Interactive 2009 Annual Report (PDF 7.56 MB) - Denbury Resources ...

108 Denbury Resources Inc. 2009 Annual ReportSale of General Partner Ownership in GenesisOn February 5, 2010, we sold our interest in Genesis Energy, LLC to an affiliate of Quintana Capital Group L.P.(“Quintana”) for net proceeds of approximately $82 million, calculated as $100 million less adjustments including thoserelated to Genesis management incentive compensation and other selling costs. This sale gives Quintana controlof Genesis’ general partner. We continue to own approximately 10% of the outstanding common units of Genesis, forwhich a resale registration statement was filed in January 2010.Equity Award GrantOn January 4, 2010, we granted equity incentive awards to our employees under the 2004 Plan. The grant included659,509 shares of restricted stock valued at $15.63 per share and 1,780,276 SARs with an exercise price of $15.63and a weighted average grant date fair value of $8.22 per unit. The awards generally vest 25% per year over afour-year period.Note 16. Supplemental Oil and Natural Gas Disclosures (Unaudited)Costs IncurredThe following table summarizes costs incurred and capitalized in oil and natural gas property acquisition, explorationand development activities. Property acquisition costs are those costs incurred to purchase, lease, or otherwiseacquire property, including both undeveloped leasehold and the purchase of reserves in place. Exploration costsinclude costs of identifying areas that may warrant examination and examining specific areas that are consideredto have prospects containing oil and natural gas reserves, including costs of drilling exploratory wells, geological andgeophysical costs and carrying costs on undeveloped properties. Development costs are incurred to obtain accessto proved reserves, including the cost of drilling development wells, and to provide facilities for extracting, treating,gathering and storing the oil and natural gas, and the cost of improved recovery systems.The Company capitalizes interest on unevaluated oil and gas properties that have ongoing development activities.Included in the costs incurred below are capitalized interest of $14.3 million in 2009, $17.6 million in 2008 and $18.3million in 2007. Costs incurred also include new asset retirement obligations established, as well as changes to assetretirement obligations resulting from revisions in cost estimates or abandonment dates. Asset retirement obligationsincluded in the table below were $11.2 million in 2009, $5.8 million in 2008 and $7.5 million in 2007 (see Note 4, “AssetRetirement Obligations”).Costs incurred in oil and natural gas activities were as follows:Year Ended December 31,In thousands 2009 2008 2007Property acquisitions:Proved $ 585,637 $ 32,781 $ 15,531Unevaluated 104,772 16,129 60,079Exploration 4,635 5,710 42,726Development 292,545 575,947 553,315Total costs incurred (1) $ 987,589 $ 630,567 $ 671,651(1) Capitalized general and administrative costs that directly relate to exploration and development activities were $14.0 million, $12.5 million and $10.3 million for theyears ended December 31, 2009, 2008, 2007, respectively.Form 10-K Part IINotes to Consolidated Financial Statements