<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2.
</TABLE>
Brigham Exploration Company
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
BRIGHAM EXPLORATION COMPANY
6300 BRIDGE POINT PARKWAY
BUILDING TWO, SUITE 500
AUSTIN, TEXAS 78730
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 13, 1999
To the Stockholders of
BRIGHAM EXPLORATION COMPANY:
Notice is hereby given that the Annual Meeting of Stockholders of
Brigham Exploration Company, a Delaware corporation (the "Company"), will be
held on Thursday, May 13, 1999, at 1:00 p.m., local time, at River Place Country
Club, 4207 River Place Blvd., Austin, Texas, for the following purposes:
1. To elect seven directors to serve until the Annual Meeting of
Stockholders in 2000;
2. To approve the appointment of PricewaterhouseCoopers LLP as
independent auditors of the Company for the year ending
December 31, 1999; and
3. To transact such other business as may properly come before
the meeting or any adjournment(s) thereof.
Only stockholders of record at the close of business on March 31, 1999
are entitled to notice of, and to vote at, the meeting or any adjournment(s)
thereof.
You are cordially invited and urged to attend the meeting, but if you
are unable to attend, please sign and date the enclosed proxy and return it
promptly in the enclosed self-addressed stamped envelope. A prompt response will
be appreciated. If you attend the meeting, you may vote in person, if you wish,
whether or not you have returned your proxy. In any event, a proxy may be
revoked at any time before it is exercised.
BY ORDER OF THE BOARD OF DIRECTORS
DAVID T. BRIGHAM
Secretary
April 14, 1999
Austin, Texas
<PAGE> 3
BRIGHAM EXPLORATION COMPANY
6300 BRIDGE POINT PARKWAY
BUILDING TWO, SUITE 500
AUSTIN, TEXAS 78730
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 13, 1999
SOLICITATION OF PROXIES
SOLICITATION AND REVOCABILITY OF PROXIES
This proxy statement is furnished to holders of Brigham Exploration
Company ("Brigham" or the "Company") common stock, $0.01 par value ("Common
Stock"), in connection with the solicitation of proxies on behalf of the Board
of Directors of the Company for use at the Annual Meeting of Stockholders of
Brigham to be held on Thursday, May 13, 1999, at 1:00 p.m., local time, at River
Place Country Club, 4207 River Place Blvd., Austin, Texas, and at any
adjournment(s) thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting of Stockholders.
Shares represented by a proxy in the form enclosed, duly signed, dated
and returned to the Company and not revoked, will be voted at the meeting in
accordance with the directions given, but in the absence of directions to the
contrary, such shares will be voted (i) for the election of the Board's nominees
for directors, (ii) for the appointment of PricewaterhouseCoopers LLP as
independent auditors of the Company for the year ending December 31, 1999, and
(iii) in accordance with the best judgment of the persons voting on any other
proposals that may come before the meeting. The Board of Directors knows of no
other matters, other than those stated in the foregoing notice, to be presented
for consideration at the meeting or any adjournment(s) thereof. If, however, any
other matters properly come before the meeting or any adjournment(s) thereof, it
is the intention of the persons named in the enclosed proxy to vote such proxy
in accordance with their judgment on any such matters. The persons named in the
enclosed proxy may also, if it is deemed to be advisable, vote such proxy to
adjourn the meeting from time to time.
Any stockholder executing and returning a proxy has the power to revoke
it at any time before it is voted by delivering to the Secretary of the Company,
6300 Bridge Point Parkway, Building Two, Suite 500, Austin, Texas 78730, a
written revocation thereof or by duly executing a proxy bearing a later date.
Any stockholder attending the Annual Meeting of Stockholders may revoke his
proxy by notifying the Secretary at such meeting and voting in person if he
desires to do so. Attendance at the Annual Meeting will not by itself revoke a
proxy.
The approximate date on which this proxy statement and the form of proxy
are first sent to stockholders is April 14, 1999.
The cost of soliciting proxies will be borne by the Company. Solicitation
may be made, without additional compensation, by directors, officers and regular
employees of the Company in person or by mail, telephone or telegram. The
Company may also request banking institutions, brokerage firms, custodians,
trustees, nominees and fiduciaries to forward solicitation material to the
beneficial owners of the Common Stock held of record by such persons, and
Brigham will reimburse the forwarding expense. All costs of preparing, printing
and mailing the form of proxy and the material used in the solicitation thereof
will be borne by the Company.
SHARES OUTSTANDING AND VOTING RIGHTS
The close of business on March 31, 1999 is the record date for
determination of stockholders entitled to notice of and to vote at the meeting
or any adjournment(s) thereof. The only voting security of the Company
outstanding is the Common Stock, each share of which entitles the holder thereof
to one vote. At the record date for the meeting, there were outstanding and
entitled to be voted 14,309,071 shares of Common Stock.
