OilVoice - Brigham Exploration Reports Fourth Quarter and Year End 2009 Results

Brigham Exploration Reports Fourth Quarter and Year End 2009 Results

Wednesday, February 24, 2010

Brigham Exploration Company has announced financial results for the quarter-ended and the year-ended December 31, 2009.

Fourth Quarter 2009 Results
Average daily production volumes for the fourth quarter 2009 were 5,069 barrels of oil equivalent (Boe) per day, down 19% when compared to those in the fourth quarter 2008. Benefiting from both operated and non-operated drilling activity in the Williston Basin, oil production volumes for the fourth quarter 2009 averaged 2,867 barrels per day, which represents a 26% increase from the 2,279 barrels per day produced in the fourth quarter 2008. Oil production volumes represented 57% of total production volumes as compared to 37% in the prior year's quarter. Production volumes in the Williston Basin for the fourth quarter 2009 were 2,513 Boe per day, which represents a 59% increase from those in the fourth quarter 2008 and an 18% increase from those in the third quarter 2009. Fourth quarter production volumes included approximately 16,475 barrels of oil produced in the Williston Basin during the quarter and recorded as inventory at year-end. Adjusting production volumes for amounts included in inventory results in average fourth quarter daily sales volumes of 4,886 Boe per day.

Revenues from the sale of oil and natural gas including hedge settlements for the fourth quarter 2009 were down 12% to $22.7 million when compared to those in the fourth quarter 2008. Lower production volumes and an increase in hedge settlement losses decreased revenues by $4.3 million and $1.7 million, respectively, while higher realized prices increased revenues by $2.7 million.

Fourth quarter 2009 production costs, which include costs for operating and maintaining producing wells (O&M expense), expensed workovers, ad valorem taxes and production taxes, were up $4.50 per Boe when compared to those in the fourth quarter 2008. The increase was largely driven by a $2.13 per Boe increase in workover expense and a $2.06 per Boe increase in production taxes. Workover expense increased due to work performed on two of the company's conventional natural gas wells. Production taxes rose in 2009 due to increased pre-hedge oil prices and production levels in North Dakota.

Our general and administrative (G&A) expense for the fourth quarter 2009 increased $0.9 million compared to the fourth quarter 2008 because of higher employee compensation costs, which were partially offset by lower contract and professional services, franchise taxes, and office expenses.

Reported net income for the fourth quarter 2009 was $2.5 million ($0.03 per diluted share) versus net income (loss) of ($180.6) million (($3.95) per basic share) for the same period last year. After-tax earnings in the fourth quarter 2009 excluding unrealized mark-to-market hedging losses were $3.8 million ($0.04 per diluted share), while after-tax earnings (loss) in the fourth quarter 2008, excluding unrealized mark-to-market hedging gains and ceiling test write-down were ($1.9) million (($0.04) per basic share). After-tax earnings (loss) excluding the above items is a non-GAAP measure.

In the fourth quarter 2009, Brigham spent $29.5 million on oil and gas capital expenditures, which represents a 38% decrease from 2008.

Year-end 2009 Results

Proved Reserves
Brigham's proved reserves totaled a record 27.7 MMboe at year-end 2009. The company grew reserves 21% during the year and replaced 372% of 2009 production, net of revisions. Additions of 9.4 MMBoe during 2009 were all drill bit related and were primarily attributable to the success of the Company's drilling efforts in the Williston Basin Bakken and Three Forks plays, where Brigham grew reserves 278% to 15.4 MMBoe. At year-end 2009, oil comprised a record 60% of proved reserves as compared to 31% at year-end 2008.

Average daily production volumes for 2009 were 5,034 Boe per day, down 5% when compared to those in 2008. Oil production volumes for 2009 averaged 2,306 barrels per day, which represents a 44% increase from the 1,605 barrels per day produced in 2008. Oil production volumes represented 46% of 2009 production volumes versus 30% of 2008 production. 2009 production volumes included approximately 16,475 barrels of oil produced in the Williston Basin during 2009 and recorded as inventory at year-end. Adjusting production volumes for amounts included in inventory results in average daily sales volumes of 4,988 Boe per day.

Revenues from the sale of oil and natural gas including hedge settlements for 2009 were $77.6 million, which represents a 36% decrease when compared to those in 2008. Lower prices and natural gas sales volumes decreased revenues by $58.5 million and $19.4 million, respectively. Partially offsetting these decreases were higher oil sales volumes and higher hedge settlements, which increased revenues by $21.0 million and $13.0 million respectively.

Production costs per barrel of equivalent increased 19%, or by $1.73 per Boe, compared to those in 2008. O&M expenses increased by $1.11 per Boe primarily due to increased salt water disposal, compressor rental, and overhead fees. Workover costs increased by $0.61 per Boe, due to an increase in the number and cost of workovers. Ad valorem and production taxes per Boe were roughly in-line with those in 2008.

2010 Capital Expenditure
Brigham's updated 2010 capital expenditure budget will fund approximately 25.7 net wells in the Williston Basin and one net Vicksburg well in our Diablo project in South Texas. The company's budgeted capital expenditure program for 2010 is as follows:

(In millions)
Drilling: $183.7
Net land and seismic: 15.6
Exploration and development capital expenditures: $199.3
Capitalized Costs: 14.8
Other non-oil & gas assets: 2.2
Total: $216.3

Gene Shepherd, Brigham's Chief Financial Officer, commented:
"Given the challenging environment in early 2009, we laid down our Williston Basin drilling rigs early in 2009 and slowly resumed our drilling activities at mid-year, drilling a total of 7.5 net horizontal Williston Basin wells in 2009. Based on our updated 2010 cap-ex budget and our enhanced liquidity position resulting from the two equity offerings and our new Senior Credit Facility that we completed last year, we now expect to drill a total of 25.7 net horizontal Williston Basin wells in 2010. This level of acceleration in drilling activity, and the associated growth in production and reserve volumes, should make 2010 the most financially rewarding year in our company's 20 year history."