- Quarterly Report (10-Q)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10 - Q

(Mark One)


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

For the quarterly period ended September 30, 2011


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 of other jurisdiction		(I.R.S. Employer
of incorporation 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)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232 405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer þ	Accelerated Filer o	Non-Accelerated Filer o	Smaller Reporting Company o
		(Do not check if smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ


Class		Outstanding
Common Stock, par value $.01 per share as of November 4, 2011		117,318,932

Brigham Exploration Company

Third Quarter 2011 Form 10-Q Report

TABLE OF CONTENTS


	Page
PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Consolidated Balance Sheets — September 30, 2011 and December 31, 2010		1

Consolidated Statements of Operations — Three and nine months ended September 30, 2011 and 2010		2

Consolidated Statement of Stockholders’ Equity — Nine months ended September 30, 2011		3

Consolidated Statements of Cash Flows — Nine months ended September 30, 2011 and 2010		4

Notes to the Consolidated Financial Statements		5

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		18

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		34

ITEM 4. CONTROLS AND PROCEDURES		37

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS		38

ITEM 1A. RISK FACTORS		38

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		38

ITEM 3. DEFAULTS UPON SENIOR SECURITIES		38

ITEM 4. (REMOVED AND RESERVED)		38

ITEM 5. OTHER INFORMATION		38

ITEM 6. EXHIBITS		39

SIGNATURES		42

Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

PART I — FINANCIAL INFORMATION


ITEM 1.		FINANCIAL STATEMENTS

BRIGHAM EXPLORATION COMPANY

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)


	September 30,			December 31,
	2011			2010

ASSETS
Current assets:
Cash and cash equivalents	$	91,544		$	23,743
Accounts receivable		131,332			70,368
Short-term investments		114,738			223,991
Inventory		53,238			34,959
Other current assets		26,106			7,796

Total current assets		416,958			360,857

Oil and natural gas properties, using the full cost method including
Proved, net of accumulated depletion of $495,115 and $423,691		761,999			486,423
Unproved		433,848			182,933

		1,195,847			669,356

Other property and equipment, net		95,887			42,837
Deferred loan fees		17,159			9,064
Other noncurrent assets		20,876			3,287

Total assets	$	1,746,727		$	1,085,401


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	89,840		$	50,023
Royalties payable		82,992			42,155
Accrued drilling costs		155,888			61,067
Participant advances received		5,511			3,037
Derivative liabilities		69			9,442
Other current liabilities		27,315			10,821

Total current liabilities		361,615			176,545


Senior Notes		600,000			300,000

Other noncurrent liabilities		12,074			15,586

Commitments and contingencies (Note 3)

Stockholders’ equity:
Common stock, $.01 par value, 180 million shares authorized, 116,800,125 and 116,564,182 shares issued and 116,498,651 and 116,289,180 shares outstanding at September 30, 2011 and December 31, 2010, respectively		1,168			1,166
Additional paid-in capital		770,920			765,326
Treasury stock, at cost; 301,474 and 275,002 shares at September 30, 2011 and December 31, 2010, respectively		(3,388	)		(2,657	)
Accumulated other comprehensive income (loss)		(8	)		(9	)
Retained earnings (deficit)		4,346			(170,556	)

Total stockholders’ equity		773,038			593,270

Total liabilities and stockholders’ equity	$	1,746,727		$	1,085,401

The accompanying notes are an integral part of these consolidated financial statements.

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BRIGHAM EXPLORATION COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010

Revenues:
Oil and natural gas sales	$	113,766		$	43,663		$	283,455		$	113,157
Gain (loss) on derivatives, net		53,094			(7,057	)		50,557			939
Support infrastructure		1,242			—			2,726			—
Other revenue		3			4			8			17

		168,105			36,610			336,746			114,113

Costs and expenses:
Lease operating		13,595			3,964			30,039			12,684
Production taxes		11,483			4,250			28,632			10,658
Support infrastructure		610			—			1,329			—
General and administrative		3,359			3,255			9,906			9,052
Depletion of oil and natural gas properties		28,953			15,312			71,424			38,770
Depreciation and amortization		1,722			362			3,937			856
Accretion of discount on asset retirement obligations		127			103			350			312

		59,849			27,246			145,617			72,332

Operating income (loss)		108,256			9,364			191,129			41,781


Other income (expense):
Interest income		240			1,716			949			3,056
Interest expense, net		(7,472	)		(2,058	)		(16,644	)		(7,893	)
Loss on redemption of Senior Notes		—			(10,948	)		—			(10,948	)
Other income (expense)		(2,333	)		1,250			4,755			3,116

		(9,565	)		(10,040	)		(10,940	)		(12,669	)

Income (loss) before income taxes		98,691			(676	)		180,189			29,112

Income tax benefit (expense):
Current		—			—			—			—
Deferred		3,822			—			(5,287	)		—

		3,822			—			(5,287	)		—

Net income (loss)	$	102,513		$	(676	)	$	174,902		$	29,112

Net income (loss) per share available to common stockholders:
Basic	$	0.88		$	(0.01	)	$	1.50		$	0.27

Diluted	$	0.86		$	(0.01	)	$	1.48		$	0.26


Weighted average shares outstanding:
Basic		116,459			115,921			116,409			109,657

Diluted		118,557			115,921			118,552			111,562

The accompanying notes are an integral part of these consolidated financial statements.

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BRIGHAM EXPLORATION COMPANY

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)


											Accumulated
					Additional						Other						Total
	Common Stock				Paid In			Treasury			Comprehensive						Stockholders’
	Shares		Amounts		Capital			Stock			Income (Loss)			Retained Earnings			Equity
Balance, December 31, 2010		116,564	$	1,166	$	765,326		$	(2,657	)	$	(9	)	$	(170,556	)	$	593,270
Comprehensive income:
Net income (loss)		—		—		—			—			—			174,902			174,902
Unrealized gains (losses) on investments		—		—		—			—			1			—			1
Tax benefit (provisions)		—		—		—			—			—			—			—

Comprehensive income																		174,903
Issuance of common stock		—		—		—			—			—			—			—
Exercises of employee stock options		84		1		669			—			—			—			670
Vesting of restricted stock		144		1		(1	)		—			—			—			—
Stock based compensation		8		—		4,926			—			—			—			4,926
Repurchases of common stock		—		—		—			(731	)		—			—			(731	)


Balance, September 30, 2011		116,800	$	1,168	$	770,920		$	(3,388	)	$	(8	)	$	4,346		$	773,038

The accompanying notes are an integral part of these consolidated financial statements.

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BRIGHAM EXPLORATION COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Nine Months Ended
	September 30,
	2011			2010
Cash flows from operating activities:
Net income (loss)	$	174,902		$	29,112
Adjustments to reconcile net income (loss) to cash provided by operating activities:
Depletion of oil and natural gas properties		71,424			38,770
Depreciation and amortization		3,937			856
Stock based compensation		2,736			1,933
Amortization of deferred loan fees and debt issuance costs		1,798			1,475
Loss on early redemption of Senior Notes		—			10,948
Market value and other adjustments for derivative instruments		(52,997	)		1,262
Accretion of discount on asset retirement obligations		350			312
Deferred income taxes		5,287			—
Other noncash items		30			—
Changes in operating assets and liabilities:
Accounts receivable		(60,964	)		(21,424	)
Other current assets		(2,545	)		(2,218	)
Accounts payable		39,817			20,574
Royalties payable		40,837			19,336
Participant advances received		2,474			(4,187	)
Other current liabilities		16,542			(2,067	)
Other noncurrent assets and liabilities		(245	)		(1,461	)

Net cash provided by operating activities		243,383			93,221


Cash flows from investing activities:
Additions to oil and natural gas properties		(500,271	)		(279,406	)
Changes to inventory		(18,279	)		(14,805	)
Purchases of short term investments		(298,021	)		(227,604	)
Sales of short term investments		407,275			116,569
Additions to other property and equipment		(57,017	)		(14,142	)
Proceeds from the sale of assets		183			12,544
Decrease (increase) in drilling advances paid		550			(1,397	)

Net cash provided (used) by investing activities		(465,580	)		(408,241	)


Cash flows from financing activities:
Proceeds from issuance of common stock, net of issuance costs		—			277,547
Redemption of Series A mandatorily redeemable preferred stock		—			(10,101	)
Proceeds from Senior Notes offering		300,000			300,000
Redemption of Senior Notes		—			(162,789	)
Deferred loan fees paid and equity costs		(9,893	)		(6,427	)
Principal payments on capital lease obligations		(48	)		—
Proceeds from exercise of employee stock options		670			2,484
Repurchases of common stock		(731	)		(471	)

Net cash provided (used) by financing activities		289,998			400,243


Net increase (decrease) in cash and cash equivalents		67,801			85,223
Cash and cash equivalents, beginning of year		23,743			40,781

Cash and cash equivalents, end of period	$	91,544		$	126,004

The accompanying notes are an integral part of these consolidated financial statements.

BRIGHAM EXPLORATION COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Organization and Nature of Operations

Brigham Exploration Company is a Delaware corporation formed on February 25, 1997 for the purpose of exchanging its common stock for the common stock of Brigham, Inc. and the partnership interests of Brigham Oil & Gas, L.P. (the “Partnership”). Hereinafter, Brigham Exploration Company and the Partnership are collectively referred to as “Brigham.” The Partnership was formed in May 1992 to explore and develop onshore domestic oil and natural gas properties using 3-D seismic imaging and other advanced technologies. Brigham’s exploration and development of oil and natural gas properties is currently focused in the Williston Basin, the Onshore Gulf Coast, the Anadarko Basin, and West Texas and Other.

2. Basis of Presentation

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

The accompanying consolidated financial statements are unaudited, and in the opinion of management, reflect all adjustments that are necessary for a fair presentation of the financial position and results of operations for the periods presented. All such adjustments are of a normal and recurring nature. The unaudited consolidated financial statements are presented in accordance with the requirements of Form 10-Q and do not include all disclosures normally required by accounting principles generally accepted in the United States of America (U.S. GAAP). The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the entire year. The unaudited consolidated financial statements should be read in conjunction with Brigham’s 2010 Annual Report on Form 10-K filed pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

3. Commitments and Contingencies

Brigham is, from time to time, party to certain lawsuits and claims arising in the ordinary course of business. While the outcome of lawsuits and claims cannot be predicted with certainty, management does not expect these matters to have a materially adverse effect on the financial condition, results of operations or cash flows of Brigham. See Part II, Item 1 Legal Proceedings.

As of September 30, 2011, there are no known environmental or other regulatory matters related to Brigham’s operations that are reasonably expected to result in a material liability to Brigham. Compliance with environmental laws and regulations has not had, and is not expected to have, a material adverse effect on Brigham’s financial position, results of operations or cash flows.

4. Net Income Available Per Common Share

Basic earnings per share (EPS) is computed by dividing net income (the numerator) by the weighted average number of common shares outstanding for the period (the denominator). Diluted EPS is computed by dividing net income by the weighted average number of common shares and potential common shares outstanding (if dilutive) during each period. Potential common shares include stock options and restricted stock. The number of potential common shares outstanding relating to stock options and restricted stock is computed using the treasury stock method.

BRIGHAM EXPLORATION COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The reconciliation of the denominators used to calculate basic EPS and diluted EPS for the three and nine months ended September 30, 2011 and 2010 are as follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2011		2010		2011		2010

Weighted average common shares outstanding — basic		116,459		115,921		116,409		109,657
Plus: Potential common shares
Stock options and restricted stock		2,098		—		2,143		1,905

Weighted average common shares outstanding — diluted		118,557		115,921		118,552		111,562


Stock options excluded from diluted EPS due to the anti-dilutive effect		105		5,178		288		1,125

5. Income Taxes

Based on estimates of its 2011 annual effective tax rate, Brigham has a $5.3 million deferred federal and state income tax expense for the nine months ended September 30, 2011. The annual effective tax rate takes into consideration the estimated reduction in Brigham’s valuation allowance through 2011. There was no federal or state tax expense (benefit) for the nine months ended September 30, 2010.

Brigham utilizes the asset and liability approach to measure deferred tax assets and liabilities based on temporary differences at each balance sheet date. By using the estimated 2011 annual effective rate, the deferred tax assets and liabilities differ from those that would result if Brigham used a year-to-date effective rate. On a year-to-date basis at September 30, 2011, Brigham has a net deferred tax liability. Using an annual effective tax rate, Brigham has a net deferred tax asset, primarily due to its net operating loss carryovers. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Based on this criteria, Brigham determined that its valuation allowance should be reduced to zero at September 30, 2011. The valuation allowance was $62.3 million at December 31, 2010.

The tax effects from an uncertain tax position can be recognized in the financial statements only if the position is more likely than not of being sustained if the position were to be challenged by a taxing authority. Brigham has examined the tax positions taken in its tax returns and determined that there are no uncertain tax positions. As a result, Brigham has recorded no uncertain tax liabilities in its consolidated balance sheet.

The tax years that remain subject to examination by Federal and major state tax jurisdictions are the years ended December 31, 2010, 2009, and 2008. In addition, Brigham is open to examination for the years 1997 through 2007, resulting from net operating losses generated and available for carryforward.

6. Derivative Instruments and Hedging Activities

Brigham utilizes various commodity swap and option contracts to (i) reduce the effects of volatility in price changes on the oil and natural gas commodities it produces and sells, (ii) reduce commodity price risk and (iii) provide a base level of cash flow in order to assure it can execute at least a portion of its capital spending plans.

