sv3asr
As filed with the Securities and
Exchange Commission on February 2, 2010
Registration Statement
No. 333-
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Form S-3
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF
1933
DENBURY RESOURCES
INC.
(Exact name of
Registrant)
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Delaware
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20-0467835
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(State of
incorporation)
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(I.R.S. Employer
Identification No.)
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1311
(Primary Standard Industrial
Classification Code Number)
Mark C. Allen, Senior Vice President and Chief Financial
Officer
Denbury Resources Inc.
5100 Tennyson Pkwy., Ste. 1200
Plano, Texas 75024
(972) 673-2000
(Name, address and telephone
number of Registrants executive offices and agent for
service)
Copies to:
Donald W. Brodsky
Judy G. Gechman
Baker & Hostetler LLP
1000 Louisiana Street
Suite 2000
Houston, Texas 77002
(713) 646-1335
Approximate date of commencement of proposed sale to the
public: From time to time after the effective
date of this Registration Statement.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans,
please check the following
box. o
If any of the securities being registered on this Form are being
offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933, other than
securities offered only in connection with dividend or interest
reinvestment plans, check the following
box. þ
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
check the following box and list the Securities Act registration
statement number of earlier effective registration statement for
the same
offering. o
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering. o
If this Form is a registration statement pursuant to General
Instruction I.D. or a post-effective amendment thereto that
shall become effective upon filing with the Commission pursuant
to Rule 462(e) under the Securities Act, check the
following
box. þ
If this Form is a post-effective amendment to a registration
statement filed pursuant to General Instruction I.D. filed
to register additional securities or additional classes of
securities pursuant to Rule 413(b) under the Securities
Act, check the following
box. o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in Rule
12b-2 of the
Exchange Act. (Check one):
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Large
accelerated
filer þ
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Accelerated
filer o
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Non-accelerated
filer o
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Smaller reporting
company o
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(Do not check if a smaller
reporting company)
CALCULATION
OF REGISTRATION FEE
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Proposed Maximum
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Proposed Maximum
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Amount of
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Title of Each Class of
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Amount to be
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Offering
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Aggregate
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Registration
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Securities to be Registered
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Registered
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Price per Unit(1)
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Offering Price
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Fee
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Common Stock, par value $.001 per share
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11,620,000
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$13.55
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$157,451,000
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$11,227
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(1) |
Pursuant to Rule 457(c) under the Securities Act of 1933,
as amended, these prices are estimated solely for the purpose of
calculating the registration fees and are based on the average
of the high and the low sales prices of the Companys
common stock on the New York Stock Exchange on January 29,
2010.
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The
information in this prospectus is not complete and may be
changed. This prospectus is not an offer to sell these
securities and we are not soliciting offers to buy these
securities in any state where the offer or sale is not
permitted.
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SUBJECT
TO COMPLETION, DATED FEBRUARY 2, 2010
PROSPECTUS
11,620,000
SHARES
Denbury
Resources Inc.
COMMON
STOCK
The selling stockholders named herein may offer and sell from
time to time up to 11,620,000 shares of our common stock
covered by this prospectus. We are registering the offer and
sale of these shares of our common stock to satisfy registration
rights that we have granted to the selling stockholders on a
private basis in connection with our acquisition from them of
certain properties. The selling stockholders will receive all of
the proceeds from any sales of their shares. We are not selling
any shares of common stock under this prospectus and will not
receive any proceeds from the sale of shares of common stock by
the selling stockholders.
Our registration of the shares of common stock covered by this
prospectus does not mean that the selling stockholders will
offer or sell any of the shares. The selling stockholders may
sell all or some of the shares of common stock covered by this
prospectus in a number of different ways and at varying prices.
More information about how the selling stockholders may sell the
shares is provided in the section entitled Plan of
Distribution beginning on page 12.
This prospectus describes the general terms of the general
manner in which the shares of common stock covered by this
prospectus will be offered. Specific terms of any offering will
be provided in a final prospectus. You should read this
prospectus and any supplement or final prospectus carefully
before you make your investment decision.
