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4Q and FY 2018 Results 2019 Outlook and Penn Virginia Combination Update – Denbury Resources Inc.

Denbury Resources Inc. · Feb 27, 2019 · 35 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. 4Q and FY 2018 Results 2019 Outlook and Penn Virginia Combination Update – Denbury Resources Inc. – slide 1
    4th Quarter & Full Year 2018 Results, 2019 Outlook & Penn Virginia Combination Update February 27, 2019 NYSE:DNR w w w. d e n b u r y. c o m
  2. 4Q and FY 2018 Results 2019 Outlook and Penn Virginia Combination Update – Denbury Resources Inc. – slide 2
    Agenda Introduction John Mayer, Director of Investor Relations Denbury Overview and Operational Update Chris Kendall, President & Chief Executive Officer Denbury Financial Review Mark Allen, Executive Vice President & Chief…
  3. 4Q and FY 2018 Results 2019 Outlook and Penn Virginia Combination Update – Denbury Resources Inc. – slide 3
    Cautionary Statements (Cont.) Statement Regarding Non-GAAP Financial Measures: This presentation also contains certain non-GAAP financial measures including adjusted cash flows from operations and adjusted EBITDAX. Any non-GAAP measure…
  4. 4Q and FY 2018 Results 2019 Outlook and Penn Virginia Combination Update – Denbury Resources Inc. – slide 4
    Denbury Overview & Operational Update Chris Kendall NYSE:DNR 6 w w w. d e n b u r y. c o m
  5. 4Q and FY 2018 Results 2019 Outlook and Penn Virginia Combination Update – Denbury Resources Inc. – slide 5
    Highly Successful 2018 sets Foundation for a Strong 2019 2018 Successes 2019 Plans and Focus Areas Strategic Strategic Entered into Penn Virginia Merger Agreement Consummate Penn Virginia Merger Operational Operational Set company…
  6. 4Q and FY 2018 Results 2019 Outlook and Penn Virginia Combination Update – Denbury Resources Inc. – slide 6
    Generating Significant Free Cash in 2019 2019E Free Cash Flow Range, Including Hedges(1) 2019E Sources & Uses 50 oil(1) In millions, unless otherwise noted In millions 2019 200 Adjusted cash flow from operations(2) 420 470 175…
  7. 4Q and FY 2018 Results 2019 Outlook and Penn Virginia Combination Update – Denbury Resources Inc. – slide 7
    2019 Capital Plan Reduced 20-25% from 2018 2019 Development Capital Budget (1) Significant Capital Projects 75MM Reduction from 2018 Tertiary In Millions Bell Creek Field Phase 6 Development 240 - 260 Million Heidelberg Field…
  8. 4Q and FY 2018 Results 2019 Outlook and Penn Virginia Combination Update – Denbury Resources Inc. – slide 8
    Production by Area & 2019 Guidance Average Daily Production (BOE/d) 2019E Production Guidance (BOE/d)(1) Field 4Q18 3Q18 4Q17 FY 2018 FY 2017 Delhi 4,526 4,383 4,906 4,368 4,869 Hastings 5,480 5,486 5,747 5,596 4,830 60,341 56,000 -…
  9. 4Q and FY 2018 Results 2019 Outlook and Penn Virginia Combination Update – Denbury Resources Inc. – slide 9
    Analysis of Total Operating Costs Total Operating Costs 4Q18 3Q18 4Q17 YTD 2018 (MM) (/BOE) (MM) (/BOE) (MM) (/BOE) (MM) (/BOE) CO2 Costs 20 3.62 14 2.63 17 3.02 68 3.07 Power & Fuel 33 6.08 34 6.31 32 5.72 139 6.32 Labor &…
  10. 4Q and FY 2018 Results 2019 Outlook and Penn Virginia Combination Update – Denbury Resources Inc. – slide 10
    1.5 Billion Increase in PV-10 Value 111% Replacement of 2018 Production Oil Gas Total PV-10 SEC Oil (MMBbl) (Bcf) MMBOE Value(2) Pricing(1) Proved reserves(1) at December 31, 2017 253 43 260 2.5 Billion 51.34 Revisions of previous…
  11. 4Q and FY 2018 Results 2019 Outlook and Penn Virginia Combination Update – Denbury Resources Inc. – slide 11
    CCA EOR Project - Optimizing Capital Spending Profile Project Update Progressing 400 MMBBL EOR Potential Extended CO2 pipeline installation to 2020 Procuring line pipe in 2019 and installing pipeline in 2020 Phase 1 peak…
