a future full of energy denbury resources inc. ipaa oil & gas investment symposium april 19 –...

a future

full of energy

Denbury Resources Inc.

IPAA Oil & Gas Investment SymposiumApril 19 – 21, 2004

2


About Forward-Looking StatementsThe data contained in this presentation that are not historical facts are forward-

looking statements that involve a number of risks and uncertainties. Such

statements may relate to, among other things, capital expenditures, drilling

activity, development activities, production efforts and volumes, asset values,

proved reserves, potential reserves and anticipated growth rates in our CO2

models, 2003 production and expenditure estimates, 2004 capital budget,

Genesis projected distributions, and other enumerated reserve potential.

These forward-looking statements are generally accompanied by words such as

“estimated”, “projected”, “potential”, “anticipated”, “forecasted” or other

words that convey the uncertainty of future events or outcomes. These

statements are based on management’s current plans and assumptions and are

subject to a number of risks and uncertainties as further outlined in our most

recent 10-K and 10-Q. Therefore, the actual results may differ materially from

the expectations, estimates or assumptions expressed in or implied by any

forward-looking statement made by or on behalf of the Company.

Cautionary Note to U.S. Investors – The United States Securities and Exchange

Commission permits oil and gas companies, in their filings with the SEC, to

disclose only proved reserves that a company has demonstrated by actual

production or conclusive formation tests to be economically and legally

producible under existing economic and operating conditions. We use certain

terms in this presentation, such as probable and potential reserves, that the

SEC’s guidelines strictly prohibit us from including in filings with the SEC.

Contact UsGareth Roberts – President & CEO

(972) 673-2030

[email protected]

Phil Rykhoek – Senior VP & CFO

(972) 673-2050

[email protected]

Laurie Burkes – Investor Relations Mgr.

(972) 673-2166

[email protected]

Corporate HeadquartersDenbury Resources Inc.

5100 Tennyson Pkwy., Ste. 3000

Plano, Texas 75024

Ph: (972) 673-2000 Fax: (972) 673-2150

Web Site: www.denbury.com

Corporate Information

Note: GEOMAP COMPANY has given its permission for us to use their data to create the oil and gas field outlines on the operational maps and to

include this material as part of this presentation. GEOMAP COMPANY reserves all rights to this field data.

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● Enterprise Value (3/31/04): - Approximately $1.1 Billion

Corporate Overview

● Total Proved Reserves (12/31/03): - 128.2 Million BOE (91.3 MMBbls Oil / 221.9 Bcf Gas)

● Production Profile (4Q03): - Approx. 55% Oil / 45% Gas

● Total Debt (3/31/04): - $305 Million

● Bank Credit Availability (3/31/04): - $140 Million

● Production (4Q03): - 34,590 BOE per Day

Reduced Debt by $50 MM in 2003

4


0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

1999 2000 2001 2002 2003

Sweet Heavy or Sour Natural Gas Offshore Sold in 2003

Average Daily Production

(BOE/d)

16,748

21,399

31,185

35,573

28%

65%

29%

58%39%

33%

45%

47%

34,704

31%

45%

7%13%

16%20% 24%

Increasing Volumes of Light Sweet Oil from Tertiary CO2 Flooding

(1) Defined as less than $2.00 NYMEX variance

(1)

5

Denbury Resources Inc.Net Proved SEC Reserve Growth

● Reserve life: 10.1 Years (based on 2003 production)

● Proved developed reserve life: 6.1 Years (based on 2003 production)

● 2003 F&D cost: $8.58

● 3 Year F&D cost: $7.36

Note: Denbury’s Reserves prepared by

DeGolyer & MacNaughton

*Includes 8.3 MMBOE of reserves sold in 2003

0

20

40

60

80

100

120

140

1998 1999 2000 2001 2002 2003

Sold in 2003

Offshore

Natural Gas

Oil

87.4

60.2

36.4

109.5

130.7*

Steady Growth – Low Average Finding Cost

(MMBOE)128.2

6

Denbury Resources Inc.Relative Asset Value Growth per Share

($ in millions except per share amounts) 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03

PV-10 Proved Reserves (1): $605 $817 $1,049 $1,099 $1,091

PV-10 of CO2 Industrial

Contracts (3):-- -- 50 57 42

Total Proved Value: $605 $817 $1,099 $1,156 $1,133

Less Debt (excluding discount): (153) (199) (341) (350) (300)

Proved Net Asset Value (2): $452 $618 $758 $806 $833

Shares outstanding: 45.7 46.0 53.0 53.5 54.2

Proved NAV Per Share (2): $9.89 $13.43 $14.30 $15.06 $15.36

(1) Using constant $27.50 per Bbl and $4.50 per MMBtu price and cost scenarios.

