Exploration

It’s not getting any easier to be an oil and gas operator. More complex reservoirs combined with emerging markets and a changing demographic create data management headaches, and often there is a huge disconnect between the technicians acquiring and interpreting the data and the managers who have to make informed decisions about them at the end of the day.

Sensing this need, Microsoft recently announced the formation of the Microsoft Upstream Reference Architecture Initiative. Currently comprising 19 members, the goal is to automate the decision processes and results in a way that provides a common, reliable environment for implementation and integration of the many technologies that make up the digital oil field. Ultimately, this architecture will help to dramatically improve efficiency and cost-effectiveness for upstream oil and gas analysis, operations, and business.

The announcement came during the annual meeting of the European Association of Geoscientists and Engineers in Barcelona.

“We see our role as working closely with our partners and delivering a platform to support these solutions,” said Paul Nguyen, industry technology strategist for Microsoft’s Global Oil & Gas division. The ultimate goal is a solution that integrates decision-making capabilities, captures the results (the decisions), and builds an “institutional memory” that becomes part of the digital oilfield operations that will continuously inform those systems.

Part of the existing problem, Nguyen said, is that the existing legacy systems hinder upstream workflows, making it difficult for domain experts to execute their strategies. “These are areas that we can organize and simplify,” he said.

But this is not a Microsoft-mandated system; rather, it will develop and deliver a framework to its partners who can then leverage that framework and build their own solutions. Having this overarching framework will also ensure a longer life for the system.

Partners are a combination of service providers, system architects, and software developers. Michele Isernia, global alliances manager for Microsoft’s Worlwide Industries Team, likened the collaboration to tourists visiting the same monument in Barcelona but wishing to capture the experience in different ways – perhaps one with a camera, one with a video camera, and one who plans to write a blog. “We have the same objective, but we bring different skills,” Isernia said. “We’re not forcing something to happen. A number of us have gotten almost to this point on our own. Now it’s time to leverage our skills to better expedite the solution.”

More information is available:

http://search.microsoft.com/results.aspx?mkt=en-US&setlang=en-US&q=Microsoft+Upstream+Reference+Architecture

and

http://www.microsoft.com/presspass/presskits/industries/manufacturing/oilgas.aspx

Low-frequency (LF) seismic surveys are a relatively new and not well-understood addition to the geophysical toolkit. According to Spectraseis, which specializes in these surveys, targeting very low frequencies provides additional constraints to the dataset, leading to better decisions.

Now the company is delving deeper. During the annual meeting of the European Association of Geoscientists and Engineers in Barcelona, the Zurich-based company announced that it has designed a new borehole tool that can take LF measurements well below the surface. Company officials are quite excited about this latest foray.

“We want to see what we get when we’re away from the surface,” said Brice Bouffard, vice president of marketing for Spectraseis. “We’re curious to see how the tool works and how the signal will evolve.”

The tool features six levels of high-sensitivity active receivers and has been designed for multiple downhole applications, including LF seismic surveys and microseismic monitoring projects. It is designed to be safely deployed and recovered on a tubing string in casing as small as 5 1/2 in. OD and in wells with temperatures up to 160°F (70°C). It is scheduled for delivery in October 2010.

The months in between should be interesting for Spectraseis because the specifications for such a tool don’t exist. Testing, scheduled to begin in July, will determine whether or not a better LF signal can be achieved by getting away from the surface and also the feasibility of combining microseismic monitoring with LF imaging.

I don’t usually attend industry breakfasts because, to be quite honest, I can rarely get up that early. But an invitation to the Houston Technology Center (HTC) breakfast piqued my interest.

Partly it was to hear Houston Mayor Annise Parker speak. Having previously seen her during a taping of the National Public Radio show “Wait, Wait – Don’t Tell Me,” I knew she had a great sense of humor. And she didn’t disappoint.

What was more surprising was the showcase of new technology on hand. The HTC focuses on four main areas of technology – energy, IT, life sciences, and NASA-originated technology – and companies from three of those disciplines gave brief presentations to showcase their wares. None of them was particularly related to E&P, but I found them fascinating nonetheless.

First was a company called Bluenergy Solarwind Inc. (www.bluenergyusa.com), which has devised a unique helical-shaped wind turbine outfitted with solar panels. Standing 20 ft (6.1 m) high, these could easily be confused for decorative sculptures and require much less space than a standard wind turbine. The turbines begin spinning in winds of 4 mph (6.4 km/h), making them ideal for urban settings that don’t get much wind.

