Announces Entry into 2008 Natural Gas Hedges
Denbury Sets Conference Call for Third Quarter Results
DALLAS, October 19 /CNW/ - Denbury Resources Inc. (NYSE: DNR) ("Denbury"
or the "Company") announced that today it has entered into an agreement to
sell its Louisiana natural gas assets for approximately $180 million plus any
amounts received from a net profits interest (before closing adjustments), to
a privately held company. The sale is expected to close in 30 to 45 days and
is subject to satisfactory completion of customary due diligence and closing
conditions. The agreement contemplates an effective date of August 1, 2007,
and consequently operating net revenue after August 1, net of capital
expenditures, along with any other purchase price adjustments, will be
accounted for as an adjustment to the ultimate sales price. The potential net
profits interest relates to a sharing of production from a well in South
Chauvin field if operating income from that well exceeds certain levels, which
the Company believes could potentially increase the ultimate sales price by up
Production attributable to the properties being sold averaged
approximately 28.8 MMcfe/d (85% natural gas) during the second quarter of
2007, representing approximately 11% of Denbury's total second quarter
production, and approximately 4% of the total proved reserves as of December
31, 2006. The Company plans to reduce its bank debt with the proceeds from the
sale, which is anticipated to repay the majority of the outstanding amounts.
The Company's bank borrowing base will not be affected by the sale and will
remain unchanged at $500 million.
Gareth Roberts, President and Chief Executive Officer, stated, "This sale
further enables us to concentrate our investment and management focus on our
tertiary operations where we have lower risk, greater predictability,
virtually no competition in our areas of operation and higher profitability.
These funds, combined with the anticipated capital from planned 'dropdowns' of
CO2 pipeline assets over the next twelve months to Genesis Energy, L.P. are
expected to fund the shortfall between our anticipated cash flow from
operations and our capital budgets in 2007 and 2008. We will adjust our
production guidance for 2007 upon completion of the sale and we also plan to
announce 2008 guidance within the next few weeks. We continue to forecast
strong organic growth in both 2007 and 2008, even after reducing our
production volumes related to this sale. Our CO2 program is working and we
remain enthusiastic about our future."
2008 Natural Gas Derivative Contracts
The Company also announced that it has swapped 60 MMcf/d of its 2008
natural gas production at a weighted average price of $7.91 per MMBtu. Based
on preliminary forecasts after the Louisiana sale, these derivative contracts
are expected to be between 70% and 80% of the Company's natural gas
Conference Call for Third Quarter Results
The Company announced that it will release its third quarter 2007 results
on Thursday, November 1, 2007. You are invited to listen to our conference
call broadcast live over the Internet on Thursday, November 1, 2007 at 10:00
a.m. CDT. Gareth Roberts, President and Chief Executive Officer, Phil Rykhoek,
Sr. Vice President and Chief Financial Officer, Bob Cornelius, Senior Vice
President - Operations and Tracy Evans, Senior Vice President of Reservoir
Engineering, will lead the call. The call may be accessed on our website at
www.denbury.com. If you are unable to participate during the live broadcast,
the call will be archived on our website for approximately 30 days. The audio
portion of the call will also be available for playback by phone for
approximately one month after the call by dialing (888) 203-1112 or (719)
457-0820, passcode number 2103409.
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 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, including secondary and tertiary recovery operations.
This press release, other than historical financial information, contains
forward looking statements that involve risks such as those involved in oil
and gas operations and those due to price volatility, and uncertainties as to
production levels, commodity prices, proved reserves, and financial results as
detailed in the Company's filings with the Securities and Exchange Commission,
including its reports on Form 10-K and 10-Q. These reports are incorporated by
reference as though fully set forth herein. These statements are based on
assumptions concerning commodity prices, existing market conditions,
scheduling, drilling and completion results and costs and engineering
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,
President and CEO, 972-673-2000 or Phil Rykhoek, Chief Financial Officer,