(2) Estimate excluding any value for potential or probable reserves, acreage, etc.

(3) PV10 of industrial contracts to end of their contractual term; includes 12/31/03 market value of Genesis units received as part of 2003 VPP transaction.

12% CAGR

PV-10 Sensitivities (12/31/03) (+/-$MM)

$1.00 per barrel change 50

$0.10 per Mcf change 15

Superior Economics

7

Denbury Resources Inc.The Denbury Difference ● Low-Risk Asset Base

● Blend of long-term, lower risk exploitation projects and higher-risk/reward investment opportunities

● Low-risk upside through CO2 and Barnett Shale plays

● Gulf Coast Region Focus● Largest producer in Mississippi● Operate all significant properties

● Strong Balance Sheet to Fund Growth● Conservative spending policy● Consistent hedging strategy

● Experienced and Motivated Personnel● 50 technical employees with over 22 years average experience● Team approach to compensation (Top 5 received less than 10% of option grants in 2003)

But Denbury’s Unique Advantage is….

8

Denbury Resources Inc.…Carbon Dioxide (CO2)

● Denbury Owns Strategic CO2 Reserves

and 183-Mile Pipeline in Mississippi

● 12/31/03 Proved Reserves of CO2: 1.6

Tcf (1)

● CO2 Can be Used to Recover

Additional Oil from Depleted Fields

● No CO2 is Sold to Other Oil Operators

● Low Cost “Pipeline” of Future Oil Field Acquisitions

CO2 Play Gives Denbury Predictable, Low-Risk Future Reserve Adds

(1) Includes +/- 160 Bcf of reserves dedicated to VPP with Genesis

CO

2 P

ipel

ine

JacksonDome

MallalieuBrookhaven

Little CreekLazy Creek

Lockhart Crossing

McComb

Jackson

New Orleans

BatonRouge

Meridian

McComb

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Denbury Resources Inc.Current CO2 Sources & Pipelines

Great Plains Coal

GasificationPlant

LeBarge

Ridgeway CO2Discovery

McElmo Dome

Sheep Mountain

BravoDome

AmmoniaPlant

GasPlants

JacksonDome

Rockies5 Fields – Additional 2 Proposed

(Anadarko)19,520 Gross Bbls/d

Operators: Exxon/Chevron/MeritCO2 Source:

Natural/Manufacturing

Rockies

Permian Basin42 Fields

155,000 Gross Bbls/dOperator: Multiple (16)

CO2 Source: Natural

Permian Basin

Mid-Continent4 Fields

9,800 Gross Bbls/dOperators:

Exxon/Anadarko/ChaparralCO2 Source: Manufacturing

Mid-Continent

Eastern Gulf Coast3 Fields

8,000 Gross Bbls/dOperator: Denbury CO2 Source: Natural

Eastern Gulf Coast

CO2 to Canada

Prolific Natural Sources of CO2 are Associated with Volcanic Activity and are Very Rare

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● Sweet Crude

● 40° API Gravity; approximately equal

to NYMEX

● Finding and Development Costs

● $4.00 to $5.00 per Bbl

● Operating costs of +/- $10.00/Bbl

● CO2 Requirement 10-12.5 Mcf/Bbl

● Significant 3rd Party Income

● Approximately $5-6 MM/yr of net

operating income from industrial

sales

Denbury’s CO2 Operations● Demonstrated Success in CO2 Flooding

● 36% CAGR in tertiary oil production (1)

● Little Creek, Mallalieu & McComb Fields

● 35.3 MMBOE proved reserves at 12/31/03

● Southwest Mississippi Fields Along

Existing 183-mile Pipeline

● 40-55 MMBOE of potential reserves

● Scheduled for development over 9 yrs

● Majority of fields already owned by DNR

● Same reservoir as Little Creek and

Mallalieu

● CO2 capacity: 450 MM/D at current

operating pressures

● CO2 current deliverability: 250 MM/D

● Currently producing: 225 MM/D(1) 1999 to 2003

Demonstrated Success with CO2 Flooding

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CO2 PIPELINE - from Jackson Dome

CO2 Operations – Oil Recovery Process

CO2 moves through formation mixing with oil droplets, expanding them and moving them to producing wells.