I want one for my house.

The second presentation was IT company Playnormous LLC (www.playnormous.com). The “normous” might be a clue to the company’s mission – to reverse childhood obesity. It provides a number of video games that help kids make better food choices. I’m hoping it works for adults as well.

Finally, Jeffery Sheldon of Houston Medical Robotics Inc. (http://www.houstontech.org/en/dir/1172/) discussed his company’s development of image guided hand-held medical robotics for use in various therapeutic applications. Combining ultra-sound imaging with the equipment needed for catheterization helps medical caregivers be much more precise with the placement of needles and tubes.

These three companies are among the 1,000 entrepreneurs who collectively have raised US $1 billion in funding over the center’s 11 years of existence. Sponsored by Houston businesses, the HTC is the largest business incubator in Texas. It accelerates the commercialization of emerging technology companies by providing in-depth business guidance, access to capital and service providers, and entrepreneurial education. It also promotes Houston as a technology city and serves as a hub for the local technology business community.

Most recently it was written up in Forbes as one of the nation’s top 10 technology incubators. In the introduction to the list, Forbes’ Christopher Steiner wrote, “Some of the biggest companies in the world, such as Hewlett-Packard and Google, were born in garages and basements – romantic, perhaps, but inefficient. A better option for intrepid entrepreneurs: technology incubators.”

Will one of these companies eventually dominate the landscape the way Google dominates the Internet? Watch this space.

It’s impossible to go to any restaurant in Houston without overhearing at least one conversation about the Deepwater Horizon disaster.

This is probably true in other areas of the country, but in Houston most of these people know what they’re talking about. I went to breakfast Saturday morning and overheard some gentlemen at a nearby table discussing the top kill procedure and debating its potential success. (It failed.) Other eavesdropped topics include what went wrong with the blowout preventer and whether there was a cement failure.

On top of this is the recent announcement by Department of the Interior Secretary Ken Salazar that the US Minerals Management Service (MMS) would be divided to keep the regulators away from the royalty collectors. The director of the MMS was fired, and other key officials were expected to step down as a result of this move.

The general press has had a field day with the MMS, an agency which flew way under the radar until recent events put it in the glaring spotlight of media attention. Now the government is being asked to defend an organization that both regulated the oil industry and reaped some of its profits. Was there a conflict of interest?

Let’s return to another lunch conversation, this time with a friend of mine who has been in the geophysical contracting industry for a long time. He only recently began dealing with the MMS, and his company got off to a very bad start when it failed to secure the proper permits before shooting a survey. Officials at the MMS came down hard on the company, requiring them to send out a research vessel to evaluate the environmental impact of the incorrectly permitted survey. Like a teen-ager becoming more cautious after that first speeding ticket, the company learned from the experience and developed better processes and a more proactive safety/environment culture. The company now has a good relationship with MMS. In fact, my friend tells me that, unlike many other government agencies, the MMS has a very service-oriented culture. If a permit is needed in a hurry, shortcuts are not an option, but they will try to help whenever the resources are available.

He even went so far as to say that he’d write letters of recommendation for any of the people he worked with at the agency because he felt they were doing their jobs correctly. They are able to resolve conflicting interests because they understand both sides of the argument – “Drill, Baby, Drill” vs. “Save the Whales” – and make balanced decisions.

“Can you imagine what it will be like when there are two separate agencies handling these issues?” he asked. “There will be a building full of folks trying to maximize government revenues and another building full of folks asking seismic companies to provide Bose noise-canceling headphones for sea slugs.”

When asked to give a presentation to explain operations to MMS officials, my friend offered to take several of them to Fourchon, La., to see a crew in action. The MMS determined that this might be construed as accepting favors from contractors. So 15 of them took a day of vacation and drove to Fourchon in their own cars for the tour. They would not accept lunch, though they did break down and drink some water. They weren’t in it for the hospitality; they were genuinely interested in knowing more about geophysical operations.

I know that operators and service companies have not always been happy with MMS decisions, but the fact is that this is one regulatory agency that actually understands the oil and gas industry. The purpose of the MMS is to make sure that offshore natural resources are exploited in a safe and environmentally sensitive manner. Until Maconda, the Gulf had a fairly pristine record when it came to major spills. To imply that this disaster came about because the MMS was too chummy with the industry is a bit of a stretch, in my opinion.

But what’s done is done. It remains to be seen if the new agency, with its divided duties, will continue to maintain this cordial but productive relationship with the energy industry.

