Brigham Exploration (BEXP) is the next Sweet 16 company to report 1st quarter results. Start doing your homework on this one. It is heavily weighted to oil. If they report the production growth I'm expecting it could take off.
This was my report after seeing their 4th quarter results:
Brigham Exploration Company (NASDAQ: BEXP) is heavily weighted to oil and the results of their Bakken Shale development drilling program. On January 27 they released their year-end reserve report that confirmed my belief that this company has incredible growth potential.
More than 90% production growth is now forecast for 2011
In the Bakken Shale - BEXP has confirmed they are adding an 8th drilling rig in May and they will be ramping up to 12 rigs during the summer.
Brigham had solid 4th quarter results. Reported earnings were $0.12 per share but that is not what is important to me. The company is continuing to generate stunning production and reserve growth.
More oil production and higher oil prices are generating strong cash flows from operations. My updated forecast now shows $2.76 and $4.58 cash flow per share for 2011 and 2012 respectively.
On February 24, Brigham announced that it will accelerate it Bakken drilling program to 12 operated Williston Basin rigs in 2011. They now plan to drill 66 net Bakken / Three Forks wells this year, compared to 39 net wells in 2010.
They are now drilling wells from “Smart Pads”, which reduce costs and allow them to develop the Bakken and Three Forks from the same surface location. It is anticipated this will reduce F&D costs by 10% to 20%.
I have decided to raise my Fair Value estimate for BEXP to $39.00/share based on
• The company’s recent reserve report, which shows that independent reserve engineers are now giving the company much higher EUR’s per well.
• Higher oil price forecasts
• Brigham’s accelerated development drilling program
Eighty percent of Brigham’s production is now crude oil, compared to only 45% in the year 2009. The percentage will continue to move higher as they complete more Bakken wells.