Denbury Resources Sets Records for Quarterly Production and Cash Flow from Operations Projects 25% Organic Growth in 2008



    DALLAS, November 1 /CNW/ - Denbury Resources Inc. (NYSE:   DNR) ("Denbury"
or the "Company") today announced its third quarter 2007 financial and
operating results. Production in the third quarter of 2007 of 45,720 BOE/d was
another Company record and was a 22% increase over third quarter of 2006
production and a 9% sequential increase over second quarter 2007 production
levels. Net cash flow provided by operations totaled $169.2 million during the
third quarter of 2007, a second Company quarterly record, and a 25% increase
over the third quarter of 2006 amount of $135.4 million. The Company also
posted near-record earnings for the quarter of $68.0 million, or $0.56 per
basic common share, as compared to earnings of $59.3 million, or $0.50 per
basic common share, for the third quarter of 2006. Record high production
levels, higher oil prices, and $11.6 million of incremental net cash receipts
on the Company's derivative contracts contributed to the positive 2007 third
quarter results, partially offset by lower natural gas prices, higher overall
expenses, and the effect of the $20.0 million differential in non-cash fair
value adjustments associated with the Company's commodity derivative
contracts.

    On a nine month basis, net income was $147.2 million in the 2007 period,
almost the same as the $147.3 million earned in the 2006 period. The higher
production levels and $24.6 million of incremental cash receipts on the
Company's derivative contracts in 2007 were offset by higher overall expenses
and the effect of the $21.7 million differential in non-cash fair value
adjustments relating to the Company's commodity derivative contracts.

    During the third quarter of 2007, the Company recorded a $5.4 million
non-cash pre-tax mark-to-market charge to earnings on its 2007 natural gas
swaps and 2007 and 2008 oil swaps. In comparison, the Company recorded a $14.6
million non-cash pre-tax gain to earnings in the third quarter of 2006 related
to the oil swaps in place at that time and the decrease in oil prices between
those quarter-ends.

    Adjusted cash flow from operations (cash flow from operations before
changes in assets and liabilities, a non-GAAP measure) for the third quarter
of 2007 increased 40% over third quarter of 2006, a more significant increase
than the 15% increase in net income, primarily due to the negative incremental
non-cash mark-to-market valuation adjustments included in the third quarter of
2007. Adjusted cash flow from operations for the third quarter of 2007 was
$166.8 million, as compared to third quarter 2006 adjusted cash flow from
operations of $119.0 million. Net cash flow provided by operations, the GAAP
measure, totaled $169.2 million during the third quarter of 2007, as compared
to $135.4 million for the same measure during the third quarter of 2006.
Adjusted cash flow and cash flow from operations differ in that the latter
measure includes the changes in receivables, accounts payable and accrued
liabilities during the quarter. (Please see the accompanying schedules for a
reconciliation of net cash flow provided by operations, as defined by
generally accepted accounting principles (GAAP), which is the GAAP measure, as
opposed to adjusted cash flow from operations, which is the non-GAAP measure).

    Production

    Production for the quarter was 45,720 BOE/d, a 22% increase over third
quarter 2006 average production of 37,561 BOE/d and a 9% sequential increase
over second quarter 2007 production levels. Oil production from the Company's
tertiary operations averaged 16,101 BOE/d in the third quarter of 2007, a 59%
increase over 2006 third quarter average tertiary production levels, and an
18% sequential increase over second quarter 2007 average tertiary production
of 13,683 BOE/d. Production from the three new floods in Phase II (Soso,
Eucutta and Martinville) contributed 3,962 BOE/d (approximately two-thirds) of
the increase over the third quarter of 2006 levels, with the balance from all
of our Phase I fields except for Little Creek Field, which is on a gradual
decline.

    Average production from the Barnett Shale increased 103% to 10,063 BOE/d
in the third quarter of 2007 as compared to 4,952 BOE/d produced there during
the third quarter of 2006, and increased 20% sequentially over the second
quarter of 2007 Barnett Shale average rate of 8,368 BOE/d, due to the
Company's successful drilling activity over the last year. During 2006, the
Company drilled 46 horizontal wells in the Barnett Shale and in the first nine
months of 2007 drilled and completed 31 additional wells. Since the second
quarter, the Company has had three rigs working in this area and plans to
maintain this level of activity through the end of 2007 and likely throughout
2008. Consequently, the Company anticipates that its rate of production growth
in the Barnett Shale will slow based on current forecasts based on average
production to date, current completion techniques and the expected level of
drilling activity.