Natural Gas and Crude Oil Derivative Contracts

Brigham enters into contracts to hedge against the variability in cash flows associated with the forecasted sale of future oil and gas production. Brigham’s hedges consist of costless collars (purchased put options and written call options), three-way collars (a standard collar plus a sold put below the floor price of the collar), purchased put options, and written call options. The costless collars and three-way collars are used to establish floor and ceiling prices on anticipated future oil and natural gas production. There are no net premiums paid or received when Brigham enters into these option agreements. Brigham has elected not to designate any of its derivative contracts as cash flow hedges for accounting purposes under Financial Accounting Standards Board Accounting Standards Codification Topic 815 “Derivatives and Hedging” (FASB ASC 815). As such, all derivative positions are carried at their fair value on the consolidated balance sheet and are marked-to-market at the end of each period. Any realized and unrealized gains or losses are recorded as gain (loss) on derivatives, net, as an increase or decrease in revenue on the consolidated statement of operations.

BRIGHAM EXPLORATION COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table reflects open commodity derivative contracts at September 30, 2011, the associated volumes and the corresponding weighted average NYMEX reference price (WTI and Henry Hub).


	Natural		Crude		Purchased		Written
	Gas		Oil		Put		Call
Settlement Period	(MMBTU)		(Barrels)		Nymex		Nymex
*Natural Gas Costless Collars*
10/01/11 — 12/31/11		90,000			$	5.75	$	7.65
10/01/11 — 12/31/11		120,000			$	5.75	$	7.40
10/01/11 — 12/31/11		120,000			$	5.00	$	6.55
*Oil Costless Collars*
10/01/11 — 07/31/12				152,500	$	65.00	$	97.20
10/01/11 — 07/31/12				152,500	$	65.00	$	98.55
10/01/11 — 07/31/12				152,500	$	65.00	$	100.40
10/01/11 — 07/31/12				152,500	$	65.00	$	100.00
10/01/11 — 12/31/11				21,000	$	65.00	$	88.25
10/01/11 — 12/31/11				15,000	$	60.00	$	97.25
10/01/11 — 12/31/11				15,000	$	65.00	$	108.00
10/01/11 — 12/31/11				12,000	$	70.00	$	106.80
10/01/11 — 12/31/11				12,000	$	75.00	$	102.60
10/01/11 — 12/31/11				9,000	$	65.00	$	100.00
10/01/11 — 12/31/11				9,000	$	75.00	$	104.30
10/01/11 — 12/31/11				46,000	$	65.00	$	100.00
10/01/11 — 12/31/11				46,000	$	65.00	$	100.00
10/01/11 — 12/31/11				46,000	$	65.00	$	106.50
10/01/11 — 12/31/11				6,000	$	75.00	$	103.00
10/01/11 — 12/31/11				6,000	$	75.00	$	95.15
10/01/11 — 12/31/11				46,000	$	65.00	$	99.00
10/01/11 — 12/31/11				46,000	$	65.00	$	97.40
10/01/11 — 12/31/11				184,000	$	90.00	$	144.00
10/01/11 — 12/31/11				6,000	$	70.00	$	96.35
01/01/12 — 06/30/12				60,000	$	75.00	$	106.90
01/01/12 — 06/30/12				182,000	$	65.00	$	100.75
01/01/12 — 06/30/12				91,000	$	65.00	$	101.00
01/01/12 — 06/30/12				182,000	$	65.00	$	99.25
01/01/12 — 06/30/12				91,000	$	65.00	$	102.75
01/01/12 — 06/30/12				136,500	$	65.00	$	107.25
01/01/12 — 07/31/12				106,500	$	65.00	$	110.00
01/01/12 — 12/31/12				366,000	$	85.00	$	139.50
02/01/12 — 12/31/12				335,000	$	80.00	$	134.25
07/01/12 — 07/31/12				62,000	$	65.00	$	102.25
04/01/12 — 04/30/12				15,000	$	80.00	$	102.50
06/01/12 — 06/30/12				25,000	$	80.00	$	102.50
07/01/12 — 07/31/12				31,000	$	65.00	$	105.25
07/01/12 — 07/31/12				62,000	$	75.00	$	114.00
07/01/12 — 09/30/12				92,000	$	65.00	$	109.40
08/01/12 — 09/30/12				61,000	$	65.00	$	110.25
08/01/12 — 09/30/12				61,000	$	65.00	$	112.00
08/01/12 — 10/31/12				92,000	$	70.00	$	110.90
08/01/12 — 10/31/12				92,000	$	70.00	$	106.50
08/01/12 — 10/31/12				276,000	$	75.00	$	112.50
09/01/12 — 12/31/12				110,000	$	80.00	$	102.50
10/01/12 — 10/31/12				62,000	$	65.00	$	112.65
10/01/12 — 10/31/12				31,000	$	70.00	$	110.90
11/01/12 — 12/31/12				122,000	$	70.00	$	107.70
11/01/12 — 12/31/12				122,000	$	70.00	$	110.00
11/01/12 — 12/31/12				244,000	$	75.00	$	112.50
01/01/13 — 02/28/13				118,000	$	75.00	$	113.05
01/01/13 — 03/31/13				180,000	$	80.00	$	120.00
01/01/13 — 03/31/13				270,000	$	80.00	$	129.45
01/01/13 — 05/31/13				302,000	$	85.00	$	134.00
03/01/13 — 03/31/13				62,000	$	80.00	$	120.00
04/01/13 — 09/30/13				540,000	$	75.00	$	109.00

BRIGHAM EXPLORATION COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


	Crude		Purchased		Written		Written
	Oil		Put		Call		Put
Settlement Period	(Barrels)		Nymex		Nymex		Nymex
Crude Oil Three Way Costless Collars
01/01/12 — 06/30/12		136,500	$	80.00	$	107.50	$	65.00
01/01/12 — 06/30/12		136,500	$	80.00	$	107.50	$	65.00


	Natural	Crude		Purchased		Written
	Gas	Oil		Put		Call
Settlement Period	(MMBTU)	(Barrels)		Nymex		Nymex
*Crude Oil Calls*
10/01/11 —12/31/11			138,000			$	100.00
*Crude Oil Puts*
10/01/11 — 06/30/12			137,000	$	65.00
10/01/11 — 06/30/12			137,000	$	65.00
10/01/11 — 06/30/12			68,500	$	65.00
10/01/11 — 06/30/12			68,500	$	65.00
07/01/12 — 12/31/12			276,000	$	80.00

Additional Disclosures about Derivative Instruments and Hedging Activities

At September 30, 2011 and December 31, 2010, Brigham had derivative financial instruments under FASB ASC 815 recorded on the consolidated balance sheet as set forth below:


		September 30,
		2011			Dec 31, 2010
		Estimated			Estimated
Type of Contract	Balance Sheet Location	Fair Value			Fair Value
		(in thousands)			(in thousands)

Derivatives Not Designated as Hedging Instruments

Derivative Assets:
Natural gas and crude oil contracts	Other current assets	$	18,322		$	2,557
Natural gas and crude oil contracts	Other non-current assets		19,593			309

Total Derivative Assets		$	37,915		$	2,866

Derivative Liabilities:
Natural gas and crude oil contracts	Derivative liabilities - current	$	(69	)	$	(9,442	)
Natural gas and crude oil contracts	Other non-current liabilities		—			(8,575	)

Total Derivative Liabilities		$	(69	)	$	(18,017	)

BRIGHAM EXPLORATION COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the three and nine months ended September 30, 2011 and 2010, the effect on income in the consolidated statement of operations for derivative financial instruments under FASB ASC 815 was as follows:


		Three Months		Three Months
		Ended		Ended
		Sept. 30, 2011		Sept. 30, 2010
	Statement of Operations	Amount of		Amount of
Type of Contract	Location of Gain (Loss)	Gain (Loss)		Gain (Loss)
		(in thousands)		(in thousands)

Derivatives Not Designated as Hedging Instruments

Natural gas contracts	Gain (loss) on derivatives, net	$	274	$	1,689
Crude oil contracts	Gain (loss) on derivatives, net		52,820		(8,746	)

Total Derivative Gain (loss)		$	53,094	$	(7,057	)


		Nine Months		Nine Months
		Ended		Ended
		Sept. 30, 2011		Sept. 30, 2010
	Statement of Operations	Amount of		Amount of
Type of Contract	Location of Gain (Loss)	Gain (Loss)		Gain (Loss)
		(in thousands)		(in thousands)

Derivatives Not Designated as Hedging Instruments

Natural gas contracts	Gain (loss) on derivatives, net	$	476	$	4,349
Crude oil contracts	Gain (loss) on derivatives, net		50,081		(3,410	)

Total Derivative Gain (loss)		$	50,557	$	939

The use of derivative transactions involves the risk that the counterparties will be unable to meet the financial terms of such transactions. Brigham’s derivative contracts are with multiple counterparties within its credit facility bank group to minimize its exposure to any individual counterparty and Brigham has netting arrangements with all of its counterparties that provide for offsetting payables against receivables from separate derivative instruments with that counterparty.

7. Fair Values

Brigham follows the provisions under Financial Accounting Standards Board Accounting Standards Codification Topic 820 “Fair Value Measurements and Disclosures” (FASB ASC 820) as it relates to financial and nonfinancial assets and liabilities. FASB ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The three levels of the fair value hierarchy defined by FASB ASC 820 are as follows:

•

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.

As such, the fair values of Brigham’s derivative financial instruments reflect Brigham’s estimate of the default risk of the parties in accordance with FASB ASC 820. The fair value of Brigham’s derivative financial instruments is determined based on counterparties’ valuation models that utilize market-corroborated inputs. The fair value of all derivative contracts is reflected on the balance sheet as detailed in the following schedule (in thousands). The current asset and liability amounts represent the fair values expected to be included in the results of operations for the subsequent year.

BRIGHAM EXPLORATION COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


				Fair Value Measurements at September 30, 2011 Using
				Quoted Prices in		Significant Other			Significant
				Active Markets		Observable			Unobservable
	September 30,			for Identical Assets		Inputs			Inputs
Description	2011			(Level 1)		(Level 2)			(Level 3)
Derivative liabilities	$	(69	)	$	—	$	(69	)	$	—
Other non-current liabilities		—			—		—			—
Other current assets		18,322			—		18,322			—
Other non-current assets		19,593			—		19,593			—

	$	37,846		$	—	$	37,846		$	—


				Fair Value Measurements at December 31, 2010 Using
				Quoted Prices in		Significant Other			Significant
				Active Markets		Observable			Unobservable
	December 31,			for Identical Assets		Inputs			Inputs
Description	2010			(Level 1)		(Level 2)			(Level 3)
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	)	$	—

Brigham’s assessment of the significance of a particular input to the fair value measurement requires judgment and may effect the valuation on the nonfinancial assets and liabilities and their placement in the fair value hierarchy levels. The fair value of Brigham’s asset retirement obligations are determined using discounted cash flow methodologies based on inputs that are not readily available in public markets. These inputs include salvage value, estimated life, working interest, a factor for inflation, and a discount factor. The fair value of the asset retirement obligations is reflected on the balance sheet as detailed below (in thousands).


				Fair Value Measurements at September 30, 2011 Using
				Quoted Prices in		Significant Other		Significant
				Active Markets		Observable		Unobservable
	September 30,			for Identical Assets		Inputs		Inputs
Description	2011			(Level 1)		(Level 2)		(Level 3)
Other non-current liabilities		(5,403	)		—		—		(5,403	)

	$	(5,403	)	$	—	$	—	$	(5,403	)


				Fair Value Measurements at December 31, 2010 Using
				Quoted Prices in		Significant Other		Significant
				Active Markets		Observable		Unobservable
	December 31,			for Identical Assets		Inputs		Inputs
Description	2010			(Level 1)		(Level 2)		(Level 3)
Other non-current liabilities		(5,923	)		—		—		(5,923	)

	$	(5,923	)	$	—	$	—	$	(5,923	)

See Note 13, “Asset Retirement Obligations” for a rollforward of the asset retirement obligation.

BRIGHAM EXPLORATION COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Investments held by Brigham include certificates of deposit, corporate debt, and government securities. The fair value of the investments is reflected on the balance sheet as detailed below (in thousands).


			Fair Value Measurements at September 30, 2011 Using
			Quoted Prices in		Significant Other		Significant
			Active Markets		Observable		Unobservable
	September 30,		for Identical Assets		Inputs		Inputs
Description	2011		(Level 1)		(Level 2)		(Level 3)
Investments		114,738		114,738		—		—

	$	114,738	$	114,738	$	—	$	—


			Fair Value Measurements at December 31, 2010 Using
			Quoted Prices in		Significant Other		Significant
			Active Markets		Observable		Unobservable
	December 31,		for Identical Assets		Inputs		Inputs
Description	2010		(Level 1)		(Level 2)		(Level 3)
Investments		223,991		223,991		—		—

	$	223,991	$	223,991	$	—	$	—

The following table summarizes, by major security type, the fair value and any unrealized gain (loss) of Brigham’s investments (in thousands). The unrealized gain (loss) is recorded on the consolidated balance sheet as other comprehensive income (loss), a component of stockholders’ equity.


	Less Than 12 Months					12 Months or Greater				Total
			Unrealized					Unrealized				Unrealized
	Fair		Gains			Fair		Gains		Fair		Gains
Description of Securities	Value		(Losses)			Value		(Losses)		Value		(Losses)
Corporate bonds and notes	$	114,738	$	(7	)	$	—	$	—	$	114,738	$	(7	)

Total	$	114,738	$	(7	)	$	—	$	—	$	114,738	$	(7	)

The cost basis of Brigham’s investments in corporate bonds and notes (in thousands) is $116,198.

