US Oil Driller Is Quite a Find

06/22/2011 9:00 am EST


Joe Donohue

Co-Founder, Desert Shores Capital LP

This US-based driller is becoming a major player in what could become North America’s largest oilfield, and with energy shares correcting, buyers can get in at steeply discounted levels now.

Energy has sold off dramatically over the past month, as has most every other sector. I like the oil drillers, especially domestic drillers like Brigham Exploration Co. (BEXP), because they don’t have the geopolitical risk that many other companies do. The stock has sold off from roughly $34 in mid April to around the $26 level currently.

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Brigham Exploration Co. engages in the exploration, development, and production of onshore oil and natural gas reserves in the Rocky Mountains, the Gulf Coast, the Anadarko Basin, and west Texas. It holds property interests in the Powder River Basin located in Wyoming; Onshore Gulf Coast consisting of the Vicksburg trend in Brooks County, Texas; Miocene and Upper Oligocene trends in Southern Louisiana; and the Frio trend in and around Matagorda County, Texas.

As of December 31, 2009, the company had estimated proven reserves of 27.7 million barrels of oil equivalent (MMBoe). It had approximately 282,584 net leasehold acres in the Williston Basin. The company sells its oil and natural gas to intrastate pipeline purchasers, operators of processing plants, and marketing companies. Brigham Exploration Co. was founded in 1990 and is based in Austin, Texas.

Virtually alone in scenic and spectacular Austin is Brigham Exploration, which is fast making a name for itself in the Williston Basin's Bakken and Three Forks reservoirs. The company has joined others in nudging the Williston of North Dakota and Montana toward discoveries and production levels that could allow it to surpass Prudhoe Bay as North America's largest oilfield.

Founded more than 20 years ago by University of Texas-trained geophysicist Bud Brigham, the company's early days were concentrated in the onshore Gulf Coast, the Anadarko Basin, and West Texas. However, as recently as late 2007, its emphasis was moved to the Williston.

Brigham has been in the rumor mill before, but recently, the July 30 call option saw five times the normal buy-side action.

(Disclosure: I am long BEXP.)

By Joe Donohue of

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