    Partially offsetting higher production from the Company's tertiary
operations and Barnett Shale was a decline in the Company's onshore Louisiana
production, which averaged 5,546 BOE/d during the third quarter of 2007, as
compared to 8,221 BOE/d during the third quarter of 2006. Production in this
area did increase slightly over the 5,391 BOE/d produced during the second
quarter of 2007. The Louisiana decline rates are normal and expected for
reservoirs in this area. Production during the third quarter of 2007
attributable to the Louisiana properties that are under contract for sale
totaled 5,031 BOE/d (85% natural gas).

    Third Quarter 2007 Financial Results

    Oil and natural gas revenues increased 32% between the respective third
quarters as the higher production levels increased revenues by 22% and higher
commodity prices increased revenue by 10%. The Company collected $9.4 million
on its derivative contract settlements in the third quarter of 2007 as
compared to cash payments made of $2.2 million on derivative contracts during
the third quarter of 2006.

    Company-wide oil price differentials (Denbury's net oil price received as
compared to NYMEX prices) were significantly better in 2007's third quarter
than in the 2006 period, but not as positive as in the second quarter of 2007,
as the market began to return to a more normal state during the third quarter.
Oil price differentials during the third quarter of 2007 averaged $2.91 per
Bbl less than NYMEX prices, as compared to $6.69 per Bbl below NYMEX prices
during the third quarter of 2006 and $1.61 per Bbl below NYMEX prices during
the second quarter of 2007. Based on October 2007 differentials, we would
expect the Company's oil price differentials to return to more historic levels
during the fourth quarter.

    The Company's average NYMEX natural gas differential was a negative
variance of $0.10 per Mcf in the third quarter of 2007 as compared to a
positive variance of $0.24 per Mcf during the third quarter of 2006.

    Lease operating expenses decreased 6% per BOE in the third quarter of
2007 as compared to the second quarter of 2007 as the higher production more
than offset the increase in gross expenses. On a comparable third quarter
basis, lease operating expenses increased on both a per BOE basis and on an
absolute dollar basis. Lease operating expenses averaged $14.10 per BOE in the
third quarter of 2007, up from $12.22 per BOE in the third quarter of 2006.
The increase over prior year's third quarter level was primarily a result of
(i) the Company's increasing emphasis on tertiary operations with their
generally higher operating costs, (ii) higher overall industry costs, (iii)
the timing impact of the continued expansion of the Company's tertiary
operations in which the cost of CO2 injection and other operating costs are
expensed, and (iv) additional lease payments for certain of our new tertiary
operating facilities.

    General and administrative expenses decreased 11% on a per BOE basis
between the two third quarter periods, averaging $2.74 per BOE in the third
quarter of 2007, down from $3.07 per BOE in the prior year's third quarter.
The decrease is largely attributable to the significant increase in production
and a $750,000 non-recurring charge to earnings in the 2006 third quarter
related to the retirement of the Company's former Vice President of Marketing.
Partially offsetting this decrease are increases related to higher personnel
costs due to salary increases and continued growth in the Company's total
number of employees.

    Interest expense increased 72% to $8.6 million in the third quarter of
2007 as a result of a 63% increase in average debt levels between the
respective third quarters. The debt levels increased to fund property
acquisitions in 2006 and 2007 and to fund the Company's capital spending which
is higher than the Company's cash flow from operations. The Company's
capitalized interest was $5.4 million for the third quarter of 2007 as
compared to $3.7 million in the third quarter of 2006, the increase due
primarily to the significant increase in unevaluated properties during 2006
and 2007.

