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Transformational Combination of & Investor Meetings – Denbury Resources Inc.

Denbury Resources Inc. · Nov 13, 2018 · 68 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. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 1
    Transformational Combination of & Investor Meetings November 13-15, 2018 NYSE:DNR w w w. d e n b u r y. c o m
  2. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 2
    The Combination of Denbury & Penn Virginia Adds High Value Investment Diversity Rocky Mountain Adds new core area in the oil window of the prolific Eagle Ford Shale play Region Large development inventory 560 Gross Lower Eagle Ford…
  3. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 3
    Why We Like the Eagle Ford Expansive play with large oil window Light Louisiana Sweet (LLS) premium oil pricing Well developed midstream infrastructure Oil Condensate Denburys Gulf Dry Gas Coast Assets Significant upside…
  4. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 4
    Why We like Penn Virginia Large and contiguous acreage position in Eagle Ford Penn Virginia Fayette County oil window 98,600 gross (84,700 net) acres Other Operator EOR Pilots 90% Liquids / 77% oil production Gonzales County…
  5. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 5
    Transaction Overview Transaction Value: 1.7 Billion; 68% Stock and 32% Cash 833 million equity; 12.4 shares of Denbury for each share of Penn Virginia (est. 191.8 million shares) 400 million cash; 25.86 for each share of Penn…
  6. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 6
    Combination Maintains Industry-Leading Oil Weighting. 100% 97% 2Q18 % Liquids Production Oil Production 94% NGL Production 90% 90% 87% 80% 74% 70% 60% 50% 40% 30% 20% 10% 0% DNR(1) Pro CPG JAG PVAC WLL CRZO WPX HPR OXY…
  7. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 7
    .While Delivering Top Tier Operating Margins. 2Q18 Peer Operating Margins (/BOE) 50 45 40 35 30 25 20 15 10 5 - Pro PVAC CPE JAG CRZO OAS DNR HPR WPX WLL CLR EPE MUR CDEV CRC AMR XOG OXY LPI PDCE NFX SM SRCI SN Forma…
  8. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 8
    .and Creating a Leading Mid-Cap Oil Producer 10 9.1 Enterprise Value(1) ( Billion) 8 7.4 6 6.1 6.0 6.0 6.0 5.4 4 4.5 4.0 3.7 3.3 2 2.9 2.8 2.8 2.3 2.1 1.5 1.3 0 WPX CRC NFX OAS WLL Pro CDEV DNR PDCE AMR CRZO JAG CPE XOG…
  9. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 9
    EOR Opportunity in the Eagle Ford Up to 140 MMBO EOR Potential on PVAC Acreage Significantly de-risked through more than 25 projects covering 200 wells Gonzales County EOR focus with 12 projects Successful peer projects immediately…
  10. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 10
    Applying Leading EOR Capabilities to the Eagle Ford Gonzales County Pilot Primary and EOR Oil Production 14,000 The EOR Process 12,000 EOR Production EOR Forecast Primary Production Rich hydrocarbon gas or CO2 is injected into a…
  11. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 11
    Eagle Ford is Ideally Suited for EOR Penn Virginias Drivers of EOR Niobrara Bakken Permian Eagle Ford Completion Complexity & Contact Area for Miscible Gas 2,500 lb/ft fracs 1,200 lb/ft fracs 1,500 lb/ft fracs 2,000 lb/ft…
  12. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 12
    Historic Eagle Ford EOR Project Performance Eagle Ford EOR Projects Gonzales County Oil Window Normalized to EOR Start Date 11,000 10,000 Pre EOR EOR 8 Gonzales County Projects with Long term 6000 BOPD 9,000 Performance 2.5X…
  13. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 13
    Penn Virginia Acreage EOR Timeline Estimate Eagle Ford stands out amongst other oily unconventional plays as the best EOR candidate Good containment of injected fluid Miscible across wide range of the oil window 1,000 wells expected…
