-----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, G3eAn6SBt4DGBQaEug+g1jFCV+LrLUhhyyeG7g881L/4f8hIIiM1zqsBIPhx5dWu 8fly8rHKR+jdgTRQfdSRKg== 0000950134-96-004652.txt : 19960906 0000950134-96-004652.hdr.sgml : 19960906 ACCESSION NUMBER: 0000950134-96-004652 CONFORMED SUBMISSION TYPE: DEFS14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19961009 FILED AS OF DATE: 19960904 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DENBURY RESOURCES INC CENTRAL INDEX KEY: 0000945764 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEFS14A SEC ACT: 1934 Act SEC FILE NUMBER: 033-93722 FILM NUMBER: 96625313 BUSINESS ADDRESS: STREET 1: 17304 PRESTON RD STREET 2: STE 200 CITY: DALLAS STATE: TX ZIP: 75252 BUSINESS PHONE: 2147133000 MAIL ADDRESS: STREET 1: 17304 PRESTON RD STREET 2: STE 200 CITY: DALLAS STATE: TX ZIP: 75252 FORMER COMPANY: FORMER CONFORMED NAME: NEWSCOPE RESOURCES LTD DATE OF NAME CHANGE: 19950627 DEFS14A 1 DEFINITIVE PROXY MATERIALS FOR SPECIAL MEETING 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: / / 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-12 DENBURY RESOURCES INC. - -------------------------------------------------------------------------------- (Name of Registrant as Specified in its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): / / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or Item 22(a)(2) of Schedule 14A. / / $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3). / / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (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: - -------------------------------------------------------------------------------- /X/ 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: - -------------------------------------------------------------------------------- 2 DENBURY RESOURCES INC. NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON OCTOBER 9, 1996 TO: THE SHAREHOLDERS OF DENBURY RESOURCES INC. TAKE NOTICE that a Special Meeting (the "Meeting") of the shareholders of Denbury Resources Inc. ("Denbury" or the "Corporation") will be held in the Banff Room at The Westin Hotel Calgary, 320 4th Ave., S.W., Calgary, Alberta on Wednesday, the 9th day of October, 1996 at 10:00 o'clock in the morning (Calgary time) for the following purposes: 1. To consider and, if thought fit, pass a Special Resolution, in the form of the Special Resolution attached as Appendix 1 to the Information Circular, amending the Articles of Continuance of the Corporation to consolidate the number of issued and outstanding Common Shares of the Corporation on the basis of one (1) Common Share for each two (2) Common Shares outstanding; 2. To consider and, if thought fit, pass a Special Resolution, in the form of the Special Resolution attached as Appendix 2 to the Information Circular, amending the Articles of Continuance of the Corporation by modifying the conversion provisions attaching to the Convertible First Preferred Shares, Series A (the "Preferred Shares") which will give the Corporation the right to require the holders of the Preferred Shares to convert their Preferred Shares into Common Shares at any time, provided that the conversion rate in effect as of January 1, 1999 will be used for any required conversion prior to such date; 3. To consider and, if though fit, pass an Ordinary Resolution, in the form of the Ordinary Resolution attached as Appendix 3 to the Information Circular, to authorize the Corporation to issue Common Shares at an issue price of Cdn. $7.36 per share in payment of the interest that would be due on the 9 1/2% Convertible Debentures of the Corporation from the conversion date (following shareholder approval of the Ordinary Resolution), to and including April 13, 1997, if the holders of such debentures convert their debentures into Common Shares prior to April 13, 1997; and 4. To transact such other business as may properly be brought before the Meeting or any adjournment thereof. The specific details of the matters proposed to be put before the Meeting are set forth in the Information Circular - Proxy Statement accompanying and forming part of this Notice. SHAREHOLDERS OF DENBURY WHO ARE UNABLE TO ATTEND THE MEETING IN PERSON ARE REQUESTED TO DATE AND SIGN THE ENCLOSED INSTRUMENT OF PROXY AND TO MAIL IT TO, OR DEPOSIT IT WITH, THE SECRETARY OF DENBURY, C/O THE R-M TRUST COMPANY, CORPORATE TRUST DEPARTMENT, 600 DOME TOWER, 333 - 7 AVENUE S.W., CALGARY, ALBERTA, T2P 2Z1. IN ORDER TO BE VALID AND ACTED UPON AT THE MEETING, FORMS OF PROXY MUST BE RETURNED TO THE AFORESAID ADDRESS NOT LESS THAN 48 HOURS (EXCLUDING SATURDAYS, SUNDAYS AND HOLIDAYS) BEFORE THE TIME SET FOR THE HOLDING OF THE MEETING OR ANY ADJOURNMENT THEREOF. SHAREHOLDERS ARE CAUTIONED THAT THE USE OF THE MAILS TO TRANSMIT PROXIES IS AT EACH SHAREHOLDER'S RISK. The Board of Directors of Denbury has fixed the record date for the Meeting at the close of business on August 30, 1996 (the "Record Date"). Only shareholders of Denbury of record as at that date are entitled to receive notice of the Meeting. Shareholders of record will be entitled to vote those shares included in the list of shareholders entitled to vote at the Meeting prepared as at the Record Date, unless any such shareholder transfers his shares after the Record Date and the transferee of those shares establishes that he owns the shares and demands, not later than the close of business on October 1, 1996, that the transferee's name be included in the list of shareholders entitled to vote at the Meeting, in which case such transferee shall be entitled to vote such shares at the Meeting. DATED at Calgary, Alberta, this 30th day of August, 1996. BY ORDER OF THE BOARD OF DIRECTORS /s/ PHIL RYKHOEK Phil Rykhoek Chief Financial Officer and Secretary 3 DENBURY RESOURCES INC. INFORMATION CIRCULAR - PROXY STATEMENT SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON WEDNESDAY, OCTOBER 9, 1996 INTRODUCTION AND GENERAL PROXY MATTERS THIS INFORMATION CIRCULAR-PROXY STATEMENT ("INFORMATION CIRCULAR") IS FURNISHED IN CONNECTION WITH THE SOLICITATION OF PROXIES BY THE MANAGEMENT OF DENBURY RESOURCES INC. ("Denbury" or the "Corporation") for use at the Special Meeting of the Shareholders of Denbury (the "Meeting") to be held on the 9th day of October, 1996 at the time and place and for the purposes set out in the accompanying Notice of Special Meeting, and any adjournments thereof. The approximate date on which this Information Circular - Proxy Statement and the enclosed Instrument of Proxy will first be sent to shareholders is September 4, 1996. The monetary disclosures contained herein are reported in U.S. dollars unless otherwise noted. RECORD DATE The Board of Directors of Denbury has fixed the record date for the Meeting at the close of business on Friday, August 30, 1996 (the "Record Date"). Only shareholders of Denbury of record as at the Record Date are