Denbury Resources Inc. Sells Offshore Assets; Sets Conference Call for Second Quarter Results.

DALLAS -- Denbury Resources Inc. (NYSE:DNR) ("Denbury" or the "Company") announced that today it sold Denbury Offshore, Inc., to Newfield Exploration Company for $200 million, before adjustments, completing the auction of its offshore properties previously announced in March 2004. The Company has received, or expects to receive, an additional $2.8 million during 2004 from the sale of other offshore assets in separate transactions.

Denbury Offshore, Inc. ("Offshore") was a wholly-owned subsidiary of Denbury Resources Inc. that held all of the Company's offshore assets, except for a recently drilled well at High Island A-6 and all of its deep rights below 18,000 feet at West Delta 27, both of which were excluded from the sale. The Company has made a recent discovery at High Island A-6 with a preliminary estimated PV10 value, net to the Company, of between $5 and $15 million based on current natural gas prices, and expects to be carried in the first exploratory well drilled at West Delta 27 under a sale/farmout agreement under negotiation with an undisclosed third party. The purchase price of $200 million was for the stock of Offshore, valued as of April 1, 2004. Operating net revenue, net of capital expenditures, between April 1, 2004 and July 20, 2004, other purchase price adjustments, and expenses associated with the sale will be deducted from the acquisition price, resulting in an estimated net adjusted sales price of between $180 and $185 million.

Offshore had total proven reserves of 96.2 Bcfe, including $82 million of future development and plugging and abandonment costs, as of December 31, 2003, average production of 51.1 MMcfe/d during the first quarter of 2004, with preliminary estimates of production of 50 to 55 MMcfe/d for the second quarter of 2004. The Company plans to retire its bank debt with the proceeds from the sale, reducing total debt to $225 million, consisting entirely of the Company's 7.5% senior subordinated notes due 2013. The Company's bank borrowing base is expected to be adjusted from $220 million to $175 million as a result of the sale. The Company estimates that the sale will generate between $70 and $75 million of excess cash after repayment of its bank debt, estimated income taxes and other fees and expenses of the sale. Credit Suisse First Boston acted as sole financial advisor to Denbury in connection with the sale of Offshore.

Gareth Roberts, President and Chief Executive Officer, stated, "With the completion of this sale, we plan to focus our energy and investment on our tertiary operations where we have lower risk, greater predictability, virtually no competition and higher profitability. With the additional capital, we plan to accelerate development of our CO2 reserves and production, accelerate Phase II of our tertiary operations, and invest additional funds in our Barnett Shale acreage and other areas of operations. With our focus on the tertiary operations, we expect to show steady, predictable organic growth in 2005 and for multiple years thereafter. We are very enthusiastic about our future."

Revised Guidance

As a result of the proceeds generated by the sale, the Company has increased its 2004 development and exploration budget from $185 million to $205 million, the increases being earmarked for 3-D seismic at its CO2 source field at Jackson Dome, accelerated development of its tertiary projects in Western Mississippi, four additional horizontal wells in the Barnett Shale, 8 to 12 additional Selma Chalk wells at Heidelberg Field and other additional projects. The Company expects its production during the third quarter to be approximately 27,500 BOE/d reflecting the absence of production from its offshore properties, with production in the fourth quarter estimated at between 28,000 and 28,500 BOE/d. The Company anticipates that its lease operating expenses on a per BOE basis will increase as a result of the offshore property sale to between $7.25 and $7.75 per BOE during the last half of the year. The Company will record the net proceeds of the offshore sale as a reduction of its full cost pool, reducing depreciation, depletion and amortization by an estimated $0.70 to $0.80 per BOE as a result of the sale. General and administrative expenses are not expected to change significantly on a gross basis, as most personnel, other than operating personnel, will be re-allocated to other areas, predominately tertiary operations. In addition, the Company expects to expense in the third quarter approximately $1.6 million of incremental general and administrative expenses for severance and other costs associated with the sale. The Company expects to incur approximately $22 million of cash income taxes in the third quarter as a result of the sale; however, the sale is not expected to significantly affect the Company's overall effective income tax rate. In connection with the disposition, the Company retired 20 MMcf/d of its natural gas hedges (by acquiring offsetting positions) covering the remainder of 2004 with a price ceiling of approximately $5.82, at a cost of approximately $4.0 million.

Second Quarter Conference Call

The Company plans to announce its second quarter 2004 results on Thursday, July 29, 2004. You are invited to listen to our conference call broadcast live over the Internet on Thursday, July 29, 2004 at 10:00 a.m. CDT. Gareth Roberts, President and Chief Executive Officer, Phil Rykhoek, Sr. Vice President and Chief Financial Officer, Mark Worthey, Senior Vice President - Operations and Tracy Evans, Senior Vice President of Reservoir Engineering, will lead the call. The Company will discuss its second quarter results on the call as well as address questions regarding the offshore disposition. The call may be accessed at 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 one month after the call by dialing 888-203-1112 or 719-457-0820.

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 key operating acreage in onshore Louisiana. 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 such as those involved in drilling activity and those due to price volatility, and uncertainties as to drilling results, production levels, commodity prices, 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.