Brigham Reaches Record Quarterly Production Volumes

Brigham announced record quarterly production volumes, revenues and operating income, excluding the impact of unrealized hedging losses. Brigham also announced the entry into a new Senior Credit Facility and provided 2011 capital expenditure budget and forecasts.

FOURTH QUARTER 2010 RESULTS

Our average daily production volumes for the fourth quarter 2010 were a quarterly record 11,384 barrels of crude oil equivalent (Boe) per day, up 125% from the fourth quarter 2009 and up 34% from the third quarter 2010. Our previous record quarterly production volumes of 8,509 Boe per day were achieved in the third quarter 2010.

Benefiting from both our operated and non-operated drilling activity in the Williston Basin, our high value crude oil production volumes for the fourth quarter 2010 averaged 9,129 barrels of crude oil per day, which represents a 218% increase from that in the fourth quarter 2009 and a 44% sequential increase from that in the third quarter 2010. Our high value crude oil production volumes represented 80% of our total production volumes in the fourth quarter 2010, as compared to 57% in the fourth quarter 2009 and 75% in the third quarter 2010.

Our production volumes in the Williston Basin for the fourth quarter 2010 were 9,359 Boe per day, which represents a 272% increase from that in the fourth quarter 2009 and a 45% sequential increase from that in the third quarter 2010.

Our fourth quarter production volumes included approximately 12,158 barrels of crude oil produced during the fourth quarter 2010 and added to inventory. Adjusting our production volumes for amounts included in inventory resulted in fourth quarter 2010 daily sales volumes of 11,249 Boe per day.

Revenues from the sale of crude oil and natural gas, including cash hedge settlements for the fourth quarter 2010, were up 195% to $67.0 million as compared to that in the fourth quarter 2009. Higher crude oil sales volumes and crude oil prices increased revenues by $38.8 million and $4.9 million, respectively. Also, higher cash hedge settlements and natural gas production increased revenue by $0.6 million and $0.1 million, respectively. Lower natural gas prices decreased revenues by $0.2 million.

During the fourth quarter 2010, our average realized price for crude oil was $74.12 per barrel, which included a $0.30 loss from the cash settlement of our crude oil derivative contracts. This compares to an average realized price in the fourth quarter 2009 of $64.32 per barrel, which included a $4.04 per barrel cash loss due to the settlement of our crude oil derivative contracts. Our average realized price for natural gas in the fourth quarter 2010 was $5.77 per Mcf, which included a $0.94 per Mcf cash gain due to the settlement of our natural gas derivative contracts. This compares to an average realized price in the fourth quarter 2009 of $6.05 per Mcf, which included a $1.08 per Mcf cash gain due to the settlement of our natural gas derivative contracts.

Our fourth quarter 2010 production costs, which include costs for operating and maintaining (O&M expense) our producing wells, expensed workovers, ad valorem taxes and production taxes, were down $0.93 per Boe when compared to the fourth quarter 2009. The decrease was driven by a $2.06 per Boe decrease in expensed workovers due to fewer workovers associated with our conventional onshore Gulf Coast and Anadarko Basin natural gas wells and a $0.97 per Boe decrease in O&M expense primarily due to our higher production volumes. These decreases were partially offset by a $2.26 per Boe increase in production taxes, which was driven by higher commodity prices and higher levels of production in North Dakota, which are subject to an 11.5% tax rate.

Our general and administrative (G&A) expenses for the fourth quarter 2010 decreased by $2.47 per Boe as compared to the prior year's quarter due to our higher production volumes. The gains associated with our higher production volumes were partially offset by an increase in employee compensation costs due to the reinstatement of full salaries in late 2009, the reinstatement of our bonus plan in 2010, higher levels of employee salaries in 2010 to ensure competitive compensation levels with other oil and gas companies, and a higher number of employees due to our increased activity in the Williston Basin.

Our depletion expense for the fourth quarter 2010 was $19.4 million ($19.19 per Boe) compared to $8.2 million ($18.53 per Boe) in the fourth quarter 2009. Our higher sales volumes increased depletion expense by $10.6 million and our higher depletion rate increased depletion expense by $0.7 million.

Our net interest expense for the fourth quarter 2010 was flat with that in the fourth quarter 2009. Net interest expense decreased $2.7 million primarily due to both the repayment of our Senior Credit Facility as a result of our October 2009 equity offering and an increase in our capitalized interest associated with our higher level of drilling activity in the Williston Basin. This was offset by a $2.7 million increase in interest expense associate with the September 2010 issuance of our $300 million Senior Notes due 2018.

We recorded a deferred tax expense of $1.1 million in the fourth quarter 2010, which was mainly due to the state of North Dakota's tax expense.

