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BofA Merrill Lynchs Global Energy Conference 2012 – Denbury Resources Inc.

Denbury Resources Inc. · Nov 13, 2012 · 38 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. BofA Merrill Lynchs Global Energy Conference 2012 – Denbury Resources Inc. – slide 1
    All Oil Companies Are Not Alike. Corporate Presentation NYSE: DNR November 2012
  2. BofA Merrill Lynchs Global Energy Conference 2012 – Denbury Resources Inc. – slide 2
    A Different Kind of Oil Company We Bring Old Oil Fields Back to Life Unique We acquire mature oil fields and recover oil using carbon dioxide (CO2) Strategy Requires large sources of CO2 near oil fields - We have both Value Highest…
  3. BofA Merrill Lynchs Global Energy Conference 2012 – Denbury Resources Inc. – slide 3
    Denbury at a Glance Pro forma(1) Total 3P Reserves (12/31/11) 1.3 BBOE 1.1 BBOE % Oil Production (3Q12) 93% 93%(2) Total Net Debt (9/30/12) 3.1 billion 2.0 billion Total Daily Production BOE/d (3Q12) 72,776 59,725(2) Proved PV-10…
  4. BofA Merrill Lynchs Global Energy Conference 2012 – Denbury Resources Inc. – slide 4
    What is CO2 EOR & How Much Oil Does It Recover Secure CO2 Supply Transport via Pipeline Inject into Oilfield CO2 EOR Delivers Almost as Much Production as Primary and Secondary Recovery(1) Tertiary Recovery Remaining (CO2…
  5. BofA Merrill Lynchs Global Energy Conference 2012 – Denbury Resources Inc. – slide 5
    Our Two CO2 EOR Target Areas: Up to 10 Billion Barrels Recoverable with CO2 EOR Denbury Rockies Region 261 Million 3P CO2 EOR Barrels Estimated 1.3 to 3.2 MT ND Billion Barrels Recoverable Greencore ID Pipeline SD Lost Cabin…
  6. BofA Merrill Lynchs Global Energy Conference 2012 – Denbury Resources Inc. – slide 6
    Gulf Coast Region: Control of CO2 Sources & Pipeline Infrastructure Provides a Strategic Advantage Summary(1) Tinsley Delhi 46 MMBbls Proved 202 36 MMBbls Tinsley Jackson Potential (2) 392 Dome Produced-to-Date 64 Delhi Free…
  7. BofA Merrill Lynchs Global Energy Conference 2012 – Denbury Resources Inc. – slide 7
    Rocky Mountain Region: Control of CO2 Sources & Pipeline Infrastructure Provides a Strategic Advantage CO2 Sources Cedar Creek Anticline 200 MMBbls(1) Existing or Proposed CO2 Source Owned or Contracted MONTANA DGC Beulah Other CO2…
  8. BofA Merrill Lynchs Global Energy Conference 2012 – Denbury Resources Inc. – slide 8
    Bakken Sale and Asset Exchange Transaction Terms Sell/Exchange Bakken assets for: 1.6 billion in cash proceeds (before closing adjustments and taxes) Operating interest in Webster Field (SE Texas) Operating interest in Hartzog Draw…
  9. BofA Merrill Lynchs Global Energy Conference 2012 – Denbury Resources Inc. – slide 9
    Encore Acquisition was Highly Profitable Purchase price: (Billions) Equity 2.8 Debt assumed 1.0 (1) Total value 3.8 Value: (Estimated values at 96.19/Bbl 12/31/11 SEC Pricing) Proved reserves at 12/31/11 1.7 (2) Value…
  10. BofA Merrill Lynchs Global Energy Conference 2012 – Denbury Resources Inc. – slide 10
    Uses of Increased Liquidity Acquisitions Future potential CO2 EOR floods Potential like-kind acquisitions, which could decrease tax leakage Stock Repurchase Program Recent bank amendment permits an additional 930 million of stock…
  11. BofA Merrill Lynchs Global Energy Conference 2012 – Denbury Resources Inc. – slide 11
    More than a Billion Barrels of Oil Potential 1,200 46 93 ..... .....1,116 560 90% 1,000 ..... 100% 100% Natural Oil 100% Oil Oil Gas 800 MMBOE 600 516 462 417 400 77% 81% Oil ..... 84% Oil Oil 200 0 12/31/11…
  12. BofA Merrill Lynchs Global Energy Conference 2012 – Denbury Resources Inc. – slide 12
    Highest Operating Margin in the Peer Group (1) /BOE 80 (4%) 1Q12 70 (7%) 2Q12 (15%) (15%) 60 (14%) 50 (11%) 40 (21%) (11%) (18%) (18%) 30 (17%) 20 (33%) 10 0 DNR DNR Peer A Peer B Peer C Peer D Peer E Peer F…
  13. BofA Merrill Lynchs Global Energy Conference 2012 – Denbury Resources Inc. – slide 13
