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Credit Suisse Energy Summit – Denbury Resources Inc.

Denbury Resources Inc. · Feb 6, 2013 · 48 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. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 1
    All Oil Companies Are Not Alike. Corporate Presentation NYSE: DNR February 2013
  2. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 2
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  3. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 3
    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…
  4. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 4
    Denbury at a Glance Pro forma(1) Total 3P Reserves (12/31/12) 1.1 BBOE 1.2 BBOE % Oil Production (4Q12E) 93% 94%(2) Total Net Debt (9/30/12)(3) 3.1 billion 3.1 billion Total Daily Production BOE/d (4Q12E) 70,116 73,450(2) Proved…
  5. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 5
    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…
  6. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 6
    Our Two CO2 EOR Target Areas: Up to 10 Billion Barrels Recoverable with CO2 EOR Denbury Rockies Region 331 Million 3P CO2 EOR Barrels(2) Estimated 1.3 to 3.2 MT ND Billion Barrels Recoverable(1) This image cannot currently be…
  7. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 7
    CO2 EOR in Gulf Coast Region: Control of CO2 Sources & Pipeline Infrastructure Provides a Strategic Advantage Summary(1) Tinsley Delhi 46 MMBbls Proved 201 36 MMBbls Tinsley Jackson Potential 386 Dome Produced-to-Date(2) 71…
  8. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 8
    CO2 EOR in Rocky Mountain Region: Control of CO2 Sources & Pipeline Infrastructure Provides a Strategic Advantage Summary(1) CO2 Sources Cedar Creek Anticline Area Proved --- Existing or Proposed CO2 Source Existing CCA Fields(1)…
  9. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 9
    Texas CO2 Pipeline Expansions Economies of Scale Hastings Oyster Bayou Webster Conroe Thompson 14 12 70 MMBbls Pipeline cost per tertiary Bbl 10 95 8 MMBbls 6 163 4 MMBbls 293 338 MMBbls 2 MMBbls -…
  10. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 10
    Strategic and Value-Driven M&A Transactions Divestitures Est. Est. Proved Est. Potential Est. Proved Impact on Production(1) Reserves Est. PDP Reserves(2) PV10(3) Current Assets (Quarter close date) (BOE/d) (MMBOE) % (MMBOE) (Billions)…
  11. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 11
    Encore Acquisition was Highly Profitable Purchase price: (Billions) Equity 2.8 Debt assumed 1.0 (1) Total value 3.8 Value: (Estimated values at 94.71/Bbl 12/31/12 SEC Pricing) Proved reserves at 12/31/12 1.5 (2) Value…
  12. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 12
    Acquisition of Cedar Creek Anticline Fields Transaction Terms Glendive North NORTH DAKOTA 1.05 billion cash, prior to working capital adjustments MONTANA Glendive Gas City Acquisition expected to close near the end of the…
  13. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 13
    Proved Reserve Changes Estimated Proved Estimated Reserves PV10 (MMBOE) (Billion) SEC Proved Reserves 12/31/11 462 10.6 New CO2 Floods (Oyster Bayou & Hastings) 57 Extensions & Discoveries and Improved Recovery 29 Acquisitions…
  14. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 14
    More than a Billion Barrels of Oil Potential 46 1,220 1,250 653 ..... 70 ..... 100% ..... 89% 100% 100% Oil 1,000 Natural Oil Oil Gas 750 MMBOE 462 451 500 77% 409 ..... 82% Oil 80% Oil 250 Oil 0 12/31/11…
  15. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 15
    Highest Operating Margin in the Peer Group (1) /BOE 70 60 For Quarter Ended September 30th, 2012 50 40 30 20 10 0 DNR Peer A Peer B Peer C Peer D Peer E Peer F Peer G Peer H Peer I Peer J (1) Data derived from…
  16. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 16
    Highest Capital Efficiency in Peer Group(1) Adjusted 3-Year Finding & Development Cost (/BOE)(2) 30.00 26.90 25.53 24.54 24.24 23.58 25.00 22.69 21.74 20.83 20.45 20.00 16.75 15.00 12.80 10.00 7.26 5.00 0.00 (3) Peer J…
  17. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 17
    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…
  18. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 18
    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…
  19. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 19
    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 October 2012,…
  20. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 20
    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…
  21. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 21
    Gulf Coast Industrial Partners Air Products PCS Nitrogen Mississippi Power (Under Construction) Port Arthur, Texas Geismar, Louisiana Kemper County, MS Hydrogen Plant Ammonia Products Gasifier Capture Date: 1Q 2013 Capture Date:…
  22. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 22
    Secure CO2 Supply to Support Rocky Mountain Growth LaBarge Area 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 28,000…
  23. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 23
    Strong Financial Position 975 million availability under Debt to Capitalization credit facility on 9/30/12(1) (9/30/12) 37% Debt Unused Credit 100% 61% Facility 1.6 billion borrowing base + (9/30/12) Cash(2) 24 million…