Brigham’s other financial instruments include cash and cash equivalents, accounts receivable, accounts payable and long-term debt. The carrying amount of cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of their immediate or short-term maturities. The carrying value of Brigham’s Senior Credit Facility approximates its fair market value since it bears interest at floating market interest rates. The following are estimated fair values and carrying values of our other financial instruments at each of these dates:


	September 30, 2011				December 31, 2010
	(in thousands)				(in thousands)
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
8 3/4% Senior Notes	$	300,000	$	327,000	$	300,000	$	325,500
6 7/8% Senior Notes	$	300,000	$	297,000	$	—	$	—

The fair value of Brigham’s 8 3/4% and 6 7/8% Senior Notes (as hereinafter defined) is based upon current market quotes and is the estimated amount required to purchase the 8 3/4% and 6 7/8% Senior Notes on the open market.

BRIGHAM EXPLORATION COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

8. Oil and Gas Properties

Brigham uses the full cost method of accounting for oil and gas properties. Under this method, all acquisition, exploration and development costs, including certain payroll, asset retirement costs, other internal costs, and interest incurred for the purpose of finding oil and natural gas reserves, are capitalized. Internal costs and capitalized interest are directly attributable to acquisition, exploration and development activities and do not include costs related to production, general corporate overhead or similar activities.

Capitalized costs of oil and natural gas properties, net of accumulated amortization, are limited to the present value (10% per annum discount rate) of estimated future net cash flow from proved oil and natural gas reserves, based on the oil and natural gas prices in effect on the balance sheet date including the impact of qualifying cash flow hedging instruments; plus the cost of properties not being amortized, if any; plus the lower of cost or estimated fair value of unproved properties included in the costs being amortized, if any; less related income tax effects. If net capitalized costs of oil and gas properties exceed this ceiling amount, Brigham is subject to a ceiling test write-down to the extent of such excess. A ceiling test write-down is a non-cash charge to earnings. If required, it would reduce earnings and impact stockholders’ equity in the period of occurrence and result in lower depreciation, depletion and amortization expense in future periods.

The risk that Brigham will experience a ceiling test write-down increases when oil and gas prices are depressed or if Brigham has substantial downward revisions in its estimated proved reserves. Based on the 12-month average oil and gas prices at September 30, 2011 ($4.16 per MMBtu for Henry Hub natural gas and $94.50 per barrel for West Texas Intermediate oil, adjusted for differentials), the unamortized cost of Brigham’s oil and gas properties did not exceed the ceiling limit. Therefore, Brigham was not required to writedown the net capitalized costs of its oil and gas properties at September 30, 2011.

During the second quarter 2010, Brigham sold a portion of its proved developed producing West Texas assets for $14 million with an effective date of January 1, 2010. The proceeds for the sale were applied to reduce the capitalized costs of oil and gas properties.

9. Support Infrastructure

Brigham recognizes revenue and expenses from its support infrastructure operations, which provide the usage of its oil, natural gas, produced water and fresh water gathering lines for transportation for certain operated wells. Brigham also provides produced water disposal services for certain operated wells currently drilling or that have been placed on production. Any intercompany revenues and expenses have been eliminated for financial statement presentation.

10. Senior Notes

8 3/4% Senior Notes

On September 27, 2010, Brigham issued $300 million of unregistered 8 3/4% Senior Notes due October 2018 (the “8 3/4% Senior Notes”). The notes were priced at 100% of their face value and are fully and unconditionally guaranteed by Brigham and its wholly-owned subsidiaries, Brigham, Inc. and Brigham Oil & Gas, L.P. Brigham does not have any independent assets or operations.

On September 27, 2010, in connection with the issuance of the 8 3/4% Senior Notes, Brigham tendered for and purchased $154.4 million of its 9 5/8% Senior Notes due 2014 and previously issued in 2006 and 2007. Brigham recorded a $10.9 million loss upon the purchase of the 9 5/8% Senior Notes. On October 8, 2010, Brigham redeemed the remaining $5.6 million of the 9 5/8% Senior Notes. Brigham recorded a $360,000 loss upon the redemption of the remaining 9 5/8% Senior Notes.

The indenture governing the 8 3/4% Senior Notes contains customary events of default. Upon the occurrence of certain events of default, the trustee or the holders of the 8 3/4% Senior Notes may declare all outstanding 8 3/4% Senior Notes to be due and payable immediately. The indenture also contains customary restrictions and covenants which could potentially limit Brigham’s flexibility to manage and fund its business. At September 30, 2011, Brigham was in compliance with all covenants under the indenture.

BRIGHAM EXPLORATION COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

6 7/8% Senior Notes

On May 16, 2011, Brigham issued $300 million of unregistered 6 7/8% Senior Notes due 2019 (the “6 7/8% Senior Notes”). The notes were priced at 100% of their face value and are fully and unconditionally guaranteed by Brigham and its wholly-owned subsidiaries, Brigham, Inc. and Brigham Oil & Gas, L.P. Brigham does not have any independent assets or operations.

The indenture governing the 6 7/8% Senior Notes contains customary events of default. Upon the occurrence of certain events of default, the trustee or the holders of the 6 7/8% Senior Notes may declare all outstanding 6 7/8% Senior Notes to be due and payable immediately. The indenture also contains customary restrictions and covenants which could potentially limit Brigham’s flexibility to manage and fund its business. At September 30, 2011, Brigham was in compliance with all covenants under the indenture.

11. Senior Credit Facility

In February 2011, Brigham amended and restated its Senior Credit Facility to provide for revolving credit borrowings up to $600 million, with an initial borrowing base of $325 million. Borrowings under the Senior Credit Facility cannot exceed its borrowing base, which is determined at least semi-annually. Brigham also extended the maturity of its Senior Credit Facility from July 2012 to February 2016. Brigham had no borrowings outstanding under its Senior Credit Facility at September 30, 2011 and December 31, 2010.

Borrowings under the Senior Credit Facility bear interest, at Brigham’s election, at a base rate (as the term is defined in the Senior Credit Facility) or Eurodollar rate, plus in each case an applicable margin that is reset quarterly. The applicable interest rate margin varies from 1.0% to 1.75% in the case of borrowings based on the base rate (as the term is defined in the Senior Credit Facility) and from 2.0% to 2.75% in the case of borrowings based on the Eurodollar rate, depending on percentage of the available borrowing base utilized. In addition, Brigham is required to pay a commitment fee on the unused portion of its borrowing base (0.50% at September 30, 2011). Borrowings under the Senior Credit Facility are collateralized by substantially all of Brigham’s oil and natural gas properties under first liens.

The Senior Credit Facility contains various covenants, including among other restrictions on liens, restrictions on incurring other indebtedness, restrictions on mergers, restrictions on investments, and restrictions on hedging activity of a speculative nature or with counterparties having credit ratings below specified levels. The Senior Credit Facility required Brigham to maintain a current ratio (as defined) of at least 1 to 1 and a net leverage ratio that must be no greater than 4 to 1. At September 30, 2011, Brigham was in compliance with all covenants under the Senior Credit Facility.

12. Preferred Stock

In June 2010, Brigham exercised its option to redeem all of its Series A mandatorily redeemable preferred stock at 101% of the stated value per share, which was held by DLJ Merchant Banking Partners III, L.P. and affiliated funds, which are managed by affiliates of Credit Suisse Securities (USA), LLC.

13. Asset Retirement Obligations

Brigham has asset retirement obligations associated with the future plugging and abandonment of proved properties and related facilities. Prior to the adoption of Financial Accounting Standards Board Accounting Standards Codification Topic 410 “Asset Retirement and Environmental Obligations” (FASB ASC 410), Brigham assumed salvage value approximated plugging and abandonment costs. As such, estimated salvage value was not excluded from depletion and plugging and abandonment costs were not accrued for over the life of the oil and gas properties. Under the provisions of FASB ASC 410, the fair value of a liability for an asset retirement obligation is recorded in the period in which it is incurred and a corresponding increase in the carrying amount of the related long-lived asset. The liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. If the liability is settled for an amount other than the recorded amount, a gain or loss is recognized. Brigham has no assets that are legally restricted for purposes of settling asset retirement obligations.

BRIGHAM EXPLORATION COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table summarizes Brigham’s asset retirement obligation transactions recorded in accordance with the provisions of FASB ASC 410 during the nine months ended September 30, 2011 and 2010 (in thousands):


	Nine Months Ended
	September 30,
	2011			2010
Beginning asset retirement obligations	$	5,923		$	6,323
Liabilities incurred for new wells placed on production		816			548
Liabilities settled		(1,686	)		(141	)
Accretion of discount on asset retirement obligations		350			312
Revisions to estimates due to sale of oil and gas properties		—			(1,208	)

	$	5,403		$	5,834

14. Stock Based Compensation

Brigham applies Financial Accounting Standards Board Accounting Standards Codification Topic 718 “Compensation — Stock Compensation” (FASB ASC 718) to account for stock based compensation. The cost for all stock based awards is based on the grant date fair value estimated in accordance with the provisions of FASB ASC 718 and is amortized on a straight-line basis over the requisite service period including estimates of pre-vesting forfeiture rates. If actual forfeitures differ from the estimates, additional adjustments to compensation expense may be required in future periods. The maximum contractual life of stock based awards is ten years.

The estimated fair value of the options granted during the nine months ended September 30, 2011 and 2010 was calculated using a Black-Scholes Merton option pricing model (Black-Scholes). The following table summarizes the weighted average assumptions used in the Black-Scholes model for options granted during the nine months ended September 30, 2011 and 2010:


	2011			2010
Risk-free interest rate		1.17	%		2.47	%
Expected life (in years)		5.0			5.0
Expected volatility		82	%		81	%
Expected dividend yield		—			—
Weighted average fair value per share of stock compensation	$	18.20		$	12.39

The Black-Scholes model incorporates assumptions to value stock based awards. The risk-free rate of interest for periods within the contractual life of the option is based on a zero-coupon U.S. government instrument over the contractual term of the equity instrument. Expected volatility is based on the historical volatility of Brigham’s stock for an equal period of the expected term.

Prior to the adoption of FASB ASC 718, Brigham presented all tax benefits of deductions resulting from the exercise of stock options as operating cash flows in the Consolidated Statement of Cash Flows. FASB ASC 718 requires the cash flow resulting from the tax deductions in excess of the compensation cost recognized for those options (excess tax benefits) to be classified as financing cash flows. Brigham did not record any excess tax benefits during the nine months ended September 30, 2011 and 2010.

The following table summarizes the components of stock based compensation included in general and administrative expense (in thousands):


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010
Pre-tax stock based compensation expense	$	1,668		$	1,698		$	4,926		$	3,594
Capitalized stock based compensation		(776	)		(804	)		(2,191	)		(1,662	)
Tax benefit		(312	)		(313	)		(957	)		(676	)

Stock based compensation expense, net	$	580		$	581		$	1,778		$	1,256

BRIGHAM EXPLORATION COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Stock Based Plan Descriptions and Share Information

Brigham provides an incentive plan for the issuance of stock options, stock appreciation rights, stock, restricted stock, cash or any combination of the foregoing. The objective of this plan is to provide incentive and reward key employees whose performance may have a significant impact on the success of Brigham. It is Brigham’s policy to use unissued shares of stock when stock options are exercised. As of September 30, 2011, the number of shares authorized under the plan was equal to the lesser of 9,966,033 or 12% of the total number of shares of common stock outstanding. At September 30, 2011, approximately 1,429,347 shares remain available for grant under the incentive plan. The Compensation Committee of the Board of Directors determines the type of awards made to each participant and the terms, conditions and limitations applicable to each award. Except for one series of stock option grants, options granted subsequent to March 4, 1997 have an exercise price equal to the fair market value of Brigham’s common stock on the date of grant. Options vest over five years and have a maximum contractual life of either seven or ten years.

Brigham also maintains a director stock option plan under which stock options are awarded to non-employee directors. Options granted under this plan have an exercise price equal to the fair market value of Brigham common stock on the date of grant and vest over five years. Stockholders have authorized the issuance of 1,000,000 shares to non-employee directors and approximately 516,800 shares remain available for grant under the director stock option plan.

The following table summarizes option activity under the incentive plans for the nine months ended September 30:


	2011					2010
				Weighted-					Weighted-
				Average					Average
				Exercise					Exercise
	Shares			Price		Shares			Price

Options outstanding at the beginning of the year		4,436,400		$	8.41		4,170,137		$	5.14
Granted		54,500		$	27.98		969,500		$	18.88
Forfeited or cancelled		(9,300	)	$	12.96		(16,800	)	$	3.92
Exercised		(84,020	)	$	7.98		(487,107	)	$	5.03

Options outstanding at the end of the quarter		4,397,580		$	8.65		4,635,730		$	8.03

Options exercisable at the end of the quarter		1,432,795		$	7.04		805,650		$	5.65

The weighted-average grant-date fair value per share of stock options granted during the nine months ended September 30, 2011 and 2010 was $18.20 and $12.39, respectively. The total intrinsic value of options exercised during the nine months ended September 30, 2011 and 2010 was $1.2 million and $1.2 million, respectively.