    Highest Capital Efficiency in Peer Group(1) Adjusted 3-Year Finding & Development Cost (/BOE)(2) 30.00 26.90 25.53 24.54 25.00 24.24 23.58 22.69 21.74 20.83 20.45 20.00 16.75 16.38 15.00 12.80 10.00 5.00 0.00 Peer A Peer…
  14. BofA Merrill Lynchs Global Energy Conference 2012 – Denbury Resources Inc. – slide 14
    CO2 EOR Superior Economics(1) EOR Bakken 575,000 BOE / Well Gulf Coast 9.6 Million / Well Model Averages 20% Royalty NYMEX oil price 90.00 90.00 Finding & development cost: Field 9.00 21.00 Infrastructure 4.50 --- Total…
  15. BofA Merrill Lynchs Global Energy Conference 2012 – Denbury Resources Inc. – slide 15
    CO2 EOR Superior Production Profile Projected Production Profile with Same Capital Spending Capital Spending per Year Based on EOR Spending Pattern 12,000 Year MM Gulf Coast EOR Field 1 83 2 83 Bakken 3 60 10,000 4 60 5 68 6…
  16. BofA Merrill Lynchs Global Energy Conference 2012 – Denbury Resources Inc. – slide 16
    CO2 EOR Compelling Economics WTI Breakeven Price for a 20% Before-Tax Rate of Return ( per Bbl)(1) 100 90 87 80 70 72 67 69 70 60 61 62 60 50 50 52 50 40 30 20 10 0 (1) Source: KeyBanc as of 10/17/12, Defined…
  17. BofA Merrill Lynchs Global Energy Conference 2012 – Denbury Resources Inc. – slide 17
    CO2 EOR Proven Value Creation Investments Inception-to-12/31/2011 () Billions Gulf Coast EOR Fields 2.7 Gulf Coast CO2 Sources & Pipelines 1.9 Less Undeveloped: EOR Fields 0.6 CO2 Pipelines 1.0 (1.6) Net Investment-to-Date…
  18. BofA Merrill Lynchs Global Energy Conference 2012 – Denbury Resources Inc. – slide 18
    Gulf Coast CO2 Supply 1,800 Additional CO2 Potential Probable & Possible Reserves: 3 TCF 1,600 Improved Recovery of Proved Reserves: 0.8 TCF Recycle: 3 TCF ANTHROPOGENIC SUPPLY- Executed Agreements with Future Construction 1,400…
  19. BofA Merrill Lynchs Global Energy Conference 2012 – Denbury Resources Inc. – slide 19
    Secure CO2 Supply to Support Rocky Mountain Growth LaBarge Field Estimated Field Size: 750 Square Miles Estimated 100 TCF of CO2 Recoverable Riley Ridge Denbury Operated 100% WI in 9,700 acre Riley Ridge Federal Unit 33% WI in…
  20. BofA Merrill Lynchs Global Energy Conference 2012 – Denbury Resources Inc. – slide 20
    Strong Financial Position 975 million availability under Debt to Capitalization credit facility on 9/30/12 (9/30/12) 37% Debt Unused Credit 100% Facility 1.6 billion borrowing base + (9/30/12) Cash 24 million 20
  21. BofA Merrill Lynchs Global Energy Conference 2012 – Denbury Resources Inc. – slide 21
    2013 Summary Guidance(1) 2013 Capital Budget 1.0 Billion(2) 2013 Production Estimate 2012E(3) 2013E 2013E All Other Operating area 150 MM (BOE/d) (BOE/d) Growth Tertiary Floods 36,500- Tertiary Oil Fields 34,500 6-14% CO2…
  22. BofA Merrill Lynchs Global Energy Conference 2012 – Denbury Resources Inc. – slide 22
    Hedges Protect Against Downside in Near-Term(1) Crude Oil (2) 2012 2013 2014 4th 1st 2nd 3rd 4th 1st Half Quarter Quarter Quarter Quarter Quarter Volumes hedged (Bbls/d) (3) 54,250 55,000 56,000 56,000 54,000 46,000 Principal…
  23. BofA Merrill Lynchs Global Energy Conference 2012 – Denbury Resources Inc. – slide 23
    A Decade of CO2 EOR Production Growth(1) Anticipating a Low Teens Average Annual Percentage Growth Rate 140,000 1,400 Estimated CO2 EOR Capital Budget (MM) Estimated CO2 EOR Production (MBbls/d) 120,000 Expected Peak 1,200…
  24. BofA Merrill Lynchs Global Energy Conference 2012 – Denbury Resources Inc. – slide 24
    CO2 EOR Proven Free Cash Flow Generator Cumulative Gulf Coast Tertiary Free Cash Flows(1) +/- 1.7 Billion Cumulative Free Cash Flow (MM) First Year of Free Cash Flow 2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E…
  25. BofA Merrill Lynchs Global Energy Conference 2012 – Denbury Resources Inc. – slide 25
    Estimated CO2 EOR Peak Production Rates Estimated Peak Production Rate Produced Proved Potential First (Net MBOE/d) Expected Operating Area to date(1) Remaining(1) Remaining(2) Production Peak…
  26. BofA Merrill Lynchs Global Energy Conference 2012 – Denbury Resources Inc. – slide 26
