BRIGHAM EXPLORATION CO, S-1/A, 1998-08-14

BRIGHAM EXPLORATION CO
S-1/A, 1998-08-14
CRUDE PETROLEUM & NATURAL GAS

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST , 1998

REGISTRATION NO. 333-53873
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------

AMENDMENT NO. 2

TO
FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------

BRIGHAM EXPLORATION COMPANY

(Exact name of Co-Registrant as specified in its charter)

<TABLE>
<S> <C>
DELAWARE 75-2692967
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>

<TABLE>
<S> <C> <C>
File No. 333- File No. 333- File No. 333-
BRIGHAM, INC. BRIGHAM HOLDINGS I, LLC BRIGHAM HOLDINGS II, LLC
(Exact name of Co-Registrant (Exact name of Co-Registrant (Exact name of Co-Registrant
as specified in its charter) as specified in its charter) as specified in its charter)
NEVADA NEVADA NEVADA
(State or other jurisdiction of (State or other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation or organization) incorporation or organization)
75-2354099 75-2692967 75-2354099
(I.R.S. Employer Identification (I.R.S. Employer Identification (I.R.S. Employer Identification
No.) No.) No.)
</TABLE>

File No. 333-

BRIGHAM OIL & GAS, L.P.

(Exact name of Co-Registrant

as specified in its charter)

DELAWARE

(State or other jurisdiction of

incorporation or organization)

75-2429186

(I.R.S. Employer Identification No.)

1311

(Primary Standard Industrial Classification Code Number)

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<S> <C>
6300 BRIDGE POINT PARKWAY BEN M. BRIGHAM
BUILDING 2, SUITE 500 PRESIDENT, CHIEF EXECUTIVE
AUSTIN, TEXAS 78730 OFFICER AND CHAIRMAN OF
(512) 427-3300 THE BOARD
(Address, including zip code, and 6300 BRIDGE POINT PARKWAY
telephone number, including BUILDING 2, SUITE 500
area code, of Co-Registrants' AUSTIN, TEXAS 78730
principal executive offices) (512) 427-3300
(Name, address, including zip
code, and telephone number,
including area code, of Co-
Registrants' agent for service)
</TABLE>

Copies of Communication to:

JOE DANNENMAIER

THOMPSON & KNIGHT, P.C.

1700 PACIFIC AVENUE, SUITE 3300

DALLAS, TEXAS 75201

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ]

If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

<PAGE> 2

CALCULATION OF REGISTRATION FEE

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<CAPTION>
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PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED(1) PRICE(2)(3) REGISTRATION FEE(4)
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<S> <C> <C>
Senior Subordinated Secured Notes due 2003.................. $50,000,000(5) $14,750
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Guaranty Agreements relating to Senior Subordinated Notes
due 2003.................................................. (6) (6)
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Warrants to Purchase Common Stock........................... (7) (7)
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Common Stock, par value $.01 per share...................... $10,000,000 $2,950
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</TABLE>

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(1) The issuer of the Notes, Warrants and Common Stock registered hereby is
Brigham Exploration Company. The Guaranty Agreements registered hereby are
made by Brigham, Inc., Brigham Holdings I, LLC., Brigham Holdings II, LLC.
and Brigham Oil & Gas, L.P.

(2) In accordance with Rule 457(o) under the Securities Act of 1933, the number
of securities being registered and the proposed maximum offering price per
security are not included in this table.

(3) Estimated for purposes of calculating registration fee.

(4) $13,940 of this fee was paid with the initial filing of this Registration
Statement.

(5) $10 million of this amount is for PIK interest.

(6) No additional consideration will be received for the Guaranty Agreements
registered hereby.

(7) No additional consideration will be received for the Warrants.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.

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<PAGE> 3

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY
NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH
OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED AUGUST , 1998

PROSPECTUS

BRIGHAM EXPLORATION COMPANY

$40,000,000 SENIOR SUBORDINATED SECURED NOTES DUE 2003

WARRANTS TO PURCHASE 1,000,000 SHARES OF COMMON STOCK

SHARES OF COMMON STOCK

------------------------------

The Senior Subordinated Secured Notes due 2003 (the "Notes"), the warrants
(the "Warrants") to purchase 1,000,000 shares of Common Stock, par value $.01
per share (the "Common Stock") at an exercise price of $ per share and the
shares (the "Shares") of Common Stock (the "Common Stock") offered
hereby (the "Offering") are being sold by Brigham Exploration Company, a
Delaware corporation ("Brigham" or the "Company"), to no more than three
institutional accredited investors.

Interest on the Notes will be payable quarterly, beginning on November 15,
1998. Interest rates payable on the Notes shall vary depending upon whether
accrued interest is paid in cash or in kind ("PIK Interest"). Interest shall be
paid in cash at interest rates of %, % and % per annum during years
one through three, year four and year five, respectively, of the term of the
Notes; provided, however, that if the payment of interest accrued on the Notes
in cash would cause a "Borrowing Base Deficiency" under the Company's revolving
credit facility or would cause the Company to be in violation of any covenant or
other restriction set forth in any Senior Loan Document (as defined) or any
agreement entered into by the Company or any subsidiary of the Company in
connection with the Notes, the Company may pay PIK Interest at interest rates of
%, % and % per annum during years one through three, year four and
year five, respectively, of the term of the Notes.

The Notes mature on , 2003, and all principal and accrued
but unpaid interest on the Notes is payable at maturity. The Company may
exercise its option to pay PIK Interest by delivering written notice thereof to
holders of the Notes on or before the quarterly interest payment date. The
Company may not pay PIK Interest for more than six quarters over the term of the
Notes. The Notes may be prepaid at any time in whole or in part, without premium
or penalty, provided that all partial prepayments must be pro rata to the
various holders of the Notes.

The Notes will rank subordinate in right of payment to the Senior
Indebtedness (as defined) and senior to all other financings (other than any
allowed capital leases and purchase money financings). The guaranty agreements
of the Company's subsidiaries will be similarly subordinated.

The Notes will be fully and unconditionally guaranteed on a joint and
several basis (the "Subsidiary Guaranty Agreements") by each of the Company's
current and future material subsidiaries and by any other current or future
subsidiaries which guarantee the Senior Indebtedness of the Company or its
subsidiaries, excluding Quest Resources L.L.C. and Venture Acquisitions L.P.
(which are not material) (collectively, the "Subsidiary Guarantors"). All of the
Subsidiary Guarantors are wholly-owned by the Company.

The Notes shall be secured by a lien on all assets of the Company and the
Subsidiary Guarantors which are now or hereafter pledged or mortgaged to secure
the Senior Indebtedness (or to secure any guaranty of the Senior Indebtedness),
including (and whether or not securing the Senior Indebtedness), a pledge of the
stock or membership interests of Brigham, Inc., Brigham Holdings I, LLC, and
Brigham Holdings II, LLC. Such lien shall be subordinate to that of the Senior
Indebtedness. As of June 30, 1998, after giving pro forma effect to the
application of the net proceeds from the Offering, the Company would have had
Senior Indebtedness outstanding (excluding unused commitments and letters of
credit) of $20.5 million under its revolving credit facility and no senior
subordinated debt outstanding other than the Notes. See "Use of Proceeds."

The Warrants will expire , 2005 and will entitle the
holders thereof to purchase an aggregate of 1,000,000 shares of Common Stock at
an exercise price equal of $ per share. The Common Stock is traded on the
Nasdaq Stock Market(SM) under the trading symbol "BEXP." On August 13, 1998, the
last reported sales price of the Common Stock on The Nasdaq Stock Market(SM) was
$8.50 per share. See "Price Range of Common Stock and Dividend Policy." The
holders of the Warrants and the Shares will have demand and "piggyback"
registration rights. See "Registration Rights Relating to the Warrants and
Shares."

------------------------------

ANY INVESTMENT IN THE SECURITIES OFFERED HEREIN INVOLVES A HIGH DEGREE OF
RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 14.

------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
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UNDERWRITING DISCOUNTS PROCEEDS TO
PRICE TO PUBLIC AND COMMISSIONS COMPANY(1)
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<S> <C> <C> <C>
Per Note.................................... % -- %
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Per Warrant................................. -- -- --
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Per Share of Common Stock................... $ -- $
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Total....................................... $ -- $
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</TABLE>

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(1) Before deducting expenses of the Offering payable by the Company estimated
to be $ .

The date of this Prospectus is August , 1998

<PAGE> 4

PROSPECTUS SUMMARY

The following summary should be read in conjunction with, and is qualified
in its entirety by, the detailed information and the Financial Statements and
notes thereto included elsewhere in this Prospectus. All references in this
Prospectus to "Brigham" or the "Company" include Brigham Exploration Company,
its subsidiaries and its predecessors and their subsidiaries. Certain terms
relating to the oil and gas industry are defined in "Glossary of Certain Oil and
Gas Terms."

THE COMPANY

Brigham is an independent exploration and production company that applies
3-D seismic imaging and other advanced technologies to systematically explore
and develop onshore domestic natural gas and oil provinces. The Company focuses
its 3-D seismic activity in provinces where it believes 3-D technology may be
effectively applied and which Brigham believes offer relatively large potential
reserve volumes per well and per field, high potential production rates and
multiple producing objectives. The Company's exploration activities are
concentrated primarily in three core provinces: the Anadarko Basin of western
Oklahoma and the Texas Panhandle; the onshore Gulf Coast of Texas and Louisiana;
and West Texas. Brigham is accelerating its 3-D seismic and drilling activities
in the Anadarko Basin and the Gulf Coast and is selectively focusing its
activities in those geologic trends of West Texas where it has achieved its best
results historically.

The Company pioneered the acquisition of large scale onshore 3-D seismic
surveys for exploration, obtaining extensive 3-D seismic data and experience in
capturing undiscovered natural gas and oil reserves. Through December 31, 1997,
Brigham had acquired 4,005 square miles (2.6 million acres) of 3-D seismic and
identified 1,170 potential drilling locations, of which the Company had drilled
370. The Company generates most of its exploratory projects and, therefore, has
the ability to retain a sizeable working interest to the extent that it decides
not to place interests with industry participants.

From inception in 1990 through December 31, 1997, Brigham had drilled 324
exploratory and 46 development wells on its 3-D seismic generated prospects with
an aggregate 63% success rate and an average working interest of 24%. Utilizing
the capital it raised in its May 1997 initial public offering, the Company
increased the average working interest it retained in its wells during the
second half of 1997, retaining a 45% average working interest in the 36 wells
that it drilled. As of December 31, 1997, the Company had added approximately 93
Bcfe of net proved reserves (excluding revisions) to its reserve base,
approximately 72 net Bcfe of which were discovered by Brigham through its
systematic 3-D seismic exploration drilling activities. The Company's estimated
net proved reserves as of December 31, 1997 were 72.3 Bcfe having an aggregate
Present Value of Future Net Revenues of $69.2 million, compared to estimated net
proved reserves as of December 31, 1996 of 21.9 Bcfe having an aggregate Present
Value of Future Net Revenues of $44.5 million. The Company's net proved reserve
volumes at December 31, 1997 were 74% natural gas and 65% categorized as proved
developed reserves.

BUSINESS STRATEGY

Brigham's business strategy is to achieve superior growth in shareholder
value through the application of its systematic exploration approach, which
emphasizes the integrated use of 3-D seismic imaging and other advanced
technologies to reduce drilling risks and finding costs. Since its inception in
1990, the Company has consistently achieved rapid growth in its acquisition of
3-D seismic data, identification of potential drilling locations, discovery of
proved reserves and production volumes.

Brigham completed its initial public offering of common stock in May 1997,
raising approximately $24 million to fund the Company's accelerated 3-D seismic
acquisition and exploration drilling activities. Key elements of the Company's
growth strategy at its initial public offering and continuing today include: (i)
accelerating the rate at which it acquires 3-D seismic and identifies potential
drilling locations; (ii) increasing the working interests it retains in
exploration projects to capture a greater share of the reserves that the Company
discovers; (iii) identifying higher potential, higher impact prospects; and (iv)
accelerating the rate at which its 3-D seismic defined locations are drilled.

3
<PAGE> 5

During the second half of 1997, the Company employed the capital raised in
its initial public offering to attain significant growth in each of its core
strategic objectives:

Accelerated 3-D Seismic Acquisition. During 1997, Brigham acquired
approximately 1,250 square miles of 3-D seismic, which increased the
Company's aggregate 3-D seismic inventory 45% to approximately 4,000 square
miles as of December 31, 1997. The overall level of 3-D seismic acquisition
in 1997 represents the most active year in the Company's history, and 85%
of this increased 3-D seismic was acquired in its higher potential Anadarko
Basin and Gulf Coast provinces.

Increased Working Interest. In an effort to retain a greater portion
of the value generated by its 3-D seismic exploration efforts, Brigham
increased the average working interests it retained in its 1997 3-D seismic
projects to 68% as compared with its average project working interest of
24% in 1990 through 1996. As a result of the higher working interests and
the accelerated acquisition of 3-D seismic, the Company acquired 845 net
square miles of 3-D seismic in 1997 as compared with 780 cumulative net
square miles acquired from 1990 through 1996.

Higher Potential, Higher Impact Prospects. By focusing an increasing
portion of its exploration activities in the more prolific Anadarko Basin,
Brigham increased its average proved reserves discovered per net well
drilled (including dry holes) to 1.2 Bcfe in 1997 from 0.7 Bcfe in 1996 and
0.4 Bcfe in 1992 through 1995. In the Anadarko Basin alone, Brigham's
average proved reserves discovered per net well drilled was 3.4 Bcfe in
1997 compared with 1.8 Bcfe in 1996 and 2 Bcfe in 1994 through 1995.
Contributing to these increases, the Company's Anadarko Basin drilling in
1997 produced the two largest field discoveries in Brigham's history, which
resulted in the discovery of approximately 52 Bcfe of gross proved reserves
and provided the Company with several development drilling opportunities.

Accelerated Drilling. Through its strategy of retaining higher working
interests in its 3-D seismic projects and subsequent drilling, Brigham
participated in the drilling of 28 net wells in 1997, a 75% increase from
the approximate 16 net wells drilled by the Company in 1996. The Company
achieved a 63% success rate on the 73 wells in its 1997 drilling program,
consistent with Brigham's historical average success rate. A key factor
contributing to its increased level of drilling activity was the Company's
addition of personnel in engineering, land and administrative functions
during 1997. These staff additions provided Brigham with the additional
infrastructure required to increase its operating capabilities, enabling
the Company to operate 37% of its gross wells and 64% of its net wells
drilled in 1997.

As a result of the combined effects of the Company's multi-pronged growth
strategy, Brigham generated net proved reserve additions of approximately 38
Bcfe through drilling in 1997, which represents approximately 175% of the
Company's year-end 1996 net proved reserves of approximately 22 Bcfe. In
addition to its drilling efforts in 1997, the Company acquired 21.5 Bcfe of net
proved reserves at an implied cost of $0.63 per proved Mcfe in its November 1997
purchase of certain properties in and adjacent to its West Bradley project area
in its Anadarko Basin province. Brigham believes this acquisition will enable it
to further build its inventory of potential drilling locations over the
historically prolific Carter Knox anticline in the Anadarko Basin through a 3-D
seismic shoot planned for 1998.

Primarily through its exploration efforts, the Company increased its net
production volumes 52% to 3.1 Bcfe in 1997 from 2.1 Bcfe in 1996. As further
evidence of the Company's acceleration efforts subsequent to its May 1997
initial public offering, Brigham increased its average net daily production
volumes from 6.6 MMcfe in the second quarter 1997 to 21.2 MMcfe in the second
quarter 1998 representing a compounded growth rate of 34% per quarter.

4
<PAGE> 6

portion of the Company's interests in certain seismic projects. The Company
intends to continue to retain higher working interests in its 3-D seismic
projects in the Anadarko Basin and the onshore Gulf Coast. By increasing its
working interests retained in the majority of its current and planned seismic
projects, Brigham expects to further accelerate its growth not only by retaining
a greater portion of the reserves it discovers, but also by increasing its
ability to control the timing of the drilling of its exploration projects and
therefore helping to accelerate its drilling pace. The Company's current 1998
budget consists of 90 gross (45 net) wells, compared with the 73 gross (28 net)
wells drilled by the Company in 1997. This increase in anticipated 1998 drilling
is the result of an increase in planned drilling of higher working interest
wells in the Anadarko Basin and the Gulf Coast offset by a reduction in planned
drilling activity in West Texas.

COMPETITIVE ADVANTAGES

Brigham believes that its knowledge base, personnel and technology provide
it with the following competitive advantages to capture undiscovered natural gas
and oil reserves.

3-D Seismic Knowledge Base. From 1990 through 1997, the Company
acquired 4,005 square miles of 3-D seismic and drilled 370 wells in over 20
geologic trends in seven basins and seven states. With the resulting
knowledge of the application of 3-D seismic to different geologic trends,
the Company has refined its exploration techniques and identified
exploration areas where it believes 3-D seismic can reduce risks and
enhance returns on its investments.

Technological Expertise. Brigham's 19 explorationists collectively
have approximately 300 years of experience, including approximately 85
years of experience using computer aided exploration ("CAEX") workstations,
and have expertise in many geologic trends.

Project Generation and Control. Brigham is not dependent on third
parties for its project flow, having generated approximately 90% of its 3-D
seismic exploration projects. With the resulting project control, the
Company is able to manage the predrilling exploration phases and can
determine the level of working interest it retains and the extent to which
it manages drilling and post-drilling operations.

Pioneering Innovations. In 1990 the Company pioneered the assemblage
of large scale onshore 3-D seismic projects and the use of pre-seismic
lease options for the systematic exploration of proven natural gas and oil
provinces. Subsequent innovations include the Company's 3-D seismic
acquisition and processing alliances and creative industry trade structures
to financially leverage its drilling program.

PRIMARY EXPLORATION PROVINCES

Brigham's exploration activities are concentrated primarily in three core
provinces: the Anadarko Basin of western Oklahoma and the Texas Panhandle; the
onshore Gulf Coast of Texas and Louisiana; and West Texas. Brigham is
accelerating 3-D seismic activity in the Anadarko Basin and the Gulf Coast and
will selectively continue such activity in those geologic trends of the West
Texas region where it has achieved its best results historically. Brigham is
focusing its 3-D seismic exploration efforts in provinces where it believes 3-D
seismic technology may be effectively applied and which the Company believes
offer relatively large potential reserve volumes per well and per field, high
potential production rates and multiple producing objectives.

Although the Company is acquiring 3-D seismic within the provinces listed
below and has identified approximately 800 potential drilling locations yet to
be drilled in those provinces, there can be no assurance that any of the seismic
will be acquired or will generate additional drilling locations or that any
potential drilling locations will be drilled at all or within the expected time
frame. The final determination with respect to the drilling of any well,
including those currently budgeted, will depend on a number of factors,
including

5
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(i) the results of exploration efforts and the review and analysis of the
seismic, (ii) the availability of sufficient capital resources by the Company
and other participants for drilling prospects, (iii) economic and industry
conditions at the time of drilling, including prevailing and anticipated prices
for natural gas and oil and the availability of drilling rigs and crews, (iv)
the financial resources and results of the Company and (v) the availability of
leases on reasonable terms and permitting for the potential drilling location.
There can be no assurance that the budgeted wells will, if drilled, encounter
reservoirs of commercial quantities of natural gas or oil.

<TABLE>
<CAPTION>
CURRENT 1998 CAPITAL BUDGET(1)
--------------------------------------------
3-D SEISMIC 3-D SEISMIC UNDRILLED CAPITAL
DATA ACQUIRED/ DATA GROSS POTENTIAL EXPENDITURES ($MM)
INTERPRETED AS OF BUDGETED TO WELLS DRILLING WELLS -----------------------------
12/31/97 BE ACQUIRED IN DRILLED LOCATIONS BUDGETED NET
(GROSS SQ. 1998 (GROSS THROUGH AS OF ------------ SEISMIC NET
PROVINCE MILES) SQ. MILES) 12/31/97 12/31/97 GROSS NET & LAND DRILLING TOTAL(2)
- -------- ----------------- -------------- -------- --------- ----- ---- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Anadarko Basin.......... 1,515/1,195 660 55 364 55 28.8 $12.5 $26.5 $39.0
Gulf Coast.............. 566/325 600 11 110 20 9.5 (0.5) 10.5 10.0
West Texas.............. 1,649/1,600 40 287 302 14 6.5 1.5 2.8 4.3
Others(3)............... 275/275 -- 17 24 1 0.2 -- 0.2 0.2
----------- ----- --- --- --- ---- ----- ----- -----
Total........... 4,005/3,395 1,300 370 800 90 45.0 $13.5 $40.0 $53.5
=========== ===== === === === ==== ===== ===== =====
</TABLE>

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(1) Prepared as of August 10, 1998.

(2) Net 3-D seismic and land acquisition costs and drilling expenditures.

(3) Colorado, Kansas and Montana.

Anadarko Basin. The Anadarko Basin is a prolific natural gas province that
the Company believes has been relatively under explored, particularly with
regard to deep, high potential objectives. The Anadarko Basin contains numerous
historically elusive stratigraphic targets, such as the Red Fork, Morrow and
Springer channel sands, and structural targets, such as the Hunton and Arbuckle
carbonates, which are well-suited to 3-D seismic imaging. In some cases, these
objectives have produced in excess of 30 Bcf of natural gas from a single well
at rates up to 30 MMcf of natural gas per day.

The Company has assembled an extensive digital data base in this province,
including geologic studies, basin wide geologic tops, production data, well
data, geographic data and over 8,400 miles of 2-D seismic. Working with its team
of in-house geologists and supplemented by consulting geologists, the Company's
explorationists integrate this data with their extensive expertise and knowledge
base to generate 3-D projects in the Anadarko Basin.

As of December 31, 1997, the Company had acquired or was acquiring 1,515
square miles (969,600 acres) in 30 projects in the Anadarko Basin. The Company
anticipates acquiring 660 square miles (422,400 acres) of additional 3-D seismic
in this province in 1998. As of December 31, 1997, Brigham had completed 44
wells in 55 attempts (80% success rate) in the Anadarko Basin and had found
cumulative proved reserves of 44 net Bcfe. In 1997, the Company completed 19
wells in 23 attempts in the Anadarko Basin with an average working interest of
39%, adding 31 net Bcfe of proved reserves. In addition, the Company acquired
21.5 net Bcfe of proved reserves in this region in November 1997. As of December
31, 1997, the Company had 364 3-D seismic delineated potential drilling
locations in the Anadarko Basin, of which the Company intends to drill 55 gross
(29 net) wells in 1998.

Gulf Coast. The onshore Gulf Coast region of Texas and Louisiana is a high
potential, multi-pay province that lends itself to 3-D seismic exploration due
to its substantial structural and stratigraphic complexity. The Company has
assembled a digital data base including geographical, production, geophysical
and geological information that the Company evaluates on its CAEX workstations.
Working with consulting regional geologists, the Company's explorationists
integrate this data with their extensive expertise and knowledge base to
generate 3-D seismic projects in the Gulf Coast. Brigham's commitment to this
province is evidenced by the Company's staff additions, the opening of its
Houston office and the addition of ten new 3-D seismic projects in 1996 and
1997.

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The Company anticipates that its increased project assemblage and 3-D
seismic acquisition activity in the Gulf Coast will generate accelerated
drilling in this province in 1998 and 1999. The Company is currently assembling
projects in the Expanded Wilcox and Expanded Vicksburg trends in South Texas,
the Miocene trend in South Texas and South Louisiana, and the Lower and Middle
Frio trends of South Texas.

As of December 31, 1997, the Company had acquired or was acquiring 566
square miles (362,400 acres) of 3-D seismic in seven projects in the onshore
Gulf Coast province. The Company anticipates acquiring 600 square miles (384,000
acres) of additional 3-D seismic in this province in 1998. As of December 31,
1997, Brigham had completed 8 wells in 11 attempts (73% success rate) in the
Gulf Coast and had found cumulative proved reserves of 3 net Bcfe. In 1997, the
Company completed seven wells in 10 attempts with an average working interest of
9% adding 3 net Bcfe of proved reserves. As of December 31, 1997, the Company
had 110 3-D seismic delineated potential drilling locations in the Gulf Coast
province, of which the Company intends to drill 20 gross (10 net) wells in 1998.

West Texas. The Company's 3-D seismic drilling activity in the West Texas
region has been focused in the Horseshoe Atoll, the Midland Basin and the
Eastern Shelf of the Permian Basin and the Hardeman Basin. Recently the Company
initiated an exploration program in the Delaware Basin and it is selectively
focusing its West Texas activity in portions of geologic trends that the Company
believes offer greater potential for lower finding costs and higher returns,
including the Fusselman formation of the Midland Basin and the Ellenberger and
Devonian formations of the Delaware Basin.

As of December 31, 1997, the Company had acquired or was acquiring 1,649
square miles (1,055,360 acres) in 74 projects in the West Texas region. The
Company anticipates acquiring 40 square miles (25,600 acres) of additional 3-D
seismic in this region in 1998. As of December 31, 1997, Brigham had completed
180 wells in 287 attempts (63% success rate) in the West Texas region and had
found cumulative proved reserves of 24 net Bcfe. In 1997, the Company completed
19 wells in 34 attempts with an average working interest of 45%, adding 4 net
Bcfe of proved reserves. As of December 31, 1997, the Company had 302 3-D
seismic delineated potential drilling locations in the West Texas region, of
which the Company intends to drill 14 gross (6 net) wells in 1998.

THE OFFERING

ISSUER..................... Brigham Exploration Company

USE OF PROCEEDS............ The net proceeds of the Offering will be used to
fund the Company's accelerated exploration and
development activities, and in the interim for
repayment of a portion of outstanding indebtedness.
See "Use of Proceeds."

The Notes

Securities Offered......... $40 million aggregate principal amount of Senior
Subordinated Secured Notes due 2003.

Maturity Date.............. , 2003.

Interest Payment Dates..... November 15, February 15, May 15 and August 15 of
each year, commencing November 15, 1998.

Interest Rate.............. Interest rates payable on the Notes shall vary
depending upon whether a accrued interest is paid
in cash or in kind ("PIK Interest"). Interest shall
be paid in cash at interest rates of %, %
and % per annum during years one through
three, year four and year five, respectively, of
the term of the Notes; provided, however, that if
the payment of interest accrued on the Notes in
cash would cause a "Borrowing Base Deficiency"
under the Company's revolving credit facility or
would cause

7
<PAGE> 9

the Company to be in violation of any covenant or
other restriction set forth in any Senior Loan
Document or any agreement entered into by the
Company or subsidiary of the Company in connection
with the Notes, the Company may pay PIK Interest at
interest rates of %, % and % per annum during
years one through three, year four and year five,
respectively, of the term of the Notes.

Ranking.................... The Notes will rank subordinate in right of payment
to the Senior Indebtedness and senior to all other
financings (other than any allowed capital leases
and purchase money financings). The Subsidiary
Guaranty Agreements will be similarly subordinated.
As of June 30, 1998, on a pro forma basis, after
giving effect to the application of the net
proceeds from the Offering, the Company would have
had $20.5 million Senior Indebtedness outstanding,
and there would be no senior subordinated debt
outstanding other than the Notes. In addition, the
Notes may be structurally subordinated to all
existing and future liabilities of the Company's
subsidiaries. See "Capitalization," "Description of
the Notes -- Ranking and Subordination,"
"Description of Other Indebtedness" and
"Subordination Agreement."

Subsidiary Guaranty
Agreements................. The Notes will be fully and unconditionally
guaranteed, jointly and severally, by each of the
Subsidiary Guarantors. The Subsidiary Guaranty
Agreements will be secured by substantially all of
the assets of the Subsidiary Guarantors. Financial
statements for the Subsidiary Guarantors are not
presented because management has determined that
they would not be material to investors.

Optional Prepayment........ The Notes may be prepaid at any time, in whole or
in part, without premium or penalty, provided that
all partial prepayments must be pro rata to the
various holders of the Notes.

Change of Control.......... A Change of Control would constitute an Event of
Default (as defined). If any Event of Default
occurs, the holders of the Notes may direct the
Trustee (as defined) to declare the principal of
and the accrued and unpaid interest on such Notes
to be due and payable immediately. However, such
repayment would be subject to certain subordination
provisions in the Indenture (as defined).

Certain Covenants.......... The Notes will be issued pursuant to an indenture
(the "Indenture") containing certain covenants
that, among other things, limit the ability of the
Company and its Subsidiaries (as defined) to incur
additional indebtedness, pay dividends, make
distributions, enter into certain sale and
leaseback transactions, enter into certain
transactions with affiliates, dispose of certain
assets, incur liens, and engage in mergers and
consolidations. See "Description of the
Notes -- Certain Covenants."

Absence of a Public Market
for the Notes.............. The Notes are new securities and may only be traded
in compliance with applicable securities laws.
There can be no assurance as to the development or
liquidity of any market for the Notes. The Company
does not intend to apply for a listing of the Notes
on any securities exchange or on any automated
dealer quotation system.

8
<PAGE> 10

The Warrants

Securities Offered......... Warrants which, when exercised, will entitle the
holders thereof to acquire an aggregate of
1,000,000 shares of Common Stock (the "Warrant
Shares").

Expiration Date............ , 2005.

Exercise................... Each Warrant will entitle the holder to acquire at
any time prior to , 2005, one
share of Common Stock at a price equal to $ per
share, subject to adjustment from time to time upon
the occurrence of certain changes in Common Stock,
certain Common Stock distributions, certain
issuances of options or convertible securities,
certain dividends and distributions and certain
other increases in the number of shares of Common
Stock.

Rights as Shareholders..... Holders of Warrants will not, by virtue of being
such holders, have any rights as stockholders of
the Company.

Registration Rights........ Pursuant to the New Registration Rights Agreement
(as defined), holders of the Shares, the Warrants,
the Warrant Shares and any other securities issued
upon the exercise of the Warrants (collectively,
the "Registrable Securities") will have demand
registration rights for two registrations, provided
that a request, which must be made by holders of
Registrable Securities collectively owning at least
25% of the Registrable Securities (or holding at
least a majority of the Registrable Securities for
a shelf registration statement if the Company is
eligible to use Form S-3), will be "counted"
towards the two registrations only when (i) all the
Registrable Securities requested to be included in
the registration statement have been included, (ii)
the corresponding registration statement has become
effective and (iii) the public offering has been
consummated and the Registrable Securities have
been sold on the terms and conditions provided
therein, provided that in the event of a shelf
registration statement (if the Company is then
eligible to file on Form S-3) the Company shall
keep such registration statement effective for two
years. The Company will agree in the New
Registration Rights Agreement to use its best
efforts to cause the registration statement to
become and remain effective for the period of the
distribution in order for it to be "counted" as
described above. Subject to other provisions
contained in the New Registration Rights Agreement,
the holders of the Registrable Securities will have
"piggyback" registration rights. Exercise of the
right to convert the Warrants to Warrant Shares
shall, at the election of the holder of the
Warrants, be contingent upon the registration of
the Warrant Shares in accordance with the New
Registration Rights Agreement and should such
registration not be completed such holder shall
have the right to rescind its election to convert
the Warrants. See "Registration Rights Relating to
the Shares and the Warrants."

Transfer Restrictions...... The Warrant Shares have not been registered under
the Securities Act and may not be offered or sold,
except pursuant to an exemption from, or in a
transaction not subject to, the registration
requirements of the Securities Act.

9
<PAGE> 11

The Common Stock

Common Stock Offered by the
Company.................. shares

Common Stock to be
Outstanding after the
Offering................. shares(1)

The Nasdaq Stock Market(SM)
Symbol................... "BEXP"

Registration Rights........ The holders of the Shares shall have registration
rights with respect to the Shares set forth above
in the summary of Registration Rights relating to
the Warrants.

- ---------------

(1) Does not include (a) 935,987 shares of Common Stock issuable, subject to
vesting, upon exercise of outstanding stock options with an average exercise
price of $7.61 per share or (b) 1,000,000 shares of Common Stock issuable
upon exercise of the Warrants with an exercise price of $ per share. See
"Management -- Executive Director Compensation," "-- Executive
Compensation," "Capitalization" and "Description of Warrants."

RISK FACTORS

Any investment in the Notes, Warrants or Shares involves a high degree of
risk. For a discussion of certain risks that a potential investor should
carefully evaluate prior to making an investment in the Notes, Warrants or
Shares, see "Risk Factors."

10
<PAGE> 12

SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

The following table sets forth selected financial data of the Company. The
data for the three years ended December 31, 1997 has been derived from the
consolidated financial statements appearing elsewhere in this Prospectus. The
data for the two years ended December 31, 1994 has been derived from
consolidated financial statements not appearing in this Prospectus. The
consolidated financial data at June 30, 1998 and for the six months ended June
30, 1998 and June 30, 1997 have been derived from the condensed consolidated
financial statements of the Company which, in the opinion of management, include
all adjustments, consisting only of normal adjustments, necessary for a fair
presentation of the results for the periods. The results for the six months
ended June 30, 1998 are not necessarily indicative of the results to be expected
for the full year. The information should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the financial statements and notes thereto included elsewhere in
this Prospectus.

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------------------------- -------------------
1993 1994 1995 1996 1997 1997 1998
------- ------- ------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Natural gas and oil sales................. $ 937 $ 2,565 $ 3,578 $ 6,141 $ 9,184 $ 3,854 $ 7,130
Workstation revenue....................... 467 815 635 627 637 324 247
------- ------- ------- -------- -------- ------- --------
Total revenues........................ 1,404 3,380 4,213 6,768 9,821 4,178 7,377
Costs and expenses:
Lease operating........................... 111 491 761 726 1,151 470 978
Production taxes.......................... 47 126 165 362 549 219 450
General and administrative................ 1,433 1,785 1,897 2,199 3,570 1,455 2,293
Depletion of natural gas and oil
properties.............................. 4,371(1) 1,104 1,626 2,323 2,732 1,395 2,784
Depreciation and amortization............. 406 561 533 487 582 287 365
------- ------- ------- -------- -------- ------- --------
Total costs and expenses.............. 6,368 4,067 4,982 6,097 8,584 3,826 6,870
------- ------- ------- -------- -------- ------- --------
Operating income (loss)..................... (4,964) (687) (769) 671 1,237 352 507
Other income (expense):
Interest income........................... 6 56 128 52 145 81 77
Interest expense.......................... (105) (668) (936) (1,173) (1,190) (546) (2,432)
------- ------- ------- -------- -------- ------- --------
Total other income (expense).......... (99) (612) (808) (1,121) (1,045) (465) (2,355)
------- ------- ------- -------- -------- ------- --------
Net income (loss) before income taxes....... (5,063) (1,299) (1,577) (450) 192 (113) (1,848)
Income tax (expense) benefit, net........... -- -- -- -- (1,228)(2) (4,813)(2) 621
------- ------- ------- -------- -------- ------- --------
Net loss.............................. $(5,063) $(1,299) $(1,577) $ (450) $ (1,036) $(4,926) $ (1,227)
======= ======= ======= ======== ======== ======= ========
Net loss per share -- basic/diluted......... $ (0.57) $ (0.15) $ (0.18) $ (0.05) $ (0.09) $ (0.50) $ (0.10)
Weighted average shares outstanding --
basic/diluted............................. 8,929 8,929 8,929 8,929 11,081 9,890 12,254
STATEMENT OF CASH FLOWS DATA:
Net cash provided by (used in) operating
activities................................ $ (730) $ 626 $ 1,383 $ 3,710 $ 9,806 $ (195) $ (1,692)
Net cash used in investing activities....... (6,983) (5,463) (8,005) (11,796) (57,300) (12,105) (30,884)
Net cash provided by financing activities... 7,839 4,634 7,724 7,731 47,748 15,842 33,981
OTHER FINANCIAL DATA:
Capital expenditures........................ $ 6,632 $ 5,445 $ 7,935 $ 13,612 $ 57,170 $11,796 $ 30,044
EBITDA(3)................................... (187) 978 1,390 3,481 4,551 2,034 3,656
Operating cash flow(4)...................... (286) 366 582 2,360 3,506 1,569 1,567
Ratio of earnings to fixed charges(6)....... -- -- -- -- 1.1x -- --
PRO FORMA FINANCIAL DATA(7):
Ratio of earnings to fixed charges(6)....... -- --
Interest expense(7)......................... 2,325 3,252
</TABLE>

<TABLE>
<CAPTION>
AS OF JUNE 30, 1998
-------------------------
ACTUAL AS ADJUSTED(5)
-------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................. $ 3,106 $ 3,106
Natural gas and oil properties, at cost, net.............. 114,454 114,454
Total assets.............................................. 129,699 131,579
Notes payable............................................. 68,000 20,450
Stockholders' equity...................................... 42,334 56,264
</TABLE>

- ---------------

(1) Includes a capitalized ceiling impairment charge of $3.3 million in 1993.

11
<PAGE> 13

(2) In conjunction with the Exchange, the Company recorded a deferred income tax
liability of $5 million to recognize the temporary differences between the
financial statement and tax bases of the assets and liabilities of the
Partnership at February 27, 1997, the date of the Exchange. During the
fourth quarter of 1997, the Company elected to record a step-up in basis of
its assets for tax purposes as a result of the Exchange. Related to this
election, the Company recorded a $3.8 million deferred income tax benefit,
resulting in a net $1.2 million ($.10 per share) non-cash deferred income
tax charge for the year ended December 31, 1997. See Note 2 of Notes to the
December 31, 1997 Consolidated Financial Statements. See "The Company."

(3) EBITDA represents net income (loss) plus income taxes, net interest expense
and depreciation, depletion and amortization expense. EBITDA should not be
considered in isolation or as a substitute for net income, cash flows from
operating activities or any other measure of financial performance prepared
in accordance with generally accepted accounting principles or as a measure
of a company's profitability or liquidity.

(4) Operating cash flow represents net income (loss) plus depreciation,
depletion and amortization ("DD&A") expenses, deferred income taxes and
other non-cash items. Operating cash flow should not be considered in
isolation or as a substitute for net income, cash flows from operating
activities or any other measure of financial performance prepared in
accordance with generally accepted accounting principles or as a measure of
a company's profitability or liquidity.

(5) As adjusted to give effect to the Offering and the application of the
estimated $47.6 million net proceeds therefrom to the Company, assuming
issuance of 1,052,632 Shares at a price of $9.50 per share. See "Use of
Proceeds" and "Capitalization."

(6) For purposes of calculating the ratio of earnings to fixed charges, earnings
are defined as income (loss) of the Company from continuing operations
before income taxes and fixed charges. Fixed charges consist of interest
expense, including amortization of loan fees, and the portion of rental
expense pursuant to operating leases deemed to be representative of the
interest component. Earnings were insufficient to cover fixed charges by
$5.1 million, $1.3 million, $1.6 million and $450,000 for the years ended
December 31, 1993, 1994, 1995 and 1996, respectively, and $113,000 and $1.9
million for the six months ended June 30, 1997 and 1998, respectively. Pro
forma earnings were insufficient to cover pro forma fixed charges by
$943,000 for the year ended December 31, 1997 and $2.7 million for the six
months ended June 30, 1998.

(7) The pro forma financial data have been prepared on the basis of the
following assumptions: (i) the Offering was consummated at the beginning of
the respective periods, (ii) the average debt outstanding during the year
ended December 31, 1997 of $12 million was refinanced with proceeds from the
Notes, (iii) debt outstanding during the first six months of 1998 was
partially repaid with proceeds from the issuance of $10 million of Shares
and was partially refinanced with proceeds from the $40 million of Notes and
(iv) the Notes bear an assumed effective interest rate of 15.7%.

12
<PAGE> 14

SUMMARY RESERVE AND OPERATING DATA
(Dollars in thousands, except per Mcfe data)

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
-------------------------------------------------- ----------------
1993 1994 1995 1996(1) 1997 1997 1998
------ ------- ------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
3-D SEISMIC ACQUIRED:
Gross square miles.......... 908 423 311 655 1,243 645 610
Net square miles............ 272 114 90 241 845 353 459
Average project working
interest.................. 30% 27% 29% 37% 68% 55% 75%
WELLS DRILLED:
Gross wells drilled......... 52 73 78 67 73 37 33
Net wells drilled........... 9.2 16.8 18.5 15.9 28.0 11.8 15.9
Average drilling working
interest.................. 18% 23% 24% 24% 38% 32% 48%
ESTIMATED PROVED RESERVES (AT
YEAR END)(2):
Natural gas (MMcf).......... 227 3,579 4,257 10,257 53,230
Oil (MBbls)................. 336 1,022 1,672 1,940 3,181
Natural gas equivalent
(MMcfe)................... 2,243 9,711 14,289 21,897 72,316
Present Value of Future Net
Revenues.................. $3,158 $10,240 $18,222 $44,506 $69,249
Percent natural gas(3)...... 10% 37% 30% 47% 74%
Percent proved
developed(3).............. 100% 76% 80% 67% 65%
NET PROVED RESERVE
ADDITIONS(4):
All sources (MMcfe)......... 1,987 8,524 8,884 13,996 59,311
Excluding acquisitions
(MMcfe)................... 1,987 8,524 8,884 13,718 38,129
RESERVE REPLACEMENT RATIO(5):
All sources................. 553% 851% 667% 679% 1,897%
Excluding acquisitions...... 553% 851% 667% 666% 1,220%
NET PRODUCTION VOLUMES:
Natural gas (MMcf).......... 59 165 272 698 1,382 457 1,947
Oil (MBbls)................. 50 140 177 227 291 127 232
Natural gas equivalent
(MMcfe)................... 359 1,002 1,332 2,060 3,126 1,222 3,338
Percent natural gas......... 16% 16% 20% 34% 44% 37% 58%
PER MCFE DATA:
Natural gas and oil sales... $ 2.61 $ 2.56 $ 2.69 $ 2.98 $ 2.94 $ 3.16 $ 2.14
Workstation revenue......... 1.30 .81 .48 .30 .20 .27 .07
Lease operating expenses.... (.31) (.49) (.57) (.35) (.37) (.38) (.29)
Production taxes............ (.13) (.13) (.12) (.18) (.18) (.18) (.13)
General and administrative
expenses.................. (3.99) (1.78) (1.42) (1.07) (1.14) (1.19) (.69)
------ ------- ------- ------- ------- ------ ------
Operating margin.......... $ (.52) $ .97 $ 1.06 $ 1.68 $ 1.45 $ 1.68 $ 1.10
====== ======= ======= ======= ======= ====== ======
</TABLE>

- ---------------

(1) Net of a sale by the Company in January 1996 of its interest in certain
properties that accounted for 299 MMcf of natural gas and 272 MBbls of oil
(1,931 MMcfe of proved reserves) as of December 31, 1995.

(2) The estimates of reserve and present value data have been prepared in
accordance with the SEC's guidelines by Cawley, Gillespie & Associates,
Inc., the Company's independent petroleum consultants ("Cawley Gillespie").
Cawley Gillespie's letter summarizing its December 31, 1997 reserve report
is attached hereto as Appendix A to this Prospectus.

(3) Based on volumes.

(4) Excludes revisions of previous estimates.

(5) Net proved reserve additions divided by the Company's net production volumes
for the period.

13
<PAGE> 15

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This Prospectus includes statements that are "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933 (the "Securities
Act") and Section 21E of the Securities Exchange Act of 1934, including
statements regarding estimated future net revenues from natural gas and oil
reserves and the present value thereof, planned capital expenditures (including
the amount and nature thereof), increases in natural gas and oil production, the
number of wells the Company anticipates drilling through 1998 and the Company's
financial position, business strategy and other plans and objectives for future
operations. Although the Company believes that the expectations reflected in
these forward-looking statements are reasonable, there can be no assurance that
the actual results or developments anticipated by the Company will be realized
or, even if substantially realized, that they will have the expected effects on
its business or operations. Among the factors that could cause actual results to
differ materially from the Company's expectations are general economic
conditions, inherent uncertainties in interpreting engineering data, operating
hazards, delays or cancellations of drilling operations for a variety of
reasons, competition, fluctuations in natural gas and oil prices, the ability of
the Company to successfully integrate the business and operations of acquired
companies, government regulations and other factors disclosed under "Risk
Factors" and elsewhere in this Prospectus. All subsequent oral and written
forward looking statements attributable to the Company or persons acting on its
behalf are expressly qualified in their entirety by these factors. The Company
assumes no obligation to update any of these statements.

RISK FACTORS

Any investment in the Notes, Warrants or Shares involves a high degree of
risk. Prospective purchasers of the Notes, Warrants or Shares should carefully
consider the risk factors set forth below, as well as the other information
contained in this Prospectus.

EFFECTS OF LEVERAGE

As of June 30, 1998, after giving pro forma effect to the application of
the estimated net proceeds from the Offering, the Company would have long-term
debt outstanding of $20.5 million. The Indenture will limit the amounts of
additional debt borrowings, including borrowings under the Credit Facility or
other Senior Indebtedness. However, the Indenture will permit the Company to
borrow under the Credit Facility up to the lesser of $75 million or the
borrowing base under the Credit Facility ($65 million upon completion of the
Offering), which, on a pro forma basis for the Offering as of June 30, 1998,
would provide the Company with the ability to borrow up to $44.5 million of
additional indebtedness under its Credit Facility. In addition, the Indenture
will allow the Company to borrow up to $25 million of future subordinated
indebtedness that is pari passu in right of payment with the Notes if the
holders of the Notes have been given a first look and right to make a proposal
for such subordinated indebtedness. See "Use of Proceeds" and "Capitalization."

The Company's level of indebtedness will have several important effects on
its operations, including (i) a substantial portion of the Company's cash flow
from operations will be dedicated to the payment of interest on its indebtedness
and will not be available for other purposes; (ii) the covenants contained in
the Indenture limit its ability to borrow additional funds or to dispose of
assets and may affect the Company's flexibility in planning for, and reacting
to, changes in business conditions and (iii) the Company's ability to obtain
additional financing in the future for working capital, capital expenditures,
acquisitions, general corporate purposes or other purposes may be impaired.
Moreover, future exploration, development or acquisition activities may require
the Company to alter its capitalization significantly. These changes in
capitalization may significantly alter the leverage of the Company. The
Company's ability to meet its debt service obligations and to reduce its total
indebtedness will be dependent upon the Company's future performance, which will
be subject to general economic conditions and to financial, business and other
factors affecting the operations of the Company, many of which are beyond its
control. There can be no assurance that the Company's future performance will
not be adversely affected by such economic conditions and financial, business
and other factors. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources."

14
<PAGE> 16

SUBORDINATION OF NOTES; STRUCTURAL SUBORDINATION; HOLDING COMPANY STRUCTURE

The Indenture governing the Notes will limit, but will not prohibit, the
incurrence by the Company of additional indebtedness that is senior in right of
payment to the Notes. In the event of bankruptcy, liquidation, reorganization or
other winding up of the Company, the assets of the Company will be available to
pay the Company's obligations on the Notes only after all Senior Indebtedness
has been paid in full, and there may not be sufficient assets remaining to pay
amounts due on the Notes. In addition, under certain circumstances, no payments
may be made with respect to principal of, premium, if any, or interest on the
Notes if a default exists with respect to any Senior Indebtedness. See
"Description of the Notes -- Ranking and Subordination."

The Company conducts all of its operations through subsidiaries.
Accordingly, the Company relies on dividends and cash advances from its
subsidiaries to provide funds necessary to meet its obligations, including the
payment of principal and interest on the Notes. The ability of any such
subsidiary to pay dividends or make cash advances is subject to applicable laws
and contractual restrictions, including restrictions under credit agreements
between such subsidiary and third party lenders, as well as the financial
condition and operating requirements of such subsidiary. As of June 30, 1998,
after giving pro forma effect to the application of the estimated net proceeds
from the Offering, the Company's subsidiaries would have had total liabilities
of approximately $39.8 million. In addition, the Notes will be effectively
subordinated to any indebtedness and liabilities (including trade payables) of
the Company's present and future subsidiaries.

The Indenture imposes limits on the ability of the Company and its
Subsidiaries (as defined) to incur additional indebtedness and liens and to
enter into agreements that would restrict the ability of such future Restricted
Subsidiaries to make distributions, loans or other payments to the Company.
These limitations are subject to various qualifications. For additional details
of these provisions and the applicable qualifications, see "Description of the
Notes -- Ranking and Subordination" and "-- Certain Covenants."

FRAUDULENT CONVEYANCE CONSIDERATIONS RELATING TO SUBSIDIARY GUARANTY AGREEMENTS

Various fraudulent conveyance laws have been enacted for the protection of
creditors and may be utilized by a court of competent jurisdiction to
subordinate or avoid any Subsidiary Guaranty Agreement issued by a Subsidiary
Guarantor. It is also possible that under certain circumstances a court could
hold that the direct obligations of a Subsidiary Guarantor could be superior to
the obligations under the Subsidiary Guaranty Agreement.

To the extent that a court were to find that at the time a Subsidiary
Guarantor entered into a Subsidiary Guaranty Agreement either (x) the Subsidiary
Guaranty Agreement was incurred by a Subsidiary Guarantor with the intent to
hinder, delay or defraud any present or future creditor or that a Subsidiary
Guarantor contemplated insolvency with a design to favor one or more creditors
to the exclusion in whole or in part of others or (y) the Subsidiary Guarantor
did not receive fair consideration or reasonably equivalent value for issuing
the Subsidiary Guaranty Agreement and, at the time it issued the Subsidiary
Guaranty Agreement, the Subsidiary Guarantor (i) was insolvent or rendered
insolvent by reason of the issuance of the Subsidiary Guaranty Agreement; (ii)
was engaged or about to engage in a business or transaction for which the
remaining assets of the Subsidiary Guarantor constituted unreasonably small
capital; or (iii) intended to incur, or believed that it would incur, debts
beyond its ability to pay such debts as they matured, the court could avoid or
subordinate the Subsidiary Guaranty Agreement in favor of the Subsidiary
Guarantor's other credits. Among other things, a legal challenge of a Subsidiary
Guaranty Agreement issued by a Subsidiary Guarantor on fraudulent conveyance
grounds may focus on the benefits, if any, realized by the Subsidiary Guarantor
as a result of the issuance by the Company of the Notes. To the extent a
Subsidiary Guaranty Agreement is avoided as a fraudulent conveyance or held
unenforceable for any other reason, the holders of the Notes would cease to have
any claim in respect of such Subsidiary Guarantor and would be creditors solely
of the Company.

The measure of insolvency for purposes of determining whether a transfer is
avoidable as a fraudulent transfer varies depending upon the law of the
jurisdiction that is being applied. Generally, however, a debtor would be
considered insolvent if the sum of all its debts, including contingent
liabilities, was greater than the value of all its assets at a fair valuation or
if the present fair saleable value of the debtor's assets was less than

15
<PAGE> 17

the amount required to repay its probable liability on its debts, including
contingent liabilities, as they become absolute and mature. To the extent that
proceeds from the Offering are used to refinance the indebtedness of the
Company, a court might find that the Company did not receive fair consideration
or reasonably equivalent value for the incurrence of the indebtedness
represented by the Notes.

To the extent that a Subsidiary Guaranty Agreement of any Subsidiary
Guarantor is avoided as a fraudulent conveyance or found unenforceable for any
other reason, holders of the Notes would cease to have any claim in respect of
such Subsidiary Guarantor. In such event, the claims of the holders of the Notes
against such Subsidiary Guarantor would be subject to the prior payment of all
liabilities and preferred stock claims of such Subsidiary Guarantor. There can
be no assurance that, after providing for all prior claims and preferred stock
interests, if any, there would be sufficient assets to satisfy the claims of the
holders of the Notes relating to any voided portion of the Subsidiary Guaranty
Agreement of such Subsidiary Guarantor.

ABSENCE OF PUBLIC MARKET FOR THE NOTES AND WARRANTS; RESTRICTIONS ON RESALE FOR
THE WARRANT SHARES

There is no existing market for the Notes or Warrants and there can be no
assurance as to the liquidity of any markets that may develop for the Notes or
Warrants, the ability of holders of the Notes or Warrants to sell their Notes or
Warrants, or the price at which holders would be able to sell their Notes or
Warrants. The Notes and Warrants may only be traded pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act and applicable state securities laws. The Company does not intend
to apply for a listing of the Notes or Warrants on any securities exchange or on
any automated dealer quotation system. Any trading prices of the Notes and
Warrants will depend on many factors, including, among other things, prevailing
interest rates, the Company's operating results and the market for similar
securities.

Historically, the market for noninvestment grade debt has been subject to
disruptions that have caused substantial volatility in the prices of securities
similar to the Notes. There can be no assurance that the market, if any, for the
Notes will not be subject to similar disruptions. Any such disruptions may have
an adverse effect on the holders of the Notes.

The Warrant Shares have not been registered under the Securities Act or any
state securities laws and, unless so registered, may not be offered or sold
except pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and applicable state securities
laws. Pursuant to the New Registration Rights Agreement, holders of the Warrants
and Warrant Shares have certain registration rights. Prior to the effectiveness
of a registration statement registering resales of the Warrant Shares, the
ability of the holders to liquidate an investment in the Warrants and Warrant
Shares will be limited.

The issuance of Warrant Shares by the Company upon exercise of Warrants by
holders who purchase Warrants directly from the Company will not be covered by a
shelf registration statement registering resales of the Warrant Shares.
Accordingly, the exercise of Warrants by such holders much be made pursuant to a
transaction exempt from registration under the Securities Act.

DEPENDENCE ON EXPLORATORY DRILLING ACTIVITIES

The Company's revenues, operating results and future rate of growth are
highly dependent upon the success of its exploratory drilling program, which
will be funded in part with the proceeds of the Offering. Exploratory drilling
involves numerous risks, including the risk that no commercially productive
natural gas or oil reservoirs will be encountered. The cost of drilling,
completing and operating wells is often uncertain, and drilling operations may
be curtailed, delayed or canceled as a result of a variety of factors, including
unexpected drilling conditions, pressure or irregularities in formations,
equipment failures or accidents, adverse weather conditions, compliance with
governmental requirements and shortages or delays in the availability of
drilling rigs and the delivery of equipment. Despite the use of 3-D seismic and
other advanced technologies, exploratory drilling remains a speculative
activity. Even when fully utilized and properly interpreted, 3-D seismic and
other advanced technologies only assist geoscientists in identifying subsurface
structures and do not enable the interpreter to know whether hydrocarbons are in
fact present in those

16
<PAGE> 18

structures. In addition, the use of 3-D seismic and other advanced technologies
requires greater predrilling expenditures than traditional drilling strategies,
and the Company could incur losses as a result of such expenditures. The
Company's future drilling activities may not be successful. There can be no
assurance that the Company's overall drilling success rate or its drilling
success rate for activity within a particular province will not decline.
Unsuccessful drilling activities could have a material adverse effect on the
Company's results of operations and financial condition. The Company often
gathers 3-D seismic over large areas. The Company's interpretation of data
delineates those portions of an area desirable for drilling. Therefore, the
Company may choose not to acquire option and lease rights prior to acquiring
seismic and, in many cases, the Company may identify a drilling location before
seeking option or lease rights in the location. Although the Company has
identified numerous potential drilling locations, there can be no assurance that
they will ever be leased or drilled or that natural gas or oil will be produced
from these or any other potential drilling locations.

VOLATILITY OF NATURAL GAS AND OIL PRICES

The Company's revenues, operating results and future rate of growth are
highly dependent upon the prices received for the Company's natural gas and oil.
Historically, the markets for natural gas and oil have been volatile and are
likely to continue to be volatile in the future. Various factors beyond the
control of the Company will affect sales prices of its natural gas and oil,
including worldwide and domestic supplies of natural gas and oil, the ability of
the members of the Organization of Petroleum Exporting Countries to agree to and
maintain oil price and production controls, political instability or armed
conflict in oil-producing regions, the price and level of foreign imports, the
level of consumer demand, the price and availability of alternative fuels, the
availability of pipeline capacity, the availability and cost of drilling rigs,
weather conditions, domestic and foreign governmental regulations and taxes, and
the overall economic environment. During 1997, the high and low prices for
natural gas on the NYMEX were $3.79 per MMBtu and $1.78 per MMBtu and the high
and low prices for oil on the NYMEX were $26.26 per Bbl and $17.60 per Bbl. From
January 1, 1998 through August 7, 1998, the high and low prices for natural gas
on the NYMEX were $2.69 per MMBtu and $1.83 per MMBtu and the high and low
prices for oil on the NYMEX were $17.82 per Bbl and $11.56 per Bbl. It is
impossible to predict future natural gas and oil price movements with certainty.
Declines in natural gas and oil prices may materially adversely affect the
Company's business, financial condition and results of operations. Lower natural
gas and oil prices also may reduce the amount of natural gas and oil that the
Company can produce economically. Any significant decline in the price of oil or
natural gas would adversely affect the Company's revenues and operating income
and may require a reduction in the carrying value of the Company's natural gas
and oil properties. See "Risk Factors -- Uncertainty of Reserve Information and
Future Net Revenue Estimates," "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Other Matters" and "Business
and Properties -- Competition."

During the six months ended June 30, 1998, the NYMEX crude oil price ranged
from $17.82 to $11.56 per barrel. This decline in prices is generally thought to
be caused primarily by an oversupply of crude oil inventory created, in part, by
an unusually warm winter in the United States and Europe, an announced increase
in crude oil production quotas for OPEC countries and a possible decline in
demand in certain Asian markets. If such a decline in the NYMEX crude oil price
worsens or persists for a protracted period, it would adversely affect the
Company's revenues, net income and cash flows from operations. Also, if these
prices maintain their present level for an extended time period or decline
further, the Company may delay or postpone certain of its capital projects.

RISKS ASSOCIATED WITH MANAGEMENT OF GROWTH AND IMPLEMENTATION OF GROWTH STRATEGY

The Company's rapid growth has placed, and is expected to continue to
place, a significant strain on the Company's financial, technical, operational
and administrative resources. As the Company increases the number of projects it
is evaluating or in which it is participating, there will be additional demands
on the Company's financial, technical, operational and administrative resources.
In addition, the Company has only limited experience operating and managing
field operations, including drilling, and there can be no assurances that the
Company will be successful in doing so. Any increase in the Company's activities
as an operator will increase its exposure to operating hazards. The failure to
continue to upgrade the Company's technical,

17
<PAGE> 19

administrative, operating and financial control systems or the occurrence of
unexpected expansion difficulties, including difficulties in recruiting and
retaining geophysicists, geologists, engineers and sufficient numbers of
qualified personnel to enable the Company to expand its role in the drilling and
production phase, or the reduced availability and/or increased costs of seismic
gathering, drilling or other services in the face of growing demand, could have
a material adverse effect on the Company's business, financial condition and
results of operations. See "Risk Factors -- Operating Hazards and Uninsured
Risks."

SUBSTANTIAL CAPITAL REQUIREMENTS

The Company makes and will continue to make substantial capital
expenditures in its exploration and development projects. The Company intends to
finance these capital expenditures with the net proceeds from the Offering, cash
flow from operations and its existing financing arrangements. Additional
financing may be required in the future to fund the Company's exploratory and
developmental drilling and 3-D seismic acquisition activities. No assurance can
be given as to the availability or terms of any such additional financing that
may be required or that financing will continue to be available under the
existing or new financing arrangements. If additional capital resources are not
available to the Company, its drilling and other activities may be curtailed and
its business, financial condition and results of operations could be materially
adversely affected. See "Use of Proceeds" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."

HISTORICAL OPERATING LOSSES AND VARIABILITY OF OPERATING RESULTS

The Company had net losses of approximately $5.1 million in 1993, $1.3
million in 1994, $1.6 million in 1995, $450,000 in 1996, $1.0 million (including
a net $1.2 million non-cash deferred income tax charge incurred in connection
with the Company's conversion from a partnership to a corporation) in 1997 and
$1.2 million in the first six months of 1998. The Company has incurred net
losses in each year of operation, and there can be no assurance that the Company
will be profitable in the future. At June 30, 1998, the Company's accumulated
deficit was $1.2 million and its total stockholders' equity was $42.3 million.
In addition, the Company's future operating results may fluctuate significantly
depending upon a number of factors, including industry conditions, prices of
natural gas and oil, rates of drilling success, rates of production from
completed wells and the timing of capital expenditures. This variability could
have a material adverse effect on the Company's business, financial condition
and results of operations. In addition, any failure or delay in the realization
of expected cash flows from operating activities could limit the Company's
ability to invest and participate in economically attractive projects. See
"Selected Financial Data" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

RESERVE REPLACEMENT RISK

In general, production from natural gas and oil properties declines as
reserves are depleted, with the rate of decline depending on reservoir
characteristics. Except to the extent the Company conducts successful
exploration and development activities or acquires properties containing proved
reserves, or both, the proved reserves of the Company will decline as reserves
are produced. The Company's future natural gas and oil production is highly
dependent upon its ability to economically find, develop or acquire reserves in
commercial quantities. The business of exploring for or developing reserves is
capital intensive. To the extent cash flow from operations is reduced and
external sources of capital become limited or unavailable, the Company's ability
to make the necessary capital investment to maintain or expand its asset base of
natural gas and oil reserves would be impaired. The Company has historically
participated in a substantial percentage of its wells as a non-operator. The
failure of an operator of the Company's wells to adequately perform operations,
or an operator's breach of the applicable agreements, could adversely impact the
Company. In addition, there can be no assurance that the Company's future
exploration and development activities will result in additional proved reserves
or that the Company will be able to drill productive wells at acceptable costs.
Furthermore, although the Company's revenues could increase if prevailing prices
for natural gas and oil increase significantly, the Company's finding and
development costs could also increase. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations."

18
<PAGE> 20

OPERATING HAZARDS AND UNINSURED RISKS

The Company's operations are subject to hazards and risks inherent in
drilling for and producing and transporting natural gas and oil, such as fires,
natural disasters, explosions, encountering formations with abnormal pressures,
blowouts, cratering, pipeline ruptures and spills, any of which can result in
the loss of hydrocarbons, environmental pollution, personal injury claims and
other damage to properties of the Company and others. As protection against
operating hazards, the Company maintains insurance coverage against some, but
not all, potential losses. The Company may elect to self-insure if management
believes that the cost of insurance, although available, is excessive relative
to the risks presented. The Company generally maintains insurance for the
hazards and risks inherent in drilling for and producing and transporting
natural gas and oil and believes this insurance is adequate. Nevertheless, the
occurrence of an event that is not covered, or not fully covered, by insurance
could have a material adverse effect on the Company's business, financial
condition and results of operations. In addition, pollution and environmental
risks generally are not fully insurable. See "Business and
Properties -- Operating Hazards and Uninsured Risks."

UNCERTAINTY OF RESERVE INFORMATION AND FUTURE NET REVENUE ESTIMATES

Numerous uncertainties are inherent in estimating quantities of proved
reserves and their values, including many factors beyond the Company's control.
The reserve information in this Prospectus is an estimate only. Although the
Company believes these estimates are reasonable, reserve estimates are imprecise
and are expected to change as additional information becomes available.
Estimates of natural gas and oil reserves by necessity are projections based on
engineering data, and uncertainties are inherent in the interpretation of this
data, the projection of future rates of production and the timing of development
expenditures. Reserve engineering is a subjective process of estimating
underground accumulations of natural gas and oil that are difficult to measure.
The accuracy of any reserve estimate is a function of the quality of available
data, engineering and geologic interpretation, and judgment. Estimates of
economically recoverable natural gas and oil reserves and of future net cash
flows depend upon a number of variable factors and assumptions, such as
historical production from the area compared with production from other
producing areas, the assumed effects of regulations by governmental agencies,
and assumptions concerning future natural gas and oil prices, future operating
costs, severance and excise taxes, development costs and workover and remedial
costs, all of which may in fact vary considerably from actual results. For these
reasons, estimates of the economically recoverable quantities of natural gas and
oil attributable to any particular group of properties, classifications of
reserves based on risk of recovery, and estimates of the future net cash flows
may vary substantially. Moreover, there can be no assurance that the Company's
reserves will ultimately be produced or that the Company's proved undeveloped
reserves will be developed within the periods anticipated. Any significant
variance in the assumptions could materially affect the estimated quantity and
value of the Company's reserves. Actual production, revenues and expenditures
with respect to the Company's reserves will likely vary from estimates, and such
variances may be material. See "Business and Properties -- Natural Gas and Oil
Reserves."

The Present Value of Future Net Revenues referred to in this Prospectus
should not be construed as the current market value of the estimated natural gas
and oil reserves attributable to the Company's properties. In accordance with
applicable requirements of the SEC, the estimated discounted future net cash
flows from proved reserves are generally based on prices and costs as of the
date of the estimate, whereas actual future prices and costs may be materially
higher or lower. At December 31, 1997, the date of the estimate of the Company's
reserves and present value data, the prices of natural gas and oil on the NYMEX
were $2.26 per MMBtu and $17.64 per Bbl, respectively. At August 7, 1998, the
prices were $1.83 per MMBtu and $13.80 per Bbl, respectively. Actual future net
cash flows also will be affected by factors such as the amount and timing of
actual production, supply and demand for natural gas and oil, curtailments or
increases in consumption by gas purchasers, and changes in governmental
regulations or taxation. The timing of actual future net cash flows from proved
reserves, and thus their actual present value, will be affected by the timing of
both the production and the incurrence of expenses in connection with
development and production of natural gas and oil properties. In addition, the
10% discount factor, which must be used to calculate discounted future net cash
flows for SEC reporting purposes, is not necessarily the most appropriate
discount factor based on

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<PAGE> 21

interest rates in effect from time to time and risks associated with the Company
or the oil and gas industry in general.

COMPETITION

The Company operates in the highly competitive areas of natural gas and oil
exploration, exploitation, acquisition and production with other companies. In
seeking to acquire desirable producing properties or new leases for future
exploration and in marketing its natural gas and oil production, as well as in
seeking to acquire the equipment and expertise necessary to operate and develop
those properties, the Company faces intense competition from a large number of
independent, technology-driven companies as well as both major and other
independent natural gas and oil companies. Many of these competitors have
financial and other resources substantially in excess of those available to the
Company. The effects of this highly competitive environment could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business and Properties -- Competition."

COMPLIANCE WITH GOVERNMENTAL REGULATIONS

The Company's business is subject to federal, state and local laws and
regulations relating to the exploration for, and the development, production and
transportation of, natural gas and oil, as well as safety matters. Although the
Company believes it is in substantial compliance with all applicable laws and
regulations, legal requirements are frequently changed and subject to
interpretation, and the Company is unable to predict the ultimate cost of
compliance with these requirements or their effect on its operations.
Significant expenditures may be required to comply with governmental laws and
regulations. See "Business and Properties -- Governmental Regulation."

COMPLIANCE WITH ENVIRONMENTAL REGULATIONS

The Company's operations are subject to complex environmental laws and
regulations adopted by federal, state and local governmental authorities.
Environmental laws and regulations are frequently changed. The implementation of
new, or the modification of existing, laws or regulations could have a material
adverse effect on the Company. The discharge of natural gas, oil, or other
pollutants into the air, soil or water may give rise to significant liabilities
on the part of the Company to the government and third parties and may require
the Company to incur substantial costs of remediation. No assurance can be given
that existing environmental laws or regulations, as currently interpreted or
reinterpreted in the future, or future laws or regulations will not materially
adversely affect the Company's results of operations and financial condition.
See "Business and Properties -- Environmental Matters."

RISK OF HEDGING ACTIVITIES

In an attempt to reduce its sensitivity to energy price volatility, the
Company has in the past and may continue in the future to enter into hedging
transactions that generally result in a fixed price over a fixed period. If the
Company's reserves are not produced at rates equivalent to the hedged position,
the Company would be required to satisfy its obligations under hedging contracts
on potentially unfavorable terms without the ability to hedge that risk through
sales of comparable quantities of its own production. Further, the terms under
which the Company enters into hedging contracts are based on assumptions and
estimates of numerous factors such as cost of production and pipeline and other
transportation costs to delivery points. Substantial variations between the
assumptions and estimates used by the Company and actual results experienced
could materially adversely affect the Company's anticipated profit margins and
its ability to manage the risk associated with fluctuations in natural gas and
oil prices. Additionally, hedging contracts limit the benefits the Company will
realize if actual prices rise above the contract prices. In addition, hedging
contracts are subject to the risk that the other party may prove unable or
unwilling to perform its obligations under such contracts. Any significant
nonperformance could have a material adverse financial effect on the Company.
For the year ended December 31, 1997, the Company realized a reduction in
revenues attributable to oil hedges of $6,191. In 1997 the Company did not hedge
any of its natural gas production. In February 1998, the Company entered into a
hedging contract whereby 10,000 MMBtu per day of natural gas is purchased and
sold subject to a fixed

20
<PAGE> 22

price swap agreement for monthly periods from April 1998 through October 1999.
Pursuant to these arrangements the Company exchanges a floating market price for
a fixed contract price. As a result of this natural gas hedging contract, the
Company realized an increase in revenues of $38,700 in the three months ended
June 30, 1998. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Other Matters."

MARKETABILITY OF PRODUCTION

The marketability of the Company's production depends in part upon the
availability, proximity and capacity of natural gas gathering systems, pipelines
and processing facilities. The Company delivers natural gas through gas
transportation systems that it generally does not own. Federal and state
regulation of natural gas and oil production and transportation, tax and energy
policies, changes in supply and demand and general economic conditions all could
adversely affect the Company's ability to produce and market its natural gas and
oil. Any dramatic change in market factors could have a material adverse effect
on the Company's business, financial condition and results of operations.

DEPENDENCE ON KEY PERSONNEL

The Company has assembled a team of geologists, geophysicists and engineers
having considerable experience applying 3-D imaging technology. The Company is
dependent upon the knowledge, skills and experience of these experts to provide
3-D imaging and assist the Company in reducing the risks associated with its
participation in natural gas and oil exploration projects. In addition, the
success of the Company's business also depends to a significant extent upon the
abilities and continued efforts of its management, particularly Ben M. Brigham,
the Company's President, Chief Executive Officer and Chairman of the Board. The
Company has an employment agreement with Ben M. Brigham, but does not have an
employment agreement with any of its other employees. The Company has key man
life insurance on Mr. Brigham in the amount of $2.0 million. The loss of
services of key management personnel or the Company's technical experts, or the
inability to attract additional qualified personnel, could have a material
adverse effect on the Company's business, financial condition and results of
operations. There can be no assurance that the Company will be successful in
attracting and retaining such executives, geophysicists, geologists and
engineers. See "Management -- Directors and Executive Officers" and "Business
and Properties -- Exploration Staff."

CONTROL BY EXISTING STOCKHOLDERS

Upon completion of the Offering, directors, executive officers and
principal stockholders of the Company, and certain of their affiliates, will
beneficially own approximately % of the Company's outstanding Common Stock.
Accordingly, these stockholders, as a group, will be able to control the outcome
of stockholder votes, including votes concerning the election of directors, the
adoption or amendment of provisions in the Company's Certificate of
Incorporation or Bylaws and the approval of mergers and other significant
corporate transactions. The existence of these levels of ownership concentrated
in a few persons makes it unlikely that any other holder of Common Stock will be
able to affect the management or direction of the Company. These factors may
also have the effect of delaying or preventing a change in the management or
voting control of the Company. See "Principal Stockholders."

YEAR 2000 COMPLIANCE

Many currently installed computer systems and software products are coded
to accept only two digit entries in the date code field. These date code fields
will need to accept four digit entries to distinguish the 21st century dates
from 20th century dates. As a result, computer systems and software used by many
companies may need to be upgraded to comply with such "Year 2000" requirements.
The Company believes that its software products are Year 2000 compliant and does
not anticipate incurring material costs related to Year 2000 compliance.
However, there can be no assurance that the Company's software products contain
all necessary software routines and programs necessary for the accurate
calculation, display, storage and manipulation of data involving dates.
Moreover, the Company cannot determine what effect, if any, the Year 2000
requirements will have on its vendors, customers, other businesses with which
its conducts business and

21
<PAGE> 23

the numerous local, state, federal, and other U.S. and foreign governmental
entities by which it is regulated, governed or taxed. No assurance can be given
that the computer systems and software of such entities will be Year 2000
compliant or that compliance costs or the impact of the Company's failure to
achieve substantial Year 2000 compliance will not have a material adverse effect
on the Company's business, financial position and results of operations.

CERTAIN ANTITAKEOVER CONSIDERATIONS

The Company's Certificate of Incorporation authorizes the Board of
Directors of the Company to issue up to 10 million shares of preferred stock
without stockholder approval and to set the rights, preferences and other
designations, including voting rights, of those shares as the Board of Directors
may determine. These provisions, alone or in combination with the matters
described in "Risk Factors -- Control by Existing Stockholders," may discourage
transactions involving actual or potential changes of control of the Company,
including transactions that otherwise could involve payment of a premium over
prevailing market prices to holders of Common Stock. The Company also is subject
to provisions of the Delaware General Corporation Law that may make some
business combinations more difficult. See "Description of Capital Stock --
Delaware Law Provisions."

SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS

Sales of a substantial number of shares of Common Stock in the public
market following the Offering could adversely affect the market price for the
Common Stock. Upon completion of the Offering the Company will have shares
of Common Stock outstanding. 8,928,574 shares of Common Stock that were issued
in reliance on exemptions from the registration requirements of the Securities
Act are now eligible for sale under Rule 144, subject to compliance with the
volume and other limitations of Rule 144, and shares of Common Stock that
will be issued in the Offering or were sold in the Company's initial public
offering are freely tradeable, except to the extent that they are held by
affiliates of the Company. Investors holding 8,421,431 shares have the right to
require the Company to register the public resale of their shares and holders of
8,928,574 shares are entitled to "piggyback" registration rights. The holders of
the Shares and Warrants will have demand and "piggyback" registration rights
with respect to the Shares and the Warrant Shares, respectively. Options
covering 935,987 shares of Common Stock are outstanding, with an average
exercise price of $7.61 per share, subject to vesting. As a result of the
Offering, Warrants to purchase 1,000,000 shares of Common Stock will be
outstanding with an exercise price of $ per share. See "Shares Eligible for
Future Sale," "Description of Capital Stock -- Registration Rights" and
"Registration Rights Relating to the Warrants and Shares."

POSSIBLE STOCK PRICE VOLATILITY

The trading price of the Common Stock and the price at which the Company
may sell securities in the future could be subject to large fluctuations in
response to limited trading volume in the Company's stock and changes in
government regulations, quarterly variations in operating results, litigation,
general market conditions, the prices of natural gas and oil, announcements by
the Company and its competitors, the liquidity of the Company, the Company's
ability to raise additional funds and other events.

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<PAGE> 24

THE COMPANY

Brigham Exploration Company was formed in February 1997 as a Delaware
corporation and is the holding company for Brigham Oil & Gas, L.P. (the
"Partnership"). The Partnership was formed in May 1992 by contribution of assets
of Brigham, Inc., and its general partners were General Atlantic Partners III,
L.P., a Delaware limited partnership ("GAP III"), and Brigham, Inc. Under the
Exchange Agreement (the "Exchange Agreement"), effective February 27, 1997, the
following transactions occurred: (i) GAP III and the limited partners of the
Partnership transferred all their partnership interests to the Company in
exchange for an aggregate of 3,314,286 shares of Common Stock, (ii) the
stockholders of Brigham, Inc. transferred all the issued and outstanding stock
of Brigham, Inc. to the Company in exchange for an aggregate of 3,859,821 shares
of Common Stock and (iii) Resource Investors Management Company Limited
Partnership ("RIMCO") exchanged all of the Partnership's subordinated
convertible notes for 1,754,464 shares of Common Stock. These transactions are
referred to in this Prospectus as the "Exchange." The stockholders of Brigham,
Inc. were Ben M. Brigham, President, Chief Executive Officer and Chairman of the
Board of the Company, and Anne L. Brigham, Executive Vice President and a
Director of the Company. The limited partners of the Partnership included the
following officers and/or directors of the Company, who received shares of
Common Stock in the Exchange as indicated: Jon L. Glass, Vice
President -- Exploration and a Director (66,964 shares); Craig M. Fleming, Chief
Financial Officer (44,643 shares); David T. Brigham, Vice President -- Land and
Administration and Corporate Secretary (44,643 shares); and Harold D. Carter, a
Director (350,893 shares). As a result of the Exchange, Brigham Exploration
Company owns, directly or indirectly, all the partnership interests in the
Partnership and no instruments, agreements or rights exist which may be
converted, exchanged into, or otherwise become interests in the Partnership. The
Company conducts its active business operations through the Partnership.
References to the "Company" or to "Brigham" are to Brigham Exploration Company
and its predecessors and subsidiaries, including the Partnership and Brigham,
Inc.

Brigham's principal executive offices are located at 6300 Bridge Point
Parkway, Building 2, Suite 500, Austin, Texas 78730 and its telephone number is
(512) 427-3300.

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<PAGE> 25

USE OF PROCEEDS

The net proceeds to the Company from the sale of the Notes, Warrants and
Shares offered by the Company are estimated to be approximately $47.6 million,
assuming a price of $9.50 per share for the Shares and after deducting the
estimated fees and expenses of the Offering.

The Company intends to use the net proceeds of the Offering to fund the
Company's accelerated exploration and development activities and in the interim
for repayment of outstanding indebtedness under the Credit Facility (as defined)
($72 million was outstanding at August 7, 1998). The interest rate for
borrowings under the Credit Facility is either the lender's base rate or LIBOR
plus 2.25%, at the Company's option. Borrowings under the facility, which
matures on January 26, 2001, currently bear interest at an annual rate of
approximately 8.6%. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital
Resources -- Revolving Credit Facilities" for a description of the Credit
Facility.

PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY

The Company's Common Stock is traded on The Nasdaq Stock Market(SM) under
the symbol "BEXP." The following table sets forth, for the periods indicated,
the reported high and low closing prices of the Company's Common Stock, as
reported on The Nasdaq Stock Market(SM):

<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
FISCAL 1997:
Second Quarter (from May 9, 1997)........................... $ 8.75 $ 7.08
Third Quarter............................................... 14.31 8.25
Fourth Quarter.............................................. 17.13 12.00
FISCAL 1998:
First Quarter............................................... $14.00 $10.50
Second Quarter.............................................. 15.50 8.75
Third Quarter (through August 13, 1998)..................... 10.25 7.00
</TABLE>

On August 13, 1998, the last reported sale price of the Common Stock as
reported on The Nasdaq Stock Market(SM) was $8.50 per share. As of August 13,
1998 there were 67 holders of record of the Common Stock.

The Company has never declared or paid cash dividends on its Common Stock
and anticipates that all future earnings will be retained for use in its
business. In addition, the Credit Facility and the Indenture prohibit the
payment of cash dividends on Common Stock. The Board of Directors of the Company
may review the Company's dividend policy from time to time in light of, among
other things, the Company's earnings and financial position. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

24
<PAGE> 26

CAPITALIZATION

The following table sets forth the capitalization of the Company (i) as of
June 30, 1998 and (ii) as adjusted for the Offering and the application of the
estimated net proceeds therefrom, assuming issuance of 1,052,632 Shares at a
price of $9.50 per share. The table should be read with "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the Financial
Statements and notes thereto in this Prospectus.

<TABLE>
<CAPTION>
AS OF JUNE 30, 1998
----------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Total debt:
Credit Facility........................................... $ 68,000 $ 20,450
Senior Subordinated Secured Notes due 2003................ -- 35,500
-------- --------
Total debt........................................ 68,000 55,950
-------- --------
Stockholders' equity:
Preferred Stock, $.01 par value, 10 million shares
authorized; no shares outstanding actual, and as
adjusted............................................... -- --
Common Stock, $.01 par value, 30 million shares
authorized; 12,253,574 shares issued and outstanding
actual and 13,306,206 as adjusted(1)................... 123 133
Additional paid-in capital................................ 44,292 58,212
Unearned stock compensation............................... (880) (880)
Accumulated deficit....................................... (1,201) (1,201)
-------- --------
Total stockholders' equity........................ 42,334 56,264
-------- --------
Total capitalization........................................ $110,334 $112,214
======== ========
</TABLE>

- ---------------

(1) Excludes (i) 1,588,169 shares of Common Stock the Company has reserved for
future issuance under the Company's 1997 Incentive Plan and 25,000 shares of
Common Stock reserved for issuance under the Company's 1997 Director Stock
Option Plan, of which options to purchase 935,987 shares, subject to
vesting, with an average exercise price of $7.61 per share are outstanding,
and (ii) on an as adjusted basis, Warrants to purchase 1,000,000 shares of
Common Stock with an exercise price of $ per share. See "Management" and
Note 11 of Notes to the December 31, 1997 Consolidated Financial Statements.

25
<PAGE> 27

SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

The following table sets forth selected financial data of the Company. The
data for the three years ended December 31, 1997 has been derived from the
consolidated financial statements appearing in this Prospectus. The data for the
two years ended December 31, 1994 has been derived from consolidated financial
statements not appearing in this Prospectus. The consolidated financial data at
June 30, 1998 and for the six months ended June 30, 1998 and June 30, 1997 have
been derived from the condensed consolidated financial statements of the Company
which, in the opinion of management, include all adjustments, consisting only of
normal adjustments, necessary for a fair presentation of the results for the
periods. The results for the six months ended June 30, 1998 are not necessarily
indicative of the results to be expected for the full year. The information
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the financial statements and
notes thereto included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------------------------- --------------------
1993 1994 1995 1996 1997 1997 1998
------- ------- ------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Natural gas and oil sales............... $ 937 $ 2,565 $ 3,578 $ 6,141 $ 9,184 $ 3,854 $ 7,130
Workstation revenue..................... 467 815 635 627 637 324 247
------- ------- ------- -------- -------- ------- --------
Total revenues...................... 1,404 3,380 4,213 6,768 9,821 4,178 7,377
Costs and expenses:
Lease operating......................... 111 491 761 726 1,151 470 978
Production taxes........................ 47 126 165 362 549 219 450
General and administrative.............. 1,433 1,785 1,897 2,199 3,570 1,455 2,293
Depletion of natural gas and oil
properties............................ 4,371(1) 1,104 1,626 2,323 2,732 1,395 2,784
Depreciation and amortization........... 406 561 533 487 582 287 365
------- ------- ------- -------- -------- ------- --------
Total costs and expenses............ 6,368 4,067 4,982 6,097 8,584 3,826 6,870
------- ------- ------- -------- -------- ------- --------
Operating income (loss)................... (4,964) (687) (769) 671 1,237 352 507
Other income (expense):
Interest income......................... 6 56 128 52 145 81 77
Interest expense........................ (105) (668) (936) (1,173) (1,190) (546) (2,432)
------- ------- ------- -------- -------- ------- --------
Total other income (expense)........ (99) (612) (808) (1,121) (1,045) (465) (2,355)
------- ------- ------- -------- -------- ------- --------
Net income (loss) before income taxes..... (5,063) (1,299) (1,577) (450) 192 (113) (1,848)
Income tax (expense) benefit, net......... -- -- -- -- (1,228)(2) (4,813)(2) 621
------- ------- ------- -------- -------- ------- --------
Net loss............................ $(5,063) $(1,299) $(1,577) $ (450) $ (1,036) $(4,926) $ (1,227)
======= ======= ======= ======== ======== ======= ========
Net loss per share -- basic/diluted....... $ (0.57) $ (0.15) $ (0.18) $ (0.05) $ (0.09) $ (0.50) $ (0.10)
Weighted average shares outstanding --
basic/diluted........................... 8,929 8,929 8,929 8,929 11,081 9,890 12,254
STATEMENT OF CASH FLOWS DATA:
Net cash provided by (used in) operating
activities.............................. $ (730) $ 626 $ 1,383 $ 3,710 $ 9,806 $ (195) $ (1,692)
Net cash used in investing activities..... (6,983) (5,463) (8,005) (11,796) (57,300) (12,105) (30,884)
Net cash provided by financing
activities.............................. 7,839 4,634 7,724 7,731 47,748 15,842 33,981
OTHER FINANCIAL DATA:
Capital expenditures...................... $ 6,632 $ 5,445 $ 7,935 $ 13,612 $ 57,170 $11,796 $ 30,044
EBITDA(3)................................. (187) 978 1,390 3,481 4,551 2,034 3,656
Operating cash flow(4).................... (286) 366 582 2,360 3,506 1,569 1,567
Ratio of earnings to fixed charges(5)..... -- -- -- -- 1.1x -- --
PRO FORMA FINANCIAL DATA(6):
Ratio of earnings to fixed charges(5)..... -- --
Interest expense(6)....................... 2,325 3,252
</TABLE>

<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF JUNE 30,
-------------------------------------------------- --------------------
1993 1994 1995 1996 1997 1997 1998
------- ------- ------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................. $ 903 $ 700 $ 1,802 $ 1,447 $ 1,701 $ 4,989 $ 3,106
Natural gas and oil properties, at cost,
net..................................... 7,803 11,970 18,538 28,005 84,176 40,199 114,454
Total assets.............................. 14,003 15,781 22,916 33,614 92,401 51,046 129,699
Notes payable............................. 3,000 7,950 16,000 24,000 32,000 -- 68,000
Stockholders' equity...................... 6,570 5,271 3,694 3,244 43,153 38,919 42,334
</TABLE>

- ---------------

(1) Includes a capitalized ceiling impairment charge of $3.3 million in 1993.

26
<PAGE> 28

(4) Operating cash flow represents net income (loss) plus DD&A expenses,
deferred income taxes and other non-cash items. Operating cash flow should
not be considered in isolation or as a substitute for net income, cash flows
from operating activities or any other measure of financial performance
prepared in accordance with generally accepted accounting principles or as a
measure of a company's profitability or liquidity.

(5) For purposes of calculating the ratio of earnings to fixed charges, earnings
are defined as income (loss) of the Company from continuing operations
before income taxes and fixed charges. Fixed charges consist of interest
expense, including amortization of loan fees, and the portion of rental
expense pursuant to operating leases deemed to be representative of the
interest component. Earnings were insufficient to cover fixed charges by
$5.1 million, $1.3 million, $1.6 million and $450,000 for the years ended
December 31, 1993, 1994, 1995 and 1996, respectively, and $113,000 and $1.9
million for the six months ended June 30, 1997 and 1998, respectively. Pro
forma earnings were insufficient to cover pro forma fixed charges by
$943,000 for the year ended December 31, 1997 and $2.7 million for the six
months ended June 30, 1998.

(6) The pro forma financial data have been prepared on the basis of the
following assumptions: (i) the Offering was consummated at the beginning of
the respective periods, (ii) the average debt outstanding during the year
ended December 31, 1997 of $12 million was refinanced with proceeds from the
Notes, (iii) debt outstanding during the first six months of 1998 was
partially repaid with proceeds from the issuance of $10 million of Shares
and was partially refinanced with proceeds from the $40 million of Notes and
(iv) the Notes bear an assumed effective interest rate of 15.7%.

27
<PAGE> 29

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

The Company is an independent exploration and production company that
applies 3-D seismic imaging and other advanced technologies to systematically
explore and develop onshore domestic natural gas and oil provinces. From
inception in 1990 through December 31, 1997, Brigham had acquired 4,005 square
miles of 3-D seismic, identified 1,170 potential drilling locations and drilled
370 wells delineated by 3-D seismic analysis. The Company believes this
performance demonstrates a systematic methodology for finding natural gas and
oil in onshore domestic natural gas and oil provinces.

Combining its geologic and geophysical expertise with a sophisticated land
effort, the Company manages the majority of its projects from conception through
3-D acquisition, processing and interpretation and leasing. Because it generates
most of its projects, the Company can control the size of the working interest
that it retains as well as the selection of the operator and the non-operating
participants. Additionally, the Company manages the negotiation and drafting of
most of its geophysical exploration agreements, resulting in reduced contract
risk and more consistent deal terms. In 1995, the Company began to manage
operations, on a limited basis, through the drilling and production phases. The
Company had discovered an aggregate of approximately 72 Bcfe of net proved
reserves as of December 31, 1997. Brigham continues to increase the working
interest it retains in its projects, based on capital availability and perceived
risk. The Company's average working interest in its wells drilled during 1995,
1996 and 1997 was 24%, 24% and 38%, respectively.

Expenditures made in natural gas and oil exploration vary from project to
project depending primarily on the costs related to land, seismic acquisition,
drilling costs and the working interest retained by the Company. Historically,
the Company's participants have borne a disproportionate share of the costs of
optioning available acreage and acquiring, processing and interpreting the 3-D
seismic, and the Company and its participants each bear leasing, drilling and
completion costs in proportion to their ownership interests. Brigham currently
intends to retain increased working interests in its current 3-D seismic
projects, thereby reducing the financial leverage it has historically received
on the costs of optioning available acreage and acquiring, processing and
interpreting the 3-D seismic and increasing its working interests during the
drilling phase.

From inception through 1996, the Company acquired 2,762 square miles of 3-D
seismic in 104 projects. Initially, the Company focused its efforts in West
Texas. In 1995, the Company began to devote substantial attention to the
Anadarko Basin, and since 1996 the Company has devoted the majority of its
resources to the Anadarko Basin and Gulf Coast. With this shift in regional
focus, the majority of the Company's production volumes has shifted from oil to
natural gas. To finance these project generation and drilling activities, the
Company has supplemented cash flow from operations with private placements of
debt and equity, commercial bank credit facilities and placements of working
interests in projects with industry participants. As the Company's cash flows
from operations and other sources of capital have increased, it has retained
larger average working interests in its projects.

In 1997, the Company acquired 1,243 square miles of 3-D seismic and
continued to focus the majority of its 3-D exploration efforts in the Anadarko
Basin and the Gulf Coast. The Company acquired 648 square miles (52%) of 3-D
seismic in nine projects in the Anadarko Basin, making this basin the most
active 3-D seismic acquisition province for the Company again in 1997. Brigham
also significantly increased its Gulf Coast activity, acquiring 412 square miles
(33%) of 3-D seismic in four projects. During 1997, the Company drilled
seventy-three 3-D seismic delineated wells, increasing its revenues from natural
gas and oil production to $9.1 million. The Company's production volumes
consisted of 44% natural gas on an equivalent basis. The Company's average
working interest in wells drilled in 1997 was 38%. The Company's fourth quarter
1997 revenue from natural gas and oil production increased to $3.2 million from
$1.9 million in the fourth quarter of 1996, while its production volumes
consisted of 53% natural gas during the fourth quarter 1997 as compared with 36%
during the prior year period. The Company supplemented cash flow from operations
with borrowings under the credit facility it had in place at the time, $24
million raised in its initial public offering of common

28
<PAGE> 30

stock in May 1997 and the placement of working interests in projects to industry
participants to finance its project generation, property acquisition and
drilling activities.

The Company uses the full-cost method of accounting for its natural gas and
oil properties. Under this method, all acquisition, exploration and development
costs, including certain internal costs that are directly attributable to the
Company's acquisition, exploration and development activities, are capitalized
in the amortizable base of the "full-cost pool" as incurred. Upon the
interpretation by the Company of the 3-D seismic associated with unproved
properties, the geological and geophysical costs of acreage that is not
specifically identified as prospective are transferred to the amortizable base.
Geological and geophysical costs associated with prospective acreage, as well as
leasehold costs, are transferred to the amortizable base when the prospects are
drilled. The Company records depletion of its full-cost pool using the unit of
production method. To the extent that the costs capitalized in the full-cost
pool (net of depreciation, depletion and amortization and related deferred
taxes) exceed the present value (using a 10% discount rate) of estimated future
net after-tax cash flows from proved natural gas and oil reserves plus the
capitalized cost of unproved properties, such costs are charged to operations.
Once incurred, a write-down of natural gas and oil properties is not reversed at
a later date. See Note 2 of Notes to the December 31, 1997 Consolidated
Financial Statements.

In connection with the Exchange in 1997, the Company issued options to
purchase 644,097 shares of Common Stock to certain of its officers and
employees. The Company recorded an unearned stock compensation balance of $1.9
million in the first quarter 1997, of which approximately one-half will be added
to the amortizable base of the full-cost pool over the vesting period of the
options and the balance will be recorded as a noncash compensation expense over
the vesting period of the options. As a result, the Company expects to incur
unearned stock compensation amortization expenses of approximately $290,000 in
1998, $140,000 in 1999 and an aggregate of $170,000 in the four years
thereafter.

The Company's predecessor was classified as a partnership for federal
income tax purposes. Therefore, no income taxes were paid or provided for by the
Company prior to the Exchange. The Company is a taxable entity. In connection
with the Exchange on February 27, 1997, the Company incurred a $5 million charge
to record a deferred income tax liability to recognize the differences between
the financial statement basis and tax basis of the Company's predecessor
partnership's natural gas and oil properties at the Exchange date, given the
provisions of enacted tax laws. During the fourth quarter 1997, the Company
elected to record a step-up in the basis of its assets for tax purposes as a
result of the Exchange. Due to this election, the Company recorded a $3.8
million non-cash deferred income tax benefit during the fourth quarter 1997,
which resulted in a net $1.2 million non-cash deferred income tax charge for the
year ended December 31, 1997.

RESULTS OF OPERATIONS

The following table sets forth certain operating data for the periods
presented.

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------- -----------------
1995 1996 1997 1997 1998
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Production:
Natural gas (MMcf).......................... 272 698 1,382 457 1,947
Oil (MBbls)................................. 177 227 291 127 232
Natural gas equivalent (MMcfe).............. 1,332 2,060 3,126 1,222 3,338
Average sales prices per unit (1):
Natural gas (per Mcf)....................... $ 1.62 $ 2.30 $ 2.56 $ 2.62 $ 2.10
Oil (per Bbl)............................... 17.76 19.98 19.40 20.87 13.15
Natural gas equivalent (per Mcfe)........... 2.69 2.98 2.94 3.16 2.14
Costs and expenses per Mcfe:
Lease operating............................. $ 0.57 $ 0.35 $ 0.37 $ 0.38 $ 0.29
Production taxes............................ 0.12 0.18 0.18 0.18 0.13
General and administrative.................. 1.42 1.07 1.14 1.19 0.69
Depletion of natural gas and oil
properties............................... 1.22 1.13 0.87 1.14 0.83
</TABLE>

29
<PAGE> 31

- ---------------

(1) Reflects the effects of the Company's hedging activities. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Other Matters."

Six Months Ended June 30, 1998 Compared to Six Months Ended June 30, 1997

Natural gas and oil sales. Natural gas and oil sales increased 85% from
$3.9 million in the first six months of 1997 to $7.1 million in the first six
months of 1998. Of this increase, $6.6 million was attributable to an increase
in production, offset by $3.4 million was attributable to a decrease in the
average sales price for natural gas and oil. Production volumes for natural gas
increased 326% from 457 MMcf in the first six months of 1997 to 1,947 MMcf in
the first six months of 1998. The average price received for natural gas
decreased 20% from $2.62 per Mcf in the first six months of 1997 to $2.10 per
Mcf in the first six months of 1998. Production volumes for oil increased 82%
from 127 MBbls in the first six months of 1997 to 232 MBbls in the first six
months of 1998. The average price received for oil decreased 37% from $20.87 per
Bbl in the first six months of 1997 to $13.15 per Bbl in the first six months of
1998. Natural gas and oil sales were increased by production from wells
completed since the first six months of 1997 partially offset by the natural
decline of existing production, and from certain wells acquired from Ward
Petroleum in Grady County, Oklahoma which were included in the Company's results
of operations effective September 1, 1997. As a result of hedging activities,
natural gas revenues increased $38,700 for the first six months of 1998,
compared to a decrease in oil revenues of $6,191 for the first six months of
1997.

Lease operating expenses. Lease operating expense increased 108% from
$470,000 in the first six months of 1997 to $978,000 in the first six months of
1998, while on a per unit of production basis, lease operating expenses for the
same periods decreased 26% from $.39 per Mcfe to $.29 per Mcfe. The increase in
lease operating expenses was primarily due to an increase in the number of
producing wells for the first six months of 1998 as compared with the same
period in 1997. The decrease in the per unit rate was primarily due to an
increase in natural gas production as a percentage of total equivalent
production (38% and 58% for the first six months of 1997 and 1998, respectively)
since a typical natural gas well produces with lower average lease operating
costs per unit of production than a typical oil well.

Production taxes. Production taxes increased 106% from $219,000 ($.18 per
Mcfe) for the first six months of 1997 to $450,000 ($.13 per Mcfe) for the first
six months of 1998 as a direct result of increased production volumes. The
effective average production tax rate remained unchanged at 6% of natural gas
and oil sales revenues for the first six months of both 1997 and 1998.

General and administrative expenses. General and administrative expenses
increased 58% from $1.5 million in the first six months of 1997 to $2.3 million
n the first six months of 1998. This increase was primarily attributable to the
hiring of additional employees to support the Company's increased level of
operational activities. Additionally, office rent, other office expenses and
costs related to the administration of a public corporation increased for the
first six months of 1998 as compared to the same period for 1997. On a per unit
of production basis, general and administrative expenses decreased 42% from
$1.19 per Mcfe for the first six months of 1997 to $.69 per Mcfe for the first
six months of 1998.

Depletion of natural gas and oil properties. Depletion of natural gas and
oil properties increased 100% from $1.4 million ($1.14 per Mcfe) in the first
six months of 1997 to $2.8 ($.83 per Mcfe) in the first six months of 1998. Of
this net increase, $2.4 million was due to the increase in production volumes
which was offset by $1 million due to a 27% decrease in the depletion rate. The
depletion rate per unit of production decreased due to an increase in natural
gas and oil reserves at lower average capital costs.

Interest expense. Net interest expense increased from $465,000 in the first
six months of 1997 to $2.4 million in the first six months of 1998. This
increase was primarily due to a higher average outstanding balance offset
partially by a lower effective interest rate. The weighted average outstanding
debt balance increased from $13.2 million in the first six months of 1997 to
$51.3 million in the first six months of 1998. The effective interest rate
increased 16% from 8.1% in the first six months of 1997 to 9.4% in the first six
months of 1998. In May 1997, the Company received $23.9 million for the sale of
shares of its common stock in a public offering. A portion of these proceeds
were used to repay the $13.3 million in debt outstanding at

30
<PAGE> 32

that date. The increase in the average outstanding debt during the first six
months of 1998 compared to the same period for 1997 was due to increased capital
expenditures related to the Company's exploration activities during the first
six months of 1998 and the repayment of debt which occurred in the first six
months of 1997. The increase in the average outstanding debt balance was
primarily a result of increased capital expenditures related to the Company's
exploration activities. Interest expense increased an additional $266,000 for
the first six months of 1998 compared to the same period for 1997 due to the
amortization of deferred loan fees totaling approximately $1.9 million incurred
in connection with the establishment of the Credit Facility in January 1998. The
amortization of these deferred loan fees will continue to be recognized in the
amount of approximately $159,000 per quarter over the term of the Credit
Facility which matures in January 2001.

Year Ended December 31, 1997 Compared to Year Ended December 31, 1996

Natural gas and oil sales. Natural gas and oil sales increased 50% from
$6.1 million in 1996 to $9.2 million in 1997. Production volume increases
accounted for $3.2 million (104%) of this increase and were offset by $134,000
(4%) from a decrease in the average sales price received for natural gas and oil
sales. Production volumes for natural gas increased 98% from 698,036 Mcf in 1996
to 1,381,996 Mcf in 1997. The average price received for natural gas increased
11% from $2.30 per Mcf in 1996 to $2.56 per Mcf in 1997. Production volumes for
oil increased 28% from 226,925 Bbls in 1996 to 290,624 Bbls in 1997. The average
price received for oil decreased 3% from $19.98 per Bbl in 1996 to $19.40 per
Bbl in 1997. Natural gas and oil sales were increased by production from 46
wells completed in 1997, which was partially offset by the natural decline of
existing production. Hedging activities in 1997 reduced the amount by which oil
revenues increased by $6,191, compared to a decrease in oil revenues of $301,280
as a result of hedging activities in 1996.

Workstation revenue. Workstation revenue increased 2% from $627,255 in 1996
to $636,702 in 1997. Workstation revenue is recognized by the Company as
industry participants in the Company's seismic programs are charged an hourly
rate for the work performed by the Company on its 3-D seismic interpretation
workstations. The Company expects workstation revenue to decline in 1998 due to
the Company increasing its working interest in the square miles of 3-D seismic
acquired beginning in 1997, reducing the net hours billed to its participants.

Lease operating expenses. Lease operating expenses increased 59% from
$725,785 ($.35 per Mcfe) in 1996 to $1,151,238 ($.37 per Mcfe) in 1997. The
increase was primarily due to an increase in producing wells during the year.

Production taxes. Production taxes increased 52% from $362,000 ($.18 per
Mcfe) in 1996 to $549,000 ($.18 per Mcfe) in 1997 as a direct result of
increased production volumes. The effective average production tax rate remained
unchanged at 6% of natural gas and oil sales revenues for each period.

General and administrative expenses. General and administrative expenses
increased 62% from $2.2 million ($1.07 per Mcfe) in 1996 to $3.6 million ($1.14
per Mcfe) in 1997. Approximately $300,000 of the increase in 1997 resulted from
nonrecurring expenses related to the Company's relocation of its corporate
headquarters from Dallas, Texas to Austin, Texas, and the balance was primarily
attributable to the hiring of additional personnel and related expenses
necessary to manage the Company's growing operations. The increase in the per
unit rate was a result of a greater increase in aggregate general and
administrative expenses than natural gas and oil production volumes from 1996 to
1997 due to the aforementioned factors.

Depletion of natural gas and oil properties. Depletion of natural gas and
oil properties increased 18% from $2.3 million ($1.13 per Mcfe) in 1996 to $2.7
million ($0.87 per Mcfe) in 1997 as a result of higher production volumes. The
per unit amount decreased due to the addition of proved reserves during 1997.

Interest expense. Interest expense was essentially unchanged from 1996 to
1997 as the Company's lower average outstanding debt balance in 1997 was offset
by a higher effective average interest rate. The weighted average outstanding
debt balance decreased 39% from $19.7 million in 1996 to $12 million in 1997.
The effective interest rate increased 83% from 5.7% in 1996 to 10.5% in 1997.
The decrease in the weighted average outstanding debt balance and increase in
the effective average interest rate resulted primarily from the conversion to
equity of privately placed 5% notes (the "5% Notes") in February 1997, the
retirement of

31
<PAGE> 33

$13.3 million of borrowings under its previous credit facility in connection
with the Company's May 1997 initial public offering, and $32 million of
borrowings incurred under its previous credit facility subsequent to the
Company's initial public offering to fund the Company's increased exploration
activity and its $13.5 million acquisition of properties from Mobil adjacent to
its West Bradley 3-D Project area. The Company's previous credit facility had an
effective interest rate of 8.8% at December 31, 1997.

Year Ended December 31, 1996 Compared to Year Ended December 31, 1995

Natural gas and oil sales. Natural gas and oil sales increased 72% from
$3.6 million in 1995 to $6.1 million in 1996. Of this increase, $2.0 million or
76% was attributable to an increase in production, and $607,894 or 24% was
attributable to an increase in the average sales price received for natural gas
and oil. Production volumes for natural gas increased 157% from 271,707 Mcf in
1995 to 698,036 Mcf in 1996. The average price received for natural gas
increased 42% from $1.62 per Mcf in 1995 to $2.30 per Mcf in 1996. Production
volumes for oil increased 28% from 176,693 Bbls in 1995 to 226,925 Bbls in 1996.
The average price received for oil increased 13% from $17.76 per Bbl in 1995 to
$19.98 per Bbl in 1996. Natural gas and oil sales were increased by production
from 42 wells completed in 1996, which was partially offset by the sale of
certain producing properties in January 1996 and the natural decline of existing
production. Hedging activities in 1996 reduced the amount by which oil revenues
increased by $301,280, compared to an increase in oil revenues of $40,849 as a
result of hedging activities in 1995.

Workstation revenue. Workstation revenue decreased 1% from $635,401 in 1995
to $627,255 in 1996, primarily as a result of a decrease in the rate at which
3-D seismic was acquired in 1995 and interpreted in 1996.

Lease operating expenses. Lease operating expenses decreased 5% from
$760,784 ($.57 per Mcfe) in 1995 to $725,785 ($.35 per Mcfe) in 1996. The
decrease was primarily due to the sale of certain producing properties in
January 1996 partially offset by an increase in producing wells. The decrease in
the per unit rate was a result of the sale of higher cost oil wells in January
1996 and an increase in the percentage of production from natural gas wells.

Production taxes. Production taxes increased 119% from $165,000 ($.12 per
Mcfe) in 1995 to $362,000 ($.18 per Mcfe) in 1996 primarily as a result of
increased production volumes. The effective average production tax rate
increased from 4.6% in 1995 to 6% in 1996, reflecting the increased percentage
of total production attributable to natural gas, which is taxed at a higher
effective rate than oil.

General and administrative expenses. General and administrative expenses
increased 16% from $1.9 million ($1.42 per Mcfe) in 1995 to $2.2 million ($1.07
per Mcfe) in 1996. Approximately $110,000 of the increase in 1996 resulted from
salary increases for employees, and the remainder was primarily attributable to
an increase in third-party consulting fees. The decrease in the per unit rate
was a result of the increase in natural gas and oil production from 1995 to
1996.

Depletion of natural gas and oil properties. Depletion of natural gas and
oil properties increased 43% from $1.6 million ($1.22 per Mcfe) in 1995 to $2.3
million ($1.13 per Mcfe) in 1996 as a result of higher production volumes.

Interest expense. Interest expense increased 25% from $936,266 in 1995 to
$1.2 million in 1996. This increase was due to a higher average outstanding debt
balance in 1996, which was partially offset by a lower effective interest rate.
The weighted average outstanding debt balance increased 71% from approximately
$11.5 million in 1995 to $19.7 million in 1996. The effective interest rate
decreased 25% from 7.6% in 1995 to 5.7% in 1996. The increase in the weighted
average outstanding debt balance and decrease in the effective interest rate
resulted primarily from the retirement of privately placed 10% notes (the "10%
Notes") and the issuance of $16 million in principal amount of 5% Notes in
August 1995.

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary sources of capital have been its revolving credit
facility and other debt borrowings, public and private equity financing, the
sale of interests in projects and funds generated by

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<PAGE> 34

operations. The Company's primary capital requirements are 3-D seismic and land
acquisition costs and drilling expenditures.

Revolving Credit Facilities. In April 1996, the Company entered into a
revolving credit facility. This facility had a three-year term and was subject
to certain borrowing base limitations. The Company had borrowings outstanding
under this credit facility of $32 million as of December 31, 1997. The Company
retired this credit facility in January 1998 with borrowings under its Credit
Facility (as defined).

In January 1998, Brigham entered into a new reserve-based credit agreement
(the "Credit Facility"). The Credit Facility's current borrowing base of $75
million will be reduced to $65 million upon issuance of the Notes. On January
31, 1999, the borrowing base will be redetermined by the bank based on the
Company's then proved reserve value. The Company, at its option, can have the
availability under the facility redetermined based on its current proved reserve
value at any time prior to January 31, 1999. Principal outstanding under the
Credit Facility is due at maturity on January 26, 2001 with interest due
monthly. The interest rate for borrowings under the Credit Facility is either
the lender's base rate or LIBOR plus 2.25%, at the Company's option. Borrowings
under the facility currently bear interest at an annual rate of approximately
8.6%. The Company's obligations under the Credit Facility are secured by
substantially all of the natural gas and oil properties of the Company. See Note
5 of Notes to the December 31, 1997 Consolidated Financial Statements. The
Company used a portion of the funds available under the Credit Facility to repay
the $32 million in borrowings outstanding at December 31, 1997 under its
previous credit facility.

The proceeds of the Offering will be used to fund partially the Company's
planned capital expenditures and in the interim for repayment of outstanding
indebtedness under the Credit Facility.

The terms of the Notes will permit the Company to borrow under the Credit
Facility, up to the lesser of $75 million or the Credit Facility borrowing base.

The Company believes that through the foreseeable future it will be able to
comply with the financial covenants contained in the Credit Facility. These
covenants include a minimum interest coverage ratio that the Company's lender in
May 1998 amended following a determination that the Company did not meet for the
first quarter of 1998 and would not meet for the second quarter of 1998 the
covenant as originally formulated. In connection with the issuance of the Notes,
the Company's lender will further amend the Credit Facility covenants to
accommodate the Notes. In the event that the Company in the future cannot meet a
covenant, no assurance can be given that its lender will amend the covenant or
waive compliance.

Cash Flow Analysis

Cash Flows from Operating Activities. Cash flows provided by operating
activities were $9.8 million in 1997, $3.7 million in 1996, and $1.4 million in
1995. The increase in cash flows for 1997 compared to 1996 was due primarily to
an increase in natural gas and oil revenues, net of lease operating expenses,
production taxes and general and administrative expenses, and changes in balance
sheet items. The increase in cash flows for 1996 compared to 1995 was due
primarily to an increase in natural gas and oil revenues, net of lease operating
expenses, production taxes and general and administrative expenses. In the first
six months of 1998, cash flow used by operations was $1.7 million primarily as a
result of the net effects of increased natural gas and oil revenues, net of
production taxes, lease operating expenses, general and administrative expenses
and interest expenses, and an increase in working capital components.

Cash Flows from Investing Activities. Cash flows used in investing
activities increased to $57.3 million in 1997 compared to $11.8 million in 1996
and $8.0 million in 1995. These increases are directly related to an increase in
capital expenditures. Capital expenditures were $57.2 million in 1997, $13.6
million in 1996 and $7.9 million in 1995. The Company acquired 1,243 gross (845
net) square miles of 3-D seismic in 1997, 655 gross (241 net) square miles in
1996, and 311 gross (90 net) square miles in 1995. The Company's drilling
efforts resulted in the successful completion of 46 wells (17.6 net) in 1997, 42
wells (8.7 net) in 1996 and 46 wells (9.9 net) in 1995, which resulted in
aggregate net increases in proved reserve volumes of 38.1 Bcfe in 1997, 13.7
Bcfe in 1996 and 8.9 Bcfe in 1995. In addition, the Company sold certain
producing properties in 1996 for $2.1 million and acquired certain producing
properties and related interests in 1997 for

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<PAGE> 35

$13.5 million. Cash flow used in investing activities was $30.9 million in the
first six months of 1998 primarily as a result of capital expenditures related
to exploration activities.

Cash Flows from Financing Activities. Cash flows from financing activities
for 1997 were $47.7 million, primarily as a result of borrowings under the
Company's previous credit facility and proceeds from the common stock sold in
the Company's initial public offering. Cash flows from financing activities for
1996 were $7.7 million, primarily as a result of borrowings under the Company's
previous credit facility. Cash flows from financing activities for 1995 were
$7.7 million, primarily as a result of the issuance of the 5% Notes offset by
the net repayment of the $7.9 million outstanding balance on the 10% Notes. Cash
flows from financing activities for the first six months of 1998 were $34
million, net of deferred loan fees of $1.9 million, primarily as a result of an
increase in borrowings under the Credit Facility to fund the difference between
cash flow from operations and cash flow from investing activities.

Capital Expenditures

The Company currently estimates that its net capital expenditures in 1998
will be approximately $59 million. The Company expects to incur these capital
expenditures primarily to drill 90 gross (45 net) planned wells, to acquire
approximately 1,300 gross (925 net) square miles of 3-D seismic and to continue
to add to and upgrade its 3-D seismic interpretation hardware and software. The
actual number of wells drilled, square miles acquired and costs incurred may
differ significantly from these estimates. See "Business and
Properties -- Primary Exploration Provinces."

Due to the Company's active 3-D seismic acquisition and drilling programs,
the Company has experienced and expects to continue to experience substantial
working capital requirements. While the Company believes that the net proceeds
of the Offering, cash flow from operations, borrowings under the Credit Facility
and proceeds expected to be received from potential sales of interests in
certain of its seismic projects to industry participants should allow the
Company to finance its operations at least through 1998 based on current
conditions, additional financing may be required in the future to fund the
Company's 3-D seismic acquisition and drilling programs. In the event additional
financing is not available, the Company may be required to curtail these
activities.

OTHER MATTERS

Hedging Activities

The Company believes that hedging, although not free of risk, allows the
Company to reduce its exposure to natural gas and oil sales price fluctuations
and thereby to achieve more predictable cash flows. However, hedging
arrangements, when utilized, limit the benefit to the Company of increases in
the prices of the hedged commodity. Moreover, the Company's hedging arrangements
apply only to a portion of its production and provide only partial price
protection against declines in commodity prices. The Company expects that the
amount of its hedges will vary from time to time. See "Risk Factors -- Risk of
Hedging Activities."

In 1995 the Company, in an attempt to reduce its sensitivity to volatile
commodity prices, began using crude oil swap arrangements resulting in a fixed
price over a period of six months. Total oil purchased and sold subject to swap
arrangements entered into by the Company was 118,150 Bbls in 1996 and 54,900
Bbls in 1995. The Company accounts for all these transactions as hedging
activities and, accordingly, adjusts the price received for natural gas and oil
production during the period the hedged transactions occur. Adjustments to the
price received for oil under these swap arrangements resulted in an increase in
oil revenues of $40,849 in 1995 and decreases in oil revenues of $301,280 in
1996 and $6,191 in 1997. As of December 31, 1997, the Company had no hedging
contracts outstanding.

In February 1998, the Company entered into a hedging contract whereby
10,000 MMBtu per day of natural gas is purchased and sold subject to a fixed
price swap agreement for monthly periods from April 1998 through October 1999.
Pursuant to these arrangements the Company exchanges a floating market price for
a fixed contract price. Payments are made by the Company when the floating price
exceeds the fixed price for a contract month and payments are received when the
fixed price exceeds the floating price. Settlements on

34
<PAGE> 36

these swaps are based on the difference between the ANR Pipeline Co.-Oklahoma
index price (as published in Inside FERC's Gas Market Report) for a contract
month and the fixed contract price for the same month. Total natural gas subject
to this hedging contract is 2,750,000 MMBtu in 1998 and 3,040,000 MMBtu in 1999.
As a result of this natural gas hedging contract, the Company realized an
increase in revenues of $38,700 in the three months ended June 30, 1998.

Effects of Inflation and Changes in Prices

The Company's results of operations and cash flows are affected by changing
natural gas and oil prices. If the price of natural gas and oil increases
(decreases), there could be a corresponding increase (decrease) in revenues as
well as the operating costs that the Company is required to bear for operations.
Inflation has had a minimal effect on the Company.

