-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LL/3Fm8cFJvzGES73ijLoOSHDyWaMQFquTwx8pTzagtRV5KoBqXs8Q5SKxQbQl87 sLwSEwTQyad9Qcms03mPyg== 0000899078-04-000725.txt : 20041028 0000899078-04-000725.hdr.sgml : 20041028 20041028111044 ACCESSION NUMBER: 0000899078-04-000725 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20041028 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20041028 DATE AS OF CHANGE: 20041028 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DENBURY RESOURCES INC CENTRAL INDEX KEY: 0000945764 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 752815171 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12935 FILM NUMBER: 041101367 BUSINESS ADDRESS: STREET 1: 5100 TENNYSON PARKWAY STREET 2: SUITE 3000 CITY: PLANO STATE: TX ZIP: 75024 BUSINESS PHONE: 9726732000 MAIL ADDRESS: STREET 1: 5100 TENNYSON PARKWAY STREET 2: SUITE 3000 CITY: PLANO STATE: TX ZIP: 75024 FORMER COMPANY: FORMER CONFORMED NAME: NEWSCOPE RESOURCES LTD DATE OF NAME CHANGE: 19950627 8-K 1 denbury8k102804.txt FORM 8-K - 10-28-2004 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): October 28, 2004 DENBURY RESOURCES INC. (Exact name of Registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 1-12935 20-0467835 (Commission File Number) (I.R.S. Employer Identification No.) 5100 Tennyson Parkway Suite 3000 Plano, Texas 75024 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (972)673-2000 _____________________N/A______________________ (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Section 2 - Financial Information Item 2.02. Results of Operations and Financial Condition On October 28, 2004, Denbury Resources Inc. issued a press release announcing its 2004 third quarter results, its 2005 capital budget and production guidance and that it will host an analyst conference on November 4th and 5th, 2004. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K. As provided in General Instruction B.2 to Form 8-K, the information furnished in this Item 2.02 and in Exhibit 99.1 hereto shall not be deemed "filed" for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing with the Securities and Exchange Commission, except as shall be expressly provided by specific reference in such filing. Section 9 - Financial Statements and Exhibits Item 9.01 Financial Statements and Exhibits. (a) Financial statements of businesses acquired. Not applicable. (b) Pro forma financial information. Not applicable. (c) Exhibits. The following exhibits are furnished in accordance with the provisions of Item 601 of Regulation S-K:
Exhibit Number Description of Exhibit 99.1 Denbury press release, dated October 28, 2004, Denbury Resources Announces Third Quarter Results, 2005 Capital Budget and Production Guidance, Hosts Analyst Conference.
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Denbury Resources Inc. (Registrant) Date: October 28, 2004 By: /s/ Phil Rykhoek ------------------------------- Phil Rykhoek Senior Vice President & Chief Financial Officer EXHIBIT 99.1 EX-99 2 denby8k102804ex991.txt EXHIBIT 99.1 Exhibit 99.1 DENBURY RESOURCES INC. P R E S S R E L E A S E Denbury Resources Announces Third Quarter Results; 2005 Capital Budget and Production Guidance; Hosts Analyst Conference News Release Released at 7:30 AM CDT DALLAS, October 28, 2004 - Denbury Resources Inc. (NYSE symbol: DNR) ("Denbury" or the "Company") today announced its third quarter 2004 financial and operating results. The Company posted earnings for the quarter of $18.3 million, or $0.33 per common share, as compared to earnings of $15.1 million or $0.28 per common share for the third quarter of 2003, the increase primarily due to higher commodity prices. Net cash flow provided by operations, a GAAP measure, totaled $44.8 million during the third quarter of 2004, less than the $49.8 million recorded during the third quarter of 2003, the decrease primarily related to current income taxes on profits from the sale of the Company's offshore properties completed in July 2004 (see below) partially offset by the benefit from recent higher commodity prices. Adjusted cash flow from operations for the third quarter of 2004 (before changes in assets and liabilities), a non-GAAP measure, totaled $29.7 million, a 35% decrease from the $45.6 million of adjusted cash flow generated in the third quarter of 2003, the decrease primarily relating to the same income taxes on the offshore property sale. (See the accompanying schedules for a reconciliation of net cash flow