  12. 4Q and FY 2018 Results 2019 Outlook and Penn Virginia Combination Update – Denbury Resources Inc. – slide 12
    CCA Exploitation Continued Mission Canyon Success, Play-Opening Initial Charles B Test Mission Canyon Extended play to the north and to the south with Cabin Creek and Little Cedar Creek Anticline Beaver tests Up to four wells…
  13. 4Q and FY 2018 Results 2019 Outlook and Penn Virginia Combination Update – Denbury Resources Inc. – slide 13
    Exploitation Gulf Coast Unswept Low-Perm Oil Potential Gulf Coast Exploitation Opportunity Targeting horizontal well opportunities Low perm portions of reservoir with low aquifer sweep High remaining oil saturation Proven concept…
  14. 4Q and FY 2018 Results 2019 Outlook and Penn Virginia Combination Update – Denbury Resources Inc. – slide 14
    Unswept Low-Perm Oil Potential Conroe Field 2A Sand Conroe 2A Sand Exploitation Opportunity High Perm Target is 2A Sand in Conroe Field High remaining oil cuts in current producers Lower quality rock not impacted by historical…
  15. 4Q and FY 2018 Results 2019 Outlook and Penn Virginia Combination Update – Denbury Resources Inc. – slide 15
    Tinsley Cotton Valley Prospect - Promising Initial Results Tinsley Cotton Valley Exploitation Initial Results Cotton Valley First well reached target depth in 1Q 2019 Prospective Area Logged 100 Cotton Valley net pay Likely gas…
  16. 4Q and FY 2018 Results 2019 Outlook and Penn Virginia Combination Update – Denbury Resources Inc. – slide 16
    Denbury Financial Review Mark Allen NYSE:DNR 18 w w w. d e n b u r y. c o m
  17. 4Q and FY 2018 Results 2019 Outlook and Penn Virginia Combination Update – Denbury Resources Inc. – slide 17
    Selected Financial Highlights In millions 4Q18 3Q18 FY 2018 Reconciliation of Cash Flows from Operations (GAAP Measure) to Adjusted Cash Flows from Operations (Non-GAAP Measure)(1) Cash flows from operations (GAAP measure) 136 148…
  18. 4Q and FY 2018 Results 2019 Outlook and Penn Virginia Combination Update – Denbury Resources Inc. – slide 18
    Improving Leverage Profile Net Debt Principal Reduction Since 12/31/14 12/31/18 Debt Maturity Profile (In millions) (In millions) Over 1 Billion Net Debt Reduction since 2014 615 Million Undrawn Bank Credit Facility Maturing in Dec…
  19. 4Q and FY 2018 Results 2019 Outlook and Penn Virginia Combination Update – Denbury Resources Inc. – slide 19
    Significantly Improving Leverage Metrics 2018 TTM Leverage Ratio 2017 TTM Leverage Ratio Trailing 12 Trailing 12 Trailing 12 Trailing 12 months months months months (incl. hedges) (excl. hedges) (incl. hedges) (excl. hedges)…
  20. 4Q and FY 2018 Results 2019 Outlook and Penn Virginia Combination Update – Denbury Resources Inc. – slide 20
    NYMEX Oil Differential Summary Another quarter of company-wide positive differential to NYMEX NYMEX Oil Differentials per barrel 4Q18 3Q18 2Q18 1Q18 4Q17 Tertiary oil fields 3.45 2.37 0.54 1.61 2.27 Gulf Coast region 5.20 3.01…
  21. 4Q and FY 2018 Results 2019 Outlook and Penn Virginia Combination Update – Denbury Resources Inc. – slide 21
    Selected Expense Line Items 4Q18 3Q18 FY 2018 In millions, unless otherwise noted () (/BOE) () (/BOE) () (/BOE) Lease operating expenses(1) 128 23.32 123 22.50 490 22.24 General and administrative expenses 10 1.87 22 3.96 71 3.25…
  22. 4Q and FY 2018 Results 2019 Outlook and Penn Virginia Combination Update – Denbury Resources Inc. – slide 22
    Hedge Positions as of February 27, 2019 2019 2020 January February Mar-June 2H WTI Volumes Hedged (Bbls/d) 3,500 3,500 3,500 Price Swaps NYMEX Swap Price(1) 59.05 59.05 59.05 Volumes Hedged (Bbls/d) 7,000 9,000 12,000 12,000…
  23. 4Q and FY 2018 Results 2019 Outlook and Penn Virginia Combination Update – Denbury Resources Inc. – slide 23
