Denbury Resources searches for the lucrative buried resources of oil and gas across the US. In 2010 the independent exploration and production company reported estimated proved reserves of 397.9 million barrels of oil equivalent in the Gulf Coast, Mid-Continent, Permian Basin, and the Rockies. In Mississippi and Montana it owns the top reserves of CO2 used for tertiary oil recovery (hydrocarbon recovery using advanced techniques) east of the Mississippi River. CO2 is transported to wellheads where it is used to force oil from abandoned wells. To expand its market share, in 2010 Denbury Resources acquired rival Encore Acquisition for $4.5 billion.
Denbury Resources' business strategy is to focus on tertiary oil activities and CO2 production in core regions where it holds a strong track record and competitive advantage, and to make complementary acquisition that strengthen its portfolio. The Encore Acquisition deal positions Denbury Resources as one of the largest CO2 enhanced oil recovery companies in the US with extensive holdings across the Gulf Coast and Rocky Mountains. In 2010 it boosted its CO2 holdings, buying a 43% non-operated working stake in the Unit located in southwestern Wyoming for $115 million.
Growing its CO2 assets further, in 2011 the company spent $191 million to buy the 57.5% working interest it did not already own in the Riley Ridge Federal Unit, in southwestern Wyoming, as well as a 33% stake in an additional 28,000 acres of leasehold property.
The global recession depressed commodity prices and the company's revenues and income in 2009. However, the downturn did not stop Denbury Resources from increasing its production, and from going ahead with the Encore Acquisition purchase.
In order to generate cash for investment in its tertiary oil operations and to pay down debt the company has been selling assets. In 2008 the company sold its gas operations in Louisiana for about $180 million, and in 2009 it sold 60% of its holdings in the Barnett Shale for about $270 million. The following year, Denbury sold the remainder of its Barnett Shale assets to Talon Oil & Gas for $210 million and acquired the Conroe Field property in Texas from Wapiti Energy for about $430 million in cash and stock. It also sold Haynesville Shale and other East Texas assets to a private buyer for $217.5 million, and sold its 46% stake in Encore Energy Partners (a master limited partnership acquired as part of the Encore Acquisition deal) for $380 million.
To raise cash, in 2010 the company also sold its interests in Genesis Energy L.P. for more than $101 million.
As a result of its expanded operations, increased production, higher oil and gas prices, and a gain from the sale of its Genesis Energy assets, Denbury Resources reported a major jump in revenues and net income in 2010.
Expanding its assets on the Texas Gulf Coast, in 2012 the company bought the Thompson Field in Fort Bend County from a private seller for $360 million.
In a major asset repositioning, Denbury sold its Bakken assets in North Dakota and Montana to Exxon Mobil and XTO Energy for $1.6 billion. It plans to use the proceeds to purchase producing assets from Exxon Mobil in Texas and Wyoming that are prime properties for CO2 exploitation.
In 2013 it agreed to buy more than $1 billion in oilfield assets in Montana and North Dakota from ConocoPhillips. – less
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