Environmental and Other Regulatory Matters

The Company's business is subject to certain federal, state and local laws
and regulations relating to the exploration for and the development, production
and marketing of natural gas and oil, as well as environmental and safety
matters. Many of these laws and regulations have become more stringent in recent
years, often imposing greater liability on a larger number of potentially
responsible parties. Although the Company believes it is in substantial
compliance with all applicable laws and regulations, the requirements imposed by
laws and regulations are frequently changed and subject to interpretation, and
the Company is unable to predict the ultimate cost of compliance with these
requirements or their effect on its operations. Any suspensions, terminations or
inability to meet applicable bonding requirements could materially adversely
affect the Company's financial condition and operations. Although significant
expenditures may be required to comply with governmental laws and regulations
applicable to the Company, compliance has not had a material adverse effect on
the earnings or competitive position of the Company. Future regulations may add
to the cost of, or significantly limit, drilling activity. See "Risk
Factors -- Compliance with Environmental Regulations," "Business and
Properties -- Governmental Regulation" and "Business and
Properties -- Environmental Matters."

Year 2000 Issues

The Company has reviewed the effect of the Year 2000 issues relating to its
information systems. The Company has determined that the Year 2000 issues
directly related to its information systems will not have a material impact on
its business, operations nor its financial position. However, the Company cannot
determine what effect, if any, the Year 2000 issues affecting its vendors,
customers, other businesses and the numerous local, state, federal and other
U.S. governmental entities with which it conducts business or by which it is
regulated or governed or taxed will have on its business or financial position.
See "Risk Factors -- Year 2000 Compliance."

Recent Accounting Pronouncements

In June 1997, the Financial Accounting Standards Board (the "FASB") issued
SFAS No. 130, "Reporting Comprehensive Income," and SFAS No. 131, "Disclosure
about Segments of an Enterprise and Related Information." Neither of these
standards is expected to have a material impact on the Company.

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which is effective for fiscal years
beginning after June 15, 1999. The Company is currently assessing the impact
adoption of this standard will have on its balance sheet and statement of
operations.

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<PAGE> 37

BUSINESS AND PROPERTIES

From inception in 1990 through 1997, Brigham had drilled 324 exploratory
and 46 development wells on its 3-D seismic generated prospects with an
aggregate 63% success rate and an average working interest of 24%. Utilizing the
capital it raised in its May 1997 initial public offering, the Company increased
the average working interest it retained in its wells during the second half of
1997, retaining a 45% average working interest in the 36 wells that it drilled.
As of December 31, 1997, the Company had added approximately 93 Bcfe of net
proved reserves (excluding revisions) to its reserve base, approximately 72 net
Bcfe of which were discovered by Brigham through its systematic 3-D seismic
exploration drilling activities. The Company's estimated net proved reserves as
of December 31, 1997 were 72.3 Bcfe having an aggregate Present Value of Future
Net Revenues of $69.2 million, compared to estimated net proved reserves as of
December 31, 1996 of 21.9 Bcfe having an aggregate Present Value of Future Net
Revenues of $44.5 million. The Company's net proved reserve volumes at December
31, 1997 were 74% natural gas and 65% categorized as proved developed reserves.

BUSINESS STRATEGY

During the second half of 1997, the Company employed the capital raised in
its initial public offering to attain significant growth in each of its core
strategic objectives:

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<PAGE> 38

Increased Working Interest. In an effort to retain a greater portion
of the value generated by its 3-D seismic exploration efforts, Brigham
increased the average working interest it retained in its 1997 3-D seismic
projects to 68% as compared with its average project working interest of
24% in 1990 through 1996. As a result of the higher working interests and
the accelerated acquisition of 3-D seismic, the Company acquired 845 net
square miles of 3-D seismic in 1997 as compared with 780 cumulative net
square miles acquired from 1990 through 1996.

Accelerated Drilling. Through its strategy of retaining higher working
interests in its 3-D projects and subsequent drilling, Brigham participated
in the drilling of 28 net wells in 1997, a 75% increase from the
approximate 16 net wells drilled by the Company in 1996. The Company
achieved a 63% success rate on the 73 wells in its 1997 drilling program,
consistent with Brigham's historical average success rate. A key factor
contributing to its increased level of drilling activity was the Company's
addition of personnel in engineering, land and administrative functions
during 1997. These staff additions provided Brigham with the additional
infrastructure required to increase its operating capabilities, enabling
the Company operate 37% of its gross wells and 64% of its net wells drilled
in 1997.

Based on the results that the Company has achieved from its growth strategy
since its initial public offering, Brigham intends with the proceeds from the
Offering to increase its exploration activities in 1998 to take advantage of
opportunities currently available to further accelerate the Company's growth.
The Company's current 1998 capital budget contemplates (i) an increase in
budgeted drilling expenditures in the Anadarko Basin and the Gulf Coast
provinces, (ii) a reduction in planned drilling activity in West Texas in part
due to recent declines in oil prices, (iii) an increase in planned 3-D seismic
acquisition activities in an effort to capture additional exploration prospects
for future drilling activities and (iv) potential sales of a portion of the
Company's interests in certain seismic projects. The Company intends to continue
to retain higher working interests in its 3-D seismic projects in the Anadarko
Basin and the onshore Gulf Coast. By increasing its working interests retained
in the majority of its current and planned seismic projects, Brigham expects to
further accelerate its growth not only by retaining a greater portion of the
reserves its discovers, but also by increasing its ability to control the timing
of the drilling of its exploration projects and therefore helping to accelerate
its drilling pace. The Company's current 1998 budget consists of 90 gross (45
net) wells, compared with the 73 gross (28 net) wells drilled by the Company in
1997. This increase in anticipated 1998

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<PAGE> 39

drilling is the result of an increase in planned drilling of higher working
interest wells in the Anadarko Basin and the Gulf Coast offset by a reduction in
planned drilling activity in West Texas.

COMPETITIVE ADVANTAGES

Brigham believes that its knowledge base, personnel and technology provide
it with the following competitive advantages to capture undiscovered natural gas
and oil reserves.

3-D Seismic Knowledge Base. The Company began acquiring 3-D seismic in
1990 and drilled its first 3-D delineated well, which was a discovery, in
February 1991. From inception through 1997, the Company has acquired 4,005
square miles of 3-D seismic and drilled 370 wells in over 20 geologic
trends in seven basins and seven states. As a result, the Company has
gained extensive technological and economic knowledge relating to the
application of 3-D seismic to different geologic trends. This experience
and knowledge enable the Company to refine its exploration techniques and
identify exploration areas where Brigham believes 3-D seismic can be
applied to reduce risks and enhance returns on its investments.

Technological Expertise. Led by its CEO, who is an experienced,
practicing geophysicist, the Company has built an exploration staff that
includes nine other geophysicists and ten geologists. Brigham's
explorationists collectively have approximately 300 years of experience,
including approximately 85 years of experience using CAEX workstations, and
have expertise in many geologic trends. The Company makes extensive use of
advanced technologies, including 3-D seismic imaging and CAEX and in-house
analytical and processing capabilities, to define drilling prospects. To
support the efforts of its explorationists, Brigham has invested in
advanced hardware and software, including 20 UNIX-based CAEX workstations.

Project Generation and Control. Brigham is not dependent on third
parties for its project flow, having generated approximately 90% of its 3-D
seismic exploration projects through the acquisition of proprietary
seismic. Therefore, the Company is able to manage the predrilling
exploration phases, from project conception and assemblage through 3-D
seismic acquisition, processing and interpretation and subsequent leasing.
Brigham believes that its management of the exploration process enhances
project quality and compresses the cycle time, contributing to lower
finding and development costs and an enhanced project rate of return.
Furthermore, the Company can determine the level of working interest it
retains and the extent to which it manages drilling and post-drilling
operations and continues to expand its efforts in these areas.

Numerous Potential Drilling Locations. As of December 31, 1997, the
Company had identified 1,170 3-D defined potential drilling locations in
historically productive geologic trends, of which 370 had been drilled. The
Company currently anticipates drilling 90 of these locations (45 net) in
1998 at an aggregate drilling cost of approximately $40 million. The
Company also anticipates net expenditures for seismic and land in 1998 of
approximately $13.5 million, including the acquisition of approximately
1,300 gross (925 net) square miles of 3-D seismic. The Company continually
evaluates and prioritizes potential drilling locations to determine whether
to drill them, farm them out or replace them with higher quality locations.

Pioneering Innovations. In 1990 the Company pioneered the assemblage
of large scale onshore 3-D seismic projects and the use of preseismic lease
options for the systematic exploration of proven natural gas and oil
provinces. The Company believes it was one of the first to form alliances
and joint participation arrangements with companies and individuals
possessing extensive local geologic or operating expertise to complement
its 3-D seismic exploration expertise. Subsequent innovations include the
Company's 3-D seismic acquisition and processing alliances and its creative
industry trade structures to financially leverage its drilling program.

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<PAGE> 40

EXPLORATION AND OPERATING APPROACH

From inception through December 31, 1997, the Company had acquired 3-D
seismic in 119 projects covering 4,005 square miles (2.6 million acres) in 20
geologic trends in seven basins and seven states. Through this activity, the
Company has developed expertise in the selection of geologic trends that are
suitable for 3-D seismic exploration. Brigham uses experience that it gains
within a trend to enhance the quality of subsequent projects in the same trend
and other analogous trends, contributing to lower finding and development costs,
compressing project cycle times and increasing project rates of return.

The Company typically acquires 3-D seismic in and around existing
production where the Company can benefit from the imaging of producing analogs.
These 3-D seismic defined analogs, combined with the Company's experience in
drilling 370 wells, provide the Company with a knowledge base to evaluate other
potential geologic trends, 3-D seismic projects within trends and 3-D seismic
delineated potential drilling locations. The Company's knowledge base assists in
identifying geologic trends where Brigham believes it can find and develop
economic volumes of natural gas and oil.

The Company has experience exploring with 3-D seismic in a wide range of
reservoir types and geologic trapping styles, both stratigraphic and structural
(including reefs, salt domes, channel sands, complex faulted and fractured
reservoirs and pinchout plays). The Company seeks to supplement its knowledge
base with local geologic expertise for a particular geologic trend by hiring new
explorationists, engaging consultants and entering into joint ventures with
industry participants. In addition, if the targeted geologic trend is extensive,
the Company typically acquires a digital data base for integration on the
Company's CAEX workstations, including digital land grids, well information, log
curves, production information, geologic studies, geologic top data bases and
existing 2-D seismic.

The Company uses its knowledge base, local geological expertise and
acquired digital data bases, integrated with 3-D seismic, to create maps of
producing reservoirs. The Company believes its 3-D generated maps are more
accurate than previous reservoir maps used by the industry (which generally were
based on subsurface geological information and 2-D seismic surveys), enabling
the Company to better evaluate recoverable reserves and the economic feasibility
of projects and drilling locations.

Brigham acquires most of its raw 3-D seismic on a proprietary basis using
seismic acquisition vendors. Additionally, the Company acquires data through
alliances affording it the exclusive right to interpret and use data for
extended periods of time. Occasionally the Company participates in
non-proprietary group shoots of 3-D seismic. In its proprietary acquisitions and
alliances, Brigham selects the sites of projects, primarily guided by its
knowledge and experience in the core provinces it explores; establishes and
monitors the seismic parameters of each project for which data is shot; and
typically selects the equipment that will be used. Data is generally priced on
the basis of square miles shot. See "Business and Properties -- Industry
Alliances."

PRIMARY EXPLORATION PROVINCES

Brigham's exploration activities are concentrated primarily in three core
provinces: the Anadarko Basin of western Oklahoma and the Texas Panhandle; the
onshore Gulf Coast of Texas and Louisiana; and West Texas. Brigham is
accelerating 3-D seismic activity in the Anadarko Basin and the Gulf Coast and
will selectively continue such activity in those geologic trends of the West
Texas region where it has achieved its best results historically. Brigham is
focusing its 3-D seismic exploration efforts in provinces where it believes 3-D
technology may be effectively applied and which the Company believes offer
relatively large potential reserve volumes per well and per field, high
potential production rates and multiple producing objectives.

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<PAGE> 41

conditions at the time of drilling, including prevailing and anticipated prices
for natural gas and oil and the availability of drilling rigs and crews, (iv)
the financial resources and results of the Company and (v) the availability of
leases on reasonable terms and permitting for the potential drilling location.
There can be no assurance that the budgeted wells will, if drilled, encounter
reservoirs of commercial quantities of natural gas or oil.

<TABLE>
<CAPTION>
3-D SEISMIC CURRENT 1998 CAPITAL BUDGET(1)
DATA --------------------------------------------
ACQUIRED/ 3-D SEISMIC UNDRILLED CAPITAL
INTERPRETED DATA GROSS POTENTIAL EXPENDITURES($MM)
AS OF BUDGETED TO WELLS DRILLING WELLS -----------------------------
12/31/97 BE ACQUIRED IN DRILLED LOCATIONS BUDGETED NET
(GROSS SQ. 1998 (GROSS THROUGH AS OF ------------ SEISMIC NET
PROVINCE MILES) SQ. MILES) 12/31/97 12/31/97 GROSS NET & LAND DRILLING TOTAL(2)
- -------- -------------- -------------- -------- --------- ----- ---- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Anadarko Basin............ 1,515/ 1,195 660 55 364 55 28.8 $12.5 $26.5 $39.0
Gulf Coast................ 566/ 325 600 11 110 20 9.5 (0.5) 10.5 10.0
West Texas................ 1,649/ 1,600 40 287 302 14 6.5 1.5 2.8 4.3
Others(3)................. 275/ 275 -- 17 24 1 0.2 -- 0.2 0.2
------- ------ ----- --- --- --- ---- ----- ----- -----
Total............. 4,005/ 3,395 1,300 370 800 90 45.0 $13.5 $40.0 $53.5
======= ====== ===== === === === ==== ===== ===== =====
</TABLE>

- ---------------

(1) Prepared as of August 10, 1998.

(2) Net 3-D seismic and land acquisition costs and drilling expenditures.

(3) Colorado, Kansas and Montana.

Over the last several years the Company has accelerated its 3-D seismic
acquisition activity in the Anadarko Basin, acquiring 195 square miles in 1995,
457 square miles in 1996 and 648 square miles in 1997. The Company retained a
66% average working interest in the 3-D seismic it acquired in this province in
1997. The Company believes its increased level of activity in the Anadarko Basin
will be a significant factor in the Company's growth. As of December 31, 1997,
the Company had acquired or was acquiring 1,515 square miles (969,600 acres) in
30 projects in the Anadarko Basin. The Company anticipates acquiring 660 square
miles (422,400 acres) of additional 3-D seismic in this province in 1998.

As of December 31, 1997, Brigham had completed 44 wells in 55 attempts (80%
success rate) in the Anadarko Basin and had found cumulative proved reserves of
44 net Bcfe. In 1997, the Company completed 19 wells in 23 attempts in its
Anadarko Basin province with an average working interest of 39%, adding 31 net
Bcfe of proved reserves. In addition, the Company acquired 21.5 net Bcfe of
proved reserves in this region in November 1997. As of December 31, 1997, the
Company had 364 3-D delineated potential drilling locations in the Anadarko
Basin, of which the Company intends to drill 55 gross (29 net) wells in 1998.

Brigham's Anadarko Basin activity provides a blend of intermediate depth,
moderate risk objectives and deeper, higher potential but somewhat higher risk
objectives. The intermediate depth targets at 9,000 to 13,000 feet have provided
Brigham with good drilling results to date. These include the Upper Morrow
channel sands and the Lower Morrow shallow marine sands of the Texas Panhandle,
the Springer channels of

40
<PAGE> 42

the Watonga Chikasha trend of western Oklahoma, and structural traps in the
Hunton carbonates of the northeastern portion of the Anadarko Basin.

Intermediate depth objectives in the Anadarko Basin can provide significant
reserve additions, as evidenced by Brigham's Lower Morrow discovery in its
Pistol Pete 3-D seismic project. In late 1997, the Brigham-operated Christopher
84 #1 (36% Brigham working interest) was completed in one of four apparently
productive Lower Morrow zones at approximately 12,000 feet, and initially tested
at 2.65 MMcfe per day with a flowing tubing pressure of 1,800 pounds per square
inch. This well was producing approximately 4 MMcfe per day with a flowing
tubing pressure of 2,750 pounds per square inch at the end of July 1998. The
Company has drilled two offset wells to the Christopher 84 #1 discovery during
1998. The first of these offsets, the Brigham-operated Madison 85 #1 (36%
Brigham working interest), was completed and is currently producing 1.1 MMcf of
natural gas per day from the sand common to the producing zone in the
Christopher 84 #1. The second offset well, the Brigham-operated Alexander 70 #1
(91% Brigham working interest), was drilled and found the producing objective to
be tight, resulting in a dry hole. The Company plans to drill at least two
additional tests of this structure during the balance of 1998.

The deeper Anadarko Basin objectives provided Brigham's first significant
Hunton formation discovery, the Brigham-operated Weise 28 #1 (33% Brigham
working interest), in its Jayhawk 3-D seismic project in Wheeler County, Texas.
Drilled to a total depth of approximately 14,800 feet, the Weise 28 #1 tested an
initial production rate of 6.1 MMcfe per day. This well was producing
approximately 2 MMcf of natural gas and 20 barrels of condensate per day with a
flowing tubing pressure of 900 pounds per square inch at the end of July 1998. A
development well to the Weise 28 #1 discovery, the Brigham-operated Amelia 31 #1
(36% Brigham working interest), has been drilled and is currently completing.
Brigham plans to drill several higher potential tests in the deeper portions of
the Anadarko Basin primarily in the Texas Panhandle and far western Oklahoma in
1998.

On November 12, 1997, Brigham acquired an interest in producing properties
and undeveloped acreage at the northern end of the Carter Knox anticline in
Grady County, Oklahoma (the "Chitwood Acquisition"). For $13.5 million, Brigham
acquired estimated net proved reserves totaling 21.3 Bcfe and received a 50%
working interest in 3,600 net acres of leasehold and 750 net mineral acres in
the Chitwood Acquisition. The properties were acquired from Mobil Oil
Corporation through Ward Petroleum Corporation ("Ward"), and Ward will act as
drilling operator. Brigham and Ward are currently participating in an
approximately 130 square mile 3-D seismic in this area to delineate
opportunities in the Springer, Big Four, Bromide and Arbuckle formations. The
Chitwood Acquisition overlaps and is adjacent to Brigham's West Bradley 3-D
Seismic Project, where Ward operates the majority of the drilling operations.

Gulf Coast. The onshore Gulf Coast region of South Texas and South
Louisiana is a high potential, multi-pay province that lends itself to 3-D
seismic exploration due to its substantial structural and stratigraphic
complexity. The Company has assembled a digital data base including
geographical, production, geophysical and geological information that the
Company evaluates on its CAEX workstations. Working with consulting regional
geologists, the Company's explorationists integrate this data with their
extensive expertise and knowledge base to generate and evaluate 3-D seismic and
projects in the Gulf Coast. Brigham's commitment to this province is evidenced
by the Company's staff additions, the opening of its Houston office and the
addition of ten new 3-D seismic projects in 1996 and 1997.

The Company anticipates that its increased project assemblage and 3-D
seismic acquisition activity in the Gulf Coast will generate accelerated
drilling in this province in 1998 and 1999. The Company is currently assembling
projects in the Expanded Wilcox and Expanded Vicksburg trends in South Texas,
the Lower and Middle Frio trends of South Texas and the Miocene Trend of South
Louisiana.

As of December 31, 1997, the Company had acquired or was acquiring 566
square miles (362,240 acres) of 3-D seismic in seven projects in the onshore
Gulf Coast province. The Company anticipates acquiring 600 square miles (384,000
acres) of additional 3-D seismic in this province in 1998. As of December 31,
1997, Brigham had completed 8 wells in 11 attempts (73% success rate) in the
Gulf Coast and had found cumulative proved reserves of 3 net Bcfe. In 1997, the
Company completed seven wells in 10 attempts with an average working interest of
9% adding 3 net Bcfe of proved reserves. As of December 31, 1997, the Company

41
<PAGE> 43

had 110 3-D delineated potential drilling locations in the Gulf Coast province,
of which the Company intends to drill 20 gross (10 net) wells in 1998.

Brigham initiated its Gulf Coast effort in 1995 with the Esperson Dome
Project in Liberty County, Texas where the Company and its participants
currently control approximately 9,600 gross (7,500 net) acres through leases and
farmouts and have acquired 39 square miles of 3-D seismic. The Esperson Dome
Project targets structurally trapped sands in the Miocene, Vicksburg and
Yegua/Cook Mountain series ranging in depth from 1,200 feet to 10,000 feet on a
complexly faulted salt dome feature. As of year-end 1997, ten wells had been
drilled in the project (one Miocene, three Yegua/Cook Mountain and six
Vicksburg), yielding seven discoveries. Brigham currently maintains a small net
profits interest in the Esperson Dome Project that will convert to a variable
back-in working interest of 12% to 20% in the project after payout.

Brigham's Welder Ranch and Caliente projects encompass an area covering
more than 400 square miles within a non-proprietary 3-D seismic program
currently being conducted in Duval and Webb counties, Texas. Initially Brigham
acquired 48 square miles of 3-D seismic over the Welder Cabeza Ranch, where the
Company controls a 100% working interest in a seismic option on approximately
17,000 acres. The first well in the project, the Brigham-operated Welder-State
212 #1, (80% Brigham working interest), was completed in February 1998, and
tested naturally at a rate of 2.75 MMcf per day from the Lower Wilcox formation
at 13,350 feet. After adding perforations in two behind pipe zones, the well was
producing approximately 700 Mcf of natural gas per day at the end of July 1998.
In mid-1998, the Company participated in the drilling of the Tesoro-operated
John and Elva Dinn #1 well (48% Brigham working interest), a 14,500 foot Lower
Wilcox test in the Company's Caliente Project. This well encountered 70 feet of
pay in the Lower Wilcox formation and is currently waiting on completion.
Brigham plans to drill four additional wells in this trend in the second half of
1998.

Another project in South Texas is Brigham's Diablo Project covering
approximately 12,000 acres in Brooks County, Texas. The Company acquired 25
square miles of proprietary 3-D seismic in 1997 and an additional 33 square
miles in 1998. Brigham recently teamed up with Exxon Company, USA, which
controls adjoining acreage to jointly explore the combined acreage for potential
below 10,000 feet in the Vicksburg formation. Brigham has retained a 33% working
interest in this deep joint exploration project. In prospective zones above
10,000 feet, primarily the Frio, Brigham has retained a 100% working interest in
its original 4,000 acre lease block. The Company plans to drill a number of
wells in this project in 1998 to test the shallow Frio and deeper Vicksburg
objectives.

In its Southwest Danbury Project in Brazoria County, Texas, Brigham is the
operator of a 13,000 foot Frio test that was drilled during the first half of
1998. In early August 1998, this well was producing 2 MMcf of natural gas and 30
barrels of condensate per day with a flowing tubing pressure of 6,100 pounds per
square inch from the Lower Frio formation. Brigham has retained a 46% working
interest in this test, and plans to drill at least one additional wells in this
project during the balance of 1998.

In May 1997, Brigham initiated its El Sauz Project with a seismic option
covering approximately 94,000 acres in Willacy and Kennedy counties, Texas. The
El Sauz Project is an underexplored area due north of the Willamar Field, which
has produced a cumulative 350 Bcf from the Miocene and Frio sands. Brigham
expects to define Miocene and Frio sands at 6,000 to 10,000 feet, with
additional potential as deep as 18,000 feet. Reserve targets range from 5 to 20
Bcf per well. The Company initiated a 200 square mile 3-D seismic program over
this acreage in 1998, with initial drilling anticipated for early 1999. Brigham
has retained a 55% working interest in the El Sauz Project after it brought in
two industry participants to leverage preseismic land and 3-D seismic
acquisition costs of this project.

Also in the Miocene/Frio trend of South Texas, Brigham acquired a seismic
option covering approximately 28,000 acres in the Hawkins Ranch located in
Matagorda County, Texas. The region has potential in the shallow, nonpressured
Miocene and Frio sands as well as the deeper, pressured Frio sands. The Company
has acquired approximately 94 square miles of new proprietary 3-D seismic to
merge with 65 square miles of non-proprietary 3-D seismic already in inventory.
The Company has negotiated a transaction pursuant to which the above described
94 square miles of proprietary 3-D seismic will become non-proprietary after an

42
<PAGE> 44

exclusivity period benefiting the Company, allowing the Company to acquire the
3-D seismic at a substantial cost savings. Brigham currently retains a 75%
working interest in this project.

Brigham's first significant venture into South Louisiana, its Tigre Point
Project, is located in six feet of water in the transition zone off Vermilion
Parish. The project consists of 44 square miles of 3-D seismic covering a 7,200
acre lease block in Louisiana State waters, where Brigham currently controls a
75% working interest. The project has targeted the same series of sands that
produce in the prolific Freshwater Bayou field, located five miles to the north.
An 18,000 foot Lower Miocene test is scheduled for late 1998. Currently, Brigham
plans to retain a 30% to 40% working interest in this project following the sale
of a portion of its interest to an industry participant.

As of December 31, 1997, the Company had acquired or was acquiring 1,649
square miles (1,055,360 acres) in 74 projects in the West Texas region. The
Company anticipates acquiring 40 square miles (25,600 acres) of additional 3-D
seismic in this province in 1998. As of December 31, 1997, Brigham had completed
180 wells in 287 attempts (63% success rate) in the West Texas province and had
found cumulative proved reserves of 24 net Bcfe. In 1997, the Company completed
19 wells in 34 attempts with an average working interest of 45% adding 4 net
Bcfe of proved reserves. As of December 31, 1997, the Company had 302 3-D
delineated potential drilling locations in the West Texas region, of which the
Company intends to drill 14 gross (6 net) wells in 1998.

The Company has recently experienced success in the deeper portions of the
Midland Basin, where it has drilled five Fusselman discoveries to date.
Currently the most significant of these discoveries is the Elizabeth Rose field,
with gross proved reserves estimated by the Company's independent petroleum
consultants at December 31, 1997 of 1.5 MMBbls of oil. The Company has drilled
five wells in this Fusselman field that were producing an aggregate of
approximately 610 Bbls of oil per day in July 1998. Brigham's working interest
in its five Fusselman discoveries ranges from 19% to 91%. In 1998 the Company
has acquired 27 square miles of 3-D seismic in three additional 3-D seismic
projects adjacent to the Elizabeth Rose field and currently retains working
interests of 100% in these projects.

The Company completed three Canyon Reef discoveries during 1997 in its
Discovery Project located in the Horseshoe Atoll Trend. This project, in which
Brigham currently retains a working interest of 75%, targets oil producing
Canyon-age reef objectives at depths of approximately 9,500 feet. The Company's
three 1997 discoveries in its Discovery Project were producing an aggregate of
approximately 160 Bbls of oil and 510 Mcf of natural gas per day in July 1998.
Brigham's working interests in these three wells range from 48% to 91%.

Among Brigham's higher potential, higher risk projects in its West Texas
province are its Buffalo and Longhorn projects, located in the Delaware Basin,
in which the Company owns a 25% working interest. From two 3-D seismic programs
covering approximately 137 square miles acquired in 1996 and 1997, the Company
has identified numerous potential 3-D seismic delineated drilling locations and
has leased over 23,000 gross (5,780 net) acres. These projects are surrounded by
prolific production from the Devonian and Ellenberger formations at depths of
15,000 to 21,000 feet, in fields such as Evetts (approximately 600 Bcf of
natural gas to date from 16 wells) and War Wink South (approximately 295 Bcf of
natural gas to date from eight wells). Brigham plans to participate with a 24%
working interest in two wells to test Bone Springs formation objectives in this
area during the second half of 1998.

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<PAGE> 45

NATURAL GAS AND OIL RESERVES

The Company's estimated total net proved reserves of natural gas and oil as
of December 31, 1995, 1996 and 1997 and the present values attributable to these
reserves as of those dates were as follows:

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
---------------------------
1995 1996(1) 1997
------- ------- -------
<S> <C> <C> <C>
Estimated net proved reserves:
Natural gas (MMcf).................................... 4,257 10,257 53,230
Oil (MBbls)........................................... 1,672 1,940 3,181
Natural gas equivalent (MMcfe)........................ 14,289 21,897 72,316
Proved developed reserves as a percentage of proved
reserves.............................................. 80% 67% 65%
Present Value of Future Net Revenues(2) (in
thousands)............................................ $18,222 $44,506 $69,249
Standardized Measure of Discounted Future Net Cash
Flows(3) (in thousands)............................... $18,222 $44,506 $64,274
</TABLE>

- ---------------

(2) The Present Value of Future Net Revenues attributable to the Company's
reserves was prepared using prices in effect at the end of the respective
periods presented, discounted at 10% per annum on a pre-tax basis. These
amounts reflect the effects of the Company's hedging activities in the
periods presented.

(3) The Standardized Measure of Discounted Future Net Cash Flows prepared by the
Company represents the present value of future net revenues after income
taxes discounted at 10%. These amounts reflect the effects of the Company's
hedging activities in the periods presented.

The average prices for the Company's reserves were $1.85 per Mcf of natural
gas and $18.22 per Bbl of oil as of December 31, 1995, $3.62 per Mcf of natural
gas and $24.66 per Bbl of oil as of December 31, 1996 and $2.11 per Mcf of
natural gas and $16.64 per Bbl of oil as of December 31, 1997.

In accordance with applicable requirements of the SEC, estimates of the
Company's proved reserves and future net revenues are made using sales prices
estimated to be in effect as of the date of such reserve estimates and are held
constant throughout the life of the properties (except to the extent a contract
specifically provides for escalation). Estimated quantities of proved reserves
and future net revenues therefrom are affected by natural gas and oil prices,
which have fluctuated widely in recent years. At December 31, 1997, the date the
Company's reserves and present value were estimated, the prices of natural gas
and oil on the NYMEX were $2.26 per MMBtu and $17.64 per Bbl, respectively. From
January 1, 1998 through August 7, 1998, the price of natural gas on the NYMEX
ranged from $2.69 per MMBtu to $1.83 per MMBtu and the price of oil on the NYMEX
ranged from $17.82 per Bbl to $11.56 per Bbl. There are numerous uncertainties
inherent in estimating natural gas and oil reserves and their estimated values,
including many factors beyond the control of the Company. The reserve data set
forth herein represents only estimates. Reservoir engineering is a subjective
process of estimating underground accumulations of natural gas and oil that
cannot be measured in an exact manner. The accuracy of any reserve estimate is a
function of the quality of available data and of engineering and geologic
interpretation and judgment. As a result, estimates of different engineers,
including those used by the Company, may vary. In addition, estimates of
reserves are subject to revision based upon actual production, results of future
development and exploration activities, prevailing natural gas and oil prices,
operating costs and other factors. The revisions may be material. Accordingly,
reserve estimates are often different from the quantities of natural gas and oil
that are ultimately recovered and are highly dependent upon the accuracy of the
assumptions upon which they are based. The Company's estimated proved reserves
have not been filed with or included in reports to any federal agency. See "Risk
Factors -- Uncertainty of Reserve Information and Future Net Revenue Estimates."

Estimates with respect to proved reserves that may be developed and
produced in the future are often based upon volumetric calculations and upon
analogy to similar types of reserves rather than actual production

44
<PAGE> 46

history. Estimates based on these methods are generally less reliable than those
based on actual production history. Subsequent evaluation of the same reserves
based upon production history will result in variations in the estimated
reserves that may be substantial.

DRILLING ACTIVITIES

The Company drilled, or participated in the drilling of, the following
number of wells during the periods indicated.

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED
------------------------------------------ JUNE 30,
1995 1996 1997 1998
------------ ------------ ------------ ------------
GROSS NET GROSS NET GROSS NET GROSS NET
----- ---- ----- ---- ----- ---- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Exploratory Wells:
Natural gas................................. 5 1.2 5 1.2 15 6.3 13 4.8
Oil......................................... 37 8.1 22 5.2 21 7.9 4 1.7
Non-productive.............................. 32 8.7 24 7.0 26 9.8 4 2.4
-- ---- -- ---- -- ---- -- ----
Total............................... 74 18.0 51 13.4 62 24.0 21 8.9
== ==== == ==== == ==== == ====
Development Wells:
Natural gas................................. -- -- 10 1.3 4 1.6 7 4.4
Oil......................................... 4 0.5 5 1.0 6 1.8 2 0.6
Non-productive.............................. -- -- 1 0.2 1 0.6 3 2.1
-- ---- -- ---- -- ---- -- ----
Total............................... 4 0.5 16 2.5 11 4.0 12 7.0
== ==== == ==== == ==== == ====
</TABLE>

The Company does not own any drilling rigs, and the majority of its
drilling activities have been conducted by industry participant operators or
independent contractors under standard drilling contracts. Consistent with its
business strategy, the Company has chosen to retain operations of an increasing
number of the wells it drills and expects to continue to operate more wells in
1998.

PRODUCTIVE WELLS AND ACREAGE

Productive Wells

The following table sets forth the Company's ownership interest as of
December 31, 1997 in productive natural gas and oil wells in the areas
indicated.

<TABLE>
<CAPTION>
NATURAL GAS OIL TOTAL
------------ ------------ ------------
PROVINCE GROSS NET GROSS NET GROSS NET
- -------- ----- ---- ----- ---- ----- ----
<S> <C> <C> <C> <C> <C> <C>
Anadarko Basin.................................... 43 13.0 5 1.2 48 14.2
Gulf Coast........................................ 1 0.0 5 0.1 6 0.1
West Texas........................................ 2 0.7 91 24.5 93 25.2
Other............................................. -- -- 1 0.5 1 0.5
-- ---- --- ---- --- ----
Total................................... 46 13.7 102 26.3 148 40.0
== ==== === ==== === ====
</TABLE>

Productive wells consist of producing wells and wells capable of
production, including wells waiting on pipeline connection. Wells that are
completed in more than one producing horizon are counted as one well. Of the
gross wells reported above, none had multiple completions.

Acreage

Undeveloped acreage includes leased acres on which wells have not been
drilled or completed to a point that would permit the production of commercial
quantities of natural gas and oil, regardless of whether or not such acreage
contains proved reserves. A gross acre is an acre in which an interest is owned.
A net acre is deemed to exist when the sum of fractional ownership interests in
gross acres equals one. The number of net

45
<PAGE> 47

acres is the sum of the fractional interests owned in gross acres expressed as
whole numbers and fractions thereof. The following table sets forth the
approximate developed and undeveloped acreage in which the Company held a
leasehold, mineral or other interest at December 31, 1997:

<TABLE>
<CAPTION>
DEVELOPED UNDEVELOPED TOTAL
-------------- ----------------- -----------------
PROVINCE GROSS NET GROSS NET GROSS NET
- -------- ------ ----- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Anadarko Basin.............................. 16,600 7,716 75,377 32,181 91,977 39,897
Gulf Coast.................................. -- -- 18,588 14,902 18,588 14,902
West Texas.................................. 6,035 1,794 19,957 11,517 25,992 13,311
Other....................................... 160 80 145,295 51,546 145,455 51,626
------ ----- ------- ------- ------- -------
Total............................. 22,795 9,590 259,217 110,146 282,012 119,736
====== ===== ======= ======= ======= =======
</TABLE>

All the leases for the undeveloped acreage summarized in the preceding
table will expire at the end of their respective primary terms unless the
existing leases are renewed, production has been obtained from the acreage
subject to the lease prior to that date, or some other "savings clause" is
implicated. The following table sets forth the minimum remaining terms of leases
for the gross and net undeveloped acreage:

<TABLE>
<CAPTION>
ACRES EXPIRING
-----------------
GROSS NET
------- -------
<S> <C> <C>
Twelve Months Ending:
December 31, 1998......................................... 120,186 46,491
December 31, 1999......................................... 65,254 30,857
December 31, 2000......................................... 51,984 24,263
Thereafter................................................ 21,793 8,535
------- -------
Total............................................. 259,217 110,146
======= =======
</TABLE>

In addition, the Company had lease options as of December 31, 1997 to
acquire an additional 254,699 acres, substantially all of which expire within
one year.

VOLUMES, PRICES AND PRODUCTION COSTS

The following table sets forth the production volumes, average prices
received and average production costs associated with the Company's sale of
natural gas and oil for the periods indicated.

<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
------------------------ -----------------
1995 1996 1997 1997 1998
------ ------ ------ ------- -------
<S> <C> <C> <C> <C> <C>
Production:
Natural gas (MMcf).............................. 272 698 1,382 457 1,947
Oil (MBbls)..................................... 177 227 291 127 232
Natural gas equivalent (MMcfe).................. 1,332 2,060 3,126 1,222 3,338
Average sales price(1):
Natural gas (per Mcf)........................... $ 1.62 $ 2.30 $ 2.56 $ 2.62 $ 2.10
Oil (per Bbl)................................... 17.76 19.98 19.40 20.87 13.15
Average production expenses and taxes (per
Mcfe)........................................... $ .69 $ .53 $ .55 $ .56 $ .42
</TABLE>

- ---------------

(1) Reflects the results of hedging activities in the periods presented.

46
<PAGE> 48

COSTS INCURRED

The costs incurred in natural gas and oil acquisition, exploration and
development activities are as follows (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1995 1996 1997
------- ------- -------
<S> <C> <C> <C>
Cost incurred for the year:
Exploration........................................... $ 6,893 $10,527 $29,421
Property acquisition.................................. 1,885 6,195 26,922
Development........................................... 713 1,328 2,953
Proceeds from participants............................ (1,296) (4,111) (319)
------- ------- -------
$ 8,195 $13,939 $58,977
======= ======= =======
</TABLE>

Costs incurred represent amounts incurred by the Company for exploration,
property acquisition and development activities. Periodically, the Company will
receive reimbursement of certain costs from participants in its projects
subsequent to project initiation in return for an interest in the project. These
payments are described as "Proceeds from participants" in the table above.

EXPLORATION STAFF

Over the last seven years the Company has assembled an exploration staff
that includes nine geophysicists, ten geologists, four petroleum engineers, five
computer applications specialists, five geophysical/geological/engineering
technicians, five landmen and five lease and division order analysts. Brigham's
nine geophysicists have different but complementary backgrounds, and their
diversity of experience in varied geological and geophysical settings, combined
with various technical specializations (from hardware and systems to software
and seismic data processing), provide the Company with valuable technical
intellectual resources. The Company's team of explorationists has approximately
300 years of exploration experience and approximately 85 years of 3-D CAEX
workstation experience, most of which was acquired at Brigham and various major
and large independent oil companies. Occasionally, the Company complements and
leverages its exploration staff by seeking out alliances or retainer
relationships with geologists having extensive experience in a particular area
of interest.

3-D SEISMIC TECHNOLOGY

The Company's strategy is to use 3-D seismic and other advanced
technologies, including CAEX, to systematically explore and develop domestic
onshore natural gas and oil provinces. In general, 3-D seismic is the process of
acquiring seismic data along multiple lines and grids. The primary advantage of
3-D seismic over 2-D seismic is that it provides information with respect to
multiple horizontal and vertical points within a geologic formation instead of
information on a single vertical line or multiple vertical lines within the
formation. Acquiring larger amounts of data relating to a geologic formation
allows a user to better correlate the data and, in some cases, obtain a greater
understanding and image of the formation. Although it is impossible to predict
with certainty the specific configuration or composition of any underground
geologic formation, the use of 3-D seismic provides clearer and more accurate
projected images of complex geologic formations, which can assist a user in
evaluating whether to drill for natural gas and oil reserves. If a decision to
drill is made, 3-D seismic can also help in determining the optimal location to
drill.

CAEX is the process of accumulating and analyzing the various seismic,
production and other data obtained relating to a geographic area. In general,
CAEX involves accumulating various 2-D and 3-D seismic with respect to a
potential drilling location, correlating that data with historical well control
and production data from similar properties and analyzing the available data
through computer programs and modeling techniques to project the likely geologic
composition of a potential drilling location and potential locations of
undiscovered natural gas and oil reserves. This process relies on a comparison
of data with respect to the potential drilling location and historical data with
respect to the density and sonic characteristics of different

47
<PAGE> 49

types of rock formations, hydrocarbons and other subsurface minerals, resulting
in a projected three dimensional image of the subsurface. This modeling is
performed through the use of advanced interactive computer workstations and
various combinations of available computer programs that have been developed
solely for this application.

Brigham has invested extensively in the advanced computer hardware and
software necessary for 3-D seismic exploration. The Company has both Landmark
and Geoquest CAEX workstations. This workstation flexibility provides the
Company the opportunity to interpret a project on the particular CAEX
workstation that it believes is best suited for defining those particular
geologic objectives. Brigham's explorationists can access a diverse software
tool kit including SeisWorks, StratWorks, SeisCube, OpenVision, ZAP, Zmap+,
ARIES, SynTool, Poststack, Continuity Cube, TDQ, AutoPix, MapView, GeoViz,
Voxels, SynView, CSA (Computed Seismic Attributes), Surface Slice,
Hampson -- Russell AVO Analysis and Modeling and ZEH Graphics CGMage Builder
(graphics montage tool).

The Company believes that its use of 3-D seismic technology provides it
with a number of benefits in the exploration, delineation and development
process that are not generally available to those who only use 2-D seismic and
conventional processing methods. In particular, the Company believes that it
obtains clearer and more accurate projected images of underground formations
through computer modeling, and is therefore better able to identify potential
locations of hydrocarbon accumulations based on the characteristics of the
formations and analogies made with nearby fields and formations where
hydrocarbons have been found. This enhanced data has been used to assist the
Company in eliminating potential drilling locations that might otherwise have
been drilled had the Company relied solely on 2-D seismic. This data has also
been used to assist the Company in attempting to identify the most desirable
location for the wellbore to increase the prospects of a successful exploratory
or development well and production from the reservoir.

INDUSTRY ALLIANCES

Veritas Anadarko Basin Acquisition Alliances. Pursuant to certain alliances
with Veritas DGC Land Ltd.("Veritas"), Brigham had acquired approximately 850
square miles of 3-D seismic in the Anadarko Basin through December 31, 1997 and
had agreed to acquire from 775 to 875 additional square miles of data to be
divided among numerous projects in that province. In exchange for the Company's
commitment to Veritas, the Company and its assignees only pay a portion of the
3-D seismic acquisition costs as the data is acquired. As the Company leases
acreage or drills wells, it pays Veritas the balance of the costs in the form of
leasing and drilling fees. In addition, in the event that the outstanding
balance of deferred seismic acquisition costs exceeds certain threshold amounts,
the Company must pre-pay part of the leasing and drilling fees to cause the
outstanding balance to fall below the current threshold amount. Under these
arrangements, Veritas has agreed to make a designated 3-D seismic crew available
to the Company on a continuous basis and, as long as the Company has a project
area ready for surveying and field seismic acquisition, to send the crew from
one project area to the next without interruption. If the Company does not have
a project area designated upon completion of one project, and Veritas has not
been able to secure an intervening project from a third party, the Company is
obligated to pay Veritas a stand-by fee. The Company has never incurred a
stand-by fee to Veritas. These arrangements afford the Company access to 3-D
seismic acquisition in a compressed cycle time, providing the Company with
operational efficiencies.

In addition, Veritas Geoservices, Ltd. provides three employees that
maintain and operate four seismic data processing workstations in Brigham's
offices. Supervised by Brigham's geophysicists, the vendor's employees process
most of the Company's 3-D seismic. The associated improvement in communication
and integration, from field data acquisition to processing, reduces project
cycle times, and therefore costs, while improving the quality of the data for
Brigham's subsequent interpretation.

Anadarko Basin Alliance I. The Company has entered into alliances with
Vintage Petroleum, Inc. ("Vintage") and Stephens Production Company ("Stephens")
providing for their participation with Brigham in all projects that the Company
conducts within a 625 square mile 3-D seismic program that was completed in 1997
with Veritas in the Anadarko Basin. Vintage and Stephens bear a disproportionate
share of all pre-seismic and certain seismic costs on all projects in the
program. Net of the interests of Vintage and Stephens,

48
<PAGE> 50

the Company holds a 37.5% interest in the program. The Company believes that
this leveraging of its costs is possible because of the expertise and knowledge
that the Company has developed, enabling the Company to build its revenue and
cash flow base at a time when it has been capital constrained.

Anadarko Basin Alliance II. Brigham is currently acquiring 3-D seismic
under a second alliance with Veritas in the Anadarko Basin. From August through
December 1997, the Company acquired approximately 225 square miles of 3-D
seismic under this alliance and expects to acquire an additional 825 square
miles in various Brigham-generated projects by mid-1999. The Company currently
has a 100% working interest in the projects under its second seismic acquisition
alliance with Veritas, and it plans to retain at least a 75% working interest in
these projects following a potential sale of a portion of its interest to an
industry participant.

Carry-to-Casing Point Programs. In order to participate in wells drilled by
the Company between April 1, 1996 and March 31, 1997, each of Gasco Limited
Partnership ("Gasco") and Middle Bay Oil Company, Inc. ("Middle Bay") agreed to
fund 25% of the Company's drilling costs and 12.5% of its completion costs for
each well drilled. In return, the Company assigned to each an undivided 12.5% of
the Company's interest in the leasehold allocated to the proration unit for each
completed well. As a result, the Company paid for 50% of costs attributable to
its working interest to casing point, and 75% of its completion costs, for 75%
of its original working interest for each well funded during the term of the
agreement.

The Company renewed its agreement with Gasco in early 1997. In order to
participate in wells drilled by the Company between April 1, 1997 and March 31,
1998, Gasco agreed to fund 18% of the Company's drilling costs and 9% of its
completion cost for each well. In return, the Company has agreed to assign to
Gasco an undivided 9% of the Company's interest in the leasehold allocated to
the production unit for each completed well. As a result, the Company pays for
82% of costs attributable to its working interest to casing point, and 91% of
its completion costs, for 91% of its original working interest for each well
funded during the term of the agreement.

The Company renewed its agreement with Gasco in early 1998. In order to
participate in wells drilled by the Company between April 1, 1998 and March 31,
1999, Gasco agreed to fund 8% of the Company's drilling costs and 4% of its
completion cost for each well. In return, the Company has agreed to assign to
Gasco an undivided 4% of the Company's interest in the leasehold allocated to
the production unit for each completed well. As a result, the Company pays for
92% of costs attributable to its working interest to casing point, and 96% of
its completion costs, for 96% of its original working interest for each well
funded during the term of the agreement.

The Company believes that its agreements with Middle Bay and Gasco have
been beneficial because they have allowed the Company to leverage its working
interests in its properties by requiring it to bear a disproportionately smaller
share of drilling costs. Depending on future conditions, the Company may seek to
enter into similar types of arrangements with industry or financial
participants. To the extent that the Company does seek to enter into such future
arrangements, the terms of these arrangements, including the percentages of
costs borne and interests assigned, may vary from those in the Company's past
and present arrangements.

NATURAL GAS AND OIL MARKETING AND MAJOR CUSTOMERS

Most of the Company's natural gas and oil production is sold through
various marketing arrangements under price sensitive or spot market contracts.
The revenues generated by the Company's operations are highly dependent upon the
prices of and demand for natural gas and oil. The price received by the Company
for its natural gas and oil production depends on numerous factors beyond the
Company's control, including seasonality, competition, the condition of the
United States economy, foreign imports, political conditions in other
oil-producing and natural gas-producing countries, the actions of the
Organization of Petroleum Exporting Countries, and domestic government
regulation, legislation and policies. Decreases in the prices of natural gas and
oil could have an adverse effect on the carrying value of the Company's proved
reserves and the Company's revenues, profitability and cash flow. Although the
Company is not currently experiencing any significant involuntary curtailment of
its natural gas or oil production, market, economic and regulatory factors may
in the future materially affect the Company's ability to sell its natural gas or
oil production. See

49
<PAGE> 51

"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Risk Factors -- Volatility of Natural Gas and Oil Prices" and
"Risk Factors -- Marketability of Production." For the year ended December 31,
1997, sales to Cobra Oil & Gas Corporation and Pride Pipeline Company were
approximately 14% and 12%, respectively, of the Company's natural gas and oil
revenues. Due to the availability of other markets and pipeline connections, the
Company does not believe that the loss of any single natural gas or oil customer
would have a material adverse effect on the Company's results of operations.

COMPETITION

The oil and gas industry is highly competitive in all of its phases. The
Company encounters competition from other oil and gas companies in all areas of
its operations, including the acquisition of seismic and leasing options and
natural gas and oil leases on properties. The Company's competitors include
major integrated natural gas and oil companies and numerous independent natural
gas and oil companies, individuals and drilling and income programs. Many of its
competitors are large, well established companies with substantially larger
operating staffs and greater capital resources than the Company's. Such
companies may be able to pay more for seismic and lease options on natural gas
and oil properties and exploratory prospects and to define, evaluate, bid for
and purchase a greater number of properties and prospects than the Company's
financial or human resources permit. The Company's ability to acquire additional
properties and to discover reserves in the future will be dependent upon its
ability to evaluate and select suitable properties and to consummate
transactions in a highly competitive environment. See "Risk
Factors -- Competition" and "Risk Factors -- Substantial Capital Requirements."

OPERATING HAZARDS AND UNINSURED RISKS

Drilling activities are subject to many risks, including the risk that no
commercially productive reservoirs will be encountered. There can be no
assurance that new wells drilled by the Company will be productive or that the
Company will recover all or any portion of its investment. Drilling for natural
gas and oil may involve unprofitable efforts, not only from dry wells, but also
from wells that are productive but do not produce sufficient net revenues to
return a profit after drilling, operating and other costs. The cost of drilling,
completing and operating wells is often uncertain. The Company's drilling
operations may be curtailed, delayed or canceled as a result of numerous
factors, many of which are beyond the Company's control, including title
problems, weather conditions, compliance with governmental requirements and
shortages or delays in the delivery of equipment and services. The Company's
future drilling activities may not be successful and, if unsuccessful, such
failure may have a material adverse effect on the Company's business, financial
condition or results of operations. See "Risk Factors -- Dependence on
Exploratory Drilling Activities." In addition, use of 3-D seismic technology
requires greater pre-drilling expenditures than traditional drilling strategies.
Although the Company believes that its use of 3-D seismic technology will
increase the probability of success, some unsuccessful wells are likely, and
there can be no assurance unsuccessful drilling efforts will not have a material
adverse effect on the Company's business, financial condition or results of
operations.

The Company's operations are subject to hazards and risks inherent in
drilling for and producing and transporting natural gas and oil, such as fires,
natural disasters, explosions, encountering formations with abnormal pressures,
blowouts, cratering, pipeline ruptures and spills, any of which can result in
the loss of hydrocarbons, environmental pollution, personal injury claims and
other damage to properties of the Company and others. The Company maintains
insurance against some but not all of the risks described above. In particular,
the insurance maintained by the Company does not cover claims relating to
failure of title to natural gas and oil leases, trespass during 3-D survey
acquisition or surface change attributable to seismic operations, business
interruption or loss of revenues due to well failure. In certain circumstances
in which insurance is available the Company may not purchase it. The occurrence
of an event that is not covered, or not fully covered, by insurance could have a
material adverse effect on the Company's business, financial condition and
results of operations.

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<PAGE> 52

EMPLOYEES

On August 7, 1998, the Company had 66 full-time employees. None is
represented by any labor union. The Company believes its relations with its
employees are good. The Company also relies on several regional consulting
service companies to provide field landmen to support the Company on a
project-by-project basis. One of these companies, Brigham Land Management, is
owned by Vincent M. Brigham, who is the brother of Ben M. Brigham, the Company's
Chief Executive Officer, President and Chairman of the Board. See "Certain
Transactions."

FACILITIES

The Company's principal executive offices are located in Austin, Texas,
where it leases approximately 28,000 square feet of office space at 6300 Bridge
Point Parkway, Building 2, Suite 500, Austin, Texas 78730. In the fall of 1998,
the Company expects to lease an additional 5,000 square feet of office space
adjacent to its principal executive offices. The Company also leases a 4,100
square foot office at 450 Gears Road, Suite 240, Houston, Texas 77067.

TITLE TO PROPERTIES

The Company believes it has satisfactory title, in all material respects,
to substantially all of its producing properties in accordance with standards
generally accepted in the oil and gas industry. The Company's properties are
subject to royalty interests, standard liens incident to operating agreements,
liens for current taxes and other inchoate burdens which the Company believes do
not materially interfere with the use of or affect the value of such properties.
The Company's Credit Facility is secured by a first lien against substantially
all of the Company's natural gas and oil properties and, pursuant to the terms
of the Offering, the Notes will be secured by a second lien against all
collateral pledged by the Company as security under its Credit Facility. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

GOVERNMENTAL REGULATION

The Company's natural gas and oil exploration, production and marketing
activities are subject to extensive laws, rules and regulations promulgated by
federal and state legislatures and agencies. Failure to comply with such laws,
rules and regulations can result in substantial penalties. The legislative and
regulatory burden on the oil and gas industry increases the Company's cost of
doing business and affects its profitability. Although the Company believes it
is in substantial compliance with all applicable laws and regulations, because
those laws and regulations are frequently amended, interpreted and
reinterpreted, the Company is unable to predict the future cost or impact of
complying with such laws and regulations.

The State of Texas and many other states require permits for drilling
operations, drilling bonds and reports concerning operations and impose other
requirements relating to the exploration and production of natural gas and oil.
These states also have statutes or regulations addressing conservation matters,
including provisions for the unitization or pooling of natural gas and oil
properties, the establishment of maximum rates of production from wells and the
regulation of spacing, plugging and abandonment of such wells.

The Federal Energy Regulatory Commission ("FERC") regulates interstate
natural gas transportation rates and service conditions, which affect the
marketing of gas produced by the Company, as well as the revenues received by
the Company for sales of such production. Since the mid-1980s, FERC has issued a
series of orders, culminating in Order Nos. 636, 636-A 636-B and 636-C ("Order
636"), that have significantly altered the marketing and transportation of gas.
Order 636 mandates a fundamental restructuring of interstate pipeline sales and
transportation service, including the unbundling by interstate pipelines of the
sale, transportation, storage and other components of the city-gate sales
services such pipelines previously performed and the provision of open-access
transportation on a nondiscriminatory basis. One of FERC's purposes in issuing
the order was to increase competition within all phases of the natural gas
industry. Numerous parties have filed petitions for review of Order 636, as well
as orders in individual pipeline restructuring proceedings. In July 1996, Order
636 was generally upheld on appeal, and the portions remanded

51
<PAGE> 53

for further action do not appear to materially affect the Company. Because Order
636 may be modified as a result of the appeals, it is difficult to predict the
ultimate impact of the orders on the Company and its gas marketing efforts.
Generally, Order 636 has eliminated or substantially reduced the interstate
pipelines' traditional role as wholesalers of natural gas and has substantially
increased competition and volatility in natural gas markets.

The FERC frequently reexamines its transportation-related policies,
including the terms and conditions under which interstate pipeline shippers may
release interstate pipeline capacity for resale in the secondary market, the
appropriateness of the use of negotiated and market-based rates, and the
implementation of additional standardized terms and conditions for interstate
gas transmission. In April 1998, the FERC issued a new rule to further
standardize pipeline transportation tariffs that could adversely affect the
reliability of scheduled interruptible transportation service on some pipelines.
While any resulting FERC action would affect the Company only indirectly, any
new rules and policy statements may have the effect of enhancing competition in
natural gas markets or affecting the cost or availability of pipeline
transportation.

The price the Company receives from the sale of natural gas liquids and oil
is affected by the cost of transporting products to markets. Effective January
1, 1995, FERC implemented regulations establishing an indexing system for
transportation rates for oil pipelines, which, generally, would index such rates
to inflation, subject to certain conditions and limitations. The Company is not
able to predict with certainty the effect, if any, of these regulations on its
operations. However, the regulations may increase transportation costs or reduce
well head prices for natural gas liquids and oil. See "Risk
Factors -- Compliance with Government Regulations."

ENVIRONMENTAL MATTERS

The Company's operations and properties are, like the oil and gas industry
in general, subject to extensive and changing federal, state and local laws and
regulations relating to environmental protection, including the generation,
storage, handling, emission, transportation and discharge of materials into the
environment, and relating to safety and health. The recent trend in
environmental legislation and regulation generally is toward stricter standards,
and this trend will likely continue. These laws and regulations may require the
acquisition of a permit or other authorization before construction or drilling
commences and for certain other activities; limit or prohibit seismic
acquisition, construction, drilling and other activities on certain lands lying
within wilderness and other protected areas; and impose substantial liabilities
for pollution resulting from the Company's operations. The permits required for
various of the Company's operations are subject to revocation, modification and
renewal by issuing authorities. Governmental authorities have the power to
enforce compliance with their regulations, and violations are subject to fines
or injunction, or both. In the opinion of management, the Company is in
substantial compliance with current applicable environmental laws and
regulations, and the Company has no material commitments for capital
expenditures to comply with existing environmental requirements. Nevertheless,
changes in existing environmental laws and regulations or in interpretations
thereof could have a significant impact on the Company, as well as the oil and
gas industry in general. The Comprehensive Environmental Response, Compensation
and Liability Act and comparable state statutes impose strict and arguably joint
and several liability on owners and operators of certain sites and on persons
who disposed of or arranged for the disposal of "hazardous substances" found at
such sites. It is not uncommon for the neighboring land owners and other third
parties to file claims for personal injury and property damage allegedly caused
by the hazardous substances released into the environment. The Resource
Conservation and Recovery Act and comparable state statutes govern the disposal
of "solid waste" and "hazardous waste" and authorize imposition of substantial
fines and penalties for noncompliance. Although CERCLA currently excludes
petroleum from its definition of "hazardous substance," state laws affecting the
Company's operations impose clean-up liability relating to petroleum and
petroleum related products. In addition, although RCRA classifies certain oil
field wastes as "non-hazardous," such exploration and production wastes could be
reclassified as hazardous wastes thereby making such wastes subject to more
stringent handling and disposal requirements.

Federal regulations require certain owners or operators of facilities that
store or otherwise handle oil, such as the Company, to prepare and implement
spill prevention, control countermeasure and response plans

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<PAGE> 54

relating to the possible discharge of oil into surface waters. The Oil Pollution
Act of 1990 contains numerous requirements relating to the prevention of and
response to oil spills into waters of the United States. For onshore and
offshore facilities that may affect waters of the United States, the OPA
requires an operator to demonstrate financial responsibility. Regulations are
currently being developed under federal and state laws concerning oil pollution
prevention and other matters that may impose additional regulatory burdens on
the Company. In addition, the Clean Water Act and analogous state laws require
permits to be obtained to authorize discharge into surface waters or to
construct facilities in wetland areas. With respect to certain of its
operations, the Company is required to maintain such permits or meet general
permit requirements. The EPA recently adopted regulations concerning discharges
of storm water runoff. This program requires covered facilities to obtain
individual permits, participate in a group or seek coverage under an EPA general
permit. The Company believes that it will be able to obtain, or be included
under, such permits, where necessary, and to make minor modifications to
existing facilities and operations that would not have a material effect on the
Company.

The Company has acquired leasehold interests in numerous properties that
for many years have produced natural gas and oil. Although the previous owners
of these interests have used operating and disposal practices that were standard
in the industry at the time, hydrocarbons or other wastes may have been disposed
of or released on or under the properties. In addition, some of the Company's
properties are operated by third parties over whom the Company has no control.
Notwithstanding the Company's lack of control over properties operated by
others, the failure of the operator to comply with applicable environmental
regulations may, in certain circumstances, adversely impact the Company. See
"Risk Factors -- Compliance with Environmental Regulations" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Other Matters."

LEGAL PROCEEDINGS

The Company is not a party to any material legal proceedings.

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information regarding the executive
officers and directors of the Company:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Ben M. Brigham........................ 38 President, Chief Executive Officer and
Chairman of the Board
Anne L. Brigham....................... 36 Executive Vice President and Director
Jon L. Glass.......................... 42 Vice President -- Exploration and
Director
Craig M. Fleming...................... 41 Chief Financial Officer
David T. Brigham...................... 37 Vice President -- Land and
Administration, Corporate Secretary
A. Lance Langford..................... 36 Vice President -- Operations
Karen E. Lynch........................ 37 Vice President -- Legal and General
Counsel
Harold D. Carter...................... 59 Director
Alexis M. Cranberg.................... 42 Director
Gary J. Milavec....................... 36 Director
Stephen P. Reynolds................... 46 Director
</TABLE>

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<PAGE> 55

Set forth below is a description of the backgrounds of the executive
officers and directors of the Company.

Ben M. "Bud" Brigham has served as Chief Executive Officer, President and
Chairman of the Board of the Company since founding the Company in 1990. From
1984 to 1990, Mr. Brigham served as an exploration geophysicist with Rosewood
Resources, an independent oil and gas exploration and production company. Mr.
Brigham began his career in Houston as a seismic data processing geophysicist
for Western Geophysical, a provider of 3-D seismic services, after earning his
B.S. in Geophysics from the University of Texas.

Anne L. Brigham has served as Executive Vice President and a Director of
the Company since its inception in 1990 and as Corporate Secretary from 1990 to
February 1998. Before joining the Company full-time in 1991, Ms. Brigham
practiced law in the oil and gas and real estate sections of Thompson & Knight,
P.C. Ms. Brigham worked as a geologist for Hunt Petroleum Corporation, an
independent oil and gas exploration and production company, for over two years
before attending law school. Ms. Brigham holds a B.S. in Geology from the
University of Texas and a J.D. from Southern Methodist University.

Jon L. Glass joined the Company in 1992 and has served as Vice
President -- Exploration since 1994 and a Director of the Company since 1995.
From 1984 to 1992, Mr. Glass served in various capacities with Santa Fe
Minerals, an oil and gas exploration company, in a variety of staff and
managerial positions mainly focused on Santa Fe Minerals' exploration activities
in the midcontinent and Gulf of Mexico (onshore and offshore). During this time
Mr. Glass also assisted in the development of exploration and acquisition
opportunities for Santa Fe Minerals in Canada and South America. Mr. Glass'
early geological experience includes three years with Mid-America Pipeline
Company and two years with Texaco USA, serving mainly as a midcontinent
exploration geologist. Mr. Glass holds a B.S. and an M.S. in Geology from
Oklahoma State University and an M.B.A. from the University of Tulsa.

Craig M. Fleming has served as the Chief Financial Officer of the Company
since 1993. From 1990 to 1993, Mr. Fleming served as Controller of Odyssey
Petroleum Co., Ltd., an independent energy company. From 1988 to 1990, Mr.
Fleming served as Controller and Treasurer for Harken Exploration Company, an
independent energy company. Mr. Fleming began his career with Arthur Anderson &
Co. in the Oil and Gas Audit Division and is a Certified Public Accountant. Mr.
Fleming holds a B.B.A. in Accounting from Texas A&M University.

David T. Brigham joined the Company in 1992 and has served as Vice
President -- Land and Administration and Corporate Secretary of the Company
since February 1998. Mr. Brigham served as Vice President -- Legal of the
Company from 1994 until February 1998. From 1987 to 1992, Mr. Brigham was an oil
and gas attorney with Worsham, Forsythe, Sampels & Wooldridge. Before attending
law school, Mr. Brigham was a landman for Wagner & Brown Oil and Gas Producers,
an independent oil and gas exploration and production company. Mr. Brigham holds
a B.B.A. in Petroleum Land Management from the University of Texas and a J.D.
from Texas Tech School of Law.

A. Lance Langford joined the Company as Manager of Operations in 1995 and
has served as Vice President -- Operations since January 1997. From 1987 to
1995, Mr. Langford served in various engineering capacities with Meridian Oil
Inc., handling a variety of reservoir, production and drilling responsibilities.
Mr. Langford holds a B.S. in Petroleum Engineering from Texas Tech University.

Karen E. Lynch joined the Company in October 1997 as General Counsel and
has served as Vice President -- Legal and General Counsel of the Company since
February 1998. Prior to joining the Company, Ms. Lynch was a shareholder in the
Dallas-based law firm of Thompson & Knight, P.C., where she practiced in the
energy area since joining the firm in 1987. Ms. Lynch holds a B.B.A. in
Petroleum Land Management from the University of Texas and a J.D. from the
University of Oklahoma.

Harold D. Carter has served as a Director of and consultant to the Company
since 1992. Mr. Carter has more than 30 years experience in the oil and gas
industry and has been an independent consultant since 1990. Prior to consulting,
Mr. Carter served as Executive Vice President of Pacific Enterprises Oil Company
(USA). Before that, Mr. Carter was associated for 20 years with Sabine
Corporation, ultimately serving as President and Chief Operating Officer from
1986 to 1989. Mr. Carter consults for Endowment Advisors, Inc.

54
<PAGE> 56

with respect to its EEP Partnerships and Associated Energy Managers, Inc. with
respect to its Energy Income Fund, L.P. and is a director of Abraxas Petroleum
Corporation. Mr. Carter has a B.B.A. in Petroleum Land Management from the
University of Texas and has completed the Program for Management Development at
the Harvard University Business School.

Alexis M. Cranberg has served as a Director of the Company since 1992. Mr.
Cranberg is President of Aspect Management Corporation, an oil and gas
exploration and investment company. In addition, Mr. Cranberg is a Director of
Esenjay Exploration, Inc. and Westport Oil and Gas, Inc. and a past Director of
General Atlantic Resources, Inc. and United Meridian Corporation. He holds a
B.S. in Petroleum Engineering from the University of Texas and an M.B.A. from
Stanford University.

Gary J. Milavec has served as a Director of the Company since 1995. Mr.
Milavec is a Managing Director of RIMCO, an investment management firm
specializing in the energy industry. Prior to joining RIMCO in 1990, Mr. Milavec
spent two years in the corporate finance department of Rauscher Pierce Refsnes,
Inc. and three years as a geological engineer with Shell Western E&P, Inc. He
also serves as a director of Universal Seismic Associates, Inc. and Texoil, Inc.
Mr. Milavec holds a B.A. in Geology from the University of Rochester, an M.S. in
Geology from the University of Oklahoma and an M.B.A. from the University of
Houston.

Stephen P. Reynolds has served as a Director of the Company since 1996. Mr.
Reynolds is a managing member of General Atlantic Partners, LLC ("GAP LLC") and
has been with GAP LLC or its predecessor entities since April 1980. Mr. Reynolds
is also President of GAP III Investors, Inc., the general partner of General
Atlantic Partners III, L.P., and is a general partner and limited partner of
GAP-Brigham Partners, L.P. Mr. Reynolds is on the board of directors of Solo
Serve Corporation, a publicly traded off-price soft goods retail company, and
Computer Learning Centers, Inc., a publicly traded company providing technology
related training. Mr. Reynolds is a nominee for Director of SS&C Technologies,
Inc. Mr. Reynolds holds a B.A. in Economics from Amherst College and a Masters
degree in Accounting from New York University.

All directors are elected to serve until the next annual meeting of
stockholders and until their successors are elected and qualified. Executive
officers are generally elected annually by the Board of Directors to serve,
subject to the discretion of the Board of Directors, until their successors are
elected or appointed.

There is no family relationship between any of the directors or between any
director and any executive officer of the Company except that Ben M. Brigham and
Anne L. Brigham are married and David T. Brigham is the brother of Ben M.
Brigham. For information regarding certain business relationships between the
Company and certain of its directors, see "Certain Transactions."

COMMITTEES OF THE BOARD

The Company's Board of Directors formed standing audit and compensation
committees on February 26, 1997, which are composed of Harold D. Carter, Alexis
M. Cranberg and Gary J. Milavec. The Audit Committee's primary responsibilities
are to (i) recommend the Company's independent auditors to the Board of
Directors, (ii) review with the Company's auditors the plan and scope of the
auditor's annual audit, the results thereof and the auditors' fees, (iii) review
the Company's financial statements and (iv) take such other action as it deems
appropriate as to the accuracy and completeness of financial records of the
Company and financial information gathering,reporting policies and procedures of
the Company. The Compensation Committee exercises the power of the Board of
Directors in connection with all matters relating to compensation of executive
officers, employee benefit plans and the administration of the Company's stock
option programs.

DIRECTOR COMPENSATION

Fees and Expenses; Other Arrangements. Directors who are also employees of
the Company are not separately compensated for serving on the Board of
Directors. Directors who are not employees of the Company receive $5,000 per
year and $500 per meeting for their services as directors. In addition, the

55
<PAGE> 57

Company reimburses Directors for the expenses incurred in connection with
attending meetings of the Board of Directors and its committees.

Pursuant to a consulting agreement with Harold D. Carter that expired May
1, 1997, the Company paid Mr. Carter $6,000 per month through June 1996 and then
$7,200 per month for the remainder of the term of the agreement to spend
approximately 50% of his working time performing such consulting and advisory
services regarding the operations of the Company as the Company requested,
including service on the management committee of the Company's predecessor
partnership. Pursuant to a subsequent consulting agreement that expires December
31, 1998, Mr. Carter continues to serve as a consultant to the Company and is
currently being compensated $7,200 per month for such services and is reimbursed
by the Company for his out-of-pocket expenses. In addition, pursuant to the
terms of Mr. Carter's consulting agreement, the Company pays Associated Energy
Managers, Inc. $1,000 per month to offset a portion of Mr. Carter's office
overhead expenses and to provide the Company with limited use of part of Mr.
Carter's office space for purposes of conducting business while employees of the
Company are in Dallas, Texas.

Alexis M. Cranberg and Stephen P. Reynolds served on the management
committee of the Company's predecessor partnership pursuant to the terms of an
agreement with General Atlantic, and Gary J. Milavec served on the committee
pursuant to the terms of an agreement with RIMCO. The Company is not obligated
to nominate any of the three to serve as a Director of the Company in the
future.

Director Stock Options. The Company's stockholders have approved the 1997
Director Stock Option Plan, pursuant to which each newly elected nonemployee
director shall be granted an option to purchase 1,000 shares of Common Stock and
each nonemployee director will receive an option to purchase 500 shares of
Common Stock on December 31 of each year. The options under the plan are granted
at fair market value on the grant date and become exercisable, subject to
certain conditions, in five equal annual installments on the first five
anniversaries of the grant date. The options terminate ten years from the grant
date, unless terminated sooner. Twenty-five thousand shares of Common Stock have
been authorized and reserved for issuance pursuant to the plan. Options to
purchase 2,000 shares of Common Stock were granted on December 31, 1997 to the
Company's four nonemployee directors pursuant to the 1997 Director Stock Option
Plan.

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

In accordance with Section 102(b)(7) of the Delaware General Corporation
Law ("DGCL"), the Company's Certificate of Incorporation includes a provision
that, to the fullest extent permitted by law, eliminates the personal liability
of members of its Board of Directors to the Company or its stockholders for
monetary damages for breach of fiduciary duty as a director. Such provision does
not eliminate or limit the liability of a director (1) for any breach of a
director's duty of loyalty to the Company or its stockholders, (2) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of a law, (3) for paying an unlawful dividend or approving an illegal
stock repurchase (as provided in Section 174 of the DGCL) or (4) for any
transaction from which the director derived an improper personal benefit.

The Company has entered into indemnity agreements with each of its
executive officers and directors that provide for indemnification in certain
instances against liability and expenses incurred in connection with proceedings
brought by or in the right of the Company or by third parties by reason of a
person serving as an officer or director of the Company.

The Company believes that these provisions and agreements will assist the
Company in attracting and retaining qualified individuals to serve as directors
and officers.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Company's compensation committee during the last ten months of the past
fiscal year consisted of Messrs. Carter, Cranberg and Milavec and all
determinations concerning executive compensation for such period for the
Company's executive officers were made by the compensation committee. The
compensation committee members abstained from participation in compensation
determinations concerning their own

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<PAGE> 58

compensation. None of the executive officers of the Company has served on the
board of directors or on the compensation committee of any other entity, any of
whose officers served on the Board of Directors of the Company.

EXECUTIVE COMPENSATION

Summary of Cash and Certain Compensation. The following table sets forth
certain summary information concerning the compensation paid or awarded to the
Chief Executive Officer of the Company and the only other executive officers of
the Company who earned in excess of $100,000 in 1997 (the "named executive
officers") for the years indicated.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-------------------------
ANNUAL COMPENSATION SHARES
NAME AND ------------------------------ RESTRICTED UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) STOCK AWARDS OPTIONS COMPENSATION($)(2)
------------------ ---- --------- ----------- ------------ ---------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Ben M. Brigham......................... 1997 228,125 30,600 -- -- 5,690
Chief Executive Officer, President
and 1996 144,000 15,000 -- -- 4,817
Chairman of the Board
Jon L. Glass........................... 1997 127,301 43,268 66,964 208,334 354
Vice President -- Exploration 1996 109,782 3,223 -- -- --
Craig M. Fleming....................... 1997 122,272 44,971 44,643 69,445 477
Chief Financial Officer 1996 102,919 8,063 -- -- --
David T. Brigham....................... 1997 108,895 32,712 44,643 69,445 428
Vice President -- Land and 1996 94,874 10,505 -- -- --
Administration, Corporate Secretary
A. Lance Langford...................... 1997 107,469 43,111 -- 52,085 410
Vice President -- Operations 1996 94,090 7,261 -- -- --
</TABLE>

- ---------------

(1) Includes the following moving allowances granted in 1997 to employees in
connection with the Company's relocation of its corporate headquarters from
Dallas, Texas, to Austin, Texas: Ben M. Brigham -- $30,600; Jon L.
Glass -- $12,076; Craig M. Fleming -- $23,654; David T. Brigham -- $17,529;
and A. Lance Langford -- $23,524.

(2) Amounts for Ben M. Brigham represent premiums paid by the Company under life
and disability insurance plans of $1,442 and $4,248, respectively, in 1997,
and $1,404 and $3,413, respectively, in 1996. Amounts for Jon L. Glass,
Craig M. Fleming, David T. Brigham and A. Lance Langford represent premiums
paid by the Company under a disability insurance plan in 1997.

Option Grants. The following table contains information about stock option
grants to the named executive officers in 1997:

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
POTENTIAL REALIZED VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(1)
------------------------------------------------- ---------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED TO OR BASE
OPTIONS EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE 0%($) 5%($) 10%($)
---- ---------- ------------ -------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Ben M. Brigham......... -- -- -- -- -- -- --
Jon L. Glass........... 208,334 32.3 5.00 7/1/04 2,005,215 3,142,280 4,619,530
Craig M. Fleming....... 69,445 10.8 5.00 7/1/04 668,408 1,047,433 1,539,851
David T. Brigham....... 69,445 10.8 5.00 7/1/04 668,408 1,047,433 1,539,851
A. Lance Langford...... 52,085 8.1 5.00 7/1/04 501,318 785,593 1,154,916
</TABLE>

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<PAGE> 59

- ---------------

(1) Amounts represent hypothetical gains that could be achieved for the options
if they are exercised at the end of the option term. Those gains are based
on assumed rates of stock price appreciation of 0%, 5% and 10% compounded
annually from February 27, 1997, the date such options had been granted,
through the expiration date. For the option term ending July 1, 2004, based
on the closing price on The Nasdaq Stock Market(SM) of the Common Stock of
$14.63 on December 31, 1997, a share of the Common Stock would have a value
on July 1, 2004 of approximately $20.08 at an assumed appreciation rate of
5% and approximately $27.17 at an assumed appreciation rate of 10%.

Option Exercises and Year-End Option Values. The following table provides
information about the number of shares issued upon option exercises by the named
executive officers during 1997, and the corresponding value realized by the
named executive officers. The table also provides information about the number
and value of options that were held by the named executive officers at December
31, 1997.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT FY-END(#) OPTIONS AT FY-END($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ben M. Brigham............ -- -- -- -- -- --
Jon L. Glass.............. -- -- -- 208,334 -- 2,005,215
Craig M. Fleming.......... -- -- -- 69,445 -- 668,408
David T. Brigham.......... -- -- -- 69,445 -- 668,408
A. Lance Langford......... -- -- -- 52,085 -- 501,318
</TABLE>

Employment Agreements

The Company employs Ben M. Brigham under an employment agreement (the
"Employment Agreement") as Chief Executive Officer and President of the Company
for a five year term that began in February 1997. The Employment Agreement
contains rollover provisions so that at all times the term of the Employment
Agreement shall be not less than three years. The agreement provides for an
annual salary of $275,000, which the Board of Directors may further increase
from time to time. Mr. Brigham is also entitled to an annual cash bonus, not to
exceed 75% of his then current salary, determined based on criteria established
by the Board of Directors. Under the Employment Agreement, Mr. Brigham is
entitled to participate in any employee benefit programs that the Company
provides to its executive officers. The only employee benefit programs that the
Company offers to its officers and employees are group insurance coverage and
participation in the Company's 401(k) Retirement Plan, the 1997 Incentive Plan
and the Incentive Bonus Plan. If Mr. Brigham terminates his employment for good
reason, which includes a material reduction of Mr. Brigham's position without
cause or his written consent, breach of a material provision of the Employment
Agreement or improper notice of termination, or if the Company terminates Mr.
Brigham without cause, the Company must pay Mr. Brigham a sum equal to the
amount of his annual base salary that he would have received during the
remainder of his employment term plus the average of his annual bonuses received
in the preceding two years times the number of years in the remainder of his
employment term. Mr. Brigham's agreement also contains a three-year non-compete
and confidentiality clause with standard terms.

Each of the other named executive officers of the Company is a party to a
confidentiality and noncompete agreement.

EMPLOYEE BENEFIT PLANS

Employees' Restricted Stock. In February 1997, the Company, in connection
with the Exchange, issued 66,964 shares, 44,643 shares and 44,643 shares of
restricted stock to Jon L. Glass, Craig M. Fleming and David T. Brigham,
respectively, in exchange for restricted limited partnership interests issued to
them in 1994.

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<PAGE> 60

Each agreement relating to the restricted stock contains confidentiality,
noncompete and vesting provisions. The shares awarded Messrs. Brigham and
Fleming vest over a three-year period -- 30% in each of July 1997 and 1998 and
40% in July 1999. Of the shares awarded to Mr. Glass, 45% have already vested,
28.33% vest in July 1998, and 26.67% vest in July 1999.

1997 Incentive Plan. The Board of Directors and the stockholders of the
Company approved the adoption of the Company's 1997 Incentive Plan (the "1997
Incentive Plan") as of February 27, 1997. The Compensation Committee selects
participants in the 1997 Incentive Plan from among those key employees and
others who hold positions of responsibility with the Company and whose
performance may have a significant effect on the success of the Company. An
aggregate of 1,588,169 shares of Common Stock have been authorized and reserved
for issuance pursuant to the 1997 Incentive Plan. In March 1997, options were
granted to purchase a total of 644,097 shares of Common Stock at an exercise
price per share of $5.00. These options vest over six years. Jon L. Glass, Craig
M. Fleming and David T. Brigham were granted options to purchase 208,334 shares,
69,445 shares and 69,445 shares of Common Stock, respectively. With the
exception of options to purchase 138,889 shares of Common Stock granted to Jon
L. Glass, these options vest as follows: 30% on July 1, 1998; 20% on July 1,
1999; 16.66% on July 1, 2000; 16.67% on July 1, 2001; and the balance on July 1,
2002. The balance of Mr. Glass' options (138,889 shares) vest as follows: 30% on
February 1, 1999; 20% on July 1, 1999; 16.66% on July 1, 2000; 16.67% on July 1,
2001; and 16.67% on July 1, 2002. Of the options issued in 1997 pursuant to the
1997 Incentive Plan, options to purchase 17,360 have been forfeited by certain
employees.

In January 1998, options were granted to purchase 307,250 shares of Common
Stock at an exercise price of $12.875 per share. These options vest over six
years in three equal bi-annual installments starting the second year following
the date of grant.

Subject to the provisions of the 1997 Incentive Plan, the Compensation
Committee is authorized to determine the type or types of awards made to each
participant and the terms, conditions and limitations applicable to each award.
In addition, the Compensation Committee has the exclusive power to interpret the
1997 Incentive Plan and to adopt rules and regulations that it may deem
necessary or appropriate, in keeping with the objectives of the 1997 Incentive
Plan.

Pursuant to the 1997 Incentive Plan, participants will be eligible to
receive awards consisting of stock options, stock appreciation rights, stock,
restricted stock, cash or any combination of the foregoing. Stock options may be
either incentive stock options within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended, or nonqualified stock options.

Incentive Bonus Plan. In connection with the Exchange, the Company adopted
the Incentive Bonus Plan (the "Incentive Bonus Plan") previously established by
the Company's predecessor partnership. The Incentive Bonus Plan is designed to
pay cash compensation and bonuses to eligible employees of the Company. Under
the Incentive Bonus Plan, the Company maintains an incentive account for each
calendar year (each an "Incentive Account") and a discretionary bonus account
(the "Discretionary Bonus Account"). Prior to the beginning of each calendar
year, the President of the Company designates the employees of the Company who
are eligible to participate in the Incentive Account being established for such
year, and each such employee's percentage of interest (an "Account Percentage")
in such Incentive Account. Subject to certain adjustments provided under the
Incentive Bonus Plan, each Incentive Account is credited with an amount equal to
one-half of the net revenue received by the Company which is equivalent to a one
percent interest in the Company's net revenue interest in the oil and gas
produced from each Company well drilled or reentered after April 30, 1992, and
the Discretionary Bonus Account is credited with an amount equal to the amount
credited to each Incentive Account. The President has discretion to allocate a
greater interest to the accounts. Within 30 days after each March 31 and
September 30, an employee who has been designated to have an Account Percentage
in the Incentive Account established for a particular year receives cash
compensation equal to his or her Account Percentage in such Incentive Account
multiplied by the amount credited to that Incentive Account for the six-month
period then ended. In addition, the President of the Company has the discretion
to award cash bonuses to any Company employee from the amounts credited to the
Discretionary Bonus Account. The participation of an employee under the
Incentive Bonus Plan

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<PAGE> 61

terminates when he or she ceases to be an employee of the Company for any
reason. The President of the Company may amend or terminate the Incentive Bonus
Plan at any time.

CERTAIN TRANSACTIONS

In connection with the land work necessary prior to and during 3-D seismic
acquisitions, the Company engages Brigham Land Management ("BLM"), an
independent company owned and managed by Vincent M. Brigham, a brother of Ben M.
Brigham, who is the Company's Chief Executive Officer, President and Chairman of
the Board, and David T. Brigham, who is a Vice President of the Company. BLM
specializes in conducting the field land work necessary prior to and during 3-D
seismic acquisitions. BLM has regional expertise in the Anadarko Basin and the
Texas Panhandle, and, to a lesser extent, West Texas. BLM performs these
services for the Company using BLM's employees and independent contractors. In
1995, 1996 and 1997, the Company paid BLM approximately $382,000, $596,000 and
$837,000, respectively. Other participants in the Company's 3-D seismic projects
reimbursed the Company for a portion of these amounts. Based on its experience
with other firms in the area, the Company believes that BLM's charges are at or
below those of other firms.

In 1994, the Company, through its subsidiary Quest Resources, L.L.C.,
formed Venture Acquisitions, L.P. ("Venture") with affiliates of RIMCO, a holder
of in excess of 5% of the Common Stock, to provide the Company with the capital
to acquire interests in certain potential drilling locations, producing
properties and 3-D seismic projects. The RIMCO affiliates have contributed $5.2
million to Venture, and the Company has contributed $286,138. Until the first
payout under the Venture limited partnership agreement, the Company's share of
all capital costs is 5%, and the Company's share of revenues and related
production expenses and costs is 10%. Between the first and second payout
levels, the Company's share of capital costs and revenues and related production
expenses and costs is 25% and thereafter increases to 50%. Venture acquired from
the Company an interest in (i) a 3-D project for approximately $75,000 in 1995,
and (ii) two 3-D delineated potential drilling locations and 3-D seismic for
approximately $83,000 in 1996. The Company billed Venture approximately $14,924
in 1995, $16,500 in 1996 and $56,658 in 1997 for its proportionate share of
exploration and overhead costs. Because RIMCO was not an affiliate of the
Company when the Venture partnership was formed, the Company believes that the
terms of the Venture partnership are no less favorable than could be obtained
from an unaffiliated third party. Gary J. Milavec, a director of the Company and
member of the Company's compensation committee, is employed by RIMCO.

In November 1994, the Company, certain RIMCO affiliates and other unrelated
industry participants entered into a geophysical exploration agreement creating
an area of mutual interest in its Esperson Dome Project in Liberty and Harris
counties, Texas. The Company financed its participation in this project by
assigning its interest, and obligation to bear costs, to Vaquero Gas Company,
Inc. ("Vaquero"), a RIMCO affiliate, subject to a 5% net profits overriding
royalty interest and the right to receive up to 50% of Vaquero's interest on the
occurrence of certain payouts. The Company also retained responsibility for
managing the 3-D seismic acquisition and interpretation of the data after it had
been acquired. During 1995, 1996 and 1997, the Company received approximately
$25,000, $123,000 and $50,000, respectively, from the RIMCO affiliates,
including Vaquero, for workstation time and geoscientists' time in interpreting
the 3-D seismic that were acquired. Because RIMCO was not an affiliate of the
Company when the project was initiated and the interest to Vaquero was
transferred, the Company believes that the terms of the arrangement are no less
favorable than could be obtained from an unaffiliated third party.

In January 1997, the Company, RIMCO and Tigre Energy Corporation ("Tigre")
entered into an agreement under which the Company had been initially assigned an
undivided 22% interest (subject to a proportionately reduced 3% overriding
royalty interest) in a project ("Tigre Point") located in Vermillion Parish,
Louisiana in return for paying certain costs of acquiring 3-D seismic and land
within the project area. The Company acquired an additional 12.5% working
interest from RIMCO and an additional 37.5% working interest from Tigre in parts
of the project under the same terms as the initial 25% interest. The Company
believes that the arrangements with RIMCO affiliates relating to Tigre Point are
on terms no less favorable

60
<PAGE> 62

than could be obtained from an unaffiliated third party, because RIMCO and
Tigre, an unaffiliated third party, are participants in the project on
substantially similar terms.

The Company and an affiliate of Universal Seismic Associates, Inc. ("USA"),
a public company of which RIMCO affiliates beneficially own approximately 22% of
the outstanding common stock, have entered into a geophysical exploration
agreement covering an area of mutual interest on the Gulf Coast. Under the terms
of the agreement, USA conducted a 3-D seismic program established by the Company
and USA and processed the data acquired under the program at cost, and the
Company will interpret the resulting seismic for the benefit of the Company and
USA at no charge to USA. Subject to a party's electing not to participate in an
acquired interest, the Company and USA will each own an undivided 50% interest
in all land interests acquired within the area of mutual interest. Through
December 31, 1997, the Company had incurred $209,314 of costs under those
arrangements. Based on its experience in acquiring 3-D seismic, the Company
believes that it has acquired 3-D seismic under this agreement on terms, and
that the arrangement is on terms, no less favorable than could be obtained from
an unaffiliated third party.

In 1993 and 1994 the Company issued to RIMCO 10% Notes in principal amounts
of $3.0 million and $4.9 million, respectively. In 1995 the Company issued RIMCO
additional 10% Notes in a principal amount of $2.6 million, and in the same
year, issued RIMCO 5% Notes in a principal amount of $16.0 million, $10.5
million of which was used to repay all the outstanding 10% Notes. The 5% Notes
were exchanged for 1,754,464 shares of Common Stock in the Exchange. In 1995,
1996 and 1997, the Company paid RIMCO $631,989, $809,332 and $340,000,
respectively, in interest payments on the 5% Notes and the 10% Notes. In 1995,
1996 and 1997, the Company distributed to RIMCO $102,107, $82,097 and $48,150,
respectively for RIMCO's overriding royalty interest in certain natural gas and
oil properties.

Pursuant to a consulting agreement with Harold D. Carter that expired May
1, 1997, the Company paid Mr. Carter $6,000 per month through June 1996 and
$7,200 per month for the remainder of the term of the agreement to spend
approximately 50% of his working time performing such consulting and advisory
services regarding the operations of the Company as the Company requested,
including service on the management committee of the Company's predecessor
partnership. Pursuant to this agreement, Mr. Carter received $72,000 in 1995,
$79,200 in 1996 and $86,580 in 1997. Additional disbursements totaling
approximately $13,000 were made by the Company to Mr. Carter during 1997 for the
reimbursement of certain expenses. Pursuant to the terms of a subsequent
consulting agreement, the Company will continue to utilize Mr. Carter's
consulting services through December 31, 1998 and pay Mr. Carter $7,200 per
month for those services and reimburse Mr. Carter for certain out-of-pocket
expenses during the term of the agreement. In addition, pursuant to the terms of
Mr. Carter's consulting agreement, the Company pays Associated Energy Managers,
Inc. $1,000 per month to offset a portion of Mr. Carter's office overhead
expenses and to provide the Company with limited use of part of Mr. Carter's
office space for purposes of conducting business while employees of the Company
are in Dallas, Texas.

In 1995, 1996 and 1997, the Company paid $35,000, $110,000 and $18,000 to
Aspect and affiliates of Alexis M. Cranberg, a director of the Company, to
acquire interests in a project in Grady County, Oklahoma and a project in
Hardeman and Wilbarger counties, Texas and Jackson County, Oklahoma. Based on
its experience in the industry, the Company believes that these transactions are
on terms no less favorable than could be obtained from an unaffiliated third
party. The Company billed Aspect and other affiliates of Alexis M. Cranberg
$13,000 in 1995 and $68,000 in 1996 for its proportionate share of the costs
related to the projects.

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<PAGE> 63

of in accordance with that previous registration. The Registration Rights
Agreement also provides "piggyback" registration rights for all registrations of
registrable securities for the Company or another security holder. In an
underwritten offering, however, the Company may exclude all or a portion of the
securities being registered pursuant to "piggyback" registration rights if the
managing underwriter determines that including those securities would raise a
substantial doubt about whether the proposed offering could be consummated. The
Registration Rights Agreement contains customary indemnity by the Company in
favor of persons selling securities in a registration governed by the
Registration Rights Agreement, and by those persons in favor of the Company,
relating to the information included in or omitted from the Registration
Statement.

PRINCIPAL STOCKHOLDERS

The table below sets forth information concerning (i) the only persons
known by the Company, based upon statements filed by such persons pursuant to
Section 13(d) or 13(g) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), to own beneficially in excess of 5% of the Common Stock as of
August 13, 1998, and (ii) the shares of Common Stock beneficially owned, as of
August 13, 1998, by each director of the Company, each executive officer listed
in the Summary Compensation Table included elsewhere in this Prospectus, and all
directors and executive officers of the Company as a group. Except as indicated,
each individual has sole voting power and sole investment power over all shares
listed opposite his name.

<TABLE>
<CAPTION>
SHARES SHARES BENEFICIALLY
BENEFICIALLY OWNED OWNED AFTER THE
PRIOR TO THE OFFERING(1) OFFERING
------------------------- -------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT NUMBER PERCENT
- ------------------------------------ ------------ ---------- --------- -------
<S> <C> <C> <C> <C>
Ben M. Brigham(2).................................... 3,720,342 30.01% 3,720,342 %
6300 Bridge Point Parkway, Bldg. 2, Suite 500
Austin, Texas 78730
Anne L. Brigham(2)................................... 3,720,342 30.01% 3,720,342 %
6300 Bridge Point Parkway, Bldg. 2, Suite 500
Austin, Texas 78730
General Atlantic Partners, L.L.C.(3)................. 2,807,143 22.64% 2,807,143 %
Three Pickwick Plaza
Greenwich, Connecticut 06830
Resource Investors Management Company(4)............. 1,754,464 14.15% 1,754,464 %
600 Travis Street, Suite 6875
Houston, Texas 77002
R. Chaney & Co., Inc.(5)............................. 635,000 5.12% 635,000 %
909 Fannin, Suite 1275
Two Houston Center
Houston, Texas 77010
Craig M. Fleming(6).................................. 65,477 * 65,477 *
Jon L. Glass(7)...................................... 88,798 * 88,798 *
David T. Brigham(8).................................. 66,477 * 66,477 *
A. Lance Langford(9)................................. 18,365 * 18,365 *
Harold D. Carter..................................... 341,893 2.76% 341,893 %
Gary J. Milavec(10).................................. -- -- -- --
Alexis M. Cranberg................................... -- -- -- --
Stephen P. Reynolds(11).............................. -- -- -- --
All directors and executive officers as a group
(11 persons)(6)(7)(8)(9)........................... 4,301,977 34.70% 4,301,977 %
</TABLE>

- ---------------

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<PAGE> 64

* Represents less than 1%.

(1) Beneficial ownership is determined in accordance with the rules of the SEC
and generally includes voting or disposition power with respect to
securities.

(2) Includes 1,831,414 shares owned by Ben M. Brigham and 1,831,410 shares
owned by Anne L. Brigham, who are husband and wife; 28,272 shares owned by
Ben M. Brigham and Anne L. Brigham as Trustees under Brigham Parental Trust
I; 28,246 shares owned by Ben M. Brigham and Anne L. Brigham as Trustees
under Brigham Parental Trust II; and 1,000 shares held by David T. Brigham,
as custodian for Elizabeth R. Brigham under the Texas Uniform Transfers to
Minors Act.

(3) Includes 2,679,418 shares held by GAP III; and 127,725 shares held by
GAP-Brigham Partners, L.P. ("GAP-Brigham"). Stephen P. Reynolds is the
general partner and a limited partner in GAP-Brigham and is President of
GAP III Investors, Inc., the general partner of GAP III.

(4) Includes 612,308 shares held by RIMCO Partners, L.P. II, 307,031 shares
held by RIMCO Partners, L.P. III and 835,125 shares held by RIMCO Partners,
L.P. IV (collectively, the "RIMCO Partnerships"). RIMCO is the general
partner of each of the RIMCO Partnerships. The general partner of RIMCO is
RIMCO Associates, Inc.

(5) Includes 610,000 shares held by R. Chaney & Partners III L.P. ("Fund III")
and 25,000 shares held by R. Chaney & Partners IV L.P. ("Fund IV"). R.
Chaney & Partners, Inc. ("Partners") is the sole general partner of Fund
III, and R. Chaney Investments, Inc. ("Investments") is the sole general
partner of Fund IV. Mr. Robert H. Chaney is the sole shareholder of
Partners and Investments.

(6) Includes 44,643 shares of restricted stock, which vest as follows: 30% in
July 1997, 30% in July 1998 and 40% in July 1999; and 20,834 shares of
Common Stock issuable upon exercise of certain stock options that vested
July 1, 1998.

(7) Includes 66,964 shares of restricted stock, which vested as follows: 16.67%
in February 1997, 28.33% in July 1997, 28.33% in July 1998 and 26.67% in
July 1999; and 20,834 shares of Common Stock issuable upon exercise of
certain stock options that vested July 1, 1998.

(8) Includes 44,643 shares of restricted stock, which vest as follows: 30% in
July 1997, 30% in July 1998 and 40% in July 1999; 1,000 shares gifted by
Ben M. Brigham and Anne L. Brigham; and 20,834 shares of Common Stock
issuable upon exercise of certain stock options that vested July 1, 1998.

(9) Includes 17,365 shares of Common Stock issuable upon exercise of certain
stock options that vest July 1, 1998.

(10) Gary J. Milavec is a Managing Director of RIMCO, the general partner of
each of the RIMCO Partnerships, and is a Vice President of RIMCO
Associates, Inc., the general partner of RIMCO. As such, Mr. Milavec may be
deemed to share voting and investment power with respect to the 612,308
shares held by RIMCO Partners, L.P. II, the 307,031 shares held by RIMCO
Partners, L.P. III and the 835,125 shares held by RIMCO Partners, L.P. IV.
Mr. Milavec disclaims beneficial ownership of shares beneficially owned by
RIMCO and the RIMCO Partnerships.

(11) Stephen P. Reynolds is the general partner and a limited partner in
GAP-Brigham and is President of GAP III Investors, Inc., the general
partner of GAP III. As such, Mr. Reynolds may be deemed to share voting and
investment power with respect to the 2,679,418 shares held by GAP III and
the 127,725 shares held by GAP-Brigham. Mr. Reynolds disclaims beneficial
ownership of shares owned by GAP III and GAP-Brigham except to the extent
of his pecuniary interest therein.

DESCRIPTION OF OTHER INDEBTEDNESS

In January 1998, Brigham entered into the Credit Facility with the Bank of
Montreal and the lenders signatory thereto. For more information, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

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<PAGE> 65

DESCRIPTION OF NOTES

GENERAL

The Notes will be issued pursuant to an Indenture between the Company and
Chase Bank of Texas, National Association, as trustee (the "Trustee"). Copies of
the Indenture will be made available to prospective purchasers upon request to
the Company. The Indenture will be subject to the Trust Indenture Act of 1939,
as amended (the "Trust Indenture Act"). The terms of the Notes will include
those stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act. The Notes will be subject to all such terms, and
holders of the Notes are referred to the Indenture and the Trust Indenture Act
for a statement thereof. The following summary of certain provisions of the
Indenture does not purport to be complete and is qualified in its entirety by
reference to the Indenture, including the definitions therein of certain terms
used below. The definitions of certain terms used in the following summary are
set forth below under "-- Certain Definitions."

TERMS OF THE NOTES

The Notes will be limited in aggregate principal amount to $40 million,
plus any PIK Interest, and will mature on , 2003. Interest on the
Notes will be payable quarterly, beginning on November 15, 1998. Interest rates
payable on the Notes shall vary depending upon whether accrued interest is paid
in cash or by PIK Interest. Interest shall be paid in cash at interest rates of
%, % and % per annum during years one through three, year four and year
five, respectively, of the term of the Notes; provided, however, that if the
payment in cash of interest accrued on the Notes would cause a "Borrowing Base
Deficiency" under the Senior Credit Agreement or would cause the Company to be
in violation of any covenant or other restriction set forth in any Senior Loan
Document or any Basic Document, the Company may pay PIK Interest at interest
rates of %, % and % per annum during years one through three, year four
and year five, respectively, of the term of the Notes. The Notes may be prepaid
at any time, in whole or in part, without premium or penalty, provided that all
partial prepayments must be pro rata to the various holders of the Notes.

Interest will be computed on the basis of a 360-day year for the actual
number of days elapsed commencing on the day immediately following any advance
of principal (or interest paid in kind) through and including the date of
payment of any principal amount. Principal, premium, if any, and interest on the
Notes will be payable in cash to holders of the Notes. The Notes will be
registered as to principal and interest in minimum denominations of $1,000 and
integral multiples of $1,000 in excess thereof. Because the parties anticipate
that the Notes, Warrants and Shares will be considered an "investment unit"
under certain United States Treasury Regulations, the aggregate offering price
must be allocated among the three securities. As a result, a portion of the
principal amount of the Notes may be considered "original issue discount"
("OID"). OID would accrue on the Notes on a constant yield basis over the term
of the Notes. Generally, OID accrues in advance of the receipt of cash to which
such OID is attributable regardless of the holder's method of accounting.

Pursuant to the Securities Purchase Agreement, the initial purchasers of
the Notes will, as long as they and/or their affiliates beneficially own 5% or
more of the Common Stock (including the Warrant Shares, whether exercised or
not), have the right to designate one member of the Board of Directors of the
Company reasonably satisfactory to the Company. If such purchasers elect to
designate a person to serve as a member of the Board of Directors of the Company
(the "Designee"), the Securities Purchase Agreement will require the Company to
(i) expand as required the number of directors constituting the entire board,
(ii) elect such Designee as is reasonably satisfactory to the Company and (iii)
submit the name of such Designee to the Company's stockholders (together with a
recommendation for election) at each meeting of the Company's stockholders at
which directors are elected, until otherwise requested by such purchasers.

SECURITY

The Obligations and the Subsidiary Guaranty Agreements, as appropriate,
will be secured by the following which, in each case shall be subordinate in
priority only to those liens, security interests or rights

64
<PAGE> 66

granted in the same collateral to secure the performance of the Company under
the Senior Loan Documents, in accordance with, but subject to, the terms of the
Subordination Agreement: (i) Security Agreements of the Company, Brigham, Inc.,
Brigham Holdings I, LLC and Brigham Holdings II, LLC granting a security
interest in all of such entity's right, title and interest in and to the Capital
Stock of Brigham, Inc., Brigham Holdings I, LLC, Brigham Holdings II, LLC and
Brigham Oil & Gas, L.P. (the "Partnership"), (ii) a Security Agreement of the
Partnership granting a security interest in all of the Partnership's right,
title and interest in and to all accounts, general intangibles, equipment and
inventory of the Partnership, and (iii) a Mortgage, Deed of Trust, Assignment of
Production, Security Agreement and Financing Statement of the Partnership
covering all of the Property of the Partnership.

RANKING AND SUBORDINATION

The Notes will be subject to the Subordination Agreement (as defined). See
"Subordination Agreement." As of June 30, 1998, on a pro forma basis, after
giving effect to the application of the estimated net proceeds from the
Offering, the Company would have had $20.5 of Senior Indebtedness outstanding.
The Indenture will limit, subject to certain financial tests, the amount of
additional Debt, including Senior Indebtedness, that the Company and its
Subsidiaries can incur. See "-- Certain Covenants Limitation on Indebtedness."

SUBSIDIARY GUARANTY AGREEMENTS

Pursuant to the Subsidiary Guaranty Agreements, each Subsidiary Guarantor
will fully and unconditionally guarantee, jointly and severally, the prompt
payment of principal of and interest on the Notes, and all other indebtedness,
obligations and liabilities of the Company under the Securities Purchase
Agreement. Each Subsidiary Guarantor that makes a payment under a Subsidiary
Guaranty Agreement shall be entitled to contribution from each other Subsidiary
Guarantor, subject to such Subsidiary Guarantor's guarantee obligations, in a
pro rata amount based on the net worth of each Subsidiary Guarantor. Financial
statements for the Subsidiary Guarantors are not presented because the Company
has determined that they would not be material to investors.

The obligations of each Subsidiary Guarantor will be limited to the greater
of (a) the "reasonably equivalent value" or "fair consideration" (or equivalent
concept) received by the Subsidiary Guarantor in exchange for the obligation
incurred under its Subsidiary Guaranty Agreement, within the meaning of any
applicable state or federal fraudulent conveyance or transfer laws; or (b) the
lesser of, after giving effect to the extent allowed by law to its rights of
contribution and subrogation under its Subsidiary Guaranty Agreement, (i) the
maximum amount that will not render the Subsidiary Guarantor insolvent or (ii)
the maximum amount that will not leave the Subsidiary Guarantor with any
property deemed an unreasonably small capital. Each Subsidiary Guarantor that
makes a payment under a Subsidiary Guaranty Agreement shall be entitled to
contribution from each other Subsidiary Guarantor in a pro rata amount based on
the net worth of each Subsidiary Guarantor.

The rights and remedies of the Noteholders under the Subsidiary Guarantors
will be subject to the Liens created or evidenced by the Senior Loan agreements
and the terms and conditions of the Subordination Agreement. See "Subordination
Agreement."

CERTAIN COVENANTS

The Indenture will contain certain covenants including, among others, the
following:

Limitation on Indebtedness

Neither the Company nor any Subsidiary will incur, create or assume any
Debt, other than Permitted Debt, such that the ratio of the Company's Adjusted
Consolidated Net Tangible Assets (as at the end of the immediately preceding
calendar quarter) to the sum of (a) Company's Consolidated Indebtedness (after
such incurrence, creation or assumption of additional Debt other than Permitted
Debt) plus (b) past due interest on Debt is less than 1.5 to 1.0. This covenant
shall also apply to any such Debt incurred or assumed as a result

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of a merger or consolidation with any other Person. Any such Debt so incurred,
created or assumed (without violation of the Indenture) must be fully
subordinated to the Obligations unless the Agent agrees otherwise, provided
that, so long as certain holders of the Notes have been given a first look and
right to make a proposal for any future subordinated indebtedness, up to
$25,000,000 (less the maximum potential balance at the time in question of the
Schedule 8.02 Payables) in the aggregate of such Debt may be incurred that is
pari passu in right of payment with the Notes. Notwithstanding the foregoing, in
the event of any refinancing of the Senior Loan, which refinancing does not
violate, on a pro forma basis for the four fiscal quarters of the Company after
the refinancing, the interest coverage test described above under "Consolidated
Interest Coverage Ratio" in "Certain Covenants," the current ratio test
described under "Current Ratio," or, provided the amount of such refinanced
Senior Loan is more than $75,000,000, the covenant in the first sentence of this
paragraph, the refinanced Senior Loan shall remain senior to (and shall not be
subordinate to) the Obligations.

Neither the Company nor any Subsidiary will incur, create, suffer or assume
any accounts payable for the deferred purchase price of Property or services or
any Trade Payables which are more than 75 days past the invoice or billing date,
unless such accounts payable are either (i) being contested in good faith by
appropriate proceedings and reserves as required under GAAP shall have been
established therefor, or (ii) Schedule 8.02 Payables which are not past due.

Notwithstanding the foregoing, if at any time the ratio of the Company's
Adjusted Consolidated Net Tangible Assets to the sum of (a) Company's
Consolidated Indebtedness plus (b) past due interest on Debt, is less than 1.5
to 1.0, the Agent shall have the right to require, and the Company covenants and
agrees to convey (or cause to be conveyed) to the Trustee or the Agent for the
benefit of the Agent and the Noteholders, such additional Potential Collateral
as the Agent shall require (subject to the Senior Lenders' rights to a first and
prior lien in such Potential Collateral). Such conveyance shall be made within
30 days following receipt of written notice from the Agent and shall be deemed a
pledge of additional Collateral in accordance with Section 7.09 of the
Indenture. As used in this paragraph, "Potential Collateral" means any of the
Company's or any Subsidiary's Oil and Gas Properties (which are not already
Collateral) which are identified as containing proved Hydrocarbon reserves,
whether existing on the date of the Indenture or thereafter acquired.

Limitation on Liens Securing Indebtedness

Neither the Company nor any Subsidiary will create, incur, assume or permit
to exist any Lien on any of its Properties (now owned or hereafter acquired),
except (i) Liens securing the Senior Loan; provided the Trustee is granted a
second Lien on such Property securing the payment of the Obligations; (ii) Liens
securing the payment of the Obligations; (iii) Excepted Liens; (iv) Liens
securing leases allowed under clause (iv) of the definition of Excepted Liens
but only on the Property under lease; (v) Liens disclosed on a schedule to the
Securities Purchase Agreement; and (vi) any Permitted Encumbrances as described
in the Mortgage.

Limitation on Dividends, Distributions and Redemptions

Neither the Company nor any Subsidiary will declare or pay any dividend,
purchase, redeem or otherwise acquire for value any of its stock now or
hereafter outstanding, return any capital to its stockholders or make any
distribution of its assets to its partners, except to the Company or any
Subsidiary.

Limitation on Sale/Leaseback Transactions

Neither the Company nor any Subsidiary will enter into any arrangement,
directly or indirectly, with any Person whereby the Company or any Subsidiary
shall sell or transfer any of its Property, whether now owned or hereafter
acquired, and whereby the Company or any Subsidiary shall then or thereafter
rent or lease as lessee such Property or any part thereof or other Property
which the Company or any Subsidiary intends to use for substantially the same
purpose or purposes as the Property sold or transferred.

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Limitation on Mergers and Consolidations

The Company will not and will not permit any Subsidiary to merge into or
with or consolidate with any other Person (other than the Company or a
Subsidiary) or sell, lease or otherwise dispose of (whether in one transaction
or in a series of transactions) all or substantially all of its Property or
assets to any other Person (other than the Company or a Subsidiary) unless (i)
no Default or Event of Default exists and after giving effect to such merger, no
Default or Event of Default shall exist, (ii) after giving effect to such merger
or consolidation, the surviving entity (as the Company hereunder), or in the
event of a merger or consolidation of a Subsidiary, the Company, would be able
to incur at least $1 in additional Debt (other than Permitted Indebtedness), and
(iii) the surviving entity ratifies and confirms its Obligations under the Basic
Documents and the Notes to the reasonable satisfaction of the Agent and each
Subsidiary Guarantor whose Subsidiary Guarantor is in full force and effect
ratifies and confirms its Subsidiary Guarantor to the reasonable satisfaction of
the Agent.

Limitation on Transactions with Affiliates

Neither the Company nor any Subsidiary will enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of Property
or the rendering of any service, with any Affiliate (other than the Company or a
Subsidiary) unless such transaction (a) is otherwise not in violation of the
Indenture, and (b) unless approved by a majority of the disinterested members of
the Board of Directors, is in the ordinary course of its business and is upon
fair and reasonable terms no less favorable to it than it would obtain in a
comparable arm's length transaction with a Person not an Affiliate.

Consolidated Interest Coverage Ratio

As of the last day of each fiscal quarter, the Company will not permit the
Consolidated Interest Coverage Ratio to be less than (i) 1.5 to 1.0 as of the
end of the first four fiscal quarters following the Closing Date and (ii) 2.0 to
1.0 as of the end of each fiscal quarter thereafter.

Current Ratio

The Company will not permit its ratio of (i) consolidated current assets of
the Company and its Consolidated Subsidiaries (including without limitation any
unused and available commitments under the Senior Credit Agreement) to (ii)
their consolidated current liabilities (excluding any principal or interest
payments due on the Senior Loan or the Notes), to be less than .8 to 1.0 at any
time.

EVENTS OF DEFAULT AND REMEDIES

Each of the following will constitute an "Event of Default" for the
purposes of the Indenture and the Notes: (a) the Company shall default in the
payment or prepayment when due of any Obligations, and such default, other than
a default of a payment or prepayment of principal (which shall have no cure
period), shall continue unremedied for a period of 30 days after such
Obligations become due, in the case of interest, or 30 days after the Company
receives notice from the Agent that such Obligations are due, in the case of
Obligations other than principal or interest; or (b) (i) the Company or any
Subsidiary Guarantor shall, as to any Debt (other than the Obligations and the
Senior Loan) aggregating more than $2,000,000, default in the payment when due
of any principal of or interest thereon, or any event specified in any note,
agreement, indenture or other document evidencing or relating to any such Debt
shall occur if the effect of such event is to cause, or (with the giving of any
notice or the lapse of time or both) to permit the holder or holders of such
Debt (or a trustee or agent on behalf of such holder or holders) to cause, such
Debt to become due prior to its stated maturity, or (ii) as to the Senior Loan,
there shall have occurred a default thereunder and the holders of the Senior
Loan shall have elected to accelerate the payment of the Senior Loan (or it
shall be accelerated automatically or otherwise be due and payable in full); or
(c) any representation, warranty or certification made or deemed made in the
Indenture or in any other Basic Document by the Company or any Subsidiary
Guarantor, or any certificate furnished by the Company or any Subsidiary
Guarantor to the Trustee, any Noteholder or the Agent pursuant to the provisions
of the Indenture or any other Basic Document, shall prove

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to have been false or misleading as of the time made or furnished in any
material and adverse respect and such default shall continue unremedied for a
period of 45 days after notice thereof to the Company by the Agent; or (d) the
Company shall default in the performance of any of its obligations pursuant to
the negative covenants in the Indenture which are not capable of being cured, or
under its obligations to provide notice of default or the covenants described
above under "Limitation on Indebtedness," "Consolidated Interest Coverage Ratio"
and "Current Ratio" in "Certain Covenants"; or the Company shall default in the
performance of any of its obligations under the negative covenants in the
Indenture which are capable of being cured (other than obligations described
under "Limitation on Indebtedness," "Consolidated Interest Coverage Ratio" and
"Current Ratio") or any other provision of the Indenture (other than its
obligation to provide notice of default) or under any other Basic Document to
which it is a party (other than the payment of amounts due which shall be
governed by clause (a)) and such default shall continue unremedied for a period
of 45 days after notice thereof to the Company by the Agent; or (e) any
Subsidiary Guarantor shall default in the performance of its obligation to pay
the Liabilities (as defined in the Subsidiary Guaranty Agreements) at maturity,
or any Subsidiary Guarantor shall default in the performance of any of its other
obligations under its Subsidiary Guaranty Agreement and such default shall
continue unremedied for a period of 45 days after notice thereof to the
Subsidiary Guarantor by the Agent; or (f) the Company shall admit in writing its
inability to, or be generally unable to, pay its debts as such debts become due;
or (g) the Company shall (1) apply for a consent to the appointment of, or the
taking of possession by, a receiver, custodian, trustee or liquidator of itself
or of all or a substantial part of its property, (2) make a general assignment
for the benefit of its creditors, (3) commence a voluntary case under the
Federal Bankruptcy Code (as now or hereafter in effect), (4) file a petition
seeking to take advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding-up, liquidation or composition or readjustment of debts,
(5) fail to controvert in a timely and appropriate manner, or acquiesce in
writing to, any petition filed against it in an involuntary case under the
Federal Bankruptcy Code, or (6) take any corporate action for the purpose of
effecting any of the foregoing; or (h) a proceeding or case shall be commenced,
without the application or consent of the Company, in any court of competent
jurisdiction, seeking (1) its liquidation, reorganization, dissolution or
winding-up, or the composition or readjustment of its debt, (2) the appointment
of a trustee, receiver, custodian, liquidator or the like of the Company of all
or any substantial part of its assets, or (3) similar relief in respect of the
Company under any law relating to bankruptcy, insolvency, reorganization,
winding-up, or composition or adjustment of debts, and such proceeding or case
shall continue undismissed, or an order, judgement or decree approving or
ordering any of the foregoing shall be entered and continue unstayed and in
effect, for a period of 60 days; or an order for relief against the Company
shall be entered in an involuntary case under the Federal Bankruptcy Code; or
(i) a judgment or judgments for the payment of money in excess of $2,000,000 in
the aggregate shall be rendered by a court against the Company and the same
shall not be discharged (or provision shall not be made for such discharge), or
a stay of execution thereof shall not be procured, within 45 days from the date
of entry thereof and the Company shall not, within said period of 45 days, or
such longer period during which execution of the same shall have been stayed,
appeal therefrom and cause the execution thereof to be stayed during such
appeal; or (j) any of the Basic Documents after delivery thereof shall for any
reason, except to the extent permitted by the terms thereof, cease to be in full
force and effect and valid, binding and enforceable in all material respects in
accordance with their terms, or cease in any material respect to create a valid
and perfected Lien of the priority required thereby on any of the collateral
purported to be covered thereby, except to the extent permitted by the terms of
the Indenture, or the Company or any Subsidiary Guarantor shall so state in
writing, and such Default shall continue unremedied for a period of 45 days
after notice thereof to the Company by the Agent; or (k) any Subsidiary
Guarantor takes, suffers or permits to exist any of the events or conditions
referred to in clauses (f), (g), (h) or (i) or if any Subsidiary Guaranty
Agreement related thereto shall for any reason cease to be valid and binding on
such Subsidiary Guarantor in all material respects or if such Subsidiary
Guarantor shall so state in writing, and such Default shall continue unremedied
for a period of 45 days after notice thereof to the Subsidiary Guarantor by the
Agent; or (l) there occurs a Change of Control; or (m) any annual audited
financial statement delivered to Agent pursuant to the Indenture is qualified
(as to going concern or similar qualifications).

