##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2010
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 001-34224
 
 Brigham Exploration Company
 (Exact name of Registrant as Specified in its Charter)
 Delaware
    
    75-2692967(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 6300 Bridge Point Parkway, Building 2, Suite 500, Austin, Texas 78730  (Address of principal executive offices) (Zip Code)
 (512) 427-3300  (Registrants telephone number, including area code)
 Securities registered pursuant to Section 12(b) of the Act:
 Title of Each Class
    
    Name of Each Exchange on Which RegisteredCommon Stock, $0.01 par value
    
    NASDAQ Global Select Market
 Securities registered pursuant to Section 12(g) of the Act:
None  (Title of Class)
 Yes þ No o
 Yes o No þ
 Yes þ No o
 Yes o No o
 o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



BRIGHAM EXPLORATION COMPANY
 TABLE OF CONTENTS
 PagePart IItem 1. Business
    
    
    2Item 1A. Risk Factors
    
    
    9Item 1B. Unresolved Staff Comments
    
    
    22Item 2. Properties
    
    
    23Item 3. Legal Proceedings
    
    
    33Item 4. [REMOVED AND RESERVED]
    
    
    33Executive Officers of the Registrant
    
    
    33Part IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    34Item 6. Selected Consolidated Financial Data
    
    
    36Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    38Item 7A. Quantitative and Qualitative Disclosures about Market Risk
    
    
    61Item 8. Financial Statements and Supplementary Data
    
    
    65Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    65Item 9A. Controls and Procedures
    
    
    65Item 9B. Other Information
    
    
    65Part IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    66Item 11. Executive Compensation
    
    
    66Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
    
    
    66Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    66Item 14. Principal Accounting Fees and Services
    
    
    66Part IVItem 15. Exhibits, Financial Statement Schedules
    
    
    66Glossary of Oil and Gas Terms
    
    
    67Signatures
    
    
    69Index to Financial Statements
    
    
    F-1Exhibit 12.1Exhibit 21Exhibit 23.1Exhibit 23.2Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2Exhibit 99.1




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BRIGHAM EXPLORATION COMPANY
 2010 ANNUAL REPORT ON FORM 10-K
 
 PART I
 
 Item 1.
    
    Business
 Overview
     At December 31, 2010
    
    
    2010Productive
    
    
    AverageProved
    
    
    Pre-Tax
    
    
    %
    
    
    Wells
    
    
    Daily ProductionProvince
    
    Reserves(a)
    
    
    PV10%(b)(c)
    
    
    Oil
    
    
    Gross
    
    
    Net
    
    
    Volumes (d)(MMBoe)
    
    
    (Millions)
    
    
    
    
    
    
    
    
    
    
    
    (Boe)Williston Basin
    
    
    55.5
    
    
    $
    939.4
    
    
    
    89
    %
    
    
    237
    
    
    
    61.0
    
    
    
    6,146Onshore Gulf
Coast
    
    
    7.6
    
    
    
    127.7
    
    
    
    21
    %
    
    
    85
    
    
    
    44.5
    
    
    
    1,394Anadarko Basin
    
    
    2.6
    
    
    
    22.1
    
    
    
    7
    %
    
    
    89
    
    
    
    23.6
    
    
    
    558West Texas and Other
    
    
    1.1
    
    
    
    19.5
    
    
    
    87
    %
    
    
    31
    
    
    
    7.6
    
    
    
    169Total
    
    
    66.8
    
    
    $
    1,108.7
    
    
    
    78
    %
    
    
    442
    
    
    
    136.7
    
    
    
    8,267
 
 (a)
    
    MMBoe is defined as one million barrels of oil equivalent determined using the ratio of six
Mcf of natural gas to one barrel of crude oil, condensate or natural gas liquids.(b)
    
    The prices used to calculate this measure were $79.43 per barrel of crude oil and $4.376 per
MMbtu of natural gas. The prices represent the average prices per barrel of crude oil and per
MMbtu of natural gas at the beginning of each month in the 12-month period prior to the end of
the reporting period. These prices were adjusted to reflect applicable transportation and
quality differentials on a well-by-well basis to arrive at realized sales prices used to
estimate our reserves at this date.(c)
    
    The standardized measure for our proved reserves at December 31, 2010 was $866.1 million. See
Item 2. Properties  Reconciliation of Standardized Measure to Pre-tax PV10% for a
definition of pre-tax PV10% and a reconciliation of our standardized measure to our pre-tax
PV10% value.(d)
    
    Average daily production volumes calculated based on 360 day year. Average daily production
volumes include approximately 29,654 barrels of oil produced during 2010 and recorded as
inventory at year-end 2010. Total oil inventory at year-end 2010 and 2009 was 46,129 and
16,475 barrels of crude oil, respectively. Total crude oil inventory at year-end 2008 was not
material. Adjusting production volumes for amounts included in inventory would result in
average daily sales volumes in 2010 and 2009 of 8,185 and 4,988 barrels of oil per day.  2




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Business Strategy
  
    
    Focus on Net Asset Value Creation in our Provinces.We plan to concentrate the majority
of our near term capital expenditures in the Williston Basin, where we believe our
approximately 364,309 net acres and the application of advanced drilling and completion
techniques provide us with a significant competitive advantage in developing the
significant net asset value associated with both the Bakken and Three Forks producing
horizons. In addition to the Williston Basin, we have a multi-year drilling prospect
inventory in
the following three provinces: Onshore Gulf Coast, Anadarko Basin and West Texas. Our
projects in these provinces provide us with important future drilling investment
diversification.
  3




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
    
    Leverage our Engineering and Operational Expertise. Our staff is highly proficient with
state-of-the-art drilling and completion techniques, including directional drilling,
horizontal drilling and multi-stage isolated fracture stimulations. Our drilling and
completion techniques in the Williston Basin have rapidly evolved from drilling and
completing long lateral wells with single large uncontrolled fracture stimulations in late
2006 to drilling and completing long lateral wells with 20 isolated fracture stimulation
stages in early 2009. During 2010, we typically drilled and completed our long lateral
wells with between 30 and 38 isolated fracture stimulation stages and made other changes to
our drilling and completion formula. We will continue to refine our drilling and completion
techniques in order to attempt to enhance the performance and the associated estimated
ultimate recoveries and net asset value of our wells.
 
    
    Capitalize on Internally Generated Exploration Successes Through Disciplined
Development Activities. From 1990 to 1999, we grew our reserves and production volumes
primarily through successful exploration drilling. In recent years, our exploratory
drilling success has generated a multi-year inventory of development drilling locations. We
have a 20 year track record of successfully generating and drilling exploration wells in
new oil and natural gas plays. We are particularly interested in those plays with
attractive exploration and development potential that complement our current exploration,
development and production activities. After identifying such a play, we will often
selectively build an acreage position in the play. Our current inventory of drilling
locations in the Williston Basin and the Vicksburg and Hunton plays in our Onshore Gulf
Coast province are examples of successful projects where our position in the play was
internally identified and originated.
 
    
    Enhance Returns Through Operational Control.We typically leverage our technical and
operational expertise by seeking to maintain operational control of our exploration and
drilling activities. As operator, we retain more control over the timing, selection and
process of drilling prospects, which enhances our ability to maximize our return on
invested capital. Since we generate most of our own projects, we generally have the ability
to retain operational control over all phases of our exploration, development and
production activities. Furthermore, retaining operational control gives us the ability to
control the financing, construction and operation of infrastructure related to our
production operations such as crude oil, natural gas and wastewater gathering and
processing, which in certain situations can enhance our well and project economics.
 Exploration and Land Staff
   Operations Staff
   4




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Crude Oil and Natural Gas Market and Major Customers
       5




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Competition
  Operating Hazards and Uninsured Risks
   Governmental Regulation
   6




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Environmental Matters
     7




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Climate Change
  Impact of Legislation and Regulation
   8




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Indirect Consequences of Regulation or Business Trends.
 Physical Impacts of Climate Change on our Costs and Operations.
 Formation
  Facilities
  Employees
  Website Access
  
 Item 1A.
    
    Risk Factors
  Crude oil and natural gas prices are volatile and thus could be subject to further reduction, which
would adversely affect our results and the price of our common stock.
     9




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
    
    worldwide and domestic supplies of crude oil and natural gas;
 
    
    actions taken by foreign crude oil and natural gas producing nations;
 
    
    political conditions and events (including instability or armed conflict) in crude
oil-producing or natural gas producing regions;
 
    
    the level of global and domestic crude oil and natural gas inventories;
 
    
    the price and level of foreign imports including liquefied natural gas imports;
 
    
    the level of consumer demand;
 
    
    the price and availability of alternative fuels;
 
    
    the availability of pipeline or other takeaway capacity;
 
    
    weather conditions;
 
    
    domestic and foreign governmental regulations and taxes; and
 
    
    the overall worldwide and domestic economic environment.
  
    
    adversely affect our financial condition, liquidity, ability to finance planned capital
expenditures and results of operations;
 
    
    reduce the amount of crude oil and natural gas that we can produce economically;
 
    
    cause us to delay or postpone some of our capital projects;
 
    
    reduce our revenues, operating income and cash flow;
 
    
    reduce the carrying value of our crude oil and natural gas properties; and
 
    
    limit our access to sources of capital, such as equity and long-term debt.
 The ongoing economic uncertainty could negatively impact the prices for crude oil and natural gas,
limit access to the credit and equity markets, increase the cost of capital, and may have other
negative consequences that we cannot predict.
  Our hedging activities may prevent us from benefiting from price increases and may expose us to
other risks.
   10




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The results of our planned drilling in the Bakken and Three Forks objectives, an emerging play with
limited drilling and production history, are subject to more uncertainties than our drilling
program in the more established formations and may not meet our expectations for reserves or
production.
   The lack of availability or high cost of drilling rigs, fracture stimulation crews, equipment,
supplies, insurance, personnel and oil field services could adversely affect our ability to execute
our exploration and development plans on a timely basis and within our budget.
  The proposed United States federal budgets for fiscal years 2011 and 2012 and proposed legislation
contain certain provisions that, if passed as originally submitted, will have an adverse effect on
our financial position, results of operations, and cash flows.
   11




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We depend on our key management personnel and technical experts and the loss any of these
individuals could adversely affect our business.
  Lower crude oil and natural gas prices may cause us to record ceiling limitation writedowns, which
would reduce our stockholders equity.
  We may have difficulty financing our planned capital expenditures, which could adversely affect our
business.
   12




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Certain of our undeveloped leasehold acreage is subject to leases that will expire over the next
several years unless production is established on units containing the acreage or the leases are
extended.
   Our exploration, development and drilling efforts and the operation of our wells may not be
profitable or achieve our targeted returns.
   
    
    unexpected drilling conditions;
 
    
    pressure or irregularities in formations;
 
    
    equipment failures or accidents;
 
    
    adverse weather conditions;
 
    
    compliance with governmental requirements; and
 
    
    shortages or delays in the availability of drilling rigs, fracture stimulation crews or
other types of equipment necessary in the oil and gas industry.
 Exploratory drilling is a speculative activity that may not result in commercially productive
reserves and may require expenditures in excess of budgeted amounts.
   13




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Although our crude oil and natural gas reserve data is independently estimated, these estimates may
still prove to be inaccurate.
  
    
    expected reservoir characteristics based on geological, geophysical and engineering
assessments;
 
    
    future production rates based on historical performance and expected future operating and
investment activities;
 
    
    future crude oil and gas prices and quality and location differentials; and
 
    
    future development and operating costs.
   We need to replace our reserves at a faster rate than companies whose reserves have longer
production periods. Our failure to replace our reserves would result in decreasing reserves and
production over time.
   Our reserves in the Gulf Coast have high initial production rates followed by steep declines in
production, resulting in a reserve life for wells in this area that is shorter than the industry
average. This production volatility has impacted and, in the future, may continue to impact our
quarterly and annual production levels.
    14




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We may not drill all of our potential drilling locations and drilling locations that we decide to
drill may not yield crude oil or natural gas in commercially viable quantities or quantities
sufficient to meet our targeted rate of return.
  The marketability of our crude oil and natural gas production depends on services and facilities
that we typically do not own or control. The failure or inaccessibility of any such services or
facilities could affect market based prices or result in a curtailment of production and revenues.
  We are subject to various operating and other casualty risks that could result in liability
exposure or the loss of production and revenues.
  
    
    fires;
 
    
    natural disasters;
 
    
    formations with abnormal pressures;
 
    
    blowouts, cratering and explosions; and
 
    
    pipeline ruptures and spills.
   15




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We may not have enough insurance to cover all of the risks we face, which could result in
significant financial exposure.
  We cannot control activities on properties we do not operate. Failure to fund capital expenditure
requirements may result in reduction or forfeiture of our interests in some of our non-operated
projects.
   Our future operating results may fluctuate and significant declines in them would limit our ability
to invest in projects.
  
    
    industry conditions;
 
    
    prices of crude oil and natural gas;
 
    
    rates of drilling success;
 
    
    capital availability;
 
    
    rates of production from completed wells; and
 
    
    the timing and amount of capital expenditures.
  We face significant competition and many of our competitors have resources in excess of our
available resources.
  
    
    seeking to acquire desirable producing properties or new leases for future exploration;
 
    
    marketing our crude oil and natural gas production; and
 
    
    seeking to acquire the equipment and expertise necessary to operate and develop those
properties.
   16




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We are subject to various governmental regulations and environmental risks that may cause us to
incur substantial costs.
    Derivatives regulation included in current financial reform legislation could impede our ability to
manage business and financial risks by restricting our use of derivative instruments as hedges
against fluctuating commodity prices.
   17




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The adoption of climate change legislation by Congress could result in increased operating costs
and reduced demand for the crude oil and natural gas we produce.
  Our level of indebtedness may adversely affect our cash available for operations, which would limit
our growth, our ability to make interest and principal payments on our indebtedness as they become
due and our flexibility to respond to market changes.
  
    
    we will dedicate a portion of our cash flow from operations to the payment of interest on
our indebtedness and to the payment of our other current obligations and will not have these
cash flows available for other purposes;
 
    
    our debt agreements limit our ability to borrow additional funds or dispose of assets and
may affect our flexibility in planning for, and reacting to, changes in business conditions;
  18




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
    
    our ability to obtain additional financing in the future for working capital, capital
expenditures, acquisitions, general corporate purposes or other purposes may be impaired;
 
    
    we may be more vulnerable to economic downturns and our ability to withstand sustained
declines in oil and natural gas prices may be impaired;
 
    
    since outstanding balances under our Senior Credit Facility are subject to variable
interest rates, we are vulnerable to increases in interest rates;
 
    
    our flexibility in planning for or reacting to changes in market conditions may be
limited; and
 
    
    it may place us at a competitive disadvantage compared to our competitors that have less
debt.
  The indenture governing the Senior Notes and the documents governing our Senior Credit Facility
impose significant operating and financial restrictions, which may prevent us from capitalizing on
business opportunities and taking some actions.
  
    
    incur additional debt;
 
    
    pay dividends on, redeem or repurchase stock;
 
    
    create liens;
 
    
    make specified types of investments;
 
    
    apply net proceeds from certain asset sales;
 
    
    engage in transactions with our affiliates;
 
    
    engage in sale and leaseback transactions;
 
    
    merge or consolidate;
 
    
    restrict dividends or other payments from subsidiaries;
 
    
    sell equity interests of subsidiaries; and
 
    
    sell, assign, transfer, lease, convey or dispose of assets.
     19




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Availability under our Senior Credit Facility is based on a borrowing base which is subject to
redetermination by our lenders. If our borrowing base is reduced, we may be required to repay
amounts outstanding under our Senior Credit Facility.
  Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt
service obligations to increase significantly.
  We may incur additional indebtedness. This could further exacerbate the risks associated with our
substantial leverage.
  To service our indebtedness we will require a significant amount of cash. Our ability to generate
cash depends on many factors beyond our control. Failure to generate sufficient cash to service our
indebtedness could adversely affect our business, financial condition and results of operations.
   20




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The market price of our stock is volatile.
  
    
    limited trading volume in our stock;
 
    
    changes in government regulations;
 
    
    quarterly variations in operating results;
 
    
    our involvement in litigation;
 
    
    general market conditions;
 
    
    the prices of crude oil and natural gas;
 
    
    announcements by us and our competitors;
 
    
    our liquidity;
 
    
    our ability to raise additional funds; and
 
    
    other events.
 Our stock price may decline when our financial results decline or when events occur that are
adverse to us or our industry.
  We are prohibited from paying dividends on our common stock.
  Certain anti-takeover provisions may adversely affect your rights as a stockholder.
   21




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Forward-Looking Statements
   
    
    our growth strategies;
 
    
    our ability to successfully and economically explore for and develop crude oil and
natural gas resources;
 
    
    anticipated trends in our business;
 
    
    our future results of operations;
 
    
    our liquidity and ability to finance our exploration and development activities;
 
    
    market conditions in the oil and gas industry;
 
    
    our ability to make and integrate acquisitions; and
 
    
    the impact of governmental regulation.
   
 Item 1B.
    
    Unresolved Staff Comments
   22




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Item 2.
    
    Properties
   Williston
    
    
    Onshore
    
    
    Anadarko
    
    
    West TexasBasin
    
    
    Gulf Coast
    
    
    Basin
    
    
    and Other
    
    
    TotalCapital expenditures for
drilling, land and
support infrastructure in 2010
(in millions) (a)
    
    $
    404.8
    
    
    $
    16.4
    
    
    $
    0.7
    
    
    $
    4.9
    
    
    $
    426.8Proved Reserves at December
31, 2010Pre-tax PV10% (in millions) (b)
    
    $
    939.4
    
    
    $
    127.7
    
    
    $
    22.1
    
    
    $
    19.5
    
    
    $
    1,108.7Crude oil (MMBbls)
    
    
    49.5
    
    
    
    1.6
    
    
    
    0.2
    
    
    
    0.9
    
    
    
    52.2Natural gas (Bcf)
    
    
    36.3
    
    
    
    36.2
    
    
    
    14.5
    
    
    
    0.8
    
    
    
    87.8Oil equivalents (MMBoe) (c)
    
    
    55.5
    
    
    
    7.6
    
    
    
    2.6
    
    
    
    1.1
    
    
    
    66.8% Oil
    
    
    89
    %
    
    
    21
    %
    
    
    7
    %
    
    
    87
    %
    
    
    78
    %Average daily production
volumes (MBoe) (d)
    
    
    6,146
    
    
    
    1,394
    
    
    
    558
    
    
    
    169
    
    
    
    8,267Average daily sales volumes
(MBoe)(d)
    
    
    6,064
    
    
    
    1,394
    
    
    
    558
    
    
    
    169
    
    
    
    8,185Productive wells at December
31, 2010Gross
    
    
    237
    
    
    
    85
    
    
    
    89
    
    
    
    31
    
    
    
    442Net
    
    
    61.0
    
    
    
    44.5
    
    
    
    23.6
    
    
    
    7.6
    
    
    
    136.7
 
 (a)
    
    Onshore Gulf Coast, Anadarko Basin and West Texas & Other capital expenditures are before the
impact of proceeds from the sale of assets.(b)
    
    The standardized measure for our proved reserves at December 31, 2010, was $866.1 million.
See - Reconciliation of Standardized Measure to Pre-tax PV10% for a definition of pre-tax
PV10% and a reconciliation of our standardized measure to our pre-tax PV10% value. The prices
used to calculate this measure were $79.43 per barrel of oil and $4.376 per MMbtu of natural
gas. These prices represent the average prices per barrel of oil and per MMbtu of natural gas
at the beginning of each month in the 12-month period prior to the end of the reporting
period. These prices were adjusted to reflect applicable transportation and quality
differentials on a well-by-well basis to arrive at realized sales prices used to estimate our
reserves at this date.(c)
    
    Boe is defined as one barrel of oil equivalent determined using the ratio of six Mcf of
natural gas to one barrel of crude oil, condensate or natural gas liquids.(d)
    
    Average daily production volumes calculated based on 360 day year. Average daily production
volumes include approximately 29,654 barrels of oil produced during 2010 and recorded as
inventory at year-end 2010. Total oil inventory at year-end 2010 and 2009 was 46,129 and
16,475 barrels of crude oil, respectively. Total crude oil
inventory at year-end 2008 was not material. Adjusting production volumes for amounts included
in inventory would result in average daily sales volumes in 2010 and 2009 of 8,185 and 4,988
barrels of oil per day.  23




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Williston Basin Province
  Overview of Williston Basin
    Overview of Williston Basin Acreage Position
     24




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Overview of Rough Rider Drilling Participation Agreement
  2010 Williston Basin Drilling and Completion Activity
 FRAC
    