  14. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 14
    Pro Forma Combined Capital Structure Financing Commitment Letter from JP Morgan Chase 1.2 billion new senior secured bank credit facility 0.4 billion senior secured 2nd lien bridge loan Est. Pro Forma for In millions, as of 9/30/18,…
  15. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 15
    Preliminary Combined Pro Forma Estimates Average Daily Production (BOE/d) Estimates thru 2020 assuming 60 70 WTI oil price 92,000 100,000 104,000 112,000 82,600 83,600 10% annual production growth 85% 90% oil production mix…
  16. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 16
    Combined 2019 & 2020 Hedge Positions 2019 2020 Detail as of November 7, 2018 1H 2H 1H 2H WTI NYMEX - Volumes Hedged (Bbls/d) 3,500 Denbury Swap Price(1) 59.05 Fixed Price Swaps WTI NYMEX Volumes Hedged (Bbls/d) 6,433 6,398…
  17. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 17
    Uncommon Company, Extraordinary Potential Enhanced with Penn Virginia Combination Industry Leading Oil Weighting Extreme Oil Gearing Favorable Crude Quality & High Exposure to LLS Pricing Top Tier Operating Margin & Significant Free…
  18. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 18
    Corporate Presentation November 2018 NYSE:DNR w w w. d e n b u r y. c o m
  19. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 19
    Uncommon Company, Extraordinary Potential Industry Leading Oil Weighting Extreme Oil Gearing Top Tier Operating Margin Favorable Crude Quality & High Exposure to LLS Pricing Vertically Integrated CO2 Supply and Infrastructure…
  20. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 20
    Denbury What We Are A Unique Energy Business Rocky 60% of production via CO2 enhanced oil recovery (EOR) Mountain Vertically integrated CO2 supply and distribution Region Cost structure largely independent from industry 3Q18…
  21. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 21
    Industry Leading Oil Weighting 100% 2Q18 % Liquids Production Oil Production 97% 97% NGL Production 90% 80% Peer Average (% Liquids) 70% Peer Average (% Oil) 60% 50% 40% 30% 20% 10% 0% DNR(1) Peer A Peer B Peer C…
  22. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 22
    Top Tier Operating Margin 40 2Q18 Peer Operating Margins (/BOE) 35 Peer Average 30 25 20 15 10 5 - Peer A Peer B DNR Peer C Peer D Peer E Peer F Peer G Peer H Peer I Peer J Peer K Peer L Peer M Peer N Peer O Peer P…
  23. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 23
    Gulf Coast Region Reserves Summary(1) (MMBOE) Proved + Tertiary Potential Tertiary Reserves Proved 127 Potential 306 Non-Tertiary Reserves Proved 21 Total MMBOE(2) 454 Tertiary Potential by Field(3) Mature Area 25 30…
  24. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 24
    Rocky Mountain Region Reserves Summary(1) (MMBOE) Proved + Tertiary Potential Tertiary Reserves Proved 26 Potential 534 Non-Tertiary Reserves Proved 86 Total MMBOE(2) 646 Tertiary Potential by Field(3) Bell Creek 20 40…
  25. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 25
    2018 Watch List 1H18 2H18 Development Oyster Bayou Facility Expansion Bell Creek Phase 5 Response West Yellow Creek Response CCA EOR Investment Decision Grieve Field Startup Delhi Tuscaloosa Infill Exploitation Cedar…
  26. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 26
    2018E Capital Plan & Production Guidance 2018 Development Capital Budget (1) 2018 Production Guidance (BOE/d) In Millions 300 - 325 Million 45 60,100 - 60,600 60,298 20 155 Tertiary 241 MM (2) 300-325 MM 95 CapEx 2…
  27. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 27
    Sanctioning CO2 EOR Development at CCA Cedar Creek Anticline Overview EOR Formation Details Red River Initial Formations Targeted Interlake Stony Mountain 1930s (Discovery) Field Discovery Timeframe (Oil) 1950s (Development)…
