Denbury Resources Acquires Key Fields in Mississippi and Texas; Mississippi Fields Acquired for Tertiary Recovery.Business Editors DALLAS--(BUSINESS WIRE)--April 18, 2001 Barnett Shale The Barnett Shale is a geological formation of economic significance. It consists of sedimentary rocks of Mississippian age in the U.S. State of Texas. The formation is estimated to stretch from the city of Dallas to west of the city of Fort Worth and south, covering 5,000 square Acreage in Texas is New Operating Area; Bank Borrowing Base Increased 33% to $200 Million Denbury Resources Inc. (NYSE NYSE See: New York Stock Exchange :DNR See dynamic noise reduction and domain name resolver. )(TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :DNR.) ("Denbury" or the "Company") today announced that it has acquired nearly 100% of the working interest in the West Mallalieu and Olive Fields in Southwestern Mississippi. In a separate transaction, Denbury acquired approximately 14,000 leasehold acres in the Barnett Shale gas play in the Fort Worth Basin, near Fort Worth, Texas Fort Worth is the fifth-largest city in the state of Texas, 18th-largest city in the United States[1], and voted one of "America’s Most Livable Communities. . Both acquisitions provide the Company with opportunities for reserve and production growth. West Mallalieu and Olive Fields Denbury acquired these two Mississippi oil fields This list of oil fields includes major fields of the past and present. The list is incomplete; there are more than 40,000 oil and gas fields of all sizes in the world[1]. for total consideration of $3.8 million with the intent of expanding its tertiary carbon dioxide carbon dioxide, chemical compound, CO2, a colorless, odorless, tasteless gas that is about one and one-half times as dense as air under ordinary conditions of temperature and pressure. ("CO2") injection operations. These fields are located within approximately five miles of the Company's current CO2 operations at Little Creek Field, the Company's second largest field. CO2 will be delivered to these fields from Denbury's CO2 reserves, acquired in February, utilizing the pipeline purchased in that same acquisition. Initial development is planned for West Mallalieu Field later this year, with a total of approximately $30 million projected to be spent at this field over the next three years. Initial estimates by Denbury, based on a successful pilot project at this field, indicate that approximately 8 million barrels of oil should be recoverable from West Mallalieu, a majority of which is expected to be booked as proved reserves proved reserves The quantity of minerals expected to be recoverable under current economic and operating conditions. The amount of proved reserves is important in valuing the stock of a company with significant holdings in natural resources. by year-end. There is also considerable potential for increasing proved reserves in the surrounding areas. The acquisition of Olive Field provides equipment and the potential to recover previously injected CO2. The acquisition of these fields is part of Denbury's strategy to implement CO2 recovery operations Operations conducted to search for, locate, identify, rescue, and return personnel, sensitive equipment, or items critical to national security. throughout the major Lower Tuscaloosa oil fields of Southwest Mississippi. These fields have produced over 245 million barrels of light sweet crude oil Sweet crude oil is a type of petroleum. Petroleum is considered "sweet" if it contains less than 0.5% sulfur[1], compared to a higher level of sulfur in sour crude oil. Sweet crude oil contains small amounts of hydrogen sulfide and carbon dioxide. to date from the Lower Tuscaloosa sands and are all currently close to being depleted de·plete tr.v. de·plet·ed, de·plet·ing, de·pletes To decrease the fullness of; use up or empty out. [Latin d or abandoned. Denbury is the only company strategically positioned to develop the potential tertiary reserves in these fields because of its ownership of CO2 reserves and pipeline. Denbury operates the only active CO2 operation in the basin at Little Creek Field and has expertise in installing and running such an operation. The Company estimates that approximately 80-100 million barrels of additional oil reserves may be available in fields in this part of the state through tertiary recovery operations. Barnett Shale Acreage Denbury has also acquired approximately 14,000 acres in the Barnett shale gas play in the Fort Worth Basin in Wise, Jack, Parker and Johnson Counties in North Texas and is leasing additional acreage in the area. Denbury views this acreage position as the first step in creating a new strategic operating area for the Company. This basin currently has over twenty rigs drilling for natural gas which typically has a shallow decline and a long life. Denbury is in the process of drilling its first well in this basin with plans to drill 3-4 additional wells in 2001. Assuming a successful exploration phase, the Company will develop a long-term development-drilling program for its acreage. Typical Barnett shale wells are drilled on 320 acre spacing with potential to down space to 80 acres. Historical initial rates of production range from 0.5 million cubic feet of natural gas per day (MMcf/d) to 1.0 MMcf/d, declining to between 100 and 200 Mcf/d, with minimal declines thereafter. Denbury is the operator, with an average 75% working interest on the 14,000 acres. Increase in Bank Borrowing Base As part of its banks' recent semi-annual review of the Company's borrowing base under its bank credit facility, Denbury's borrowing base was increased from $150 million to $200 million. The Company currently has approximately $82 million outstanding under this credit facility, with availability of approximately $118 million. 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 Noun 1. Gulf of Mexico - an arm of the Atlantic to the south of the United States and to the east of Mexico Golfo de Mexico Atlantic, Atlantic Ocean - the 2nd largest ocean; separates North and South America on the west from Europe and Africa on the east areas. The Company increases the value of acquired properties in its core areas through a combination of exploitation drilling and proven engineering extraction practices. The company will make a presentation to investors and analysts on Thursday, April 19 at the IPAA IPAA International Psychoanalytical Association. Oil and Gas Investment Symposium in New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. . Management's presentation can be viewed on the Company's internet site at www.denbury.com. The audio portion of the presentation can be found at www.ipaa.org. 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. , and 10-Q. 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. |
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