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Corporate Presentation – Denbury Resources Inc.

Denbury Resources Inc. · Sep 20, 2012 · 44 slides

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Slides

  1. Corporate Presentation – Denbury Resources Inc. – slide 1
    All Oil Companies Are Not Alike. Corporate Presentation NYSE: DNR May/June 2012 September
  2. Corporate Presentation – Denbury Resources Inc. – slide 2
    A Different Kind of Oil Company Leading CO2 Enhanced Oil Recovery (EOR) Company in the U.S. with a Unique Profile 8.9 billion enterprise value Scale 72,337 BOE/d production (2Q12)(1) Highest operating margins and capital efficiency…
  3. Corporate Presentation – Denbury Resources Inc. – slide 3
    Denbury at a Glance Pro forma for sale (1) Total 3P Reserves (12/31/11) 1.3 BBOE 1.1 BBOE % Oil Production (2Q12) 93% 93%(2) Total Net Debt (6/30/12) 2.9 billion 1.8 billion Total Daily Production BOE/d (2Q12) 72,337 60,300(2)…
  4. Corporate Presentation – Denbury Resources Inc. – slide 4
    What is CO2 EOR & How Much Does It Recover Secure CO2 Supply Transport via Pipeline Inject into Oilfield EOR Delivers Almost as Much Production as Primary or Secondary Recovery(1) Tertiary Recovery Remaining (CO2 EOR) Oil…
  5. Corporate Presentation – Denbury Resources Inc. – slide 5
    Our Two EOR Target Areas: Up to 10 Billion Barrels Recoverable with EOR Denbury Rockies Region 258 Million 3P EOR Barrels Estimated 1.3 to 3.2 MT ND Billion Barrels Recoverable Greencore ID Pipeline SD Lost Cabin Hartzog Draw…
  6. Corporate Presentation – Denbury Resources Inc. – slide 6
    Gulf Coast Region: Control of CO2 Sources & Pipeline Infrastructure Provides a Strategic Advantage Summary(1) Tinsley 5 Delhi 3 46 MMBbls Proved 202 36 MMBbls Tinsley Jackson Probable (2) 392 Dome Produced-to-Date 64 Delhi…
  7. Corporate Presentation – Denbury Resources Inc. – slide 7
    Rocky Mountain Region: Control of CO2 Sources & Pipeline Infrastructure Provides a Strategic Advantage CO2 Sources Cedar Creek Anticline 197 MMBbls(1) Existing Anthropogenic (Man-made) Proposed Coal to Gas or Liquids MONTANA DGC…
  8. Corporate Presentation – 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)(1) Operating interest in Hartzog…
  9. Corporate Presentation – Denbury Resources Inc. – slide 9
    More than a Billion Barrels of Oil Potential 1,200 46 93 ..... 100% .....1,113 557 1,000 ..... 100% Natural90% 100% Oil Oil Gas Oil 800 MMBOE 600 516 462 417 400 77% 81% Oil ..... 80% Oil Oil 200 0 12/31/11…
  10. Corporate Presentation – Denbury Resources Inc. – slide 10
    Proven Track Record Net Daily Oil Production Tertiary Operations (through 6/30/12) Bbls/d Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 Phase 7 Phase 8 40,000 36,000 32,000 28,000 24,000 30% CAGR 20,000 (1999-2011) 16,000…
  11. Corporate Presentation – Denbury Resources Inc. – slide 11
    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…
  12. Corporate Presentation – Denbury Resources Inc. – slide 12
    Highest Capital Efficiency in Peer Group(1) Does not include impact from recently announced Bakken sale and asset exchange 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…
  13. Corporate Presentation – Denbury Resources Inc. – slide 13
    Compelling Economics(1) EOR Bakken 575,000 BOE / Well Gulf Coast 9.6 Million / Well(2) Model Averages 20% Royalty NYMEX oil price 90.00 90.00 Finding & development cost: Field 9.00 21.00 Infrastructure 4.50 --- Total capital…
  14. Corporate Presentation – Denbury Resources Inc. – slide 14
    Complementary Production Profiles 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 52…