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During the continuance of any Event of Default specified above (other than
clauses (f), (g) or (h)), or in clause (k) as it relates to clauses (f), (g) or
(h) thereof, the Agent may by written notice to the Company declare the entire
principal amount of all Obligations then outstanding, including interest accrued
thereon, to be immediately due and payable without presentment, demand, protest,
notice of protest or dishonor, notice of intent to accelerate, or other notice
of default of any kind.

Upon the happening of any Event of Default specified in clauses (f), (g) or
(h), or clause (k) as it relates to clauses (f), (g) or (h), the entire
principal amount of all Obligations then outstanding, including interest accrued
thereon, shall, without notice or action by the Trustee, the Agent or the
Noteholders be immediately due and payable without presentment, demand, protest,
notice of protest or dishonor, notice of intent to accelerate or other notice of
default of any kind.

In addition to the foregoing, upon the happening of any of the events
described in subsections (a) and (b) above, the Trustee, at the direction of the
Agent may exercise any of the rights or remedies provided in the Collateral
Documents and other Basic Documents or avail itself of any rights or remedies
provided by applicable law. The Trustee's ability to exercise any such rights or
remedies will be subject to any Liens created or evidenced by the Senior Loan
Documents and the Subordination Agreement.

All proceeds received after maturity of the Notes, whether by acceleration
or otherwise shall be applied first to reimbursement of expenses and indemnities
provided for in the Basic Documents; second to accrued interest on the Notes;
third to fees; fourth pro rata to principal outstanding on the Notes and other
Obligations; and any excess shall be paid to the Company or as otherwise
required by any Governmental Requirement.

During the continuance of an Event of Default, the Trustee at the direction
of the Agent may (subject to all rights of the Senior Loan Agent and the Senior
Lenders under the Senior Loan Documents) exercise its rights and remedies
granted under the Mortgages and the other Basic Documents, including the rights
and remedies granted under the Mortgages and the other Basic Documents,
including the right to obtain possession of all Production and Proceeds then
held by the Company and such mortgagors and to receive directly from the
purchasers of Hydrocarbons all other Production and Proceeds. In no case shall
any failure by the Trustee to collect directly any such Production and Proceeds
constitute in any way a release of any of its or the Agent's rights under the
Basic Documents.

No periodic evidence is required to be furnished by the Company as to the
absence of default or as to compliance with the terms of the Indenture. However,
promptly after the Company knows that any Default has occurred, the Company is
required to deliver to the Agent a notice of such Default.

AMENDMENT AND WAIVER

Except as otherwise provided in the Indenture, no amendment, waiver,
consent, modification, or termination of any provision of the Indenture, the
Notes or any other Basic Document, shall be effective unless signed by the
Company and the Majority Noteholders. Any amendment, supplement or modification
of or to any provision of the Indenture or the Notes or any other Basic
Document, any waiver of any provision of the Indenture, the Notes or any other
Basic Document, and any consent to any departure by the Company from the terms
of any provision of the Indenture, the Notes or any other Basic Document, shall
be effective only in the specific instance and for the specific purpose for
which made or given. Except where notice is specifically required by the
Indenture, no notice to or demand on the Company in any case shall entitle the
Company to any other or further notice or demand in similar or other
circumstances.

CONCERNING THE TRUSTEE

Chase Bank of Texas, National Association, is to be the Trustee under the
Indenture.

The Trustee in its individual or any other capacity may become the owner or
pledgee of Notes and may otherwise deal with the Company or its Subsidiaries or
Affiliates with the same rights it would have if it were not Trustee. If,
however, the Trustee acquires any conflicting interest (as defined in the Trust
Indenture Act), it must eliminate such conflict or resign. The Indenture will
provide that if an Event of Default has occurred and is continuing, the Trustee
shall exercise such rights and powers vested in it by the Indenture and use the

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same degree of care and skill in such exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs. The Trustee shall be under no obligation and may refuse to perform any
duty or exercise any right or power unless it receives indemnity satisfactory to
it against any loss, liability or expense

The Trustee shall not be required to take notice, and shall not be deemed
to have notice, of any Default or Event of Default under the Indenture, unless
the Trustee shall be notified specifically of the Default or Event of Default in
a written instrument or document delivered to it by the Company or any
Subsidiary Guarantor, or by the Agent or the Majority Noteholders. The holders
of the Notes will appoint the Agent (which shall be one of such holders) to act
on their behalf. Thus, the Agent will have authority to on behalf of a majority
of the aggregate principal of the Notes.

GOVERNING LAW

The Indenture will provide that it will be governed by the laws of the
State of Texas.

CERTAIN DEFINITIONS

Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full definition of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.

"Adjusted Consolidated Net Tangible Assets" or "ACNTA" means (without
duplication), as of the date of determination, (a) the sum of (i) the discounted
future net revenue from proved crude oil and natural gas reserves of the Company
and its Consolidated Subsidiaries calculated in accordance with Commission
guidelines before any state or federal income taxes, as estimated in the most
current Reserve Report, as increased by, as of the date of determination, the
discounted future net revenue of (A) estimated proved crude oil and natural gas
reserves of the Company and its Consolidated Subsidiaries attributable to
acquisitions consummated since the date of such Reserve Report, and (B)
estimated proved crude oil and natural gas reserves of the Company and its
Consolidated Subsidiaries attributable to extensions, discoveries and other
additions and upward determinations of estimates of proved crude oil and natural
gas reserves due to exploration, development or exploitation, production or
other activities which reserves were not reflected in the most current Reserve
Report which would, in the case of a determination made pursuant to clauses (A)
and (B), in accordance with standard industry practice, result in such
determinations, in each case calculated in accordance with Commission guidelines
(utilizing the Commission guideline prices utilized in the most current Reserve
Report), and decreased by, as of the date of determination, the discounted
future net revenue attributable to (C) estimated proved crude oil and natural
gas reserves of the Company and its Consolidated Subsidiaries reflected in the
most current Reserve Report produced or disposed of since the date of such
Reserve Report and (D) reductions in the estimated proved crude oil and natural
gas reserves of the Company and its Consolidated Subsidiaries reflected in such
Reserve Report since the date of such Reserve Report attributable to downward
determinations of estimates of proved crude oil and natural gas reserves due to
exploration, development or exploitation, production or other activities
conducted or otherwise occurring since the date of the most current Reserve
Report which would, in the case of determinations made pursuant to clauses (C)
and (D), in accordance with standard industry practice, result in such
determinations, in each case calculated in accordance with Commission guidelines
(utilizing the Commission guideline prices utilized in the most current Reserve
Report); provided, however, that, in the case of each of the determinations made
pursuant to clauses (A) through (D), such increases and decreases shall be as
estimated by the Company's engineers, except that if as a result of such
acquisitions, dispositions, discoveries, extensions or revisions, there is a net
increase in the ACNTA which exceeds $10,000,000, the Agent shall have the right
to require that such increases and decreases in the discounted future net
revenue be confirmed in writing by an independent petroleum engineer, at the
Company's expense, (ii) the capitalized costs that are attributable to seismic
and undeveloped oil and gas leases of the Company and its Consolidated
Subsidiaries to which no proved crude oil and natural gas reserves are
attributed, based on the Company's books and records as of a date no earlier
than the date of the Company's latest annual or quarterly financial statements,
(iii) the Net Working Capital on a date no earlier than the date of the
Company's latest annual or quarterly financial statements and (iv) the

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greater of (I) the net book value on a date no earlier than the date of the
Company's latest annual or quarterly financial statements and (II) the appraised
value, as estimated by independent appraisers reasonably acceptable to the
Agent, of other tangible assets of the Company and its Consolidated Subsidiaries
as of a date no earlier than the date of the Company's latest audited financial
statements, minus (b) to the extent not otherwise taken into account in the
immediately preceding clause (a), the sum of (i) minority interests, (ii) any
natural gas balancing liabilities and credits of the Company and its
Consolidated Subsidiaries reflected in the Company's latest audited financial
statements, (iii) the discounted future net revenue, calculated in accordance
with Commission guidelines (utilizing the Commission guideline prices utilized
in the Company's most current Reserve Report), attributable to reserves subject
to participation interests, overriding royalty interests or other interests of
third parties, pursuant to participation, partnership, vendor financing or other
agreements then in effect, or which otherwise are required to be delivered to
third parties, (iv) the discounted future net revenue, calculated in accordance
with Commission guidelines (utilizing the Commission guideline prices utilized
in the Company's most current Reserve Report), attributable to reserves that are
required to be delivered to third parties to fully satisfy the obligations of
the Company and its Consolidated Subsidiaries with respect to volumetric
production payments and (v) the discounted future net revenue, calculated in
accordance with Commission guidelines, attributable to reserves subject to
dollar-denominated production payments that, based on the estimates of
production included in determining the discounted future net revenue specified
in the immediately preceding clause (a) (i) (utilizing the Commission guideline
prices utilized in the Company's most current Reserve Report), would be
necessary to satisfy fully the obligations of the Company and its Consolidated
Subsidiaries with respect to dollar-denominated production payments.

"Affiliate" of any Person means (i) any Person directly or indirectly
controlled by, controlling or under common control with such first Person, (ii)
any director or officer of such first Person or of any Person referred to in
clause (i) above and (iii) if any Person in clause (i) above is an individual,
any member of the immediate family (including parents, spouse and children) of
such individual and any trust whose principal beneficiary is such individual or
one or more members of such immediate family and any Person who is controlled by
any such member or trust. For purposes of this definition, any Person which owns
directly or indirectly 20% or more of the securities having ordinary voting
power for the election of directors or other governing body of a corporation or
20% or more of the partnership or other ownership interests of any other Person
(other than as a limited partner of such other Person) will be deemed to
"control" (including, with its correlative meanings, "controlled by" and "under
common control with") such corporation or other Person.

"Agent" means the Person appointed and authorized by each Noteholders in
the Indenture as Agent to take such action on behalf of such Noteholder and to
exercise such powers under the Indenture as are delegated to the Agent by the
terms thereof and of the other Basic Documents, together with such powers as are
reasonably incidental thereto.

"Basic Documents" means, collectively, the Indenture, the Securities
Purchase Agreement and the other Loan Documents.

"Board of Directors" means the Board of Directors of the Company.

"Business Day" means any day other than a Saturday, Sunday, or a legal
holiday for commercial banks in Houston, Texas, or New York, New York.

"Business Opportunities Agreement" means the Corporate Shareholders'
Agreement to be dated as of even date with the Indenture between the purchasers
of the Notes and the Company.

"Capital Stock" of any Person means any and all shares, interests,
participations, or other equivalents (however designated) of, or rights,
warrants, or options to purchase, corporate stock, partnership interests, or any
other equity interest (however designated) of or in such Person.

"Change in Control" means (i) a transaction, including any merger or
consolidation of Company with any other Person, in which the shareholders of the
Company immediately prior to such transaction (treating the holders of the
Warrants as holders of voting shares) do not own at least 51.0% of the voting
shares of stock of the Company (or the surviving entity in the case of a merger
or consolidation) immediately following the

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consummation of such transaction, or (ii) a transaction, including any merger or
consolidation of Company with any other Person, in which the members of the
Board of Directors immediately prior to such transaction do not comprise at
least a majority of the board of directors of the Company (or the surviving
entity in the case of a merger or consolidation) for a period of 12 months
immediately following the consummation of such transaction, or (iii) an event,
including any merger or consolidation of Company with any other Person, such
that Mr. Ben Brigham no longer manages the Company (or the surviving entity in
the case of a merger or consolidation), other than as a result of his death or
disability.

"Closing Date" means the date upon which the Securities Purchase Agreement
is executed.

"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute.

"Collateral" means the properties, property interests and rights described
in "Security" above, or otherwise covered by the Collateral Documents, as
security for the Obligations.

"Collateral Documents" means collectively the documents required by the
Agent or the Noteholders to obtain the security interests in the Collateral, as
described in " Security" above, and all other such agreements, documents and
instruments required in the Indenture, as the same may from time to time be
amended or supplemented.

"Commission" means the United States Securities and Exchange Commission.

"Common Stock" means the common stock, par value $0.01 per share, of the
Company or such other class of securities as shall, after the date of the
Indenture, constitute the common equity of the Company.

"Consolidated Indebtedness" means all Debt of the Company and its
Consolidated Subsidiaries.

"Consolidated Interest Coverage Ratio" means, as of the date of
determination, the ratio of (i) EBITDA for the preceding four calendar quarters
to (ii) Interest Expense for the same four calendar quarters.

"Consolidated Net Income" means with respect to the Company and its
Consolidated Subsidiaries, for any period, the aggregate of the net income (or
loss) of the Company and its Consolidated Subsidiaries after allowance for taxes
for such period, determined on a consolidated basis in accordance with GAAP;
provided that there shall be excluded from the calculation of such net income
(to the extent otherwise included therein) the following: (i) the net income of
any Person in which Company or any Consolidated Subsidiary has an interest
(which interest does not cause the net income of such other Person to be
consolidated with the net income of Company and its Consolidated Subsidiaries in
accordance with GAAP), except to the extent of the amount of dividends or
distributions actually paid in such period by such other Person to the Company
or to a Consolidated Subsidiary, as the case may be; (ii) the net income (but
not loss) of any Consolidated Subsidiary to the extent that the declaration or
payment of dividends or similar distributions or transfers or loans by that
Consolidated Subsidiary is not at the time permitted by operation of the terms
of its charter or any agreement, instrument or Governmental Requirement
applicable to such Consolidated Subsidiary, or is otherwise restricted or
prohibited, in each case determined in accordance with GAAP; (iii) the net
income (or loss) of any Person acquired in a pooling-of-interests transaction
for any period prior to the date of such transaction; (iv) any extraordinary
gains or losses, including gains or losses attributable to Property sales not in
the ordinary course of business; and (v) the cumulative effect of a change in
accounting principles and any gains or losses attributable to writeups or
writedowns of assets.

"Consolidated Subsidiaries" means each Subsidiary of the Company (whether
now existing or hereafter created or acquired) the financial statements of which
shall be (or should have been) consolidated with the financial statements of the
Company in accordance with GAAP.

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borrowed money) excluding Trade Payables but including Schedule 8.02 Payables;
(iv) all obligations under leases which shall have been, or should have been, in
accordance with GAAP, recorded as capital leases in respect of which such Person
is liable (whether contingent or otherwise); (v) all obligations under leases
(other than capital leases and oil and gas leases) which require such Person or
its Affiliate to make payments exceeding $100,000 (or $500,000 in the aggregate)
over the term of such lease, including payments at termination, which are
substantially equal to at least 80% of the purchase price of the Property
subject to such lease plus interest at an imputed rate of interest; (vi) all
Debt (as described in the other clauses of this definition) of others secured by
a Lien on any asset of such Person, whether or not such Debt is assumed by such
Person; (vii) all Debt (as described in the other clauses of this definition) of
others guaranteed by such Person or in which such Person otherwise assures a
creditor against loss of the Debt of others; (viii) all obligations or
undertakings of such Person to maintain or cause to be maintained the financial
position or covenants of others including without limitation agreements
expressed as an agreement to purchase the Debt or Property of others or
otherwise; (ix) obligations to deliver Hydrocarbons in consideration of advance
payments; (x) obligations to pay for goods or services whether or not such goods
or services are actually received or utilized by such Person; (xi) any capital
stock of such Person in which such Person has a mandatory obligation to redeem
such stock; (xii) any Debt of a Special Entity for which such Person is liable
either by agreement or because of a Governmental Requirement; (xiii) the
undischarged balance of any production payment created by such Person or for the
creation of which such Person directly or indirectly received payment; and (xiv)
all obligations of such Person under Hedging Agreements, provided that "Debt"
shall not include (a) interest or fees (other than earned but unpaid issuance
fees) on any of the foregoing, (b) obligations associated with bid, performance,
surety or appeal bonds (including those required by Governmental Requirements in
connection with Oil and Gas Properties), (c) gas balancing obligations (whether
volumetric or dollar denominated), (d) intercompany obligations among the
Company and its Consolidated Subsidiaries, (e) indemnity obligations which have
not matured into fixed liabilities, and (f) purchase price adjustments and
similar post-closing obligations (but excluding the deferred payment of any
purchase price) incurred in connection with the permitted purchase and sale of
Property or stock, and which is to be determined and payable no later than 180
days following the closing of such purchase and sale.

"Default" means an Event of Default or an event which with notice or lapse
of time, or both, would become, an Event of Default.

"Default Rate" means, for any applicable period, an interest rate equal to
the then applicable rate of interest on the Notes (for cash payments of
interest) plus 4.00% per annum, but in no event shall the Default Rate exceed
the Maximum Rate.

"EBITDA" means, for any period, the sum of Consolidated Net Income for such
period plus the following expenses or charges to the extent deducted from
Consolidated Net Income in such period: interest, taxes, depreciation, depletion
and amortization, and other non-cash charges, minus all non-cash income added to
Consolidated Net Income in such period.

"Effective Date" means the date the Indenture is executed by all the
parties thereto.

"Employee Plan" means any employee benefit plan, program or policy with
respect to which the Company or any ERISA Affiliate may have any liability or
any obligation to contribute, other than a Plan or a Multiemployer Plan.

"Environmental Laws" means any and all Governmental Requirements pertaining
to the environment in effect in any and all jurisdictions in which the Company
or any Subsidiary is conducting or at any time has conducted business, or where
any Property of the Company or any Subsidiary is located, including, without
limitation, the Oil Pollution Act of 1990, as amended, the Clean Air Act, as
amended, the Comprehensive Environmental, Response, Compensation, and Liability
Act of 1980, as amended, the Federal Water Pollution Control Act, as amended,
the Occupational Safety and Health Act of 1970, as amended, the Resource
Conservation and Recovery Act of 1976, as amended, the Safe Drinking Water Act,
as amended, the Toxic Substances Control Act, as amended, the Superfund
Amendments and Reauthorization Act of 1986, as amended, the Hazardous Materials
Transportation Act, as amended, and other environmental conservation or
protection laws. As used in the provisions hereof relating to Environmental
Laws, the term "oil" has the

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meaning specified in OPA; the terms "hazardous substance" and "release" (or
"threatened release") have the meanings specified in CERCLA, and the terms
"solid waste" and "disposal" (or "disposed") have the meanings specified in
RCRA; provided, however, that (i) in the event either OPA, CERCLA or RCRA is
amended so as to broaden the meaning of any term defined thereby, such broader
meaning shall apply subsequent to the effective date of such amendment, and (ii)
to the extent the laws of the state in which any Property of the Company or any
Subsidiary is located establish a meaning for "oil," "hazardous substance,"
"release," "solid waste" or "disposal" which is broader than that specified in
either OPA, CERCLA or RCRA, such broader meaning shall apply.

"Equity Documents" means the Warrants, the stock certificates representing
the Shares, the New Registration Rights Agreement and the Business Opportunities
Agreement.

"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time and any successor statute.

"ERISA Affiliate" means each trade or business (whether or not
incorporated) which together with the Company or any Subsidiary of the Company
would be deemed to be a "single employer" within the meaning of Section
4001(b)(1) of ERISA or subsections (b), (c), (m) or (o) of section 414 of the
Code.

"Excepted Liens" means (i) Liens for taxes, assessments or other
governmental charges or levies not yet due or which are being contested in good
faith by appropriate action and for which adequate reserves have been maintained
in accordance with GAAP; (ii) Liens in connection with workman's compensation,
unemployment insurance or other social security, old age pension or public
liability obligations not yet due or which are being contested in good faith by
appropriate action and for which adequate reserves have been maintained in
accordance with GAAP; (iii) operators', vendors', carriers', warehousemen's,
repairmen's, mechanics', workmen's, materialmen's, construction or other like
Liens arising by operation of law in the ordinary course of business or incident
to the exploration, development, operation and maintenance of Oil and Gas
Properties or customary landlord's liens, each of which is in respect of
obligations that have not been outstanding more than 90 days or which are being
contested in good faith by appropriate proceedings and for which adequate
reserves have been maintained in accordance with GAAP; (iv) any Liens reserved
in leases or farmout agreements for rent or royalties and for compliance with
the terms of the farmout agreements or leases in the case of leasehold estates,
to the extent that any such Lien referred to in this clause does not materially
impair the use of the Property covered by such Lien for the purposes for which
such Property is held or materially impair the value of the Property subject
thereto; (v) encumbrances (other than to secure the payment of borrowed money or
the deferred purchase price of Property or services), easements, restrictions,
servitudes, permits, conditions, covenants, exceptions or reservations in any
rights of way or other Property for the purpose of roads, pipelines,
transmission lines, transportation lines, distribution lines for the removal of
gas, oil, coal or other minerals or timber, and other like purposes, or for the
joint or common use of real estate, rights of way, facilities and equipment, and
defects, irregularities, zoning restrictions and deficiencies in title of any
rights of way or other Property which in the aggregate do not materially impair
the use of such rights of way or other Property for the purposes for which such
rights of way and other Property are held or materially imp air the value of
such Property subject thereto; (vi) deposits of cash or securities to secure the
performance of bids, trade, contracts, leases, statutory obligations and other
obligations of a like nature incurred in the ordinary course of business; and
(vii) Liens permitted by the Loan Documents.

"Federal Funds Rate" means, for any day, a fluctuating interest rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers on such
day, as published for such day (or, if such day is not a Business Day, for the
next preceding Business Day) by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business Day, the average
of the quotations for any such day on such transactions received by the Agent
from three federal funds brokers of recognized standing selected by it.

"Financial Statements" means the audited consolidated balance sheet of the
Company and its consolidated subsidiaries at December 31, 1997 and the related
consolidated statement of income, stockholders' equity and cash flow of the
Company and its consolidated subsidiaries for the fiscal year then ended, and
the

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unaudited consolidated balance sheet of the Company at June 30, 1998 and its
consolidated subsidiaries and the related consolidated statement of income,
stockholders' equity and cash flow of the Company and its consolidated
subsidiaries for the six-month period then ended.

"First Reserve Report" means the Reserve Report to be prepared as of
December 31, 1998 or later and furnished by the Company to the Agent pursuant to
the Indenture.

"GAAP" means generally accepted accounting principles in the United States
of America in effect from time to time.

"Governmental Authority" includes the country, the state, county, city and
political subdivisions in which any Person or such Person's Property is located
or which exercises valid jurisdiction over any such Person or such Person's
Property, and any court, agency, department, commission, board, bureau or
instrumentality of any of them including monetary authorities which exercises
valid jurisdiction over any such Person or such Person's Property. Unless
otherwise specified, all references to Governmental Authority in the Indenture
shall mean a Governmental Authority having jurisdiction over, where applicable,
the Company, the Subsidiaries or any of their Property or the Agent or any
Noteholder.

"Hedging Agreements" means any commodity, interest rate or currency swap,
cap, floor, collar, forward agreement or other exchange or protection agreements
or any option with respect to any such transaction.

"Hydrocarbon Interests" means all rights, titles, interests and estates now
or hereafter acquired in and to oil and gas leases, oil, gas and mineral leases,
or other liquid or gaseous hydrocarbon leases, mineral fee interests, overriding
royalty and royalty interests, net profit interests and production payment
interests, including any reserved or residual interests of whatever nature.

"Hydrocarbons" means oil, gas, casinghead gas, drip gasoline, natural
gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and
all products refined or separated therefrom.

"Initial Reserve Report" means the report of Cawley, Gillespie & Associates
with respect to the Oil and Gas Properties of the Partnership as of November 30,
1997.

"Interest Expense" means, for each applicable period for which EBITDA is to
be calculated, the sum of all required cash payments of interest during such
period on borrowed money. Interest on the Notes, for purposes of this
definition, shall be deemed cash payments, calculated at the cash interest rate,
whether paid in cash or in kind.

"Lien" means any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such interest
is based on the common law, statute or contract, and whether such obligation or
claim is fixed or contingent, and including but not limited to (i) the lien or
security interest arising from a mortgage, encumbrance, pledge, security
agreement, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes or (ii) production payments and the like payable out of
Oil and Gas Properties. The term "Lien" includes reservations, exceptions,
encroachments, easements, rights of way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances affecting Property. For the
purpose of the Indenture, a Person shall be deemed to be the owner of any
Property which it has acquired or holds subject to a conditional sale agreement,
or leases under a financing lease or other arrangement pursuant to which title
to the Property has been retained by or vested in some other Person in a
transaction intended to create a financing.

"Loan Documents" means the Indenture, the Notes, the Structuring Fee
Agreement, the Collateral Documents, and any and all other agreements or
instruments now or hereafter executed and delivered by the Company or any
Subsidiary or Affiliate of the Company (other than the Equity Documents and any
assignments, participation or similar agreements between any Noteholder and any
other lender or creditor with respect to any Obligations pursuant to the
Indenture) in connection with, or as security for the payment or performance of,
the Notes or the Indenture, as such agreements may be amended, supplemented or
restated from time to time.

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"Majority Noteholders" means, at any time, the Noteholders holding more
than 50% of the outstanding principal balance of the Notes.

"Material Adverse Effect" means any material and adverse effect on (i) the
assets, liabilities, financial condition, business, operations or affairs of the
Company and its Subsidiaries taken as a whole, from those reflected in the
Financial Statements, or from the facts represented or warranted in any Loan
Document at the time made, or (ii) the ability of the Company and its
Subsidiaries taken as a whole to carry out their business as of the Closing Date
or as proposed as of the Closing Date to be conducted or to meet their
obligations under the Loan Documents on a timely basis.

"Maximum Rate" means at any particular time in question, the maximum
nonusurious rate of interest, if any, which under applicable law may then be
charged on the Notes. If such maximum rate changes after the date hereof, the
Maximum Rate shall be automatically increased or decreased, as the case may be,
without notice to the Company from time to time as the effective date of each
change in such maximum rate.

"Mortgage" means a mortgage required by the Indenture to be executed in
favor of the Trustee, as collateral agent for the ratable benefit of the
Noteholders.

"Mortgaged Property" means the Property owned by the Company and its
Subsidiaries which is subject to the Liens existing and to exist under the Loan
Documents.

"Multiemployer Plan" means a Plan defined as such in Section 3(37) or
4001(a)(3) of ERISA.

"NASDAQ" means the National Association of Securities Dealers Automated
Quotation System.

"Net Working Capital" means, for any Person or group of Persons and as of
any date of its determination, the difference (shown on the balance sheets of
such Person or group as of the end of the most recent fiscal quarter of such
Person or group for which internal financial statements are available) between
(i) all current assets of such Person or group and (ii) all current liabilities
of such Person or group, except the current portion of long-term Debt.

"Noteholders" means the initial purchasers of the Notes and/or, to the
extent then applicable, each assignee of such purchasers or their respective
successors or assigns in whose name a Note may be registered in the note
register kept for that purpose.

"Obligations" means any and all amounts, liabilities and obligations owing
from time to time by Company to the Trustee, Agent or the Noteholders, pursuant
to any of the Basic Documents and all renewals, extensions and/or rearrangements
thereof, whether such amounts, liabilities or obligations be liquidated or
unliquidated, now existing or hereafter arising, absolute or contingent.

"Oil and Gas Properties" means Hydrocarbon Interests; the Properties now or
hereafter pooled or unitized with Hydrocarbon Interests; all presently existing
or future unitization, pooling agreements and declarations of pooled units and
the units created thereby (including without limitation all units created under
orders, regulations and rules of any Governmental Authority) which may affect
all or any portion of the Hydrocarbon Interests; all operating agreements,
contracts and other agreements which relate to any of the Hydrocarbon Interests
or the production, sale, purchase, exchange or processing of Hydrocarbons from
or attributable to such Hydrocarbon Interests; all Hydrocarbons in and under and
which may be produced and saved or attributable to the Hydrocarbon Interests,
including all oil in tanks, the lands covered thereby and all rents, issues,
profits, proceeds, products, revenues and other incomes from or attributable to
the Hydrocarbon Interests; all tenements, hereditaments, appurtenances and
Properties in any manner appertaining, belonging, affixed or incidental to the
Hydrocarbon Interests; and all Properties, rights, titles, interests and estates
described or referred to above, including any and all Property, real or
personal, now owned or hereafter acquired and situated upon, used, held for use
or useful in connection with the operating, working or development of any of
such Hydrocarbon Interests or Property (excluding drilling rights, automotive
equipment or other personal property which may be on such premises for the
purpose of drilling a well or other similar temporary use) and including any and
all oil wells, gas wells, injection wells or other wells, buildings, structures,
fuel separators, liquid extraction plants, plant compressors, pumps, pumping
units, field gathering systems, tanks and tank batteries, fixtures, valves,
fittings, machinery and parts, engines, boilers, meters,

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apparatus, appliances, tools, implements, cables, wires, towers, casing, tubing
and rods, similar equipment, surface leases, rights-of-way, easements and
servitudes together with all additions, substitutions, replacements, accessions
and attachments to any and all of the foregoing.

"outstanding", when used with reference to Notes, means, as of any
particular time, all Notes authenticated and delivered by the Trustee under the
Indenture, except

(a) Notes that have been canceled by the Trustee or delivered to the
Trustee for cancellation;

(b) Notes for which monies in the necessary amount for payment or
redemption shall have been deposited in trust with the Trustee or with any
paying agent (other than the Company), provided that, if such Notes are to
be redeemed, notice of such redemption shall have been given as provided in
the Indenture or provision satisfactory to the Trustee shall have been made
for giving such notice; and

(c) Notes in lieu of or in substitution for which other Notes shall
have been authenticated and delivered pursuant to the terms of the
Indenture.

"Participation" means, for each Noteholder, such Noteholder's proportionate
share of the Obligations and the Warrants.

"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions.

"Permitted Debt" means:

(a) The Senior Loan, up to the lesser of $75,000,000 or the "Borrowing
Base" under the Senior Credit Agreement;

(b) The Notes or other Obligations arising under the Loan Documents or
any guaranty of or suretyship arrangement for the Notes or other
Obligations arising under the Loan Documents;

(c) Debt of the Company which is existing on the Closing Date and is
reflected in the Financial Statements or constitutes Schedule 8.02
Payables, and any renewals or extensions (but not increases) thereof;

(d) Accounts payable for the deferred purchase price of Property or
services (other than Trade Payables) from time to time incurred in the
ordinary course of business which, if greater than 60 days past the invoice
or billing date, are being contested in good faith by appropriate
proceedings if reserves adequate under GAAP shall have been established
therefor;

(e) Debt of the Company under capital leases (as required to be
reported on the financial statements of the Company pursuant to GAAP) not
to exceed $2,000,000;

(f) Debt of the Company under Hedging Agreements with a Senior Lender
or another investment grade counterparty the notional amounts on which do
not exceed 75% of Company's anticipated oil and/or gas production to be
produced during the term of such Hedging Agreements entered into as a part
of its normal business operations as a risk management strategy and/or
hedge against changes resulting from market conditions related to the
Company's and its Subsidiaries' operations; and

(g) Debt of the Company not described in clauses (a) through (f)
which, in the aggregate, does not exceed $1,000,000 at any one time
outstanding.

"Person" means any individual, corporation, company, voluntary association,
partnership, joint venture, trust, limited liability company, unincorporated
organization or government or any agency, instrumentality or political
subdivision thereof, or any other form of entity.

"Plan" means any employee pension benefit plan, as defined in Section 3(2)
of ERISA, which (i) is currently or hereafter sponsored, maintained or
contributed to by the Company, any Subsidiary or an ERISA Affiliate or (ii) was
at any time during the preceding six calendar years sponsored, maintained or
contributed to, by the Company, any Subsidiary or an ERISA Affiliate.

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"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.

"Reportable Event" means an event described in Section 4043(c) of ERISA
with respect to a Plan, other than an event described in paragraphs (1) through
(8) as to which the 30 day notice requirement has been waived by the PBGC.

"Reserve Report" means a report, in form satisfactory to the Senior Loan
Agent (or if there is no Senior Loan or requirement for a Reserve Report under
the Senior Loan, the Agent), setting forth, as of the dates set forth in the
Indenture (or such other date in the event of an unscheduled redetermination);
(i) the proved oil and gas reserves attributable to the Company's and its
Subsidiaries' Hydrocarbon Interests together with a projection of the rate of
production and future net income, taxes operating expenses and capital
expenditures with respect thereto as of such date, based upon the pricing
assumptions consistent with Commission reporting requirements at the time and
(ii) such other information as the Senior Loan Agent (or, if there is no Senior
Loan, or requirement for a Reserve Report under the Senior Loan, the Agent) may
reasonably request. The term "Reserve Report" shall also include the Initial
Reserve Report, the First Reserve Report, certain supplemental Reserve Reports
described in the Indenture, and certain information to be provided by the
Company with the delivery of each Reserve Report.

"Schedule 8.02 Payables" means payables owing under the agreements listed
on Schedule 8.02 to the Indenture which are outstanding more than 75 days after
they become fixed and owing, provided that the aggregate amounts of such
payables under each such agreement do not exceed the amount set forth for each
such agreement or such schedule.

"Scheduled Redetermination Date" means the last Business Day of each
September and March during the term of the Notes, commencing September 1999 .

"Securities Purchase Agreement" means the Securities Purchase Agreement to
be dated of even date with the Indenture between the purchasers of the Notes and
the Company.

"Senior Credit Agreement" means the Credit Agreement dated as of January
26, 1998, among the Partnership, the Senior Loan Agent, and the Senior Lenders,
as it may from time to time be amended, modified or supplemented from time to
time, and any Credit Agreement or similar agreement executed with banks or other
financial institutions in connection with any refinancing of the Senior Loan
permitted under the Indenture and under the Subordination Agreement.

"Senior Lenders" means each of the lenders from time to time under the
Senior Credit Agreement.

"Senior Loan" shall mean, collectively, any advance or advances of
principal made by the Senior Lenders to the Partnership or the Company under the
Senior Credit Agreement and the other Senior Loan Documents.

"Senior Loan Agent" means the agent or agents designated under the Senior
Credit Agreement. Bank of Montreal is currently the Senior Loan Agent.

"Senior Loan Documents" means the Senior Credit Agreement and all
promissory notes, collateral documents and other agreements, documents and
instruments executed or delivered in connection therewith, as such agreements
may be amended, modified or supplemented from time to time.

"Special Entity" means any joint venture, limited liability company or
partnership, general or limited partnership or any other type of partnership or
company other than a corporation, in which a Person or one or more of its other
Subsidiaries is a member, owner, partner or joint venturer and owns, directly or
indirectly, at least a majority of the equity of such entity or controls such
entity, but excluding any tax partnerships that are not classified as
partnerships under state law. For purposes of the definition, any Person which
owns directly or indirectly an equity investment in another Person which allows
the first Person to manage or elect managers who manage the normal activities of
such second Person will be deemed to "control" such second Person (e.g., a sole
general partner controls a limited partnership).

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"Structuring Fee Agreement" means the agreement between the Company and an
affiliate of the purchasers of the Notes to be dated as of the date of the
Indenture.

"Subsidiary" means (i) any corporation of which at least a majority of the
outstanding shares of stock having by the terms thereof ordinary voting power to
elect a majority of the board of directors of such corporation (irrespective of
whether or not at the time stock of any other class or classes of such
corporation shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned or controlled by a
Person or one or more of its Subsidiaries or by a Person and one or more of its
Subsidiaries and (ii) any Special Entity. Unless otherwise indicated in the
Indenture, each reference to the term "Subsidiary" shall mean a Subsidiary of
the Company. Quest Resources L.L.C. and Venture Acquisitions L.P., which are not
material, shall not be considered Subsidiaries of the Company.

"Trade Payables" means customary trade payables incurred in the ordinary
course of business.

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SUBORDINATION AGREEMENT

GENERAL

Pursuant to an Intercreditor and Subordination Agreement (the
"Subordination Agreement") to be entered into by the Trustee, the Noteholders,
the agent for the Noteholders (the "Subordinated Agent"), the Bank of Montreal,
as agent for the lenders ("Senior Lender") under the Credit Facility (the
"Senior Agent"), the Company and certain of its subsidiaries, the Subordinated
Indebtedness (as defined) will be expressly subordinated to the extent and
manner provided in the Subordination Agreement to the Senior Indebtedness,
whether currently outstanding or hereafter created, incurred, assumed or
guaranteed. The following discussion of certain provisions of the Subordination
Agreement does not purport to be complete and is qualified in its entirety by
reference to the Subordination Agreement, including the definitions therein of
certain terms used below. The definitions of certain terms used in the following
summary are set forth below under "-- Certain Definitions." Except for the terms
"Subordination Agreement" and "Senior Indebtedness", the terms defined in this
"Subordination Agreement" section have such meanings only for purposes of this
section.

SUBORDINATION

The Company and the Subsidiary Guarantors will not be permitted to make any
payment (whether by redemption, purchase, retirement, defeasance, set-off or
otherwise) upon or in respect of the Subordinated Indebtedness, until all
principal and other obligations with respect to the Senior Indebtedness have
been paid in full if: (A) a default in the payment of any principal of or
interest on the Senior Indebtedness occurs; or (B) the payment of the
Subordinated Indebtedness would result in a default or event of default under
the Senior Loan Documents or any other default has occurred and is continuing
with respect to the Senior Indebtedness that permits, or with the giving of
notice or passage of time or both (unless cured or waived) would permit, the
Senior Agent or the Senior Lender to accelerate its maturity and the
Subordinated Agent receives a notice of the default (a "Payment Blockage
Notice") from the Company or any Subsidiary Guarantor, the Senior Agent or any
Senior Lender with regard to the foregoing.

The Company and each Subsidiary Guarantor will be permitted to resume
payments on and distributions in respect of the Subordinated Indebtedness upon:
(A) in the case of a default referred to in clause (A) in the preceding
paragraph, the date upon which the default is cured or waived, or (B) in the
case of a default referred to in clause (b) of the preceding paragraph, the
earliest of (1) the date on which such nonpayment default is cured or waived or
(2) the expiration of the applicable Payment Blockage Period unless the maturity
of the Senior Indebtedness has been accelerated.

Upon any payment or distribution of property or securities to creditors of
the Company or any Subsidiary Guarantor in a liquidation or dissolution of such
person or its property, or in an assignment for the benefit of creditors or any
marshaling of its assets and liabilities: (A) the Senior Lender shall be
entitled to receive payment in full of all Senior Indebtedness (including
interest after the commencement of any such proceeding at the rate specified in
the Senior Loan Documents, whether or not a claim for such interest would be
allowed in such proceeding) before the Subordinated Agent and/or Noteholder
shall be entitled to receive any payment with respect to the Subordinated
Indebtedness; and (B) until the Senior Indebtedness is paid in full, any payment
or distribution to which the Subordinated Agent and/or the Noteholders would be
entitled shall be made to the Senior Agent for its benefit and the benefit of
the Senior Lender; and (C) under the circumstances described in this paragraph,
the Company, any Subsidiary Guarantor, or any receiver, trustee in bankruptcy,
liquidating trustee, agent or other similar Person making any payment or
distribution of cash or other property or securities is authorized or instructed
to make any payment or distribution to which the Subordinated Agent and/or the
Noteholders would otherwise be entitled (other than securities that are
subordinated at least to the same extent as the Subordinated Indebtedness)
directly to the Senior Agent for its benefit and the benefit of the Senior
Lender to the extent necessary to pay all Senior Indebtedness in full, after
giving effect to any concurrent payment, distribution or provision therefor to
or for the Senior Agent and the Senior Lender.

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Liens upon the property of any of the Company or any Subsidiary Guarantor
securing payments of the Subordinated Indebtedness will be and remain inferior
and subordinated to any liens securing payments of the Senior Indebtedness in
such property regardless of whether such encumbrances in favor of the
Subordinated Agent or any Noteholder or the Senior Agent and the Senior Lender
exist on the date of the Subordination Agreement or are thereafter created or
attached and regardless of the date of execution and delivery or the date of
filing or recording. Any obligation of the Company or any Subsidiary Guarantor
under the Subordinated Loan Documents to deliver possession of any property to
the Trustee under the Indenture, the Subordinated Agent or the Noteholders,
whether for purposes of perfection or realization of any rights thereunder shall
be subordinate in all respects to the Company's or any Subsidiary Guarantor's
obligation to deliver possession of any such property to the Senior Loan Agent
or Senior Lender under the Senior Loan Documents for such purposes.

CERTAIN DEFINITIONS

Set forth below are certain defined terms used in the above summary of
certain provisions of the Subordination Agreement. Except for the terms
"Subordination Agreement" and "Senior Indebtedness", the terms defined in this
"Subordination Agreement" section have such meanings only for purposes of this
section.

"Hedging Agreement" means the ISDA Master Agreement between the Partnership
and Bank of Montreal now or hereafter entered into, and any hedging transactions
entered into pursuant to the terms thereof.

"Payment Blockage Period" means the period commencing on (i) the date on
which a default in the payment of any principal of or interest on the Senior
Indebtedness occurs or (ii) the date on which a Payment Blockage Notice is
given, and expiring on the date which is 60 days following the first day of the
Payment Blockage Period.

"Senior Guaranty Agreements" means Guaranty Agreements executed by the
Company and the Subsidiary Guarantors (other than the Partnership), in favor of
the Senior Agent and the Senior Lender to secure, inter alia, the obligations of
the Partnership under the Credit Facility.

"Senior Indebtedness" shall mean the principal balance of all loans
advanced to or letters of credit issued for the account of the Partnership
pursuant to the terms and conditions of the Senior Loan Documents, not to exceed
$75,000,000 plus the additional amounts permitted under Section 2.6(a) of the
Subordination Agreement, and accrued but unpaid interest thereon, all fees,
expenses, reimbursement obligations, liabilities, indemnities or other monetary
obligations of the Company or any Subsidiary Guarantor under any Senior Loan
Document, and all swap settlement amounts or other amounts due and payable under
the Hedging Agreement, whether any of the foregoing is (i) absolute or
contingent, direct or indirect, joint, several or independent, (ii) now
outstanding or owing or which may hereafter be existing or incurred, (iii) due
or to become due, or (iv) held or to be held by the Senior Agent or any Senior
Lender, and all renewals, extensions, rearrangements, refundings and
modifications thereof permitted by the terms of the Subordination Agreement.

"Senior Loan Documents" mean the Credit Facility, the Senior Mortgage, the
Senior Guaranty Agreements, the Senior Parent Security Agreement and those other
documents or instruments given in connection therewith

"Senior Mortgage" means one or more Mortgage, Deed of Trust, Assignment of
Production, Security Agreement and Financing Statements and one or more Security
Agreements, heretofore or hereafter executed by the Partnership in favor of the
Senior Agent to secure, inter alia, the obligations outstanding under the Credit
Facility.

"Senior Parent Security Agreement" means the Security Agreement executed by
the Company in favor of the Senior Agent and the Senior Lender to secure, inter
alia, the obligations of the Partnership under the Credit Facility.

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"Subordinated Indebtedness" shall mean the principal balance of all loans
advanced to the Company pursuant to the terms and conditions of the Subordinated
Loan Documents (including interest paid in kind as permitted by the Subordinated
Loan Documents), and accrued but unpaid interest thereon, and all fees,
expenses, reimbursement obligations, liabilities, indemnities or other monetary
obligations of the Company or any Subsidiary Guarantor under any Subordinated
Loan Document whether any of the foregoing is (i) absolute or contingent, direct
or indirect, joint, several or independent, (ii) now outstanding or owing or
hereafter existing or incurred, (iii) due or to become due, or (iv) held or to
be held by the Subordinated Agent or any Noteholder, and all renewals,
extensions, rearrangements, refundings and modifications thereof permitted by
the terms hereof.

"Subordinated Loan Documents" means the Indenture, Securities Purchase
Agreement, the Subordinated Mortgage, the Subsidiary Guaranty Agreements, the
Subordinated Parent Security Agreement and those other documents or instruments
given in connection therewith.

"Subordinated Mortgage" means one or more Mortgage, Deed of Trust,
Assignment of Production, Security Agreement and Financing Statements, executed
by the Partnership granting subordinated liens in the properties subject to the
Senior Mortgage in favor of the Trustee to secure, inter alia, the obligations
outstanding under the Indenture.

"Subordinated Parent Security Agreement" means the Security Agreement
executed by the Company in favor of the Trustee to secure, inter alia, the
obligations of the Company under the Subordinated Loan Documents.

DESCRIPTION OF WARRANTS

GENERAL

Warrants to purchase shares of Common Stock at an exercise price of $
per share, payable in cash, will be issued pursuant to warrant certificates. The
Warrants will expire on , 2005 (the "Warrant Expiration
Date"). The Warrants will entitle the holders thereof to purchase in the
aggregate 1,000,000 shares of Common Stock. The holders of the Warrants (the
"Warrantholders") will be entitled to exercise all or a portion of their
Warrants at any time after issuance of the Warrants and on or prior to the
Warrant Expiration Date at which time all unexercised Warrants will expire. This
summary does not purport to be a complete description of the Warrants and is
subject to the detailed provisions of, and qualified in its entirety by
reference to, the warrant certificates (including the definitions contained
therein).

MERGERS, CONSOLIDATIONS OF THE COMPANY; ANTI-DILUTION ADJUSTMENTS

In case of any reclassification or change of outstanding securities
issuable upon exercise of the Warrants (other than a change in par value, or
from par value to no par value, or from no par value to par value or as a result
of a subdivision or combination to which a separate provision applies), or in
case of any consolidation or merger of the Company with or into another entity
or other person (other than a merger with another entity or other person in
which the Company is the surviving corporation and which does not result in any
reclassification or change in the securities issuable upon exercise of the
Warrants), provision must be made for Warrantholders to receive, upon the
exercise of Warrants and in lieu of Warrant Shares, such securities or assets as
would be issued or paid in respect of shares of Common Stock upon such
reclassification, change, consolidation or merger.

If the Company declares a dividend on its Common Stock payable in stock or
other securities of the Company to the holders of its Common Stock, the
Warrantholders shall be entitled to receive upon any exercise of a Warrant, in
addition to the Warrant Shares, the number of shares of stock or other
securities which such holder would have been entitled to receive if he had been
a holder immediately prior to the record date for such dividend (or, if no
record date shall have been established, the payment date for such dividend) of
the number of Warrant Shares purchasable on exercise of such Warrant immediately
prior to such record date or payment date, as the case may be.

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The number of Warrant Shares issuable upon exercise of a Warrant will also
be adjusted in the event of a combination or subdivision of the Common Stock.

EXERCISE PRICE ADJUSTMENTS

If the Company issues any additional shares of Common Stock (otherwise than
as described above under "Mergers and Consolidations of the Company;
Anti-Dilution Adjustments") at a price per share less than the average price per
share of Common Stock (with each day's price determined by averaging the high
and low sales prices as reported on the National Association of Securities
Dealers Automated Quotations Systems) for the 20 trading days immediately
preceding the date of the authorization of such issuance (the "Market Price") by
the Board of Directors of the Company, then the exercise price of the Warrants
upon each such issuance shall be adjusted to that price determined by
multiplying the exercise price by a fraction: (A) the numerator of which shall
be the sum of (i) the number of shares of Common Stock outstanding immediately
prior to the issuance of such additional shares of Common Stock multiplied by
the Market Price, and (ii) the consideration, if any, received by the Company
upon the issuance of such additional shares of Common Stock, and (B) the
denominator of which shall be the Market Price multiplied by the total number of
shares of Common Stock outstanding immediately after the issuance of such
additional shares of Common Stock. No such adjustments of the exercise price
shall be made upon the issuance of any additional shares of Common Stock that
(y) are issued pursuant to thrift plans, stock purchase plans, stock bonus
plans, stock option plans, employee stock ownership plans and other incentive or
profit sharing arrangements for the benefit of employees ("Employee Benefit
Plans") that otherwise would cause an adjustment; provided that the aggregate
number of shares of Common Stock so issued (including the shares issued pursuant
to any options, rights or warrants or convertible or exchangeable securities
issued under such Employee Benefit Plans containing the right to purchase shares
of Common Stock) pursuant to Employee Benefit Plans after the date of the
closing of the Company's initial public offering, as adjusted for any stock
splits, stock dividends or subdivisions or combinations of Common Stock prior to
the Warrant Expiration Date, shall not in the aggregate exceed 5% of the
Company's outstanding Common Stock at the time of such issuance; or (z) are
issued pursuant to any Common Stock Equivalent (as defined) (i) if upon the
issuance of any such Common Stock Equivalent, any such adjustments shall
previously have been made pursuant to the provisions described in the following
paragraph or (ii) if no adjustment was required pursuant such provisions.

If the Company shall issue any security or evidence of indebtedness which
is convertible into or exchangeable for Common Stock ("Convertible Security"),
or any warrant, option or other right to subscribe for or purchase Common Stock
or any Convertible Security, other than pursuant to Employee Benefit Plans
(together with Convertible Securities, "Common Stock Equivalent"), or if, after
any such issuance, the price per share for which additional shares of Common
Stock may be issuable thereunder is amended, then the exercise price upon each
such issuance or amendment shall be adjusted as provided in preceding paragraph
on the basis that (i) the maximum number of additional shares of Common Stock
issuable pursuant to all such Common Stock Equivalents shall be deemed to have
been issued as of the earlier of (a) the date on which the Company shall enter
into a firm contract for the issuance of such Common Stock Equivalent, or (b)
the date of actual issuance of such Common Stock Equivalent; and (ii) the
aggregate consideration for such maximum number of additional shares of Common
Stock shall be deemed to be the minimum consideration received and receivable by
the Company for the issuance of such additional shares of Common Stock pursuant
to such Common Stock Equivalent; provided, however, that no such adjustment
shall be made unless the consideration received and receivable by the Company
per share of Common Stock for the issuance of such additional shares of Common
Stock pursuant to such Common Stock Equivalent is less than the Market Price. No
such adjustment of the exercise price shall be made upon the issuance of any
Convertible Security which is issued pursuant to the exercise of any warrants or
other subscription or purchase rights therefor, if any adjustment shall
previously have been made in the exercise price then in effect upon the issuance
of such warrants or other rights pursuant to the provisions described in this
paragraph. Appropriate readjustments to the purchase price will be made upon the
expiration of the right to convert, exchange or exercise any Common Stock
Equivalent if any such Common Stock Equivalent shall not have been converted,
exercised or exchanged.

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REPORTS

The Company will cause to be delivered, by first-class mail, postage
prepaid, to the Warrantholders a copy of any reports delivered by the Company to
the holders of Common Stock.

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 30 million shares
of Common Stock, par value $.01 per share, and 10 million shares of preferred
stock, par value $.01 per share ("Preferred Stock"). As of August 13, 1998, the
Company had outstanding 12,253,574 shares of Common Stock held of record by 67
stockholders and stock options for an aggregate of 935,987 shares.

COMMON STOCK

The holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to the stockholders. The Certificate of
Incorporation of the Company does not allow the stockholders to take action by
less than unanimous consent. Each share of Common Stock is entitled to
participate equally in dividends, if, as and when declared by the Company's
Board of Directors, and in the distribution of assets in the event of
liquidation, subject in all cases to any prior rights of outstanding shares of
Preferred Stock. The Company has never paid cash dividends on its Common Stock
and is currently restricted from doing so by the Credit Facility, and,
subsequent to the Offering, will be further restricted by the Indenture. The
shares of Common Stock have no preemptive or conversion rights, redemption
rights, or sinking fund provisions. The outstanding shares of Common Stock are,
and the shares of Common Stock offered hereby upon issuance and sale will be,
duly authorized, validly issued, fully paid, and nonassessable.

PREFERRED STOCK

The Company has no outstanding Preferred Stock. The Company is authorized
to issue 10 million shares of Preferred Stock. The Company's Board of Directors
may establish, without stockholder approval, one or more classes or series of
Preferred Stock having the number of shares, designations, relative voting
rights, dividend rates, liquidation and other rights, preferences, and
limitations that the Board of Directors may designate. The Company believes that
this power to issue Preferred Stock will provide flexibility in connection with
possible corporate transactions. The issuance of Preferred Stock, however, could
adversely affect the voting power of holders of Common Stock and restrict their
rights to receive payments upon liquidation of the Company. It could also have
the effect of delaying, deferring or preventing a change in control of the
Company. The Company does not currently plan to issue Preferred Stock.

DELAWARE LAW PROVISIONS

The Company is a Delaware corporation and is subject to Section 203 of the
Delaware General Corporation Law. Generally, Section 203 prohibits the Company
from engaging in a "business combination" (as defined in Section 203) with an
"interested stockholder" (defined generally as a person owning 15% or more of
the Company's outstanding voting stock) for three years following the date that
person becomes an interested stockholder, unless (a) before that person became
an interested stockholder, the Company's Board of Directors approved the
transaction in which the interested stockholder became an interested stockholder
or approved the business combination; (b) upon completion of the transaction
that resulted in the interested stockholder's becoming an interested
stockholder, the interested stockholder owns at least 85% of the voting stock
outstanding at the time the transaction commenced (excluding stock held by
directors who are also officers of the Company and by employee stock plans that
do not provide employees with the right to determine confidentially whether
shares held subject to the plan will be tendered in a tender or exchange offer);
or (c) following the transaction in which that person became an interested
stockholder, the business combination is approved by the Company's Board of
Directors and authorized at a meeting of stockholders by the affirmative vote of
the holders of at least two-thirds of the outstanding voting stock not owned by
the interested stockholder.

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Under Section 203, these restrictions also do not apply to certain business
combinations proposed by an interested stockholder following the announcement or
notification of one of certain extraordinary transactions involving the Company
and a person who was not an interested stockholder during the previous three
years or who became an interested stockholder with the approval of a majority of
the Company's directors, if that extraordinary transaction is approved or not
opposed by a majority of the directors who were directors before any person
became an interested stockholder in the previous three years or who were
recommended for election or elected to succeed such directors by a majority of
such directors then in office.

REGISTRATION RIGHTS

The Company has entered into a Registration Rights Agreement with General
Atlantic Partners III, L.P., GAP-Brigham Partners, L.P., RIMCO Partners, L.P.
II, RIMCO Partners, L.P. III and RIMCO Partners, L.P. IV, Ben M. Brigham, Anne
L. Brigham, Harold D. Carter, Craig M. Fleming, David T. Brigham and Jon L.
Glass. Pursuant to the Registration Rights Agreement, Anne and Ben Brigham,
acting together, the General Atlantic entities, acting together, and the RIMCO
entities, acting together, each may separately require the Company to register
securities, on one occasion, if the shares to be registered have an estimated
aggregate offering price to the public of at least $3 million. One additional
registration is allowed if any registrable securities requested to be included
in a previous registration statement were not disposed of in accordance with
that previous registration. The Registration Rights Agreement also provides
"piggyback" registration rights after the Offering for all registrations of
registrable securities for the Company or another security holder. In an
underwritten offering, however, the Company may exclude all or a portion of the
securities being registered pursuant to "piggyback" registration rights if the
managing underwriter determines that including those securities would raise a
substantial doubt about whether the proposed offering could be consummated. The
Registration Rights Agreement contains customary indemnity by the Company in
favor of persons selling securities in a registration governed by the
Registration Rights Agreement, and by those persons in favor of the Company,
relating to the information included in or omitted from the Registration
Statement.

The holders of the Shares and the Warrants will have demand and "piggyback"
registration rights with respect to the Shares and the Warrant Shares,
respectively. See "Registration Rights Relating to the Warrants and Shares."

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Common Stock is American Stock
Transfer & Trust Company.

REGISTRATION RIGHTS RELATING TO THE WARRANTS AND SHARES

Pursuant to a New Registration Rights Agreement (the "New Registration
Rights Agreement") to be entered into among the Company and the initial
purchasers of the Warrants and Shares, holders of the Shares, the Warrants, the
Warrant Shares and any other securities issued upon the exercise of the Warrants
(collectively, the "Registrable Securities") collectively owning at least 25% of
the Registrable Securities may require the Company to register (other than
pursuant to a shelf registration on Form S-3) all or any part of the Registrable
Securities held by such holders. In addition, in the event that the Company is
eligible to register securities for resale with the Commission on Form S-3,
holders collectively owning at least a majority of the Registrable Securities
may require the Company to register under Form S-3 all or any portion of the
Registrable Securities held by such holders. The Company shall only be required
under the New Registration Rights Agreement to register Registrable Securities
(including under Form S-3) pursuant to such demand rights on two occasions;
provided that a request will only be "counted" when (i) all the Registrable
Securities requested to be included in the registration statement have been
included, (ii) the corresponding registration statement has become effective and
(iii) the public offering has been consummated and the Registrable Securities
have been sold on the terms and conditions provided therein, provided that in
the event of a shelf registration statement (if the Company is then eligible to
file on Form S-3) the Company shall keep such registration statement effective
for two years from the effective date.

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If the Company is required to effect a registration pursuant to the New
Registration Rights Agreement, subject to certain exceptions described therein
the Company will be required to file a registration statement with respect to
the applicable securities within 30 days in the case of a shelf registration
statement (if the Company is then eligible to file on Form S-3), or otherwise
within 60 days. The Company will use its best efforts to cause the registration
statement to become and remain effective for the period of the distribution in
order for it to be "counted" as described above.

Subject to existing registration rights of institutional investors, the
holders of the Registrable Securities will provide "piggyback" registration
rights to the holders of Registrable Securities in the event the Company
registers any of its equity securities for the Company or other security
holders. In an underwritten offering, however, subject to certain provisions
including priority of securities to be registered, the Company may exclude all
or a portion of the Registrable Securities being registered pursuant to
"piggyback" registration rights if in the good faith opinion of the managing
underwriter the inclusion of the shares would raise a substantial doubt as to
whether the proposed offering could successfully be consummated.

Exercise of the right to convert the Warrants to Warrant Shares shall, at
the election of the holder of the Warrants, be contingent upon the registration
of the Warrant Shares in accordance with the New Registration Rights Agreement
and should such registration not be completed such holder shall have the right
to rescind its election to convert the Warrants.

The New Registration Rights Agreement will contain customary indemnity by
the Company in favor of persons selling securities in a registration governed by
the New Registration Right Agreement, and by those persons in favor of the
Company, relating to the information included in or omitted from the
registration statement.

The summary herein of certain provisions of the New Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the New Registration Rights
Agreement form, which is available upon request to the Company.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offering, the Company will have shares of
Common Stock outstanding. Of these shares, the shares of Common Stock
offered hereby will be freely transferable without restriction under the
Securities Act unless they are held by the Company's affiliates, as that term is
used in Rule 144 under the Securities Act. 8,928,574 shares of Common Stock were
issued in reliance on exemptions from the registration requirements of the
Securities Act and are eligible for sale under Rule 144, based on current SEC
rules and subject to compliance with the volume and other requirements of Rule
144. Beginning February 27, 1999, all of those shares of Common Stock will
become eligible for sale under Rule 144(k) if they are not held by affiliates of
the Company. shares of Common Stock that will be issued in the Offering or
that were sold in the Company's initial public offering are freely tradeable,
except to the extent that they are held by affiliates of the Company.

In general, under Rule 144 a person (or persons whose sales are
aggregated), including an affiliate, who has beneficially owned shares for at
least one year is entitled to sell in broker transactions, within any three-
month period after the Offering, a number of shares that does not exceed the
greater of (i) 1% of the then outstanding Common Stock (approximately
shares immediately after the Offering) or (ii) the average weekly trading volume
in the Common Stock during the four calendar weeks preceding the sale, subject
to the filing of a Form 144 with respect to the sale and other limitations. In
addition, a person who was not an affiliate of the Company during the three
months preceding a sale and who has beneficially owned the shares proposed to be
sold for at least two years is entitled to sell the shares under Rule 144(k)
without regard to the manner-of-sale, volume and other limitations of Rule 144.
The SEC has proposed modifications to Rule 144 that could change some of these
requirements.

The holders of 8,421,431 shares of Common Stock and their permitted
transferees are entitled to demand registration of those shares under the
Securities Act, and the holders of 8,928,574 shares of Common Stock are entitled
to "piggyback" registration rights. The holders of the Shares and the Warrants
will have demand

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and "piggyback" registration rights with respect to the Shares and Warrant
Shares, respectively. See "Description of Capital Stock -- Registration Rights"
and "Registration Rights Relating to the Warrants and Shares."

Options covering 935,987 shares of Common Stock are outstanding, with an
average exercise price of $7.61 per share, subject to vesting.

Pursuant to the Offering, Warrants to purchase 1,000,000 shares of Common
Stock at an exercise price of $ per share will be issued and outstanding.
Such Warrants shall be immediately exercisable.

PLAN OF DISTRIBUTION

The Notes, Warrants and shares of Common Stock offered hereby will be
purchased by not more than three institutional "accredited investors", as
defined in Rule 501(a)(1), (2), (3) and (7) under the Securities Act. The
offering price per Share will be based on the average volume-weighted closing
sales price of the Common Stock as reported on the National Association of
Securities Dealers Automated Quotation System over a period of time prior to
closing.

LEGAL MATTERS

Certain legal matters in connection with the securities being offered
hereby will be passed upon for the Company by Thompson & Knight, P.C., Dallas,
Texas.

EXPERTS

The consolidated financial statements of Brigham Exploration Company as of
December 31, 1997 and 1996 and for each of the three years in the period ended
December 31, 1997 included in this Prospectus have been so included in reliance
on the report of PricewaterhouseCoopers LLP, independent accountants, given on
authority of said firm as experts in auditing and accounting.

The letter of Cawley, Gillespie & Associates, Inc., independent oil and gas
consultants, set forth in this Prospectus as Appendix A has been included herein
in reliance upon the firm as expert with respect to the matters contained in
that letter. In addition, the information with respect to the reserve reports
prepared by Cawley Gillespie has been included herein in reliance upon by the
firm as experts with respect to such information.

AVAILABLE INFORMATION

The Company has filed with the Commission a Registration Statement on Form
S-1 (as amended and together with all exhibits thereto, the "Registration
Statement") under the Securities Act, with respect to the shares of Common Stock
offered by this Prospectus. This Prospectus constitutes a part of the
Registration Statement and does not contain all of the information set forth in
the Registration Statement, certain parts of which are omitted from this
Prospectus as permitted by the rules and regulations of the SEC. Statements in
this Prospectus about the contents of any contract or other document are not
necessarily complete; reference is made in each instance to the copy of the
contract or other document filed as an exhibit to the Registration Statement.
Each such statement is qualified in all respects by such reference. The
Registration Statement and accompanying exhibits and schedules may by inspected
and copies may be obtained (at prescribed rates) at the public reference
facilities of the SEC at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549. Copies of the Registration Statement may also be
inspected at the SEC's regional offices at 7 World Trade Center, Suite 1300, New
York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. In addition, the Common Stock will be listed on
the Nasdaq National Market, 1735 K Street, N.W., Washington, D.C. 20006-1500,
where such material may also be inspected and copied.

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The Company is subject to the information and periodic reporting
requirements of the Securities Exchange Act of 1934, and, in accordance
therewith, files periodic reports, proxy statements and other information with
the SEC. Such periodic reports, proxy statements and other information will be
available for inspection and copying at the public reference facilities and
regional offices referred to above. In addition, these reports, proxy statements
and other information may also be obtained from the web site that the SEC
maintains at http://www.sec.gov.

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GLOSSARY OF CERTAIN OIL AND GAS TERMS

The following are abbreviations and definitions of certain terms commonly
used in the oil and gas industry and this Prospectus.

Bbl. One stock tank barrel, or 42 U.S. gallons liquid volume, used herein
in reference to oil or other liquid hydrocarbons.

Bcf. One billion cubic feet.

Bcfe. One billion cubic feet of natural gas equivalent. In reference to
natural gas, natural gas equivalents are determined using the ratio of 6 Mcf of
natural gas to 1 Bbl of oil, condensate or natural gas liquids.

Completion. The installation of permanent equipment for the production of
natural gas or oil.

Developed Acreage. The number of acres which are allocated or assignable to
producing wells or wells capable of production.

Development Well. A well drilled within the proved area of natural gas or
an oil reservoir to the depth of a stratigraphic horizon known to be productive.

Drilling Costs. The costs associated with drilling and completing a well
(exclusive of seismic and land acquisition costs for that well and future
development costs associated with proved undeveloped reserves added by the well)
divided by total proved reserve additions.

Dry Well. A well found to be incapable of producing either natural gas or
oil in sufficient quantities to justify completion of natural gas or an oil
well.

Exploratory Well. A well drilled to find and produce natural gas or oil in
an unproved area, to find a new reservoir in a field previously found to be
productive of natural gas or oil in another reservoir, or to extend a known
reservoir.

Finding and Development Costs. Capital costs incurred in the acquisition,
exploration and development of proved natural gas and oil reserves divided by
proved reserve additions.

Gross Acres or Gross Wells. The total acres or wells, as the case may be,
in which the Company has a working interest.

Mbbl. One thousand barrels of oil or other liquid hydrocarbons.

Mcf. One thousand cubic feet of natural gas.

Mcfe. One thousand cubic feet of natural gas equivalent.

MMBbl. One million barrels of oil or other liquid hydrocarbons.

MMBtu. One million Btu, or British Thermal Units. One British Thermal Unit
is the quantity of heat required to raise the temperature of one pound of water
by one degree Fahrenheit.

MMcf. One million cubic feet of natural gas.

MMcfe. One million cubic feet of natural gas equivalent.

Net Acres or Net Wells. Gross acres or wells multiplied, in each case, by
the percentage working interest owned by the Company.

Net Production. Production that is owned by the Company less royalties and
production due others.

Oil. Crude oil or condensate.

Operator. The individual or company responsible for the exploration,
development, and production of natural gas or an oil well or lease.

Present Value of Future Net Revenues or PV-10. The pretax present value of
estimated future revenues to be generated from the production of proved reserves
calculated in accordance with SEC guidelines, net of

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estimated production and future development costs, using prices and costs as of
the date of estimation without future escalation, without giving effect to
non-property related expenses such as general and administrative expenses, debt
service and depreciation, depletion and amortization, and discounted using an
annual discount rate of 10%.

Proved Developed Reserves. Reserves that can be expected to be recovered
through existing wells with existing equipment and operating methods.

Proved Reserves. The estimated quantities of crude oil, natural gas and
natural gas liquids which geological and engineering data demonstrate with
reasonable certainty to be recoverable in future years from known reservoirs
under existing economic and operating conditions.

Proved Undeveloped Reserves. Reserves that are expected to be recovered
from new wells on undrilled acreage or from existing wells where a relatively
major expenditure is required for recompletion.

Royalty. An interest in an oil and gas lease that gives the owner of the
interest the right to receive a portion of the production from the leased
acreage (or of the proceeds of the sale thereof), but generally does not require
the owner to pay any portion of the costs of drilling or operating the wells on
the leased acreage. Royalties may be either landowner's royalties, which are
reserved by the owner of the leased acreage at the time the lease is granted, or
overriding royalties, which are usually reserved by an owner of the leasehold in
connection with a transfer to a subsequent owner.

Spud. Start drilling a new well (or restart).

Success Rate. The number of wells on which production casing has been run
for a completion attempt as a percentage of the number of wells drilled.

2-D Seismic. The method by which a cross-section of the earth's subsurface
is created through the interpretation of reflecting seismic data collected along
a single source profile.

3-D Seismic. The method by which a three dimensional image of the earth's
subsurface is created through the interpretation of reflection seismic data
collected over surface grid. 3-D seismic surveys allow for a more detailed
understanding of the subsurface than do conventional surveys and contribute
significantly to field appraisal, development and production.

Working Interest. An interest in an oil and gas lease that gives the owner
of the interest the right to drill for and produce natural gas and oil on the
leased acreage and requires the owner to pay a share of the costs of drilling
and production operations.

90
<PAGE> 92

BRIGHAM EXPLORATION COMPANY

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Audited Financial Statements
Report of Independent Accountants......................... F-2
Consolidated Balance Sheets as of December 31, 1997 and
1996................................................... F-3
Consolidated Statements of Operations for the Years Ended
December 31, 1997, 1996, and 1995...................... F-4
Consolidated Statements of Stockholders' Equity for the
Years Ended December 31, 1997, 1996, and 1995.......... F-5
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1997, 1996, and 1995...................... F-6
Notes to the December 31, 1997 Consolidated Financial
Statements............................................. F-7
Unaudited Financial Statements
Condensed Consolidated Balance Sheets as of December 31,
1997 and June 30, 1998................................. F-20
Condensed Consolidated Statements of Operations for the
Six Months Ended June 30, 1997 and 1998................ F-21
Condensed Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 1997 and 1998................ F-22
Notes to the June 30, 1998 Condensed Consolidated
Financial Statements................................... F-23
</TABLE>

F-1
<PAGE> 93

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
and Stockholders of Brigham Exploration Company

In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, of stockholders' equity and of
cash flows present fairly, in all material respects, the financial position of
Brigham Exploration Company and its subsidiaries at December 31, 1997 and 1996,
and the results of their operations and its cash flows for each of the three
years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

PRICE WATERHOUSE LLP

Houston, Texas
March 6, 1998

F-2
<PAGE> 94

BRIGHAM EXPLORATION COMPANY

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1997 1996
------- -------
<S> <C> <C>
Current assets:
Cash and cash equivalents................................. $ 1,701 $ 1,447
Accounts receivable....................................... 4,909 2,696
Prepaid expenses.......................................... 280 152
------- -------
Total current assets.............................. 6,890 4,295
------- -------
Natural gas and oil properties, at cost, net................ 84,176 28,005
Other property and equipment, at cost, net.................. 1,239 532
Drilling advances paid...................................... 78 419
Other noncurrent assets..................................... 18 363
------- -------
$92,401 $33,614
======= =======

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable.......................................... $11,892 $ 2,937
Accrued drilling costs.................................... 2,406 915
Participant advances received............................. 489 1,137
Other current liabilities................................. 726 628
------- -------
Total current liabilities......................... 15,513 5,617
------- -------
Notes payable............................................... 32,000 8,000
Subordinated notes payable -- related party................. -- 16,000
Other noncurrent liabilities................................ 507 753
Deferred income tax liability............................... 1,228 --
Stockholders' equity:
Predecessor capital....................................... -- 3,244
Preferred stock, $.01 par value, 10 million shares
authorized, none issued and outstanding................ -- --
Common stock, $.01 par value, 30 million shares
authorized, 12,253,574 issued and outstanding.......... 123 --
Additional paid-in capital................................ 44,344 --
Unearned stock compensation............................... (1,340) --
Retained earnings......................................... 26 --
------- -------
Total stockholders' equity........................ 43,153 3,244
------- -------
$92,401 $33,614
======= =======
</TABLE>

The Company uses the full cost method to account for its natural gas and oil
properties.

See accompanying notes to the consolidated financial statements.

F-3
<PAGE> 95

BRIGHAM EXPLORATION COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Revenues:
Natural gas and oil sales................................. $ 9,184 $ 6,141 $ 3,578
Workstation revenue....................................... 637 627 635
------- ------- -------
9,821 6,768 4,213
------- ------- -------
Costs and expenses:
Lease operating........................................... 1,151 726 761
Production taxes.......................................... 549 362 165
General and administrative................................ 3,570 2,199 1,897
Depletion of natural gas and oil properties............... 2,732 2,323 1,626
Depreciation and amortization............................. 306 487 533
Amortization of stock compensation........................ 276 -- --
------- ------- -------
8,584 6,097 4,982
------- ------- -------
Operating income (loss)................................ 1,237 671 (769)
------- ------- -------
Other income (expense):
Interest income........................................... 145 52 128
Interest expense.......................................... (1,017) (373) (187)
Interest expense -- related party......................... (173) (800) (749)
------- ------- -------
(1,045) (1,121) (808)
------- ------- -------
Net income (loss) before income taxes....................... 192 (450) (1,577)
Income tax expense.......................................... (1,228) -- --
------- ------- -------
Net loss.................................................. $(1,036) $ (450) $(1,577)
======= ======= =======
Net loss per share:
Basic/Diluted............................................. $ (0.09) $ (0.05) $ (0.18)
Common shares outstanding:
Basic/Diluted............................................. 11,081 8,929 8,929
</TABLE>

See accompanying notes to the consolidated financial statements.

F-4
<PAGE> 96

BRIGHAM EXPLORATION COMPANY

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL UNEARNED
--------------------- PAID-IN STOCK RETAINED PREDECESSOR
SHARES AMOUNTS CAPITAL COMPENSATION EARNINGS CAPITAL TOTAL
----------- ------- ---------- ------------ -------- ------------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance,
December 31, 1994..... -- $ -- $ -- $ -- $-- $ 5,271 $ 5,271
Net loss.............. -- -- -- -- -- (1,577) (1,577)
----------- ---- ------- ------- --- ------- -------
Balance,
December 31, 1995..... -- -- -- -- -- 3,694 3,694
Net loss.............. -- -- -- -- -- (450) (450)
----------- ---- ------- ------- --- ------- -------
Balance,
December 31, 1996..... -- -- -- -- -- 3,244 3,244
Consummation of the
Exchange.............. 8,928,574 90 19,580 -- -- (3,244) 16,426
Issuance of stock
options............... -- -- 1,932 (1,932) -- -- --
Issuance of common
stock................. 3,325,000.. 33 23,894 -- -- -- 23,927
Net loss for period
ended February 27,
1997.................. -- -- (4,869) -- -- -- (4,869)
Net income for period
from February 27, 1997
to Dec. 31, 1997...... -- -- 3,807 -- 26 -- 3,833
(Note 1) Amortization
of unearned stock
compensation....... -- -- -- 592 -- -- 592
----------- ---- ------- ------- --- ------- -------
Balance,
December 31, 1997..... 12,253,574.. $123 $44,344 $(1,340) $26 $ -- $43,153
=========== ==== ======= ======= === ======= =======
</TABLE>

See accompanying notes to the consolidated financial statements.

F-5
<PAGE> 97

BRIGHAM EXPLORATION COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss.................................................. $ (1,036) $ (450) $ (1,577)
Adjustments to reconcile net loss to cash provided by
operating activities:
Depletion of natural gas and oil properties............ 2,732 2,323 1,626
Depreciation and amortization.......................... 306 487 533
Amortization of stock compensation..................... 276 -- --
Changes in working capital and other items:
(Increase) decrease in accounts receivable........... (2,213) (1,440) 413
(Increase) decrease in prepaid expenses.............. (128) 25 (107)
Increase in accounts payable......................... 8,955 1,619 128
Increase (decrease) in participant advances
received.......................................... (648) 804 92
Increase in other current liabilities................ 50 60 151
Increase in deferred interest payable -- related
party............................................. 53 320 113
Increase in deferred income tax liability............ 1,228 -- --
Other noncurrent assets.............................. 281 (224) (26)
Other noncurrent liabilities......................... (50) 186 37
-------- -------- --------
Net cash provided by operating activities......... 9,806 3,710 1,383
-------- -------- --------
Cash flows from investing activities:
Additions to natural gas and oil properties............... (57,170) (13,612) (7,935)
Proceeds from the sale of natural gas and oil
properties............................................. 74 2,149 --
Additions to other property and equipment................. (545) (41) (51)
(Increase) decrease in drilling advances paid............. 341 (292) (19)
-------- -------- --------
Net cash used by investing activities............. (57,300) (11,796) (8,005)
-------- -------- --------
Cash flows from financing activities:
Proceeds from issuance of common stock.................... 23,927 -- --
Proceeds from issuance of subordinated notes payable...... -- -- 16,000
Increase in notes payable................................. 37,250 8,000 2,560
Repayment of notes payable................................ (13,250) -- (10,510)
Principal payments on capital lease obligations........... (179) (269) (326)
-------- -------- --------
Net cash provided by financing activities......... 47,748 7,731 7,724
-------- -------- --------
Net increase (decrease) in cash and cash equivalents........ 254 (355) 1,102
Cash and cash equivalents, beginning of year................ 1,447 1,802 700
-------- -------- --------
Cash and cash equivalents, end of year...................... $ 1,701 $ 1,447 $ 1,802
======== ======== ========
Supplemental disclosure of cash flow information:
Cash paid during the year for interest.................... $ 1,679 $ 762 $ 654
======== ======== ========
Supplemental disclosure of noncash investing and financing
activities:
Capital lease asset additions............................. $ 403 $ 101 $ 208
======== ======== ========
</TABLE>

See accompanying notes to the consolidated financial statements.

F-6
<PAGE> 98

BRIGHAM EXPLORATION COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND NATURE OF OPERATIONS

Brigham Exploration Company is a Delaware corporation formed on February
25, 1997 for the purpose of exchanging its common stock for the common stock of
Brigham, Inc. and the partnership interests of Brigham Oil & Gas, L.P. (the
"Partnership"). Hereinafter, Brigham Exploration Company and the Partnership are
collectively referred to as "the Company." Brigham, Inc. is a Nevada corporation
whose only asset is its ownership interest in the Partnership. The Partnership
was formed in May 1992 to explore and develop onshore domestic natural gas and
oil properties using 3-D seismic imaging and other advanced technologies. Since
its inception, the Partnership has focused its exploration and development of
natural gas and oil properties primarily in the Permian and Hardeman Basins of
West Texas, the Anadarko Basin and the onshore Gulf Coast.

Pursuant to an exchange agreement dated February 26, 1997 (the "Exchange
Agreement") and upon the initial filing on February 27, 1997 of a registration
statement with the Securities and Exchange Commission for the public offering of
common stock (the "Offering"), the shareholders of Brigham, Inc. transferred all
of the outstanding stock of Brigham, Inc. to the Company in exchange for
3,859,821 shares of common stock of the Company. Pursuant to the Exchange
Agreement, the Partnership's other general partner and the limited partners also
transferred all of their partnership interests to the Company in exchange for
3,314,286 shares of common stock of the Company. Furthermore, the holders of the
Partnership's subordinated convertible notes transferred these notes to the
Company in exchange for 1,754,464 shares of common stock. These transactions are
referred to as "the Exchange." In completing the Exchange, the Company issued
8,928,571 shares of common stock to the stockholders of Brigham, Inc., the
partners of the Partnership and the holder of the Partnership's subordinated
notes payable. As a result of the Exchange, the Company now owns all the
partnership interests in the Partnership. In May 1997, the Company sold
3,325,000 shares of its common stock in the Offering at a price of $8.00 per
share. With a portion of the proceeds from the Offering, the Company repaid the
$13.3 million in outstanding borrowings under the existing revolving credit
facility.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results may differ from those estimates.

The Exchange has been reflected in the consolidated financial statements of
the Company as a reorganization.

Principles of Consolidation

The accompanying financial statements include the accounts of the Company
and its wholly-owned subsidiaries, and its proportionate share of assets,
liabilities and income and expenses of the limited partnerships in which the
Company, or any of its subsidiaries has a participating interest. All
significant intercompany accounts and transactions have been eliminated.

Cash and Cash Equivalents

The Company considers all highly liquid financial instruments with an
original maturity of three months or less to be cash equivalents.

F-7
<PAGE> 99
BRIGHAM EXPLORATION COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Property and Equipment

The Company uses the full cost method of accounting for its investment in
natural gas and oil properties. Under this method, all acquisition, exploration
and development costs, including certain payroll and other internal costs,
incurred for the purpose of finding natural gas and oil reserves are
capitalized. Costs associated with production and general corporate activities
are expensed in the period incurred.

The capitalized costs of the Company's natural gas and oil properties plus
future development, dismantlement, restoration and abandonment costs (the
"Amortizable Base"), net of estimated of salvage values, are amortized using the
unit-of-production method based upon estimates of total proved reserve
quantities. The Company's capitalized costs of its natural gas and oil
properties, net of accumulated amortization, are limited to the total of
estimated future net cash flows from proved natural gas and oil reserves,
discounted at ten percent, plus the cost of unevaluated properties. There are
many factors, including global events, that may influence the production,
processing, marketing and valuation of natural gas and oil. A reduction in the
valuation of natural gas and oil properties resulting from declining prices or
production could adversely impact depletion rates and ceiling test limitations.

All costs directly associated with the acquisition and evaluation of
unproved properties are initially excluded from the Amortizable Base. Upon the
interpretation by the Company of the 3-D seismic data associated with unproved
properties, the geological and geophysical costs related to acreage that is not
specifically identified as prospective are added to the Amortizable Base.
Geological and geophysical costs associated with prospective acreage, as well as
leasehold costs, are added to the Amortizable Base when the prospects are
drilled. Costs of prospective acreage are reviewed annually for impairment on a
property-by-property basis.

Other property and equipment, which primarily consists of 3-D seismic
interpretation workstations, are depreciated on a straight-line basis over the
estimated useful lives of the assets after considering salvage value. Estimated
useful lives are as follows:

<TABLE>
<S> <C>
Furniture and fixtures...................................... 10 years
Machinery and equipment..................................... 5 years
3-D seismic interpretation workstations and software........ 3 years
</TABLE>

Betterments and major improvements that extend the useful lives are
capitalized, while expenditures for repairs and maintenance of a minor nature
are expensed as incurred.

Revenue Recognition

The Company recognizes natural gas and oil sales from its interests in
producing wells under the sales method of accounting. Under the sales method,
the Company recognizes revenues based on the amount of natural gas or oil sold
to purchasers, which may differ from the amounts to which the Company is
entitled based on its interest in the properties. Gas balancing obligations as
of December 31, 1995, 1996 and 1997 were not significant. Net realized gains or
losses arising from the Company's crude oil price swaps (see Note 10) are
recognized in the period incurred as a component of natural gas and oil sales.

Industry participants in the Company's seismic programs are charged on an
hourly basis for the work performed by the Company on its 3-D seismic
interpretation workstations. The Company recognizes workstation revenue as
service is provided.

Federal and State Income Taxes

Prior to the consummation of the Exchange, there was no income tax
provision included in the financial statements as the Partnership was not a
taxpaying entity. Income and losses were passed through to its

F-8
<PAGE> 100
BRIGHAM EXPLORATION COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

partners on the basis of the allocation provisions established by the
partnership agreement. Upon consummation of the Exchange, the Partnership became
subject to federal income taxes through its ownership by the Company.

In conjunction with the Exchange, the Company recorded a deferred income
tax liability of $5 million to recognize the temporary differences between the
financial statement and tax bases of the assets and liabilities of the
Partnership at the Exchange date, February 27, 1997, given the provisions of
enacted tax laws. Subsequent to this date, the Company elected to record a
step-up in basis of its assets for tax purposes as a result of the Exchange.
Related to this election, the Company recorded a $3.8 million deferred income
tax benefit, resulting in a net $1.2 million deferred income tax charge for the
year ended December 31, 1997.

Earnings Per Share

The Company has adopted Statement of Financial Accounting Standards
("SFAS") No. 128 "Earnings per Share." This statement establishes new standards
for computing and presenting earnings per share ("EPS") and requires restatement
of all prior-period EPS information.

Recent Pronouncements

In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income," which will become effective for the Company in
1998. SFAS No. 130 will require companies to present certain items as separate
components of stockholders' equity. Management does not believe that the effect
of implementing this standard will materially impact the Company's financial
statements.

3. ACQUISITION

On November 12, 1997, the Company acquired a 50% interest in certain
producing properties in Grady County, Oklahoma (the "Acquisition"). These
properties were formerly owned by Mobil and were acquired by Ward Petroleum. The
acquisition has been accounted for as a purchase and the results of operations
of the properties acquired are included in the Company's results of operations
effective September 1, 1997. The purchase price of $13.4 million was financed
primarily through the Company's existing revolving credit facility and was based
on the Company's determination of the fair value of the assets acquired.

Pro Forma Information

The following unaudited pro forma statement of operations information has
been prepared to give effect to the Acquisition as if the transaction had
occurred at the beginning of 1996 and 1997. The historical results of operations
have been adjusted to reflect (i) the difference between the acquired
properties' historical depletion and such expense calculated based on the value
allocated to the acquired assets, (ii) the increase in interest expense
associated with the debt issued in the transaction, and (iii) the increase in
federal income taxes related to historical net income attributable to the
properties acquired. The pro forma amounts do not

F-9
<PAGE> 101
BRIGHAM EXPLORATION COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

purport to be indicative of the results of operations that would have been
reported had the Acquisition occurred as of the dates indicated, or that may be
reported in the future (in thousands).

<TABLE>
<CAPTION>
PRO FORMA
YEAR ENDED
DECEMBER 31,
----------------
1997 1996
------- ------
<S> <C> <C>
Revenues.................................................... $11,194 $8,516
Costs and expenses:
Lease operating and production taxes...................... 1,864 1,300
General and administrative................................ 3,570 2,199
Depletion of natural gas and oil properties............... 3,307 2,791
Depreciation and amortization............................. 582 487
Interest expense, net..................................... 2,235 2,355
------- ------
Total costs and expenses.................................. 11,558 9,132
------- ------
Net loss before income taxes................................ (364) (616)
Income tax expense........................................ 1,039 --
------- ------
Net loss.................................................... $(1,403) $ (616)
======= ======
Net loss per share:
Basic/Diluted............................................. $ (0.13) $(0.07)
======= ======
Common shares outstanding:
Basic/Diluted............................................. 11,081 8,929
======= ======
</TABLE>

4. PROPERTY AND EQUIPMENT

Property and equipment, at cost, are summarized as follows (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1997 1996
------- -------
<S> <C> <C>
Natural gas and oil properties.............................. $96,458 $37,555
Accumulated depletion....................................... (12,282) (9,550)
------- -------
84,176 28,005
------- -------
Other property and equipment:
3-D seismic interpretation workstations and software...... 1,693 1,456
Office furniture and equipment............................ 1,095 384
Accumulated depreciation.................................. (1,549) (1,308)
------- -------
1,239 532
------- -------
$85,415 $28,537
======= =======
</TABLE>

The Company sold its interest in certain producing properties for $2.1
million and $74,000 during 1996
and 1997, respectively. No gain or loss was recognized on these transaction
because the Company applies the full cost method of accounting for its
investment in natural gas and oil properties.

The Company capitalizes certain payroll and other internal costs directly
attributable to acquisition, exploration and development activities as part of
its investment in natural gas and oil properties over the periods benefited by
these activities. During the years ended December 31, 1995, 1996 and 1997,
certain payroll and other internal costs incurred of $1,640,196, $1,826,013 and
$3,330,518, respectively, were capitalized.

F-10
<PAGE> 102
BRIGHAM EXPLORATION COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. NOTES PAYABLE AND SUBORDINATED NOTES PAYABLE

In April 1996, the Company entered into a revolving credit facility with
Bank One, Texas, NA (the "Bank One Facility") which provided for borrowings up
to $25 million. On November 10, 1997, the Bank One Facility was amended and the
amount available under the agreement was increased to $75 million. The Company's
borrowings under the Bank One Facility were limited to a borrowing base
determined periodically by the lender. This determination was based upon the
Company's proved net gas and oil properties.

The amounts outstanding under the revolving credit facility, excluding a
$5.4 million special advance made November 12, 1997, bore interest, at the
borrower's option, at the Base Rate or (i) LIBOR plus 1.75% if the principal
outstanding is less than or equal to 50% of the borrowing base, (ii) LIBOR plus
2.0% if the principal outstanding is less than or equal to 75% but more than 50%
of the borrowing base, and (iii) LIBOR plus 2.25% if the principal outstanding
is greater than 75% of the borrowing base. The Base Rate is the fluctuating rate
of interest per annum established from time to time by the lender. Interest
accrued on the $5.4 million special advance at 11.50% per annum. The Company
also paid a quarterly commitment fee of 0.5% per annum for the unused portion of
the borrowing base.

In January 1998, the Company entered into a reserve-based revolving credit
facility with the Bank of Montreal (the "Bank of Montreal Facility"). The Bank
of Montreal Facility provides for borrowings up to $75 million until January 31,
1999, at which time the borrowing available will be redetermined by the Bank of
Montreal based on the Company's proved reserve value at that time. The Company
may elect, at its option, to have the borrowing availability redetermined based
on the Company's proved reserve value at any time prior to January 31, 1999.
Amounts outstanding under the Bank of Montreal Facility bear interest at either
the lender's Base Rate or LIBOR plus 2.25%, at the Company's option. The
Company's obligations under the Bank of Montreal Facility are secured by
substantially all of the natural gas and oil properties of the Company. A
portion of the funds available under the Bank of Montreal Facility were used to
repay in full the Bank One Facility.

The subordinated notes payable bore interest at 5% per annum and were due
in 2002. The notes were convertible into a 20% interest in the Company at any
time prior to maturity and were unsecured. Interest payments of 3% were due
semi-annually and the remaining 2% was deferred until maturity. Pursuant to the
Exchange (see Note 1), the holders of these notes exchanged the notes and
related deferred interest for shares of the Company's common stock.

6. CAPITAL LEASE OBLIGATIONS

Property under capital leases consists of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
-------------
1997 1996
----- -----
<S> <C> <C>
3-D seismic interpretation workstations and software........ $ 497 $ 525
Office furniture and equipment.............................. 204 17
----- -----
701 542
Accumulated depreciation and amortization................... (241) (305)
----- -----
$ 460 $ 237
===== =====
</TABLE>

F-11
<PAGE> 103
BRIGHAM EXPLORATION COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The obligations under capital leases are at fixed interest rates ranging
from 9% to 17% and are collateralized by property, plant and equipment. The
future minimum lease payments under the capital leases and the present value of
the net minimum lease payments at December 31, 1997 are as follows (in
thousands):

<TABLE>
<S> <C>
1998........................................................ $ 261
1999........................................................ 185
2000........................................................ 99
2001........................................................ 40
2002........................................................ 24
-----
Total minimum lease payments................................ 609
Estimated executory costs included in capital leases...... (73)
-----
Net minimum lease payments.................................. 536
Amounts representing interest............................. (81)
-----
Present value of net minimum lease payments................. 455
Less: current portion....................................... (181)
-----
Noncurrent portion.......................................... $ 274
=====
</TABLE>

7. INCOME TAXES

The provision for income taxes consists of the following (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1997
------------
<S> <C>
Current income taxes:
Federal................................................... $ --
State..................................................... --
Deferred income taxes:
Federal................................................... 1,228
State..................................................... --
------
$1,228
======
</TABLE>

The difference in income taxes provided and the amounts determined by
applying the federal statutory tax rate to income before income taxes result
from the following (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1997
------------
<S> <C>
Tax at statutory rate....................................... $ 65
Add (deduct) the effect of:
January and February income, not taxable.................. (44)
Nondeductible expenses.................................... 14
Tax effect of Exchange.................................... 1,193
------
$1,228
======
</TABLE>

F-12
<PAGE> 104
BRIGHAM EXPLORATION COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The components of deferred income tax assets and liabilities are as follows
(in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
1997
------------
<S> <C>
Deferred tax assets:
Net operating loss carryforwards.......................... $ 5,563
Amortization of stock compensation........................ 94
Other..................................................... 3
-------
5,660
Deferred tax liability:
Depreciable and depletable property....................... (6,888)
-------
$(1,228)
=======
</TABLE>

The Company has regular and alternative minimum tax net operating loss
carryforwards of approximately $16,361 million and $8,441 million, respectively,
each including separate return limitation year carryovers of approximately
$1,352 million, which expire by December 31, 2012.

8. EARNINGS PER SHARE

Earnings per share have been calculated in accordance with the provisions
of SFAS No. 128. The implementation of the standard has resulted in the
presentation of a basic EPS calculation in the consolidated financial statements
as well as a diluted EPS calculation. Basic EPS is computed by dividing net
income (loss) applicable to common shareholders by the weighted average number
of common shares outstanding during each period. Diluted EPS is computed by
dividing net income (loss) applicable to common shareholders by the weighted
average number of common shares and common share equivalents outstanding (if
dilutive), during each period. The number of common share equivalents
outstanding is computed using the treasury stock method.

Historical earnings per common share for 1996 and 1995 is based on shares
issued upon consummation of the Exchange, assuming such shares has been
outstanding for all periods presented. Earnings per share for 1997 is presented
giving effect to the shares issued pursuant to the Exchange as well as shares
issued in the initial public offering.

At December 31, 1997, options to purchase 644,097 shares of common stock
were outstanding but were not included in the computation of diluted earnings
per share due to the anti-dilutive effect they would have on EPS if converted.

In January 1998, the Company granted 309,247 stock options under the 1997
incentive plan (the "1997 Incentive Plan") with an exercise price of $12.88.

9. COMMITMENTS AND CONTINGENCIES

The Company is, from time to time, party to certain lawsuits and claims
arising in the ordinary course of business. While the outcome of lawsuits and
claims cannot be predicted with certainty, management does not expect these
matters to have a materially adverse effect on the financial condition, results
of operations or cash flows of the Company.

F-13
<PAGE> 105
BRIGHAM EXPLORATION COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company leases office equipment and space under operating leases
expiring at various dates through 2007. The future minimum annual rental
payments under the noncancelable terms of these leases at December 31, 1997, are
as follows (in thousands):

Rental expense for the years ended December 31, 1995, 1996 and 1997 was
$239,715, $253,112 and $606,173, respectively.

Since the Company's major products are commodities, significant changes in
the prices of natural gas and oil could have a significant impact on the
Company's results of operations for any particular year.

As of December 31, 1997, there were no known environmental or other
regulatory matters related to the Company's operations which are reasonably
expected to result in a material liability to the Company. Compliance with
environmental laws and regulations has not had, and is not expected to have, a
material adverse effect on the Company's capital expenditures, earnings or
competitive position.

During 1997, approximately 14% and 12% of the Company's natural gas and oil
production was sold to two separate customers. During 1996, approximately 16%,
12% and 10% of the Company's natural gas and oil production was sold to three
separate customers. During 1995, approximately 14%, 11%, 10% and 10% of the
Company's natural gas and oil production was sold to four separate customers.
However, due to the availability of other markets, the Company does not believe
that the loss of any one of these individual customers would adversely affect
the Company's result of operations.

10. FINANCIAL INSTRUMENTS

The Company periodically enters into commodity price swap agreements which
require payments to (or receipts from) counterparties based on the differential
between a fixed price and a variable price for a fixed quantity of natural gas
or crude oil without the exchange of the underlying volumes. The notional
amounts of these derivative financial instruments are based on planned
production from existing wells. The Company uses these derivative financial
instruments to manage market risks resulting from fluctuations in commodity
prices. Commodity price swaps are effective in minimizing these risks by
creating essentially equal and offsetting market exposures. The derivative
financial instruments held by the Company are not leveraged and are held for
purposes other than trading.

At December 31, 1996, the Company was a party to crude oil swap based on an
average notional volume of 7,550 barrels of crude oil per month and a fixed
price of $22.70 per barrel. The contract expired in May 1997. The fair market
value of the crude oil price swap at December 31, 1996, based on the market
price of crude oil in December 1996, was $41,902. The Company was not a party to
any swap agreements at December 31, 1997.

In February 1998, the Company entered into a hedging contract whereby
natural gas is purchased and sold subject to a fixed price swap agreement for
monthly periods from April 1998 through October 1999. Total natural gas subject
to this hedging contract is 2,750,000 MMBtu in 1998 and 3,040,000 MMBtu in 1999.

The Company's non-derivative financial instruments include cash and cash
equivalents, accounts receivable, accounts payable and long-term debt. The
carrying amount of cash and cash equivalents, accounts

F-14
<PAGE> 106
BRIGHAM EXPLORATION COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

receivable and accounts payable approximate fair value because of their
immediate or short maturities. The carrying value of the Company's revolving
credit facility (see Note 5) approximates its fair market value since it bears
interest at floating market interest rates. At December 31, 1996, the carrying
amount of the Company's subordinated notes payable exceeded the fair market
value by $1.9 million, based on current rates offered to the Company for debt of
the same remaining maturity.

The Company's accounts receivable relate to natural gas and oil sales to
various industry companies, amounts due from industry participants for
expenditures made by the Company on their behalf and workstation revenues.
Credit terms, typical of industry standards, are of a short-term nature and the
Company does not require collateral. The Company's accounts receivable at
December 31, 1997 do not represent significant credit risks as they are
dispersed across many counterparties. Counterparties to the crude oil price
swaps are investment grade financial institutions.

11. EMPLOYEE BENEFIT PLANS

Retirement Savings Plan

During 1996 the Company adopted a defined contribution 401(k) plan for
substantially all of its employees. Eligible employees may contribute up to 15%
of their compensation to this plan. The 401(k) plan provides that the Company
may, at its discretion, match employee contributions. The Company did not match
employee contributions in 1997 or 1996.

Stock Compensation

In 1994 three employees were granted restricted interests in the Company
which vest in increments through July 1999. At the date of grant, the value of
these interests was immaterial. On February 26, 1997, in connection with the
Exchange (see Note 1), the three employees transferred these company interests
to the Company in exchange for 156,250 shares of restricted common stock of the
Company. The terms of the restricted stock and the restricted company interests
are substantially the same. The shares vest over a three-year period ending in
1999. No compensation expense will result from this exchange.

The Company adopted an incentive plan, effective upon completion of the
Exchange (see Note 1), which provides for the issuance of stock options, stock
appreciation rights, stock, restricted stock, cash or any combination of the
foregoing. The objective of this plan is to reward key employees whose
performance may have a significant effect on the success of the Company. An
aggregate of 1,588,170 shares of the Company's common stock was reserved for
issuance pursuant to this plan. The Compensation Committee of the Board of
Directors will determine the type of awards made to each participant and the
terms, conditions and limitations applicable to each award.

The Company granted 644,097 stock options as of March 4, 1997. These
options were granted under the 1997 Incentive Plan established as part of the
Exchange (Note 1). These options have contractual lives of 7.3 years and have an
exercise price of $5.00 compared to the public offering price of $8.00. This
grant resulted in noncash compensation expense which is recognized over the
appropriate vesting period. None of these options were exercisable at December
31, 1997.

As provided under SFAS 123, the Company estimates that the fair value of
these options on their grant date, using the Black-Scholes Option Pricing Model,
was $3.4 million ($5.32 per option). This valuation was determined using the
following assumptions: risk free interest rate of 6.24%; volatility factor of
the expected market prices of the Company's common stock of 38%; no expected
dividends; and weighted average option lives of 7.3 years. If this valuation
method were elected for accounting purposes, the estimated fair value of $3.4
million would be amortized over the appropriate vesting periods of the options
through 2003, resulting in a pro forma net loss for the year ended December 31,
1997 of $1.3 million, or $0.11 per common share.

F-15
<PAGE> 107
BRIGHAM EXPLORATION COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

12. RELATED PARTY TRANSACTIONS

During the years ended December 31, 1995, 1996 and 1997, the Company paid
approximately $382,000, $596,000 and $837,000 respectively, in fees for land
acquisition services performed by a company owned by a brother of the Company's
President and Chief Executive Officer. Other participants in the Company's 3-D
seismic projects reimbursed the Company for a portion of these amounts.

The Company also participated in various industry projects with affiliates
of the holder of the subordinated notes payable (see Note 5). During 1996 and
1997, the Company received approximately $123,000 and $50,000, respectively, for
workstation and geoscientists' time spent interpreting 3-D seismic data and
workstation use. In 1997, the Company paid approximately $214,000 for an
interest in an exploration project sold by the affiliates. The Company billed
the affiliates $197,000 in 1997 for their proportionate share of the costs
related to this and other projects in which the affiliates participate. The
Company also sold to an affiliate of the holders of the subordinated notes
payable an interest in (i) a 3-D project for approximately $75,000 in 1995 and
(ii) two 3-D delineated potential drilling locations and 3-D seismic data for
approximately $83,000 in 1996.

In 1996 and 1997, the Company paid $110,000 and $18,000 for working
interests in natural gas and oil properties owned by affiliates of a member of
the Company's board of directors/management committee. The Company billed the
affiliates $13,000 and $68,000 in 1995 and 1996, respectively, for their
proportionate share of the costs related to this project.

A limited partner and member of the Company's management committee served
as a consultant to the Company on various aspects of the Company's business and
strategic issues. Fees paid for these services by the Company were $72,000,
$79,200 and $86,580 for the twelve month periods ended December 31, 1995, 1996
and 1997, respectively. Additional disbursements totaling approximately $13,000
were made during 1997 for the reimbursement of certain expenses.

13. NATURAL GAS AND OIL EXPLORATION AND PRODUCTION ACTIVITIES

The tables presented below provide supplemental information about natural
gas and oil exploration and production activities as defined by SFAS No. 69,
"Disclosures about Oil and Gas Producing Activities."

Results of Operations for Natural Gas and Oil Producing Activities (in
thousands)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Natural gas and oil sales.................................. $9,184 $6,141 $3,578
Costs and expenses:
Lease operating.......................................... 1,151 726 761
Production taxes......................................... 549 362 165
Depletion of natural gas and oil properties.............. 2,732 2,323 1,626
Income taxes............................................. 1,322 -- --
------ ------ ------
Total costs and expenses................................... 5,754 3,411 2,552
------ ------ ------
$3,430 $2,730 $1,026
====== ====== ======
Depletion per physical unit of production (equivalent Mcf
of gas).................................................. $ 0.87 $ 1.13 $ 1.22
====== ====== ======
</TABLE>

Natural gas and oil sales reflect the market prices of net production sold
or transferred, with appropriate adjustments for royalties, net profits interest
and other contractual provisions. Lease operating expenses include lifting costs
incurred to operate and maintain productive wells and related equipment,
including such costs as operating labor, repairs and maintenance, materials,
supplies and fuel consumed. Production taxes

F-16
<PAGE> 108
BRIGHAM EXPLORATION COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

include production and severance taxes. No provision was made for income taxes
for 1995 and 1996 since these taxes are the responsibility of the partners (see
Note 2). Depletion of natural gas and oil properties relates to capitalized
costs incurred in acquisition, exploration and development activities. Results
of operations do not include interest expense and general corporate amounts.

Costs Incurred and Capitalized Costs

The costs incurred in natural gas and oil acquisition, exploration and
development activities follow (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Costs incurred for the year:
Exploration........................................... $29,421 $10,527 $ 6,893
Property acquisition.................................. 26,922 6,195 1,885
Development........................................... 2,953 1,328 713
Proceeds from participants............................ (319) (4,111) (1,296)
------- ------- -------
$58,977 $13,939 $ 8,195
======= ======= =======
</TABLE>

Costs incurred represent amounts incurred by the Company for exploration,
property acquisition and development activities. Periodically, the Company will
receive proceeds from participants subsequent to project initiation for an
assignment of an interest in the project. These payments are represented by
proceeds from participants.

Capitalized costs related to natural gas and oil acquisition, exploration
and development activities follow (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1997 1996
-------- -------
<S> <C> <C>
Cost of natural gas and oil properties at year-end:
Proved.................................................... $ 67,615 $30,487
Unproved.................................................. 28,843 7,068
-------- -------
Total capitalized costs................................... 96,458 37,555
Accumulated depletion..................................... (12,282) (9,550)
-------- -------
$ 84,176 $28,005
======== =======
</TABLE>

Following is a summary of costs (in thousands) excluded from depletion at
December 31, 1997, by year incurred. At this time, the Company is unable to
predict either the timing of the inclusion of these costs and the related
natural gas and oil reserves in its depletion computation or their potential
future impact on depletion rates.

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------- PRIOR
1997 1996 1995 YEARS TOTAL
------- ------ ---- ------ -------
<S> <C> <C> <C> <C> <C>
Property acquisition...................... $17,382 $2,515 $694 $1,852 $22,443
Exploration............................... 4,393 1,242 234 531 6,400
------- ------ ---- ------ -------
Total..................................... $21,775 $3,757 $928 $2,383 $28,843
======= ====== ==== ====== =======
</TABLE>

F-17
<PAGE> 109
BRIGHAM EXPLORATION COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

14. NATURAL GAS AND OIL RESERVES AND RELATED FINANCIAL DATA (UNAUDITED)

Information with respect to the Company's natural gas and oil producing
activities is presented in the following tables. Reserve quantities as well as
certain information regarding future production and discounted cash flows were
determined by the Company's independent petroleum consultants and internal
petroleum reservoir engineer.

Natural Gas and Oil Reserve Data

The following tables present the Company's estimates of its proved natural
gas and oil reserves. The Company emphasizes that reserve estimates are
approximates and are expected to change as additional information becomes
available. Reservoir engineering is a subjective process of estimating
underground accumulations of natural gas and oil that cannot be measured in an
exact way, and the accuracy of any reserve estimate is a function of the quality
of available data and of engineering and geological interpretation and judgment.
Accordingly, there can be no assurance that the reserves set forth herein will
ultimately be produced nor can there be assurance that the proved undeveloped
reserves will be developed within the periods anticipated. A substantial portion
of the reserve balances were estimated utilizing the volumetric method, as
opposed to the production performance method.

<TABLE>
<CAPTION>
NATURAL
GAS OIL
(MMCF) (MBBLS)
------- -------
<S> <C> <C>
Proved reserves at December 31, 1994........................ 3,579 1,022
Revisions to previous estimates........................... (1,600) (214)
Extensions, discoveries and other additions............... 2,555 1,055
Sales of minerals-in-place................................ (6) (14)
Production................................................ (271) (177)
------ -----
Proved reserves at December 31, 1995........................ 4,257 1,672
Revisions to previous estimates........................... (1,005) (232)
Extensions, discoveries and other additions............... 7,742 996
Purchase of minerals-in-place............................. 260 3
Sales of minerals-in-place................................ (299) (272)
Production................................................ (698) (227)
------ -----
Proved reserves at December 31, 1996........................ 10,257 1,940
Revisions of previous estimates........................... (3,044) (447)
Extensions, discoveries and other additions............... 33,721 735
Purchase of minerals-in-place............................. 13,718 1,244
Sales of minerals-in-place................................ (40) --
Production................................................ (1,382) (291)
------ -----
Proved reserves at December 31, 1997........................ 53,230 3,181
====== =====
Proved developed reserves at December 31:
1995...................................................... 3,819 1,274
1996...................................................... 6,034 1,453
1997...................................................... 30,677 2,665
</TABLE>

Proved reserves are estimated quantities of crude natural gas and oil which
geological and engineering data indicate with reasonable certainty to be
recoverable in future years from known reservoirs under existing economic and
operating conditions. Proved developed reserves are proved reserves which can be
expected to be recovered through existing wells with existing equipment and
operating methods.

F-18
<PAGE> 110
BRIGHAM EXPLORATION COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Standardized Measure of Discounted Future Net Cash Inflows and Changes Therein

The following table presents a standardized measure of discounted future
net cash inflows (in thousands) relating to proved natural gas and oil reserves.
Future cash flows were computed by applying year end prices of natural gas and
oil relating to the Company's proved reserves to the estimated year-end
quantities of those reserves. Future price changes were considered only to the
extent provided by contractual agreements in existence at year-end. Future
production and development costs were computed by estimating those expenditures
expected to occur in developing and producing the proved natural gas and oil
reserves at the end of the year, based on year-end costs. Actual future cash
inflows may vary considerably and the standardized measure does not necessarily
represent the fair value of the Company's natural gas and oil reserves.

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Future cash inflows.................................. $165,156 $ 84,987 $ 38,333
Future development and production costs.............. (40,923) (20,998) (12,543)
Future income taxes.................................. (22,919) -- --
-------- -------- --------
Future net cash inflows.............................. $101,314 $ 63,989 $ 25,790
======== ======== ========
Future net cash inflow before income taxes,
discounted at 10% per annum........................ $ 69,249 $ 44,506 $ 18,222
======== ======== ========
Standardized measure of future net cash inflows
discounted at 10% per annum........................ $ 64,274 $ 44,506 $ 18,222
======== ======== ========
</TABLE>

The average natural gas and oil prices used to calculate the future net
cash inflows at December 31, 1997 were $16.64 per barrel and $2.11 per Mcf,
respectively. At December 31, 1997, the NYMEX price for natural gas was $2.26
per MMBtu and the NYMEX price for oil was $17.64 per barrel. From January 1,
1998 to March 24, 1997, the NYMEX price for natural gas ranged from $2.00 per
MMBtu to $2.38 per MMBtu and the NYMEX price for oil ranged from $13.21 per
barrel to $17.82 per barrel.

Changes in the future net cash inflows discounted at 10% per annum follow:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1997 1996 1995
-------- ------- -------
<S> <C> <C> <C>
Beginning of period.................................... $ 44,506 $18,222 $10,240
Sales of natural gas and oil produced, net of
production costs.................................. (7,484) (5,053) (2,652)
Development costs incurred........................... 1,955 246 169
Extensions and discoveries........................... 38,016 29,457 11,669
Purchases of minerals-in-place....................... 16,965 384 --
Sales of minerals-in-place........................... (94) (2,380) (198)
Net change of prices and production costs............ (20,466) 7,023 1,394
Change in future development costs................... 319 303 419
Changes in production rates and other................ (1,954) (342) (364)
Revisions of quantity estimates...................... (6,964) (5,176) (3,479)
Accretion of discount................................ 4,450 1,822 1,024
Change in income taxes............................... (4,975) -- --
-------- ------- -------
End of period.......................................... $ 64,274 $44,506 $18,222
======== ======= =======
</TABLE>

F-19
<PAGE> 111

BRIGHAM EXPLORATION COMPANY

CONDENSED CONSOLIDATED
BALANCE SHEETS
(IN THOUSANDS)

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1997 1998
------------ -----------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents................................. $ 1,701 $ 3,106
Accounts receivable....................................... 4,909 7,934
Prepaid expenses.......................................... 280 217
------- --------
Total current assets.............................. 6,890 11,257
------- --------
Natural gas and oil properties, at cost, net................ 84,176 114,454
Other property and equipment, at cost, net.................. 1,239 1,603
Drilling advances paid...................................... 78 603
Deferred loan fees.......................................... -- 1,645
Other noncurrent assets..................................... 18 137
------- --------
$92,401 $129,699
======= ========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable.......................................... $11,892 $ 7,837
Accrued drilling costs.................................... 2,406 5,206
Participant advances received............................. 489 442
Other current liabilities................................. 726 4,748
------- --------
Total current liabilities......................... 15,513 18,233
------- --------
Notes payable............................................... 32,000 68,000
Other noncurrent liabilities................................ 507 526
Deferred income tax liability............................... 1,228 606
Stockholders' equity:
Preferred stock, $.01 par value, 10 million shares
authorized, none issued and outstanding................ -- --
Common stock, $.01 par value, 30 million shares
authorized, 12,253,574 issued and outstanding.......... 123 123
Additional paid-in capital................................ 44,344 44,292
Unearned stock compensation............................... (1,340) (880)
Retained earnings (accumulated deficit)................... 26 (1,201)
------- --------
Total stockholders' equity........................ 43,153 42,334
------- --------
$92,401 $129,699
======= ========
</TABLE>

See accompanying notes to the condensed consolidated financial statements.

F-20
<PAGE> 112

BRIGHAM EXPLORATION COMPANY

CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
-----------------
1997 1998
------- -------
<S> <C> <C>
Revenues:
Natural gas and oil sales................................. $ 3,854 $ 7,130
Workstation revenue....................................... 324 247
------- -------
4,178 7,377
------- -------
Costs and expenses:
Lease operating........................................... 470 978
Production taxes.......................................... 219 450
General and administrative................................ 1,455 2,293
Depletion of natural gas and oil properties............... 1,395 2,784
Depreciation and amortization............................. 172 175
Amortization of stock compensation........................ 115 190
------- -------
3,826 6,870
------- -------
Operating income....................................... 352 507
------- -------
Other income (expense):
Interest income........................................... 81 77
Interest expense.......................................... (372) (2,432)
Interest expense -- related party......................... (174) --
------- -------
(465) (2,355)
------- -------
Net loss before income taxes................................ (113) (1,848)
Income tax (expense) benefit................................ (4,813) 621
------- -------
Net loss.................................................. $(4,926) $(1,227)
======= =======
Net loss per share:
Basic/Diluted............................................. $ (0.50) $ (0.10)
Weighted average common shares outstanding:
Basic/Diluted............................................. 9,890 12,254
</TABLE>

See accompanying notes to the condensed consolidated financial statements.

F-21
<PAGE> 113

BRIGHAM EXPLORATION COMPANY

CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
-------------------
1997 1998
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net loss.................................................. $ (4,926) $ (1,227)
Adjustments to reconcile net loss to cash provided by
operating activities:
Depletion of natural gas and oil properties............ 1,395 2,784
Depreciation and amortization.......................... 172 175
Amortization of stock compensation..................... 115 190
Amortization of deferred loan fees..................... -- 266
Changes in deferred income tax liability............... 4,813 (622)
Changes in working capital and other items............. (1,764) (3,258)
-------- --------
Net cash used by operating activities............. (195) (1,692)
-------- --------
Cash flows from investing activities:
Additions to natural gas and oil properties............... (11,796) (30,044)
Additions to other property and equipment................. (183) (315)
Increase in drilling advances paid........................ (126) (525)
-------- --------
Net cash used by investing activities................ (12,105) (30,884)
-------- --------
Cash flows from financing activities:
Proceeds from issuance of common stock.................... 23,929 --
Increase in notes payable................................. 5,250 70,800
Repayment of notes payable................................ (13,250) (34,800)
Principal payments on capital lease obligations........... (87) (108)
Deferred loan fees........................................ -- (1,911)
-------- --------
Net cash provided by financing activities............ 15,842 33,981
-------- --------
Net increase in cash and cash equivalents................... 3,542 1,405
Cash and cash equivalents, beginning of period.............. 1,447 1,701
-------- --------
Cash and cash equivalents, end of period.................... $ 4,989 $ 3,106
======== ========
</TABLE>

See accompanying notes to the condensed consolidated financial statements.

F-22
<PAGE> 114

BRIGHAM EXPLORATION COMPANY

NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(UNAUDITED)

1. ORGANIZATION AND NATURE OF OPERATIONS

Brigham Exploration Company (the "Company") is a Delaware corporation
formed on February 25, 1997 for the purpose of exchanging its common stock for
the common stock of Brigham, Inc. and the partnership interests of Brigham Oil &
Gas, L.P. (the "Partnership"). Brigham, Inc. is a Texas corporation whose only
asset is its ownership interest in the Partnership. The Partnership was formed
in May 1992 to explore and develop onshore domestic natural gas and oil
properties using 3-D seismic imaging and other advanced technologies. Since its
inception, the Partnership has focused its exploration and development of
natural gas and oil properties in West Texas, the Anadarko Basin and the onshore
Gulf Coast.