According to one online poll, 70% of those surveyed think that BP is botching spill efforts and should be removed from the team handling the crisis.

Apparently that 70% doesn’t include the US Coast Guard, though.

In a quote attributed to Coast Guard Commandant Thad Allen in a recent Associated Press article, Allen said, “To push BP out of the way would raise a question – to replace them with what?” Allen is heading up the federal response to the spill and was quoted during a White House briefing.

Apparently the Obama administration is facing criticism over its lack of control over the situation. But let’s examine a couple of facts:

1. It’s unlikely that the Obama administration has ever tried to cap a gushing well in 5,000 ft (1,525 m) of water, because
2. The oil industry has never tried to cap a gushing well in 5,000 ft of water.

The AP article’s take on BP’s latest attempt, a top kill, is that it’s “yet another technique never tested 5,000 feet under water.” Of course it’s never been tested. Nothing like this has ever happened before.

Allen’s comments were a response to Interior Secretary Ken Salazar’s statement over the weekend that the government would step in if it was determined that BP wasn’t pulling out all the stops. “If we find that they’re not doing what they’re supposed to be doing, we’ll push them out of the way appropriately,” the article quoted Salazar as saying. Allen’s take was, “That’s more of a metaphor.” He maintained that BP was doing everything in its power to stop the leak and that he was “satisfied with the coordination that’s going on.”

Seriously, I’m siding with the Coast Guard on this one. The sense amongst the lay public seems to be that nothing BP has tried has worked, which means they’re not trying hard enough. I challenge the world’s best petroleum and mechanical engineers to try something that BP hasn’t already tried. The company has been trotting out new ideas on a weekly basis to try to stop this mess before it can spread any farther, but it’s an engineering issue of massive proportions.

Meanwhile, as two relief wells are underway, BP is also considering injecting “junk” into the well and placing a new blowout preventer on top of the one that failed.

The crisis has reopened all of the not-yet-scabbing wounds between Republicans and Democrats, of course, with the Obama administration taking a disproportionate amount of blame for an accident it had nothing to do with. Former Alaska Gov. Sarah Palin declared that Obama was being “lax” in his response to the spill. White House spokeperson Robert Gibbs fired back stating that perhaps Palin needed her own blowout preventer.

At least they’re learning something about the industry.

I get a lot of stuff in my inbox every day, as do most of us. But as a magazine editor, much of my mail is from companies hoping to have me write about them or at least publish their press releases. The relevant ones I do; the irrelevant ones I trash (or forward, if they’re hysterically off-topic).

But once in awhile a story comes along that I think deserves some real play, and that’s why you will see information about the International Association of Oil & Gas Producers (OGP) and its joint industry program (JIP) on the effects of exploration and production sound on marine life in an upcoming issue of E&P as well as in my blog. There are lots of JIPs out there doing good things, and typically they’re also looking for more funding. This particular JIP asked if I could help get the word out. And I’m happy to help.

Few in the upstream offshore sector are unaware of the concerns of environmental groups and regulators about the potential impact of manmade noise on marine life. The US government recently enacted the Marine Mammal Protection Act (MMPA), which requires, among other things, that a trained spotter be aboard every vessel to spot whales and mitigate the situation before the animal has a chance to be adversely affected by the operation. Those who have to comply with these regulations find them somewhat burdensome, but other groups don’t think we’re going far enough. The International Association of Geophysical Contractors, for instance, recently sent members an e-mail outlining the intentions of a group called the Center for Biological Diversity (CBD) that plans to sue the US Minerals Management Service for its lack of MMPA enforcement.

While the statement from the CBD implies a well-understood connection between seismic surveys and damage to marine mammals, there is little scientific evidence to back this up. That’s not to say they’re wrong; it’s just that so little research has been done until recently, and several unknowns remain.

The goal of the JIP is to raise money from participants and let contracts to research organizations to study issues that it thinks will help member companies run their businesses in an environmentally responsible way. One of the neatest gadgets to come out of the JIP to date is a software program called PAMGuard. Used to interpret the results of passive acoustic monitoring (PAM), PAMGuard is a software program used onboard a vessel that indicates the presence of marine mammals in the vicinity of a survey based on the sounds they make underwater. It can, and has, been trained to pick distinctive species noises out of a jumble of overlying noise and indicate the animal’s presence. PAMGuard won’t necessarily replace spotters but can certainly complement them at times when visibility is low.