    Depreciation, depletion and amortization expense ("DD&A") on the
Company's oil and natural gas properties increased to $11.43 per BOE, a 6%
increase over the third quarter 2006 rate of $10.81 per BOE, and a 4%
sequential increase over the second quarter 2007 rate of $10.94 per BOE,
primarily due to rising costs. In the third quarter of 2007, the additional
capital spending and incremental future development costs more than offset the
higher reserves, causing a slight sequential increase in the DD&A rate from
the second quarter. In addition to the DD&A on oil and natural gas properties,
the Company incurred an average of $1.12 per BOE for DD&A on its CO2 and other
fixed assets for the third quarter of 2007, almost the same as the average of
$1.11 per BOE incurred in the third quarter of 2006.

    Outlook

    Primarily as a result of the strong production results from the Barnett
Shale and later than anticipated timing on the Company's Louisiana property
sale, the Company is increasing its production guidance for 2007 to 42,500
BOE/d, an increase of 500 BOE/d. The revised guidance represents total growth
of approximately 16% over average 2006 production levels. The revised guidance
assumes that the sale of the Company's Louisiana properties closes in early
December of 2007. The Company's 2007 tertiary production guidance remains
unchanged at a projected average of 14,750 BOE/d, a projected 46% increase
over average 2006 tertiary production levels.

    Denbury's 2007 development and exploration budget is currently
approximately $700 million, of which approximately 60% is related to tertiary
operations. Any acquisitions made by the Company would be in addition to these
current capital budget amounts. Denbury's preliminary 2008 capital budget
(excluding acquisitions) is $900 million, which includes $325 million
allocated to CO2 pipelines. Over 50% of the $575 million remaining budget is
currently targeted for other tertiary related operations, and over 25% for the
Barnett Shale, with the balance to be spent in other areas.

    The Company preliminarily anticipates that its 2008 tertiary average
production will be between 22,000 BOE/d and 25,000 BOE/d, an increase of 59%
over estimated 2007 tertiary averages, based on the mid-point of 2008's
forecasted range. The Company's estimated total production for 2008, using
that same tertiary production mid-point and excluding the Louisiana properties
currently under contract and expected to be sold in 2007, is projected to be
approximately 47,500 BOE/d, a projected organic growth rate of over 25%. The
Company plans to provide more details regarding its 2008 plans and projections
at its analyst meeting on Wednesday, November 7, 2007.

    Denbury's total debt (principal amount excluding capital leases) as of
October 31, 2007 was approximately $765 million, consisting of $525 million of
subordinated debt and $240 million of bank debt outstanding on the Company's
$500 million borrowing base.

    Gareth Roberts, Chief Executive Officer, said: "This quarter, our
incremental oil production from our Phase II in East Mississippi anchored the
growth in our tertiary program. We are pleased to be right on track with our
2007 tertiary forecast, having left the guidance unchanged since a year ago.
We continue to believe we have one of the strongest organic growth models in
our industry, as evidenced by our projected 25% increase in total production
for 2008 outlined above, driven by our projected 59% increase in tertiary oil
production.

    "We continue to expand our CO2 pipeline infrastructure and expect to have
our Jackson Dome to Tinsley CO2 pipeline operational by year-end. We expect a
delay of a few months in the conversion to CO2 service of the natural gas
pipeline which runs to Cranfield Field, as a recent evaluation of the line
indicated more repairs are required than originally projected. We are
finalizing our order for the steel for the planned CO2 pipeline which will run
from Southern Louisiana to Hastings Field (the Green Pipeline), and
right-of-way work and other planning is ongoing for that line. Our target for
completion of the Green Pipeline is year-end 2009. While we are extremely busy
and still have occasional issues with shortages of goods and services in our
industry, we continue to improve our management of that process, and are
generally on schedule.

    "Work is progressing on the planned 'drop-down' of CO2 pipelines to
Genesis Energy, L.P. and we would expect to close those transactions by
year-end. That, coupled with the recently announced agreement to sell our
Louisiana natural gas assets, should give us the funds to repay our bank debt
and end 2007 with significant cash. That cash, plus another planned
'drop-down' of assets to Genesis late in 2008, should fund the anticipated
deficit between our preliminary 2008 capital program and our 2008 projected
cash flow. Our program is working, our plans and strategy have not changed,
and we continue to be enthusiastic about the future."