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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
March 31, 1999, and (ii) the shares of Common Stock beneficially owned, as of
March 31, 1999, by each director of the Company, each executive officer listed
in the Summary Compensation Table included elsewhere in this proxy statement,
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>
COMMON STOCK
BENEFICIALLY OWNED (1)
------------------------------
NUMBER PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OF SHARES OF CLASS
- -------------------------------------------------------------- ------------ --------------
<S> <C> <C>
Ben M. Brigham (2)............................................ 3,710,292 24.01%
6300 Bridge Point Parkway, Bldg. 2, Suite 500
Austin, Texas 78730
Anne L. Brigham (2)........................................... 3,710,292 24.01%
6300 Bridge Point Parkway, Bldg. 2, Suite 500
Austin, Texas 78730
General Atlantic Partners, L.L.C. (3)......................... 2,807,143 18.16%
Three Pickwick Plaza
Greenwich, Connecticut 06830
Enron Capital & Trade Resources Corp. (4)..................... 2,052,632 13.28%
1400 Smith Street
Houston, Texas 77002
Joint Energy Development Investments II Limited Partners (4).. 1,539,474 10.22%
1400 Smith Street
Houston, Texas 77002
Resource Investors Management Company (5)..................... 1,754,464 11.35%
600 Travis Street, Suite 6875
Houston, Texas 77002
Veritas DGC Land, Inc......................................... 1,002,865 6.49%
3701 Kirby Drive, Suite 112
Houston, Texas 77098-3982
R. Chaney & Co., Inc. (6)..................................... 795,000 5.14%
909 Fannin, Suite 1275
Two Houston Center
Houston, Texas 77010
Craig M. Fleming (7).......................................... 65,477 *
Jon L. Glass (8).............................................. 129,465 *
David T. Brigham (9).......................................... 67,477 *
A. Lance Langford (10)........................................ 18,365 *
Karen E. Lynch................................................ 625 *
Harold D. Carter (11)......................................... 341,993 2.21%
W. Craig Childers (12)........................................ -- --
Alexis M. Cranberg (13)....................................... 100 *
Stephen P. Reynolds (14)...................................... 100 *
All directors and executive officers as a group
(11 persons) (7)(8)(9) 4,333,894 28.04%
</TABLE>
- --------------------------
* 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
<PAGE> 5
(2) Includes 1,821,014 shares owned by Ben M. Brigham and 1,821,010 shares
owned by Anne L. Brigham, who are husband and wife; 27,022 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 13,000 shares held by David
T. Brigham, as custodian for each of Mr. and Mrs. Brigham's four children
under the Texas Uniform Transfers to Minors Act.
(3) Includes 2,679,418 shares held by General Atlantic Partners III, L.P.
("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) Enron Capital & Trade Resources, Inc. ("Enron Capital") may be deemed
beneficially to own 2,052,632 shares as a result of the holdings of ECT
Merchant Investments Corp. ("ECT Investments") and Joint Energy
Development Investments II Limited Partners ("JEDI II"). ECT Investments
holds 263,158 shares and warrants to purchase 250,000 shares, and JEDI II
holds 789,474 shares and warrants to purchase 750,000 shares. ECT
Investments is a wholly owned subsidiary of Enron Capital. Because a
subsidiary of Enron Capital is the general partner of Enron Capital
Management II Limited Partnership, which is in turn the general partner of
JEDI II, Enron Capital may be deemed to be the beneficial owner of the
shares owned by JEDI II, although Enron Capital disclaims beneficial
ownership of these shares. Enron Capital is a wholly owned subsidiary of
Enron Corp. ("Enron"); Enron disclaims beneficial ownership of any shares
beneficially owned by either Enron Capital or JEDI II.
(5) 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"). Resource
Investors Management Company ("RIMCO") is the general partner of each of
the RIMCO Partnerships. The general partner of RIMCO is RIMCO Associates,
Inc.
(6) Includes 610,000 shares held by R. Chaney & Partners III L.P. ("Fund III")
and 185,000 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.
(7) 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.
(8) Includes 66,964 shares of restricted stock, which vest 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 and 41,667 shares of Common Stock issuable upon
exercise of certain stock options that vested July 1, 1998 and February 1,
1999, respectively.
(9) 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 2,000 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.
(10) Includes 17,365 shares of Common Stock issuable upon exercise of certain
stock options that vested July 1, 1998.
(11) Includes 100 shares of Common Stock issuable upon exercise of certain
stock options that vested December 31, 1998.
(12) Mr. Childers is a Managing Director of Enron Capital.
(13) Includes 100 shares of Common Stock issuable upon exercise of certain
stock options that vested December 31, 1998.
(14) Includes 100 shares of Common Stock issuable upon exercise of certain
stock options that vested December 31, 1998. 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.
3
<PAGE> 6
PROPOSAL 1.
ELECTION OF DIRECTORS
The business and affairs of the Company are managed by and under the
direction of the Board of Directors, which exercises all corporate powers of the
Company and establishes broad corporate policies.
The Company's Board of Directors formed standing audit and compensation
committees on February 26, 1997. Members of the Audit Committee and the
Compensation Committee are currently Harold D. Carter, Alexis M. Cranberg and
Stephen P. Reynolds. Gary J. Milavec was a member of the Audit Committee and the
Compensation Committee from January 1, 1998 until September 1, 1998, the
effective date of Mr. Milavec's resignation from the Company's Board of
Directors. W. Craig Childers was appointed to fill the vacancy created on the
Board of Directors by Mr. Milavec's resignation, and Mr. Reynolds was appointed
to fill the vacancy created on the Audit Committee and the Compensation
Committee by the resignation. 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.
In 1998, the Board of Directors held six meetings, the Audit Committee
held one meeting and the Compensation Committee held three meetings. No director
attended fewer than 75% of the meetings of the Board of Directors held during
the period for which he or she was a director or meetings held by committees of
the Board of Directors on which he or she served held during the period for
which he or she was a member of such committee.