    
    IP
    
    
    30 DAYWELL NAME
    
    County
    
    
    OBJECTIVE
    
    
    ~WI
    
    
    STAGES
    
    
    (Boe/d)
    
    
    Average (Boe/d)**Arvid Anderson 14-11 #1H
    
    Mountrail
    
    Bakken
    
    
    68
    %
    
    
    38
    
    
    
    3,191
    
    
    
    1,330Roger Sorenson 8-5 #1H
    
    Mountrail
    
    Bakken
    
    
    54
    %
    
    
    38
    
    
    
    2,658
    
    
    
    1,120Heen 26-35 #1H
    
    Williams
    
    Bakken
    
    
    76
    %
    
    
    38
    
    
    
    3,791
    
    
    
    1,379Brakken 30-31 #1H
    
    Williams
    
    Bakken
    
    
    56
    %
    
    
    30
    
    
    
    3,573
    
    
    
    1,277Lippert 1-12 #1H
    
    Williams
    
    Bakken
    
    
    66
    %
    
    
    31
    
    
    
    2,214
    
    
    
    942Brad Olson 9-16 #2H
    
    Williams
    
    Bakken
    
    
    56
    %*
    
    
    32
    
    
    
    2,717
    
    
    
    773Smith Farms 23-14 #1H
    
    Williams
    
    Bakken
    
    
    82
    %
    
    
    32
    
    
    
    2,417
    
    
    
    1,041Abelmann 23-14 #1H
    
    McKenzie
    
    Bakken
    
    
    53
    %
    
    
    33
    
    
    
    4,169
    
    
    
    1,407Clifford Bakke 26-35 #1H
    
    Mountrail
    
    Bakken
    
    
    43
    %
    
    
    38
    
    
    
    5,061
    
    
    
    2,328Boots 13-24 #1H
    
    Williams
    
    Bakken
    
    
    74
    %
    
    
    31
    
    
    
    1,946
    
    
    
    662Larsen 3-10 #1H
    
    Williams
    
    Bakken
    
    
    72
    %
    
    
    31
    
    
    
    3,090
    
    
    
    1,034Domaskin 30-31 #1H
    
    Mountrail
    
    Bakken
    
    
    65
    %
    
    
    38
    
    
    
    4,675
    
    
    
    1,882State 36-1 #2H
    
    Williams
    
    Three Forks
    
    
    30
    %*
    
    
    31
    
    
    
    2,356
    
    
    
    874Sukut 28-33 #1H
    
    Williams
    
    Bakken
    
    
    42
    %*
    
    
    32
    
    
    
    1,959
    
    
    
    801Abe Owan 21-16 #1H
    
    Williams
    
    Bakken
    
    
    57
    %
    
    
    37
    
    
    
    2,213
    
    
    
    900Weisz 11-14 #1H
    
    Williams
    
    Bakken
    
    
    52
    %
    
    
    37
    
    
    
    2,278
    
    
    
    1,014Wright 4-33 #1H
    
    Mountrail
    
    Bakken
    
    
    88
    %
    
    
    38
    
    
    
    3,660
    
    
    
    1,322Michael Owan 26-35 #1H
    
    Williams
    
    Bakken
    
    
    87
    %
    
    
    33
    
    
    
    2,931
    
    
    
    889Sedlacek Trust 33-4 #1H
    
    McKenzie
    
    Bakken
    
    
    48
    %*
    
    
    30
    
    
    
    2,695
    
    
    
    826Rogney 17-8 #1H
    
    Roosevelt
    
    Bakken
    
    
    100
    %
    
    
    30
    
    
    
    909
    
    
    
    355Ross Alger 6-7 #1H
    
    Mountrail
    
    Bakken
    
    
    47
    %
    
    
    32
    
    
    
    3,070
    
    
    
    1,465Owan 29-32 #1H
    
    Williams
    
    Bakken
    
    
    78
    %
    
    
    31
    
    
    
    2,302
    
    
    
    868Abe 30-31 #1H
    
    Williams
    
    Bakken
    
    
    97
    %
    
    
    31
    
    
    
    1,847
    
    
    
    731Jack Cvancara 19-18 #1H
    
    Mountrail
    
    Bakken
    
    
    83
    %
    
    
    36
    
    
    
    5,035
    
    
    
    1,800Tjelde 29-32 #1H
    
    McKenzie
    
    Bakken
    
    
    77
    %
    
    
    30
    
    
    
    3,171
    
    
    
    931Abelmann State 21-16 #1H
    
    McKenzie
    
    Bakken
    
    
    64
    %
    
    
    31
    
    
    
    3,301
    
    
    
    1,044Mortenson 5-32 #1H
    
    Williams
    
    Bakken
    
    
    77
    %
    
    
    23
    
    
    
    2,314
    
    
    
    584Arnson 13-24 #1H
    
    Williams
    
    Bakken
    
    
    93
    %
    
    
    30
    
    
    
    1,339
    
    
    
    480Sorenson 29-32 #1H
    
    Mountrail
    
    Bakken
    
    
    95
    %
    
    
    27
    
    
    
    5,133
    
    
    
    1,909Jack Erickson 6-31 #1H
    
    Williams
    
    Bakken
    
    
    21
    %*
    
    
    30
    
    
    
    2,652
    
    
    
    833Jerome Anderson 15-10 #1H
    
    Mountrail
    
    Bakken
    
    
    50
    %
    
    
    30
    
    
    
    3,115
    
    
    
    1,146Papineau Trust 17-20 #1H
    
    Williams
    
    Bakken
    
    
    43
    %*
    
    
    29
    
    
    
    3,042
    
    
    
    971Kalil 25-36 #1H
    
    Williams
    
    Bakken
    
    
    38
    %*
    
    
    30
    
    
    
    1,586
    
    
    
    650Liffrig 29-20 #1H
    
    Mountrail
    
    Three Forks
    
    
    72
    %
    
    
    29
    
    
    
    2,477
    
    
    
    1,082Owan-Nehring 27-34
    
    Williams
    
    Bakken
    
    
    49
    %
    
    
    30
    
    
    
    2,513
    
    
    
    1,089Jackson 35-34 #1H
    
    Williams
    
    Bakken
    
    
    62
    %
    
    
    30
    
    
    
    3,540
    
    
    
    907State 36-1 #1H
    
    Williams
    
    Bakken
    
    
    16
    %*
    
    
    30
    
    
    
    3,807
    
    
    
    1,516Averages
    
    
    2,939
    
    
    
    1,085
 *
    
    Rough Rider drilling participation agreement wells where our working interest is anticipated
to increase upon payout.**
    
    Excludes any days well was down for remediation.  25




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##### Table of Contents



2011 Williston Basin Drilling and Completion Activity / 2011 Capital Budget
 FRAC
    
    
    IP
    
    
    30 DAYWELL NAME
    
    County
    
    
    OBJECTIVE
    
    
    ~WI
    
    
    STAGES
    
    
    (Boe/d)
    
    
    Average (Boe/d)**Knoshaug 14-11 #1H
    
    Williams
    
    Bakken
    
    
    50
    %
    
    
    36
    
    
    
    4,443
    
    
    NAGibbins 1-12 #1H
    
    McKenzie
    
    Bakken
    
    
    55
    %
    
    
    33
    
    
    
    2,582
    
    
    NASwindle 16-9 #1H
    
    Roosevelt
    
    Bakken
    
    
    52
    %
    
    
    19
    
    
    
    1,065
    
    
    NALloyd 34-3 #1H
    
    McKenzie
    
    Bakken
    
    
    29
    %*
    
    
    31
    
    
    
    4,030
    
    
    
    1,456Bratcher 10-3 #1H
    
    McKenzie
    
    Bakken
    
    
    91
    %
    
    
    30
    
    
    
    3,667
    
    
    
    1,129M. Macklin 15-22 #1H
    
    Williams
    
    Bakken
    
    
    89
    %
    
    
    38
    
    
    
    2,534
    
    
    
    1,062M. Olson 20-29 #1H
    
    Williams
    
    Bakken
    
    
    91
    %
    
    
    38
    
    
    
    2,080
    
    
    
    1,007Averages
    
    
    2,914
    
    
    
    1,164
 *
    
    Rough Rider drilling participation agreement wells where our working interest is anticipated
to increase upon payout.**
    
    Excludes any days well was down for remediation.  Onshore Gulf Coast Province
   Anadarko Basin Province
   West Texas and Other Province
   26




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##### Table of Contents



Title to Properties
  Crude Oil and Natural Gas Reserves
  Summary of Crude Oil and Natural Gas Reserves as of Fiscal-Year-End Based on Average Fiscal-Year
Prices
 ReservesCrude oil
    
    
    NaturalGas
    
    
    Total(MMBbls)
    
    
    (Bcf)
    
    
    (MMBoe)(a)PROVEDDeveloped:United States
    
    
    17.5
    
    
    
    36.5
    
    
    
    23.6Undeveloped:United States
    
    
    34.7
    
    
    
    51.3
    
    
    
    43.2TOTAL PROVED
    
    
    52.2
    
    
    
    87.8
    
    
    
    66.8
 (a)
    
    Boe is defined as one barrel of oil equivalent determined using the ratio of six Mcf of
natural gas to one Bbl of crude oil, condensate or natural gas liquids.    27




---



##### Table of Contents



Proved Undeveloped Reserves
      28




---



##### Table of Contents



Reconciliation of Standardized Measure to Pre-tax PV10%
  At December 31,2010
    
    
    2009
    
    
    2008Standardized measure of discounted future net cash flows
    
    $
    866.1
    
    
    $
    246.5
    
    
    $
    279.3Add present value of future income tax discounted at 10%
    
    
    242.6
    
    
    
    7.6
    
    
    
    8.7Pre-tax PV10%
    
    $
    1,108.7
    
    
    $
    254.1
    
    
    $
    288.0
  29




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##### Table of Contents



Drilling Activities
  Year Ended December 31,2010
    
    
    2009
    
    
    2008Gross
    
    
    Net
    
    
    Gross
    
    
    Net
    
    
    Gross
    
    
    NetExploratory wells:Natural gas
    
    
    0
    
    
    
    0.0
    
    
    
    0
    
    
    
    0.0
    
    
    
    4
    
    
    
    1.3Crude oil
    
    
    1
    
    
    
    1.0
    
    
    
    1
    
    
    
    0.1
    
    
    
    1
    
    
    
    0.8Non-productive
    
    
    0
    
    
    
    0.0
    
    
    
    1
    
    
    
    0.2
    
    
    
    2
    
    
    
    1.0Total
    
    
    1
    
    
    
    1.0
    
    
    
    2
    
    
    
    0.3
    
    
    
    7
    
    
    
    3.1Development wells:Natural gas
    
    
    7
    
    
    
    2.1
    
    
    
    1
    
    
    
    0.6
    
    
    
    9
    
    
    
    4.5Crude oil
    
    
    125
    
    
    
    31.1
    
    
    
    51
    
    
    
    6.9
    
    
    
    52
    
    
    
    7.8Non-productive
    
    
    0
    
    
    
    0.0
    
    
    
    0
    
    
    
    0.0
    
    
    
    0
    
    
    
    0.0Total
    
    
    132
    
    
    
    33.2
    
    
    
    52
    
    
    
    7.5
    
    
    
    61
    
    
    
    12.3
 Present Activities
   Delivery Commitments
   30




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##### Table of Contents



Productive Wells and Acreage
 Productive Wells
  Natural Gas
    
    
    Crude oil
    
    
    TotalGross
    
    
    Net
    
    
    Gross
    
    
    Net
    
    
    Gross
    
    
    NetWilliston Basin
    
    
    0
    
    
    
    0.0
    
    
    
    237
    
    
    
    61.0
    
    
    
    237
    
    
    
    61.0Onshore Gulf Coast
    
    
    68
    
    
    
    40.4
    
    
    
    17
    
    
    
    4.1
    
    
    
    85
    
    
    
    44.5Anadarko Basin
    
    
    79
    
    
    
    22.1
    
    
    
    10
    
    
    
    1.5
    
    
    
    89
    
    
    
    23.6West Texas and Other
    
    
    0
    
    
    
    0.0
    
    
    
    31
    
    
    
    7.6
    
    
    
    31
    
    
    
    7.6Total
    
    
    147
    
    
    
    62.5
    
    
    
    295
    
    
    
    74.2
    
    
    
    442
    
    
    
    136.7
  Acreage
  Developed(a)
    
    
    Undeveloped(a)
    
    
    TotalGross
    
    
    Net
    
    
    Gross
    
    
    Net
    
    
    Gross
    
    
    NetWilliston Basin
    
    
    131,531
    
    
    
    87,273
    
    
    
    469,070
    
    
    
    277,036
    
    
    
    600,601
    
    
    
    364,309Onshore Gulf Coast
    
    
    21,627
    
    
    
    9,077
    
    
    
    5,016
    
    
    
    2,985
    
    
    
    26,643
    
    
    
    12,062Anadarko Basin
    
    
    61,529
    
    
    
    17,498
    
    
    
    7,136
    
    
    
    5,110
    
    
    
    68,665
    
    
    
    22,608West Texas and Other
    
    
    11,928
    
    
    
    2,316
    
    
    
    6,508
    
    
    
    756
    
    
    
    18,436
    
    
    
    3,072Total
    
    
    226,615
    
    
    
    116,164
    
    
    
    487,730
    
    
    
    285,887
    
    
    
    714,345
    
    
    
    402,051
 
 (a)
    
    Does not include acreage for which assignments have not been received.  Acres ExpiringTwelve Months Ending:
    
    Gross
    
    
    NetDecember 31, 2011
    
    
    110,129
    
    
    
    54,477December 31, 2012
    
    
    159,025
    
    
    
    95,979December 31, 2013
    
    
    155,224
    
    
    
    81,771December 31, 2014
    
    
    36,045
    
    
    
    28,806December 31, 2015
    
    
    7,358
    
    
    
    4,928Thereafter
    
    
    19,949
    
    
    
    19,926Total
    
    
    487,730
    
    
    
    285,887
   31




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##### Table of Contents



Sales Volumes, Prices and Production Costs
  Year Ended December 31,2010
    
    
    2009
    
    
    2008Sales volumes(a):Crude oil volumes (MBbls)Williston Basin
    
    
    2,026
    
    
    
    607
    
    
    
    285Natural gas volumes (MMcf)Williston Basin
    
    
    940
    
    
    
    163
    
    
    
    50
   Average crude oil prices based on sales volumes:Crude oil price (per Bbl)
    
    $
    71.08
    
    
    $
    54.79
    
    
    $
    89.06Crude oil price including derivative settlement gains (losses) (per Bbl)
    
    $
    70.87
    
    
    $
    53.99
    
    
    $
    84.63Crude oil price including derivative settlements and unrealized gains
(losses) (per Bbl)
    
    $
    64.55
    
    
    $
    48.65
    
    
    $
    89.79Average natural gas prices based on sales volumes:Natural gas price (per Mcf)
    
    $
    5.23
    
    
    $
    4.01
    
    
    $
    9.21Natural gas price including derivative settlement gains (losses)
(per Mcf)
    
    $
    6.02
    
    
    $
    5.71
    
    
    $
    9.08Natural gas price including derivative settlements and unrealized gains
(losses) (per Mcf)
    
    $
    6.16
    
    
    $
    5.21
    
    
    $
    9.48Average equivalent prices based on sales volumes:Oil equivalent price (per Boe)
    
    $
    60.84
    
    
    $
    37.97
    
    
    $
    65.50Oil equivalent price including derivative settlement gains (losses)
(per Boe)
    
    $
    61.90
    
    
    $
    43.19
    
    
    $
    63.62Oil equivalent price including derivative settlements and unrealized
gains (losses) (per Boe)
    
    $
    57.43
    
    
    $
    39.12
    
    
    $
    66.84Average production costs (per Boe) based on sales volumes:Lease operating expenses (includes costs for operating and maintenance
and expensed workovers)
    
    $
    6.03
    
    
    $
    7.61
    
    
    $
    5.89Ad valorem taxes
    
    $
    0.30
    
    
    $
    0.56
    
    
    $
    0.58Production taxes
    
    $
    5.88
    
    
    $
    2.84
    
    
    $
    2.81
 
 (a)
    
    Sales volumes for 2010 and 2009 exclude 29,654 and 16,475 barrels of crude oil produced
during the year and added to inventory during the respective period. Ending inventory at year
end 2008 was not material.  32




---



##### Table of Contents



Item 3.
    
    Legal Proceedings
   
 Item 4.
    
    Removed and Reserved.
 
 Executive Officers of the Registrant
  Name
    
    Age
    
    PositionBen M. Brigham
    
    51
    
    Chief Executive Officer, President and ChairmanEugene B. Shepherd, Jr.
    
    52
    
    Executive Vice President and Chief Financial OfficerDavid T. Brigham
    
    50
    
    Executive Vice President  Land and Administration and DirectorA. Lance Langford
    
    48
    
    Executive Vice President  OperationsJeffery E. Larson
    
    52
    
    Executive Vice President  Exploration
 Ben M. Bud Brigham
 Eugene B. Shepherd, Jr.
 David T. Brigham
  33




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##### Table of Contents



A. Lance Langford
 Jeffery E. Larson
 
 PART II
 
 Item 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
 Price Range of Common Stock, Performance Graph, and Dividend Policy
  High
    
    
    Low2009:First Quarter
    
    $
    4.25
    
    
    $
    1.04Second Quarter
    
    
    4.30
    
    
    
    1.60Third Quarter
    
    
    10.61
    
    
    
    2.50Fourth Quarter
    
    
    14.93
    
    
    
    7.992010:First Quarter
    
    $
    18.00
    
    
    $
    12.58Second Quarter
    
    
    21.15
    
    
    
    13.45Third Quarter
    
    
    19.15
    
    
    
    14.18Fourth Quarter
    
    
    28.15
    
    
    
    18.55
   34




---



##### Table of Contents



COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
 
 *
    
    $100 invested on 12/31/05 in stock or index, including reinvestment of dividends. Fiscal
years ending
December 31.   35




---



##### Table of Contents



Securities Authorized for Issuance under Equity Compensation Plans
  Number ofSecuritiesNumber of
    
    
    
    
    
    
    RemainingSecurities to be
    
    
    
    
    
    
    Available forIssued upon
    
    
    Weighted-
    
    
    Future IssuanceExercise of
    
    
    Average Price of
    
    
    Under EquityOutstanding
    
    
    Outstanding
    
    
    CompensationPlan Category
    
    Options
    
    
    Options
    
    
    PlansEquity compensation
plans approved by
security holders(a)
    
    
    741,037
    
    
    $
    8.41
    
    
    
    2,262,815Equity compensation
plans not approved
by security holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    741,037
    
    
    $
    8.41
    
    
    
    2,262,815
 
 (a)
    
    Does not include 530,883 shares of restricted stock issued and outstanding at December 31,
2010. Issuer Purchases of Equity Securities
  Total Number of
    
    
    Average PricePeriod
    
    Shares Purchased
    
    
    Paid per ShareOctober 2010
    
    
    2,520
    
    
    $
    21.01Total
    
    
    2,520
    
    
    
    21.01
 
 Item 6.
    