entitled to receive notice of the Meeting unless such person transfers their shares after the Record Date and the transferee of those shares establishes that they own the shares and demands, not later than the close of business on October 1, 1996, that the transferee's name be included in the list of shareholders entitled to vote. APPOINTMENT AND REVOCATION OF PROXIES An Instrument of Proxy accompanies the Notice of Special Meeting and this Information Circular. In order to be valid and acted upon at the Meeting, Instruments of Proxy must be received by the Secretary of Denbury c/o The R-M Trust Company, Corporate Trust Department, 600 Dome Tower, 333 - 7th Avenue S.W., Calgary, Alberta T2P 2Z1, not less than 48 hours (excluding Saturdays, Sundays and holidays) before the time set for the holding of the Meeting or any adjournment thereof. The instrument appointing a proxy shall be in writing and shall be executed by the shareholder or his attorney authorized in writing or, if the shareholder is a corporation, under its corporate seal or by an officer or attorney thereof duly authorized. THE PERSONS NAMED IN THE ENCLOSED FORM OF PROXY ARE DIRECTORS AND/OR OFFICERS OF DENBURY. EACH SHAREHOLDER HAS THE RIGHT TO APPOINT A PROXYHOLDER OTHER THAN THE PERSONS DESIGNATED IN THE FORM OF PROXY, WHO NEED NOT BE A SHAREHOLDER, TO ATTEND AND TO ACT FOR THEM AND ON THEIR BEHALF AT THE MEETING. TO EXERCISE SUCH RIGHT, THE NAME OF THE NOMINEES OF MANAGEMENT SHOULD BE CROSSED OUT AND THE NAME OF THE SHAREHOLDER'S APPOINTEE SHOULD BE LEGIBLY PRINTED IN THE BLANK SPACE PROVIDED. A shareholder who has submitted a proxy may revoke it any time prior to the exercise thereof. If a person who has given a proxy attends personally at the Meeting at which such proxy is to be voted, such person may revoke the proxy and vote in person. In addition to revocation in any other manner permitted by law, a proxy may be revoked by instrument in writing executed by the shareholder or his attorney authorized in writing or, if the shareholder is a corporation, under its corporate seal by an officer or attorney thereof duly authorized and deposited either at the registered office of Denbury at any time up to and including the last business day preceding the day of the Meeting or any adjournment thereof at which the proxy is to be used, or with the Chairman of the Meeting on the day of the Meeting or any adjournment thereof and, upon either of such deposits, the proxy is revoked. 2 4 PERSONS MAKING THE SOLICITATION THIS SOLICITATION IS MADE ON BEHALF OF THE MANAGEMENT OF DENBURY. The costs incurred in the preparation and mailing of the Instrument of Proxy, Notice of Special Meeting and this Information Circular will be borne by Denbury. In addition to solicitation by mail, proxies may be solicited by personal interviews, telephone or other means of communication by directors, officers and employees of Denbury, who will not be specifically remunerated therefor. While no arrangements have been made to date by Denbury, it may contract for the distribution and solicitation of proxies for the Meeting, in which event the costs incurred with respect to such solicitation will be borne by Denbury. EXERCISE OF DISCRETION BY PROXY The shares represented by proxy in favor of the two Special Resolutions and the Ordinary Resolution shall be voted on any ballot at the Meeting and, where the shareholder specifies a choice with respect to any matter to be acted upon, the shares shall be voted on any ballot in accordance with the specification so made. IN THE ABSENCE OF SUCH SPECIFICATION, THE COMMON SHARES OF DENBURY ("COMMON SHARES") WILL BE VOTED IN FAVOR OF THE MATTERS TO BE ACTED UPON. THE PERSONS APPOINTED UNDER THE INSTRUMENT OF PROXY FURNISHED BY DENBURY ARE CONFERRED WITH DISCRETIONARY AUTHORITY WITH RESPECT TO AMENDMENTS OR VARIATIONS OF THOSE MATTERS SPECIFIED IN THE INSTRUMENT OF PROXY AND NOTICE OF SPECIAL MEETING. AT THE TIME OF PRINTING THIS INFORMATION CIRCULAR, MANAGEMENT OF DENBURY KNOWS OF NO SUCH AMENDMENT, VARIATION OR OTHER MATTER. OUTSTANDING VOTING SHARES As at August 30, 1996, 23,841,930 Common Shares were issued and outstanding, each share carrying the right to one (1) vote on a ballot at the Meeting. Broker non-votes and abstentions, if any, will not be included in vote totals and, as such, will have no effect on any proposal. A quorum for the transaction of business at the Meeting is not less than two (2) persons present holding or representing not less than 5% of the Common Shares entitled to be voted at the Meeting. Each of the Special Resolutions submitted to a vote at the Meeting require the affirmative vote of two-thirds of the Common Shares present in person or represented by proxy at the Meeting, for approval. The Ordinary Resolution and any other matters that come before the Meeting require the affirmative vote of a majority of the Common Shares present in person or represented by proxy at the Meeting, for approval. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth information as of July 31, 1996, concerning the beneficial ownership of Common Shares held by (i) any shareholders known to the Corporation to own beneficially more than 5% of the issued and outstanding Common Shares, and (ii) all executive officers and directors individually and as a group. Except as otherwise indicated and except for those shares that are listed as being beneficially owned by more than one shareholder, each shareholder identified in the table has sole voting and investment power with respect to their shares.
NUMBER OF COMMON SHARES NAME AND ADDRESS OF BENEFICIALLY PERCENT OF BENEFICIAL OWNER OWNED CLASS - --------------------------------- ---------------- -------------- Ronald Greene Suite 700, 407 - 2nd Street Calgary, Alberta T2P 2Y3 1,719,536 (1) 7.1% (1) David Bonderman 201 Main Street, Suite 2420 Ft. Worth, TX 76102 13,956,511 (2) 47.6% (2)
3 5
NUMBER OF COMMON SHARES NAME AND ADDRESS OF BENEFICIALLY PERCENT OF BENEFICIAL OWNER OWNED CLASS - --------------------------------- ---------------- -------------- Martin Fortier(9) 2550, 140 - 4 Avenue SW Calgary, Alberta T2P 3N3 115,000 (3) 0.5% (3) William S. Price, III 600 California Street, Suite 1850 San Francisco, CA 94108 13,956,511 (2) 47.6% (2) David Stanton - 600 California Street, Suite 1850 - (4) (4) San Francisco, CA 94108 Wieland Wettstein 2550, 140 - 4 Avenue SW Calgary, Alberta T2P 3N3 539,828 (5) 2.3% (5) Gareth Roberts 17304 Preston Rd., Suite 200 Dallas, TX 75252 1,028,479 (6) 4.3% (6) Phil Rykhoek 17304 Preston Rd., Suite 200 Dallas, TX 75252 27,636 (3) 0.1% (3) Mark Worthey 17304 Preston Rd., Suite 200 Dallas, TX 75252 152,739 (3) 0.6% (3) Matthew Deso 17304 Preston Rd., Suite 200 Dallas, TX 75252 133,139 (3) 0.6% (3) All of the executive officers and directors as a group (10 persons) 17,672,868 (7) 58.4% (7) TPG Advisors, Inc. 201 Main Street, Suite 2420 Ft. Worth, TX 76102 13,956,511 (2) 47.6% (2) Mackenzie Financial Corporation 150 Bloor Street West, Suite M111 Toronto, Ontario M5S 3B5 1,343,400 (8) 5.7%(8)