provided by operations, as defined by generally accepted accounting principles ("GAAP"), which is a GAAP measure, as opposed to adjusted cash flow, which is a non-GAAP measure). Impact of Offshore Sale - ----------------------- On July 20, 2004, the Company closed the sale of Denbury Offshore, Inc., a subsidiary that held Denbury's offshore assets, for $200 million (before adjustments) to Newfield Exploration Company. The sale price was based on the asset value of the offshore assets as of April 1, 2004, which means that the net revenue and expenses from these properties which the Company received between April 1st and closing, as well as expenses of the sale and other contractual adjustments, reduced the purchase price to approximately $187 million. The Company's third quarter results include 1,885 BOE/d of production for the first 19 days of July relating to the offshore properties sold to Newfield, generating approximately $5.3 million of net operating revenue (revenue less operating expenses). During the third quarter, Denbury also recorded approximately $18.0 million of current income taxes relating to the offshore sale, and paid approximately $1.4 million of severance pay related to the sale in addition to approximately $1.0 million paid during the first six months of 2004. On a pro forma basis, excluding the impact of the offshore operations during the third quarter of 2004 as outlined above, third quarter 2004 net income is estimated to be $15.5 million, with adjusted cash flow from operations of $43.8 million. Production - ---------- Production for the third quarter, excluding the offshore production outlined above, was 27,772 BOE/d, just slightly higher than production during the prior quarter and 7% higher than the average of 25,930 BOE/d produced during the third quarter of 2003 (excluding any offshore production for both comparative periods). Oil production from the Company's tertiary operations 1 increased 6% over levels in the prior quarter and increased 65% when compared to third quarter 2003 tertiary production, averaging 6,967 Bbls/d in the third quarter of 2004, primarily as a result of production increases at Mallalieu and McComb Fields. Natural gas production increased in the Barnett Shale as a result of recent drilling activity, increasing from approximately 1.5 MMcf/d in the third quarter of 2003 to approximately 3.9 MMcf/d in the 2004 quarter. Partially offsetting these increases were declines in onshore Louisiana production resulting from natural field depletion, the single largest factor being expected depletion at Thornwell Field, onshore Louisiana, which declined approximately 1,400 BOE/d from first quarter 2004 production levels. Third Quarter 2004 Financial Results - ------------------------------------ The Company's net income declined from second quarter 2004 levels, as higher commodity prices were more than offset by the loss of offshore production and its net operating income. Payments on the Company's commodity hedges continued to be a significant outflow, totaling $22.2 million for the third quarter of 2004, and hedge payments are expected to be even higher in the fourth quarter of 2004, after which time they will drop significantly, as most of the out-of-the-money hedges expire by the end of this year. Depreciation and amortization expense declined approximately $0.84 per BOE from the second quarter of 2004 primarily as a result of proceeds from the offshore sale being credited to the Company's full cost pool. When comparing the respective third quarters of 2003 and 2004, higher commodity prices in the 2004 period more than offset lower production, resulting in a 21% increase in net income in the 2004 period. Operating expenses decreased slightly to $7.25 per BOE in the third quarter of 2004 as compared to $7.35 per BOE in the third quarter of 2003, primarily because there were no significant or unusual workover expenses in the 2004 period. Expenses remained at relatively high levels because of increased activity and emphasis on tertiary operations (with their higher operating costs), higher energy costs to operate the properties, and general cost inflation in the industry. Production taxes increased in the third quarter of 2004 along with increased commodity prices. General and administrative expenses increased, averaging $2.27 per BOE in the third quarter of 2004, up from $1.13 per BOE in the prior year's third quarter. Lower production as a result of the offshore sale