    Selected Consolidated Financial Data
   36




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##### Table of Contents



Year Ended December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(In thousands, except per share information)Statement of Operations Data:Revenues:Crude oil and natural gas sales
    
    $
    179,279
    
    
    $
    68,192
    
    
    $
    125,108
    
    
    $
    120,557
    
    
    $
    102,835Gain (loss) on derivatives, net
    
    
    (10,066
    )
    
    
    2,064
    
    
    
    2,548
    
    
    
    (1,664
    )
    
    
    3,335Support infrastructure revenue
    
    
    489
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other revenue
    
    
    20
    
    
    
    88
    
    
    
    132
    
    
    
    88
    
    
    
    127Total revenues
    
    
    169,722
    
    
    
    70,344
    
    
    
    127,788
    
    
    
    118,981
    
    
    
    106,297Costs and expenses:Lease operating
    
    
    18,651
    
    
    
    14,655
    
    
    
    12,363
    
    
    
    10,704
    
    
    
    10,701Production taxes
    
    
    17,313
    
    
    
    5,098
    
    
    
    5,374
    
    
    
    2,541
    
    
    
    4,021Support infrastructure expenses
    
    
    50
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    General and administrative
    
    
    12,943
    
    
    
    9,243
    
    
    
    9,557
    
    
    
    9,276
    
    
    
    7,887Depletion of crude oil and natural
gas properties
    
    
    58,195
    
    
    
    32,054
    
    
    
    53,498
    
    
    
    59,079
    
    
    
    46,386Impairment of crude oil and natural
gas properties
    
    
    
    
    
    
    114,781
    
    
    
    237,180
    
    
    
    6,505
    
    
    
    Depreciation and amortization
    
    
    1,704
    
    
    
    812
    
    
    
    629
    
    
    
    613
    
    
    
    537Loss on inventory valuation
    
    
    
    
    
    
    2,196
    
    
    
    
    
    
    
    
    
    
    
    Accretion of discount on asset
retirement obligations
    
    
    422
    
    
    
    421
    
    
    
    361
    
    
    
    379
    
    
    
    317Total costs and expenses
    
    
    109,278
    
    
    
    179,260
    
    
    
    318,962
    
    
    
    89,097
    
    
    
    69,849Operating income (loss)
    
    
    60,444
    
    
    
    (108,916
    )
    
    
    (191,174
    )
    
    
    29,884
    
    
    
    36,448Other income (expense):Interest income
    
    
    1,198
    
    
    
    578
    
    
    
    191
    
    
    
    654
    
    
    
    1,207Interest expense, net
    
    
    (11,448
    )
    
    
    (16,431
    )
    
    
    (14,495
    )
    
    
    (14,622
    )
    
    
    (9,688
    )Gain loss on derivatives, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,213Loss on early redemption of
Senior Notes
    
    
    (11,308
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other income (expense)
    
    
    5,094
    
    
    
    1,544
    
    
    
    530
    
    
    
    1,022
    
    
    
    1,352Total other income (expense)
    
    
    (16,464
    )
    
    
    (14,309
    )
    
    
    (13,774
    )
    
    
    (12,946
    )
    
    
    (3,916
    )Income (loss) before income taxes
and cumulative effect of change in
accounting principle
    
    
    43,980
    
    
    
    (123,225
    )
    
    
    (204,948
    )
    
    
    16,938
    
    
    
    32,532Income tax benefit (expense):Current
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Deferred
    
    
    (1,084
    )
    
    
    233
    
    
    
    42,701
    
    
    
    (6,728
    )
    
    
    (12,744
    )(1,084
    )
    
    
    233
    
    
    
    42,701
    
    
    
    (6,728
    )
    
    
    (12,744
    )Net income (loss) available to
common stockholders
    
    $
    42,896
    
    
    $
    (122,992
    )
    
    $
    (162,247
    )
    
    $
    10,210
    
    
    $
    19,788Net income (loss) per share
available to common shareholders:Basic
    
    $
    0.39
    
    
    $
    (1.74
    )
    
    $
    (3.57
    )
    
    $
    0.23
    
    
    $
    0.44Diluted
    
    
    0.38
    
    
    
    (1.74
    )
    
    
    (3.57
    )
    
    
    0.22
    
    
    
    0.43Weighted average shares outstanding:Basic
    
    
    111,355
    
    
    
    70,569
    
    
    
    45,441
    
    
    
    45,110
    
    
    
    45,017Diluted
    
    
    113,308
    
    
    
    70,569
    
    
    
    45,441
    
    
    
    45,531
    
    
    
    45,597
  37




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##### Table of Contents



At December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(In thousands)Statement of Cash Flows Data:Net cash provided (used) by:Operating activities
    
    $
    144,520
    
    
    $
    51,750
    
    
    $
    69,630
    
    
    $
    90,449
    
    
    $
    88,687Investing activities
    
    
    (556,211
    )
    
    
    (164,620
    )
    
    
    (179,866
    )
    
    
    (99,093
    )
    
    
    (171,747
    )Financing activities
    
    
    394,653
    
    
    
    113,608
    
    
    
    136,416
    
    
    
    18,207
    
    
    
    83,385Balance Sheet Data:Cash and cash equivalents
    
    $
    23,743
    
    
    $
    40,781
    
    
    $
    40,043
    
    
    $
    13,863
    
    
    $
    4,300Investments
    
    
    223,991
    
    
    
    80,093
    
    
    
    
    
    
    
    
    
    
    
    Crude oil and natural gas properties,
using the full cost method of
accounting, net
    
    
    669,356
    
    
    
    330,733
    
    
    
    404,839
    
    
    
    510,207
    
    
    
    485,525Total assets
    
    
    1,085,401
    
    
    
    498,256
    
    
    
    489,056
    
    
    
    548,428
    
    
    
    522,587Long-term debt
    
    
    300,000
    
    
    
    158,968
    
    
    
    303,730
    
    
    
    168,492
    
    
    
    149,334Series A preferred stock, mandatorily
redeemable (a)
    
    
    
    
    
    
    10,101
    
    
    
    10,101
    
    
    
    10,101
    
    
    
    10,101Total stockholders equity
    
    
    593,270
    
    
    
    264,283
    
    
    
    121,269
    
    
    
    279,027
    
    
    
    266,015
 (a)
    
    At year-end 2009, our Series A preferred stock was classified as a current liability as it
was scheduled to be redeemed in 2010. Our Series A preferred stock was redeemed in the second
quarter 2010. 
 Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
  Sources of Our Revenues
   Components of Our Cost Structure
 Production Costs
 
    
    Lease operating expenses are generally comprised of several components including: the
cost of labor and supervision to operate our wells and related equipment; repairs and
maintenance; fluid treatment and disposal; related materials, supplies, and fuel; and
insurance applicable to our wells and related facilities and equipment. Lease operating
expenses also include the cost for expensed workovers. Lease operating expenses are driven
in part by the type of commodity produced, the level of workover activity and the
geographical location of the properties.
 
    
    Lease operating expenses also include ad valorem taxes, which are imposed by local
taxing authorities such as school districts, cities, and counties or boroughs. The amount
of tax we pay is based on a percent of value of the property assessed or determined by the
taxing authority on an annual basis. When crude oil and natural
gas prices rise, the value of our underlying property interests increase, which results in
higher ad valorem taxes.
  38




---



##### Table of Contents




    
    In the U.S., there are a variety of state and federal taxes levied on the production of
crude oil and natural gas. These are commonly grouped together and referred to as
production taxes. The majority of our production tax expense is based on a percent of gross
value realized at the wellhead at the time the production is sold or removed from the
lease. As a result, our production tax expense increases when crude oil and gas prices rise
or when production from an area increases.
 
    
    Historically, taxing authorities have occasionally encouraged the oil and natural gas
industry to explore for new crude oil and natural gas reserves, or to develop high cost
reserves, through reduced tax rates or tax credits. These incentives have been narrow in
scope and short-lived. A small number of our wells have qualified for reduced production
taxes because they were discoveries based on the use of 3-D seismic or they are high cost
wells.
 Depreciation, Depletion and Amortization
 Asset Retirement Accretion Expense
 General and Administrative Expense
 Interest.
 Income Taxes.
 Capital Commitments
   39




---



##### Table of Contents



Overview of Capital Activity
       Capital Expenditures
  
    
    cost of acquiring and maintaining our lease acreage position and our seismic resources;
 
    
    cost of drilling and completing new crude oil and natural gas wells;
 
    
    cost of installing and maintaining new support infrastructure;
 
    
    cost of maintaining, repairing and enhancing existing crude oil and natural gas wells;
 
    
    cost related to plugging and abandoning unproductive or uneconomic wells; and
 
    
    indirect costs related to our exploration activities, including payroll and other
expenses attributable to our exploration professional staff.
   40




---



##### Table of Contents




    
    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.
     2011(In millions)Drilling
    
    $
    582.1Support infrastructure
    
    
    83.2Land
    
    
    27.4Total oil and gas capital expenditures
    
    $
    692.7
    41




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##### Table of Contents



Contractual Obligations
  Payments Due by Year2013-
    
    
    2015 andTotal
    
    
    2011
    
    
    2012
    
    
    2014
    
    
    Thereafter(In thousands)Debt:Senior Notes
    
    $
    300,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    300,000Senior Credit Facility
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    300,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    300,000Other commitments:Interest, Senior Notes(a)
    
    $
    210,000
    
    
    $
    26,250
    
    
    $
    26,250
    
    
    $
    52,500
    
    
    $
    105,000Interest, Senior Credit Facility(b)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Drilling rigs(c)
    
    
    42,582
    
    
    
    9,432
    
    
    
    10,785
    
    
    
    21,900
    
    
    
    465Non-cancelable operating leases
    
    
    1,199
    
    
    
    793
    
    
    
    406
    
    
    
    
    
    
    
    Total
    
    $
    553,781
    
    
    $
    36,475
    
    
    $
    37,441
    
    
    $
    74,400
    
    
    $
    405,465
 
 (a)
    
    Calculated assuming $300 million of Senior Notes outstanding and an interest rate of 8.75%.
The payments are made in April and October until maturity in October 2018.(b)
    
    Calculated assuming no amounts outstanding under our Senior Credit Facility. The interest
rate under our facility is dependent upon Eurodollar borrowing rates plus a margin that
fluctuates dependent upon the amount outstanding under the facility. The Eurodollar rate for
one month borrowings was 0.32% on December 31, 2010. The amount of interest that we pay on
amounts borrowed under our Senior Credit Facility will fluctuate over time as borrowings
increase or decrease, as the applicable Eurodollar rate increases and decreases and as the
applicable interest rate increases or decreases. See Item 7A. Quantitative and Qualitative
Disclosures About Market Risk  Interest Rate Risk.(c)
    
    Contractual agreements with third-party service providers to
procure drilling rigs for exploratory and development activities.
See Item 8.  Financial Statements and Supplementary Data  Note 10  Contingencies, Commitments and Factors Which May Affect Future
Obligations.  Crude Oil and Natural Gas Reserves
  At December 31,2010
    
    
    2009
    
    
    2008Estimated Net Proved Reserves:Crude oil (MMBbls)
    
    
    52.2
    
    
    
    16.6
    
    
    
    7.1Natural gas (Bcf)
    
    
    87.8
    
    
    
    66.4
    
    
    
    94.7Oil equivalent (MMBoe)(a)
    
    
    66.8
    
    
    
    27.7
    
    
    
    22.8Proved developed reserves as a percentage of net proved reserves
    
    
    35
    %
    
    
    37
    %
    
    
    46
    %
 (a)
    
    Boe is defined as one barrel of oil equivalent determined using the ratio of six Mcf of
natural gas to one Bbl of crude oil, condensate or natural gas liquids.  42




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##### Table of Contents



Results of Operations
 Comparison of the twelve-month periods ended December 31, 2010, 2009 and 2008
 Production volumes
 Year Ended December 31,2010
    
    
    % Change
    
    
    2009
    
    
    % Change
    
    
    2008Crude oil (MBbls)(a)
    
    
    2,216
    
    
    
    167
    %
    
    
    830
    
    
    
    44
    %
    
    
    578Natural gas (MMcf)
    
    
    4,562
    
    
    
    (23
    %)
    
    
    5,892
    
    
    
    (26
    %)
    
    
    7,996Total (MBoe)(b)
    
    
    2,976
    
    
    
    64
    %
    
    
    1,812
    
    
    
    (5
    %)
    
    
    1,910Average daily production volumes
(Boe/d)(c)
    
    
    8,267
    
    
    
    64
    %
    
    
    5,034
    
    
    
    (5
    %)
    
    
    5,306
 
 (a)
    
    Includes approximately 29,654 and 16,475 barrels of oil produced in 2010 and 2009,
respectively, and added to inventory in the respective year. Ending inventory at year end 2008
and was not material.(b)
    
    Boe is defined as one barrel equivalent of crude oil, determined using the ratio of six Mcf
of natural gas to one Bbl of crude oil, condensate or natural gas liquids.(c)
    
    Average daily production volumes calculated based on 360 day year. Increase in Inventory During the Year
 Year Ended December 31,2010
    
    
    % Change
    
    
    2009
    
    
    % Change
    
    
    2008Crude oil (Bbls)
    
    
    29,654
    
    
    
    80
    %
    
    
    16,475
    
    
    NM
    
    
    
    Natural gas (Mcf)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total (Boe)
    
    
    29,654
    
    
    
    80
    %
    
    
    16,475
    
    
    NM
    
    
    
    
 Sales volumes (Production volumes less increase in Inventory)
 Year Ended December 31,2010
    
    
    % Change
    
    
    2009
    
    
    % Change
    
    
    2008Crude oil (MBbls)(a)
    
    
    2,186
    
    
    
    169
    %
    
    
    814
    
    
    
    41
    %
    
    
    578Natural gas (MMcf)
    
    
    4,562
    
    
    
    (23
    %)
    
    
    5,892
    
    
    
    (26
    %)
    
    
    7,996Total (MBoe)(b)
    
    
    2,947
    
    
    
    64
    %
    
    
    1,796
    
    
    
    (6
    %)
    
    
    1,910Average daily sales volumes (Boepd)(c)
    
    
    8,185
    
    
    
    64
    %
    
    
    4,988
    
    
    
    (6
    %)
    
    
    5,306
 
 (a)
    
    Excludes approximately 29,654 and 16,475 barrels of oil produced in 2010 and 2009,
respectively, and recorded as inventory at year-end. Ending inventory at year end 2008 was not
material.(b)
    
    Boe is defined as one barrel equivalent of crude oil, determined using the ratio of six Mcf
of natural gas to one Bbl of crude oil, condensate or natural gas liquids.(c)
    
    Average daily sales volumes calculated based on 360 day year.  43




---



##### Table of Contents




    
    Sales volumes from our Williston Basin province for 2010 increased 244% when compared
to 2009. The increase was attributable to the rapid acceleration of our drilling activities
in the Williston Basin. Sales volumes from this province represented 74% of our total sales
volumes in 2010 versus 35% in 2009. Approximately 93% of our 2010 sales volumes from this
province were oil compared to 96% in 2009.
 
    
    Sales volumes from our Onshore Gulf Coast province for 2010 decreased 36% when compared
to 2009. The decrease in volumes was attributable to the reduction in our drilling activity
in this province in order to focus our activities in the Williston Basin. Because of our
limited drilling program, only limited new volumes were brought on line to offset the
natural decline of our wells. Sales volumes from this province represented 17% of our total
sales volumes in 2010 versus 44% in 2009. Approximately 82% of our 2010 sales volumes from
this province were natural gas compared to 89% in 2009.
 
    
    Sales volumes from our Anadarko Basin province for 2010 decreased 23% when compared to
2009. The decrease in volumes was attributable to the reduction in drilling activity in
this province in order to focus our activities in the Williston Basin. Because of the
reduction in our drilling program in this province, limited new volumes were brought on
line to offset the natural decline of our wells. Sales volumes from this province
represented 7% of our volumes in 2010 versus 15% in 2009. Approximately 92% of our 2010
sales volumes from this province were natural gas compared to 92% in 2009.
 
    
    Sales volumes from our West Texas & Other province for 2010 decreased 45% when compared
to 2009. The decrease in volumes was attributable to the reduction in our drilling activity
in this province in order to focus our activities in the Williston Basin and the sale of
producing properties in the second quarter 2010. Because of our limited drilling program,
only limited new volumes were brought on line to offset the natural decline of our wells.
Sales volumes from this province represented 2% of our total volumes in 2010 versus 6% in
2009. Approximately 87% of our 2010 sales volumes from this province were oil compared to
89% in 2009.
  
    
    Sales volumes from our Williston Basin province for 2009 increased 116% when compared
to 2008. The increase was attributable to the rapid escalation of our drilling activities
in the Williston Basin. Sales volumes from this province represented 35% of our total
volumes in 2009 versus 15% in 2008. Approximately 96% of our 2009 sales volumes from this
province were oil compared to 97% in 2008.
 
    
    Sales volumes from our Onshore Gulf Coast province for 2009 decreased 32% when compared
to 2008. The decrease in volumes was attributable to the reduction in our drilling activity
in this province in order to focus our activities in the Williston Basin. Because of our
limited drilling program, only limited new volumes were brought on line to offset the
natural decline of our wells. Sales volumes from this province represented 44% of our total
sales volumes in 2009 versus 61% in 2008. Approximately 89% of our 2009 sales volumes from
this province were natural gas compared to 87% in 2008.
 
    
    Sales volumes from our Anadarko Basin province for 2009 decreased 20% when compared to
2008. The decrease in volumes was attributable to the reduction in drilling activity in
this province in order to focus our activities in the Williston Basin. Because of the
reduction in our drilling program in this province, no new volumes were brought on line to
offset the natural decline of our wells. Sales volumes from this province represented 15%
of our volumes in 2009 versus 17% in 2008. Approximately 92% of our 2009 sales volumes from
this province were natural gas compared to 93% in 2008.
 
    
    Sales volumes from our West Texas & Other province for 2009 decreased 17% when compared
to 2008. The decrease in volumes was attributable to the reduction in our drilling activity
in this province in order to focus our activities in the Williston Basin. Because of our
limited drilling program, only limited new volumes were brought on line to offset the
natural decline of our wells. Sales volumes from this province represented 6% of our total
volumes in 2009 versus 7% in 2008. Approximately 88% of our 2009 sales volumes from this
province were oil compared to 88% in 2008.
  44




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##### Table of Contents



Revenue, commodity prices and hedging
  Year Ended December 31,2010
    
    
    % Change
    
    
    2009
    
    
    % Change
    
    
    2008(In thousands, except per unit measurements)Crude oil revenue:Crude oil revenue
    
    $
    155,403
    
    
    
    249
    %
    
    $
    44,580
    
    
    
    (13
    %)
    
    $
    51,449Crude oil derivative settlement
gains (losses)
    
    
    (468
    )
    
    
    (28
    %)
    
    
    (654
    )
    
    
    (74
    %)
    
    
    (2,564
    )Crude oil revenue including
derivative settlements
    
    $
    154,935
    
    
    
    253
    %
    
    $
    43,926
    
    
    
    (10
    %)
    
    $
    48,885Crude oil derivative unrealized
gains (losses)
    
    
    (13,808
    )
    
    
    218
    %
    
    
    (4,343
    )
    
    NM
    
    
    
    2,983Crude oil revenue including
derivative settlements and
unrealized gains (losses)
    
    
    141,127
    
    
    
    257
    %
    
    
    39,583
    
    
    
    (24
    %)
    
    
    51,868Natural gas revenue:Natural gas revenue
    
    $
    23,876
    
    
    
    1
    %
    
    $
    23,612
    
    
    
    (68
    %)
    
    $
    73,659Natural gas derivative settlement
gains (losses)
    
    
    3,577
    
    
    
    (64
    %)
    
    
    10,031
    
    
    NM
    
    
    
    (1,028
    )Natural gas revenue including
derivative settlements
    
    $
    27,453
    
    
    
    (18
    %)
    
    $
    33,643
    
    
    
    (54
    %)
    
    $
    72,631Natural gas derivative unrealized
gains (losses)
    
    
    633
    
    
    NM
    
    
    
    (2,970
    )
    
    NM
    
    
    
    3,157Natural gas revenue including
derivative settlements and
unrealized gains (losses)
    
    
    28,086
    
    
    
    (8
    %)
    
    
    30,673
    
    
    
    (60
    %)
    
    
    75,788Crude oil and natural gas revenue:Crude oil and natural gas revenue
    
    $
    179,279
    
    
    
    163
    %
    
    $
    68,192
    
    
    
    (45
    %)
    
    $
    125,108Crude oil and natural gas
derivative settlement gains
(losses)
    
    
    3,109
    
    
    
    (67
    %)
    
    
    9,377
    
    
    NM
    
    
    
    (3,592
    )Crude oil and natural gas
revenue including derivative
settlement gains (losses)
    
    
    182,388
    
    
    
    135
    %
    
    
    77,569
    
    
    
    (36
    %)
    
    
    121,516Crude oil and natural gas
derivative unrealized gains
(losses)
    
    
    (13,175
    )
    
    
    80
    %
    
    
    (7,313
    )
    
    NM
    
    
    
    6,140Crude oil and natural gas
revenue including derivative
settlements and unrealized
gains (losses)
    
    
    169,213
    
    
    
    141
    %
    
    
    70,256
    
    
    
    (45
    %)
    
    
    127,656Support infrastructure revenue
    
    
    489
    
    
    NM
    
    
    
    
    
    
    NM
    
    
    
    Other revenue
    
    
    20
    
    
    
    (77
    %)
    
    
    88
    
    
    
    (33
    %)
    
    
    132Total revenue
    
    $
    169,722
    
    
    
    141
    %
    
    $
    70,344
    
    
    
    (45
    %)
    
    $
    127,788Average crude oil prices (based
on sales volumes):Crude oil price (per Bbl)
    
    $
    71.08
    
    
    
    30
    %
    
    $
    54.79
    
    
    
    (38
    %)
    
    $
    89.06Crude oil price including
derivative settlement gains
(losses) (per Bbl)
    
    $
    70.87
    
    
    
    31
    %
    
    $
    53.99
    
    
    
    (36
    %)
    
    $
    84.63Crude oil price including
derivative settlements and
unrealized gains (losses) (per
Bbl)
    