(1) After giving effect to the pro forma conversion of Cdn. $2,000,000 of the 9 1/2% Convertible Debentures into 493,820 Common Shares. Includes 60,300 Common Shares held by Mr. Greene's wife in her retirement plan and 1,041,666 Common Shares held by Tortuga Investment Corp., which is solely owned by Mr. Greene. Ownership does not include any shares which may be issued in lieu of interest on the 9 1/2% Convertible Debentures if the shareholders approve the Ordinary Resolution attached as Appendix 3 to this Information Circular. 4 6 (2) After giving effect to (i) the pro forma conversion of the 1,500,000 Convertible First Preferred Shares, Series A of the Corporation (the "Preferred Shares") into 4,373,178 Common Shares using the current conversion rate which is in effect until September 30, 1996, and (ii) the pro forma exercise of the outstanding 1,250,000 Common Share Purchase Warrants of the Corporation. Ownership does not include the additional 1,259,567 Common Shares which would be acquired if the Special Resolution attached hereto as Appendix 2 regarding the Preferred Shares is approved by the shareholders and the Corporation elects to require an early conversion. None of Mr. Bonderman, Mr. Price or TPG Advisors, Inc. is the owner of record of any securities of the Corporation. However, Mr. Bonderman and Mr. Price are directors, executive officers and shareholders of TPG Advisors, Inc., which is the general partner of TPG GenPar, L.P., which in turn is the general partner of both TPG Partners, L.P., and TPG Parallel, L.P. (collectively, TPG), which are the direct beneficial owners of these securities. (3) After giving effect to the pro forma exercise, as applicable, of the 60,000, 26,875, 146,500 and 125,000 Common Shares which Mr. Fortier, Mr. Rykhoek, Mr. Worthey and Mr. Deso, respectively, have the right to acquire pursuant to stock options which are currently vested or which vest within sixty days of the date hereof. (4) Although Mr. Stanton is not considered to be a "beneficial owner" as that term is defined by the United States Securities and Exchange Commission, Mr. Stanton is a managing director of TPG Partners, L.P. (5) After giving effect to the pro forma exercise of 65,850 Common Shares which Mr. Wettstein has the right to acquire pursuant to vested stock options. Also includes 420,978 Common Shares held by S.P. Hunt Holdings Ltd., which is solely owned by a trust of which Mr. Wettstein is a trustee, and 39,200 Common Shares owned by his wife. (6) After giving effect to the pro forma exercise of the 55,500 Common Shares which Mr. Roberts has the right to acquire pursuant to vested stock options. Also includes 276,660 Common Shares held by Ashley Petroleum, Inc., which is solely owned by Mr. Roberts, and 2,853 Common Shares owned by his wife. (7) After giving effect to (i) the pro forma conversion of Cdn. $2,000,000 of the 9 1/2% Convertible Debentures into 493,820 Common Shares, (ii) the pro forma conversion of 1,500,000 Preferred Shares into 4,373,178 Common Shares using the current conversion rate which is in effect until September 30, 1996, (iii) the pro forma exercise of 1,250,000 Common Share Purchase Warrants of the Corporation, and (iv) the pro forma exercise of the 479,725 Common Shares which the officers and directors as a group have the right to acquire pursuant to stock options which are currently vested or which vest within sixty days of the date hereof. Ownership does not include the additional 1,259,567 Common Shares which would be acquired if the Special Resolution attached hereto as Appendix 2 regarding the Preferred Shares is approved by the shareholders and the Corporation elects to require an early conversion. Ownership does include the shares held by TPG, although Mr. Price and Mr. Bonderman, who are directors of the Corporation, are not the owners of record of these securities. Mr. Price and Mr. Bonderman are directors, executive officers and shareholders of TPG Advisors, Inc., which is the general partner of TPG GenPar, L.P., which in turn is the general partner of both TPG Partners, L.P. and TPG Parallel, L.P., which are the direct beneficial owners of these same securities. (8) Based upon the latest Schedule 13G filed by Mackenzie Financial Corporation, ownership includes Common Shares held in several accounts managed by Mackenzie Financial Corporation, none of which individually owns more than 5% of the outstanding Common Shares. (9) Mr. Fortier resigned from his position as a director of the Company effective August 30, 1996. 5 7 BUSINESS TO BE CONDUCTED AT THE MEETING GENERAL PURPOSE OF THE BUSINESS TO BE CONDUCTED AT THE MEETING The Corporation became a Canadian listed company in 1984, but since 1992 when the Corporation acquired its U.S. subsidiary, the Corporation has operated exclusively in the United States. Management is of the view that this situation has limited the Corporation's analytical and investment community following and its ability to finance and meet its growing capital needs. During 1995, the Corporation launched a number of initiatives designed to align its shareholder base with its U.S. asset base, with the intention of providing better access to the U.S. markets for the Corporation's future capital requirements. The above referenced initiatives were also designed to strengthen the Corporation and position it for growth in the U.S. oil and gas industry. These initiatives included (i) a new listing on NASDAQ with the intention of facilitating the raising of capital in the U.S. public equity markets at some point in the future, (ii) a name change to Denbury Resources Inc., to parallel the name of its U.S. operating subsidiary, Denbury Management, Inc., (iii) the completion of a private placement of $40 million with TPG, (iv) the reorganization of the Corporation's Board of Directors and the appointment of Mr. R.G. Greene as Chairman and Messrs. B. Price and D. Stanton as new directors, and (v) in 1996, the expansion of the Board of Directors and the nomination and election of Mr. D. Bonderman as a director. Since 1992, the Corporation has experienced rapid expansion through a combination of producing property acquisitions and development of existing and acquired properties, as evidenced by the growth from $8.2 million of total assets at December 31, 1992 to $77.6 million of total assets at December 31, 1995. During the three year period ended December 31, 1995, capital expenditures of the Corporation have exceeded cash flow from operations by more than 400%, with total capital expenditures in excess of $75 million during such period. The Corporation has budgeted capital expenditures of approximately $80 million for 1996 of which approximately $61 million had