Denbury proved reserves increase by 36%, production up 21% year over year
PLANO, Texas -- Denbury Resources Inc. announced that its total estimated proved oil and natural gas reserves at December 31, 2012 were 409 MMboe, consisting of 329 MMbbl of crude oil, condensate and natural gas liquids, and 482 Bcf of natural gas. Reserves were 80% liquids and 60% proved developed, and 49% of such reserves were attributable to Denbury' s carbon dioxide enhanced oil recovery operations.
Nearly all of Denbury' s reserves not attributable to CO2 EOR operations at year-end 2012 relate to planned future CO2 EOR operations. Also, year-end 2012 proved reserve estimates do not include the estimated 42 MMboe of proved reserves associated with Denbury' s pending acquisition of property interests in the Cedar Creek Anticline of Montana and North Dakota from ConocoPhillips in a transaction expected to close near the end of the first quarter of 2013.
Denbury' s aggregate proved reserve additions during 2012 were 114 MMboe, primarily consisting of 57 MMboe from CO2 EOR operations at Hastings and Oyster Bayou fields, 26 MMboe from the acquisition of interests in the Thompson, Webster, and Hartzog Draw fields that Denbury plans to flood with CO2 in the future, and additions of 11 MMboe in the Bakken area prior to its sale in the fourth quarter of 2012. These 2012 additions were offset by 26 MMboe of production, the sale during the year of properties with combined proved reserves of 124 MMboe, and minor revisions, including those related to lower natural gas prices. Total tertiary oil reserves at December 31, 2012 were 201 MMboe, up 36% from the prior year-end level of 148 MMboe, primarily as a result of initial bookings at Hastings and Oyster Bayou fields.
The estimated discounted net present value of Denbury' s proved reserves at December 31, 2012, before projected income taxes, using a 10% per annum discount rate, was $9.9 billion, using first-day-of-the-month 12-month average 2012 prices of $94.71/bbl for oil and $2.85 per MMBtu for natural gas. This represents a $0.7 billion decline from the prior year level as the strategic sale of properties with a PV-10 Value of $1.9 billion at year-end 2011 (using first-day-of-the-month 12-month average 2011 prices of $96.19 per bbl for oil and $4.16 per MMBtu for natural gas) and the impact of lower oil and natural gas prices more than offset increases from additional tertiary reserves and acquired properties. The year-end 2012 PV-10 Value of proved reserves attributable to Denbury' s tertiary oil activities was $6.8 billion, a $1.1 billion, or 19%, increase from the prior year level. Also, year-end 2012 PV-10 Values do not include any PV-10 Value of the pending CCA Acquisition, which is currently estimated at $1.1 billion using the same commodity price assumptions as those in Denbury' s year-end 2012 report. On a pro forma basis, it is currently estimated that the CCA Acquisition would increase the Company' s PV-10 Value to approximately $11 billion.
Denbury' s estimated proved CO2 reserves at year end 2012, increased 8% to 9.6 Tcf. CO2 reserves are presented on a gross working interest or 8/8ths basis, except those reserves recently acquired from ExxonMobil which are reported net to Denbury' s interest.
Of these total CO2 reserves, 6.1 Tcf were in the Gulf Coast region and 3.5 Tcf were in the Rocky Mountain region. Denbury' s acquisition of approximately one-third of ExxonMobil' s CO2 reserves in LaBarge Field in Wyoming added approximately 1.3 Tcf to its Rocky Mountain region CO2 reserves.
Preliminary 2012 and Fourth Quarter Production
Based on preliminary data, Denbury' s average annual production rate for 2012 was 71,689 Boepd which included 35,206 bpd from tertiary properties and 14,847 boepd from properties sold in 2012. Preliminary estimated total fourth quarter 2012 production was 70,116 boepd which included 37,550 bpd from tertiary properties and 10,064 boepd from the Bakken area assets the Company sold during such quarter.
Quarterly total continuing production, which excludes production from the Bakken area assets sold during the fourth quarter of 2012, was 60,052 boepd, up 7% from the prior quarter continuing production levels, driven by an 8% sequential increase in tertiary production and a 6% sequential increase in non-tertiary production. Fourth quarter of 2012 tertiary production was 21% higher than the year ago quarter primarily due to strong contributions from the company' s newest CO2 floods at Hastings and Oyster Bayou fields and the expansion of existing CO2 floods at Delhi and Tinsley fields. The sequential increase in non-tertiary production during the fourth quarter of 2012 was primarily the result of properties acquired from ExxonMobil during such quarter, which contributed approximately 1,200 boepd to quarterly production. Denbury estimates current average net production from the properties to be acquired in the pending CCA Acquisition at approximately 11,000 boepd, of which 99% is oil and natural gas liquids. Assuming the acquisition closes as currently scheduled near the end of the first quarter of 2013, Denbury estimates the properties would contribute approximately 7,700 boepd to its full-year 2013 average daily production.
Preliminary 2012 capital expenditures
Denbury estimates that 2012 capital expenditures, excluding expenditures on acquisitions, capitalized interest, and tertiary startup costs, were approximately $1.45 billion, which was in-line with the budgeted amount. Of this amount, approximately $1.1 billion was spent on oil and natural gas development and exploration activities, with the remainder primarily spent on CO2 sources and infrastructure. Capital expenditures on properties Denbury sold in 2012 were approximately $0.4 billion.