  28. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 28
    EOR Potential 400 MMBBL at Cedar Creek Anticline Planned Development Summary Phase 1 Red River formation development at East Lookout Butte and Cedar Hills South 175,000 net acres Targets 30 MMBbls of recoverable oil; first tertiary…
  29. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 29
    CCA Decades of Sustainable Production and Free Cash Flow Est. Incremental EOR Production CCA Project Highlights Phase 1 and 2 estimated incremental tertiary production 7,500 - 12,500 net Bbls/d for Phase 1 of 7,500 12,500 Bbls/d…
  30. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 30
    Exploitation A New Dimension for Growth Size of circles = Cost to test Costs per test range from 0.5MM 8MM - Testing in 2018 Large Short-Cycle Opportunity Set 20 30 Numerous exploitation targets across 18 28 Denburys 600,000…
  31. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 31
    Mission Canyon Mission Canyon Exploitation Added 2nd rig in late 3Q Successful test at Cabin Creek with 24 hour rate 1000 BOPD Cedar Creek Anticline Potential to add up to 5 additional Cabin Creek locations Well 6 (Oct 18) Began…
  32. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 32
    Tinsley Perry Sand Well 2 Overview Recovery Factor Proven light tight oil accumulation with low historical North Fault Block vertical well recovery; below current producing horizon Well 1 (2Q18) Successful first well with…
  33. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 33
    Powder River Basin Stacked Pay In Hartzog Draw Unit Hartzog Draw Exploitation North Dakota 20,700 gross / 12,900 net acres in Campbell & Shannon: 449 BOED IP Johnson Counties, WY Montana Rate, 94% Oil Wyoming…
  34. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 34
    Recent Debt Transactions Further Improve Leverage Profile Net Debt Principal Reduction Since 12/31/14 9/30/18 Debt Maturity Profile (In millions) RECENT TRANSACTIONS (In millions) Over 1 Billion Net Debt Reduction Amended and Extended…
  35. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 35
    Significantly Improving Leverage Metrics TTM Leverage Ratio 3Q18 Annualized Leverage Ratio Trailing 12 months Trailing 12 months 3Q18 3Q18 in millions (incl. hedges) (excl. hedges) (incl. hedges) (excl. hedges) Adjusted EBITDAX(1)…
  36. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 36
    Hedge Positions as of November 7, 2018 2018 2019 2020 Detail as of November 7, 2018 2H 1H 2H 1H 2H Volumes Hedged (Bbls/d) 15,500 Fixed Price Swaps (1) WTI Swap Price 50.13 NYMEX Volumes Hedged (Bbls/d) 5,000 3,500 Swap…
  37. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 37
    Appendix NYSE:DNR 22 w w w. d e n b u r y. c o m
  38. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 38
    Slide Notes Slide 8 Gulf Coast Region Slide 9 Rocky Mountain Region 1) Proved tertiary and non-tertiary oil and natural gas reserves based upon 1) Proved tertiary and non-tertiary oil and natural gas reserves based upon year-end…
  39. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 39
    CO2 EOR Process CO2 Injection Well Production Well CO2 EOR can produce about as much oil as CO2 Pipeline primary or secondary recovery(1) Recovery of Original Oil in Place Primary 20% Secondary 18% (Waterfloods) (OOIP)…
  40. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 40
    CO2 EOR is a Proven Process CO2 EOR Oil Production by Region(1) Significant CO2 EOR Operators by Region 300 Gulf Coast/Other Gulf Coast Region Mid-Continent 250 Denbury Resources Hilcorp Rocky Mountains Permian Basin Region 200…
  41. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 41
    Significant Running Room with CO2 EOR Up to 83 Billion Barrels of Technically Recoverable Oil U.S Lower 48(1)(2) 2.8 to 6.6 MT Billion Barrels ND Rocky Mountain Region(2) 33-83 Billion of Technically WY Recoverable Oil(1,2)…