    $
    64.55
    
    
    
    33
    %
    
    $
    48.65
    
    
    
    (46
    %)
    
    $
    89.79
  45




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##### Table of Contents



Year Ended December 31,2010
    
    
    % Change
    
    
    2009
    
    
    % Change
    
    
    2008(In thousands, except per unit measurements)Average natural gas prices:Natural gas price (per Mcf)
    
    $
    5.23
    
    
    
    30
    %
    
    $
    4.01
    
    
    
    (56
    %)
    
    $
    9.21Natural gas price including
derivative settlement gains
(losses) (per Mcf)
    
    $
    6.02
    
    
    
    5
    %
    
    $
    5.71
    
    
    
    (37
    %)
    
    $
    9.08Natural gas price including
derivative settlements and
unrealized gains (losses) (per
Mcf)
    
    $
    6.16
    
    
    
    18
    %
    
    $
    5.21
    
    
    
    (45
    %)
    
    $
    9.48Average oil equivalent prices
(based on sales volumes):Oil equivalent price (per Bbl)
    
    $
    60.84
    
    
    
    60
    %
    
    $
    37.97
    
    
    
    (42
    %)
    
    $
    65.46Oil equivalent price including
derivative settlement gains
(losses) (per bbl)
    
    $
    61.90
    
    
    
    43
    %
    
    $
    43.19
    
    
    
    (32
    %)
    
    $
    63.60Oil equivalent price including
derivative settlements and
unrealized gains (losses) (per
Bbl)
    
    $
    57.43
    
    
    
    47
    %
    
    $
    39.12
    
    
    
    (41
    %)
    
    $
    66.84
 2009
    
    
    2008to 2010
    
    
    to 2009Change in revenue from the sale of crude oilPrice variance impact
    
    $
    35,622
    
    
    $
    (27,885
    )Sales volume variance impact
    
    
    75,201
    
    
    
    21,016Cash settlement of derivative hedging contracts
    
    
    186
    
    
    
    1,910Unrealized gains (losses) due to derivative hedging contracts
    
    
    (9,465
    )
    
    
    (7,326
    )Total change
    
    $
    101,544
    
    
    $
    (12,285
    )Change in revenue from the sale of natural gasPrice variance impact
    
    $
    5,581
    
    
    $
    (30,657
    )Sales volume variance impact
    
    
    (5,317
    )
    
    
    (19,390
    )Cash settlement of derivative hedging contracts
    
    
    (6,454
    )
    
    
    11,059Unrealized gains (losses) due to derivative hedging contracts
    
    
    3,603
    
    
    
    (6,127
    )Total change
    
    $
    (2,587
    )
    
    $
    (45,115
    )Change in revenue from the sale of crude oil and natural gasPrice variance impact
    
    $
    41,203
    
    
    $
    (58,542
    )Volume variance impact
    
    
    69,884
    
    
    
    1,626Cash settlement of derivative hedging contracts
    
    
    (6,268
    )
    
    
    12,969Unrealized gains (losses) due to derivative hedging contracts
    
    
    (5,862
    )
    
    
    (13,453
    )Total change
    
    $
    98,957
    
    
    $
    (57,400
    )
  
    
    a 169% increase in our crude oil sales volumes, which was partially offset by a 23%
decrease in our natural gas sales volumes, increased revenue by $69.9 million;
 
    
    a 60% increase in the average crude oil equivalent price increased revenue by $41.2
million;
 
    
    a $3.1 million gain from the settlement of derivative contracts in 2010 versus a $9.4
million settlement gain in 2009 decreased revenue by $6.3 million; and
 
    
    a $13.2 million unrealized loss due to derivative hedging contracts in 2010 versus a
$7.3 million unrealized loss due to derivative hedging contracts in 2009 decreased revenue
by $5.9 million.
  46




---



##### Table of Contents




    
    a 42% decrease in the average oil equivalent price decreased revenue by $58.5 million;
 
    
    a $7.3 million unrealized loss due to derivative hedging contracts in 2009 versus a
$6.1 million unrealized gain due to derivative hedging contracts in 2008 decreased revenue
by $13.5 million;
 
    
    an 41% increase in our crude oil sales volumes, which was partially offset by a 26%
decrease in our natural gas sales volumes, increased revenue by $1.6 million; and
 
    
    a $9.4 million gain from the settlement of derivative contracts in 2009 versus a $3.6
million settlement loss in 2008 increased revenue by $13.0 million.
 Support infrastructure.
 Other revenue.
 Hedging.
  47




---



##### Table of Contents



Year Ended December 31,2010
    
    
    % Change
    
    
    2009
    
    
    % Change
    
    
    2008Crude oil collars and three
way costless collarsVolumes (Bbls)
    
    
    1,056,500
    
    
    
    321
    %
    
    
    251,000
    
    
    
    38
    %
    
    
    182,500Average floor price (per Bbl)
    
    $
    62.51
    
    
    
    5
    %
    
    $
    59.43
    
    
    
    (15
    %)
    
    $
    69.55Average ceiling price (per Bbl)
    
    $
    93.02
    
    
    
    16
    %
    
    $
    80.12
    
    
    
    (15
    %)
    
    $
    93.82Gain /(loss) upon settlement
(in thousands)
    
    $
    (468
    )
    
    NM
    
    
    $
    902
    
    
    NM
    
    
    $
    (2,564
    )Crude oil swapsVolumes (Bbls)
    
    
    
    
    
    
    (100
    %)
    
    
    90,000
    
    
    NM
    
    
    
    Average swap price
(per Bbl)
    
    $
    
    
    
    
    (100
    %)
    
    $
    50.75
    
    
    NM
    
    
    $
    Gain /(loss) upon settlement
(in thousands)
    
    $
    
    
    
    
    (100
    %)
    
    $
    (1,556
    )
    
    NM
    
    
    $
    Total crude oil gain / (loss)
upon settlement (in thousands)
    
    $
    (468
    )
    
    
    (100
    %)
    
    $
    (654
    )
    
    
    (75
    %)
    
    $
    (2,564
    )Natural gas collars and three
way costless collarsVolumes (MMbtu)
    
    
    2,730,000
    
    
    
    39
    %
    
    
    1,960,000
    
    
    
    (60
    %)
    
    
    4,850,000Average floor price (per
MMbtu)
    
    $
    5.79
    
    
    
    (19
    %)
    
    $
    7.19
    
    
    
    (6
    %)
    
    $
    7.65Average ceiling price (per
MMbtu)
    
    $
    7.36
    
    
    
    (17
    %)
    
    $
    8.83
    
    
    
    (18
    %)
    
    $
    10.75Gain /(loss) upon settlement
(in thousands)
    
    $
    3,577
    
    
    
    (56
    %)
    
    $
    8,133
    
    
    NM
    
    
    $
    (1,028
    )Natural gas swapsVolumes (MMbtu)
    
    
    
    
    
    
    (100
    %)
    
    
    2,490,000
    
    
    NM
    
    
    
    Average swap price
(per MMbtu)
    
    $
    
    
    
    
    (100
    %)
    
    $
    4.359
    
    
    NM
    
    
    $
    Gain /(loss) upon settlement
(in thousands)
    
    $
    
    
    
    
    (100
    %)
    
    $
    1,898
    
    
    NM
    
    
    $
    Total natural gas gain /(loss)
upon settlement (in
thousands)
    
    $
    3,577
    
    
    
    (64
    %)
    
    $
    10,031
    
    
    NM
    
    
    $
    (1,028
    )
  48




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##### Table of Contents



Operating costs and expenses
 Production costs.
 Unit-of-Production(Per Boe based on Sales Volumes)Year Ended December 31,2010
    
    
    % Change
    
    
    2009
    
    
    % Change
    
    
    2008Production costs:Operating & maintenance
    
    $
    4.65
    
    
    
    (23
    %)
    
    $
    6.02
    
    
    
    22
    %
    
    $
    4.92Expensed workovers
    
    
    1.38
    
    
    
    (13
    %)
    
    
    1.58
    
    
    
    65
    %
    
    
    0.96Ad valorem taxes
    
    
    0.30
    
    
    
    (46
    %)
    
    
    0.56
    
    
    
    (7
    %)
    
    
    0.60Lease operating expenses
    
    $
    6.33
    
    
    
    (22
    %)
    
    $
    8.16
    
    
    
    26
    %
    
    $
    6.48Production taxes
    
    
    5.88
    
    
    
    107
    %
    
    
    2.84
    
    
    
    1
    %
    
    
    2.82Production costs
    
    $
    12.21
    
    
    
    11
    %
    
    $
    11.00
    
    
    
    18
    %
    
    $
    9.30
 Amount(In thousands)Year Ended December 31,2010
    
    
    % Change
    
    
    2009
    
    
    % Change
    
    
    2008Production costs:Operating & maintenance
    
    $
    13,698
    
    
    
    27
    %
    
    $
    10,823
    
    
    
    15
    %
    
    $
    9,399Expensed workovers
    
    
    4,055
    
    
    
    43
    %
    
    
    2,832
    
    
    
    53
    %
    
    
    1,851Ad valorem taxes
    
    
    898
    
    
    
    (10
    %)
    
    
    1,000
    
    
    
    (10
    %)
    
    
    1,113Lease operating expenses
    
    $
    18,651
    
    
    
    27
    %
    
    $
    14,655
    
    
    
    19
    %
    
    $
    12,363Production taxes
    
    
    17,313
    
    
    
    240
    %
    
    
    5,098
    
    
    
    (5
    %)
    
    
    5,374Production costs
    
    $
    35,964
    
    
    
    82
    %
    
    $
    19,753
    
    
    
    11
    %
    
    $
    17,737
  
    
    production taxes increased 107% due to higher commodity sales prices and higher crude
oil sales volumes in North Dakota, which are subject to an 11.5% tax rate; and
 
    
    higher production taxes were partially offset by 23% lower per unit lease operating
expense, which was attributable to 64% higher sales volumes in 2010 as compared to that in
2009.
  
    
    O&M expenses increased 22%, or by $1.10 per Boe, due to increases in salt water
disposal, compressor rental and overhead fees; and
 
    
    expensed workovers increased 65%, or by $0.62 per Boe, due to an increase in the number
and cost of our workovers in 2009, in particular two workovers associated with our
conventional natural gas wells.
 Support infrastructure.
  49




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##### Table of Contents



General and administrative expenses
 Year Ended December 31,2010
    
    
    % Change
    
    
    2009
    
    
    % Change
    
    
    2008(In thousands, except per unit measurements which are based on sales volumes)General and
administrative
costs
    
    $
    25,495
    
    
    
    50
    %
    
    $
    16,961
    
    
    
    (3
    %)
    
    $
    17,551Capitalized general
and administrative
costs
    
    
    (12,552
    )
    
    
    63
    %
    
    
    (7,718
    )
    
    
    (4
    %)
    
    
    (7,994
    )General and
administrative
Expenses
    
    $
    12,943
    
    
    
    40
    %
    
    $
    9,243
    
    
    
    (3
    %)
    
    $
    9,557General and
administrative
expenses (per Boe)
    
    $
    4.39
    
    
    
    (15
    %)
    
    $
    5.15
    
    
    
    3
    %
    
    $
    4.98
  
    
    total compensation expense increased by $7.9 million due to the reinstatement of full
salaries in late 2009 due to improved economic conditions, the reinstatement of our bonus
plan in 2010, higher levels of employee salaries in 2010 to ensure competitive compensation
levels with other oil and gas companies, and a higher number of employees due to our
increased activity level in the Williston Basin; and
 
    
    other office expense increased by $0.6 million due to higher information technology
costs.
  
    
    total compensation expense decreased by $0.3 million from 2008 to 2009 due to lower
levels of employee salaries and bonuses associated with our cost cutting measures
implemented in April 2009; and
 
    
    office expenses decreased by $0.3 million from 2008 to 2009 due to our cost containment
measures.
 Depletion of crude oil and natural gas properties.
 Year Ended December 31,2010
    
    
    % Change
    
    
    2009
    
    
    % Change
    
    
    2008(In thousands, except per unit measurements which are based on sales volumes)Depletion of crude
oil and natural gas
properties
    
    $
    58,195
    
    
    
    82
    %
    
    $
    32,054
    
    
    
    (40
    %)
    
    $
    53,498Depletion of crude
oil and natural gas
properties (per
Boe)
    
    $
    19.75
    
    
    
    11
    %
    
    $
    17.85
    
    
    
    (36
    %)
    
    $
    28.02
    50




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##### Table of Contents



Impairment of crude oil and natural gas properties
   Inventory Valuation.
 Net interest expense.
 Year Ended December 31,2010
    
    
    % Change
    
    
    2009
    
    
    % Change
    
    
    2008(In thousands)Interest on Senior Notes
    
    $
    18,240
    
    
    
    18
    %
    
    $
    15,400
    
    
    
    0
    %
    
    $
    15,401Interest on Senior Credit Facility
    
    
    26
    
    
    
    (99
    %)
    
    
    3,375
    
    
    
    72
    %
    
    
    1,960Commitment fees
    
    
    636
    
    
    
    226
    %
    
    
    195
    
    
    
    (24
    %)
    
    
    256Dividend on mandatorily
redeemable preferred stock
    
    
    269
    
    
    
    (56
    %)
    
    
    606
    
    
    
    0
    %
    
    
    608Amortization of deferred loan and
debt issuance cost
    
    
    1,939
    
    
    
    26
    %
    
    
    1,538
    
    
    
    49
    %
    
    
    1,032Other general interest expense
    
    
    108
    
    
    
    260
    %
    
    
    30
    
    
    NM
    
    
    
    Capitalized interest expense
    
    
    (9,770
    )
    
    
    107
    %
    
    
    (4,713
    )
    
    
    (1
    %)
    
    
    (4,762
    )Net interest expense
    
    $
    11,448
    
    
    
    (30
    %)
    
    $
    16,431
    
    
    
    13
    %
    
    $
    14,495Weighted average debt outstanding
    
    $
    201,447
    
    
    
    (27
    %)
    
    $
    274,211
    
    
    
    25
    %
    
    $
    220,116Average interest rate on
outstanding indebtedness(a)
    
    
    9.57
    %
    
    
    
    
    
    
    7.15
    %
    
    
    
    
    
    
    8.28
    %
 
 (a)
    
    Calculated as the sum of the interest 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 the weighted average debt and preferred stock outstanding for the
period.  51




---



##### Table of Contents



Loss on early redemption of Senior Notes
 Other income (expense). Other income (expense) included:
 Year Ended December 31,2010
    
    
    % Change
    
    
    2009
    
    
    % Change
    
    
    2008(In thousands)Other:Gain (loss) on sale of inventory or assets
    
    
    831
    
    
    
    105
    %
    
    
    405
    
    
    NM
    
    
    
    Other income (loss)
    
    
    4,263
    
    
    
    274
    %
    
    
    1,139
    
    
    
    115
    %
    
    
    530Total other income (loss)
    
    $
    5,094
    
    
    
    230
    %
    
    $
    1,544
    
    
    
    191
    %
    
    $
    530
  Income taxes.
     52




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##### Table of Contents



Liquidity and Capital Resources
 Sources of Capital
  Senior Notes
    
    
    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 our guarantors existing
and future secured indebtedness, including debt of our Senior Credit Facility.
   Senior Credit Facility
    53




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##### Table of Contents



Percent of
    
    EurodollarBorrowing Base
    
    Rate
    
    
    Base Rate
    
    
    CommitmentUtilized
    
    Advances
    
    
    Advances(1)
    
    
    Fee< 50%
    
    
    2.00
    %
    
    
    1.00
    %
    
    
    0.50
    %≥ 50%
    
    
    2.25
    %
    
    
    1.25
    %
    
    
    0.50
    %≥ 75%
    
    
    2.50
    %
    
    
    1.50
    %
    
    
    0.50
    %≥ 90%
    
    
    2.75
    %
    
    
    1.75
    %
    
    
    0.50
    %
 
 (1)
    
    Base Rate means for any day a fluctuating rate per annum equal to the highest of the
following: (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 1.00% 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.  Mandatorily Redeemable Preferred Stock
  Off Balance Sheet Arrangements
  Analysis of Changes In Cash and Cash Equivalents
  Year Ended December 31,2010
    
    
    % Change
    
    
    2009
    
    
    % Change
    
    
    2008(In thousands)Net income
    
    $
    42,896
    
    
    NM
    
    
    $
    (122,992
    )
    
    
    24
    %
    
    $
    (162,247
    )Non-cash charges
    
    
    90,735
    
    
    
    (43
    %)
    
    
    159,132
    
    
    
    (35
    %)
    
    
    245,545Changes in working capital and other
items
    
    
    10,889
    
    
    
    (30
    %)
    
    
    15,610
    
    
    NM
    
    
    
    (13,668
    )Cash flows provided by operating
activities
    
    $
    144,520
    
    
    
    179
    %
    
    $
    51,750
    
    
    
    (26
    %)
    
    $
    69,630Cash flows used by investing activities
    
    
    (556,211
    )
    
    
    238
    %
    
    
    (164,620
    )
    
    
    (8
    %)
    
    
    (179,866
    )Cash flows provided (used) by
financing activities
    
    
    394,653
    
    
    
    247
    %
    
    
    113,608
    
    
    
    (17
    %)
    
    
    136,416Net increase (decrease) in cash and
cash equivalents
    
    $
    (17,038
    )
    
    NM
    
    
    $
    738
    
    
    
    (97
    %)
    
    $
    26,180
  54




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##### Table of Contents



Analysis of net cash provided by operating activities
  
    
    higher crude oil volumes, which were partially offset by lower natural gas volumes,
increased operating cash flow by $69.9 million;
 
    
    higher oil equivalent sales prices increased operating cash flow by $41.2 million;
 
    
    higher production taxes decreased operating cash flow by $12.2 million;
 
    
    lower realized hedge settlements decreased operating cash flow by $6.3 million;
 
    
    the change in working capital decreased operating cash flow by $4.7 million;
 
    
    higher lease operating costs decreased operating cash flow by $4.0 million; and
 
    
    higher general and administrative expense reduced operating cash flow by $3.7 million.
  
    
    a 42% decrease in sales prices of crude oil and natural gas decreased operating cash
flow by $58.5 million;
 
    
    higher lease operating costs decreased operating cash flow by $2.3 million;
 
    
    the change in working capital increased operating cash flow by $29.3 million;
 
    
    higher realized hedge settlements increased operating cash flow by $13.0 million; and
 
    
    higher crude oil volumes partially offset by lower natural gas volumes decreased
revenue by $1.6 million.
 Working Capital
   Analysis of changes in cash flows used by investing activities
    55




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##### Table of Contents



2010
    
    
    % Change
    
    
    2009
    
    
    % Change
    
    
    2008Capital expenditures for crude oil and
natural gas activities:Drilling
    
    $
    280,080
    
    
    
    381
    %
    
    $
    58,209
    
    
    
    (57
    %)
    
    $
    136,248Support infrastructure (a)
    
    
    33,226
    
    
    NM
    
    
    
    
    
    
    
    0
    %
    
    
    Land
    
    
    112,153
    
    
    
    6,269
    %
    
    
    1,761
    
    
    
    (95
    %)
    
    
    35,796Capitalized cost
    
    
    21,470
    
    
    
    73
    %
    
    
    12,432
    
    
    
    (3
    %)
    
    
    12,852Capitalized asset retirement obligation
    
    
    814
    
    
    
    149
    %
    
    
    327
    
    
    
    (21
    %)
    
    
    412Total
    
    $
    447,743
    
    
    
    516
    %
    
    $
    72,729
    
    
    
    (61
    %)
    
    $
    185,308Reconciling Items:Asset sale proceeds including ARO
reduction liability
    
    $
    (17,698
    )
    
    NM
    
    
    $
    
    
    
    
    0
    %
    
    $
    Change in short term investments
    
    
    143,898
    
    
    
    80
    %
    
    
    80,093
    
    
    NM
    
    
    
    Change in other property and equipment
(b)
    
    
    6,235
    
    
    
    280
    %
    
    
    1,642
    
    
    
    249
    %
    
    
    470Change in accrued drilling costs
    
    
    (45,569
    )
    
    NM
    
    
    
    4,270
    
    
    NM
    
    
    
    (4,927
    )Change in drilling advances paid
    
    
    794
    
    
    NM
    
    
    
    
    
    
    
    0
    %
    
    
    Change in inventory
    
    
    20,709
    
    
    
    163
    %
    
    
    7,881
    
    
    NM
    
    
    
    Other
    
    
    99
    
    
    
    NM
    
    
    
    (1,995
    )
    
    
    103
    %
    
    
    (985
    )Total Reconciling Items
    
    
    108,468
    
    
    