PAMGuard software is free and open-source, and literature points out that both of these elements are critical. Found as a free download at SourceForge.net, PAMGuard is open to the intellectual resources of the oil and gas and research communities. The website also supports developers with a developer tutorial and full developer training notes. These notes include how to make PAMGuard plug-ins and how to get signed up for the developer newsletter.

Why make it so easy? Simple – the JIP wants everyone to use PAMGuard, partly to get the remaining glitches out but mostly to show a unified front to critics who feel industry doesn’t care about marine life. The goal is to get the entire offshore industry, including the seismic contractors, aware of and using PAMGuard so that when regulations change, as they will, the industry will be ready.

For more information about the JIP, visit www.soundandmarinelife.org. For more information about OGP, visit www.ogp.org.uk.

As oil continues to spill into the Gulf of Mexico from the MC252 “Maconda” well, fingers are starting to be pointed at the various companies involved in the disaster. Thus it is that Tim Probert, president, Global Business Lines and chief HSE officer for Halliburton, testified before the Senate’s Committee on Energy and Natural Resources May 11.

This is a significant development in the ongoing investigation because cement failure has been floated as a possible cause for the blowout. Halliburton had four workers on the rig at the time of the explosion, and all four made it safely home, so their recollections have helped the company piece together its potential culpability.

Below is an excerpt of Probert’s testimony. The full document and the diagram he refers to are available at http://www.halliburton.com/public/news/pubsdata/press_release/2010/ProbertTestimony.pdf.

I need to start this section with an important statement of disclosure. Halliburton, as a service provider to the well owner, is contractually bound to comply with the well owner’s instructions on all matters relating to the performance of all work‐related activities. It is also important to understand the roles and responsibilities of the various parties involved in the construction of a well. The construction of a deepwater well is a complex operation involving the performance of numerous tasks by multiple parties led by the well owner’s representative, who has the ultimate authority for decisions on how and when various activities are conducted.

Attached to this testimony is an illustration showing the approximate depths and positions of the casing and liner strings set in this well. In addition, the approximate position of the various cement placements is illustrated, which is consistent with the well design. It should be noted that cement is used at specific designated spots and is not designed to be a complete barrier through the entire wellbore.

Cement can be used to isolate formation fluids, to prevent movement of these fluids between formations, and to bond and support the casing. A mixture of cement, water, and chemicals is combined in a slurry that can be pumped into position around the outside of steel liners and casing.

There are many external factors that impact the design and execution of a cement job. These include the variability in the hole geometry, relative location of hydrocarbon zones, hydrocarbon content, and the prior condition of the wellbore and associated fluids as determined by the drilling fluid provider. Casing strings are typically run with devices to centralize the casing concentrically in the wellbore and prevent incomplete displacement of drilling fluid, or “channeling.”

While every effort is made to complete a cement job with the highest levels of mechanical and hydraulic integrity, the above-mentioned well conditions may prevent this. Confirming cement integrity after placement would require the well owner to direct the wireline provider to obtain cement evaluation logs. Based on the findings of these logs, the well owner can elect to perform remedial action  by perforating the casing and “squeezing” cement into remaining voids to improve the integrity of the original cement.

The centralizer placement on the production casing, the drilling fluid conditioning program prior to cementing, and the cement slurry and placement design used for this well were implemented as directed by the well owner. However, as shown in the attached diagram, by design there is no continuous cement column throughout the entire wellbore.

Approximately 20 hours prior to the catastrophic loss of well control, Halliburton had completed the cementing of the ninth and final production casing string in accordance with the well program. Following the placement of 51 barrels of cement slurry, the casing seal assembly was set in the casing hanger. In accordance with accepted industry practice, as required by MMS (the US Minerals Management Service) and as directed by the well owner, a positive pressure test was then conducted to demonstrate the integrity of the production casing string. The results of the positive test were reviewed by the well owner, and the decision was made to proceed with the well program.

The next step included the performance of a “negative” pressure test, which tests the integrity of the casing seal assembly and is conducted by the drilling contractor at the direction of the well owner and in accordance with MMS requirements. We understand that Halliburton was instructed to record drill pipe pressure during this test until Halliburton’s cementing personnel were advised by the drilling contractor that the negative pressure test had been completed, and were placed on standby.

We understand that the drilling contractor then proceeded to displace the riser with seawater prior to the planned placement of the final cement plug, which would have been installed inside the production string and enabled the planned temporary abandonment of the well. Prior to the point in the well construction plan that the Halliburton personnel would have set the final cement plug, the catastrophic incident occurred. As a result, the final cement plug was never set.