  42. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 42
    Abundant CO2 Supply & No Significant Capital Required for Several Years Gulf Coast CO2 Supply Rocky Mountain CO2 Supply Jackson Dome LaBarge Area o Proved CO2 reserves as of 12/31/17: 5.2 Tcf(1) o Estimated field size: 750 square…
  43. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 43
    2018E CapEx Within Budgeted Cash Flow 55 Oil In millions, unless otherwise noted Est. Cash Flow Range 55/Bbl 2018E Budgeted Sources & Uses 400 (Including Hedges)(1) In millions 2018E(1) Capital Budget Adjusted cash flow from…
  44. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 44
    Production by Area Average Daily Production (BOE/d) Field 2016 1Q17 2Q17 3Q17 4Q17 2017 1Q18 2Q18 3Q18 Delhi 4,155 4,991 4,965 4,619 4,906 4,869 4,169 4,391 4,383 Hastings 4,829 4,288 4,400 4,867 5,747 4,830 5,704 5,716 5,486…
  45. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 45
    NYMEX Oil Differential Summary Another quarter of company-wide positive differential to NYMEX Crude Oil Differentials per barrel 2016 1Q17 2Q17 3Q17 4Q17 2017 1Q18 2Q18 3Q18 Tertiary Oil Fields Gulf Coast Region (1.35) (1.58)…
  46. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 46
    Analysis of Total Operating Costs Total Operating Costs per BOE 2016 1Q17 2Q17 3Q17 4Q17 2017 1Q18 2Q18 3Q18 CO2 Costs 2.16 2.86 2.36 3.22 3.02 2.86 3.09 2.92 2.63 Power & Fuel 5.29 5.93 6.04 6.18 5.72 5.97 6.68 6.19 6.31 1)…
  47. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 47
    CO2 Cost & NYMEX Oil Price 0.50 110 0.45 100 0.40 90 NYMEX Crude Oil Price / Bbl 80 0.35 CO2 Costs / Mcf (1) 70 0.30 60 0.25 50 0.20 40 0.15 30 0.10 20 0.05 10 0.00 (2) (2) (2) 0 1Q14 2Q14 3Q14 4Q14 1Q15…
  48. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 48
    Houston Area Land Sales Conroe Webster o 3,400 surface acres consisting of 7 parcels for o 800 surface acres consisting of 11 commercial commercial and residential development parcels o Multiple parcels along I-45 frontage road…
  49. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 49
    Non-GAAP Measures Reconciliation of net income (GAAP measure) to adjusted cash flows from operations (non-GAAP measure) to cash flows from operations (GAAP measure) 2017 2018 In millions Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Net income (GAAP…
  50. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 50
    Non-GAAP Measures (Cont.) Reconciliation of net income (GAAP measure) to adjusted EBITDAX (non-GAAP measure) 2017 2018 In millions Q3 Q4 FY Q1 Q2 Q3 TTM Net income (GAAP measure) 0 127 163 40 30 78 275 Adjustments to reconcile to…
  51. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 51
    Transformational Combination of Denbury & Penn Virginia Investor Meetings Investor Presentation November 13-15, 2018 Nasdaq Ticker: PVAC November 2016
  52. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 52
    Forward Looking and Cautionary Statements Certain statements contained herein that are not descriptions of historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and…
  53. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 53
    Penn Virginia Overview Pure Play Eagle Ford Shale Operator 98,500 gross / 84,700(1) net acres in Gonzales, Lavaca and Dewitt Counties; 99% Operated; 92% HBP Substantial Lower Eagle Ford inventory estimated at 560 gross locations…
  54. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 54
    Strong Operational and Financial Performance Third Quarter 2018 Highlights Continued Operational Excellence in 3Q18 Drilled and turned to sales 10 gross (9.7 net) wells in the Eagle Ford 2.1 MMBOE (77% oil), or 22,912 BOEPD 9%…
  55. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 55