    Conference Call

    The public is invited to listen to the Company's conference call set for
today, November 1, 2007 at 10:00 A.M. CDT. The call will be broadcast live
over the Internet at the Company's web site: www.denbury.com. If you are
unable to participate during the live broadcast, the call will be archived on
the Denbury web site for approximately 30 days and will also be available for
playback for one month by dialing 888-203-1112 or 719-457-0820, passcode
2103409.

    Financial and Statistical Data Tables

    Following are financial highlights for the comparative three and nine
month periods ended September 30, 2007 and 2006. All production volumes and
dollars are expressed on a net revenue interest basis with gas volumes
converted at 6:1.

    

                      THIRD QUARTER FINANCIAL HIGHLIGHTS
    (Amounts in thousands of U.S. dollars, except per share and unit data)

                                         Three Months Ended
                                            September 30,       Percentage
                                         -------------------
                                           2007      2006         Change
                                         --------- ---------    ----------
    Revenues:
       Oil sales                          190,685   138,172    +       38%
       Gas sales                           57,528    49,626    +       16%
       CO2 sales and transportation fees    3,594     2,687    +       34%
       Interest and other income            1,702     1,716    -        1%
                                         --------- ---------
          Total revenues                  253,509   192,201    +       32%
                                         --------- ---------

    Expenses:
       Lease operating expenses            59,323    42,225    +       40%
       Production taxes and marketing
        expenses                           12,676     9,749    +       30%
       CO2 operating expenses               1,304       842    +       55%
       General and administrative          11,541    10,599    +        9%
       Interest, net                        8,628     5,009    +       72%
       Depletion and depreciation          52,797    41,188    +       28%
       Commodity derivative income         (3,973)  (12,375)   -       68%
                                         --------- ---------
          Total expenses                  142,296    97,237    +       46%
                                         --------- ---------

    Income before income taxes            111,213    94,964    +       17%

    Income tax provision
       Current income taxes                 5,197     5,419    -        4%
       Deferred income taxes               38,028    30,251    +       26%
                                         --------- ---------

    NET INCOME                             67,988    59,294    +       15%
                                         --------- ---------

    Net income per common share:
       Basic                                 0.56      0.50    +       12%
       Diluted                               0.54      0.48    +       13%

    Weighted average common shares:
       Basic                              120,434   117,917    +        2%
       Diluted                            125,225   123,966    +        1%

    Production (daily - net of
     royalties):
       Oil (barrels)                       28,680    23,468    +       22%
       Gas (mcf)                          102,239    84,557    +       21%
       BOE (6:1)                           45,720    37,561    +       22%

    Unit sales price (including
     derivative settlements):
       Oil (per barrel)                     71.12     62.97    +       13%
       Gas (per mcf)                         7.44      6.38    +       17%
       BOE (6:1)                            61.25     53.71    +       14%

    Unit sales price (excluding
     derivative settlements):
       Oil (per barrel)                     72.27     64.00    +       13%
       Gas (per mcf)                         6.12      6.38    -        4%
       BOE (6:1)                            59.01     54.35    +        9%
    

    
                                         Three Months Ended
                                            September 30,       Percentage
                                         -------------------
                                           2007      2006         Change
                                         --------- ---------    ----------

    Oil and gas derivative contracts
       Cash receipt (payment) on                                 greater
        settlements                         9,414    (2,207)   + than 100%
       Non-cash fair value adjustment                            greater
        income (expense)                   (5,441)   14,582    - than 100%
                                         --------- ---------
          Total income (expense) from
           contracts                        3,973    12,375    -       68%
                                         --------- ---------

    Non-GAAP Financial Measure (1)
    Adjusted cash flow from operations
     (non-GAAP measure)                   166,776   118,983    +       40%
    Net change in assets and liabilities
     relating to operations                 2,438    16,382    -       85%
                                         --------- ---------
    Cash flow from operations (GAAP
     measure)                             169,214   135,365    +       25%
                                         --------- ---------

    Oil & gas capital investments         168,853   128,202    +       32%
    CO2 capital investments                                      greater
                                           33,981    14,450    + than 100%
    Proceeds from sales of properties         127     5,893    -       98%