The following table summarizes information about stock options outstanding and exercisable at September 30, 2011:


	Options Outstanding					Options Exercisable
	Number		Weighted-			Number		Weighted-
	Outstanding at		Average	Weighted-		Exercisable at		Average	Weighted-
	September 30,		Remaining	Average		September 30,		Remaining	Average
Exercise Price	2011		Contractual Life	Exercise Price		2011		Contractual Life	Exercise Price
$2.20 to $3.11		1,064,000	7.5 years	$	2.24		350,000	7.4 years	$	2.25
3.66 to 5.08		357,600	4.0 years	$	5.08		89,400	4.0 years	$	5.08
5.96 to 6.23		1,586,480	7.3 years	$	5.98		652,995	6.5 years	$	6.00
7.22 to 8.77		110,000	3.1 years	$	7.51		68,000	2.8 years	$	7.44
8.93 to 13.86		214,500	5.1 years	$	11.80		92,500	2.3 years	$	11.05
14.43 to 16.85		62,000	8.7 years	$	15.24		12,400	8.7 years	$	15.24
18.36 to 27.15		969,000	8.5 years	$	19.67		167,500	8.6 years	$	19.12
28.00 to 30.20		34,000	9.8 years	$	29.31		—	—	$	—

$2.20 to $30.20		4,397,580	7.2 years	$	8.65		1,432,795	6.4 years	$	7.04

BRIGHAM EXPLORATION COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The aggregate intrinsic value of options outstanding and exercisable at September 30, 2011 was $93.5 million and $32.8 million, respectively. The aggregate intrinsic value represents the total pre-tax value (the difference between Brigham’s closing stock price on the last trading day of the quarter and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on September 30, 2011. The amount of aggregate intrinsic value will change based on the fair market value of Brigham’s stock.

As of September 30, 2011, there was approximately $14.2 million of total unrecognized compensation expense related to unvested stock based compensation plans. This compensation expense is expected to be recognized, net of forfeitures, on a straight-line basis over the remaining vesting period of approximately 5 years.

Restricted Stock

During the nine months ended September 30, 2011 and 2010, Brigham issued 273,331 and 105,363, respectively, restricted shares of common stock as compensation to officers and employees of Brigham. The restricted shares generally vest over five years or cliff-vest at the end of five years. As of September 30, 2011, there was approximately $8.8 million of total unrecognized compensation expense related to unvested restricted stock. This compensation expense is expected to be recognized, net of forfeitures, over the remaining vesting period of approximately 4.5 years. Brigham has assumed a 3% weighted average forfeiture rate for restricted stock. If actual forfeitures differ from the estimates, additional adjustments to compensation expense may be required in future periods.

The following table reflects the outstanding restricted stock awards and activity related thereto for the nine months ended September 30:


	2011					2010
				Weighted-					Weighted-
				Average					Average
	Shares			Price		Shares			Price

Restricted shares outstanding at the beginning of the year		530,883		$	8.35		556,990		$	7.04
Shares granted		273,331		$	30.85		105,363		$	14.45
Shares forfeited		(1,863	)	$	23.84		(600	)	$	5.26
Lapse of restrictions		(144,423	)	$	10.21		(119,760	)	$	7.31

Shares outstanding at the end of the quarter		657,928		$	17.25		541,993		$	8.43

During the nine months ended September 30, 2011, Brigham also issued 7,500 shares of certain non-plan stock to non-employee directors. The shares of non-plan stock vested immediately and Brigham recognized approximately $199,000 of compensation expense.

15. Comprehensive Income

For the periods indicated, comprehensive income (loss) consisted of the following (in thousands):


	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2011		2010			20101		2010

Net income (loss)	$	102,513	$	(676	)	$	174,902	$	29,112
Unrealized gains (losses) on investments		52		220			1		(1,861	)

Other comprehensive income (loss), net	$	102,565	$	(456	)	$	174,903	$	27,251

BRIGHAM EXPLORATION COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

16. Subsequent Events

On October 17, 2011, Brigham entered into a definitive merger agreement with Statoil ASA (“Parent”) and Fargo Acquisition Inc. (“Purchaser”) to purchase all the issued and outstanding shares of common stock of Brigham Exploration Company for $36.50 per share by means of an all cash tender offer net to the stockholder without interest, less any applicable with holding taxes. The tender offer commenced on October 28, 2011 and is scheduled to expire, unless extended, at 12:00 midnight, New York City time at the end of Wednesday, November 30, 2011. The agreement contains certain termination rights that provide that, upon termination of the agreement by Brigham under specified circumstances, Brigham would be required to pay a termination fee of $137 million.

17. Related Party Transactions

During the nine months ended September 30, 2011 and 2010, Brigham incurred costs of approximately $7.7 million and $7.2 million, respectively, in fees for land acquisition services performed by Brigham Land Management, owned by a brother of Brigham’s Chairman, President and Chief Executive Officer and its Executive Vice President — Land and Administration. Other participants in Brigham’s 3-D seismic projects reimbursed Brigham for a portion of these amounts. At September 30, 2011 and December 31, 2010, Brigham had a liability recorded in accounts payable of approximately $499,000 and $1,000, respectively, related to services performed by this company.

During the nine months ended September 30, 2011 and 2010, Brigham incurred costs of approximately $1.4 million and $1.4 million, respectively, in fees for services performed by a service company in which Mr. Hobart Smith, one of Brigham’s current directors, owns stock and serves as a consultant. At September 30, 2011 and December 31, 2010, Brigham had a liability recorded in accounts payable of approximately $349,000 and $219,000, respectively, related to services performed by this company.


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

The following updates information as to our financial condition provided in our 2010 Annual Report on Form 10-K, and analyzes the changes in the results of operations between the three and nine month periods ended September 30, 2011 and September 30, 2010. For definitions of commonly used oil and gas terms as used in this Form 10-Q, please refer to the “Glossary of Oil and Gas Terms” provided in our 2010 Annual Report on Form 10-K. Statements in the following discussion may be forward-looking and involve risk and uncertainty. The following discussion should be read in conjunction with our Consolidated Financial Statements and Notes hereto.

General Overview

We are an independent exploration, development and production company that utilizes advanced exploration, drilling and completion technologies to systematically explore for, develop and produce domestic onshore crude oil and natural gas reserves. We focus our activities in provinces where we believe these technologies, including horizontal drilling, multi-stage isolated fracture stimulations and 3-D seismic imaging, can be used to effectively maximize our return on invested capital.

Historically, our exploration and development activities were focused in our Onshore Gulf Coast, the Anadarko Basin and West Texas and Other provinces. However, in late 2007, the majority of our drilling capital expenditures shifted from our historically active areas to the Williston Basin, where we are currently targeting the Bakken and Three Forks objectives. We have approximately 376,000 net leasehold acres in the Williston Basin. Through the third quarter 2011, we have invested in excess of $1.2 billion on drilling, land and support infrastructure in this region. In total, we have drilled 98 consecutive long lateral high frac stage Bakken and three forks wells in North Dakota at an average early 24-hour peak rate of approximately 2,819 barrels of oil equivalent.

Our business strategy is to create value for our stockholders by growing reserves, production volumes and cash flow through exploration and development drilling in areas where we can use technology to generate high rates of return on our invested capital.

Overview of Third Quarter 2011

Third quarter 2011 crude oil prices, excluding realized and unrealized derivative hedging results, increased 26% from that in the third quarter 2010. In the third quarter 2011, the average sales price that we received for crude oil, excluding realized and unrealized derivative hedging results, was $84.60 per barrel, which represents a $17.53 per barrel increase from that in the third quarter 2010. Third quarter 2011 natural gas prices inclusive of natural gas liquids, but excluding realized and unrealized derivative hedging results, increased 29% from that in the third quarter 2010. In the third quarter 2011, the average sales price that we received for natural gas inclusive of natural gas liquids, but excluding realized and unrealized derivative hedging results, was $6.41 per Mcf, which represents a $1.43 per Mcf increase from that in the third quarter 2010.

Our third quarter 2011 production volumes were 16,380 barrels of equivalent per day, which represents a 93% increase from last year’s third quarter production volumes. Crude oil represented 86% of our production volumes in the third quarter 2011 as compared to 75% of our production volumes in the third quarter 2010. Both the increase in our production volumes and the increase in crude oil as a percent of total production volumes were as a result of our increased level of activity and successful drilling program in the Williston Basin targeting the Bakken and Three Forks objectives. Our third quarter 2011 production volumes included approximately 13,863 barrels of crude oil added to inventory during the quarter. Adjusting our third quarter 2011 production volumes for our increased level of inventory resulted in sales volumes of 16,226 barrels of equivalent per day in the third quarter 2011 versus sales volumes of 8,427 barrels of equivalent per day in the third quarter 2010.

Our third quarter 2011 crude oil revenue, including cash hedge settlements but excluding unrealized hedging gains and losses, increased $67.3 million, or 178%, compared to that in the third quarter 2010. Crude oil revenue increased $45.9 million due to higher sales volumes and $21.9 million due to higher sales prices. These increases were partially offset by a $0.5 million decrease in crude oil cash hedge settlements.

Third quarter 2011 natural gas revenue, including cash hedge settlements but excluding unrealized hedging gains and losses, increased $2.0 million from that in the third quarter 2010. Natural gas revenue increased $1.8 million due to higher sales prices and $0.5 million due to higher sales volumes. These increases were partially offset by a $0.3 million decrease in natural gas cash hedge settlements.

Third quarter 2011 operating income was $108.3 million versus $9.4 million in the third quarter last year. The improvement in revenue associated with higher sales volumes, higher commodity prices and higher unrealized mark-to-market hedging gains was partially offset by lower cash hedge settlements. Higher revenue was also partially offset by increased depletion, lease operating and production tax expenses.

As of September 30, 2011, we had $206.3 million in cash, cash equivalents and short term investments and $1.7 billion in total assets. Short term investments totaling $114.7 million consist of government sponsored entity and investment grade corporate bonds, notes and commercial paper. Maturity dates are staggered to meet anticipated funding needs, and we expect to hold these investments to maturity. All of our investments are subject to market risks if sold prior to maturity and the credit risks of the issuers. Our portfolio at September 30, 2011 also includes approximately $15.0 million in cash equivalents. Our cash is held in commercial bank accounts. See Note 7 for a discussion of the fair value of these investments and instruments.

Subsequent Events

Results for the Three and Nine Months Ended September 30, 2011

Comparison of the three month and nine month periods ended September 30, 2011 and 2010.

Production volumes


	Three months ended September 30,							Nine months ended September 30,
	2011		% Change			2010		2011		% Change			2010

Crude oil (MBbls)(1)		1,262		121	%		572		3,010		116	%		1,394
Natural gas (MMcf)		1,271		9	%		1,163		3,486		4	%		3,344
Total (MBoe)(2)		1,474		93	%		766		3,591		84	%		1,952
Average daily production (Boe/d)(3)		16,380		93	%		8,509		13,300		84	%		7,228


(1)		Includes approximately 13,863 and 7,395 barrels of crude oil produced in the Williston Basin and added to inventory during the third quarters 2011 and 2010, respectively. Includes approximately 32,751 and 17,496 barrels of crude oil produced in the Williston Basin and added to inventory during the first nine months 2011 and 2010, respectively.

(2)		Boe is defined as one barrel equivalent of crude oil, determined using the ratio of six Mcf of natural gas to one Bbl of crude oil, condensate or natural gas liquids.

(3)		Average daily production is calculated using 30 days per calendar month.

Sales Volumes (Production volumes less the Incremental Change in Inventory)


	Three months ended September 30,							Nine months ended September 30,
	2011		% Change			2010		2011		% Change			2010

Crude oil (MBbls)(1)		1,248		121	%		565		2,977		116	%		1,377
Natural gas (MMcf)		1,271		9	%		1,163		3,486		4	%		3,344
Total (MBoe)(2)		1,460		93	%		758		3,558		84	%		1,934
Average daily production (Boe/d)(3)		16,226		93	%		8,427		13,179		84	%		7,163


(1)		Excludes approximately 13,863 and 7,395 barrels of crude oil produced in the Williston Basin and added to inventory during the third quarters 2011 and 2010, respectively. Excludes approximately 32,751 and 17,496 barrels of crude oil produced in the Williston Basin and added to inventory during the first nine months 2011 and 2010, respectively.

(2)		Boe is defined as one barrel equivalent of crude oil, determined using the ratio of six Mcf of natural gas to one Bbl of crude oil, condensate or natural gas liquids.

(3)		Average daily production is calculated using 30 days per calendar month.

Crude oil represented 86% of our third quarter 2011 production volumes and 84% of our first nine months 2011 production volumes, compared to 75% in the third quarter 2010 and 71% in the first nine months 2010.

Revenues, Commodity Prices and Hedging

The following table sets forth our production volumes, the average prices we received before hedging, the average prices we received including derivative settlement gains (losses) and the average prices including derivative settlements and unrealized gains (losses).