All duly submitted and unrevoked proxies will be voted for the nominees
for directors selected by the Board of Directors, except where authorization so
to vote is withheld. If any nominee(s) should become unavailable for election
for any presently unforeseen reason, the persons designated as proxies will have
full discretion to cast votes for another person(s) designated by the Board.
With regard to the election of directors, votes may be cast in favor of or
withheld from each nominee. The seven nominees who receive a plurality of the
votes cast by shareholders present or represented by proxy at the Annual
Meeting, and entitled to vote on the election of directors, will be elected as
directors of the Company. Thus, any abstentions, "broker non-votes" (shares held
by brokers or nominees as to which they have no discretionary authority to vote
on a particular matter and have received no instructions from the beneficial
owners or persons entitled to vote thereon) or other limited proxies will have
no effect on the election of directors.
The seven nominees of the Board of Directors of the Company are named
below. Each of the nominees has consented to serve as a director if elected. Set
forth below is certain information with respect to the nominees, including
information as to each nominee's age as of April 14, 1999, position with the
Company, business experience during the past five years and directorships of
publicly held companies.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
ELECTION OF THE NOMINEES LISTED BELOW.
Ben M."Bud" Brigham, age 39, 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. Mr. Brigham is the
husband of Anne L. Brigham, Director, and the brother of David T. Brigham, Vice
President--Land and Administration and Corporate Secretary.
4
<PAGE> 7
Anne L. Brigham, age 37, has served as a Director of the Company since
its inception in 1990. Ms. Brigham served as Executive Vice President of the
Company from 1990 to March 1999, and served as Corporate Secretary of the
Company 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. Ms.
Brigham is the wife of Ben M. Brigham, Chairman, Chief Executive Officer and
President, and the sister-in-law of David T. Brigham, Vice President--Land and
Administration and Corporate Secretary.
Jon L. Glass, age 43, 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.
Harold D. Carter, age 60, 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. 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, a
publicly traded oil and gas company, and Energy Partners, Ltd., a private
company. 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, age 43, has served as a Director of the Company
since 1992. Mr. Cranberg is President of Aspect Management, Inc. and Aspect
Resources, LLC, each a private oil and gas exploration and investment company.
In addition, Mr. Cranberg is a director for Esenjay Exploration, Inc., a
publicly traded oil and gas company, and Westport Oil & Gas, a private oil and
gas company. Mr. Cranberg is 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.
Stephen P. Reynolds, age 47, has served as a Director of the Company
since 1996. Mr. Reynolds is a special advisor to 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, Computer Learning Centers, Inc., a publicly traded company
providing technology related training, SS&C Technologies, Inc., a publicly
traded software and programming company, and MAPICS, Inc., a publicly traded
software and programming company. Mr. Reynolds holds a B.A. in Economics from
Amherst College and a Masters degree in Accounting from New York University.
W. Craig Childers, 50, has served as a Director of the Company since
September 1998. Mr. Childers has served as a Managing Director of Enron Capital
& Trade Resources Corp. since January 1998 and served as Vice President of the
same company from May 1994 through January 1998. In addition, he is a director
of Sheridan Energy Inc., a publicly traded independent domestic energy company.
Mr. Childers was appointed to the Board of Directors and has been selected as a
nominee pursuant to an agreement with affiliates of Enron. See "Certain
Transactions."
5
<PAGE> 8
COMPENSATION OF DIRECTORS
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
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
December 31, 1998, the Company paid Mr. Carter $7,200 per month and reimbursed
his out-of-pocket expenses for him to spend approximately 50% of his working
time performing such consulting and advisory services regarding the operations
of the Company as the Company requested. In addition, pursuant to the terms of
Mr. Carter's consulting agreement, the Company paid Associated Energy Managers,
Inc. $1,000 per month in 1998 to offset a portion of Mr. Carter's office
overhead expenses and 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. The Company is continuing to utilize Mr. Carter's
consulting services and is currently paying Mr. Carter $4,000 per month for such
consulting services, as well as paying Associated Energy Managers, Inc. $1,000
per month for office space overhead and use.
Director Stock Options. Pursuant to the Company's 1997 Director Stock
Option Plan, 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. 25,000 shares
of Common Stock have been authorized and reserved for issuance pursuant to the
plan. Options to purchase 3,000 shares of Common Stock were granted in 1998 to
the Company's four nonemployee directors pursuant to the 1997 Directors Stock
Option Plan.
COMPLIANCE WITH SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the 1934 Act requires directors and officers of the
Company, and persons who own more than 10% of the Common Stock, to file with the
SEC initial reports of ownership and reports of changes in ownership of the
Common Stock. Directors, officers and more than 10% stockholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file. To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during the year ended December 31, 1998, all Section
16(a) filing requirements applicable to its directors, officers and more than
10% beneficial owners were met.