caused a significant increase in per BOE amounts, as did approximately $1.4 million of severance costs related to the offshore property sale. The Company's general and administrative costs have also risen in order to comply with the requirements of the Sarbanes-Oxley Act. Interest expense decreased on a gross and per BOE basis as a result of lower overall interest rates, primarily related to the subordinated debt refinancing in 2003, and lower average debt levels as a result of the $50 million reduction in debt during 2003 and $85 million of bank debt paid off in July 2004 with the proceeds from the offshore sale. Depreciation, depletion and amortization expense ("DD&A") decreased in the third quarter of 2004 to $7.62 per BOE, down from $8.46 per BOE in the prior quarter, as a result of the offshore sale, the proceeds of which were credited to the full cost pool. The DD&A rate in the most recent quarter was still slightly higher than the third quarter of 2003 rate, primarily as a result of the higher percentage of expenditures spent on offshore properties during 2003 and the first half of 2004, which typically have a higher finding and development cost per BOE. 2 The Company recognized a current income tax expense of $18.9 million in the third quarter of 2004 related to state income taxes and alternative minimum taxes resulting primarily from the offshore sale, which taxes cannot be offset by the Company's regular tax net loss carryforwards or enhanced oil recovery credits, partially offset by a deferred tax benefit of $11.1 million. Outlook - ------- Denbury's 2004 development and exploration budget is currently $213 million. Denbury's total current debt is $225 million, with no amounts outstanding under its $200 million bank borrowing base, and with approximately $70 million of cash remaining from the offshore sale. The Company plans to invest this cash over the next one to two years on property acquisitions, particularly properties that have future tertiary potential, some of which could be new core properties for additional phases of tertiary operations. The Company is leaving its earlier 2004 fourth quarter production forecast unchanged, anticipating a quarterly average of between 28,000 and 28,500 BOE/d. The Company has tentatively set its 2005 development and exploration expenditure budget at $260 million, excluding any potential acquisitions. Approximately 55% to 60% of the budget will be spent on projects relating to the Company's tertiary recovery (CO2) projects, which includes additional drilling and development at the CO2 source fields (Jackson Dome), additional development of the Brookhaven, Mallalieu, McComb and Smithdale Fields in southwestern Mississippi, and the commencement of work on three oil fields in East Mississippi in anticipation of the new CO2 pipeline to East Mississippi scheduled to be completed by mid-2006. The cost of the new CO2 pipeline is not included in the $260 million budget, as the Company currently expects to finance this pipeline through project financing and effectively pay for the pipeline over time. The current estimated cost for the pipeline is approximately $45 million. Approximately 10% of the 2005 budget is being allocated to each of the remaining two core areas of onshore Louisiana and eastern Mississippi and about 10% to 15% to the Barnett Shale. Approximately 10% of the budget relates to exploratory projects, primarily natural gas targets onshore Louisiana. Based on this capital budget program, the Company anticipates that its production for 2005 will be in the range of 30,500 BOE/d, plus or minus 10% higher than the Company's third quarter 2004 production levels excluding offshore production during the quarter. The Company's production from its tertiary CO2 projects during 2005 is expected to increase between 45% and 50%, from an anticipated 2004 average of approximately 6,800 BOE/d to a projected 2005 average of approximately 10,000 BOE/d. The 2005 production forecast excludes any anticipated production from our successful well at High Island A-6 as this property may be sold. Gareth Roberts, Chief Executive Officer, said: "We are aggressively expanding our core tertiary operations by accelerating our first two phases of tertiary development in Southwest and East Mississippi and by actively pursuing additional properties for subsequent phases. We plan to continue the expansion and development of our CO2 reserve and production capacity in 2005 by drilling four