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

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52 Denbury Resources Inc. 2009 Annual ReportCertain of our operating results and statistics for each of the last three years are included in the following table.Year Ended December 31,In thousands, except per share and unit data 2009 2008 2007Operating resultsNet income (loss) $ (75,156) $ 388,396 $ 253,147Net income (loss) per common share – basic (0.30) 1.59 1.05Net income (loss) per common share – diluted (0.30) 1.54 1.00Cash flow from operations 530,599 774,519 570,214Average daily production volumesBbls/d 36,951 31,436 27,925Mcf/d 68,086 89,442 97,141BOE/d (1) 48,299 46,343 44,115Operating revenuesOil sales $ 778,836 $ 1,066,917 $ 711,457Natural gas sales 87,873 280,093 241,331Total oil and natural gas sales $ 866,709 $ 1,347,010 $ 952,788Oil and natural gas derivative contracts (2)Cash receipt (payment) on settlement of derivative contracts $ 146,734 $ (57,553) $ 20,480Non-cash fair value adjustment income (expense) (382,960) 257,606 (39,077)Total income (expense) from oil and natural gas derivative contracts $ (236,226) $ 200,053 $ (18,597)Operating expensesLease operating expenses $ 326,132 $ 307,550 $ 230,932Production taxes and marketing expenses (3) 42,484 63,752 49,091Total production expenses $ 368,616 $ 371,302 $ 280,023Non-tertiary CO 2 operating marginCO 2 sales and transportation fees (4) $ 13,422 $ 13,858 $ 13,630CO 2 operating expenses (4,649) (4,216) (4,214)Non-tertiary CO 2 operating margin $ 8,773 $ 9,642 $ 9,416Unit prices – including impact of derivative settlements (2)Oil price per Bbl $ 68.63 $ 90.04 $ 68.84Natural gas price per Mcf 3.54 7.74 7.66Unit prices – excluding impact of derivative settlements (2)Oil price per Bbl $ 57.75 $ 92.73 $ 69.80Natural gas price per Mcf 3.54 8.56 6.81Oil and natural gas operating revenues and expenses per BOE (1)Oil and natural gas revenues $ 49.16 $ 79.42 $ 59.17Oil and natural gas lease operating expenses $ 18.50 $ 18.13 $ 14.34Oil and natural gas production taxes and marketing expense 2.41 3.76 3.05Total oil and natural gas production expenses $ 20.91 $ 21.89 $ 17.39(1) Barrel of oil equivalent using the ratio of one barrel of oil to six Mcf of natural gas (“BOE”).(2) See also “Market Risk Management” below for information concerning the Company’s derivative transactions.(3) For 2009, 2008 and 2007, includes transportation expenses paid to Genesis of $7.9 million, $8.0 million and $6.0 million, respectively.(4) For 2009, 2008 and 2007, includes deferred revenue of $4.2 million, $4.5 million, and $4.4 million, respectively, associated with volumetric production payments andtransportation income of $5.5 million, $5.5 million and $5.2 million, respectively, both from Genesis.Form 10-K Part IIManagement’s Discussion and Analysis of Financial Condition and Results of Operations
Denbury Resources Inc. 2009 Annual Report 53Production: Average daily production by area for 2009, 2008 and 2007, and each of the quarters of 2009 is listed inthe following table.Average Daily Production (BOE/d)First Second Third FourthQuarter Quarter Quarter Quarter Year Ended December 31,Operating Area 2009 2009 2009 2009 2009 2008 2007Tertiary oil fields 22,583 24,092 24,347 26,307 24,343 19,377 14,767Mississippi – non-CO 2 floods 11,904 10,043 8,931 8,914 9,937 11,897 12,479Texas 17,063 16,088 7,579 8,035 12,154 13,214 10,074Onshore Louisiana 708 885 699 679 743 624 5,542Alabama and other 1,150 1,161 1,103 1,077 1,122 1,231 1,253Total Company 53,408 52,269 42,659 45,012 48,299 46,343 44,115As outlined in the above table, production increased 1,956 BOE/d (4%) between 2008 and 2009, and 2,228 BOE/d(5%) between 2007 and 2008. The increase from 2008 to 2009 is due primarily to a 26% increase in tertiary oilproduction and to the acquisition of Hastings Field, partially offset by the sale of our Barnett Shale properties and todecreases in our Mississippi – non-CO 2 floods. Excluding production from the Barnett Shale properties sold during2009, production would have averaged 38,760 BOE/d during 2009 and 33,643 BOE/d during 2008, a 15% increaseyear-to-year. Our production increase between 2007 and 2008 was due to a 31% increase in tertiary oil production andproduction increases in the Barnett Shale, partially offset by the sale of our Louisiana natural gas properties anddeclines in our Mississippi – non-CO 2 floods. The increase in our tertiary oil production is discussed above under“Results of Operations – CO 2 Operations.”The acquisition of Hastings Field in February 2009 added 1,956 BOE/d during 2009 to our Texas area production.As discussed previously, we sold 60% of our interests in the Barnett Shale during June and July 2009, and sold ourremaining 40% interest in these properties during December 2009.Production in the Mississippi – non-tertiary operations decreased each of the last two years. Production in this areadecreased 5% from 2007 to 2008, and further decreased 16% from 2008 to 2009. Most of this decrease is dueto the expected gradual decline in Heidelberg Field due to depletion, although to a greater extent in 2009 due to thedevelopment of the Heidelberg CO 2 flood, which resulted in production being shut-in while portions of the field wereconverted to tertiary operations. When production commences from these CO 2 floods, these volumes are reportedas tertiary production for Heidelberg Field. Also, production is lower in 2009 due to no drilling activity in the SelmaChalk. Our drilling activity in Sharon Field (natural gas) in the latter part of 2008 helped offset the declines in the first quarterof 2009, but production there has declined each of the last three quarters of 2009, as we did not drill any additionalwells in 2009.Our production during 2009 was 77% oil as compared to 68% during 2008 and 63% during 2007. This increase isdue to the sale of our Louisiana natural gas assets during December 2007 and February 2008, the sale of our BarnettShale properties during 2009, the acquisition of Hastings Field during February 2009, and to the increase in our tertiaryoperations each year. Pro forma for the sale of the Barnett assets and the Conroe acquisition, fourth quarter 2009production would have been 91% oil.Management’s Discussion and Analysis of Financial Condition and Results of OperationsForm 10-K Part II
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Denbury Resources Inc.5100 Tennyson
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