6
<PAGE> 9
COMPENSATION OF EXECUTIVE OFFICERS
Summary 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 other executive officers of the Company who earned in excess of $100,000 in
1998 (the "named executive officers") for the years indicated.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------- -------------------------
SHARES ALL OTHER
NAME AND RESTRICTED UNDERLYING COMPEN-
PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) STOCK AWARDS OPTIONS SATION($)(2)
- ------------------------------------------- ---- --------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Ben M. Brigham............................. 1998 277,062 160,750 -- -- 6,451
Chief Executive Officer, President and 1997 258,725 30,600 -- -- 6,236
Chairman of the Board 1996 144,000 15,000 -- -- 4,817
Jon L. Glass............................... 1998 160,000 64,003 -- 10,000 (3) --
Vice President - Exploration 1997 127,301 43,268 66,964 208,334 --
1996 109,782 9,225 -- -- --
Craig M. Fleming........................... 1998 139,750 46,080 -- 45,000 (3) --
Chief Financial Officer 1997 122,272 44,971 44,643 69,445 --
1996 102,919 8,063 -- -- --
David T. Brigham........................... 1998 124,917 36,294 -- 45,000 (3) --
Vice President - Land and Administration, 1997 108,895 32,712 44,643 69,445 --
Corporate Secretary 1996 94,874 10,505 -- -- --
A. Lance Langford ......................... 1998 121,000 32,811 -- 65,000 (4) --
Vice President - Operations 1997 110,044 40,537 -- 52,085 --
1996 94,090 7,261 -- -- --
Karen E. Lynch(5).......................... 1998 120,134 41,824 -- 50,000 (6) --
Vice President and General Counsel 1997 24,130 9,500 -- 50,000 (6) --
</TABLE>
- -----------------
(1) Includes the following moving allowances granted to employees in
connection with the Company's relocation of its corporate headquarters
from Dallas, Texas, to Austin, Texas: in 1997, Ben M. Brigham -
$30,600; Jon L. Glass - $12,076; Craig M. Fleming - $23,654; David T.
Brigham - $17,529; A. Lance Langford - $20,949; and Karen E. Lynch -
$7,500; in 1998, Jon L. Glass - $25,750; and Karen E. Lynch - $6,750.
(2) Consists of premiums paid by the Company under life and disability
insurance plans of $2,647 and $3,804, respectively in 1998, $2,612 and
$3,624, respectively, in 1997, and $1,404 and $3,413, respectively, in
1996.
(3) Includes 5,000 shares underlying options that were issued in January
1998 and were canceled and reissued in December 1998. See "Option
Repricing."
(4) Includes 25,000 shares underlying options that were issued in January
1998 and were canceled and reissued in December 1998. See "Option
Repricing."
(5) Ms. Lynch joined the Company as General Counsel in October 1997 and has
served as Vice President and General Counsel since February 1998.
(6) Represents 50,000 shares underlying options that were issued in October
1997 and were canceled and reissued in January 1998 and in December
1998. See "Option Repricing."
7
<PAGE> 10
Option Grants
The following table contains information about stock option grants to
the named executive officers in 1998:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZED VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
Individual Grants FOR OPTION TERM (1)
------------------------------------------------------- ---------------------------
Number of % of Total
Securities Options
Underlying Granted to Exercise or
Options Employees in Base Price Expiration
NAME Granted (#) Fiscal Year(2) ($/Sh) Date 5% ($) 10% ($)
- ------------------------- ------------ ------------- ----------- ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Ben M. Brigham .......... -- -- -- -- -- --
Jon L. Glass ............ 5,000(3) 0.9% 6.31 12/14/05 7,061 21,813
5,000 0.9% 6.31 12/14/05 7,061 21,813
Craig M. Fleming ........ 5,000(3) 0.9% 6.31 12/14/05 7,061 21,813
40,000 7.1% 6.31 12/14/05 56,492 174,506
David T. Brigham ........ 5,000(3) 0.9% 6.31 12/14/05 7,061 21,813
40,000 7.1% 6.31 12/14/05 56,492 174,506
A. Lance Langford ....... 25,000(3) 4.4% 6.31 12/14/05 35,307 109,066
40,000 7.1% 6.31 12/14/05 56,492 174,506
Karen E. Lynch .......... 50,000(3) 8.9% 6.31 12/14/05 70,614 218,132
</TABLE>
- -------------------------
(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 5% and
10% compounded annually from the date such options had been granted,
through the expiration date. For the option term ending December 14,
2005, based on the closing price on the Nasdaq Stock Market(sm) of the
Common Stock of $5.50 on December 31, 1998, a share of the Common Stock
would have a value on December 14, 2005 of approximately $7.72 at an
assumed appreciation rate of 5% and approximately $10.67 at an assumed
appreciation rate of 10%.
(2) Does not include shares underlying options issued as replacement
options upon the cancellation of options previously granted in January
1998. See "Option Repricing."
(3) These options were issued in January 1998 with an exercise price of
$12.875 per share and an expiration date of January 12, 2005, and were
canceled and reissued in December 1998 with an exercise price of $6.31
per share and an expiration date of December 14, 2005. See "Option
Repricing."
8
<PAGE> 11
Option Exercises and Year-End Option Values
The following table provides information about the number of shares
issued upon option exercises by the named executive officers during 1998, and
the corresponding value realized by the named executive officers. The table also
provides information about the number and value of options that were held by the
named executive officers at December 31, 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT FY-END (#) OPTIONS AT FY-END ($)
ACQUIRED ON VALUE ------------------------------ ---------------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
BEN M. BRIGHAM........... -- -- -- -- -- --
JON L. GLASS............. -- -- 20,834 197,500 10,417 93,750
CRAIG M. FLEMING......... -- -- 20,834 93,611 10,417 24,306
DAVID T. BRIGHAM......... -- -- 20,834 93,611 10,417 24,306
A. LANCE LANGFORD........ -- -- 17,365 99,720 8,683 17,360
KAREN E. LYNCH........... -- -- -- 50,000 -- --
</TABLE>
OPTION REPRICING
The following report is provided to stockholders by the members of the
Compensation Committee of the Board of Directors.