Pursuant to an exchange agreement dated February 26, 1997 (the "Exchange
Agreement") and upon the initial filing on February 27, 1997 of a registration
statement with the Securities and Exchange Commission for the public offering of
common stock (the "Offering"), the shareholders of Brigham, Inc. transferred all
of the outstanding stock of Brigham, Inc. to the Company in exchange for
3,859,821 shares of common stock of the Company. Pursuant to the Exchange
Agreement, the Partnership's other general partner and the limited partners also
transferred all of their partnership interests to the Company in exchange for
3,314,286 shares of common stock of the Company. Furthermore, the holders of the
Partnership's subordinated convertible notes transferred these notes to the
Company in exchange for 1,754,464 shares of common stock. These transactions are
referred to as the "Exchange." In completing the Exchange, the Company issued
8,928,571 shares of common stock to the stockholders of Brigham, Inc., the
partners of the Partnership and the holder of the Partnership's subordinated
notes payable. As a result of the Exchange, the Company now owns all the
partnership interests in the Partnership.

In May 1997, the Company sold 3,325,000 shares of its common stock in the
Offering at a price of $8.00 per share. With a portion of the proceeds from the
Offering, the Company repaid the then outstanding borrowings ($13.3 million)
under the Company's revolving credit facility.

2. BASIS OF PRESENTATION

The unaudited condensed consolidated balance sheets at December 31, 1997
and June 30, 1998 reflect the consolidated accounts of the Company. The
unaudited condensed consolidated statements of operations and of cash flows for
the six months ended June 30, 1997 and 1998 include the results of operations
and of cash flows of the Partnership for the period from January 1, 1997 to
February 27, 1997 and of the Company for the period from February 25, 1997, the
date of its inception, to June 30, 1997 and for the six months ended June 30,
1998. As the Exchange was the conversion of a partnership to a corporation, the
Exchange was accounted for by the Company as a reorganization.

The accompanying condensed consolidated financial statements are unaudited,
and in the opinion of management, reflect all adjustments that are necessary for
a fair presentation of the financial position and results of operations for the
periods presented. All such adjustments are of a normal and recurring nature.
The results of operations for the periods presented are not necessarily
indicative of the results to be expected for the entire year. The unaudited
condensed consolidated financial statements should be read in conjunction with
the Company's 1997 Annual Report on Form 10-K pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934.

3. NOTES PAYABLE

In January 1998, the Company entered into a reserve based revolving credit
facility (the "Credit Facility"). The Credit Facility provides for borrowings up
to $75 million, all of which was immediately available for borrowing to fund
capital expenditures, until January 31, 1999, at which time the borrowing

F-23
<PAGE> 115
BRIGHAM EXPLORATION COMPANY

NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS -- (CONTINUED)

availability will be redetermined by the lender based on the Company's proved
reserve value at that time. The Company may elect, at its option, to have the
borrowing availability redetermined based on the Company's proved reserve value
at any time prior to January 31, 1999. Amounts outstanding under the Credit
Facility bear interest at either the lender's Base Rate or LIBOR plus 2.25%, at
the Company's option. The Company's obligations under the Credit Facility are
secured by substantially all of the natural gas and oil properties of the
Company. A portion of the funds borrowed under the Credit Facility were used to
repay in full the debt outstanding under the Company's previous revolving credit
facility.

In connection with the origination of the Credit Facility, certain bank
fees and other expenses totaling approximately $1.9 million were recorded as
deferred costs and will be amortized over the life of the loan which matures
January 26, 2001.

4. INCOME TAXES

Prior to the consummation of the Exchange, the Partnership was not subject
to federal income taxes. Income and losses were passed through to its partners
on the basis of the allocation provisions established by the partnership
agreement. Upon consummation of the Exchange, the Partnership's net income
became subject to federal income taxes through its ownership by the Company.
Also, in conjunction with the Exchange, the Company recorded a deferred income
tax liability of $5 million to recognize the temporary differences between the
financial statement and tax bases of the assets and liabilities of the
Partnership at the Exchange date, February 27, 1997, given the provisions of
enacted tax laws. Subsequent to this date, the Company elected to record a
step-up in basis of its assets for tax purposes as a result of the Exchange. As
a result of this election, the Company recorded a $3.8 million deferred income
tax benefit in the fourth quarter of 1997, which resulted in a net $1.2 million
non-cash deferred income tax charge for the year ended December 31, 1997.

5. EARNINGS PER SHARE

Earnings per share have been calculated in accordance with the provisions
of Statement of Financial Accounting Standards ("SFAS") No. 128. The
implementation of this standard has resulted in the presentation of a basic EPS
calculation in the consolidated financial statements as well as a diluted EPS
calculation. Basic EPS is computed by dividing net income (loss) applicable to
common shareholders by the weighted average number of common shares outstanding
during each period. Diluted EPS is computed by dividing net income (loss)
applicable to common shareholders by the weighted average number of common
shares and common share equivalents outstanding, if dilutive, during each
period. The number of common share equivalents outstanding is computed using the
treasury stock method.

Historical earnings per share for the six months ended June 30, 1997 is
based on shares of common stock issued upon consummation of the Exchange (Note
1). At June 30, 1997 and 1998, options to purchase 644,097 and 935,987,
respectively, shares of common stock were outstanding but were not included in
the computation of diluted EPS due to the anti-dilutive effect they would have
on EPS if converted.

6. REPORTING COMPREHENSIVE INCOME

In June 1997, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 130, "Reporting Comprehensive Income." The new standard, which is effective
for financial statements issued for periods ending after December 15, 1997,
established standards for reporting, in addition to net income, comprehensive
income and its components including, as applicable, foreign currency items,
minimum pension liability adjustments and unrealized gains and losses on certain
investments in debt and equity securities. Upon adoption, the Company is also
required to reclassify financial statements for earlier periods provided for

F-24
<PAGE> 116
BRIGHAM EXPLORATION COMPANY

NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS -- (CONTINUED)

comparative purposes. The Company adopted this standard in the first quarter of
1998. There is no difference between the Company's net income as reported and
comprehensive income.

7. SEGMENT REPORTING

In June 1997, the FASB issued SFAS No. 131, "Disclosure about Segments of
an Enterprise and Related Information," which the Company adopted in the first
quarter of 1998. The standard established requirements for reporting information
about operating segments in interim financial reports issued to shareholders. It
also established standards for related disclosures about products and services,
geographic areas and major customers. Under SFAS No. 131, operating segments are
to be determined consistent with management's organization and evaluation of
financial information internally for making operating decisions and assessing
performance. The disclosure provisions of this standard are not applicable for
interim periods in the year of adoption. The adoption of this new standard is
not expected to have a material impact on the Company's consolidated balance
sheet or statement of operations.

8. ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

In June, 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." The new standard is effective for fiscal
years beginning after June 15, 1999, but earlier application is permitted. SFAS
No. 133 requires that all derivatives be recognized on the balance sheet as
either assets or liabilities and measured at fair value regardless of any hedge
relationship that exists. The corresponding gains and losses should be reported
based on the hedge relationship that exists. The adoption of this new standard
is not expected to have a material impact on the Company's consolidated balance
sheet or statement of operations.

F-25
<PAGE> 117

May 26, 1998

Brigham Exploration Company
6300 Bridge Point Parkway
Building Two, Suite 500
Austin, Texas 78730

Re: Evaluation
BRIGHAM EXPLORATION COMPANY
Proved Reserves
As of December 31, 1997

Pursuant to the Guidelines of the Securities
and Exchange Commission for Reporting
Corporate Reserves and Future Net Revenue

Gentlemen:

As requested, we are submitting our estimated proven reserves and future
net cash flows, as of December 31, 1997, attributable to the interest of Brigham
Exploration Company in certain natural gas and oil properties. The evaluated
properties are located in various counties in Kansas, New Mexico, Oklahoma and
Texas. This report was prepared using constant prices and costs and conforms to
the guidelines of the Securities and Exchange Commission (SEC).

Composite forecasts for the total proved, proved developed producing,
proved developed non-producing and proved undeveloped estimates are presented by
category in Tables I-P, I-PDP, I-PDNP and I-PUD, respectively. The proved
reserves and economics for all three groups are summarized as follows:

<TABLE>
<CAPTION>
NET RESERVES FUTURE NET CASH FLOW
----------------------- ----------------------------
OIL GAS PRESENT WORTH
CATEGORY (BARRELS) (MCF) TOTAL AT 10%
- -------- --------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Proved Developed:
Producing...................... 2,146,422 26,002,050 $ 67,895,820 $44,240,260
Non-Producing.................. 518,606 4,674,717 14,544,070 3,980,896
Proved Undeveloped............... 516,290 22,552,930 41,783,310 21,028,250
--------- ----------- ------------ -----------
Total Proved................ 3,181,318 53,229,700 $124,233,200 $69,249,406
========= =========== ============ ===========
</TABLE>

Future revenue is prior to deducting state production taxes and ad valorem
taxes. Future net cash flow is after deducting these taxes, future capital costs
and operating expenses, but before consideration of federal income taxes. In
accordance with SEC guidelines, the future net cash flow has been discounted at
an annual rate of ten percent to determine its "present worth". The present
worth is shown to indicate the effect of time on the value of money and should
not be construed as being the fair market value of the properties.

The oil reserves include oil and condensate. Oil volumes are expressed in
barrels (42 U.S. gallons). Gas volumes are expressed in thousands of standard
cubic feet (Mcf) at contract temperature and pressure base.

Our estimates are for proved reserves only and do not include any probable
or possible reserves nor have any values been attributed to interest in acreage
beyond the location for which undeveloped reserves have been estimated.

Oil and gas prices being received at December 31, 1997 were utilized as
furnished. Direct lease operating expenses are based on 1996 and 1997 historical
data and do not include general and administrative overhead. Investments are
capital costs for pumping unit installations, work-overs and drilling costs and
were utilized as furnished. All economic factors were held constant in
accordance with SEC guidelines.

An on-site field inspection of the properties has not been performed nor
have the mechanical operation or condition of the wells and their related
facilities been examined nor have the wells been tested by Cawley, Gillespie &
Associates, Inc. Possible environmental liability related to the properties has
not been investigated

A-1
<PAGE> 118

nor considered. The cost of plugging and the salvage value of equipment at
abandonment have not been included.

The reserve classifications and the economic considerations used herein
conform to the criteria of the Securities and Exchange Commission. The reserves
and economics are predicated on regulatory agency classifications, rules,
policies, laws, taxes and royalties currently in effect except as noted herein.
The possible effects of changes in legislation or other Federal or State
restrictive actions which could affect the reserves and economics have not been
considered.

The proved reserve estimates and forecasts were based upon interpretations
of data furnished by your office and available from our files. All estimates
represent our best judgment based on the data available at the time of
preparation. It should be realized that the reserve estimates, the reserves
actually recovered, the revenue derived therefrom and the actual cost incurred
could be more or less than the estimated amounts. Additionally, the prices and
costs may vary from those utilized which may increase or decrease both the
volume and future net revenue.

Ownership was accepted as furnished and has not been independently
confirmed. We are independent registered professional engineers and geologists.
We do not own an interest in the properties or Brigham Exploration Company and
are not employed on a contingent basis. Our work-papers and related data
utilized in the preparation of these estimates are available in our office.

Yours very truly,

Cawley, Gillespie & Associates, Inc.

/s/ AARON CAWLEY

------------------------------------
Aaron Cawley, P.E.
Executive Vice President
AC:rkf

A-2
<PAGE> 119

- ------------------------------------------------------
- ------------------------------------------------------

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
OR THE SOLICITATION OF ANY OFFER TO BUY ANY SECURITIES OTHER THAN THE NOTES,
WARRANTS AND SHARES OFFERED BY THIS PROSPECTUS, NOR DOES IT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF ANY OFFER TO BUY THE NOTES, WARRANTS AND SHARES BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.

---------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................ 3
Disclosure Regarding Forward-Looking
Statements.............................. 14
Risk Factors.............................. 14
The Company............................... 23
Use of Proceeds........................... 24
Price Range of Common Stock and Dividend
Policy.................................. 24
Capitalization............................ 25
Selected Financial Data................... 26
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.............................. 28
Business and Properties................... 36
Management................................ 53
Certain Transactions...................... 60
Principal Stockholders.................... 62
Description of Other Indebtedness......... 63
Description of Notes...................... 64
Subordination Agreement................... 80
Description of Warrants................... 82
Description of Capital Stock.............. 84
Registration Rights Relating to the
Warrants and Shares..................... 85
Shares Eligible for Future Sale........... 86
Plan of Distribution...................... 87
Legal Matters............................. 87
Experts................................... 87
Available Information..................... 87
Glossary of Certain Oil and Gas Terms..... 89
Index to Financial Statements............. F-1
Letter of Cawley, Gillespie & Associates,
Inc..................................... A-1
</TABLE>

---------------------

UNTIL , 1998 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE NOTES, WARRANTS AND SHARES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------

$40,000,000

SENIOR SUBORDINATED SECURED

NOTES DUE 2003

WARRANTS TO PURCHASE

1,000,000 SHARES OF COMMON STOCK

SHARES OF COMMON STOCK

BRIGHAM EXPLORATION COMPANY

----------------

PROSPECTUS
----------------
, 1998

- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 120

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The estimated expenses payable by Brigham Exploration Company (the
"Registrant" or the "Company") in connection with the registration of the
securities offered hereby, other than underwriting discounts and commissions,
are as follows:

<TABLE>
<S> <C>
SEC Registration Fee........................................ $ 17,700
NASD Filing Fee............................................. 5,100
Nasdaq National Market Listing Fee.......................... 17,500
Accounting Fees and Expenses................................ 35,000
Legal Fees and Expenses..................................... 125,000
Engineering Fees and Expenses............................... --
Transfer Agent and Registrar Fees........................... 1,500
Printing and Engraving Expenses............................. 85,000
Miscellaneous............................................... 63,200
--------
Total............................................. $350,000
========
</TABLE>

- ---------------

* To be provided by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Under Section 145 of the DGCL, the Registrant has the power to indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding (other than an
action by or in the right of the corporation) by reason of the fact that the
person is or was a director, officer, employee or agent of any corporation,
partnership, joint venture, trust or other enterprise, reasonably incurred in
connection with such action, suit or proceeding. The power to indemnify applies
only if the person acted in good faith and in a manner the person reasonably
believed to be in or not opposed to the best interests of the corporation, and
with respect to any criminal action or proceeding, had no reasonable cause to
believe the person's conduct was unlawful.

In the case of an action by or in the right of the Registrant, no
indemnification may be made with respect to any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Registrant unless
and only to the extent that the court of chancery or the court in which such
action or suit was brought shall determine that despite the adjudication of
liability such person is fairly and reasonably entitled to indemnity for such
expenses which the court shall deem proper. Section 145 of the DGCL further
provides that to the extent a director or officer of the Registrant has been
successful in the defense of any action, suit or proceeding referred to above or
in the defense of any claim, issue or matter therein, that person shall be
indemnified against expenses (including attorney's fees) actually and reasonably
incurred in connection therewith.

The Registrant also has the power to purchase and maintain insurance on
behalf of any person covering any liability incurred in that person's capacity
as a director, officer, employee or agent of the corporation, or

II-1
<PAGE> 121

arising out of that person's status as such, whether or not the corporation
would have the power to indemnify against the liability.

The Certificate of Incorporation and Bylaws provide that the Registrant
will indemnify its officers and directors and former officers and directors
against any expenses, judgments or settlement payments sustained or paid by such
persons as a result of having acted as an officer or director of the Registrant,
or, at the request of the Registrant, as an officer, director, agent or employee
of another business entity. The Certificate of Incorporation and Bylaws further
provide that the Registrant may, by action of its Board of Directors, provide
indemnification to employees and agents of the Registrant, individually or as a
group, with the same scope and effect as the indemnification of directors and
officers.

The form of Indemnity Agreement contained in Exhibit 10.23 provides for the
indemnification in certain instances against liability and expenses incurred in
connection with proceedings brought by or in the right of the Company or by
third parties by reason of a person serving as an officer or director of the
Company.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

The following information relates to all securities issued or sold by the
Registrant since inception and not registered under the Securities Act of 1933
(the "Securities Act").

Unless otherwise specifically provided, each of the transactions described
below was conducted in reliance upon the exemption from registration provided in
Section 4(2) of the Securities Act and the rules and regulations promulgated
thereunder. Furthermore, each of the certificates representing the Registrant's
securities issued in connection with such transactions contains a restrictive
legend, as appropriate, requiring each person acquiring such securities from the
Registrant to furnish investment representations to the Registrant and stating
that no underwriters participated in such transactions.

The Registrant was formed on February 25, 1997. On February 26, 1997, the
Company sold three shares of the Registrant's Common Stock to Ben M. Brigham,
President of the Company. Pursuant to the terms of an Agreement and Plan of
Reorganization dated February 26, 1997 (the "Exchange Agreement") the Company
became the holding company for Brigham Oil & Gas, L.P., which conducts the
Registrant's operations and was formed in May 1992 (the "Partnership"). Pursuant
to the terms of the Exchange Agreement, the limited partners of the Partnership
received 634,868 shares of the Registrant's common stock. In addition, the
general partners or their stockholders received 6,539,239 shares of the
Registrant's common stock for each share of common stock of the general partner
owned by such stockholder. Each certificate issued in connection with such
exchange contained an appropriate restrictive legend.

In August 1995, the Registrant issued $16 million principal amount of its
5% convertible subordinated notes (the "Notes") to Resource Investment
Management Company. Immediately after the consummation of the exchange described
above, RIMCO converted the Notes into 1,759,464 shares of the Registrant's
common stock. Each certificate issued in connection with that conversion
contained an appropriate restrictive legend.

The Registrant and its predecessor have granted options that remain
outstanding to purchase an aggregate of 935,987 shares of Common Stock, subject
to vesting, and issued 156,250 shares of restricted stock to officers and key
employees.

II-2
<PAGE> 122

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits:

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
2.1 -- Exchange Agreement (filed as Exhibit 2.1 to the Company's
Registration Statement on Form S-1 (Registration No.
333-22491), and incorporated herein by reference).
3.1 -- Certificate of Incorporation (filed as Exhibit 3.1 to the
Company's Registration Statement on Form S-1
(Registration No. 333-22491), and incorporated herein by
reference).
3.2 -- Bylaws (filed as Exhibit 3.2 to the Company's
Registration Statement on Form S-1 (Registration No.
333-22491), and incorporated herein by reference).
4.1 -- Form of Common Stock Certificate (filed as Exhibit 4.1 to
the Company's Registration Statement on Form S-1
(Registration No. 333-22491), and incorporated herein by
reference).
4.2+ -- Form of Indenture
4.3+ -- Form of Warrant Certificate
4.4+ -- Form of Senior Subordinated Secured Note due 2003
4.5+ -- Form of Registration Rights Agreement
5+ -- Opinion of Thompson & Knight, A Professional Corporation
10.1 -- Agreement of Limited Partnership of Venture Acquisitions,
L.P., dated September 23, 1994, by and between Quest
Resources, L.L.C. and RIMCO Energy, Inc. as general
partners, and RIMCO Production Company, Inc., RIMCO
Exploration Partners, L.P. I and RIMCO Exploration
Partners, L.P. II, as limited partners (filed as Exhibit
10.2 to the Company's Registration Statement on Form S-1
(Registration No. 333-22491), and incorporated herein by
reference).
10.2 -- Regulations of Quest Resources, L.L.C. (filed as Exhibit
10.3 to the Company's Registration Statement on Form S-1
(Registration No. 333-22491), and incorporated herein by
reference).
10.3 -- Management and Ownership Agreement, dated September 23,
1994, by and among Brigham Oil & Gas, L.P., Brigham
Exploration Company, General Atlantic Partners III, L.P.,
Harold D. Carter, Ben M. Brigham and GAP-Brigham
Partners, L.P. (filed as Exhibit 10.4 to the Company's
Registration Statement on Form S-1 (Registration No.
333-22491), and incorporated herein by reference).
10.4*++ -- Consulting Agreement, dated May 1, 1997, by and between
Brigham Oil & Gas, L.P. and Harold D. Carter.
10.5* -- Employment Agreement, by and between Brigham Exploration
Company and Ben M. Brigham (filed as Exhibit 10.7 to the
Company's Registration Statement on Form S-1
(Registration No. 333-22491), and incorporated herein by
reference).
10.6* -- Form of Confidentiality and Noncompete Agreement between
the Registrant and each of its executive officers (filed
as Exhibit 10.8 to the Company's Registration Statement
on Form S-1 (Registration No. 333-22491), and
incorporated herein by reference).
10.7* -- 1997 Incentive Plan of Brigham Exploration Company (filed
as Exhibit 10.9 to the Company's Registration Statement
on Form S-1 (Registration No. 333-22491), and
incorporated herein by reference).
</TABLE>

II-3
<PAGE> 123

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.7.1* -- Form of Option Agreement for certain executive officers
(filed as Exhibit 10.9.1 to the Company's Registration
Statement on Form S-1 (Registration No. 333-22491), and
incorporated herein by reference).
10.7.2* -- Option Agreement dated as of March 4, 1997, by and
between Brigham Exploration Company and Jon L. Glass
(filed as Exhibit 10.9.2 to the Company's Registration
Statement on Form S-1 (Registration No. 333-22491), and
incorporated herein by reference).
10.8* -- Incentive Bonus Plan dated as of February 28, 1997 of
Brigham, Inc. and Brigham Oil & Gas, L.P. (filed as
Exhibit 10.10 to the Company's Registration Statement on
Form S-1 (Registration No. 333-22491), and incorporated
herein by reference).
10.9.1++ -- First Amendment to Two Bridge Point Lease Agreement dated
April 11, 1997 between Investors Life Insurance Company
of North America and Brigham Oil & Gas, L.P.
10.9.2++ -- Second Amendment to Two Bridge Point Lease Agreement
dated October 13, 1997 between Investors Life Insurance
Company of North America and Brigham Oil & Gas, L.P.
10.9.3++ -- Letter dated April 17, 1998 exercising Right of First
Refusal to Lease "3rd Option Space."
10.9 -- Two Bridge Point Lease Agreement, dated September 30,
1996, by and between Investors Life Insurance Company of
North America and Brigham Oil & Gas, L.P. (filed as
Exhibit 10.14 to the Company's Registration Statement on
Form S-1 (Registration No. 333-22491), and incorporated
herein by reference).
10.10 -- Anadarko Basin Seismic Operations Agreement, dated
February 15, 1996, by and between Brigham Oil & Gas, L.P.
and Veritas Geophysical, Ltd. (filed as Exhibit 10.15 to
the Company's Registration Statement on Form S-1
(Registration No. 333-22491), and incorporated herein by
reference).
10.10.1 -- Letter Amendment to Anadarko Basin Seismic Operations
Agreement, dated June 10, 1996, between Brigham Oil &
Gas, L.P. and Veritas Geophysical, Ltd. (filed as Exhibit
10.15.1 to the Company's Registration Statement on Form
S-1 (Registration No. 333-22491), and incorporated herein
by reference).
10.11 -- Expense Allocation and Participation Agreement, dated
April 1, 1996, between Brigham Oil & Gas, L.P. and Gasco
Limited Partnership. (filed as Exhibit 10.16 to the
Company's Registration Statement on Form S-1
(Registration No. 333-22491), and incorporated herein by
reference).
10.11.1 -- Amendment to Expense Allocation and Participation
Agreement, dated October 21, 1996, between Brigham Oil &
Gas, L.P. and Gasco Limited Partnership (filed as Exhibit
10.16.1 to the Company's Registration Statement on Form
S-1 (Registration No. 333-22491), and incorporated herein
by reference).
10.12 -- Expense Allocation and Participation Agreement, dated
April 1, 1996, between Brigham Oil & Gas, L.P. and Middle
Bay Oil Company, Inc. (filed as Exhibit 10.17 to the
Company's Registration Statement on Form S-1
(Registration No. 333-22491), and incorporated herein by
reference).
10.12.1 -- Amendment to Expense Allocation and Participation
Agreement, dated September 26, 1996, between Brigham Oil
& Gas, L.P. and Middle Bay Oil Company, Inc. (filed as
Exhibit 10.17.1 to the Company's Registration Statement
on Form S-1 (Registration No. 333-22491), and
incorporated herein by reference).
</TABLE>

II-4
<PAGE> 124

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.12.2 -- Letter Amendment to Expense Allocation and Participation
Agreement, dated May 20, 1996, between Brigham Oil & Gas,
L.P. and Middle Bay Oil Company, Inc. (filed as Exhibit
10.17.2 to the Company's Registration Statement on Form
S-1 (Registration No. 333-22491), and incorporated herein
by reference).
10.13 -- Anadarko Basin Joint Participation Agreement, dated May
1, 1996, by and among Stephens Production Company and
Brigham Oil & Gas, L.P. (filed as Exhibit 10.18 to the
Company's Registration Statement on Form S-1
(Registration No. 333-22491), and incorporated herein by
reference).
10.14 -- Anadarko Basin Joint Participation Agreement, dated May
1, 1996, by and between Vintage Petroleum, Inc. and
Brigham Oil & Gas, L.P. (filed as Exhibit 10.19 to the
Company's Registration Statement on Form S-1
(Registration No. 333-22491), and incorporated herein by
reference).
10.15 -- Processing Alliance Agreement, dated July 20, 1993,
between Veritas Seismic Ltd. and Brigham Oil & Gas, L.P.
(filed as Exhibit 10.20 to the Company's Registration
Statement on Form S-1 (Registration No. 333- 22491), and
incorporated herein by reference).
10.15.1 -- Letter Amendment to Processing Alliance Agreement, dated
November 3, 1994, between Veritas Seismic Ltd. and
Brigham Oil & Gas, L.P. (filed as Exhibit 10.20.1 to the
Company's Registration Statement on Form S-1
(Registration No. 333-22491), and incorporated herein by
reference).
10.16 -- Agreement and Assignment of Interest, West Bradley
Project, dated September 1, 1995, by and between Aspect
Resources Limited Liability Company and Brigham Oil &
Gas, L.P. (filed as Exhibit 10.21 to the Company's
Registration Statement on Form S-1 (Registration No.
333-22491), and incorporated herein by reference).
10.17 -- Agreement and Assignment of Interests in lands located in
Grady County, Oklahoma, West Bradley Project, dated
December 1, 1995, by and between Aspect Resources Limited
Liability Company, Brigham Oil & Gas, L.P. and Venture
Acquisitions, L.P. (filed as Exhibit 10.22 to the
Company's Registration Statement on Form S-1
(Registration No. 333-22491), and incorporated herein by
reference).
10.18 -- Agreement and Assignment of Interests, West Bradley
Project, dated December 1, 1995, by and between Aspect
Resources Limited Liability Company and Brigham Oil &
Gas, L.P. (filed as Exhibit 10.23 to the Company's
Registration Statement on Form S-1 (Registration No.
333-22491), and incorporated herein by reference).
10.19 -- Geophysical Exploration Agreement, Hardeman Project,
Hardeman and Wilbarger Counties, Texas and Jackson
County, Oklahoma, dated March 15, 1993 by and among
General Atlantic Resources, Inc., Maynard Oil Company,
Ruja Muta Corporation, Tucker Scully Interests Ltd., JHJ
Exploration, Ltd., Cheyenne Petroleum Company, Antrim
Resources, Inc., and Brigham Oil & Gas, L.P. (filed as
Exhibit 10.24 to the Company's Registration Statement on
Form S-1 (Registration No. 333-22491), and incorporated
herein by reference).
10.20 -- Agreement and Partial Assignment of Interests in OK13-P
Prospect Area, Jackson County, Oklahoma (Hardeman
Project), dated August 1, 1995, by and between Brigham
Oil & Gas, L.P. and Aspect Resources Limited Liability
Company (filed as Exhibit 10.25 to the Company's
Registration Statement on Form S-1 (Registration No.
333-22491), and incorporated herein by reference).
</TABLE>

II-5
<PAGE> 125

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.21 -- Agreement and Partial Assignment of Interests in Q140-E
Prospect Area, Hardeman County, Texas (Hardeman Project),
dated August 1, 1995, by and between Brigham Oil & Gas,
L.P. and Aspect Resources Limited Liability Company
(filed as Exhibit 10.26 to the Company's Registration
Statement on Form S-1 (Registration No. 333-22491), and
incorporated herein by reference).
10.22 -- Agreement and Partial Assignment of Interests in Hankins
#1 Chappel Prospect Agreement, Jackson County, Oklahoma
(Hardeman Project), dated March 21, 1996, by and between
Brigham Oil & Gas, L.P., NGR, Ltd. and Aspect Resources
Limited Liability Company (filed as Exhibit 10.27 to the
Company's Registration Statement on Form S-1
(Registration No. 333-22491), and incorporated herein by
reference).
10.23 -- Form of Indemnity Agreement between the Registrant and
each of its executive officers (filed as Exhibit 10.28 to
the Company's Registration Statement on Form S-1
(Registration No. 333-22491), and incorporated herein by
reference).
10.24 -- Registration Rights Agreement dated February 26, 1997 by
and among Brigham Exploration Company, General Atlantic
Partners III L.P., GAP-Brigham Partners, L.P., RIMCO
Partners, L.P. II, RIMCO Partners L.P. III, and RIMCO
Partners, L.P. IV, Ben M. Brigham, Anne L. Brigham,
Harold D. Carter, Craig M. Fleming, David T. Brigham and
Jon L. Glass (filed as Exhibit 10.29 to the Company's
Registration Statement on Form S-1 (Registration No.
333-22491), and incorporated herein by reference).
10.25 -- 1997 Director Stock Option Plan (filed as Exhibit 10.30
to the Company's Registration Statement on Form S-1
(Registration No. 333-22491), and incorporated herein by
reference).
10.26 -- Form of Employee Stock Ownership Agreement (filed as
Exhibit 10.31 to the Company's Registration Statement on
Form S-1 (Registration No. 333-22491), and incorporated
herein by reference).
10.27 -- Agreement and Assignment of Interest in Geophysical
Exploration Agreement, Esperson Dome Project, dated
November 1, 1994, by and between Brigham Oil & Gas, L.P.
and Vaquero Gas Company (filed as Exhibit 10.33 to the
Company's Registration Statement on Form S-1
(Registration No. 333-22491), and incorporated herein by
reference).
10.28 -- Geophysical Exploration Agreement, Southwest Danbury
Project, Brazoria County, Texas, dated as of July 1,
1996, by and among UNEXCO, Inc. and Brigham Oil & Gas,
L.P. (filed as Exhibit 10.34 to the Company's
Registration Statement on Form S-1 (Registration No.
333-22491), and incorporated herein by reference).
10.29 -- Geophysical Exploration Agreement, Welder Project, Duval
County, Texas, dated as of October 1, 1996, by and among
UNEXCO, Inc. and Brigham Oil & Gas, L.P. (filed as
Exhibit 10.35 to the Company's Registration Statement on
Form S-1 (Registration No. 333-22491), and incorporated
herein by reference).
10.30 -- Proposed Trade Structure, RIMCO/Tigre Project, Vermillion
Parish, Louisiana, among Brigham Oil & Gas, L.P., Tigre
Energy Corporation and Resource Investors Management
Company (filed as Exhibit 10.36.1 to the Company's
Registration Statement on Form S-1 (Registration No.
333-22491), and incorporated herein by reference).
</TABLE>

II-6
<PAGE> 126

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.30.1 -- Letter relating to Proposed Trade Structure, RIMCO/Tigre
Project, dated January 31, 1997, from Resource Investors
Management Company to Brigham Oil & Gas, L.P. (filed as
Exhibit 10.36.1 to the Company's Registration Statement
on Form S-1 (Registration No. 333-22491), and
incorporated herein by reference).
10.31 -- Anadarko Basin Seismic Operations Agreement II, dated as
of April 1, 1997, by and between Brigham Oil & Gas, L.P.
(filed as Exhibit 10.37 to the Company's Registration
Statement on Form S-1 (Registration No. 333-22491), and
incorporated herein by reference).
10.31.1 -- Letter Amendment to Anadarko Basin Seismic Operations
Agreement II, dated March 20, 1997, between Brigham Oil &
Gas, L.P. and Veritas DGC Land, Inc. (filed as Exhibit
10.37 to the Company's Registration Statement on Form S-1
(Registration No. 333-22491), and incorporated herein by
reference).
10.32 -- Expense Allocation and Participation Agreement II, dated
April 1, 1997, between Brigham Oil & Gas, L.P., and Gasco
Limited Partnership (filed as Exhibit 10.31 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997, and incorporated herein by
reference).
10.33 -- Credit Agreement dated as of January 26, 1998 among
Brigham Oil & Gas, L.P., Bank of Montreal, as Agent, and
the lenders signatory thereto (filed as Exhibit 10.36 to
the Company's Annual Report on Form 10-K for the year
ended December 31, 1997, and incorporated herein by
reference).
10.33.1++ -- Guaranty Agreement dated January 26, 1998 by Brigham
Exploration Company in favor of Bank of Montreal, as
Agent, and each of the Lenders party to the Credit
Agreement.
10.33.2++ -- First Amendment to Guaranty Agreement dated as of March
30, 1998 between Brigham Exploration Company and Bank of
Montreal, as agent for the Lenders party to the Credit
Agreement.
10.34+ -- Form of Securities Purchase Agreement
10.35+ -- Form of First Amendment to Credit Agreement among Brigham
Oil & Gas, L.P., Bank of Montreal, as Agent, and the
Lenders signatory thereto.
10.36+ -- Form of Second Amendment to Guaranty Agreement between
Brigham Exploration Company and Bank of Montreal, as
agent for the Lenders party to the Credit Agreement.
12+ -- Computation of Ratio of Earnings to Fixed Charges
21++ -- Subsidiaries of the Registrant.
23.1+ -- Consent of Thompson & Knight, A Professional Corporation
(included in Exhibit 5 above).
23.2+ -- Consent of PricewaterhouseCoopers LLP, independent
accountants.
23.3+ -- Consent of Cawley, Gillespie & Associates, Inc.,
independent petroleum engineers.
24.1++ -- Powers of Attorney.
25+ -- Statement of eligibility of trustee
</TABLE>

- ---------------

* Management contract or compensatory plan.

+ Filed herewith.

++ Previously filed.

(b) Financial Statement Schedules: None.

II-7
<PAGE> 127

ITEM 17. UNDERTAKINGS

The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreements, certificates in such
denominations and registered in such names as required by the particular
Underwriter, to permit prompt delivery to each purchaser.

The undersigned Registrant also hereby undertakes that:

(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

II-8
<PAGE> 128

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, each of the
undersigned registrants has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in Austin, Texas,
on August 14, 1998.

BRIGHAM EXPLORATION COMPANY

By: /s/ BEN M. BRIGHAM

----------------------------------
Ben M. Brigham
President, Chief Executive Officer
and
Chairman of the Board

BRIGHAM, INC.

By: /s/ BEN M. BRIGHAM

----------------------------------
Ben M. Brigham
President and Chairman of
the Board
BRIGHAM OIL & GAS, L.P.

By: Brigham, Inc., its General
Partner

By: /s/ BEN M. BRIGHAM

--------------------------------
Ben M. Brigham
President and Chairman of

the Board

II-9
<PAGE> 129

BRIGHAM HOLDINGS I, LLC

By: /s/ BEN M. BRIGHAM

----------------------------------

Ben M. Brigham

Manager and President

BRIGHAM HOLDINGS II, LLC

By: /s/ BEN M. BRIGHAM

----------------------------------
Ben M. Brigham

Manager and President

II-10
<PAGE> 130

BRIGHAM EXPLORATION COMPANY

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>

/s/ BEN M. BRIGHAM President, Chief Executive August 14, 1998
- ----------------------------------------------------- Officer and Chairman of the
Ben M. Brigham Board (principal executive
officer)

/s/ ANNE L. BRIGHAM* Executive Vice President and August 14, 1998
- ----------------------------------------------------- Director
Anne L. Brigham

/s/ CRAIG M. FLEMING* Chief Financial Officer, August 14, 1998
- ----------------------------------------------------- Vice President -- Finance
Craig M. Fleming and Treasurer (principal
financial and accounting
officer)

/s/ JON L. GLASS* Vice August 14, 1998
- ----------------------------------------------------- President -- Exploration and
Jon L. Glass Director

/s/ HAROLD D. CARTER* Director August 14, 1998
- -----------------------------------------------------
Harold D. Carter

/s/ GARY J. MILAVEC* Director August 14, 1998
- -----------------------------------------------------
Gary J. Milavec

/s/ ALEXIS M. CRANBERG* Director August 14, 1998
- -----------------------------------------------------
Alexis M. Cranberg

/s/ STEPHEN P. REYNOLDS* Director August 14, 1998
- -----------------------------------------------------
Stephen P. Reynolds

*By: /s/ BEN M. BRIGHAM
------------------------------------------------
Ben M. Brigham
Attorney-in-fact
</TABLE>

II-11
<PAGE> 131

BRIGHAM, INC.

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned directors and officers
of Brigham, Inc., a Nevada corporation, which is filing a Registration Statement
on Form S-1 with the Securities and Exchange Commission, Washington D.C. 20549
under the provisions of the Securities Act of 1933, as amended (the "Securities
Act"), hereby constitute and appoint Ben M. Brigham and Craig M. Fleming, and
each of them, the individual's true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for the person and in his
other name, place and post-effective amendments, to the Registration Statement
and any or all amendments, including post-effective amendments, to the
Registration Statement, including a Prospectus or an amended Prospectus therein
and any registration statement for the same offering that is to be effective
upon filing pursuant to Rule 462(b) under the Securities Act, and all other
documents in connection therewith to be filed with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact as agents or any of them, or their
substitute or substitutes, may lawfully door cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>

/s/ BEN M. BRIGHAM President and Chairman of the August 14, 1998
- ----------------------------------------------------- Board (principal executive
Ben M. Brigham officer)

/s/ CRAIG M. FLEMING Chief Financial Officer, Vice August 14, 1998
- ----------------------------------------------------- President -- Finance, Treasurer
Craig M. Fleming and Director (principal
financial and accounting
officer)
</TABLE>

II-12
<PAGE> 132

BRIGHAM HOLDINGS I, LLC

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned managers and officers
of Brigham Holdings I, LLC, a Nevada limited liability company, which is filing
a Registration Statement on Form S-1 with the Securities and Exchange
Commission, Washington D.C. 20549 under the provisions of the Securities Act of
1933, as amended (the "Securities Act"), hereby constitute and appoint Ben M.
Brigham and Craig M. Fleming, and each of them, the individual's true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for the person and in his other name, place and post-effective
amendments, to the Registration Statement and any or all amendments, including
post-effective amendments, to the Registration Statement, including a Prospectus
or an amended Prospectus therein and any registration statement for the same
offering that is to be effective upon filing pursuant to Rule 462(b) under the
Securities Act, and all other documents in connection therewith to be filed with
the Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact as
agents or any of them, or their substitute or substitutes, may lawfully door
cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>

/s/ BEN M. BRIGHAM President and Manager August 14, 1998
- ----------------------------------------------------- (principal executive officer)
Ben M. Brigham

/s/ CRAIG M. FLEMING Vice President, Treasurer and August 14, 1998
- ----------------------------------------------------- Manager (principal financial
Craig M. Fleming and accounting officer)
</TABLE>

II-13
<PAGE> 133

BRIGHAM HOLDINGS II, LLC

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned managers and officers
of Brigham Holdings II, LLC, a Nevada limited liability company, which is filing
a Registration Statement on Form S-1 with the Securities and Exchange
Commission, Washington D.C. 20549 under the provisions of the Securities Act of
1933, as amended (the "Securities Act"), hereby constitute and appoint Ben M.
Brigham and Craig M. Fleming, and each of them, the individual's true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for the person and in his other name, place and post-effective
amendments, to the Registration Statement and any or all amendments, including
post-effective amendments, to the Registration Statement, including a Prospectus
or an amended Prospectus therein and any registration statement for the same
offering that is to be effective upon filing pursuant to Rule 462(b) under the
Securities Act, and all other documents in connection therewith to be filed with
the Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact as
agents or any of them, or their substitute or substitutes, may lawfully door
cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>

/s/ BEN M. BRIGHAM President and Manager August 14, 1998
- ----------------------------------------------------- (principal executive officer)
Ben M. Brigham

II-14
<PAGE> 134

BRIGHAM OIL & GAS, L.P.

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers of Brigham
Oil & Gas, L.P., a Nevada limited partnership, and directors of Brigham, Inc.,
the general partner of Brigham Oil & Gas, L.P., which is filing a Registration
Statement on Form S-1 with the Securities and Exchange Commission, Washington
D.C. 20549 under the provisions of the Securities Act of 1933, as amended (the
"Securities Act"), hereby constitute and appoint Ben M. Brigham and Craig M.
Fleming, and each of them, the individual's true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution, for the person
and in his other name, place and post-effective amendments, to the Registration
Statement and any or all amendments, including post-effective amendments, to the
Registration Statement, including a Prospectus or an amended Prospectus therein
and any registration statement for the same offering that is to be effective
upon filing pursuant to Rule 462(b) under the Securities Act, and all other
documents in connection therewith to be filed with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact as agents or any of them, or their
substitute or substitutes, may lawfully door cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>

/s/ BEN M. BRIGHAM President of the Registrant and August 14, 1998
- ----------------------------------------------------- Director of its General Partner
Ben M. Brigham (principal executive officer)

/s/ CRAIG M. FLEMING Chief Financial Officer of the August 14, 1998
- ----------------------------------------------------- Registrant and Director of its
Craig M. Fleming General Partner (principal
financial and accounting
officer)
</TABLE>

II-15
<PAGE> 135

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>

2.1 -- Exchange Agreement (filed as Exhibit 2.1 to the Company's
Registration Statement on Form S-1 (Registration No.
333-22491), and incorporated herein by reference).
3.1 -- Certificate of Incorporation (filed as Exhibit 3.1 to the
Company's Registration Statement on Form S-1
(Registration No. 333-22491), and incorporated herein by
reference).
3.2 -- Bylaws (filed as Exhibit 3.2 to the Company's
Registration Statement on Form S-1 (Registration No.
333-22491), and incorporated herein by reference).
4.1 -- Form of Common Stock Certificate (filed as Exhibit 4.1 to
the Company's Registration Statement on Form S-1
(Registration No. 333-22491), and incorporated herein by
reference).
4.2+ -- Form of Indenture
4.3+ -- Form of Warrant Certificate
4.4+ -- Form of Senior Subordinated Secured Note due 2003
4.5+ -- Form of Registration Rights Agreement
5+ -- Opinion of Thompson & Knight, A Professional Corporation
10.1 -- Agreement of Limited Partnership of Venture Acquisitions,
L.P., dated September 23, 1994, by and between Quest
Resources, L.L.C. and RIMCO Energy, Inc. as general
partners, and RIMCO Production Company, Inc., RIMCO
Exploration Partners, L.P. I and RIMCO Exploration
Partners, L.P. II, as limited partners (filed as Exhibit
10.2 to the Company's Registration Statement on Form S-1
(Registration No. 333-22491), and incorporated herein by
reference).
10.2 -- Regulations of Quest Resources, L.L.C. (filed as Exhibit
10.3 to the Company's Registration Statement on Form S-1
(Registration No. 333-22491), and incorporated herein by
reference).
10.3 -- Management and Ownership Agreement, dated September 23,
1994, by and among Brigham Oil & Gas, L.P., Brigham
Exploration Company, General Atlantic Partners III, L.P.,
Harold D. Carter, Ben M. Brigham and GAP-Brigham
Partners, L.P. (filed as Exhibit 10.4 to the Company's
Registration Statement on Form S-1 (Registration No.
333-22491), and incorporated herein by reference).
10.4*++ -- Consulting Agreement, dated May 1, 1997, by and between
Brigham Oil & Gas, L.P. and Harold D. Carter.
10.5* -- Employment Agreement, by and between Brigham Exploration
Company and Ben M. Brigham (filed as Exhibit 10.7 to the
Company's Registration Statement on Form S-1
(Registration No. 333-22491), and incorporated herein by
reference).
10.6* -- Form of Confidentiality and Noncompete Agreement between
the Registrant and each of its executive officers (filed
as Exhibit 10.8 to the Company's Registration Statement
on Form S-1 (Registration No. 333-22491), and
incorporated herein by reference).
10.7* -- 1997 Incentive Plan of Brigham Exploration Company (filed
as Exhibit 10.9 to the Company's Registration Statement
on Form S-1 (Registration No. 333-22491), and
incorporated herein by reference).
10.7.1* -- Form of Option Agreement for certain executive officers
(filed as Exhibit 10.9.1 to the Company's Registration
Statement on Form S-1 (Registration No. 333-22491), and
incorporated herein by reference).
</TABLE>

<PAGE> 136

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.7.2* -- Option Agreement dated as of March 4, 1997, by and
between Brigham Exploration Company and Jon L. Glass
(filed as Exhibit 10.9.2 to the Company's Registration
Statement on Form S-1 (Registration No. 333-22491), and
incorporated herein by reference).
10.8* -- Incentive Bonus Plan dated as of February 28, 1997 of
Brigham, Inc. and Brigham Oil & Gas, L.P. (filed as
Exhibit 10.10 to the Company's Registration Statement on
Form S-1 (Registration No. 333-22491), and incorporated
herein by reference).
10.9.1++ -- First Amendment to Two Bridge Point Lease Agreement dated
April 11, 1997 between Investors Life Insurance Company
of North America and Brigham Oil & Gas, L.P.
10.9.2++ -- Second Amendment to Two Bridge Point Lease Agreement
dated October 13, 1997 between Investors Life Insurance
Company of North America and Brigham Oil & Gas, L.P.
10.9.3++ -- Letter dated April 17, 1998 exercising Right of First
Refusal to Lease "3rd Option Space."
10.9 -- Two Bridge Point Lease Agreement, dated September 30,
1996, by and between Investors Life Insurance Company of
North America and Brigham Oil & Gas, L.P. (filed as
Exhibit 10.14 to the Company's Registration Statement on
Form S-1 (Registration No. 333-22491), and incorporated
herein by reference).
10.10 -- Anadarko Basin Seismic Operations Agreement, dated
February 15, 1996, by and between Brigham Oil & Gas, L.P.
and Veritas Geophysical, Ltd. (filed as Exhibit 10.15 to
the Company's Registration Statement on Form S-1
(Registration No. 333-22491), and incorporated herein by
reference).
10.10.1 -- Letter Amendment to Anadarko Basin Seismic Operations
Agreement, dated June 10, 1996, between Brigham Oil &
Gas, L.P. and Veritas Geophysical, Ltd. (filed as Exhibit
10.15.1 to the Company's Registration Statement on Form
S-1 (Registration No. 333-22491), and incorporated herein
by reference).
10.11 -- Expense Allocation and Participation Agreement, dated
April 1, 1996, between Brigham Oil & Gas, L.P. and Gasco
Limited Partnership. (filed as Exhibit 10.16 to the
Company's Registration Statement on Form S-1
(Registration No. 333-22491), and incorporated herein by
reference).
10.11.1 -- Amendment to Expense Allocation and Participation
Agreement, dated October 21, 1996, between Brigham Oil &
Gas, L.P. and Gasco Limited Partnership (filed as Exhibit
10.16.1 to the Company's Registration Statement on Form
S-1 (Registration No. 333-22491), and incorporated herein
by reference).
10.12 -- Expense Allocation and Participation Agreement, dated
April 1, 1996, between Brigham Oil & Gas, L.P. and Middle
Bay Oil Company, Inc. (filed as Exhibit 10.17 to the
Company's Registration Statement on Form S-1
(Registration No. 333-22491), and incorporated herein by
reference).
10.12.1 -- Amendment to Expense Allocation and Participation
Agreement, dated September 26, 1996, between Brigham Oil
& Gas, L.P. and Middle Bay Oil Company, Inc. (filed as
Exhibit 10.17.1 to the Company's Registration Statement
on Form S-1 (Registration No. 333-22491), and
incorporated herein by reference).
10.12.2 -- Letter Amendment to Expense Allocation and Participation
Agreement, dated May 20, 1996, between Brigham Oil & Gas,
L.P. and Middle Bay Oil Company, Inc. (filed as Exhibit
10.17.2 to the Company's Registration Statement on Form
S-1 (Registration No. 333-22491), and incorporated herein
by reference).
</TABLE>

<PAGE> 137

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.13 -- Anadarko Basin Joint Participation Agreement, dated May
1, 1996, by and among Stephens Production Company and
Brigham Oil & Gas, L.P. (filed as Exhibit 10.18 to the
Company's Registration Statement on Form S-1
(Registration No. 333-22491), and incorporated herein by
reference).
10.14 -- Anadarko Basin Joint Participation Agreement, dated May
1, 1996, by and between Vintage Petroleum, Inc. and
Brigham Oil & Gas, L.P. (filed as Exhibit 10.19 to the
Company's Registration Statement on Form S-1
(Registration No. 333-22491), and incorporated herein by
reference).
10.15 -- Processing Alliance Agreement, dated July 20, 1993,
between Veritas Seismic Ltd. and Brigham Oil & Gas, L.P.
(filed as Exhibit 10.20 to the Company's Registration
Statement on Form S-1 (Registration No. 333- 22491), and
incorporated herein by reference).
10.15.1 -- Letter Amendment to Processing Alliance Agreement, dated
November 3, 1994, between Veritas Seismic Ltd. and
Brigham Oil & Gas, L.P. (filed as Exhibit 10.20.1 to the
Company's Registration Statement on Form S-1
(Registration No. 333-22491), and incorporated herein by
reference).
10.16 -- Agreement and Assignment of Interest, West Bradley
Project, dated September 1, 1995, by and between Aspect
Resources Limited Liability Company and Brigham Oil &
Gas, L.P. (filed as Exhibit 10.21 to the Company's
Registration Statement on Form S-1 (Registration No.
333-22491), and incorporated herein by reference).
10.17 -- Agreement and Assignment of Interests in lands located in
Grady County, Oklahoma, West Bradley Project, dated
December 1, 1995, by and between Aspect Resources Limited
Liability Company, Brigham Oil & Gas, L.P. and Venture
Acquisitions, L.P. (filed as Exhibit 10.22 to the
Company's Registration Statement on Form S-1
(Registration No. 333-22491), and incorporated herein by
reference).
10.18 -- Agreement and Assignment of Interests, West Bradley
Project, dated December 1, 1995, by and between Aspect
Resources Limited Liability Company and Brigham Oil &
Gas, L.P. (filed as Exhibit 10.23 to the Company's
Registration Statement on Form S-1 (Registration No.
333-22491), and incorporated herein by reference).
10.19 -- Geophysical Exploration Agreement, Hardeman Project,
Hardeman and Wilbarger Counties, Texas and Jackson
County, Oklahoma, dated March 15, 1993 by and among
General Atlantic Resources, Inc., Maynard Oil Company,
Ruja Muta Corporation, Tucker Scully Interests Ltd., JHJ
Exploration, Ltd., Cheyenne Petroleum Company, Antrim
Resources, Inc., and Brigham Oil & Gas, L.P. (filed as
Exhibit 10.24 to the Company's Registration Statement on
Form S-1 (Registration No. 333-22491), and incorporated
herein by reference).
10.20 -- Agreement and Partial Assignment of Interests in OK13-P
Prospect Area, Jackson County, Oklahoma (Hardeman
Project), dated August 1, 1995, by and between Brigham
Oil & Gas, L.P. and Aspect Resources Limited Liability
Company (filed as Exhibit 10.25 to the Company's
Registration Statement on Form S-1 (Registration No.
333-22491), and incorporated herein by reference).
10.21 -- Agreement and Partial Assignment of Interests in Q140-E
Prospect Area, Hardeman County, Texas (Hardeman Project),
dated August 1, 1995, by and between Brigham Oil & Gas,
L.P. and Aspect Resources Limited Liability Company
(filed as Exhibit 10.26 to the Company's Registration
Statement on Form S-1 (Registration No. 333-22491), and
incorporated herein by reference).
</TABLE>
<PAGE> 138

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.22 -- Agreement and Partial Assignment of Interests in Hankins
#1 Chappel Prospect Agreement, Jackson County, Oklahoma
(Hardeman Project), dated March 21, 1996, by and between
Brigham Oil & Gas, L.P., NGR, Ltd. and Aspect Resources
Limited Liability Company (filed as Exhibit 10.27 to the
Company's Registration Statement on Form S-1
(Registration No. 333-22491), and incorporated herein by
reference).
10.23 -- Form of Indemnity Agreement between the Registrant and
each of its executive officers (filed as Exhibit 10.28 to
the Company's Registration Statement on Form S-1
(Registration No. 333-22491), and incorporated herein by
reference).
10.24 -- Registration Rights Agreement dated February 26, 1997 by
and among Brigham Exploration Company, General Atlantic
Partners III L.P., GAP-Brigham Partners, L.P., RIMCO
Partners, L.P. II, RIMCO Partners L.P. III, and RIMCO
Partners, L.P. IV, Ben M. Brigham, Anne L. Brigham,
Harold D. Carter, Craig M. Fleming, David T. Brigham and
Jon L. Glass (filed as Exhibit 10.29 to the Company's
Registration Statement on Form S-1 (Registration No.
333-22491), and incorporated herein by reference).
10.25 -- 1997 Director Stock Option Plan (filed as Exhibit 10.30
to the Company's Registration Statement on Form S-1
(Registration No. 333-22491), and incorporated herein by
reference).
10.26 -- Form of Employee Stock Ownership Agreement (filed as
Exhibit 10.31 to the Company's Registration Statement on
Form S-1 (Registration No. 333-22491), and incorporated
herein by reference).
10.27 -- Agreement and Assignment of Interest in Geophysical
Exploration Agreement, Esperson Dome Project, dated
November 1, 1994, by and between Brigham Oil & Gas, L.P.
and Vaquero Gas Company (filed as Exhibit 10.33 to the
Company's Registration Statement on Form S-1
(Registration No. 333-22491), and incorporated herein by
reference).
10.28 -- Geophysical Exploration Agreement, Southwest Danbury
Project, Brazoria County, Texas, dated as of July 1,
1996, by and among UNEXCO, Inc. and Brigham Oil & Gas,
L.P. (filed as Exhibit 10.34 to the Company's
Registration Statement on Form S-1 (Registration No.
333-22491), and incorporated herein by reference).
10.29 -- Geophysical Exploration Agreement, Welder Project, Duval
County, Texas, dated as of October 1, 1996, by and among
UNEXCO, Inc. and Brigham Oil & Gas, L.P. (filed as
Exhibit 10.35 to the Company's Registration Statement on
Form S-1 (Registration No. 333-22491), and incorporated
herein by reference).
10.30 -- Proposed Trade Structure, RIMCO/Tigre Project, Vermillion
Parish, Louisiana, among Brigham Oil & Gas, L.P., Tigre
Energy Corporation and Resource Investors Management
Company (filed as Exhibit 10.36.1 to the Company's
Registration Statement on Form S-1 (Registration No.
333-22491), and incorporated herein by reference).
10.30.1 -- Letter relating to Proposed Trade Structure, RIMCO/Tigre
Project, dated January 31, 1997, from Resource Investors
Management Company to Brigham Oil & Gas, L.P. (filed as
Exhibit 10.36.1 to the Company's Registration Statement
on Form S-1 (Registration No. 333-22491), and
incorporated herein by reference).
10.31 -- Anadarko Basin Seismic Operations Agreement II, dated as
of April 1, 1997, by and between Brigham Oil & Gas, L.P.
(filed as Exhibit 10.37 to the Company's Registration
Statement on Form S-1 (Registration No. 333-22491), and
incorporated herein by reference).
</TABLE>
<PAGE> 139

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.31.1 -- Letter Amendment to Anadarko Basin Seismic Operations
Agreement II, dated March 20, 1997, between Brigham Oil &
Gas, L.P. and Veritas DGC Land, Inc. (filed as Exhibit
10.37 to the Company's Registration Statement on Form S-1
(Registration No. 333-22491), and incorporated herein by
reference).
10.32 -- Expense Allocation and Participation Agreement II, dated
April 1, 1997, between Brigham Oil & Gas, L.P., and Gasco
Limited Partnership (filed as Exhibit 10.31 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997, and incorporated herein by
reference).
10.33 -- Credit Agreement dated as of January 26, 1998 among
Brigham Oil & Gas, L.P., Bank of Montreal, as Agent, and
the lenders signatory thereto (filed as Exhibit 10.36 to
the Company's Annual Report on Form 10-K for the year
ended December 31, 1997, and incorporated herein by
reference).
10.33.1++ -- Guaranty Agreement dated January 26, 1998 by Brigham
Exploration Company in favor of Bank of Montreal, as
Agent, and each of the Lenders party to the Credit
Agreement.
10.33.2++ -- First Amendment to Guaranty Agreement dated as of March
30, 1998 between Brigham Exploration Company and Bank of
Montreal, as agent for the Lenders party to the Credit
Agreement.
10.34+ -- Form of Securities Purchase Agreement
10.35+ -- Form of First Amendment to Credit Agreement among Brigham
Oil & Gas, L.P., Bank of Montreal, as Agent, and the
Lenders signatory thereto.
10.36+ -- Form of Second Amendment to Guaranty Agreement between
Brigham Exploration Company and Bank of Montreal, as
agent for the Lenders party to the Credit Agreement.
12+ -- Computation of Ratio of Earnings to Fixed Charges
21++ -- Subsidiaries of the Registrant.
23.1+ -- Consent of Thompson & Knight, A Professional Corporation
(included in Exhibit 5 above).
23.2+ -- Consent of PricewaterhouseCoopers LLP, independent
accountants.
23.3+ -- Consent of Cawley, Gillespie & Associates, Inc.,
independent petroleum engineers.
24.1++ -- Powers of Attorney.
25+ -- Statement of eligibility of trustee
</TABLE>

- ---------------

* Management contract or compensatory plan.

+ Filed herewith.

++ Previously filed.

<PAGE> 1
EXHIBIT 4.2

- --------------------------------------------------------------------------------

BRIGHAM EXPLORATION COMPANY

Borrower

AND

CHASE BANK OF TEXAS, NATIONAL ASSOCIATION

Trustee

---------------

I N D E N T U R E

Dated as of August ___, 1998

---------------

$50,000,000
Senior Subordinated Secured Notes due 2003

- --------------------------------------------------------------------------------
<PAGE> 2

TABLE OF CONTENTS
<TABLE>
<S> <C>
PRELIMINARY STATEMENT.............................................................................................1

ARTICLE I
DEFINITIONS..............................................................................................1
Section 1.01 Definitions................................................................................1
Section 1.02 Accounting Procedures and Interpretation..................................................15

ARTICLE II
ISSUE, DESCRIPTION, FORM, EXECUTION, REGISTRATION
OF TRANSFER AND EXCHANGE OF NOTES.......................................................................16
Section 2.01 Form and Dating...........................................................................16
Section 2.02 Execution and Authentication..............................................................16
Section 2.03 Denomination of Notes and Record Date.....................................................16
Section 2.04 Manual Execution..........................................................................16
Section 2.05 Transfer and Exchange.....................................................................17
Section 2.06 Replacement Notes.........................................................................18
Section 2.07 Cancellation of Notes.....................................................................18
Section 2.08 No Third Party Benefit....................................................................18

ARTICLE III
SUBORDINATION...........................................................................................19

ARTICLE IV
SECURITY FOR THE OBLIGATIONS............................................................................19
Section 4.01 Security..................................................................................19

ARTICLE V
[RESERVED]..............................................................................................20

ARTICLE VI
[RESERVED]..............................................................................................20

ARTICLE VII
AFFIRMATIVE COVENANTS...................................................................................20
Section 7.01 Financial Statements and Reports..........................................................20
Section 7.02 Litigation................................................................................22
Section 7.03 Maintenance, Etc..........................................................................22
Section 7.04 Environmental Matters.....................................................................23
Section 7.05 Further Assurances........................................................................23
Section 7.06 Performance of Obligations................................................................24
Section 7.07 Engineering Reports.......................................................................24
Section 7.08 Intentionally Omitted.....................................................................25
Section 7.09 Additional Collateral.....................................................................25
</TABLE>

-i-

<PAGE> 3

<TABLE>
<S> <C> <C>
Section 7.10 ERISA Information and Compliance..........................................................26
Section 7.11 Subsidiary Security.......................................................................26

ARTICLE VIII
NEGATIVE COVENANTS......................................................................................27
Section 8.01 Debt......................................................................................27
Section 8.02 Liens.....................................................................................27
Section 8.03 Investments, Loans and Advances...........................................................28
Section 8.04 Dividends, Distributions and Redemptions..................................................29
Section 8.05 Sales and Leasebacks......................................................................29
Section 8.06 Nature of Business........................................................................29
Section 8.07 Mergers, Etc..............................................................................29
Section 8.08 Proceeds of Notes.........................................................................29
Section 8.09 ERISA Compliance..........................................................................30
Section 8.10 Sale of Oil and Gas Properties............................................................30
Section 8.11 Environmental Matters.....................................................................31
Section 8.12 Transactions with Affiliates..............................................................31
Section 8.13 Negative Pledge Agreements................................................................31
Section 8.14 Gas Imbalances, Take-or-Pay Prepayments...................................................31
Section 8.15 Borrower as Operator......................................................................32
Section 8.16 Consolidated Interest Coverage Ratio......................................................32

ARTICLE IX
PAYMENT OF THE NOTES....................................................................................32
Section 9.01 Repayment.................................................................................32
Section 9.02 Interest..................................................................................32
Section 9.03 Payments and Computations.................................................................34

ARTICLE X
DEFAULT AND REMEDIES....................................................................................36
Section 10.01 Events of Default........................................................................36
Section 10.02 Remedies.................................................................................38
Section 10.03 Production and Proceeds..................................................................38
Section 10.04 Set-Off..................................................................................39

ARTICLE XI
THE AGENT...............................................................................................39
Section 11.01 Authorization and Action.................................................................39
Section 11.02 Agent's Reliance, Etc....................................................................39
Section 11.03 The Agent and Its Affiliates.............................................................40
Section 11.04 Noteholders Loan Decision................................................................40
Section 11.05 Indemnification..........................................................................40
Section 11.06 Successor Agent..........................................................................40

ARTICLE XII
TRUSTEE.................................................................................................41
</TABLE>

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<PAGE> 4
<TABLE>
<S> <C> <C>
Section 12.01 Duties of Trustee........................................................................41
Section 12.02 Rights of Trustee........................................................................42
Section 12.03 Individual Rights of Trustee.............................................................43
Section 12.04 Trustee's Disclaimer.....................................................................43
Section 12.05 Notice of Defaults.......................................................................43
Section 12.06 Reports by Trustee to Noteholders........................................................43
Section 12.07 Compensation and Indemnity...............................................................44
Section 12.08 Replacement of Trustee...................................................................45
Section 12.09 Successor Trustee by Merger, etc.........................................................45
Section 12.10 Eligibility, Disqualification............................................................45
Section 12.11 Preferential Collection of Claims Against Borrower.......................................46
Section 12.12 Appointment of Co-Trustee................................................................46

ARTICLE XIII
MISCELLANEOUS...........................................................................................47
Section 13.01 Interpretation and Survival of Provisions................................................47
Section 13.02 Costs, Expenses and Taxes................................................................47
Section 13.03 No Waiver; Modifications in Writing......................................................49
Section 13.04 Binding Effect; Assignment...............................................................49
Section 13.05 Communications...........................................................................50
Section 13.06 Governing Law............................................................................51
Section 13.07 Arbitration..............................................................................51
Section 13.08 Confidentiality..........................................................................52
Section 13.09 Execution in Counterparts................................................................53
Section 13.10 Trust Indenture Act Controls.............................................................53
Section 13.11 Communication by Noteholders with Other Noteholders......................................53
Section 13.12 Certificate and Opinion as to Conditions Precedent.......................................53
Section 13.13 Statements Required in Certificate or Opinion............................................53
Section 13.14 Rules by Trustee and Agents..............................................................54
Section 13.15 Legal Holidays...........................................................................54
</TABLE>

EXHIBITS

Exhibit A Form of Note
Exhibit B Form of Guaranty Agreement
Exhibit C Form of Subordination Agreement
Exhibit D Form of Security Agreement
Exhibit E Form of Security Agreement
Exhibit F Form of Mortgage, Deed of Trust, Assignment of Production,
Security Agreement and Financing Statement
Exhibit G Acceptance of Appointment

-iii-

<PAGE> 5

INDENTURE, dated as of August ___, 1998, between BRIGHAM EXPLORATION
COMPANY, a corporation duly organized and existing under the laws of the State
of Delaware (hereinafter sometimes referred to as the "Borrower"), and Chase
Bank of Texas, National Association, a national banking association existing
under the laws of the United States (hereinafter sometimes referred to as the
"Trustee").

PRELIMINARY STATEMENT

All covenants and agreements made by the Borrower herein are for the
benefit and security of the holders of the Borrower's Senior Subordinated
Secured Notes due 2003.

ARTICLE I
DEFINITIONS

Section 1.01 Definitions.

"Acquired Shares" means _____________ shares of Common Stock acquired
by the Noteholders on the Funding Date in accordance with Section 2.01 of the
Securities Purchase Agreement and any additional shares of Common Stock of the
Borrower issued to the Noteholders after the Funding Date in accordance with
Section 2.01(ii) of the Securities Purchase Agreement.

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<PAGE> 6

Report which would, in the case of determinations made pursuant to clauses (C)
and (D), in accordance with standard industry practice, result in such
determinations, in each case calculated in accordance with Commission guidelines
(utilizing the Commission guideline prices utilized in the most current Reserve
Report); provided, however, that, in the case of each of the determinations made
pursuant to clauses (A) through (D), such increases and decreases shall be as
estimated by the Borrower's engineers, except that if as a result of such
acquisitions, dispositions, discoveries, extensions or revisions, there is a net
increase in the ACNTA which exceeds $10,000,000, the Agent shall have the right
to require that such increases and decreases in the discounted future net
revenue be confirmed in writing by an independent petroleum engineer, at the
Borrower's expense, (ii) the capitalized costs that are attributable to seismic
and undeveloped oil and gas leases of the Borrower and its Consolidated
Subsidiaries to which no proved crude oil and natural gas reserves are
attributed, based on the Borrower's books and records as of a date no earlier
than the date of the Borrower's latest annual or quarterly financial statements,
(iii) the Net Working Capital on a date no earlier than the date of the
Borrower's latest annual or quarterly financial statements and (iv) the greater
of (I) the net book value on a date no earlier than the date of the Borrower's
latest annual or quarterly financial statements and (II) the appraised value, as
estimated by independent appraisers reasonably acceptable to the Agent, of other
tangible assets of the Borrower and its Consolidated Subsidiaries as of a date
no earlier than the date of the Borrower's latest audited financial statements,
minus (b) to the extent not otherwise taken into account in the immediately
preceding clause (a), the sum of (i) minority interests, (ii) any natural gas
balancing liabilities and credits of the Borrower and its Consolidated
Subsidiaries reflected in the Borrower's latest audited financial statements,
(iii) the discounted future net revenue, calculated in accordance with
Commission guidelines (utilizing the Commission guideline prices utilized in the
Borrower's most current Reserve Report), attributable to reserves subject to
participation interests, overriding royalty interests or other interests of
third parties, pursuant to participation, partnership, vendor financing or other
agreements then in effect, or which otherwise are required to be delivered to
third parties, (iv) the discounted future net revenue, calculated in accordance
with Commission guidelines (utilizing the Commission guideline prices utilized
in the Borrower's most current Reserve Report), attributable to reserves that
are required to be delivered to third parties to fully satisfy the obligations
of the Borrower and its Consolidated Subsidiaries with respect to volumetric
production payments and (v) the discounted future net revenue, calculated in
accordance with Commission guidelines, attributable to reserves subject to
dollar-denominated production payments that, based on the estimates of
production included in determining the discounted future net revenue specified
in the immediately preceding clause (a) (i) (utilizing the Commission guideline
prices utilized in the Borrower's most current Reserve Report), would be
necessary to satisfy fully the obligations of the Borrower and its Consolidated
Subsidiaries with respect to dollar-denominated production payments.

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<PAGE> 7

20% or more of the securities having ordinary voting power for the election of
directors or other governing body of a corporation or 20% or more of the
partnership or other ownership interests of any other Person (other than as a
limited partner of such other Person) will be deemed to "control" (including,
with its correlative meanings, "controlled by" and "under common control with")
such corporation or other Person.

"Agent" means JEDI-II in its capacity as agent pursuant to Article XI
and includes any successor agent pursuant to Section 11.06.

"Agent's Account" shall have the meaning specified in Section 9.03.

"Average Share Price" means $__________.

"Basic Documents" means, collectively, this Indenture, the Securities
Purchase Agreement and the other Loan Documents.

"Board of Directors" means the Board of Directors of the Borrower.

"BOG" means Brigham Oil & Gas, L.P., a Delaware limited partnership.

"Business Day" means any day other than a Saturday, Sunday, or a legal
holiday for commercial banks in Houston, Texas, or New York, New York.

"Business Opportunities Agreement" means the Corporate Shareholders'
Agreement dated as of even date herewith between the Purchasers and the
Borrower.

"Change in Control" means (i) a transaction, including any merger or
consolidation of Borrower with any other Person, in which the shareholders of
the Borrower immediately prior to such transaction (treating the holders of the
Warrants as holders of voting shares) do not own at least fifty-one percent
(51.0%) of the voting shares of stock of the Borrower (or the surviving entity
in the case of a merger or consolidation) immediately following the consummation
of such transaction, or (ii) a transaction, including any merger or
consolidation of Borrower with any other Person, in which the members of the
Board of Directors immediately prior to such transaction do not comprise at
least a majority of the board of directors of the Borrower (or the surviving
entity in the case of a merger or consolidation) for a period of twelve (12)
months immediately following the consummation of such transaction, or (iii) an
event, including any merger or consolidation of Borrower with any other Person,
such that Mr. Ben Brigham no longer manages the Borrower (or the surviving
entity in the case of a merger or consolidation), other than as a result of his
death or disability.

"Closing" has the meaning provided therefor in Section 2.02 of the
Securities Purchase Agreement.

-3-
<PAGE> 8

"Closing Date" means the date upon which the Closing occurs as provided
in Section 2.02 of the Securities Purchase Agreement.

"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute.

"Collateral" means the properties, property interests and rights
described in Section 4.01 hereof, or otherwise covered by the Collateral
Documents, as security for the Obligations.

"Collateral Documents" means collectively the documents required by the
Agent or the Noteholders to obtain the security interests in the Collateral, as
described in Section 4.01 hereof, and all other agreements, documents and
instruments required in Section 4.01, as the same may from time to time be
amended or supplemented.

"Commission" means the United States Securities and Exchange
Commission.

"Common Stock" means the common stock, par value $0.01 per share, of
the Borrower or such other class of securities as shall, after the date of this
Indenture, constitute the common equity of the Borrower.

"Consolidated Indebtedness" means all Debt of the Borrower and its
Consolidated Subsidiaries.

"Consolidated Net Income" means with respect to the Borrower and its
Consolidated Subsidiaries, for any period, the aggregate of the net income (or
loss) of the Borrower and its Consolidated Subsidiaries after allowance for
taxes for such period, determined on a consolidated basis in accordance with
GAAP; provided that there shall be excluded from the calculation of such net
income (to the extent otherwise included therein) the following: (i) the net
income of any Person in which Borrower or any Consolidated Subsidiary has an
interest (which interest does not cause the net income of such other Person to
be consolidated with the net income of Borrower and its Consolidated
Subsidiaries in accordance with GAAP), except to the extent of the amount of
dividends or distributions actually paid in such period by such other Person to
the Borrower or to a Consolidated Subsidiary, as the case may be; (ii) the net
income (but not loss) of any Consolidated Subsidiary to the extent that the
declaration or payment of dividends or similar distributions or transfers or
loans by that Consolidated Subsidiary is not at the time permitted by operation
of the terms of its charter or any agreement, instrument or Governmental
Requirement applicable to such Consolidated Subsidiary, or is otherwise
restricted or prohibited, in each case determined in accordance with GAAP; (iii)
the net income (or loss) of any Person acquired in a pooling-of-interests
transaction for any period prior to the date of such transaction; (iv) any
extraordinary gains or losses, including gains or losses attributable to
Property sales not in the ordinary course of business; and (v) the

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<PAGE> 9

cumulative effect of a change in accounting principles and any gains or losses
attributable to writeups or writedowns of assets.

"Consolidated Subsidiaries" shall mean each Subsidiary of the Borrower
(whether now existing or hereafter created or acquired) the financial statements
of which shall be (or should have been) consolidated with the financial
statements of the Borrower in accordance with GAAP.

"corporate trust office" of the Trustee means the office of the Trustee
at the address set out in Section 13.05 or at any other office or agency so
designated by the Trustee.

"Debt" means, for any Person the sum of the following (without
duplication): (i) all obligations of such Person for borrowed money or evidenced
by bonds, debentures, notes or other similar instruments (including principal
and earned but unpaid issuance fees); (ii) all obligations of such Person
(whether contingent or otherwise) in respect of bankers' acceptances, letters of
credit, surety or other bonds and similar instruments; (iii) all obligations of
such Person to pay the deferred purchase price of Property or services (other
than for borrowed money) excluding Trade Payables but including Schedule 8.02
Payables; (iv) all obligations under leases which shall have been, or should
have been, in accordance with GAAP, recorded as capital leases in respect of
which such Person is liable (whether contingent or otherwise); (v) all
obligations under leases (other than capital leases and oil and gas leases)
which require such Person or its Affiliate to make payments exceeding $100,000
(or $500,000 in the aggregate) over the term of such lease, including payments
at termination, which are substantially equal to at least eighty percent (80%)
of the purchase price of the Property subject to such lease plus interest at an
imputed rate of interest; (vi) all Debt (as described in the other clauses of
this definition) of others secured by a Lien on any asset of such Person,
whether or not such Debt is assumed by such Person; (vii) all Debt (as described
in the other clauses of this definition) of others guaranteed by such Person or
in which such Person otherwise assures a creditor against loss of the Debt of
others; (viii) all obligations or undertakings of such Person to maintain or
cause to be maintained the financial position or covenants of others including
without limitation agreements expressed as an agreement to purchase the Debt or
Property of others or otherwise; (ix) obligations to deliver Hydrocarbons in
consideration of advance payments; (x) obligations to pay for goods or services
whether or not such goods or services are actually received or utilized by such
Person; (xi) any capital stock of such Person in which such Person has a
mandatory obligation to redeem such stock; (xii) any Debt of a Special Entity
for which such Person is liable either by agreement or because of a Governmental
Requirement; (xiii) the undischarged balance of any production payment created
by such Person or for the creation of which such Person directly or indirectly
received payment; and (xiv) all obligations of such Person under Hedging
Agreements, provided that "Debt" shall not include (a) interest or fees (other
than earned but unpaid issuance fees) on any of the foregoing, (b) obligations
associated with bid, performance, surety or appeal bonds (including those
required by Governmental Requirements in connection with Oil and Gas
Properties), (c) gas balancing obligations (whether volumetric or dollar
denominated), (d) intercompany obligations among the Borrower and its
Consolidated Subsidiaries, (e) indemnity obligations which have not matured into
fixed liabilities, and (f) purchase price adjustments and similar post-closing
obligations (but excluding the deferred payment of any purchase price) incurred
in connection with the permitted

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<PAGE> 10

purchase and sale of Property or stock, and which is to be determined and
payable no later than 180 days following the closing of such purchase and sale.

"Default" shall mean an Event of Default or an event which with notice
or lapse of time, or both, would become, an Event of Default.

"Default Rate" means, for any applicable period, an interest rate equal
to the then applicable rate of interest on the Notes (for cash payments of
interest) plus 4.00% per annum, but in no event shall the Default Rate exceed
the Maximum Rate.

"EBITDA" shall mean, for any period, the sum of Consolidated Net Income
for such period plus the following expenses or charges to the extent deducted
from Consolidated Net Income in such period: interest, taxes, depreciation,
depletion and amortization, and other non-cash charges, minus all non-cash
income added to Consolidated Net Income in such period.

"Effective Date" means the date this Indenture is executed by all the
parties hereto.

"Employee Plan" means any employee benefit plan, program or policy with
respect to which the Borrower or any ERISA Affiliate may have any liability or
any obligation to contribute, other than a Plan or a Multiemployer Plan.

"Environmental Laws" means any and all Governmental Requirements
pertaining to the environment in effect in any and all jurisdictions in which
the Borrower or any Subsidiary is conducting or at any time has conducted
business, or where any Property of the Borrower or any Subsidiary is located,
including, without limitation, the Oil Pollution Act of 1990 ("OPA"), as
amended, the Clean Air Act, as amended, the Comprehensive Environmental,
Response, Compensation, and Liability Act of 1980 ("CERCLA"), as amended, the
Federal Water Pollution Control Act, as amended, the Occupational Safety and
Health Act of 1970, as amended, the Resource Conservation and Recovery Act of
1976 ("RCRA"), as amended, the Safe Drinking Water Act, as amended, the Toxic
Substances Control Act, as amended, the Superfund Amendments and Reauthorization
Act of 1986, as amended, the Hazardous Materials Transportation Act, as amended,
and other environmental conservation or protection laws. As used in the
provisions hereof relating to Environmental Laws, the term "oil" has the meaning
specified in OPA; the terms "hazardous substance" and "release" (or "threatened
release") have the meanings specified in CERCLA, and the terms "solid waste" and
"disposal" (or "disposed") have the meanings specified in RCRA; provided,
however, that (i) in the event either OPA, CERCLA or RCRA is amended so as to
broaden the meaning of any term defined thereby, such broader meaning shall
apply subsequent to the effective date of such amendment, and (ii) to the extent
the laws of the state in which any Property of the Borrower or any Subsidiary is
located establish a meaning for "oil," "hazardous substance," "release," "solid
waste" or "disposal" which is broader than that specified in either OPA, CERCLA
or RCRA, such broader meaning shall apply.

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<PAGE> 11

"Equity Documents" means the Warrants, the stock certificates
representing the Acquired Shares, the Registration Rights Agreement and the
Business Opportunities Agreement.

"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time and any successor statute.

"ERISA Affiliate" shall mean each trade or business (whether or not
incorporated) which together with the Borrower or any Subsidiary of the Borrower
would be deemed to be a "single employer" within the meaning of Section
4001(b)(1) of ERISA or subsections (b), (c), (m) or (o) of section 414 of the
Code.

"Event of Default" shall have the meaning assigned such term in Section
10.01.

"Excepted Liens" means (i) Liens for taxes, assessments or other
governmental charges or levies not yet due or which are being contested in good
faith by appropriate action and for which adequate reserves have been maintained
in accordance with GAAP; (ii) Liens in connection with workman's compensation,
unemployment insurance or other social security, old age pension or public
liability obligations not yet due or which are being contested in good faith by
appropriate action and for which adequate reserves have been maintained in
accordance with GAAP; (iii) operators', vendors', carriers', warehousemen's,
repairmen's, mechanics', workmen's, materialmen's, construction or other like
Liens arising by operation of law in the ordinary course of business or incident
to the exploration, development, operation and maintenance of Oil and Gas
Properties or customary landlord's liens, each of which is in respect of
obligations that have not been outstanding more than 90 days or which are being
contested in good faith by appropriate proceedings and for which adequate
reserves have been maintained in accordance with GAAP; (iv) any Liens reserved
in leases or farmout agreements for rent or royalties and for compliance with
the terms of the farmout agreements or leases in the case of leasehold estates,
to the extent that any such Lien referred to in this clause does not materially
impair the use of the Property covered by such Lien for the purposes for which
such Property is held or materially impair the value of the Property subject
thereto; (v) encumbrances (other than to secure the payment of borrowed money or
the deferred purchase price of Property or services), easements, restrictions,
servitudes, permits, conditions, covenants, exceptions or reservations in any
rights of way or other Property for the purpose of roads, pipelines,
transmission lines, transportation lines, distribution lines for the removal of
gas, oil, coal or other minerals or timber, and other like purposes, or for the
joint or common use of real estate, rights of way, facilities and equipment, and
defects, irregularities, zoning restrictions and deficiencies in title of any
rights of way or other Property which in the aggregate do not materially impair
the use of such rights of way or other Property for the purposes for which such
rights of way and other Property are held or materially impair the value of such
Property subject thereto; (vi) deposits of cash or securities to secure the
performance of bids, trade, contracts, leases, statutory obligations and other
obligations of a like nature incurred in the ordinary course of business; and
(vii) Liens permitted by the Loan Documents.

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by federal funds brokers on such day, as published for such day (or, if such day
is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for any such day on such
transactions received by the Agent from three federal funds brokers of
recognized standing selected by it.

"Financial Statements" means the financial statement or statements
described or referred to in Section 4.02 of the Securities Purchase Agreement.

"First Reserve Report" shall have the meaning set out in Section
7.07(a).

"Funding Date" means the first Business Day following the date all of
the conditions precedent to funding in Article VI of the Securities Purchase
Agreement have been satisfied.

"GAAP" means generally accepted accounting principles in the United
States of America in effect from time to time.

"Governmental Authority" shall include the country, the state, county,
city and political subdivisions in which any Person or such Person's Property is
located or which exercises valid jurisdiction over any such Person or such
Person's Property, and any court, agency, department, commission, board, bureau
or instrumentality of any of them including monetary authorities which exercises
valid jurisdiction over any such Person or such Person's Property. Unless
otherwise specified, all references to Governmental Authority herein shall mean
a Governmental Authority having jurisdiction over, where applicable, the
Borrower, the Subsidiaries or any of their Property or the Agent or any
Noteholder.

"Guarantors" means Brigham, Inc., Brigham Holdings I, LLC, Brigham
Holdings II, LLC, BOG and any other Person who becomes party to a Guaranty
Agreement pursuant to the terms of Section 7.11.

"Guaranty Agreements" means the agreements executed by the Guarantors
substantially in the form of Exhibit B guarantying, unconditionally, payment of
the Obligations, as the same may be amended, modified or supplemented from time
to time.

"Hedging Agreements" means any commodity, interest rate or currency
swap, cap, floor, collar, forward agreement or other exchange or protection
agreements or any option with respect to any such transaction.

"Hydrocarbon Interests" means all rights, titles, interests and estates
now or hereafter acquired in and to oil and gas leases, oil, gas and mineral
leases, or other liquid or gaseous hydrocarbon leases, mineral fee interests,
overriding royalty and royalty interests, net profit interests and production
payment interests, including any reserved or residual interests of whatever
nature.

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"Hydrocarbons" means oil, gas, casinghead gas, drip gasoline, natural
gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and
all products refined or separated therefrom.

"Indenture" means this instrument as originally executed, or, if
amended or supplemented as herein provided, as so amended or supplemented.

"Initial Reserve Report" means the report of Cawley, Gillespie &
Associates with respect to the Oil and Gas Properties of BOG as of November 30,
1997, a copy of which has been delivered to Agent.

"Interest Expense" means, for each applicable period for which EBITDA
is to be calculated, the sum of all required cash payments of interest during
such period on borrowed money. Interest on the Notes, for purposes of this
definition, shall be deemed cash payments, calculated at the cash interest rate,
whether paid in cash or in kind.

"Interest Payment Date" means each November __, February __, May __,
and August __ following the Funding Date until and including the Maturity Date.

"Lien" means any interest in Property securing an obligation owed to,
or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute or contract, and whether such
obligation or claim is fixed or contingent, and including but not limited to (i)
the lien or security interest arising from a mortgage, encumbrance, pledge,
security agreement, conditional sale or trust receipt or a lease, consignment or
bailment for security purposes or (ii) production payments and the like payable
out of Oil and Gas Properties. The term "Lien" shall include reservations,
exceptions, encroachments, easements, rights of way, covenants, conditions,
restrictions, leases and other title exceptions and encumbrances affecting
Property. For the purpose of this Indenture, a Person shall be deemed to be the
owner of any Property which it has acquired or holds subject to a conditional
sale agreement, or leases under a financing lease or other arrangement pursuant
to which title to the Property has been retained by or vested in some other
Person in a transaction intended to create a financing.

"Loan Documents" means this Indenture, the Notes, the Structuring Fee
Agreement, the Collateral Documents, and any and all other agreements or
instruments now or hereafter executed and delivered by the Borrower or any
Subsidiary or Affiliate of the Borrower (other than the Equity Documents and any
assignments, participation or similar agreements between any Noteholder and any
other lender or creditor with respect to any Obligations pursuant to this
Indenture) in connection with, or as security for the payment or performance of,
the Notes or this Indenture, as such agreements may be amended, supplemented or
restated from time to time.

"Majority Noteholders" means, at any time, the Noteholders holding more
than 50% of the outstanding principal balance of the Notes.

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<PAGE> 14

"Material Adverse Effect" means any material and adverse effect on (i)
the assets, liabilities, financial condition, business, operations or affairs of
the Borrower and its Subsidiaries taken as a whole, from those reflected in the
Financial Statements, or from the facts represented or warranted in any Loan
Document at the time made, or (ii) the ability of the Borrower and its
Subsidiaries taken as a whole to carry out their business as of the Closing Date
or as proposed as of the Closing Date to be conducted or to meet their
obligations under the Loan Documents on a timely basis.

"Maturity Date" means August __, 2003, or in the event of an
acceleration of the Obligations, such earlier date as the Obligations become due
and payable in full.

"Maximum Rate" means at any particular time in question, the maximum
nonusurious rate of interest, if any, which under applicable law may then be
charged on the Notes. If such maximum rate changes after the date hereof, the
Maximum Rate shall be automatically increased or decreased, as the case may be,
without notice to the Borrower from time to time as the effective date of each
change in such maximum rate.

"Mortgage" means the "Mortgage" referred to in Section 4.01(c) or
4.01(f)(ii) and any other mortgages executed pursuant to Section 7.09 hereof.

"Mortgaged Property" means the Property owned by the Borrower and its
Subsidiaries which is subject to the Liens existing and to exist under the Loan
Documents.

"Multiemployer Plan" means a Plan defined as such in Section 3(37) or
4001(a)(3) of ERISA.

"NASDAQ" means the National Association of Securities Dealers Automated
Quotation System.

"Net Working Capital" means, for any Person or group of Persons and as
of any date of its determination, the difference (shown on the balance sheets of
such Person or group as of the end of the most recent fiscal quarter of such
Person or group for which internal financial statements are available) between
(i) all current assets of such Person or group and (ii) all current liabilities
of such Person or group, except the current portion of long-term Debt.

"Notes" means the Senior Subordinated Secured Notes issued pursuant to
Section 2.03 of the Securities Purchase Agreement, in the aggregate face amount
of $50,000,000, dated as of the date hereof, made by the Borrower and payable to
the order of the Noteholders in their respective Participations.

"Noteholders" means ___________________ and/or, to the extent then
applicable, each assignee of ______________ or their respective successors or
assigns in whose name a Note may be registered in the Note Register kept for
that purpose.

"Noteholder's Account" means for any Noteholder, the account specified
by such Noteholder as its Noteholder's Account by notice in writing to the
Agent.

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"Note Register" and "Note Registrar" have the respective meanings
specified in Section 2.05.

"Obligations" means any and all amounts, liabilities and obligations
owing from time to time by Borrower to the Agent or the Noteholders, pursuant to
any of the Basic Documents and all renewals, extensions and/or rearrangements
thereof, whether such amounts, liabilities or obligations be liquidated or
unliquidated, now existing or hereafter arising, absolute or contingent.

"Officers' Certificate" means a certificate signed by the Chairman of
the Board, the President or any Vice President and by the Treasurer or any
Assistant Treasurer or the Secretary or any Assistant Secretary of the Borrower.
Each such certificate shall include the statements provided for in Section
13.13, if and to the extent required by the provisions thereof.

"Oil and Gas Properties" means Hydrocarbon Interests; the Properties
now or hereafter pooled or unitized with Hydrocarbon Interests; all presently
existing or future unitization, pooling agreements and declarations of pooled
units and the units created thereby (including without limitation all units
created under orders, regulations and rules of any Governmental Authority) which
may affect all or any portion of the Hydrocarbon Interests; all operating
agreements, contracts and other agreements which relate to any of the
Hydrocarbon Interests or the production, sale, purchase, exchange or processing
of Hydrocarbons from or attributable to such Hydrocarbon Interests; all
Hydrocarbons in and under and which may be produced and saved or attributable to
the Hydrocarbon Interests, including all oil in tanks, the lands covered thereby
and all rents, issues, profits, proceeds, products, revenues and other incomes
from or attributable to the Hydrocarbon Interests; all tenements, hereditaments,
appurtenances and Properties in any manner appertaining, belonging, affixed or
incidental to the Hydrocarbon Interests; and all Properties, rights, titles,
interests and estates described or referred to above, including any and all
Property, real or personal, now owned or hereafter acquired and situated upon,
used, held for use or useful in connection with the operating, working or
development of any of such Hydrocarbon Interests or Property (excluding drilling
rights, automotive equipment or other personal property which may be on such
premises for the purpose of drilling a well or other similar temporary use) and
including any and all oil wells, gas wells, injection wells or other wells,
buildings, structures, fuel separators, liquid extraction plants, plant
compressors, pumps, pumping units, field gathering systems, tanks and tank
batteries, fixtures, valves, fittings, machinery and parts, engines, boilers,
meters, apparatus, appliances, tools, implements, cables, wires, towers, casing,
tubing and rods, similar equipment, surface leases, rights-of-way, easements and
servitudes together with all additions, substitutions, replacements, accessions
and attachments to any and all of the foregoing.

"Opinion of Counsel" means an opinion in writing signed by legal
counsel who shall be reasonably satisfactory to the Trustee and may be counsel
to the Borrower. Each such opinion shall include the statements provided for in
Section 13.13, if and to the extent required by the provisions thereof.

"outstanding", when used with reference to Notes, means, as of any
particular time, all Notes authenticated and delivered by the Trustee under this
Indenture, except

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<PAGE> 16

(a) Notes that have been canceled by the Trustee or
delivered to the Trustee for cancellation;

(b) Notes for which monies in the necessary amount for payment
or redemption shall have been deposited in trust with the Trustee or
with any paying agent (other than the Borrower), provided that, if such
Notes are to be redeemed, notice of such redemption shall have been
given as provided in Article IV or provision satisfactory to the
Trustee shall have been made for giving such notice; and

(c) Notes in lieu of or in substitution for which other Notes
shall have been authenticated and delivered pursuant to the terms of
Section 2.06.

"Participation" means, for each Noteholder, such Noteholder's
proportionate share of the Obligations and the Warrants.

"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions.

"Permitted Debt" means:

(a) The Senior Loan, up to the lesser of $75,000,000 or
the "Borrowing Base" under the Senior Credit Agreement;

(b) The Notes or other Obligations arising under the Loan
Documents or any guaranty of or suretyship arrangement for the Notes or
other Obligations arising under the Loan Documents;

(c) Debt of the Borrower which is existing on the Closing Date
and is reflected in the Financial Statements or which constitutes
Schedule 8.02 Payables, and any renewals or extensions (but not
increases) thereof;

(d) Accounts payable for the deferred purchase price of
Property or services (other than Trade Payables) from time to time
incurred in the ordinary course of business which, if greater than 60
days past the invoice or billing date, are being contested in good
faith by appropriate proceedings if reserves adequate under GAAP shall
have been established therefor;

(e) Debt of the Borrower under capital leases (as required to
be reported on the financial statements of the Borrower pursuant to
GAAP) not to exceed $2,000,000;

(f) Debt of the Borrower under Hedging Agreements with a
Senior Lender or another investment grade counterparty the notional
amounts on which do not exceed 75% of Borrower's anticipated oil and/or
gas production to be produced during the term of such Hedging
Agreements entered into as a part of its normal business operations as

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<PAGE> 17

a risk management strategy and/or hedge against changes resulting from
market conditions related to the Borrower's and its Subsidiaries'
operations; and

(g) Debt of the Borrower not described in clauses (a) through
(f) which, in the aggregate, does not exceed $1,000,000 at any one time
outstanding.

"Person" means any individual, corporation, company, voluntary
association, partnership, joint venture, trust, limited liability company,
unincorporated organization or government or any agency, instrumentality or
political subdivision thereof, or any other form of entity.

"Plan" means any employee pension benefit plan, as defined in Section
3(2) of ERISA, which (i) is currently or hereafter sponsored, maintained or
contributed to by the Borrower, any Subsidiary or an ERISA Affiliate or (ii) was
at any time during the preceding six calendar years sponsored, maintained or
contributed to, by the Borrower, any Subsidiary or an ERISA Affiliate.

"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.

"Registration Rights Agreement" means the Registration Rights Agreement
dated as of the date hereof, made by the Borrower relating to the Warrants, the
Warrant Shares and the Acquired Shares.

"Reserve Report" means a report, in form satisfactory to the Senior
Loan Agent (or if there is no Senior Loan or requirement for a Reserve Report
under the Senior Loan, the Agent), setting forth, as of the dates set forth in
Sections 7.07(a) and (b) (or such other date in the event of an unscheduled
redetermination); (i) the proved oil and gas reserves attributable to the
Borrower's and its Subsidiaries' Hydrocarbon Interests together with a
projection of the rate of production and future net income, taxes, operating
expenses and capital expenditures with respect thereto as of such date, based
upon the pricing assumptions consistent with Commission reporting requirements
at the time and (ii) such other information as the Senior Loan Agent (or, if
there is no Senior Loan, or requirement for a Reserve Report under the Senior
Loan, the Agent) may reasonably request. The term "Reserve Report" shall also
include the Initial Reserve Report, the First Reserve Report, the supplemental
Reserve Reports described in Section 7.07(b), and the information to be provided
by the Borrower each year pursuant to Section 7.07(d).

"Responsible Officer" means, as to any Person, the Chief Executive
Officer, the President, any Vice President or the Chief Financial Officer of
such Person. Unless otherwise specified, all references to a Responsible Officer
herein shall mean a Responsible Officer of the Borrower. "Responsible Officer"
when used with respect to the Trustee means the chairman or the vice-chairman of
the board of directors, the chairman of the executive committee of the board of
directors, the president, any vice president, any second or assistant vice
president, the

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<PAGE> 18

cashier, any assistant cashier, the secretary, any assistant secretary, the
treasurer, any assistant treasurer, any senior trust officer or trust officer,
or any other officer or assistant officer of the Trustee customarily performing
functions similar to those performed by the persons who at the time shall be
such officers, respectively, or to whom any corporate trust matter is referred
because of his knowledge of and familiarity with the particular subject.

"Schedule 8.02 Payables" means payables owing under the agreements
listed on Schedule 8.02 which are outstanding more than 75 days after they
become fixed and owing, provided that the aggregate amounts of such payables
under each such agreement do not exceed the amount set forth for each such
agreement on such schedule.

"Scheduled Redetermination Date" means the last Business Day of each
September and March during the term of the Notes, commencing September 1999.

"Securities" means the Notes, the Warrants and the Acquired Shares.

"Securities Act" means the Securities Act of 1933, as amended from time
to time, and the rules and regulations of the Commission promulgated thereunder.

"Securities Purchase Agreement" means the Securities Purchase Agreement
dated of even date herewith between the Noteholders and the Borrower.

"Senior Credit Agreement" means the Credit Agreement dated as of
January 26, 1998, among BOG, the Senior Loan Agent, and the Senior Lenders, as
it may from time to time be amended, modified or supplemented from time to time,
and any Credit Agreement or similar agreement executed with banks or other
financial institutions in connection with any refinancing of the Senior Loan
permitted hereunder and under the Subordination Agreement.

"Senior Loan Agent" means the agent or agents designated under the
Senior Credit Agreement. Bank of Montreal is the Senior Loan Agent as of the
date hereof.

"Senior Lenders" means each of the lenders from time to time under the
Senior Credit Agreement.

"Senior Loan" shall mean, collectively, any advance or advances of
principal made by the Senior Lenders to BOG or the Borrower under the Senior
Credit Agreement and the other Senior Loan Documents.

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<PAGE> 19

venturer and owns, directly or indirectly, at least a majority of the equity of
such entity or controls such entity, but excluding any tax partnerships that are
not classified as partnerships under state law. For purposes of this definition,
any Person which owns directly or indirectly an equity investment in another
Person which allows the first Person to manage or elect managers who manage the
normal activities of such second Person will be deemed to "control" such second
Person (e.g.,a sole general partner controls a limited partnership).

"Structuring Fee Agreement" means the agreement between the Borrower
and ___________________ dated as of the date hereof.

"Subordination Agreement" means the Intercreditor and Subordination
Agreement dated as of even date herewith, by and among the Trustee, the Senior
Loan Agent, the Senior Lenders, the Agent, the Noteholders, the Borrower and
certain Subsidiaries, substantially in the form of Exhibit C as the same may be
supplemented or amended from time to time.

"Subsidiary" means (i) any corporation of which at least a majority of
the outstanding shares of stock having by the terms thereof ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether or not at the time stock of any other class or classes
of such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time directly or indirectly owned or
controlled by a Person or one or more of its Subsidiaries or by a Person and one
or more of its Subsidiaries and (ii) any Special Entity. Unless otherwise
indicated herein, each reference to the term "Subsidiary" shall mean a
Subsidiary of the Borrower. Quest Resources L.L.C. and Venture Acquisitions L.P.
shall not be considered Subsidiaries of Borrower.

"TIA" (except as herein otherwise expressly provided or unless the
context otherwise requires) means the Trust Indenture Act of 1939, as amended,
as in force at the date of this Indenture as originally executed.

"Trade Payables" means customary trade payables incurred in the
ordinary course of business.

"Trustee" means Chase Bank of Texas, National Association, and, subject
to the provisions of Article XII, shall also include its successors and assigns.

"Warrants" means the Warrants issued by the Borrower to ECT and JEDI-II
in their respective Participations pursuant to Section 2.03 of the Securities
Purchase Agreement, for the purchase of an aggregate of 1,000,000 shares of
Common Stock, and any Warrants issued upon the transfer thereof or in
substitution therefore, pursuant to the Warrant Certificate to be issued to ECT
and JEDI-II, forms of which are attached to the Securities Purchase Agreement as
Exhibit A.

"Warrant Shares" means the shares of Common Stock and other securities
receivable upon exercise of the Warrants.

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Section 1.02 Accounting Procedures and Interpretation. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be furnished to the Agent or the Noteholders (including ACNTA
calculations) hereunder shall be prepared, in accordance with GAAP, applied on a
basis consistent with the Financial Statements (except for changes concurred
with by the Borrower's independent public accountants).

ARTICLE II
ISSUE, DESCRIPTION, FORM, EXECUTION, REGISTRATION
OF TRANSFER AND EXCHANGE OF NOTES

Section 2.01 Form and Dating. The Notes and the Trustee's certificate
of authentication are to be substantially in the form of Exhibit A with such
appropriate insertions, omissions, substitutions, amendments, changes and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange on which the Notes may be listed or as may, consistently
herewith, be determined by the officers executing such Notes as evidenced by
their execution of the Notes.

The terms and provisions contained in the Notes and each Guaranty
Agreement shall constitute, and are hereby expressly made, a part of this
Indenture and, to the extent applicable, the Borrower and the Guarantors, by
their execution and delivery of this Indenture and each Guaranty Agreement,
expressly agree to such terms and provisions and to be bound thereby.

The definitive Notes shall be printed or produced in any manner as may
be determined by the officers executing such Notes, as evidenced by their
execution of such Notes.

Section 2.02 Execution and Authentication. The Notes and each Guaranty
Agreement shall be executed by the Borrower and Guarantors, respectively, and be
delivered to the Trustee for authentication, and the Trustee shall thereupon, or
from time to time thereafter, authenticate and deliver said Notes and each
Guaranty Agreement to and upon the written order of the Borrower, signed by its
President or a Vice President and by its Treasurer, Assistant Treasurer,
Secretary or Assistant Secretary, without any further action by the Borrower.

Section 2.03 Denomination of Notes and Record Date. The Notes shall be
issuable as registered Notes without coupons in denominations of $1,000 and any
integral multiple thereof. Each Note shall be dated the date of its
authentication.

The person in whose name any Note is registered at the close of
business on any record date (as hereinafter defined) with respect to any
interest payment date shall be entitled to receive the interest payable on such
interest payment date. The term "record date" as used with respect to any
Interest Payment Date shall mean the day of the calendar month preceding the day
on which such Interest Payment Date falls. The principal of, and premium, if
any, and interest on,

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<PAGE> 21

the Notes shall be payable at the principal office of the Borrower and any other
office or agency of the Borrower designated for that purpose; provided, however,
that principal and interest may be payable at the option of the Noteholders to
the Agent's Account.

Section 2.04 Manual Execution. The Notes and Guaranty Agreements shall
be signed manually or by facsimile signature on behalf of the Borrower by its
President or a Vice President attested by the manual or facsimile signature of
its Secretary or an Assistant Secretary.

Only such Notes as shall bear thereon a certificate of authentication
substantially in the form recited in Exhibit A, manually executed by the
Trustee, shall be entitled to the benefits of this Indenture or be valid or
obligatory for any purpose. Such certificate by the Trustee upon any Note
executed by the Borrower shall be conclusive evidence that the Note so
authenticated has been duly authenticated and delivered hereunder.

In case any officer of the Borrower who shall have signed any of the
Notes shall cease to be such officer before the Notes so signed shall have been
authenticated and delivered by the Trustee, or disposed of by the Borrower, such
Notes nevertheless may be authenticated and delivered or disposed of as though
the person who signed such Notes had not ceased to be such officer of the
Borrower; and any Note may be signed on behalf of the Borrower by such persons
as, at the actual date of the execution of such Note, shall be the proper
officers of the Borrower, although at the date of the execution of this
Indenture any such person was not an officer.

Section 2.05 Transfer and Exchange. The Notes may be exchanged for a
like aggregate principal amount of Notes of other authorized denominations.
Notes to be exchanged shall be surrendered at the Borrower's principal office,
and the Borrower shall execute and the Trustee shall authenticate and deliver in
exchange therefor the Note or Notes which the Noteholder making the exchange
shall be entitled to receive.

The Borrower shall keep or cause to be maintained at said office or
agency a register (herein sometimes referred to as the "Note Register") in
which, subject to such reasonable regulations as it may prescribe, the Borrower
shall register Notes and shall register the transfer of Notes as in this Article
II provided. For the purposes of registration, exchange, registration of
transfer, redemption or conversion of Notes, the Trustee is hereby appointed
Note Registrar. Upon surrender for registration of transfer of any Note at said
office or agency, the Borrower shall execute and the Trustee shall authenticate
and deliver in the name of the transferee or transferees a new Note or Notes in
a like aggregate principal amount. At all reasonable times the Note Register
shall be open for inspection by the Trustee. No transfer of any Note shall be
valid unless made at said office or agency.

All Notes presented or surrendered for registration of transfer,
exchange, conversion or payment shall (if so required by the Borrower or the
Trustee) be accompanied by a written instrument or instruments of transfer, in
form satisfactory to the Borrower and the Trustee, duly executed by the
registered Noteholder or his attorney duly authorized in writing.

No service charge shall be made for any exchange or registration of
transfer of Notes, or issue of new Notes in case of partial prepayment or
conversion, but the Borrower may

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require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto.

The Borrower shall not be required (i) to issue, register the transfer
of, or exchange any Note during a period beginning at the opening of business 15
days before the mailing of a notice of redemption of the Notes selected for
redemption and ending on the day of such mailing, or (ii) to register the
transfer of or exchange any Note so selected for redemption in whole or in part,
except the unredeemed portions of Notes being redeemed in part.

Section 2.06 Replacement Notes. In case any Note shall become mutilated
or be destroyed, lost or stolen, the Borrower shall execute, and the Trustee
shall authenticate and deliver, a new Note, in exchange and substitution for the
mutilated Note or in lieu of and substitution for the Note destroyed, lost or
stolen. In every case, the applicant for a substituted Note shall furnish to the
Borrower and the Trustee such security or indemnity as may be required by them
to hold each of them harmless, and, in every case of destruction, loss or theft,
the applicant shall also furnish to the Borrower and to the Trustee evidence to
their satisfaction of the destruction, loss or theft of such Note and of the
ownership thereof. The Trustee may authenticate any such substituted Note and
deliver the same upon the request or authorization of the Borrower. Upon the
issuance of any substituted Note, the Borrower may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses connected therewith, including fees and
expenses of the Trustee. In case any Note which has matured or is about to
mature or has been called for prepayment or has been presented for conversion
shall become mutilated or be destroyed, lost or stolen, the Borrower may,
instead of issuing a substitute Note, pay or authorize the payment of the same
(without surrender thereof except in the case of a mutilated Note) if the
applicant for such payment shall furnish the Borrower and the Trustee with such
security or indemnity as may be required by them to hold each of them harmless,
and, in case of destruction, loss or theft, evidence to the satisfaction of the
Borrower and the Trustee of the destruction, loss or theft of such Note and of
the ownership thereof.

If, after the delivery of such replacement Note, a bona fide purchaser
of the original Note in lieu of which such replacement Note was issued presents
for payment or registration such original Note, the Trustee shall be entitled to
recover such replacement Note from the person to whom it was delivered or any
person taking therefrom, except a bona fide purchaser, and shall be entitled to
recover upon the security or indemnity provided therefor to the extent of any
loss, damage, cost or expense incurred by the borrower or Trustee in connection
therewith.

Every substituted Note issued pursuant to the provisions of this
Section 2.06 upon evidence that any Note is destroyed, lost or stolen shall,
with respect to such Note, constitute an additional contractual obligation of
the Borrower, whether or not the destroyed, lost or stolen Note shall be found
at any time, and shall be entitled to all the benefits of this Indenture equally
and proportionately with any and all other Notes duly issued hereunder. All
Notes shall be held and owned upon the express condition that the foregoing
provisions are exclusive with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Notes, and shall preclude any and all other
rights or remedies, notwithstanding any law or statute existing or hereafter

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<PAGE> 23

enacted to the contrary with respect to the replacement or payment of negotiable
instruments or other securities without their surrender.

Section 2.07 Cancellation of Notes. All Notes surrendered for payment,
conversion, registration of transfer or exchange shall, if surrendered to the
Borrower or any paying agent, be delivered to the Trustee for cancellation, or,
if surrendered to the Trustee, shall be canceled by it, and no Notes shall be
issued in lieu thereof except as expressly permitted by any of the provisions of
this Indenture. On request of the Borrower, the Trustee shall deliver to the
Borrower canceled Notes held by the Trustee; provided, however, that the Trustee
may at any time destroy any canceled Notes and deliver to the Borrower a
certificate of such destruction. If the Borrower shall acquire any of the Notes,
however, such acquisition shall not operate as a redemption or satisfaction of
the indebtedness represented by such Notes unless and until the same are
delivered to the Trustee or surrendered to the Trustee for cancellation.

Section 2.08 No Third Party Benefit. Subject to the terms of the
Subordination Agreement, nothing in this Indenture or in the Notes, expressed or
implied, shall give or be construed to give to any person, firm or corporation,
other than the parties hereto and the Noteholders, any legal or equitable right,
remedy or claim under or in respect of this Indenture, or under any covenant,
condition or provision herein contained; all its covenants, conditions and
provisions being for the sole benefit of the parties hereto and of the
Noteholders.

ARTICLE III
SUBORDINATION

The Notes shall be subject to the Subordination Agreement.

ARTICLE IV
SECURITY FOR THE OBLIGATIONS

Section 4.01 Security. The Obligations shall be secured by the
following which, in each case shall be subordinate in priority only to those
liens, security interests or rights granted in the same collateral to secure the
performance of Borrower under the Senior Loan Documents, in accordance with, but
subject to, the terms of the Subordination Agreement:

(a) (i) A Security Agreement substantially in the form of
Exhibit D duly executed by the Borrower in favor of the Trustee for the ratable
benefit of the Noteholders granting a security interest in all of the Borrower's
right, title and interest in and to the Capital Stock of Brigham, Inc. and
Brigham Holdings I, LLC, together with proper UCC-1 Financing Statements duly
filed in Texas, (ii) a Security Agreement substantially in the form of Exhibit D
duly executed by Brigham, Inc. in favor of the Trustee for the ratable benefit
of the Noteholders granting a security interest in all of Brigham, Inc.'s right,
title and interest in and to the Capital Stock of Brigham Holdings II, LLC and
BOG, together with proper UCC-1 Financing Statements duly filed in Texas, (iii)
a Security Agreement substantially in the form of Exhibit D duly executed by
Brigham Holdings II, LLC in favor of the Trustee for the ratable

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<PAGE> 24

benefit of the Noteholders granting a security interest in all of Brigham
Holdings II, LLC's, right, title and interest in and to the Capital Stock of
BOG, together with proper UCC-1 Financing Statements duly filed in Texas and
(iv) a Security Agreement substantially in the form of Exhibit D duly executed
by Brigham Holdings I, LLC in favor of the Trustee for the ratable benefit of
the Noteholders granting a security interest in all of Brigham Holdings I, LLC's
right, title and interest in and to the Capital Stock of BOG, together with
proper UCC-1 Financing Statements duly filed in Texas.

(b) A Security Agreement, substantially in the form of Exhibit
E duly executed by BOG in favor of the Trustee, as collateral agent for the
ratable benefit of the Noteholders granting a security interest in all of BOG's
right, title and interest in and to all accounts, general intangibles, equipment
and inventory of BOG subject to Liens under the Senior Loan Documents.

(c) A Mortgage, Deed of Trust, Assignment of Production,
Security Agreement and Financing Statement substantially in the form of Exhibit
F executed by BOG in favor of the Trustee, as collateral agent for the ratable
benefit of the Noteholders covering all of the Property of BOG subject to Liens
under the Senior Loan Documents.

(d) A Guaranty Agreement duly executed by each of BOG,
Brigham, Inc., Brigham Holdings I, LLC and Brigham Holdings II, LLC in favor of
the Trustee for the ratable benefit of the Noteholders guarantying the payment
and performance of the Obligations.

(e) Stock Powers executed by the Borrower and related stock
certificates of Brigham, Inc.

(f) (i) Guaranty Agreements from each and every Person now or
hereafter guaranteeing all or any portion of the Senior Loan, (ii) Mortgages
covering any and all real property (including Oil and Gas Property) now or
hereafter pledged as collateral for all or any portion of the Senior Loan, (iii)
security agreements covering any and all Property (other than real property
subject to a Mortgage) now or hereafter pledged as collateral for all or any
portion of the Senior Loan, and (iv) financing statements, stock pledges or
other agreements necessary or appropriate to perfect the liens and/or security
interests granted pursuant to any of the foregoing. Each of the foregoing
instruments shall be in substantially the same form and substance as those
executed of even date herewith or otherwise.

ARTICLE V
[RESERVED]

ARTICLE VI
[RESERVED]

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<PAGE> 25

ARTICLE VII
AFFIRMATIVE COVENANTS

Unless the Agent's prior written consent to the contrary is obtained,
the Borrower will, for the benefit of each of the Noteholders, at all times
comply with the covenants contained in this Article VII (or cause each
Subsidiary's compliance with the applicable covenants), from the date hereof and
for so long as any part of the Obligations is outstanding.

Section 7.01 Financial Statements and Reports. The Borrower shall
deliver, or shall cause to be delivered, to the Agent with sufficient copies for
each of the Noteholders:

(a) Annual Financial Statements. As soon as available and in
any event within 90 days after the end of each fiscal year of the Borrower, the
audited consolidated statements of income, stockholders' equity, changes in
financial position and cash flow of the Borrower and its Consolidated
Subsidiaries for such fiscal year, and the related consolidated and unaudited
consolidating balance sheets of the Borrower and its Consolidated Subsidiaries
as at the end of such fiscal year, and setting forth in each case in comparative
form the corresponding figures for the preceding fiscal year, and accompanied by
the related opinion of independent public accountants of recognized national
standing acceptable to the Senior Loan Agent (or in the absence of a Senior
Loan, the Agent) which opinion shall state that said financial statements fairly
present the consolidated financial condition and results of operations of the
Borrower and its Consolidated Subsidiaries as at the end of, and for, such
fiscal year and that such financial statements have been prepared in accordance
with GAAP except for such changes in such principles with which the independent
public accountants shall have concurred and such opinion shall not contain a
"going concern" or like qualification or exception.

(b) Quarterly Financial Statements. As soon as available and
in any event within 60 days after the end of each of the first three fiscal
quarterly periods of each fiscal year of the Borrower, consolidated statements
of income, stockholders' equity, changes in financial position and cash flow of
the Borrower and its Consolidated Subsidiaries for such period and for the
period from the beginning of the respective fiscal year to the end of such
period, and the related consolidated and consolidating balance sheets as at the
end of such period, setting forth in each case in comparative form the
corresponding figures for the corresponding period in the preceding fiscal year,
accompanied by the certificate of a Responsible Officer, which certificate shall
state that said financial statements fairly present the consolidated financial
condition and results of operations of the Borrower and its Consolidated
Subsidiaries in accordance with GAAP, as at the end of, and for, such period
(subject to normal year-end audit adjustments).

(c) Notice of Default. Promptly after the Borrower knows that
any Default or any Material Adverse Effect has occurred, a notice of such
Default or Material Adverse Effect, describing the same in reasonable detail and
the action the Borrower proposes to take with respect thereto.

(d) Other Accounting Reports. Promptly upon receipt thereof, a
copy of each other report or letter (excluding routine correspondence and audit
request letters) submitted to

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<PAGE> 26

the Borrower by independent accountants in connection with any annual, interim
or special audit made by them of the books of the Borrower, and a copy of any
response by the Borrower to such letter or report (including responses to any
audit request letters).

(e) SEC Filings, Etc. Promptly upon its becoming available,
each financial statement, report, notice or proxy statement sent by the Borrower
to stockholders generally and each regular or periodic report and any
registration statement, prospectus or written communication (other than
transmittal letters) in respect thereof filed by the Borrower with or received
by the Borrower in connection therewith from any securities exchange or the
Commission or any successor agency.

(f) Notices Under Other Loan Agreements. Promptly after the
furnishing thereof, copies of any statement, report or notice furnished to any
Person pursuant to the terms of any indenture, loan or credit or other similar
agreement, other than this Indenture and not otherwise required to be furnished
to the Agent or the Trustee pursuant to any other provision of this Section
7.01.

