Jul
05
Posted by bakken
Bud Brigham is a poster child for how to build a business in the Bakken Region. He leveraged his technical expertise as a Geophysicist to start Brigham Exploration more than 20 years ago and hasn’t looked back since (and built a multibillion dollar company in the process). A little over a year ago Bud Brigham of Brigham Exploration was kind enough to share his thoughts on his company and we decided to touch base with him again on Brigham’s current operations and it’s future prospects. Enjoy the interview below!
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Question: Brigham recently came out with an estimate of Q2 production at the lower end of 12,000 to 14,000 barrels of oil equivalent per day. Operations been impacted by the worst winter in almost 100 years and heavy rain. Can you expand upon some of the support infrastructure improvements that may mitigate this risk going forward?
Answer: We began to see some of the benefits of our support infrastructure system during the second quarter and expect to generate significant benefits next winter after our system fully comes on line in the fourth quarter 2011. For example, in the second quarter, we were able to continue to frac our wells as our fresh water system reduced our dependence on trucks that take water our sites and therefore enabled us to continue fracing a key well despite the short-term moratorium on trucking along the County roads that occurred in early June. Next winter, we’ll be able to take oil and produced water off our locations with our gathering system and deliver fresh water out to our locations without the need for trucks. A reduced dependence on trucks will enable us to continue to produce and complete our wells during periods of bad weather uninterrupted.
And it’s not just our support infrastructure that will help us going forward. Our operations engineers foresaw early on the need to be more efficient in our drilling and completion operations via the use of smart pads, or drilling and completing multiple wells from a single drilling pad. Drilling from a single pad allows us to reduce our rig and equipment moves, which also makes us less susceptible to weather. Furthermore, our smart pads allow us to complete wells using our zipper frac technology. Zipper fracs allows us to complete wells more efficiently than if wells were completed independently. During June, we brought on line to production a record number of wells, which was partially attributable to our zipper fracs.
We believe both of these enhancements we will allow us to deliver sequential production growth in the second quarter 2011 at a time when many other operators in the Williston Basin are revising their sequential production estimates downward. In summary, we believe this foreshadows the advantages we will increasingly experience relative to our peers, which should enable us to continue to operate even under adverse weather conditions such as we experienced in the winter of 2010-2011.
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Question: Back in 2010 during our last interview you indicated that Brigham was focused on executing but would consider being acquired if it was in the best interest of the shareholders. A year later is the company still heads down on executing and expanding? Has your strategy changed at all in the last year?
Answer: We continue to stay focused on creating value for our shareholders. We are ramping up our rig count to 10 operated rigs by July and will add our first walking rigs in the first quarter 2012. Furthermore, this summer, we think we’ll go a long way toward de-risking the Three Forks on our Rough Rider acreage in Williams and McKenzie Counties, North Dakota and will bring on line a number of wells in Montana. For example, we just brought on line to production our Gobbs 17-8 #1H well in Roosevelt County, Montana at an early 24-hour peak rate of 1,818 barrels of oil equivalent. This well was approximately 17 miles to the northwest of our record Montana Bakken well, the Johnson 30-19 #1H, and bodes well for our acreage between the Johnson and Gobbs wells. This is a very exciting time at Brigham and me and all of our highly dedicated employees are extremely excited about the opportunity to drill and complete wells in what we believe is the best shale play in North America. We’re getting the oil manufacturing plant rolling at time when America needs and ever increasing supply of secure oil. We thrilled to be working with the great people of the States of North Dakota and Montana to find oil in America for Americans.
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Question: In the few years it has become apparent that Brigham has some valuable intellectual property around horizontal drilling & fracing . Many smaller players in the region have not been able to replicate your success/production. Would you consider some acquisitions to scale the business?
Answer: Yes, we’ve enjoyed a great deal of success with acreage acquisitions. Last year we grew our acreage by roughly 30%, and have had additional success acquiring acreage thus far in 2011. We continue to source and evaluate other acreage transactions and would consider larger transactions. We think we can create and compound value in the Williston Basin better than anyone given our inherent competitive advantages, in part due to our success, but also due to our concentrated dominant early mover acreage position in the best portions of the play.
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Question: Can you describe your hedging strategy for 2012 and beyond?
Answer: We hedge our volumes to help to ensure a stable level of cash flow so that we can keep rigs in the field even during times of depressed crude prices. We typically use costless collars and in April added about 900,000 barrels of crude oil collars with a floor price of $85 to $90 and a ceiling price of $134 to $144. We believe these wide collars protect us to the downside and still allow our stockholders to participate in crude price upside.
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Question: Brigham currently has around 371,000 net leasehold acres under its control. Do you believe that this is sufficient acreage to handle Brigham’s drilling expansion over the next 5 years?
Answer: We believe our core de-risked acreage alone provides us with an 11 to 17 year inventory of net drilling locations assuming our 2011 drilling pace. We expect this inventory to grow over time with continued drilling success in Montana and the acquisition of additional acreage. We’ll be out here a long time drilling wells in North Dakota and Montana.
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Question: Brigham has had some fantastic production out of its Sorenson and Cvancara wells (as well as many others). Do you feel that drilling/fracing technology has reached a plateau or do you expect further innovation and productivity in future wells?
Answer: We continue to generate improving well performance, so the trend is very positive. We’re out in the field continually trying to innovate and deliver the best possible well result for our stockholders. We believe our entrepreneurial work environment fosters innovation and will allow us to deliver better wells results over time in terms of estimated ultimate recoveries and also be able to reduce our wells costs by potentially 10 to 20%. The bottom line is that we’re attempting to enhance economics by adjusting both levers, increased cash flow from more productive wells and better economics by drilling cheaper wells. Fundamentally, we believe we’re very early at figuring out optimal ways to drill, complete and stimulate this world class resource. If you think of it in terms of baseball, we’re in the early innings of the game.
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Mar
16
Posted by bakkenexpert
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.
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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.
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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.
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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.
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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.
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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.
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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.
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