INJECTION WELL - Injects CO2 in dense phase

PRODUCTION WELLS - Produce oil, water and CO2 (CO2 is later recycled)

Oil Recovery Using CO2 is +/- 17% of OriginalOil in Place (Based on Little Creek)

Primary recovery = +/- 20%

Secondary recovery (waterfloods) = +/- 18%

Tertiary (CO2) = +/- 17%

CO2 Injection is One of the Most Efficient Tertiary Recovery Methods for Crude Oil

12


LCU Net Daily Production by PhaseNet Daily Production

Little Creek Area

2

2

Net Daily Production vs. CO2 Purchases

Production Follows CO2 Injection

13

Denbury Resources Inc.Mallalieu, West FieldNet Oil Production vs. CO2 Purchases

WMU Net Daily Production by PhaseNet Daily Production

0

1,000

2,000

3,000

4,000

Jan-02 May-02 Sep-02 Jan-03 May-03 Sep-03 Jan-04

Net

BO

PD

TotalPhase 1Phase 2

Production Follows CO2 Injection

14

Denbury Resources Inc.Summary of Tertiary Economics

(Millions) Little Creek Mallalieu McComb TotalJackson

Dome

Acquisition Cost $12.0 $ 4.0 $ 2.3 $ 18.3 $42.0

Total Investment 52.0 38.5 14.3 104.8 85.2

Total Receipts (net op. income) 69.8 14.0 (0.8) 83.0 41.3

Balance to Recover ($17.8) $24.5 $15.1 $21.8 $44.0

PV10 (12/31/03)

SEC Pricing (proved only) $112.7 $218.0 $103.9 $434.6 $32.0

Proved Reserves (MMBOE) 7.4 16.0 11.9 35.3 1.6 Tcf

(1) (2)

(3)

(1) Includes West Little Creek and Lazy Creek(2) Includes East Mallalieu(3) PV10 of industrial contracts

Superior Economics

15

Denbury Resources Inc.CO2 Model Assumptions – Phase I

Operating Cost: ● CO2 Utilization – 12.5 Mcf per Barrel of Oil Produced

● CO2 Costs (2003) - $0.12/Mcf ($1.50 per gross barrel of oil produced)

● Total Operating Costs – Approx. $10/Net Barrel of Oil Produced (does not include overhead)

Capital Cost: ● Limited Gross Capital Expenditures to $60 Million per Year

● Total Capital Costs - $4.00 per Net Barrel of Oil Produced

● Total Capital Costs Including Jackson Dome CO2 Wells and Facilities

- $4.50 per Net Barrel of Oil Produced

CO2 Pipeline: ● Maximum Pipeline Rates of 400 MMcf per Day

● Total CO2 Required – Approx. 1.6 Tcf (includes industrial users)

Oil Reserves: ● 35 MMBOE Proved as of 12/31/03 (D&M)

● 42 MMBOE Net Unrisked Potential

● Total Oil Reserves Used in Model – 77 MMBOE (low end of potential range)

Southwest Mississippi

Phase I Represents Fields Along Our CO2 Pipeline

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Projected Net Oil Production

CO2 Business Model – Phase I

28% Annual P

roductio

n Gro

wth (2002 – 2008)

Strong, Steady Predictable Growth in Core Assets

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Duke

EOTT

Gen

esis

Genesis

Hunt

EOTT

Genesis

EOTT

0 10 20

1 5 -1

4 -15 -1

D E N K M A N N # 1

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6

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6

( DRI )