(g) Other Matters. Subject to any applicable restrictions on
disclosure, from time to time such other information regarding the business,
affairs or financial condition of the Borrower (including, without limitation,
any Plan or Multiemployer Plan and any reports or other information required to
be filed under ERISA) as may be requested by and provided to the Senior Lender
or Senior Loan Agent.

(h) Annual Budgets. Concurrent with the First Reserve Report
and each January 1 Reserve Report thereafter, a one-year financial projection
for the Borrower and its Subsidiaries in form acceptable to the Senior Loan
Agent (or in the absence of a Senior Loan or Senior Loan Agent, the Agent),
which projection shall include revenues, expenses and capital expenditures.

(i) Monthly Operating Statements. As soon as available and in
any event within 30 days after the end of each month, monthly operating
statements of BOG including, without limitation, production reports and general
and administrative cost summaries by lease for its Oil and Gas Properties, which
reports shall include quantities or volume of production, revenue, realized
product prices, taxes, capital expenditures by category and lease operating
costs which have accrued to BOG's accounts in such period, and such other
information with respect thereto as the Senior Loan Agent (or in the absence of
a Senior Loan or Senior Loan Agent, the Agent) may require.

The Borrower will furnish to the Agent, at the time it furnishes each set of
financial statements pursuant to paragraph (a) or (b) above, a certificate
substantially in the form of Exhibit C-2 to the Senior Credit Agreement executed
by a Responsible Officer (i) certifying as to the matters set forth therein and
stating that no Default has occurred and is continuing (or, if any Default has
occurred and is continuing, describing the same in reasonable detail), (ii)
setting forth in reasonable detail the computations necessary to determine
whether the Borrower is in compliance with Sections 8.01 and 8.16 as of the end
of the respective fiscal quarter or fiscal year, and (iii) certifying that said
financial statements fairly present the consolidated and

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<PAGE> 27

consolidating financial condition and consolidated results of operations in
accordance with GAAP, as at the end of, and for, such period (subject to normal
year-end audit adjustments).

Section 7.02 Litigation. The Borrower shall promptly give to the Agent
notice of: (i) all legal or arbitral proceedings, and of all proceedings before
any Governmental Authority involving the Borrower or any Guarantor, except
proceedings which, if adversely determined within any reasonable range of loss,
would not have a Material Adverse Effect, and (ii) of any material litigation or
material proceeding against the Borrower or any Guarantor in which the amount
involved is not covered in full by insurance (subject to normal and customary
deductibles), or in which injunctive or similar relief is sought. The Borrower
will, and will cause each of the Guarantors to, promptly notify the Agent of any
claim, judgment, Lien or other encumbrance affecting any Property of the
Borrower or any Guarantor if the value of the claim, judgment, Lien, or other
encumbrance affecting such Property shall exceed $1,000,000.

Section 7.03 Maintenance, Etc.

(a) The Borrower shall and shall cause each Subsidiary to:
upon reasonable notice, permit representatives of the Agent, during normal
business hours, to examine, copy and make extracts from its financial books and
records, to inspect its Properties, and to discuss its business and affairs with
its officers, all to the extent reasonably required by the Agent; keep, or cause
to be kept, insured by financially sound and reputable insurers all Property of
a character usually insured by Persons engaged in the same or similar business
similarly situated against loss or damage of the kinds and in the amounts
customarily insured against by such Persons and carry such other insurance as is
usually carried by such Persons including, without limitation, environmental
risk insurance to the extent reasonably available; and, where failure to do so
would have a Material Adverse Effect: preserve and maintain its corporate
existence and all of its material attendant rights, privileges and franchises,
keep appropriate books of record and account in relation to its business and
activities, comply with all Governmental Requirements, pay and discharge all
taxes, assessments and governmental charges or levies imposed on it or on its
income or profits or on any of its Property, except for any such tax,
assessment, charge or levy the payment of which is being contested in good faith
and by proper proceedings and against which adequate reserves are being
maintained.

(b) Contemporaneously with the delivery of the financial
statements required by Section 7.01(a) to be delivered for each year, the
Borrower will furnish or cause to be furnished to the Agent a certificate of
insurance coverage from the insurer in form and scope reasonably satisfactory to
the Agent and, if required by the Agent, will furnish the Agent copies of the
applicable policies.

(c) The Borrower will and will cause each Subsidiary to
maintain and operate its Oil and Gas Properties and other material Properties or
cause or make reasonable and customary efforts to cause such Oil and Gas
Properties and other material Properties to be maintained and operated in all
material respects in a good and workmanlike manner in accordance with the
practices of the industry and in compliance with all applicable contracts and
agreements and in compliance in all material respects with all Governmental
Requirements. The

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<PAGE> 28

covenants contained in this Section 7.03(c) shall not apply to insignificant
Properties unless a failure of such covenant could have a Material Adverse
Effect.

Section 7.04 Environmental Matters.

(a) To the extent that a reasonably prudent owner or operator
would do so under the same or similar circumstances, the Borrower will and will
cause each Subsidiary to establish and implement such procedures as may be
reasonably necessary to periodically determine and assure that all Oil and Gas
Properties of the Borrower and the Subsidiaries and the operations conducted
thereon and other activities of the Borrower and the Subsidiaries are in
compliance with and do not violate the requirements of any Environmental Laws,
where failure of the foregoing would have a Material Adverse Effect.

(b) The Borrower will promptly notify the Agent in writing of
any threatened action, investigation or inquiry by any Governmental Authority of
which the Borrower has knowledge in connection with any Environmental Laws with
respect to the Property of the Borrower or any Subsidiary, excluding routine
testing, compliance and correction action.

Section 7.05 Further Assurances. The Borrower will and will cause each
Guarantor to cure promptly any defects in the creation and issuance of the Notes
and the execution and delivery of the Basic Documents. The Borrower at its
expense will and will cause each Guarantor to promptly execute and deliver to
the Agent upon request all such other documents, agreements and instruments to
further evidence and more fully describe the collateral intended as security for
the Notes, or to correct any omissions in the Basic Documents, or to state more
fully the security obligations set out herein or in any of the Basic Documents,
or to perfect, protect or preserve any Liens created pursuant to any of the
Basic Documents, or to make any recordings, to file any notices or obtain any
consents, all as may be necessary or appropriate in connection therewith.

Section 7.06 Performance of Obligations. The Borrower will pay the
Notes according to the reading, tenor and effect thereof; and the Borrower will
and will cause each Guarantor to do and perform every act and discharge all of
the obligations to be performed and discharged by them under the Basic
Documents, at the time and times and in the manner specified.

Section 7.07 Engineering Reports.

(a) Not less than 30 days prior to the First Borrowing Base
Determination Date, the Borrower shall furnish to the Agent a Reserve Report
prepared as of December 1, 1998 or later (the "First Reserve Report") and as
provided in clause 7.07(b) below.

(b) On January 31, 1999 and not less than 30 days prior to
each Scheduled Redetermination Date thereafter, commencing with the Scheduled
Redetermination Date to occur on September 30, 1999, the Borrower shall furnish
to the Agent a Reserve Report. The Reserve Report furnished for the September 30
Scheduled Redetermination Date shall be prepared as of the preceding July 1 and
the Reserve Report furnished for the March Scheduled Redetermination Date (as
well as the Reserve Report furnished on January 31, 1999) shall be prepared as
of the

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<PAGE> 29

preceding January 1. The Reserve Report furnished on January 31, 1999 and the
January 1 Reserve Report of each year beginning January 1, 2000 shall be
prepared by certified independent petroleum engineers or other independent
petroleum consultant(s) acceptable to the Agent and the First Reserve Report and
the July 1 Reserve Report of each year shall be prepared by or under the
supervision of the chief engineer or Vice President of Operations of the
Borrower who shall certify such Reserve Report to have been prepared in
accordance with the procedures used in the immediately preceding First Reserve
Report or January 1 Reserve Report, as appropriate. At Borrower's option, the
July 1 Reserve Report of each year may instead consist of a report from the
independent petroleum engineers referred to above on any new wells and a
roll-forward by Borrower on any wells previously reported on.

(c) In addition, the Borrower shall furnish to the Agent
copies of any additional Reserve Reports (other than those specified in Sections
7.07(a) and (b) above) that Borrower or any of its Subsidiaries deliver to the
Senior Loan Agent or Senior Lenders pursuant to the Senior Loan Documents.

(d) With the delivery of each Reserve Report, the Borrower
shall provide to the Agent:

(i) a certificate from a Responsible Officer
certifying that, to the best of his knowledge and in all material
respects: (i) the most recently delivered Reserve Report does not in
the belief of such officer and based upon information in the Borrower's
possession, materially overstate the oil and gas reserves of the
Borrower and the Subsidiaries as a whole bearing in mind that reserves
are evaluated based upon estimates and assumptions with respect to
which reasonable minds of competent engineers may differ, (ii) except
as set forth in such Reserve Report or on an exhibit to the
certificate, on a net basis there are no gas imbalances, take or pay or
other prepayments with respect to its Oil and Gas Properties evaluated
in such Reserve Report which would violate Section 8.14, (iii) none of
its proved Hydrocarbon Interests have been sold since the date of the
last Borrowing Base determination except as set forth on an exhibit to
the certificate, which certificate shall list all of its proved
Hydrocarbon Interests sold and in such detail as reasonably required by
the Agent, (iv) attached to the certificate is a list of its proved
Hydrocarbon Interests added to and deleted from the immediately prior
Reserve Report and a list showing any change in working interest or net
revenue interest in its Hydrocarbon Interests occurring, (v) at the
Agent's request, attached to the certificate is a list of all Persons
disbursing proceeds to the Borrower from its Oil and Gas Properties and
(vi) except as set forth on a schedule attached to the certificate all
of the proved Hydrocarbon Interests evaluated by such Reserve Report
are Mortgaged Property; and

(ii) a certificate from a Responsible Officer
certifying that, to the best of his knowledge and in all material
respects (i) the representations of the Borrower in Section 4.10 are
true and correct and apply to the Hydrocarbon Interests evaluated in
the Reserve Report that are described in the Mortgage and (ii) the
Borrower has, with respect to those material Hydrocarbon Interests that
are evaluated in the most recently delivered Reserve Report, but that
are not covered by a Mortgage, conducted overall title due diligence
that, in all material respects, equals or exceeds industry standards
given the applicable facts and circumstances.

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<PAGE> 30

(e) In addition to the foregoing, on August 30, 1998, the
Borrower shall furnish to the Agent a Reserve Report prepared as of July 1,
1998, by or under the supervision of the chief engineer or Vice President of
Operations of the Borrower who shall certify such Reserve Report to have been
prepared in accordance with the procedures used in the immediately preceding
Initial Reserve Report.

(f) Notwithstanding the foregoing, so long as there is a
Senior Credit Agreement in effect which requires the semi-annual delivery to the
Senior Lenders of reserve reports evaluating the Borrower's and its
Subsidiaries' Oil and Gas Properties, delivering the Agent and Noteholders with
a copy of each such reserve report and any accompanying officer's certificate
(certified to Agent and the Noteholders) required thereunder shall satisfy the
Borrower's obligations under this Section 7.07, so long as such reserve report
includes a calculation of reserve value based upon pricing assumptions
consistent with Commission reporting requirements at the time.

Section 7.08 Intentionally Omitted.

Section 7.09 Additional Collateral.

(a) Should any of the Borrower's or any Subsidiary's
Properties which are not Mortgaged Property be pledged as collateral for the
payment of all or any portion of the Senior Loan Obligations, the Borrower will
simultaneously with such pledge in favor of the Senior Lenders (or Senior Loan
Agent) grant or cause such Subsidiary to grant to the Trustee as security for
the Obligations a second-priority Lien interest (subject only to Excepted Liens,
the matters set out on Schedule 4.10 hereto, and any additional qualifications
and exceptions accepted by the Senior Lenders under any mortgage of such
Property to the Senior Agent) in the Borrower's or the Subsidiary's interest in
such Properties not already subject to a Lien of the Basic Documents, which Lien
will be created and perfected by and in accordance with the provisions of deeds
of trust, security agreements and financing statements, or other Basic
Documents, all in form substantially the same as the previous Collateral
Documents and in sufficient executed (and acknowledged where necessary or
appropriate) counterparts for recording purposes.

(b) Concurrently with the granting of the Lien or other action
referred to in Section 7.09(a) above, the Borrower will provide to the Agent all
title information provided to the Senior Lenders or Senior Loan Agent in
connection therewith and any legal opinion (addressed to the Agent as well)
provided to the Seniors Lenders or Senior Loan Agent in connection therewith.

Section 7.10 ERISA Information and Compliance. Immediately after any
Responsible Officer of the Borrower knows or has reason to know any of the
following items are true, the Borrower will deliver to the Agent a certificate
of a Responsible Officer of the Borrower setting forth details as to such
occurrence and such action, if any, the Borrower or any ERISA Affiliate

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<PAGE> 31
is required or proposes to take, together with any notices required or proposed
to be given to or filed with or by the Borrower or its ERISA Affiliate with
respect thereto: that a Reportable Event has occurred or that an application may
be or has been made to the Secretary of the Treasury for a waiver or
modification of the minimum funding standard; that a Multiemployer Plan has been
or may be terminated, reorganized, partitioned or declared insolvent under Title
IV of ERISA; that any required contribution which is material to a Plan,
Multiemployer Plan or Employee Plan has not been or may not be timely made; that
proceedings may be or have been instituted under Section 4069(a) of ERISA to
impose liability on the Borrower or an ERISA Affiliate or under Section 4042 of
ERISA to terminate a Plan or appoint a trustee to administer a Plan; that the
Borrower or any ERISA Affiliate has incurred or may incur any liability
(including any contingent or secondary liability) on account of the termination
of or withdrawal from a Plan or a Multiemployer Plan; and that the Borrower or
any ERISA Affiliate may be required to provide security to a Plan under Section
401(a)(29) of the Code; or any other condition(s) exist(s) or may occur with
respect to one or more Plans, Employee Plans and/or Multiemployer Plans which
would reasonably be expected to result, individually or in the aggregate, in a
Material Adverse Effect.

Section 7.11 Subsidiary Security. Should the Borrower grant to the
Senior Loan Agent for the benefit of the Senior Lenders, or to the Senior
Lenders, a security interest and pledge of the Capital Stock of any Subsidiary
(whether existing as of the Closing Date or created or acquired thereafter), the
Borrower will, simultaneously with such pledge in favor of the Senior Loan Agent
or Senior Lenders, grant to the Trustee for the benefit of the Noteholders, a
second in priority security interest and pledge of such Capital Stock in form
and substance satisfactory to the Agent and if any Subsidiary should guaranty
all or any portion of the Senior Loan, the Borrower will cause such Subsidiary
to enter into a Guaranty Agreement of the Obligations in substantially the same
form as the Guaranty Agreement given by Brigham, Inc. on the Closing Date or
otherwise in form and substance satisfactory to the Agent. The delivery of such
security and guaranty shall be accompanied by such back up corporate authority
and opinions of counsel (addressed to the Agent as well as the Senior Loan
Agent) as are provided to the Senior Loan Agent.

ARTICLE VIII
NEGATIVE COVENANTS

Unless the Agent's prior written consent to the contrary is obtained,
for the benefit of each of the Noteholders, the Borrower will at all times
comply with the covenants contained in this Article VIII (or cause each
Subsidiary's compliance with the applicable covenants), from the date hereof and
for so long as any part of the Obligations is outstanding.

Section 8.01 Debt. Neither the Borrower nor any Subsidiary will:

(a) Incur, create or assume any Debt, other than Permitted
Debt, such that the ratio of the Borrower's Adjusted Consolidated Net Tangible
Assets (as at the end of the immediately preceding calendar quarter) to the sum
of (i) Borrower's Consolidated Indebtedness (after such incurrence, creation or
assumption of additional Debt other than Permitted Debt) plus

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<PAGE> 32

(ii) past due interest on Debt, is less than 1.5 to 1.0. This covenant shall
also apply to any such Debt incurred or assumed as a result of a merger or
consolidation with any other Person. Any such Debt so incurred, created or
assumed (without violation of this Section 8.01) must be fully subordinated to
the Obligations unless the Agent agrees otherwise, provided that, so long as ECT
has been given a first look and right to make a proposal for any future
subordinated indebtedness, up to $25,000,000 (less the maximum potential balance
at the time in question of the Schedule 8.02 Payables) in the aggregate of such
Debt may be incurred that is pari passu in right of payment with the Notes.
Notwithstanding the foregoing, in the event of any refinancing of the Senior
Loan, which refinancing does not violate, on a proforma basis for the four
fiscal quarters of the Borrower after the refinancing, the interest coverage
test of Section 8.16, the current ratio test of Section 8.17, or, provided the
amount of such refinanced Senior Loan is more than $75,000,000, the covenant in
the first sentence of this subsection (a), the refinanced Senior Loan shall
remain senior to (and shall not be subordinate to) the Obligations; or

(b) Incur, create, suffer or assume any accounts payable for
the deferred purchase price of Property or services or any Trade Payables which
are more than 75 days past the invoice or billing date, unless such accounts
payable are either (i) being contested in good faith by appropriate proceedings
and reserves as required under GAAP shall have been established therefor, or
(ii) Schedule 8.02 Payables which are not past due.

Notwithstanding the foregoing, if at any time the ratio of the Borrower's
Adjusted Consolidated Net Tangible Assets to the sum of (a) Borrower's
Consolidated Indebtedness plus (b) past due interest on Debt, is less than 1.5
to 1.0, the Agent shall have the right to require, and the Borrower covenants
and agrees to convey (or cause to be conveyed) to the Trustee or the Agent for
the benefit of the Agent and the Noteholders, such additional Potential
Collateral as the Agent shall require (subject to the Senior Lenders' rights to
a first and prior lien in such Potential Collateral). Such conveyance shall be
made within 30 days following receipt of written notice from the Agent and shall
be deemed a pledge of additional Collateral in accordance with Section 7.09. As
used in this paragraph, "Potential Collateral" means any of Borrower's or any
Subsidiary's Oil and Gas Properties (which are not already Collateral) which are
identified as containing proved Hydrocarbon reserves, whether currently existing
or hereafter acquired.

Section 8.02 Liens. Neither the Borrower nor any Subsidiary will
create, incur, assume or permit to exist any Lien on any of its Properties (now
owned or hereafter acquired), except:

(a) Liens securing the Senior Loan; provided the Trustee or
the Agent is granted a second Lien in such Property securing the payment of the
Obligations;

(b) Liens securing the payment of the Obligations;

(d) Liens securing leases allowed under clause (e) of the
definition of Excepted Liens but only on the Property under lease;

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<PAGE> 33

(e) Liens disclosed on Schedule 8.02; and

(f) Any Permitted Encumbrances as described in the Mortgage.

Section 8.03 Investments, Loans and Advances. Neither the Borrower nor
any Subsidiary will make or permit to remain outstanding any loans or advances
to or investments in any Person, except that the foregoing restriction shall not
apply to:

(a) investments, loans or advances reflected in the
Financial Statements or which are disclosed to the Noteholders in Schedule 8.03;

(b) accounts receivable arising in the ordinary course Of
business;

(c) direct obligations of the United States or any agency
thereof, or obligations guaranteed by the United States or any agency thereof,
in each case maturing within one year from the date of creation thereof;

(d) commercial paper maturing within one year from the date of
creation thereof rated in the highest grade by Standard & Poors Corporation or
Moody's Investors Service, Inc.;

(e) deposits maturing within one year from the date of
creation thereof with, including certificates of deposit issued by any office
located in the United States, Canada, or England of, any bank or trust company
which is organized under the laws of the United States, Canada, England or any
state or province thereof, which has capital, surplus and undivided profits
aggregating at least $100,000,000.00 (as of the date of such bank or trust
company's most recent financial reports) and has a short term deposit rating of
no lower than A2 or P2, as such rating is set forth from time to time, by
Standard & Poors Corporation or Moody's Investors Service, Inc. (or their
successors), respectively;

(f) deposits in money market funds investing exclusively in
investments described in Section 8.03(c), 8.03(d) or 8.03(e);

(g) Investments of up to $400,000 in the aggregate in Quest
Resources L.L.C.;

(h) (i) investments, distributions, loans and advances by the
Borrower in or to any Subsidiary of the Borrower which is a Guarantor, (ii)
investments, distributions, loans and advances by the Borrower in or to any
Subsidiary of the Borrower which is not a Guarantor, provided that such
Subsidiary has direct or indirect ownership interests in Oil and Gas Properties
or gas gathering systems, gas plants, and similar assets related thereto and the
aggregate outstanding amount of such investments, distributions, loans and
advances under this clause (ii) shall not exceed $1,000,000 at any time, or
(iii) investments in equity interests in any Person (other than a Subsidiary as
provided in clauses (i) or (ii)) whose business is the acquisition, exploration
and development of Oil and Gas Properties, gas gathering systems, gas plants, or
any line of business which is closely related thereto, provided that the
aggregate outstanding amount of any such investments under this clause (iii)
shall not exceed $1,000,000 at any time;

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(i) investments, distributions, loans and advances by a
Subsidiary to the Borrower;

(j) extensions of credit to purchasers, working interest
owners, employees and other persons in the ordinary course of business, up to an
aggregate of $1,000,000 at any one time.

Section 8.04 Dividends, Distributions and Redemptions. Neither the
Borrower or any Subsidiary will declare or pay any dividend, purchase, redeem or
otherwise acquire for value any of its stock now or hereafter outstanding,
return any capital to its stockholders or make any distribution of its assets to
its partners, except to the Borrower or any Subsidiary.

Section 8.05 Sales and Leasebacks. Neither the Borrower nor any
Subsidiary will enter into any arrangement, directly or indirectly, with any
Person whereby the Borrower or any Subsidiary shall sell or transfer any of its
Property, whether now owned or hereafter acquired, and whereby the Borrower or
any Subsidiary shall then or thereafter rent or lease as lessee such Property or
any part thereof or other Property which the Borrower or any Subsidiary intends
to use for substantially the same purpose or purposes as the Property sold or
transferred.

Section 8.06 Nature of Business. Neither the Borrower nor any
Subsidiary will allow any material change to be made in the character of its
business as an independent oil and gas exploration and production company.

Section 8.07 Mergers, Etc. The Borrower will not and will not permit
any Subsidiary to merge into or with or consolidate with any other Person (other
than the Borrower or a Subsidiary) or sell, lease or otherwise dispose of
(whether in one transaction or in a series of transactions) all or substantially
all of its Property or assets to any other Person (other than the Borrower or a
Subsidiary) unless (i) no Default or Event of Default exists and after giving
effect to such merger, no Default or Event of Default shall exist, (ii) after
giving effect to such merger or consolidation, the surviving entity (as the
Borrower hereunder), or in the event of a merger or consolidation of a
Subsidiary, the Borrower, would be able to incur at least $1 in additional Debt
(other than Permitted Indebtedness), and (iii) the surviving entity ratifies and
confirms its Obligations under the Basic Documents and the Notes to the
reasonable satisfaction of the Agent and each Guarantor whose Guaranty Agreement
is in full force and effect ratifies and confirms its Guaranty Agreement to the
reasonable satisfaction of the Agent.

Section 8.08 Proceeds of Notes. The Borrower will not permit proceeds
of the Notes to be used for any purpose other than the partial payment of the
Senior Loan. Neither the Borrower nor any Person acting on behalf of the
Borrower has taken or will take any action which might cause any of the Basic
Documents to violate Regulation G, U or X or any other regulation of the Board
of Governors of the Federal Reserve System or to violate Section 7 of the
Securities Exchange Act of 1934 or any rule or regulation thereunder, in each
case as now in effect or as the same may hereinafter be in effect.

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Section 8.09 ERISA Compliance. The Borrower will not at any time:

(a) Engage in, or permit any ERISA Affiliate to engage in, any
transaction in connection with which the Borrower or any ERISA Affiliate could
be subjected to either a civil penalty assessed pursuant to section 502(c), (i),
or (l) of ERISA or a tax imposed by Chapter 43 of Subtitle D of the Code, which
could reasonably be expected to have a Material Adverse Effect;

(b) Terminate, or permit any ERISA Affiliate to terminate, any
Plan in a manner, or take any other action with respect to any Plan, which could
reasonably be expected to result in any liability of the Borrower or any ERISA
Affiliate to the PBGC, which could have a Material Adverse Effect;

(c) Permit to exist, or allow any ERISA Affiliate to permit to
exist, any accumulated funding deficiency within the meaning of Section 302 of
ERISA or section 412 of the Code, whether or not waived, with respect to any
Plan which, if funded, could reasonably be expected to have a Material Adverse
Effect;

(d) Permit, or allow any ERISA Affiliate to permit, the
actuarial present value of the benefit liabilities under any Plan maintained by
the Borrower or any ERISA Affiliate which is regulated under Title IV of ERISA
to exceed the current value of the assets (computed on a plan termination basis
in accordance with Title IV of ERISA) of such Plan allocable to such benefit
liabilities by an amount which could, if such benefits become payable,
reasonably be expected to have a Material Adverse Effect. The term "actuarial
present value of the benefit liabilities" shall have the meaning specified in
section 4041 of ERISA;

(e) Contribute to or assume an obligation to contribute to, or
permit any ERISA Affiliate to contribute to or assume an obligation to
contribute to, any Multiemployer Plan;

(f) Incur, or permit any ERISA Affiliate to incur, a liability
to or on account of a Plan under sections 515, 4062, 4063, 4064, 4201 or 4204 of
ERISA which, in the aggregate for all such liabilities, could reasonably be
expected to have a Material Adverse Effect;

(g) Contribute to or assume an obligation to contribute to, or
permit any ERISA Affiliate to contribute to or assume an obligation to
contribute to, any employee welfare benefit plan, as defined in section 3(1) of
ERISA, including, without limitation, any such plan maintained to provide
benefits to former employees of such entities, that may not be terminated by
such entities in their sole discretion at any time without any material
liability; or

(h) Amend or permit any ERISA Affiliate to amend, a Plan
resulting in an increase in current liability such that Borrower or any ERISA
Affiliate is required to provide security to such Plan under section 401(a)(29)
of the Code.

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Section 8.10 Sale of Oil and Gas Properties. The Borrower will not, and
will not permit any Subsidiary to, sell, assign, farm-out, convey or otherwise
transfer any Hydrocarbon Interests except for (i) the sale of Hydrocarbons in
the ordinary course of business; (ii) assignments, farmouts, and other
disposition of Hydrocarbon Interests which do not contain identified proved
Hydrocarbon reserves, provided such assignments, farmouts, and other
dispositions are in the normal course of business (e.g., in bringing in
participants or disposing of unattractive prospects); (iii) the sale or transfer
of equipment that is no longer necessary for the business of the Borrower or
such Subsidiary or is replaced by equipment of at least comparable value and use
and (iv) during any consecutive four fiscal quarters, sales of Hydrocarbon
Interests containing identified proved Hydrocarbon reserves which, when taken
together with the proceeds of any permitted sales of Subsidiaries during such
four quarters under the next sentence of this Section 8.10, shall not exceed
$3,000,000 in the aggregate. The Borrower will not sell, and will not permit the
sale of, any interest in any Subsidiary unless all or substantially all of the
Borrower's interest in such Subsidiary is sold and, during any consecutive four
fiscal quarters, the proceeds of any such sale taken together with the proceeds
of any sale of Hydrocarbon Interests permitted under clause (iv) of this Section
8.10 does not exceed $3,000,000.

Section 8.11 Environmental Matters. Neither the Borrower nor any
Subsidiary will knowingly cause or permit any of its Property to be in violation
of, or knowingly do anything or permit anything to be done which will subject
any such Property to any remedial obligations under any Environmental Laws,
assuming disclosure to the applicable Governmental Authority of all relevant
facts, conditions and circumstances, if any, pertaining to such Property, where
such violations or remedial obligations would have a Material Adverse Effect.

Section 8.12 Transactions with Affiliates. Neither the Borrower nor any
Subsidiary will enter into any transaction, including, without limitation, any
purchase, sale, lease or exchange of Property or the rendering of any service,
with any Affiliate (other than the Borrower or a Subsidiary) unless such
transaction (a) is otherwise not in violation of this Indenture, and (b) unless
approved by a majority of the disinterested members of the Board of Directors,
is in the ordinary course of its business and is upon fair and reasonable terms
no less favorable to it than it would obtain in a comparable arm's length
transaction with a Person not an Affiliate.

Section 8.13 Negative Pledge Agreements. The Borrower will not and will
not permit any Subsidiary to create, incur, assume or suffer to exist any
contract, agreement or understanding (other than the Basic Documents) which in
any way prohibits or restricts any Subsidiary from paying dividends or making
any other distribution to the Borrower or which requires the consent of a notice
to other Persons in connection with any of the foregoing, other than the Senior
Loan Documents so long as the Senior Loan Documents permit the payment of
dividends and making of other distributions by the Subsidiaries to the Borrower
to the extent needed for the Borrower to meet its scheduled debt service
obligations to the Noteholders.

Section 8.14 Gas Imbalances, Take-or-Pay Prepayments. The Borrower will
not allow gas imbalances, take-or-pay or other prepayments with respect to the
Hydrocarbon Interests of the Borrower and its Subsidiaries which would require
the Borrower or its Subsidiaries to deliver five percent (5%) or more of the
Borrower's and its Subsidiaries' Hydrocarbons

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<PAGE> 37

produced on a monthly basis from the Hydrocarbon Interests at some future time
without then or thereafter receiving full payment therefor.

Section 8.15 Borrower as Operator. The Borrower will not and will not
allow any of its Subsidiaries to voluntarily resign as operator of more than
twenty-five percent (25%) of their currently operated Oil and Gas Properties,
unless a substitute operator is appointed that is another Subsidiary of the
Borrower or is otherwise acceptable to the Majority Noteholders, approval of
such substitute operator not to be unreasonably withheld.

Section 8.16 Consolidated Interest Coverage Ratio. As of the last day
of each fiscal quarter, the Borrower will not permit the Consolidated Interest
Coverage Ratio to be less than (i) 1.5 to 1.0 as of the end of the first four
(4) fiscal quarters following the Closing Date and (ii) 2.0 to 1.0 as of the end
of each fiscal quarter thereafter.

Section 8.17 Current Ratio. The Borrower will not permit its ratio of
(i) consolidated current assets of the Borrower and its Consolidated
Subsidiaries (including, without limitation, any unused and available
commitments under the Senior Credit Agreement) to (ii) their consolidated
current liabilities (excluding any principal or interest payments due on the
Senior Loan or the Notes), to be less than .8 to 1.0 at any time.

ARTICLE IX
PAYMENT OF THE NOTES

Section 9.01 Repayment. The Borrower shall pay to the Noteholders on
the Maturity Date an amount equal to the outstanding principal amount of the
Notes plus the accrued and unpaid interest on the outstanding principal amount
of the Notes. The Borrower may prepay the Obligations at any time in whole or in
part without penalty or premium.

Section 9.02 Interest.

(a) Subject to the provisions of Section 9.02(b), the
outstanding principal amount of the Notes shall bear interest at the following
rates per annum:

Period Rate
------ ----

Funding Date through August __, 2001 12%

August __, 2001 through August __, 2002 13%

August __, 2002 through Maturity Date 14%

The foregoing rates shall apply only to interest which is paid in cash. In the
event the Borrower should elect to make any interest payments in kind as
permitted by Section 9.02(b), the rates applicable to such payments shall be as
set forth in Section 9.02(b).

(b) So long as there exists no Event of Default, if on any
Interest Payment Date either (i) there exists a "Borrowing Base Deficiency"
under the Senior Credit Agreement or (ii) the payment in cash of interest
accrued on the Notes would cause the Borrower to be in violation of any covenant
or other restriction set forth in the Senior Loan Documents or any Basic
Document, the Borrower may pay such interest in kind, as provided in this
Section 9.02(b). In such event the accrued interest due on such Interest Payment
Date shall be calculated at the rates set forth in this Section 9.02(b) and the
interest due (calculated at the

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rates set forth in this Section 9.02(b)) shall be deemed an advance of principal
under the Notes and, as of the Interest Payment Date, shall be added to the
outstanding principal balance of the Notes (notwithstanding that the outstanding
principal balance may exceed, in the aggregate, the face amount of the Notes).
In order to exercise its option to pay interest in kind under this Section
9.02(b), the Borrower shall, on or before the applicable Interest Payment Date,
deliver written notice to the Agent executed by a Responsible Officer specifying
the applicable covenant or restriction of the Senior Loan Documents or the Basic
Documents that will be violated by payment of accrued interest in cash and
notifying Agent of its election to pay interest in kind. Any such election must
be made as to all Notes. Should Borrower fail to deliver such written notice in
a timely fashion Borrower shall be deemed to have irrevocably elected to make
payment of accrued interest in cash and any subsequent failure to do so in a
timely fashion (subject to the thirty (30) day grace period provided in Section
10.01(a)) shall constitute an Event of Default hereunder. Notwithstanding
anything contained herein to the contrary, the Borrower may not pay interest in
kind over the term of the Notes for more than six (6) calendar quarters. In the
event the Borrower elects to pay interest in kind, such interest to be paid
shall be calculated at the following rates commencing on the immediately
preceding Interest Payment Date:

Period Rate
------ ----

Funding Date through August __, 2001 13%

August __, 2001 through August __, 2002 14%

August __, 2002 through Maturity Date 15%

(c) In the event any sum due and payable hereunder is not paid
when due such past due amount shall accrue interest at the Default Rate from the
date due until paid. Should an Event of Default occur hereunder, interest on the
Obligations shall accrue at the Default Rate from the date of occurrence of the
Default to which such Event of Default is attributable, until such Event of
Default is cured or waived.

(d) Interest shall be computed based on a year of 360 days and
twelve 30-day months (pro-rated appropriately for the period from the Funding
Date until the first Interest Payment Date and for any period of less than three
months for which interest may be due as a result of the prepayment or
acceleration of the Notes). The rates of interest applicable to the Notes
provided in Sections 9.02(a) and (b) shall commence on the first day immediately
following the Funding Date or the applicable anniversary of the Funding Date and
remain in effect through the next succeeding anniversary of the Funding Date, or
the Maturity Date, as applicable.

(e) Accrued interest on the Notes shall be due and payable in
cash or, if permitted by Section 9.02(b), in kind, quarterly on each Interest
Payment Date (including the Maturity Date) or, in the event the maturity of the
Notes is accelerated pursuant to the terms of the Basic Documents, such earlier
date as the Notes become due and payable, or the date the Notes are paid in
full, whichever first occurs. If any Interest Payment Date is not a Business

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<PAGE> 39

Day, the interest payment that would be due thereon shall instead be due on the
next following Business Day.

(f) Notwithstanding anything herein or in the other Basic
Documents to the contrary, it is the intention of the parties hereto to conform
strictly to usury laws applicable to this transaction. Accordingly, if the
transactions contemplated hereby would be usurious under applicable law, then,
in that event, notwithstanding anything to the contrary in the Notes, this
Indenture or in any other Basic Document or agreement entered into in connection
with or as security for the Notes, it is agreed as follows: (a) the aggregate of
all consideration which constitutes interest under law applicable to the
Noteholders that is contracted for, taken, reserved, charged or received under
the Notes, this Indenture or under any of the other Basic Documents or
agreements or otherwise in connection with this transaction shall under no
circumstances exceed the maximum amount allowed by such applicable law, and any
excess shall be canceled automatically and, if already paid, shall be credited
by the Noteholders on the principal amount of the Obligations (or, to the extent
that the principal amount of the Obligations shall have been or would thereby be
paid in full, refunded to the Borrower); and (b) in the event that the maturity
of the Notes is accelerated by reason of any Event of Default under this
Indenture or otherwise, or in the event of any required or permitted prepayment,
then such consideration that constitutes interest under law applicable to this
transaction may never include more than the maximum amount allowed by such
applicable law, and (c) excess interest, if any, provided for in this Indenture
or otherwise in connection with the Notes shall be canceled automatically and,
if already paid, shall be credited by the Noteholders on the principal amount of
the Obligations (or, to the extent that the principal amount of the Obligations
shall have been or would thereby be paid in full, refunded by the Noteholders to
the Borrower). All sums paid or agreed to be paid to the Noteholders for the
use, forbearance or detention of sums included in the Obligations shall, to the
extent permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full term of the Notes until payment in full so that the rate or
amount of interest on account of the Obligations does not exceed the applicable
usury ceiling, if any. As used in this Section 9.02(f), the term "applicable
law" shall mean the laws which govern this Indenture as described in Section
12.07 (or the law of any other jurisdiction whose laws may be mandatorily
applicable notwithstanding other provisions of this Indenture), or law of the
United States of America applicable to the Noteholders and the Notes which would
permit the Noteholders to contract for, charge, take, reserve or receive a
greater amount of interest than under any other applicable law. If the stated
rate of interest under this Indenture ever exceeds the Maximum Rate, then the
outstanding principal amount of the Notes made hereunder shall bear interest at
the Maximum Rate until the difference between the interest which would have been
due at the stated rates of interest and the amount due at the Maximum Rate (the
"Lost Interest") has been recaptured by the Noteholders. If the Notes are repaid
in full and the Lost Interest has not been fully recaptured by the Noteholders
pursuant to the preceding sentence, then the Notes shall be deemed to have
accrued interest at the Maximum Rate since the date the initial advance under
the Notes was made to the extent necessary to recapture the Lost Interest not
recaptured pursuant to the preceding sentence and, to the extent allowed by law,
the Borrower shall pay to the Noteholders the amount of the Lost Interest
remaining to be recaptured by the Noteholders.

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Section 9.03 Payments and Computations.

(a) All payments and obligations by Borrower under the Notes
or any other Basic Document shall be made to the Agent, without any presentment
and without any notation of such payment being made on the Notes (i) by wire
transfer in immediately available funds to such account as the Agent may
designate from time to time by written notice to the Borrower (the "Agent's
Account") or (ii) in such other manner as may be designated in writing to the
Borrower by the Agent.

(b) The Borrower shall make each payment under this Indenture
and under the Notes not later than 2:00 p.m. (Houston, Texas time) on the day
when due in U.S. Dollars to the Agent at the location specified in paragraph (a)
above in immediately available funds. All payments by the Borrower hereunder
shall be made without any offset, abatement, withholding, or reduction.

(c) Whenever any payment under the Basic Documents shall be
stated to be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day, and (other than an interest payment subject
to Section 9.02(e) above) such extension of time shall in such case be included
in the computation of payment of interest. If the time for payment for an amount
payable is not specified in the Basic Documents, or in any other document, the
payment shall be due and payable ten days after the date on which the Agent or
any Noteholder demands payment therefor.

(d) Following receipt of payment in cash of any obligations
due under the Notes or any other Basic Document the Agent will promptly
thereafter cause to be distributed like funds relating to the payment of
principal, interest or fees ratably to the Noteholders at their respective
Noteholder's Account. If and to the extent that the Agent receives any payment
or prepayment from the Borrower and fails to distribute such payment or
prepayment to the Noteholders ratably on the basis of their respective
Participations on the day the Agent receives such payment or prepayment (if
received prior to 1:00 P.M. (Houston, Texas time) on such day) or the next
Business Day (if received after 1:00 P.M. (Houston, Texas time) on such day),
then the Agent shall pay to each Noteholder such Noteholder's Participation of
such payment or prepayment together with interest thereon at the Federal Funds
Rate for each day from the date such amount should have been distributed by the
Agent until such payment or prepayment is actually distributed to the
Noteholders. All payments and prepayments received shall be applied first to
accrued interest and second to the reduction of principal.

(e) Unless the Agent shall have received written notice from
the Borrower prior to the date on which any payment is due to the Noteholders
that the Borrower will not make such payment in full or will make such payment
in kind pursuant to Section 9.02(b), the Agent may assume that the Borrower has
made such payment in full, in cash, to the Agent on such date and the Agent may,
in reliance upon such assumption, cause to be distributed to each Noteholder on
such date an amount equal to the amount then due such Noteholder. If and to the
extent the Borrower shall not have so made such payment in full, in cash, to the
Agent, each Noteholder shall repay to the Agent forthwith on demand such amount
distributed to such Noteholder, together with interest, for each day from the
date such amount is distributed to such

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Noteholder until the date such Noteholder repays such amount to the Agent, at
the Federal Funds Rate for such day.

ARTICLE X
DEFAULT AND REMEDIES

Section 10.01 Events of Default. The occurrence of any of the following
shall be an "Event of Default" for the purposes of this Indenture and the Notes:

(a) the Borrower shall default in the payment or prepayment
when due of any Obligations, and such default, other than a default of a payment
or prepayment of principal (which shall have no cure period), shall continue
unremedied for a period of thirty (30) days after such Obligations become due,
in the case of interest, or thirty (30) days after the Borrower receives notice
from the Agent that such Obligations are due, in the case of Obligations other
than principal or interest; or

(b) (i) The Borrower or any Guarantor shall, as to any Debt
(other than the Obligations and the Senior Loan) aggregating more than
$2,000,000 default in the payment when due of any principal of or interest
thereon, or any event specified in any note, agreement, indenture or other
document evidencing or relating to any such Debt shall occur if the effect of
such event is to cause, or (with the giving of any notice or the lapse of time
or both) to permit the holder or holders of such Debt (or a trustee or agent on
behalf of such holder or holders) to cause, such Debt to become due prior to its
stated maturity, or (ii) as to the Senior Loan, there shall have occurred a
default thereunder and the holders of the Senior Loan shall have elected to
accelerate the payment of the Senior Loan (or it shall be accelerated
automatically or otherwise be due and payable in full); or

(c) any representation, warranty or certification made or
deemed made herein or in any other Basic Document by the Borrower or any
Guarantor, or any certificate furnished by the Borrower or any Guarantor to the
Trustee, any Noteholder or the Agent pursuant to the provisions hereof or any
other Basic Document, shall prove to have been false or misleading as of the
time made or furnished in any material and adverse respect and such default
shall continue unremedied for a period of forty-five (45) days after notice
thereof to the Borrower by the Agent; or

(d) the Borrower shall default in the performance of any of
its obligations under Article VIII which are not capable of being cured, or
under Sections 8.01, 8.16, 8.17 or 7.01(c); or the Borrower shall default in the
performance of any of its obligations under Article VIII which are capable of
being cured (other than Sections 8.01, 8.16 and 8.17) or any other Article of
this Indenture (other than 7.01(c)) or under any other Basic Document to which
it is a party (other than the payment of amounts due which shall be governed by
Section 10.01(a)) and such default shall continue unremedied for a period of
forty-five (45) days after notice thereof to the Borrower by the Agent; or

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(e) any Guarantor shall default in the performance of its
obligation to pay the Liabilities (as defined in the Guaranty Agreement) at
maturity, or any Guarantor shall default in the performance of any of its other
obligations under its Guaranty Agreement and such default shall continue
unremedied for a period of forty-five (45) days after notice thereof to the
Guarantor by the Agent; or

(f) the Borrower shall admit in writing its inability to, or
be generally unable to, pay its debts as such debts become due; or

(g) the Borrower shall (i) apply for a consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of all or a substantial part of its property, (ii)
make a general assignment for the benefit of its creditors, (iii) commence a
voluntary case under the Federal Bankruptcy Code (as now or hereafter in
effect), (iv) file a petition seeking to take advantage of any other law
relating to bankruptcy, insolvency, reorganization, winding-up, liquidation or
composition or readjustment of debts, (v) fail to controvert in a timely and
appropriate manner, or acquiesce in writing to, any petition filed against it in
an involuntary case under the Federal Bankruptcy Code, or (vi) take any
corporate action for the purpose of effecting any of the foregoing, or

(h) a proceeding or case shall be commenced, without the
application or consent of the Borrower, in any court of competent jurisdiction,
seeking (i) its liquidation, reorganization, dissolution or winding-up, or the
composition or readjustment of its debt; (ii) the appointment of a trustee,
receiver, custodian, liquidator or the like of the Borrower of all or any
substantial part of its assets, or (iii) similar relief in respect of the
Borrower under any law relating to bankruptcy, insolvency, reorganization,
winding-up, or composition or adjustment of debts, and such proceeding or case
shall continue undismissed, or an order, judgement or decree approving or
ordering any of the foregoing shall be entered and continue unstayed and in
effect, for a period of 60 days; or an order for relief against the Borrower
shall be entered in an involuntary case under the Federal Bankruptcy Code; or

(i) a judgment or judgments for the payment of money in excess
of $2,000,000 in the aggregate shall be rendered by a court against the Borrower
and the same shall not be discharged (or provision shall not be made for such
discharge), or a stay of execution thereof shall not be procured, within
forty-five (45) days from the date of entry thereof and the Borrower shall not,
within said period of 45 days, or such longer period during which execution of
the same shall have been stayed, appeal therefrom and cause the execution
thereof to be stayed during such appeal; or

(j) any of the Basic Documents after delivery thereof shall
for any reason, except to the extent permitted by the terms thereof, cease to be
in full force and effect and valid, binding and enforceable in all material
respects in accordance with their terms, or cease in any material respect to
create a valid and perfected Lien of the priority required thereby on any of the
collateral purported to be covered thereby, except to the extent permitted by
the terms of this Indenture, or the Borrower or any Guarantor shall so state in
writing, and such Default shall continue unremedied for a period of forty-five
(45) days after notice thereof to the Borrower by the Agent; or

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(k) any Guarantor takes, suffers or permits to exist any of
the events or conditions referred to in paragraphs (f), (g), (h) or (i) hereof
or if any Guaranty Agreement related thereto shall for any reason cease to be
valid and binding on such Guarantor in all material respects or if such
Guarantor shall so state in writing, and such Default shall continue unremedied
for a period of forty-five (45) days after notice thereof to the Guarantor by
the Agent; or

(l) there occurs a Change in Control; or

(m) any annual audited financial statement delivered to Agent
pursuant to Section 7.01(a) is qualified (as to going concern or similar
qualifications).

Section 10.02 Remedies.

(a) During the continuance of any Event of Default specified
in Section 10.01 (other than clauses (f), (g) or (h) of Section 10.01), or in
clause (k) as it relates to clauses (f), (g) or (h) thereof, the Agent may by
written notice to the Borrower declare the entire principal amount of all
Obligations then outstanding, including interest accrued thereon, to be
immediately due and payable without presentment, demand, protest, notice of
protest or dishonor, notice of intent to accelerate, or other notice of default
of any kind, all of which are hereby expressly waived by the Borrower.

(b) Upon the happening of any Event of Default specified in
clauses (f), (g) or (h) of Section 10.01, or clause (k) as it relates to clauses
(f), (g) or (h), the entire principal amount of all Obligations then
outstanding, including interest accrued thereon, shall, without notice or action
by the Trustee, the Agent or the Noteholders be immediately due and payable
without presentment, demand, protest, notice of protest or dishonor, notice of
intent to accelerate or other notice of default of any kind, all of which are
hereby expressly waived by the Borrower.

(c) In addition to the foregoing, upon the happening of any of
the events described in subsections (a) and (b) above, the Trustee, at the
direction of the Agent may exercise any of the rights or remedies provided in
the Collateral Documents and other Basic Documents or avail itself of any rights
or remedies provided by applicable law.

(d) All proceeds received after maturity of the Notes, whether
by acceleration or otherwise shall be applied first to reimbursement of expenses
and indemnities provided for in the Basic Documents; second to accrued interest
on the Notes; third to fees; fourth pro rata to principal outstanding on the
Notes and other Obligations; and any excess shall be paid to the Borrower or as
otherwise required by any Governmental Requirement.

Section 10.03 Production and Proceeds. Notwithstanding that, by the
terms of the various Mortgages and other Basic Documents, the Borrower and any
other mortgagors are and will be assigning to the Trustee all of the
Hydrocarbons covered thereby and all of the products thereof and proceeds and
revenues attributable thereto and all payments in lieu of such Hydrocarbons (in
this section collectively called the "Production and Proceeds"), so long as no

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Default has occurred and is continuing (a) the Borrower and such mortgagors may
continue to receive all such Production and Proceeds, subject, however, to the
Liens created under the Mortgages and other Basic Documents, and (b) upon the
Borrower's request the Agent will confirm to any purchasers of Hydrocarbons,
title examiners, or other Persons that the Borrower and such mortgagors continue
to have the right so to receive such Production and Proceeds until notification
by the Agent of the occurrence of a Default. During the continuance of an Event
of Default, however, the Trustee at the direction of the Agent may (subject to
all rights of the Senior Loan Agent and the Senior Lenders under the Senior Loan
Documents) exercise its rights and remedies granted under the Mortgages and the
other Basic Documents, including the rights and remedies granted under the
Mortgages and the other Basic Documents, including the right to obtain
possession of all Production and Proceeds then held by the Borrower and such
mortgagors and to receive directly from the purchasers of Hydrocarbons all other
Production and Proceeds. In no case shall any failure by the Trustee to collect
directly any such Production and Proceeds constitute in any way a release of any
of its or the Agent's rights under the Basic Documents.

Section 10.04 Set-Off. Upon the occurrence of any Event of Default, any
Noteholder shall have the right to set-off any funds of the Borrower in the
possession of the Noteholder against any Debt (or accrued interest on Debt) then
due by the Borrower to the Noteholder. The Borrower agrees that any holder of
Notes or a participation in the Notes may exercise any and all rights of
counter-claim, set-off, banker's lien and other liens with respect to any and
all monies owing by the Borrower to such holder as fully as if such holder of a
participation were a holder of a Note in the amount of such participation.

ARTICLE XI
THE AGENT

Section 11.01 Authorization and Action. Each Noteholder hereby appoints
and authorizes the Agent to take such action on behalf of such Noteholder and to
exercise such powers under this Indenture as are delegated to the Agent by the
terms hereof and of the other Basic Documents, together with such powers as are
reasonably incidental thereto. As to any matters not expressly provided for by
this Indenture or any other Basic Document (including, without limitation,
enforcement or collection of the Notes), the Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) only upon the instructions of the Majority Noteholders, and such
instructions shall be binding upon Noteholders; provided, however, that the
Agent shall not be required to take any action which exposes the Agent to
personal liability or which is contrary to this Indenture, any other Basic
Document, or applicable law.

Section 11.02 Agent's Reliance, Etc. Neither the Agent nor any of the
Agent's directors, officers, agents or employees shall be liable for any action
taken or omitted to be taken (including the Agent's own negligence) by it or
them under or in connection with this Indenture or the other Basic Documents,
except for its or their own gross negligence or willful misconduct. Without
limitation of the generality of the foregoing, the Agent: (a) may treat the
payee of any Note as the holder thereof until the Agent receives written notice
of the

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assignment or transfer thereof signed by such payee and in form satisfactory to
the Agent; (b) may consult with legal counsel (including counsel for the
Borrower), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts; (c)
makes no warranty or representation to any Noteholder and shall not be
responsible to any Noteholder for any statements, warranties or representations
made in or in connection with this Indenture or the other Basic Documents; (d)
shall not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of this Indenture or any
other Basic Document on the part of the Borrower or any Subsidiary or to inspect
the Property (including the books and records) of such Persons; (e) shall not be
responsible to any Noteholder for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Indenture or any other
Basic Document; and (f) shall incur no liability under or in respect of this
Indenture or any other Basic Document by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telecopy) reasonably
believed by it to be genuine and signed or sent by the proper party or parties.

Section 11.03 The Agent and Its Affiliates. With respect to its
Participation, and the Note issued to it, the Agent shall have the same rights
and powers under this Indenture as any other Noteholder and may exercise the
same as though it were not an Agent hereunder. The term "Noteholder" or
"Noteholders" shall, unless otherwise expressly indicated, include the Agent in
its individual capacity. The Agent and its Affiliates may accept deposits from,
lend money to, act as trustee under indentures of, and generally engage in any
kind of business with, the Borrower or any Subsidiary, and any Person who may do
business with or own securities of the Borrower, or any Subsidiary, all as if
the Agent were not an agent hereunder and without any duty to account therefor
to the Noteholders.

Section 11.04 Noteholders Loan Decision. Each Noteholder acknowledges
that it has, independently and without reliance upon the Agent or any other
Noteholder and based on the Financial Statements and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into the Basic Documents. Each Noteholder also acknowledges
that it will, independently and without reliance upon the Agent or any other
Noteholder and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Indenture.

Section 11.05 Indemnification. The Noteholders severally agree to
indemnify the Agent and each Affiliate thereof and their respective directors,
officers, employees and agents (to the extent not reimbursed by the Borrower),
according to their respective Participations from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against the Agent in any way relating to or
arising out of this Indenture or any action taken or omitted by the Agent under
this Indenture or any other Basic Document (INCLUDING THE AGENT'S OWN
NEGLIGENCE), provided that no Noteholder shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Agent's gross negligence or
willful misconduct. Without limitation of the foregoing, each Noteholder agrees
to reimburse

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the Agent promptly upon demand for its ratable share of any out-of-pocket
expenses (including counsel fees) incurred by the Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Indenture
or any other Basic Document, to the extent that the Agent is not reimbursed for
such expenses by the Borrower.

Section 11.06 Successor Agent. The Agent may resign at any time by
giving written notice thereof to the Noteholders and the Borrower and may be
removed at any time with cause by the Majority Noteholders upon receipt of
written notice from the Majority Noteholders to such effect. Upon receipt of
notice of any such resignation or removal, the Majority Noteholders shall have
the right to appoint a successor Agent with, if no Default exists, the consent
of the Borrower, which consent shall not be unreasonably withheld. If no
successor Agent shall have been so appointed by the Majority Noteholders with
the consent of the Borrower, if required, and shall have accepted such
appointment, within 30 days after the retiring Agent's giving of notice of
resignation or the Majority Noteholders' removal of the retiring Agent, then the
retiring Agent may, on behalf of the Noteholders and the Borrower, appoint a
successor Agent. Upon the acceptance of any appointment as Agent by a successor
Agent, such successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations under this
Indenture and the other Basic Documents. After any retiring Agent's resignation
or removal hereunder as Agent, the provisions of this Article XI shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent this Indenture and the other Basic Documents.

ARTICLE XII
TRUSTEE

Section 12.01 Duties of Trustee.

(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such rights and powers vested in it by this Indenture and
use the same degree of care and skill in such exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.

(b) Except during the continuance of an Event of Default:

(i) The Trustee need perform only those duties that
are specifically set forth (or incorporated by reference) in this
Indenture and no others.

(ii) In the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, in the case of any such certificates or
opinions which by any provision hereof are specifically required to be
furnished to the

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Trustee, the Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
Indenture (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein).

(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:

(i) This paragraph (c) does not limit the effect
of paragraph (b) of this Section.

(ii) The Trustee shall not be liable for any error of
judgment made in good faith by an officer of the Trustee, unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts.

(iii) The Trustee shall not be liable with respect to
action it takes or omits to take in good faith in accordance with a
direction received by it from the Agent, and the Trustee shall be
entitled from time to time to request such a direction.

(d) Every provision of this Indenture and each Collateral
Document that in any way relates to the Trustee is subject to paragraphs (a),
(b) and (c) of this Section.

(e) The Trustee shall be under no obligation and may refuse to
perform any duty or exercise any right or power unless it receives indemnity
satisfactory to it against any loss, liability or expense. No provision of this
Indenture or any Collateral Document shall require the Trustee to expend or risk
its own funds or otherwise incur financial liability in the performance of any
of its duties hereunder or in the exercise of any of its rights or powers, if it
shall have reasonable grounds to believe that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it.

(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Borrower.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.

(g) The Trustee shall not be required to take notice, and
shall not be deemed to have notice, of any Default or Event of Default
hereunder, unless the Trustee shall be notified specifically of the Default or
Event of Default in a written instrument or document delivered to it by the
Borrower or any Guarantor, or by the Agent or the Majority Noteholders.
In the absence of delivery of a notice satisfying those requirements, the
Trustee may assume that there is no Default or Event of Default, except as noted
above.

Section 12.02 Rights of Trustee.

(a) The Trustee may conclusively rely on and shall be fully
protected in acting or refraining from acting upon any document believed by it
to be genuine and to have been signed or presented by the proper person. The
Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument,

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opinion, report, notice, request, direction, consent, order, bond, debenture or
other paper or document, but the Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Borrower, personally or by agent or attorney, to the extent reasonably
required by such inquiry or investigation at the sole expense of the Borrower
and shall incur no liability or additional liability of any kind by reason of
such inquiry or investigation.

(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such certificate or opinion.

(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.

(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers.

(e) The Trustee may consult with counsel of its selection and
the advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon.

(f) The Trustee will not, without the consent of the Agent,
give any consent, waiver or approval required under the Collateral Documents or
by the terms hereof with respect to the Collateral or agree to any amendment or
modification of the Collateral Documents.

(g) The Trustee may settle or compromise at any time any and
all claims against it which may be asserted by any governmental body or private
party for the alleged violation of any Environmental Laws affecting any of the
Collateral, and may disclaim (as to itself, but not as to the Indenture or any
successor Trustee) any power (including, without limitation, the power to sell
the Collateral) granted by the Indenture, the Collateral Documents or any
statute or rule of law, the exercise of which power may, in the sole discretion
of the Trustee, as advised by counsel, cause the Trustee to incur corporate or
personal liability under any Environmental Laws.

Section 12.03 Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Notes and
may otherwise deal with the Borrower or its Subsidiaries or Affiliates with the
same rights it would have if it were not Trustee. The provision of this Section
shall extend to Affiliates of the Trustee. Any Agent may do the same with like
rights. However, the Trustee must comply with Sections 12.10 and 12.11.

Section 12.04 Trustee's Disclaimer.

The Trustee makes no representation as to the value or condition of the
Collateral or any part thereof, or as to the title of the Borrower or any
Subsidiary thereto, or as to the security

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afforded thereby or hereby, or as to the validity or genuineness of any
Collateral pledged and deposited with the Trustee, or the validity or adequacy
of this Indenture or the Notes, it shall not be accountable for the Borrower's
use of the proceeds from the Notes or any offering memorandum or solicitation
documents, and it shall not be responsible for any statement in the Basic
Documents other than its certificate of authentication.

Section 12.05 Notice of Defaults.

If a Default occurs and is continuing and if it is actually known to a
Responsible Officer of the Trustee pursuant to Section 12.01(g), the Trustee
shall mail to each Noteholder and the Agent pursuant to Section 13.05 a notice
of the Default within 90 days after it occurs. Except in the case of a Default
in any payment on any Note, the Trustee may withhold the notice if and so long
as the board of directors, executive committee or a trust committee of officers
in good faith determines that withholding the notice is in the interests of the
Noteholders.

Section 12.06 Reports by Trustee to Noteholders.

Within 60 days after each November 15, beginning with the November 15
following the date of this Indenture, the Trustee shall mail to each Noteholder
a brief report dated as of such November 15, that complies with TIA ss.313(a),
but only if such report is required in any year under TIA ss.313(a). The Trustee
also shall comply with TIA ss.ss.313(b) and 313(c).

A copy of each report at the time of its mailing to Noteholders shall
be filed with the SEC and each stock exchange on which the Notes are listed. The
Borrower shall promptly notify the Trustee in writing when the Notes become
listed on any national securities exchange or of any delisting thereof.

Section 12.07 Compensation and Indemnity.

The Borrower and the Guarantors jointly and severally agree to pay the
Trustee from time to time such compensation as shall be agreed in writing
between the Borrower and the Trustee for its services (which compensation shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust). The Borrower and the Guarantors jointly and
severally agree to reimburse the Trustee upon request for all reasonable
out-of-pocket expenses, disbursements and advances incurred by it. Such
expenses shall include when applicable the reasonable compensation and expenses
of the Trustee's agents and counsel.

The Borrower and the Guarantors jointly and severally agree to
indemnify each of the Trustee and any predecessor Trustee against any and all
loss, liability, damage, claim or expenses, including taxes (other than taxes
based on the income of the Trustee) incurred by it arising out of or in
connection with the acceptance and administration of the trust and its duties
hereunder as Trustee and/or Note Registrar, including the costs and expenses of
enforcing this Indenture against the Borrower (including with respect to this
Section 12.07) and of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder. The Trustee shall notify the Borrower and the Guarantors of any claim
for which it may seek indemnity; however, unless the position of the Borrower is

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materially prejudiced by such failure, the failure of the Trustee to promptly
notify the Borrower shall not limit its right to indemnification. The Borrower
shall defend each such claim and the Trustee shall cooperate in the defense. The
Trustee may retain separate counsel and the Borrower shall reimburse the Trustee
for the reasonable fees and expenses of such counsel if the Borrower is advised
by an Opinion of Counsel that the Trustee has separate defenses and that
separate representation is appropriate or if the Trustee reasonably determines
that such joint defense would otherwise involve a conflict of interest. The
Borrower need not pay for any settlement made without its consent.

Neither the Borrower nor the Guarantors shall be obligated to reimburse
any expense or indemnify against any loss or liability incurred by the Trustee
through the Trustee's breach of the applicable standard of care for its conduct
under Section 12.01.

When the Trustee incurs expenses or renders services after the
occurrence of any Event of Default specified in Sections 10.01(f), (g) or (h),
the expenses and the compensation for the services are intended to constitute
expenses of administration under any Bankruptcy Law.

The provisions of this Section 12.07 shall survive the satisfaction and
discharge or other termination of this Indenture.

Section 12.08 Replacement of Trustee.

The Trustee may resign by so notifying the Borrower and the Guarantors.
The Agent may remove the Trustee by so notifying the Trustee, in writing. The
Borrower may remove the Trustee if.

(a) the Trustee fails to comply with Section 12.10;

(b) the Trustee is adjudged a bankrupt or an insolvent;

(d) the Trustee becomes incapable of acting as Trustee
hereunder.

If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Borrower shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office, the
Agent may appoint a successor Trustee to replace the successor Trustee appointed
by the Borrower.

A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Borrower and the Guarantors.
Immediately after that, the retiring Trustee shall transfer all property held by
it as Trustee to the successor Trustee the resignation or removal of the
retiring Trustee shall become effective, and the successor Trustee shall have
all the rights, powers and duties of the Trustee under this Indenture. A
successor Trustee shall mail notice of its succession to each Noteholder.

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If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Borrower or
the Agent may petition, at the expense of the Borrower, any court of competent
jurisdiction for the appointment of a successor Trustee.

If the Trustee fails to comply with Section 12.10, the Agent may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee. Any successor Trustee shall comply with
TIA ss.310(a)(5).

Section 12.09 Successor Trustee by Merger, etc.

If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee; provided such corporation or association shall be otherwise eligible
and qualified under this Article.

Section 12.10 Eligibility, Disqualification.

This Indenture shall always have a Trustee which satisfies the
requirements of TIA ss.310(a)(1) and (5). The Trustee shall always have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall also comply with
TIA ss. 310(b).

Section 12.11 Preferential Collection of Claims Against Borrower.

The Trustee shall comply with TIA ss.311(a), excluding any creditor
relationship listed in TIA ss.311(b). A Trustee who has resigned or been removed
shall be subject to TIA ss.311(a) to the extent indicated therein.

Section 12.12 Appointment of Co-Trustee.

If the Trustee deems it necessary or desirable in connection with the
Collateral and/or the enforcement of the Collateral Documents, the Trustee may
appoint a co-Trustee with such powers of the Trustee as may be designated by the
Trustee at the time of such appointment (including acting as separate trustee of
any Collateral), and the Borrower shall, on request, execute and deliver to such
co-Trustee any deeds, conveyances or other instruments required by such
co-Trustee so appointed by the Trustee to more fully and certainly vest in and
confirm to such co-Trustee its rights, powers, trusts, duties and obligations
hereunder.

All rights (including rights to indemnification hereunder), powers,
duties and obligations conferred or imposed upon the Trustee shall be conferred
or imposed upon and exercised or performed by the Trustee or jointly by the
Trustee and such co-Trustees, except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed the Trustee
shall be incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations shall be exercised and performed by
such co-Trustees. No Trustee or co-Trustee shall be personally liable by reason
of any act or omission of any

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other Trustee or co-Trustee hereunder. Any co-Trustee appointed pursuant to this
Section 12.12 may be removed by the Trustee pursuant to the terms of this
Indenture and may be removed and may resign pursuant to the provisions of the
applicable Collateral Document and of this Indenture.

A co-Trustee shall not be responsible for and makes no representation
as to the value or condition of the Collateral or any part thereof, or as to the
title of the Borrower thereto, or as to the security afforded thereby or hereby,
or as to the validity or genuineness of any Collateral pledged and deposited
with such co-Trustee, or the validity or adequacy of this Indenture or the
Notes; a co-Trustee shall not be accountable for the Borrower's use of the
proceeds from the Notes, and it shall not be responsible for any statement of
the Borrower in this Indenture or any document issued in connection with the
sale of the Notes or any statement in the Notes. A co-Trustee makes no
representations with respect to the effectiveness or adequacy of this Indenture
or any Basic Document or the validity or perfection, if any, of Liens granted
under this Indenture or the Collateral Documents. A co-Trustee shall not be
responsible for independently ascertaining or maintaining such validity or
perfection, if any, and shall be fully protected in relying upon certificates
and opinions delivered to it in accordance with the terms of this Indenture or
the Collateral Documents.

Section 12.13 No Conflict. It is the purpose of this section of the
Indenture to remove any potential conflict of interest in the instance in which
Chase Bank of Texas, National Association ("Chase") is acting as Trustee and, in
its commercial banking capacity, has or may develop a lending relationship with
the Borrower or any of its Subsidiary Guarantors. Accordingly, in the event
that Chase, in its commercial banking capacity, has or may develop a lending
relationship with the Borrower or any of its Subsidiary Guarantors, Chase may,
but is not obligated to, resign as Trustee, such resignation to be effective
automatically upon receipt by the Trustee of notice from the successor Trustee
evidencing its assumption of the duties of Trustee hereunder, without notice to
and without prior approval of any party. In the event Chase resigns as trustee
pursuant to this Section 12.13, First Union National Bank, a national banking
association duly organized and existing under the laws of the United States of
America with a corporate trust office in Jacksonville, Florida, or any
successor appointed pursuant to the "Acceptance of Appointment" attached hereto
as Exhibit 6, has agreed to and shall automatically become successor Trustee
hereunder for all purposes. Chase shall give notice of its resignation in
writing to the Borrower, the Agent and the Noteholders as soon as possible but
in any event not less than forty-five (45) days after its resignation, provided
that failure to give such notice shall not impair the effectiveness of such
resignation. The provisions of this section shall extend to Affiliates of Chase.

ARTICLE XIII
MISCELLANEOUS

Section 13.01 Interpretation and Survival of Provisions. Article,
Section, Schedule, and Exhibit references are to this Indenture, unless
otherwise specified. All references to instruments, documents, contracts, and
agreements are references to such instruments, documents, contracts, and
agreements as the same may be amended, supplemented, and otherwise modified from
time to time, unless otherwise specified. The word "including" shall mean
"including but not limited to." Whenever the Borrower has an obligation under
the Basic Documents, the expense of complying with that obligation shall be an
expense of the Borrower unless otherwise specified. Whenever any determination,
consent, or approval is to be made or given by the Noteholders, such action
shall be in the Noteholders' sole discretion unless otherwise specified in this
Indenture. If any provision in the Basic Documents is held to be illegal,
invalid, not binding, or unenforceable, such provision shall be fully severable
and the Basic Documents shall be construed and enforced as if such illegal,
invalid, not binding, or unenforceable provision had never comprised a part of
the Basic Documents, and the remaining provisions shall remain in full force and
effect. The Basic Documents have been reviewed and negotiated by sophisticated
parties with access to legal counsel and shall not be construed against the
drafter. The representations, warranties, and covenants made in this Indenture,
the Notes or any other Basic Document shall remain operative and in full force
and effect regardless of (a) any investigation made by or on behalf of the
Borrower or the Noteholders or (b) acceptance of any of the Notes and payment
therefor and repayment or repurchase thereof. All indemnification obligations of
the Borrower and the provisions of Section 13.02 shall remain operative and in
full force and effect unless such obligations are expressly terminated in a
writing referencing those individual Sections, regardless of any purported
general termination of this Indenture or any other Basic Document.

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Section 13.02 Costs, Expenses and Taxes.

(a) Intentionally Deleted.

(b) The Borrower agrees to indemnify the Agent and the
Noteholders, and their respective officers, directors, employees,
representatives, agents, attorneys, and Affiliates (collectively, "Related
Parties") from, hold each of them harmless against and promptly upon demand pay
or reimburse each of them for, any and all actions, suits, proceedings
(including any investigations, litigation, or inquiries), claims, demands, and
causes of action, and, in connection therewith, all reasonable costs, losses,
liabilities, damages, or expenses of any kind or nature whatsoever (collectively
the "Indemnity Matters") which may be incurred by or asserted against or involve
any of them (whether or not any of them is designated a party thereto) as a
result of, arising out of, or in any way related to (i) any actual or proposed
use by the Borrower of the proceeds of any sale of the Notes, (ii) the
operations of the business of the Borrower or any Subsidiary, (iii) any bodily
injury or death or property damage occurring in or upon or in the vicinity of
any Collateral, (iv) any claim by any third Person against any Collateral
assigned to or paid to any Noteholder pursuant to any Collateral Document, (v)
the failure of the Borrower or any Subsidiary to comply with any Governmental
Requirement, or (vi) any other aspect of this Indenture and the other Basic
Documents, including, without limitation, the reasonable fees and disbursements
of counsel and all other reasonable expenses incurred in connection with
investigating, defending or preparing to defend any such action, suit,
proceeding (including any investigations, litigation, or inquiries), or claim
and INCLUDING ALL INDEMNITY MATTERS ARISING BY REASON OF THE ORDINARY NEGLIGENCE
OF ANY INDEMNITEE (but excluding all Indemnity Matters arising solely by reason
of claims between the Noteholders or any Noteholder and the Agent or any
Noteholder's shareholders against the Agent or any Noteholder or by reason of
the gross negligence or wilful misconduct of any Indemnitee).

(c) The Borrower agrees to pay and hold the Noteholders
harmless from and against any and all present and future stamp and other similar
taxes with respect to this Indenture and Basic Documents and save the
Noteholders harmless from and against any and all liabilities with respect to or
resulting from any delay or omission to pay such taxes, and will indemnify the
Noteholders for the full amount of taxes paid by the Noteholders in respect of
payments made or to be made under this Indenture, any Note, or any other Basic
Document and any liability (including penalties, interest, and expenses) arising
therefrom or with respect thereto, whether or not such taxes were correctly or
legally asserted.

(d) The Borrower agrees to indemnify and hold harmless from
time to time the Noteholders, and their respective Related Parties, together
with the Trustee, from and against any and all losses, claims, cost recovery
actions, administrative orders or proceedings, damages, and liabilities to which
any such Person may become subject (i) under any Environmental Law applicable to
the Borrower, any Subsidiary, or any of their respective Properties, (ii) as a
result of the breach or non-compliance by the Borrower or any Subsidiary with
any Environmental Law applicable to the Borrower or any Subsidiary, or any of
their respective Properties, (iii) due to the ownership by the Borrower or any
Subsidiary of their respective Properties or any activity on any of their
respective Properties, or any past activity on any of their respective
Properties

-49-
<PAGE> 54

which, though lawful and fully permissible at the time, could result in present
liability, (iv) the presence, use, release, storage, treatment, or disposal of
hazardous substances on or at any of the properties owned or operated by the
Borrower or any Subsidiary, or (v) any other environmental, health, or safety
condition in connection with this Indenture or any other Basic Document.

(e) In the case of any indemnification hereunder, the
Noteholder or other Person indemnified hereunder shall give notice to the
Borrower within a reasonable period of time of any such claim or demand being
made against the Noteholder or other indemnified Person and the Borrower at its
sole cost and expense shall provide a defense of such claim, provided, however,
that (i) if the Borrower has failed to assume the defense and employ counsel or
(ii) if the defendants in any such action include both the indemnified party and
the Borrower or any Subsidiary and counsel to the indemnified party shall have
concluded that there may be reasonable defenses available to the indemnified
party that are different from or additional to those available to the Borrower
or such Subsidiary or if the interests of the indemnified party reasonably may
be deemed to conflict with the interests of the Borrower or such Subsidiary,
then the indemnified party shall have the right to select a separate counsel and
to assume such legal defense and otherwise to participate in the defense of such
action, with the expenses and fees of such separate counsel and other expenses
related to such participation to be reimbursed by the Borrower as incurred.

(f) No indemnitee may settle any claim to be indemnified
without the consent of the indemnitor, such consent not to be unreasonably
withheld; provided, that the indemnitor may not reasonably withhold consent to
any settlement that an indemnitee proposes if the indemnitor does not have the
financial ability to pay all its obligations outstanding and asserted against
the indemnitee at that time, including the maximum potential claims against the
indemnitee to be indemnified pursuant to this Section 13.02.

(g) This Section 13.02 shall not apply to actions, suits,
proceedings, investigations, demands, losses, liabilities, claims, damages,
deficiencies, interest, judgments, costs, or expenses relating to any Property
to the extent arising from the acts or omissions of the Agent or any Noteholder
during the period after which such Person, its successors or assigns shall have
acquired possession of such Property (whether through foreclosure or deed in
lieu of foreclosure, as mortgagee in possession or otherwise).

(h) The Borrower's obligations under this Section 13.02 shall
survive any termination of this Indenture and the payment of the Obligations.

Section 13.03 No Waiver; Modifications in Writing.

(a) No failure or delay on the part of the Trustee, the
Borrower, the Agent or the Noteholders in exercising any right, power, or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power, or remedy preclude any other or further
exercise thereof or the exercise of any right, power, or remedy. The remedies
provided for herein are cumulative and are not exclusive of any remedies that
may be available to the Borrower, the Trustee, the Agent or the Noteholders at
law or in equity or otherwise.

-50-
<PAGE> 55

(b) Except as otherwise provided herein, no amendment, waiver,
consent, modification, or termination of any provision of this Indenture, the
Notes or any other Basic Document, shall be effective unless signed by the
Borrower and the Majority Noteholders. The Noteholders have all rights to take
such actions under this Indenture and the other Basic Documents without the
consent or joinder of any holder of the Acquired Shares or Warrants. Any
amendment, supplement or modification of or to any provision of this Indenture
or the Notes or any other Basic Document, any waiver of any provision of this
Indenture, the Notes or any other Basic Document, and any consent to any
departure by the Borrower from the terms of any provision of this Indenture, the
Notes or any other Basic Document, shall be effective only in the specific
instance and for the specific purpose for which made or given. Except where
notice is specifically required by this Indenture, no notice to or demand on the
Borrower in any case shall entitle the Borrower to any other or further notice
or demand in similar or other circumstances.

Section 13.04 Binding Effect; Assignment. This Indenture shall be
binding upon the Borrower, the Trustee, the Agent and the Noteholders, and their
respective successors and permitted assigns. Except as expressly provided in
this Indenture, this Indenture shall not be construed so as to confer any right
or benefit upon any Person other than the Borrower, Trustee, Agent and
Noteholders, and their respective successors and permitted assigns. Subject to
applicable federal law and state securities law, all or any portion of the
rights and obligations of the Noteholders under this Indenture with respect to
the Basic Documents may be sold, assigned or pledged by any Noteholder. Upon any
assignment of the Basic Documents, the acquiring Noteholder shall succeed to all
of the selling Noteholder's rights and obligations under the Basic Documents to
the extent assigned and the selling Noteholder shall be automatically released
from any such obligations hereunder with respect to the Basic Documents to the
extent assigned.

Section 13.05 Communications. All notices and demands provided for
hereunder shall be in writing and shall be given by registered or certified
mail, return receipt requested, telecopy, air courier guaranteeing overnight
delivery or personal delivery to the following addresses:

If to the Trustee:

Chase Bank of Texas, National Association
Global Trust Services
600 Travis Street, Suite 1150
Houston, Texas 77002
Attention: Mr. Mauri J. Cowen
Telephone: (713) 216-6686
Telecopier: (713) 216-5474

-51-
<PAGE> 56

If to the Agent:

If to the Noteholders:

and

If to the Borrower:

6300 Bridge Point Parkway
Building 2, Suite 500
Austin, Texas 78730
Attention: Craig M. Fleming
Telecopier: (512) 472-3400

or to such other address as the Borrower, Agent or any Noteholder may designate
in writing. All other communications may be by regular mail. All notices and
communications shall be deemed to have been duly given: at the time delivered by
hand, if personally delivered; four days after being sent by certified mail,
return receipt requested, if mailed; when receipt acknowledged, if telecopied;
and on the next Business Day if timely delivered to an air courier guaranteeing
overnight delivery. Notwithstanding the foregoing, notices to the Trustee shall
be effective only upon receipt.

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<PAGE> 57

Section 13.06 Governing Law. This Indenture will be construed in
accordance with and governed by the laws of the State of Texas without regard to
principles of conflicts of laws.

Section 13.07 Arbitration.

(a) Binding Arbitration. Subject to the provisions of
subparagraph (e), on the request of either the Borrower, the Agent or any
Noteholder, whether made before or after the institution of any legal
proceeding, any action, dispute, claim or controversy of any kind now existing
or hereafter arising between any of the parties hereto in any way arising out
of, pertaining to or in connection with this Indenture (a "Dispute") shall be
resolved by binding arbitration in accordance with the terms hereof. Either the
Borrower, the Agent or any Noteholder may, by summary proceedings, bring an
action in court to compel arbitration of any Dispute.

(b) Governing Rules. Any arbitration shall be administered by
the American Arbitration Association (the "AAA") in accordance with the terms of
this Section, the Commercial Arbitration Rules of the AAA, and, to the maximum
extent applicable, the Federal Arbitration Act. Judgment on any award rendered
by an arbitrator may be entered in any court having jurisdiction.

(c) Arbitrators. Any arbitration shall be conducted before a
three person panel of neutral arbitrators. Such panel shall consist of one
person from each of the following categories: (1) an attorney who has practiced
in the area of commercial law for at least 10 years or a retired judge at the
Texas or United States District Court or an appellate court level; (2) a person
with at least 10 years experience in commercial lending; and (3) a person with
at least 10 years experience in the energy service industry. The AAA shall
submit a list of persons meeting the criteria outlined above for each category
of arbitrator, and the parties shall select one person from each category in the
manner established by the AAA. If the parties cannot agree on an arbitrator
within 30 days after the request for an arbitration, then any party may request
the AAA to select an arbitrator. The arbitrator may engage engineers,
accountants or other consultants that the arbitrator deems necessary to render a
conclusion in the arbitration proceeding.

(d) Conduct of Arbitration. To the maximum extent practicable,
an arbitration proceeding hereunder shall be concluded within 180 days of the
filing of the Dispute with the AAA. Arbitration proceedings shall be conducted
in Houston, Texas. At the conclusion of any arbitration proceeding, the
arbitrator shall make specific written findings of fact and conclusions of law.
The arbitrator shall have the power to award recovery of all costs and fees to
the prevailing party. The Borrower, the Agent and the Noteholders each agree to
keep all Disputes and arbitration proceedings strictly confidential except for
disclosure of information required by applicable law.

(e) Parties' Rights. Nothing in the preceding paragraph shall
require arbitration prior to the Agent's or the Noteholders' exercise of any
rights and remedies under Article X. In addition, nothing in this Section 13.07,
nor the exercise of any right to arbitrate thereunder, shall limit the right of
the Borrower, the Agent, the Trustee or any Noteholder: (a)

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<PAGE> 58

to foreclose against any Collateral by the exercise of the power of sale under,
or to secure direct payment of the proceeds of any Collateral as provided under,
any deed of trust, mortgage, or other security agreement or instrument or
applicable law; (b) to exercise self-help remedies such as setoff or
repossession; or (c) to obtain provisional or ancillary remedies or relief such
as replevin, injunctive relief, attachment or appointment of a receiver from a
court having jurisdiction, before, during or after the pendency of any
arbitration proceeding. Any foreclosure action, or the institution and
maintenance of any action for such judicial relief, or pursuit of provisional or
ancillary remedies, or exercise of self-help remedies shall not constitute a
waiver of the right of the exercising party to submit any claim or dispute to
arbitration.

(f) Costs of Arbitration. All fees of the arbitrator and any
engineer, accountant or other consultant engaged by the arbitrator, shall be
paid by the Borrower (as to 50%) and the Noteholders (as to 50%) unless
otherwise awarded by the arbitrator.

Section 13.08 Confidentiality. In the event that the Borrower or any
Guarantor (hereinafter called the "Subject Entities") provides to the Agent or
the Noteholders written confidential information or, if communicated as
confidential, oral confidential information belonging to any Subject Entity, the
Agent and the Noteholders shall thereafter maintain such information in
confidence in accordance with the standards of care and diligence that each
utilizes in maintaining its own confidential information. This obligation of
confidence shall not apply to such portions of the information which (i) are in
the public domain, (ii) hereafter become part of the public domain without the
Agent or the Noteholders breaching their obligation of confidence to any Subject
Entity, (iii) are previously known by the Agent or the Noteholders from some
source other than any Subject Entity, (iv) are hereafter developed by the Agent
or the Noteholders without using a Subject Entity's information, (v) are
hereafter obtained by or available to the Agent or the Noteholders from a third
party who owes no obligation of confidence to any Subject Entity with respect to
such information, (vi) are disclosed with a Subject Entity's consent, (vii) must
be disclosed either pursuant to any Governmental Requirement or to Persons
regulating the activities of the Agent or the Noteholders, or (viii) may be
required to be disclosed by law or regulation or order of any Governmental
Authority in any judicial, arbitration or governmental proceeding. Further, the
Agent or a Noteholder may disclose any such information to any other Noteholder,
any independent petroleum engineers or consultants, any independent certified
public accounts, any legal counsel employed by such Person in connection with
this Indenture or any other Basic Document, including without limitation, the
enforcement or exercise of all rights and remedies thereunder, or, subject to
Section 13.04, any assignee or participant (including prospective assignees and
participants) in the Obligations; provided, however, that the Agent or the
Noteholders shall receive a confidentiality agreement from the Person to whom
such information is disclosed such that said person shall have the same
obligation to maintain the confidentiality of such information as is imposed
upon the Agent or the Noteholders hereunder. Notwithstanding anything to the
contrary provided herein, this obligation of confidence shall cease three (3)
years from the date the information was furnished, unless the Borrower requests
in writing at least thirty (30) days prior to the expiration of such three (3)
year period, to maintain the confidentiality of such information for an
additional three year period.

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<PAGE> 59

Section 13.09 Execution in Counterparts. This Indenture may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original and all of which counterparts, taken together, shall
constitute but one and the same Agreement.

Section 13.10 Trust Indenture Act Controls. Whether prior to or
following the qualification of this Indenture under the TIA, if any provision of
this Indenture limits, qualifies, or conflicts with the duties imposed by
operation of TIA ss. 318(c) upon an Indenture qualified under the TIA, the
imposed duties shall control under this Indenture.

Section 13.11 Communication by Noteholders with Other Noteholders.
Noteholders may communicate pursuant to TIA ss. 312(b) with other Noteholders
with respect to their rights under this Indenture or the Notes. The Company, the
Guarantors, the Trustee, the Registrar and anyone else shall have the protection
of TIA ss. 312(c).

Section 13.12 Certificate and Opinion as to Conditions Precedent. Upon
any request or application by the Borrower or any Guarantor to the Trustee to
take any action under this Indenture, the Borrower or such Guarantor, as the
case may be, shall furnish to the Trustee:

(a) an Officers' Certificate (which shall include the
statements set forth in Section 13.13) stating that, in the opinion of the
signers, the conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with;

(b) an Opinion of Counsel stating that, in the opinion of such
counsel, such conditions precedent have been complied with; and

(c) any Opinion of Counsel may assume the existence of
non-existence of facts necessary to support such Opinion unless such counsel has
actual knowledge that such assumption would be contrary to the actual facts.

Section 13.13 Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture shall include:

(a) a statement that each person making such certificate
or opinion has read such covenant or condition;

(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;

(c) a statement that, in the opinion of each such person, he
has made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition has
been complied with; and

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<PAGE> 60

(d) a statement as to whether or not, in the opinion of each
such person, such covenant or condition has been complied with.

Section 13.14 Rules by Trustee and Agents. The Trustee may make
reasonable rules for action by or a meeting of the Noteholders. The Note
Registrar may make reasonable rules for its functions.

Section 13.15 Legal Holidays. A "Legal Holiday" is a Saturday, a
Sunday, or a day on which banks and trust companies in the City of New York are
not required by law or executive order to be open. If a payment date is a Legal
Holiday at a place of payment, payment may be made at the place on the next
succeeding day that is not a Legal Holiday, without additional interest.

IN WITNESS WHEREOF, BRIGHAM EXPLORATION COMPANY has caused this
Indenture to be signed by its President or one of its Vice Presidents, and its
corporate seal to be affixed hereunto, and the same to be attested by its
Secretary or an Assistant Secretary, and CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION has caused this Indenture to be signed by one of its duly authorized
trust officers, all as of the day and year first above written.

BRIGHAM EXPLORATION COMPANY

By:
--------------------------------
Name:
---------------------------
Title:
--------------------------

CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION,
as Trustee

By:
--------------------------------
Name:
---------------------------
Title:
--------------------------

-56-
<PAGE> 61

STATE OF TEXAS )
)
COUNTY OF DALLAS )

BEFORE ME, the undersigned authority, a Notary Public in and for said
state, on this day personally appeared ________________ and _____________, known
to me to be the persons and officers whose names are subscribed to the foregoing
instrument and acknowledged to me that the same was the act of the said BRIGHAM
EXPLORATION COMPANY, a Delaware corporation, and that they executed the same as
the act of said corporation for the purposes and consideration therein
expressed, and in the capacity therein stated.

GIVEN UNDER MY HAND AND SEAL OF OFFICE, this ______ day of August,
1998.

-------------------------------------------
Notary Public in and for the State of Texas

My commission expires:

- ------------------------------

STATE OF TEXAS )
)
COUNTY OF HARRIS )

BEFORE ME, the undersigned authority, a Notary Public in and for said
state, on this day personally appeared ______________ , known to me to be the
person and officer whose names are subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION, a national banking association, and that she executed the
same as the act of said national banking association for the purposes and
consideration therein expressed, and in the capacity therein stated.

GIVEN UNDER MY HAND AND SEAL OF OFFICE, this _____ day of ________,
1998.

-------------------------------------------
Notary Public in and for the State of Texas

My commission expires:

- ------------------------------

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<PAGE> 62
EXHIBIT A

1998

THIS INSTRUMENT IS SUBORDINATED TO THE EXTENT AND IN THE MANNER
PROVIDED IN THE SUBORDINATION AGREEMENT REFERRED TO BELOW.

NOTWITHSTANDING THE PROVISIONS OF SECTION 2.05 OF THE SECURITIES
PURCHASE AGREEMENT REFERRED TO BELOW, THE INITIAL PRINCIPAL BALANCE OF
THIS NOTE IS $____________, AND SUCH PRINCIPAL AMOUNT SHALL BE
INCREASED BY THE AMOUNT OF ANY PAYMENTS OF INTEREST ON THIS NOTE IN
KIND. FOR MORE INFORMATION, CONTACT THE COMPANY AT THE ADDRESS
SPECIFIED IN THE SECURITIES PURCHASE AGREEMENT.

________________

Senior Subordinated Secured Note due 2003

No. __ Houston, Texas
$_________ August __, 1998

BRIGHAM EXPLORATION COMPANY, a Delaware corporation ("Company"), for
value received, hereby promises to pay to the order of ___________
("Purchaser"), to its account at __________________, ABA No. _________, Account
No. __________, or such other account or address in the State of Texas as may
be specified by the Purchaser, the principal amount of ___________ DOLLARS
($________), or, if less, the aggregate unpaid principal balance of this Note
(including any additions to such principal balance as a result of the payment
of interest owing in respect of this Note in kind, as more fully described
below), together with interest on the unpaid balance of such principal amount
in accordance with the Indenture dated as of August __, 1998 (the "Indenture"),
between the Company, and ________________, as Trustee (the "Trustee"). The
Indenture is being executed in connection with the Securities Purchase
Agreement dated as of August __, 1998 (as modified from time to time, the
"Securities Purchase Agreement", and together with the Indenture, the
"Securities Purchase Documents") among the Company, the Purchaser and the other
purchasers party thereto (together with the Purchaser, referred to collectively
as the "Noteholders"), and ______________________________, as agent for the
Noteholders ("Agent").
<PAGE> 63
The Securities Purchase Documents provide for the making of loans by
the Noteholders to the Company in exchange for, among other things, the
issuance by the Company of the Notes and Warrants (as defined in the Securities
Purchase Documents). The Company hereby acknowledges and agrees that, as of
the date of the issuance of this Note and notwithstanding the provisions of
Section 2.05 of the Securities Purchase Agreement, the aggregate outstanding
principal balance of this Note is $_________. In addition, the Securities
Purchase Documents provide that payment of a portion of the interest owing by
the Company in respect of the Notes may be made by the Company in kind. The
Company hereby acknowledges and agrees that any such payments of interest in
kind in respect of this Note shall be deemed to be additional principal
advanced by the Purchaser under this Note and such additional principal shall
be added to the unpaid principal amount of this Note owing by the Company to
Purchaser in respect of this Note. The loan made by the Purchaser to the
Company under this Note (including, without limitation, loans deemed to be made
as a result of any payments of interest in kind) and all payments made on
account of the principal amount of such loans shall be entered by the Purchaser
in its records or on the grid attached hereto which is part of this Note;
provided that, the failure of the Purchaser to make any such notation shall not
impair or otherwise affect the Company's obligations under this Note.

This Note is subject to optional prepayments, in whole or in part and
without premium or penalty, as specified in the Securities Purchase Documents.
Payments of principal and interest on this Note are subordinated to the extent
provided in the Subordination Agreement dated as of August __, 1998
("Subordination Agreement") among the Noteholders, the Agent and Bank of
Montreal, as agent for certain senior bank lenders. Payments of principal and
interest due on this Note shall be made in lawful money of the United States of
America in accordance with the Securities Purchase Documents.

This Note is issued pursuant to the Securities Purchase Documents and
is subject to and entitled to the benefits of the Securities Purchase Documents
and the security and support therefor, and the holder of this Note may enforce
such rights in accordance with the Securities Purchase Documents. Without
limiting the foregoing, upon the occurrence of an Event of Default (as defined
in the Indenture), payments due under this Note may be accelerated in the
manner and with the effect provided in the Securities Purchase Documents.

It is the intention of the Purchaser and the Company to conform
strictly to any applicable usury laws. Accordingly, the terms of the
Securities Purchase Documents relating to the prevention of usury will be
strictly followed.

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.

-2-
<PAGE> 64

BRIGHAM EXPLORATION COMPANY

By:
------------------------------
Name: Craig M. Fleming
Title: Chief Financial Officer

TRUSTEE'S CERTIFICATE
OF AUTHENTICATION

This is one of the securities referred to
in the within-mentioned Indenture

CHASE BANK OF TEXAS, NATIONAL ASSOCIATION

By:
------------------------------
Authorized Signatory

Dated:
------------------

-3-
<PAGE> 65
LOAN, MATURITIES, AND PAYMENTS OF PRINCIPAL

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Date Amount of Maturity of Amount of Unpaid Principal Notation Made
Loan Loan Principal Paid Balance By
or Prepaid
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>

- ----------------------------------------------------------------------------------------

- ----------------------------------------------------------------------------------------
</TABLE>

-4-
<PAGE> 66

EXHIBIT B

GUARANTY AGREEMENT

_____________________________________________

IN FAVOR OF

__________________________

AUGUST ___, 1998
<PAGE> 67
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 1 GENERAL TERMS
Section 1.1 Terms Defined Above . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.3 Credit Agreement Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

ARTICLE 2 THE GUARANTY
Section 2.1 Liabilities Guaranteed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.2 Nature of Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.3 Collateral Agent's Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.4 Guarantor's Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.5 Maturity of Liabilities; Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.6 Collateral Agent's and Noteholders' Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.7 Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.8 Events and Circumstances Not Reducing or Discharging Guarantor's
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.9 Right of Subrogation and Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

ARTICLE 3 REPRESENTATIONS AND WARRANTIES
Section 3.1 By Guarantor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.2 No Representation by Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

ARTICLE 4 SUBORDINATION OF INDEBTEDNESS
Section 4.1 Subordination of All Guarantor Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.2 Claims in Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.3 Payments Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.4 Liens Subordinate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

ARTICLE 5 MISCELLANEOUS
Section 5.1 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5.3 Business and Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5.4 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5.5 Invalidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.6 Subordination Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.7 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>

-i-
<PAGE> 68
GUARANTY AGREEMENT

THIS GUARANTY AGREEMENT by ______________________________ (hereinafter
called "Guarantor"), is in favor of __________________________________________
as agent (the "Agent") for the ratable benefit of itself and the Noteholders
(hereinafter defined).

W I T N E S S E T H:

A. BRIGHAM EXPLORATION COMPANY, a Delaware corporation
(hereinafter called "Borrower") has entered into (i) the Indenture dated as of
August __, 1998 (as the same may be amended from time to time, the "Indenture")
between the Borrower and _________, as Trustee ("Trustee"), and (ii) the
Securities Purchase Agreement dated as of August __, 1998 (as the same may be
amended from time to time, the "Securities Purchase Agreement," and together
with the Indenture, the "Securities Purchase Documents") among the Borrower,
the purchasers named therein ("Noteholders"), and the Agent, in connection with
the Borrower's Senior Subordinated Notes due 2003; and

B. One of the terms and conditions stated in the Securities
Purchase Documents for the making of the loans described therein is the
execution and delivery to the Agent for the ratable benefit of itself and the
Noteholders of this Guaranty Agreement;

NOW, THEREFORE, (i) in order to comply with the terms and conditions
of the Securities Purchase Documents, (ii) to induce the Noteholders, at any
time or from time to time, to loan monies, with or without security to or for
the account of Borrower in accordance with the terms of the Securities Purchase
Documents, (iii) at the special insistence and request of the Noteholders, and
(iv) for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Guarantor hereby agrees as follows:

ARTICLE 1
GENERAL TERMS

Section 1.1 Terms Defined Above. As used in this Guaranty
Agreement, the terms "Agent", Borrower", "Guarantor", "Indenture", "Trustee"
and "Securities Purchase Documents" shall have the meanings indicated above.

Section 1.2 Certain Definitions. As used in this Guaranty
Agreement, the following terms shall have the following meanings, unless the
context otherwise requires:

"Contribution Obligation" shall mean an amount equal, at any time and
from time to time and for each respective Subsidiary Guarantor, to the
product of (a) its Contribution Percentage times (b) the sum of all
payments made previous to or at the time of calculation

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by all Subsidiary Guarantors in respect of the Liabilities, as a
Subsidiary Guarantor (less the amount of any such payments previously
returned to any Subsidiary Guarantor by operation of law or otherwise,
but not including payments received by any Subsidiary Guarantor by way
of its rights of subrogation and contribution under Section 2.9 of the
other Guaranty Agreements), provided, however, such Contribution
Obligation for any Subsidiary Guarantor shall in no event exceed such
Subsidiary Guarantor's Maximum Guaranteed Amount, as defined in the
respective Guaranty Agreement of such Subsidiary Guarantor.

"Contribution Percentage" shall mean for any Subsidiary Guarantor for
any applicable date as of which such percentage is being determined,
an amount equal to the quotient of (a) the Net Worth of such
Subsidiary Guarantor as of such date, divided by (b) the sum of the
Net Worth of all the Subsidiary Guarantors as of such date.

"Guarantor Claims" shall have the meaning indicated in Section 4.1
hereof.

"Guaranty Agreement" shall mean this Guaranty Agreement, and where the
context indicates, the Guaranty Agreement of any other Subsidiary
Guarantor, as the same may from time to time be amended or
supplemented.

"Liabilities" shall mean:

(a) any and all indebtedness, obligations and liabilities
of the Borrower to the Agent and the Noteholders pursuant to the
Securities Purchase Documents, including without limitation, the
unpaid principal of and interest on the Notes (as defined in the
Securities Purchase Documents);

(b) any additional Obligations (as defined in the
Securities Purchase Documents) owing to the Agent and the Noteholders;
and

(c) all renewals, rearrangements, increases, extensions
for any period, amendments or supplements in whole or in part of the
Notes or any documents evidencing the above.

"Maximum Guaranteed Amount" shall mean, for the Guarantor, the greater
of (a) the "reasonably equivalent value" or "fair consideration" (or
equivalent concept) received by the Guarantor in exchange for the
obligation incurred hereunder, within the meaning of any applicable
state or federal fraudulent conveyance or transfer laws; or (b) the
lesser of (i) the maximum amount that will not render the Guarantor
insolvent, or (ii) the maximum amount that will not leave the
Guarantor with any property deemed an unreasonably small capital.
Clauses (i) and (ii) are and shall be determined pursuant to and as of
the appropriate date mandated by such applicable state or federal
fraudulent conveyance or transfer laws and to the extent allowed by

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law take into account the rights to contribution and subrogation under
Section 2.9 in each Guaranty Agreement so as to provide for the
largest Maximum Guaranteed Amount possible.

"Net Payments" shall mean an amount equal, at any time and from time
to time and for each respective Subsidiary Guarantor, to the
difference of (a) the sum of all payments made previous to or at the
time of calculation by such Subsidiary Guarantor in respect to the
Liabilities, as a Subsidiary Guarantor, and in respect of its
obligations contained in this Guaranty Agreement, less (b) the sum of
all such payments previously returned to such Subsidiary Guarantor by
operation of law or otherwise and including payments received by such
Subsidiary Guarantor by way of its rights of subrogation and
contribution under Section 2.9 of the other Guaranty Agreements.

"Net Worth" shall mean for any Subsidiary Guarantor, calculated on and
as of any applicable date on which such amount is being determined,
the difference between (a) the sum of all such Subsidiary Guarantor's
property, at a fair valuation and as of such date, minus (b) the sum
of all such Subsidiary Guarantor's debts, at a fair valuation and as
of such date, excluding the Liabilities.

"Noteholders" shall mean the holders of the Notes from time to time,
and the holders of any promissory note or notes given in substitution
or replacement thereof, including, without limitation, pursuant to
Section 2.06 of the Indenture.

"Subsidiary Guarantors" shall mean the Guarantors as defined in the
Securities Purchase Documents, including the Guarantor.

Section 1.3 Securities Purchase Documents Definitions. Unless
otherwise defined herein, all terms beginning with a capital letter which are
defined in the Securities Purchase Documents shall have the same meanings
herein as therein.

ARTICLE 2
THE GUARANTY

Section 2.1 Liabilities Guaranteed. Guarantor hereby irrevocably
and unconditionally guarantees the prompt payment of the Liabilities when due,
whether at maturity or otherwise, provided, however, that, notwithstanding
anything herein or in any other Loan Document to the contrary, the maximum
liability of Guarantor hereunder shall in no event exceed the Maximum
Guaranteed Amount.

Section 2.2 Nature of Guaranty. This Guaranty Agreement is an
absolute, irrevocable, completed and continuing guaranty of payment and not a
guaranty of collection, and no notice of the Liabilities or any extension of
credit already or hereafter contracted by or extended to Borrower need

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be given to Guarantor. This Guaranty Agreement may not be revoked by Guarantor
and shall continue to be effective with respect to debt under the Liabilities
arising or created after any attempted revocation by Guarantor and shall remain
in full force and effect until the Liabilities are paid in full. Borrower and
the Noteholders may modify, alter, rearrange, extend for any period and/or
renew from time to time, the Liabilities, and the Noteholders may waive any
Default or Events of Default without notice to the Guarantor and in such event
Guarantor will remain fully bound hereunder on the Liabilities. This Guaranty
Agreement shall continue to be effective or be reinstated, as the case may be,
if at any time any payment of the Liabilities is rescinded or must otherwise be
returned by any of the Noteholders upon the insolvency, bankruptcy or
reorganization of Borrower or otherwise, all as though such payment had not
been made. This Guaranty Agreement may be enforced by Trustee, Agent and any
holder of any of the Liabilities and shall not be discharged by the assignment
or negotiation of all or part of the Liabilities. Guarantor hereby expressly
waives presentment, demand, notice of non-payment, protest and notice of
protest and dishonor, notice of Default or Event of Default, and also notice of
acceptance of this Guaranty Agreement, acceptance on the part of the
Noteholders being conclusively presumed by the Noteholders' request for this
Guaranty Agreement and delivery of the same to Trustee.

Section 2.3 Trustee's Rights. Guarantor authorizes Trustee,
without notice or demand and without affecting Guarantor's liability hereunder,
to take and hold security for the payment of this Guaranty Agreement and/or the
Liabilities, and exchange, enforce, waive and release any such security; and to
apply such security and direct the order or manner of sale thereof as Trustee
in its discretion may determine; and to obtain a guaranty of the Liabilities
from any one or more Persons and at any time or times to enforce, waive,
rearrange, modify, limit or release any of such other Persons from their
obligations under such guaranties.

Section 2.4 Guarantor's Waivers. Guarantor waives any right to
require any of the Noteholders to (i) proceed against Borrower or any other
person liable on the Liabilities, (ii) enforce any of their rights against any
other guarantor of the Liabilities (iii) proceed or enforce any of their rights
against or exhaust any security given to secure the Liabilities (iv) have
Borrower joined with Guarantor in any suit arising out of this Guaranty
Agreement and/or the Liabilities, or (v) pursue any other remedy in the
Noteholders' powers whatsoever. The Noteholders shall not be required to
mitigate damages or take any action to reduce, collect or enforce the
Liabilities. Guarantor waives any defense arising by reason of any disability,
lack of corporate authority or power, or other defense of Borrower or any other
guarantor of the Liabilities, and shall remain liable hereon regardless of
whether Borrower or any other guarantor be found not liable thereon for any
reason. Whether and when to exercise any of the remedies of the Noteholders
under any of the Loan Documents shall be in the sole and absolute discretion of
the Agent, acting on behalf of itself and the Noteholders, and no delay by the
Agent in enforcing any remedy, including delay in conducting a foreclosure
sale, shall be a defense to the Guarantor's liability under this Guaranty
Agreement.

Section 2.5 Maturity of Liabilities; Payment. Guarantor agrees
that if the maturity of any of the Liabilities is accelerated by bankruptcy or
otherwise, such maturity shall also be deemed accelerated for the purpose of
this Guaranty Agreement without demand or notice to Guarantor.

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Guarantor will, forthwith upon notice from the Agent, pay to the Agent the
amount due and unpaid by Borrower and guaranteed hereby. The failure of the
Agent to give this notice shall not in any way release Guarantor hereunder.

Section 2.6 Agent's and Noteholders' Expenses. If Guarantor
fails to pay the Liabilities after notice from Agent of Borrower's failure to
pay any Liabilities at maturity, and if the Agent or any Noteholder obtains the
services of an attorney for collection of amounts owing by Guarantor hereunder,
or obtaining advice of counsel in respect of any of their rights under this
Guaranty Agreement, or if suit is filed to enforce this Guaranty Agreement, or
if proceedings are had in any bankruptcy, probate, receivership or other
judicial proceedings for the establishment or collection of any amount owing by
Guarantor hereunder, or if any amount owing by Guarantor hereunder is collected
through such proceedings, Guarantor agrees to pay to Agent and Noteholder, the
Agent's and the Noteholder's respective reasonable attorneys' fees.

Section 2.7 Liability. It is expressly agreed that the liability
of the Guarantor for the payment of the Liabilities guaranteed hereby shall be
primary and not secondary.

Section 2.8 Events and Circumstances Not Reducing or Discharging
Guarantor's Obligations. Guarantor hereby consents and agrees to each of the
following to the fullest extent permitted by law, and agrees that Guarantor's
obligations under this Guaranty Agreement shall not be released, diminished,
impaired, reduced or adversely affected by any of the following, and waives any
rights (including without limitation rights to notice) which Guarantor might
otherwise have as a result of or in connection with any of the following:

(a) Modifications, etc. Any renewal, extension,
modification, increase, decrease, alteration or rearrangement of all or any
part of the Liabilities, or of the Notes, or the Securities Purchase Documents
or any instrument executed in connection therewith, or any contract or
understanding between Borrower and any of the Noteholders, or any other Person,
pertaining to the Liabilities;

(b) Adjustment, etc. Any adjustment, indulgence,
forbearance or compromise that might be granted or given by any Trustee, Agent
or any Noteholder to Borrower or Guarantor or any Person liable on the
Liabilities;

(c) Condition of Borrower or Guarantor. The insolvency,
bankruptcy arrangement, adjustment, composition, liquidation, disability,
dissolution, death or lack of power of Borrower or Guarantor or any other
Person at any time liable for the payment of all or part of the Liabilities; or
any dissolution of Borrower or Guarantor, or any sale, lease or transfer of any
or all of the assets of Borrower or Guarantor, or any changes in the
shareholders, partners, or members of Borrower or Guarantor; or any
reorganization of Borrower or Guarantor;

(d) Invalidity of Liabilities. The invalidity,
illegality or unenforceability of all or any part of the Liabilities, or any
document or agreement executed in connection with the

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Liabilities, for any reason whatsoever, including without limitation the fact
that the Liabilities, or any part thereof, exceed the amount permitted by law,
the act of creating the Liabilities or any part thereof is ultra vires, the
officers or representatives executing the documents or otherwise creating the
Liabilities acted in excess of their authority, the Liabilities violate
applicable usury laws, the Borrower has valid defenses, claims or offsets
(whether at law, in equity or by agreement) which render the Liabilities wholly
or partially uncollectible from Borrower, the creation, performance or
repayment of the Liabilities (or the execution, delivery and performance of any
document or instrument representing part of the Liabilities or executed in
connection with the Liabilities, or given to secure the repayment of the
Liabilities) is illegal, uncollectible, legally impossible or unenforceable, or
the Securities Purchase Documents or other documents or instruments pertaining
to the Liabilities have been forged or otherwise are irregular or not genuine
or authentic;

(e) Release of Obligors. Any full or partial release of
the liability of Borrower on the Liabilities or any part thereof, of any
co-guarantors, or any other Person now or hereafter liable, whether directly or
indirectly, jointly, severally, or jointly and severally, to pay, perform,
guarantee or assure the payment of the Liabilities or any part thereof, it
being recognized, acknowledged and agreed by Guarantor that Guarantor may be
required to pay the Liabilities in full without assistance or support of any
other Person, and Guarantor has not been induced to enter into this Guaranty
Agreement on the basis of a contemplation, belief, understanding or agreement
that other parties other than the Borrower will be liable to perform the
Liabilities, or the Noteholders will look to other parties to perform the
Liabilities.

(f) Other Security. The taking or accepting of any other
security, collateral or guaranty, or other assurance of payment, for all or any
part of the Liabilities;

(g) Release of Collateral, etc. Any release, surrender,
exchange, subordination, deterioration, waste, loss or impairment (including
without limitation negligent, willful, unreasonable or unjustifiable
impairment) of any collateral, property or security, at any time existing in
connection with, or assuring or securing payment of, all or any part of the
Liabilities;

(h) Care and Diligence. The failure of the Noteholders
or any other Person to exercise diligence or reasonable care in the
preservation, protection, enforcement, sale or other handling or treatment of
all or any part of such collateral, property or security;

(i) Status of Liens. The fact that any collateral,
security, security interest or lien contemplated or intended to be given,
created or granted as security for the repayment of the Liabilities shall not
be properly perfected or created, or shall prove to be unenforceable or
subordinate to any other security interest or lien, it being recognized and
agreed by Guarantor that Guarantor is not entering into this Guaranty Agreement
in reliance on, or in contemplation of the benefits of, the validity,
enforceability, collectibility or value of any of the collateral for the
Liabilities;

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(j) Payments Rescinded. Any payment by Borrower to the
Agent or the Noteholders is held to constitute a preference under the
bankruptcy laws, or for any reason the Agent or the Noteholders are required to
refund such payment or pay such amount to Borrower or someone else; or

(k) Other Actions Taken or Omitted. Any other action
taken or omitted to be taken with respect to the Securities Purchase Documents,
the Liabilities, or the security and collateral therefor, whether or not such
action or omission prejudices Guarantor or increases the likelihood that
Guarantor will be required to pay the Liabilities pursuant to the terms hereof;
it being the unambiguous and unequivocal intention of Guarantor that Guarantor
shall be obligated to pay the Liabilities when due, notwithstanding any
occurrence, circumstance, event, action, or omission whatsoever, whether
contemplated or uncontemplated, and whether or not otherwise or particularly
described herein, except for the full and final payment and satisfaction of the
Liabilities.

Section 2.9 Right of Subrogation and Contribution. If Guarantor
makes a payment in respect of the Liabilities, it shall be subrogated to the
rights of the Noteholders against the Borrower with respect to such payment and
shall have the rights of contribution against the other Subsidiary Guarantors
set forth in Section 2.9 of the Subsidiary Guarantors' Guaranty Agreements;
provided that Guarantor shall not enforce its rights to any payment by way of
subrogation or by exercising its rights of contribution or reimbursement or the
right to participate in any security now or hereafter held by or for the
benefit of the Noteholders until the Liabilities have been paid in full. The
Guarantor agrees that after all the Liabilities have been paid in full that if
its then current Net Payments are less than the amount of its then current
Contribution Obligation, Guarantor shall pay to the other Subsidiary Guarantors
an amount (together with any payments required of the other Subsidiary
Guarantors by Section 2.9 of each other Guaranty Agreement) such that the Net
Payments made by all Subsidiary Guarantors in respect of the Liabilities shall
be shared among all of the Subsidiary Guarantors in proportion to their
respective Contribution Percentage.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES

Section 3.1 By Guarantor. In order to induce the Agent and the
Noteholders to accept this Guaranty Agreement, Guarantor represents and
warrants to the Agent and the Noteholders (which representations and warranties
will survive the creation of the Liabilities and any extension of credit
thereunder) that:

(a) Benefit to Guarantor. Guarantor's guaranty pursuant
to this Guaranty Agreement reasonably may be expected to benefit, directly or
indirectly, Guarantor.

(b) Existence. Guarantor is duly organized, legally
existing and in good standing under the laws of the state of its formation and
is duly qualified as a foreign entity in all jurisdictions wherein the property
owned or the business transacted by it makes such qualification necessary.

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(c) Power and Authorization. Guarantor is duly
authorized and empowered to execute, deliver and perform this Guaranty
Agreement and all corporate or other organizational action on Guarantor's part
requisite for the due execution, delivery and performance of this Guaranty
Agreement has been duly and effectively taken.

(d) Binding Obligations. This Guaranty Agreement
constitutes valid and binding obligations of Guarantor, enforceable in
accordance with its terms (except that enforcement may be subject to any
applicable bankruptcy, insolvency or similar laws generally affecting the
enforcement of creditors' rights or by general principles of equity).

(e) No Consent. Guarantor's execution, delivery and
performance of this Guaranty Agreement does not require the consent or approval
of any other Person, including without limitation any regulatory authority or
governmental body of the United States or any state thereof or any political
subdivision of the United States or any state thereof.

(f) Solvency. The Guarantor hereby represents that (i)
it is not insolvent as of the date hereof and will not be rendered insolvent as
a result of this Guaranty Agreement, (ii) it is not engaged in business or a
transaction, or about to engage in a business or a transaction, for which any
property or assets remaining with such Guarantor is unreasonably small capital,
and (iii) it does not intend to incur, or believe it will incur, debts that
will be beyond its ability to pay as such debts mature.

(g) Litigation. Except as disclosed to the Noteholders
in Schedule 4.03 of the Securities Purchase Agreement, at the Closing Date
there is no litigation, legal, administrative or arbitral proceeding,
investigation or other action of any nature pending or, to the knowledge of the
Guarantor threatened against the Guarantor or any of its Subsidiaries which
involves the possibility of any judgment or liability against the Guarantor or
any of its Subsidiaries not fully covered by insurance (except for normal
deductibles), and which would be more likely than not to have a Material
Adverse Effect.

(h) No Breach. Neither the execution and delivery of
this Guaranty Agreement, nor compliance with the terms and provisions hereof
will conflict with or result in a breach of, or require any consent which has
not been obtained as of the Closing Date under, the respective charter or
by-laws or other constituent documents of the Guarantor or any of its
Subsidiaries or any Governmental Requirement or any material agreement or
instrument to which the Guarantor or any of its Subsidiaries is a party or by
which it is bound or to which it or its Properties are subject, or constitute a
default under any such agreement or instrument, or result in the creation or
imposition of any Lien upon any of the material revenues or assets of the
Guarantor or any of its Subsidiaries pursuant to the terms of any such
agreement or instrument other than the Liens created by the Loan Documents.

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Section 3.2 No Representation by Noteholders. Neither the
Noteholders nor any other Person has made any representation, warranty or
statement to the Guarantor in order to induce the Guarantor to execute this
Guaranty Agreement.

ARTICLE 4
SUBORDINATION OF INDEBTEDNESS

Section 4.1 Subordination of All Guarantor Claims. As used
herein, the term "Guarantor Claims" shall mean all debts and liabilities of
Borrower to Guarantor, whether such debts and liabilities now exist or are
hereafter incurred or arise, or whether the obligation of Borrower thereon be
direct, contingent, primary, secondary, several, joint and several, or
otherwise, and irrespective of whether such debts or liabilities be evidenced
by note, contract, open account, or otherwise, and irrespective of the person
or persons in whose favor such debts or liabilities may, at their inception,
have been, or may hereafter be created, or the manner in which they have been
or may hereafter be acquired by Guarantor. The Guarantor Claims shall include
without limitation all rights and claims of Guarantor against Borrower arising
as a result of subrogation or otherwise as a result of Guarantor's payment of
all or a portion of the Liabilities. If any Default exists and is continuing,
and if Agent gives notice thereof to the Guarantor requiring the Guarantor
Claims not be paid, then, for so long as any Default continues to exist,
Guarantor shall not receive or collect, directly or indirectly, from Borrower
or any other party any amount upon the Guarantor Claims.

Section 4.2 Claims in Bankruptcy. In the event of receivership,
bankruptcy, reorganization, arrangement, debtor's relief, or other insolvency
proceedings involving Borrower as debtor, the Noteholders shall have the right
to prove their claim in any proceeding, so as to establish its rights hereunder
and receive directly from the receiver, trustee or other court custodian,
dividends and payments which would otherwise be payable upon Guarantor Claims.
Guarantor hereby assigns such dividends and payments to the Noteholders.
Should Agent or any Noteholder receive, for application upon the Liabilities,
any such dividend or payment which is otherwise payable to Guarantor, and
which, as between Borrower and Guarantor, shall constitute a credit upon the
Guarantor Claims, then upon payment in full of the Liabilities, Guarantor shall
become subrogated to the rights of Agent or the Noteholders, as applicable, to
the extent that such payments to Agent or the Noteholders, as applicable, on
the Guarantor Claims have contributed toward the liquidation of the
Liabilities, and such subrogation shall be with respect to that proportion of
the Liabilities which would have been unpaid if Agent or Noteholders, as
applicable, had not received dividends or payments upon the Guarantor Claims.