Halliburton is confident that the cementing work on the Mississippi Canyon 252 well was completed in accordance with the requirements of the well owner’s well construction plan.

Bill Herbert of Simmons & Co., in his “Simmons Morning Energy Note,” takes BP to task for reassigning blame. “One bizarre and distasteful aspect of this tragedy has been BP’s continuous refrain since the blowout to lay a disproportionate share of the blame on [Transocean,  Halliburton, and Cameron] by inferring that it only had an arm’s length engagement/involvement in this whole process, which is patently absurd,” he writes. “Sure, the service companies are implementing and even recommending solutions, but the operator (BP) has the final say with regard to well construction architecture and signs off on all of the service solutions provided.”

When a plane crashes, does the US Congress call in the CEOs of the major airlines? Typically not.

So why are America’s top five oil companies being summoned to Capitol Hill to discuss the oil spill in the Gulf of Mexico?

Oh, and wait – there’s more. They’re also going to have to defend rising gasoline prices. Last time I filled up I paid US $2.59 for premium gasoline, no doubt a bargain compared to what people are paying in other parts of the world. Yet Rep. Edward J. Markey (D-Mass.) seems to think a good scolding will encourage these pesky CEOs to stop making profit so that Joe the Plumber can afford a cross-country trip this summer.

Here’s the release:

Markey Calls Oil CEOs to Congress

Oil Spill in Gulf, Energy Policy, Effects of Gas Prices on Economy Prompt Request for Oil Heads

WASHINGTON (April 29, 2010) – A large, growing oil slick in the Gulf of Mexico has been set on fire to contain the damage and is threatening the coastline. Oil profits are up. And the nation’s largest oil companies are finally coming to the table to discuss America’s energy policy.

With these multiple issues at play, Rep. Edward J. Markey (D-Mass.) sent formal notice to the heads of America’s top five oil companies to soon appear before the Select Committee on Energy Independence and Global Warming, which Rep. Markey chairs.

“From the health of our economy to the health of our environment, it’s time for the American public to hear from the oil companies,” said Rep. Markey. “Their opinions and answers on the issues of energy policy are vital given the push in Congress to construct a comprehensive energy independence strategy for our nation.”

The Gulf of Mexico oil spill, which is now leaking at a rate of 5,000 barrels of oil per day, could by next week exceed the size of the Santa Barbara oil spill of 1969. This accident follows the release of thousands of miles of coastline by the Obama administration for potential new offshore drilling.

Meanwhile, gas and oil prices have continued to rise, even as American families and businesses are beginning to recover from a recession. The average price of gasoline has now crept towards three dollars, averaging nearly $2.90 per gallon, an increase of about 85 cents compared to this time last year. And driving season hasn’t even yet begun.

“Four dollar gasoline helped break our economy’s back. And now, just as we are starting a recovery, the price of gas is creeping back towards three dollars, threatening the budgets of families and small businesses across the nation,” said Rep. Markey. “We need to craft a comprehensive strategy that protects consumers, and our nation’s oil companies must join us in that effort.”

Oil profits are also up for the top five oil companies — ExxonMobil, BP, ConocoPhillips, Shell and Chevron. ExxonMobil today reported a quarterly profit increase of 38 percent, or $6.3 billion. BP, which owns the sunken rig, reported a first quarter net profit of $6.08 billion, an increase of 137 percent. ConocoPhillips reported increased earnings of $2.1 billion for the first quarter. Shell announced profits of $4.8 billion, rising by 60 percent. Chevron will announce its earnings report on Friday.

The exact date and time of the hearing will be announced soon.

This kind of crap has to stop. First of all, there’s misinformation here – BP does NOT own the sunken rig, and the linkage between the recent opening of offshore acreage and the Transocean disaster is yellow journalism at its finest. Secondly, the oil majors are more than happy to have a voice in developing an energy policy since they’re the ones most affected by it. Thirdly, I wish the folks representing us in Washington could grasp a few simple concepts like supply and demand.

Maybe their chat with the CEOs will help edify them. We can only hope.

I don’t usually work Sunday afternoons. But I got an e-mail Sunday morning from the US Minerals Management Service (MMS) announcing a press conference to detail the ongoing efforts to curb the oil spill resulting from the fire on the Transocean Deepwater Horizon. Curious to know what it would take to plug a 1,000 bo/d leak at 5,000 ft (1,525 m), I decided to listen in.