CLARKE

COVINGTON

JASPER

JONES

LAUDERDALE

MADISON

NEWTON

RANKIN

SCOTT

SIMPSON

SMITH

WAYNE

CO2 Business Model – Phase II

Oil and Natural Gas Pipelines in Place

Fields with at Least 5 MMBO of Cumulative Production

Den

bury

CO 2

Pip

elin

e

Cumulative Gross Production to Date: 880 MMBO

Denbury Interest

EAST MISSISSIPPI

Jackson Dome

Significant Additional Potential Oil Reserves in East Mississippi

18

Denbury Resources Inc.CO2 Model Assumptions – Phase II

Operating Cost: ● CO2 Utilization: 9.25 Mcf per Barrel of Oil Produced

● CO2 Costs: $0.30/Mcf (includes transportation)

● Total Operating Costs: $11-$13 / Net Barrel of Oil Produced (does not include overhead)

● Average Oil Discount to NYMEX: $4.20

Capital Cost: ● Limited Gross Capital Expenditures to $40 Million per Year

● Total Capital Costs: $2.60 per Net Barrel of Oil Produced

● Total Capital Costs Including Jackson Dome CO2 Wells and Facilities:

$3.25 per Net Barrel of Oil Produced

CO2 Pipeline: ● Maximum Pipeline Rates of 210 MMcf per Day

● Total CO2 Required: Approx. 910 BCF

Oil Reserves: ● 80 MMBOE Net Potential as of 12/31/03

East Mississippi

Represents First Phase of East MS Fields

19

Denbury Resources Inc.CO2 Business Model – Phase II


Similar Production Profile as Phase I

20

Denbury Resources Inc.CO2 Business Model – Phases I & II


21% Annual Production Growth (2002 – 2013)

Combined Phases Yield Predictable Growth Thru 2013

21

Denbury Resources Inc.CO2 Business Model – Phases I & II

CO2 Requires Less Than 50% of Total Corporate Budget

22

Denbury Resources Inc.Possible Future CO2 Projects

CO

2 P

ipel

ine

McComb

Jackson

New Orleans

BatonRouge

Meridian

● 75-90 MMBOE Total Net Potential(35.3 MMBOE Proved as of 12/31/03)

Phase I – W. Mississippi

● 80 MMBOE Net Potential

Phase II – E. Mississippi

Potential 80 Mile Pipeline

Potential 120 Mile Pipeline

100-500 MMBblsPotential

100-200 MMBblsAdd’lPotential

Beyond Phase II

JacksonDome

Significant Potential Beyond Phase I and II

23

Denbury Resources Inc.Solid Asset Base

Jackson

McComb

Baton Rouge

Lake Charles

Lafayette

New Orleans

Houma

DallasMeridian

CO

2 P

ipel

ine

Proved Reserves as of 12/31/03

G U L F O F M E X I C O

BARNETT SHALE

● Approx. 22,000 Undeveloped Acres

● Proved Reserves (MMBOE): 3.0

● Q4 ’03 Prod. (BOE/d): 268

● 2004 Est. CAPEX ($MM): $7.5

BARNETT SHALE


● Q4 ’03 Prod. (BOE/d): 5,579

● 2004 Est. CAPEX ($MM): $80.7

CO2 OPERATIONS

ONSHORE LOUISIANA


● Q4 ’03 Prod. (BOE/d): 8,320

● 2004 Est. CAPEX ($MM): $22.7

ONSHORE LOUISIANA

Several Conventional Plays in Other Areas Add Additional Growth Potential

EAST MISSISSIPPI


● Q4 ’03 Prod. (BOE/d): 13,066 ● 2004 Est. CAPEX ($MM): $32.4

EAST MISSISSIPPI

OFFSHORE GULF OF MEXICO


● Q4 ’03 Prod. (BOE/d): 7,357

● 2004 Est. CAPEX ($MM): $28.7

OFFSHORE GULF OF MEXICO

24

Denbury Resources Inc.Capital Budget (1)

2003

OffshoreGulf of Mexico

$54.0

Other

$9.1Jackson

Dome (CO2)

$19.7

OnshoreLouisiana

$33.1 E. Mississippi

$24.6

Projected 2004

OffshoreGulf of Mexico

$28.7

Other

$7.5 JacksonDome (CO2)

$31.5

SW Mississippi (CO2)

$49.2

OnshoreLouisiana

$22.7

E. Mississippi

$32.4

SW Mississippi (CO2)

$25.8

$166.3 Million $172.0 Million

(1) Excludes acquisitions; includes allocated capitalized overhead

Increased Emphasis in 2004 on Core Assets

25

Denbury Resources Inc.Financial Data per BOE

(1) NYMEX prices based on average of daily closing prices of near month contracts.(2) Cash flow from operations, excluding the change in assets and liabilities. See our website for a reconciliation of Adjusted

Cash Flow to Cash Flow from Operations.

