantors named
therein and Wells Fargo Bank, N.A., as trustee (filed as Exhibit 4.1 to Brighams Current
Report on Form 8-K, as amended (filed April 24, 2006), and incorporated herein by reference)4.7
    
    Notations of Guarantees, dated April 20, 2006, among Brigham Exploration Company, the
Guarantors named therein and Wells Fargo Bank, N.A., as trustee, (filed as Exhibit 4.2 to
Brighams Current Report on Form 8-K, as amended (filed April 24, 2006), and incorporated
herein by reference)4.8
    
    Rule 144A 9 5/8% Senior Notes due 2014, dated April 20, 2006 (filed as Exhibit 4.3 to
Brighams Current Report on Form 8-K, as amended (filed April 24, 2006), and incorporated
herein by reference)4.9
    
    Reg S 9 5/8% Senior Notes due 2014, dated April 20, 2006 (filed as Exhibit 4.4 to Brighams
Current Report on Form 8-K, as amended (filed April 24, 2006), and incorporated herein by
reference)4.10
    
    Notations of Guarantees dated as of April 9, 2007, among Brigham Exploration Company, the
Guarantors named therein and Wells Fargo Bank, N.A., as trustee (filed as Exhibit 4.2 to
Brighams Current Report on Form 8-K filed on April 13, 2007 and incorporated in by reference)4.11
    
    Rule 144A 9 5/8% Senior Notes due 2014 (filed as Exhibit 4.3 to Brighams Current Report on
Form 8-K filed on April 13, 2007 and incorporated in by reference)4.12
    
    Reg S 9 5/8% Senior Notes due 2014 (filed as Exhibit 4.4 on Form 8-K filed to Brighams
Current Report on April 13, 2007 and incorporated in by reference)4.13
    
    Rights Agreement, dated as of December 10, 2008, between Brigham Exploration Company and
American Stock Transfer & Trust Company, LLC, as Rights Agent (filed as Exhibit 4.1 to
Brighams Current Report on Form 8-K (filed December 11, 2008) and incorporated herein by
reference)4.14
    
    Certificate of Designations of Series C Junior Preferred Stock of Brigham Exploration Company
effective as of December 10, 2008 (filed as Exhibit 3.1 to Brighams Current Report on Form
8-K (filed December 11, 2008) and incorporated herein by reference)10.46
    
    Fourth Amendment to the Fourth Amended and Restated Credit Agreement (incorporated by
reference to Exhibit 10.43 to Brighams Current Report on Form 8-K filed May 28, 2009)10.47*
    
    1997 Incentive Plan, as amended through May 28, 2009 (incorporated by reference to Exhibit
10.44 to Brighams Current Report on Form 8-K filed May 28, 2009)10.48*
    
    Amendment to Options Agreement10.49*
    
    Form of Non-qualified Stock Option Grant for Non-employee
Directors31.1
    
    Certification of Chief Executive Officer of the Company pursuant to Rule 13a-14(a) of the
Securities Exchange Act of 193431.2
    
    Certification of Chief Financial Officer of the Company pursuant to Rule 13a-14(a) of the
Securities Exchange Act of 193432.1
    
    Certification of Chief Executive Officer of the Company pursuant to 18 U.S.C. § 135032.2
    
    Certification of Chief Financial Officer of the Company pursuant to 18 U.S.C. § 1350
 *
    
    Management contract or compensatory plan.