been spent as of June 30, 1996. In order to fund these expenditures and maintain the Corporation's fast rate of growth, the Corporation has historically raised capital through the issuance of additional equity on a periodic basis from either public offerings in Canada or through private placements in Canada and the U.S., supplemented by debt during interim periods. Due to the recent acquisition of the Amerada Hess properties for approximately $37 million and other acquisition and development expenditures, the Corporation's bank debt has increased from $100 thousand at December 31, 1995 to $42 million as of August 30, 1996. The Board of Directors believes that it is in the Corporation's best interest to raise additional equity and reduce its debt levels in order to better position the Corporation for future acquisition and development opportunities. Consequently, the Corporation is planning to raise approximately $50 million from a public equity offering during the fourth quarter of 1996. As part of the Corporation's strategy, such an equity offering will likely be conducted primarily in the U.S. with the principal objectives of (i) improving the Corporation's trading volume and liquidity on NASDAQ, (ii) broadening its U.S. shareholder base, and (iii) providing a more efficient market for its Common Shares. In order to position the Corporation for such an U.S. offering, the Board of Directors and its financial advisors believe that it is in the best interests of the Corporation to (i) increase the market price per Common Share to levels significantly above U.S. $5.00, the level below which certain stocks are subject to the Penny Stock Rules ("Low-Priced Securities"), (ii) simplify the capital structure of the Corporation, and (iii) reduce the overhang that exists as a result of existing convertible securities. The Board of Directors believe that these goals are best achieved by the following resolutions which propose to (i) consolidate the number of Common Shares on a one-for-two basis, (ii) modify the terms of the Preferred Shares such that the Preferred Shares may be converted to Common Shares at the election of the Corporation prior to January 1, 1999, and (iii) issue Common Shares to the holders of the 9 1/2% Convertible Debentures in order to induce such holders to convert their debentures to Common Shares prior to their mandatory redemption date. 6 8 1. CONSOLIDATION OF SHARE CAPITAL At the Meeting, shareholders of the Corporation will be asked to consider and, if thought fit, pass a Special Resolution amending the Articles of Continuance of the Corporation to consolidate the number of issued and outstanding Common Shares of the Corporation on the basis of one (1) Common Share for each two (2) Common Shares outstanding (the "Consolidation"). The text of the Special Resolution is attached to this Information Circular as Appendix 1. As of August 30, 1996, the Corporation had 23,841,930 Common Shares issued and outstanding and approximately 1,200 holders of record. The proposed one-for-two Consolidation would reduce by one-half the number of Common Shares of the Corporation outstanding to approximately 11,920,965 Common Shares. The number of holders of record is not expected to materially change as a result of Consolidation. If the Consolidation is approved by the shareholders and implemented, the Corporation will adjust accordingly the conversion or exercise price and the number of Common Shares issuable upon conversion of the Preferred Shares, the 9 1/2% Convertible Debentures, and upon exercise of outstanding warrants and options. The effective date of the Consolidation will be the date of issuance of the Certificate of Amendment by the Director appointed under the Canada Business Corporations Act and such date is herein referred to as the "Effective Date." The Effective Date is expected to occur within a few days following approval of the Consolidation by the shareholders of the Corporation. On the Effective Date, the Common Shares of the Corporation will be consolidated on a one-for-two basis. As soon as practicable after the Effective Date, a letter of transmittal containing instructions with respect to the surrender of the Corporation's share certificates will be furnished to the Corporation's shareholders for use in exchanging their share certificates. Upon the return of a properly completed letter of transmittal together with the share certificates for the Common Shares, certificates for an appropriate number of Common Shares following their consolidation will be issued. As provided in the Special Resolution attached as Appendix 1, fractional shares will not be issued in connection with the Consolidation and the Corporation will make a cash payment in lieu thereof equal to the fair market value of such fractional shares, based upon the average closing price of the Common Shares on the NASDAQ for the 10 trading days preceding the Consolidation. In calculating fractional share interests, all Common Shares registered in the name of each holder of Common Shares or nominee of such holder shall be aggregated. Management and its financial advisors believe that the current price of the Corporation's Common Shares (recently at or below U.S. $6.50 per share) impairs an efficient U.S. market in the Corporation's stock. This is due to several factors which management believes impact lower priced stocks including (1) a reluctance or restriction among certain institutions to invest in Low-Priced Securities, (2) internal restrictions imposed by many securities firms on the solicitation of orders of Low-Priced Securities by stockbrokers, (3) a reluctance among analysts to write research reports on Low-Priced Securities due to the preceding factors and (4) high transaction costs relative to share price due to the prevailing rule that commissions charged on the purchase and sale of stock, as a percentage of share price, are higher on lower priced stocks. Management and its financial advisors believe that the consolidated number of Common Shares and the resulting higher market price will be more appropriate for the Corporation's market capitalization and should enable the Corporation to have greater flexibility with respect to future financings. Management and its financial advisors believe that the Consolidation will have the effect of increasing the market price per share of the Common Shares and that such increase may, over time, alleviate some or all of the factors noted above and lead to a more efficient market in the Common Shares. There can, however, be no assurance as to the amount of increase in the market price per share, nor any assurance that the factors discussed above will be alleviated. Holders should also be aware that the Consolidation may result in a decrease in the trading volume of the Common Shares due to the decrease in the number of outstanding shares. 