	Three months ended September 30,									Nine months ended September 30,
	2011			% Change			2010			2011			% Change			2010

Crude oil revenue:
Crude oil revenue	$	105,617			179	%	$	37,868		$	262,574			176	%	$	95,161
Crude oil derivative settlement gains (losses)		(448	)	NM				—			(4,331	)		1,800	%		(228	)

Crude oil revenue including derivative settlements	$	105,169			178	%	$	37,868		$	258,243			172	%	$	94,933
Crude oil derivative unrealized gains (losses)		53,268		NM				(8,746	)		54,412		NM				(3,183	)

Crude oil revenue including derivative settlements and unrealized gains (losses)	$	158,437			444	%	$	29,122		$	312,655			241	%	$	91,750
Natural gas revenue:
Natural gas revenue	$	8,149			41	%	$	5,795		$	20,881			16	%	$	17,996
Natural gas derivative settlement gains (losses)		426			(44	%)		757			1,891			(22	%)		2,428

Natural gas revenue including derivative settlements	$	8,575			31	%	$	6,552		$	22,772			11	%	$	20,424
Natural gas derivative unrealized gains (losses)		(152	)	NM				932			(1,415	)	NM				1,922

Natural gas revenue including derivative settlements and unrealized gains (losses)	$	8,423			13	%	$	7,484		$	21,357			(4	%)	$	22,346
Crude oil and natural gas revenue:
Crude oil and natural gas revenue	$	113,766			161	%	$	43,663		$	283,455			150	%	$	113,157
Crude oil and natural gas derivative settlement gains (losses)		(22	)	NM				757			(2,440	)	NM				2,200

Crude oil and natural gas revenue including derivative settlements		113,744			156	%		44,420			281,015			144	%		115,357
Crude oil and natural gas derivative unrealized gains (losses)		53,116		NM				(7,814	)		52,997		NM				(1,261	)

Crude oil and natural gas revenue including derivative settlements and unrealized gains (losses)		166,860			356	%		36,606			334,012			193	%		114,096
Support infrastructure		1,242		NM				—			2,726		NM				—
Other revenue		3			(25	%)		4			8			(53	%)		17

Total revenue	$	168,105			359	%	$	36,610		$	336,746			195	%	$	114,113


	Three months ended September 30,							Nine months ended September 30,
	2011		% Change			2010		2011		% Change			2010

Average crude oil prices:
Crude oil price (per Bbl)	$	84.60		26	%	$	67.07	$	88.19		28	%	$	69.12
Crude oil price including derivative settlement gains (losses) (per Bbl)		84.24		26	%		67.07		86.74		26	%		68.97
Crude oil price including derivative settlements and unrealized gains (losses) (per Bbl)	$	126.91		146	%	$	51.58	$	105.01		58	%	$	66.64
Average natural gas prices:
Natural gas price (per Mcf)	$	6.41		29	%	$	4.98	$	5.99		11	%	$	5.38
Natural gas price including derivative settlement gains (losses) (per Mcf)		6.74		20	%		5.63		6.53		7	%		6.11
Natural gas price including derivative settlements and unrealized gains (losses) (per Mcf)	$	6.63		3	%	$	6.44	$	6.13		(8	%)	$	6.68
Average crude oil equivalent prices:
Crude oil equivalent price (per Boe)	$	77.90		35	%	$	57.57	$	79.66		36	%	$	58.51
Crude oil equivalent price including derivative settlement gains (losses) (per Boe)		77.89		33	%		58.57		78.98		32	%		59.64
Crude oil equivalent price including derivative settlements and unrealized gains (losses) (per Boe)	$	114.26		137	%	$	48.27	$	93.87		59	%	$	58.99


	For the three			For the nine
	month periods			month periods
	ended September 30,			ended September 30,
	2011 and 2010			2011 and 2010

Change in revenue from the sale of crude oil
Volume variance impact	$	45,865		$	110,628
Price variance impact		21,884			56,785
Cash settlement of hedging contracts		(448	)		(4,103	)
Unrealized hedge gain or loss		62,014			57,595

Total change	$	129,315		$	220,905

Change in revenue from the sale of natural gas
Volume variance impact	$	536		$	758
Price variance impact		1,818			2,127
Cash settlement of hedging contracts		(331	)		(537	)
Unrealized hedge gain or loss		(1,084	)		(3,337	)

Total change	$	939		$	(989	)

Change in revenue from the sale of crude oil and natural gas
Volume variance impact	$	46,401		$	111,386
Price variance impact		23,702			58,912
Cash settlement of hedging contracts		(779	)		(4,640	)
Unrealized hedge gain or loss		60,930			54,258

Total change	$	130,254		$	219,916

Third quarter 2011 crude oil and natural gas revenues including derivative cash settlements and unrealized gains (losses) increased $130.3 million when compared to the third quarter 2010. The change in revenues was attributable to the following:

•

a $53.2 million unrealized derivative gain in third quarter 2011 versus a $7.8 million unrealized derivative loss in third quarter 2010 increased revenues by $61.0 million;

•

an increase in crude oil and natural gas sales volumes of 121% and 9%, respectively, resulted in a $46.4 million increase in revenues;

•

an increase in pre-hedge crude oil and natural gas prices of 26% and 29%, respectively, increased revenues by $23.7 million; and

•

a minimal cash loss from the settlement of derivative contracts in the third quarter 2011 versus a $0.8 million cash gain from the settlement of derivative contracts in the third quarter 2010 decreased revenues by $0.8 million.

First nine months 2011 crude oil and natural gas revenues including derivative cash settlements and unrealized gains (losses) increased $219.9 million when compared to that in the first nine months 2010. The change in revenues was attributable to the following:

•

an increase in crude oil and natural gas sales volumes of 116% and 4%, respectively, drove a $111.4 million increase in revenues;

•

an increase in pre-hedge crude oil and natural gas prices of 28% and 11%, respectively, increased revenues by $58.9 million;

•

a $53.0 million unrealized derivative gain in first nine months 2011 versus a $1.3 million unrealized derivative loss in first nine months 2010 increased revenues by $54.3 million; and

•

a $2.5 million cash loss from the settlement of derivative contracts in the first nine months 2011 versus a $2.2 million cash gain from the settlement of derivative contracts in first nine months 2010 decreased revenues by $4.7 million.

Hedging. We utilize collars, three way costless collars and puts to (i) reduce the effect of price volatility on the commodities that we produce and sell, (ii) reduce commodity price risk and (iii) provide a base level of cash flow in order to assure we can execute at least a portion of our capital spending plans.

The following table details derivative contracts that settled during the third quarter and first nine months 2011 and 2010 and includes the type of derivative contract, the volume, the weighted average NYMEX reference price for those volumes, and the associated gain (loss) upon settlement.


	Three months ended September 30,								Nine months ended September 30,
	2011			% Change			2010		2011			% Change			2010

Crude oil collars
Volumes (Bbls)		698,000			117	%		322,000		1,772,000			161	%		678,000
Average floor price ($ per Bo)	$	67.69			6	%	$	63.92	$	66.61			8	%	$	61.88
Average ceiling price ($ per Bo)	$	103.57			9	%	$	94.60	$	100.55			10	%	$	91.64
Gain (loss) upon settlement ($ in thousands)	$	(448	)	NM			$	—	$	(4,331	)		1,800	%	$	(228	)

Total crude oil
Gain (loss) upon settlement ($ in thousands)	$	(448	)	NM			$	—	$	(4,331	)		1,800	%	$	(228	)

Natural gas collars
Volumes (MMbtu)		330,000			(52	%)		690,000		1,200,000			(33	%)		1,800,000
Average floor price ($ per MMbtu)	$	5.48			(1	%)	$	5.51	$	5.79			5	%	$	5.50
Average ceiling price ($ per MMbtu)	$	7.16			2	%	$	7.02	$	7.44			6	%	$	7.02
Gain (loss) upon settlement ($ in thousands)	$	426			(44	%)	$	757	$	1,891			2	%	$	1,855

Natural gas three ways
Volumes (MMbtu)		—			—	%		—		—			(100	%)		390,000
Average floor price ($ per MMbtu)	$	—			—	%	$	—	$	—			(100	%)	$	6.96
Average ceiling price ($ per MMbtu)	$	—			—	%	$	—	$	—			(100	%)	$	8.62
Average price — written puts ($ per MMbtu)	$	—			—	%	$	—	$	—			(100	%)	$	4.58
Gain (loss) upon settlement ($ in thousands)	$	—			—	%	$	—	$	—			(100	%)	$	573

Total natural gas
Gain (loss) upon settlement ($ in thousands)	$	426			(44	%)	$	757	$	1,891			(22	%)	$	2,428

Support infrastructure. Revenue from support infrastructure comes from fees related to our support infrastructure assets in the Williston Basin, including fees from crude oil, natural gas, produced water and fresh water gathering lines as well as produced water disposal wells. Two of our produced water disposal wells in our Ross and Rough Rider project areas became operational early in the fourth quarter 2010 and late in the fourth quarter 2010, respectively. A second produced water disposal well in Rough Rider became operational at the end of the second quarter 2011. Our crude oil, produced water and fresh water gathering lines are expected to be operational in the fourth quarter 2011 and first quarter 2012.

Other revenue . Other revenue relates to fees that we charge other parties who use our gas gathering systems that we own outside the Williston Basin to move their production from the wellhead to first party gas pipeline systems.

Operating costs and expenses

Production costs. We believe that per unit of production measures are the best ways to evaluate our production costs. We use this information to internally evaluate our performance, as well as to evaluate our performance relative to our peers.


	Unit-of-Production							Amount
	(Per Boe)							(In thousands)
	Three months ended September 30,							Three months ended September 30,
	2011		% Change			2010		2011		% Change			2010

Production costs:
Operating & maintenance	$	6.89		50	%	$	4.58	$	10,063		190	%	$	3,470
Expensed workovers		2.03		534	%		0.32		2,957		1,112	%		244
Ad valorem taxes		0.39		18	%		0.33		575		130	%		250

Lease operating expenses	$	9.31		78	%	$	5.23	$	13,595		243	%	$	3,964

Production taxes		7.87		40	%		5.61		11,483		170	%		4,250

Production costs	$	17.18		58	%	$	10.84	$	25,078		205	%	$	8,214

Third quarter 2011 per unit of production costs increased $6.34 per Boe, or 58%, when compared to that in the third quarter last year, primarily due to the following:

•

operating and maintenance expenses increased $2.31 per Boe, or 50%, due to increased costs associated with surface location and road repairs following the record winter snowfall melt and heavy rains and higher produced water disposal costs;

•

production taxes increased $2.26 per Boe, or 40%, 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

•

expensed workovers increased $1.71 per Boe, or 534%, due to an increase in major, non-recurring repairs following the record winter snowfall melt and heavy rains.


	Unit-of-Production							Amount
	(Per Boe)							(In thousands)
	Nine months ended September 30,							Nine months ended September 30,
	2011		% Change			2010		2011		% Change			2010

Production costs:
Operating & maintenance	$	6.19		34	%	$	4.61	$	22,014		147	%	$	8,915
Expensed workovers		1.77		13	%		1.56		6,300		109	%		3,019
Ad valorem taxes		0.48		23	%		0.39		1,725		130	%		750

Lease operating expenses	$	8.44		29	%	$	6.56	$	30,039		137	%	$	12,684

Production taxes		8.05		46	%		5.51		28,632		169	%		10,658

Production costs	$	16.49		37	%	$	12.07	$	58,671		151	%	$	23,342

First nine months 2011 per unit of production costs increased $4.42 per Boe, or 37%, when compared to the first nine months last year mainly due to the following:

•

production taxes increased $2.54 per Boe, or 46%, due to higher commodity sales prices and higher crude oil sales volumes in North Dakota, which are subject to a 11.5% tax rate;

•

operating and maintenance expenses increased $1.58 per Boe, or 34%, due to increased costs associated with surface location and road repairs following the record winter snowfall melt and heavy rains and higher produced water disposal costs; and

•

expensed workovers increased $0.21 per Boe, or 13%, due to an increase in major, non-recurring repairs following the record winter snowfall melt and heavy rains.

General and administrative expenses. We capitalize a portion of our general and administrative costs. Capitalized costs include the cost of technical employees who work directly on capital projects and a portion of our associated technical organization costs such as supervision, telephone and postage.


	Three months ended September 30,									Nine months ended September 30,
	2011			% Change			2010			2011			% Change			2010
	(In thousands, except per unit measurements)
General and administrative costs	$	6,698			7	%	$	6,255		$	19,598			12	%	$	17,503
Capitalized general and administrative costs		(3,339	)		11	%		(3,000	)		(9,692	)		15	%		(8,451	)

General and administrative expenses	$	3,359			3	%	$	3,255		$	9,906	%		9	%	$	9,052


General and administrative expense ($ per Boe)	$	2.30			(46	%)	$	4.29		$	2.78			(41	%)	$	4.68

Our general and administrative costs prior to capitalization for the third quarter 2011 increased primarily because of higher financial reporting, travel and professional costs. Our general and administrative costs prior to capitalization for the nine months ended September 2011 increased primarily because of higher compensations costs attributable to higher stock compensation costs and higher levels of employee salaries in 2011 to ensure competitive compensation levels with other oil and gas companies and a higher number of employees due to our increased activity in the Williston Basin. Our per unit costs in both the three and nine months periods ended September 2011 decreased due to our higher sales volumes.

Depletion of oil and natural gas properties . Our depletion expense is driven by many factors including certain costs spent in the exploration for and development of producing reserves, production levels, and estimates of proved reserve quantities and future developmental costs at the end of the year.


	Three months ended September 30,							Nine months ended September 30,
	2011		% Change			2010		2011		% Change			2010
	(In thousands, except per unit measurements)

Depletion of oil and natural gas properties	$	28,953		89	%	$	15,312	$	71,424		84	%	$	38,770
Depletion of oil and natural gas properties ($ per Boe)	$	19.83		(2	%)	$	20.20	$	20.07		0	%	$	20.05

Our depletion expense for the third quarter 2011 was $13.6 million higher than that in the third quarter 2010. Higher sales volumes increased depletion expense by $14.2 million, while a lower depletion rate decreased depletion expense by $0.6 million.

Our depletion expense for the first nine months 2011 was $32.7 million higher than that in the first nine months 2010. Higher sales volumes and a higher depletion rate increased depletion expense by $32.6 million and $0.1 million, respectively.

Impairment of crude oil and natural gas properties . We use the full cost method of accounting for crude oil and gas properties. Under this method, all acquisition, exploration and development costs, including certain payroll, asset retirement costs, other internal costs, and interest incurred for the purpose of finding crude oil and natural gas reserves, are capitalized. Internal costs and interest capitalized are directly attributable to acquisition, exploration and development activities and do not include costs related to production, general corporate overhead or similar activities.