Section 4.3 Payments Held in Trust. In the event that
notwithstanding Sections 4.1 and 4.2 above, Guarantor should receive any funds,
payments, claims or distributions which are prohibited by such Sections,
Guarantor agrees to hold in trust for the Noteholders an amount equal to the
amount of all funds, payments, claims or distributions so received, and agrees
that it shall have absolutely no dominion over the amount of such funds,
payments, claims or distributions except to pay them promptly to Agent, and
Guarantor covenants promptly to pay the same to Agent.

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Section 4.4 Liens Subordinate. Guarantor agrees that any liens,
security interests, judgment liens, charges or other encumbrances upon
Borrower's assets securing payment of the Guarantor Claims shall be and remain
inferior and subordinate to any liens, security interests, judgment liens,
charges or other encumbrances upon Borrower's assets securing payment of the
Liabilities, regardless of whether such encumbrances in favor of Guarantor,
Agent or the Noteholders presently exist or are hereafter created or attach.
Without the prior written consent of the Noteholders, Guarantor shall not (a)
exercise or enforce any creditor's right it may have against the Borrower, or
(b) foreclose, repossess, sequester or otherwise take steps or institute any
action or proceeding (judicial or otherwise, including without limitation the
commencement of or joinder in any liquidation, bankruptcy, rearrangement,
debtor's relief or insolvency proceeding) to enforce any lien, mortgages, deeds
of trust, security interest, collateral rights, judgments or other encumbrances
on assets of Borrower held by Guarantor.

ARTICLE 5
MISCELLANEOUS

Section 5.1 Successors and Assigns. This Guaranty Agreement is
and shall be in every particular available to the successors and assigns of
Trustee, Agent and the Noteholders and is and shall always be fully binding
upon the legal representatives, heirs, successors and assigns of Guarantor,
notwithstanding that some or all of the monies, the repayment of which this
Guaranty Agreement applies, may be actually advanced after any bankruptcy,
receivership, reorganization, death, disability or other event affecting
Guarantor.

Section 5.2 Notices. Any notice or demand to Guarantor under or
in connection with this Guaranty Agreement may be given and shall conclusively
be deemed and considered to have been given and received in accordance with
Section 12.06 of the Securities Purchase Agreement, addressed to Guarantor at
the address on the signature page hereof or at such other address provided to
Trustee and Agent in writing.

Section 5.3 Business and Financial Information. Subject to any
applicable confidentiality agreements, the Guarantor will promptly furnish to
Trustee, Agent and the Noteholders from time to time upon request such
information regarding the business and affairs and financial condition of the
Guarantor and its subsidiaries as Trustee, Agent and the Noteholders may
reasonably request.

Section 5.4 Construction. This Guaranty Agreement is a contract
made under and shall be construed in accordance with and governed by the laws
of the State of Texas.

Section 5.5 Invalidity. In the event that any one or more of the
provisions contained in this Guaranty Agreement shall, for any reason, be held
invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provision of this Guaranty
Agreement.

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Section 5.6 Subordination Agreement. The rights and remedies of
Agent and the Noteholders under this Guaranty Agreement are subject to the
terms and conditions of that certain Subordination Agreement dated as of even
date herewith, made by the Agent, the Noteholders and the Bank of Montreal.

Section 5.7 ENTIRE AGREEMENT. THIS WRITTEN GUARANTY AGREEMENT
EMBODIES THE ENTIRE AGREEMENT AND UNDERSTANDING AMONG THE AGENT, THE
NOTEHOLDERS AND THE GUARANTOR AND SUPERSEDES ALL OTHER AGREEMENTS AND
UNDERSTANDINGS BETWEEN SUCH PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND
THEREOF. THIS WRITTEN GUARANTY AGREEMENT REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

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WITNESS THE EXECUTION HEREOF, as of this the ____ day of August, 1998.

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By:
----------------------------
Name:
--------------------------
Title:
-------------------------

Address:
-----------------------
-----------------------
-----------------------

Telecopier No.:
----------------
Telephone No.:
-----------------
Attention:
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EXHIBIT C
INTERCREDITOR AND
SUBORDINATION AGREEMENT

THIS INTERCREDITOR AND SUBORDINATION AGREEMENT (the "Agreement") is
made as of August __, 1998, by __________ ("__"), ___________ ("___" and
together with ___, the "Subordinated Lender"), and ____, as agent for the
Subordinated Lender (in such capacity, the "Subordinated Agent"), and BANK OF
MONTREAL, as agent (in such capacity, and together with any successor in such
capacity, the "Senior Agent") for each of the lenders that is a signatory to, or
which becomes a signatory to, the Senior Credit Agreement (as defined below)
(collectively, the "Senior Lender"), for the benefit of the Senior Agent and
Senior Lender.

BRIGHAM EXPLORATION COMPANY, a Delaware corporation (the "Parent),
BRIGHAM OIL & GAS, L.P., a Delaware limited partnership ("BOG"), BRIGHAM, INC.,
a Nevada corporation ("BI"), BRIGHAM HOLDINGS I, LLC, a Nevada limited
liability company ("BH-I") and BRIGHAM HOLDINGS II, LLC, a Nevada limited
liability company ("BH-II", and together with BI and BH-I, the "Obligors") are
signatories hereto solely for the purpose of evidencing their acknowledgment
and consent to the terms and conditions of this Agreement and their agreement
to make payment of the Senior Indebtedness and Subordinated Indebtedness (as
such terms are defined below) in accordance with Section 2.2 of this Agreement.

RECITALS

A. BOG, as the borrower, the Senior Agent and the Senior Lender
are parties to that certain Credit Agreement dated as of January 26, 1998, as
amended by (i) that certain First Amendment to Credit Agreement dated as of
________ ,1998 and (ii) that certain Second Amendment to Credit Agreement dated
as of _______, 1998 (such agreement, as the same may be from time to time
further amended, supplemented, restated, refinanced or replaced, the "Senior
Credit Agreement"), pursuant to which the Senior Lender has made certain credit
available to and on behalf of BOG.

B. BOG has heretofore executed and may hereafter execute one or
more Mortgage, Deed of Trust, Assignment of Production, Security Agreement and
Financing Statements and one or more Security Agreements (such agreements, as
the same may be from time to time amended, supplemented or replaced, the
"Senior Mortgage") dated as of January 26, 1998 in favor of the Senior Agent to
secure, inter alia, the obligations outstanding under the Senior Credit
Agreement.

C. Parent, BI, BH-I and BH-II have each executed a Guaranty
Agreement dated as of January 26, 1998 (such Guaranty Agreements, as the same
may be from time to time further amended,

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supplemented or replaced, being referred to herein as the "Senior Guaranty
Agreements"), in favor of the Senior Agent and the Senior Lender to guarantee,
inter alia, the obligations of BOG under the Senior Credit Agreement.

D. Parent has executed a Security Agreement date as of January
26, 1998 (such Security Agreement, as the same may be from time to time further
amended, supplemented or replaced, the "Senior Parent Security Agreement") in
favor of the Senior Agent and the Senior Lender to secure, inter alia, the
obligations of BOG under the Senior Credit Agreement. The Senior Credit
Agreement, the Senior Mortgage, the Senior Guaranty Agreements, the Senior
Parent Security Agreement and any other documents or instruments given in
connection therewith being collectively referred to herein as the "Senior Loan
Documents").

E. Of even date herewith, Parent, as the borrower, the
Subordinated Lender and the Subordinated Agent have executed a Securities
Purchase Agreement (the "Securities Purchase Agreement") pursuant to which the
Subordinated Lender will make certain advances to the Parent in accordance with
the terms and conditions of an Indenture of even date herewith executed by the
Parent (the "Indenture"), such advances to be evidenced by one or more
promissory notes executed by the Parent in accordance with the Securities
Purchase Agreement and the Indenture (the "Subordinated Notes ").

F. In connection with the execution and delivery of the
Securities Purchase Agreement, the Indenture and the Subordinated Notes, BOG
has executed one or more Mortgage, Deed of Trust, Assignment of Production,
Security Agreement and Financing Statements, granting subordinated liens in the
properties subject to the Senior Mortgage (such agreements, as the same may be
from time to time amended, supplemented or replaced, the "Subordinated
Mortgage") in favor of the Trustee under the Indenture ("Trustee"), for the
benefit of the Subordinated Agent and the Subordinated Lender, to secure, inter
alia, the obligations outstanding under the Subordinated Loan Documents (as
defined below).

G. In connection with the execution and delivery of the
Securities Purchase Agreement, BOG, BI, BH-I and BH-II have each executed a
Guaranty Agreement dated as of even date herewith (such Guaranty Agreements, as
the same may be from time to time further amended, supplemented or replaced,
being referred to herein as the "Subordinated Guaranty Agreements"), in favor
of the Trustee, for the benefit of the Subordinated Agent and the Subordinated
Lender to guarantee, inter alia, the obligations of the Parent under the
Subordinated Loan Documents.

H. In connection with the execution and delivery of the
Securities Purchase Agreement and the Indenture, the Parent has executed a
Security Agreement dated of even date herewith (such Security Agreement, as the
same may be from time to time further amended, supplemented or replaced, being
referred to herein as the "Subordinated Parent Security Agreement"), in favor
of the Trustee, for the benefit of the Subordinated Agent and the Subordinated
Lender, to secure, inter alia,

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the obligations of the Parent under the Subordinated Loan Documents. The
Securities Purchase Agreement, the Indenture, the Subordinated Notes, the
Subordinated Mortgage, the Subordinated Guaranty Agreements, the Subordinated
Parent Security Agreement and those other documents or instruments given in
connection therewith, including those identified on Exhibit "A" attached hereto
being collectively referred to herein as the "Subordinated Loan Documents").

H. One of the conditions to the Senior Agent and the Senior
Lender executing the Second Amendment to Credit Agreement referred to above is
the execution and delivery of this Agreement.

I. Therefore, (i) in order to comply with the terms and
conditions of the Second Amendment to Credit Agreement, (ii) at the special
insistence and request of the Senior Agent and the Senior Lender, and (iii) for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Subordinated Agent, the Subordinated Lender, the
Senior Agent on behalf of the Senior Lender, and the Parent, BOG and the
Obligors agree as follows:

ARTICLE I
Definitions

Section 1.1 Terms Defined Above. As used in this Agreement, the
terms defined above shall have the meanings respectively assigned to them.

Section 1.2 Certain Definition. As used in this Agreement the
following terms shall have the following meanings, unless the context otherwise
requires:

"Hedging Agreement" shall mean the ISDA Master Agreement between BOG
and Bank of Montreal now or hereafter entered into, and any hedging
transactions entered into pursuant to the terms thereof.

"Lien" shall mean any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of the Property,
whether such interest is based on the common law, statute or contract,
and whether such obligation or claim is fixed or contingent, and
including but not limited to the lien or security interest arising
from a mortgage, encumbrance, pledge, security agreement, conditional
sale or trust receipt or a lease, consignment or bailment for security
purposes.

"Payment Blockage Period" means the period commencing on (i) the date
on which a default in the payment of any principal of or interest on
the Senior Indebtedness occurs or (ii) the date on which a Payment
Blockage Notice (as defined below) is given, and expiring on the date
which is 60 days following the first day of the Payment Blockage
Period.

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"Oil and Gas Properties" shall have the meaning attributed to such
term in the Senior Credit Agreement.

"Person" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, trust, limited liability
company, unincorporated organization or government or any agency,
instrumentality or political subdivision thereof, or any other form of
entity.

" Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.

"Senior Indebtedness" shall mean the principal balance of all loans
advanced to or letters of credit issued for the account of BOG
pursuant to the terms and conditions of the Senior Loan Documents, not
to exceed $75,000,000 plus such additional amounts as are permitted
under Section 2.6(a)(ii) of this Agreement, and accrued but unpaid
interest thereon, all fees, expenses, reimbursement obligations,
liabilities, indemnities or other monetary obligations of BOG, the
Parent or any Obligor under any Senior Loan Document, and all swap
settlement amounts or other amounts due and payable under the Hedging
Agreement, whether any of the foregoing is (i) absolute or contingent,
direct or indirect, joint, several or independent, (ii) now
outstanding or owing or which may hereafter be existing or incurred,
(iii) due or to become due, or (iv) held or to be held by the Senior
Agent or any Senior Lender, and all renewals, extensions,
rearrangements, refundings and modifications thereof permitted by the
terms hereof.

"Subordinated Indebtedness" shall mean the principal balance of all
loans advanced to the Parent pursuant to the terms and conditions of
the Subordinated Loan Documents (including interest paid in kind as
permitted by the Subordinated Loan Documents), and accrued but unpaid
interest thereon, and all fees, expenses, reimbursement obligations,
liabilities, indemnities or other monetary obligations of BOG, the
Parent or any Obligor under any Subordinated Loan Document, whether
any of the foregoing is (i) absolute or contingent, direct or
indirect, joint, several or independent, (ii) now outstanding or owing
or hereafter existing or incurred, (iii) due or to become due, or (iv)
held or to be held by the Subordinated Agent or any Subordinated
Lender, and all renewals, extensions, rearrangements, refundings and
modifications thereof permitted by the terms hereof.

ARTICLE II
Subordination

Section 2.1 Agreement to Subordinate. The payment of any and all
Subordinated Indebtedness and the Subordinated Loan Documents are expressly
subordinated to the extent and in the manner set forth in Sections 2.2 through
2.8 hereof to the Senior Indebtedness and the Senior Loan Documents.

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Section 2.2 Payment Subordination upon Default.

(a) The Subordinated Agent and the Subordinated Lender
agree, that:

(i) the Subordinated Indebtedness is subordinate in right
of payment, to the extent and in the manner provided in this
Agreement, to the prior payment in full of all Senior Indebtedness
(whether outstanding on the date hereof or hereafter created,
incurred, assumed or guaranteed);

(ii) the Parent, BOG and the Obligors may not make any
payment (whether by redemption, purchase, retirement, defeasance,
set-off or otherwise) upon or in respect of the Subordinated
Indebtedness, until all principal and other obligations with respect
to the Senior Indebtedness have been paid in full if:

(A) a default in the payment of any principal of or
interest on the Senior Indebtedness occurs; or

(B) the payment of the Subordinated Indebtedness would
result in a default or event of default under the
Senior Loan Documents or any other default has
occurred and is continuing with respect to the Senior
Indebtedness that permits, or with the giving of
notice or passage of time or both (unless cured or
waived) would permit, the Senior Agent or the Senior
Lender to accelerate its maturity and the
Subordinated Agent receives a notice of the default
(a "Payment Blockage Notice") from the Parent, BOG,
any Obligor, the Senior Agent or any Senior Lender
with regard to the foregoing.

(iii) the Parent, BOG and each Obligor may resume payments
on and distributions in respect of the Subordinated Indebtedness upon:

(A) in the case of a default referred to in Section
2.2(a)(ii)(A), the date upon which the default is
cured or waived, or

(B) in the case of a default referred to in Section
2.2(a)(ii)(B), the earliest of (1) the date on which
such nonpayment default is cured or waived or (2) the
expiration of the applicable Payment Blockage Period
unless the maturity of the Senior Indebtedness has
been accelerated.

(iv) Upon any payment or distribution of property or
securities to creditors of the Parent, BOG or any Obligor in a
liquidation or dissolution of such person or its property, or in an
assignment for the benefit of creditors or any marshaling of its
assets and liabilities:

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(A) the Senior Lender shall be entitled to receive
payment in full of all Senior Indebtedness (including interest
after the commencement of any such proceeding at the rate
specified in the Senior Loan Documents, whether or not a claim
for such interest would be allowed in such proceeding) before
the Subordinated Agent and/or Subordinated Lender shall be
entitled to receive any payment with respect to the
Subordinated Indebtedness; and

(B) until the Senior Indebtedness is paid in full, any
payment or distribution to which the Subordinated Agent and/or
the Subordinated Lender would be entitled shall be made to the
Senior Agent for its benefit and the benefit of the Senior
Lender.

(C) Under the circumstances described in this clause
(iv), the Parent, BOG, any Obligor, or any receiver, trustee
in bankruptcy, liquidating trustee, agent or other similar
Person making any payment or distribution of cash or other
property or securities is authorized or instructed to make any
payment or distribution to which the Subordinated Agent and/or
the Subordinated Lender would otherwise be entitled (other
than securities that are subordinated at least to the same
extent as the Subordinated Indebtedness) directly to the
Senior Agent for its benefit and the benefit of the Senior
Lender to the extent necessary to pay all Senior Indebtedness
in full, after giving effect to any concurrent payment,
distribution or provision therefor to or for the Senior Agent
and the Senior Lender.

(b) The Senior Agent and the Senior Lender shall have the
right, in their sole and absolute discretion, to waive the conditions of
Section 2.2(a) prohibiting the payment of the Subordinated Indebtedness whether
in an enforcement action brought by the Senior Agent or Senior Lender on the
Senior Indebtedness or otherwise.

(c) The foregoing provisions of Section 2.2 shall not
impair or prohibit the rights of the Subordinated Lender to receive payments in
the form of equity securities or additional subordinated debt (including the
payment of interest in kind as permitted by the Subordinated Loan Documents)
that is subordinated to the Senior Indebtedness in accordance with the terms of
this Agreement. Nothing in this Agreement shall limit or restrict the accrual
or charging of default interest on any of the Subordinated Indebtedness not
paid when due. In addition, the foregoing provisions of this Section 2.2 shall
not prevent the Subordinated Agent or any Subordinated Lender from exercising
its available remedies upon a default or event of default under the
Subordinated Loan Documents, subject to (y) the rights of the Senior Agent and
the Senior Lender to receive distributions and payments otherwise payable to
the Subordinated Lenders, and (z) the expiration of any then applicable Payment
Blockage Period.

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Section 2.3 Payments Received or Made in Violation of this
Agreement.

(a) In the event the Subordinated Agent or any
Subordinated Lender shall receive any payment or distribution on account of the
Subordinated Indebtedness which it is not entitled to receive under the
provisions of Section 2.2, the Subordinated Agent or such Subordinated Lender
will hold any amount so received in trust for the Senior Lender and will
forthwith turn over such payment to the Senior Agent in the form received by it
(together with any necessary endorsement) to be applied to the Senior
Indebtedness. In the event of any failure by the Subordinated Agent or any
Subordinated Lender to make any such endorsement, the Senior Agent is hereby
irrevocably authorized and granted a power of attorney (which is irrevocable
and coupled with interest) to make the same.

(b) If the Parent or any Obligor shall become aware that
a "Default" or an "Event of Default" has occurred under Senior Credit Agreement
then such Person shall give the Senior Agent, the Senior Lender and the
Subordinated Agent prompt written notice thereof.

(c) This Agreement defines the relative rights of the
Senior Agent and the Senior Lender and the Subordinated Agent and Subordinated
Lender. Nothing in this Agreement shall: (i) impair, as between the Parent, BOG
or any Obligor, the Subordinated Agent and the Subordinated Lender, the
obligations of the Parent, BOG and each Obligor, which are absolute and
unconditional, to pay the Subordinated Indebtedness in accordance with the
terms of the Subordinated Loan Documents, or (ii) prevent the Subordinated
Agent or any Subordinated Lender from exercising its available remedies subject
to any applicable Payment Blockage Period.

Section 2.4 Liens Subordinate.

(a) The Subordinated Agent and the Subordinated Lender
agree that any Liens upon the Property of any of the Parent, BOG or any Obligor
securing payments of the Subordinated Indebtedness are and shall be and remain
inferior and subordinated to any Liens securing payments of the Senior
Indebtedness in such Property regardless of whether such encumbrances in favor
of the Subordinated Agent or any Subordinated Lender or the Senior Agent and
the Senior Lender presently exist or are hereafter created or attached and
regardless of the date of execution and delivery or the date of filing or
recording. Any obligation of the Parent, BOG or any Obligor under the
Subordinated Loan Documents to deliver possession of any Property to the
Trustee under the Indenture, the Subordinated Agent or the Subordinated Lender,
whether for purposes of perfection or realization of any rights thereunder
shall be subordinate in all respects to the Parent's, BOG's or any Obligor's
obligation to deliver possession of any such Property to the Senior Loan Agent
or Senior Lender under the Senior Loan Documents for such purposes.

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(b) The Subordinated Agent and the Subordinated Lender
covenant and agree not to contest or dispute, whether in any proceeding or
otherwise, the validity, enforceability, attachment, priority or perfected
status of any Lien granted in favor of the Senior Agent or any Senior Lender or
take any steps or actions, including the institution of any proceedings, to
enjoin or restrain the Senior Agent or any Senior Lender from the exercise of
the remedies afforded them under the Senior Loan Documents or applicable law in
and to any of the Senior Lender Collateral.

Section 2.5 Agreement Not to Pursue Action.

(a) Following the commencement of any Payment Blockage
Period, the Subordinated Agent and each Subordinated Lender covenants that it
will not, until the earlier of the date (1) of expiration of the applicable
Payment Blockage Period, (2) the Senior Indebtedness is paid in full or the
event which gave rise to the Payment Blockage Period is cured or waived, (3)
there occurs an event which would cause an automatic acceleration of the
Subordinated Indebtedness under any of Sections 10.01(f), (g), (h) or (k) of
the Indenture, or (4) the Senior Indebtedness is accelerated and the Senior
Agent or Senior Lender takes any action to enforce any of their respective
rights under the Senior Credit Agreement, do any of the following unless the
Senior Agent or Senior Lender shall also join in such action or commence a
similar action: (i) commence any action or proceeding against the Parent, BOG
or any Obligor to recover all or any part of the Subordinated Indebtedness or
join with any other creditor in bringing any proceedings against such Person
under any bankruptcy, reorganization, readjustment of debt, arrangement of
debt, receivership, liquidation or insolvency law or statute of the Federal or
any state government, (ii) accelerate the maturity of any Subordinated
Indebtedness, or (iii) foreclose, repossess, sequester or otherwise take steps
or institute any action or proceeding to enforce any Lien, collateral right,
judgment or other encumbrances on any Property of the Parent, BOG or any
Obligor held by the Subordinated Agent or any Subordinated Lender, or to take
possession of any such Property; provided the foregoing will not prohibit (A)
such presentment as may be necessary to prevent the discharge of any liable
parties on any instrument, (B) the filing of claims or notices to prevent the
running of any applicable statute of limitations, or (C) or similar actions
necessary to preserve the legal rights of the Subordinated Lender and/or the
Subordinated Agent.

(b) Notwithstanding anything contained in this Agreement
to the contrary, the Subordinated Agent and Subordinated Lender shall not be
prohibited at any time, whether during a Payment Blockage Period or otherwise,
from delivering any notice of default to the Parent, BOG or any Obligor, and
the existence of any Payment Blockage Period shall not prevent, abate or delay
the running of any applicable cure period under the Subordinated Loan Documents
following any default or notice of any default under the Subordinated Loan
Documents.

(c) The Senior Lender and Senior Agent may enforce no
more than two (2) Payment Blockage Periods during any 365 day period.

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Section 2.6 Rights of the Senior Agent and the Senior Lender. The
Senior Agent and the Senior Lender may, at any time, and from time to time,
without the consent of or notice to the Subordinated Agent or any Subordinated
Lender, without incurring responsibility to the Subordinated Agent and/or any
Subordinated Lender, without impairing or releasing any of the Senior Agent or
the Senior Lender's rights or any of the obligations of the Subordinated Agent
and the Subordinated Lender under this Agreement:

(a) change the amount, manner, place or terms of payment,
or change or extend for any period the time of payment of, or renew, increase
or otherwise alter the Senior Indebtedness or any Senior Loan Document or any
other instrument or agreement now or hereafter executed or evidencing any of
the Senior Indebtedness in any manner, or enter into or amend in any manner any
other agreement relating to the Senior Indebtedness, except as follows:

(i) To increase the rate of interest or modify
the interest payment schedule unless, on a pro forma basis,
for the four fiscal quarters of the Parent occurring after the
effective date of such increase or modification, the interest
coverage test in Section 8.16 of the Indenture is satisfied;
or

(ii) To increase the principal amount of the
Senior Indebtedness above $75,000,000 unless the Senior
Indebtedness (as increased) is (A) funded by financial
institutions and (B) permitted to be incurred under Section
8.01 of the Indenture; or

(iii) To further restrict (beyond those
restrictions in the Senior Credit Agreement as in effect on
the date hereof) any payment of dividends or similar
distributions by any subsidiary of the Parent to the Parent or
the granting of any Lien or other security interest securing
payment of the Subordinated Indebtedness or any guarantees of
the Subordinated Indebtedness; or

(iv) To restrict any payments of the Subordinated
Indebtedness except as provided in Section 2.2 above;

(b) sell, exchange, release or otherwise deal with all or
any part of any Property by whomsoever at any time pledged or mortgaged to
secure, howsoever securing, the Senior Indebtedness;

(d) exercise or refrain from exercising any rights
against the Parent, BOG or any other Obligor or others, including the
Subordinated Agent and the Subordinated Lender; and

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(e) apply any sums received by the Senior Agent and/or
Senior Lender, paid by any Person and however realized, to payment of the
Senior Indebtedness in such a manner as the Senior Agent and the Senior Lender,
in their sole discretion, may deem appropriate.

Upon request by the Senior Agent prior to the funding of any Senior
Indebtedness in excess of $75,000,000, if permitted under Section 2.6(a)(ii)
above, the Subordinated Lender will confirm, based upon the information
available to it, whether or not such proposed additional Senior Indebtedness is
permitted under Section 2.6(a)(ii).

Section 2.7 Subordination May Not Be Impaired by the Parent, BOG
or the Obligors. No right of any present or future Senior Agent or Senior
Lender to enforce the subordination as provided in this Agreement will at any
time or in any way be prejudiced or impaired by any act or failure to act on
the part of the Parent, BOG or any Obligor or by any act or failure to act, in
good faith, by the Senior Agent or any Senior Lender, or by any noncompliance
by the Parent, BOG or any Obligor with the terms of any Subordinated Loan
Document, regardless of any knowledge thereof that the Senior Agent or any
Senior Lender may have or otherwise be charged with. The provisions of this
Section 2.7 are intended to be for the benefit of, and shall be enforceable
directly by, the Senior Agent or the Senior Lender.

Section 2.8 Authorization to File Proof of Claim. If the
Subordinated Agent or any Subordinated Lender does not file a proper proof of
claim or proof of debt in the form required in any proceeding referred to in
Section 2.2(a)(iv) hereof at least 30 days before the expiration of the time to
file such claim, the Senior Agent is hereby authorized to file an appropriate
claim for and on behalf of the Subordinated Agent and the Subordinated Lender.

ARTICLE III
Representations. Warranties and Covenant

Section 3.1 Representations of Subordinated Agent and
Subordinated Lender. The Subordinated Agent and each Subordinated Lender
represent and warrant that:

(a) neither the execution nor delivery of this Agreement
nor fulfillment of or compliance with the terms and provisions hereof will
conflict with, or result in a breach of the terms, conditions or provisions of,
or constitute a default under, any agreement or instrument which it is now
subject to;

(b) it has all requisite authority to execute, deliver
and perform its obligations under this Agreement; and

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Subordinated Agent and the Subordinated Lender, enforceable in accordance with
its terms, subject to applicable bankruptcy, insolvency or similar laws and
general principles of equity.

Section 3.2 Representations of Senior Agent. The Senior Agent
represents and warrants that:

(a) neither the execution nor delivery of this Agreement
nor fulfillment of or compliance with the terms and provisions hereof will
conflict with, or result in a breach of the terms, conditions or provisions of,
or constitute a default under, any of the Senior Loan Documents or any other
agreement or instrument which it is now subject to;

(b) it has all requisite authority for itself and as
agent acting on behalf of the Senior Lender, to execute, deliver and perform
its and the Senior Lender's obligations under this Agreement; and

(c) this Agreement constitutes the legal, valid, and
binding obligation of the Senior Agent, enforceable in accordance to its terms,
subject to applicable bankruptcy, insolvency or similar laws and general
principles of equity.

Section 3.3 Subordinated Agent, Subordinated Lender Covenants.
The Subordinated Agent and each Subordinated Lender covenant that so long as
any of the Senior Indebtedness remains outstanding and until the termination of
the "Aggregate Commitments" (as defined in the Senior Credit Agreement), it
will:

(a) cause any note, debenture, or instrument evidencing
or securing the Subordinated Indebtedness to contain a statement or legend to
the effect that such note, debenture, or other instrument is subordinated to
the Senior Indebtedness in the manner and to the extent set forth in this
Agreement;

(b) not assign or transfer to others the Subordinated
Indebtedness or any claim it has or may have against the Parent, BOG or any
other Obligor as long as any of the Senior Indebtedness remains outstanding,
unless such assignment or transfer is expressly made subject to this Agreement;

(c) not amend, supplement or otherwise modify the terms
of the Subordinated Indebtedness without the express written consent of the
Senior Agent, which consent will not be unreasonably withheld, which has the
effect of (i) increasing the principal amount of the Subordinated Indebtedness,
provided that the foregoing shall not affect the Parent's right to make payment
in kind of accrued interest or the Subordinated Lender's ability to accept
payment in kind as provided in the Subordinated Loan Documents, thereby
increasing the principal amount of the Subordinated Indebtedness and (ii)
increasing the rate of interest or any fees charged on the Subordinated

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Indebtedness (provided that the foregoing shall not prohibit any fees or
changes in the rate of interest contemplated by the terms of the Securities
Purchase Agreement);

(d) not ask for, sue for, take, or demand any payment on
such indebtedness, except as permitted hereby; and

(e) execute any and all other instruments necessary as
reasonably required by the Senior Agent or the Senior Lender to effect the
subordinations intended hereby.

ARTICLE IV
Miscellaneous

Section 4.1 Acceptance by the Senior Agent and the Senior Lender.
The foregoing subordination provisions are, and are intended to be, an
inducement and a consideration to the Senior Agent and each Senior Lender,
whether such Senior Lender's Senior Indebtedness is created or acquired before
or after the issuance of Subordinated Indebtedness, to acquire and continue to
hold, or to continue to hold, such Senior Indebtedness and each such Senior
Lender shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold, or in continuing to hold, such
Senior Indebtedness. Notice of acceptance of this Agreement is waived,
acceptance on the part of the Senior Agent and the Senior Lender being
conclusively presumed by their request for this Agreement and delivery of the
same to them.

Section 4.2 Assignment by the Senior Agent and the Senior Lender.
This Agreement may be assigned by the Senior Agent and the Senior Lender in
connection with any assignment or transfer of the Senior Indebtedness or any
replacement or refinancing of the Senior Loan.

Section 4.3 Notice. All notices and other communications provided
for herein shall be given or made by telecopy, courier or U.S. Mail or in
writing and telecopied, mailed or delivered to the intended recipient at the
"Address for Notices" specified below its name on the signature pages hereof or
at such other address as shall be designated by such party in a notice to each
other party; and in the case of the Senior Agent or any Senior Lender in care
of the Senior Agent at the following address:

Bank of Montreal, as Agent
700 Louisiana, Suite 4400
Houston, Texas 77002
Telecopier No.: (713) 223-4007
Telephone No.: (713) 546-9700
Attention: Client Services Group

or at such other address as shall be designated by the Senior Agent in a notice
to each other party.

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Except as otherwise provided in this Agreement, all such communications shall
be deemed to have been duly given when transmitted by telecopier, delivered to
the telegraph or cable office or personally delivered or, in the case of a
mailed notice, five (5) days after the date deposited in the mails, postage
prepaid, in each case given or addressed as aforesaid.

Section 4.4 Amendments and Waivers. The Senior Agent's,
Subordinated Agent's, any Senior Lender's or Subordinated Lender's acceptance
of partial or delinquent payments or any forbearance, failure or delay by any
of the foregoing in exercising any right, power or remedy hereunder shall not
be deemed a waiver of any obligation of the Parent, BOG or any Obligor or the
Senior Agent, Senior Lender, Subordinated Agent or any Subordinated Lender, or
of any right, power or remedy of the Senior Agent, Senior Lender, Subordinated
Agent or Subordinated Lender; and no partial exercise of any right, power or
remedy shall preclude any other or further exercise thereof. The Subordinated
Agent and the Subordinated Lender hereby agree that if the Senior Agent and/or
any Senior Lender agrees to a waiver of any provision hereunder, or an exchange
of or release of collateral, or the addition or release of any Person as an
Obligor, any such action shall not constitute a waiver of any of the Senior
Agent's and/or any Senior Lender's other rights or of the Subordinated Agent's
or any Subordinated Lender's obligations hereunder. This Agreement may be
amended only by an instrument in writing executed jointly by the Subordinated
Agent and the Senior Agent and may be supplemented only by documents delivered
or to be delivered in accordance with the express terms hereof.

Section 4.5 Parties to the Agreement. The provisions of this
Agreement are and are intended solely for the purpose of defining the relative
rights of the Subordinated Agent, the Subordinated Lender, the Senior Agent and
the Senior Lender, and are solely for the benefit of the Senior Agent, the
Senior Lender, the Subordinated Agent and the Subordinated Lender (including
their respective assignees and successors); and may not be relied upon or
enforced by any other Person. The Parent, BOG and each Obligor have joined
herein solely for the purpose of evidencing their acknowledgment and consent to
the terms and conditions of this Agreement and their agreement to make payment
of the Senior Indebtedness and Subordinated Indebtedness in accordance with the
terms of Section 2.2.

Section 4.6 Reinstatement. To the extent that any payments on the
Senior Indebtedness or proceeds of any collateral are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid
by the Senior Agent or any Senior Lender to a trustee, debtor in possession,
receiver or other Person under any bankruptcy law, common law or equitable
cause, then to such extent, obligations hereunder with respect to the Senior
Indebtedness so satisfied shall be revived and continue as if such payment or
proceeds had not been received and the Senior Agent's and the Senior Lender's
Liens, interests, rights, powers and remedies under the Senior Loan Documents
and this Agreement shall continue in full force and effect. In such event, each
Senior Loan Document and this Agreement shall be automatically reinstated and
the Parent, BOG, the Obligors, the Subordinated Agent and the Subordinated
Lender shall take such action as may be

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reasonably requested by the Senior Agent and the Senior Lender to effect such
reinstatement. Any Senior Lender which has assigned its rights hereunder shall
continue to be entitled to the benefits of this Section notwithstanding such
assignment.

Section 4.7 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.

Section 4.8 ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT EMBODIES THE
ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE SENIOR AGENT AND THE SENIOR
LENDER, THE SUBORDINATED AGENT AND THE SUBORDINATED LENDER AND SUPERSEDES ALL
OTHER AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH PARTIES RELATING TO THE
SUBJECT MATTER HEREOF AND THEREOF. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

Section 4.9 References and Title. All references in this
Agreement to articles, sections, subsections and other subdivisions refer to
the articles, sections, subsections and other subdivisions of this Agreement
unless expressly provided otherwise. Titles appearing at the beginning of any
subdivisions are for convenience only and do not constitute any part of such
subdivisions and shall be disregarded in construing the language contained in
such subdivisions.

Section 4.10 Severability. All rights, remedies and powers
provided herein may be exercised only to the extent that the exercise thereof
does not violate any applicable provision of law; and all the provisions hereof
are intended (a) to be subject to all applicable mandatory provisions of law
which may be controlling and (b) to be limited to the extent necessary so that
they will not render this Agreement invalid under the provisions of any
applicable law. If any term or provision of this Agreement shall be determined
to be illegal or unenforceable, all other terms and provisions of this
Agreement shall nevertheless remain effective and shall be enforced to the
fullest extent permitted by applicable law and the parties agree to promptly
meet and negotiate in good faith to establish new arrangements which have the
effect of preserving in the economic and commercial benefits established by
this Agreement.

Section 4.11 Subrogation. Subject to the terms of Section 4.6,
after all Senior Indebtedness is paid in full and until the Subordinated
Indebtedness has been paid in full, the Subordinated Lender shall be subrogated
to the rights of the Senior Agent and the Senior Lender to receive
distributions and payments applicable to the Senior Indebtedness to the extent
that distributions and payments otherwise payable to the Subordinated Lender
have been applied to the payment of Senior Indebtedness. A payment or
distribution made under this Agreement to the Senior Agent and/or the

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<PAGE> 94
Senior Lender that otherwise would have been made to the Subordinated Lender is
not, as between Parent, BOG or any Obligor and the Subordinated Agent and
Subordinated Lender, a payment on the Subordinated Indebtedness.

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<PAGE> 95
WITNESS THE EXECUTION HEREOF, as of this the _____ day of August, 1998.

SENIOR AGENT:

BANK OF MONTREAL

By:
-------------------------
Name:
-----------------------
Title:
----------------------

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<PAGE> 96
PARENT:

BRIGHAM EXPLORATION COMPANY,
a Delaware corporation

By:
------------------------
Craig M. Fleming
Chief Financial Officer

BOG:

BRIGHAM OIL & GAS, L.P.,
a Delaware limited partnership

By: Brigham, Inc., a Nevada
corporation, its General Partner

By:
-----------------------
Craig M. Fleming
Chief Financial Officer

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<PAGE> 97
OBLIGORS:

BRIGHAM, INC.,
a Nevada corporation

By:
--------------------------
Craig M. Fleming
Chief Financial Officer

BRIGHAM HOLDINGS I, LLC,
a Nevada limited liability company

By:
--------------------------
Name:
------------------------
Title:
-----------------------

BRIGHAM HOLDINGS II, LLC,
a Nevada limited liability company

By:
--------------------------
Name:
------------------------
Title:
-----------------------

Addresses for notices of the Parent, BOG
and each Obligor:

6300 Bridge Point Parkway
Building 2, Suite 500
Austin, Texas 78730
Telecopy No: 512-427-3400

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<PAGE> 98
EXHIBIT A

Subordinated Loan Document

1. The Securities Purchase Agreement.

2. Subordinated Note(s) in the aggregate face amount of $50,000,000
issued by the Parent in favor of the Subordinated Lender(s).

3. Mortgage, Deed of Trust, Assignment of Production, Security Agreement
and Financing Statement dated as of August __, 1998 executed by BOG in
favor of the Subordinated Agent, for its benefit and the benefit of
Subordinated Lender.

5. Guaranty Agreement dated as of August __, 1998 executed by BOG in
favor of the Subordinated Agent and Subordinated Lender.

6. Guaranty Agreement dated as of August __, 1998 executed by Brigham,
Inc. in favor of the Subordinated Agent and Subordinated Lender.

7. Guaranty Agreement dated as of August __, 1998 executed by Brigham
Holdings I, LLC in favor of the Subordinated Agent and Subordinated
Lender.

8. Guaranty Agreement dated as of August __, 1998 executed by Brigham
Holdings II, LLC in favor of the Subordinated Agent and Subordinated
Lender.

10.

11.

12.
<PAGE> 99
- --------------------------------------------------------------------------------

Exhibit D
------------
SECURITY AGREEMENT

Between

----------------------------------------

and

, as Trustee
--------------------

August __, 1998

- --------------------------------------------------------------------------------

<PAGE> 100
SECURITY AGREEMENT

THIS SECURITY AGREEMENT (this "Agreement") is made as of August __,
1998, between ___________________ ("Pledgor"); and _________ having an address
at __________ ("Secured Party") as trustee and as collateral agent for the
ratable benefit of Agent and the Noteholders (each as defined in the Securities
Purchase Documents described below).

RECITALS
A. [The Pledgor] [Brigham Exploration Company, a Delaware
corporation] ("Borrower") is executing (i) the Securities Purchase Agreement
dated as of August __, 1998 (such agreement, as may from time to time be
amended or supplemented, being hereinafter called the "Securities Purchase
Agreement") among the [Pledgor] [Borrower], the purchasers named therein
("Noteholders") and __________________, as agent for such Noteholders ("Agent"),
and (ii) the Indenture dated as of August __, 1998 ("Indenture," and together
with the Securities Purchase Agreement, collectively referred to herein as the
"Securities Purchase Documents") between the [Pledgor] [Borrower] and the
Trustee, pursuant to which, upon the terms and conditions stated therein,
Noteholders agree to make loans to [Pledgor[ [Borrower].

B. The Noteholders have conditioned their respective obligations
under the Securities Purchase Documents upon the execution and delivery by
Pledgor of this Agreement, and Pledgor has agreed to enter into this Agreement.

C. Therefore, in order to comply with the terms and conditions of
the Securities Purchase Documents and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Pledgor hereby agrees with Secured Party as follows:

ARTICLE 1

SECURITY INTEREST

Section 1.01 Pledge. Pledgor hereby pledges, assigns and grants
to Secured Party a security interest in and right of set-off against the assets
referred to in Section 1.02 (the "Collateral") to secure the prompt payment and
performance of the "Obligations" (as defined in Section 2.02) and the
performance by Pledgor of this Agreement.

Section 1.02 Collateral. The Collateral consists of the following
types or items of property which are owned by Pledgor.

(a) The securities described or referred to in Exhibit A
attached hereto and made a part hereof.

(b) (i) the certificates or instruments, if any,
representing such securities, (ii) all dividends (cash, stock or
otherwise), cash, instruments, rights to subscribe,

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<PAGE> 101
purchase or sell and all other rights and property from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of such securities, (iii) all replacements,
additions to and substitutions for any of the property referred to in
this Section 1.02, including, without limitation, claims against third
parties, (iv) the proceeds, interest, profits and other income of or
on any of the property referred to in this Section 1.02 and (v) all
books and records relating to any of the property referred to in this
Section 1.02.

It is expressly contemplated that additional securities or other property of
the type described in this Section 1.02 may from time to time be pledged,
assigned or granted to Secured Party as additional security for the
Obligations, and the term "Collateral" as used herein shall be deemed for all
purposes hereof to include all such additional securities and property,
together with all other property of the types described above related thereto.

Section 1.03 Transfer of Collateral. All certificates or
instruments representing or evidencing the Pledged Securities shall, subject
to, that certain Security Agreement dated January 26, 1998 from [Pledgor]
[Borrower] to the Senior Loan Agreement (the "Senior Security Agreement") and
the terms of the Subordination Agreement, be delivered to and held pursuant
hereto by Secured Party or a Person designated by Secured Party and shall be in
suitable form for transfer by delivery, or shall be accompanied by duly
executed instruments of transfer or assignment in blank, or (in the case of
either certificated or uncertificated securities) Secured Party shall, subject
to the Liens created under the Senior Security Agreement and to the terms of
the Subordination Agreement, have been provided with evidence that the Pledged
Securities have been otherwise transferred to Secured Party in accordance with
Section 8.301 of the Code, all in form and substance satisfactory to Secured
Party. Notwithstanding the preceding sentence, and subject to the terms of the
Subordination Agreement, at Secured Party's discretion, all Pledged Securities
must be delivered or transferred in such manner as to permit Secured Party to
be a "protected purchaser" to the extent of its security interest as provided
in Section 8.303 of the Code. Secured Party shall have the right, at any time
in its discretion and without notice to Pledgor but subject to the Liens
created under the Senior Security Agreement and to the terms of the
Subordination Agreement, to transfer to or to register in the name of Secured
Party or any of its nominees any or all of the Pledged Securities, subject only
to the revocable rights specified in Section 6.06. In addition, Secured Party
shall have the right at any time to exchange certificates or instruments
representing or evidencing Pledged Securities for certificates or instruments
of smaller or larger denominations.

ARTICLE 2

DEFINITIONS

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<PAGE> 102
Documents but which are not defined herein shall have the same meanings as
defined in the Securities Purchase Documents.

Section 2.02 Certain Definitions. As used in this Agreement, the
following terms shall have the following meanings, unless the context otherwise
requires:

"Agreement" means this Security Agreement, as the same may
from time to time be amended or supplemented.

"Code" means the Uniform Commercial Code as presently in
effect in the State of Texas, Business and Commerce Code, Chapters 1
through 9. Unless otherwise indicated by the context herein, all
uncapitalized terms which are defined in the Code shall have their
respective meanings as used in Chapters 8 and 9 of the Code.

"Event of Default" means any event specified in Section 6.01.

"Obligations" means:

(a) any and all indebtedness, obligations and
liabilities now or hereafter incurred by the Pledgor pursuant
to the Securities Purchase Documents, including without
limitation, the unpaid principal of and interest on the Notes;

(b) payment of and performance of any and all
present or future obligations of Borrower according to the
terms of any Hedging Agreement now or hereafter arising
between the Pledgor and any Noteholder;

(c) any additional "Obligations" (as defined in
the Securities Purchase Documents) owing to the Agent and the
Noteholders;

(d) all renewals, rearrangements, increases,
extensions for any period, amendments or supplement in whole
or in part of the Notes or any documents evidencing the above;
and

(e) all interest, charges, expenses, attorneys'
or other fees and any other sums payable to or incurred by
Agent and the Noteholders in connection with the execution,
administration or enforcement of Agent's or any of the
Noteholders' rights and remedies hereunder or any other
agreement with Pledgor.

"Obligor" means any Person, other than Pledgor, liable
(whether directly or indirectly, primarily or secondarily) for the
payment or performance of any of the Obligations whether as maker,
co-maker, endorser, guarantor, accommodation party, general partner or
otherwise.

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<PAGE> 103
"Pledged Securities" means all of the securities and other
property (whether or not the same constitutes a "security" under the
Code) referred to in Section 1.02 and all additional securities (as
that term is defined in the Code), if any, constituting Collateral
under this Agreement.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES

In order to induce Secured Party, the Agent and the Noteholders to
accept this Agreement, Pledgor represents and warrants to Secured Party, the
Agent and the Noteholders (which representations and warranties will survive
the creation and payment of the Obligations) that:

Section 3.01 Ownership of Collateral; Encumbrances. Pledgor is
the legal and beneficial owner of the Collateral free and clear of any adverse
claim, lien, security interest, option or other charge or encumbrance except
for the security interest created by this Agreement and the security interest
granted to the Senior Loan Agent pursuant to the Senior Security Agreement, and
Pledgor has full right, power and authority to pledge, assign and grant a
security interest in the Collateral to Secured Party.

Section 3.02 No Required Consent. No authorization, consent,
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body (other than the filing of financing statements) is
required for (a) the due execution, delivery and performance by Pledgor of this
Agreement, (b) the grant by Pledgor of the security interest granted by this
Agreement, (c) the perfection of such security interest or (d) the exercise by
Secured Party of its rights and remedies under this Agreement.

Section 3.03 Pledged Securities. The Pledged Securities have been
duly authorized and validly issued, and are fully paid and non-assessable.

Section 3.04 Security Interest. The pledge of Pledged Securities
pursuant to this Agreement creates a valid and perfected second priority
security interest subordinate only to the first priority security interest of
the Senior Loan Agent, in the Collateral, enforceable against Borrower and all
third parties and securing payment of the Obligations.

Section 3.05 Collateral. All statements or other information
provided by Pledgor to Secured Party, Agent or any Noteholder describing or
with respect to the Collateral is or (in the case of subsequently furnished
information) will be when provided correct and complete in all material
respects.

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<PAGE> 104

ARTICLE 4

COVENANTS AND AGREEMENTS

Pledgor will at all times comply with the covenants and agreements
contained in this Article 4, from the date hereof and for so long as any part
of the Obligations are outstanding.

Section 4.01 Sale, Disposition or Encumbrance of Collateral.
Except as permitted by the Indenture, Pledgor will not in any way encumber any
of the Collateral (or permit or suffer any of the Collateral to be encumbered)
or sell, pledge, assign, lend or otherwise dispose of or transfer any of the
Collateral to or in favor of any Person other than Secured Party or to the
Senior Loan Agent pursuant to the Senior Security Agreement and in accordance
with the terms of the Subordination Agreement.

Section 4.02 Dividends or Distributions. So long as no Event of
Default shall have occurred and be continuing: Pledgor shall be entitled to
receive and retain any and all dividends and interest paid in respect of the
Collateral, provided, however, that any and all

(a) dividends and interest paid or payable other than in
cash in respect of, and instruments and other property received,
receivable or otherwise distributed in respect of, or in exchange for
(including, without limitation, any certificate or share purchased or
exchanged in connection with a tender offer or merger agreement), any
Collateral,

(b) dividends and other distributions paid or payable in
cash in respect of any Collateral in connection with a partial or
total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in surplus, or reclassification, and

(c) cash paid, payable or otherwise distributed in
respect of principal of, or in redemption of, or in exchange for, any
Collateral,

shall, subject to the Liens created under the Senior Security Agreement and to
the terms of the Subordination Agreement, be, and shall be forthwith delivered
to Secured Party to hold as, Collateral and shall, subject to the Liens created
under the Senior Security Agreement and to the terms of the Subordination
Agreement, if received by Pledgor, be received in trust for the benefit of
Secured Party, be segregated from the other property or funds of Pledgor, and
be forthwith delivered to Secured Party as Collateral in the same form as so
received (with any necessary indorsement).

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<PAGE> 105
Section 4.03 Records and Information. Pledgor shall keep accurate
and complete records of the Collateral (including proceeds, payments,
distributions, income and profits). Pledgor will promptly provide written
notice to Secured Party of all information which in any way relates to or
affects the filing of any financing statement or other public notices or
recordings, or the delivery and possession of items of Collateral for the
purpose of perfecting a security interest in the Collateral.

Section 4.04 Certain Liabilities. Pledgor hereby assumes all
liability for the Collateral, the security interest created hereunder and any
use, possession, maintenance, management, enforcement or collection of any or
all of the Collateral.

Section 4.05 Further Assurances. Upon the request of Secured
Party, Pledgor shall (at Pledgor's expense) execute and deliver all such
assignments, certificates, instruments, securities, financing statements,
notifications to financial intermediaries, clearing corporations, issuers of
securities or other third parties or other documents and give further
assurances and do all other acts and things as Secured Party may reasonably
request to perfect Secured Party's interest in the Collateral or to protect,
enforce or otherwise effect Secured Party's rights and remedies hereunder.

Section 4.06 Stock Powers. Pledgor shall furnish to Secured Party
such stock powers and other instruments as may be required by Secured Party to
assure the transferability of the Collateral when and as often as may be
requested by Secured Party.

Section 4.07 Rights to Sell. If Secured Party shall determine to
exercise its rights to sell all or any of the Collateral pursuant to its rights
hereunder subject to the Senior Security Agreement and in accordance with the
terms of the Subordination Agreement, Pledgor agrees that, upon request of
Secured Party, Pledgor will, at its own expense:

(a) execute and deliver, and use its best efforts to
cause each issuer of the Collateral contemplated to be sold and the
directors and officers thereof to execute and deliver, all such
instruments and documents, and do or cause to be done all such other
acts and things, as may be necessary or, in the opinion of Secured
Party, advisable to register such Collateral under the provisions of
the Securities Act of 1933, as from time to time amended (the
"Securities Act"), if such registration is, in the opinion of Secured
Party, necessary or advisable to effect a public distribution of the
Collateral, and to cause the registration statement relating thereto
to become effective and to remain effective for such period as
prospectuses are required by law to be furnished, and to make all
amendments and supplements thereto and to the related prospectus
which, in the opinion of Secured Party, are necessary or advisable,
all in conformity with the

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<PAGE> 106
requirements of the Securities Act and the rules and regulations of
the Securities and Exchange Commission applicable thereto;

(b) use its best efforts to qualify the Collateral under
the state securities or "Blue Sky" laws and to obtain all necessary
governmental approvals for the sale of the Collateral, as requested by
Secured Party;

(c) use its best efforts to cause each such issuer to
make available to its security holders, as soon as practicable, an
earnings statement which will satisfy the provisions of Section 11(a)
of the Securities Act; and

(d) use its best efforts to do or cause to be done all
such others acts and things as may be necessary to make such sale of
the Collateral or any part thereof valid and binding and in compliance
with applicable law.

Pledgor further acknowledges the impossibility of ascertaining the amount of
damages which would be suffered by Secured Party and the Noteholders by reason
of the failure by Pledgor to perform any of the covenants contained in this
Section 4.07 and consequently agrees that if Pledgor shall fail to perform any
of such covenants, it shall pay, as liquidated damages, and not as penalty, an
amount (in no event to exceed the amount of Obligations then outstanding) equal
to the value of the Collateral on the date the Secured Party shall demand
compliance with this Section 4.07.

Section 4.08 Voting and Other Consensual Rights. Except to the
extent otherwise provided in subsection 6.06(d), Pledgor shall be entitled to
exercise any and all voting and other consensual rights pertaining to the
Collateral or any part thereof for any purpose not inconsistent with the terms
of this Agreement; provided however, that Pledgor shall not exercise or refrain
from exercising any such right if such action would have a material adverse
effect on the value of the Collateral or any part thereof, and, provided,
further, that upon request of Secured Party at any time or from time to time,
Pledgor shall give Secured Party prompt written notice of the manner in which
Pledgor has exercised, or the reasons for refraining from exercising, any such
right.

ARTICLE 5

RIGHTS, DUTIES AND POWERS OF SECURED PARTY

The following rights, duties and powers of Secured Party are
applicable irrespective of whether an Event of Default occurs and is
continuing:

Section 5.01 Discharge Encumbrances. Secured Party may, at its
option, discharge any taxes, liens, security interests or other encumbrances at
any time levied or

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<PAGE> 107
placed on the Collateral. Pledgor agrees to reimburse Secured Party upon
demand for any payment so made, plus interest thereon from the date of Secured
Party's demand at the Post-Default Rate.

Section 5.02 Transfer of Collateral. Secured Party may transfer
any or all of the Obligations, and upon any such transfer Secured Party may
transfer its interest in any or all of the Collateral and shall be fully
discharged thereafter from all liability therefor. Any transferee of the
Collateral shall be vested with all rights, powers and remedies of Secured
Party hereunder.

Section 5.03 Cumulative and Other Rights. The rights, powers and
remedies of Secured Party hereunder are, subject to the Liens under the Senior
Security Agreement and the terms of the Subordination Agreement, in addition to
all rights, powers and remedies given by law or in equity. The exercise by
Secured Party of any one or more of the rights, powers and remedies herein
shall not be construed as a waiver of any other rights, powers and remedies,
including, without limitation, any other rights of set-off. If any of the
Obligations are given in renewal, extension for any period or rearrangement, or
applied toward the payment of debt secured by any lien, Secured Party shall be,
and is hereby, subrogated (to the maximum extent permitted by law) to all the
rights, titles, interests and liens securing the debt so renewed, extended,
rearranged or paid.

Section 5.04 Disclaimer of Certain Duties. The powers conferred
upon Secured Party by this Agreement are to protect its interest in the
Collateral and shall not impose any duty upon Secured Party, Agent or any
Noteholder to exercise any such powers. Pledgor hereby agrees that Secured
Party shall not be liable for, nor shall the indebtedness evidenced by the
Obligations be diminished by, Secured Party's delay or failure to collect upon,
foreclose, sell, take possession of or otherwise obtain value for the
Collateral.

Section 5.05 Custody and Preservation of the Collateral. Secured
Party shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which comparable secured parties accord
comparable collateral, it being understood and agreed, however, that neither
Secured Party, Agent nor any Noteholder shall have responsibility for (a)
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Collateral, whether or not
Secured Party has or is deemed to have knowledge of such matters, or (b) taking
any necessary steps to preserve rights against Persons or entities with respect
to any Collateral.

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<PAGE> 108
ARTICLE 6

EVENTS OF DEFAULT

Section 6.01 Events. It shall constitute an Event of Default
under this Agreement if an Event of Default occurs and is continuing under the
Securities Purchase Documents.

Section 6.02 Remedies. Upon the occurrence and during the
continuance of any Event of Default, Secured Party may, subject to the Liens
created under the Senior Security Agreement and to the terms of the
Subordination Agreement, take any or all of the following actions without
notice (except where expressly required below or in the Securities Purchase
Documents) or demand to Pledgor:

(a) Declare all or part of the indebtedness pursuant to
the Obligations immediately due and payable as provided in the
Securities Purchase Documents and enforce payment of the same by
Pledgor or any Obligor.

(b) Sell, in one or more sales and in one or more
parcels, or otherwise dispose of any or all of the Collateral in any
commercially reasonable manner as Secured Party may elect, in a public
or private transaction, at any location as deemed reasonable by
Secured Party either for cash or credit or for future delivery at such
price as Secured Party may deem fair, and (unless prohibited by the
Code, as adopted in any applicable jurisdiction) Secured Party, Agent
or any Noteholder may be the purchaser of any or all Collateral so
sold and may apply upon the purchase price therefor any Obligations
secured hereby. Any such sale or transfer by Secured Party either to
itself or to any other Person shall be absolutely free from any claim
of right by Pledgor, including any equity or right of redemption, stay
or appraisal which Pledgor has or may have under any rule of law,
regulation or statute now existing or hereafter adopted. Upon any
such sale or transfer, Secured Party shall have the right to deliver,
assign and transfer to the purchaser or transferee thereof the
Collateral so sold or transferred. If Secured Party deems it
advisable to do so, it may restrict the bidders or purchasers of any
such sale or transfer to Persons or entities who will represent and
agree that they are purchasing the Collateral for their own account
and not with the view to the distribution or resale of any of the
Collateral. Secured Party may, at its discretion, provide for a
public sale, and any such public sale shall be held at such time or
times within ordinary business hours and at such place or places as
Secured Party may fix in the notice of such sale. Secured Party shall
not be obligated to make any sale pursuant to any such notice.
Secured Party may, without notice or publication, adjourn any public
or private sale by announcement at any time and place fixed for such
sale, and such sale may be made at any time or place to which the same
may be so adjourned. In the event any sale or transfer hereunder is
not completed or is defective in the opinion of Secured Party, such

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sale or transfer shall not exhaust the rights of Secured Party
hereunder, and Secured Party shall have the right to cause one or more
subsequent sales or transfers to be made hereunder. If only part of
the Collateral is sold or transferred such that the Obligations remain
outstanding (in whole or in part), Secured Party's rights and remedies
hereunder shall not be exhausted, waived or modified, and Secured
Party is specifically empowered to make one or more successive sales
or transfers until all the Collateral shall be sold or transferred and
all the Obligations are paid. In the event that Secured Party elects
not to sell the Collateral, Secured Party retains its rights to
dispose of or utilize the Collateral or any part or parts thereof in
any manner authorized or permitted by law or in equity, and to apply
the proceeds of the same towards payment of the Obligations.

(c) Apply proceeds of the disposition of the Collateral
to the Obligations in any manner elected by Secured Party and
permitted by the Code or otherwise permitted by law or in equity.
Such application may include, without limitation, the reasonable
attorneys' fees and legal expenses incurred by Secured Party and the
Noteholders.

(d) Appoint any Person as agent to perform any act or
acts necessary or incident to any sale or transfer by Secured Party of
the Collateral.

(e) Receive, change the address for delivery, open and
dispose of mail addressed to Pledgor, and to execute, assign and
endorse negotiable and other instruments for the payment of money,
documents of title or other evidences of payment, shipment or storage
for any form of Collateral on behalf of and in the name of Pledgor.

(f) Exercise all other rights and remedies permitted by
law or in equity.

Section 6.03 Attorney-in-Fact. Pledgor hereby irrevocably
appoints Secured Party as Pledgor's attorney-in- fact, with full authority in
the place and stead of Pledgor and in the name of Pledgor or otherwise, from
time to time in Secured Party's discretion upon the occurrence and during the
continuance of an Event of Default and subject to the terms of the
Subordination Agreement, but at Pledgor's cost and expense and without notice
to Pledgor, to take any action and to execute any assignment, certificate,
financing statement, stock power, notification, document or instrument which
Secured Party may deem necessary or advisable to accomplish the purposes of
this Agreement, including, without limitation, to receive, endorse and collect
all instruments made payable to Pledgor representing any dividend, interest
payment or other distribution in respect of the Collateral or any part thereof
and to give full discharge for the same.

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Section 6.04 Liability for Deficiency. If any sale or other
disposition of Collateral by Secured Party in compliance with the Loan
Documents and applicable law or any other action of Secured Party or any
Noteholder hereunder in compliance with the Loan Documents and applicable law
results in reduction of the Obligations, such action will not release Pledgor
from its liability to Secured Party and the Noteholders for any unpaid
Obligations, including costs, charges and expenses incurred in the liquidation
of Collateral, together with interest thereon, and the same shall be
immediately due and payable to Secured Party at Secured Party's address set
forth in the opening paragraph hereof.

Section 6.05 Reasonable Notice. If any applicable provision of
any law requires Secured Party or any Noteholder to give reasonable notice of
any sale or disposition or other action, Pledgor hereby agrees that ten days'
prior written notice shall constitute reasonable notice thereof. Such notice,
in the case of public sale, shall state the time and place fixed for such sale
and, in the case of private sale, the time after which such sale is to be made.

Section 6.06 Pledged Securities. Upon the occurrence and during
the continuance of an Event of Default and subject to the Liens created under
the Senior Security Agreement and to the terms of the Subordination Agreement:

(a) All rights of Pledgor to receive the dividends and
interest payments which it would otherwise be authorized to receive
and retain pursuant to Section 4.02 shall cease, and all such rights
shall thereupon become vested in Secured Party who shall thereupon
have the sole right to receive and hold as Collateral such dividends
and interest payments, but Secured Party shall have no duty to receive
and hold such dividends and interest payments and shall not be
responsible for any failure to do so or delay in so doing.

(b) All dividends and interest payments which are
received by Pledgor contrary to the provisions of this Section 6.06
shall be received in trust for the benefit of Secured Party, shall be
segregated from other funds of Pledgor and shall be forthwith paid
over to Secured Party as Collateral in the same form as so received
(with any necessary indorsement).

(c) Secured Party may exercise any and all rights of
conversion, exchange, subscription or any other rights, privileges or
options pertaining to any of the Pledged Securities as if it were the
absolute owner thereof, including without limitation, the right to
exchange at its discretion, any and all of the Pledged Securities upon
the merger, consolidation, reorganization, recapitalization or other
readjustment of any issuer of such Pledged Securities or upon the
exercise by any such issuer or Secured Party of any right, privilege
or option pertaining to any of the Pledged Securities, and in
connection therewith, to deposit and deliver any and all of the
Pledged Securities with any committee, depository, transfer agent,
registrar or other designated agency upon such terms and conditions as
it may determine, all without liability except to account for property
actually received by it, but Secured Party shall

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have no duty to exercise any of the aforesaid rights, privileges or
options and shall not be responsible for any failure to do so or delay
in so doing.

(d) If the issuer of any Pledged Securities is the
subject of bankruptcy, insolvency, receivership, custodianship or
other proceedings under the supervision of any court or governmental
agency or instrumentality, then all rights of Pledgor to exercise the
voting and other consensual rights which Pledgor would otherwise be
entitled to exercise pursuant to Section 4.08 with respect to the
Pledged Securities issued by such issuer shall cease, and all such
rights shall thereupon become vested in Secured Party who shall
thereupon have the sole right to exercise such voting and other
consensual rights, but Secured Party shall have no duty to exercise
any such voting or other consensual rights and shall not be
responsible for any failure to do so or delay in so doing.

Section 6.07 Non-judicial Enforcement. To the extent permitted by
law, Secured Party may enforce its rights hereunder without prior judicial
process or judicial hearing, and to the extent permitted by law Pledgor
expressly waives any and all legal rights which might otherwise require Secured
Party to enforce its rights by judicial process.

ARTICLE 7

MISCELLANEOUS PROVISIONS

Section 7.01 Notices. Any notice required or permitted to be
given under or in connection with this Agreement shall be given in accordance
with the notice provisions of the Securities Purchase Documents.

Section 7.02 Amendments and Waivers. Secured Party's acceptance
of partial or delinquent payments or any forbearance, failure or delay by
Secured Party in exercising any right, power or remedy hereunder shall not be
deemed a waiver of any obligation of Pledgor or any Obligor, or of any right,
power or remedy of Secured Party; and no partial exercise of any right, power
or remedy shall preclude any other or further exercise thereof. Secured Party
may remedy any Event of Default hereunder or in connection with the Obligations
without waiving the Event of Default so remedied. Pledgor hereby agrees that
if Secured Party agrees to a waiver of any provision hereunder, or an exchange
of or release of the Collateral, or the addition or release of any Obligor or
other Person, any such action shall not constitute a waiver of any of Secured
Party's other rights or of Pledgor's obligations hereunder. This Agreement may
be amended only by an instrument in writing executed jointly by Pledgor and
Secured Party and may be supplemented only by documents delivered or to be
delivered in accordance with the express terms hereof.

Section 7.03 Copy as Financing Statement. A photocopy or other
reproduction of this Agreement may be delivered by Pledgor or Secured Party to
any financial intermediary

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or other third party for the purpose of transferring or perfecting any or all
of the Pledged Securities to Secured Party or its designee or assignee.

Section 7.04 Possession of Collateral. Secured Party shall be
deemed to have possession of any Collateral in transit to it or set apart for
it (or, in either case, any of its agents, affiliates or correspondents).

Section 7.05 Redelivery of Collateral. If any sale or transfer of
Collateral by Secured Party results in full satisfaction of the Obligations,
and after such sale or transfer and discharge there remains a surplus of
proceeds, Secured Party will deliver to Pledgor such excess proceeds in a
commercially reasonable time; provided, however, that neither Secured Party nor
any Noteholder shall have any liability for any interest, cost or expense in
connection with any delay in delivering such proceeds to Pledgor.

Section 7.06 Governing Law; Jurisdiction. This Agreement and the
security interest granted hereby shall be construed in accordance with and
governed by the laws of the State of Texas (except to the extent that the laws
of any other jurisdiction govern the perfection and priority of the security
interests granted hereby).

Section 7.07 Continuing Security Agreement.

(a) Except as may be expressly applicable pursuant to Section
9.505 of the Code, no action taken or omission to act by Secured Party or the
Noteholders hereunder, including, without limitation, any exercise of voting or
consensual rights pursuant to Section 4.08 or any other action taken or
inaction pursuant to Section 6.02, shall be deemed to constitute a retention of
the Collateral in satisfaction of the Obligations or otherwise to be in full
satisfaction of the Obligations, and the Obligations shall remain in full force
and effect, until Secured Party and the Noteholders shall have applied payments
(including, without limitation, collections from Collateral) towards the
Obligations in the full amount then outstanding or until such subsequent time
as is hereinafter provided in subsection (b) below.

(b) To the extent that any payments on the Obligations or proceeds
of the Collateral are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver or other Person under any bankruptcy law, common law or
equitable cause, then to such extent the Obligations so satisfied shall be
revived and continue as if such payment or proceeds had not been received by
Secured Party or the Noteholders, and Secured Party's and the Noteholders'
security interests, rights, powers and remedies hereunder shall continue in
full force and effect. In such event, this Agreement shall be automatically
reinstated if it shall theretofore have been terminated pursuant to Section
7.08.

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all Collateral in its possession to Pledgor, and (b) executed a written release
or termination statement and reassigned to Pledgor without recourse or warranty
any remaining Collateral and all rights conveyed hereby. Upon the complete
payment of the Obligations and the compliance by Pledgor with all covenants and
agreements hereof, Secured Party, at the written request and expense of
Pledgor, will release, reassign and transfer the Collateral to Pledgor and
declare this Agreement to be of no further force or effect. Notwithstanding
the foregoing, the reimbursement and indemnification provisions of Section 4.04
and the provisions of subsection 7.07(b) shall survive the termination of this
Agreement.

Section 7.08 Subordination Agreement. The rights and remedies of
the Agent and the Noteholders under this Agreement are subject to the terms and
conditions of that certain Subordination Agreement dated as of August __, 1998,
made by Secured Party, the Agent, the Noteholders and the Bank of Montreal.

Section 7.09 Counterparts, Effectiveness. This Agreement may be
executed in two or more counterparts. Each counterpart is deemed an original,
but all such counterparts taken together constitute one and the same
instrument. This Agreement becomes effective upon the execution hereof by
Pledgor and delivery of the same to Secured Party, Agent or the Noteholders,
and it is not necessary for Secured Party, Agent or any Noteholder to execute
any acceptance hereof or otherwise signify or express its acceptance hereof.

PLEDGOR:
----------------------------------

By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------

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<PAGE> 114
FINANCING STATEMENT

This Financing Statement is presented to a filing officer for filing
pursuant to the Uniform Commercial Code.

1. The name and address of the Debtor is:

[DEBTOR'S NAME]
6300 Bridge Point Parkway
Building 2, Suite 500
Austin, Texas 78730

2. The name and address of the Secured Party is:

-----------------------

-----------------------
Federal Tax I.D.
------
3. This Financing Statement covers the following Collateral:

(a) The securities described or referred to in Exhibit A
attached hereto and made a part hereof.

(b) (i) the certificates or instruments, if any, representing
such securities, (ii) all dividends (cash, stock or otherwise), cash,
instruments, rights to subscribe, purchase or sell and all other
rights and property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of
such securities, (iii) all replacements, additions to and
substitutions for any of the property referred to in this paragraph 3,
including, without limitation, claims against third parties, (iv) the
proceeds, interest, profits and other income of or on any of the
property referred to in this paragraph 3 and (v) all books and records
relating to any of the property referred to in this paragraph 3.

PLEDGOR :
----------------------------------

By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------

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<PAGE> 115
EXHIBIT A

PLEDGED SECURITIES

______ shares of capital stock of _______________evidenced by
Certificate No. ___, such shares representing _______ of the capital stock of
_______________

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<PAGE> 116

EXHIBIT E

SECURITY AGREEMENT

(Accounts, Inventory, Equipment, Chattel Paper, Documents,
Instruments, General Intangibles and Other Property)

Between

BRIGHAM OIL & GAS, L.P.

and

_______________,
as Trustee

August __, 1998
<PAGE> 117
SECURITY AGREEMENT

Accounts, Inventory, Equipment, Chattel Paper, Documents,
Instruments, General Intangibles and Other Property

THIS SECURITY AGREEMENT (this "Agreement") is made as of August __,
1998, between BRIGHAM OIL & GAS L.P., a Delaware limited partnership with
principal offices at 6300 Bridge Point Parkway, Bldg. 2, Suite 500, Austin,
Texas 78730 ("Debtor"); and _________ having an address at __________ ("Secured
Party") as trustee and as collateral agent for the ratable benefit of Agent and
the Noteholders (each as defined in the Securities Purchase Documents described
below).

RECITALS

A. Brigham Exploration Company, a Delaware corporation
("Borrower") is executing (i) the Securities Purchase Agreement dated as of
August __, 1998 (such agreement, as may from time to time be amended or
supplemented, being hereinafter called the "Securities Purchase Agreement")
among the Borrower, the purchasers named therein ("Noteholders") and _________
___________________________________________________________, as agent for such
Noteholders ("Agent"), and (ii) the Indenture dated as of August __, 1998
("Indenture," and together with the Securities Purchase Agreement, collectively
referred to herein as the "Securities Purchase Documents") between the Borrower
and the Trustee, pursuant to which, upon the terms and conditions stated
therein, the Noteholders agree to make loans to the Debtor.

B. The Noteholders have conditioned their respective obligations
under the Securities Purchase Documents upon (1) the execution and delivery by
Debtor of the Guaranty Agreement dated as of August __, 1998 ("Guaranty
Agreement") made by the Debtor for the benefit of the Agent and the Noteholders
and providing for the guarantee by the Debtor of the Borrower's obligations
under the Securities Purchase Documents, and (2) the execution and delivery by
Debtor of this Agreement in order to secured its guaranty obligations, and
Debtor has agreed to enter into this Agreement.

C. Therefore, in order to comply with the terms and conditions of
the Securities Purchase Documents and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Debtor hereby agrees with Secured Party as follows:

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ARTICLE 1

SECURITY INTEREST

Section 1.01 Grant of Security Interest. Debtor hereby assigns
and grants to Secured Party a security interest in and right of set-off against
the assets referred to in Section 1.02 (the "Collateral") to secure the prompt
payment and performance of the "Obligations" (as defined in Section 2.02) and
the performance by Debtor of this Agreement.

Section 1.02 Collateral. The Collateral consists of the following
types or items of property which are owned by Debtor (including property
hereafter acquired by Debtor as well as property which Debtor now owns or in
which Debtor has rights):

(a) All of Debtor's accounts, inventory, equipment,
chattel paper, documents, instruments and general intangibles.

(b) (i) Any related or additional property from time to
time delivered to or deposited with Secured Party by or for the
account of Debtor; (ii) all certificates of title or other documents
evidencing ownership or possession of or otherwise relating to any
property referred to in this Section 1.02; (iii) all property used or
usable in connection with any property referred to in this Section
1.02; (iv) all policies of insurance (whether or not required by
Secured Party) covering any property referred to in this Section 1.02;
(v) all goods which were at any time included in the Collateral and
which are returned to or for the account of Debtor following their
sale, lease or other disposition; (vi) all proceeds, products,
replacements, additions to, substitutions for, accessions of, and
property necessary for the operation of any of the property referred
to in this Section 1.02, including, without limitation, insurance
payable as a result of loss or damage to any of the property referred
to in this Section 1.02, refunds of unearned premiums of any such
insurance policy and claims against third parties; and (vii) all books
and records related to any of the property referred to in this Section
1.02, including, without limitation, any and all books of account,
customer lists and other records relating in any way to the accounts,
chattel paper, instruments or inventory referred to in this Section
1.02.

(c) All general intangibles related to any property
referred to in this Section 1.02, including, without limitation, all
(i) letters of credit, bonds, guaranties, purchase or sales agreements
and other contractual rights, rights to performance, and claims for
damages, refunds (including tax refunds) or other monies due or to
become due; (ii) orders, franchises, permits, certificates, licenses,
consents, exemptions, variances, authorizations or other approvals by
any governmental agency or court; (iii) consulting, engineering and
technological information and specifications, design data, patent
rights, trade secrets, literary rights, copyrights, trademarks,
labels, trade names and other intellectual property;

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(iv) business records, computer tapes and computer software; (v)
goodwill; and (vi) other intangible personal property, whether similar
or dissimilar to the property referred to in this Section 1.02.

It is expressly contemplated that additional property may from time to time be
pledged, assigned or granted to Secured Party as additional security for the
Obligations, and the term "Collateral" as used herein shall be deemed for all
purposes hereof to include all such additional property, together with all
other property of the types described above related thereto. The term
"Collateral" does not, however, include any geological or geophysical data or
other property to the extent that the assignment thereof or granting of a
security interest therein would violate any contracts or other restrictions
applicable thereto.

ARTICLE 2

DEFINITIONS

Section 2.01 Terms Defined Above or in the Securities Purchase
Documents. As used in this Agreement, the terms defined above shall have the
meanings respectively assigned to them. Other capitalized terms which are
defined in the Securities Purchase Documents but which are not defined herein
shall have the same meanings as defined in the Securities Purchase Documents.

Section 2.02 Certain Definitions. As used in this Agreement, the
following terms shall have the following meanings, unless the context otherwise
requires:

"Accounts" means all accounts, chattel paper and instruments
(as such terms are defined in the Code) at any time included in the
Collateral.

"Account Debtor" means any Person liable (whether directly or
indirectly, primarily or secondarily) for the payment or performance
of any obligations included in the Collateral, whether as an account
debtor (as defined in the Code), obligor on an instrument, issuer of
documents or securities, guarantor or otherwise.

"Agreement" means this Security Agreement, as the same may
from time to time be amended or supplemented.

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"Disclosure - Restricted Collateral" means any Collateral in
which Debtor is permitted to grant a security interest but which
Debtor is not permitted, under confidentiality agreements or
restrictions from time to time in effect, to disclosure to Secured
Party or Noteholders.

"Event of Default" means any event specified in Section 6.01.

"Inventory" means all inventory (as defined in the Code) at
any time included in the Collateral.

"Obligations" means:

(a) any and all indebtedness, obligations and liabilities
now or hereafter incurred by the Debtor pursuant to the Guaranty
Agreement;

(b) payment of and performance of any and all present or
future obligations of Debtor according to the terms of any Hedging
Agreement now or hereafter arising between the Debtor and any
Noteholder;

(c) any additional "Obligations", (as defined in the
Securities Purchase Documents) owing to the Agent and the Noteholders;

(d) all renewals, rearrangements, increases, extensions
for any period, amendments or supplement in whole or in part of the
Notes or any documents evidencing the above; and

(e) all interest, charges, expenses, attorneys' or other
fees and any other sums payable to or incurred by the Agent and the
Noteholders in connection with the execution, administration or
enforcement of Secured Party's or any of the Noteholders' rights and
remedies hereunder or any other agreement with Debtor.

"Obligor" means any Person, other than Debtor, liable (whether
directly or indirectly, primarily or secondarily) for the payment or
performance of any of the Obligations whether as maker, co-maker,
endorser, guarantor, accommodation party, general partner or
otherwise.

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ARTICLE 3

REPRESENTATIONS AND WARRANTIES

In order to induce Secured Party to accept this Agreement, Debtor
represents and warrants to Secured Party (which representations and warranties
will survive the creation and payment of the Obligations) that:

Section 3.01 Ownership of Collateral; Encumbrances. Debtor is the
legal and beneficial owner of the Collateral free and clear of any adverse
claim, lien, security interest, option or other charge or encumbrance except
for the matters permitted under or otherwise disclosed in the Securities
Purchase Documents and the security interest created by this Agreement, and
Debtor has full right, power and authority to assign and grant a security
interest in the Collateral to Secured Party.

Section 3.02 No Required Consent. Except for any consents or
waivers required in connection with Disclosure-Restricted Collateral, no
authorization, consent, approval or other action by, and no notice to or filing
with, any governmental authority or regulatory body (other than the filing of
financing statements) is required for (a) the due execution, delivery and
performance by Debtor of this Agreement, (b) the grant by Debtor of the
security interest granted by this Agreement, (c) the perfection of such
security interest or (d) the exercise by Secured Party of its rights and
remedies under this Agreement.

Section 3.03 Priority Security Interest. Subject only to the
matters permitted under or otherwise disclosed in the Securities Purchase
Documents and to the terms of the Subordination Agreement, the grant of the
security interest in the Collateral pursuant to this Agreement creates a valid
and perfected priority security interest in the Collateral, enforceable against
Debtor and all third parties and securing payment of the Obligations, and
second only to the security interest granted to Senior Loan Agent, including
without limitation pursuant to that certain Security Agreement dated January
26, 1998 from Pledgor to the Senior Loan Agent (the "Senior Security
Agreement").

Section 3.04 No Filings By Third Parties. No unexpired financing
statement or other public notice or recording covering the Collateral is on
file in any public office (other than any financing statement or other public
notice or recording naming Secured Party or the Senior Loan Agent as the
secured party therein), and Debtor will not execute any such financing
statement or other public notice or recording so long as any of the Obligations
are outstanding.

Section 3.05 No Name Changes. Debtor has not, during the
preceding five years, entered into any contract, agreement, security instrument
or other document using a name other than, or been known by or otherwise used
any name other than, the name used by Debtor herein.

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Section 3.06 Location of Debtor and Collateral. Debtor's chief
executive office and Debtor's records concerning the Collateral are located at
the address or location set forth in the opening paragraph hereof. As of the
date hereof, the Collateral is located at Debtor's address set forth in the
opening paragraph hereof or in the states set forth on Schedule 3.06 attached
hereto.

Section 3.07 Collateral. All statements or other information
provided by Debtor to Secured Party or any Noteholder describing or with
respect to the Collateral is or (in the case of subsequently furnished
information) will be when provided correct and complete in all material
respects.

Section 3.08 Delivery of Documents or Letters of Credit. With
respect to any Inventory or other Collateral covered by one or more
certificates of title or other documents evidencing ownership or possession
thereof, and with respect to any Accounts or other Collateral supported by
letters of credit, each of such certificates, documents or letters of credit
has, if requested by Secured Party, been delivered to the Secured Party, except
that such documents or instruments may, if there are outstanding amounts owing
under the Senior Loan Agreement, be delivered to the Senior Loan Agent who
shall maintain first priority status of such security interest according to the
terms of the Senior Loan Agreement (provided that all certificates, documents
and letters of credit referred to in Section 1.02 shall be subject to the
security interest created by this Agreement irrespective of whether or not such
delivery shall have been made).

ARTICLE 4

COVENANTS AND AGREEMENTS

Debtor will at all times comply with the covenants and agreements
contained in this Article 4, from the date hereof and for so long as any part
of the Obligations are outstanding.

Section 4.01 Change in Location of Collateral or Debtor. Debtor
will notify Secured Party on or before the date of any change in location of
the Collateral to a place outside the states listed on Schedule 3.06. Debtor
will give Secured Party 30 days' prior written notice of (a) the opening or
closing of any place of Debtor's business or (b) any change in the location of
Debtor's chief executive office or address.

Section 4.02 Change in Debtor's Name or Corporate Structure.
Debtor will not change its name, identity or corporate structure (including,
without limitation, any merger, consolidation or sale of substantially all of
its assets) without notifying Secured Party of such change in writing at least
30 days prior to the effective date of such change. Without the express
written consent of Secured Party, however, Debtor will not engage in any other
business or transaction with respect to the Collateral herein under any name
other than Debtor's name hereunder or "Brigham Exploration Company" unless the
Debtor has notified the Secured Party of such other name and executed or

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caused to be executed financing statements or other documentation required by
the Secured Party to continue the perfection of the Security Interest herein.

Section 4.03 Documents; Collateral in Possession of Third Parties.
If certificates of title or other documents evidencing ownership or possession
of the Collateral are issued or outstanding, Debtor will, upon Secured Party's
request, cause the interest of Secured Party to be properly noted thereon and
will, forthwith upon receipt and subject to the Liens under the Senior Security
Agreement and to the terms of the Subordination Agreement, deliver same to
Secured Party. If any Collateral is at any time in the possession or control
of any warehouseman, bailee, agent or independent contractor, Debtor shall,
upon Secured Party's request, notify such Person of Secured Party's security
interest in such Collateral. Upon Secured Party's request, Debtor shall
instruct any such Person to hold all such Collateral for Secured Party's
account subject to Debtor's instructions and the terms of the Subordination
Agreement, or, if an Event of Default shall have occurred, subject to Secured
Party's instructions and the Liens under the Senior Security Agreement and to
the terms of the Subordination Agreement.

Section 4.04 Delivery of Letters of Credit and Instruments.
Debtor will, upon Secured Party's request and subject to the Liens under the
Senior Security Agreement and to the terms of the Subordination Agreement,
deliver each letter of credit, if any, included in the Collateral to Secured
Party, in each case forthwith upon receipt by or for the account of Debtor. If
any Account becomes evidenced by a promissory note, trade acceptance or any
other instrument for the payment of money (other than checks or drafts in
payment of Accounts collected by Debtor in the ordinary course of business
prior to notification by Secured Party under Section 6.02(h)), Debtor will,
upon Secured Party's request and subject to the Liens under the Senior Security
Agreement and to the terms of the Subordination Agreement, immediately deliver
such instrument to Secured Party appropriately endorsed and, regardless of the
form of presentment, demand, notice of dishonor, protest and notice of protest
with respect thereto, Debtor will remain liable thereon until such instrument
is paid in full.

Section 4.05 Encumbrance of Collateral. Except as permitted by
Section 4.10 or as permitted by the Securities Purchase Documents with Secured
Party's prior written consent, Debtor will not in any way encumber any of the
Collateral (or permit or suffer any of the Collateral to be encumbered) to or
in favor of any Person other than Secured Party.

Section 4.06 Proceeds of Collateral. Upon Secured Party's request
during the continuance of a Default, Debtor will, subject to the Liens under
the Senior Security Agreement and to the terms of the Subordination Agreement,
deliver to Secured Party promptly upon receipt all proceeds delivered to Debtor
from the sale or disposition of any Collateral. If chattel paper, documents or
instruments are received as proceeds, which are required to be delivered to
Secured Party, they will be, subject to the Liens under the Senior Security
Agreement and to the terms of the Subordination Agreement, immediately, in such
circumstances, properly endorsed or assigned and delivered to Secured Party as
Collateral. This Section 4.06 shall not be construed to permit sales or
dispositions

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of Collateral except as may be elsewhere expressly permitted by this Agreement
or the Securities Purchase Documents.

Section 4.07 Records and Information. Debtor shall keep accurate
and complete records of the Collateral (including proceeds). These records
shall reflect complete and accurate records of the Inventory and all facts
concerning each Account.

Section 4.08 Certain Liabilities. Debtor hereby assumes all
liability for the Collateral, the security interests created hereunder and any
use, possession, maintenance, management, enforcement or collection of any or
all of the Collateral.

Section 4.09 Further Assurances. Upon the request of Secured
Party, Debtor shall (at Debtor's expense) execute and deliver all such
assignments, certificates, financing statements or other documents and give
further assurances and do all other acts and things as Secured Party may
reasonably request to perfect Secured Party's interest in the Collateral or to
protect, enforce or otherwise effect Secured Party's rights and remedies
hereunder.

Section 4.10 Accounts.

(a) Prior to notification by Secured Party under Section 6.02(h),
Debtor will collect the Accounts in the ordinary course of its business and may
retain the proceeds of such collections (subject to Section 4.04).

(b) Debtor will duly perform or cause to be performed all of
Debtor's obligations with respect to the Accounts and the underlying sales of
goods or other transactions giving rise to the Accounts.

Section 4.11 Collateral Attached to Other Property. In the event
that the Collateral is to be attached or affixed to any real property, Debtor
hereby agrees that this Agreement may be filed for record in any appropriate
real estate records as a financing statement which is a fixture filing. In
connection therewith, Debtor will take whatever action is required by Section
4.09. If Debtor is not the record owner of such real property, Debtor will
provide Secured Party with any additional security agreements or financing
statements necessary for the perfection of Secured Party's security interest in
the Collateral.

ARTICLE 5

RIGHTS, DUTIES AND POWERS OF SECURED PARTY

The following rights, duties and powers of Secured Party are
applicable irrespective of whether an Event of Default occurs and is
continuing:

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Section 5.01 Discharge Encumbrances. Secured Party may, at its
option, discharge any taxes, liens, security interests or other encumbrances at
any time levied or placed on the Collateral, may pay for insurance on the
Collateral and may pay for the reasonable maintenance and preservation of the
Collateral. Debtor agrees to reimburse Secured Party upon demand for any
payment so made, plus interest thereon from the date of Secured Party's demand
at the Post-Default Rate.

Section 5.03 Licenses and Rights to Use Collateral. In connection
with any transfer or sale (to Secured Party or any other Person) of the
Collateral, Secured Party is hereby granted a transferable license or other
right to use, without any charge but subject to the terms of the Subordination
Agreement, any of Debtor's labels, patents, copyrights, trade names, trade
secrets, trademarks or other similar property (excluding, however, all
Disclosure-Restricted Collateral) in completing production, advertising or
selling such Collateral. Debtor's rights under all licenses and franchise
agreements shall inure to the benefit of Secured Party and any transferee of
all or any part of the Collateral.

Section 5.04 Cumulative and Other Rights. The rights, powers and
remedies of Secured Party hereunder are subject to the Liens under the Senior
Security Agreement and to the terms of the Subordination Agreement, in addition
to all rights, powers and remedies given by law or in equity. The exercise by
Secured Party of any one or more of the rights, powers and remedies herein
shall not be construed as a waiver of any other rights, powers and remedies,
including, without limitation, any other rights of set-off. If any of the
Obligations are given in renewal, extension for any period or rearrangement, or
applied toward the payment of debt secured by any lien, Secured Party shall be,
and is hereby, subrogated (to the maximum extent permitted by law) to all the
rights, titles, interests and liens securing the debt so renewed, extended,
rearranged or paid.

Section 5.05 Disclaimer of Certain Duties.

(a) The powers conferred upon Secured Party by this Agreement are
to protect its interest in the Collateral and shall not impose any duty upon
Secured Party or any Noteholder to exercise any such powers. Debtor hereby
agrees that Secured Party shall not be liable for, nor shall the indebtedness
evidenced by the Obligations be diminished by, Secured Party's delay or failure
to collect upon, foreclose, sell, take possession of or otherwise obtain value
for the Collateral.

(b) Secured Party shall, subject to the terms of the Subordination
Agreement, be under no duty whatsoever to make or give any presentment, notice
of dishonor, protest, demand for

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performance, notice of non-performance, notice of intent to accelerate, notice
of acceleration, or other notice or demand in connection with any Collateral or
the Obligations, or to take any steps necessary to preserve any rights against
any Obligor, Account Debtor or other Person. Debtor waives any right of
marshaling in respect of any and all Collateral, and waives any right to
require Secured Party or any Noteholder to proceed against any Obligor, Account
Debtor or other Person, exhaust any Collateral or enforce any other remedy
which Secured Party or any Noteholder now has or may hereafter have against any
Obligor or other Person.

Section 5.06 Modification of Obligations; Other Security. Debtor
waives (a) any and all notice of acceptance, creation, modification,
rearrangement, renewal or extension for any period of any instrument executed
by any Obligor in connection with the Obligations and (b) any defense of any
Obligor by reason of disability, lack of authorization, cessation of the
liability of any Obligor or for any other reason. Debtor authorizes Secured
Party, without notice or demand and without any reservation of rights against
Debtor and without affecting Debtor's liability hereunder or on the
Obligations, from time to time to (i) take and hold other property, other than
the Collateral, as security for the Obligations, and exchange, enforce, waive
and release any or all of the Collateral, (ii) apply the Collateral in the
manner permitted by this Agreement and (iii) renew, extend for any period,
accelerate, amend or modify, supplement, enforce, compromise, settle, waive or
release the obligations of any Obligor or any instrument or agreement of such
other Person with respect to any or all of the Obligations or Collateral.

ARTICLE 6

EVENTS OF DEFAULT

Section 6.01 Events. It shall constitute an Event of Default
under this Agreement if an Event of Default occurs and is continuing under the
Securities Purchase Documents.

Section 6.02 Remedies. Upon the occurrence and during the
continuance of any Event of Default and subject to the Liens under the Senior
Security Agreement and to the terms of the Subordination Agreement, Secured
Party may take any or all of the following actions without notice (except where
expressly required below or in the Securities Purchase Documents) or demand to
Debtor:

(a) Declare all or part of the indebtedness pursuant to
the Obligations immediately due and payable as provided in the
Securities Purchase Documents, and enforce payment of the same by
Debtor or any Obligor.

(b) Take possession of the Collateral, or at Secured
Party's request Debtor shall, at Debtor's cost, assemble the
Collateral and make it available at a location to be specified by
Secured Party which is reasonably convenient to Debtor and Secured
Party. Secured

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Party may, at its option, render any equipment unusable that may be
included in the Collateral, or, at Secured Party's request, Debtor
will render it unusable. In any event, Debtor shall bear the risk of
accidental loss or damage to or diminution in value of the Collateral,
and neither Secured Party nor any Noteholder will have any liability
whatsoever for failure to obtain or maintain insurance, nor to
determine whether any insurance ever in force is adequate as to amount
or as to risk insured.

(c) Sell or lease, in one or more sales or leases and in
one or more parcels, or otherwise dispose of any or all of the
Collateral in its then condition or in any other commercially
reasonable manner as Secured Party may elect, in a public or private
transaction, at any location as deemed reasonable by Secured Party
(including, without limitation, Debtor's premises), either for cash or
credit or for future delivery at such price as Secured Party may deem
fair, and (unless prohibited by the Code, as adopted in any applicable
jurisdiction) Secured Party or any Noteholder may be the purchaser of
any or all Collateral so sold and may apply upon the purchase price
therefor any Obligations secured hereby. Any such sale or transfer by
Secured Party either to itself or to any other Person shall be
absolutely free from any claim of right by Debtor, including any
equity or right of redemption, stay or appraisal which Debtor has or
may have under any rule of law, regulation or statute now existing or
hereafter adopted. Upon any such sale or transfer, Secured Party
shall have the right to deliver, assign and transfer to the purchaser
or transferee thereof the Collateral so sold or transferred. It shall
not be necessary that the Collateral or any part thereof be present at
the location of any such sale or transfer. Secured Party may, at its
discretion, provide for a public sale, and any such public sale shall
be held at such time or times within ordinary business hours and at
such place or places as Secured Party may fix in the notice of such
sale. Secured Party shall not be obligated to make any sale pursuant
to any such notice. Secured Party may, without notice or publication,
adjourn any public or private sale by announcement at any time and
place fixed for such sale, and such sale may be made at any time or
place to which the same may be so adjourned. In the event any sale or
transfer hereunder is not completed or is defective in the opinion of
Secured Party, such sale or transfer shall not exhaust the rights of
Secured Party hereunder, and Secured Party shall have the right to
cause one or more subsequent sales or transfers to be made hereunder.
In the event that any of the Collateral is sold or transferred on
credit, or to be held by Secured Party for future delivery to a
purchaser or transferee, the Collateral so sold or transferred may be
retained by Secured Party until the purchase price or other
consideration is paid by the purchaser or transferee thereof, but in
the event that such purchaser or transferee fails to pay for the
Collateral so sold or transferred or to take delivery thereof, neither
Secured Party nor any Noteholder shall incur any liability in
connection therewith. If only part of the Collateral is sold or
transferred such that the Obligations remain outstanding (in whole or
in part), Secured Party's rights and remedies hereunder shall not be
exhausted, waived or modified, and Secured Party is specifically
empowered to make one or more successive sales or transfers until all
the Collateral shall be sold or transferred and all the Obligations
are paid.

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In the event that Secured Party elects not to sell the Collateral,
Secured Party retains its rights to lease or otherwise dispose of or
utilize the Collateral or any part or parts thereof in any manner
authorized or permitted by law or in equity, and to apply the proceeds
of the same towards payment of the Obligations.

(d) Take possession of all books and records of Debtor
pertaining to the Collateral. Secured Party shall have the authority
to enter upon any real property or improvements thereon in order to
obtain any such books or records, or any Collateral located thereon,
and remove the same therefrom without liability.

(e) Apply proceeds of the disposition of the Collateral
to the Obligations in any manner elected by Secured Party and
permitted by the Code or otherwise permitted by law or in equity.
Such application may include, without limitation, the reasonable
expenses of retaking, holding, preparing for sale or other
disposition, and the reasonable attorneys' fees and legal expenses
incurred by Secured Party and the Noteholders.

(f) Appoint any Person as agent to perform any act or
acts necessary or incident to any sale or transfer by Secured Party of
the Collateral. Additionally, any sale or transfer hereunder may be
conducted by an auctioneer or any officer or agent of Secured Party.

(g) Receive, change the address for delivery, open and
dispose of mail addressed to Debtor, and to execute, assign and
endorse negotiable and other instruments for the payment of money,
documents of title or other evidences of payment, shipment or storage
for any form of Collateral on behalf of and in the name of Debtor.

(h) Notify or require Debtor to notify Account Debtors
that the Accounts have been assigned to Secured Party and direct such
Account Debtors to make payments on the Accounts directly to Secured
Party. To the extent Secured Party does not so elect, Debtor shall
continue to collect the Accounts. Secured Party or its designee shall
also have the right, in its own name or in the name of Debtor, to do
any of the following: (i) to demand, collect, receipt for, settle,
compromise any amounts due, give acquittances for, prosecute or defend
any action which may be in relation to any monies due or to become due
by virtue of, the Accounts; (ii) to sell, transfer or assign or
otherwise deal in the Accounts or the proceeds thereof or the related
goods, as fully and effectively as if Secured Party were the absolute
owner thereof; (iii) to extend the time of payment of any of the
Accounts, to grant waivers and make any allowance or other adjustment
with reference thereto; (iv) to endorse the name of Debtor on notes,
checks or other evidences of payments on Collateral that may come into
possession of Secured Party; (v) to take control of cash and other
proceeds of any Collateral; (vi) to sign the name of Debtor on any
invoice or bill of lading relating to any Collateral, or any drafts
against Account Debtors or other persons making payment with respect
to

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Collateral; (vii) to send a request for verification of Accounts to
any Account Debtor; and (viii) to do all other acts and things
necessary to carry out the intent of this Agreement.

(i) Exercise all other rights and remedies permitted by
law or in equity.

Notwithstanding the foregoing, Secured Party may not knowingly
do anything hereunder which would violate the rights known to the
Secured Party of third parties with respect to Disclosure-Restricted
Collateral.

Section 6.03 Attorney-in-Fact. Debtor hereby irrevocably appoints
Secured Party as Debtor's attorney-in-fact, with full authority in the place
and stead of Debtor and in the name of Debtor or otherwise, from time to time
in Secured Party's discretion upon the occurrence and during the continuance of
an Event of Default and subject to the terms of the Subordination Agreement,
but at Debtor's cost and expense and without notice to Debtor:

(a) To obtain, adjust, sell and cancel any insurance with
respect to the Collateral, and endorse any draft drawn by insurers of
the Collateral. Secured Party may apply any proceeds or unearned
premiums of such insurance to the Obligations (whether or not due).

(b) To take any action and to execute any assignment,
certificate, financing statement, notification, document or instrument
which Secured Party may deem necessary or advisable to accomplish the
purposes of this Agreement, including, without limitation, to receive,
endorse and collect all instruments made payable to Debtor
representing any payment or other distribution in respect of the
Collateral or any part thereof and to give full discharge for the
same.

Section 6.04 Account Debtors. Any payment or settlement of an
Account made by an Account Debtor will be, to the extent of such payment or to
the extent provided under such settlement, a release, discharge and acquittance
of the Account Debtor with respect to such Account, and Debtor shall take any
action as may be required by Secured Party in connection therewith. No Account
Debtor on any Account will ever be bound to make inquiry as to the termination
of this Agreement or the rights of Secured Party to act hereunder, but shall be
fully protected by Debtor in making payment directly to Secured Party.

Section 6.05 Liability for Deficiency. If any sale or other
disposition of Collateral by Secured Party in compliance with the Loan
Documents and applicable law or any other action of Secured Party or any
Noteholder hereunder in compliance with the Loan Documents and applicable law
results in reduction of the Obligations, such action will not release Debtor
from its liability to Secured Party and the Noteholders for any unpaid
Obligations, including costs, charges and expenses incurred in the liquidation
of Collateral, together with interest thereon, and the same shall be

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immediately due and payable to Secured Party at Secured Party's address set
forth in the opening paragraph hereof.

Section 6.06 Reasonable Notice. If any applicable provision of
any law requires Secured Party or any Noteholder to give reasonable notice of
any sale or disposition or other action, Debtor hereby agrees that ten days'
prior written notice shall constitute reasonable notice thereof. Such notice,
in the case of public sale, shall state the time and place fixed for such sale
and, in the case of private sale, the time after which such sale is to be made.

Section 6.07 Non-judicial Enforcement. To the extent permitted by
law, Secured Party may enforce its rights hereunder without prior judicial
process or judicial hearing, and to the extent permitted by law Debtor
expressly waives any and all legal rights which might otherwise require Secured
Party to enforce its rights by judicial process.

ARTICLE 7

MISCELLANEOUS PROVISIONS

Section 7.02 Amendments and Waivers. Secured Party's acceptance
of partial or delinquent payments or any forbearance, failure or delay by
Secured Party in exercising any right, power or remedy hereunder shall not be
deemed a waiver of any obligation of Debtor or any Obligor, or of any right,
power or remedy of Secured Party; and no partial exercise of any right, power
or remedy shall preclude any other or further exercise thereof. Secured Party
may remedy any Event of Default hereunder or in connection with the Obligations
without waiving the Event of Default so remedied. Debtor hereby agrees that if
Secured Party agrees to a waiver of any provision hereunder, or an exchange of
or release of the Collateral, or the addition or release of any Obligor or
other Person, any such action shall not constitute a waiver of any of Secured
Party's other rights or of Debtor's obligations hereunder. This Agreement may
be amended only by an instrument in writing executed jointly by Debtor and
Secured Party and may be supplemented only by documents delivered or to be
delivered in accordance with the express terms hereof.

Section 7.03 Copy as Financing Statement. A photocopy or other
reproduction of this Agreement or any financing statement covering the
Collateral is sufficient as a financing statement, and the same may be filed
with any appropriate filing authority for the purpose of perfecting Secured
Party's security interest in the Collateral.

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Section 7.04 Possession of Collateral. Secured Party shall be
deemed to have possession of any Collateral in transit to it or set apart for
it (or, in either case, any of its agents, affiliates or correspondents).

Section 7.05 Redelivery of Collateral. If any sale or transfer of
Collateral by Secured Party results in full satisfaction of the Obligations,
and after such sale or transfer and discharge there remains a surplus of
proceeds, Secured Party will deliver to Debtor such excess proceeds in a
commercially reasonable time; provided, however, that neither Secured Party nor
any Noteholder shall have any liability for any interest, cost or expense in
connection with any delay in delivering such proceeds to Debtor.

Section 7.07 Continuing Security Agreement.

(a) Except as may be expressly applicable pursuant to Section
9.505 of the Code, no action taken or omission to act by Secured Party or the
Noteholders hereunder, including, without limitation, any action taken or
inaction pursuant to Section 6.02, shall be deemed to constitute a retention of
the Collateral in satisfaction of the Obligations or otherwise to be in full
satisfaction of the Obligations, and the Obligations shall remain in full force
and effect, until Secured Party and the Noteholders shall have applied payments
(including, without limitation, collections from Collateral) towards the
Obligations in the full amount then outstanding or until such subsequent time
as is hereinafter provided in subsection (b) below.

Section 7.08 Termination. The grant of a security interest
hereunder and all of Secured Party's and the Noteholders' rights, powers and
remedies in connection therewith shall remain in full force and effect until
Secured Party has retransferred and delivered all Collateral in its possession
to Debtor, and executed a written release or termination statement and
reassigned to Debtor without recourse or warranty any remaining Collateral and
all rights conveyed hereby. Upon the complete

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payment of the Obligations and the compliance by Debtor with all covenants and
agreements hereof, Secured Party, at the written request and expense of Debtor,
will release, reassign and transfer the Collateral to Debtor and declare this
Agreement to be of no further force or effect. Notwithstanding the foregoing,
the reimbursement and indemnification provisions of Section 4.08 and the
provisions of subsection 7.07(b) shall survive the termination of this
Agreement.

Section 7.08 Subordination Agreement. This Agreement and the
rights and remedies of the Agent and the Noteholders hereunder are subject to
this Agreement and the terms and conditions of that certain Subordination
Agreement dated as of August __, 1998, made by the Agent, the Noteholders and
the Bank of Montreal.

Section 7.09 Counterparts, Effectiveness. This Agreement may be
executed in two or more counterparts. Each counterpart is deemed an original,
but all such counterparts taken together constitute one and the same
instrument. This Agreement becomes effective upon the execution hereof by
Debtor and delivery of the same to Secured Party or the Noteholders, and it is
not necessary for Secured Party or any Noteholder to execute any acceptance
hereof or otherwise signify or express its acceptance hereof.

DEBTOR: BRIGHAM OIL & GAS, L.P.

By: Brigham, Inc., its General Partner

By:
----------------------------
Name: Craig M. Fleming
Title: Chief Financial Officer

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FINANCING STATEMENT

This Financing Statement is presented to a filing officer for filing
pursuant to the Uniform Commercial Code.

1. The name and address of the Debtor is:

Brigham Oil & Gas, L.P.
6300 Bridge Point Parkway
Building 2, Suite 500
Austin, Texas 78730

2. The name and address of the Secured Party is:

Chase Manhattan Bank
600 Travis
Suite 1150
Houston, Texas 77002

3. This Financing Statement covers the following Collateral:

(a) All of Debtor's accounts, inventory, equipment,
chattel paper, documents, instruments and general intangibles.

(b) (i) Any related or additional property from time to
time delivered to or deposited with Secured Party by or for the
account of Debtor; (ii) all certificates of title or other documents
evidencing ownership or possession of or otherwise relating to any
property referred to in this paragraph 3; (iii) all property used or
usable in connection with any property referred to in this paragraph
3; (iv) all policies of insurance (whether or not required by Secured
Party) covering any property referred to in this paragraph 3; (v) all
goods which were at any time included in the Collateral and which are
returned to or for the account of Debtor following their sale, lease
or other disposition; (vi) all proceeds, products, replacements,
additions to, substitutions for, accessions of, and property necessary
for the operation of any of the property referred to in this paragraph
3, including, without limitation, insurance payable as a result of
loss or damage to any of the property referred to in this paragraph 3,
refunds of unearned premiums of any such insurance policy and claims
against third parties; and (vii) all books and records related to any
of the property referred to in this paragraph 3, including, without
limitation, any and all books of account, customer lists and

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other records relating in any way to the accounts, chattel paper,
instruments or inventory referred to in this paragraph 3.

(c) All general intangibles related to any property
referred to in this paragraph 3, including, without limitation, all
(i) bonds, guaranties, purchase or sales agreements and other
contractual rights, rights to performance, and claims for damages,
refunds (including tax refunds) or other monies due or to become due;
(ii) orders, franchises, permits, certificates, licenses, consents,
exemptions, variances, authorizations or other approvals by any
governmental agency or court; (iii) consulting, engineering and
technological information and specifications, design data, patent
rights, trade secrets, literary rights, copyrights, trademarks,
labels, trade names and other intellectual property; (iv) business
records, computer tapes and computer software; (v) goodwill; and (vi)
all other intangible personal property, whether similar or dissimilar
to the foregoing.

DEBTOR: BRIGHAM OIL & GAS, L.P.

By: Brigham, Inc., its General Partner

By:
-------------------------------
Name: Craig M. Fleming
Title: Chief Financial Officer

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SCHEDULE 3.06

STATES

Texas
Oklahoma
New Mexico
Kansas

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<PAGE> 136
EXHIBIT F

WHEN RECORDED RETURN TO:
Chase Manhattan Bank
600 Travis
Suite 1150
Houston, Texas 77002

MORTGAGE, DEED OF TRUST, ASSIGNMENT OF PRODUCTION,
SECURITY AGREEMENT AND FINANCING STATEMENT

FROM

BRIGHAM OIL & GAS, L.P.

______________, AS MORTGAGEE

FOR THE BENEFIT OF

_________________________________________________________
AS AGENT

A POWER OF SALE HAS BEEN GRANTED IN THIS INSTRUMENT. IN CERTAIN STATES, A
POWER OF SALE MAY ALLOW THE TRUSTEE OR THE AGENT TO TAKE THE MORTGAGED PROPERTY
AND SELL IT WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON DEFAULT BY THE
GRANTOR UNDER THIS INSTRUMENT.

THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS.

THIS INSTRUMENT SECURES PAYMENT OF FUTURE ADVANCES.

THIS INSTRUMENT COVERS PROCEEDS OF MORTGAGED PROPERTY.

THIS IS DEEMED TO BE A LINE OF CREDIT MORTGAGE UNDER THE PROVISIONS OF SECTION
48-7-4 N.M.S.A.
<PAGE> 137
TABLE OF CONTENTS

<TABLE>
<S> <C>
ARTICLE I

Grant of Lien and Indebtedness Secured
Section 1.01 Grant of Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02 Grant of Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.03 Indebtedness Secured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 1.04 Fixture Filing, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 1.05 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

ARTICLE II

Assignment of Production
Section 2.01 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.02 Rights Under Texas Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.03 No Modification of Payment Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

ARTICLE III

Representations and Warranties and Covenants
Section 3.01 Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.02 Defend Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.03 Not a Foreign Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.04 Power to Create Lien and Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.05 Revenue and Cost Bearing Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.06 Rentals Paid; Leases in Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.07 Operation by Third Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.08 Abandon, Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.09 Failure to Perform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

ARTICLE IV

Rights and Remedies
Section 4.01 Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.02 Foreclosure and Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.03 Substitute Trustees and Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
<PAGE> 138
<TABLE>
<S> <C> <C>
Section 4.04 Judicial Foreclosure; Receivership . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.05 Foreclosure for Installments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.06 Separate Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.07 Occupancy After Foreclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.08 Remedies Cumulative, Concurrent and Nonexclusive . . . . . . . . . . . . . . . . . . . . . 12
Section 4.09 No Release of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.10 Release of and Resort to Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.11 Waiver of Redemption, Notice and Marshalling of Assets, Etc . . . . . . . . . . . . . . . . 13
Section 4.12 Discontinuance of Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.13 Application of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.14 Resignation of Operator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.15 INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.16 Power of Sale in Oklahoma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

ARTICLE V

The Trustee
Section 5.01 Duties, Rights, and Powers of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 5.02 Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 5.03 Retention of Moneys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

ARTICLE VI

Miscellaneous
Section 6.01 Instrument Construed as Mortgage, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 6.02 Release of Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 6.03 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 6.04 Successors and Assigns of Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 6.05 Satisfaction of Prior Encumbrance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 6.06 Subrogation of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 6.07 Nature of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 6.08 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 6.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 6.10 EXCULPATION PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 6.11 Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Exhibit A - Mortgaged Property
</TABLE>

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MORTGAGE, DEED OF TRUST, ASSIGNMENT OF
PRODUCTION, SECURITY AGREEMENT AND FINANCING STATEMENT

This MORTGAGE, DEED OF TRUST, ASSIGNMENT OF PRODUCTION, SECURITY
AGREEMENT AND FINANCING STATEMENT (this "Mortgage") is entered into as of the
effective time and date hereinafter stated (the "Effective Date") by BRIGHAM OIL
& GAS, L.P., a Delaware limited partnership, whose address for notice is 6300
Bridge Point Parkway, Building 2, Suite 500, Austin, Texas 78730 ("Mortgagor"),
to ___________, whose address is _________, ("Mortgagee"), for the benefit of
___________________________________________________________, whose address for
notice is ________________, as Agent (as defined below), and for the benefit of
the Noteholders (as defined below).

R E C I T A L S:

A. Brigham Exploration Company, a Delaware corporation
("Borrower") has executed (i) a Securities Purchase Agreement dated as of August
__, 1998 (such agreement, as same may from time to time be modified, extended,
renewed, replaced, restated, amended or supplemented, being herein called the
"Securities Purchase Agreement") among the Mortgagor, the purchasers named
therein ("Noteholders"), and _______________________________________, as agent
for the Noteholders ("Agent") and (ii) the Indenture dated as of August __, 1998
("Indenture," and together with the Securities Purchase Agreement, collectively
referred to herein as the "Securities Purchase Documents").

B. The proceeds of the indebtedness evidenced by the Securities
Purchase Documents and the Notes (as defined in the Securities Purchase
Documents) issued in connection therewith are being used by the Borrower to
repay indebtedness owing under (i) the Credit Agreement dated as of January 28,
1998 (such agreement, as the same may from time to time be modified, extended,
renewed, restated, amended or supplemented, being herein called the "Credit
Agreement") among the Mortgagor, the lenders party thereto ("Senior Lenders"),
and Bank of Montreal, as agent for the Lenders ("Senior Loan Agent") and (ii)
the promissory note in the original principal amount of $75,000,000 (such note,
as the same may from time to time be modified, extended, renewed, restated,
amended, replaced or supplemented, being herein called the "BMO Note") issued
by the Mortgagor payable to the order of Bank of Montreal.

C. The BMO Note and all other obligations now or hereafter
existing or to exist under the Credit Agreement is secured in part by those
certain deeds of trust, mortgages, and other documents more particularly
described on Schedule 1 attached hereto and made a part hereof (such
instruments, together with any others as may now exist or hereafter be executed
pursuant to the Credit Agreement, as any of the same may from time to time be
amended, renewed, restated, modified or supplemented, being referred to herein
collectively as the "Senior Mortgages").
<PAGE> 140
D. In connection with the execution and delivery of the
Securities Purchase Documents, the Agent, the Noteholders and the Senior Loan
Agent have executed the Subordination Agreement dated as of August __, 1998
("Subordination Agreement") in order to evidence the relative priorities and
rights of the Senior Loan Agent and the Senior Lenders to the rights and
obligations of the Agent, the Noteholders and the Borrower under the Securities
Purchase Documents.

E. The Mortgagor will derive substantial benefit, both directly
and indirectly, from the making of the loans under the Securities Purchase
Documents and has agreed to execute and deliver to the Mortgagee for the
benefit of the Agent and the Noteholders the Guaranty Agreement dated as of
August __, 1998 ("Guaranty").

F. Therefore, in order to secure both the obligations of the
Borrower under the Securities Purchase Documents and under the Notes and the
obligations of the Mortgagor under the Guaranty, and to otherwise comply with
the terms and conditions of the Securities Purchase Documents and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Mortgagor hereby agrees with Mortgagee as follows:

ARTICLE I

Grant of Lien and Indebtedness Secured

Section 1.01 Grant of Liens. To secure payment of the
Indebtedness (as hereinafter defined) and the performance of the covenants and
obligations herein contained, Mortgagor does by these presents hereby, subject
to the reservations and restrictions set forth herein below and further subject
to the priority of the Liens created or evidenced by the Senior Mortgage(s) and
any Security Agreement or financing statement associated therewith, (i) GRANT,
BARGAIN, SELL, ASSIGN, SET OVER, TRANSFER and CONVEY unto_______, as Trustee,
whose address for notice hereunder is __________________("Trustee") and the
Trustee's successors and substitutes in trust hereunder with power of sale, for
the use and benefit of the Mortgagee on behalf of the Agent and the
Noteholders, all of the following described real and personal property, rights,
titles, interests and estates which are located in (or cover properties located
in) the State of Texas or which are located within (or cover properties located
within) the offshore area over which the United States of America asserts
jurisdiction and to which the laws of such state are applicable with respect to
this Mortgage and/or the liens or security interests created hereby (the "Deed
of Trust Mortgaged Property") and (ii) GRANT, MORTGAGE, PLEDGE, HYPOTHECATE AND
GRANT A POWER OF SALE to Mortgagee, for its benefit and the benefit of the
Agent and the Noteholders, with respect to, all of the following described real
and personal property, rights, titles, interests and estates which were not
granted to Trustee in clause (i) above (the "Other

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Mortgaged Property") (the Deed of Trust Property and the Other Mortgaged
Property herein collectively called the "Mortgaged Property"):

(a) All rights, titles, interests and estates now owned or
hereafter acquired by Mortgagor in and to the oil and gas leases and/or oil,
gas and other mineral leases and other interests and estates and the lands and
premises covered or affected thereby which are described on Exhibit A attached
to the Senior Mortgages listed in Schedule 1 (the "Senior Mortgages Exhibit A")
and Exhibit A (including Part I and Part II thereof) hereto (the "Additional
Exhibit A") (collectively called the "Hydrocarbon Property") or which
Hydrocarbon Property is otherwise referred to herein, and specifically, but
without limitation, the undivided interests of Mortgagor which are more
particularly described on the Senior Mortgages Exhibit A and the Additional
Exhibit A (the Senior Mortgages Exhibit A and the Additional Exhibit A are
herein collectively referred to as "Exhibit A").