7 9 DIRECTORS' RECOMMENDATION THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS ADOPT THE SPECIAL RESOLUTION SET OUT IN APPENDIX 1 TO THE INFORMATION CIRCULAR APPROVING THE CONSOLIDATION OF THE COMMON SHARES OF THE CORPORATION ON THE BASIS OF ONE (1) COMMON SHARE FOR EACH TWO (2) ISSUED AND OUTSTANDING COMMON SHARES. The resolution must be approved by a two-thirds majority of votes cast by shareholders who vote in person or by proxy at the Meeting. In addition, the Consolidation is conditional upon the approval of The Toronto Stock Exchange. 2. THE PREFERRED AMENDMENT At a Special Meeting of the Corporation held on December 21, 1995, the shareholders approved the issuance of 1,500,000 Preferred Shares for $15 million as part of a $40 million private placement of securities with TPG. In addition to the Preferred Shares, the private placement included 8.333 million Common Shares issued at $2.925 per share and 1.25 million warrants at a price of $.50 per warrant entitling the holder to purchase 1.25 million Common Shares at $3.70 per share. As a result of this private placement, TPG, on a fully diluted basis, owns 43% of the issued and outstanding Common Shares. Under the terms of the private placement, TPG also received the right to nominate three out of seven directors of the Corporation. In addition, the Corporation's Articles of Continuance were amended to provide for certain matters to be approved by a majority of not less than two-thirds of the members of the Board of Directors, one of which would be any amendment to the Articles of Continuance, which applies to both Special Resolutions being considered at the Meeting. The Preferred Shares were initially convertible at $3.70 per Common Share (equivalent to approximately 2.70 Common Shares for each Preferred Share) with such conversion rate declining 2.5% per quarter. If TPG elected to convert the Preferred Shares during the third quarter of 1996, these Preferred Shares would convert into 4,373,178 Common Shares. The Preferred Shares also have a mandatory redemption at a 63.86% premium at December 21, 2000, and currently provide that the Corporation can cause a mandatory conversion of all, but not less than all, the Preferred Shares after January 1, 1999, if the price of the Common Shares exceeds $5.00 per share for a period of 40 consecutive trading days. The Preferred Shares do not have any cash or other stated dividend requirements although the Corporation is making an accrual each quarter to account for the mandatory redemption premium quarterly accretion. This accrual correspondingly reduces the net income available to the common shareholders and is considered in the Corporation's earnings per share calculation. At the Meeting, shareholders of the Corporation will be asked to consider and, if thought fit, pass a Special Resolution amending the Articles of Continuance of the Corporation modifying the conversion provisions attaching to the outstanding Preferred Shares (the "Preferred Amendment"). The Preferred Amendment would give the Corporation the right to require the holder of the Preferred Shares, at the election of the Corporation, to convert the Preferred Shares to Common Shares (the "Conversion"), provided that the conversion rate which will be in effect as of January 1, 1999 shall be used in any Conversion prior to such date. The Preferred Amendment would also remove the existing requirement that the Common Shares trade above U.S. $5.00 per share for a 40 day period prior to the Corporation being entitled to force a conversion. Currently the Corporation can not require a Conversion prior to January 1, 1999 and then, only if the market price of the Common Shares has been a minimum of U.S. $5.00 per share for 40 trading days. TPG, as the sole holder of the Preferred Shares, has already approved the Preferred Amendment and plans to vote its Common Shares, representing 35% of the Common Shares outstanding and entitled to vote at the Special Meeting, in favor of the Special Resolution approving the Preferred Amendment. The text of the Special Resolution is attached to this Information Circular as Appendix 2. Even if the Preferred Amendment is approved by the shareholders of the Corporation, no conversion of the Preferred Shares may occur without the approval of two-thirds of the members of the Board of Directors, of which three of the seven members represent TPG. The Board of Directors have unanimously, with Messrs. Bonderman, Price and Stanton having disclosed their interest in the transaction, approved the conversion of the Preferred Shares, subject to, and simultaneously with, the completion of the public equity offering which is currently being planned. 8 10 Based upon the conversion rate in effect as of January 1, 1999, this Conversion would result in the issuance of 3.75 Common Shares of the Corporation for each issued outstanding Preferred Share for an aggregate issuance of 5,632,745 Common Shares, and the outstanding Preferred Shares would be canceled. This Conversion would increase the number of outstanding Common Shares from 23,841,930 to 29,474,675, on a pro forma basis as of August 30, 1996. Following the Conversion, TPG would increase its Common Share ownership from 35% to 47% on a primary basis and from 43% to 47% on a fully diluted basis assuming the conversion or exercise of all convertible securities, warrants and options. The Common Shares which will be issued to the holder of the Preferred Shares will bear a restrictive legend prohibiting sale without registration under the United States Securities Act of 1933, as amended (the "Act") or an exemption therefrom, and such shares will not be freely tradeable. However, such shares are subject to a registration rights agreement effective through December, 2000. Advantages and Disadvantages of the Preferred Amendment Management and its financial advisors believe that the adoption of the Preferred Amendment and an associated Conversion would have the following advantages and disadvantages with respect to the current holders of the Common Shares, and TPG, the current holder of the Preferred Shares: (a) With respect to the holders of the Common Shares, adoption of the Preferred Amendment and a Conversion would be beneficial in that it would: (i) enhance the Corporation's ability to raise additional capital, which would enable the Corporation to maintain and/or increase its level of acquisition and development activities, (ii) eliminate the charge to earnings for the imputed preferred dividend, which would increase both net income and net income per Common Share based on the results of operations for the six months ended June 30, 1996, (iii) increase the net book value per Common Share from $2.46 to $2.53 as of June 30, 1996, (iv) remove the liquidation preference of the Preferred Shares, and (v) allow the Corporation to effectively eliminate the retraction requirement