  15. Corporate Presentation – Denbury Resources Inc. – slide 15
    Secure CO2 Supply to Support Gulf Coast Growth 2,500 Possible 2,000 2 Tcf Probable 1,500 2.5 Tcf MMCFPD CO2 Recycle 1,000 3.3 Tcf (Proved Only) Jackson Dome Anthropogenic Supply 500 Proved 6.7 Tcf 165 MMCFPD (as…
  16. Corporate Presentation – Denbury Resources Inc. – slide 16
    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…
  17. Corporate Presentation – Denbury Resources Inc. – slide 17
    Strong Financial Position 1.1 billion availability under Debt to Capitalization credit facility on 6/30/12 (6/30/12) 36% Debt Unused Credit 100% Facility 1.6 billion borrowing base + (6/30/12) Cash 28 million Net of cash,…
  18. Corporate Presentation – Denbury Resources Inc. – slide 18
    2012 Summary Guidance(1) 2012 Capital Budget 1.5 Billion(2) 2012 Production Estimate All Other 1Q12 2Q12 2012E 2012E Operating area 100MM Tertiary Floods (BOE/d) (BOE/d) (BOE/d) growth 430MM 33,000- Tertiary Oil Fields 33,257…
  19. Corporate Presentation – Denbury Resources Inc. – slide 19
    Hedges Protect Against Downside in Near-Term(1) Crude Oil (2) 2012 2013 2014 1st 2nd 3rd 4th 2nd Half 1st Half Quarter Quarter Quarter Quarter Volumes hedged (Bbls/d) (3) 54,250 55,000 56,000 56,000 54,000 46,000 Principal price…
  20. Corporate Presentation – Denbury Resources Inc. – slide 20
    CO2 EOR Compelling Economics WTI Breakeven Price for a 15% After-Tax Rate of Return ( per Bbl)(1) 100 90 86 83 79 80 75 76 70 64 65 59 61 58 60 50 50 51 50 40 30 20 10 0 (1) Source: ISI Group report dated June…
  21. Corporate Presentation – Denbury Resources Inc. – slide 21
    Sustainable EOR Growth through 2020 (1) 140,000 1,400 Expected Peak EOR Cap-Ex Estimated EOR Production (Bbls/d) Estimated EOR Capital Budget (MM) 120,000 120,000 1,200 100,000 100,000 1,000 EOR 2012E Cap-Ex 80,000 800…
  22. Corporate Presentation – Denbury Resources Inc. – slide 22
    CO2 EOR Generates Significant Free Cash Flow Cumulative Gulf Coast Tertiary Free Cash Flows(1) +/- 2 Billion Cumulative Free Cash Flow (MM) First Year of Free Cash Flow 2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E…
  23. Corporate Presentation – Denbury Resources Inc. – slide 23
    Estimated EOR Peak Production Rates (as of 12/31/11) Estimated Peak Production Rate Produced Proved 2P&3P First (Net MBOE/d) Expected Operating Area to date(1) Remaining(1) Remaining(2) Production Peak…
  24. Corporate Presentation – Denbury Resources Inc. – slide 24
    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…
  25. Corporate Presentation – Denbury Resources Inc. – slide 25
    Corporate Information Corporate Headquarters Denbury Resources Inc. 5320 Legacy Drive Plano, Texas 75024 Ph: (972) 673-2000 denbury.com Contact Information Phil Rykhoek Chief Executive Officer (972) 673-2000 Mark Allen…
  26. Corporate Presentation – Denbury Resources Inc. – slide 26
    Appendix
  27. Corporate Presentation – Denbury Resources Inc. – slide 27
    CO2 EOR is a Proven Process History of CO2 EOR Significant CO2 EOR Operators by Region 1910s-1970s CO2 Field Discoveries (Bravo Dome, Gulf Coast Region McElmo Dome, Jackson Dome, Sheep Mountain) Denbury Resources 1950s-1960s…
  28. Corporate Presentation – Denbury Resources Inc. – slide 28
    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…
  29. Corporate Presentation – Denbury Resources Inc. – slide 29
    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 30
  30. Corporate Presentation – Denbury Resources Inc. – slide 30
    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 31
  31. Corporate Presentation – Denbury Resources Inc. – slide 31