    18
    %
    
    
    91,891
    
    
    NM
    
    
    
    (5,442
    )Net cash used in investing activities
    
    $
    556,211
    
    
    
    238
    %
    
    $
    164,620
    
    
    
    (8
    %)
    
    $
    179,866
 (a)
    
    Support infrastructure costs are recorded on our balance sheet in Other Property and
Equipment.(b)
    
    Excludes approximately $33.2 million in support infrastructure costs, which are
included in capital expenditures for crude oil and natural gas activities above. Analysis of changes in cash flows from financing activities
    Common Stock Transactions
   Shares Issued
    
    
    Net Proceeds(in thousands)2010 common stock transactions:April 2010 common stock offering
    
    
    16,100,000
    
    
    $
    277,547Exercise of employee stock options
    
    
    741,037
    
    
    $
    3,8842009 common stock transactions:May 2009 common stock offering
    
    
    36,292,117
    
    
    $
    93,407October 2009 common stock offering
    
    
    16,837,523
    
    
    $
    168,318Exercise of employee stock options
    
    
    256,314
    
    
    $
    1,2192008 common stock transactions:Exercise of employee stock options
    
    
    385,715
    
    
    $
    2,066
  56




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##### Table of Contents



Critical Accounting Policies
  Use of Estimates
  Crude oil and Natural Gas Reserves
    Crude Oil and Natural Gas Property
    57




---



##### Table of Contents



Asset Retirement Obligations
    58




---



##### Table of Contents



Income Taxes
    Revenue Recognition
     Derivative Instruments and Hedging Activities
    59




---



##### Table of Contents



New Accounting Pronouncements
  Other Matters
 Commodity Prices
    Derivative Instruments
   60




---



##### Table of Contents



Effects of Inflation and Changes in Prices
  Environmental and Other Regulatory Matters
  
 Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
 Management Opinion Concerning Derivative Instruments
  Fair Value of Derivative Contracts
   Fair Value ofUndesignatedDerivativeContractsEstimated fair value of open contracts at December 31, 2009
    
    $
    (1,975
    )Changes in fair values of derivative contracts:Natural gas collars
    
    $
    4,210Crude oil collars
    
    
    (14,276
    )Settlements of derivative contracts that were open at December 31, 2009:Natural gas collars
    
    $
    (3,578
    )Crude oil collars
    
    
    468Estimated fair value of open contracts at December 31, 2010
    
    $
    (15,151
    )
  61




---



##### Table of Contents



Derivative Instruments and Hedging Activities
          62




---



##### Table of Contents



Crude
    
    
    Purchased
    
    
    WrittenOil
    
    
    Put
    
    
    CallSettlement Period
    
    (Bbls)
    
    
    (Nymex)
    
    
    (Nymex)Crude Oil Costless Collars01/01/11  12/31/11
    
    
    84,000
    
    
    $
    65.00
    
    
    $
    88.2501/01/11  12/31/11
    
    
    60,000
    
    
    $
    60.00
    
    
    $
    97.2501/01/11  12/31/11
    
    
    60,000
    
    
    $
    65.00
    
    
    $
    108.0001/01/11  06/30/11
    
    
    18,000
    
    
    $
    65.00
    
    
    $
    97.5001/01/11  12/31/11
    
    
    48,000
    
    
    $
    70.00
    
    
    $
    106.8001/01/11  12/31/11
    
    
    48,000
    
    
    $
    75.00
    
    
    $
    102.6007/01/11  12/31/11
    
    
    12,000
    
    
    $
    75.00
    
    
    $
    103.0001/01/11  06/30/11
    
    
    24,000
    
    
    $
    70.00
    
    
    $
    92.5007/01/11  09/30/11
    
    
    9,000
    
    
    $
    70.00
    
    
    $
    95.0010/01/11  12/31/11
    
    
    6,000
    
    
    $
    70.00
    
    
    $
    96.3501/01/11  02/28/11
    
    
    10,000
    
    
    $
    70.00
    
    
    $
    92.0001/01/11  07/31/11
    
    
    21,000
    
    
    $
    70.00
    
    
    $
    94.8001/01/11  03/31/11
    
    
    9,000
    
    
    $
    75.00
    
    
    $
    93.5007/01/11  12/31/11
    
    
    12,000
    
    
    $
    75.00
    
    
    $
    95.1501/01/11  12/31/11
    
    
    36,000
    
    
    $
    75.00
    
    
    $
    104.3001/01/12  06/30/12
    
    
    60,000
    
    
    $
    75.00
    
    
    $
    106.9001/01/11  02/28/11
    
    
    8,000
    
    
    $
    75.00
    
    
    $
    103.5003/01/11  04/30/11
    
    
    16,000
    
    
    $
    75.00
    
    
    $
    104.5001/01/11  12/31/11
    
    
    36,000
    
    
    $
    65.00
    
    
    $
    100.0001/01/11  07/31/12
    
    
    289,000
    
    
    $
    65.00
    
    
    $
    97.2001/01/11  07/31/12
    
    
    289,000
    
    
    $
    65.00
    
    
    $
    98.5501/01/11  07/31/12
    
    
    289,000
    
    
    $
    65.00
    
    
    $
    100.0001/01/11  07/31/12
    
    
    289,000
    
    
    $
    65.00
    
    
    $
    100.4003/01/11  08/31/11
    
    
    46,000
    
    
    $
    65.00
    
    
    $
    94.8009/01/11  12/31/11
    
    
    61,000
    
    
    $
    65.00
    
    
    $
    97.4001/01/12  06/30/12
    
    
    182,000
    
    
    $
    65.00
    
    
    $
    99.2509/01/11  12/31/11
    
    
    61,000
    
    
    $
    65.00
    
    
    $
    99.0003/01/11  08/31/11
    
    
    46,000
    
    
    $
    65.00
    
    
    $
    96.7501/01/12  06/30/12
    
    
    91,000
    
    
    $
    65.00
    
    
    $
    101.0001/01/12  06/30/12
    
    
    182,000
    
    
    $
    65.00
    
    
    $
    100.7501/01/12  06/30/12
    
    
    91,000
    
    
    $
    65.00
    
    
    $
    102.7507/01/12  07/31/12
    
    
    62,000
    
    
    $
    65.00
    
    
    $
    102.2505/01/11  12/31/11
    
    
    122,500
    
    
    $
    65.00
    
    
    $
    100.0007/01/12  07/31/12
    
    
    31,000
    
    
    $
    65.00
    
    
    $
    105.2505/01/11  12/31/11
    
    
    122,500
    
    
    $
    65.00
    
    
    $
    106.5001/01/11  02/28/11
    
    
    29,500
    
    
    $
    65.00
    
    
    $
    98.7501/01/11  12/31/11
    
    
    182,500
    
    
    $
    65.00
    
    
    $
    100.0001/01/12  06/30/12
    
    
    136,500
    
    
    $
    65.00
    
    
    $
    107.2507/01/12  09/30/12
    
    
    92,000
    
    
    $
    65.00
    
    
    $
    109.4008/01/12  09/30/12
    
    
    61,000
    
    
    $
    65.00
    
    
    $
    110.2508/01/12  09/30/12
    
    
    61,000
    
    
    $
    65.00
    
    
    $
    112.0010/01/12  10/31/12
    
    
    62,000
    
    
    $
    65.00
    
    
    $
    112.6501/01/12  07/31/12
    
    
    106,500
    
    
    $
    65.00
    
    
    $
    110.0001/01/11  06/30/11*
    
    
    90,500
    
    
    $
    65.00
    
    
    $
    95.0001/01/11  06/30/11*
    
    
    90,500
    
    
    $
    65.00
    
    
    $
    97.5008/01/12  10/31/12
    
    
    92,000
    
    
    $
    70.00
    
    
    $
    110.9010/01/12  10/31/12
    
    
    31,000
    
    
    $
    70.00
    
    
    $
    110.9008/01/12  10/31/12
    
    
    92,000
    
    
    $
    70.00
    
    
    $
    106.5011/01/12  12/31/12
    
    
    122,000
    
    
    $
    70.00
    
    
    $
    107.7011/01/12  12/31/12
    
    
    122,000
    
    
    $
    70.00
    
    
    $
    110.00
 *
    
    Crude oil collar was completed in two phases. First, the put option (floor) was purchased.
Subsequently, the call option (ceiling) was sold thereby converting the position into a collar.  63




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##### Table of Contents



Crude
    
    
    PurchasedOil
    
    
    PutSettlement Period
    
    (Bbls)
    
    
    (Nymex)Crude Oil Floors01/01/12  06/30/12
    
    
    91,000
    
    
    $
    65.0001/01/12  06/30/12
    
    
    91,000
    
    
    $
    65.0001/01/12  06/30/12
    
    
    45,500
    
    
    $
    65.0001/01/12  06/30/12
    
    
    45,500
    
    
    $
    65.00
 Natural
    
    
    Purchased
    
    
    WrittenGas
    
    
    Put
    
    
    CallSettlement Period
    
    (MMbtu)
    
    
    (Nymex)
    
    
    (Nymex)Natural Gas Costless Collars01/01/11  03/31/11
    
    
    120,000
    
    
    $
    6.50
    
    
    $
    8.2501/01/11  03/31/11
    
    
    210,000
    
    
    $
    6.40
    
    
    $
    7.8001/01/11  12/31/11
    
    
    360,000
    
    
    $
    5.75
    
    
    $
    7.6501/01/11  12/31/11
    
    
    480,000
    
    
    $
    5.75
    
    
    $
    7.4004/01/11  12/31/11
    
    
    360,000
    
    
    $
    5.00
    
    
    $
    6.55
  Crude
    
    
    Purchased
    
    
    WrittenOil
    
    
    Put
    
    
    CallSettlement Period
    
    (Bbls)
    
    
    (Nymex)
    
    
    (Nymex)Crude oil Costless Collars07/01/11  12/31/11**
    
    
    276,000
    
    
    $
    65.00
    
    
    $
    100.0008/01/12  10/31/12
    
    
    276,000
    
    
    $
    75.00
    
    
    $
    112.5011/01/12  12/31/12
    
    
    244,000
    
    
    $
    75.00
    
    
    $
    112.5007/01/12  07/31/12
    
    
    62,000
    
    
    $
    75.00
    
    
    $
    114.0001/01/13  02/28/13
    
    
    118,000
    
    
    $
    75.00
    
    
    $
    113.0501/01/13  03/31/13
    
    
    180,000
    
    
    $
    80.00
    
    
    $
    120.0003/01/13  03/31/13
    
    
    62,000
    
    
    $
    80.00
    
    
    $
    120.00
 Crude
    
    
    PurchasedOil
    
    
    PutSettlement Period
    
    (Bbls)
    
    
    (Nymex)Crude Oil Floors07/01/12  12/31/12
    
    
    276,000
    
    
    $
    80.00
 **
    
    Crude oil collar was completed in two phases. First, the put option (floor) was purchased prior
to December 31, 2010. Subsequently, the call option (ceiling) was sold in January 2011 thereby
converting the position into a collar. Interest Rate Risk
    64




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##### Table of Contents



Item 8.
    
    Financial Statements and Supplementary Data
  
 Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A.
    
    Controls and Procedures
 Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
  Managements Report on Internal Control over Financial Reporting
 Internal Control  Integrated Framework Internal Control  Integrated Framework
  Changes in Internal Control over Financial Reporting
  
 Item 9B.
    
    Other Information
   65




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##### Table of Contents



PART III
 
 Item 10.
    
    Directors, Executive Officers and Corporate Governance
   
 Item 11.
    
    Executive Compensation
  
 Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  
 Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
  
 Item 14.
    
    Principal Accounting Fees and Services
  
 PART IV
 
 Item 15.
    
    Exhibits, Financial Statement Schedules
 (a)
    
    1. Consolidated Financial Statements: See Index to Financial Statements on page F-1.
 2.
    
    No schedules are required.
 3.
    
    Exhibits:
   66




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##### Table of Contents



GLOSSARY OF OIL AND GAS TERMS
  3-D seismic.
 Bbl.
 Boe.
 Completion.
 Completion Rate.
 Development Well.
 Dry Well.
 Early Production Rate.
 Exploratory Well.
 Gross Acres or Gross Wells.
 Hydraulic fracturing
 Lease Operating Expenses.
 MBbl.
 MBoe. One thousand barrels of crude oil equivalent.
 Mcf.
 MMBbl.
  67




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##### Table of Contents



Mcfe.
 MMBtu.
 MMcf.
 MMcfe.
 Net Acres or Net Wells.
 Net Production.
 Oil.
 Operator.
 Pay.
 Pre-tax PV10%.
 Proved Developed Reserves.
 Proved Reserves.
 Proved Undeveloped Reserves.
 Royalty.
 Spud.
 Standardized Measure.
 Working Interest.
  68




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##### Table of Contents



SIGNATURES
  BRIGHAM EXPLORATION COMPANYBy:
    /s/ BEN M. BRIGHAMBen M. BrighamChief Executive Officer,
President and Chairman of the Board  /s/ BEN M. BRIGHAM

Ben M. Brigham
    
    Chief Executive Officer, President and Chairman of the Board
(Principal Executive Officer)/s/ EUGENE B. SHEPHERD, JR.

Eugene B. Shepherd, Jr.
    
    Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)/s/ DAVID T. BRIGHAM

David T. Brigham
    
    Executive Vice President  Land and Administration and
Director/s/ HAROLD D. CARTER

Harold D. Carter
    
    Director/s/ STEPHEN C. HURLEY

Stephen C. Hurley
    
    Director/s/ STEPHEN P. REYNOLDS

Stephen P. Reynolds

    
    Director/s/ HOBART A. SMITH

Hobart A. Smith
    
    Director/s/ SCOTT W. TINKER

Scott W. Tinker
    
    Director
  69




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 
 INDEX TO FINANCIAL STATEMENTS
 PageReports of Independent Registered Public Accounting Firms
    
    F-2Consolidated Balance Sheets as of December 31, 2010 and 2009
    
    F-4Consolidated Statements of Operations for the Years Ended December 31, 2010, 2009 and 2008
    
    F-5Consolidated Statements of Stockholders Equity for the Years Ended December 31, 2010, 2009 and 2008
    
    F-6Consolidated Statements of Cash Flows for the Years Ended December 31, 2010, 2009 and 2008
    
    F-7Notes to the Consolidated Financial Statements
    
    F-8Supplemental Oil and Gas Information (Unaudited)
    
    F-29Supplemental Quarterly Financial Information (Unaudited)
    
    F-32
  F-1




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    Internal Control  Integrated
Framework,
  
  F-2




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Internal Control  Integrated
Framework .
    Internal Control  Integrated Framework, .
 .
  
  F-3




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 
 CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)
 December 31,2010
    
    
    2009ASSETSCurrent assets:Cash and cash equivalents
    
    $
    23,743
    
    
    $
    40,781Accounts receivable
    
    
    70,368
    
    
    
    21,194Short term investments
    
    
    223,991
    
    
    
    80,093Inventory
    
    
    34,959
    
    
    
    14,087Other current assets
    
    
    7,796
    
    
    
    2,284Total current assets
    
    
    360,857
    
    
    
    158,439Oil and natural gas properties, using the full cost method of accountingProved
    
    
    910,114
    
    
    
    619,920Unproved
    
    
    182,933
    
    
    
    76,309Accumulated depletion
    
    
    (423,691
    )
    
    
    (365,496
    )669,356
    
    
    
    330,733Other property and equipment, net
    
    
    42,837
    
    
    
    3,025Deferred loan fees
    
    
    9,064
    
    
    
    5,213Other noncurrent assets
    
    
    3,287
    
    
    
    846Total assets
    
    $
    1,085,401
    
    
    $
    498,256LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    50,023
    
    
    $
    19,251Royalties payable
    
    
    42,155
    
    
    
    8,268Accrued drilling costs
    
    
    61,067
    
    
    
    15,498Participant advances received
    
    
    3,037
    
    
    
    6,949Series A Preferred Stock, mandatorily redeemable, $.01 par value,
$20 stated and redemption value, 2,250,000 shares authorized,
505,051 shares issued and outstanding at December 31, 2009
    
    
    
    
    
    
    10,101Derivative liabilities
    
    
    9,442
    
    
    
    2,405Other current liabilities
    
    
    10,821
    
    
    
    5,301Total current liabilities
    
    
    176,545
    
    
    
    67,773Senior Notes
    
    
    300,000
    
    
    
    158,968Deferred income taxes
    
    
    1,088
    
    
    
    Other noncurrent liabilities
    
    
    14,498
    
    
    
    7,232Commitments and contingencies (Note 10)Stockholders equity:Common stock, $.01 par value, 180 million shares authorized,
116,564,182 and 99,593,075 shares issued and 116,289,180 and 99,351,825
shares outstanding at December 31, 2010 and 2009, respectively
    
    
    1,166
    
    
    
    996Additional paid-in capital
    
    
    765,326
    
    
    
    479,077Treasury stock, at cost; 275,002 and 241,250 shares at December 31,
2010 and 2009, respectively
    
    
    (2,657
    )
    
    
    (2,133
    )Accumulated other comprehensive income (loss)
    
    
    (9
    )
    
    
    (205
    )Retained earnings (deficit)
    
    
    (170,556
    )
    
    
    (213,452
    )Total stockholders equity
    
    
    593,270
    
    
    
    264,283Total liabilities and stockholders equity
    
    $
    1,085,401
    
    
    $
    498,256
   F-4




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 
 CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)
 Year Ended December 31,2010
    
    
    2009
    
    
    2008Revenues:Oil and natural gas sales
    
    $
    179,279
    
    
    $
    68,192
    
    
    $
    125,108Gain (loss) on derivatives, net
    
    
    (10,066
    )
    
    
    2,064
    
    
    
    2,548Support infrastructure
    
    
    489
    
    
    
    
    
    
    
    Other revenue
    
    
    20
    
    
    
    88
    
    
    
    132169,722
    
    
    
    70,344
    
    
    
    127,788Costs and expenses:Lease operating
    
    
    18,651
    
    
    
    14,655
    
    
    
    12,363Production taxes
    
    
    17,313
    
    
    
    5,098
    
    
    
    5,374Support infrastructure
    
    
    50
    
    
    
    
    
    
    
    General and administrative
    
    
    12,943
    
    
    
    9,243
    
    
    
    9,557Depletion of oil and natural gas properties
    
    
    58,195
    
    
    
    32,054
    
    
    
    53,498Impairment of oil and natural gas properties
    
    
    
    
    
    
    114,781
    
    
    
    237,180Depreciation and amortization
    
    
    1,704
    
    
    
    812
    
    
    
    629Accretion of discount on asset retirement obligations
    
    
    422
    
    
    
    421
    
    
    
    361Loss on inventory valuation
    
    
    
    
    
    
    2,196
    
    
    
    109,278
    
    
    
    179,260
    
    
    
    318,962Operating income (loss)
    
    
    60,444
    
    
    
    (108,916
    )
    
    
    (191,174
    )Other income (expense):Interest income
    
    
    1,198
    
    
    
    578
    
    
    
    191Interest expense, net
    
    
    (11,448
    )
    
    
    (16,431
    )
    
    
    (14,495
    )Loss on early redemption of Senior Notes
    
    
    (11,308
    )
    
    
    
    
    
    
    Other income (expense)
    
    
    5,094
    
    
    
    1,544
    
    
    
    530(16,464
    )
    
    
    (14,309
    )
    
    
    (13,774
    )Income (loss) before income taxes
    
    
    43,980
    
    
    
    (123,225
    )
    
    
    (204,948
    )Income tax benefit (expense):Current
    
    
    
    
    
    
    
    
    
    
    Deferred
    
    
    (1,084
    )
    
    
    233
    
    
    
    42,701(1,084
    )
    
    
    233
    
    
    
    42,701Net Income (loss)
    
    $
    42,896
    
    
    $
    (122,992
    )
    
    $
    (162,247
    )Net income (loss) per share available to common stockholders:Basic
    
    $
    0.39
    
    
    $
    (1.74
    )
    
    $
    (3.57
    )Diluted
    
    $
    0.38
    
    
    $
    (1.74
    )
    
    $
    (3.57
    )Weighted average common shares outstanding:Basic
    
    
    111,355
    
    
    
    70,569
    
    
    
    45,441Diluted
    
    
    113,308
    
    
    
    70,569
    
    
    
    45,441
   F-5




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(In thousands)
 AccumulatedOther
    
    
    RetainedAdditional
    
    
    
    
    
    
    Comprehensive
    
    
    Earnings
    
    
    TotalCommon Stock
    
    
    Paid In
    
    
    Treasury
    
    
    Income
    
    
    (Accumulated
    
    
    StockholdersShares
    
    
    Amounts
    
    
    Capital
    
    
    Stock
    
    
    (Loss)
    