(b) All rights, titles, interests and estates now owned or
hereafter acquired by Mortgagor in and to (i) the properties now or hereafter
pooled or unitized with the Hydrocarbon Property; (ii) all presently existing
or future unitization, communitization, pooling agreements and declarations of
pooled units and the units created thereby (including, without limitation, all
units created under orders, regulations, rules or other official acts of any
Federal, State or other governmental body or agency having jurisdiction and any
units created solely among working interest owners pursuant to operating
agreements or otherwise) which may affect all or any portion of the Hydrocarbon
Property including, without limitation, those units which may be described or
referred to on attached Exhibit A; (iii) all operating agreements, production
sales or other contracts, farmout agreements, farm-in agreements, area of
mutual interest agreements, equipment leases and other agreements described or
referred to in this Mortgage or which relate to any of the Hydrocarbon Property
or interests in the Hydrocarbon Property described or referred to herein or on
Exhibit A or to the production, sale, purchase, exchange, processing, handling,
storage, transporting or marketing of the Hydrocarbons (hereinafter defined)
from or attributable to such Hydrocarbon Property or interests; and (iv)
subject to applicable restrictions on disclosure and/or transfer, all
geological, geophysical, engineering, accounting, title, legal, and other
technical or business data concerning the Mortgaged Property, the Hydrocarbons,
or any other item of Property which are in the possession of Mortgagor or in
which Mortgagor can otherwise grant a security interest, and all books, files,
records, magnetic media, computer records, and other forms of recording or
obtaining access to such data.

(c) All rights, titles, interests and estates now owned or
hereafter acquired by Mortgagor in and to all oil, gas, casinghead gas,
condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and all
products refined therefrom and all other minerals (collectively called the
"Hydrocarbons") in and under and which may be produced and saved from or
attributable to the Hydrocarbon Property, the lands pooled or unitized
therewith and Mortgagor's interests therein, including all oil in tanks and all
rents, issues, profits, proceeds, products, revenues and other income from or
attributable to the Hydrocarbon Property, the lands pooled or unitized
therewith and Mortgagor's interests therein which are subjected or required to
be subjected to the liens and security interests of this Mortgage.

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(d) All tenements, hereditaments, appurtenances and properties in
anywise appertaining, belonging, affixed or incidental to the Hydrocarbon
Property, rights, titles, interests and estates described or referred to in
paragraphs (a) and (b) above, which are now owned or which may hereafter be
acquired by Mortgagor, including, without limitation, any and all property,
real or personal, now owned or hereafter acquired and situated upon, used, held
for use, or useful in connection with the operating, working or development of
any of such Hydrocarbon Property or the lands pooled or unitized therewith
(excluding drilling rigs, trucks, automotive equipment or other personal
property which may be taken to the premises for the purpose of drilling a well
or for other similar temporary uses) and including any and all oil wells, gas
wells, injection wells or other wells, buildings, structures, field separators,
liquid extraction plants, plant compressors, pumps, pumping units, pipelines,
sales and flow lines, gathering systems, field gathering systems, salt water
disposal facilities, tanks and tank batteries, fixtures, valves, fittings,
machinery and parts, engines, boilers, meters, apparatus, equipment,
appliances, tools, implements, cables, wires, towers, casing, tubing and rods,
surface leases, rights-of-way, easements, servitudes, licenses and other
surface and subsurface rights together with all additions, substitutions,
replacements, accessions and attachments to any and all of the foregoing
properties.

(e) Any property that may from time to time hereafter, by delivery
or by writing of any kind, be subjected to the lien and security interest
hereof by Mortgagor or by anyone on Mortgagor's behalf; and the Trustee is
hereby authorized to receive the same at any time as additional security
hereunder.

(f) All of the rights, titles and interests of every nature
whatsoever now owned or hereafter acquired by Mortgagor in and to the
Hydrocarbon Property rights, titles, interests and estates and every part and
parcel thereof, including, without limitation, the Hydrocarbon Property rights,
titles, interests and estates as the same may be enlarged by the discharge of
any payments out of production or by the removal of any charges or Permitted
Encumbrances (as hereinafter defined in Section 3.01) to which any of the
Hydrocarbon Property rights, titles, interests or estates are subject, or
otherwise; all rights of Mortgagor to liens and security interests securing
payment of proceeds from the sale of production from the Mortgaged Property,
including, but not limited to, those liens and security interests provided in
Tex. Bus. & Com. Code Ann. Section 9.319 (Tex. UCC) (Vernon Supp. 1989)
("Section 9.319 Tex. UCC"), as amended from time to time; together with any and
all renewals and extensions of any of the Hydrocarbon Property rights, titles,
interests or estates; all contracts and agreements supplemental to or
amendatory of or in substitution for the contracts and agreements described or
mentioned above; and any and all additional interests of any kind hereafter
acquired by Mortgagor in and to the Hydrocarbon Property rights, titles,
interests or estates.

(g) All accounts, contract rights, inventory, general intangibles,
insurance contracts and insurance proceeds constituting a part of, relating to
or arising out of those portions of the Mortgaged Property which are described
in paragraphs (a) through (f) above and all proceeds and products of all such
portions of the Mortgaged Property and payments in lieu of production (such as
"take or

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<PAGE> 143
pay" payments), whether such proceeds or payments are goods, money, documents,
instruments, chattel paper, securities, accounts, general intangibles,
fixtures, real property, or other assets.

Notwithstanding any provision hereof to the contrary, this Mortgage
does not cover, and there is expressly excepted and excluded from the definition
of Mortgaged Property, any properties, rights and interests as may now or
hereafter be beneficially or equitable owned by (or contractually owing to) a
third party under any one or more of the agreements or other arrangements now or
hereafter described in Schedule 4.10 of the Securities Purchase Agreements (the
"Participating Third Parties"), but only to the extent any such exception and
exclusion does not cause the undivided interests specified in Exhibit A to be
reduced or otherwise adversely affected. Without limitation of the generality
of the foregoing, any undivided interest (a) with respect to which Mortgagor
holds legal title (whether of record or not), and (b) that is in excess of the
undivided interests in such Mortgaged Property as are specified in the Exhibit A
shall be excluded from the definition of Mortgaged Property to the extent a
Participating Third Party now or hereafter has an interest therein and, to that
extent, shall otherwise be free and clear of this Mortgage (and any security
agreement and/or financing statement associated herewith).

TO HAVE AND TO HOLD the Mortgaged Property unto the Trustee and to his
successors and assigns forever to secure the payment of the Indebtedness
(hereinafter defined) and to secure the performance of the covenants,
agreements, and obligations of the Mortgagor herein contained.

Section 1.02 Grant of Security Interest. To further secure the
Indebtedness, Mortgagor hereby grants to Mortgagee, subject to the reservations
and restrictions set forth herein below and further subject to the priority of
the Liens created or evidenced by the Senior Mortgage(s) and any security
agreement or financing statement executed in association therewith and to the
terms of the Subordinated Agreement (as defined in the Securities Purchase
Documents), a security interest in and to the Mortgaged Property (whether now
or hereafter acquired by operation of law or otherwise) insofar as the
Mortgaged Property consists of equipment, accounts, contract rights, general
intangibles (subject in the case of geological and geophysical data (including
without limitation raw data and interpretations) contract rights and general
intangibles to any existing restrictions on disclosure and/or transfer),
insurance contracts, insurance proceeds, inventory, Hydrocarbons, fixtures and
any and all other personal property of any kind or character defined in and
subject to the provisions of the Uniform Commercial Code presently in effect in
the jurisdiction in which the Mortgaged Property is situated ("Applicable
UCC"), including the proceeds and products from any and all of such personal
property. Upon the happening of any of the Events of Default, but subject to
Liens created or evidenced by the Senior Mortgage(s) and the terms of the
Subordination Agreement, Mortgagee is and shall be entitled to all of the
rights, powers and remedies afforded a secured party by the Applicable UCC with
reference to the personal property and fixtures in which Mortgagee has been
granted a security interest herein, or the Trustee or Mortgagee may proceed as
to both the real and personal property covered hereby in accordance with the
rights and remedies granted under this Mortgage in respect of the real property
covered hereby. Such rights, powers and

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<PAGE> 144
remedies shall be cumulative and in addition to those granted to the Trustee or
Mortgagee under any other provision of this Mortgage or under any other
Collateral Document (as defined in the Securities Purchase Documents). Written
notice mailed to Mortgagor as provided herein at least five (5) days prior to
the date of public sale of any part of the Mortgaged Property which is personal
property subject to the provisions of the Applicable UCC, or prior to the date
after which private sale of any such part of the Mortgaged Property will be
made, shall constitute reasonable notice.

Section 1.03 Indebtedness Secured. This Mortgage is executed and
delivered by Mortgagor to secure and enforce the following (the
"Indebtedness"):

(a) Payment of and performance of (i) any and all indebtedness,
obligations and liabilities of Borrower owing to the Agent and the Noteholders
pursuant to the Securities Purchase Documents, whether now existing or
hereafter arising, and (ii) any and all indebtedness, obligations and
liabilities of Mortgagor owing to the Agent and the Noteholders pursuant to the
Guaranty, which Guaranty guarantees the payment of all amounts owing by the
Borrower under, or in connection with, the Securities Purchase Documents,
including, without limitation, all obligations of the Borrower under the
promissory notes which are or may be executed by the Borrower payable to the
order of the Noteholders and being in the original face amount of $50,000,000
with final maturity on or before ____________, 2003 and all other notes given
in substitution therefor or in modification, renewal or extension thereof, in
whole or in part (such notes, as from time to time supplemented, amended or
modified and all other notes given in substitution therefor or in modification,
renewal or extension thereof, in whole or in part, being hereafter called the
"Note").

(b) Any sums which may be advanced or paid by Mortgagee under the
terms hereof or of the Securities Purchase Documents on account of the failure
of Mortgagor to comply with the covenants of Mortgagor contained herein or in
the Securities Purchase Documents, and all other indebtedness of Mortgagor
arising pursuant to the provisions of this Mortgage.

Section 1.04 Fixture Filing, Etc. Without in any manner limiting
the generality of any of the other provisions of this Mortgage: (a) some
portions of the goods described or to which reference is made herein are or are
to become fixtures on the land described or to which reference is made herein
or on attached Exhibit A; (b) the security interests created hereby under
applicable provisions of the Applicable UCC will attach to Hydrocarbons
(minerals including oil and gas) or the accounts resulting from the sale
thereof at the wellhead or minehead located on the land described or to which
reference is made herein; (c) this Mortgage is to be filed of record in the
real estate records as a financing statement, and (d) Mortgagor is the record
owner of the real estate or interests in the real estate comprised of the
Mortgaged Property.

Section 1.05 Defined Terms. Any capitalized term used in this
Mortgage and not defined in this Mortgage shall have the meaning assigned to
such term in the Securities Purchase Documents.

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ARTICLE II

Assignment of Production

Section 2.01 Assignment. Subject to the priority of the Liens
created or evidenced by the Senior Mortgages and any security agreement or
financing statement executed in connection therewith, and to the terms of the
Subordination Agreement and the Permitted Encumbrances, Mortgagor has
absolutely and unconditionally assigned, transferred, and conveyed, and does
hereby absolutely and unconditionally assign, transfer and convey unto
Mortgagee, its successors and assigns, all of the Hydrocarbons and all products
obtained or processed therefrom, and the revenues and proceeds now and
hereafter attributable to the Hydrocarbons and said products and all payments
in lieu of the Hydrocarbons such as "take or pay" payments or settlements.
Subject to the terms of the Subordination Agreement and the Securities Purchase
Documents, the Hydrocarbons and products are to be delivered into pipe lines
connected with the Mortgaged Property, or to the purchaser thereof, to the
credit of Mortgagee, free and clear of all taxes, charges, costs, and expenses,
and all such revenues and proceeds shall be paid directly to Mortgagee, at its
head quarters in _________________ with no duty or obligation of any party
paying the same to inquire into the rights of Mortgagee to receive the same,
what application is made thereof, or as to any other matter. Mortgagor agrees
to perform all such acts, and to execute all such further assignments,
transfers and division orders, and other instruments as may be required or
desired by Mortgagee or any party in order to have said proceeds and revenues
so paid to Mortgagee. Subject to the Liens created or evidenced by the Senior
Mortgage(s) and the terms of the Subordination Agreement and the Securities
Purchase Documents, Mortgagee is fully authorized to receive and receipt for
said revenues and proceeds; to endorse and cash any and all checks and drafts
payable to the order of Mortgagor or Mortgagee for the account of Mortgagor
received from or in connection with said revenues or proceeds and to hold the
proceeds thereof in a bank account as additional collateral securing the
Indebtedness; and to execute transfer and division orders in the name of
Mortgagor, or otherwise, with warranties binding Mortgagor. All proceeds
received by the Mortgagee pursuant to this assignment shall be applied as
provided in the Securities Purchase Documents and in the other Loan Documents.
Mortgagee shall not be liable for any delay, neglect, or failure to effect
collection of any proceeds or to take any other action in connection therewith
or hereunder; but Mortgagee shall have the right, at its election, in the name
of Mortgagor or otherwise, to prosecute and defend any and all actions or legal
proceedings deemed advisable by Mortgagee in order to collect such funds and to
protect the interests of Mortgagee, and/or Mortgagor, with all costs, expenses
and attorneys' fees incurred in connection therewith being paid by Mortgagor.
Mortgagor hereby appoints Mortgagee as its attorney-in-fact to pursue any and
all rights of Mortgagor to liens on and security interests in the Hydrocarbons
securing payment of proceeds of runs attributable to the Hydrocarbons. In
addition to the rights granted to Trustee and/or Mortgagee in Section 1.01 (f)
of this Mortgage, Mortgagor hereby further transfers and assigns to Mortgagee
any and all such liens, security interests, financing statements or similar
interests of Mortgagor attributable to its interest in the Hydrocarbons and
proceeds of runs therefrom arising under or created by said statutory
provision, judicial decision or otherwise. The power of attorney granted to
Mortgagee in this Section 2.01,

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<PAGE> 146
being coupled with an interest, shall be irrevocable so long as the
Indebtedness or any part thereof remains unpaid.

Section 2.02 Rights Under Texas Act. Subject to the priority of
the Liens created or evidenced by the Senior Mortgages and any security
agreement or financing statement executed in connection therewith, and to the
terms of the Subordination Agreement, the Securities Purchase Documents and the
Permitted Encumbrances, Mortgagor hereby grants, sells, assigns, sets over and
mortgages unto Mortgagee during the term hereof, all of Mortgagor's rights and
interests pursuant to the provisions of Section 9.319 Tex. UCC, hereby vesting
in Mortgagee all of Mortgagor's rights as an interest owner to the continuing
security interest in and lien upon the Mortgaged Property.

Section 2.03 No Modification of Payment Obligations. Nothing
herein contained shall modify or otherwise alter the obligation of Mortgagor to
make prompt payment of all principal and interest owing on the Indebtedness
when and as the same become due regardless of whether the proceeds of the
Hydrocarbons are sufficient to pay the same and the rights provided in
accordance with the foregoing assignment provision shall be cumulative of all
other security of any and every character now or hereafter existing to secure
payment of the Indebtedness.

ARTICLE III

Representations and Warranties and Covenants

Mortgagor hereby represents and warrants as follows:

Section 3.01 Title. To the extent of the undivided interests
specified on the attached Additional Exhibit A and the Senior Mortgages Exhibit
A, Mortgagor has good and indefeasible title to and is possessed of the
Mortgaged Property, subject to the Permitted Encumbrances. The Mortgaged
Property is free of any and all Liens except for Excepted Liens and Liens, if
any, described in the Senior Mortgages, or on Exhibit A (collectively, the
"Permitted Encumbrances").

Notwithstanding and provision hereof to the contrary, the covenants,
representation and warranties contained in this Mortgage, to the extent
pertaining to any Mortgaged Property described in Part II of Additional Exhibit
A, are limited to the wellbores (and any production therefrom) of the wells
specifically listed in such Part II of Additional Exhibit A.

Section 3.02 Defend Title. This Mortgage is, and always will be
kept, a direct first or, to the extent the Senior Mortgage is in place, second
lien and security interest upon the Mortgaged Property subject only to the
Permitted Encumbrances and, except as provided in the Securities Purchase
Documents, Mortgagor will not create or suffer to be created or permit to exist
any lien, security interest or charge prior or junior to or on a parity with
the lien and security interest of this

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<PAGE> 147
Mortgage upon the Mortgaged Property or any part thereof or upon the rents,
issues, revenues, profits and other income therefrom. Mortgagor will warrant
and defend the title to the Mortgaged Property against the claims and demands
of all other persons whomsoever and will maintain and preserve the lien created
hereby so long as any of the Indebtedness secured hereby remains unpaid.
Should an adverse claim be made against or a cloud develop upon the title to
any part of the Mortgaged Property, Mortgagor agrees it will immediately defend
against such adverse claim or take appropriate action to remove such cloud at
Mortgagor's cost and expense, and Mortgagor further agrees that the Trustee
and/or Mortgagee may, subject to the terms of the Subordination Agreement, take
such other action as they deem advisable to protect and preserve their
interests in the Mortgaged Property, and in such event Mortgagor will indemnify
the Trustee and Mortgagee against any and all cost, attorney's fees and other
expenses which they may incur in defending against any such adverse claim or
taking action to remove any such cloud.

Section 3.03 Not a Foreign Person. Mortgagor is not a "foreign
person" within the meaning of the Internal Revenue Code of 1986, as amended
(hereinafter called the "Code"), Sections 1445 and 7701 (i.e. Mortgagor is not
a non-resident alien, foreign corporation, foreign partnership, foreign trust
or foreign estate as those terms are defined in the Code and any regulations
promulgated thereunder).

Section 3.04 Power to Create Lien and Security. The Mortgagor
has, in all material respects, full power and lawful authority to grant,
bargain, sell, assign, transfer, mortgage, and convey a security interest in
all of the Mortgaged Property in the manner and form herein provided and
without obtaining the authorization, approval, consent or waiver of any lessor,
sublessor, Governmental Authority or other party or parties whomsoever.

Section 3.05 Revenue and Cost Bearing Interest. Mortgagor's
ownership of the Hydrocarbon Property and the undivided interests therein as
specified on the Senior Mortgages Exhibit A and the Additional Exhibit A does,
after giving full effect to all Permitted Encumbrances, afford Mortgagor not
less than those net interests (expressed as a fraction, percentage or decimal)
in the production from or which is allocated to such Hydrocarbon Property
specified as net revenue interest (NRI) on the Senior Mortgages Exhibit A and
the Additional Exhibit A and causes Mortgagor to bear not more than that
portion (expressed as a fraction, percentage or decimal), specified as net
revenue interest (NRI) on the Senior Mortgages Exhibit A and the Additional
Exhibit A, of the costs of drilling, developing and operating the wells
identified on the Senior Mortgages Exhibit A and the Additional Exhibit A.

Section 3.06 Rentals Paid; Leases in Effect. All rentals and
royalties due and payable in accordance with the terms of any leases or
subleases comprising any material part of the Hydrocarbon Property have been
duly paid or provided for and all leases or subleases comprising any material
part of the Hydrocarbon Property are in full force and effect.

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Section 3.07 Operation by Third Parties. All or portions of the
Mortgaged Property may be comprised of interests in the Hydrocarbon Property
which are other than working interests or which may be operated by a party or
parties other than Mortgagor and with respect to all or any such interests and
properties as may be comprised of interests other than working interests or
which may be operated by parties other than Mortgagor, Mortgagor's covenants as
expressed in this Article III are modified to require that Mortgagor use its
best efforts to obtain compliance with such covenants by the working interest
owners or the operator or operators of such leases or properties.

Section 3.08 Abandon, Sales. The Mortgagor will not sell, lease,
assign, transfer or otherwise dispose or abandon any of the Mortgaged Property
except as permitted by the Securities Purchase Documents.

Section 3.09 Failure to Perform. Subject to the priority of the
Liens created or evidenced by the Senior Mortgages and any security agreement
or financing statement executed in connection therewith, and to the terms of
the Subordination Agreement, the Mortgagor agrees that if the Mortgagor, after
receipt from Mortgagee of written notice and demand, fails to perform any act
or to take any action which the Mortgagor is required to perform or take
hereunder or pay any money which the Mortgagor is required to pay hereunder,
each of the Mortgagee and the Trustee in the Mortgagor's name or its or their
own name may, but shall not be obligated to, perform or cause to perform such
act or take such action or pay such money, and any expenses so incurred by
either of them and any money so paid by either of them shall be a demand
obligation owing by the Mortgagor to the Mortgagee or the Trustee, as the case
may be, and each of the Mortgagee and the Trustee, upon making such payment,
shall be subrogated to all of the rights of the Person receiving such payment.
Each amount due and owing by Mortgagor to each of the Mortgagee and the Trustee
pursuant to this Mortgage shall bear interest from the date of such expenditure
or payment or other occurrence which gives rise to such amount being owed to
such Person until paid at the [Post-Default Rate], and all such amounts
together with such interest thereon shall be a part of the Indebtedness
described in Section 1.03 hereof.

ARTICLE IV

Rights and Remedies

Section 4.01 Event of Default. An "Event of Default" under the
Securities Purchase Documents shall be an Event of Default under this Mortgage.

Section 4.02 Foreclosure and Sale. Subject to the priority of the
Liens created or evidenced by the Senior Mortgages and any security agreement
or financing statement executed in connection therewith, and to the terms of
the Subordination Agreement and the Securities Purchase Documents, if an Event
of Default shall occur and be continuing, Mortgagee shall have the right and
option to proceed with foreclosure by directing the Trustee, or his successors
or substitutes in trust, to proceed with foreclosure and to sell, to the extent
permitted by law, all or any portion of the Mortgaged

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Property at one or more sales, as an entirety or in parcels, at such place or
places in otherwise such manner and upon such notice as may be required by law,
or, in the absence of any such requirement, as the Mortgagee may deem
appropriate, and to make conveyance to the purchaser or purchasers. Where the
Mortgaged Property is situated in more than one county, notice as above
provided shall be posted and filed in all such counties (if such notices are
required by law), and all such Mortgaged Property may be sold in any such
county and any such notice shall designate the county where such Mortgaged
Property is to be sold. Subject to the priority of the Liens created or
evidenced by the Senior Mortgages and any security agreement or financing
statement executed in connection therewith, and to the terms of the
Subordination Agreement and the Securities Purchase Documents, nothing
contained in this Section 4.02 shall be construed so as to limit in any way the
Trustee's rights to sell the Mortgaged Property, or any portion thereof, by
private sale if, and to the extent that, such private sale is permitted under
the laws of the applicable jurisdiction or by public or private sale after
entry of a judgment by any court of competent jurisdiction so ordering.
Mortgagor hereby irrevocably appoints the Trustee to be the attorney of
Mortgagor and in the name and on behalf of Mortgagor to execute and deliver any
deeds, transfers, conveyances, assignments, assurances and notices which
Mortgagor ought to execute and deliver and do and perform any and all such acts
and things which Mortgagor ought to do and perform under the covenants herein
contained and generally, to use the name of Mortgagor in the exercise of all or
any of the powers hereby conferred on the Trustee. At any such sale: (i)
whether made under the power herein contained or any other legal enactment, or
by virtue of any judicial proceedings or any other legal right, remedy or
recourse, it shall not be necessary for Trustee to have physically present, or
to have constructive possession of, the Mortgaged Property (Mortgagor hereby
covenanting and agreeing to deliver to Trustee any portion of the Mortgaged
Property not actually or constructively possessed by Trustee immediately upon
demand by Trustee) and the title to and right of possession of any such
property shall pass to the purchaser thereof as completely as if the same had
been actually present and delivered to purchaser at such sale, (ii) each
instrument of conveyance executed by Trustee shall contain a general warranty
of title, binding upon Mortgagor and its successors and assigns, (iii) each and
every recital contained in any instrument of conveyance made by Trustee shall
conclusively establish the truth and accuracy of the matters recited therein,
including, without limitation, nonpayment of the Indebtedness, advertisement
and conduct of such sale in the manner provided herein and otherwise by law and
appointment of any successor Trustee hereunder, (iv) any and all prerequisites
to the validity thereof shall be conclusively presumed to have been performed,
(v) the receipt of Trustee or of such other party or officer making the sale
shall be a sufficient discharge to the purchaser or purchasers for its purchase
money and no such purchaser or purchasers, or its assigns or personal
representatives, shall thereafter be obligated to see to the application of
such purchase money, or be in any way answerable for any loss, misapplication
or nonapplication thereof, (vi) to the fullest extent permitted by law,
Mortgagor shall be completely and irrevocably divested of all of its right,
title, interest, claim and demand whatsoever, either at law or in equity, in
and to the property sold and such sale shall be a perpetual bar both at law and
in equity against Mortgagor, and against any and all other persons claiming or
to claim the property sold or any part thereof, by, through or under Mortgagor,
and (vii) to the extent and under such circumstances as are permitted by law,
Mortgagee may be a purchaser at any such sale, and shall have the right, after
paying or accounting for all costs

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of said sale or sales, to credit the amount of the bid upon the amount of the
Indebtedness (in the order of priority set forth in Section 4.13 hereof) in
lieu of cash payment.

Section 4.03 Substitute Trustees and Agents. The Trustee or his
successor or substitute may appoint or delegate any one or more persons as
agent to perform any act or acts necessary or incident to any sale held by
Trustee, including the posting of notices and the conduct of sale, but in the
name and on behalf of Trustee, his successor or substitute. If Trustee or his
successor or substitute shall have given notice of sale hereunder, any
successor or substitute trustee thereafter appointed may complete the sale and
the conveyance of the property pursuant thereto as if such notice had been
given by the successor or substitute trustee conducting the sale.

Section 4.04 Judicial Foreclosure; Receivership. Subject to the
priority of the Liens created or evidenced by the Senior Mortgages and any
security agreement or financing statement executed in connection therewith, and
to the terms of the Subordination Agreement and the Securities Purchase
Documents: if any of the Indebtedness shall become due and payable and shall
not be promptly paid, the Trustee or Mortgagee shall have the right and power
to proceed by a suit or suits in equity or at law, whether for the specific
performance of any covenant or agreement herein contained or in aid of the
execution of any power herein granted, or for any foreclosure hereunder or for
the sale of the Mortgaged Property under the judgment or decree of any court or
courts of competent jurisdiction, or for the appointment of a receiver pending
any foreclosure hereunder or the sale of the Mortgaged Property under the order
of a court or courts of competent jurisdiction or under executory or other
legal process, or for the enforcement of any other appropriate legal or
equitable remedy. Any money advanced by the Trustee and/or Mortgagee in
connection with any such receivership shall be a demand obligation (which
obligation Mortgagor hereby expressly promises to pay) owing by Mortgagor to
the Trustee and/or Mortgagee and shall bear interest from the date of making
such advance by the Trustee and/or Mortgagee until paid at the Post Default
Rate.

Section 4.05 Foreclosure for Installments. Subject to the
priority of the Liens created or evidenced by the Senior Mortgages and any
security agreement or financing statement executed in connection therewith, and
to the terms of the Subordination Agreement and the Securities Purchase
Documents: Mortgagee shall also have the option to proceed with foreclosure in
satisfaction of any installments of the Indebtedness which have not been paid
when due either through the courts or by directing the Trustee or his
successors in trust to proceed with foreclosure in satisfaction of the matured
but unpaid portion of the Indebtedness as if under a full foreclosure,
conducting the sale as herein provided and without declaring the entire
principal balance and accrued interest due; such sale may be made subject to
the unmatured portion of the Indebtedness, and any such sale shall not in any
manner affect the unmatured portion of the Indebtedness, but as to such
unmatured portion of the Indebtedness this Mortgage shall remain in full force
and effect just as though no sale had been made hereunder. It is further
agreed that several sales may be made hereunder without exhausting the right of
sale for any unmatured part of the Indebtedness, it being the purpose hereof to
provide for a foreclosure and sale of the security for any matured portion of
the Indebtedness without

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exhausting the power to foreclose and sell the Mortgaged Property for any
subsequently maturing portion of the Indebtedness.

Section 4.06 Separate Sales The Mortgaged Property may be sold in
one or more parcels and in such manner and order as Mortgagee, in its sole
discretion, may elect, it being expressly understood and agreed that the right
of sale arising out of any Event of Default shall not be exhausted by any one
or more sales.

Section 4.07 Occupancy After Foreclosure. In the event there is a
foreclosure sale hereunder and at the time of such sale Mortgagor or
Mortgagor's heirs, devisees, representatives, successors or assigns or any
other person claiming any interest in the Mortgaged Property by, through or
under Mortgagor, are occupying or using the Mortgaged Property or any part
thereof, each and all shall immediately become the tenant of the purchaser at
such sale, which tenancy shall be a tenancy from day to day, terminable at the
will of either the landlord or tenant, or at a reasonable rental per day based
upon the value of the property occupied, such rental to be due daily to the
purchaser; to the extent permitted by applicable law, the purchaser at such
sale shall, notwithstanding any language herein apparently to the contrary,
have the sole option to demand immediate possession following the sale or to
permit the occupants to remain as tenants at will. In the event the tenant
fails to surrender possession of said property upon demand, the purchaser shall
be entitled to institute and maintain a summary action for possession of the
Mortgaged Property (such as an action for forcible entry and detainer) in any
court having jurisdiction.

Section 4.08 Remedies Cumulative, Concurrent and Nonexclusive.
Every right, power and remedy herein given to the Trustee or Mortgagee shall
subject to the Liens created or evidenced by the Senior Mortgage(s) and to the
terms of the Subordination Agreement, be cumulative and in addition to every
other right, power and remedy herein specifically given or now or hereafter
existing in equity, at law or by statute (including specifically those granted
by the Applicable UCC in effect and applicable to the Mortgaged Property or any
portion thereof) and each and every right, power and remedy whether
specifically herein given or otherwise existing may, subject to the priority of
the Liens created or evidenced by the Senior Mortgages and any security
agreement or financing statement executed in connection therewith, and to the
terms of the Subordination Agreement, be exercised from time to time and so
often and in such order as may be deemed expedient by the Trustee or Mortgagee,
and the exercise, or the beginning of the exercise, of any such right, power or
remedy shall not be deemed a waiver of the right to exercise, at the same time
or thereafter any other right, power or remedy. No delay or omission by the
Trustee or Mortgagee in the exercise of any right, power or remedy shall impair
any such right, power or remedy or operate as a waiver thereof or of any other
right, power or remedy then or thereafter existing.

Section 4.09 No Release of Obligations. Neither Mortgagor, any
guarantor nor any other person hereafter obligated for payment of all or any
part of the Indebtedness shall be relieved of such obligation by reason of (a)
the failure of Trustee to comply with any request of Mortgagor, or any
guarantor or any other person so obligated to foreclose the lien of this
Mortgage or to enforce any

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provision hereunder or under the Securities Purchase Documents; (b) the
release, regardless of consideration, of the Mortgaged Property or any portion
thereof or interest therein or the addition of any other property to the
Mortgaged Property; (c) any agreement or stipulation between any subsequent
owner of the Mortgaged Property and Mortgagee extending, renewing, rearranging
or in any other way modifying the terms of this Mortgage without first having
obtained the consent of, given notice to or paid any consideration to
Mortgagor, any guarantor or such other person, and in such event Mortgagor,
guarantor and all such other persons shall continue to be liable to make
payment according to the terms of any such extension or modification agreement
unless expressly released and discharged in writing by Mortgagee; or (d) by any
other act or occurrence save and except the complete payment of the
Indebtedness and the complete fulfillment of all obligations hereunder or under
the Securities Purchase Documents.

Section 4.10 Release of and Resort to Collateral. Mortgagee may
release, regardless of consideration, any part of the Mortgaged Property
without, as to the remainder, in any way impairing, affecting, subordinating or
releasing the lien or security interest created in or evidenced by this
Mortgage or its stature as, subject to the Liens created or evidenced by the
Senior Mortgage(s) and the terms of the Subordination Agreement, a first and
prior lien and security interest in and to the Mortgaged Property, and without
in any way releasing or diminishing the liability of any person or entity
liable for the repayment of the Indebtedness. For payment of the Indebtedness,
Mortgagee may resort to any other security therefor held by Mortgagee or
Trustee in such order and manner as Mortgagee may elect.

Section 4.11 Waiver of Redemption, Notice and Marshalling of
Assets, Etc. To the fullest extent permitted by law, Mortgagor hereby
irrevocably and unconditionally waives and releases (a) all benefits that might
accrue to Mortgagor by virtue of any present or future moratorium law or other
law exempting the Mortgaged Property from attachment, levy or sale on execution
or providing for any appraisement, valuation, stay of execution, exemption from
civil process, redemption or extension of time for payment and (b) any right to
a marshalling of assets or a sale in inverse order of alienation. If any law
referred to in this Mortgage and now in force, of which Mortgagor or its
successor or successors might take advantage despite the provisions hereof,
shall hereafter be repealed or cease to be in force, such law shall thereafter
be deemed not to constitute any part of the contract herein contained or to
preclude the operation or application of the provisions hereof. Provided,
however, that if the laws of any state do not permit the redemption period to
be waived, the redemption period is specifically reduced to the minimum amount
of time allowable by statute, and specifically for any property located in the
State of New Mexico, the redemption period hereunder shall be reduced to one
month.

Section 4.12 Discontinuance of Proceedings In case Mortgagee
shall have proceeded to invoke any right, remedy or recourse permitted
hereunder or under the Securities Purchase Documents and shall thereafter elect
to discontinue or abandon same for any reason, Mortgagee shall have the
unqualified right so to do and, in such an event, Mortgagor and Mortgagee shall
be restored to their former positions with respect to the Indebtedness, this
Mortgage, the Securities Purchase

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Documents, the Mortgaged Property and otherwise, and the rights, remedies,
recourses and powers of Mortgagee shall continue as if same had never been
invoked.

Section 4.13 Application of Proceeds. Subject to the priority of
the Liens created or evidenced by the Senior Mortgages and any security
agreement or financing statement executed in connection therewith, and to the
terms of the Subordination Agreement the proceeds of any sale of the Mortgaged
Property or any part thereof and all other monies received by the Trustee or
Mortgagee in any proceedings for the enforcement hereof or otherwise, whose
application has not elsewhere herein been specifically provided for, shall be
applied:

(a) first, to the payment of all reasonable expenses incurred by
the Agent or any Noteholder incident to the enforcement of this Mortgage, the
Securities Purchase Documents or any of the Indebtedness (including, without
limiting the generality of the foregoing, expenses of any entry or taking of
possession, of any sale, of advertisement thereof, and of conveyances, and
court costs, compensation of agents and employees, legal fees and a reasonable
commission to the Trustee acting), and to the payment of all other charges,
reasonable expenses, liabilities and advances incurred or made by the Trustee
or Mortgagee under this Mortgage or in executing any trust or power hereunder;

(b) second to payment of the Indebtedness in such order and manner
as Mortgagee may elect; and

Section 4.14 Resignation of Operator. In addition to all rights
and remedies under this Mortgage, at law and in equity, if any Event of Default
shall occur and Trustee or the Mortgagee shall exercise any possessory remedies
under this Mortgage with respect to any portion of the Hydrocarbon Property (or
Mortgagor shall transfer any Mortgaged Property "in lieu of" foreclosure), the
Mortgagee or the Trustee shall have the right to request that any operator of
any Hydrocarbon Property which is either Mortgagor or any Affiliate of
Mortgagor to resign as operator under the joint operating agreement applicable
thereto, and no later than 60 days after receipt by Mortgagor of any such
request, Mortgagor shall resign (or cause such other party to resign) as
operator of such Hydrocarbon Property.

Section 4.15 INDEMNITY. IN CONNECTION WITH ANY ACTION TAKEN BY
THE TRUSTEE AND/OR MORTGAGEE PURSUANT TO THIS MORTGAGE, THE TRUSTEE AND/OR
MORTGAGEE AND THEIR OFFICERS, DIRECTORS, EMPLOYEES, REPRESENTATIVES, AGENTS,
ATTORNEYS, ACCOUNTANTS AND EXPERTS ("INDEMNIFIED PARTIES") SHALL NOT BE LIABLE
FOR ANY LOSS SUSTAINED BY MORTGAGOR RESULTING FROM AN ASSERTION THAT MORTGAGEE
HAS RECEIVED FUNDS FROM THE PRODUCTION OF HYDROCARBONS CLAIMED BY THIRD PERSONS
OR ANY ACT OR OMISSION OF ANY INDEMNIFIED PARTY IN ADMINISTERING, MANAGING,
OPERATING OR CONTROLLING THE MORTGAGED PROPERTY INCLUDING SUCH LOSS WHICH MAY
RESULT FROM

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THE ORDINARY NEGLIGENCE OF AN INDEMNIFIED PARTY UNLESS SUCH LOSS IS CAUSED BY
THE GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR BAD FAITH OF AN INDEMNIFIED PARTY,
NOR SHALL THE TRUSTEE AND/OR MORTGAGEE BE OBLIGATED TO PERFORM OR DISCHARGE ANY
OBLIGATION, DUTY OR LIABILITY OF MORTGAGOR. MORTGAGOR SHALL AND DOES HEREBY
AGREE TO INDEMNIFY EACH INDEMNIFIED PARTY FOR, AND TO HOLD EACH INDEMNIFIED
PARTY HARMLESS FROM, ANY AND ALL LIABILITY, LOSS OR DAMAGE WHICH MAY OR MIGHT
BE INCURRED BY ANY INDEMNIFIED PARTY BY REASON OF THIS MORTGAGE OR THE EXERCISE
OF RIGHTS OR REMEDIES HEREUNDER; SHOULD THE TRUSTEE AND/OR MORTGAGEE MAKE ANY
EXPENDITURE ON ACCOUNT OF ANY SUCH LIABILITY, LOSS OR DAMAGE, THE AMOUNT
THEREOF, INCLUDING COSTS, EXPENSES AND REASONABLE ATTORNEYS' FEES, SHALL BE A
DEMAND OBLIGATION (WHICH OBLIGATION MORTGAGOR HEREBY EXPRESSLY PROMISES TO PAY)
OWING BY MORTGAGOR TO THE TRUSTEE AND/OR MORTGAGEE AND SHALL BEAR INTEREST FROM
THE DATE EXPENDED UNTIL PAID AT THE POST-DEFAULT RATE, SHALL BE A PART OF THE
INDEBTEDNESS AND SHALL BE SECURED BY THIS MORTGAGE AND ANY OTHER SECURITY
INSTRUMENT. MORTGAGOR HEREBY ASSENTS TO, RATIFIES AND CONFIRMS ANY AND ALL
ACTIONS OF THE TRUSTEE AND/OR MORTGAGEE WITH RESPECT TO THE MORTGAGED PROPERTY
TAKEN UNDER, AND IN COMPLIANCE WITH THE TERMS OF, THIS MORTGAGE. THE
LIABILITIES OF THE MORTGAGOR AS SET FORTH IN THIS SECTION 4.15 SHALL SURVIVE
THE TERMINATION OF THIS MORTGAGE.

Section 4.16 Power of Sale in Oklahoma. Any sale of any part of
the Mortgaged Property located in the State of Oklahoma shall be made in
conformity to the laws thereof, and it is agreed that the appraisement of any
such properties is expressly waived or not waived at the option of the Agent,
and any such option may be exercised prior to the time judgment is rendered in
any foreclosure hereon. A POWER OF SALE HAS BEEN GRANTED IN THIS MORTGAGE. A
POWER OF SALE MAY ALLOW THE MORTGAGEE TO TAKE THE MORTGAGED PROPERTY AND SELL
IT WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON DEFAULT BY GRANTOR UNDER
THIS MORTGAGE. The parties hereto are cognizant of and acknowledge the
Oklahoma Power of Sale Mortgage Foreclosure Act which went into effect November
1, 1986. Notwithstanding any provision Article IV to the contrary, it is the
intent of the parties that the provisions herein relating to the power of sale
which are applicable to the Mortgaged Property located in the State of Oklahoma
are subject to the provisions of the Oklahoma Power of Sale Mortgage
Foreclosure Act. In addition, it is the intent of the parties that the power
of sale granted herein may be exercised by the Mortgagee pursuant to the terms
and provisions of the Oklahoma Power of Sale Mortgage Foreclosure Act.

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ARTICLE V

The Trustee

Section 5.01 Duties, Rights, and Powers of Trustee. It shall be
no part of the duty of the Trustee to see to any recording, filing or
registration of this Mortgage or any other instrument in addition or
supplemental thereto, or to give any notice thereof, or to see to the payment
of or be under any duty in respect of any tax or assessment or other
governmental charge which may be levied or assessed on the Mortgaged Property,
or any part thereof, or against Mortgagor, or to see to the performance or
observance by Mortgagor of any of the covenants and agreements contained
herein. The Trustee shall not be responsible for the execution, acknowledgment
or validity of this Mortgage or of any instrument in addition or supplemental
hereto or for the sufficiency of the security purported to be created hereby,
and makes no representation in respect thereof or in respect of the rights of
Mortgagee. The Trustee shall have the right to advise with counsel upon any
matters arising hereunder and shall be fully protected in relying as to legal
matters on the advice of counsel. The Trustee shall not incur any personal
liability hereunder except for Trustee's own gross negligence, bad faith and/or
willful misconduct; and the Trustee shall have the right to rely on any
instrument, document or signature authorizing or supporting any action taken or
proposed to be taken by him hereunder, believed by him in good faith to be
genuine.

Section 5.02 Successor Trustee. The Trustee may resign by written
notice addressed to Mortgagee or be removed at any time with or without cause
by an instrument in writing duly executed on behalf of Mortgagee. In case of
the death, resignation or removal of the Trustee, a successor trustee may be
appointed by Mortgagee by instrument of substitution complying with any
applicable requirements of law, or, in the absence of any such requirement,
without other formality than appointment and designation in writing. Written
notice of such appointment and designation shall be given by Mortgagee to
Mortgagor, but the validity of any such appointment shall not be impaired or
affected by failure to give such notice or by any defect therein. Such
appointment and designation shall be full evidence of the right and authority
to make the same and of all the facts therein recited, and, upon the making of
any such appointment and designation, this Mortgage shall vest in the successor
trustee all the estate and title in and to all of the Mortgaged Property, and
the successor trustee shall thereupon succeed to all of the rights, powers,
privileges, immunities and duties hereby conferred upon the Trustee named
herein, and one such appointment and designation shall not exhaust the right to
appoint and designate a successor trustee hereunder but such right may be
exercised repeatedly as long as any Indebtedness remains unpaid hereunder. To
facilitate the administration of the duties hereunder, Mortgagee may appoint
multiple trustees to serve in such capacity or in such jurisdictions as
Mortgagee may designate.

Section 5.03 Retention of Moneys. All moneys received by Trustee
shall, until used or applied as herein provided, be held in trust for the
purposes for which they were received, but need not be segregated in any manner
from any other moneys (except to the extent required by law), and Trustee shall
be under no liability for interest on any moneys received by him hereunder.

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ARTICLE VI

Miscellaneous

Section 6.01 Instrument Construed as Mortgage, Etc. With respect
to any portions of the Mortgaged Property located in any state or other
jurisdiction the laws of which do not provide for the use or enforcement of a
deed of trust or the office, rights and authority of the Trustee as herein
provided, the general language of conveyance hereof to the Trustee is intended
and the same shall be construed as words of mortgage unto and in favor of
Mortgagee and the rights and authority granted to the Trustee herein may be
enforced and asserted by Mortgagee in accordance with the laws of the
jurisdiction in which such portion of the Mortgaged Property is located and the
same may be foreclosed at the option of Mortgagee as to any or all such
portions of the Mortgaged Property in any manner permitted by the laws of the
jurisdiction in which such portions of the Mortgaged Property is situated.
This Mortgage may be construed as a mortgage, deed of trust, chattel mortgage,
conveyance, assignment, security agreement, pledge, financing statement,
hypothecation or contract, or any one or more of them, in order fully to
effectuate the lien hereof and the purposes and agreements herein set forth.

Section 6.02 Release of Mortgage. If all Indebtedness secured
hereby shall be paid and the Securities Purchase Documents terminated,
Mortgagee shall forthwith cause satisfaction and discharge of this Mortgage to
be entered upon the record at the expense of Mortgagor and shall execute and
deliver or cause to be executed and delivered such instruments of satisfaction
and reassignment as may be appropriate. Otherwise, this Mortgage shall remain
and continue in full force and effect.

Section 6.03 Severability. If any provision hereof is invalid or
unenforceable in any jurisdiction, the other provisions hereof shall remain in
full force and effect in such jurisdiction and the remaining provisions hereof
shall be liberally construed in favor of the Trustee and Mortgagee in order to
effectuate the provisions hereof, and the invalidity or unenforceability of any
provision hereof in any jurisdiction shall not affect the validity or
enforceability of any such provision in any other jurisdiction.

Section 6.04 Successors and Assigns of Parties. The term
"Mortgagee" as used herein shall mean and include any legal owner, holder,
assignee or pledgee of any of the Indebtedness secured hereby (including,
without limitation, the Agent and the Noteholders). The terms used to
designate Trustee, Mortgagee and Mortgagor shall be deemed to include the
respective heirs, legal representatives, successors and assigns of such
parties.

Section 6.05 Satisfaction of Prior Encumbrance. To the extent
that proceeds of the Securities Purchase Documents are used to pay indebtedness
secured by any outstanding lien, security interest, charge or prior encumbrance
against the Mortgaged Property, including the Senior

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Mortgages but subject to the Subordination Agreement, such proceeds have been
advanced by Mortgagee at Mortgagor's request, and Mortgagee shall be subrogated
to any and all rights, security interests and liens owned by any owner or
holder of such outstanding liens, security interests, charges or encumbrances,
irrespective of whether said liens, security interests, charges or encumbrances
are released, and it is expressly understood that, in consideration of the
payment of such other indebtedness by Mortgagee, Mortgagor hereby waives and
releases all demands and causes of action for offsets and payments to, upon and
in connection with the said indebtedness.

Section 6.06 Subrogation of Trustee. This Mortgage is made with
full substitution and subrogation of the Trustee and his successors in this
trust and his and their assigns in and to all covenants and warranties by
others heretofore given or made in respect of the Mortgaged Property or any
part thereof.

Section 6.07 Nature of Covenants. The covenants and agreements
herein contained shall constitute covenants running with the land and interests
covered or affected hereby and shall be binding upon the heirs, legal
representatives, successors and assigns of the parties hereto.

Section 6.08 Notices. All notices, requests, consents, demands
and other communications required or permitted hereunder shall be in writing
and shall be deemed sufficiently given or furnished if delivered by registered
or certified United States mail, postage prepaid, or by personal service
(including express or courier service) at the addresses specified in the first
paragraph of this Mortgage (unless changed by similar notice in writing given
by the particular party whose address is to be changed). Any such notice or
communication shall be deemed to have been given either at the time of personal
delivery or, in the case of delivery at the address and in the manner provided
herein, upon receipt; provided that, service of notice as required by the laws
of any state in which portions of the Mortgaged Property may be situated shall
for all purposes be deemed appropriate and sufficient with the giving of such
notice.

Section 6.09 Counterparts. This Mortgage is being executed in
several counterparts, all of which are identical, except that to facilitate
recordation, if the Mortgaged Property is situated in more than one county,
descriptions of only those portions of the Mortgaged Property located in the
county in which a particular counterpart is recorded shall be attached as the
Additional Exhibit A thereto. Attached to certain of those counterparts to be
recorded in the state of Oklahoma will be Exhibit A-1 which will contain the
descriptions of those portions of the Mortgaged Property located in Oklahoma
described in the Senior Mortgages Exhibit A. A complete Additional Exhibit A
will be attached to that certain counterpart to be attached to a Financing
Statement and filed with the Secretary of State of Texas in the Uniform
Commercial Code Records. Each of such counterparts shall for all purposes be
deemed to be an original and all such counterparts shall together constitute
but one and the same instrument.

SECTION 6.10 EXCULPATION PROVISIONS. EACH OF THE PARTIES HERETO
SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS MORTGAGE; AND AGREES THAT
IT IS CHARGED WITH

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NOTICE AND KNOWLEDGE OF THE TERMS OF THIS MORTGAGE; THAT IT HAS IN FACT READ
THIS MORTGAGE AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE
TERMS, CONDITIONS AND EFFECTS OF THIS MORTGAGE; THAT IT HAS BEEN REPRESENTED BY
INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING
ITS EXECUTION OF THIS MORTGAGE; AND HAS RECEIVED THE ADVICE OF ITS ATTORNEY IN
ENTERING INTO THIS MORTGAGE; AND THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS
OF THIS MORTGAGE RESULT IN ONE PARTY ASSUMING THE LIABILITY INHERENT IN SOME
ASPECTS OF THE TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS RESPONSIBILITY
FOR SUCH LIABILITY. EACH PARTY HERETO AGREES AND COVENANTS THAT IT WILL NOT
CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION OF THIS
MORTGAGE ON THE BASIS THAT THE PARTY HAD NO NOTICE OR KNOWLEDGE OF SUCH
PROVISION OR THAT THE PROVISION IS NOT "CONSPICUOUS."

Section 6.11 Subordination. The rights and remedies of the
Mortgagee, the Agent and the Noteholders under this Mortgage are subject to the
terms and conditions of the Subordination Agreement.

WITNESS THE EXECUTION HEREOF, this ________ day of ___________, 1998,
to be effective as of ________________, 1998 (the "Effective Date").

MORTGAGOR:

BRIGHAM OIL & GAS, L.P.
By: Brigham, Inc., its General Partner

By:
--------------------------------
Name: Craig M. Fleming
Title: Chief Financial Officer

MORTGAGEE:

-----------------------------------

By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------

20
<PAGE> 159
STATE OF TEXAS )
)
COUNTY OF HARRIS )

NEW MEXICO

The foregoing instrument was acknowledged before me on ______________,
1998 by Craig M. Fleming, Chief Financial Officer of BRIGHAM, INC., a Nevada
corporation, as general partner of BRIGHAM OIL & GAS, L.P., a Delaware limited
partnership, on behalf of such corporation, as general partner of the limited
partnership.

OKLAHOMA

This instrument was acknowledged before me on _____________, 1998 by
Craig M. Fleming, Chief Financial Officer of BRIGHAM, INC., a Nevada
corporation, as general partner of BRIGHAM OIL & GAS, L.P., a Delaware limited
partnership, on behalf of the corporation, as general partner of the limited
partnership.

TEXAS

This instrument was acknowledged before me on ___________, 1998 by
Craig M. Fleming, Chief Financial Officer of BRIGHAM, INC., a Nevada
corporation, as general partner of BRIGHAM OIL & GAS, L.P., a Delaware limited
partnership, on behalf of such corporation, as general partner of the limited
partnership.

-------------------------------
Notary Public in and for the
State of Texas

Notarial Seal:

21
<PAGE> 160
STATE OF TEXAS )
)
COUNTY OF HARRIS )

NEW MEXICO

The foregoing instrument was acknowledged before me on ___________,
1998 by __________________, ________________ of __________________, a
________________, on behalf of such _______________.

OKLAHOMA

This instrument was acknowledged before me on ___________, 1998 by
__________________, _______________ of __________________, a ____________, on
behalf of the __________________.

TEXAS

This instrument was acknowledged before me on ___________, 1998 by
__________________, _______________ of __________________, a ____________, on
behalf of the __________________.

-------------------------------
Notary Public in and for the
State of Texas

Notarial Seal:

22
<PAGE> 161
FINANCING STATEMENT

This Financing Statement is presented to a Filing Officer for filing
pursuant to the Uniform Commercial Code.

1. The name and address of the Debtor is:

BRIGHAM OIL & GAS, L.P.
6300 Bridge Point Parkway
Building 2, Suite 500
Austin, Texas 78730

2. The name and address of Secured Party is:

----------------------------

3. This Financing Statement covers the following Collateral:

All of Debtor's rights, titles and interests in and to the accounts,
equipment, goods, fixtures, general intangibles, inventory and any and
all other personal property of any kind or character described in and
covered by the Mortgage, Deed of Trust, Assignment of Production,
Security Agreement and Financing Statement from Debtor to the Trustee
named therein and Secured Party, a copy of which instrument is
attached hereto as Exhibit "A" and made a part hereof for all
purposes, and the proceeds and products of such personal property.

DEBTOR:

BRIGHAM OIL & GAS, L.P.

By: Brigham, Inc., its General Partner

By:
-----------------------------
Name: Craig M. Fleming
Title: Chief Financial Officer

23
<PAGE> 162

EXHIBIT G

Re: $50,000,000
Brigham Exploration Company
Senior Subordinated Secured Notes due 2003
(the "Notes")

ACCEPTANCE OF APPOINTMENT

FOR GOOD AND VALUABLE CONSIDERATION, the receipt of which is hereby
acknowledged, First Union National Bank, a national banking association (the
"Successor Trustee"), does hereby accept its appointment upon the terms
specified in Section 12.13 of the Indenture securing the referenced Notes, and
does hereby irrevocably agree (subject to its rights of resignation described
below) to assume the responsibilities, rights, powers and obligations of the
Trustee for the Notes immediately upon its receipt of notice from any person of
the resignation of Chase Bank of Texas, National Association as Trustee,
pursuant to Section 12.13 of the Indenture. Promptly upon receipt of such
notice, the Successor Trustee will notify the resigning Trustee, the Agent and
the Noteholders of its assumption of the duties of Trustee.

The Successor Trustee hereby reserves the right to resign, and does hereby
acknowledge that it may be removed, in the same manner as is provided for the
resignation and removal of the Trustee pursuant to Section 12.08 of the
Indenture; provided that no such resignation or removal shall become effective
until a successor to the Successor Trustee shall have been appointed and shall
have accepted its appointment in the manner described in Section 12.08 of the
Indenture.

IN WITNESS WHEREOF, the Successor Trustee has caused this Acceptance of
Appointment to be executed by its duly authorized officer as of the ____ day of
August, 1998.

FIRST UNION NATIONAL BANK

By:
----------------------

Name:
--------------------

Title:
-------------------

Address of Successor Trustee:

225 Water Street, 3rd Floor
Jacksonville, Florida 32202-0122
Telephone: (904) 361-3174
Telecopy: (904) 361-7735

<PAGE> 1
EXHIBIT 4.3

WARRANT CERTIFICATE

Number of Warrants: ____________ Warrant No.

This warrant certificate ("Warrant Certificate") certifies that, for
value received,

is the registered holder of the number of warrants (the "Warrants") set forth
above. Each Warrant entitles the holder thereof, at any time or from time to
time during the Exercise Period, to purchase from the Company one fully paid
and nonassessable share of Common Stock at the Exercise Price, subject to
adjustment as provided herein. The Warrants constitute, as of the Initial
Issuance Date, ___% of the outstanding Common Stock on a fully diluted basis
using the treasury stock method. Initially capitalized terms used but not
defined herein shall have the meanings ascribed to them in the Securities
Purchase Agreement.

"Common Stock" means the common stock, $.01 par value per share, of
the Company and such other class of securities as shall then represent the
common equity of the Company.

"Company" means Brigham Exploration Company, a Delaware corporation.

"Exercise Period" means the period of time between the Funding Date,
as defined in the Securities Purchase Agreement and 5:00 p.m. (New York City
time) on the Expiration Date.

"Exercise Price," subject in all circumstances to adjustment in
accordance with Section 2, means $_______.

"Expiration Date" means the date on which the seventh (7th)
anniversary of the Funding Date occurs.

"Funding Date" is defined in the Securities Purchase Agreement.

"IPO" shall mean the initial public offering of securities of the
Company consummated on May 24, 1997, pursuant to a registration statement filed
under the Securities of 1933, as amended, and the rules and regulations
promulgated thereunder.

"Issuance Date" means ______________, 1998.
<PAGE> 2
"Person" means any individual, corporation, company, partnership,
joint venture, trust, limited liability company, unincorporated organization or
government or any agency, instrumentality or political subdivision thereof, or
any other form of entity.

"Price" means the average of the "high" and "low" prices as reported
in The Wall Street Journal's listing for such day (corrected for obvious
typographical errors) or if such shares are not reported in such listing, the
average of the reported "high" and "low" sales prices on the largest national
securities exchange (based on the aggregate dollar value of securities listed)
on which such shares are listed or traded, or if such shares are not listed or
traded on any national securities exchange, then the average of the reported
"high" and "low" sales prices for such shares in the over-the-counter market,
as reported on the National Association of Securities Dealers Automated
Quotations System, or, if such prices shall not be reported thereon, the
average of the closing bid and asked prices so reported, or, if such prices
shall not be reported, then the average of the closing bid and asked prices
reported by the National Quotations Bureau Incorporated, or, in all other
cases, the Estimated Private Market Equity Value divided by the number of
outstanding shares (on a fully diluted basis using the treasury stock method).
The "average" Price per share for any period shall be determined by dividing
the sum of the Prices determined for the individual trading days in such period
by the number of trading days in such period.

"Securities Purchase Agreement" means the Securities Purchase
Agreement, dated as of ______________, 1998, among the Company, ________ and
individually and as agent.

1. EXERCISE OF WARRANTS. (a) The Warrants may be exercised in
whole or in part, at any time or from time to time, during the Exercise Period,
by presentation and surrender to the Company at its address set forth in
Section 9 of (i) this Warrant Certificate with the Election To Exercise,
attached hereto as Exhibit A, duly completed and executed, and (ii) payment of
the Exercise Price, by bank draft or cashier's check, for the number of
Warrants being exercised. If the holder of this Warrant Certificate at any
time exercises less than all the Warrants, the Company shall issue to such
holder a warrant certificate identical in form to this Warrant Certificate, but
evidencing a number of Warrants equal to the number of Warrants originally
represented by this Warrant Certificate less the number of Warrants previously
exercised. Likewise, upon the presentation and surrender of this Warrant
Certificate to the Company at its address set forth in Section 9 and at the
request of the holder, the Company will, without expense, at the option of the
holder, issue to the holder in substitution for this Warrant Certificate one or
more warrant certificates in identical form and for an aggregate number of
Warrants equal to the number of Warrants evidenced by this Warrant Certificate.

(b) To the extent that the Warrants have not been
exercised at or prior to the Expiration Date, such Warrants shall expire and
the rights of the holder shall become void and of no effect.

-2-
<PAGE> 3
2. ANTIDILUTION ADJUSTMENTS. The shares of Common Stock
purchasable on exercise of the Warrants are shares of Common Stock as
constituted as of the Issuance Date. The number and kind of securities
purchasable upon the exercise of the Warrants, and the Exercise Price, shall be
subject to adjustment from time to time upon the happening of certain events,
as follows:

(a) Mergers, Consolidations and Reclassifications. In
case of any reclassification or change of outstanding securities issuable upon
exercise of the Warrants at any time after the Issuance Date (other than a
change in par value, or from par value to no par value, or from no par value to
par value or as a result of a subdivision or combination to which subsection
2(b) applies), or in case of any consolidation or merger of the Company with or
into another entity or other person (other than a merger with another entity or
other person in which the Company is the surviving corporation and which does
not result in any reclassification or change in the securities issuable upon
exercise of this Warrant Certificate), the holder of the Warrants shall have,
and the Company, or such successor corporation or other entity, shall covenant
in the constituent documents effecting any of the foregoing transactions that
such holder does have, the right to obtain upon the exercise of the Warrants,
in lieu of each share of Common Stock, other securities, money or other
property theretofore issuable upon exercise of a Warrant, the kind and amount
of shares of stock, other securities, money or other property receivable upon
such reclassification, change, consolidation or merger by a holder of the
shares of Common Stock, other securities, money or other property issuable upon
exercise of a Warrant if the Warrants had been exercised immediately prior to
such reclassification, change, consolidation or merger. The constituent
documents effecting any such reclassification, change, consolidation or merger
shall provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided in this subsection 2(a). The
provisions of this subsection 2(a) shall similarly apply to successive
reclassifications, changes, consolidations or mergers.

(b) Subdivisions and Combinations. If the Company, at
any time after the Issuance Date, shall subdivide its shares of Common Stock
into a greater number of shares, the Exercise Price in effect immediately prior
to such subdivision shall be proportionately reduced, and the number of shares
of Common Stock purchasable upon exercise of the Warrants shall be
proportionately increased, as at the effective date of such subdivision, or if
the Company shall take a record of holders of its Common Stock for such
purpose, as at such record date, whichever is earlier. If the Company, at any
time after the Issuance Date, shall combine its shares of Common Stock into a
smaller number of shares, the Exercise Price in effect immediately prior to
such combination shall be proportionately increased, and the number of shares
of Common Stock purchasable upon exercise of the Warrants shall be
proportionately reduced, as at the effective date of such combination, or if
the Company shall take a record of holders of its Common Stock for purposes of
such combination, as at such record date, whichever is earlier.

(c) Dividends and Distributions. If the Company at any
time after the Issuance Date shall declare a dividend on its Common Stock
payable in stock or other securities of the Company to the holders of its
Common Stock, the holder of this Warrant Certificate shall, without additional
cost, be entitled to receive upon any exercise of a Warrant, in addition to the
Common Stock to which such holder would otherwise be entitled upon such
exercise, the number of shares of stock or other securities which such holder
would have been entitled to receive if he had been a holder immediately prior
to the record date for such dividend (or, if no record date shall have been
established, the payment date for such dividend) of the number of shares of
Common Stock

-3-
<PAGE> 4
purchasable on exercise of such Warrant immediately prior to such record date
or payment date, as the case may be.

(d) Certain Issuances of Securities. If the Company at
any time after the Issuance Date shall issue any additional shares of Common
Stock (otherwise than as provided in paragraphs (a) through (c) of this Section
2) at a price per share less than the average Price per share of Common Stock
for the 20 trading days immediately preceding the date of the authorization of
such issuance (the "Market Price") by the Board of Directors, then the Exercise
Price upon each such issuance shall be adjusted to that price determined by
multiplying the Exercise Price by a fraction:

i. the numerator of which shall be the sum of
(1) the number of shares of Common Stock outstanding immediately prior
to the issuance of such additional shares of Common Stock multiplied
by the Market Price, and (2) the consideration, if any, received by
the Company upon the issuance of such additional shares of Common
Stock, and

ii. the denominator of which shall be the Market
Price multiplied by the total number of shares of Common Stock
outstanding immediately after the issuance of such additional shares
of Common Stock.

No adjustments of the Exercise Price shall be made under this
paragraph (d) upon the issuance of any additional shares of Common Stock that
(y) are issued pursuant to thrift plans, stock purchase plans, stock bonus
plans, stock option plans, employee stock ownership plans and other incentive
or profit sharing arrangements for the benefit of employees ("Employee Benefit
Plans") that otherwise would cause an adjustment under this paragraph (d);
provided that the aggregate number of shares of Common Stock so issued
(including the shares issued pursuant to any options, rights or warrants or
convertible or exchangeable securities issued under such Employee Benefit Plans
containing the right to purchase shares of Common Stock) pursuant to Employee
Benefit Plans after the closing date of the IPO, as adjusted for any stock
splits, stock dividends or subdivisions or combinations of Common Stock prior
to the Expiration Date, shall not in the aggregate exceed 5% of the Company's
outstanding Common Stock at the time of such issuance; or (z) are issued
pursuant to any Common Stock Equivalent (as hereinafter defined) (i) if upon
the issuance of any such Common Stock Equivalent, any such adjustments shall
previously have been made pursuant to paragraph (e) of this Section 2 or (ii)
if no adjustment was required pursuant to paragraph (e) of this Section 2.

(e) Common Stock Equivalents. If the Company shall,
after the Issuance Date, issue any security or evidence of indebtedness which
is convertible into or exchangeable for Common Stock ("Convertible Security"),
or any warrant, option or other right to subscribe for or purchase Common Stock
or any Convertible Security, other than pursuant to Employee Benefit Plans
(together with Convertible Securities, "Common Stock Equivalent"), or if, after
any such issuance, the price per share for which additional shares of Common
Stock may be issuable thereunder is amended, then the Exercise Price upon each
such issuance or amendment shall be adjusted as provided in subsection (d) on
the basis that (i) the maximum number of additional shares of Common Stock
issuable pursuant to all such Common Stock Equivalents shall be deemed to have

-4-
<PAGE> 5
been issued as of the earlier of (a) the date on which the Company shall enter
into a firm contract for the issuance of such Common Stock Equivalent, or (b)
the date of actual issuance of such Common Stock Equivalent; and (ii) the
aggregate consideration for such maximum number of additional shares of Common
Stock shall be deemed to be the minimum consideration received and receivable
by the Company for the issuance of such additional shares of Common Stock
pursuant to such Common Stock Equivalent; provided, however, that no adjustment
shall be made pursuant to this subsection (e) unless the consideration received
and receivable by the Company per share of Common Stock for the issuance of
such additional shares of Common Stock pursuant to such Common Stock Equivalent
is less than the Market Price. No adjustment of the Exercise Price shall be
made under this subsection (e) upon the issuance of any Convertible Security
which is issued pursuant to the exercise of any warrants or other subscription
or purchase rights therefor, if any adjustment shall previously have been made
in the Exercise Price then in effect upon the issuance of such warrants or
other rights pursuant to this subsection (e).

(f) Miscellaneous. The following provisions shall be
applicable to the making of adjustments in the Exercise Price hereinbefore
provided in this Section 2:

i. The consideration received by the Company
shall be deemed to be the following: (I) to the extent that any
additional shares of Common Stock or any Common Stock Equivalent shall
be issued for cash consideration, the consideration received by the
Company therefor, or, if such additional shares of Common Stock or
Common Stock Equivalent are offered by the Company for subscription,
the subscription price, or, if such additional shares of Common Stock
or Common Stock Equivalent are sold to underwriters or dealers for
public offering without a subscription offering, the initial public
offering price, in any such case excluding any amounts paid or
receivable for accrued interest or accrued dividends and without
deduction of any compensation, discounts, commissions or expenses paid
or incurred by the Company for and in the underwriting of, or
otherwise in connection with, the issue thereof; (II) to the extent
that such issuance shall be for a consideration other than cash, then,
except as herein otherwise expressly provided, the fair value of such
consideration at the time of such issuance as determined in good faith
by the Board of Directors, as evidenced by a certified resolution of
the Board of Directors delivered to the holder of this Warrant
Certificate setting forth such determination. The consideration for
any additional shares of Common Stock issuable pursuant to any Common
Stock Equivalent shall be the consideration received by the Company
for issuing such Common Stock Equivalent, plus the additional
consideration payable to the Company upon the exercise, conversion or
exchange of such Common Stock Equivalent. In case of the issuance at
any time of any additional shares of Common Stock or Common Stock
Equivalent in payment or satisfaction of any dividend upon any class
of stock other than Common Stock, the Company shall be deemed to have
received for such additional shares of Common Stock or Common Stock
Equivalent (which shall not be deemed to be a dividend payable in, or
other distribution of, Common Stock under subsection (c) above)
consideration equal to the amount of such dividend so paid or
satisfied.

-5-
<PAGE> 6
ii. Upon the expiration of the right to convert,
exchange or exercise any Common Stock Equivalent the issuance of which
effected an adjustment in the Exercise Price, if any such Common Stock
Equivalent shall not have been converted, exercised or exchanged, the
number of shares of Common Stock deemed to be issued and outstanding
because they were issuable upon conversion, exchange or exercise of
any such Common Stock Equivalent shall no longer be computed as set
forth above, and the Exercise Price shall forthwith be readjusted and
thereafter be the price which it would have been (but reflecting any
other adjustments in the Exercise Price made pursuant to the
provisions of subsection (d) after the issuance of such Common Stock
Equivalent) had the adjustment of the Exercise Price made upon the
issuance or sale of such Common Stock Equivalent been made on the
basis of the issuance only of the number of additional shares of
Common Stock actually issued upon exercise, conversion or exchange of
such Common Stock Equivalent and thereupon only the number of
additional shares of Common Stock actually so issued shall be deemed
to have been issued and only the consideration actually received by
the Company (computed as in subparagraph (i) of this paragraph (f))
shall be deemed to have been received by the Company.

iii. The number of shares of Common Stock at any
time outstanding shall not include any shares thereof then directly or
indirectly owned or held by or for the account of the Company or its
wholly owned subsidiaries.

iv. For the purposes of this Section 2, the term
"shares of Common Stock" shall mean shares of (i) the class of stock
designated as the Common Stock at the date hereof or (ii) any other
class of stock resulting from successive changes or reclassifications
of such shares consisting solely of changes in par value, or from par
value to no par value, or from no par value to par value. If at any
time, because of an adjustment pursuant to subsection (a), the
Warrants shall entitle the holders to purchase any securities other
than shares of Common Stock, thereafter the number of such other
securities so purchasable upon exercise of each Warrant and the
Exercise Price of such securities shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Stock
contained in this Section 2.

(g) Calculation of Exercise Price. The Exercise Price in
effect from time to time shall be calculated to four decimal places
and rounded to the nearest thousandth.

3. NOTICE OF ADJUSTMENTS. Whenever the Exercise Price or the
number of shares of Common Stock is required to be adjusted as provided in
Section 2, the Company shall forthwith compute the adjusted Exercise Price or
the number of shares of Common Stock issuable and shall prepare and mail to the
holder hereof a certificate setting forth such adjusted Exercise Price or such
number of shares of Common Stock, showing in reasonable detail the facts upon
which the adjustment is based.

-6-
<PAGE> 7
4. VOLUNTARY REDUCTION. (a) The Company may at its option,
but shall not be obligated to, at any time during the term of the Warrants,
reduce the then current Exercise Price by any amount selected by the Board of
Directors; provided that if the Company elects so to reduce the then current
Exercise Price, such reduction shall be irrevocable during its effective period
and remain in effect for a minimum of 30 days following the date of such
election, after which time the Company may, at its option, reinstate the
Exercise Price in effect prior to such reduction. Whenever the Exercise Price
is reduced, the Company shall mail to the holder a notice of the reduction at
least 30 days before the date the reduced Exercise Price takes effect, stating
the reduced Exercise Price and the period for which such reduced Exercise Price
will be in effect.

(b) The Company may make such decreases in the Exercise
Price, in addition to those required or allowed by this Section 4, as shall be
determined by it, as evidenced by a certified resolution of the Board of
Directors delivered to the holders, to be advisable to avoid or diminish any
income tax to the holder resulting from any dividend or distribution of stock
or issuance of rights or warrants to purchase or subscribe for stock or from
any event treated as such for income tax purposes.

5. NOTICES TO WARRANT HOLDERS. In the event:

(a) the Company shall authorize any consolidation or
merger to which the Company is a party and for which approval of any
stockholders of the Company is required, or of the conveyance or sale of all or
substantially all of the assets of the Company, or of any reclassification or
change of the Common Stock or other securities issuable upon exercise of the
Warrants (other than a change in par value, or from par value to no par value,
or from no par value to par value or as a result of a subdivision or
combination), or a tender offer or exchange offer for shares of Common Stock
(or other securities issuable upon the exercise of the Warrants); or

(b) the Company shall declare any dividend (or any other
distribution) on the Common Stock or any other class of its capital stock; or

(c) the Company shall authorize the granting to the
holders of Common Stock or any other class of its capital stock of rights or
warrants to subscribe for or purchase any shares of any class or series of
capital stock or any other securities convertible into or exchangeable for
shares of stock; or

(d) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company;

then the Company shall cause to be sent to the holder hereof, at least
30 days prior to the applicable record date hereinafter specified, or promptly
in the case of events for which there is no record date, a written notice
stating (x) the date for the determination of the holders of record of shares
of Common Stock (or other securities issuable upon the exercise of the
Warrants) entitled to receive any such dividends or other distribution, (y) the
initial expiration date set forth in any tender offer or exchange offer for
shares of Common Stock (or other securities issuable upon the exercise

-7-
<PAGE> 8
of the Warrants), or (z) the date on which any of the events specified in
subsections (a)-(d) is expected to become effective or consummated, and the
date as of which it is expected that holders of record of shares of Common
Stock (or other securities issuable upon the exercise of the Warrants) shall be
entitled to exchange such shares for securities or other property, if any,
deliverable upon any such event. Failure to give such notice or any defect
therein shall not affect the legality or validity of any such event, or the
vote upon any such action.

6. REPORTS TO WARRANT HOLDERS. The Company will cause to be
delivered, by first-class mail, postage prepaid, to the holder at such holder's
address appearing hereon, or such other address as the holder shall specify, a
copy of any reports delivered by the Company to the holders of Common Stock.

7. COVENANTS OF THE COMPANY. The Company covenants and agrees
that:

(a) Until the Expiration Date, the Company shall
at all times reserve and keep available, free from preemptive rights, out of
the aggregate of its authorized but unissued Common Stock (and other
securities), for the purpose of enabling it to satisfy any obligation to issue
shares of Common Stock (and other securities) upon the exercise of the
Warrants, the number of shares of Common Stock (and other securities) issuable
upon the exercise of such Warrants.

(b) The Company shall pay all expenses, taxes and
other charges payable in connection with the preparation, issuance and delivery
of new warrant certificates on transfer of the Warrants.

(c) All Common Stock (and other securities) which
may be issued upon exercise of the Warrants shall upon issuance be validly
issued, fully paid, non-assessable and free from all preemptive rights and all
taxes, liens and charges with respect to the issuance thereof, and will not be
subject to any restrictions on voting or transfer thereof except as set forth
in any stockholders agreement.

(d) All original issue taxes payable in respect
of the issuance of shares of Common Stock to the registered holder hereof upon
the exercise of the Warrants shall be borne by the Company; provided, that the
Company shall not be required to pay any tax or charge imposed in connection
with any transfer involved in the issuance of any certificate representing
shares of Common Stock (and other securities) in any name other than that of
the registered holder hereof, and in such case the Company shall not be
required to issue or deliver any certificate representing shares of Common
Stock (and other securities) until such tax or other charge has been paid or it
has been established to the Company's satisfaction that no such tax or charge
is due.

(e) As soon as practicable after the receipt from
the holder of this Warrant Certificate of notice of the exercise of a number of
warrants sufficient to require a filing under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 and the rules, regulations and formal interpretations
thereunder, as amended from time to time (the "HSR Act"), but in any event no
later than the 10th business day after receipt of such notice, the Company will
(i) prepare and file with

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<PAGE> 9
the Antitrust Division of the Department of Justice (the "DOJ") and the Federal
Trade Commission (the "FTC") the Notification and Report Form (accompanied by
all documentary attachments contemplated thereby) required by the HSR Act, (ii)
upon the request of the holder, request early termination of the waiting period
imposed by the HSR Act, (iii) coordinate and cooperate with the holder in
responding to formal and informal requests for additional information and
documentary material from the DOJ and the FTC in connection with such filing,
(iv) use its best efforts to take, or cause to be taken, all reasonable action
and to do, or cause to be done, all things necessary and appropriate to permit
the issuance to the holder of the shares of Common Stock issuable upon the
exercise of the warrants with respect to which any filing is required under the
HSR Act, and (v) reimburse the holder for the entire amount of any filing fee
or any other costs and expenses incurred by the holder in connection therewith
(including legal fees), or as required to be paid under the HSR Act.

(f) QUOTATION ON NASDAQ. The Company shall
maintain the designation and quotations, or listing, of its Common Stock on the
NASDAQ national market (or on the New York Stock Exchange or the American Stock
Exchange) until the date on which none of the Warrants or Warrant Shares remain
outstanding.

8. NO RIGHTS AS STOCKHOLDER. The holder of the Warrants shall
not, by virtue of holding such Warrants, be entitled to any rights of a
stockholder of the Company either at law or in equity, and the rights of the
holder of the Warrants are limited to those expressed herein.

9. NOTICES. All notices provided for hereunder shall be in
writing and may be given by registered or certified mail, return receipt
requested, telex, telegram, telecopier, air courier guaranteeing overnight
delivery of personal delivery, if to the holder at the following address:

and, if to the Company:

Brigham Exploration Company
6300 Bride Point Parkway
Building 2, Suite 500
Austin, Texas 78730
Attention: Craig M. Fleming
Telecopier: (512) 472-3400

10. GOVERNING LAW. This Warrant Certificate shall be governed by
and construed in accordance with the laws of the State of Texas without regard
to principles of conflict of laws.

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<PAGE> 10
11. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT CERTIFICATES.
Upon receipt by the Company of evidence reasonably satisfactory to it of the
ownership of and the loss, theft, destruction or mutilation of any Warrant
Certificate, then, in the absence of notice to the Company that such Warrant
Certificate has been acquired by a bona fide purchaser, the Company shall
execute and deliver, in exchange for or in lieu of the lost, stolen, destroyed
or mutilated Warrant Certificate, a substitute Warrant Certificate of the same
tenor and evidencing a like number of Warrants.

12. ASSIGNMENT. The holder of this Warrant Certificate shall
be entitled, without obtaining the consent of the Company, to transfer or
assign its rights, title and interest in (and rights, title and interest under)
this Warrant Certificate in whole or in part to any Person or Persons. Upon
surrender of this Warrant Certificate to the Company, with the Transfer Form
annexed hereto as Exhibit B duly executed, the Company shall, without charge,
execute and deliver a new warrant certificate or warrant certificates,
identical in form to this Warrant Certificate, evidencing the number of
Warrants being transferred pursuant to the Transfer Form in the name of the
assignee or assignees named in such Transfer Form. If the holder's entire
interest is not being assigned, the Company shall, without charge, execute and
deliver one or more new warrant certificates identical in form to this Warrant
Certificate, but evidencing a number of Warrants equal to the number of
Warrants originally represented by this Warrant Certificate less the number
being transferred pursuant to the Transfer Form, and this Warrant Certificate
shall promptly be canceled. The terms and provisions of this Warrant
Certificate shall inure to the benefit of the holder and its successors and
assigns and shall be binding upon the Company and its successors and assigns,
including, without limitation, any Person succeeding the Company by merger,
consolidation or acquisition of all or substantially all of the Company's
assets.

IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be executed this ____ day of __________, 1998 by the undersigned, thereunto
duly authorized.

BRIGHAM EXPLORATION COMPANY

By:
------------------------------
Craig M. Fleming
Chief Financial Officer

-10-
<PAGE> 11
EXHIBIT A

ELECTION TO EXERCISE
[To be executed on exercise of the Warrants evidenced by
this Warrant Certificate]

TO: Brigham Exploration Company

The undersigned, the holder of the Warrants evidenced by the attached
Warrant Certificate, hereby irrevocably elects to exercise Warrants, and
herewith makes payment of ___________________________________________________
($_______________) representing the aggregate Exercise Price thereof, and
requests that the certificate representing the securities issuable hereunder be
issued in the name of _____________________ and delivered to _________________,
whose address is ___________________________________________.

Dated:
---------------------------

Name of Registered Holder:
---------------------
Signature:
-------------------------------------
Title:
-----------------------------------------
Address:
---------------------------------------

NOTICE: The above signature(s) must correspond with the name as written on the
face of the Warrant Certificate in every detail, without alteration or
enlargement or any change whatsoever.

-11-
<PAGE> 12
EXHIBIT B

TRANSFER FORM
[To be executed only upon transfer of the Warrants evidenced by
this Warrant Certificate]

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
______________________________________________________ the Warrants
represented by the within Warrant Certificate, together with all right, title
and interest therein, and does hereby irrevocably constitute and appoint
_____________________________________ Attorney-in-Fact, to transfer same on the
books of the Company with full power of substitution in the premises.

Dated:
-----------------------------

Name of Registered Holder:
---------------------
Signature:
-------------------------------------
Title:
-----------------------------------------
Address:
---------------------------------------

WITNESS:

- --------------------------------

NOTICE: The above signature(s) must correspond with the name as written on the
face of the Warrant Certificate in every detail, without alteration or
enlargement or any change whatsoever.

-12-

<PAGE> 1
EXHIBIT 4.4

1998

THIS INSTRUMENT IS SUBORDINATED TO THE EXTENT AND IN THE MANNER
PROVIDED IN THE SUBORDINATION AGREEMENT REFERRED TO BELOW.

________________

Senior Subordinated Secured Note due 2003

No. __ Houston, Texas
$_________ August __, 1998

BRIGHAM EXPLORATION COMPANY, a Delaware corporation ("Company"), for
value received, hereby promises to pay to the order of ___________
("Purchaser"), to its account at __________________, ABA No. _________, Account
No. __________, or such other account or address in the State of Texas as may
be specified by the Purchaser, the principal amount of ___________ DOLLARS
($________), or, if less, the aggregate unpaid principal balance of this Note
(including any additions to such principal balance as a result of the payment
of interest owing in respect of this Note in kind, as more fully described
below), together with interest on the unpaid balance of such principal amount
in accordance with the Indenture dated as of August __, 1998 (the "Indenture"),
between the Company, and ________________, as Trustee (the "Trustee"). The
Indenture is being executed in connection with the Securities Purchase
Agreement dated as of August __, 1998 (as modified from time to time, the
"Securities Purchase Agreement", and together with the Indenture, the
"Securities Purchase Documents") among the Company, the Purchaser and the other
purchasers party thereto (together with the Purchaser, referred to collectively
as the "Noteholders"), and ______________________________, as agent for the
Noteholders ("Agent").
<PAGE> 2
The Securities Purchase Documents provide for the making of loans by
the Noteholders to the Company in exchange for, among other things, the
issuance by the Company of the Notes and Warrants (as defined in the Securities
Purchase Documents). The Company hereby acknowledges and agrees that, as of
the date of the issuance of this Note and notwithstanding the provisions of
Section 2.05 of the Securities Purchase Agreement, the aggregate outstanding
principal balance of this Note is $_________. In addition, the Securities
Purchase Documents provide that payment of a portion of the interest owing by
the Company in respect of the Notes may be made by the Company in kind. The
Company hereby acknowledges and agrees that any such payments of interest in
kind in respect of this Note shall be deemed to be additional principal
advanced by the Purchaser under this Note and such additional principal shall
be added to the unpaid principal amount of this Note owing by the Company to
Purchaser in respect of this Note. The loan made by the Purchaser to the
Company under this Note (including, without limitation, loans deemed to be made
as a result of any payments of interest in kind) and all payments made on
account of the principal amount of such loans shall be entered by the Purchaser
in its records or on the grid attached hereto which is part of this Note;
provided that, the failure of the Purchaser to make any such notation shall not
impair or otherwise affect the Company's obligations under this Note.

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.

-2-
<PAGE> 3

BRIGHAM EXPLORATION COMPANY

By:
------------------------------
Name: Craig M. Fleming
Title: Chief Financial Officer

TRUSTEE'S CERTIFICATE
OF AUTHENTICATION

This is one of the securities referred to
in the within-mentioned Indenture

CHASE BANK OF TEXAS, NATIONAL ASSOCIATION

By:
------------------------------
Authorized Signatory

Dated:
------------------

-3-
<PAGE> 4
LOAN, MATURITIES, AND PAYMENTS OF PRINCIPAL

- ----------------------------------------------------------------------------------------

- ----------------------------------------------------------------------------------------
</TABLE>

-4-

<PAGE> 1
EXHIBIT 4.5

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (this "Agreement") is made and
entered into as of ______________, 1998, by and among Brigham Exploration
Company, a Delaware corporation (the "Company"), _______________________________
________________________________________, a ___________________ ("_____"), and
____________________________________, a ____________________ ("____").

This Agreement is made pursuant to the Securities Purchase Agreement
(the "Securities Purchase Agreement") dated as of ______________, 1998, by and
among the Company, ____ and ____. In order to induce ____ and ____ to enter into
the Securities Purchase Agreement, the Company has agreed to provide the
registration and other rights set forth in this Agreement. Pursuant to the
Securities Purchase Agreement, ____ and ____ will purchase the Acquired Shares
and Warrants. The execution and delivery of this Agreement is a condition to the
Closing (as defined in the Securities Purchase Agreement).

The parties agree as follows:

ARTICLE I

Section 1.01. Definitions. Capitalized terms used herein without
definition shall have the meanings given to them in the Securities Purchase
Agreement. The terms set forth below are used herein as so defined:

"Commission" has the meaning specified therefor in Section 1.02 of
this Agreement.

"Common Stock" means the common stock, par value $0.01 per share,
of the Company.

"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.

"Holder" means the record holder of any Registrable Securities.

"Inspector" has the meaning specified therefor in Section 2.03
this Agreement.

"Losses" has the meaning specified therefor in Section 2.07 of
this Agreement.

"Other Holders" has the meaning specified therefor in Section 2.01
of this Agreement.

"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, business
trust, trust or unincorporated entity.

"Records" has the meaning specified therefor in Section 2.03 of
this Agreement.

<PAGE> 2

"Registrable Securities" means the Acquired Shares, the Warrants,
the Warrant Shares and any other securities issued upon the exercise of the
Warrants, until such time as such securities cease to be Registrable Securities
pursuant to Section 1.02 hereof.

"Requesting Holder(s)" has the meaning specified therefor in
Section 2.01 of this Agreement.

"Request Notice" has the meaning specified therefor in Section
2.01 of this Agreement.

"Registration Statement" has the meaning specified therefor in
Section 2.01 of this Agreement.

"Securities Act" has the meaning specified therefor in Section
1.02 of this Agreement.

"Securities Purchase Agreement" means the Securities Purchase
Agreement, dated as of ______________, 1998, among the Company, ECT and JEDI,
individually and as agent.

"Selling Holder" means a Holder who is selling Registrable
Securities pursuant to a Registration Statement.

Section 1.02. Registrable Securities. Any Registrable Security will
cease to be a Registrable Security when (i) a Registration Statement covering
such Registrable Security has been declared effective by the Securities and
Exchange Commission (the "Commission") and such Registrable Security has been
sold or disposed of pursuant to such effective Registration Statement; (ii) such
Registrable Security is disposed of pursuant to Rule 144 (or any similar
provision then in force) under the Securities Act of 1933, as amended (the
"Securities Act"); (iii) such Registrable Security is eligible to be, and at the
time of determination can be, disposed of pursuant to paragraph (k) of Rule 144
(or any similar provision then in force) under the Securities Act; or (iv) such
Registrable Security is held by the Company or one of its subsidiaries.

ARTICLE II

Section 2.01. Demand Registration. (a) Any time after the Funding Date,
as defined in the Securities Purchase Agreement, (i) any Holder or Holders who
collectively beneficially own at least 25% (twenty-five percent) of the
Registrable Securities may request (a "Request Notice") the Company to register
under the Securities Act (other than pursuant to a shelf registration on Form
S-3) all or any portion of the Registrable Securities that are held by such
Holder or Holders (collectively, the "Requesting Holder") for sale in the manner
specified in the Request Notice and (ii) in the event that the Company is
eligible to file a Registration Statement on Form S-3, any Holders who
collectively beneficially own at least a majority of the Registrable Securities
may submit a Request Notice to the Company to register under Form S-3 all or any
portion of the Registrable Securities that are held by such Requesting Holder(s)
for sale in the manner specified in the Request Notice.

-2-

<PAGE> 3

(b) Promptly following receipt of a Request Notice, the
Company shall immediately notify each Holder (except the Requesting Holder) of
the receipt of a Request Notice and shall use its best efforts to file a
registration statement under the Securities Act (each such registration
statement is hereinafter referred to as a "Registration Statement") effecting
the registration under the Securities Act, for public sale in accordance with
the method of disposition specified in such Request Notice, of the Registrable
Securities specified in the Request Notice (and in any notices that the Company
receives from other Holders no later than the 15th day after receipt of the
notice sent by the Company) (such other Holders and the Requesting Holder are
hereinafter referred to as the "Requesting Holders"). If such method of
disposition shall be an underwritten public offering, the Requesting Holders
holding a majority of the Registerable Securities to be registered may designate
the managing underwriter of such offering, subject to the approval of the
Company, which approval shall not be withheld unreasonably. The Company shall be
obligated to register Registrable Securities pursuant to this Section 2.01 on
two occasions only. A request pursuant to this Section 2.01 shall be counted
("Counted") only when (i) all the Registrable Securities requested to be
included in any such registration have been so included, (ii) the corresponding
Registration Statement has become effective under the Securities Act, and (iii)
the public offering has been consummated and the Registrable Securities have
been sold on the terms and conditions specified therein; provided, however, that
in the event of a shelf registration if the Company is then eligible to file a
Registration Statement on Form S-3, the Company shall keep such Registration
Statement effective for two years from the effective date of the Registration
Statement.

(c) The Company may delay the filing or effectiveness of a
Registration Statement after receipt of a Request Notice (i) for up to 90 days
if at the time of such request, the Company is engaged in a firm commitment
underwritten public offering of its securities in which Holders may include
Registrable Securities and for which the Company has delivered the notice to the
Holders required by Section 2.02 or (ii) for up to 60 days if at the time of
such request the Board of Directors of the Company determines in its reasonable
judgment and in good faith that the filing of such a Registration Statement or
the making of any required disclosure in connection therewith would have a
material adverse effect on the Company or substantially interfere with a
significant transaction in which the Company is then engaged; provided that the
Company may not delay the filing of a Registration Statement in reliance on this
clause (ii) more than once during any period of twelve consecutive calendar
months.

(d) The Company and any institutional investor who is entitled
to piggy-back registration rights as of the Closing Date ("Other Holders") with
respect to a Registration Statement filed pursuant to Section 2.01 may include
securities of the Company in such Registration Statement, but only to the extent
that, in the good faith opinion of the managing underwriter (if such method of
disposition shall be an underwritten public offering) supported by written
reasons therefor, the inclusion of such shares would not raise a substantial
doubt as to whether the proposed offering could successfully be consummated.
Subject to Section 2.01(c) above, except as provided in this subsection (d), the
Company will not effect any other registration of its equity securities (except
with respect to Registration Statements on Form S-4 or S-8 or for purposes
permissible under such forms as of the date hereof), whether for its own account
or that of any Other Holder, from the date of receipt of a Request Notice
related to an underwritten public offering until the completion of the
distribution by the underwriters of all securities thereunder.

-3-

<PAGE> 4

(e) Exercise of the right to convert the Warrants to Warrant
Shares shall at the Holder's sole election and discretion be contingent upon the
registration of the Warrant Shares in accordance with this Agreement and should
such registration not be completed pursuant to the terms hereof, Holder shall
have the right, at its sole discretion, to rescind its election to convert the
Warrants.

(f) From and after the date of this Agreement and until no
Registrable Securities remain outstanding, the Company shall not grant
registration rights to any Person if such rights would conflict with the
provisions of this Agreement.

Section 2.02. Piggy-Back Registration. If the Company proposes
to register any of its equity securities under the Securities Act for sale to
the public, whether for its own account or for the account of Other Holders or
both (except with respect to Registration Statements on Forms S-4 or S-8 or for
purposes permissible under such forms as of the date hereof), each such time it
will give written notice to all Holders of its intention to do so no less than
20 days prior to the anticipated filing date. Upon the written request received
by the Company from any Holder no later than the 15th day after receipt by such
Holder of the notice sent by the Company (which request shall state the intended
method of disposition thereof), the Company will use best efforts to cause the
Registrable Securities as to which registration shall have been so requested to
be included in the securities to be covered by such Registration Statement, all
to the extent requisite to permit the sale or other disposition by each Holder
(in accordance with its written request) of such Registrable Securities so
registered; provided, however, that the Company may at any time prior to the
effectiveness of any such Registration Statement, in its sole discretion and
without the consent of any Holder, abandon any proposed offering by the Company
in which any Holder had requested to participate. The number of Registrable
Securities to be included in such a registration may be reduced or eliminated if
and to the extent, in the case of an underwritten offering, the managing
underwriter shall advise the Company that such inclusion would materially
jeopardize the successful marketing of the securities (including the Registrable
Securities) proposed to be sold therein; provided, however, that such number of
shares of Registrable Securities shall not be reduced if any securities included
in such registration are included other than for the account of the Company
unless the shares included in the Registration for the account of such Persons
are also reduced on a pro rata basis, provided, in the case of a Registration
Statement filed pursuant to the exercise of demand registration rights of any
Other Holders, priority shall be given first to the Other Holders demanding such
registration.

Section 2.03. Registration Procedures. If and whenever the
Company is required pursuant to this Agreement to effect the registration of
any of the Registrable Securities under the Securities Act, the Company will, as
expeditiously as possible:

(a) prepare and file with the Commission a Registration
Statement, on a form available to the Company, with respect to such securities
(which filing shall be made (i) as promptly as possible (but in no event later
than 30 days after the receipt by the Company of a Request Notice) in the case
of a shelf registration if the Company is then eligible to file a Registration
Statement on Form S-3 or (ii) as promptly as possible (but in no event later
than 60 days after the receipt by the Company of a Request Notice) in the case
of any underwritten offering or if the Company is not

-4-

<PAGE> 5

eligible to file a Registration Statement on Form S-3, provided that in no event
will the Company be obligated to file a Registration Statement pursuant to (i)
or (ii) prior to the Funding Date pursuant to the Securities Purchase Agreement.
The Company shall thereafter use best efforts to cause such Registration
Statement to become and remain effective for the period of the distribution in
order for it to be Counted;

(b) prepare and file with the Commission such amendments and
supplements to such Registration Statement and the prospectus used in connection
therewith as may be necessary to keep such Registration Statement effective for
the distribution period to be Counted and as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement in accordance with the Holders
intended method of disposition;

(c) furnish to each Selling Holder and to each underwriter
such number of copies of the Registration Statement and the prospectus included
therein (including each preliminary prospectus and each document incorporated by
reference therein to the extent then required by the rules and regulations of
the Commission) as such Persons may reasonably request in order to facilitate
the public sale or other disposition of the Registrable Securities covered by
such Registration Statement;

(d) if applicable, use best efforts to register or qualify the
Registrable Securities covered by such Registration Statement under the
securities or blue sky laws of such jurisdictions as the Selling Holders or, in
the case of an underwritten public offering, the managing underwriter, shall
reasonably request, provided that the Company will not be required to qualify
generally to transact business in any jurisdiction where it is not then required
to so qualify or to take any action that would subject it to general service of
process in any such jurisdiction where it is not then so subject;

(e) immediately notify each Selling Holder and each
underwriter, at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a result of
which the prospectus contained in such Registration Statement, as then in
effect, includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing and as
promptly as practicable amend or supplement the prospectus or take other
appropriate action so that the prospectus does not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing;

(f) in the case of an underwritten public offering, furnish
upon request, (i) on the date that Registrable Securities are delivered to the
underwriters for sale pursuant to such Registration Statement, an opinion of
counsel for the Company dated as of such date and addressed to the underwriters
and to the Selling Holders, stating that such Registration Statement has become
effective under the Securities Act and that (A) to the best knowledge of such
counsel, no stop order suspending the effectiveness thereof has been issued and
no proceedings for that purpose have been instituted or are pending or
contemplated under the Securities Act, (B) the Registration Statement,

-5-

<PAGE> 6

the related prospectus, and each amendment or supplement thereof, comply as to
form in all material respects with the requirements of the Securities Act and
the applicable rules and regulations thereunder of the Commission (except that
such counsel need express no opinion as to the financial statements, or any
expertized schedule, report or information contained or incorporated therein)
and (C) to such other effects as may reasonably be requested by counsel for the
underwriters, and (ii) on the effective date of the Registration Statement and
on the date that Registrable Securities are delivered to the underwriters for
sale pursuant to such Registration Statement, a letter dated such dates from the
independent accountants retained by the Company, addressed to the underwriters
and, if available, to the Selling Holders, stating that they are independent
public accountants within the meaning of the Securities Act and that, in the
opinion of such accountants, the financial statements of the Company and the
schedules thereto that are included or incorporated by reference in the
Registration Statement or the prospectus, or any amendment or supplement
thereof, comply as to form in all material respects with the applicable
requirements of the Securities Act and the published rules and regulations
thereunder, and such letter shall additionally address such other financial
matters (including information as to the period ending no more than five
business days prior to the date of such letter) included in the Registration
Statement in respect of which such letter is being given as the underwriters may
reasonably request;

(g) make available for inspection by the Selling Holders
designated by a majority thereof, any underwriter participating in any
distribution pursuant to such Registration Statement, and any attorney,
accountant or other agent retained by such representative of the Selling Holders
or underwriter (the "Inspectors"), all financial and other records, pertinent
corporate documents and properties of the Company (collectively, the "Records"),
and cause the Company's officers, directors and employees to supply all
information reasonably requested by any such Inspector in connection with such
Registration Statement.

(h) cause the Registerable Securities to be listed on New York
Stock Exchange, American Stock Exchange or on the NASDAQ National Market if the
Common Stock is or becomes so listed;

(i) use best efforts to keep effective and maintain for the
period of distribution to be Counted, qualification, approval or listing
obtained to cover the Registrable Securities as may be necessary for the Selling
Holders to dispose thereof and shall from time to time amend or supplement any
prospectus used in connection therewith to the extent necessary in order to
comply with applicable law;

(j) use best efforts to cause the Registrable Securities to be
registered with or approved by such other governmental agencies or authorities
as may be necessary by virtue of the business and operations of the Company to
enable the Selling Holders to consummate the disposition of such Registrable
Securities; and

(k) take such other actions as are reasonably requested by the
Selling Holders or the underwriters, if any, in order to expedite, facilitate or
consummate the disposition of such Registrable Securities.

-6-

<PAGE> 7

In connection with each registration hereunder with respect to an
underwritten public offering, the Company and each Selling Holder agrees to
enter into a written agreement with the managing underwriter or underwriters
selected in the manner herein provided in such form and containing such
provisions as are customary in the securities business for such an arrangement
between underwriters and companies of the Company's size and investment stature,
provided that such agreement shall not contain any such provision applicable to
the Company or the Selling Holders that is inconsistent with the provisions
hereof; and further provided, that the time and place of the closing under said
agreement shall be as mutually agreed upon among the Company, the Selling
Holders and such managing underwriter. In connection with each registration
hereunder, each Selling Holder will furnish promptly to the Company in writing
such information with respect to itself and the proposed distribution by it as
shall be necessary in order to ensure compliance with federal and applicable
state securities laws.

Section 2.04. Restrictions on Public Sale by Selling Holders of
Registrable Securities. To the extent not inconsistent with applicable law,
including insurance codes, each Selling Holder whose Registrable Securities are
included in a Registration Statement pursuant to this Agreement agrees not to
effect any public sale or distribution of the issue being registered (or any
securities of the Company convertible into or exchangeable or exercisable for
securities of the same type as the issue being registered) during the 14 days
before, and during the 90-day period beginning on, the effective date of such
Registration Statement (except as part of such registration), but only if and to
the extent requested in writing (with reasonable prior notice) by the managing
underwriter or underwriters in the case of an underwritten public offering by
the Company of securities of the same type as the Registrable Securities,
provided that the duration of the foregoing restrictions shall be no longer than
the duration of the shortest restriction imposed by the underwriters on the
officers or directors or any other stockholder of the Company; and provided
further, that the period of time for which the Company is required to keep such
registration statement which includes Registrable Securities continuously
effective shall be increased by a period equal to such requested holdback
period.

Section 2.05. Restrictions on Public Sale by the Company. To the extent
required by an underwriter in an underwritten public offering, the Company
agrees not to effect on its own behalf any public sale or distribution of any
securities similar to those being registered, or any securities convertible into
or exchangeable or exercisable for such securities, during the 14 days before,
and during the 90-day period beginning on, the effective date of any
registration statement in which the Selling Holders of Registrable Securities
are participating, other than pursuant to such registration statement or a
Registration Statement on Form S-8 or Form S-4.

Section 2.06. Expenses.

(a) "Registration Expenses" means all expenses incident to the
Company's performance under or compliance with this Agreement, including without
limitation, all registration and filing fees, blue sky fees and expenses,
printing expenses, listing fees, fees and disbursements of counsel and
independent public accountants for the Company, fees of the National Association
of Securities Dealers, Inc., transfer taxes, fees of transfer agents and
registrars, costs of insurance and reasonable out-of-pocket expenses (including
without limitation, reasonable legal fees of one counsel

-7-

<PAGE> 8

for all Selling Holders), but excluding any Selling Expenses. "Selling Expenses"
means all underwriting fees, discounts and selling commissions allocable to the
sale of the Registrable Securities.

(b) The Company will pay all Registration Expenses in
connection with each Registration Statement filed pursuant to this Agreement,
whether or not the Registration Statement becomes effective, and the Selling
Holders shall pay all Selling Expenses in connection with any Registrable
Securities registered pursuant to this Agreement.

Section 2.07. Indemnification. (a) In the event of a registration of
any Registrable Securities under the Securities Act pursuant to this Agreement,
the Company will indemnify and hold harmless each Selling Holder thereunder and
each underwriter, pursuant to the applicable underwriting agreement with such
underwriter, of Registrable Securities thereunder and each Person, if any, who
controls such Selling Holder or underwriter within the meaning of the Securities
Act and the Exchange Act, against any losses, claims, damages or liabilities
(including reasonable attorneys' fees) ("Losses"), joint or several, to which
such Selling Holder or underwriter or controlling Person may become subject
under the Securities Act, the Exchange Act or otherwise, insofar as such Losses,
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
Registration Statement under which such Registrable Securities were registered
under the Securities Act pursuant to this Agreement, any preliminary prospectus
or final prospectus contained therein, or any amendment or supplement thereof,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse each such Selling Holder,
each such underwriter and each such controlling Person for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such Loss or actions; provided, however, that the Company will not
be liable in any such case if and to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made in conformity
with information furnished by such Selling Holder, such underwriter or such
controlling Person in writing specifically for use in such Registration
Statement or prospectus.

(b) Each Selling Holder agrees to indemnify and hold harmless
the Company, its directors, officers, employees and agents and each Person, if
any, who controls the Company within the meaning of the Securities Act or of the
Exchange Act to the same extent as the foregoing indemnity from the Company to
such Selling Holder, but only with respect to information regarding such Selling
Holder furnished in writing by or on behalf of such Selling Holder expressly for
inclusion in any Registration Statement or prospectus relating to the
Registrable Securities, or any amendment or supplement thereto; provided,
however, that the liability of such Selling Holder shall not be greater in
amount than the dollar amount of the proceeds (net of any Selling Expenses)
received by such Selling Holder from the sale of the Registrable Securities
giving rise to such indemnification.

(c) Promptly after receipt by an indemnified party hereunder
of notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party in writing thereof, but

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<PAGE> 9

the omission so to notify the indemnifying party shall not relieve it from any
liability which it may have to any indemnified party. In case any such action
shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate in and, to the extent it shall wish, to assume and
undertake the defense thereof with counsel reasonably satisfactory to such
indemnified party and, after notice from the indemnifying party to such
indemnified party of its election so to assume and undertake the defense
thereof, the indemnifying party shall not be liable to such indemnified party
under this Section 2.07 for any legal expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation and of liaison with counsel as so elected; provided,
however, that, (i) if the indemnifying party has failed to assume the defense
and employ counsel or (ii) if the defendants in any such action include both the
indemnified party and the indemnifying party and counsel to the indemnified
party shall have concluded that there may be reasonable defenses available to
the indemnified party that are different from or additional to those available
to the indemnifying party or that the interests of the indemnified party
reasonably may be deemed to conflict with the interests of the indemnifying
party, then the indemnified party shall have the right to select a separate
counsel and to assume such legal defense and otherwise to participate in the
defense of such action, with the expenses and fees of such separate counsel and
other expenses related to such participation to be reimbursed by the
indemnifying party as incurred.

(d) If the indemnification provided for in this Section 2.07
is unavailable to the Company or the Selling Holders or is insufficient to hold
them harmless in respect of any Losses, then each such indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such Losses as between the
Company on the one hand and each Selling Holder on the other, in such proportion
as is appropriate to reflect the relative fault of the Company on the one hand
and of each Selling Holder on the other in connection with the statements or
omissions which resulted in such Losses, as well as any other relevant equitable
considerations. The relative fault of the Company on the one hand and each
Selling Holder on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statements of a material fact or
the omission or alleged omission to state a material fact has been made by, or
relates to, information supplied by such party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.

No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who is not guilty of such fraudulent
misrepresentation.

ARTICLE III

Section 3.01. Communications. All notices and other communications
provided for or permitted hereunder shall be made in writing by telecopy,
courier service or personal delivery:

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<PAGE> 10

(a) if to a Holder, at the most current address given by such
Holder to the Company in accordance with the provisions of this Section 3.01,
which address initially is, with respect to JEDI or ECT, the address set forth
in the Securities Purchase Agreement, and

(b) if to the Company, initially at its address set forth in
the Securities Purchase Agreement, and

(c) for each, thereafter at such other address, notice of
which is given in accordance with the provisions of this Section 3.01.

All such notices and communications shall be deemed to have
been received at the time delivered by hand, if personally delivered; when
receipt acknowledged, if telecopied; and on the next business day if timely
delivered to an air courier guaranteeing overnight delivery.

Section 3.02. Successor and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including subsequent holders of Registrable Securities.

Section 3.03. Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which counterparts, when so executed and delivered, shall be deemed to
be an original and all of which counterparts, taken together, shall constitute
but one and the same Agreement.

Section 3.04. Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

Section 3.05. Governing Law. THE LAWS OF THE STATE OF TEXAS SHALL
GOVERN THIS AGREEMENT WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.

Section 3.06. Severability of Provisions. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting or impairing the validity or enforceability of such provision in any
other jurisdiction.

Section 3.07. Entire Agreement. This Agreement, together with the
Securities Purchase Agreement and the other Basic Documents (as defined in the
Securities Purchase Agreement) are intended by the parties as a final expression
of their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein with respect to
the registration rights granted by the Company with respect to the securities
sold pursuant to the Securities Purchase Agreement. This Agreement, the
Securities Purchase Agreement and the other Basic Documents supersede all prior
agreements and understandings between the parties with respect to such subject
matter.

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<PAGE> 11

Section 3.08. Attorneys' Fees. In any action or proceeding brought to
enforce any provision of this Agreement, the successful party shall be entitled
to recover reasonable attorneys' fees in addition to its costs and expenses and
any other available remedy.

Section 3.09. Amendment. This Agreement may be amended only by means of
a written amendment signed by the Company and by the Holders of a majority of
the Registrable Securities.

Section 3.10. Registrable Securities Held by the Company or Its
Affiliates. In determining whether the Holders of the required amount of
Registrable Securities have concurred in any direction, amendment, supplement,
waiver or consent, Registrable Securities owned by the Company or one of its
Affiliates shall be disregarded.

Section 3.11. Assignment of Rights. The rights of any Holder under this
Agreement may be assigned to any Person who acquires any Registrable Securities.
Any assignment of registration rights pursuant to this Section 3.11 shall be
effective only upon receipt by the Company of written notice from such assigning
Holder stating the name and address of any assignee. The rights of an assignee
under this Section 3.11 shall be the same rights granted to the assigning Holder
under this Agreement. In connection with any such assignment, the term "Holder"
as used herein shall, where appropriate to assign the rights and obligations of
the assigning Holder hereunder to such assignee, be deemed to refer to the
assignee.

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<PAGE> 12

IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.

BRIGHAM EXPLORATION COMPANY

By:
--------------------------------
Craig M. Fleming
Chief Financial Officer

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<PAGE> 1
EXHIBIT 5

(214) 969-1700

August 14, 1998

Brigham Exploration Company
6300 Bridge Point Parkway
Building Two, Suite 500
Austin, Texas 78730

Dear Sirs and Madams:

We have acted as counsel for Brigham Exploration Company, a Delaware
corporation (the "Company"), in connection with the preparation of the Company's
Registration Statement on Form S-1 (Registration No. 333-53873), as amended (the
"Registration Statement"), filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended, relating to the proposed offering
(the "Offering") of (i) shares (the "Shares") of the Company's common stock, par
value $.01 per share ("Common Stock") having an aggregate value of $10 million,
(ii) $50,000,000 of Senior Subordinated Notes due 2003 (the "Notes") and (iii)
warrants (the "Warrants") to purchase 1,000,000 shares of Common Stock. The
Notes will be issued pursuant to an Indenture (the "Indenture") between the
Company and Chase Bank of Texas, National Association, as trustee, the form of
which is filed as Exhibit 4.2 to the Registration Statement. The Notes will be
guaranteed by Brigham Oil & Gas, L.P., Brigham, Inc., Brigham Holdings I, LLC
and Brigham Holdings II, LLC (the "Subsidiary Guarantors") pursuant to
Subsidiary Guaranty Agreements (as defined in the Registration Statement), a
form of which is filed as part of Exhibit 4.2 to the Registration Statement.
The Shares, Notes, Subsidiary Guaranty Agreements and Warrants are collectively
referred to herein as the "Securities." The Securities are proposed to be sold
by the Company pursuant to a Securities Purchase Agreement (as defined in the
Registration Statement), the form of which is filed as Exhibit 10.34 to the
Registration Statement.

In connection with the foregoing, we have examined the originals or
copies, certified or otherwise authenticated to our satisfaction, of the
Registration Statement, forms of the Indenture, the Subsidiary Guaranty
Agreements and the Securities Purchase Agreement, and such corporate records of
the Company, certificates of public officials and of officers of the Company
and other agreements, instruments and documents as we have deemed necessary as
a basis for the opinions hereinafter expressed. Where facts material to the
opinions hereinafter expressed were not independently established by us, we
have relied upon the statements of officers of the Company, where we deemed
such reliance appropriate under the circumstances.

Based upon the foregoing, subject to the qualifications hereinafter
set forth, and having regard for such legal considerations as we deem relevant,
we are of the opinion that:

1. The Company is a corporation duly incorporated under the laws
of the State of Delaware.

2. The Securities proposed to be issued pursuant to the Offering
have been duly authorized for issuance and, subject to the Registration
Statement becoming effective under the Securities Act of 1933, and to compliance
with any applicable state securities laws, when issued and delivered in
accordance with the Indenture and the Securities Purchase
<PAGE> 2
Agreement, (i) the Shares and the Warrants will be legally issued, fully paid
and nonassessable, (ii) the Notes will constitute valid and legally binding
obligations of the Company, entitled to the benefits of the Indenture, and
(iii) the Subsidiary Guaranty Agreements will constitute valid and legally
binding obligations of the Subsidiary Guarantors.

The opinions expressed above are limited by, subject to and based on
the assumptions, limitations and qualifications set forth below:

(a) The validity and binding effect of the Notes and the
Subsidiary Guaranty Agreements may be limited or affected by
bankruptcy, reorganization, insolvency, fraudulent conveyance,
moratorium or other similar laws relating to or affecting creditors'
rights generally and by general equitable principles (regardless of
whether such validity and binding effect is considered in a proceeding
in equity or at law), and except as rights to indemnity and
contribution under the Indenture and the Subsidiary Guaranty
Agreements may be limited by applicable laws or policies underlying
such laws.

We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement and to the reference to us under the caption "Legal
Matters" in the prospectus forming a part of the Registration Statement. In
giving this consent, we do not thereby admit that we are within the category of
persons whose consent is required under Section 7 of the Securities Act of 1933
or the rules or regulations of the Securities and Exchange Commission
thereunder.

Respectfully submitted,

THOMPSON & KNIGHT,
A Professional Corporation

By: /s/ Joe Dannenmaier
-----------------------------
Joe Dannenmaier, Attorney

<PAGE> 1
EXHIBIT 10.34

================================================================================

SECURITIES PURCHASE AGREEMENT

BETWEEN

BRIGHAM EXPLORATION COMPANY

AND

-------------------

AND

-------------------
DATED AS OF AUGUST __, 1998

$50,000,000 SENIOR SUBORDINATED SECURED NOTES DUE 2003,

WARRANTS TO PURCHASE __________ SHARES OF COMMON STOCK;

AND

ACQUISITION OF _________ SHARES OF COMMON STOCK

================================================================================

<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<S> <C>
ARTICLE I
DEFINITIONS..............................................................................................1
Section 1.01 Definitions............................................................................1

ARTICLE II
ISSUANCE OF SECURITIES; RIGHTS OF PURCHASERS............................................................10
Section 2.01 Issuance of Securities................................................................10
Section 2.02 The Closing; Funding Date.............................................................11
Section 2.03 Delivery..............................................................................11
Section 2.04 Payment...............................................................................11
Section 2.05 Tax Matters...........................................................................11
Section 2.06 Rights of Purchasers..................................................................12

ARTICLE III
SECURITY FOR THE OBLIGATIONS ...........................................................................12
Section 3.01 Security..............................................................................12

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER............................................................12
Section 4.01 Corporate Existence...................................................................12
Section 4.02 Financial Condition...................................................................13
Section 4.03 Litigation............................................................................13
Section 4.04 No Breach.............................................................................13
Section 4.05 Authority.............................................................................14
Section 4.06 Approvals.............................................................................14
Section 4.07 Use of Loans..........................................................................14
Section 4.08 ERISA.................................................................................14
Section 4.09 Taxes.................................................................................15
Section 4.10 Titles, etc...........................................................................15
Section 4.11 No Material Misstatements.............................................................16
Section 4.12 Investment Company Act................................................................17
Section 4.13 Public Utility Holding Company Act....................................................17
Section 4.14 Subsidiaries..........................................................................17
Section 4.15 Location of Business and Offices......................................................17
Section 4.16 Defaults..............................................................................17
Section 4.17 Environmental Matters.................................................................17
Section 4.18 Compliance with the Law...............................................................18
Section 4.19 Insurance.............................................................................19
Section 4.20 Hedging Agreements....................................................................19
Section 4.21 Restriction on Liens..................................................................20
</TABLE>

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<PAGE> 3
<TABLE>
<S> <C>
Section 4.22 Material Agreements...................................................................20
Section 4.23 Gas Imbalances........................................................................20
Section 4.24 Capitalization........................................................................20
Section 4.25 Acquired Shares.......................................................................20
Section 4.26 Warrant Shares........................................................................21
Section 4.27 No Restrictions.......................................................................21
Section 4.28 Certain Fees..........................................................................21

ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS........................................................21
Section 5.01 Investment............................................................................21
Section 5.02 Nature of Purchasers..................................................................22
Section 5.03 Receipt of Information; Authorization.................................................22

ARTICLE VI
CONDITIONS PRECEDENT TO FUNDING.........................................................................22
Section 6.01 Conditions Precedent to Obligations of the Purchasers.................................22
Section 6.02 Conditions Precedent to Obligations of the Seller.....................................25
Section 6.03 Conditions Precedent to the Obligations of Purchasers and Seller......................26

ARTICLE VII
AFFIRMATIVE COVENANTS...................................................................................26
Section 7.01 Warrants..............................................................................26
Section 7.02 Hart-Scott-Rodino Compliance..........................................................26
Section 7.03 Board Representation..................................................................27
Section 7.04 Common Stock; Dividends; Voting Rights................................................27

ARTICLE VIII
[OMITTED BY THE PARTIES HERETO..........................................................................27

ARTICLE IX
[OMITTED BY THE PARTIES HERETO].........................................................................27

ARTICLE X
.......................................................................................................27

ARTICLE XI
[OMITTED BY THE PARTIES HERETO..........................................................................27

ARTICLE XII
MISCELLANEOUS...........................................................................................28
Section 12.01 Interpretation and Survival of Provisions.............................................28
Section 12.02 Costs, Expenses and Taxes.............................................................28
</TABLE>

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<PAGE> 4

<TABLE>
<S> <C>
Section 12.03 No Waiver; Modifications in Writing...................................................29
Section 12.04 Binding Effect; Assignment............................................................30
Section 12.05 Replacement Securities................................................................30
Section 12.06 Communications........................................................................30
Section 12.07 Governing Law.........................................................................31
Section 12.08 Arbitration...........................................................................31
Section 12.09 Execution in Counterparts.............................................................32
</TABLE>

Exhibits:

Exhibit A - Form of Warrants

Schedules:

Schedule 4.02 - Liabilities
Schedule 4.03 - Litigation
Schedule 4.09 - Taxes
Schedule 4.10 - Titles, Etc.
Schedule 4.14 - Subsidiaries and Addresses
Schedule 4.19 - Insurance
Schedule 4.20 - Hedging Agreements
Schedule 4.22 - Material Agreements
Schedule 4.23 - Gas Imbalances
Schedule 4.24 - Voting Agreements; Registration Rights

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<PAGE> 5

SECURITIES PURCHASE AGREEMENT

SECURITIES PURCHASE AGREEMENT, dated as of August __, 1998 (this
"Agreement"), among BRIGHAM EXPLORATION COMPANY, a Delaware corporation,
__________ ., a _________________ ("___") and _____________________ , a
____________________________ ("_____").

