NYSE:DNR $ 3.21 +0.07 +2.23% Volume: 6,111,070 April 19, 2018

Naturally Occurring CO2 Sources

LaBarge Field. We acquired an overriding royalty interest equivalent to an approximate one-third ownership interest in ExxonMobil’s CO2 reserves in LaBarge Field in the fourth quarter of 2012 as part of the sale and exchange transaction with ExxonMobil.  Our interest at Riley Ridge (discussed below) is also produced from the LaBarge Field. LaBarge Field is located in southwestern Wyoming. During 2016, we received an average of approximately 63 MMcf/d of CO2 from ExxonMobil’s Shute Creek gas processing plant at LaBarge Field. Based on current capacity, and subject to availability of CO2, we currently expect that we could receive up to 115 MMcf/d of CO2 by 2021 from such plant. We pay ExxonMobil a fee to process and deliver the CO2, which we use in our Rocky Mountain region CO2 floods. As of December 31, 2016, our interest in LaBarge Field consisted of approximately 1.2 Tcf of proved CO2 reserves.

Riley Ridge. The Riley Ridge Federal Unit is also located in southwestern Wyoming and produces gas from the same LaBarge Field. We own 100% of the operating interests in Riley Ridge, as well as a gas processing facility. We acquired the Riley Ridge Federal Unit and the associated gas processing facility with the intent to separate for sale the natural gas and helium from the full well stream after construction of the gas processing facility was completed, and ultimately for the purpose of gaining a source of CO2 to utilize in flooding our fields in the Rocky Mountain region. Subsequently, issues arose related to contractor performance and design failure that caused significant delays and incremental costs to complete the facility. We placed the gas processing facility into service during the fourth quarter of 2013, and we were successful in running the facility for part of 2014 before additional issues arose related to optimal operation of the facility and sulfur build-up in the gas supply wells. In mid-2014, the gas processing facility was shut-in and to date remains shut-in. We plan to continue engineering work and analysis in 2017 to determine if there are alternative options to remediate the sulfur build-up in the gas supply wells and to assess our ability to reduce the costs thereof; however, the time of completion and results of such analysis are currently uncertain.

CO2 Captured from Industrial Sources

We began purchasing and receiving CO2 from the ConocoPhillips-operated Lost Cabin gas plant in central Wyoming in the first quarter of 2013, under a contract that provides us as much as 50 MMcf/d of CO2 for use in our Rocky Mountain region CO2 floods.

3.21 +0.07 +2.23% Volume: 6,111,070 04/19/18
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