Our reported net income for the fourth quarter 2010 was $13.8 million ($0.12 per diluted share) versus net income of $2.5 million ($0.03 per diluted share) for the same period last year. Our after-tax earnings in the fourth quarter 2010 excluding the loss on the early redemption of our Senior Notes due 2014 and unrealized mark-to-market hedging losses were $25.4 million ($0.21 per diluted share) as compared to our after-tax earnings in the fourth quarter 2009 excluding our unrealized mark-to-market hedging losses were $3.8 million ($0.04 per diluted share). After-tax earnings excluding the above items is a non-GAAP measure and a reconciliation of GAAP net income to after-tax earnings excluding the above items is included in our accompanying financial tables found later in this release.

In the fourth quarter 2010, we spent $108.1 million in oil and gas capital expenditures.

YEAR END 2010 RESULTS

Our average daily production volumes for 2010 were 8,267 Boe per day, up 64% from that in 2009. Benefiting from both our operated and non-operated drilling activity in the Williston Basin, our high value crude oil production volumes for 2010 averaged 6,155 barrels per day, which represents a 167% increase from that in 2009. Our high value crude oil production volumes represented 74% of our total production volumes in 2010 as compared to 46% in 2009.

Our production volumes in the Williston Basin for 2010 were 6,146 Boe per day, which represents a 240% increase from that in 2009.

Our 2010 production volumes included approximately 29,654 barrels of crude oil produced and added to inventory during the period. Adjusting our production volumes for amounts included in inventory results in average 2010 daily sales volumes of 8,185 Boe per day.

Revenues from the sale of crude oil and natural gas, including cash hedge settlements for 2010, were up 135% to $182.4 million as compared to that in 2009. Higher crude oil sales volumes and crude oil commodity prices increased revenues by $75.2 million and $35.6 million, respectively. Higher natural gas prices also increased revenues by $5.6 million. Lower natural gas sales volumes and cash hedge settlements decreased revenues by $5.3 million and $6.3 million, respectively.

During 2010, our average realized price for crude oil was $70.87 per barrel, which included a $0.21 per barrel cash loss due to the cash settlement of our crude oil derivative contracts. This compares to an average realized price in 2009 of $53.99 per barrel, which included a $0.80 per barrel cash loss due to the settlement of our crude oil derivative contracts. Our average realized price for natural gas in 2010 was $6.02 per Mcf, which included a $0.79 per Mcf cash gain associated with the settlement of our natural gas derivative contracts. This compares to an average realized price in 2009 of $5.71 per Mcf, which included a $1.70 per Mcf cash gain due to the settlement of our natural gas derivative contracts.

Our production costs for 2010 were up $1.21 per Boe when compared to those in last year. The increase was driven by a $3.04 per Boe increase in production taxes, which was driven by higher commodity prices and higher levels of production in North Dakota, which are subject to an 11.5% tax rate. The increase in production taxes was partially offset by a $1.37 per Boe decrease in O&M expense due primarily to our higher production volumes and a $0.26 per Boe decrease in Ad valorem taxes.

Our G&A expenses for 2010 decreased by $0.76 per Boe as compared to the prior year due to our higher production volumes. The gains associated with our higher production volumes were partially offset by an increase in employee compensation costs due to the reinstatement of full salaries in late 2009, the reinstatement of our bonus plan in 2010, higher levels of employee salaries in 2010 to ensure competitive compensation levels with other oil and gas companies, and a higher number of employees due to our increased activity in the Williston Basin.

Our depletion expense for 2010 was $58.2 million ($19.75 per Boe) versus $32.1 million ($17.85 per Boe) in 2009. Our higher sales volumes increased depletion expense by $20.5 million and our higher depletion rate increased depletion expense by $5.6 million.

Our net interest expense for 2010 was $5.0 million lower than that in 2009 primarily due to a $5.1 million increase in capitalized interest expense associated with our higher level of activity in the Williston Basin. Interest expense also decreased $3.3 million due to lower levels of debt outstanding on our Senior Credit Facility subsequent to its repayment in October 2009 in conjunction with our common stock offering. These decreases were partially offset by a $2.8 million increase in interest expense associate with the September 2010 issuance of our $300 million Senior Notes due 2018.

We recorded a deferred tax expense of $1.1 million in 2010, which was mainly due to the state of North Dakota's tax expense.

Our reported net income for 2010 was $42.9 million ($0.38 per diluted share) versus net income (loss) of ($123.0) million (($1.74) per diluted share) for last year. Our after-tax earnings in 2010 excluding the loss on early redemption of Senior Notes due 2014 and unrealized mark-to-market hedging losses were $66.7 million ($0.59 per diluted share) as compared to our after-tax earnings in 2009 excluding the effect of our first quarter 2009 ceiling test write-down, unrealized mark-to-market hedging losses, and non-cash write-down of the carrying value of our inventory were $1.3 million ($0.02 per diluted share).

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Brent Crude Oil : $54.33/BBL 0.81%
Light Crude Oil : $51.5/BBL 1.29%
Natural Gas : $3.75/MMBtu 1.35%
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