Largely because of declining commodity prices and related conditions,
which have occurred independent of management decisions, the market price of
Brigham Exploration Company Common Stock has declined with the market prices of
shares of other independent exploration and production companies. The
Compensation Committee grants stock options with the goals of ensuring that the
interests of management remain closely aligned with those of the Company's
stockholders and creating incentive for executive officers to remain with the
Company for the long term. In order to further such goals, the Compensation
Committee felt it necessary to adjust the exercise price on previously granted
options so that the new exercise price would more closely approximate the market
price, and therefore, provide greater incentive for the executive officers and
employees. Consequently, on December 14, 1998, the Compensation Committee
authorized the exchange of all outstanding options granted to executive officers
and employees in January 1998 with an exercise price of $12.875 per share for
options with an exercise price of $6.31 per share. The following table sets
forth certain information concerning option repricing activity for repriced
options held by any executive officer since May 9, 1997, the date of the
Company's initial public offering.
TEN-YEAR OPTION/SAR REPRICINGS
<TABLE>
<CAPTION>
MARKET PRICE EXERCISE LENGTH OF ORIGINAL
OF STOCK AT PRICE AT OPTION TERM
NUMBER OF TIME OF TIME OF REMAINING
OPTIONS/SARS REPRICING OR REPRICING OR NEW AT DATE OF
REPRICED OR AMENDMENT AMENDMENT EXERCISE REPRICING OR
NAME DATE AMENDED (#) ($) ($) PRICE ($) AMENDMENT
- ------------------------------- -------- ------------ ------------ ----------- --------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Jon L. Glass................... 12/14/98 5,000 6.31 12.875 6.31 6 years, 1 month
Craig M. Fleming............... 12/14/98 5,000 6.31 12.875 6.31 6 years, 1 month
David T. Brigham............... 12/14/98 5,000 6.31 12.875 6.31 6 years, 1 month
A. Lance Langford.............. 12/14/98 25,000 6.31 12.875 6.31 6 years, 1 month
Karen E. Lynch................. 1/14/98 50,000 12.875 14.875 12.875 6 years, 2 months
12/14/98 50,000 6.31 12.875 6.31 6 years, 1 month
</TABLE>
9
<PAGE> 12
BOARD REPORT ON EXECUTIVE COMPENSATION POLICY
The Company's executive compensation policy is designed to attract,
motivate, reward and retain the key executive talent necessary to achieve the
Company's business objectives and contribute to the long-term success of the
Company. In order to meet these goals, the Company's compensation policy for its
executive officers focuses primarily on determining appropriate salary levels
and providing long-term stock-based incentives. To a lesser extent, the
Company's compensation policy also contemplates performance-based cash bonuses.
The Company's compensation principles for the Chief Executive Officer are
identical to those of the Company's other executive officers.
Cash Compensation. In determining its recommendations for adjustments
to officers' base salaries (excluding the Chief Executive Officer), the Company
focuses primarily on the scope of each officer's responsibilities, each
officer's contributions to the Company's success in moving toward its long-term
goals during the twelve months immediately preceding his or her hire date, the
accomplishment of goals set by the officer and approved by the Board for that
year, the Company's assessment of the quality of services rendered by the
officer, comparison with compensation for officers of comparable companies and
an appraisal of the Company's financial position. In certain situations, the
Company may also pay cash bonuses, the amount of which will be determined based
on the contribution of the officer and the benefit to the Company of the
transaction or development. The Compensation Committee determined officers'
salary adjustments and cash bonuses in October 1998 based upon the information
available with respect to the performance of the officers and the Company for
the preceding twelve months. In March 1999, with the expectation for continuing
difficult industry conditions, the Company announced a 10% salary reduction for
all employees, including officers, except that the Chief Executive Officer has
elected to take a 15% salary reduction. The salary reductions are to be
effective as of May 1, 1999. In addition, in March 1999 the Company announced
that, until further notice, there will be no cash bonuses paid to employees,
including officers, in 1999.
Equity Compensation. The grant of stock options to executive officers
constitutes an important element of long-term compensation for the executive
officers. The grant of stock options increases management's equity ownership in
the Company with the goal of ensuring that the interests of management remain
closely aligned with those of the Company's stockholders. The Board believes
that stock options in the Company provide a direct link between executive
compensation and stockholder value. By attaching vesting requirements, stock
options also create an incentive for executive officers to remain with the
Company for the long term. See "Option Repricing" for certain information
regarding stock option repricings in 1998.
Chief Executive Officer Compensation. The factors and criteria upon
which the salary of Ben M. Brigham, the Chief Executive Officer, is based are
similar to the criteria used in evaluating salary adjustments for the other
executive officers of the Company, except that the Chief Executive Officer's
performance is evaluated for the prior fiscal year as opposed to the twelve
months immediately preceding his hire date. The Chief Executive Officer's
individual contributions to the Company included his leadership role in
establishing and retaining a strong management team, developing and implementing
the Company's business plans and attracting investment capital to the Company.
In addition, the Compensation Committee reviewed compensation levels of chief
executive officers at comparable companies in the Company's industry. During
1998, the Chief Executive Officer's salary was adjusted by the Compensation
Committee based upon the information available as to his efforts and the results
achieved by the Company during fiscal year 1997. With the expectation of
continuing difficult industry conditions, in March 1999 the Chief Executive
Officer elected to take a 15% salary reduction, to be effective as of May 1,
1999.
