Mon, 1 Dec 2008|
Automatically Generated Transcript (may not be 100% accurate)
Our next -- -- company is Brigham Exploration headquartered in Austin Brigham is an independent exploration development and production company. And joining us today's mr. -- program. My name is gene Sheppard but could make the trip today and the chief financial officer of the company is we meet through the presentation can be provide me with some port looking information. When encourage you review the risk factors that more thoroughly -- SEC filings. It's -- a corporate profile is concerned Brigham is an organic drill bit focused. Expiration production company with an extensive inventory. Of resource play reserve growth potential. And on the conditional side of our business development drilling locations and expiration upside. Our our resource play acreage which totals roughly 300 -- -- thousand acres is concentrated. In the Willis in basin and the powder river basin. You know you -- out of our business are development drilling locations are concentrated. In the Vicksburg in south Texas -- we're partnering with ExxonMobil. And in the Anadarko basin. And our companies have a long track record of expiration success. With the ball cover expiration prospects. Currently concentrated in the onshore Gulf Coast. In Anadarko basin. As far as our focus areas are concerned. On the conventional side of the business. We like the fact that are out long lived. West Texas in Anadarko basin assets complement our shorter reserve black and higher rate of return projects in the -- -- Gulf Coast. Within the last several years we've been building out and inventory. Of what we feel will become relatively low risk. Long live oil weighted. Projects. Principally in the Rockies. And we feel those unconventional. Projects further complement our. Gas weighted -- reserve like projects in the onshore Gulf Coast. Some some key operating statistics you can -- in the upper. -- -- corner. The slide. That. A reserves into 2007. Were. Roughly 86 for senators reserves are concentrated in the Anadarko basin. And the onshore Gulf Coast. In the upper right in chorus line is REB. Cap -- Budget that we -- dated back in July this year and only about 33% of that -- is targeting. The onshore Gulf Coast Anadarko basin and that's down from roughly. 80% of the capex. That we announced the beginning of 2007. Were targeting this two years have clearly. 2008 is a transition year for the company. Or planning to spending much larger portion of our ED capex. On our unconventional projects. In the lower right hand corner. Slide you concede that are our expiration capital is is actually down in 2008. To 15% totally -- capex from from 26% last year. Historically our exploratory cap -- is accounted for a very significant portion of our company's reserve growth potential. This year. In addition to the reserve growth potential associated with this year's exploratory -- -- We've got a lot of opportunities you grow reserves in a resource plays. Which we've not had in prior years. A little more discussion round -- acts is -- updated budget that we announced in July. About -- 66% of that capex and target the Willis to base and that's up from 40% of the capex that we announce the beginning of the year. About 27% of the updated capex -- target. The onshore gulf -- will -- we will drill three Vicksburg. Projects and six -- -- and -- projects. -- -- next year's cap -- is concerned. -- currently formulating a plan we don't actually announce our capex -- till January we talked about our our conference call last week. That we expect to -- between ninety. And 120 -- dollars capex -- the -- capex in 2009. The bulk of that capex will be spent in the Willis in basin in the nature of it it'll have more of development drilling risk profile to that. In as the case with the majority of -- -- peers in the industry will be east. Living out of cash -- too much greater degree in 2009 relative to 2008. Some key takeaways. Obviously we have got a lot going on in the Willis -- -- on our acreage position. East of the nest and we drilled a total of nine horizontal -- in wells including our first three forks well that. Actually came on in October. At a rate of 892. Barrels. Of oil per day. West of the -- and we are currently drilling in completing our fourth and fifth grass -- wells. And this was after successfully -- tracking one of the initial wells that we drilled in the -- Back in 2006. In producing that sidetracked well. Or bring it on initial rate of 717 barrels of oil per day on our acreage position in Montana. We had so far during 2008 and had two red river discoveries. -- planned to drill our and there's -- next -- protest in the first quarter of next year. It's four southern Louisiana is concerned. We've successfully drilling completed. Three exploratory wells. And one development well so far in 2008 and have one additional exploratory well that walls but between now and the end of the year in southern Louisiana. This is an important slide and it looks -- our. RN AV per share. And and based on the current stock price -- somewhere around five dollars a share you can -- -- we're trading. In a very significant discount. To our year end 2007. Proved reserves which were essentially our conventional reserves located in onshore Gulf Coast -- -- basins that hasn't really give us. Much in the way of credit for the big acreage in asset position that -- accumulated in the will estimates. So now I'm gonna talk a little more detail about our activities and Wilson basin. The US GS announced in April there