Denbury Announces $66.5 Million in Property Acquisitions; New Properties Expected to Increase Daily Production an Additional 17% in 2001.

Business Editors

DALLAS--(BUSINESS WIRE)--Oct. 25, 2000

Denbury Resources Inc. (NYSE:DNR) (TSE:DNR) ("Denbury" or the "Company") today announced that it has purchased, or signed purchase and sale agreements to purchase, interests in three fields located in southwest Louisiana for a total consideration of $66.5 million. The transactions consist of 42 producing wells located in Thornwell, Iberia and Port Barre Fields. Approximately 92% of the wells will be operated by Denbury. All acquisitions are expected to be completed by the end of November, subject to normal closing conditions. Denbury will use its existing credit facility to fund the acquisitions.

Approximately 80% of the daily production from the acquired properties is natural gas. Assuming closing occurs as scheduled, the Company estimates these properties will add about 17.9 million cubic feet of natural gas per day ("MMcf/d") and 675 barrels of oil per day ("Bbls/d"), or 22.0 MMcf equivalent/d ("MMcfe/d"), to Denbury's average production during the fourth quarter of 2000. In 2001, the acquisitions are expected to add an average of approximately 20.6 MMcf/d and 875 Bbls/d, or 25.9 MMcfe/d, net to the total acquired interest.

These important acquisitions increase the Company's fourth quarter targeted average production rate to 25,650 BOE/d, up 17% from the previously announced target of 22,000 BOE/d, and increases the targeted average production rate for 2001 to 29,300 BOE/d, up 17% from the previously announced target of 25,000 BOE/d. The 2001 capital expenditure budget will be increased to $109 million from $100 million to meet the activity associated with the new properties.

Based on preliminary estimates by the Company, these acquisitions are expected to add net proved reserves of approximately 30 Bcfe (5 MMBOE) as of August 1, 2000. In order to insure a minimum rate of return on these properties, the Company has purchased a price floor (i.e. put) for approximately $2.5 million covering 100% of the forecasted proven natural gas production on the two acquisitions for 2001 and 2002. The price floor varies by quarter but ranges from $2.94 to $4.25 for 2001 and from $2.93 to $3.65 for 2002 with a weighted average price of $3.51 for 2001 and $3.23 for 2002.

Mr. Gareth Roberts, Chief Executive Officer of Denbury, said: "These acquisitions not only increase our natural gas production to approximately 40% of our total estimated production for 2001, but provide additional exploration and exploitation opportunities. We have identified a significant amount of future natural gas potential on these properties, and as such, expect to attribute 30% to 40% of the purchase price to unevaluated properties. Although the acquisition initially appears to have a high finding cost above our historical levels, with our price floors protecting any unforeseen commodity price weakness and the upside potential that our engineers and geologists have already identified, we expect to show an excellent rate of return on these acquisitions."

In addition, the Company recently purchased price floors for 2001 covering 12,800 Bbls/d of oil, with a floor price of $22.00 per Bbl, and covering 37.5 MMcf/d, with a floor price of $2.80 per MMBtu, at a total cost of approximately $2.6 million. These floors cover approximately 75% of the Company's forecasted production for 2001, excluding the aforementioned acquisitions. The Company will continue to receive market rates for the covered portion of its daily production as long as commodity prices remain above the levels of the price floors.

Denbury will be releasing its third quarter results on Thursday morning, November 2nd. You are invited to listen to our conference call that will be broadcast live over the Internet on Friday, November 3, 2000 at 10:00 a.m. CDT. The call may be accessed at our Web site: www.denbury.com. If you are unable to participate during the live broadcast, the call will be archived on our Web site for approximately 30 days.

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 and holds key operating acreage in the onshore Louisiana and offshore Gulf of Mexico areas. The Company increases the value of acquired properties in its core areas through a combination of exploitation drilling and proven engineering extraction practices.

This press release, other than historical financial information, contains forward looking statements that involve risks and uncertainties including expected reserve quantities, production levels, exploration and exploitation results, commodity prices, financial results and other risks and uncertainties detailed in the Company's filings with the Securities and Exchange Commission, including Denbury's reports on Form 10-K, 10-Q and 8-K. These reports are incorporated by this reference as though fully set forth herein. These statements are based on engineering, geological 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.