In determining the amount of annual cash bonus compensation to be paid
to the Chief Executive Officer, the Compensation Committee also reviews the
performance of the Chief Executive Officer and the Company for the prior fiscal
year. For such purposes, the Compensation Committee utilizes a four part formula
which the Committee believes provides a quantitative and qualitative framework
to measure the performance of the Chief Executive Officer and the Company. This
formula generally consists of the following components: (i) the attainment by
the Company of certain threshold multiples of reserve value additions for
drilling levels during the fiscal year; (ii) in the event that certain threshold
coverage ratios in (i) are met, the attainment of budgeted drilling levels by
the Company for the fiscal year; (iii) the number of potential future drilling
locations added to the Company's inventory during the fiscal year; and (iv)
10
<PAGE> 13
a discretionary component to reward other performance factors that are not
easily quantifiable. In May 1998 a cash bonus was paid to the Chief Executive
Officer based upon such criteria. In March 1999 the Chief Executive Officer also
elected to waive any cash bonus compensation in 1999.
Harold D. Carter
Alexis M. Cranberg
Stephen P. Reynolds
SECTION 162(m) OF THE INTERNAL REVENUE CODE.
Section 162(m) of the Internal Revenue Code of 1986, as amended, generally
limits (to $1 million per covered executive) the deductibility for federal
income tax purposes of annual compensation paid to a company's chief executive
officer and each of its other four most highly compensated executive officers.
All options granted under the Company's existing plans will qualify for an
exemption from the application of Section 162(m) of the Code, thereby preserving
the deductibility for federal income tax purposes of compensation that may be
attributable to the exercise of such options.
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, except A. Lance
Langford and Karen E. Lynch, is a party to a confidentiality and noncompete
agreement contained in agreements relating to the officers' restricted stock.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Members of the Compensation Committee are currently Harold D. Carter,
Alexis M. Cranberg and Stephen P. Reynolds. Gary J. Milavec was a member of the
Audit Committee and the Compensation Committee from January 1, 1998 until
September 1, 1998, the effective date of Mr. Milavec's resignation from the
Company's Board of Directors. Mr. Reynolds filled the vacancy created on the
Compensation Committee by the resignation of Mr. Milavec. All determinations
concerning executive compensation for the last fiscal year 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 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. See "Certain Transactions" below for certain information regarding
relationships between the Company and entities with whom Mr. Milavec or Mr.
Cranberg are affiliated.
11
<PAGE> 14
CERTAIN TRANSACTIONS
In connection with land work necessary for certain of the Company's 3-D
seismic exploration operations, 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 necessary field land
work relating to 3-D seismic exploration. BLM has regional expertise in the
Anadarko Basin, the Texas Panhandle and West Texas. BLM performs these services
for the Company using BLM's employees and independent contractors. In 1998 the
Company paid BLM approximately $851,000. 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 connection with the Company's
planned reduction of its capital expenditure budget for 1999, the Company does
not currently intend to assemble new 3-D seismic projects in 1999, and therefore
expects that the amounts paid to BLM in 1999 will be significantly lower than in
prior years.
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 $6.8
million to Venture, and the Company has contributed $375,348. 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 data
for approximately $83,000 in 1996. The Company billed Venture approximately
$17,768 in 1998 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 former director of the Company and a former 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 data acquisition and interpretation of the data after
it had been acquired. During 1998, the Company received approximately $23,000
from the RIMCO affiliates, including Vaquero, for workstation time and
geoscientists' time in interpreting the 3-D seismic data 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 1998, the Company distributed to RIMCO $25,934 for RIMCO's overriding
royalty interest in certain natural gas and oil properties.
In August 1998, the Company issued $50 million of debt and equity
securities to two affiliates of Enron, Enron Capital and JEDI II, pursuant to a
securities purchase agreement (the "Purchase Agreement") among the Company,
Enron Capital and JEDI II. Securities issued by the Company in connection with
this financing transaction included: (i) $40 million of Senior Subordinated
Secured Notes due 2003 (the "Subordinated Notes"), (ii) warrants to purchase
1,000,000 shares of the Company's Common Stock at a price of $10.45 per share
(the "Warrants") and (iii) 1,052,632 shares of the Company's Common Stock at a
price of $9.50 per share. In 1998, the Company paid Enron affiliates $1.2
million in interest payments on the Subordinated Notes. In connection with the
closing of the Purchase Agreement,
12
<PAGE> 15
the Company paid an aggregate of $2.1 million in fees to JEDI II and ECT
Securities Corp., an Enron affiliate. The Company also entered into a
registration rights agreement with Enron Capital and JEDI II, granting them
certain demand registration rights for two registrations with respect to the
shares of the Company's Common Stock (including shares issuable upon the
exercise of the Warrants) and the Warrants, as well as certain "piggyback"
registration rights. The Purchase Agreement also granted Enron Capital or its
designated affiliate certain rights to designate one member of the Company's
Board of Directors for so long as Enron Capital and/or JEDI II own 5% or more of
the Company's outstanding Common Stock. According to an amendment dated January
12, 1999 to a Schedule 13D of the applicable Enron entities, Enron Capital
contributed its shares of Common Stock of the Company, its Warrants and its
rights under the Purchase Agreement and the registration rights agreement to ECT
Investments on December 31, 1998. In March 1999, the Company and the trustee
under the indenture governing the Subordinated Notes entered into an amendment
to the indenture. This amendment provides the Company with the option to pay
interest due on the Subordinated Notes in kind, for any reason, through the
second quarter of 2000. In addition, certain financial and other covenants were
amended. The Warrants were also amended to provide for a reduction in the
exercise price per share of the Warrants from $10.45 per share to $3.50 per
share. W. Craig Childers, a director of the Company who was appointed to the
Board of Directors pursuant to the Purchase Agreement, is a Managing Director of
Enron Capital.