    BOE data (6:1)
       Oil and natural gas revenues         59.01     54.35    +        9%
       Gain (loss) on settlements of                             greater
        derivative contracts                 2.24     (0.64)   + than 100%
       Lease operating expenses            (14.10)   (12.22)   +       15%
       Production taxes and marketing
        expense                             (3.01)    (2.82)   +        7%
                                         --------- ---------
          Production netback                44.14     38.67    +       14%
       Non-tertiary CO2 operating margin     0.54      0.53    +        2%
       General and administrative           (2.74)    (3.07)   -       11%
       Net cash interest expense            (1.61)    (0.92)   +       75%
       Current income taxes and other       (0.68)    (0.78)   -       13%
       Changes in asset and liabilities
        relating to operations               0.58      4.74    -       88%
                                         --------- ---------
          Cash flow from operations         40.23     39.17    +        3%
                                         --------- ---------

    (1) See "Non-GAAP Measures" at the end of this report.
    

    

                       NINE MONTH FINANCIAL HIGHLIGHTS
    (Amounts in thousands of U.S. dollars, except per share and unit data)

                                         Nine Months Ended
                                           September 30,        Percentage
                                       ---------------------
                                          2007       2006         Change
                                       ---------- ----------    ----------
    Revenues:
       Oil sales                          459,995    387,731   +       19%
       Gas sales                          174,831    165,014   +        6%
       CO2 sales and transportation
        fees                               10,079      7,049   +       43%
       Interest and other income            5,269      5,119   +        3%
                                       ---------- ----------
          Total revenues                  650,174    564,913   +       15%
                                       ---------- ----------

    Expenses:
       Lease operating expenses           167,087    120,148   +       39%
       Production taxes and marketing
        expenses                           33,266     27,272   +       22%
       CO2 operating expenses               3,211      2,272   +       41%
       General and administrative          34,669     35,040   -        1%
       Interest, net                       23,059     19,014   +       21%
       Depletion and depreciation         140,059    110,083   +       27%
       Commodity derivative expense         7,885     10,784   -       27%
                                       ---------- ----------
          Total expenses                  409,236    324,613   +       26%
                                       ---------- ----------

    Income before income taxes            240,938    240,300            -

    Income tax provision
       Current income taxes                14,158     12,856   +       10%
       Deferred income taxes               79,609     80,110   -        1%
                                       ---------- ----------

    NET INCOME                            147,171    147,334            -
                                       ---------- ----------

    Net income per common share:
       Basic                                 1.23       1.27   -        3%
       Diluted                               1.17       1.20   -        3%

    Weighted average common shares:
       Basic                              119,745    115,864   +        3%
       Diluted                            125,405    123,055   +        2%

    Production (daily - net of
     royalties):
       Oil (barrels)                       26,319     23,018   +       14%
       Gas (mcf)                           94,129     82,912   +       14%
       BOE (6:1)                           42,007     36,837   +       14%

    Unit sales price (including
     derivative settlements):
       Oil (per barrel)                     63.46      60.88   +        4%
       Gas (per mcf)                         7.71       7.29   +        6%
       BOE (6:1)                            57.05      54.44   +        5%

    Unit sales price (excluding
     derivative settlements):
       Oil (per barrel)                     64.02      61.70   +        4%
       Gas (per mcf)                         6.80       7.29   -        7%
       BOE (6:1)                            55.36      54.96   +        1%
    

    
                                         Nine Months Ended
                                           September 30,        Percentage
                                       ---------------------
                                          2007       2006         Change
                                       ---------- ----------    ----------

    Oil and gas derivative contracts
       Cash receipt (payment) on                                 greater
        settlements                       19,384     (5,187)   + than 100%
       Non-cash fair value adjustment                            greater
        income (expense)                 (27,269)    (5,597)   - than 100%
                                       ---------- ----------
          Total income (expense) from
           contracts                      (7,885)   (10,784)   +       27%
                                       ---------- ----------

    Non-GAAP Financial Measure: (1)
    Adjusted cash flow from operations
     (non-GAAP measure)                  401,496    355,625    +       13%
    Net change in assets and
     liabilities relating to                                     greater
     operations                          (36,685)   (11,331)   + than 100%
                                       ---------- ----------
    Cash flow from operations (GAAP
     measure)                            364,811    344,294    +        6%
                                       ---------- ----------