    Denbury & Penn Virginia Combination Discussion Chris Kendall NYSE:DNR 25 w w w. d e n b u r y. c o m
  24. 4Q and FY 2018 Results 2019 Outlook and Penn Virginia Combination Update – Denbury Resources Inc. – slide 24
    A Compelling Combination Complementary Strategic Fit Sustainable Operating Model Solid Financial Profile Denburys resilient, low-decline 5% 10% compound annual 3.5x debt/EBITDAX at close production base production growth with…
  25. 4Q and FY 2018 Results 2019 Outlook and Penn Virginia Combination Update – Denbury Resources Inc. – slide 25
    Updated Preliminary Combined Pro Forma Estimates Average Daily Production (MBOE/d) Estimates thru 2021 assuming 55 60 WTI oil price 5% 10% compound annual production growth 82 83 89 87 93 94 102 Assumes 2 rig Eagle Ford program in…
  26. 4Q and FY 2018 Results 2019 Outlook and Penn Virginia Combination Update – Denbury Resources Inc. – slide 26
    Transaction Summary Transaction Value 400 million cash; 25.86 for each share of Penn Virginia 12.4 shares of Denbury for each share of Penn Virginia (est. 191.8 million shares) 503 million net debt at December 31, 2018 assumed by…
  27. 4Q and FY 2018 Results 2019 Outlook and Penn Virginia Combination Update – Denbury Resources Inc. – slide 27
    Pro Forma Combined Capital Structure Financing Commitment from JPMorgan 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 12/31/18, unless…
  28. 4Q and FY 2018 Results 2019 Outlook and Penn Virginia Combination Update – Denbury Resources Inc. – slide 28
    Expanding EOR Opportunity in the Eagle Ford Up to 140 MMBO EOR Potential on PVAC Acreage Eagle Ford EOR reached 18,000 BOPD of incremental production in 2018 Significantly de-risked through more than 25 projects covering 300…
  29. 4Q and FY 2018 Results 2019 Outlook and Penn Virginia Combination Update – Denbury Resources Inc. – slide 29
    Key Advantages of CO2 as the EOR Injectant Significantly lower minimum miscibility pressure (MMP) than rich hydrocarbon gas Lower MMP nearly doubles operating pressure margin Expands EOR potential to a wider range of the oil window…
  30. 4Q and FY 2018 Results 2019 Outlook and Penn Virginia Combination Update – Denbury Resources Inc. – slide 30
    Q&A NYSE:DNR 32 w w w. d e n b u r y. c o m
  31. 4Q and FY 2018 Results 2019 Outlook and Penn Virginia Combination Update – Denbury Resources Inc. – slide 31
    Appendix NYSE:DNR 33 w w w. d e n b u r y. c o m
  32. 4Q and FY 2018 Results 2019 Outlook and Penn Virginia Combination Update – Denbury Resources Inc. – slide 32
    Slide Notes Slide 12 1.5 Billion Increase in PV-10 Value 1) Estimated proved reserves and PV-10 Value for year-end 2018 were computed using first-day-of-the-month 12-month average prices of 65.56 per Bbl for oil (based on NYMEX…
  33. 4Q and FY 2018 Results 2019 Outlook and Penn Virginia Combination Update – Denbury Resources Inc. – slide 33
    Reconciliation of Adjusted Net Income Reconciliation of Net Income (GAAP Measure) to Adjusted Net Income (Non-GAAP Measure)(1) 4Q18 3Q18 FY 2018 Per Diluted Per Diluted Per Diluted In millions, except per-share data Amount Amount…
  34. 4Q and FY 2018 Results 2019 Outlook and Penn Virginia Combination Update – Denbury Resources Inc. – slide 34
    Non-GAAP Measures Reconciliation of net income (GAAP measure) to adjusted EBITDAX (non-GAAP measure) 2017 2018 In millions Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Net income (GAAP measure) 22 14 0 127 163 40 30 78 174 323 Adjustments to…
  35. 4Q and FY 2018 Results 2019 Outlook and Penn Virginia Combination Update – Denbury Resources Inc. – slide 35
    Non-GAAP Measures (Cont.) 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 Q4 FY Net…

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