  24. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 24
    2013 Summary Guidance(1) 2013 Capital Budget 1.0 Billion(2) 2013 Production Estimate 2012E 2013E 2013E All Other Operating area 150 MM (BOE/d) (BOE/d) Growth Tertiary Floods 36,500- Tertiary Oil Fields 35,206 4-12% CO2 Sources…
  25. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 25
    Hedges Protect Against Downside in Near-Term(1) Crude Oil (2) 2013 2014 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 1st Half 2nd Half Volumes hedged (Bbls/d) 55,000 56,000 56,000 54,000 52,000 48,000 Principal price floors…
  26. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 26
    A Decade of CO2 EOR Production Growth(1) Anticipating Average Annual Percentage Growth Rate in the Low Teens 120,000 2,300 Estimated CO2 EOR Production Estimated CO2 EOR Capital 100,000 100,000 1,800 Expected Peak CO2 EOR…
  27. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 27
    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…
  28. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 28
    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…
  29. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 29
    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…
  30. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 30
    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…
  31. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 31
    Appendix
  32. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 32
    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…
  33. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 33
    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…
  34. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 34
    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…
  35. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 35
    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…
  36. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 36
    Denbury vs. Peer Group Trading Multiples 14 12 10 8 P/CFPS 6 4 2 - 0% 50% 100% 150% 200% 250% 300% 350% 400% 450% P/ Proved NAV Source: KeyBanc Net Asset Values (NAVs) based on YE11 proved reserves…
  37. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 37
    CO2 EOR Generalized Type Curve Plateau Production Rate Incline (Yrs) Plateau (Yrs) Decline (Yrs) Large Fields 6 6.5 30 Average Fields 4.5 5.5 25 Small Fields 4 5 20 38
  38. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 38
    Capital Spending Range for CO2 Floods 100 90 80 % of Total Capital 70 60 50 40 30 20 10 0 1 2 3 4 5 Year 39
  39. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 39
    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…
  40. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 40
    Production by Area (BOE/d)(1) Operating area 1Q12 2Q12 3Q12 4Q12E 2012E 2013E Tertiary Oil Fields 33,257 35,208 34,786 37,550 35,206 36,500 39,500 Texas Non-Tertiary 3,674 4,573 5,173 5,513 4,737 6,300 Other Gulf Coast…
  41. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 41
    Tertiary Production by Field Average Daily Production (BOE/d) Field 2008 2009 2010 2011 2012E 1Q12 2Q12 3Q12 4Q12E Brookhaven 2,826 3,416 3,429 3,255 2,692 3,014 2,779 2,460 2,520 Little Creek Area 1,683 1,502 1,805 1,561 1,091 1,216…
  42. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 42
    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…
  43. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 43
    Pro Forma Bakken Transaction YTD 9/30/2012 Pro Forma(1) Production (BOE/d) 72,217 56,367 % 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)…
  44. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 44
    NYMEX Differential Summary Crude Oil Differentials 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 Tertiary Oil Fields 0.66 0.90 4.33 9.69 14.84 19.44 9.80 13.60 10.61 Mississippi (7.59) (8.02) (4.50) 1.32 7.25 6.98 2.44 8.63 2.48…
  45. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 45
    Tracking Oil Prices We currently sell 40% of our oil production based on LLS index price, 20% based on various other indexes, most of which have also improved relative to WTI, but to a lesser degree 135 Light Louisiana Sweet…
  46. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 46
    Crude Oil Hedge Detail 2013 Crude Oil Hedges (BOPD)(1) 2014 Crude Oil Hedges (BOPD)(1) Average(2) Ceiling Average(2) Ceiling Instrument Volume Floor Ceiling Low High Instrument Volume Floor Ceiling Low High Q1 Collars 6,000 70.00…
  47. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 47
    Capital Structure Pro forma for debt offering (MM) 9/30/12 9/30/12 Cash and cash equivalents(1) 24 24 Bank credit facility(2) (Borrowing base of 1.6 billion, matures May 2016) 625 330 9.75% Sr. Sub Notes due 2016 (Callable March…
  48. Credit Suisse Energy Summit – Denbury Resources Inc. – slide 48
    Sources and Uses Sources of Funds (MM) 4.625% Senior Subordinated Notes 1,200 Total Sources 1,200 Uses of Funds (MM) Repay 9.75% Senior Subordinated Notes due 2016(1) 426 Repay 9.50% Senior Subordinated Notes dues 2016(2) 225…

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