    Oil & gas capital investments        514,822    692,638    -       26%
    CO2 capital investments                                      greater
                                         102,408     42,617    + than 100%
    Proceeds from sales of properties      5,967      7,931    -       25%

    Cash and cash equivalents             39,414     28,924    +       36%
    Total assets                       2,674,364  1,961,644    +       36%
    Total long-term debt (excluding
     discount, premium & capital
     leases)                             755,000    445,000    +       70%
    Total stockholders' equity         1,290,480  1,043,980    +       24%

    BOE data (6:1)
       Oil and natural gas revenues        55.36      54.96    +        1%
       Gain (loss) on settlements of                             greater
        derivative contracts                1.69      (0.52)   - than 100%
       Lease operating expenses           (14.57)    (11.95)   +       22%
       Production taxes and marketing
        expense                            (2.90)     (2.71)   +        7%
                                       ---------- ----------
          Production netback               39.58      39.78    -        1%
       Non-tertiary CO2 operating
        margin                              0.60       0.48    +       25%
       General and administrative          (3.02)     (3.48)   -       13%
       Net cash interest expense           (1.49)     (1.38)   +        8%
       Current income taxes and other                            greater
                                           (0.66)     (0.04)   + than 100%
       Changes in asset and
        liabilities relating to                                  greater
        operations                         (3.20)     (1.12)   + than 100%
                                       ---------- ----------
          Cash flow from operations        31.81      34.24    -        7%
                                       ---------- ----------

    (1) See "Non-GAAP Measures" at the end of this report.
    

    Non-GAAP Measures

    Adjusted cash flow from operations is a non-GAAP measure that represents
cash flow provided by operations before changes in assets and liabilities, as
summarized from the Company's Consolidated Statements of Cash Flows. Adjusted
cash flow from operations measures the cash flow earned or incurred from
operating activities without regard to the collection or payment of associated
receivables or payables. The Company believes that it is important to consider
this measure separately, as it believes it can often be a better way to
discuss changes in operating trends in its business caused by changes in
production, prices, operating costs and so forth, without regard to whether
the earned or incurred item was collected or paid during that period. Adjusted
cash flow from operations is not a measure of financial performance under GAAP
and should not be considered as an alternative to cash flows from operations,
investing, or financing activities, nor as a liquidity measure or indicator of
cash flows. For a further discussion, see "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Operating Results"
in the Company's latest Form 10-Q or Form 10-K.

    Denbury Resources Inc. (www.denbury.com) is a growing independent oil and
gas company. The Company is the largest oil and natural gas operator in
Mississippi, owns the largest reserves of CO2 used for tertiary oil recovery
east of the Mississippi River, and holds significant operating acreage onshore
Alabama, in the Barnett Shale play near Fort Worth, Texas, and properties in
Southeast Texas. The Company's goal is to increase the value of acquired
properties through a combination of exploitation, drilling and proven
engineering extraction practices, with its most significant emphasis relating
to tertiary recovery operations.

    This press release, other than historical financial information, contains
forward looking statements that involve risks and uncertainties including
expected reserve quantities and values relating to the Company's proved and
probable reserves, the Company's potential reserves from its tertiary
operations, forecasted production levels relating to the Company's tertiary
operations and overall production levels, estimated capital expenditures for
2007, pricing assumptions based on current and projected oil and natural gas
prices, anticipated transactions, and other risks and uncertainties detailed
in the Company's filings with the Securities and Exchange Commission,
including Denbury's most recent reports on Form 10-K and Form 10-Q. These
risks and uncertainties are incorporated by this reference as though fully set
forth herein. These statements are based on engineering, geological, financial
and operating assumptions that management believes are reasonable based on
currently available information; however, management's assumptions and the
Company's future performance are both subject to a wide range of business
risks, and there is no assurance that these goals and projections can or will
be met. Actual results may vary materially.




For further information:

For further information: Denbury Resources Inc. Gareth Roberts,
972-673-2000 President and CEO or Phil Rykhoek, 972-673-2000 Sr. VP and Chief
Financial Officer www.denbury.com

Organization Profile

DENBURY RESOURCES INC.

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