    Key Slickwater Completions & Well Results 22 Choke PVA Rigby Unit (1) PVA Axis Unit 3 Well IP-24: 5,183 BOE/D 3 Well IP-24: 6,341 BOE/D IP-30: TBD GEN 4 IP-30: 3,928 BOE/D GEN 4 PVA Kudu Unit PVA Hawg Hunter Unit 4 Well IP-24: 5,889…
  56. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 56
    Large Inventory of Locations With Attractive Returns Eagle Ford Economics by Area Capital Efficiency of XRLs Provides Superior ROR + + [67]% (1) UPdate Note: Based on managements internal estimates as of June 30,…
  57. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 57
    Selling into LLS Market LLS Commanding Significant Premium Over WTI and Midland Prices Q318 Production: 90% Liquids; 77% Oil Receives LLS Pricing, Premium Over WTI and Midland Realized 71.67 per barrel in 3Q18 Blended Oil Yields…
  58. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 58
    Crude Oil Delivery Optionality Geographic Location Provides PVACs Production Access to LLS Markets and Pricing Flatonia Three Delivery Points Enterprise Products Line Kinder Morgan Pipeline Houston Ship Channel Phillips 66…
  59. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 59
    Production Growth Targeting 120+% (1) Year-Over-Year Production Growth (pro forma for Oklahoma sale) Lower Adjusted Increasing Realized Increasing Direct Operating Lowers Production Cash Operating Margin Expenses per Leverage…
  60. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 60
    Declining Adjusted Direct Operating Expenses(1) per BOE Lower Adjusted Increasing Direct Operating Increasing Realized Lowers Production Expenses per Cash Operating Leverage Metric 120+% Y-O-Y BOE Margin per BOE LOE per BOE…
  61. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 61
    Strong Realized Cash Operating Margin(1) per BOE Increasing Lower Adjusted Direct Operating Increasing Realized Production Lowers Expenses per Cash Operating Margin 120+% Y-O-Y Leverage Metric per BOE BOE LLS Pricing and Low…
  62. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 62
    Balance Sheet Improvement LTM Net Debt to Adjusted EBITDAX Increasing Lower Adjusted Lowers Direct Operating Increasing Realized Cash Leverage Production Operating Margin per BOE 120+% Y-O-Y Expenses per Metric BOE Expect to…
  63. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 63
    Appendix
  64. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 64
    Updated Hedge Portfolio(1) Mitigating Commodity Price Volatility Through Proactive Hedging Program 12,000 Oil Barrels Per Day 57.05 10,000 8,000 65.27 54.48 54.09 6,000 59.17 4,000 2,000 0- Q3-Q4 2018 2019 2020…
  65. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 65
    Non-GAAP Reconciliation Adjusted EBITDAX - Unaudited Reconciliation of GAAP Net income (loss) to Non-GAAP Adjusted EBITDAX Adjusted EBITDAX represents net income (loss) before interest expense, income tax expense, depreciation,…
  66. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 66
    Non-GAAP Reconciliation Adjusted Cash G&A - Unaudited Reconciliation of GAAP General administrative expenses to Non-GAAP Adjusted cash general and administrative expenses Adjusted cash general and administrative expense (Adjusted cash…
  67. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 67
    Non-GAAP Reconciliation Adjusted Direct Operating Expenses - Unaudited Reconciliation of GAAP Operating expenses to Non-GAAP Adjusted direct operating expenses Adjusted direct operating expenses and adjusted direct operating expenses…
  68. Transformational Combination of & Investor Meetings – Denbury Resources Inc. – slide 68
    Non-GAAP Reconciliation Realized Cash Operating Margin Unaudited Reconciliation of GAAP Income (loss) before income taxes to Non-GAAP Realized cash operating margin Realized cash operating margin and realized cash operating margin per…

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