Denbury Announces New Company Record for Proved Reserve Quantities; Quantities Increased 25%; Operational Update.

Business Editors & Energy Writers

DALLAS--(BUSINESS WIRE)--Feb. 1, 2002

Denbury Resources Inc. (NYSE:DNR) (TSE:DNR.) today announced its Dec. 31, 2001 estimates of proved reserves. DeGolyer and MacNaughton, an independent reservoir engineering firm, prepared Denbury's year-end reserve report.

Proved Reserve Analysis

In accordance with SEC requirements, Denbury's proved reserves at Dec. 31, 2001 were computed using unescalated year-end 2001 commodity prices of $19.84 per barrel of oil and $2.57 per MMBtu of natural gas. Using these prices, the Company's total proved reserves were 76.5 million barrels of oil and 198.3 Bcf of natural gas, or 109.5 MMBOE (on a 6:1 basis), a 25% increase from the prior year-end quantities. Approximately 75% of the 2001 year-end proved reserves were categorized as proved developed.

The discounted present value of the proved reserves before taxes at Dec. 31, 2001 using a 10% discount rate ("PV-10") is $574.3 million, approximately one-half of the PV-10 value for the prior year using last year's prices. The SEC prior year reserves were computed using unescalated commodity prices of $26.80 per barrel of oil and $9.78 per MMBtu of natural gas. If year-end 2001 prices were used to calculate both year-end 2000 and 2001 reserves, the PV-10 value increased approximately 46% from the beginning of 2001 to year-end 2001. Following is a preliminary reconciliation of the proved reserve quantities between Dec. 31, 2000 and 2001:

                                      Oil         Gas
                                    (MMBbl)      (Bcf)        MMBOE
                                  ----------  ----------   -----------
Balance at 12/31/2000                70.7       100.6         87.4
  Revisions due to price changes     (7.8)       (2.8)        (8.3)
  Acquisitions                       11.5        65.8         22.5
  Extensions, discoveries and
  other revisions                     8.3        65.8         19.3
  Estimated 2001 production          (6.2)      (31.1)       (11.4)
                                  ----------  ----------   -----------
Balance at 12/31/2001                76.5       198.3        109.5
                                  ==========  ==========   ===========

Management Comments

Gareth Roberts, Chief Executive Officer, said: "We are pleased with our year-end reserves. Even though prices have declined substantially, during 2001 we replaced production 3.7 times (excluding the downward revisions due to price changes) with approximately 54% of our new reserves coming from acquisitions and 46% coming from our development program. The Matrix properties are meeting or exceeding our expectations with a 35% increase in proved reserve quantities on these properties, from 71.6 Bcfe as of June 30, 2001 to 96.6 Bcfe as of year-end. When you adjust for the production during the interim period, the reserve quantities for Matrix would have increased by 46%. We have identified several more opportunities on these properties although most of these opportunities will not be exploited until natural gas prices recover."

"We estimate that our total expenditures for 2001 will be approximately $170 million for exploration and development and approximately $160 million for acquisitions (excluding the CO2 source acquisition), giving us a preliminary finding cost for 2001, excluding the downward adjustment of price revisions, of approximately $7.90 per BOE ($1.32 per Mcfe). Although this is higher than our finding cost for the prior two years, primarily due to the acquisition of Matrix Oil & Gas, our three year finding cost is still an excellent $5.25 per BOE ($0.87 per Mcfe)."

"For the second year in a row, we were able to nearly double our proved natural gas reserves during the year. A majority of these natural gas reserve additions came from our Matrix acquisition, with the balance from drilling activities in South Louisiana and properties offshore. With these natural gas reserve additions, at year-end natural gas makes up approximately 30% of our reserves on a BOE basis and about 50% of our production."

Operational Update

As a result of weather conditions that temporarily shut-in production in the Gulf of Mexico and delayed commencement of other operations and other onshore unanticipated delays, the Company expects that its fourth quarter 2001 average daily production will be between 34,750 BOE/d and 35,000 BOE/d, almost the same as the prior quarter's average daily production, and approximately 1% to 2% below the Company's prior forecast.

The Company continues to expect that its production in 2002 will average approximately 35,250 BOE/d. Although the recent drop in prices has lowered the Company's projected cash flow for 2002 to an amount that is close to its budgeted expenditures, with the Company's hedges that cover over 75% of its projected natural gas production and over 60% of its projected oil production, the impact of further potential price declines will be significantly reduced. The Company does not currently anticipate further reducing its capital budget unless price declines in the future are significant.

Based on the preliminary estimate of the fair market value of the Company's claim against Enron (around $9 million), the Company anticipates a non-cash pre-tax write down of its derivative hedge assets relating to Enron of around $25 million in the fourth quarter of 2001 to adjust the assets to the preliminary estimate of fair market value. As required by Financial Accounting Standards #133, the Company's pre-tax other comprehensive income relating to these hedges, previously recorded as part of the mark-to-market value adjustment as of Sept. 30, 2001, is not reversed until the periods during which the hedges would have originally expired. As such, during 2002 and 2003 the Company will recognize this amount, resulting in pre-tax income during 2002 of approximately $13 million and pre-tax income during 2003 of approximately $5 million. There are several factors which could affect the market value of Denbury's claim against Enron and consequently the amount of the Company's writedown could be modified before Feb. 27, the date 2001 earnings will be released.

Upcoming Presentations

Mr. Gareth Roberts, President and CEO, will be presenting at the Credit Suisse First Boston Energy Conference next Tuesday, Feb. 5 and Mr. Phil Rykhoek, Chief Financial Officer, will be presenting at the Morgan Stanley Global Leveraged Finance Conference on Monday, Feb. 11. The slide presentation that will be used at both of these conferences will be available on Denbury's website, www.denbury.com, prior to Feb. 5, and will include updated operational and financial data, a video presentation on CO2, and a summary review of our significant acquisitions since 1997. The presentation by Mr. Roberts will also be webcast, available from www.denbury.com, and archived on our web site for approximately 30 days thereafter.

About the Company

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 and values, production levels, capital expenditures 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 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 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.