Capitalized costs of crude oil and natural gas properties, net of accumulated amortization, are limited to the present value (10% per annum discount rate) of estimated future net cash flow from proved crude oil and natural gas reserves, based on the average of crude oil and natural gas prices in effect at the beginning of each month in the twelve month period prior to the end of the reporting period; plus the cost of properties not being amortized, if any; plus the lower of cost or estimated fair value of unproved properties included in the costs being amortized, if any; less related income tax effects. If net capitalized costs of crude oil and gas properties exceed this ceiling amount, we are subject to a ceiling test writedown to the extent of such excess. A ceiling test writedown is a non-cash charge to earnings and reduces stockholders’ equity in the period of occurrence. The risk that we will experience a ceiling test writedown increases when crude oil and gas prices are depressed or if we have substantial downward revisions in our estimated proved reserves.

During the three and nine month periods ended September 30, 2011 and 2010, no ceiling test impairment was recorded.

Net interest expense. Interest on our 8 3/4% and 6 7/8% Senior Notes and our Senior Credit Facility represents the largest portion of our interest expense. Other costs include commitment fees that we pay on the unused portion of the borrowing base for our Senior Credit Facility. In addition, we typically pay loan and debt issuance costs when we enter into new lending agreements or amend existing agreements. When incurred, these costs are recorded as non-current assets and are then amortized over the life of the loan. We capitalize interest costs on borrowings associated with our major capital projects prior to their completion. Capitalized interest is added to the cost of the underlying assets and is amortized over the lives of the assets.


	Three months ended September 30,									Nine months ended September 30,
	2011			% Change			2010			2011			% Change			2010
	(In thousands)

Interest on Senior Notes	$	11,719			195	%	$	3,977		$	27,250			133	%	$	11,677
Interest on Senior Credit Facility		11		NM				—			139		NM				—
Commitment fees		429			166	%		161			1,090			124	%		487
Dividend on mandatorily redeemable preferred stock		—			0	%		—			—		NM				269
Amortization of deferred loan and debt issuance cost		643			48	%		435			1,751			25	%		1,398
Other general interest expense		11		NM				—			110			9	%		101
Capitalized interest expense		(5,341	)		112	%		(2,515	)		(13,696	)		127	%		(6,039	)

Net interest expense	$	7,472			263	%	$	2,058		$	16,644			111	%	$	7,893


Weighted average debt outstanding	$	600,437			261	%	$	166,331		$	455,743			171	%	$	168,091
Average interest rate on outstanding indebtedness (a)		8.0	%					9.9	%		8.4	%					10.0	%


a)		Calculated as the sum of the interest expense on our outstanding indebtedness, commitment fees that we pay on our unused borrowing capacity and the dividend on our mandatorily redeemable preferred stock divided by our weighted average debt and preferred stock outstanding for the period.

Third quarter 2011 interest expense was $5.4 million higher than that in 2010 primarily due to a $7.7 million increase in interest expense associated with our 8 3/4% and 6 7/8% Senior Notes that were issued in September 2010 and May 2011, respectively. This increase was partially offset by a $2.8 million increase in capitalized interest expense associated with our higher level of activity in the Williston Basin.

First nine months 2011 interest expense was $8.8 million higher than that in 2010 primarily due to a $15.6 million increase in interest expense associated with our 8 3/4% and 6 7/8% Senior Notes that were issued in September 2010 and May 2011, respectively. This increase was partially offset by a $7.7 million increase in capitalized interest expense associated with our higher level of activity in the Williston Basin.

Other income (expense).

Other income (expense) included:


	Three months ended September 30,						Nine months ended September 30,
	2011			% Change	2010		2011		% Change			2010
	(In thousands)
Other income (expense):
Total other income	$	(2,333	)	NM	$	1,250	$	4,755		53	%	$	3,116

Other income decreased in third quarter 2011 as a result of costs to refurbish drilling pipe.

Capital Expenditures

The timing of most of our capital expenditures is discretionary because we operate the majority of our wells. We have long-term capital commitment expenditures with a drilling contractor for four walking drilling rigs for a three year period beginning on their delivery dates, two of which are expected to be delivered in early 2012 and two of which are expected to be delivered mid-year 2012. Other than these obligations, we have no material long-term capital expenditure commitments. Consequently, we have a significant degree of flexibility to adjust the level of our capital expenditures as circumstances warrant. Our capital expenditure program includes the following:

•

cost of acquiring and maintaining our lease acreage position;

•

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.

The capital that funds our drilling activities is allocated to individual prospects based on the value potential of a prospect, as measured by a risked net present value analysis. We start each year with a budget and re-evaluate this budget monthly. The primary factors that impact this value creation measure include forecasted commodity prices, drilling and completion costs, and a prospect’s risked reserve size and risked initial producing rate. Other factors that are also monitored throughout the year that influence the amount and timing of our planned expenditures include the level of production from our existing crude oil and natural gas properties, the availability of drilling and completion services, and the success and resulting production of our newly drilled wells. The outcome of our monthly analysis results in a reprioritization of our exploration and development drilling schedule to ensure that we are optimizing our capital expenditure plan.

The final determination with respect to our 2011 budgeted expenditures will depend on a number of factors, including:

•

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.

There can be no assurance that the budgeted wells will, if drilled, encounter commercial quantities of crude oil or natural gas.

Factors that could cause us to further increase our level of activity and capital budget in 2011 include an improvement in commodity prices or well performance that exceeds our risked forecasts, the divestiture of non-strategic conventional assets, a reduction in service and material costs, or the formation of joint ventures with other exploration and production companies outside of our core de-risked acreage positions in the Williston Basin, all of which would positively impact our operating cash flow.

Factors that would cause us to reduce our capital budget in 2011 include, but are not limited to, reductions in commodity prices or underperformance of wells relative to our risked forecasts or increases in service and materials costs, all of which would negatively impact our operating cash flow.

The table below summarizes the amount spent on oil and gas capital expenditures through September 30, 2011.


	Amount
	Spent Through
	September 30, 2011
	(In millions)
Drilling	$	514.4
Support infrastructure		49.6
Land		69.2

Oil and gas capital expenditures	$	633.2

Liquidity and Capital Resources

Sources of Capital

For the remainder of 2011, we intend to fund our capital expenditure program and contractual commitments with cash, cash equivalents, short term investments on hand as of September 30, 2011, cash flows from operations, the potential sale of interests in projects and properties, availability under our Senior Credit Facility or alternative financing sources.

8 3/4% Senior Notes

As of September 30, 2011, we had outstanding $300 million of 8 3/4% Senior Notes due 2018, which were issued in September 2010. In connection with the issuance of the 8 3/4% Senior Notes, we tendered for and purchased or redeemed $160 million of our 9 5/8% Senior Notes due 2014 in September and October 2010.

Our 8 3/4% Senior Notes are fully and unconditionally guaranteed by us, and our wholly-owned subsidiaries, Brigham, Inc. and Brigham Oil & Gas, L.P. Beginning April 2011, we paid 8 3/4% interest on the $300 million outstanding. Future interest payments are due semi-annually in arrears in October and April of each year.

The 8 3/4% Senior Notes are our unsecured senior obligations, and:

•

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.

The Indenture governing the 8 3/4% Senior Notes contains customary events of default. Upon the occurrence of certain events of default, the trustee or the holders of the 8 3/4% Senior Notes may declare all outstanding 8 3/4% Senior Notes to be due and payable immediately.

Additionally, the Indenture governing the 8 3/4% Senior Notes contains customary restrictions and covenants which could potentially limit our flexibility to manage and fund our business. We were in compliance with all covenants associated with the 8 3/4% Senior Notes as of September 30, 2011.

6 7/8% Senior Notes

As of September 30, 2011, we had outstanding $300 million of 6 7/8% Senior Notes due 2019, which were issued in May 2011.

Our 6 7/8% Senior Notes are fully and unconditionally guaranteed by us, and our wholly-owned subsidiaries, Brigham, Inc. and Brigham Oil & Gas, L.P. Beginning December 2011, we will pay 6 7/8% interest on the $300 million outstanding. Future interest payments are due semi-annually in arrears in December and June of each year.

The 6 7/8% Senior Notes are our unsecured senior obligations, and:

•

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.

The Indenture governing the 6 7/8% Senior Notes contains customary events of default. Upon the occurrence of certain events of default, the trustee or the holders of the 6 7/8% Senior Notes may declare all outstanding 6 7/8% Senior Notes to be due and payable immediately.

Additionally, the Indenture governing the 6 7/8% Senior Notes contains customary restrictions and covenants which could potentially limit our flexibility to manage and fund our business. We were in compliance with all covenants associated with the 6 7/8% Senior Notes as of September 30, 2011.

Senior Credit Facility

Our Senior Credit Facility provides for revolving credit borrowings up to $600 million, a current borrowing base of $325 million and a five year maturity. As of September 30, 2011, we had no amounts outstanding under our Senior Credit Facility.

The borrowing base under our Senior Credit Facility will be redetermined at least semi-annually and the amount of borrowing capacity available to us under the Senior Credit Facility could fluctuate. In early November 2011, banks in our Senior Credit Facility waived conducting the regularly scheduled fall redetermination in light of our acquisition by Statoil ASA announced on October 17, 2011 and as discussed further in Subsequent Events. Depending on the results and timing of Statoil ASA’s tender offer, we may elect to schedule a redetermination in December. In the event that we schedule a redetermination in December and the borrowing base is adjusted below the amount that we have borrowed, our access to further borrowings will be reduced, and we may not have the resources necessary to pay off the borrowing base deficiency and carry out our planned spending for exploration and development activities.

Borrowings under our Senior Credit Facility bear interest at a base rate or a Eurodollar rate, at our election, plus in each case an applicable margin. These margins are reset quarterly and are subject to increase if the total amount borrowed under our Senior Credit Facility reaches certain percentages of the available borrowing base, as shown below:


Percent of	Eurodollar
Borrowing Base	Rate			Base Rate			Commitment
Utilized	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.

Our Senior Credit Facility also contains customary restrictions and covenants. Should we be unable to comply with these or other covenants, our senior lenders may be unwilling to waive compliance or amend the covenants and our liquidity may be adversely affected. Pursuant to our Senior Credit Facility, our current ratio must be at least 1.0 to 1 and net leverage ratio must not be greater than 4.00 to 1. As of September 30, 2011, we were in compliance with the covenants under our Senior Credit Facility.

Mandatorily Redeemable Preferred Stock

In June 2010, we exercised our option to redeem all of our Series A mandatorily redeemable preferred stock at 101% of the stated value per share, which was held by DLJ Merchant Banking Partners III, L.P. and affiliated funds, which are managed by affiliates of Credit Suisse Securities (USA), LLC.

Off Balance Sheet Arrangements

We currently have operating leases, which are considered off balance sheet arrangements. We do not currently have any other off balance sheet arrangements or other such unrecorded obligations, and we have not guaranteed the debt of any other party. We do not believe that these arrangements are reasonably likely to materially affect our liquidity or availability of, or requirements for, capital resources.

Analysis of Changes in Cash and Cash Equivalents

The table below summarizes our sources and uses of cash during the periods indicated.


	Nine months ended September 30,
	2011			% Change			2010
	(In thousands)

Net income (loss)	$	174,902			501	%	$	29,112
Non-cash items		32,565			(41	%)		55,556
Changes in working capital and other items		35,916			320	%		8,553

Cash flows provided by operating activities	$	243,383			161	%	$	93,221
Cash flows (used) by investing activities		(465,580	)		14	%		(408,241	)
Cash flows provided by financing activities		289,998			(28	%)		400,243

Net increase in cash and cash equivalents	$	67,801			(20	%)	$	85,223

Analysis of net cash provided by operating activities

Net cash provided by operating activities is a function of the amount of crude oil and natural gas that we produce, the prices that we receive from the sale of crude oil and natural gas, which are inherently volatile and unpredictable, gains or losses related to the settlement of our derivative contracts, operating costs and our cost of capital. Our asset base, as with other extractive industries, is a depleting one in which each barrel of crude oil or Mcf of natural gas produced must be replaced or our ability to generate cash flow, and thus sustain our exploration and development activities, will diminish.

Net cash provided by operating activities for the first nine months 2011 was $150.2 million higher than the first nine months 2010. The following are the primary reasons for the increase:

•

higher crude oil and natural gas sales volumes increased operating cash flow by $111.3 million;

•

higher crude oil and natural gas sales prices increased operating cash flow by $58.9 million;

•

higher production taxes decreased operating cash flow by $18.0 million; and

•

higher lease operating costs decreased operating cash flow by $17.4 million.

Analysis of changes in cash flows used in investing activities


	Nine months ended September 30,
	2011			% Change			2010
	(In thousands)
Capital expenditures for oil and natural gas activities:
Drilling	$	514,421			160	%	$	197,970
Support infrastructure		49,593			205	%		16,259
Land		69,199			(33	%)		103,172
Capitalized cost		21,806			51	%		14,489
Capitalized asset retirement obligation		816			49	%		547

Total	$	655,835			97	%	$	332,437


Reconciling Items:
Asset sale proceeds including ARO liability reduction	$	—			(100	%)	$	(13,706	)
Change in accrued drilling costs		(94,821	)		128	%		(41,605	)
Change in drilling advances paid		(550	)	NM				1,397
Change in short term investments		(109,254	)	NM				111,035
Change in other property and equipment		7,447		NM				4,500
Change in inventory		18,279			23	%		14,805
Other		(11,356	)		1,726	%		(622	)

Total Reconciling Items		(190,255	)	NM				75,804

Net cash used in investing activities	$	465,580			14	%	$	408,241

Net cash used by investing activities was impacted by the following items during in the first nine months 2011:

•

drilling expenditures increased by $316.5 million;

•

support infrastructure expenditures increased by $33.3 million;

•

land expenditures decreased by $34.0 million;

•

capitalized costs increased by $7.3 million;

•

the change in accrued drilling costs decreased cash used in investing activities by $53.2 million;

•

the change in short term investments decreased cash used in investing activities by $220.3 million; and

•

the change in inventory increased cash used in investing activities by $3.5 million.

