SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 18, 2001
DENBURY RESOURCES INC.
(Exact name of Registrant as specified in its charter)
Delaware
(State or other jurisdiction
of incorporation or organization)
1-12935 75-2815171
(Commission File Number) (I.R.S. Employer
Identification No.)
5100 Tennyson Parkway
Suite 3000
Plano, Texas 75024
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (972)673-2000
Item 2. Acquisition or Disposition of Assets.
On January 18, 2001, Denbury Resources Inc. ("Denbury" or the "Company")
announced that it had signed a purchase and sale agreement to acquire carbon
dioxide ("CO2") reserves, production and associated assets from a unit of Airgas
Inc. for $42 million effective January 1, 2001.
The Acquisition
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The acquisition includes ten producing CO2 wells and production facilities
located near Jackson, Mississippi and a 183 mile, 20 inch pipeline which is
currently transporting CO2 to Denbury's tertiary recovery operation at Little
Creek Field, as well as CO2 to other commercial customers. The Company estimates
that this acquisition includes approximately 1.0 trillion cubic feet of usable
CO2 reserves. Current production is approximately 60 million cubic feet of CO2
per day ("MMcf/d"). Denbury purchases about 25 MMcf/d of this amount for
injection at its Little Creek Field. The balance of the purchased CO2, 35
MMcf/d, will be sold under long-term contracts to commercial CO2 users.
Acquisition Adds Value to Company's Operations
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CO2 production capacity of the acquired wells is estimated at 110 MMcf/d,
but it is estimated that this could be increased to around 250 MMcf/d by adding
compression facilities. An associated pipeline purchased as part of the
transaction is capable of transporting over 400 MMcf/d. The Company is acquiring
almost 100% of the working interests in the producing wells and will operate the
properties. Denbury will use its existing credit facility, under which the
borrowing base was recently increased from $110 million to $150 million, to fund
the acquisition. Closing is expected to occur in early February 2001, subject to
normal and customary closing conditions. After closing, the Company expects to
have approximately $110 million of total bank debt outstanding.
This Form 8-K, other than historical financial information, contains
forward looking statements that involve risks and uncertainties including
expected reserve quantities, production levels, financial results and other
risks and uncertainties detailed in the Company's filings with the Securities
and Exchange Commission, including Denbury's reports on Form 10-K and 10-Q.
These reports are incorporated by this reference as though fully set forth
herein. These statements are based on engineering, geological and operating
assumptions that management believes are reasonable based on currently available
information; however, management's assumptions and the Company's future
performance are both subject to a wide range of business risks, and there is no
assurance that these goals and projections can or will be met. Actual results
may vary materially.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Denbury Resources Inc.
(Registrant)
Date: January 26, 2001 By: /s/Phil Rykhoek
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Phil Rykhoek
Chief Financial Officer