American Oil and Gas Reporter - January 2017 - 46

Outlook 2017
SIZING UP OPPORTUNITY
Bud Brigham is chairman of Brigham Resources and Brigham Minerals. He began
his career in the early 1980s as a seismic processing geophysicist and exploration
geophysicist. He founded Brigham Exploration Company in 1990 and served as its
president and chief executive. The company went public in 1997, and was sold to
Bud Brigham
Chairman and Co-Founder

Brigham Resources
and Brigham Minerals

Statoil in 2011. Along with others, Brigham then established Brigham Resources
and Brigham Minerals, as well as Anthem Ventures, which includes real estate and
movie ventures. He holds a B.S. in geophysics from the University of Texas at Austin.

Editor's Note: On Dec. 14, Diamondback Energy Inc. and
Brigham Resources announced an agreement for Diamondback
to purchase Brigham Resources for $2.43 billion, giving Diamondback more than 76,000 net acres of leasehold interests and 182,000
net surface acres in the Permian Basin. The deal included only
about 5,000 net acres of the more than 36,000 net acres of minerals owned by Brigham Minerals.
You started Brigham Exploration in 1990 with an initial in-

Q: vestment of $25,000, and sold it 21 years later to Statoil for

$4.5 billion. You then re-entered the business as chairman of
Brigham Resources and Brigham Minerals. How would you assess the level of opportunity available to smaller independents?
What general types of business strategies appear most favorable
over the longer term for independents? What do you see as the
biggest business challenges to establishing and growing a successful small independent?
BRIGHAM: Our businesses-from Brigham Exploration to
now Brigham Resources and Brigham Minerals-have focused on
leveraging the latest technologies and superior knowledge bases
to identify and optimally exploit the highest-margin and economically advantaged oil and gas resources. In the 1990s, the most
significant technological leverage was provided by 3-D seismic,
which previously had been viewed as a purely exploration tool.
Our growth was driven by our pioneering success with that technology.
Today, more than ever, the opportunities presented to independents are technology related. Horizontal drilling and completion
technology have combined to create a tight reservoir revolution
in the United States, a renaissance that is affecting the entire globe.
In our view, we are in the early stages of this renaissance, and it
will continue for many years or even decades. This presents both
challenges and opportunities for entrepreneurial independents.
Associated with this dynamic and rapidly evolving environment, there is more differentiation by operator today than ever
46 THE AMERICAN OIL & GAS REPORTER

in the industry's history. This is particularly apparent for plays
in the early stages of delineation, where often there are widely
different economic outcomes even in adjacent drilling units. The
outperformers are the experienced companies that are providing
a creative environment, and that encourage innovation and
measured, intelligent risk taking. Such operators are outperforming their peers substantially, including most of the large independents and majors. That stated, adopting best practices over time,
facilitated by service providers, will deliver some convergence
of outcomes.
This is a dramatically different world for independents, and
it presents very different challenges. As noted, operational expertise and innovation are separating winners from losers. But there
is another differentiator. In this low-price environment since late
2014, the economic competitiveness of basins and plays is more
dispersed than I have seen in my career. We are blessed to be operating in the Permian Basin, and it is apparent that it is among
the best oil and gas real estate in the world. In time, it may prove
the very best. As we emerge from the trough in oil prices, the Permian will be providing the marginal barrel where supply meets
demand.
No other basin compares with the Permian, both in terms of
current economics and the ultimate resource. Of course that is a
significant challenge for independents not already in the basin,
as the cost of entry is an order-of-magnitude higher than it was
in the past, presenting capital-scale challenges.
Furthermore, the capital-scale challenge only starts there, given that the cost of drilling and completing wells also is an orderof-magnitude higher. Given that it is crowded and expensive, independents could consider seeking out and staking smaller positions in the Permian, which hopefully could be grown over time,
or explore for the next high-quality tight reservoir play.
Finding and developing reserves in U.S. onshore basins is

Q: a very different proposition than it was when you began your

career. From a geophysicist's perspective, how would you summarize the evolution of the geosciences in resource plays? What

American Oil and Gas Reporter - January 2017

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