Our common stock is traded on the NYSE under the symbol
DNR. On January 29, 2010 the last reported sale
price of our common stock on the NYSE was $13.55 per share.
Investing in our common stock involves risks. See Risk
Factors on page 6 of this prospectus.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities, or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
The date of this prospectus
is ,
2010
TABLE OF
CONTENTS
Our principal executive office is located at 5100 Tennyson
Parkway, Suite 1200, Plano, Texas 75024 and our telephone
number is
(972) 673-2000.
We also have four primary field offices, located in Jackson,
Mississippi; Laurel, Mississippi; McComb, Mississippi; and
Pearland, Texas.
ABOUT
THIS PROSPECTUS
This prospectus is part of a registration statement that we have
filed with the U.S. Securities and Exchange Commission,
using a shelf registration process. This prospectus
relates to the offer and sale by the selling stockholders of our
common stock. You should rely on the information contained or
incorporated by reference into this prospectus. Specific
information about the terms of an offering will be included in a
final prospectus or a prospectus supplement relating to each
offering of shares made pursuant to this registration statement.
The final prospectus may also add, update or change information
contained in this prospectus. We have not authorized any other
person to provide you with different information. You should
read carefully the entire prospectus, as well as the documents
incorporated by reference in the prospectus and the final
prospectus, before making an investment decision.
If anyone else provides you with different or inconsistent
information, you should not rely on it. Neither we nor the
selling stockholders are making an offer to sell our common
stock in any jurisdiction where the offer or sale is not
permitted. You should assume that the information contained in
this prospectus and in the documents incorporated by reference
herein is accurate only as of their respective dates. Our
business, results of operations, financial condition and
prospects may have changed since those dates.
CAUTIONARY
STATEMENTS CONCERNING FORWARD-LOOKING STATEMENTS
This document and the documents incorporated by reference herein
include forward-looking statements about Denbury,
Encore Acquisition Company, or Encore, and the combined company
after the merger of Encore with and into Denbury, within the
meaning of Section 27A of the Securities Act of 1933, as
amended (which is referred to as the Securities Act in this
prospectus), Section 21E of the Securities Exchange Act of
1934, as amended (which is referred to as the Exchange Act in
this prospectus), and the Private Securities Litigation Reform
Act of 1995, regarding the financial position, business
strategy, production and reserve growth, possible or assumed
future results of operations, and other plans and objectives for
the future operations of Denbury, including following the merger
of Encore into Denbury, and statements regarding integration of
the businesses of Denbury and Encore and general economic
conditions. See Summary The merger and
Risk Factors.
The events and circumstances referred to in forward-looking
statements are subject to numerous risks and uncertainties.
Although we believe that in making such statements our
expectations are based on reasonable assumptions, the events and
circumstances referred to may be influenced by factors that
could cause actual outcomes and results to be materially
different from those projected.
Except for its obligations to disclose material information
under United States federal securities laws, Denbury does not
undertake any obligation to release publicly any revision to any
forward-looking statement, to report events or circumstances
after the date of this document or to report the occurrence of
unanticipated events.
Statements that are predictive in nature, that depend upon or
refer to future events or conditions, or that include words such
as will, would, should,
plans, likely, expects,
anticipates, intends,
believes, estimates, thinks,
may and similar expressions, are forward-looking
statements. The following important factors, in addition to
those discussed under Risk Factors and elsewhere in
this document, could affect the future results of the energy
industry in general, and Denbury after the merger in particular,
and could cause those results to differ materially from those
expressed in or implied by such forward-looking statements:
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uncertainties inherent in the development and production of and
exploration for oil and natural gas and in estimating reserves;
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unexpected difficulties in integrating the operations of Denbury
and Encore;
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the need to make unexpected future capital expenditures
(including the amount and nature thereof);
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the impact of oil and natural gas price fluctuations;
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the effects of our indebtedness and increases in interest rates
thereon, which could restrict our ability to operate, make us
vulnerable to general adverse economic and industry conditions,
place us at a competitive disadvantage compared to our
competitors that have less debt, and have other adverse
consequences;
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the effects of competition;
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the success of our risk management activities;
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the availability of acquisition or combination opportunities (or
lack thereof);
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the impact of current and future laws and governmental
regulations;
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environmental liabilities that are not covered by an effective
indemnification agreement or insurance; and
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general economic, market or business conditions.