additional CO2 wells, two of which are expected to add additional CO2 reserves. Next year, we are also stepping up our activity in the Barnett Shale, with 25 horizontal wells scheduled for 2005. The net result is a projected +/- 10% increase in overall production, all from internal organic growth. We believe that we can continue this rate of growth for several years without acquisitions, an enviable position in our industry. In addition, with our strong balance sheet and cash position, we have plenty of capital to pursue acquisitions that could further increase our inventory of projects and growth potential. With current strong oil prices and our strategic position in the Mississippi area with our tertiary operations, we believe we are ideally positioned for the future." 3 Conference Call - --------------- The public is invited to listen to the Company's conference call set for today, October 28, 2004, at 10:00 A.M. CDT. The call will be broadcast live over the Internet at our web site: www. denbury.com. If you are unable to participate during the live broadcast, the call will be archived on our web site for approximately 30 days and will also be available for playback for one week by dialing 888-203-1112 or 719-457-0820. Analyst Conference - ------------------ Denbury Resources Inc. (NYSE symbol: DNR), announced today that several members of Denbury's management are hosting a conference in New Orleans for analysts on November 4th and 5th, 2004 where they will be presenting specific operational and financial updates. The slide presentation that will be presented to the analysts will be available on Denbury's website, www.denbury.com, beginning on November 4 and will include updated operational and comparative financial data and an in-depth review of the Company's significant properties. The main presentation will be webcast on November 4th and available on www.denbury.com and will be archived on our web site for approximately 30 days thereafter. To date, approximately 50 buy and sell-side analysts and several asset managers have signed up for the presentations. Registration is ongoing and can be made through the contact numbers below. Financial and Statistical Data Tables - ------------------------------------- Following are financial highlights for the comparative three and nine month periods ended September 30, 2004 and 2003. All production volumes and dollars are expressed on a net revenue interest basis with gas volumes converted at 6:1. 4
THIRD QUARTER FINANCIAL HIGHLIGHTS (Amounts in thousands of U.S. dollars, except per share and unit data) Three Months Ended September 30, ------------------------------------------ Percentage 2004 2003 Change -------------------- -------------------- --------------- Revenues: Oil sales 68,144 44,863 52% Gas sales 34,924 43,933 -21% CO2 sales and transportation fees 1,681 2,238 -25% Loss on settlements of derivative contracts (22,243) (12,031) 85% Interest and other income 664 387 72% -------------------- -------------------- Total revenues 83,170 79,390 5% -------------------- -------------------- Expenses: Lease operating expenses 19,781 22,400 -12% Production taxes and marketing expense 4,900 3,761 30% CO2 operating costs 255 602 -58% General and administrative 6,197 3,445 80% Interest 4,768 5,358 -11% Depletion, depreciation and accretion 20,780 22,566 -8% Amortization of derivative contracts and other non-cash hedging adjustments 383 (1,441) >100% -------------------- -------------------- Total expenses 57,064 56,691 1% -------------------- -------------------- Income before income taxes 26,106 22,699 15% Income tax provision (benefit) Current income taxes 18,949 (1,514) >100% Deferred income taxes (11,117) 9,064 >100% -------------------- -------------------- NET INCOME 18,274 15,149 21% ==================== ==================== Net income per common share: Basic 0.33 0.28 18% Diluted 0.32 0.27 19% Weighted average common shares: Basic 55,085 54,014 2% Diluted 57,549 55,718 3% Production (daily - net of royalties) Oil (barrels) 19,206 18,051 6% Gas (mcf) 62,708 90,393 -31% BOE (6:1) 29,657 33,116 -10% Unit sales price (including hedges) Oil (per barrel) 28.25 24.60 15% Gas (per mcf) 5.36 4.32 24% Unit sales price (excluding hedges) Oil (per barrel) 38.57 27.01 43% Gas (per mcf) 6.05 5.28 15%
