Denbury Resources Inc.
DNR ("Denbury" or the "Company") today announced that its total
estimated proved oil and natural gas reserves at December 31, 2012 were 409
million barrels of oil equivalent ("MMBOE"), consisting of 329 million barrels
of crude oil, condensate and natural gas liquids, and 482 billion cubic feet
(80 MMBOE) of natural gas. Reserves were 80% liquids and 60% proved developed,
and 49% of such reserves were attributable to Denbury's carbon dioxide
enhanced oil recovery ("CO[2] EOR" or "tertiary") operations. Nearly all of
Denbury's reserves not attributable to CO[2] EOR operations at year-end 2012
relate to planned future CO[2] EOR operations. Also, year-end 2012 proved
reserve estimates do not include the estimated 42 MMBOE of proved reserves
associated with Denbury's pending acquisition of property interests in the
Cedar Creek Anticline of Montana and North Dakota from ConocoPhillips in a
transaction expected to close near the end of the first quarter of 2013 (the
"CCA Acquisition").
Denbury's aggregate proved reserve additions during 2012 were 114 MMBOE,
primarily consisting of 57 MMBOE from CO[2] EOR operations at Hastings and
Oyster Bayou fields, 26 MMBOE from the acquisition of interests in the
Thompson, Webster, and Hartzog Draw fields that Denbury plans to flood with
CO[2] in the future, and additions of 11 MMBOE in the Bakken area prior to its
sale in the fourth quarter of 2012. These 2012 additions were offset by 26
MMBOE of production, the sale during the year of properties with combined
proved reserves of 124 MMBOE, and minor revisions, including those related to
lower natural gas prices. Total tertiary oil reserves at December 31, 2012
were 201 MMBOE, up 36% from the prior year-end level of 148 MMBOE, primarily
as a result of initial bookings at Hastings and Oyster Bayou fields.
The estimated discounted net present value of Denbury's proved reserves at
December 31, 2012, before projected income taxes, using a 10% per annum
discount rate ("PV-10 Value", a non-GAAP measure), was $9.9 billion, using
first-day-of-the-month 12-month average 2012 prices of $94.71 per barrel
("Bbl") for oil and $2.85 per million British thermal unit ("MMBtu") for
natural gas. This represents a $0.7 billion decline from the prior year level
as the strategic sale of properties with a PV-10 Value of $1.9 billion at
year-end 2011 (using first-day-of-the-month 12-month average 2011 prices of
$96.19 per Bbl for oil and $4.16 per MMBtu for natural gas) and the impact of
lower oil and natural gas prices more than offset increases from additional
tertiary reserves and acquired properties. The year-end 2012 PV-10 Value of
proved reserves attributable to Denbury's tertiary oil activities was $6.8
billion, a $1.1 billion, or 19%, increase from the prior year level. Also,
year-end 2012 PV-10 Values do not include any PV-10 Value of the pending CCA
Acquisition, which is currently estimated at $1.1 billion using the same
commodity price assumptions as those in Denbury's year-end 2012 report. On a
pro forma basis, it is currently estimated that the CCA Acquisition would
increase the Company's PV-10 Value to approximately $11 billion. Following is
a preliminary reconciliation of the change in the Company's proved oil and
natural gas reserve quantities between December 31, 2011 and December 31,
2012, along with the pro forma impact of the pending CCA Acquisition:
MMBOE
Balance at December 31, 2011 462
Extensions & discoveries and improved recoveries 86
Acquisitions 28
Sales (124)
Estimated revisions due to price changes (7)
Other estimated revisions (10)
Estimated 2012 production (26)
Balance at December 31, 2012 409
Estimated reserves from pending CCA Acquisition 42
Estimated pro forma reserves 451
Denbury's estimated proved CO[2] reserves at year end 2012, increased 8% to
9.6 trillion cubic feet ("Tcf"). CO[2] reserves are presented on a gross
working interest or 8/8^ths basis, except those reserves recently acquired
from ExxonMobil which are reported net to Denbury's interest. Of these total
CO[2] reserves, 6.1 Tcf were in the Gulf Coast region and 3.5 Tcf were in the
Rocky Mountain region. Denbury's acquisition of approximately one-third of
ExxonMobil's CO[2] reserves in LaBarge Field in Wyoming added approximately
1.3 Tcf to its Rocky Mountain region CO[2] reserves.
Preliminary 2012 and Fourth Quarter Production
Based on preliminary data, Denbury's average annual production rate for 2012
was 71,689 barrels of oil equivalent per day ("BOE/d") which included 35,206
barrels per day ("Bbls/d") from tertiary properties and 14,847 BOE/d from
properties sold in 2012. Preliminary estimated total fourth quarter 2012
production was 70,116 BOE/d which included 37,550 Bbls/d from tertiary
properties and 10,064 BOE/d from the Bakken area assets the Company sold
during such quarter. Quarterly total continuing production, which excludes
production from the Bakken area assets sold during the fourth quarter of 2012,
was 60,052 BOE/d, up 7% from the prior quarter continuing production levels,
driven by an 8% sequential increase in tertiary production and a 6% sequential
increase in non-tertiary production. Fourth quarter of 2012 tertiary
production was 21% higher than the year ago quarter primarily due to strong
contributions from the Company's newest CO[2] floods at Hastings and Oyster
Bayou fields and the expansion of existing CO[2] floods at Delhi and Tinsley
fields. The sequential increase in non-tertiary production during the fourth
quarter of 2012 was primarily the result of properties acquired from
ExxonMobil during such quarter, which contributed approximately 1,200 BOE/d to
quarterly production. Denbury estimates current average net production from
the properties to be acquired in the pending CCA Acquisition at approximately
11,000 BOE/d, of which 99% is oil and natural gas liquids. Assuming the
acquisition closes as currently scheduled near the end of the first quarter of
2013, Denbury estimates the properties would contribute approximately 7,700
BOE/d to its full-year 2013 average daily production.
Preliminary 2012 Capital Expenditures
Denbury estimates that 2012 capital expenditures, excluding expenditures on
acquisitions, capitalized interest, and tertiary startup costs, were
approximately $1.45 billion, which was in-line with the budgeted amount. Of
this amount, approximately $1.1 billion was spent on oil and natural gas
development and exploration activities, with the remainder primarily spent on
CO[2] sources and infrastructure. Capital expenditures on properties Denbury
sold in 2012 were approximately $0.4 billion.
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