    
    Deficit)
    
    
    EquityBalance, December 31, 2007
    
    
    45,304
    
    
    $
    453
    
    
    $
    207,526
    
    
    $
    (854
    )
    
    $
    115
    
    
    $
    71,787
    
    
    $
    279,027Comprehensive income
(loss):Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (162,247
    )
    
    
    (162,247
    )Tax provisions related
to cash flow hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    61
    
    
    
    
    
    
    
    61Net (gains) losses
included in net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (176
    )
    
    
    
    
    
    
    (176
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (162,362
    )Issuance of common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Vesting of restricted stock
    
    
    139
    
    
    
    1
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercise of employee stock
options
    
    
    386
    
    
    
    4
    
    
    
    2,062
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,066Repurchases of common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (348
    )
    
    
    
    
    
    
    
    
    
    
    (348
    )Vesting of share-based
payments
    
    
    
    
    
    
    
    
    
    
    2,886
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,886Balance, December 31, 2008
    
    
    45,829
    
    
    $
    458
    
    
    $
    212,473
    
    
    $
    (1,202
    )
    
    $
    
    
    
    $
    (90,460
    )
    
    $
    121,269Comprehensive income
(loss):Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (122,992
    )
    
    
    (122,992
    )Tax provisions related
to cash flow hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (205
    )
    
    
    
    
    
    
    (205
    )Net (gains) losses
included in net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (123,197
    )Issuance of common stock
    
    
    53,130
    
    
    
    532
    
    
    
    261,193
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    261,725Vesting of restricted stock
    
    
    378
    
    
    
    4
    
    
    
    (4
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercise of employee stock
options
    
    
    256
    
    
    
    2
    
    
    
    1,217
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,219Repurchases of common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (931
    )
    
    
    
    
    
    
    
    
    
    
    (931
    )Vesting of share-based
payments
    
    
    
    
    
    
    
    
    
    
    4,198
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,198Balance, December 31, 2009
    
    
    99,593
    
    
    $
    996
    
    
    $
    479,077
    
    
    $
    (2,133
    )
    
    $
    (205
    )
    
    $
    (213,452
    )
    
    $
    264,283Comprehensive income
(loss):Net income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    42,896
    
    
    
    42,896Unrealized gains (loss)
on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    196
    
    
    
    
    
    
    
    196Tax benefits (provisions)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Comprehensive income
(loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43,092Issuance of common stock
    
    
    16,100
    
    
    
    161
    
    
    
    277,386
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    277,547Vesting of restricted stock
    
    
    130
    
    
    
    1
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercise of employee stock
options
    
    
    741
    
    
    
    8
    
    
    
    3,876
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,884Repurchases of common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (524
    )
    
    
    
    
    
    
    
    
    
    
    (524
    )Vesting of share-based
payments
    
    
    
    
    
    
    
    
    
    
    4,988
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,988Balance, December 31, 2010
    
    
    116,564
    
    
    $
    1,166
    
    
    $
    765,326
    
    
    $
    (2,657
    )
    
    $
    (9
    )
    
    $
    (170,556
    )
    
    $
    593,270
   F-6




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 Year Ended December 31,2010
    
    
    2009
    
    
    2008Cash flows from operating activities:Net income (loss)
    
    $
    42,896
    
    
    $
    (122,992
    )
    
    $
    (162,247
    )Adjustments to reconcile net income (loss) to cash provided
(used) by operating activities:Depletion of oil and natural gas properties
    
    
    58,195
    
    
    
    32,054
    
    
    
    53,498Impairment of oil and natural gas properties
    
    
    
    
    
    
    114,781
    
    
    
    237,180Depreciation and amortization
    
    
    1,704
    
    
    
    812
    
    
    
    629Stock based compensation
    
    
    2,676
    
    
    
    2,278
    
    
    
    1,592Amortization of discount and deferred loan fees
    
    
    2,025
    
    
    
    1,635
    
    
    
    1,105Loss on early redemption of Senior Notes
    
    
    11,308
    
    
    
    
    
    
    
    Accretion of discount on asset retirement obligations
    
    
    422
    
    
    
    421
    
    
    
    361Market value adjustment for derivative instruments
    
    
    13,175
    
    
    
    7,313
    
    
    
    (6,140
    )Deferred income taxes
    
    
    1,084
    
    
    
    (233
    )
    
    
    (42,701
    )Provision for doubtful accounts
    
    
    146
    
    
    
    (19
    )
    
    
    17Other noncash items
    
    
    
    
    
    
    90
    
    
    
    4Changes in working capital and other items:Accounts receivable
    
    
    (49,320
    )
    
    
    3,383
    
    
    
    (9,966
    )Other current assets
    
    
    (4,106
    )
    
    
    803
    
    
    
    (6,521
    )Accounts and royalties payable
    
    
    64,659
    
    
    
    6,363
    
    
    
    2,877Other current liabilities
    
    
    1,608
    
    
    
    4,964
    
    
    
    500Noncurrent assets
    
    
    (1,524
    )
    
    
    114
    
    
    
    (330
    )Noncurrent liabilities
    
    
    (428
    )
    
    
    (17
    )
    
    
    (228
    )Net cash provided by operating activities
    
    
    144,520
    
    
    
    51,750
    
    
    
    69,630Cash flows from investing activities:Additions to oil and natural gas properties
    
    
    (367,245
    )
    
    
    (74,668
    )
    
    
    (178,637
    )Proceeds from sale of oil and natural gas properties
    
    
    17,918
    
    
    
    
    
    
    
    Changes in inventory
    
    
    (20,872
    )
    
    
    (7,881
    )
    
    
    Additions to other property and equipment
    
    
    (41,516
    )
    
    
    (2,054
    )
    
    
    (1,472
    )Purchases of short term investments
    
    
    (331,624
    )
    
    
    (86,575
    )
    
    
    Sales of short term investments
    
    
    187,922
    
    
    
    6,277
    
    
    
    (Increase) decrease in drilling advances paid
    
    
    (794
    )
    
    
    (274
    )
    
    
    798Changes to restricted cash
    
    
    
    
    
    
    555
    
    
    
    (555
    )Net cash used by investing activities
    
    
    (556,211
    )
    
    
    (164,620
    )
    
    
    (179,866
    )Cash flows from financing activities:Proceeds from issuance of common stock, net of issuance costs
    
    
    277,547
    
    
    
    261,725
    
    
    
    Proceeds from exercise of employee stock options
    
    
    3,884
    
    
    
    1,219
    
    
    
    2,066Proceeds from Senior Notes offering
    
    
    300,000
    
    
    
    
    
    
    
    Redemption of Senior Notes offering
    
    
    (168,683
    )
    
    
    
    
    
    
    Redemption of Series A Preferred Stock
    
    
    (10,101
    )
    
    
    
    
    
    
    Repurchases of common stock
    
    
    (524
    )
    
    
    (931
    )
    
    
    (348
    )Increase in senior credit facility
    
    
    
    
    
    
    
    
    
    
    139,500Repayment of senior credit facility
    
    
    
    
    
    
    (145,000
    )
    
    
    (4,500
    )Deferred loan fees paid and equity costs
    
    
    (7,470
    )
    
    
    (3,405
    )
    
    
    (302
    )Net cash provided by financing activities
    
    
    394,653
    
    
    
    113,608
    
    
    
    136,416Net increase (decrease) in cash and cash equivalents
    
    
    (17,038
    )
    
    
    738
    
    
    
    26,180Cash and cash equivalents, beginning of year
    
    
    40,781
    
    
    
    40,043
    
    
    
    13,863Cash and cash equivalents, end of year
    
    $
    23,743
    
    
    $
    40,781
    
    
    $
    40,043
   F-7




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 1. Organization and Nature of Operations
  2. Summary of Significant Accounting Policies
 Use of Estimates
  Reclassifications
  Principles of Consolidation
  Cash and Cash Equivalents
  Investments
   F-8




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Inventory
  Property and Equipment
    Support infrastructure wells and gathering systems
    
    15 yearsFurniture and fixtures
    
    10 yearsMachinery and equipment
    
    3  10 years3-D seismic interpretation workstations and software
    
    3 yearsPipeyard equipment and improvements
    
    7  15 yearsField general equipment
    
    3  15 yearsLand
    
    
    
   F-9




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Asset Retirement Obligations
  Revenue Recognition
    Derivative Instruments and Hedging Activities
   Other Comprehensive Income (Loss)
   F-10




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  2010
    
    
    2009
    
    
    2008Balance, beginning of year
    
    $
    (205
    )
    
    $
    
    
    
    $
    115Unrealized (gains) losses on investments
    
    
    196
    
    
    
    (205
    )
    
    
    Tax benefits (provisions) related to cash flow hedges
    
    
    
    
    
    
    
    
    
    
    61Net (gains) losses included in earnings
    
    
    
    
    
    
    
    
    
    
    (176
    )Balance, end of year
    
    $
    (9
    )
    
    $
    (205
    )
    
    $
    
 Stock Based Compensation
  Income Taxes
  Deferred Loan Fees
  Segment Information
  Treasury Stock
  Mandatorily Redeemable Preferred Stock
   F-11




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 New Pronouncements
  3. Property and Equipment
  December 31,2010
    
    
    2009Oil and natural gas properties
    
    $
    1,093,047
    
    
    $
    696,229Accumulated depletion
    
    
    (423,691
    )
    
    
    (365,496
    )669,356
    
    
    
    330,733
 December 31,2010
    
    
    2009Other property and equipment:Support infrastructure wells and gathering systems
    
    
    32,543
    
    
    
    3-D seismic interpretation workstations and software
    
    
    1,627
    
    
    
    1,619Office furniture and equipment
    
    
    3,646
    
    
    
    3,307Pipeyard equipment and improvements
    
    
    3,686
    
    
    
    832Field general equipment
    
    
    6,655
    
    
    
    1,739Land
    
    
    1,264
    
    
    
    409Accumulated depreciation
    
    
    (6,584
    )
    
    
    (4,881
    )42,837
    
    
    
    3,025$
    712,193
    
    
    $
    333,758
  F-12




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Year Ended December 31,2010
    
    
    2009
    
    
    2008Capitalized certain payroll and other internal costs
    
    $
    12,552
    
    
    $
    7,718
    
    
    $
    7,994Capitalized interest costs
    
    
    9,770
    
    
    
    4,713
    
    
    
    4,761$
    22,322
    
    
    $
    12,431
    
    
    $
    12,755
     4. Common Stock
     F-13




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 5. Senior Credit Facility and Senior Notes
  December 31,2010
    
    
    2009(In thousands)Senior Credit Facility
    
    $
    
    
    
    $
    Senior Notes
    
    
    300,000
    
    
    
    160,000Discount on Senior Notes
    
    
    
    
    
    
    (1,032
    )Total Debt
    
    $
    300,000
    
    
    $
    158,968Less: Current Maturities
    
    
    
    
    
    
    Total Long-Term Debt
    
    $
    300,000
    
    
    $
    158,968
 Senior Credit Facility
     Senior Notes
 3 4 3 4
  F-14




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 3 4
 3 4 3 4 3 4
 6. Preferred Stock
 Series A Mandatorily Redeemable Preferred Stock
  Year Ended
    
    
    Year EndedDecember 31, 2010
    
    
    December 31, 2009Shares
    
    
    Amounts
    
    
    Shares
    
    
    AmountsBalance, beginning of year
    
    
    505,051
    
    
    $
    10,101
    
    
    
    505,051
    
    
    $
    10,101Balance, end of year
    
    
    
    
    
    $
    
    
    
    
    505,051
    
    
    $
    10,101
   7. Asset Retirement Obligations
   F-15




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Year EndedDecember 31,2010
    
    
    2009Beginning asset retirement obligations
    
    $
    6,323
    
    
    $
    5,592Liabilities incurred for new wells placed on production
    
    
    814
    
    
    
    327Liabilities settled
    
    
    (428
    )
    
    
    (17
    )Revisions to estimates due to sale of oil and gas properties
    
    
    (1,208
    )
    
    
    Accretion of discount on asset retirement obligations
    
    
    422
    
    
    
    421$
    5,923
    
    
    $
    6,323
 8. Income Taxes
   Year Ended December 31,2010
    
    
    2009
    
    
    2008Current income taxes
    
    $
    
    
    
    $
    
    
    
    $
    Deferred income taxes (benefits):Federal
    
    
    14,805
    
    
    
    (43,029
    )
    
    
    (71,445
    )State
    
    
    1,655
    
    
    
    (1,141
    )
    
    
    (5,745
    )Federal and state valuation allowances
    
    
    (15,376
    )
    
    
    43,937
    
    
    
    34,489$
    1,084
    
    
    $
    (233
    )
    
    $
    (42,701
    )
  Year Ended December 31,2010
    
    
    2009
    
    
    2008Tax (benefit) at statutory rate
    
    $
    15,393
    
    
    $
    (43,129
    )
    
    $
    (71,732
    )Add the effect of:Nondeductible expenses, net of tax exempt income
    
    
    7
    
    
    
    1
    
    
    
    6Preferred stock dividends
    
    
    129
    
    
    
    212
    
    
    
    212Incentive stock options not exercised
    
    
    93
    
    
    
    26
    
    
    
    47State income taxes (benefits), net of federal deduction
    
    
    1,076
    
    
    
    (741
    )
    
    
    (3,734
    )State valuation allowance, net of federal deduction
    
    
    (369
    )
    
    
    644
    
    
    
    2,455Federal valuation allowance
    
    
    (15,303
    )
    
    
    42,719
    
    
    
    30,002Other
    
    
    58
    
    
    
    35
    
    
    
    43$
    1,084
    
    
    $
    (233
    )
    
    $
    (42,701
    )
  F-16




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  December 31,2010
    
    
    2009Deferred tax assetsCurrent:Unrealized hedging and other derivative losses
    
    $
    3,504
    
    
    $
    913State deferred taxes
    
    
    381
    
    
    
    Other
    
    
    82
    
    
    
    36Current
    
    
    3,967
    
    
    
    949Non-current:Net operating loss carryforwards (NOLs)
    
    
    82,394
    
    
    
    84,706Percentage depletion carryforwards
    
    
    4,896
    
    
    
    4,433Stock compensation
    
    
    4,115
    
    
    
    3,328Asset retirement obligations
    
    
    2,073
    
    
    
    2,213Unrealized derivative losses
    
    
    3,100
    
    
    
    318Other
    
    
    784
    
    
    
    81Non-current
    
    
    97,362
    
    
    
    95,079101,329
    
    
    
    96,028Valuation allowance
    
    
    (62,309
    )
    
    
    (77,153
    )Total net deferred tax assets
    
    
    39,020
    
    
    
    18,875Deferred tax liabilitiesCurrent:Unrealized derivative gains
    
    $
    (1,630
    )
    
    $
    (403
    )Current
    
    
    (1,630
    )
    
    
    (403
    )Non-current:Depreciable and depletable property
    
    
    (36,851
    )
    
    
    (18,392
    )Other
    
    
    (539
    )
    
    
    (80
    )Non-current
    
    
    (37,390
    )
    
    
    (18,472
    )Total net deferred tax liabilities
    
    
    (39,020
    )
    
    
    (18,875
    )Total federal deferred tax asset (liability)
    
    
    
    
    
    
    Total state deferred tax asset (liability)
    
    
    (1,088
    )
    
    
    Total deferred tax asset (liability)
    
    $
    (1,088
    )
    
    $
    
     F-17




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  9. Net Income Available Per Common Share
  Year Ended December 31,2010
    
    
    2009
    
    
    2008(In thousands, except per share amounts)Basic EPS:Income (loss) available to common stockholders
    
    $
    42,896
    
    
    $
    (122,992
    )
    
    $
    (162,247
    )Weighted average common shares outstanding  basic
    
    
    111,355
    
    
    
    70,569
    
    
    
    45,441Basic EPS:Income (loss) available to common stockholders
    
    $
    0.39
    
    
    $
    (1.74
    )
    
    $
    (3.57
    )Diluted EPS:Income (loss) available to common stockholders  diluted
    
    $
    42,896
    
    
    $
    (122,992
    )
    
    $
    (162,247
    )Common shares outstanding
    
    
    111,355
    
    
    
    70,569
    
    
    
    45,441Effect of dilutive securities:Stock options and restricted stock
    
    
    1,953
    
    
    
    
    
    
    
    Potentially dilutive common shares
    
    
    1,953
    
    
    
    
    
    
    
    Adjusted common shares outstanding  diluted
    
    
    113,308
    
    
    
    70,569
    
    
    
    45,441Diluted EPS:Income (loss) available to common stockholders
    
    $
    0.38
    
    
    $
    (1.74
    )
    
    $
    (3.57
    )
  10. Contingencies, Commitments and Factors Which May Affect Future Operations
 Litigation
    F-18




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Operating Lease Commitments
  2011
    
    
    10,2252012
    
    
    11,1912013
    
    
    10,9502014
    
    
    10,9502015
    
    
    465Thereafter$
    43,781
  Major Purchasers
  2010
    
    
    2009
    
    
    2008Purchaser A
    
    
    
    
    
    
    
    
    
    
    21
    %Purchaser B
    
    
    
    
    
    
    31
    %
    
    
    19
    %Purchaser C
    
    
    17
    %
    
    
    13
    %
    
    
    Purchaser D
    
    
    19
    %
    
    
    
    
    
    
    Purchaser E
    
    
    18
    %
    
    
    
    
    
    
    Purchaser F
    
    
    13
    %
    
    
    
    
    
    
    
  Factors Which May Affect Future Operations
  11. Derivative Instruments and Hedging Activities
  Natural Gas and Crude Oil Derivative Contracts
 Cash flow hedges
   F-19




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Natural
    
    
    
    
    
    
    Purchased
    
    
    WrittenGas
    
    
    Oil
    
    
    Put
    
    
    CallSettlement Period
    
    (MMBTU)
    
    
    (Barrels)
    
    
    Nymex
    
    
    NymexNatural Gas Costless Collars01/01/11  03/31/11
    
    
    120,000
    
    
    
    
    
    
    $
    6.50
    
    
    $
    8.2501/01/11  03/31/11
    
    
    210,000
    
    
    
    
    
    
    $
    6.40
    
    
    $
    7.8001/01/11  12/31/11
    
    
    360,000
    
    
    
    
    
    
    $
    5.75
    
    
    $
    7.6501/01/11  12/31/11
    
    
    480,000
    
    
    
    
    
    
    $
    5.75
    
    
    $
    7.4004/01/11  12/31/11
    
    
    360,000
    
    
    
    
    
    
    $
    5.00
    
    
    $
    6.55Oil Costless Collars01/01/11  07/31/12
    
    
    
    
    
    
    289,000
    
    
    $
    65.00
    
    
    $
    97.2001/01/11  07/31/12
    
    
    
    
    
    
    289,000
    
    
    $
    65.00
    
    
    $
    98.5501/01/11  07/31/12
    
    
    
    
    
    
    289,000
    
    
    $
    65.00
    
    
    $
    100.4001/01/11  07/31/12
    
    
    
    
    
    
    289,000
    
    
    $
    65.00
    
    
    $
    100.0001/01/11  02/28/11
    
    
    
    
    
    
    29,500
    
    
    $
    65.00
    
    
    $
    98.7501/01/11  02/28/11
    
    
    
    
    
    
    10,000
    
    
    $
    70.00
    
    
    $
    92.0001/01/11  02/28/11
    
    
    
    
    
    
    8,000
    
    
    $
    75.00
    
    
    $
    103.5001/01/11  03/31/11
    
    
    
    
    
    
    9,000
    
    
    $
    75.00
    
    
    $
    93.5001/01/11  06/30/11
    
    
    
    
    
    
    18,000
    
    
    $
    65.00
    
    
    $
    97.5001/01/11  06/30/11
    
    
    
    
    
    
    24,000
    
    
    $
    70.00
    
    
    $
    92.5001/01/11  07/31/11
    
    
    
    
    
    
    21,000
    
    
    $
    70.00
    
    
    $
    94.8001/01/11  12/31/11
    
    
    
    
    
    
    84,000
    
    
    $
    65.00
    
    
    $
    88.2501/01/11  12/31/11
    
    
    
    
    
    
    60,000
    
    
    $
    60.00
    
    
    $
    97.2501/01/11  12/31/11
    
    
    
    
    
    
    60,000
    
    
    $
    65.00
    
    
    $
    108.0001/01/11  12/31/11
    
    
    
    
    
    
    48,000
    
    
    $
    70.00
    
    
    $
    106.8001/01/11  12/31/11
    
    
    
    
    
    
    48,000
    
    
    $
    75.00
    
    
    $
    102.6001/01/11  12/31/11
    
    
    
    
    
