The CEO’s of small cap Oil & Gas companies are typically of a more rugged breed than most Fortune 500 companies. Where most CEO’s are number crunchers who like chatting in the boardroom, oil execs are more comfortable getting their hands dirty in the field and Bud Brigham, CEO of Brigham Exploration is no exception. He started out in the trenches as a geophysicist and saw an opportunity to use his technical expertise to launch Brigham Exploration. For the longs that hopes a Brigham buyout is in the future, that hope should still be intact as Bud indicates that his focus is around maximizing shareholder value whether it be via organic growth or being acquired. Enjoy the interview below:
Question: Mr Brigham, you got your start as a exploration geophysicist back in the mid 80’s. How did your technical background in seismic data help shape Brigham Exploration into the company it is today?
Answer: Since our founding, our business model was to leverage technology to reduce finding and development costs to generate optimal economic returns and enhance shareholder value. My background in geophysics benefited us in the early days given that 3-D seismic was the breakthrough technology that drove our strong performance during the 1990’s. However, as we built out our technological team we brought on and further developed core competencies in drilling and completion technologies. Those competencies benefited us beginning in the late 1990’s when we were drilling deep pressured lower Vicksburg wells in areas where many operators had experienced severe problems. Our team made three large field discoveries in Brooks County, Texas, and have drilled over 42 successful Vicksburg wells which generated extremely attractive economic returns for our shareholders. They’ve also successfully drilled difficult wells in Southern Louisiana and even 25,000 foot directional discoveries in the Hunton of the Texas panhandle. So our operational expertise leveraging drilling and completion technology was proven even prior to the success we’ve enjoyed drilling the first very high frac stage long laterals in the Bakken and Three Forks play of the Williston Basin.
Question: What are some of the challenges Brigham faced in the early days of drilling in the Bakken region?
Answer: Early on the then current technology did not deliver the production and economic performance required to generate the returns we were seeking for our shareholders. So the initial challenge was to see beyond the then current results, to pick up acreage in the best areas, with confidence that our innovations in drilling and completion techniques would ultimately deliver the returns for our shareholders that we were seeking. Our staff rose to the challenge, and we’re proud of the fact that our operations team demonstrated operational leadership in the play, which has now led to sixteen consecutive high frac stage long lateral discoveries with initial peak production rates of roughly 2,400 Boe per day.
Question: There is currently a lot of innovation occuring in the Bakken region from Continental Resources Eco-Pad drilling pads to Brigham’s pushing the limit on frac stages and completion technology. Do you view oil & gas companies in the region as competitors or partners (or perhaps a bit of both).
Answer: A little bit of both. Continental is an example of an excellent operator advancing the play to all of our benefit. We enjoy a strong relationship with Continental and most of the other quality operators in the play, and in many ways we’re working together to help each other out. On the other hand, there are occasions where we are directly competing, particularly for acreage. That being said, it’s a friendly and ethical competition that’s beneficial to the region and it’s landowners.
Question: What is Brigham’s growth strategy in the Bakken region with the 288,000 net acres you control and do you expect to acquire additional acreage in the coming year?
Answer: We are blessed with a huge inventory for a company of our size. For example, with four rigs running the roughly 150,000 net acres that we view as derisked provides us with a more than 17 year inventory of drilling projects. If we have success with our first operated Three Forks well in Rough Rider our inventory would potentially grow to 26 years. Success in Montana, and our other extensional areas, would grow it further. That being said, this is a once in a lifetime opportunity to capture value for our shareholders, and we are doing so today with a focus on adding additional acreage in our proven areas.
Question: Is Brigham still on track to drill 25.7 net Williston Basin wells in 2010 and do you expect similar growth for 2011?
Answer: Given the amount of inventory in front of us we are looking for optimal ways to accelerate our drilling in 2011 and subsequent years, beyond the roughly 26 net wells we have planned for 2010. Our wells have generally outperformed our expectations, which could by itself support an accelerated effort. We also have substantial conventional assets that could potentially be monetized and the capital redeployed to further accelerate our drilling pace. Fundamentally, given the return on these projects accelerating our drilling will be very accretive for our shareholders, it’s simply a matter of seeking the least expensive sources of capital to accomplish that end.
Question: There has been a lot of buzz around the operational efficiency your drilling/exploration teams have achieved in the last year which has given Brigham a definitive competitive advanatage. Would Brigham Exploration ever consider being acquired in the future as a number of larger O&G companies may see a great deal of synergy in your portfolio of expertise and assets.
Answer: Our goal is to optimize our creation of shareholder value for our shareholders, and we will consider any option that accomplishes that objective. We believe we’re in an enviable position with demonstrated operational leadership in what we believe to be the premier domestic resource play. For us now it’s about largely about “blocking and tackling”, and about being of course smart in our strategy and execution.
Look for more interviews in the coming months. Please make sure to subscribe below to get the latest info right in your inbox!
About Brigham Exploration
Brigham Exploration Company is an independent exploration, development and production company that utilizes advanced exploration, drilling and completion technologies to systematically explore for, develop and produce domestic onshore oil and natural gas reserves. For more information about Brigham Exploration, please visit our website at www.bexp3d.com or contact Investor Relations at 512-427-3444.
Forward-Looking Statement Disclosure
Except for the historical information contained herein, the matters discussed in this news release are forward-looking statements within the meaning of the federal securities laws. Important factors that could cause our actual results to differ materially from those contained in the forward-looking statements include initial production rates which decline steeply over the early life of wells, our growth strategies, our ability to successfully and economically explore for and develop oil and gas resources, anticipated trends in our business, our liquidity and ability to finance our exploration and development activities, market conditions in the oil and gas industry, our ability to make and integrate acquisitions, the impact of governmental regulation and other risks more fully described in the company’s filings with the Securities and Exchange Commission. Forward-looking statements are typically identified by use of terms such as “may,” “will,” “expect,” “anticipate,” “estimate” and similar words, although some forward-looking statements may be expressed differently. All forward-looking statements contained in this release, including any forecasts and estimates, are based on management’s outlook only as of the date of this release, and we undertake no obligation to update or revise these forward-looking statements, whether as a result of subsequent developments or otherwise.