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Three Months Ended September 30, ----------------------------------------- Percentage 2004 2003 Change -------------------- ------------------- -------------- Non-GAAP Financial Measure (1) Adjusted cash flow from operations (non-GAAP measure) 29,747 45,611 -35% Net change in assets and liabilities relating to operations 15,019 4,178 >100% -------------------- ------------------- Cash flow from operations (GAAP measure) 44,766 49,789 -10% ==================== =================== Oil & gas capital investments 37,644 39,251 -4% CO2 capital investments 15,825 2,635 >100% Proceeds from sales of oil and gas properties 187,133 1,174 >100% BOE data (6:1) Oil and natural gas revenue 37.78 29.14 30% Loss on settlements of derivative contracts (8.15) (3.95) >100% Lease operating costs (7.25) (7.35) -1% Production taxes and marketing expense (1.80) (1.23) 46% -------------------- ------------------- Production netback 20.58 16.61 24% CO2 operating cash flow 0.55 0.54 2% General and administrative (2.27) (1.13) >100% Net cash interest expense (1.49) (1.55) -4% Current income taxes and other (6.46) 0.50 >100% Changes in asset and liabilities relating to operations 5.50 1.37 >100% -------------------- ------------------- Cash flow from operations 16.41 16.34 0% ==================== ===================
(1) See "Non-GAAP Measures" at the end of this report. 6
NINE MONTH FINANCIAL HIGHLIGHTS (Amounts in thousands of U.S. dollars, except per share and unit data) Nine Months Ended September 30, ------------------------------------------ Percentage 2004 2003 Change -------------------- -------------------- --------------- Revenues: Oil sales 181,198 140,998 29% Gas sales 151,177 154,274 -2% CO2 sales and transportation fees 4,622 6,872 -33% Loss on settlements of derivative contracts (54,750) (53,072) 3% Interest and other income 1,422 989 44% -------------------- -------------------- Total revenues 283,669 250,061 13% -------------------- -------------------- Expenses: Lease operating expenses 66,839 67,850 -1% Production taxes and marketing expense 13,481 11,124 21% CO2 operating costs 608 1,453 -58% General and administrative 15,123 10,612 43% Interest 14,917 18,046 -17% Loss on early retirement of debt - 17,629 -100% Depletion, depreciation and accretion 76,265 69,249 10% Amortization of derivative contracts and other non-cash hedging adjustments 8,347 (3,702) >100% -------------------- -------------------- Total expenses 195,580 192,261 2% -------------------- -------------------- Income before income taxes 88,089 57,800 52% Income tax provision Current income taxes 22,045 123 > 100% Deferred income taxes 6,077 18,946 -68% -------------------- -------------------- Income before cumulative effect of change in accounting principle 59,967 38,731 55% Cumulative effect of change in accounting principle, net of income taxes of $1,600 - 2,612 -100% -------------------- -------------------- NET INCOME 59,967 41,343 45% ==================== ==================== Net income per common share - basic: Income before cumulative effect of change in accounting principle 1.10 0.72 53% Cumulative effect of change in accounting principle - 0.05 -100% -------------------- -------------------- Net income per common share - basic 1.10 0.77 43% ==================== ==================== Net income per common share - diluted: Income before cumulative effect of change in accounting principle 1.05 0.70 50% Cumulative effect of change in accounting principle - 0.05 -100% -------------------- -------------------- Net income per common share - diluted 1.05 0.75 40% ==================== ====================
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Nine Months Ended September 30, ------------------------------------------ Percentage 2004 2003 Change -------------------- -------------------- -------------- Weighted average common shares: Basic 54,740 53,824 2% Diluted 57,020 55,375 3% Production (daily - net of royalties) Oil (barrels) 19,114 18,852 1% Gas (mcf) 91,028 95,341 -5% BOE (6:1) 34,285 34,742 -1% Unit sales price (including hedges) Oil (per barrel) 26.58 24.41 9% Gas (per mcf) 5.55 4.48 24% Unit sales price (excluding hedges) Oil (per barrel) 34.60 27.40 26% Gas (per mcf) 6.06 5.93 2% Non-GAAP Financial Measure: (1) Adjusted cash flow from operations (non-GAAP measure) 151,721 141,966 7% Net change in assets and liabilities relating to operations (750) 3,874 >100% -------------------- -------------------- Cash flow from operations (GAAP measure) 150,971 145,840 4% ==================== ==================== Oil & gas capital investments 129,606 119,584 