Analysis of changes in cash flows from financing activities

Net cash provided by financing activities in the first nine months of 2011 was 28% less than the first nine months of 2010. During the first nine months 2011, we received net proceeds of $294.4 million associated with our May 2011 6 ⁷ / ₈ % Senior Notes offering. During the first nine months 2010, we received net proceeds of $277.5 million from our April 2010 common stock offering and $146.5 million from our September 2010 8 3/4% Senior Notes offering.

Common Stock Transactions

The following is a list of common stock transactions that occurred in the nine months ended September 30, 2011 and 2010.


	Shares Issued		Net Proceeds
	(In thousands, except share data)
2011 common stock transactions:
Exercise of employee stock options		84,020	$	670

2010 common stock transactions:
Common stock offering (April)		16,100,000	$	277,547
Exercise of employee stock options		487,107	$	2,484

Other Matters

Derivative Instruments

Our results of operations and operating cash flow are impacted by changes in market prices for crude oil and natural gas. We believe the use of derivative instruments, although not free of risk, allows us to reduce our exposure to crude oil and natural gas sales price fluctuations and thereby achieve a more predictable cash flow. While the use of derivative instruments limits the downside risk of adverse price movements, their use may also limit future revenues from favorable price movements. Moreover, our derivative contracts generally do not apply to all of our production and thus provide only partial price protection against declines in commodity prices. We expect that the amount of our derivative contracts will vary from time to time.

Effects of Inflation and Changes in Prices

Our results of operations and cash flows are affected by changing crude oil and natural gas prices. If the price of crude oil and natural gas increases (decreases), there could be a corresponding increase (decrease) in revenues as well as the operating costs that we are required to bear for operations.

Environmental and Other Regulatory Matters

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

Forward-looking Information

We or our representatives may make forward-looking statements, oral or written, including statements in this report, press releases and filings with the SEC, regarding estimated future net revenues from crude oil and natural gas reserves and the present value thereof, planned capital expenditures (including the amount and nature thereof), increases in crude oil and natural gas production, the number of wells we anticipate drilling during 2011 and our financial position, business strategy and other plans and objectives for future operations. Although we believe that the expectations reflected in these forward-looking statements are reasonable, there can be no assurance that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected effects on our business or operations. Among the factors that could cause actual results to differ materially from our expectations are general economic conditions, inherent uncertainties in interpreting engineering data, operating hazards, delays or cancellations of drilling operations for a variety of reasons, competition, fluctuations in crude oil and natural gas prices, availability of sufficient capital resources to us or our project participants, government regulations and other factors set forth among the risk factors noted in our Form 10-K report for the year ended December 31, 2010, including, but not limited to, the Risk Factors identified in Item 1A. of such report. All subsequent oral and written forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these factors. We assume no obligation to update any of these statements.


ITEM 3.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Management Opinion Concerning Derivative Instruments

We use derivative instruments to manage exposure to commodity prices and interest rate risks. Our objectives for holding derivatives are to achieve a consistent level of cash flow to support a portion of our planned capital spending. Our use of derivative instruments for hedging activities could materially affect our results of operations in particular quarterly or annual periods since such instruments can limit our ability to benefit from favorable price movements. We do not enter into derivative instruments for trading purposes. See Notes 6 and 7 for more details.

Derivative Instruments and Hedging Activities

Our primary commodity market risk exposure is to changes in the prices that we receive for our crude oil and natural gas production. The market prices for crude oil and natural gas have been highly volatile and are likely to continue to be highly volatile in the future. As such, we employ established policies and procedures to manage our exposure to fluctuations in the sales prices we receive for our crude oil and natural gas production via derivative instruments.

While the use of derivative instruments limits the downside risk of adverse price movements, their use may also limit future revenues from favorable price movements. Moreover, our derivative contracts generally do not apply to all of our production and thus provide only partial price protection against declines in commodity prices. We expect that the amount of our derivative contracts will vary from time to time.

During 2010 and through September 30, 2011, we were party to crude oil costless collars, crude oil puts, natural gas costless collars and natural gas three-way costless collars.

We use costless collars to establish floor (purchased put option) and ceiling prices (written call option) on our anticipated future crude oil and natural gas production. We do not pay or receive net premiums when we enter into these option arrangements. These contracts are settled monthly. When the settlement price for a period is above the ceiling price (written call option), we pay our counterparty. When the settlement price for a period is below the floor price (purchased put option), our counterparty is required to pay us.

A three-way costless collar consists of a costless collar (purchased put option and written call option) plus a put (written put) sold by us with a price below the floor price (purchased put option) of the costless collar. We receive no net premiums when we enter into these option arrangements. These contracts are settled monthly. The written put requires us to make a payment to our counterparty if the settlement price for a period is below the written put price. Combining the costless collar (purchased put option and written call option) with the written put results in us being entitled to a net payment equal to the difference between the floor price (purchased put option) of the costless collar and the written put price if the settlement price is equal to or less than the written put price. If the settlement price is greater than the written put price, the result is the same as it would have been with a costless collar. This strategy enables us to increase the floor and the ceiling price of the collar beyond the range of a traditional costless collar while offsetting the associated cost with the sale of the written put.

We also use put options to establish floor prices (purchased put option) on our anticipated future crude oil production. We pay an initial premium when we enter into these option arrangements. These contracts are settled monthly. When the settlement price for a period is below the floor price (purchased put option), our counterparty is required to pay us.

Natural gas derivative transactions are generally settled based upon the average reported settlement prices on the NYMEX for the last three trading days of a particular contract month. Crude oil derivative transactions are generally settled based on the average reported settlement prices on the NYMEX for each trading day of a particular calendar month.

The following tables reflect our open crude oil and natural gas contracts as of September 30, 2011, the associated volumes and the corresponding weighted average NYMEX floor and cap price.


	Crude		Purchased		Written
	Oil		Put		Call
Settlement Period	(Bbls)		(Nymex)		(Nymex)
*Crude Oil Costless Collars*
10/01/11 — 12/31/11		21,000	$	65.00	$	88.25
10/01/11 — 12/31/11		15,000	$	60.00	$	97.25
10/01/11 — 12/31/11		15,000	$	65.00	$	108.00
10/01/11 — 12/31/11		12,000	$	70.00	$	106.80
10/01/11 — 12/31/11		12,000	$	75.00	$	102.60
10/01/11 — 12/31/11		6,000	$	75.00	$	103.00
10/01/11 — 12/31/11		6,000	$	70.00	$	96.35
10/01/11 — 12/31/11		6,000	$	75.00	$	95.15
10/01/11 — 12/31/11		9,000	$	75.00	$	104.30
01/01/12 — 06/30/12		60,000	$	75.00	$	106.90
10/01/11 — 12/31/11		9,000	$	65.00	$	100.00
10/01/11 — 07/31/12		152,500	$	65.00	$	97.20
10/01/11 — 07/31/12		152,500	$	65.00	$	98.55
10/01/11 — 07/31/12		152,500	$	65.00	$	100.00
10/01/11 — 07/31/12		152,500	$	65.00	$	100.40
10/01/11 — 12/31/11		46,000	$	65.00	$	97.40
01/01/12 — 06/30/12		182,000	$	65.00	$	99.25
10/01/11 — 12/31/11		46,000	$	65.00	$	99.00
01/01/12 — 06/30/12		91,000	$	65.00	$	101.00
01/01/12 — 06/30/12		182,000	$	65.00	$	100.75
01/01/12 — 06/30/12		91,000	$	65.00	$	102.75
07/01/12 — 07/31/12		62,000	$	65.00	$	102.25
10/01/11 — 12/31/11		46,000	$	65.00	$	100.00
07/01/12 — 07/31/12		31,000	$	65.00	$	105.25
10/01/11 — 12/31/11		46,000	$	65.00	$	106.50
10/01/11 — 12/31/11		46,000	$	65.00	$	100.00
01/01/12 — 06/30/12		136,500	$	65.00	$	107.25
07/01/12 — 09/30/12		92,000	$	65.00	$	109.40
08/01/12 — 09/30/12		61,000	$	65.00	$	110.25
08/01/12 — 09/30/12		61,000	$	65.00	$	112.00
10/01/12 — 10/31/12		62,000	$	65.00	$	112.65
01/01/12 — 07/31/12		106,500	$	65.00	$	110.00
08/01/12 — 10/31/12		92,000	$	70.00	$	110.90
10/01/12 — 10/31/12		31,000	$	70.00	$	110.90
08/01/12 — 10/31/12*		92,000	$	70.00	$	106.50
11/01/12 — 12/31/12		122,000	$	70.00	$	107.70
11/01/12 — 12/31/12		122,000	$	70.00	$	110.00
10/01/11 — 12/31/11*		138,000	$	65.00	$	100.00
08/01/12 — 10/31/12		276,000	$	75.00	$	112.50
11/01/12 — 12/31/12		244,000	$	75.00	$	112.50
07/01/12 — 07/31/12		62,000	$	75.00	$	114.00
01/01/13 — 02/28/13		118,000	$	75.00	$	113.05
01/01/13 — 03/31/13		180,000	$	80.00	$	120.00
03/01/13 — 03/31/13		62,000	$	80.00	$	120.00
02/01/12 — 12/31/12		335,000	$	80.00	$	134.25
01/01/13 — 03/31/13		270,000	$	80.00	$	129.45
10/01/11 — 12/31/11		184,000	$	90.00	$	144.00
01/01/12 — 12/31/12		366,000	$	85.00	$	139.50
01/01/13 — 05/31/13		302,000	$	85.00	$	134.00
01/01/12 — 06/30/12**		136,500	$	80.00	$	107.50
01/01/12 — 06/30/12**		136,500	$	80.00	$	107.50
04/01/12 — 04/30/12		15,000	$	80.00	$	102.50
06/01/12 — 06/30/12		25,000	$	80.00	$	102.50
09/01/12 — 09/30/12		20,000	$	80.00	$	102.50
10/01/12 — 12/31/12		90,000	$	80.00	$	102.50
04/01/13 — 09/30/13		540,000	$	75.00	$	109.00


*		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.

**		Crude oil collar was completed in two phases. First, the put option(floor) was purchased. Subsequently, a three-way costless collar was purchased to convert the position into a collar with a higher floor price.


	Crude		Purchased
	Oil		Put
Settlement Period	(Bbls)		(Nymex)
*Crude Oil Puts*
07/01/12 — 12/31/12		276,000	$	80.00


	Natural		Purchased		Written
	Gas		Put		Call
Settlement Period	(MMbtu)		(Nymex)		(Nymex)
*Natural Gas Costless Collars*
10/01/11 — 12/31/11		90,000	$	5.75	$	7.65
10/01/11 — 12/31/11		120,000	$	5.75	$	7.40
10/01/11 — 12/31/11		120,000	$	5.00	$	6.55


ITEM 4.		CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of September 30, 2011, our management, including our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon and as of the date of the evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective at a reasonable assurance level.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting during the third quarter of 2011 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION


ITEM 1.		LEGAL PROCEEDINGS

As discussed in Note 3 of Notes to the Consolidated Financial Statements included in Part I. Financial Statements, Brigham is party to various legal actions arising in the ordinary course of business and does not expect these matters to have a material adverse effect on its consolidated financial condition, results of operations or cash flows.

On Monday, October 17, 2011, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Statoil ASA (“Statoil”) and its indirect, wholly-owned subsidiary Fargo Acquisition, Inc. (“Purchaser”), pursuant to which Purchaser would commence an all-cash tender offer to purchase all outstanding shares of the Company’s common stock. Subject to certain conditions, after completion of the tender offer, Purchaser would merge with the Company, with the Company surviving as a wholly-owned subsidiary of Statoil. The tender offer was commenced by Purchaser on October 28, 2011, and on that date the Company filed a Solicitation/Recommendation Statement on Schedule 14D-9 (the “Schedule 14D-9”) with the Securities and Exchange Commission (“SEC”) under the Securities Exchange Act of 1934, in which the Company’s Board of Directors unanimously recommended to the Company’s stockholders that they accept the tender offer and, if necessary under applicable law, vote their shares to approve the proposed merger. Under the terms of the tender offer, each stockholder is entitled to receive $36.50 per share, net to the stockholder in cash, without interest. The tender offer is scheduled to expire on November 30, 2011, unless extended by Purchaser. Following the announcement of the tender offer, several separate Plaintiffs filed putative class action lawsuits in Texas and Delaware against the Company and its Board of Directors. These lawsuits also include certain claims against Statoil and, in some cases, Purchaser. Each lawsuit purports to represent the same class of individuals, that is, the Company’s stockholders. Six suits were filed in Travis County, Texas and six suits were filed in the Chancery Court of the State of Delaware. Following these initial filings, the plaintiffs in the Delaware suits amended their claims and consolidated their pleadings into one lawsuit filed in the Court of Chancery in the State of Delaware, The Edward J. Goodman Life Income Trust et al. v. Brigham Exploration Company, et al. The Company filed a motion with the Travis County Court requesting that the Court consolidate the six suits pending in that court and then stay the consolidated case in favor of the litigation pending in the Delaware Court of Chancery. A hearing on this motion to consolidate and stay the Texas litigation is scheduled for Wednesday, November 9, 2011. The Delaware and Texas suits seek certification of a class of the Company’s stockholders and generally allege, among other things, that (i) members of the Board of Directors breached their fiduciary duties in connection with the Merger Agreement by failing to maximize stockholder value, agreeing to preclusive deal protection provisions, engaging in self-dealing, failing to protect against conflicts of interest and by filing a materially false and misleading Schedule 14D-9 with the SEC; and (ii) the Company aided and abetted the Board of Directors’ purported breaches of fiduciary duties. The Delaware and Texas suits seek, among other relief, an injunction prohibiting the tender offer and requiring the Company to implement new procedures and processes to obtain a new merger agreement, the imposition of a constructive trust in favor of the plaintiffs and the members of the proposed class upon any benefits improperly received by defendants as a result of their alleged wrongful conduct, rescission for any portions of the tender offer already implemented, damages, costs and attorneys’ and experts’ fees. We believe the Delaware and Texas actions are without merit and intend to defend ourselves vigorously. The six lawsuits filed in the Chancery Court of the State of Delaware as described above are: Weisberg v. Brigham Exploration Company et al. , Case No. 6957 (filed on October 20, 2011), Fioravanti v. Brigham Exploration Company et al. , Case No. 6962 (filed on October 21, 2011), Teamsters Allied Benefit Funds v. Brigham Exploration Company et al. , Case No. 6975 (filed on October 25, 2011), The Edward J. Goodman Life Income Trust and the Edward J. Goodman Generation Skipping Trust v. Brigham Exploration Company et al. , Case No. 6969 (filed on October 25, 2011), Oklahoma Law Enforcement Retirement System v. Brigham Exploration Company et al. , Case No. 6980 (filed on October 26, 2011), and Oklahoma Police Pension & Retirement System v. Brigham Exploration Company et al. , Case No. 6982 (filed on October 26, 2011). The six lawsuits filed in the District Court in Travis County, Texas as described above are: Boytim v. Brigham Exploration Company et al. , Case No. D-1-GN-11-003205 (filed on October 17, 2011), Duncan v. Brigham Exploration Company et al. , Case No. D-1-GN-11-003215 (filed on October 18, 2011), Giske v. Brigham Exploration Company et al. , Case No. D-1-GN-11-003227 (filed on October 19, 2011), Fioravanti v. Brigham Exploration Company et al. , Case No. D-1-GN-11-003258 (filed on October 24, 2011), Schwimmer v. Brigham Exploration Company et al. , Case No. D-1-GN-11-00317 (filed on October 28, 2011), and Ohler v. Brigham Exploration Company et al. , Case No. D-1-GN-11-003418 (filed on November 7, 2011).