    
    36,000
    
    
    $
    65.00
    
    
    $
    100.0001/01/11  12/31/11
    
    
    
    
    
    
    36,000
    
    
    $
    75.00
    
    
    $
    104.3001/01/11  12/31/11
    
    
    
    
    
    
    182,500
    
    
    $
    65.00
    
    
    $
    100.0003/01/11  04/30/11
    
    
    
    
    
    
    16,000
    
    
    $
    75.00
    
    
    $
    104.5003/01/11  08/31/11
    
    
    
    
    
    
    46,000
    
    
    $
    65.00
    
    
    $
    96.7503/01/11  08/31/11
    
    
    
    
    
    
    46,000
    
    
    $
    65.00
    
    
    $
    94.8005/01/11  12/31/11
    
    
    
    
    
    
    122,500
    
    
    $
    65.00
    
    
    $
    100.0005/01/11  12/31/11
    
    
    
    
    
    
    122,500
    
    
    $
    65.00
    
    
    $
    106.5007/01/11  09/30/11
    
    
    
    
    
    
    9,000
    
    
    $
    70.00
    
    
    $
    95.0007/01/11  12/31/11
    
    
    
    
    
    
    12,000
    
    
    $
    75.00
    
    
    $
    103.0007/01/11  12/31/11
    
    
    
    
    
    
    12,000
    
    
    $
    75.00
    
    
    $
    95.1509/01/11  12/31/11
    
    
    
    
    
    
    61,000
    
    
    $
    65.00
    
    
    $
    99.0009/01/11  12/31/11
    
    
    
    
    
    
    61,000
    
    
    $
    65.00
    
    
    $
    97.4010/01/11  12/31/11
    
    
    
    
    
    
    6,000
    
    
    $
    70.00
    
    
    $
    96.3501/01/12  06/30/12
    
    
    
    
    
    
    60,000
    
    
    $
    75.00
    
    
    $
    106.9001/01/12  06/30/12
    
    
    
    
    
    
    182,000
    
    
    $
    65.00
    
    
    $
    100.7501/01/12  06/30/12
    
    
    
    
    
    
    91,000
    
    
    $
    65.00
    
    
    $
    101.0001/01/12  06/30/12
    
    
    
    
    
    
    182,000
    
    
    $
    65.00
    
    
    $
    99.2501/01/12  06/30/12
    
    
    
    
    
    
    91,000
    
    
    $
    65.00
    
    
    $
    102.7501/01/12  06/30/12
    
    
    
    
    
    
    136,500
    
    
    $
    65.00
    
    
    $
    107.2501/01/12  07/31/12
    
    
    
    
    
    
    106,500
    
    
    $
    65.00
    
    
    $
    110.0007/01/12  07/31/12
    
    
    
    
    
    
    62,000
    
    
    $
    65.00
    
    
    $
    102.2507/01/12  07/31/12
    
    
    
    
    
    
    31,000
    
    
    $
    65.00
    
    
    $
    105.2507/01/12  09/30/12
    
    
    
    
    
    
    92,000
    
    
    $
    65.00
    
    
    $
    109.4008/01/12  09/30/12
    
    
    
    
    
    
    61,000
    
    
    $
    65.00
    
    
    $
    110.2508/01/12  09/30/12
    
    
    
    
    
    
    61,000
    
    
    $
    65.00
    
    
    $
    112.0008/01/12  10/31/12
    
    
    
    
    
    
    92,000
    
    
    $
    70.00
    
    
    $
    110.9008/01/12  10/31/12
    
    
    
    
    
    
    92,000
    
    
    $
    70.00
    
    
    $
    106.5010/01/12  10/31/12
    
    
    
    
    
    
    62,000
    
    
    $
    65.00
    
    
    $
    112.6510/01/12  10/31/12
    
    
    
    
    
    
    31,000
    
    
    $
    70.00
    
    
    $
    110.9011/01/12  12/31/12
    
    
    
    
    
    
    122,000
    
    
    $
    70.00
    
    
    $
    107.7011/01/12  12/31/12
    
    
    
    
    
    
    122,000
    
    
    $
    70.00
    
    
    $
    110.00
  F-20




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Natural
    
    
    
    
    
    
    Purchased
    
    
    WrittenGas
    
    
    Oil
    
    
    Put
    
    
    CallSettlement Period
    
    (MMBTU)
    
    
    (Barrels)
    
    
    Nymex
    
    
    NymexCrude Oil Calls01/01/11  06/30/11
    
    
    
    
    
    
    90,500
    
    
    
    
    
    
    $
    95.0001/01/11  06/30/11
    
    
    
    
    
    
    90,500
    
    
    
    
    
    
    $
    97.50Crude Oil Puts01/01/11  06/30/12
    
    
    
    
    
    
    273,500
    
    
    $
    65.0001/01/11  06/30/12
    
    
    
    
    
    
    273,500
    
    
    $
    65.0007/01/11  06/30/12
    
    
    
    
    
    
    91,500
    
    
    $
    65.0007/01/11  06/30/12
    
    
    
    
    
    
    91,500
    
    
    $
    65.00
  Natural
    
    
    
    
    
    
    Purchased
    
    
    WrittenGas
    
    
    Oil
    
    
    Put
    
    
    CallSettlement Period
    
    (MMBTU)
    
    
    (Barrels)
    
    
    Nymex
    
    
    NymexOil Costless Collars07/01/12  07/31/12
    
    
    
    
    
    
    62,000
    
    
    $
    75.00
    
    
    $
    114.0008/01/12  10/31/12
    
    
    
    
    
    
    276,000
    
    
    $
    75.00
    
    
    $
    112.5011/01/12  12/30/12
    
    
    
    
    
    
    244,000
    
    
    $
    75.00
    
    
    $
    112.5001/01/13  02/28/13
    
    
    
    
    
    
    118,000
    
    
    $
    75.00
    
    
    $
    113.0501/01/13  03/31/13
    
    
    
    
    
    
    180,000
    
    
    $
    80.00
    
    
    $
    120.0003/01/13  03/31/13
    
    
    
    
    
    
    62,000
    
    
    $
    80.00
    
    
    $
    120.00Crude Oil Calls07/01/11  12/31/11
    
    
    
    
    
    
    276,000
    
    
    
    
    
    
    $
    100.00Crude Oil Puts07/01/12  12/31/12
    
    
    
    
    
    
    276,000
    
    
    $
    80.00
 Additional Disclosures about Derivative Instruments and Hedging Activities
  Dec 31, 2010
    
    
    Dec 31, 2009Estimated
    
    
    EstimatedType of Contract
    
    Balance Sheet Location
    
    Fair Value
    
    
    Fair Value(in thousands)
    
    
    (in thousands)Derivatives Not Designated
as Hedging InstrumentsDerivative Assets:Natural gas and oil contracts
    
    Other current assets
    
    $
    2,557
    
    
    $
    1,152Natural gas and oil contracts
    
    Other non-current assets
    
    
    309
    
    
    
    186Total Derivative Assets
    
    
    
    $
    2,866
    
    
    $
    1,338Derivative Liabilities:Natural gas and oil contracts
    
    Derivative liabilities  current
    
    $
    (9,442
    )
    
    $
    (2,405
    )Natural gas and oil contracts
    
    Other non-current liabilities
    
    
    (8,575
    )
    
    
    (909
    )Total Derivative Liabilities
    
    
    
    $
    (18,017
    )
    
    $
    (3,314
    )
  F-21




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Year
    
    
    YearEnded
    
    
    EndedDec 31, 2010
    
    
    Dec 31, 2009Statement of Operations
    
    Amount of
    
    
    Amount ofType of Contract
    
    Location of Gain (Loss)
    
    Gain (Loss)
    
    
    Gain (Loss)(in thousands)
    
    
    (in thousands)Derivatives Not
Designated as Hedging
InstrumentsNatural gas contracts
    
    Gain (loss) on derivatives, net
    
    $
    4,210
    
    
    $
    7,061Oil contracts
    
    Gain (loss) on derivatives, net
    
    
    (14,276
    )
    
    
    (4,997
    )Total Derivative Gain (loss)
    
    
    
    $
    (10,066
    )
    
    $
    2,064
  12. 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.
  F-22




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Fair Value Measurements at December 31, 2010 UsingQuoted Prices in
    
    
    Significant Other
    
    
    SignificantActive Markets
    
    
    Observable
    
    
    UnobservableDecember 31,
    
    
    for Identical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    2010
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Current derivative liabilities
    
    $
    (9,442
    )
    
    $
    
    
    
    $
    (9,442
    )
    
    $
    Other non-current liabilities
    
    
    (8,575
    )
    
    
    
    
    
    
    (8,575
    )
    
    
    Other current assets
    
    
    2,557
    
    
    
    
    
    
    
    2,557
    
    
    
    Other non-current assets
    
    
    309
    
    
    
    
    
    
    
    309
    
    
    
    $
    (15,151
    )
    
    $
    
    
    
    $
    (15,151
    )
    
    $
    
 Fair Value Measurements at December 31, 2009 UsingQuoted Prices in
    
    
    Significant Other
    
    
    SignificantActive Markets
    
    
    Observable
    
    
    UnobservableDecember 31,
    
    
    for Identical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Current derivative liabilities
    
    $
    (2,405
    )
    
    $
    
    
    
    $
    (2,405
    )
    
    $
    Other non-current liabilities
    
    
    (909
    )
    
    
    
    
    
    
    (909
    )
    
    
    Current derivative assets
    
    
    1,152
    
    
    
    
    
    
    
    1,152
    
    
    
    Other non-current assets
    
    
    186
    
    
    
    
    
    
    
    186
    
    
    
    $
    (1,976
    )
    
    $
    
    
    
    $
    (1,976
    )
    
    $
    
  Fair Value Measurements at December 31, 2010 UsingQuoted Prices in
    
    
    Significant Other
    
    
    SignificantActive Markets
    
    
    Observable
    
    
    UnobservableDecember 31,
    
    
    for Identical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    2010
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Other non-current liabilities
    
    
    (5,923
    )
    
    
    
    
    
    
    
    
    
    
    (5,923
    )$
    (5,923
    )
    
    $
    
    
    
    $
    
    
    
    $
    (5,923
    )
 Fair Value Measurements at December 31, 2009 UsingQuoted Prices in
    
    
    Significant Other
    
    
    SignificantActive Markets
    
    
    Observable
    
    
    UnobservableDecember 31,
    
    
    for Identical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Other non-current liabilities
    
    
    (6,323
    )
    
    
    
    
    
    
    
    
    
    
    (6,323
    )$
    (6,323
    )
    
    $
    
    
    
    $
    
    
    
    $
    (6,323
    )
  F-23




---



##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Fair Value Measurements at December 31, 2010 UsingQuoted Prices in
    
    
    Significant Other
    
    
    SignificantActive Markets
    
    
    Observable
    
    
    UnobservableDecember 31,
    
    
    for Identical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    



    2010
    

    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Investments
    
    
    223,991
    
    
    
    223,991
    
    
    
    
    
    
    
    $
    223,991
    
    
    $
    223,991
    
    
    $
    
    
    
    $
    Fair Value Measurements at December 31, 2009 UsingQuoted Prices in
    
    
    Significant Other
    
    
    SignificantActive Markets
    
    
    Observable
    
    
    UnobservableDecember 31,
    
    
    for Identical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Investments
    
    
    80,093
    
    
    
    80,093
    
    
    
    
    
    
    
    $
    80,093
    
    
    $
    80,093
    
    
    $
    
    
    
    $
    
  Less Than 12 Months
    
    
    12 Months or Greater
    
    
    TotalUnrealized
    
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    UnrealizedDescription of
    
    Fair
    
    
    Gains
    
    
    Fair
    
    
    Gains
    
    
    Fair
    
    
    GainsSecurities
    
    Value
    
    
    (Losses)
    
    
    Value
    
    
    (Losses)
    
    
    Value
    
    
    (Losses)Certificates of deposit
    
    $
    241
    
    
    $
    1
    
    
    $
    
    
    
    $
    
    
    
    $
    241
    
    
    $
    1Corporate debt
    
    
    183,391
    
    
    
    68
    
    
    
    26,324
    
    
    
    (86
    )
    
    
    209,715
    
    
    
    (18
    )Government securities
    
    
    14,035
    
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    14,035
    
    
    
    8Total
    
    $
    197,667
    
    
    $
    77
    
    
    $
    26,324
    
    
    $
    (86
    )
    
    $
    223,991
    
    
    $
    (9
    )
   December 31, 2010
    
    
    December 31, 2009(in millions)
    
    
    (in millions)Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairAmount
    
    
    Value
    
    
    Amount
    
    
    ValueSenior Notes
    
    $
    300,000
    
    
    $
    325,500
    
    
    $
    160,000
    
    
    $
    160,000Series A Preferred Stock
    
    $
    
    
    
    $
    
    
    
    $
    10,101
    
    
    $
    10,166
   F-24




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 13. Stock Based Compensation
   2010
    
    
    2009
    
    
    2008Risk-free interest rate
    
    
    2.46
    %
    
    
    2.64
    %
    
    
    2.78
    %Expected life (in years)
    
    
    5.0
    
    
    
    5.0
    
    
    
    5.0Expected volatility
    
    
    81
    %
    
    
    78
    %
    
    
    56
    %Expected dividend yield
    
    
    
    
    
    
    
    
    
    
    Weighted average fair value per share of stock compensation
    
    $
    12.38
    
    
    $
    3.41
    
    
    $
    2.52
    Twelve Months EndedDecember 31,2010
    
    
    2009
    
    
    2008Pre-tax stock based compensation expense
    
    $
    4,992
    
    
    $
    4,282
    
    
    $
    2,926Capitalized stock based compensation
    
    
    (2,316
    )
    
    
    (2,003
    )
    
    
    (1,334
    )Tax benefit
    
    
    (937
    )
    
    
    (798
    )
    
    
    (557
    )Stock based compensation expense, net
    
    $
    1,739
    
    
    $
    1,481
    
    
    $
    1,035
    F-25




---



##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  2010
    
    
    2009
    
    
    2008Weighted-
    
    
    
    
    
    
    Weighted-
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    Exercise
    
    
    
    
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    Price
    
    
    Shares
    
    
    PriceOptions outstanding at
beginning of year
    
    
    4,170,137
    
    
    $
    5.14
    
    
    
    3,128,651
    
    
    $
    7.00
    
    
    
    3,046,166
    
    
    $
    7.14Granted
    
    
    1,029,500
    
    
    $
    19.27
    
    
    
    2,846,975
    
    
    $
    4.80
    
    
    
    534,000
    
    
    $
    5.08Forfeited or cancelled
    
    
    (22,200
    )
    
    $
    4.32
    
    
    
    (1,549,675
    )
    
    $
    8.30
    
    
    
    (65,300
    )
    
    $
    7.79Exercised
    
    
    (741,037
    )
    
    $
    5.20
    
    
    
    (255,814
    )
    
    $
    4.89
    
    
    
    (386,215
    )
    
    $
    5.35Options outstanding at
end of year
    
    
    4,436,400
    
    
    $
    8.41
    
    
    
    4,170,137
    
    
    $
    5.14
    
    
    
    3,128,651
    
    
    $
    7.00Options exercisable at
end of year
    
    
    675,620
    
    
    $
    5.83
    
    
    
    691,962
    
    
    $
    6.17
    
    
    
    1,954,851
    
    
    $
    7.17
   Options Outstanding
    
    
    Options ExercisableWeighted-
    
    
    
    
    
    
    
    
    
    
    Weighted-Number
    
    
    Average
    
    
    Weighted-
    
    
    Number
    
    
    Average
    
    
    Weighted-Outstanding at
    
    
    Remaining
    
    
    Average
    
    
    Exercisable at
    
    
    Remaining
    
    
    AverageDecember 31,
    
    
    Contractual
    
    
    Exercise
    
    
    December 31,
    
    
    Contractual
    
    
    ExerciseExercise Price
    
    2010
    
    
    Life
    
    
    Price
    
    
    2010
    
    
    Life
    
    
    Price$2.20 to $3.11
    
    
    1,089,000
    
    
    8.2 years
    
    
    $
    2.24
    
    
    
    137,000
    
    
    8.1 years
    
    
    $
    2.265.08 to 5.08
    
    
    371,320
    
    
    4.8 years
    
    
    $
    5.08
    
    
    
    101,320
    
    
    4.8 years
    
    
    $
    5.085.96 to 6.23
    
    
    1,599,580
    
    
    8.0 years
    
    
    $
    5.98
    
    
    
    301,300
    
    
    6.7 years
    
    
    $
    6.027.22 to 8.84
    
    
    111,000
    
    
    3.9 years
    
    
    $
    7.52
    
    
    
    42,000
    
    
    3.5 years
    
    
    $
    7.478.93 to 13.86
    
    
    236,000
    
    
    6.5 years
    
    
    $
    11.66
    
    
    
    94,000
    
    
    3.0 years
    
    
    $
    10.4714.43 to 16.85
    
    
    62,000
    
    
    9.4 years
    
    
    $
    15.24
    
    
    
    
    
    
    
    
    
    
    $
    18.36 to 27.15
    
    
    967,500
    
    
    9.3 years
    
    
    $
    19.53
    
    
    
    
    
    
    
    
    
    
    $
    2.20 to 27.15
    
    
    4,436,400
    
    
    7.9 years
    
    
    $
    8.41
    
    
    
    675,620
    
    
    6.0 years
    
    
    $
    5.83
    F-26




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Restricted Stock
   Year Ended
    
    
    Year EndedDecember 31, 2010
    
    
    December 31, 2009Weighted-
    
    
    
    
    
    
    Weighted-Number of
    
    
    Average
    
    
    Number of
    
    
    AverageShares
    
    
    Price
    
    
    Shares
    
    
    PriceRestricted Stock Awards:Restricted shares outstanding at the beginning of
the year
    
    
    556,990
    
    
    $
    7.04
    
    
    
    593,260
    
    
    $
    7.58Shares granted
    
    
    105,363
    
    
    $
    14.45
    
    
    
    342,574
    
    
    $
    4.99Lapse of restrictions
    
    
    (130,070
    )
    
    $
    7.71
    
    
    
    (377,844
    )
    
    $
    6.02Forfeitures
    
    
    (1,400
    )
    
    $
    5.26
    
    
    
    (1,000
    )
    
    $
    9.49Restricted shares outstanding at the end of the year
    
    
    530,883
    
    
    $
    8.35
    
    
    
    556,990
    
    
    $
    7.04
 14. Employee Benefit Plans
  15. Related Party Transactions
    F-27




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   16. Subsequent Events
  17. Supplemental Cash Flow Information
  Year Ended December 31,2010
    
    
    2009
    
    
    2008Cash paid for interest, net of capitalized amounts
    
    $
    4,726
    
    
    $
    14,545
    
    
    $
    12,382Noncash investing and financing activities:Capitalized asset retirement obligations
    
    
    814
    
    
    
    327
    
    
    
    412Accrued drilling costs
    
    
    45,569
    
    
    
    (4,270
    )
    
    
    4,927Capitalized stock compensation
    
    
    2,316
    
    
    
    2,003
    
    
    
    1,334
 18. Other Assets and Liabilities
  December 312010
    
    
    2009Prepayments
    
    $
    2,490
    
    
    $
    767Derivative assets
    
    
    2,557
    
    
    
    1,152Other
    
    
    2,749
    
    
    
    365$
    7,796
    
    
    $
    2,284
  December 312010
    
    
    2009Accrued interest
    
    $
    6,971
    
    
    $
    2,660Other accrued liabilities
    
    
    3,850
    
    
    
    2,641$
    10,821
    
    
    $
    5,301
  F-28




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 
 SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED)
 Oil and Natural Gas Exploration and Production Activities
  Costs Incurred and Capitalized Costs
  December 31,2010
    
    
    2009
    
    
    2008Costs incurred for the year:Exploration (including geological and geophysical costs)
    
    $
    20,906
    
    
    $
    10,566
    
    
    $
    43,229Property acquisition
    
    
    121,058
    
    
    
    15,416
    
    
    
    35,299Development
    
    
    273,158
    
    
    
    54,261
    
    
    
    110,155$
    415,122
    
    
    $
    80,243
    
    
    $
    188,683
  December 31,
    
    
    Prior2010
    
    
    2009
    
    
    2008
    
    
    Years
    
    
    TotalProperty acquisition
    
    $
    79,308
    
    
    $
    5,680
    
    
    $
    11,851
    
    
    $
    2,775
    
    
    $
    99,614Exploration
(including
geological and
geophysical costs)
    
    
    1,679
    
    
    
    37
    
    
    
    3,256
    
    
    
    13,146
    
    
    
    18,118Drilling
    
    
    50,981
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,981Capitalized interest
    