are updated assessment and ranked. The three point seven billion barrels. Of recoverable reserves. In the Boston second only to those on the -- slope of Alaska so huge opportunity there. This lab looks that. The acreage position. And you can -- that it's attractive located within the boundaries of the US GS assessment. One comment about our -- position the bulk of that position has been put together. Under five year leases with in the last twelve to eighteen months we feel like we got plenty of time. To exploit that very substantial acreage position. This slide speaks to the fact that based on our relatively small market cap in the very substantial lakers position we haven't Wilson basin. That we offer investors. More exposure. Per dollar market cap to the ball in news reports and any company that's currently operating. In the -- -- base. The -- looks at the reserve potential associated with -- acreage position in the Willis and basin. -- -- -- -- The -- -- portion of that portfolio. Which is essentially our our acreage position east and -- in around on -- candidate represents only about 15% of our. Our acreage position in the well Austin -- And look at only the -- -- not including three forks. We feel we've got roughly 43 million barrels of oil equivalent a potential. On that acreage -- that's a very significant number. When you compare that number two the proved reserves. There were on the company's books in the 2007. Which were since -- conventional reserves. Which equated it roughly 23 million barrels of oil equivalent. The -- horizontal Bakken play. Is we know today really got kicked off with the discovery the elm coulee field back in 2001. We began to put our acreage position get in the well Austin based back in late 2005. He concentrated as leasing activities in western. On North Dakota at the present time we've got roughly 96000 acres in western North Dakota west of the -- and we've got 96000 acres. East to the -- and in and around Monroe county and we've got a 102000. Acres in Montana. Is forests our Montana activities are concerned as is said earlier. Today. We've had two red river discoveries that we've drilled this year. The second well. As was the case with the first well -- a vertical completion that we drilling depleted total cost about two point seven million dollars. Our very first red river discovery in this area was drilled back in 1997. -- well looks like it'll team ultimately about 300000. Barrels. We got sixteen prospect leads. Prospect in prospect leads in inventory. In as -- said earlier plan to sputter necks -- red river test. In the first quarter of 2009. Moving to our acreage position. And highlighting -- -- a creature west of the nest in western North Dakota. After we began putting -- exposition together in late 05 in 2006 we drilled. Three pilot wells. Three initial pilot -- -- -- can seem here with the yellow labels. The first two -- the field and -- sin and in the third was the Mariah check. The results from those wells were disappointing to us the first to -- came on. -- initial rates. Right around 200 barrels a day. And and stabilize between ninety and fifty barrels today. The third well -- -- check we have some operational problems were never able to get that well looked out production. Earlier this year we re entered the right -- sidetracked the well successfully sidetracked the well. And have. Announce we brought that well on production just north of 700 barrels of all per day. We're in the process of completing. Two additional grass roots wells. In the same vicinity is the Mariah check. And -- We're hoping to do this by using some of the drilling completion techniques that work so well east of the -- and to demonstrate the economic viability of our acreage west of the -- and and hope to have results on those two wells within the next sixty days. Looking at are -- bridge east of the nest and. We have got roughly. 7000 acres. Not corners not working but in the lower right hand corner of the slide could see the green dots. That's the Bay Area that's referred to his -- -- were -- he's had some success and they have drilled. A total of a 103 wells they've announced results on 44 the average -- for those wells. Has come in and write about thirteen hundred barrels a day it's a very substantial rates immediately north of part shell. We've got roughly 9000 acres in and here we refer to his Stanley. And you can see the two purple drilling rigs. Located on our Stanley position. We in July announced our first well personal Bakken well. The drilling on that acreage position that will came on just north of 600 barrels of oil per day. North and west. Part shell is an area where we've got 28000. Net acres it's near we refer to -- Ross you can see the orange box surrounded. We've drilled five wells on that acreage position today in our most recent well -- -- of well. As. Came on in July at a rate of just over 11100 barrels Alford and so that's clearly the best -- we drilled to date. In the -- This -- looks is a cross section on the show -- in a minute but it runs from the elm coulee field across western North Dakota. Across the -- and into -- counting. And -- that cross section. And you can see with this lower Bakken shale. Thickening as you move -- Montrose county while he -- -- industry is so excited about the potential for both the middle Bakken and three forks. -- -- -- -- -- This is another look at that lower Bakken shale source rock this is a net -- -- pac man. And you can see that the thickest part of that. Of that lower Bakken shale source rock. Coincides with our