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

46 Denbury Resources Inc. 2009 Annual ReportPayments Due by PeriodIn thousands Total 2010 2011 2012 2013 2014 ThereafterContractual Obligations:Subordinated debt (a) $ 951,350 $ — $ — $ — $ 225,000 $ — $ 726,350Senior bank loan (a) 125,000 — 125,000 — — — —Estimated interest paymentson subordinated debt andSenior Bank Loan (a) 451,156 84,632 83,540 80,944 68,230 64,069 69,741Commitment, transaction, andadvisory fees related to financingof the Encore merger (b) 47,892 47,892 —Pipeline financing leaseobligations (c) 559,056 31,759 33,205 33,438 33,518 33,513 393,623Operating lease obligations 162,161 27,566 26,621 23,248 20,544 17,145 47,037Capital lease obligations (d) 7,314 1,974 1,974 1,272 700 673 721Capital expenditure obligations (e) 229,548 78,006 44,337 35,735 35,735 35,735 —Derivative contracts payment (f) 88,006 86,986 1,020 — — — —Other Cash Commitments:Future development costs onproved oil and gas reserves,net of capital obligations (g) 754,469 197,640 208,603 128,380 91,381 36,823 91,642Future development cost onproved CO 2 reserves, net ofcapital obligations (h) 121,467 12,467 11,000 — — 11,000 87,000Asset retirement obligations (i) 134,486 1,585 1,316 740 983 174 129,688Total $ 3,631,905 $ 570,507 $ 536,616 $ 303,757 $ 476,091 $ 199,132 $ 1,545,802(a) These long-term borrowings and related interest payments are further discussed in Note 6 to the Consolidated Financial Statements. This table assumes that ourlong-term debt is held until maturity.(b) Represents the minimum estimated fees payable to JP Morgan for financing commitments related to the proposed acquisition of Encore if the Encore Merger doesnot close. If the Merger closes, these fees would be increased to approximately $95 million.(c) Represents estimated future cash payments under a long-term transportation service agreement for the Free State Pipeline, and future minimum cash payments ina 20-year financing lease for the NEJD pipeline system. Both transactions with Genesis were entered into in 2008 and are being accounted for as financing leases.The payment required for the Free State Pipeline is variable based upon the amount of the CO 2 we ship through the pipeline and the commitment amounts disclosedabove for that financing lease are computed based upon our internal forecasts. Approximately $308 million of these payments represent interest. See Note 3 to theConsolidated Financial Statements.(d) Represents future minimum cash commitments of $4.7 million to Genesis under capital leases in place at December 31, 2009, primarily for transportation of crudeoil and CO 2, and $2.6 million for office space and rental equipment. Approximately $1.4 million of these payments represents interest.(e) Represents future cash commitments under contracts in place as of December 31, 2009, primarily for pipe, pipeline construction contracts, drilling rig services andwell related costs. As is common in our industry, we commit to make certain expenditures on a regular basis as part of our ongoing development and explorationprogram. These commitments generally relate to projects that occur during the subsequent several months and are usually part of our normal operating expensesor part of our capital budget, which for 2010 is currently set at $650 million, exclusive of acquisitions and capitalized interest. In certain cases we have the ability toterminate contracts for equipment in which case we would only be liable for the cost incurred by the vendor up to that point; however, as we currently do notanticipate cancelling those contracts these amounts include our estimated payments under those contracts. We also have recurring expenditures for such things asaccounting, engineering and legal fees, software maintenance, subscriptions, and other overhead type items. Normally these expenditures do not change materiallyon an aggregate basis from year to year and are part of our general and administrative expenses. We have not attempted to estimate the amounts of these types ofrecurring expenditures in this table as most could be quickly cancelled with regard to any specific vendor, even though the expense itself may be required for ongoingnormal operations of the Company.(f) Represents the estimated future payments under our oil and natural gas derivative contracts based on the futures market prices as of December 31, 2009. Theseamounts will change as oil and natural gas commodity prices change. The estimated fair market value of our oil and natural gas commodity derivatives atDecember 31, 2009 was a $128.7 million net liability. See further discussion of our derivative contracts and their market price sensitivities in “Market Risk Management”below in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, and in Note 10 to the Consolidated Financial Statements.(g) Represents projected capital costs as scheduled in our December 31, 2009 proved reserve report that are necessary in order to recover our proved oil and naturalgas reserves. These are not contractual commitments and are net of any other capital obligations shown under “Contractual Obligations” in the table above.(h) Represents projected capital costs as scheduled in our December 31, 2009 proved reserve report that are necessary in order to recover our proved CO 2 reservesfrom our CO 2 source wells used to produce CO 2 for our tertiary operations. These are not contractual commitments and are net of any other capital obligationsshown above.(i) Represents the estimated future asset retirement obligations on an undiscounted basis. The present discounted asset retirement obligation is $54.3 million, asdetermined under the “Asset Retirement and Environmental Obligations” topic of the FASC, and is further discussed in Note 4 to the Consolidated Financial Statements.Form 10-K Part IIManagement’s Discussion and Analysis of Financial Condition and Results of Operations