(6:1 Basis) 2003 2002 2001

Weighted Average NYMEX Variance per BOE(1) $(1.46) $(2.13) $(2.37)

Revenue $30.43 $21.17 $22.88

Cash Receipts (payments) from Hedges (4.91) 0.07 1.64

Production Taxes and Marketing Expenses (1.17) (0.92) (0.96)

Lease Operating Expense (7.06) (5.48) (4.84)

Production Netback $17.29 $14.84 $18.72

Operating Margin from CO2 Operations 0.51 0.48 0.38

General and Administrative Expense (1.20) (0.96) (0.89)

Net Cash Interest Expense (1.61) (1.73) (1.74)

Current Taxes and Other (0.01) 0.04 (0.06)

Adjusted Cash Flow (2) $14.98 $12.67 $16.41

DD&A (7.48) (7.26) (6.27)

Non-Cash Hedging Income (expense) 0.28 0.24 (2.90)

Deferred Income Taxes and Other (2.14) (2.05) (2.27)

Early Retirement of Subordinated Debt (1.39) --- ---

Cumulative Effect from FAS 143 Adoption 0.21 --- ---

Net Income $4.46 $3.60 $ 4.97

We Monitor All Revenue & Expenses on a Gross and per BOE Basis

26


Crude Oil Natural Gas

Bbls/dAvg

Price MMcf/dAvg

PriceFloors --- --- --- ---Swaps 9,500 $22.99 --- ---Collars --- --- 30.0 $3.50/

$4.45

30.0 $3.00/$5.84

55% of Total

Volume

2004E

Crude Oil Natural Gas

Bbls/dAvg

Price MMcf/dAvg

PriceFloors --- --- --- ---Swaps --- --- --- ---Collars --- --- 15.0 $3.00/

$5.50

6% of Total Volume

2005E

Note: For further detail see 10-K

Hedge Position

Hedging Less as Balance Sheet Becomes Stronger

27


0

100

200

300

400

500

600

700

800Capitalization Long-Term Debt

Debt to Capital Analysis

$225

$153$199

$341($ i

n m

illi

on

s)

$225

$415

$676

$736

$350

$193

(1) Excludes accumulated other comprehensive income (loss).

(2) Principal amounts; excludes discount on subordinated debt.

(1) (2)

12/98 12/99 12/00 12/01 12/02 12/03Debt/Cap Ratio:

117% 68% 48% 50% 48% 40%

$300

$748

Balance Sheet Has Become Stronger Over Time

28

Denbury Resources Inc.Genesis

● Public MLP engaged in Crude Oil Gathering, Marketing and Transportation

● Denbury Owns General Partner Interest; Total of Approximately 9.25%

● Genesis’ Mississippi Pipeline Runs Near Several of our Key Fields

● Genesis May Function as a Financer and Operator of New Pipelines and

Gathering Systems Requested by Denbury

● Anticipated Distributions of $0.60 per Unit in 2004; $0.80 in 2005

● Denbury Expects Between $2.5 and $3.0 Million of Cash from Genesis in 2004 for

Distributions and Service Fees Relating to VPP

Genesis Has Enhanced Our Marketing Position in Our Core Areas

29


● Low-Risk, Low Cost Reserve Potential for Several Years Through CO2

● Maintain a Strong Balance Sheet

● Use Price Floors and Collars to Protect Against Downside Volatility

● Shifting More of Our Focus and Spending to CO2 Play

● One of Few Companies with Years of Inventory for Future Growth

● Core Assets are Growing, Even Though Our Total Production is Currently Flat

Growth Strategy

We Are Growing Our Core Assets

30

Denbury Resources Inc.Denbury Stock Performance 2000-2003

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00

$16.00Avg. Volume Avg. Close

Liquidity Continues to Improve, Which Also Helps Stock Price

a future full of energy denbury resources inc. ipaa oil & gas investment symposium april 19 –...

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