    
    7,876
    
    
    
    3,902
    
    
    
    1,902
    
    
    
    540
    
    
    
    14,220Total
    
    $
    139,844
    
    
    $
    9,619
    
    
    $
    17,009
    
    
    $
    16,461
    
    
    $
    182,933
  F-29




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED)  (Continued)
 Oil and Natural Gas Reserves and Related Financial Data
  Oil and Natural Gas Reserve Data
  NaturalOil
    
    
    Gas(MBbls)
    
    
    (MMcf)Proved reserves at December 31, 2007
    
    
    5,593
    
    
    
    106,643Revisions of previous estimates
    
    
    413
    
    
    
    (7,834
    )Extensions, discoveries and other additions
    
    
    1,637
    
    
    
    3,866Production
    
    
    (578
    )
    
    
    (7,996
    )Proved reserves at December 31, 2008
    
    
    7,065
    
    
    
    94,679Revisions of previous estimates
    
    
    2,055
    
    
    
    (28,742
    )Extensions, discoveries and other additions
    
    
    8,354
    
    
    
    6,367Sales of mineral in place
    
    
    (37
    )
    
    
    (13
    )Production
    
    
    (814
    )
    
    
    (5,892
    )Proved reserves at December 31, 2009
    
    
    16,623
    
    
    
    66,399Revisions of previous estimates (a)
    
    
    3,588
    
    
    
    (856
    )Extensions, discoveries and other additions (b)
    
    
    34,523
    
    
    
    27,045Purchase of mineral in place
    
    
    219
    
    
    
    211Sales of mineral in place
    
    
    (528
    )
    
    
    (412
    )Production
    
    
    (2,216
    )
    
    
    (4,562
    )Proved reserves at December 31, 2010
    
    
    52,209
    
    
    
    87,825Proved developed reserves at December 31:2007
    
    
    3,321
    
    
    
    49,3672008
    
    
    3,583
    
    
    
    41,9282009
    
    
    5,342
    
    
    
    29,1782010
    
    
    17,522
    
    
    
    36,537
 (a)
    
    Revisions of previous estimates include performance and technical revisions of 3,619 MBoe,
economic revisions of 895 MBoe, interest trades of (255) MBoe, and elimination of PUD reserves
that will not be developed within 5 years of (813) MBoe.(b)
    
    Extensions, discoveries and other additions include discoveries and associated PUDs of
39,030 MBoe, primarily in the Williston Basin.   F-30




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED)  (Continued)
 Standardized Measure of Discounted Future Net Cash Inflows and Changes Therein
  December 31,2010
    
    
    2009
    
    
    2008Future cash inflows
    
    $
    4,233,003
    
    
    $
    1,158,260
    
    
    $
    899,745Future production costs
    
    
    (1,117,690
    )
    
    
    (330,837
    )
    
    
    (206,640
    )Future development costs
    
    
    (770,356
    )
    
    
    (266,733
    )
    
    
    (160,304
    )Future income tax expense
    
    
    (619,145
    )
    
    
    (32,493
    )
    
    
    (32,152
    )Future net cash inflows
    
    
    1,725,812
    
    
    
    528,197
    
    
    
    500,64910% annual discount for estimated timing of cash flows
    
    
    (859,699
    )
    
    
    (281,721
    )
    
    
    (221,353
    )Standardized measure of discounted future net cash flows
    
    $
    866,113
    
    
    $
    246,476
    
    
    $
    279,296
  NaturalOil
    
    
    Gas(Bbl)
    
    
    (MMbtu)December 31, 2010
    
    $
    79.43
    
    
    $
    4.38December 31, 2009
    
    
    61.18
    
    
    $
    3.87December 31, 2008
    
    
    44.60
    
    
    $
    5.71
  December 31,2010
    
    
    2009
    
    
    2008Beginning of period
    
    $
    246,476
    
    
    $
    279,296
    
    
    $
    394,514Sales of oil and natural gas produced, net of production costs
    
    
    (143,169
    )
    
    
    (48,439
    )
    
    
    (107,144
    )Previously estimated development costs incurred during the period
    
    
    69,829
    
    
    
    16,574
    
    
    
    51,494Extensions and discoveries
    
    
    643,526
    
    
    
    75,803
    
    
    
    30,175Net change of prices and production costs
    
    
    213,101
    
    
    
    (41,750
    )
    
    
    (184,497
    )Change in future development costs
    
    
    (39,841
    )
    
    
    6,874
    
    
    
    (28,901
    )Changes in production rates (timing)
    
    
    18,296
    
    
    
    (17,557
    )
    
    
    (2,201
    )Revisions of previous quantity estimates
    
    
    84,417
    
    
    
    (41,726
    )
    
    
    (16,436
    )Accretion of discount
    
    
    25,430
    
    
    
    28,722
    
    
    
    49,130Change in income taxes
    
    
    (234,529
    )
    
    
    99
    
    
    
    88,868Purchases of reserves in place
    
    
    6,688
    
    
    
    
    
    
    
    Sales of reserves in place
    
    
    (9,877
    )
    
    
    (591
    )
    
    
    Other
    
    
    (14,234
    )
    
    
    (10,829
    )
    
    
    4,294End of period
    
    $
    866,113
    
    
    $
    246,476
    
    
    $
    279,296
  F-31




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##### Table of Contents



BRIGHAM EXPLORATION COMPANY
 
 SUPPLEMENTAL QUARTERLY FINANCIAL INFORMATION
 Quarterly Financial Data (Unaudited)
 Year Ended December 31, 2010Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter1
    
    
    2
    
    
    3
    
    
    4Revenue
    
    $
    32,573
    
    
    $
    44,930
    
    
    $
    36,610
    
    
    $
    55,609Operating income (loss)
    
    
    13,081
    
    
    
    19,336
    
    
    
    9,364
    
    
    
    18,663Net income (loss)*
    
    
    11,315
    
    
    
    18,473
    
    
    
    (676
    )
    
    
    13,784Net income (loss) per share:Basic
    
    $
    0.11
    
    
    $
    0.16
    
    
    $
    (0.01
    )
    
    $
    0.12Diluted
    
    $
    0.11
    
    
    $
    0.16
    
    
    $
    (0.01
    )
    
    $
    0.12
 Year Ended December 31, 2009Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter1
    
    
    2
    
    
    3
    
    
    4Revenue
    
    $
    18,486
    
    
    $
    10,514
    
    
    $
    19,867
    
    
    $
    21,477Operating income (loss)*
    
    
    (115,152
    )
    
    
    (2,787
    )
    
    
    4,750
    
    
    
    4,273Net income (loss)*
    
    
    (119,071
    )
    
    
    (6,960
    )
    
    
    491
    
    
    
    2,548Net income (loss) per share:Basic
    
    $
    (2.60
    )
    
    $
    (0.12
    )
    
    $
    0.01
    
    
    $
    0.03Diluted
    
    $
    (2.60
    )
    
    $
    (0.12
    )
    
    $
    0.01
    
    
    $
    0.03
 *
    
    Net income (loss) includes the impact from the loss on early redemption of Senior Notes in
the amount of $10.9 million for the third quarter of 2010. Operating income (loss) and Net
income (loss) include the impact from the writedown of the net capitalized costs of Brighams
oil and gas properties in the amounts of $114.8 million for the first quarter of 2009.  F-32




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##### Table of Contents



INDEX TO EXHIBITS
 Number

    
    
    
    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 of 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 (filed as Exhibit 3.5 to Brighams
Current Report on Form 8-K (filed May 28, 2009) and incorporated herein by
reference)3.4
    
    
    
    
    Certificate of Amendment of Certificate of Incorporation of Brigham
Exploration Company dated June 14, 2006, (filed as Exhibit 3.4 to
Brighams Annual Report on Form 10-K for the year ended December 31, 2008
and incorporated herein by reference)3.5
    
    
    
    
    Certificate of Amendment of Certificate of Incorporation of Brigham
Exploration Company dated October 7, 2009 (filed as Exhibit 3.5 to
Brighams Current Report on Form 8-K (filed October 13, 2009) and
incorporated herein by reference)4.1
    
    
    
    
    Form of Common Stock Certificate (filed as Exhibit 4.1 to Brighams
Registration Statement on Form S-1 (Registration No. 333-22491) and
incorporated herein by reference)4.2
    
    
    
    
    Certificate of Designations of Series A Preferred Stock (Par Value $.01
Per Share) of Brigham Exploration Company filed October 31, 2000 (filed as
Exhibit 4.1 to Brighams Current Report on Form 8-K, as amended (filed
November 8, 2000) and incorporated herein by reference)4.3
    
    
    
    
    Certificate of Amendment of Certificate of Designations of Series A
Preferred Stock (Par Value $.01 Per Share) of Brigham Exploration Company,
filed March 2, 2001 (filed as Exhibit 4.2.1 to Brighams Annual Report on
Form 10-K for the year ended December 31, 2000 and incorporated herein by
reference)4.4
    
    
    
    
    Certificate of Elimination of Certificate of Designations of Series A
Preferred Stock (Par Value $.01 Per Share) of Brigham Exploration Company,
filed August 9, 2010 (filed as Exhibit 3.7 to Brighams Current Report on
Form 8-K (filed August 10, 2010) and incorporated herein by reference)4.5
    
    
    
    
    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 and incorporated herein by reference)4.6
    
    
    
    
    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)4.7
    
    
    
    
    Certificate of Designations of Series C Junior Participating Preferred
Stock of Brigham Exploration Company effective as of December 10, 2008
(filed as Exhibit 3.1 to Brighams Current Report on Form 8-K (filed
December 11, 2008) and incorporated herein by reference)4.8
    
    
    
    
    Certificate of Elimination of Certificate of Designations of Series C
Junior Participating Preferred Stock of Brigham Exploration Company
effective March 9, 2010 (filed as Exhibit 3.6 to Brighams Current Report
on Form 8-K (filed March 15, 2010) and incorporated herein by reference)4.9
    
    
    
    
    First Supplemental Indenture, dated September 27, 2010, among the Company,
the Guarantors and Wells Fargo Bank, National Association, as Trustee
(filed as Exhibit 4.16 to Brighams Current Report on Form 8-K (filed
October 1, 2010) and incorporated herein by reference)4.10
    
    
    
    
    Indenture, dated September 27, 2010, among the Company, the Guarantors and
Wells Fargo Bank, National Association, as Trustee (filed as Exhibit 4.17
to Brighams Current Report on Form 8-K (filed October 1, 2010) and
incorporated herein by reference)




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##### Table of Contents



Number

    
    
    
    Description4.11
    
    
    
    
    Rule 144A 8 3/4% Senior Note due 2018 and Notation of Guarantee (filed as
Exhibit 4.18 to Brighams Current Report on Form 8-K (filed October 1,
2010) and incorporated herein by reference)4.12
    
    
    
    
    Regulation S 8 3/4% Senior Note due 2018 and Notation of Guarantee (filed
as Exhibit 4.19 to Brighams Current Report on Form 8-K (filed October 1,
2010) and incorporated herein by reference)10.1
    
    
    
    
    Amended and Restated Agreement of Limited Partnership of Brigham Oil &
Gas, L.P., dated December 30, 1997 by and among Brigham, Inc., Brigham
Holdings I, L.L.C. and Brigham Holdings II, L.L.C. (filed as Exhibit
10.1.4 to Brighams Annual Report on Form 10-K for the year ended December
31, 1998 and incorporated herein by reference)10.2
    *
    
    
    
    Form Change of Control Agreement dated as of September 20, 1999 between
Brigham Exploration Company and certain Officers (filed as Exhibit 10.3 to
Brighams Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 1999 and incorporated by reference herein)10.3
    
    
    
    
    Fourth Amended and Restated Credit Agreement, dated June 29, 2005 between
Brigham Oil & Gas, L.P., Bank of America, N.A., The Royal Bank of Scotland
plc, BNP Paribas and Banc of America Securities LLC. (filed as Exhibit
10.1 to Brighams Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 2005 and incorporated herein by reference)10.4
    
    
    
    
    Resignation of Agent, Appointment of Successor Agent and Assignment of
Security Instruments dated June 29, 2005 by and among Brigham Oil & Gas,
L.P., Société Generale and Bank of America, N.A. (filed as Exhibit 10.2 to
Brighams Quarterly Report on Form 10-Q for the fiscal quarter ended June
30, 2005 and incorporated herein by reference)10.5
    
    
    
    
    First Amendment to Fourth Amended and Restated Credit Agreement, between
Brigham Exploration Company and the banks named therein, dated April 10,
2006 (filed as Exhibit 10.3 to Brighams Current Report on Form 8-K, as
amended (filed April 24, 2006) and incorporated herein by reference)10.6
    
    
    
    
    Second Amendment to Fourth Amended and Restated Credit Agreement, between
Brigham Exploration Company and the banks named therein, dated March 27,
2007 (filed as Exhibit 10.3 to Brighams Current Report on Form 8-K (filed
on April 13, 2007) and incorporated in by reference)10.7
    *
    
    
    
    Form of the Amended and Restated Indemnity Agreement (filed as Exhibit
99.1 to Brighams Current Report on Form 8-K, as amended (filed December
5, 2006), and incorporated herein by reference)10.8
    
    
    
    
    Agreement Relating to Voting of Shares dated July 31, 2008, between
Brigham Exploration Company and DLJ Merchant Banking Partners III, L.P.,
DLJ Offshore Partners III, C.V., DLJ Offshore Partners III-1, C.V., DLJ
Offshore Partners III-2, C.V., DLJ MB Partners III GmbH & Co. KG,
Millennium Partners II, L.P., MBP III Plan Investors, L.P., DLJ ESC II,
L.P. and DLJMB Funding III, Inc. (filed as Exhibit 10.42 to Brighams
Current Report on Form 8-K (filed August 5, 2008) and incorporated herein
by reference)10.9
    
    
    
    
    Third Amendment to the Fourth Amended and Restated Credit Agreement dated
as of November 7, 2008 (filed as Exhibit 10.43 to Brighams Current Report
on Form 8-K (filed November 12, 2008) and incorporated herein by
reference)10.10
    *
    
    
    
    Amendment to the 1997 Incentive Plan, dated March 9, 2010 (filed as
Exhibit 10.46 to Brighams Current Report on Form 8-K (filed March 15,
2010) and incorporated herein by reference)10.11
    *
    
    
    
    Form of Restricted Stock Agreement under the 1997 Incentive Plan of
Brigham Exploration Company (filed as Exhibit 10.45 to Brighams Current
Report on Form 8-K (filed December 29, 2008) and incorporated herein by
reference)




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##### Table of Contents



Number

    
    
    
    Description10.12
    *
    
    
    
    Form of Option Agreement (Non-Qualified Stock Option) under the 1997
Incentive Plan of Brigham Exploration Company (filed as Exhibit 10.46 to
Brighams Current Report on Form 8-K (filed December 29, 2008) and
incorporated herein by reference)10.13
    *
    
    
    
    Form of Option Agreement (Incentive Option) under the 1997 Incentive Plan
of Brigham Exploration Company (filed as Exhibit 10.47 to Brighams
Current Report on Form 8-K (filed December 29, 2008) and incorporated
herein by reference)10.14
    *
    
    
    
    Brigham Exploration Company 1997 Director Stock Option Plan (as amended
effective January 1, 2009) (filed as Exhibit 10.48 to Brighams Current
Report on Form 8-K (filed December 29, 2008) and incorporated herein by
reference)10.15
    *
    
    
    
    Form of Non-Qualified Stock Option Agreement under the 1997 Director Stock
Option Plan (filed as Exhibit 10.49 to Brighams Current Report on Form
8-K (filed December 29, 2008) and incorporated herein by reference)10.16
    *
    
    
    
    Form of Amendment to the Change of Control Agreement (filed as Exhibit
10.50 to Brighams Current Report on Form 8-K (filed December 29, 2008)
and incorporated herein by reference)10.17
    *
    
    
    
    Amendment to the Employment Agreement between the Company and Ben M.
Brigham dated as of December 23, 2008 (filed as Exhibit 10.51 to Brighams
Current Report on Form 8-K (filed December 29, 2008) and incorporated
herein by reference)10.18
    
    
    
    
    Confirmation of Notice of Termination of Consulting Agreement with Harold
D. Carter, between Brigham Oil & Gas, L.P. and Harold D. Carter, effective
as of January 1, 2009 (filed as Exhibit 10.41 to Brighams Quarterly
Report on Form 10-Q for the fiscal quarter ended March 31, 2009 and
incorporated herein by reference)10.19
    *
    
    
    
    1997 Incentive Plan Amendment to Option Agreements, effective as of April
22, 2009 (filed as Exhibit 10.42 to Brighams Quarterly Report on Form
10-Q for the fiscal quarter ended March 31, 2009 and incorporated herein
by reference)10.20
    
    
    
    
    Fourth Amendment to the Fourth Amended and Restated Credit Agreement dated
as of May 13, 2009 (filed as Exhibit 10.43 to Brighams Current Report on
Form 8-K (filed May 28, 2009) and incorporated herein by reference)10.21
    
    
    
    
    Fifth Amendment to the Fourth Amended and Restated Credit Agreement dated
as of July 24, 2009 (filed as Exhibit 10.45 to Brighams Current Report on
Form 8-K (filed July 28, 2009) and incorporated herein by reference)10.22
    *
    
    
    
    Form of Non-Qualified Stock Option Agreement (filed as Exhibit 10.49 to
Brighams Quarterly Report on Form 10-Q for the fiscal quarter ended June
30, 2009) and incorporated herein by reference)10.23
    *
    
    
    
    Form of Non-Qualified Stock Option Agreement under the 1997 Director Stock
Option Plan (filed as Exhibit 10.3 to Brighams Quarterly Report on Form
10-Q for the fiscal quarter ended September 30, 2009 and incorporated
herein by reference)10.24
    *
    
    
    
    Form of Non-Qualified Stock Option Agreement (filed as Exhibit 10.4 to
Brighams Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 2009 and incorporated herein by reference)10.25
    *
    
    
    
    Form of Amendment to Non-Qualified Stock Option Agreements (filed as
Exhibit 10.5 to Brighams Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 2009 and incorporated herein by reference)10.26
    *
    
    
    
    Amendment to Brigham Exploration Company 1997 Director Stock Option Plan,
effective as of September 23, 2009 (filed as Exhibit 10.6 to Brighams
Quarterly Report on Form 10-Q for the fiscal quarter ended September 30,
2009 and incorporated herein by reference)10.27
    *
    
    
    
    Amendment to Non-Qualified Stock Option Agreements under the 1997 Director
Stock Option Plan, effective as of September 23, 2009 (filed as Exhibit
10.7 to Brighams Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 2009 and incorporated herein by reference)




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##### Table of Contents



Number

    
    
    
    Description10.28
    
    
    
    
    Sixth Amendment and Consent to the Fourth Amended and Restated Credit
Agreement dated as of May 28, 2010 between the Company and the banks named
therein (filed as Exhibit 10.47 to Brighams Current Report on Form 8-K
(filed June 3, 2010) and incorporated herein by reference)10.29
    
    
    
    
    Registration Rights Agreement, dated September 27, 2010, among the
Company, the Guarantors and the Initial Purchasers (filed as Exhibit 4.20
to Brighams Current Report on Form 8-K (filed October 1, 2010) and
incorporated herein by reference)10.30
    
    
    
    
    Seventh Amendment to the Fourth Amended and Restated Credit Agreement
dated as of September 10, 2010 between the Company and the banks named
therein (filed as Exhibit 10.48 to Brighams Current Report on Form 8-K
(filed September 13, 2010) and incorporated herein by reference)10.31
    
    
    
    
    Purchase Agreement dated September 16, 2010 among the Company, the
Guarantors and the Initial Purchasers. (filed as Exhibit 10.49 to
Brighams Current Report on Form 8-K (filed September 20, 2010) and
incorporated herein by reference)12.1
    
    
    
    
    Statement Regarding Computation of Ratios21
    
    
    
    
    Subsidiaries of the Registrant23.1
    
    
    
    
    Consent of KPMG LLP, Independent Registered Public Accounting Firm23.2
    
    
    
    
    Consent of Cawley, Gillespie & Associates, Inc.31.1
    
    
    
    
    Certification of Chief Executive Officer pursuant to Sec. 302 of the
Sarbanes-Oxley Act of 200231.2
    
    
    
    
    Certification of Chief Financial Officer pursuant to Sec. 302 of the
Sarbanes-Oxley Act of 200232.1
    
    
    
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. SECTION 135032.2
    
    
    
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. SECTION 135099.1
    
    
    
    
    Report of Cawley, Gillespie & Associates, Inc.
 
 *
    
    Management contract or compensatory plan.
    
    Filed herewith