(Adds analyst comments, background; updates share movement)
By Ajay Kamalakaran
BANGALORE - July 15 (Reuters) - Shares of oil and gas producer Brigham Exploration Co BEXP.O rose as much as 10 percent on Tuesday after it said two of its wells in North Dakota were successfully producing oil.
Both wells are in the Bakken Formation, which covers parts of Montana, North Dakota and Saskatchewan, and could have the potential to yield huge reserves.
Record high crude and gas prices and advances in drilling have triggered a frenzy of exploration activity among energy companies in "unconventional" fields like the Bakken, where oil and natural gas are locked in substances like shale that were once considered too costly for drilling.
The Austin, Texas-based company said its Mrachek 15-22 1H well was at an early flowing production rate of about 727 barrels of oil equivalent per day (BOED).
The well's results show potential for its particular area, west of the Nesson Anticline in the Bakken Shale, even though initial drilling was questionable and it was considered a risky prospect, RBC Capital Markets analyst Scott Hanold said from Minneapolis, Minnesota.
"Given the fact that they have 100,000 acres, people are getting excited about that," Hanold said of development in that region.
He said those wells weren't as good as others tested in Mountrail, where the second successful well was drilled, and not as highly fractured as the Mountrail area.
The other well, known as the Johnson 33 1H, in the North Stanley area of Mountrail County, North Dakota was flowing at an early peak rate of 618 BOED, Brigham said.
In May, XTO Energy Inc XTO.N agreed to pay $1.85 billion in cash and stock to buy more than 350,000 acres of property in the Bakken Shale region from privately held Headington Oil Co.
XTO said the acquired properties were located in the Bar Trend and Nesson Anticline of the Bakken Shale.
Hanold, who rates Brigham as "sector perform", said the Johnson well is Brigham's best in Mountrail.
Last week, Continental Resources Inc (CLR.N) said its second crude oil well in the Bakken Shale flowed at an average rate of 1,095 BOED, which was about 58 percent higher than its first well.
Brigham also said completion operations are underway on two other Mountrail County Bakken wells, while two significant Parshall/Austin area wells are currently drilling, and at least one well at Three Forks is planned for the second half of 2008 in Mountrail County.
In April, the U.S. Geological Survey (USGS) estimated about 3 billion to 4.3 billion barrels of undiscovered, recoverable crude oil in the North Dakota and Montana Bakken Shale play.
The area could also hold 1.85 trillion cubic feet of natural gas and 148 million barrels of natural gas liquids, the USGS said.
As early as 2000 there was virtually no oil and gas produced from the Bakken Shale because of its complex geology, but it now accounts for half of Montana's oil production, and the area has turned North Dakota into the No. 8 U.S. oil producer.
Brigham said it is accelerating its Williston Basin Bakken drilling program by starting its second operated rig line during August.
"In total, we have the potential to drill approximately 602 net horizontal wells in the Williston Basin," Brigham Chief Executive Bud Brigham said in a statement.
Shares of the company were up 6 percent at $16.97 in afternoon trade on Nasdaq, while the Dow Jones U.S. Exploration & Production Index .DJUSOS was down about 3 percent at 798.68. (Editing by Bernard Orr)