    IN SUMMARY: A Different Kind of Oil Company Leading CO2 Enhanced Oil Recovery (EOR) Company in the U.S. with a Unique Profile Significant strategic advantage in CO2 EOR Well defined and focused long-term growth strategy Highest…
  27. BofA Merrill Lynchs Global Energy Conference 2012 – Denbury Resources Inc. – slide 27
    Corporate Information Corporate Headquarters Denbury Resources Inc. 5320 Legacy Drive Plano, Texas 75024 Ph: (972) 673-2000 Fax: (972) 673-2150 denbury.com Contact Information Phil Rykhoek President & CEO (972) 673-2000 Mark…
  28. BofA Merrill Lynchs Global Energy Conference 2012 – Denbury Resources Inc. – slide 28
    Appendix
  29. BofA Merrill Lynchs Global Energy Conference 2012 – Denbury Resources Inc. – slide 29
    Why is CO2 EOR our core focus High Confidence of Oil Target Nearly 70 million barrels produced by Denbury to date Net upward adjustments to reserves-to-date CO2 Flooding Recovers Oil (CO2 s Crude Oil) First CO2 EOR production was in…
  30. BofA Merrill Lynchs Global Energy Conference 2012 – Denbury Resources Inc. – slide 30
    CO2 EOR is a Proven Process Significant CO2 EOR Operators by Region Significant CO2 Suppliers by Region Gulf Coast Region Gulf Coast Region Denbury Resources Jackson Dome, MS (Denbury Resources) Permian Basin Region Permian Basin…
  31. BofA Merrill Lynchs Global Energy Conference 2012 – Denbury Resources Inc. – slide 31
    CO2 Operations: Oil Recovery Process CO2 PIPELINE - from Jackson Dome INJECTION WELL - Injects CO2 in dense phase PRODUCTION WELLS Produce oil, water and CO2 Oil Formation (CO2 is recycled) CO2 moves through formation…
  32. BofA Merrill Lynchs Global Energy Conference 2012 – Denbury Resources Inc. – slide 32
    Capital Spending Flexibility in Low Oil Price Environment Unique characteristics of CO2 EOR provides significant capital flexibility We attempt to balance development expenditures with free cash flow In contrast to shale plays, a…
  33. BofA Merrill Lynchs Global Energy Conference 2012 – Denbury Resources Inc. – slide 33
    Production by Area (BOE/d)(1) 2012E Operating area 1Q12 2Q12 3Q12 Using Mid-point 2013E of Guidance Tertiary Oil Fields 33,257 35,208 34,786 34,500 36,500 39,500 Texas Non-Tertiary 3,674 4,573 5,173 4,650 6,300 Other Gulf Coast…
  34. BofA Merrill Lynchs Global Energy Conference 2012 – Denbury Resources Inc. – slide 34
    Tertiary Production by Field Average Daily Production (BOE/d) Field 2007 2008 2009 2010 2011 1Q12 2Q12 3Q12 Brookhaven 2,048 2,826 3,416 3,429 3,255 3,014 2,779 2,460 Little Creek Area 2,014 1,683 1,502 1,805 1,561 1,216 1,131 1,021…
  35. BofA Merrill Lynchs Global Energy Conference 2012 – Denbury Resources Inc. – slide 35
    Analysis of Tertiary Operating Costs Correlation 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 w/Oil /BOE /BOE /BOE /BOE /BOE /BOE /BOE /BOE /BOE CO2 Costs Direct 4.52 5.38 5.39 5.43 4.87 4.53 5.76 5.14 4.96 Power & Fuel Partially…
  36. BofA Merrill Lynchs Global Energy Conference 2012 – Denbury Resources Inc. – slide 36
    Pro Forma Bakken Transaction YTD 9/30/2012 Pro Forma(1) Production (BOE/d) 72,217 56,444 % Oil Production 93% 95% NYMEX Oil Price Differential (/Bbl) 0.80 5.70 LOE/BOE 19.90 24.00 Operating Margin/BOE(2) 64.40 66.40 DD&A/BOE(3)…
  37. BofA Merrill Lynchs Global Energy Conference 2012 – Denbury Resources Inc. – slide 37
    Crude Oil & Natural Gas Hedge Detail 2012 Crude Oil Hedges (BOPD) (1) 2013 Crude Oil Hedges (BOPD) (1) Average (2) Ceiling Average (2) Ceiling Instrument Volume Price Floor Ceiling Low High Instrument Volume Price Floor Ceiling Low…
  38. BofA Merrill Lynchs Global Energy Conference 2012 – Denbury Resources Inc. – slide 38
    Capital Structure (MM) 9/30/12 Cash 24 Bank credit facility (Borrowing base of 1.6 billion, matures May 2016) 625 9.750% Sr. Sub Notes due 2016 (Callable March 2013 at 104.875% of par) 412 9.500% Sr. Sub Notes due 2016 (Callable May…

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