On March 30, 1999, the Company entered into an agreement (the "Exchange
Agreement") with Veritas DGC Land, Inc. ("Veritas") to exchange 1,002,865 shares
of newly issued Common Stock of the Company valued at $3.50 per share for
approximately $3.5 million of payment obligations due to Veritas in 1999 for
certain seismic acquisition and processing services previously performed. In
addition, the Exchange Agreement provides for the payment by the Company of up
to $1 million in future seismic processing services to be performed by Veritas
in newly issued shares of the Company's Common Stock valued at $3.50 per share,
in the event that the Company does not elect to pay for such services in cash.
In connection with the Exchange Agreement, the Company also entered into a
registration rights agreement with Veritas requiring registration for the shares
of the Company's Common Stock issued (whether now or in the future) pursuant to
the Exchange Agreement, as well as providing certain "piggyback" registration
rights. Pursuant to certain agreements with Veritas, in 1998 the Company paid
Veritas an aggregate of $14.9 million for seismic acquisition and processing
services. Because Veritas was not an affiliate of the Company when services were
provided in 1998, the Company believes that the terms of the service
arrangements were no less favorable than could be obtained from an unaffiliated
third party.
Pursuant to a consulting agreement with Harold D. Carter that expired
December 31, 1998, the Company paid Mr. Carter $7,200 per month to spend
approximately 50% of his working time performing such consulting and advisory
services regarding the operations of the Company as the Company requested.
Pursuant to this agreement, Mr. Carter received $86,400 in 1998. Additional
disbursements totaling approximately $6,389 were made by the Company to Mr.
Carter during 1998 for the reimbursement of certain expenses. In addition,
pursuant to the terms of Mr. Carter's consulting agreement, the Company paid
Associated Energy Managers, Inc. $1,000 per month in 1998 to offset a portion of
Mr. Carter's office overhead expenses and 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. The Company is continuing to
utilize Mr. Carter's consulting services and currently paying Mr. Carter $4,000
per month for such consulting services, as well as paying Associated Energy
Managers, Inc. $1,000 per month for office space overhead and use.
On February 10, 1999, the Company and Aspect Resources, LLC ("Aspect
Resources") entered into a Joint Development Agreement, under which Aspect
Resources has agreed to pay for 100% of certain land acquisition costs the
Company incurs within one of the Company's South Texas projects prior to
February 10, 2001. In return for funding 100% of such costs, Aspect Resources
will be initially assigned 25% of the oil and gas leasehold interests and 50% of
the mineral or royalty interests which are acquired by the Company with such
funds. The Company has an election to reimburse Aspect Resources for 75% of the
costs it funded for the oil and gas leasehold interests within the time period
specified in the Joint Development Agreement; however, in the event that the
Company does not elect to reimburse Aspect Resources for 75% of such costs, the
Company must subsequently assign to Aspect Resources an additional 25% interest
in the leasehold interests acquired. The Company does not have the option to
reimburse Aspect Resources for 75% of the costs incurred to acquire mineral or
royalty interests, as opposed to leasehold interests. Alexis M. Cranberg, a
director of the Company and member of the Compensation Committee, is President
of Aspect Resources.
13
<PAGE> 16
The Company 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 RIMCO entities, acting together, and the General Atlantic
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 $3.0 million. One additional
registration is allowed if any registrable securities requested to be included
in a previous registration statement have not been disposed 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.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]
14
<PAGE> 17
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on
the Common Stock with the cumulative total return of (i) the Media General
Industry Group Index No. 121, "Independent Oil & Gas" ("MG E&P Group Index") and
(ii) the Nasdaq Market Index from the first day of trading of the Common Stock,
May 9, 1997, through December 31, 1998. The index for Media General Industry
Group No. 121 is being used in lieu of the index for Media General Industry
Group No. 353, "Oil, Natural Gas Exploration," which is no longer available.
Media General Financial Services has reconfigured its industry groupings and
Group 121 contains many of the companies formerly included in Group 353. The
graph assumes that the value of an investment in the Common Stock and each index
was $100 at May 9, 1997 and that any dividends were reinvested. Numerical values
used for the quarter-end plot points in the graph are set forth in the table
under the graph.
COMPARISON OF CUMULATIVE TOTAL RETURN FOR BRIGHAM EXPLORATION COMPANY,
NASDAQ MARKET INDEX AND MG E&P GROUP INDEX
[GRAPHIC]
<TABLE>
<CAPTION>
5/9/97 6/30/97 9/30/97 12/31/97 3/31/98 6/30/98 9/30/98 12/31/98
------ ------- ------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Brigham Exploration Company 100.00 99.26 164.44 173.33 146.67 105.19 77.04 65.19
NASDAQ Market Index 100.00 114.62 133.64 125.21 146.75 150.54 135.68 176.38
MG E&P Group Index 100.00 107.12 115.62 99.18 102.64 90.71 73.41 64.65
</TABLE>
15
<PAGE> 18
PROPOSAL 2.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed, and recommends the approval of the
appointment of, PricewaterhouseCoopers LLP as independent auditors for the year
ending December 31, 1999. PricewaterhouseCoopers LLP has been the Company's
auditors since 1992. Representatives of PricewaterhouseCoopers LLP are expected
to be present at the Annual Meeting and will be given the opportunity to make a
statement, if they desire to do so, and to respond to appropriate questions.
