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Gold/Mining/Energy : KERM'S KORNER -- Ignore unavailable to you. Want to Upgrade?

To: Arnie who wrote (7470)	11/26/1997 3:31:00 AM
From: Kerm Yerman	Respond to of 15196

PROPERTY ACQUISITION / Denbury Resources $202 Mil Chevron Property Purchase DALLAS and CALGARY, Alberta, Nov. 25 /CNW/ -- Denbury Resources Inc. (NYSE: DNR; TSE) announced today that it has entered into an asset sale agreement with Chevron U.S.A. Inc. to purchase producing oil properties in the Heidelberg Field, Jasper County, Mississippi, for $202.0 million. This field is in the same area as the Company's other core Mississippi properties and includes operated, non-operating and royalty interests with approximately 122 producing wells, of which 96 wells will be Company operated with an average working interest of 94% and an average net revenue interest of 81%. The average daily production from these properties during the first nine months of 1997 was approximately 2,900 Bbls/d and 600 Mcf/d, net to the acquired interest. The Company has also acquired minor interests in Heidelberg Field from three other entities at an aggregate cost of approximately $5.9 million. These four acquisitions are expected to add net proved reserves of approximately 29.9 million barrels of oil and 1.8 billion cubic feet of gas, or approximately 30.2 million barrels on a BOE basis, as of January 1, 1998, to the Company based on preliminary estimates by Netherland, Sewell and Associates, Inc., the Company's independent petroleum engineers. As a result of the significant amount of future work to be performed and its expected effect on future reserves and production, the Company has attributed approximately $75 million of the purchase price to unevaluated properties. During its initial evaluation of the field, the Company has identified several potential development projects. This includes initiating the Eutaw East One Fault Block Oil Pool Unit (Eutaw formation in East Heidelberg) waterflood project with water injection expected to begin in March, 1998, upgrading lift capacity in over 15 wells, recompleting 30 wells in new zones, over 40 potential drilling locations, and other potential secondary and tertiary recovery projects. The Company has experienced success in its horizontal drilling program at nearby Davis, Quitman and Eucutta Fields and based on this information, the Company anticipates that 25 of the proposed future wells will be horizontal wells. The Company also operates a similar type Eutaw waterflood unit at its East Eucutta Field, located approximately nine miles to the southeast, with production from sands with similar porosity, permeability, thickness, and drive mechanisms. The total development budget during 1998 for Heidelberg Field is expected to be approximately $28 million. Denbury anticipates funding this acquisition initially with an expanded bank financing and is currently exploring its alternatives to fund this acquisition with other more permanent forms of capital. The transaction is effective January 1, 1998 and is anticipated to close in late December, 1997. It is subject to the possible effect of preferential purchase rights held by third parties and by typical purchase price adjustments. Denbury is a rapidly growing independent oil and gas company with its primary operations in the states of Louisiana and Mississippi.