    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…
  32. Corporate Presentation – Denbury Resources Inc. – slide 32
    Production by Area (BOE/d) (1) Operating area 2Q11 3Q11 4Q11 2011 1Q12(2) 2Q12(2) 2012E(2),(3) Tertiary Oil Fields 30,771 31,091 31,144 30,959 33,257 35,208 33,000 - 36,000 Mississippi 5,642 5,636 4,746 5,486 4,573 4,095 4,450…
  33. Corporate Presentation – Denbury Resources Inc. – slide 33
    Tertiary Production by Field Average Daily Production (BOE/d) Field 2Q11 3Q11 4Q11 1Q12 2Q12 Phase 1 Brookhaven 3,213 3,030 3,121 3,014 2,779 Little Creek Area 1,636 1,533 1,445 1,216 1,131 Mallalieu Area 2,646 2,620 2,587 2,585…
  34. Corporate Presentation – Denbury Resources Inc. – slide 34
    Analysis of Tertiary Operating Costs Correlation 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 w/Oil /Bbl /Bbl /Bbl /Bbl /Bbl /Bbl /Bbl /Bbl /Bbl CO2 Costs Direct 4.73 4.52 5.38 5.39 5.43 4.87 4.53 5.76 5.14 Power & Fuel Partially…
  35. Corporate Presentation – Denbury Resources Inc. – slide 35
    Potential Carbon Gasification Projects Denbury purchase contracts (contingent on plants being completed) Initial production expected +/- 4 years after construction begins (not before 2015) Gulf Coast Sources (0.29 to 0.44/Mcf 60 Oil)…
  36. Corporate Presentation – Denbury Resources Inc. – slide 36
    Rockies Anthropogenic CO2 Rocky Mountain Purchase Contracts MMCFD COP Lost Cabin (Central Wyoming) (Q1 2013) Currently Under +/- 50 Construction XOM LaBarge (SW Wyoming) (1) (Q3 2012) +/- 50 DKRW Medicine Bow (SE Wyoming) (2) (+/-…
  37. Corporate Presentation – Denbury Resources Inc. – slide 37
    Webster Field Southeastern Texas Acquisition expected to close late 4Q 2012 Denbury will be the operator with a 99.4% working interest Discovered in 1937 by Humble oil with a peak production in the 1970s at over 67,000 barrels per…
  38. Corporate Presentation – Denbury Resources Inc. – slide 38
    Hartzog Draw Field Northeastern Wyoming Acquisition expected to close late 4Q 2012 Denbury will be the operator with an: o 83% working interest in the oil producing Shannon Sandstone zone, and a o 67% working interest in the natural…
  39. Corporate Presentation – Denbury Resources Inc. – slide 39
    Thompson Field, Fort Bend County, Texas Acquired in June 2012 for 366 million cash(1) Denbury is the operator with a nearly 100% working interest and 84.7% net revenue interest Original oil in place of 650 MMBbls, with zones initially…
  40. Corporate Presentation – Denbury Resources Inc. – slide 40
    Bakken Area(1) Bakken Area 200,000 net acres Nesson 300 MMBOE of total potential Anticline 107 MMBOE Proved as of 6/30/2012 2011 Production 8,788 BOE/d 2Q12 Production 15,208 BOE/d 99% increase vs. 2Q11 2012E Production…
  41. Corporate Presentation – Denbury Resources Inc. – slide 41
    Bakken Area Production Zones Approx. Net Productive Zone Estimated Acreage Area MB TFS Wells/DSU (1,000s) Charlson 6 15 Murphy Creek 6 18 Bear Creek 6 10 Cherry 6 66 Lone Butte 6 9 Camp/Indian Hills 6 16 NE Foothills 3…
  42. Corporate Presentation – Denbury Resources Inc. – slide 42
    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…
  43. Corporate Presentation – Denbury Resources Inc. – slide 43
    Capital Structure (MM) 6/30/12 Cash 28 Bank credit facility (Borrowing base of 1.6 billion, matures May 2016) 520 9.750% Sr. Sub Notes due 2016 (Callable March 2013 at 104.875% of par) 411 9.500% Sr. Sub Notes due 2016 (Callable…
  44. Corporate Presentation – Denbury Resources Inc. – slide 44
    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…

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