In consideration of the mutual covenants and agreements set forth
herein and for good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows:

ARTICLE I
DEFINITIONS

Section 1.01 Definitions. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:

"Acquired Shares" means ____________ shares of Common Stock acquired by
the Purchasers on the Funding Date in accordance with Section 2.01 and any
additional shares of Common Stock of the Seller issued to the Purchasers after
the Funding Date in accordance with Section 2.01(ii).

"Affiliate" of any Person shall mean (i) any Person directly or
indirectly controlled by, controlling or under common control with such first
Person, (ii) any director or officer of such first Person or of any Person
referred to in clause (i) above and (iii) if any Person in clause (i) above is
an individual, any member of the immediate family (including parents, spouse and
children) of such individual and any trust whose principal beneficiary is such
individual or one or more members of such immediate family and any Person who is
controlled by any such member or trust. For purposes of this definition, any
Person which is the sole general partner of a limited partnership, or which owns
directly or indirectly 20% or more of the securities having ordinary voting
power for the election of directors or other governing body of a corporation or
20% or more of the partnership or other ownership interests of any other Person
(other than as a limited partner of such other Person) will be deemed to
"control" (including, with its correlative meanings, "controlled by" and "under
common control with") such corporation or other Person.

"Agent" is defined in the Indenture.

"Average Share Price" means $_____.

"Basic Documents" means, collectively, this Agreement, the other Loan
Documents, the Structuring Fee Agreement and the Equity Documents.

"Board of Directors" means the Board of Directors of the Seller.

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<PAGE> 6

"BOG" means Brigham Oil & Gas, L.P., a Delaware limited partnership.

"Business Day" means any day other than a Saturday, Sunday, or a legal
holiday for commercial banks in Houston, Texas, or New York, New York.

"Business Opportunities Agreement" means the Corporate Opportunities
Shareholders' Agreement dated as of even date herewith between the Purchasers
and the Seller.

"Closing" has the meaning provided therefor in Section 2.02.

"Closing Date" means the date upon which the Closing occurs as provided
in Section 2.02.

"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute.

"Collateral" is defined in the Indenture.

"Collateral Documents" is defined in the Indenture.

"Commission" means the United States Securities and Exchange
Commission.

"Common Stock" means the common stock, par value $0.01 per share, of
the Seller or such other class of securities as shall, after the date of this
Agreement, constitute the common equity of the Seller.

"Consolidated Subsidiaries" shall mean each Subsidiary of the Seller
(whether now existing or hereafter created or acquired) the financial statements
of which shall be (or should have been) consolidated with the financial
statements of the Seller in accordance with GAAP.

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<PAGE> 7

aggregate) over the term of such lease, including payments at termination, which
are substantially equal to at least eighty percent (80%) of the purchase price
of the Property subject to such lease plus interest at an imputed rate of
interest; (vi) all Debt (as described in the other clauses of this definition)
of others secured by a Lien on any asset of such Person, whether or not such
Debt is assumed by such Person; (vii) all Debt (as described in the other
clauses of this definition) of others guaranteed by such Person or in which such
Person otherwise assures a creditor against loss of the Debt of others; (viii)
all obligations or undertakings of such Person to maintain or cause to be
maintained the financial position or covenants of others including without
limitation agreements expressed as an agreement to purchase the Debt or Property
of others or otherwise; (ix) obligations to deliver Hydrocarbons in
consideration of advance payments; (x) obligations to pay for goods or services
whether or not such goods or services are actually received or utilized by such
Person; (xi) any capital stock of such Person in which such Person has a
mandatory obligation to redeem such stock; (xii) any Debt of a Special Entity
for which such Person is liable either by agreement or because of a Governmental
Requirement; (xiii) the undischarged balance of any production payment created
by such Person or for the creation of which such Person directly or indirectly
received payment; and (xiv) all obligations of such Person under Hedging
Agreements, provided that "Debt" shall not include (a) interest and fees (other
than past due issuance fees) on any of the foregoing, (b) obligations associated
with bid, performance, surety or appeal bonds (including those required by
Governmental Requirements in connection with Oil and Gas Properties), (c) gas
balancing obligations (whether volumetric or dollar denominated), (d)
intercompany obligations among the Seller and its Consolidated Subsidiaries, (e)
indemnity obligations which have not matured into fixed liabilities, and (f)
purchase price adjustments and similar post-closing obligations (but excluding
the deferred payment of any purchase price) incurred in connection with the
permitted purchase and sale of Property or stock, and which is to be determined
and payable no later than 180 days following the closing of such purchase and
sale.

"Designee" shall have the meaning set forth in Section 7.03.

"Effective Date" means the date this Agreement is executed by all the
parties hereto.

"Employee Plan" means any employee benefit plan, program or policy with
respect to which the Seller or any ERISA Affiliate may have any liability or any
obligation to contribute, other than a Plan or a Multiemployer Plan.

"Environmental Laws" means any and all Governmental Requirements
pertaining to the environment in effect in any and all jurisdictions in which
the Seller or any Subsidiary is conducting or at any time has conducted
business, or where any Property of the Seller or any Subsidiary is located,
including, without limitation, the Oil Pollution Act of 1990 ("OPA"), as
amended, the Clean Air Act, as amended, the Comprehensive Environmental,
Response, Compensation, and Liability Act of 1980 ("CERCLA"), as amended, the
Federal Water Pollution Control Act, as amended, the Occupational Safety and
Health Act of 1970, as amended, the Resource Conservation and Recovery Act of
1976 ("RCRA"), as amended, the Safe Drinking Water Act, as amended, the Toxic
Substances Control Act, as amended, the Superfund Amendments and Reauthorization
Act of 1986,

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<PAGE> 8

as amended, the Hazardous Materials Transportation Act, as amended, and other
environmental conservation or protection laws. As used in the provisions hereof
relating to Environmental Laws, the term "oil" has the meaning specified in OPA;
the terms "hazardous substance" and "release" (or "threatened release") have the
meanings specified in CERCLA, and the terms "solid waste" and "disposal" (or
"disposed") have the meanings specified in RCRA; provided, however, that (i) in
the event either OPA, CERCLA or RCRA is amended so as to broaden the meaning of
any term defined thereby, such broader meaning shall apply subsequent to the
effective date of such amendment, and (ii) to the extent the laws of the state
in which any Property of the Seller or any Subsidiary is located establish a
meaning for "oil," "hazardous substance," "release," "solid waste" or "disposal"
which is broader than that specified in either OPA, CERCLA or RCRA, such broader
meaning shall apply.

"Equity Documents" means the Warrants, the stock certificates
representing the Acquired Shares, the Registration Rights Agreement and the
Business Opportunities Agreement.

"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time and any successor statute.

"ERISA Affiliate" shall mean each trade or business (whether or not
incorporated) which together with the Seller or any Subsidiary of the Seller
would be deemed to be a "single employer" within the meaning of Section
4001(b)(1) of ERISA or subsections (b), (c), (m) or (o) of section 414 of the
Code.

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<PAGE> 9

rights of way, facilities and equipment, and defects, irregularities, zoning
restrictions and deficiencies in title of any rights of way or other Property
which in the aggregate do not materially impair the use of such rights of way or
other Property for the purposes for which such rights of way and other Property
are held or materially impair the value of such Property subject thereto; (vi)
deposits of cash or securities to secure the performance of bids, trade,
contracts, leases, statutory obligations and other obligations of a like nature
incurred in the ordinary course of business; and (vii) Liens permitted by the
Loan Documents.

"Financial Statements" means the financial statement or statements
described or referred to in Section 4.02.

"Financing Agreement" means an agreement between the Seller and
_________________ pursuant to which the Seller grants to _________________ the
right and option to participate during the three years following the Closing
Date for up to 20% on any public or private (e.g. 144A) high yield debt offering
by the Seller with gross proceeds in excess of $50,000,000.

"Funding Date" means the first Business Day following the date all of
the conditions precedent to funding in Article VI have been satisfied.

"GAAP" means generally accepted accounting principles in the United
States of America in effect from time to time.

"Governmental Authority" shall include the country, the state, county,
city and political subdivisions in which any Person or such Person's Property is
located or which exercises valid jurisdiction over any such Person or such
Person's Property, and any court, agency, department, commission, board, bureau
or instrumentality of any of them including monetary authorities which exercises
valid jurisdiction over any such Person or such Person's Property. Unless
otherwise specified, all references to Governmental Authority herein shall mean
a Governmental Authority having jurisdiction over, where applicable, the Seller,
the Subsidiaries or any of their Property or any Purchaser.

"Government Requirement" means any law, statute, code, ordinance,
order, determination, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, authorization or other directive or requirement
(in the case of banking regulatory authorities whether or not having the force
of law), including without limitation, Environmental Laws, energy regulations
and occupational, safety and health standards or controls of any Governmental
Authority.

"Guarantors" means Brigham, Inc., Brigham Holdings I, LLC, Brigham
Holdings II, LLC, BOG and any other Person who becomes party to a Guaranty
Agreement pursuant to the terms of the Loan Documents.

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<PAGE> 10

"Guaranty Agreements" means the agreements executed by the Guarantors
in form and substance satisfactory to the Trustee and the Purchasers
guarantying, unconditionally, payment of the Obligations, as the same may be
amended, modified or supplemented from time to time.

"Hedging Agreements" means any commodity, interest rate or currency
swap, cap, floor, collar, forward agreement or other exchange or protection
agreements or any option with respect to any such transaction.

"Hydrocarbon Interests" means all rights, titles, interests and estates
now or hereafter acquired in and to oil and gas leases, oil, gas and mineral
leases, or other liquid or gaseous hydrocarbon leases, mineral fee interests,
overriding royalty and royalty interests, net profit interests and production
payment interests, including any reserved or residual interests of whatever
nature.

"Hydrocarbons" means oil, gas, casinghead gas, drip gasoline, natural
gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and
all products refined or separated therefrom.

"Indenture" means that certain Indenture dated as of August ___, 1998,
executed by Seller.

"Investment Unit" has the meaning provided therefor in Section 2.05 of
this Agreement.

"Lien" means any interest in Property securing an obligation owed to,
or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute or contract, and whether such
obligation or claim is fixed or contingent, and including but not limited to (i)
the lien or security interest arising from a mortgage, encumbrance, pledge,
security agreement, conditional sale or trust receipt or a lease, consignment or
bailment for security purposes or (ii) production payments and the like payable
out of Oil and Gas Properties. The term "Lien" shall include reservations,
exceptions, encroachments, easements, rights of way, covenants, conditions,
restrictions, leases and other title exceptions and encumbrances affecting
Property. For the purpose of this Agreement, a Person shall be deemed to be the
owner of any Property which it has acquired or holds subject to a conditional
sale agreement, or leases under a financing lease or other arrangement pursuant
to which title to the Property has been retained by or vested in some other
Person in a transaction intended to create a financing.

"Loan Documents" means this Agreement, the Indenture, the Notes, the
Structuring Fee Agreement, the Collateral Documents, and any and all other
agreements or instruments now or hereafter executed and delivered by the Seller
or any Subsidiary or Affiliate of the Seller (other than the Equity Documents
and any assignments, participation or similar agreements between any Purchaser
and any other lender or creditor with respect to any Obligations pursuant to
this Agreement) in connection with, or as security for the payment or
performance of, the Notes or this Agreement, as such agreements may be amended,
supplemented or restated from time to time.

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<PAGE> 11

"Majority Purchasers" means, at any time, the Purchasers holding more
than 50% of the Warrants.

"Material Adverse Effect" means any material and adverse effect on (i)
the assets, liabilities, financial condition, business, operations or affairs of
the Seller and its Subsidiaries taken as a whole, from those reflected in the
Financial Statements, or from the facts represented or warranted in any Loan
Document at the time made, or (ii) the ability of the Seller and its
Subsidiaries taken as a whole to carry out their business as of the Closing Date
or as proposed as of the Closing Date to be conducted or to meet their
obligations under the Loan Documents on a timely basis.

"Mortgage" is defined in the Indenture.

"Mortgaged Property" means the Property owned by the Seller and its
Subsidiaries which is subject to the Liens existing and to exist under the Loan
Documents.

"Multiemployer Plan" means a Plan defined as such in Section 3(37) or
4001(a)(3) of ERISA.

"NASDAQ" means the National Association of Securities Dealers
Automated Quotation System.

"Notes" means the Senior Subordinated Secured Notes issued pursuant to
Section 2.03 of this Agreement and the Indenture, in the aggregate face amount
of $50,000,000, dated as of the date hereof, made by the Seller and initially
payable to the order of the Purchasers in their respective Participations.

"Noteholders" means, from time to time, the holders of the Notes.

"Obligations" means any and all amounts, liabilities and obligations
owing from time to time by Seller to the Agent or the Noteholders, pursuant to
any of the Loan Documents and all renewals, extensions and/or rearrangements
thereof, whether such amounts, liabilities or obligations be liquidated or
unliquidated, now existing or hereafter arising, absolute or contingent.

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affixed or incidental to the Hydrocarbon Interests; and all Properties, rights,
titles, interests and estates described or referred to above, including any and
all Property, real or personal, now owned or hereafter acquired and situated
upon, used, held for use or useful in connection with the operating, working or
development of any of such Hydrocarbon Interests or Property (excluding drilling
rights, automotive equipment or other personal property which may be on such
premises for the purpose of drilling a well or other similar temporary use) and
including any and all oil wells, gas wells, injection wells or other wells,
buildings, structures, fuel separators, liquid extraction plants, plant
compressors, pumps, pumping units, field gathering systems, tanks and tank
batteries, fixtures, valves, fittings, machinery and parts, engines, boilers,
meters, apparatus, appliances, tools, implements, cables, wires, towers, casing,
tubing and rods, similar equipment, surface leases, rights-of-way, easements and
servitudes together with all additions, substitutions, replacements, accessions
and attachments to any and all of the foregoing.

"Participation" means, for each Purchaser, such Purchaser's
proportionate share of the Obligations and the Warrants. As of the Effective
Date, ECT's Participation shall be 25% and JEDI- II's Participation shall be
75%.

"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions.

"Person" means any individual, corporation, company, voluntary
association, partnership, joint venture, trust, limited liability company,
unincorporated organization or government or any agency, instrumentality or
political subdivision thereof, or any other form of entity.

"Plan" means any employee pension benefit plan, as defined in Section
3(2) of ERISA, which (i) is currently or hereafter sponsored, maintained or
contributed to by the Seller, any Subsidiary or an ERISA Affiliate or (ii) was
at any time during the preceding six calendar years sponsored, maintained or
contributed to, by the Seller, any Subsidiary or an ERISA Affiliate.

"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.

"Purchasers" means ___ and ______ and/or, to the extent then
applicable, each assignee of ___ or _______ or their respective successors or
assigns pursuant to Section 12.04.

"Registration Rights Agreement" means the Registration Rights Agreement
dated as of the date hereof, made by the Seller in favor of the Purchasers
relating to the Warrants, the Warrant Shares and the Acquired Shares.

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"Reserve Report" is defined in the Indenture.

"Responsible Officer" means, as to any Person, the Chief Executive
Officer, the President or any Vice President of such Person and the Chief
Financial Officer of such Person. Unless otherwise specified, all references to
a Responsible Officer herein shall mean a Responsible Officer of the Seller.

"Securities" means the Notes, the Warrants and the Acquired Shares.

"Securities Act" means the Securities Act of 1933, as amended from time
to time, and the rules and regulations of the Commission promulgated thereunder.

"Seller" means Brigham Exploration Company, a Delaware corporation.

"Senior Credit Agreement" means the Credit Agreement dated as of
January 26, 1998, among BOG, the Senior Loan Agent, and the Senior Lenders, as
it may from time to time be amended, modified or supplemented from time to time,
and any Credit Agreement or similar agreement executed in connection with any
refinancing of the Senior Loan permitted hereunder and under the Subordination
Agreement.

"Senior Loan Agent" means the agent or agents designated under the
Senior Credit Agreement. Bank of Montreal is the Senior Loan Agent as of the
date hereof.

"Senior Lenders" means each of the lenders from time to time under the
Senior Credit Agreement.

"Senior Loan" shall mean, collectively, any advance or advances of
principal made by the Senior Lenders to BOG under the Senior Credit Agreement
and the other Senior Loan Documents.

"Special Entity" means any joint venture, limited liability company or
partnership, general or limited partnership or any other type of partnership or
company other than a corporation, in which a Person or one or more of its other
Subsidiaries is a member, owner, partner or joint venturer and owns, directly or
indirectly, at least a majority of the equity of such entity or controls such
entity, but excluding any tax partnerships that are not classified as
partnerships under state law. For purposes of this definition, any Person which
owns directly or indirectly an equity investment in another Person which allows
the first Person to manage or elect managers who manage the normal activities of
such second Person will be deemed to "control" such second Person (e.g.,a sole
general partner controls a limited partnership).

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"Structuring Fee Agreement" means the agreement between the Seller and
____________________ dated as of the date hereof.

"Subordination Agreement" means the Intercreditor Subordination
Agreement dated as of even date herewith, by and among the Trustee, the Senior
Loan Agent, the Senior Lenders, the Agent, the Purchasers, the Seller and
certain Subsidiaries, as the same may be supplemented or amended from time to
time.

"Subsidiary" means (i) any corporation of which at least a majority of
the outstanding shares of stock having by the terms thereof ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether or not at the time stock of any other class or classes
of such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time directly or indirectly owned or
controlled by a Person or one or more of its Subsidiaries or by a Person and one
or more of its Subsidiaries and (ii) any Special Entity. Unless otherwise
indicated herein, each reference to the term "Subsidiary" shall mean a
Subsidiary of the Seller. Quest Resources L.L.C. and Venture Acquisitions L.P.
shall not be considered Subsidiaries of Seller.

"Trade Payables" means customary trade payables incurred in the
ordinary course of business.

"Trustee" means the Trustee as defined in the Indenture.

"Warrant Shares" means the shares of Common Stock and other securities
receivable upon exercise of the Warrants.

"Warrants" means the Warrants issued by the Seller to the Purchasers in
their respective Participations pursuant to Section 2.03, for the purchase of an
aggregate of __________ shares of Common Stock, and any Warrants issued upon the
transfer thereof or in substitution therefor, pursuant to the Warrant
Certificates to be issued to ECT and JEDI-II, forms of which are attached hereto
as Exhibit A.

Section 1.02 Accounting Procedures and Interpretation. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be furnished by the Seller hereunder shall be prepared, in
accordance with GAAP, applied on a basis consistent with the Financial
Statements (except for changes concurred with by the Seller's independent public
accountants).

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ARTICLE II
ISSUANCE OF SECURITIES; RIGHTS OF PURCHASERS

Section 2.01 Issuance of Securities. Subject to the terms and
conditions herein set forth, the Seller agrees that it will issue the Securities
to the Purchasers and the Purchasers agree that they shall each purchase the
Securities from the Seller for an aggregate cash consideration of $50,000,000,
as follows:

(i) The Notes and the Warrants will be purchased by
the Purchasers in their respective participations and sold for
an aggregate cash consideration of $40,000,000.

(ii) The Acquired Shares will be purchased by the
Purchasers or their respective Affiliates for a total cash
consideration of $10,000,000. The number of Acquired Shares to
be purchased and sold on the Funding Date shall be determined
by dividing the $10,000,000 purchase price by the Average
Share Price. If within 180 days following the Funding Date the
Seller enters into an agreement to issue or issues new Common
Stock for a price per share that is less than the Average
Share Price (a "Post Funding Sale Price"), the Seller shall,
contemporaneously with the issuance of such new Common Stock,
issue and deliver to the Purchasers or their respective
Affiliates additional shares of Common Stock (which shall be
deemed additional Acquired Shares) such that, after issuance
and delivery of such additional Acquired Shares, the total
number of Acquired Shares received by the Purchasers or their
respective Affiliates multiplied by the Post Funding Date Sale
Price, shall aggregate $10,000,000.

Section 2.02 The Closing; Funding Date.

(a) The execution of the Basic Documents and all other
instruments required pursuant to Section 6.01 will take place at a closing (the
"Closing") to be held at the offices of Bracewell & Patterson, L.L.P. on such
date as the Seller and the Purchasers shall agree. The date and time at which
the Closing occurs is the "Closing Date".

(b) Delivery of the Securities by the Seller to the
Purchasers, and payment by the Purchasers to the Seller of the consideration
therefor as set forth in Section 2.01, shall occur on the Funding Date.

Section 2.03 Delivery. Delivery of the Securities pursuant to this
Agreement shall be made on the Funding Date by the Seller delivering to the
Purchasers, against payment of the purchase price therefor, as follows: (i) one
Note executed by the Seller in the face amount of $___________, payable to the
order of ___ and one Note executed by the Seller in the face amount of
$_____________, payable to the order of ______, (ii) one certificate executed by
the Seller representing ____'s Participation in the Warrants and one certificate
executed by the Seller

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representing ______'s Participation in the Warrants, registered in the names of
____ and ______, respectively (or such other Person as either Purchaser may have
designated in writing to the Seller at least three Business Days prior to the
Funding Date) and (iii) a certificate or certificates of Common Stock executed
by the Seller representing the Purchasers and/or their respective Affiliates
share of the Acquired Shares registered in the name(s) of the Purchasers and/or
their respective Affiliates (or such other Person as either Purchaser may have
designated in writing to the Seller at least three Business Days prior to the
Funding Date).

Section 2.04 Payment. Payment of the consideration for the Securities
shall be made on the Funding Date by wire transfer of immediately available
funds to such account of the Seller as shall have been designated to ECT at
least two Business Days prior to the Funding Date.

Section 2.05 Tax Matters. The Seller and the Purchasers agree as
follows: (i) Purchasers' acquisition of the Securities constitutes the purchase
of an "investment unit" (the "Investment Unit") for purposes of Treas. Reg.
ss.1.1273-2(h)(1); (ii) the issue price of the Investment Unit is $50,000,000,
as determined in accordance with Treas. Reg. ss.1.1273-2(a)(1); (iii) the issue
price for the Investment Unit shall be allocated among the Notes, the Warrants,
and the Acquired Shares in accordance with their relative fair market values, as
required by Treas. Reg. ss.1.1273-2(h)(1); and (iv) the parties agree that the
issue price shall be allocated among the Notes, the Warrants, and the Acquired
Shares as follows and the parties shall be bound by such allocation for all
tax-related purposes:

Notes: $_________
Warrants: $_________
Acquired Shares: $10,000,000

Section 2.06 Rights of Purchasers. The Purchasers shall have such
rights with respect to the registration of the Warrant Shares and the Acquired
Shares under the Securities Act and state securities laws as are set forth in
the Registration Rights Agreement, which shall be executed by the Seller and the
Purchasers at the Closing.

ARTICLE III
SECURITY FOR THE OBLIGATIONS

Section 3.01 Security. The Obligations shall be secured by the
Collateral and the Collateral Documents in accordance with the Indenture.

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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER

The Seller represents and warrants to the Purchasers, for the benefit
of each of the holders of the Notes, the holders of the Warrants and the holders
of the Acquired Shares, which representations and warranties shall survive the
execution of any Basic Document, that as of the date of this Agreement:

Section 4.01 Corporate Existence. The Seller: (i) is a corporation duly
organized, legally existing and in good standing under the laws of the State of
Delaware; (ii) has all requisite power, and has all material governmental
licenses, authorizations, consents and approvals necessary to own its assets and
carry on its business as now being or as proposed to be conducted; and (iii) is
qualified to do business in all jurisdictions in which the nature of the
business conducted by it makes such qualifications necessary and where failure
so to qualify would have a Material Adverse Effect. Brigham, Inc.: (i) is a
corporation duly organized, legally existing and in good standing under the laws
of the State of Nevada; (ii) has all requisite power, and has all material
governmental licenses, authorizations, consents and approvals necessary to own
its assets and carry on its business as now being or as proposed to be
conducted; and (iii) is qualified to do business in all jurisdictions in which
the nature of the business conducted by it makes such qualifications necessary
and where failure so to qualify would have a Material Adverse Effect. Each of
Brigham Holdings I, LLC and Brigham Holdings II, LLC: (i) is a limited liability
company duly organized, legally existing and in good standing under the laws of
the State of Nevada; (ii) has all requisite power, and has all material
governmental licenses, authorizations, consents and approvals necessary to own
its assets and carry on its business as now being or as proposed to be
conducted; and (iii) is qualified to do business in all jurisdictions in which
the nature of the business conducted by it makes such qualifications necessary
and where failure so to qualify would have a Material Adverse Effect. Brigham
Oil & Gas, L.P.: (i) is a limited partnership duly organized, legally existing
and in good standing under the laws of the State of Delaware; (ii) has all
requisite power, and has all material governmental licenses, authorizations,
consents and approvals necessary to own its assets and carry on its business as
now being or as proposed to be conducted; and (iii) is qualified to do business
in all jurisdictions in which the nature of the business conducted by it makes
such qualifications necessary and where failure so to qualify would have a
Material Adverse Effect.

Section 4.02 Financial Condition. The audited consolidated balance
sheet of the Seller and its Consolidated Subsidiaries as at December 31, 1997
and the related consolidated statement of income, stockholders' equity and cash
flow of the Seller and its Consolidated Subsidiaries for the fiscal year ended
on said date, with the opinion thereon of Price Waterhouse, heretofore furnished
to the Purchasers and the unaudited consolidated balance sheet of the Seller and
its Consolidated Subsidiaries as at June 30, 1998, and their related
consolidated statements of income, stockholders' equity and cash flow of the
Seller and its Consolidated Subsidiaries for the six-month period ended on such
date heretofore furnished to the Purchasers, are complete and correct and fairly
present the consolidated financial condition of the Seller and its Consolidated
Subsidiaries as at said dates and the results of its operations for the fiscal
year and the six-month period on said dates, all in

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<PAGE> 18

accordance with GAAP, as applied on a consistent basis (subject, in the case of
the interim financial statements, to normal year-end adjustments). Neither the
Seller nor any Consolidated Subsidiary has on the Closing Date any material
Debt, Trade Payables, contingent liabilities, liabilities for taxes, unusual
forward or long-term commitments or unrealized or anticipated losses from any
unfavorable commitments, except as referred to or reflected or provided for in
the Financial Statements or in Schedule 4.02. Since June 30, 1998, there has
been no change or event having a Material Adverse Effect. Since the date of the
Financial Statements, neither the business nor the Properties of the Seller or
any of the Consolidated Subsidiaries, taken as a whole, have been materially and
adversely affected as a result of any fire, explosion, earthquake, flood,
drought, windstorm, accident, strike or other labor disturbance, embargo,
requisition or taking of Property or cancellation of contracts, permits or
concessions by any Governmental Authority, riot, activities of armed forces or
acts of God or of any public enemy.

Section 4.03 Litigation. Except as disclosed to the Purchasers in
Schedule 4.03, at the Closing Date there is no litigation, legal, administrative
or arbitral proceeding, investigation or other action of any nature pending or,
to the knowledge of the Seller, threatened against or affecting the Seller or
any Subsidiary which both (a) involves the possibility of any judgment or
liability against the Seller or any Subsidiary not fully covered by insurance
(except for normal deductibles), and (b) would be more likely than not to have a
Material Adverse Effect.

Section 4.04 No Breach. Neither the execution and delivery of the Basic
Documents, nor compliance with the terms and provisions hereof will conflict
with or result in a breach of, or require any consent which has not been
obtained as of the Closing Date under, the Articles of Incorporation or by-laws
of the Seller, the respective charter, by-laws, partnership agreements or
regulations of any Subsidiary or any Governmental Requirement or any material
agreement or instrument to which the Seller or any Subsidiary is a party or by
which it is bound or to which it or its Properties are subject, or constitute a
default under any such agreement or instrument, or result in the creation or
imposition of any Lien upon any of the material revenues or assets of the Seller
or any Subsidiary pursuant to the terms of any such agreement or instrument
other than the Liens created by the Loan Documents.

Section 4.05 Authority. The Seller and each Subsidiary has all
necessary power and authority to execute, deliver and perform its obligations
under the Basic Documents to which it is a party; and the execution, delivery
and performance by the Seller and each Subsidiary of the Basic Documents to
which it is a party, have been duly authorized by all necessary action on its
part; and the Basic Documents constitute the legal, valid and binding
obligations of the Seller and each Subsidiary, enforceable in accordance with
their terms, except as such enforceability may be limited by bankruptcy,
insolvency, fraudulent transfer and similar laws affecting creditors' rights
generally or by general principles of equity.

Section 4.06 Approvals. Except for registration of the Securities under
the Securities Act, no authorizations, approvals or consents of, and no filings
or registrations with, any Governmental Authority are necessary for the
execution, delivery or performance by the Seller or any Subsidiary of the Basic
Documents or for the validity or enforceability thereof.

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Section 4.07 Use of Loans. The purchase price of the Notes, the
Warrants and the Acquired Shares shall be used solely to pay principal and
interest outstanding on the Senior Loan. In no event shall the purchase price of
the Notes, the Warrants or the Acquired Shares be used to finance in whole or in
part any hostile acquisition. The Seller is not engaged principally, or as one
of its important activities, in the business of extending credit for the
purpose, whether immediate, incidental or ultimate, or buying or carrying margin
stock (within the meaning of Regulation G, U or X of the Board of Governors of
the Federal Reserve System) and no part of the purchase price of the Notes, the
Warrants or the Acquired Shares will be used to buy or carry any margin stock.

Section 4.08 ERISA.

(a) The Seller and each ERISA Affiliate have complied in all
material respects with ERISA and, where applicable, the Code regarding such
Plan.

(b) Each Plan is, and has been, maintained in substantial
compliance with ERISA and, where applicable, the Code.

(c) No act, omission or transaction has occurred which could
result in imposition on the Seller or any ERISA Affiliate (whether directly or
indirectly) of an amount of $100,000 or more as (i) either a civil penalty
assessed pursuant to section 502(c), (i) or (1) of ERISA or a tax imposed
pursuant to Chapter 43 of Subtitle D of the Code or (ii) breach of fiduciary
duty liability damages under section 409 of ERISA.

(d) No Plan (other than a defined contribution plan) or any
trust created under any such Plan has been terminated since September 2, 1974.
No liability to the PBGC in excess of $100,000 (other than for the payment of
current premiums which are not past due) by the Seller or any ERISA Affiliate
has been or is expected by the Seller or any ERISA Affiliate to be incurred with
respect to any Plan. No ERISA Event with respect to any Plan has occurred which
could reasonably expected to result in liabilities of $100,000 or more.

(e) Full payment when due has been made of all amounts which
the Seller or any ERISA Affiliate is required under the terms of each Plan or
applicable law to have paid as contributions to such Plan, and no accumulated
funding deficiency in an amount of $100,000 or more (as defined in section 302
of ERISA and section 412 of the Code), whether or not waived, exists with
respect to any Plan.

(f) The actuarial present value of the benefit liabilities
under each Plan which is subject to Title IV of ERISA does not, as of the end of
the Seller's most recently ended fiscal year, exceed the current value of the
assets (computed on a plan termination basis in accordance with Title IV of
ERISA) of such Plan allocable to such benefit liabilities by $100,000 or more.
The term "actuarial present value of the benefit liabilities" shall have the
meaning specified in section 4041 of ERISA.

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(g) None of the Seller or any ERISA Affiliate sponsors,
maintains, or contributes to an employee welfare benefit plan, as defined in
section 3(1) of ERISA, including, without limitation, any such plan maintained
to provide benefits to former employees of such entities, that may not be
terminated by the Seller or any ERISA Affiliate in its sole discretion at any
time without any material liability.

(h) None of the Seller or any ERISA Affiliate sponsors,
maintains or contributes to, or has at any time in the preceding six calendar
years, sponsored, maintained or contributed to, any Multiemployer Plan.

(i) None of the Seller or any ERISA Affiliate is required to
provide security under section 401(a)(29) of the Code due to a Plan amendment
that results in an increase in current liability for the Plan.

Section 4.09 Taxes. Except as set out in Schedule 4.09, the Seller and
each Subsidiary has filed all United States Federal income tax returns and all
other tax returns which are required to be filed by it and has paid all material
taxes due pursuant to such returns or pursuant to any assessment received by the
Seller or any such Subsidiary, except for any taxes which are being contested in
good faith and by proper proceedings and against which adequate reserves are
being maintained. The charges, accruals and reserves on the books of the Seller
and its Subsidiaries in respect of taxes and other governmental charges are, in
the opinion of the Seller, adequate. No tax lien has been filed and, to the
knowledge of the Seller, no claim is being asserted with respect to any such
tax, fee or other charge, except for any taxes, fees or other charges which are
being contested in good faith and by proper proceedings and against which
adequate reserves are being maintained.

Section 4.10 Titles, etc.

(a) Subject to the matters set out in Schedule 4.10, each of
the Seller and the Subsidiaries has good and defensible title to (i) the Oil and
Gas Properties that are both (A) evaluated in the most recently delivered
Reserve Report and (B) described in Part One of Exhibit A to the Mortgage, free
and clear of all Liens except Liens permitted by Section 8.02 of the Indenture,
and (ii) to the best of Seller's knowledge, the balance of Seller's material
(individually or in the aggregate) Oil and Gas Properties (and/or those of the
Subsidiaries) that are described in the Mortgage or that are otherwise evaluated
in the most recently delivered Reserve Report, are free and clear (to the best
of Seller's knowledge) of all Liens except Liens permitted by Section 8.02 of
the Indenture. Except for immaterial divergences, after giving full effect to
the Excepted Liens and the matters set forth in Schedule 4.10, the Seller or its
Subsidiaries own the net interests in production attributable to the Hydrocarbon
Interests that are both (A) evaluated in the most recently delivered Reserve
Report and (B) reflected in the Mortgage, and the ownership of such Hydrocarbon
Interests shall not in any material respect obligate the Seller or its
Subsidiaries to bear the costs and expenses relating to the maintenance,
development and operations of each such Hydrocarbon Interest in an amount in
excess of the working interest of such Hydrocarbon Interest set forth in the
Mortgage (without a corresponding increase in net revenue interest). The Seller
does not believe, based upon

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information in its possession, that its most recently delivered Reserve Report
materially overstates its (or any Subsidiaries) oil and gas reserves, bearing in
mind that reserves are evaluated based upon estimates and assumptions with
respect to which reasonable minds of competent reserve engineers may differ and
that reserve estimates are affected by the oil and gas prices used in the
preparation thereof.

(b) All leases and agreements necessary for the conduct of the
business of the Seller and the Subsidiaries are valid and subsisting, in full
force and effect and there exists no default or event or circumstance which with
the giving of notice or the passage of time or both would give rise to a default
under any such lease or leases, which would affect in any material respect the
conduct of the business of the Seller and the Subsidiaries.

(c) The Properties presently owned, leased or licensed by the
Seller and the Subsidiaries, including, without limitation, all easements and
rights of way, include all Properties necessary to permit the Seller and the
Subsidiaries to conduct their business in all material respects in the same
manner as its business has been conducted prior to the Closing Date.

(d) All of the Properties of the Seller and the Subsidiaries
which are reasonably necessary for the operation of their business are in good
working condition in all material respects and are maintained in accordance with
prudent business standards.

Section 4.11 No Material Misstatements. Taken as a whole, the written
information, statements, exhibits, certificates, documents and reports furnished
to the Purchasers by the Seller or any Guarantor in connection with the
negotiation of this Agreement do not contain any material misstatement of fact
or omit to state a material fact or any fact necessary to make the statements
contained therein not materially misleading in the light of the circumstances in
which made and with respect to the Seller or any Guarantor. As of the Closing
Date, there is no fact peculiar to the Seller or any Guarantor which has a
Material Adverse Effect or in the future is reasonably likely to have (so far as
the Seller can now foresee) a Material Adverse Effect and which has not been set
forth in this Agreement or the other documents, certificates and statements
furnished to the Purchasers by or on behalf of the Seller or any Guarantor prior
to, or on, the Closing Date in connection with the transactions contemplated
hereby.

Section 4.12 Investment Company Act. Neither the Seller nor any
Subsidiary is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.

Section 4.13 Public Utility Holding Company Act. Neither the Seller nor
any Subsidiary is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," or a "public utility" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.

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Section 4.14 Subsidiaries. Except as set forth on Schedule 4.14, the
Seller has no Subsidiaries or any direct or indirect ownership interest in any
other Persons. Schedule 4.14 sets forth the ownership interest of the Seller
(direct or indirect) in and to all such Persons.

Section 4.15 Location of Business and Offices. As of the Closing Date,
the Seller's principal place of business and chief executive offices are located
at the address stated in Section 12.06. The principal place of business and
chief executive office of each Subsidiary are located at the addresses stated on
Schedule 4.14.

Section 4.16 Defaults. Neither the Seller nor any Subsidiary is in
default nor has any event or circumstance occurred which, but for the expiration
of any applicable grace period or the giving of notice, or both, would
constitute a default under any material agreement or instrument to which the
Seller or any Subsidiary is a party or by which the Seller or any Subsidiary is
bound which default would have a Material Adverse Effect. No Default hereunder
has occurred and is continuing. No "Event of Default" under the Senior Loan
Documents has occurred and is continuing nor has Seller or any of its
Subsidiaries received any notice of a "Default" under the Senior Loan Documents
that has triggered a cure period.

Section 4.17 Environmental Matters. Except as provided in Schedule 4.17
or for matters which are more likely than not to not to have a Material Adverse
Effect (or with respect to (c), (d) and (e) below, where the failure to take
such actions is more likely than not to not have a Material Adverse Effect):

(a) Neither any Property of the Seller or any of its
Subsidiaries nor the operations conducted thereon violate any order or
requirement of any court or Governmental Authority or any Environmental Laws;

(b) Without limitation of clause (a) above, no Property of the
Seller or any of its Subsidiaries nor the operations currently conducted thereon
or, to the best knowledge of the Seller, by any prior owner or operator of such
Property or operation, are in violation of or subject to any existing, pending
or threatened action, suit, investigation, inquiry or proceeding by or before
any court or Governmental Authority or to any remedial obligations under
Environmental Laws;

(c) All notices, permits, licenses or similar authorizations,
if any, required to be obtained or filed by the Seller or any of its
Subsidiaries in connection with the operation or use of any and all Property of
the Seller and each of its Subsidiaries, including without limitation present,
or to the best of Seller's knowledge, past treatment, storage, disposal or
release of a hazardous substance or solid waste into the environment, have been
duly obtained or filed, and the Seller and each Subsidiary thereof are in
compliance with the terms and conditions of all such notices, permits, licenses
and similar authorizations;

(d) All hazardous substances, solid waste, and oil and gas
exploration and production wastes, if any, generated at any and all Property of
the Seller and each of its Subsidiaries

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<PAGE> 23

have in the past, during Seller's or its Subsidiaries' tenure of ownership and
to the best of Seller's knowledge, prior thereto, been transported, treated and
disposed of in accordance with Environmental Laws and so as not to pose an
imminent and substantial endangerment to public health or welfare or the
environment, and, to the best knowledge of the Seller, all such transport
carriers and treatment and disposal facilities have been and are operating in
compliance with Environmental Laws and so as not to pose an imminent and
substantial endangerment to public health or welfare or the environment, and are
not the subject of any existing, pending or threatened action, investigation or
inquiry by any Governmental Authority in connection with any Environmental Laws;

(e) The Seller has taken all steps reasonably necessary to
determine and has determined that no hazardous substances, solid waste, or oil
and gas exploration and production wastes, have been disposed of or otherwise
released and there has been no threatened release of any hazardous substances on
or to any Property of the Seller or any of its Subsidiaries except in compliance
with Environmental Laws and so as not to pose an imminent and substantial
endangerment to public health or welfare or the environment;

(f) To the extent applicable, all Property of the Seller and
each of its Subsidiaries currently satisfies all design, operation, and
equipment requirements imposed by the OPA or scheduled as of the Closing Date to
be imposed by OPA during the term of this Agreement, and the Seller does not
have any reason to believe that such Property, to the extent subject to OPA,
will not be able to maintain compliance with the OPA requirements during the
term of this Agreement; and

(g) Neither the Seller nor any of its Subsidiaries has any
known contingent liability in connection with any release or threatened release
of any oil, hazardous substance or solid waste into the environment.

Section 4.18 Compliance with the Law. Neither the Seller nor any
Subsidiary has violated any Governmental Requirement or failed to obtain any
license, permit, franchise or other governmental authorization necessary for the
ownership of any of its Properties or the conduct of its business, which
violation or failure would have (in the event such violation or failure were
asserted by any Person through appropriate action) a Material Adverse Effect.
Except for such acts or failures to act as would not have a Material Adverse
Effect, the Oil and Gas Properties (and properties unitized therewith) of the
Seller and its subsidiaries have been maintained, operated and developed in a
good and workmanlike manner and in conformity with all applicable laws and all
rules, regulations and orders of all duly constituted authorities having
jurisdiction and in conformity with the provisions of all leases, subleases or
other contracts comprising a part of the Hydrocarbon Interests and other
contracts and agreements forming a part of such Oil and Gas Properties;
specifically in this connection, but subject to the Material Adverse Effect
qualification set forth above, (i) after the Closing Date, no such Oil and Gas
Property is subject to having allowable production reduced below the full and
regular allowable (including the maximum permissible tolerance) because of any
overproduction (whether or not the same was permissible at the time) prior to
the Closing Date and (ii) none of the wells comprising a part of such Oil and
Gas Properties (or

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<PAGE> 24

properties unitized therewith) are deviated from the vertical more than the
maximum permitted by applicable laws, regulations, rules and orders, and such
wells are, in fact, bottomed under and are producing from, and the well bores
are wholly within, such Oil and Gas Properties (or in the case of wells located
on properties unitized therewith, such unitized properties).

Section 4.19 Insurance. Schedule 4.19 attached hereto contains an
accurate and complete description of all material policies of fire, liability,
workmen's compensation and other forms of insurance owned or held by the Seller
and each Subsidiary as of the Closing Date. All such policies are in full force
and effect, all premiums with respect thereto covering all periods up to and
including the Closing Date have been paid, and no notice of cancellation or
termination has been received with respect to any such policy. Such policies are
sufficient for compliance with all requirements of law and of all agreements to
which the Seller or any Subsidiary is a party; are valid, outstanding and
enforceable policies; provide adequate insurance coverage in at lease such
amounts and against at least such risks (but including in any event public
liability) as are usually insured against in the same general area by companies
engaged in the same or a similar business for the assets and operations of the
Seller and each Subsidiary; will remain in full force and effect through the
respective dates set forth on Schedule 4.19 without the payment of additional
premiums; and will not in any way be affected by, or terminate or lapse by
reason of, the transactions contemplated by this Agreement. Schedule 4.19
identifies all material risks, if any, which the Seller, the Subsidiaries and
their respective board of directors or officers have designated as being self
insured. Neither the Seller nor any Subsidiary has been refused any insurance
with respect to its assets or operations, nor has its coverage been limited
below usual and customary policy limits, by an insurance carrier to which it has
applied for any such insurance or with which is has carried insurance during the
last three years.

Section 4.20 Hedging Agreements. Schedule 4.20 sets forth, as of the
Closing Date, a true and complete list of all Hedging Agreements (including
commodity price swap agreements, forward agreements or contracts of sale which
provide for prepayment for deferred shipment or delivery of oil, gas or other
commodities) of the Seller and each Subsidiary, the material terms thereof
(including the type, term, effective date, termination date and notional amounts
of volumes), the net mark to market value thereof, all credit support agreements
relating thereto (including any margin required or supplied), and the
counterparty to each such agreement.

Section 4.21 Restriction on Liens. Neither the Seller nor any
Subsidiary is a party to any agreement or arrangement (other than the Loan
Documents and the Senior Loan Documents), or subject to any order, judgment,
writ or decree, which either restricts or purports to restrict ability to grant
Liens to other Persons on or in respect of their respective assets or
Properties.

Section 4.22 Material Agreements. Set forth on Schedule 4.22 hereto is
a complete and correct list of all material agreements, leases, indentures,
purchase agreements, obligations in respect of letters of credit, guarantees,
joint venture agreements, and other instruments in effect or to be in effect as
of the Closing Date (other than the Senior Loan Documents and Hedging
Agreements) providing for, evidencing, securing or otherwise relating to any
material Debt of the Seller or any Subsidiary, and all obligations of the Seller
or any Subsidiary to issuers of surety or appeal bonds

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<PAGE> 25

(excluding operator's bonds, plugging and abandonment bonds, and similar surety
obligations obtained in the ordinary course of business) issued for account of
the Seller or any such Subsidiary, and such list correctly set forth the names
of the debtor or lessee and creditor or lessor with respect to the Debt or lease
obligations outstanding or to be outstanding and the property subject to any
Lien securing such Debt or lease obligations.

Section 4.23 Gas Imbalances. As of the Closing Date, except as set
forth in the most recent Reserve Report furnished to the Purchasers or on
Schedule 4.23, on a net basis there are no gas imbalances, take or pay or other
prepayments with respect to the Seller's or any Subsidiary's Hydrocarbon
Interests which would require the Seller or such Subsidiary to deliver five
percent (5%) or more of the monthly production from the Seller's and its
Subsidiaries' Hydrocarbons produced on a monthly basis from the Hydrocarbon
Interests, at some future time without then or thereafter receiving full payment
therefor.

Section 4.24 Capitalization. The authorized Capital Stock of the Seller
consists of: (a) 30,000,000 shares of Common Stock, par value $.01 per share and
(b) 10,000,000 shares of Preferred Stock, par value $.01 per share, of which
there are issued and outstanding 12,253,574 shares of Common Stock and no other
shares of Capital Stock. All outstanding shares of Common Stock are validly
issued, fully paid and nonassessable and were issued free of preemptive rights.
Except as set forth on Schedule 4.24, the Seller is not a party to any voting
trust or other agreement with respect to the voting of its Capital Stock. Except
for the Warrants, there are no (i) outstanding securities convertible or
exchangeable into Capital Stock of the Seller or (ii) warrants, contracts,
commitments, agreements, understandings, or arrangements of any kind to which
the Seller is a party relating to the repurchase or issuance of any Capital
Stock. Except as set forth on Schedule 4.24 and except as contemplated in the
Equity Documents, the Seller is not a party to or bound by any agreement with
respect to any of its securities which grants registration rights to any Person.

Section 4.25 Acquired Shares. When issued and delivered against payment
therefor in accordance with the terms of this Agreement, the Acquired Shares
will be duly and validly issued, fully paid, nonassessable, free of preemptive
rights and free from all taxes payable by the Seller and Liens (except any Liens
created or suffered to be created by the Purchasers) and will not be subject to
any restriction on the voting or transfer thereof created by the Seller other
than in the Equity Documents and the applicable provisions of federal and state
securities laws.

Section 4.26 Warrant Shares. When issued and delivered against payment
therefor in accordance with the terms of the Warrants, the Warrant Shares
issuable upon exercise of the Warrants will be duly and validly issued, fully
paid, nonassessable, free of preemptive rights and free from all taxes payable
by the Seller and Liens (except any Liens created or suffered to be created by
the Purchasers) and will not be subject to any restriction on the voting or
transfer thereof created by the Seller other than in the Equity Documents and
the applicable provisions of federal and state securities laws. The Seller has
duly and validly reserved the Warrant Shares, as of the Closing Date, for
issuance upon conversion of the Warrants.

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<PAGE> 26

Section 4.27 No Restrictions. The Seller currently is not, and in the
future will not, be subject to any agreements that purport to impose
restrictions or limitations on the Purchasers, as affiliates of the Seller or
otherwise, without the prior written consent and authorization of each of the
Purchasers.

Section 4.28 Certain Fees. Except for the fees payable to ECT
Securities Corp. and JEDI-II pursuant to the Structuring Fee Agreement, no fees
or commissions will be payable by the Seller to brokers, finders, investment
bankers, or Purchasers with respect to the issuance and sale of any of the
Securities or the consummation of the transaction contemplated by this
Agreement. The Seller agrees that it will indemnify and hold harmless the
Purchasers from and against any and all claims, demands, or liabilities for
broker's, finders, placement, or other similar fees or commissions incurred by
the Seller or alleged to have been incurred by the Seller in connection with the
issuance or sale of the Securities or the consummation of the transaction
contemplated by this Agreement.

ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

The Purchasers each represent and warrant to the Seller, which
representations and warranties shall survive the execution of any Basic
Document, that as of the date of this Agreement:

Section 5.01 Investment. Each Purchaser represents and warrants to, and
covenants and agrees with, the Seller that the Securities are being acquired for
its own account and with no intention of distributing or reselling the Notes,
the Warrants, the Warrant Shares or the Acquired Shares in any transaction which
would be in violation of the securities laws of the United States of America or
any State, without prejudice, however, to Purchasers' right at all times to sell
or otherwise dispose of all or any part of the Notes, the Warrants, the Warrant
Shares or the Acquired Shares under a registration statement under the
Securities Act and applicable state securities laws or under an exemption from
such registration available thereunder (including, without limitation, if
available, Rule 144A promulgated thereunder). If either Purchaser should in the
future decide to dispose of any of the Notes, the Warrants, the Warrant Shares
or the Acquired Shares, the Purchasers understand and agree (i) that it may do
so only (A) in compliance with the Securities Act and applicable state
securities law, as then in effect, and (B) in the manner contemplated by any
registration statement pursuant to which such securities are being offered, and
(ii) that stop-transfer instructions to that effect will be in effect with
respect to such securities. The Purchasers agree to the imprinting, so long as
appropriate, of a legend on each Note and on each certificate representing
Warrants, Warrant Shares or the Acquired Shares, to the effect as set forth
above.

Section 5.02 Nature of Purchasers. Each Purchaser represents and
warrants to, and covenants and agrees with, the Seller that, (i) it is an
"accredited investor" within the meaning of paragraphs (a)(3) or (8) of Rule 501
under the Securities Act and (ii) by reason of its business and financial
experience it has such knowledge, sophistication and experience in business and
financial

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<PAGE> 27

matters so as to be capable of evaluating the merits and risks of the
prospective investment in the Securities, is able to bear the economic risk of
such investment and, at the present time, would be able to afford a complete
loss of such investment.

Section 5.03 Receipt of Information; Authorization. Each Purchaser
acknowledges that it has been furnished all information that it deems necessary
or desirable to the making of an informed investment decision concerning the
Securities. Each Purchaser acknowledges that it has had an opportunity to ask
questions of and receive satisfactory answers from designated representatives of
the Seller concerning the terms and conditions pursuant to which the purchase of
the Securities are made. Each Purchaser acknowledges that it has been afforded
an opportunity to examine such documents and other information which it has
requested for the purpose of verifying the information provided to it and for
the purpose of answering any questions it may have concerning the business
affairs and financial condition of the Seller. Each Purchaser represents that it
alone or with its advisors has knowledge and experience in the business of the
Seller and the Seller so as to be capable of evaluating the merits and risks of
an investment in the Seller based upon the information furnished to it, its
knowledge of the business and affairs of the Seller, the records, files, and
plans of the Seller (which have been made available to it), such additional
information as it has requested and has received from the Seller, and the
independent inquiries and investigations undertaken by it. Each Purchaser
represents and warrants that the purchase of the Securities by it has been duly
and properly authorized and this Agreement and each Basic Document to which the
Purchasers are a signatory has been duly executed and delivered by it or on its
behalf.

ARTICLE VI
CONDITIONS PRECEDENT TO FUNDING

Section 6.01 Conditions Precedent to Obligations of the Purchasers. The
obligation of the Purchasers to acquire the Securities on the Funding Date is
subject to each of the following:

(a) The accuracy as of the Closing Date of each and every
representation and warranty of the Seller, each Guarantor, and the Senior Loan
Agent made in this Agreement or any other Basic Document, or in any certificate
delivered to the Purchasers pursuant to or in connection with this Agreement,
and receipt by the Purchasers of a Certificate executed by a duly Responsible
Officer, dated as of the Funding Date, certifying that each of the
representations and warranties of the Seller and each Guarantor made in this
Agreement or any other Basic Document are true and correct as of the Funding
Date, and that the Seller and each Guarantor has performed to date all of its
respective covenants and agreements under the Basic Documents.

(b) The absence as of the Closing Date and the Funding Date of
a Default or Event of Default hereunder or an "Event of Default" under the
Senior Credit Agreement or any "Default"under the Senior Loan Documents that has
triggered a cure period.

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<PAGE> 28

(d) The satisfaction of each of the following conditions as of
or prior to the Closing Date:

(i) The Purchasers (or the Trustee, where
appropriate) shall have received the following, each in form and
substance satisfactory to the Purchasers and in sufficient
counterparts:

(A) Duly executed counterparts of this
Agreement and the Indenture signed by all the parties hereto
and thereto.

(B) The duly executed Financing Agreement,
Structuring Fee Agreement, Guaranty Agreements, Subordination
Agreement and Registration Rights Agreement, dated as of the
Closing Date in form and substance satisfactory to Purchasers.

(D) Certificates of good standing as to the
Seller and each Guarantor issued by the Secretary of State of
their respective states of incorporation or formation.

(E) The duly executed certificate of the
Secretary of the Seller setting forth (i) resolutions of its
directors in form and substance satisfactory to the Purchasers
with respect to the authorization of this Agreement and the
other Basic Documents to which it is a party and the
transactions contemplated hereby and thereby; (ii) the names
and true signatures of the officers authorized to sign such
instruments; and (iii) copies of the articles or certificate
of incorporation and the bylaws of the Seller.

(F) The duly executed certificate of the
Secretary of each Guarantor which is a corporation setting
forth (i) resolutions of its directors in form and substance
satisfactory to the Purchasers with respect to the
authorization of the Guaranty Agreements executed by such
Guarantors and the transactions contemplated hereby and
thereby; (ii) the names and true signatures of the officers
authorized to sign such instruments; and (iii) copies of the
articles or certificate of incorporation and the bylaws of
each Guarantor.

(G) The duly executed certificate of all the
partners of each Guarantor that is a Partnership and each
member of each Guarantor that is a limited liability company,
setting forth (i) the authorization of the Guaranty Agreements
and the transactions contemplated hereby and thereby; (ii) the
names and title of all

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<PAGE> 29

persons authorized to sign such instruments; and (iii) copies
of the applicable partnership agreement or other regulating
documents of each such Guarantor.

(H) Evidence that the insurance required
hereunder and under the other Basic Documents has been
obtained and is in full force and effect.

(I) Copies of the Senior Loan Documents.

(J) Any other document which the Purchasers
may reasonably request, including opinions addressed to
Purchasers, dated as of the Closing Date, from the counsel for
the Seller and each of the Guarantors acceptable to each of
the Purchasers addressing the existence and good standing of
the Seller, the authorization of the Basic Documents, the
enforceability of the Basic Documents, the absence of
conflicts with law, other material agreements, and court
orders, the absence of litigation, and such other matters as
the Purchasers may reasonably request.

(ii) The Seller shall have executed (but not
delivered) the Notes, Warrants and Acquired Shares, each in form and
substance satisfactory to the Purchasers.

(iii) The Seller shall have received consents to the
Basic Documents by the Senior Lenders; and the Senior Loan Documents
shall have been amended in form and substance reasonably satisfactory
to Purchasers to permit the transactions contemplated by the Loan
Documents, including the payment of dividends or other distributions by
Subsidiaries to the Seller in order for the Seller to meet its debt
service obligations to the Purchasers under the Notes.

(iv) The Purchasers shall have completed a due
diligence review of the Seller and the Subsidiaries to the satisfaction
of the Purchasers in their sole discretion.

(v) The Purchasers shall have received the latest
internally prepared consolidated financial statements of the Seller and
its Subsidiaries which shall be at least through June 30, 1998. Since
June 30, 1998, there shall have occurred no event which could have a
Material Adverse Effect.

(vi) The Board of Directors of each of the Seller,
the Guarantors, the Purchasers and ________ must have approved the
transactions contemplated under this Agreement and the other Basic
Documents.

(vii) All other consents, including without
limitation any required shareholder approval, and waivers necessary to
complete the transactions under this Agreement and the other Basic
Documents shall have been obtained by the Seller, the Guarantors and
the Purchasers.

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<PAGE> 30

(e) The Warrants Shares and the Acquired Shares shall have
been approved for listing on NASDAQ and the registration statement on Form S-1
registering the Notes, the Warrants, and the Acquired Shares shall have been
declared effective by the Commission and no stop order with respect thereto
shall have been issued.

(f) The Seller shall have delivered to the Purchasers the
executed Notes, Warrants and Acquired Shares.

(g) The Mortgages shall have been filed in two counties of
Purchasers' choice.

(h) The Seller shall have paid to ECT Securities Corp. and
JEDI-II all payments required under the terms of the Structuring Fee Agreement.

(i) If requested in writing by either of the Purchasers, a
Designee of the Purchasers shall have been appointed to the Board of Directors
of the Seller pursuant to Section 7.03.

(j) The Seller shall have duly and validly reserved the
Warrant Shares for issuance upon conversion of the Warrants.

(k) The issuance of the Securities by the Seller shall not as
of the Funding Date be enjoined (temporarily or permanently) under the laws of
any jurisdiction to which the Seller is subject.

(l) Each of the Basic Documents shall have been executed and
delivered by all the respective parties thereto and shall be in full force and
effect.

Section 6.02 Conditions Precedent to Obligations of the Seller. The
obligations of the Seller to issue and sell Securities hereunder is subject, on
the Funding Date, to the prior or simultaneous satisfaction or waiver of the
following conditions:

(a) The representations and warranties made by the Purchasers
herein shall be true and correct in all respects on and as of the Funding Date
with the same effect as though such representations and warranties had been made
on and as of the Funding Date.

(b) The Purchasers shall have accepted delivery of and made
payment for the Securities.

(c) The issuance of the Securities by the Seller shall not as
of the Funding Date be enjoined (temporarily or permanently) under the laws of
any jurisdiction to which the Seller is subject.

(d) Each of the Basic Documents shall have been executed and
delivered by all the respective parties thereto and shall be in full force and
effect.

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<PAGE> 31

Section 6.03 Conditions Precedent to the Obligations of Purchasers and
Seller. The obligations of the Purchasers and Seller hereunder are contingent
upon the Funding Date occurring on or before 5:00 p.m., Houston, Texas time on
September 1, 1998.

ARTICLE VII
AFFIRMATIVE COVENANTS

Unless the prior written consent to the contrary is obtained from (i)
the holders of the majority of the Warrants (as to Sections 7.01 and 7.02) and
(ii) ECT (as to Sections 7.03 and 7.04) the Seller will, for the benefit of each
of the holders of the Warrants or Warrant Shares and the holders of the Acquired
Shares, at all times comply with the covenants contained in this Article VII (or
cause each Subsidiary's compliance with the applicable covenants), from the date
hereof and for so long as (x) the term of the Warrants, as to Sections 7.01 and
7.02, (y) ______ and ______ and/or their Affiliates beneficially own 5% or more
of the outstanding Common Stock of the Seller (including the Warrant Shares
represented by the Warrants, whether exercised or not), as to Section 7.03 and
(z) any part of the Obligations is outstanding, as to Section 7.04.

Section 7.01 Warrants. Seller shall at all times during the term of the
Warrants maintain a sufficient number of shares of Common Stock of the Seller to
be issued as Warrant Shares upon the exercise of all or part of the Warrants.
Seller shall (i) notify the holders of the Warrants promptly after the exercise
of any of the Warrants by a holder or holders thereof, of the exercise thereof,
(ii) provide to the holders of the Warrants such information or materials in
connection therewith as may be reasonably requested by the the holders of the
Warrants, and (iii) otherwise provide to all the holders of the Warrants copies
of all notices provided to or from the Seller in connection with the Warrants.

Section 7.02 Hart-Scott-Rodino Compliance. As soon as practicable after
the receipt from any holder of the Warrants or any Seller (the "Notice Giver")
of notice of the exercise of a number of Warrants sufficient to require a filing
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the rules,
regulations and formal interpretations thereunder, as amended from time to time
(the "HSR Act"), but in any event no later than the 10th Business Day after
receipt of such notice, the Seller will (i) prepare and file with the Antitrust
Division of the Department of Justice (the "DOJ") and the Federal Trade
Commission (the "FTC") the Notification and Report Form (accompanied by all
documentary attachments contemplated thereby) required by the HSR Act, (ii) upon
the request of any holder of the Warrants (the "Notice Giver"), request early
termination of the waiting period imposed by the HSR Act, (iii) coordinate and
cooperate with the Notice Giver in responding to formal and informal requests
for additional information and documentary material from the DOJ and the FTC in
connection with such filing, and (iv) use its best efforts to take, or cause to
be taken, all reasonable action and to do, or cause to be done, all things
reasonably necessary and appropriate to permit the issuance to the Notice Giver
of the shares of common stock issuance upon the exercise of the warrants with
respect to which any filing is required under the HSR Act, and (v) reimburse the
holders of the Warrants for the entire amount of any filing fee or any other
costs and expenses incurred by holders of the Warrants in connection therewith
(including legal fees), or as required to be paid under the HSR Act.

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<PAGE> 32

Section 7.03 Board Representation. ___ or its designated Affiliate (the
"Acting Party") shall have the right (a) to designate one member of the Board
of Directors of the Seller or (b) (i) to receive (and Seller covenants and
agrees to deliver to the Acting Party) prior notice of any proposed board
action and to receive (and Seller covenants and agrees to deliver to the Acting
Party) reasonable notice of and a right to attend any meeting of the Seller's
Board of Directors, (ii) to receive (and Seller covenants and agrees to deliver
to the Acting Party), promptly after they are produced, all management reports
and accounts relating to the Seller that are provided to Seller's Board of
Directors or any committee of the Board of Directors and (iii) upon reasonable
notice, to have reasonable access to the books and records of the Seller,
including statutory books, minute books and customer lists. In the event the
Acting Party elects to designate a person to serve as a member of the Board of
Directors of the Seller (the "Designee"), the Seller shall (x) expand as
required the number of directors constituting the entire board, (y) fill the
vacancy created by such expansion with such Designee and (z) submit the name of
such Designee to the stockholders of the Seller (together with a recommendation
of his or her election) at each meeting of stockholders at which directors are
elected, until requested otherwise by the Acting Party. Any Designee shall
agree to resign at the request of the Seller, at any time after the expiration
of the rights of the ___ and any Acting Party pursuant to this Section 7.03.
The rights of ___ under this Section 7.03 shall not be assignable other than to
an Affiliate of ___.

Section 7.04 Common Stock; Dividends; Voting Rights. The declaration of
dividends by the Seller shall be solely at the discretion of the Board of
Directors of the Seller. Except for holders of Common Stock, no other class of
Capital Stock of the Seller shall have any voting rights whatsoever, either
separately or in conjunction with the Common Stock.

ARTICLE VIII
[OMITTED BY THE PARTIES HERETO]

ARTICLE IX
[OMITTED BY THE PARTIES HERETO]

ARTICLE X
[OMITTED BY THE PARTIES HERETO]

ARTICLE XI
[OMITTED BY THE PARTIES HERETO]

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ARTICLE XII
MISCELLANEOUS

Section 12.01 Interpretation and Survival of Provisions. Article,
Section, Schedule, and Exhibit references are to this Agreement, unless
otherwise specified. All references to instruments, documents, contracts, and
agreements are references to such instruments, documents, contracts, and
agreements as the same may be amended, supplemented, and otherwise modified from
time to time, unless otherwise specified. The word "including" shall mean
"including but not limited to." Whenever the Seller has an obligation under the
Basic Documents, the expense of complying with that obligation shall be an
expense of the Seller unless otherwise specified. Whenever any determination,
consent, or approval is to be made or given by the Purchasers, any holder of the
Warrants or the Acquired Shares, such action shall be in such Person's sole
discretion unless otherwise specified in this Agreement. If any provision in the
Basic Documents is held to be illegal, invalid, not binding, or unenforceable,
such provision shall be fully severable and the Basic Documents shall be
construed and enforced as if such illegal, invalid, not binding, or
unenforceable provision had never comprised a part of the Basic Documents, and
the remaining provisions shall remain in full force and effect. The Basic
Documents have been reviewed and negotiated by sophisticated parties with access
to legal counsel and shall not be construed against the drafter. The
representations, warranties, and covenants made in this Agreement, the Notes or
any other Basic Document shall remain operative and in full force and effect
regardless of (a) any investigation made by or on behalf of the Seller or the
Purchasers or (b) acceptance of any of the Securities and payment therefor and
repayment or repurchase thereof. All indemnification obligations of the Seller
and the provisions of Section 12.02 shall remain operative and in full force and
effect unless such obligations are expressly terminated in a writing referencing
those individual Sections, regardless of any purported general termination of
this Agreement.

Section 12.02 Costs, Expenses and Taxes.

(a) Intentionally Deleted.

(b) The Seller agrees to indemnify the Purchasers, and their
respective officers, directors, employees, representatives, agents, attorneys,
and Affiliates (collectively, "Related Parties") from, hold each of them
harmless against and promptly upon demand pay or reimburse each of them for, any
and all actions, suits, proceedings (including any investigations, litigation,
or inquiries), claims, demands, and causes of action by third parties, and, in
connection therewith, all reasonable costs, losses, liabilities, damages, or
expenses of any kind or nature whatsoever (collectively the "Indemnity Matters")
which may be incurred by or asserted against or involve any of them (whether or
not any of them is designated a party thereto) as a result of, arising out of,
or in any way related to (i) any actual or proposed use by the Seller of the
proceeds of any sale of the Securities, (ii) the operations of the business of
the Seller or any Subsidiary, (iii) any bodily injury or death or property
damage occurring in or upon or in the vicinity of any Collateral, (iv) any claim
by any third Person against any Collateral assigned to or paid to any Noteholder
pursuant to any Collateral Document, (v) the failure of the Seller or any
Subsidiary to comply with any

-29-

<PAGE> 34
Governmental Requirement, or (vi) any other aspect of this Agreement and the
other Basic Documents, including, without limitation, the reasonable fees and
disbursements of counsel and all other reasonable expenses incurred in
connection with investigating, defending or preparing to defend any such action,
suit, proceeding (including any investigations, litigation, or inquiries), or
claim and INCLUDING ALL INDEMNITY MATTERS ARISING BY REASON OF THE ORDINARY
NEGLIGENCE OF ANY INDEMNITEE (but excluding all Indemnity Matters arising solely
by reason of claims between the Purchasers or any Purchaser's shareholders
against any Purchaser or by reason of the gross negligence or wilful misconduct
of any Indemnitee).

(c) The Seller agrees to pay and hold the Purchasers harmless
from and against any and all present and future stamp and other similar taxes
with respect to this Agreement and the Equity Documents and save the Purchasers
harmless from and against any and all liabilities with respect to or resulting
from any delay or omission to pay such taxes, and will indemnify the Purchasers
for the full amount of taxes paid by the Purchasers in respect of payments made
or to be made under this Agreement, any other Equity Document and any liability
(including penalties, interest, and expenses) arising therefrom or with respect
thereto, whether or not such taxes were correctly or legally asserted.

(d) In the case of any indemnification hereunder, the
Purchaser or other Person indemnified hereunder shall give notice to the Seller
within a reasonable period of time of any such claim or demand being made
against the Purchaser or other indemnified Person and the Seller, at its sole
cost and expense, shall provide a defense of such claim, provided, however,
that, (i) if the Seller has failed to assume the defense and employ counsel or
(ii) if the defendants in any such action include both the indemnified party and
the Seller or any Subsidiary and counsel to the indemnified party shall have
concluded that there may be reasonable defenses available to the indemnified
party that are different from or additional to those available to the Seller or
such Subsidiary or if the interests of the indemnified party reasonably may be
deemed to conflict with the interest of the Seller or such Subsidiary, then the
indemnified party shall have the right to select a separate counsel and to
assume such legal defense and otherwise to participate in the defense of such
action, with the expenses and fees of such separate counsel and other expenses
related to such participation to be reimbursed by the Seller as incurred.

(e) No indemnitee may settle any claim to be indemnified
without the consent of the indemnitor, such consent not to be unreasonably
withheld; provided, that the indemnitor may not reasonably withhold consent to
any settlement that an indemnitee proposes if the indemnitor does not have the
financial ability to pay all its obligations outstanding and asserted against
the indemnitee at that time, including the maximum potential claims against the
indemnitee to be indemnified pursuant to this Section 12.02.

(f) This Section 12.02 shall not apply to actions, suits,
proceedings, investigations, demands, losses, liabilities, claims, damages,
deficiencies, interest, judgements, costs, or expenses relating to any Property
to the extent arising from the acts or omissions of the Agent or any Noteholder
during the period after which such Person, its successors or assigns shall have

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<PAGE> 35

acquired possession of such Property (whether through foreclosure or deed in
lieu of foreclosure, as mortgagee in possession or otherwise).

(g) The Seller's obligations under this Section 12.02 shall
survive any termination of this Agreement and the payment of the Obligations.

Section 12.03 No Waiver; Modifications in Writing.

(a) No failure or delay on the part of the Seller or the
Purchasers in exercising any right, power, or remedy hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right,
power, or remedy preclude any other or further exercise thereof or the exercise
of any right, power, or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the Seller or the
Purchasers at law or in equity or otherwise.

(b) Except as otherwise provided herein, no amendment, waiver,
consent, modification, or termination of any provision of this Agreement, shall
be effective unless signed by the Seller and the holders of more than 50% of the
outstanding principal balance of the Notes and the holders of more than 50% of
the Warrants. Any amendment, supplement or modification of or to any provision
of this Agreement or any other Equity Document, any waiver of any provision of
this Agreement or any other Equity Document, and any consent to any departure by
the Seller from the terms of any provision of this Agreement or any other Equity
Document, shall be effective only in the specific instance and for the specific
purpose for which made or given. Except where notice is specifically required by
this Agreement, no notice to or demand on the Seller in any case shall entitle
the Seller to any other or further notice or demand in similar or other
circumstances.

Section 12.04 Binding Effect; Assignment. This Agreement shall be
binding upon the Seller and the Purchasers, and their respective successors and
permitted assigns. Except as expressly provided in this Agreement, this
Agreement shall not be construed so as to confer any right or benefit upon any
Person other than the parties to this Agreement, and their respective successors
and permitted assigns. Subject to applicable federal and state securities laws
the rights and obligations of the Purchasers under this Agreement with respect
to the Warrants and the Equity Documents may be sold, assigned or pledged by any
Purchaser, in whole or in part, in accordance with the provisions of the
Warrants, and upon any such assignment, the holders of the Warrants shall
succeed to all of the selling Purchaser's rights and obligations under this
Agreement with respect to the Warrants and the Equity Documents to the extent
assigned and the selling Purchaser shall be automatically released from any
obligations thereunder with respect to the Warrants and the Equity Documents to
the extent assigned. Subject to applicable federal and state securities laws the
Acquired Shares may be sold, assigned or pledged subject only to the
Registration Rights Agreement and upon any such assignment the holders of the
Acquired Shares shall succeed to the Purchaser's rights and obligations under
the Registration Rights Agreement. Upon request of any Purchaser in connection
with any transfer of the Warrants or Acquired Shares, the Seller shall execute
and deliver any amendment to

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<PAGE> 36

this Agreement, the Warrants, and the other Equity Documents reasonably
requested by the Purchaser to reflect the transfer and delineate the rights of
the transferor and the transferee.

Section 12.05 Replacement Securities. Upon receipt of evidence
satisfactory to the Seller of the loss, theft, destruction, or mutilation of any
Warrants, Warrant Shares or Acquired Shares and, in the case of any such loss,
theft, or destruction, upon delivery of any unsecured letter of indemnity
reasonably satisfactory to the Seller or, in the case of any such mutilation,
upon surrender or cancellation thereof, the Seller will issue a new Warrants,
Warrant Shares or Acquired Shares, as applicable.

Section 12.06 Communications. All notices and demands provided for
hereunder shall be in writing and shall be given by registered or certified
mail, return receipt requested, telecopy, air courier guaranteeing overnight
delivery or personal delivery to the following addresses:

If to the Purchasers:

and

If to the Seller:

6300 Bridge Point Parkway
Building 2, Suite 500
Austin, Texas 78730
Attention: Craig M. Fleming
Telecopier: (512) 472-3400

or to such other address as the Seller or any Purchaser may designate in
writing. All other communications may be by regular mail. All notices and
communications shall be deemed to have been duly given: at the time delivered by
hand, if personally delivered; four days after being sent

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<PAGE> 37

by certified mail, return receipt requested, if mailed; when receipt
acknowledged, if telecopied; and on the next Business Day if timely delivered to
an air courier guaranteeing overnight delivery.

Section 12.07 Governing Law. This Agreement will be construed in
accordance with and governed by the laws of the State of Texas without regard to
principles of conflicts of laws.

Section 12.08 Arbitration.

(a) Binding Arbitration. Subject to the provisions of
subparagraph (e), on the request of either the Seller or any Purchaser, whether
made before or after the institution of any legal proceeding, any action,
dispute, claim or controversy of any kind now existing or hereafter arising
between any of the parties hereto in any way arising out of, pertaining to or in
connection with this Agreement (a "Dispute") shall be resolved by binding
arbitration in accordance with the terms hereof. Either the Seller or any
Purchaser may, by summary proceedings, bring an action in court to compel
arbitration of any Dispute.

(d) Conduct of Arbitration. To the maximum extent practicable,
an arbitration proceeding hereunder shall be concluded within 180 days of the
filing of the Dispute with the AAA. Arbitration proceedings shall be conducted
in Houston, Texas. At the conclusion of any arbitration proceeding, the
arbitrator shall make specific written findings of fact and conclusions of law.
The arbitrator shall have the power to award recovery of all costs and fees to
the prevailing party. The Seller and the Purchasers each agree to keep all
Disputes and arbitration proceedings strictly confidential except for disclosure
of information required by applicable law.

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<PAGE> 38

(e) Costs of Arbitration. All fees of the arbitrator and any
engineer, accountant or other consultant engaged by the arbitrator, shall be
paid by the Seller (as to 50%) and the Purchasers (as to 50%) unless otherwise
awarded by the arbitrator.

Section 12.09 Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original and all of which counterparts, taken together, shall
constitute but one and the same Agreement.

IN WITNESS WHEREOF, the parties hereto execute this Agreement,
effective as of the date first above written.

BRIGHAM EXPLORATION COMPANY,
a Delaware corporation

By:
---------------------------
Craig M. Fleming
Chief Financial Officer

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<PAGE> 39

SCHEDULE 4.02

LIABILITIES

None

<PAGE> 40

SCHEDULE 4.03

LITIGATION

None

<PAGE> 41

SCHEDULE 4.09

TAXES

None

<PAGE> 42

SCHEDULE 4.20

HEDGING AGREEMENTS

None

<PAGE> 43

SCHEDULE 4.22

MATERIAL AGREEMENTS

None

<PAGE> 44

SCHEDULE 4.23

GAS IMBALANCES

None

<PAGE> 45

SCHEDULE 4.24

VOTING AGREEMENTS; REGISTRATION RIGHTS

<PAGE> 1
EXHIBIT 10.35

DRAFT
August 13, 1998

FIRST AMENDMENT TO CREDIT AGREEMENT

THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "Amendment") dated
as of August ___, 1998 is among: BRIGHAM OIL & GAS, L.P., a Delaware limited
partnership (the "Borrower"); each of the Lenders (as defined in the Credit
Agreement as hereinafter defined); and BANK OF MONTREAL, a Canadian bank (in its
individual capacity, "BMO"), as agent for the Lenders (in such capacity,
together with its successors in such capacity, the "Agent").

R E C I T A L S

A. The Borrower, the Agents, and the Lenders have entered into that
certain Credit Agreement dated as of January 26, 1998 (the "Credit Agreement"),
pursuant to which the Lenders have agreed to make certain loans and extensions
of credit to the Borrower upon the terms and conditions as provided therein; and

B. The Borrower, the Agents, and the Lenders now desire to make certain
amendments to the Credit Agreement.

NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration and the mutual benefits, covenants and agreements herein
expressed, the parties hereto now agree as follows:

Section 1. Certain Definitions. Unless otherwise defined herein, all
terms beginning with a capital letter which are defined in the Credit Agreement
shall have the same meanings herein as therein unless the context hereof
otherwise requires.

Section 2. Amendments to Credit Agreement.

(a) Additional Defined Terms. Section 1.02 of the Credit Agreement is
hereby amended and supplemented by adding the following new definitions, which
are read in their entirety as follows:

"First Amendment" shall mean that certain First Amendment to
Credit Agreement dated as of August ___, 1998 among the Borrower, the
Lenders and the Agent.

<PAGE> 2

"Indenture" shall mean that certain Indenture dated as of
August ____, 1998 between Brigham Exploration, as the issuer of the
Subordinated Debt, and Chase Bank of Texas, National Association, as
the trustee.

"Securities Purchase Agreement" shall mean that certain
Securities Purchase Agreement dated August ___, 1998 among Brigham
Exploration, the purchasers named therein and ___, as agent for such
purchasers regarding $50,000,000 Senior Subordinated Secured Notes due
2003.

"Subordinated Debt" shall mean the Debt in the principal
amount not to exceed $40,000,000 (plus up to an additional $10,000,000
for interest paid in kind pursuant to Section 9.02 of the Indenture) of
Brigham Exploration incurred under the Indenture and expressly
subordinated to the Indebtedness pursuant to agreements in form and
substance satisfactory to the Lenders.

"Subordination Agreement" shall mean that certain
Intercreditor and Subordination Agreement dated as of August _____,
1998, and from time to time amended, ___, ___, and Bank of Montreal.

(b) Section 2.03. Section 2.03 (a) is hereby deleted in its entirety,
and the following is substituted therefor:

"(a) The Aggregate Commitments shall at all times be equal to
$65,000,000 until January 31, 1999 after which date it shall be equal
to the lesser of (i) the Aggregate Maximum Credit Amounts after
adjustments resulting from reductions pursuant to Section 2.03(b)
hereof, (ii) $65,000,000, or (iii) the Borrowing Base as determined
from time to time."

(c) Section 2.07. Section 2.07(c) of the Credit Agreement is hereby
deleted in its entirety, and the following is substituted therefor:

"(c) Upon any redetermination of the amount of the Borrowing
Base in accordance with Section 2.08, if the redetermined Borrowing
Base is less than the aggregate outstanding principal amount of the
Loans plus the LC Exposure, then the Borrower shall within ninety (90)
days (or such shorter period as hereinafter provided) of receipt of
written notice thereof: (i) prepay the Loans in an aggregate principal
amount equal to such excess, together with interest on the principal
amount paid accrued to the date of such prepayment, provided however,
that upon the First Borrowing Base determination such required
prepayment shall be made on or before 15 days after such First
Borrowing Base determination if such deficiency is ten

-2-
<PAGE> 3

percent (10%) or more of the Borrowing Base and (ii) if a Borrowing
Base deficiency remains after prepaying all of the Loans ause of LC
Exposure, the Borrower shall pay to the Agent on behalf of the Lenders
an amount equal to such Borrowing Base deficiency to be held as cash
collateral as provided in Section 2.10(b) hereof."

(d) Section 7.21. Section 7.21 of the Credit Agreement is hereby
deleted in its entirety, and the following is substituted therefor:

"Restriction on Liens. Neither the Borrower nor any Subsidiary
is a party to or subject to any agreement or arrangement (other than
the Loan Documents, the documents described in Section 4.01(a) through
(d) of the Indenture, and the Indenture), or subject to any order,
judgment, writ or decree, which either restricts or purports to
restrict its ability to grant Liens to other Persons on or in respect
of their respective assets or Properties."

(e) Section 9.01. Section 9.01 of the Credit Agreement is hereby
amended by adding the following new clause (i):

"(i) Guarantees of the Borrower and its Subsidiaries which
have executed prior and senior guarantees of the Indebtedness in form
and substance satisfactory to the Agent, of the Subordinated Debt,
which Guarantees are subordinated and otherwise in form and substance
satisfactory to the Agent consistent with the Subordination Agreement."

(f) Section 9.02. Section 9.02 of the Credit Agreement is hereby
amended by adding the following new clause (f):

"(f) Liens securing the Subordinated Debt on Properties upon
which prior Liens have been granted to secure the Indebtedness pursuant
to documents in form and substance satisfactory to the Agent, provided
such Liens are subordinated on terms satisfactory to the Agent
consistent with the Subordination Agreement."

(g) Section 9.03. Section 9.03(j)(a) of the Credit Agreement is hereby
deleted in its entirety and the following is substituted therefor:

(a) to Brigham Exploration, Brigham, Inc., Brigham Holdings I,
LLC and/or Brigham Holdings II, LLC

(i) to pay Federal or State taxes owing by any of
them, payroll and payroll related taxes and other reasonable
general and administrative expenses, or consisting of
forgiveness of indebtedness, and

-3-
<PAGE> 4

(ii) so long as no Borrowing Base deficiency exists
or will be created thereby, no Event of Default or, with
respect to Section 5.2(q), (r), (s) or (u) of the Guaranty
Agreement of Brigham Exploration, Default, is in existence or
will be created thereby, to enable Brigham Exploration to pay
accrued and unpaid interest owing on the "Notes" (as defined
in the Indenture).

(h) Section 9.17. Section 9.17 of the Credit Agreement is hereby
deleted in its entirety, and the following is substituted therefor:

"Section 9.17 Negative Pledge Agreements. The Borrower will
not and will not permit any Subsidiary to create, incur, assume or
suffer to exist any contract, agreement or understanding (other than
the Loan Documents) which in any way prohibits or restricts (i) the
granting, conveying, creation or imposition of any Lien on any of its
Property (other than the Indenture and the documents described in
Section 4.01(a) through (d) of the Indenture) or (ii) any Subsidiary
from paying dividends or making any other distribution to the Borrower
or which requires the consent of or notice to other Persons in
connection with any of the foregoing."

(i) Article IX. Article IX is hereby supplemented by adding the
following new section:

"Section 9.19 Borrower as Operator. The Borrower will not and
will not permit any of the Subsidiaries to voluntarily resign as
operator of more than twenty-five percent (25%) of their currently
operated Oil and Gas Properties unless the new operator is acceptable
to the Majority Lenders."

Section 3. Conditions Precedent. This Amendment shall ome binding
upon the receipt by the Agent of the following documents and satisfaction of the
other conditions provided in this Section 3, each of which must be satisfactory
to the Agent in form and substance:

(a) counterparts of this Amendment executed by the Borrower
and the Lenders;

(b) certificates of the Secretary or an Assistant Secretary of
the Borrower and of the Guarantor setting forth for each of them (i)
the resolutions of its board of directors with respect to the
authorization to execute, deliver and perform this Amendment; (ii) the
officer of such entity authorized to sign this Amendment, and (iii) the
signature of such authorized officer of such entity;

(c) evidence of the closing and concurrent funding of the
Subordinated Debt pursuant to the Indenture and the equity issuance
pursuant to the Securities Purchase Agreement;

-4-
<PAGE> 5

(d) a copy of the Securities Purchase Agreement and the
Indenture and all documents executed with respect to the Subordinated
Debt all in form and substance acceptable to the Lenders; and

(e) A security agreement executed by Brigham Exploration in
favor of the Agent granting a first-priority security interest in all
of Brigham Exploration's right, title and interest to the ownership
interests of Brigham Holdings I, LLC;

(f) A security agreement executed by Brigham Inc. in favor of
the Agent granting a first-priority security interest in all of Brigham
Inc.'s right, title and interest in and to the ownership interests of
Brigham Holdings II, LLC and the Borrower;

(g) A security agreement executed by Brigham Holdings II, LLC
in favor of the Agent granting a first-priority security interest in
all of Brigham Holdings II, LLC's right, title and interest in and to
the partnership interests in Borrower;

(h) A security agreement executed by Brigham Holdings I, LLC
in favor of the Agent granting a first priority security interest in
all of Brigham Holdings I, LLC's right, title and interest in and to
the partnership interests in Borrower;

(i) such other documents as Agent or its counsel may
reasonably request.

Section 4. Representations and Warranties. The Borrower hereby
reaffirms that as of the effective date of this Amendment, the representations
and warranties made by the Borrower in the Credit Agreement will be true and
correct as though made on and as of the effective date of this Amendment, and
further, the Borrower represents that no Default or Material Adverse Effect
shall have occurred and be continuing on such date.

Section 5. Limitations. The amendments set forth herein are limited
precisely as written and shall not be deemed to (a) be a consent to, or waiver
or modification of, any other term or condition of the Credit Agreement or any
of the other Loan Documents, or (b) prejudice any right or rights which the
Lenders may now have or may have in the future under or in connection with the
Credit Agreement or any of the other Loan Documents. Except as expressly
supplemented, amended or modified hereby, the terms and provisions of the Credit
Agreement or any other Loan Documents are and shall remain in full force and
effect. In the event of a conflict between this Amendment and any of the
foregoing documents, the terms of this Amendment shall be controlling.

Section 6. Governing Law. This Amendment and the rights and obligations
of the parties hereunder and under the Credit Agreement shall be construed in
accordance with and be governed by the laws of the State of Texas and the United
States of America.

-5-
<PAGE> 6

Section 7. Descriptive Headings, etc. The descriptive headings of the
several Sections of this Amendment are inserted for convenience only and shall
not be deemed to affect the meaning or construction of any of the provisions
hereof.

Section 8. Counterparts. This Amendment may be executed in any number
of counterparts and by different parties on separate counterparts and all of
such counterparts shall together constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date first written above.

NOTICE PURSUANT TO TEX. BUS. & COMM. CODE SECTION .26.02

THIS AMENDMENT AND OTHER LOAN DOCUMENTS EXECUTED BY ANY OF THE PARTIES
BEFORE OR SUBSTANTIALLY CONTEMPORANEOUSLY WITH THE EXECUTION HEREOF TOGETHER
CONSTITUTE A WRITTEN LOAN AGREEMENT AND REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENT
BETWEEN THE PARTIES.

BORROWER: BRIGHAM OIL & GAS, L.P.

By: Brigham, Inc., its General Partner

By:
--------------------------------
Robert T. Moffett
Vice President & Secretary

LENDER AND AGENT: BANK OF MONTREAL

By:
------------------------------------
Name: Robert L. Roberts
Title: Director, U.S. Corporate Banking

-6-

<PAGE> 1
EXHIBIT 10.36

DRAFT
August 13, 1998

SECOND AMENDMENT TO GUARANTY AGREEMENT

THIS SECOND AMENDMENT TO GUARANTY AGREEMENT (this "Amendment") dated as
of August ___, 1998 is between BRIGHAM EXPLORATION COMPANY, a Delaware
corporation (the "Guarantor") and BANK OF MONTREAL, as agent ("Agent") for the
lenders (the "Lenders") that are or become parties to the Credit Agreement
defined below.

RECITALS

A. Brigham Oil & Gas, L.P., a Delaware limited partnership (the
"Borrower"), the Agent and the Lenders previously entered into that certain
Credit Agreement dated as of January 26, 1998 as amended by First Amendment to
Credit Agreement of even date herewith (as amended, the "Credit Agreement"),
pursuant to which the Lenders agreed to make certain loans and extensions of
credit to the Borrower.

B. Pursuant to the terms and conditions stated in the Credit Agreement,
Guarantor executed that certain Guaranty Agreement of even date therewith by
Guarantor, as amended by First Amendment to Guaranty Agreement dated as of March
30, 1998 (such Guaranty Agreement as amended called the "Guaranty Agreement").

C. Guarantor and the Agent now desire to amend certain provisions of
the Guaranty Agreement.

NOW THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the Guarantor, the Agent and the Lenders hereby agree that the
Guaranty Agreement shall be amended as follows:

Section 1. Certain Definitions. As used in this Amendment, the terms
"Agent", "Amendment", "Borrower", "Credit Agreement", "Guarantor" and "Lenders"
shall have the meanings indicated above; and unless otherwise defined herein,
all terms beginning with a capital letter which are defined in the Guaranty
Agreement shall have the same meanings herein as therein unless the context
hereof otherwise requires.

Section 2. Amendments to Guaranty Agreement.

(a) Additional Defined Terms. Section 1.02 of the Guaranty
Agreement is hereby amended and supplemented by adding the following
new definitions, which are read in their entirety as follows:

- 1 -

<PAGE> 2

"Indenture" shall mean that certain Indenture dated
as of August __, 1998, between the Guarantor, as issuer of the
Subordinated Debt, and Chase Bank of Texas, National
Association, as trustee.

"Securities Purchase Agreement" shall mean that
certain Securities Purchase Agreement dated as of August __,
1998 among the Guarantor and the purchasers named therein
regarding $50,000,000 Senior Subordinated Secured Notes due
2003.

"Subordination Agreement" shall mean that certain
Intercreditor and Subordination Agreement dated August __,
1998, as from time to time amended, among _______________,
________________________, and Bank of Montreal.

"Subordinated Debt" shall mean the Debt in the
principal amount not to exceed $40,000,000 (plus up to an
additional $10,000,000 for interest paid in kind pursuant to
Section 9.02 of the Indenture) of Brigham Exploration incurred
under the Indenture and expressly subordinated to the
Indebtedness pursuant to agreements in form and substance
satisfactory to the Lenders consistent with the Subordination
Agreement.

"Subordinated Guarantees" shall mean the Guarantees
permitted under Section 5.2(a)(7).

(b) Section 3.1(m) is hereby amended by adding the following
phrase at the end thereof: ", except for liens and security interests
securing the Liabilities, the Subordinated Guarantees or the
Subordinated Debt which liens and security interests securing the
Subordinated Guarantees or the Subordinated Debt shall be subordinated
on terms satisfactory to the Agent consistent with the Subordination
Agreement."

(i) Section 5.2(a) is amended by adding the following
new clauses (6) and (7):

"(6) the Subordinated Debt."

"(7) Guarantees by Subsidiaries of the
Guarantor (which also are obligated upon or otherwise
guarantee the Liabilities pursuant to documents in
form and substance satisfactory to the Agent) which
guarantee the Subordinated Debt permitted under
Section 5.2(a)(6) above, which Guarantees are
subordinated consistent with the

- 2 -

<PAGE> 3

Subordination Agreement and otherwise are in form and
substance satisfactory to the Agent.

(ii) Section 5.2(b) is amended by adding the
following new clause (4):

"(4) Liens securing the Subordinated Debt or
the Subordinated Guarantees on Properties upon which
prior Liens have been granted to secure the
Liabilities pursuant to documents in form and
substance satisfactory to the Agent, provided that
such Liens are subordinated on terms satisfactory to
the Agent consistent with the Subordination
Agreement."

(iii) Section 5.2(o) is hereby amended by deleting
the parenthetical clause in the third line and inserting the
following in lieu thereof:

"(other than the Loan Documents, the Indenture and
the documents described in Section 4.01(a) through
(d) of the Indenture, and any other documents
establishing Liens permitted under Section
5.2(b)(4))"

(iv) Section 5.2(s) is hereby deleted in its
entirety, and the following is substituted therefor:

"(s) Interest Coverage Ratio. The Guarantor
will not permit its Interest Coverage Ratio as of the
end of any fiscal quarter of the Guarantor
(calculated quarterly at the end of each fiscal
quarter) to be less than the following ratios during
the following periods. Interest Coverage Ratio shall
mean the ratio of (i) EBITDA to (ii) interest
payments accruing during the following periods (for
purposes hereof only cash interest accrued during the
last fiscal quarter shall be included, but all
interest (whether or not paid in cash) accrued for
all other fiscal quarters included within the test
period shall be included):

(i) not less than 1.25 to 1 for the
three (3) month period ending
December 31, 1998;

(ii) not less than 1.75 to 1 for the six
(6) month period ending March 31,
1999;

(iii) not less than 2 to 1 for the nine
(9) month period ending June 30,
1999;

- 3 -
<PAGE> 4
(iv) not less than 2.25 to 1 for the
twelve (12) month period ending
September 30, 1999;

(v) thereafter, not less than 3 to 1
for the twelve (12) month periods
ending at the end of each fiscal
quarter of the Guarantor;

(vi) not less than 2.75 to 1 for the
twelve (12) month period ending
December 31, 1999; and

(v) Section 5.2 is amended by adding the
following new clauses (t) and (u):

"(t) Securities Purchase Agreement
and Indenture. The Guarantor will not agree
to any amendment or modification to the
Securities Purchase Agreement or the
Indenture without the express written
consent of the Agent."

"(u) Payments on Subordinated Debt.
No prepayments of principal will be made on
the Subordinated Debt without prior written
consent of the Lenders. No payments of
interest will be made in cash on the
Subordinated Debt if (i) an Event of Default
or, with respect to Section 5.2(q), (r) or
(s), Default, is in existence or would be
created thereby; (ii) a Borrowing Base
deficiency is in existence under the Credit
Agreement; (iii) such payment will be in
contravention of the Subordination Agreement
or (iv) the Interest Coverage Ratio is less
than the following ratios during the
following periods:

(i) 1.5 to 1 for the twelve (12)
month period ending December
31, 1998;

(ii) 1.75 to 1 for the twelve (12)
month periods ending March
31, 1999 and June 30, 1999;

(iii) 2.5 to 1 for the twelve (12)
month period ending September
30, 1999;

(iv) 2.75 to 1 for the twelve
month period ending December
30, 1999; and

- 4 -

<PAGE> 5

(v) thereafter, 3 to 1 for the
twelve (12) month periods
ending at the end of each
fiscal quarter of the
Guarantor."

Section 4. Representations and Warranties. Guarantor hereby reaffirms
that as of the effective date of this Amendment, the representations and
warranties made by the Guarantor in Article III of the Guaranty Agreement will
be true and correct as though made on and as of the effective date of this
Amendment.

Section 5. Ratification. Guarantor hereby expressly ratifies and
affirms its obligations under the Guaranty Agreement as amended by this
Amendment and agrees that the Guaranty Agreement as amended by this Amendment
remains in full force and effect.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered and effective as of the date first above written.

NOTICE PURSUANT TO TEX. BUS. & COMM. CODE SECTION 26.02

- 5 -
<PAGE> 6

GUARANTOR: BRIGHAM EXPLORATION COMPANY

By:
--------------------------------------
Name:
Title:

AGENT AND LENDER: BANK OF MONTREAL

By:
--------------------------------------
Name:
Title:

- 6 -

<PAGE> 1
Exhibit 12 Computation of Ratio of Earnings to Fixed Charges

<TABLE>
<CAPTION>
Six Months Ended
Year Ended December 31, June 30,
--------------------------------------------------- ------------------
1993 1994 1995 1996 1997 1997 1998
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
RATIO OF EARNINGS TO FIXED CHARGES

Pre-tax income (loss) from
continuing operations $(5,063) $(1,299) $(1,577) $ (450) $ 192 $ (113) $(1,848)

Fixed charges:
Interest expense 105 668 936 1,173 1,190 546 2,432
Allocation of operating
lease costs to interest 38 67 79 84 200 57 158
Amortization of deferred
loan fees -- -- -- -- (a) (a) (a)
------- ------- ------- ------- ------- ------- -------
Total fixed charges 143 735 1,015 1,257 1,390 603 2,590
------- ------- ------- ------- ------- ------- -------

Earnings before income taxes
and fixed charges $(4,920) $ (564) $ (562) $ 807 $ 1,582 $ 490 $ 742
======= ======= ======= ======= ======= ======= =======

Ratio of earnings to
fixed charges -- -- -- -- 1.1 -- --
======= ======= ======= ======= ======= ======= =======

Insufficient coverage $ 5,063 $ 1,299 $ 1,577 $ 450 $ 113 $ 1,848
======= ======= ======= ======= ======= =======
</TABLE>

(a) Amortization of deferred loan fees included in interest expense.

<TABLE>

PRO FORMA RATIO OF EARNINGS TO FIXED CHARGES
<S> <C> <C>
Earnings before income taxes
and fixed charges, as above $ 1,582 $ 742

Fixed charges, as above 1,390 2,590

Pro forma adjustments:
Estimated net increase in
interest expense from
refinancing (b) 1,135 1,288

Estimated decrease in interest
expense from pay-down of debt -- (468)
------- -------
Total pro forma fixed charges $ 2,525 $ 3,410
======= =======

Pro forma ratio of earnings to
fixed charges -- --
======= =======

Insufficient coverage $ 943 $ 2,668
</TABLE>

(b) Includes amortization of deferred loan fees

<PAGE> 1
EXHIBIT 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of this
Amendment No. 2 to the Registration Statement on Form S-1 (No. 333-53873) of our
report dated March 6, 1998, relating to the consolidated financial statements of
Brigham Exploration Corporation, which appears in such Prospectus. We also
consent to the reference to us under the heading "Experts" in such Prospectus.

/S/ PRICEWATERHOUSECOOPERS LLP
PRICEWATERHOUSECOOPERS LLP

Houston, Texas
August 12, 1998

<PAGE> 1
EXHIBIT 23.3

[CAWLEY, GILLESPIE & ASSOCIATES, INC. LETTERHEAD]

August 10, 1998

Brigham Exploration Company
6300 Bridge Point Parkway
Building Two, Suite 500
Austin, Texas 78730

Gentlemen:

In connection with the offering of shares of common stock, par value $.01
per share ("Common Stock"), of Brigham Exploration Company (the "Company"), we
delivered a letter dated May 26, 1998 to you with respect to an estimate of the
reserves, future production and income attributable to certain interests of the
Company, as of December 31, 1997.

We understand that you intend that our letter be included in a Registration
Statement on Form S-1 and any amendments thereto, as well as a Prospectus to be
provided to potential purchasers of Common Stock, and we hereby consent to such
use. We also consent to the references in the Registration Statement on Form
S-1 or Prospectus to our firm and to the information provided therein.

Yours very truly,

Cawley, Gillespie & Associates, Inc.

/s/ AARON CAWLEY
Aaron Cawley, P.E.
Executive Vice President

<PAGE> 1
EXHIBIT 25

===============================================================================

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549
-------------------------

FORM T-1

STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ____
-----------------------

CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)

74-0800980
(I.R.S. Employer Identification Number)

712 MAIN STREET, HOUSTON, TEXAS 77002
(Address of principal executive offices) (Zip code)

LEE BOOCKER, 712 MAIN STREET, 26TH FLOOR
HOUSTON, TEXAS 77002 (713) 216-2448
(Name, address and telephone number of agent for service)

BRIGHAM EXPLORATION COMPANY
(Exact name of obligor as specified in its charter)
SEE TABLE OF ADDITIONAL OBLIGORS BELOW

DELAWARE 75-2692967
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)

6300 BRIDGE POINT PARKWAY, BUILDING 2, SUITE 500
AUSTIN, TEXAS 78730
(Address of principal executive offices) (Zip code)

SENIOR SUBORDINATED SECURED NOTES DUE 2003
(Title of indenture securities)
===============================================================================

<PAGE> 2

TABLE OF ADDITIONAL OBLIGORS

ADDRESS,INCLUDING ZIP
CODE, AND TELEPHONE
NUMBER, INCLUDING AREA
STATE OR OTHER CODE, OF REGISTRANT'S
JURISDICTION OF IRS EMPLOYER PRINCIPAL EXECUTIVE
NAME INCORPORATION ID NO. OFFICES
---- ------------- ------------ ----------------------

<S> <C> <C> <C>
Brigham, Inc. Nevada 75-2354099 (1)
Brigham Holdings I, LLC Nevada 75-2692967 (2)
Brigham Holdings II, LLC Nevada 75-2354099 (2)
Brigham Oil & Gas, L.P. Delaware 75-2429186 (1)
</TABLE>

(1) 6300 Bridge Point Parkway, Building 2, Suite 500, Austin, Texas 78730

(2) 3773 Howard Hughes Parkway, Suite 300N, Las Vegas, Nevada 89109

<PAGE> 3

ITEM 1. GENERAL INFORMATION.

FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:

(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING
AUTHORITY TO WHICH IT IS SUBJECT.

Comptroller of the Currency, Washington, D.C.
Federal Deposit Insurance Corporation, Washington, D.C.
Board of Governors of the Federal Reserve System, Washington,
D.C.

(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.

The trustee is authorized to exercise corporate trust powers.

ITEM 2. AFFILIATIONS WITH THE OBLIGOR.

IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH
SUCH AFFILIATION.

The obligor is not an affiliate of the trustee. (See Note on
Page 7.)

ITEM 3. VOTING SECURITIES OF THE TRUSTEE.

FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF VOTING
SECURITIES OF THE TRUSTEE.

COL. A COL. B
TITLE OF CLASS AMOUNT OUTSTANDING

Not applicable by virtue of Form T-1 General Instruction B
and response to Item 13.

ITEM 4. TRUSTEESHIPS UNDER OTHER INDENTURES.

IF THE TRUSTEE IS A TRUSTEE UNDER ANOTHER INDENTURE UNDER
WHICH ANY OTHER SECURITIES, OR CERTIFICATES OF INTEREST OR PARTICIPATION IN ANY
OTHER SECURITIES, OF THE OBLIGOR ARE OUTSTANDING, FURNISH THE FOLLOWING
INFORMATION:

(a) TITLE OF THE SECURITIES OUTSTANDING UNDER EACH SUCH
OTHER INDENTURE.

Not applicable by virtue of Form T-1 General Instruction B
and response to Item 13.

1
<PAGE> 4
ITEM 4. (CONTINUED)

(b) A BRIEF STATEMENT OF THE FACTS RELIED UPON AS A BASIS FOR
THE CLAIM THAT NO CONFLICTING INTEREST WITHIN THE MEANING OF
SECTION 310(b)(1) OF THE ACT ARISES AS A RESULT OF THE
TRUSTEESHIP UNDER ANY SUCH OTHER INDENTURE, INCLUDING A
STATEMENT AS TO HOW THE INDENTURE SECURITIES WILL RANK AS
COMPARED WITH THE SECURITIES ISSUED UNDER SUCH OTHER
INDENTURE.

Not applicable by virtue of Form T-1 General Instruction B
and response to Item 13.

ITEM 5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH
OBLIGOR OR UNDERWRITERS.

IF THE TRUSTEE OR ANY OF THE DIRECTORS OR EXECUTIVE OFFICER OF
THE TRUSTEE IS A DIRECTOR, OFFICER, PARTNER, EMPLOYEE, APPOINTEE, OR
REPRESENTATIVE OF THE OBLIGOR OR OF ANY UNDERWRITER FOR THE OBLIGOR, IDENTIFY
EACH SUCH PERSON HAVING ANY SUCH CONNECTION AND STATE THE NATURE OF EACH SUCH
CONNECTION.

Not applicable by virtue of Form T-1 General Instruction B
and response to Item 13.

ITEM 6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS
OFFICIALS.

FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES
OF THE TRUSTEE OWNED BENEFICIALLY BY THE OBLIGOR AND EACH DIRECTOR, PARTNER AND
EXECUTIVE OFFICER OF THE OBLIGOR.

COL. A COL. B COL. C COL. D
PERCENTAGE OF
VOTING SECURITIES
REPRESENTED BY
AMOUNT OWNED AMOUNT GIVEN IN
NAME OF OWNER TITLE OF CLASS BENEFICIALLY COL. C
- ------------- -------------- ------------ -------

Not applicable by virtue of Form T-1 General Instruction B and response to
Item 13.

2
<PAGE> 5

ITEM 7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS
OR THEIR OFFICIALS.

FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES
OF THE TRUSTEE OWNED BENEFICIALLY BY EACH UNDERWRITER FOR THE OBLIGOR AND EACH
DIRECTOR, PARTNER AND EXECUTIVE OFFICER OF EACH SUCH UNDERWRITER.

Not applicable by virtue of Form T-1 General Instruction B and response to
Item 13.

ITEM 8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE.

FURNISH THE FOLLOWING INFORMATION AS TO THE SECURITIES OF THE
OBLIGOR OWNED BENEFICIALLY OR HELD AS COLLATERAL SECURITY FOR OBLIGATIONS IN
DEFAULT BY THE TRUSTEE.

COL. A COL. B COL. C COL. D
AMOUNT OWNED
WHETHER THE BENEFICIALLY OR PERCENT OF
SECURITIES HELD AS COLLATERAL CLASS
ARE VOTING SECURITY FOR REPRESENTED BY
OR NONVOTING OBIGATIONS IN AMOUNT GIVEN
TITLE OF CLASS SECURITIES DEFAULT IN COL. C
- -------------- ---------- ------------------ --------------

Not applicable by virtue of Form T-1 General Instruction B and response
to Item 13.

3
<PAGE> 6

ITEM 9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE.

IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL SECURITY
FOR OBLIGATIONS IN DEFAULT ANY SECURITIES OF AN UNDERWRITER FOR THE OBLIGOR,
FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF SECURITIES OF SUCH
UNDERWRITER ANY OF WHICH ARE SO OWNED OR HELD BY THE TRUSTEE.

COL. A COL. B COL. C COL. D
AMOUNT OWNED
BENEFICIALLY OR PERCENT OF
HELD AS COLLATERAL CLASS
NAME OF ISSUER SECURITY FOR REPRESENTED BY
AND AMOUNT OBLIGATIONS IN AMOUNT GIVEN
TITLE OF CLASS OUTSTANDING DEFAULT BY TRUSTEE IN COL. C
- -------------- ----------- ------------------ ---------

Not applicable by virtue of Form T-1 General Instruction B and response to
Item 13.

ITEM 10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES
OF CERTAIN AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR.

IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL
SECURITY FOR OBLIGATIONS IN DEFAULT VOTING SECURITIES OF A PERSON WHO, TO THE
KNOWLEDGE OF THE TRUSTEE (1) OWNS 10% OR MORE OF THE VOTING SECURITIES OF THE
OBLIGOR OR (2) IS AN AFFILIATE, OTHER THAN A SUBSIDIARY, OF THE OBLIGOR, FURNISH
THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES OF SUCH PERSON.

Not applicable by virtue of Form T-1 General Instruction B and response to
Item 13.

4
<PAGE> 7
ITEM 11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF
A PERSON OWNING 50% OR MORE OF THE VOTING SECURITIES OF THE
OBLIGOR.

IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL
SECURITY FOR OBLIGATIONS IN DEFAULT ANY SECURITIES OF A PERSON WHO, TO THE
KNOWLEDGE OF THE TRUSTEE, OWNS 50% OR MORE OF THE VOTING SECURITIES OF THE
OBLIGOR, FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF SECURITIES OR
SUCH PERSON ANY OF WHICH ARE SO OWNED OR HELD BY THE TRUSTEE.

Not applicable by virtue of Form T-1 General Instruction B and response to
Item 13.

ITEM 12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE.

EXCEPT AS NOTED IN THE INSTRUCTIONS, IF THE OBLIGOR IS
INDEBTED TO THE TRUSTEE, FURNISH THE FOLLOWING INFORMATION:

COL. A COL. B COL. C

NATURE OF AMOUNT
INDEBTEDNESS OUTSTANDING DATE DUE
------------ ----------- --------

Not applicable by virtue of Form T-1 General Instruction B and response
to Item 13.

ITEM 13. DEFAULTS BY THE OBLIGOR.

(a) STATE WHETHER THERE IS OR HAS BEEN A DEFAULT WITH RESPECT TO
THE SECURITIES UNDER THIS INDENTURE. EXPLAIN THE NATURE OF ANY SUCH DEFAULT.

There is not, nor has there been, a default with respect to the
securities under this indenture. (See Note on Page 7.)

5
<PAGE> 8

ITEM 13. (CONTINUED)

(b) IF THE TRUSTEE IS A TRUSTEE UNDER ANOTHER INDENTURE UNDER WHICH ANY
SECURITIES, OR CERTIFICATES OF INTEREST OR PARTICIPATION IN ANY OTHER
SECURITIES, OF THE OBLIGOR ARE OUTSTANDING, OR IS TRUSTEE FOR MORE THAN ONE
OUTSTANDING SERIES OF SECURITIES UNDER THE INDENTURE, STATE WHETHER THERE HAS
BEEN A DEFAULT UNDER ANY SUCH INDENTURE OR SERIES, IDENTIFY THE INDENTURE OR
SERIES AFFECTED, AND EXPLAIN THE NATURE OF ANY SUCH DEFAULT.

There has not been a default under any such indenture or series. (See
Note on Page 7.)

ITEM 14. AFFILIATIONS WITH THE UNDERWRITERS.

IF ANY UNDERWRITER IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE
EACH SUCH AFFILIATION.

Not applicable by virtue of Form T-1 General Instruction B and response
to Item 13.

ITEM 15. FOREIGN TRUSTEE.

IDENTIFY THE ORDER OR RULE PURSUANT TO WHICH THE FOREIGN
TRUSTEE IS AUTHORIZED TO ACT AS SOLE TRUSTEE UNDER INDENTURES QUALIFIED OR TO
BE QUALIFIED UNDER THE ACT.

Not applicable.

ITEM 16. LIST OF EXHIBITS.

LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF
ELIGIBILITY.

o 1. A copy of the articles of association of the trustee
now in effect.

# 2. A copy of the certificate of authority of the trustee
to commence business.

* 3. A copy of the certificate of authorization of the
trustee to exercise corporate trust powers issued by the
Board of Governors of the Federal Reserve System under date
of January 21, 1948.

+ 4. A copy of the existing bylaws of the trustee.

5. Not applicable.

6
<PAGE> 9
6. The consent of the United States institutional trustees
required by Section 321(b) of the Act.

[]7. A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority.

8. Not applicable.

9. Not applicable.

NOTE REGARDING INCORPORATED EXHIBITS

Effective January 20, 1998, the name of the Trustee was changed from
Texas Commerce Bank National Association to Chase Bank of Texas, National
Association. The exhibits incorporated herein by reference, except for Exhibit
7, were filed under the former name of the Trustee.

o Incorporated by reference to exhibit bearing the same
designation and previously filed with the Securities and Exchange
Commission as exhibits to the Form S-3 File No. 33-56195.

# Incorporated by reference to exhibit bearing the same
designation and previously filed with the Securities and Exchange
Commission as exhibits to the Form S-3 File No. 33-42814.

* Incorporated by reference to exhibit bearing the same
designation and previously filed with the Securities and Exchange
Commission as exhibits to the Form S-11 File No. 33-25132.

+ Incorporated by reference to exhibit bearing the same
designation and previously filed with the Securities and Exchange
Commission as exhibits to the Form S-3 File No. 33-65055.

[] Incorporated by reference to exhibit bearing the same
designation and previously filed with the Securities and Exchange
Commission as exhibits to the Form S-3 File No. 333-52197.

NOTE

Inasmuch as this Form T-1 is filed prior to the ascertainment
by the trustee of all facts on which to base responsive answers to Items 2 and
13, the answers to said Items are based on incomplete information. Such Items
may, however, be considered as correct unless amended by an amendment to this
Form T-1.

7
<PAGE> 10
SIGNATURE

PURSUANT TO THE REQUIREMENTS OF THE TRUST INDENTURE ACT OF 1939 THE
TRUSTEE, CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, FORMERLY KNOWN AS TEXAS
COMMERCE BANK NATIONAL ASSOCIATION, A NATIONAL BANKING ASSOCIATION ORGANIZED AND
EXISTING UNDER THE LAWS OF THE UNITED STATES OF AMERICA, HAS DULY CAUSED THIS
STATEMENT OF ELIGIBILITY TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO AUTHORIZED, ALL IN THE CITY OF HOUSTON, AND STATE OF TEXAS, ON THE ___
DAY OF AUGUST, 1998.

CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, AS TRUSTEE

By: /s/ DONNA EDMUNDSON
--------------------------------
Donna Edmundson
Vice President and Trust Officer

<PAGE> 11

EXHIBIT 6

Securities and Exchange Commission
Washington, D.C. 20549

Gentlemen:

The undersigned is trustee under an Indenture between Brigham
Exploration Company, a Delaware corporation (the "Company"), together with
certain subsidiary guarantors, and Chase Bank of Texas, National Association
(formerly known as Texas Commerce Bank National Association), as Trustee,
entered into in connection with the issuance of the Company's Senior
Subordinated Secured Notes due 2003.

In accordance with Section 321(b) of the Trust Indenture Act of 1939,
the undersigned hereby consents that reports of examinations of the undersigned,
made by Federal or State authorities authorized to make such examinations, may
be furnished by such authorities to the Securities and Exchange Commission upon
its request therefor.

Very truly yours,

CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, as Trustee

By: /s/ DONNA EDMUNDSON
----------------------------------
Donna Edmundson
Vice President and Trust Officer