to repurchase the Preferred Shares in December, 2000 by giving the Corporation the right to require a Conversion at any time prior to that date. The adoption of the Preferred Amendment and a Conversion could be disadvantageous in that the issuance of 5,632,745 Common Shares on a Conversion using the conversion rate which previously would not have been applicable until January 1, 1999, is 1,259,567 (29%) more Common Shares than TPG would receive using the third quarter of 1996 conversion rate. The issuance of these incremental Common Shares would dilute the cash flow from operations on a per share basis. Under normal circumstances, however, the 5,632,745 Common Shares issuable as of January 1, 1999 would be the minimum number of Common Shares that would ever be issued upon a Conversion under the existing Preferred Share provisions as TPG would not be likely to convert its Preferred Shares prior to the mandatory retraction date (December, 2000) unless required to do so by the Corporation. (b) With respect to TPG, the holder of the Preferred Shares, adoption of the Preferred Amendment and a Conversion would be beneficial in that it would (i) enhance the Corporation's ability to raise additional capital, which would enable the Corporation to maintain and/or increase its level of acquisition and development activities, and (ii) accelerate its imputed earnings on the Preferred Shares by potentially giving TPG the January 1, 1999 conversion rate prior to that date. The adoption of the Preferred Amendment and a Conversion would be disadvantageous in that TPG would (i) effectively lose its right to a mandatory cash retraction in December, 2000 due to the Corporation's ability to force a Conversion at any time, (ii) lose its right to additional imputed dividends after January 1, 1999, and (iii) lose its liquidation priority. 9 11 DIRECTORS' RECOMMENDATION THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS ADOPT THE SPECIAL RESOLUTION SET OUT IN APPENDIX 2 TO THE INFORMATION CIRCULAR MODIFYING THE CONVERSION PROVISIONS OF THE PREFERRED SHARES. The resolution must be approved by a two-thirds majority of votes cast by shareholders who vote in person or by proxy at the Meeting. In addition, the Preferred Amendment is conditional upon the approval of The Toronto Stock Exchange. 3. EARLY RETIREMENT OF 9 1/2% CONVERTIBLE DEBENTURES On January 17, 1995, the Corporation issued Cdn. $2,500,000 principal amount of unsecured convertible debentures ("Convertible Debentures"). The Convertible Debentures are due on January 17, 2000, have an interest rate of 9 1/2% per annum, and are convertible at any time by the holders into Common Shares at a conversion price of Cdn. $4.05 per Common Share. The Company has the right to require an early redemption after April 13, 1997, if after that date, the price of the Common Shares exceeds Cdn. $5.10 per share for a period of 30 consecutive trading days on The Toronto Stock Exchange. At the Meeting, shareholders of the Corporation will be asked to consider and, if thought fit, approve an Ordinary Resolution authorizing the Corporation to issue Common Shares at an issue price of Cdn. $7.36 per share for the interest that would be due on the 9 1/2% Convertible Debentures from the conversion date (following shareholder approval of the Ordinary Resolution) to and including April 13, 1997, if the holders of the debentures agree to convert their debentures early (the "Retirement"). The text of the Ordinary Resolution is attached to this Information Circular as Appendix 3. The Board of Directors, with Mr. Ronald Greene an 80% holder of the 9 1/2% Convertible Debentures abstaining from the vote, approved a resolution on July 29, 1996 approving the Retirement. Mr. Greene is also a significant shareholder of the Company and is entitled to vote his 1,225,716 Common Shares at the Meeting (see also "Security Ownership of Certain Beneficial Owners and Management"). Mr. Greene and the other holder of the debentures have accepted the proposed terms and have agreed to the early Retirement, subject to shareholder approval. If approved, the Corporation would issue a total of 15,915 Common Shares for the interim interest, assuming a Retirement date of October 15, 1996, plus an additional 617,284 Common Shares to be issued in redemption of the Cdn. $2,500,000 principal amount of 9 1/2% Convertible Debentures in accordance with the existing terms of such debentures. The number of Common Shares proposed to be issued for interest is based on the Common Share average closing price on The Toronto Stock Exchange during the 30 days prior to the board meeting on July 29, 1996, at which time the board approved the Retirement. For many of the same reasons previously discussed, Management is of the opinion that the Retirement is in the best interests of the Corporation and its shareholders in order to further reduce the overhang that would otherwise exist at the time of the public equity offering as a result of the outstanding convertible securities. DIRECTORS' RECOMMENDATION THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS ADOPT THE ORDINARY RESOLUTION SET OUT IN APPENDIX 3 TO THE INFORMATION CIRCULAR APPROVING THE ISSUANCE OF COMMON SHARES FOR INTEREST AND THE EARLY RETIREMENT OF THE 9 1/2% CONVERTIBLE DEBENTURES. The resolution must be approved by a simple majority of votes cast by shareholders who vote in person or by proxy at the Meeting. In addition, the Retirement is conditional upon the approval of The Toronto Stock Exchange. 10 12 DIRECTORS AND OFFICERS INSURANCE Effective in September, 1995, the Corporation purchased directors and officers insurance covering each of its officers and directors at an annual cost of $119,000. The insurance provides up to $5 million of coverage for the officers and directors with deductibles up to $350,000, depending on the type of claim, and $5 million coverage for the Corporation with a 25% co-insurance provision. The Corporation has paid for 100% of the cost of this insurance. INTEREST OF CERTAIN PERSONS AND COMPANIES IN MATTERS TO BE ACTED UPON Certain members of the Board of Directors, Mr. Bonderman, Mr. Stanton and Mr. Price, are affiliated with TPG which is the sole holder of the Preferred Shares. For information regarding the stock ownership, approval rights, and board seats of TPG and the advantages and disadvantages of the early conversion to both TPG and the common shareholders, see "Business to be Conducted at the Meeting - The Preferred Amendment." Mr. Ronald Greene, Chairman of the Board, owns 80% of the outstanding 9 1/2% Convertible Debentures. See "Business to be Conducted at the Meeting - Early Retirement of the 9 1/2% Convertible Debentures." Management of the Corporation is not aware of any other material interest of any director, nominee for director, senior officer or anyone who has held office as such since the beginning