big Ross acreage position. In western Montreal county. Win continental resources earlier this year announced they're us first successful three forks well the price well the -- well. There was a lot of interest from the industry in the three forks. Across the -- debates and and I'm gonna give -- a little bit of of color on the three forks this yellow section it's identified on the cross section. Is is the middle Bakken member and it's the it's that horizon it has sufficient -- ferocity that allows it to serve. Is it -- is -- conduit to the well or it's bounded on either side by the upper. Bakken shale source rock. And -- lower Bakken -- source rock and and on top immediately above the -- Is the lodge pole which surged in -- evil camp and attracts those block and -- -- -- -- from migrating now. Immediately below. The lower Bakken -- source -- -- can -- in purple is that is the three ports. And that also has sufficient Herman proxies allows it to serve. Is -- -- born conduit to the -- war. This is another cross section into showing you. That held at the middle Bakken and three forks Reza force thickening she moved into Monroe County. This is a slide that I showed TO earlier. And going back to it is -- wanted to point out to you. Our first three forks well is that well represented by purple -- it's -- eighty's well that we brought on an October became -- 800. And -- -- barrels a day in our plans are. To drill our second. Three forks well the -- that well. And it says fourth quarters but elections but in the first quarter of 2009. -- and you can see. To the west. The three forks. -- recent discoveries by other operators that are -- filed by the blue labels XTO on -- fidelity and continental resources. The slide based on a recent price deck looks at our our breakeven case. For the -- -- -- can see here we need teams of roughly 240000. Barrels. Of oil. Here we're looking at -- -- associated with are to focus here is. East of the -- and in the -- theory where seeming. Teams between 30700000. Barrels which -- quite. Two returns. Between seventeen and seven 7%. As far as the partial areas concern were seeming teams. Between 500 and a million barrels which would equate to returns of between forty and a 100%. In this lab looks at. The returns based on different price -- the Green Line is that fifty dollar per barrel price case the Blue Line is a sixty dollar for real price -- -- the Red Line. It's seven dollars -- and conceded even at. You know relatively low -- prices. We're still generating attractive. Rates of return in the -- Is a very busy -- apologized that's -- reflects the evolution of our approach to getting your wells -- and pleaded. In the -- in the Blue Line. Reflects the reproach we've been used in recent -- most recently completed wells. The Green -- reflects they approach we're going to you were gonna be drilling to section lateral. And in using up to twenty -- stages it and assuming commodity prices don't change. The dashed lines reflect the returns that we expect. Generate based on. -- service cost the lower service -- we expect to see in 2009. This -- looks at the reserve booking potential we have at the end of 2008 you can see in 2007. We drilled three Brigham operated wells in 2008 -- -- 12 Brigham operated wells. Will also participate in additional 44. Grows on operated wells. And we feel that at the end of this year we'll have the opportunity to book reserves associate with a hundred roads or 22. Net locations. This lab looks it again the evolution of our approach to getting wells drilled and completed. In the horizontal Bakken and three forks play. And basically the bottom line is drilling longer latter roles in using more -- stages. Exposes more -- for rock which enhances performance. Than one. Last slide on them -- in this the slot actually looks at the fumes. Of some recent wells that we've drilled and how those teams have been positively impacted by increasing the number -- stages. So that covers the lowest in -- just a couple flats and southern Louisiana is a set earlier. On the as far as our -- activities in southern Louisiana were three for four. Our first expiration -- our main pass well we expect to get hooked up to production here in the next week to two weeks. We expect that -- to come on between fifteen and twenty mean today than the two additional southern Louisiana expiration wells will be get hooked up in the first quarter. Next year. We have. Drilled one successful development well are -- -- number five was brought production in October at a rate of right around seventeen million a day. In this lab looks at the potential rights that we could. We would expect to see from our southern Louisiana activities. Based on some initial test data. We intend to keep a strong balance cheated into the quarter we have debt to book cap of about 45%. In debt -- idea of roughly 2.4. Times. If we talked about on the call last week we've -- -- -- -- 245 million dollars you've got as of the date of our call we had 79 million dollars drawn down. Under that 145 million dollar -- days. One last -- looking in our hedge portfolio. You based on the midpoint of our guidance for the fourth quarter. In using those lines for the fourth reported first quarter 2000. We've got roughly 33% of those volumes engaged. It up or price just north of nine dollars and -- so. Attractive hedge for -- -- we just wish you is larger so. And that's. That concludes our presentation and I guess were going to break out. Session to answer any questions that you might have thanks for giving us the opportunity -- present.