I gotta tell you, I was pretty impressed, not only be the frankness with which questions were answered but also by the sheer scope of the problem and the determination being exhibited to solve it. The cause of the incident is still unknown and will be investigated, but the priority is to stop the leaking oil before it can impact sensitive coastal areas. This is being undertaken by a “unified command” comprising the MMS, the US Coast Guard, and BP.

According to Coast Guard Rear Admiral Mary Landry, 8^th district commander and federal onshore coordinator, this effort actually has its roots in the Exxon Valdez spill in 1989. The devastation cause by that incident led the United States government to enact the 1990 Oil Pollution Act, which spells out specifically which agencies and parties are responsible for which acts during a spill cleanup. “It outlines an organized response to spills,” Landry said. “I’m very thankful we have that system in place.”

BP’s prime role at the moment is to activate the blowout preventer (BOP) at the well head. The company is also making plans to drill relief wells in case the BOP can’t be activated. The command is also dropping dispersant on the oil, monitoring it from the air, alerting coastal states to its progress, and examining a system that’s been successful in shallow water that drops a dome over the wellhead and pipes fluids to the surface. This has never been done at this water depth, however.

Meanwhile the National Oceanic and Atmospheric Administration is providing weather reports and ocean current conditions to help predict the movement of the spill.

About 1,000 people have been involved in the disaster since the rig burst into flame April 20. And it was obvious from the attitudes of the participants in the press conference that nobody will relax until the spill has been contained. “I can’t tell you how focused we are,” said Doug Suttles, COO of BP Exploration and Production.

Ask employees of Brigham Exploration what took their company from dire times to a tenfold increase in stock price in one year, and the answer is like to be one word: “Bakken.”

After all, Brigham’s success in this single unconventional oil play is enough to cause it to divest some of its conventional assets to focus more attention and money in North Dakota and Montana.

Ben M. “Bud” Brigham, chairman of the board, president, and CEO of Brigham, recently gave a talk at the Houston Producers Forum about his company’s success in the Bakken. His 20-year-old company has seen its shares of ups and downs, but, he said, “I’m excited about the Bakken. It’s a special play, and it keeps getting better.”

Brigham has 300,000 net acres in the Bakken and Three Forks plays and has drilled 18 consecutive successful long-lateral, high frac-stage wells that are averaging 2,581 boe/d in their initial rates. In addition, the company has de-risked 469 of its net undrilled locations in Mountrail, Williams, and McKenzie counties.

After a “modest” 2009 in which the company was “hibernating” for the first half of the year, Brigham brought in a rig in the second half and grew its proved reserves 21% to 27.7 MMboe, driven by a 276% increase in the Williston Basin.

Ironically, some of this success. Brigham said, has been driven by the gas shale plays. High-tech completions strategies that have unlocked the Barnett and its sisters work equally as well in oil plays, so his company can use the same rigs and services, helping to constrain costs.

With this much success using one rig, it’s natural to assume that greater success can be realized with more rigs. Currently the company has four rigs running in the area, and it plans to ramp up to eight wells within the next year or so. This should equate to about $10 to $11 of incremental net asset value per share. This accelerated plan will increase oil production 125% in 2010 and 100% in 2011, he said, and will convert the majority of the company’s core acreage to held-by-production in the next three years. It also shortens the core acreage development cycle by an estimated nine years.

The wells pay out in about 1.4 years, he said, and have an expected 36-year economic life.

Brigham is expecting additional upside in Montana, the Rough Rider Three Forks area, and extensional areas that could more than double the current de-risked inventory. It will drill its first Montana Bakken well in the first half of this year, with 281 net locations if the program is successful. It plans an initial Rough Rider Three Forks well during the same time period, with a successful discovery leading to 281 potential net locations. Three Forks success in Montana could result in 170 net locations.

Additional upside potential will come from cost reduction as the company scales the learning curve; refracs; denser drilling in tighter areas; expansion into new areas as technology improves; secondary recover in the Bakken and Three Forks plays; continued development of conventional plays – the company has made three recent 3-D-delineated Red River discoveries – and higher oil and gas prices, which will benefit the long economic life of these reserves.

Combined with investment in infrastructure, the fact that oil is selling at a premium to natural gas, a balanced capacity differential, and Brigham’s vast acreage holdings, the company should be sitting pretty in the Bakken for many years to come.

To view this presentation, go to http://www.bexp3d.com/IR_pres.pdf.