ITEM 1A.		RISK FACTORS

There have been no material changes to the risk factors disclosed in Item 1A. of our report on Form 10-K for the year ended December 31, 2010 except as stated below.

Failure to complete or delays in completing our pending acquisition by affiliates of Statoil ASA could negatively affect our stock price and our future business, operations and financial results.

On October 17, 2011, we entered into an Agreement and Plan of Merger with Statoil ASA (“Parent”) and Fargo Acquisition Inc., a wholly owned subsidiary of Parent (“Purchaser”), pursuant to which Purchaser will commence an offer (the Offer) to acquire all of the outstanding shares of our common stock, par value $0.01 per share, for $36.50 per share, net to the stockholder in cash, without interest. The Offer commenced on October 28, 2011 and will remain open until November 30, 2011, subject to extension under certain circumstances. The Agreement and Plan of Merger also provides that following consummation of the Offer and satisfaction or waiver of certain customary conditions, Purchaser will be merged with and into the Company, with the Company surviving as a wholly owned subsidiary of Parent. There is no assurance that Purchaser will consummate the Offer or the merger. If the transactions contemplated by the Agreement and Plan of Merger are not completed for any reason, we may be subject to a number of risks, including the following:

•

the current market price of our common stock may reflect a market assumption that the Offer will be consummated and the merger will occur and a failure to consummate the Offer and the merger could result in a negative perception of us by the stock market and cause a decline in the market price of our common stock;

•

certain costs relating to the Agreement and Plan of Merger, including certain investment banking, financing, legal and accounting fees and expenses, must be paid even if the merger is not completed, and we may be required to pay a fee of $137 million to Parent if the Agreement and Plan of Merger is terminated under specified circumstances; and

•

we would continue to face the risks that we currently face as an independent company.

The pending transactions with Parent may cause disruption in our business and management and present difficulties attracting, motivating and retaining executives and other key employees.

Parties with which we do business may experience uncertainty associated with the transactions contemplated in the Agreement and Plan of Merger, including with respect to current or future business relationships, and our management and employees may be distracted from day-to-day operations because matters related to the merger may require substantial commitments of time and resources. In addition, the Agreement and Plan of Merger restricts us from making certain acquisitions and taking other specified actions without Parent’s approval. These restrictions could prevent us from pursuing attractive business opportunities that may arise prior to the completion of the merger. These disruptions could have an adverse effect on our business, financial condition, results of operations or prospects. The adverse effect of such disruptions could be exacerbated by a delay in the consummation of the Offer and the completion of the merger or the termination of the Agreement and Plan of Merger. In addition, uncertainty about the effect of the merger on our employees may have an adverse effect on us. This uncertainty may impair our ability to attract, retain and motivate key personnel until the merger is completed. Employee retention may be particularly challenging during the pendency of the merger, as employees may experience uncertainty about their future roles with Parent.

The Agreement and Plan of Merger restricts our ability to pursue alternatives to the merger.

The Agreement and Plan of Merger contains “no shop” provisions that, subject to limited fiduciary exceptions, restrict our ability to initiate, solicit, encourage or facilitate, discuss, negotiate or accept a competing third party proposal to acquire all or a significant part of us. Further, there are only a limited number of exceptions that would allow our board of directors to withdraw or change its recommendation to holders of our common stock that they tender their shares of common stock in the Offer and that stockholder vote in favor of the adoption of the Agreement and Plan of Merger. If our board of directors were to take such actions as permitted by the Agreement and Plan of Merger, doing so in specified situations could entitle Parent to terminate the Agreement and Plan of Merger and to be paid a termination fee of 137.0 million. These restrictions could deter a potential acquirer from proposing an alternative transaction.


ITEM 2.		UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

In the third quarter 2011, we elected to allow employees to deliver shares of vested restricted stock with a fair market value equal to their federal, state and local tax withholding amounts on the date of issue in lieu of cash payment.


							Maximum
							Number (or
							Approximate
							Dollar Value) of
					Total Number of		Shares that May
					Shares Purchased		Yet Be
					as Part of Publicly		Purchased Under
	Total Number of		Average Price		Announced Plans		the Plans or
Period	Shares Purchased		Paid per Share		or Programs		Programs
July 2011		—	$	—		—		—
August 2011		—		—		—		—
September 2011		7,915		28.45		—		—

Total		7,915	$	28.45		—		—


ITEM 3.		DEFAULTS UPON SENIOR SECURITIES

None.


ITEM 4.		(REMOVED AND RESERVED)


ITEM 5.		OTHER INFORMATION

None.

ITEM 6. EXHIBITS


	2.1		Agreement and Plan of Merger dated October 17, 2011 by and among Statoil ASA, Fargo Acquisition Inc. and Brigham Exploration Company (filed as Exhibit 2.1to Brigham’s Current Report on Form 8-K (filed October 21, 2011) and incorporated herein by reference)

	2.2		Tender and Voting Agreement dated as of October 17, 2011 by and among Statoil ASA, Fargo Acquisition Inc. and the directors and executive officers of Brigham Exploration Company (filed as Exhibit 2.2 to Brigham’s Current Report on Form 8-K (filed October 21, 2011) and incorporated herein by reference)

	3.1		Certificate of Incorporation (filed as Exhibit 3.1 to Brigham’s Registration Statement on Form S-1 (Registration No. 333-22491) and incorporated herein by reference)

	3.2		Certificates of Amendment of Certificate of Incorporation of Brigham Exploration Company dated May 6, 1999 and May 22, 2000 (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 dated 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 dated 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		Indenture, dated September 27, 2010, among Brigham Exploration Company, Brigham, Inc., Brigham Oil & Gas, L.P. 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)

	4.10		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)

	4.11		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)

	4.12	*	Indenture, dated May 19, 2011, among Brigham Exploration Company, Brigham, Inc., Brigham Oil & Gas, L.P. and Wells Fargo Bank, National Association, as Trustee

	4.13	*	Rule 144A 6 7/8% Senior Note due 2019 and Notation of Guarantee

	4.14	*	Regulation S 6 7/8% Senior Note due 2019 and Notation of Guarantee

	4.15	*	Registration Rights Agreement dated May 19, 2011, among Brigham Exploration Company, Brigham, Inc., Brigham Oil & Gas, L.P., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Credit Suisse Securities (USA) LLC, as representatives for the several initial purchasers

	31.1	*	Certification of Chief Executive Officer of the Company pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934

	31.2	*	Certification of Chief Financial Officer of the Company pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934

	32.1	*	Certification of Chief Executive Officer of the Company pursuant to 18 U.S.C. § 1350

	32.2	*	Certification of Chief Financial Officer of the Company pursuant to 18 U.S.C. § 1350

101.INS		**	XBRL Instance Document

101.SCH		**	XBRL Schema Document

101.CAL		**	XBRL Calculation Linkbase Document

101.LAB		**	XBRL Label Linkbase Document

101.PRE		**	XBRL Presentation Linkbase Document

101.DEF		**	XBRL Definition Linkbase Document


*		Filed herewith.

**		Furnished herewith.


	3.4			Certificate of Amendment to Certificate of Incorporation of Brigham Exploration Company dated June 14, 2006 (filed as Exhibit 3.4 to Brigham’s Annual Report on Form 10-K for the year ended December 31, 2008 and incorporated herein by reference)

	3.5			Certificate of Amendment to Certificate of Incorporation of Brigham Exploration Company dated October 7, 2009 (filed as Exhibit 3.5 to Brigham’s Current Report on Form 8-K (dated October 13, 2009) and incorporated herein by reference)

	4.1			Form of Common Stock Certificate (filed as Exhibit 4.1 to Brigham’s Registration Statement on Form S-1 (Registration No. 333-22491) and incorporated herein by reference)

	4.2			Certificate of Designations of Series A Preferred Stock (Par Value $.01 Per Share) of Brigham Exploration Company filed October 31, 2000 (filed as Exhibit 4.1 to Brigham’s Current Report on Form 8-K, as amended (filed November 8, 2000) and incorporated herein by reference)

	4.3			Certificate of Amendment of Certificate of Designations of Series A Preferred Stock (Par Value $.01 Per Share) of Brigham Exploration Company, filed March 2, 2001 (filed as Exhibit 4.2.1 to Brigham’s Annual Report on Form 10-K for the year ended December 31, 2000 (filed March 23, 2001) and incorporated herein by reference)

	4.4			Certificate of 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 (filed March 31, 2003) 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			Indenture, dated April 20, 2006, among Brigham Exploration Company, the Guarantors named therein and Wells Fargo Bank, N.A., as trustee (filed as Exhibit 4.1 to Brigham’s Current Report on Form 8-K (filed April 24, 2006) and incorporated herein by reference)

	4.8			Notations of Guarantees, dated April 20, 2006, among Brigham Exploration Company, the Guarantors named therein and Wells Fargo Bank, N.A., as trustee, (filed as Exhibit 4.2 to Brigham’s Current Report on Form 8-K (filed April 24, 2006) and incorporated herein by reference)

	4.9			Rule 144A 9 5/8% Senior Notes due 2014, dated April 20, 2006 (filed as Exhibit 4.3 to Brigham’s Current Report on Form 8-K (filed April 24, 2006) and incorporated herein by reference)

	4.10			Reg S 9 5/8% Senior Notes due 2014, dated April 20, 2006 (filed as Exhibit 4.4 to Brigham’s Current Report on Form 8-K (filed April 24, 2006) and incorporated herein by reference)

	4.11			Notations of Guarantees dated as of April 9, 2007, among Brigham Exploration Company, the Guarantors named therein and Wells Fargo Bank, N.A., as trustee (filed as Exhibit 4.2 to Brigham’s Current Report on Form 8-K (filed April 13, 2007) and incorporated in by reference)

	4.12			Rule 144A 9 5/8% Senior Notes due 2014 (filed as Exhibit 4.3 to Brigham’s Current Report on Form 8-K (filed April 13, 2007) and incorporated in by reference)

	4.13			Reg S 9 5/8% Senior Notes due 2014 (filed as Exhibit 4.4 to Brigham’s Current Report on Form 8-K (filed April 13, 2007) and incorporated herein by reference)


	4.14			Rights Agreement, dated as of December 10, 2008, between Brigham Exploration Company and American Stock Transfer & Trust Company, LLC, as Rights Agent (filed as Exhibit 4.1 to Brigham’s Current Report on Form 8-K (filed December 11, 2008) and incorporated herein by reference)

	4.15			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)

	4.16			Certificate of Elimination of Certificate of Designations of Series C Junior 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)

	4.17			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)

	4.18			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)

	4.19			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)

	4.20			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)

	4.21			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)

	10.48			Seventh Amendment and Consent to the Fourth Amended and Restated Credit Agreement dated as of June 29, 2005 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)

	10.49			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)

	31.1			Certification of Chief Executive Officer of the Company pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934

	31.2			Certification of Chief Financial Officer of the Company pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934

	32.1			Certification of Chief Executive Officer of the Company pursuant to 18 U.S.C. § 1350

	32.2			Certification of Chief Financial Officer of the Company pursuant to 18 U.S.C. § 1350

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on November 7, 2011.


	BRIGHAM EXPLORATION COMPANY
	By:	/s/ BEN M. BRIGHAM
		Ben M. Brigham
		Chief Executive Officer, President and Chairman of the Board

	By:	/s/ EUGENE B. SHEPHERD, JR.
		Eugene B. Shepherd, Jr.
		Executive Vice President and Chief Financial Officer

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