of the Corporation's last financial year or of any associate or affiliate of any of the foregoing persons in any matter to be acted on at the Meeting except as disclosed herein. INTEREST OF MANAGEMENT AND OTHER IN MATERIAL TRANSACTIONS No director or senior officer of the Corporation, insider of the Corporation. or any associate or affiliate of any of the following persons, has or had any material interest in any transaction since the beginning of the Corporation's last completed financial year or in any proposed transaction that has materially affected, or will materially affect the Corporation or any of its affiliates, except as disclosed elsewhere in this Information Circular. OTHER MATTERS Management knows of no amendment, variation or other matters to come before the Meeting other than the matters referred to in the Notice of Special Meeting. However, if any other matter properly comes before the Meeting, the accompanying proxy will be voted on such matter in accordance with the best judgment of the person or persons voting the proxy. All information contained in this Information Circular relating to the occupations, affiliations and securities holdings of directors and officers of the Corporation and their relationship and transactions with the Corporation is based upon information received from the individual directors and officers. All information relating to any beneficial owner of more than 5% of the Corporation's Common Shares is based upon information contained in reports filed by such owner with the SEC. APPROVAL AND CERTIFICATION The contents and sending of this Information Circular has been approved by the directors of Denbury. The foregoing contains no untrue statement of a material fact and does not omit to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made. DATED at Calgary, Alberta as of the 30th day of August, 1996. 11 13 DENBURY RESOURCES INC. /s/ Gareth Roberts /s/ Phil Rykhoek - --------------------------------- --------------------------------- Gareth Roberts Phil Rykhoek President and Corporation Secretary and Chief Executive Officer Chief Financial Officer 12 14 APPENDIX 1 ATTACHED TO AND FORMING PART OF THE INFORMATION CIRCULAR - PROXY STATEMENT OF DENBURY RESOURCES INC. DATED AUGUST 30, 1996 CONSOLIDATION OF SHARES BE IT RESOLVED, as a special resolution of the shareholders of the Corporation, that: 1. pursuant to section 173(1)(h) of the Canada Business Corporation Act, the issued and outstanding Common Shares of the Corporation be changed by the consolidation of the issued and outstanding Common Shares on the basis of one (1) Common Share for each two (2) issued and outstanding Common Shares; 2. no fractional shares shall be issued upon the aforesaid consolidation and, in the case of the consolidation resulting in a shareholder otherwise becoming entitled to a fractional Common Share, the Corporation will make a cash payment in lieu thereof equal to the fair market value of such fractional shares, as determined by the Board of Directors based upon the average closing price of the Common Shares on the NASDAQ for the 10 trading days preceding the consolidation and, in calculating fractional share interests, all Common Shares registered in the name of a holder of Common Shares or nominee of such holder, shall be aggregated. 3. any one director or officer of the Corporation is hereby authorized to file Articles of Amendment to effect the aforesaid consolidation with the Director appointed under the Canada Business Corporations Act and to do and perform all such further acts and things and to execute all such other deeds, documents, and other instruments as may be necessary or desirable in order to carry out the provisions of this resolution; 4. the directors of the Corporation, in their sole discretion and notwithstanding that this resolution has been duly passed by the shareholders of the Corporation, may revoke this resolution before it is acted upon without further approval of the shareholders; and 5. subject to the approval of this resolution by the shareholders of the Corporation, the aforesaid consolidation is conditional upon the approval of The Toronto Stock Exchange. 13 15 APPENDIX 2 ATTACHED TO AND FORMING PART OF THE INFORMATION CIRCULAR - PROXY STATEMENT OF DENBURY RESOURCES INC. DATED AUGUST 30, 1996 AMENDMENT TO PREFERRED SHARE CONVERSION TERMS BE IT RESOLVED, as a special resolution of the shareholders of the Corporation, that: 1. pursuant to section 173(1)(g) of the Canada Business Corporations Act, the rights, privileges, restrictions and conditions (the "Preferred Share Terms") attaching to the outstanding Convertible First Preferred Shares, Series A ("Preferred Shares") of the Corporation be and the same are hereby modified and amended to enable the Corporation to have the right to require the holders of the Preferred Shares to exercise their conversion rights set forth in Section 3.1 of the Preferred Share Terms in respect of all, but not less than all, the Preferred Shares held by such holders, at any time, provided that if such mandatory conversion right is exercised by the Corporation at any time prior to January 1, 1999, the Preferred Shares shall be convertible into Common Shares at the conversion rate in effect as at January 1, 1999, and specifically, the provisions of Section 3.3 of the Preferred Share Terms be and the same are hereby amended by the deletion of the first sentence thereof and the substitution therefor of the following: "Notwithstanding the foregoing, the Corporation shall have the right to require the holders of the First Preferred Shares, Series A to exercise their conversion rights set forth in Section 3.1 in respect of all, but not less than all, the First Preferred Shares, Series A held by such holders provided that if such right is exercised by the Corporation at any time prior to January 1, 1999, the First Preferred Shares, Series A shall be convertible into fully paid and non-assessable Common Shares on the Current Conversion Basis in effect as at January 1, 1999." 2. the issuance of the Common Shares of the Corporation on conversion of the Preferred Shares in accordance with the rights, privileges, restrictions and conditions attached to such Preferred Shares, as modified hereby, be and the same is hereby authorized and approved; 3. any one director or officer of the Corporation is hereby authorized to file Articles of Amendment to effect the aforesaid amendment to the Preferred Share Terms with the Director appointed under the Canada Business Corporations Act and to do and perform all such further acts and things and to execute all such other deeds, documents and other instruments as may be necessary or desirable in order to carry out the provisions of this resolution; and 4. the directors of the Corporation, in their sole discretion and notwithstanding that this resolution has been duly passed by the shareholders of the Corporation, may revoke this resolution before it is acted upon without further approval of the shareholders. 