Unless stockholders specify otherwise in the proxy, proxies solicited by
the Board of Directors will be voted by the persons named in the proxy at the
Annual Meeting to ratify the selection of PricewaterhouseCoopers LLP as the
Company's auditors for 1999. The affirmative vote of a majority of the votes
cast at the Annual Meeting will be required for ratification.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP.
OTHER MATTERS
The Board of Directors of the Company does not intend to present any other
matters at the meeting and knows of no other matters which will be presented.
However, if any other matters come before the meeting, it is the intention of
the persons named in the enclosed proxy to vote in accordance with their
judgment on such matters.
STOCKHOLDER PROPOSALS
It is contemplated that the Annual Meeting of Stockholders of the Company
in 2000 will take place during the second week of May 2000. Stockholder
proposals for inclusion in the Company's proxy materials for the Annual Meeting
of Stockholders in 2000 must be received at the Company's principal executive
office in Austin, Texas, addressed to the Secretary of the Company, not later
than December 16, 1999.
With respect to shareholder proposals which are not intended to be
included in the Company's proxy materials, the bylaws of the Company provide
that notice of any such shareholder proposal nominating persons for election to
the Board of Directors of the Company must be received at the Company's
principal executive office not later than 90 days prior to the annual meeting;
and all other shareholder proposals must be received not less than 60 nor more
than 120 days prior to the meeting.
FORM 10-K ANNUAL REPORT
The Company will provide without charge to each person from whom a proxy
is solicited by this proxy statement, upon the written request of any such
person, a copy of the Company's annual report on Form 10-K, including the
financial statements and the schedules thereto, required to be filed with the
Securities and Exchange Commission pursuant to Section 13(a)-1 under the 1934
Act for the Company's most recent fiscal year. Requests should be directed to
Investor Relations, Brigham Exploration Company, 6300 Bridge Point Parkway,
Building Two, Suite 500, Austin, Texas 78730.
By Order of the Board of Directors
David T. Brigham
Secretary
April 14, 1999
Austin, Texas
16
<PAGE> 19
BRIGHAM EXPLORATION COMPANY
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 13, 1999
The undersigned hereby appoints Ben M. Brigham and David T. Brigham, or
any of them, each with full power of substitution, to represent the undersigned
at the Annual Meeting of Stockholders of Brigham Exploration Company to be held
at 1:00 p.m. C.S.T. on May 13, 1999 at River Place Country Club, 4207 River
Place Blvd., Austin, Texas, and at any adjournments or postponements thereof,
and to vote the number of shares the undersigned would be entitled to vote if
personally present at the meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF ALL NOMINEES
FOR ELECTION TO THE BOARD OF DIRECTORS AND FOR PROPOSAL 2.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF BRIGHAM
EXPLORATION COMPANY. THIS PROXY WILL BE VOTED AS DIRECTED. IN THE ABSENCE OF
DIRECTION, THIS PROXY WILL BE VOTED FOR THE NOMINEES FOR ELECTION AND FOR
PROPOSAL 2. IN THEIR DISCRETION, THE PROXY HOLDERS ARE AUTHORIZED TO VOTE UPON
SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT
THEREOF TO THE EXTENT AUTHORIZED BY RULE 14a-4(c) PROMULGATED BY THE SECURITIES
AND EXCHANGE COMMISSION AND BY APPLICABLE STATE LAWS.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
<PAGE> 20
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS. NOMINEES:
[ ] FOR all nominees listed at right [ ] WITHHOLD AUTHORITY to Ben M. Brigham
(except as indicated to the contrary) vote for all nominees listed Anne L. Brigham
Harold D. Carter
W. Craig Childers
Alexis M. Cranberg
Jon L. Glass
Stephen P. Reynolds
</TABLE>
INSTRUCTION: (To withhold authority to vote for any individual nominee,
write that nominee's name on the line below.)
2. Ratification of PricewaterhouseCoopers LLP as the Company's Auditors for the
fiscal year ending December 31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. The transaction of such other Business as may properly come before the
meeting or any adjournments or postponements of the meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO
COMPLETE, DATE, SIGN AND PROMPTLY MAL THIS PROXY IN THE ENCLOSED RETURN ENVELOPE
SO THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING.
The undersigned hereby revokes any proxy or proxies heretofore given to
represent or vote such common stock and hereby ratifies and confirms all actions
that the proxies named herein, their substitutes, or any of them, may lawfully
take in accordance with the terms hereof.
Dated: , 1999
-------------------- -----------------------------------------
Signature(s)*
-----------------------------------------
Signature if held jointly
*NOTE: Please sign exactly as your name(s) appear(s) on your stock
certificate. If shares of stock stand of record in the names of two
or more persons or in the name of husband and wife, whether as
joint tenants or otherwise, both or all of such persons should sign
the proxy. If shares of stock are held of record by a corporation,
the proxy should be executed by the president or vice president and
the secretary or assistant secretary. Executors, administrators or
other fiduciaries who execute the above proxy for a stockholder
should give their full title. Please date the proxy.