8% CO2 capital investments 42,966 16,008 >100% Proceeds from sales of oil and gas properties 188,279 29,328 >100% Cash and cash equivalents 93,142 28,108 >100% Short-term investments 31,955 - N/A Total assets 991,709 942,558 5% Total long-term debt (excluding discount) 225,000 329,000 -32% Total stockholders' equity 500,630 410,386 22% BOE data (6:1) Oil and natural gas revenue 35.38 31.13 14% Loss on settlements of derivative contracts (5.83) (5.60) 4% Lease operating costs (7.11) (7.15) -1% Production taxes and marketing expense (1.44) (1.17) 23% -------------------- -------------------- Production netback 21.00 17.21 22% CO2 operating cash flow 0.43 0.57 -25% General and administrative (1.61) (1.12) 44% Net cash interest expense (1.39) (1.69) -18% Current income taxes and other (2.28) - N/A Changes in asset and liabilities relating to operations (0.08) 0.40 >100% -------------------- -------------------- Cash flow from operations 16.07 15.37 5% ==================== ====================
(1) See "Non-GAAP Measures" at the end of this report. 8 Denbury CEO adopts 10b5-1 plan - ------------------------------ In September 2004, Ashley Petroleum Inc., a corporation controlled by Mr. Gareth Roberts, Denbury's President and CEO, entered into a 10b5-1 plan pursuant to which it will sell up to 60,000 shares of common stock over the next twelve months, subject to minimum price restrictions, commencing in November 2004. Ashley Petroleum Inc. currently owns a total of 138,330 shares of common stock. Mr. Roberts currently controls approximately 955,730 shares of common stock, including 261,885 shares related to vested and unvested stock options, 138,330 shares owned by Ashley Petroleum Inc. and 235,000 shares of unvested restricted stock. Non-GAAP Measures - ----------------- Adjusted cash flow from operations is a non-GAAP measure that represents cash flow provided by operations before changes in assets and liabilities, as summarized from the Company's Consolidated Statements of Cash Flows. Adjusted cash flow from operations measures the cash flow earned or incurred from operating activities without regard to the collection or payment of associated receivables or payables. The Company believes that it is important to consider this measure separately, as it believes it can often be a better way to discuss changes in operating trends in its business caused by changes in production, prices, operating costs, and so forth, without regard to whether the earned or incurred item was collected or paid during that period. For a further discussion, see "Management's Discussion and Analysis of Financial Condition and Results of Operations - Operating Results" in our latest Form 10-Q or Form 10-K. Denbury Resources Inc. (www.denbury.com) is a growing independent oil and gas company. The Company is the largest oil and natural gas operator in Mississippi, owns the largest reserves of carbon dioxide used for tertiary oil recovery east of the Mississippi River, and holds significant operating acreage in onshore Louisiana. The Company increases the value of acquired properties in its core areas through a combination of exploitation drilling and proven engineering extraction practices, including secondary and tertiary recovery operations. This press release, other than historical financial information, contains forward looking statements that involve risks such as those involved in drilling activity and those due to price volatility, and uncertainties as to drilling results, proved reserves, production levels, commodity prices, and financial results as detailed in the Company's filings with the Securities and Exchange Commission, including its reports on Form 10-K and 10-Q. These reports are incorporated by reference as though fully set forth herein. These statements are based on assumptions concerning commodity prices, existing market conditions, scheduling, drilling and completion results and costs and engineering assumptions that management believes are reasonable based on currently available information; however, management's assumptions and the Company's future performance are both subject to a wide range of business risks, and there is no assurance that these goals and projections can or will be met. Actual results may vary materially. For further information contact: Gareth Roberts, President and CEO, 972-673-2000 Phil Rykhoek, Sr. VP and Chief Financial Officer, 972-673-2000 www.denbury.com 9 -----END PRIVACY-ENHANCED MESSAGE-----