14 16 APPENDIX 3 ATTACHED TO AND FORMING PART OF THE INFORMATION CIRCULAR - PROXY STATEMENT OF DENBURY RESOURCES INC. DATED AUGUST 30, 1996 ISSUANCE OF COMMON SHARES ON EARLY RETIREMENT OF 9.5% CONVERTIBLE DEBENTURES BE IT RESOLVED, as an ordinary resolution of the shareholders of the Corporation, that: 1. in the event the holders of the outstanding 9.5% Convertible Debentures ("Debentures") convert such Debentures into Common Shares at any time prior to April 13, 1997, the Corporation be and it is hereby authorized to issue to the holders of such debentures, Common Shares at an issue price of Cdn. $7.36 per share in payment of the interest that would be due on the Debentures from the date of conversion of such Debentures at any time following the approval of this ordinary resolution to and including April 13, 1997 (the first date on which the Corporation may redeem the Debentures), with the number of Common Shares issuable calculated by dividing the aggregate amount of such interest by $7.36; 2. any one director or officer of the Corporation is hereby authorized to do and perform all such further acts and things and to execute all such other deeds, documents and other instruments as may be necessary or desirable in order to carry out the provisions of this resolution; 3. the directors of the Corporation, in their sole discretion and notwithstanding that this resolution has been duly passed by the shareholders of the Corporation, may revoke this resolution before it is acted upon without further approval of the shareholders; and 4. the aforesaid issuance is conditional upon the approval of The Toronto Stock Exchange. 15 17 DENBURY RESOURCES INC. Suite 2550, 140 - 4th Avenue S.W. Calgary, Alberta T2P 3N3 INSTRUMENT OF PROXY ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS The undersigned shareholder of Denbury Resources Inc. ("Denbury" or the "Corporation") hereby appoints Ronald G. Greene, Chairman of the Board of Denbury, of the City of Calgary, in the Province of Alberta, or failing him, Phil Rykhoek, Chief Financial Officer and Secretary of Denbury, of the City of Dallas, in the State of Texas, or instead of either of the foregoing, ______________________________________________________, as proxyholder of the undersigned, with full power of substitution, to attend, act and vote for and on behalf of the undersigned at the Special Meeting of shareholders of Denbury (the "Meeting"), to be held on Wednesday, October 9, 1996, at 10:00 a.m. (Calgary time) and at any adjournment or adjournments thereof, and on every ballot that may take place in consequence thereof, to the same extent and with the same powers as if the undersigned were personally present at the Meeting with authority to vote at the said proxyholder's discretion, except as otherwise specified below. Without limiting the general powers hereby conferred, the undersigned hereby directs the said proxyholder to vote the shares represented by this Instrument of Proxy in the following manner: 1. FOR [ ] OR AGAINST [ ] the Special Resolution amending the Articles of Continuance of the Corporation to consolidate the number of issued and outstanding Common Shares of the Corporation on the basis of one (1) Common Share for each two (2) Common Shares outstanding; 2. FOR [ ] OR AGAINST [ ] the Special Resolution amending the Articles of Continuance of the Corporation by modifying the conversion provisions attaching to the Convertible First Preferred Shares, Series A (the "Preferred Shares") which will give the Corporation the right to require the holders of the Preferred Shares to convert their Preferred Shares into Common Shares at any time, provided that the conversion rate as of January 1, 1999 will be used for any required conversion prior to that date; 3. FOR [ ] OR AGAINST [ ] the Ordinary Resolution to provide for the Corporation to issue Common Shares at Cdn. $7.36 per share in payment of the interest that would be due on the 9 1/2% Convertible Debentures from the Conversion date (following the Meeting) to and including April 13, 1997, if the holders of the debentures convert their debentures into Common Shares prior to April 13, 1997; and 4. At the discretion of the said proxyholder, upon any amendment or variation of the above matters or any other matter that may be properly brought before the Meeting or any adjournment thereof in such manner as such proxy, in such proxy's sole judgement, may determine. THIS INSTRUMENT OF PROXY IS SOLICITED ON BEHALF OF THE MANAGEMENT OF DENBURY. THE SHARES REPRESENTED BY THIS INSTRUMENT OF PROXY WILL, WHERE THE SHAREHOLDER HAS SPECIFIED A CHOICE WITH RESPECT TO THE ABOVE MATTERS, BE VOTED AS DIRECTED ABOVE, OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED IN FAVOR OF THE ABOVE MATTERS. EACH SHAREHOLDER HAS THE RIGHT TO APPOINT A PROXYHOLDER, OTHER THAN THE PERSONS DESIGNATED ABOVE, WHO NEED NOT BE A SHAREHOLDER, TO ATTEND AND TO ACT FOR HIM AND ON HIS BEHALF AT THE MEETING. TO EXERCISE SUCH RIGHT, THE NAMES OF THE NOMINEES OF MANAGEMENT SHOULD BE CROSSED OUT AND THE NAME OF THE SHAREHOLDER'S APPOINTEE SHOULD BE LEGIBLY PRINTED IN THE BLANK SPACE PROVIDED. The undersigned hereby revokes any proxies heretofore given with respect to the undersigned's Denbury common shares with respect to the said Meeting. Dated this _____day of__________________, 1996. --------------------------------------------------- Shareholder's Signature --------------------------------------------------- Name of Shareholder (Please Print) (See over for notes) 18 NOTES: 1. If the shareholder is a corporation, its corporate seal must be affixed or it must be signed by an officer or attorney thereof duly authorized. 2. This Instrument of Proxy must be dated and the signature hereon should be exactly the same as the name in which the shares are registered. If the instrument of proxy is undated, it shall be deemed to bear the date on which it is mailed by the person making the solicitation. 3. Persons signing as executors, administrators, trustees, etc. should so indicate and give their full title as such. 4. This instrument of proxy will not be valid and not be acted upon or voted unless it is completed as outlined herein and delivered to the attention of Denbury's Secretary, c/o The R-M Trust Company, Corporate Trust Department, 600 Dome Tower, 333 - 7th Avenue S.W., Calgary, Alberta, T2P 2Z1, Attention: Daneal McGeein or faxed to the attention of Daneal McGeein at (403)264-2100, not less than 48 hours (excluding Saturdays, Sundays and holidays) before the time set for the holding of the Meeting or any adjournment thereof. A proxy is valid only at the meeting in respect of which it is given or any adjournment(s) of that meeting. -----END PRIVACY-ENHANCED MESSAGE-----