Denbury Resources Answers Questions Regarding Hedge Position with Enron.Business Editors DALLAS--(BUSINESS WIRE)--Nov. 28, 2001 In answer to questions about its hedge position with Enron Corp. in light of today's downgrade Downgrade A negative change in the rating of a security. Notes: For example, an analyst may downgrade a stock from strong buy to buy, or a bond rating agency may downgrade a bond from AAA to AA. of Enron's debt ratings and the cancellation of Enron's proposed merger with Dynegy Inc., 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 reported that the natural gas price floors that the Company has with Enron include a price floor for 2002 with a strike price of $4.25 per MMBtu covering 41 MMcf/d, a price floor for 2003 with a strike price of $3.75 per MMBtu covering 33 MMcf/d, plus other minor natural gas price floors in 2002. Based on natural gas futures prices Futures price The price at which parties to a futures contract agree to transact upon the settlement date. at the close of business today, if Enron were to fully and timely make payment on these price floors, the Company would receive approximately $19 million during 2002 and approximately $7 million in 2003 on these contracts. No payments currently due the Company from Enron are in arrears Adv. 1. in arrears - in debt; "he fell behind with his mortgage payments"; "a month behind in the rent"; "a company that has been run behindhand for years"; "in arrears with their utility bills" behindhand, behind . These hedges are part of the $18 million spent by Denbury on price floors as part of the Matrix acquisition completed in July 2001. To date, the Company has received approximately $9 million in cash payments from these floors purchased in the second quarter. Given the nature of recent developments, the Company is unable to predict the amounts, if any, it will ultimately receive under the Enron hedge contracts. Substantially all of the Company's price floors for the remainder of 2001, other minor natural gas price floors for 2002 and an oil price floor covering 10,000 Bbls/d with a strike price of $21.00 per Bbl for 2002 are with other counterparties Counterparties The parties on either side of an interest rate swap or a currency, equity or commodity swap, or to an options or futures position. . Denbury Resources Inc. is a growing independent oil and natural gas company engaged in acquisition, development and exploration activities in the U.S. Gulf Coast region. The Company holds significant reserves and production in Mississippi, where it is the largest producer of oil and natural gas, onshore on·shore adj. 1. Moving or directed toward the shore: an onshore wind. 2. Located on the shore: an onshore beacon; an onshore patrol. adv. in Louisiana and in the 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 . 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 contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , consisting of opinions, forecasts, projections, guidance and other statements, other than historical financial information, regarding budgeted capital expenditures, expected production and financial results, among others. These statements are based on assumptions that are subject to change and to risks and uncertainties, especially volatility in oil and gas prices, geological risks, drilling results and production costs, and other risks and uncertainties detailed in the Company's filings with the Securities and Exchange Commission, including the Company's reports on Forms 10-K and 10-Q. Although management believes the expectations reflected in such forward-looking statements are reasonable based on currently available information, 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. Estimates of future financial or operating performance provided by the Company are based on existing market conditions and engineering and geologic information available at this time. Actual financial and operating performance may vary from these estimates. Future performance is dependent upon oil and gas prices, exploratory and development drilling results, engineering and geologic information and risks and changes in market conditions. |
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