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All written and oral forward-looking statements attributable to
Denbury or persons acting on behalf of Denbury are expressly
qualified in their entirety by such factors. For additional
information with respect to these factors, see Where You
Can Find More Information.
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WHERE YOU
CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Exchange
Act, which requires us to file annual, quarterly and special
reports, proxy statements and other information with the SEC.
You may read and copy any document that we file at the Public
Reference Room of the SEC at 100 F Street, N.E.,
Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330
for further information on the operation of its public reference
room. You may view our reports electronically at the SECs
Internet site at
http://www.sec.gov,
or at our own website at
http://www.denbury.com.
This prospectus constitutes part of a Registration Statement on
Form S-3
filed with the SEC under the Securities Act. It omits some of
the information contained in the Registration Statement, and
reference is made to the Registration Statement for further
information with respect to us and the securities we are
offering. Any statement contained in this prospectus concerning
the provisions of any document filed as an exhibit to the
Registration Statement or otherwise filed with the SEC is not
necessarily complete, and in each instance reference is made to
the filed document.
The SEC allows us to incorporate by reference the
information we file with it, which means that we can disclose
important information to you by referring you to that
information. Any information referred to in this way is
considered part of this prospectus from the date we file the
document containing it. Any reports filed by us with the SEC
after the date of this prospectus and before the date that the
offering of the securities by means of this prospectus is
terminated will automatically update and, where applicable,
supersede any information contained in this prospectus or
incorporated by reference in this prospectus. We incorporate by
reference (excluding any information furnished pursuant to
Item 2.02 or 7.01 of any report on
Form 8-K)
the documents listed below and any future filings made with the
SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act until we sell all the securities covered by this prospectus:
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Annual Report on
Form 10-K
for the year ended December 31, 2008;
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Quarterly Reports on
Form 10-Q
for the quarters ended March 31, 2009, June 30, 2009
and September 30, 2009;
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Current Reports on
Form 8-K
filed with the SEC on January 7, 2009, February 5,
2009, February 6, 2009, February 17, 2009, May 6,
2009, July 7, 2009, November 2, 2009 (dated
November 1, 2009), November 5, 2009 (dated
October 31, 2009), November 13, 2009, December 3,
2009, December 7, 2009, December 23, 2009,
December 23, 2009, January 6, 2010, February 1,
2010, as amended on February 1, 2010, February 2, 2010
(attaching as exhibits financial, oil and natural gas reserves
and other information of Encore) and February 2, 2010
(attaching as exhibits unaudited pro forma financial and
reserves information of the combined company); and
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The description of Denbury common stock set forth in the
Registration Statement on Form
8-A
(File No. 001-12935
filed with the SEC pursuant to Section 12 of the Exchange
Act on April 25, 1997, as amended on April 21, 1999),
and any amendment or report filed for the purpose of updating
such description.
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You may request a copy of these filings at no cost by writing or
telephoning Laurie Burkes, Investor Relations at Denbury
Resources Inc., 5100 Tennyson Parkway, Suite 1200, Plano,
Texas 75024,
phone: (972) 673-2000.
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SUMMARY
In this prospectus, when we use the terms
Denbury, the Company, we,
us or our, we mean Denbury Resources
Inc. and its subsidiaries on a consolidated basis, unless
otherwise indicated or the context requires otherwise. The
merger refers to the merger of Encore with and into
the Company. References to oil and natural gas prices used in
this prospectus mean the NYMEX WTI oil price and the Henry Hub
natural gas cash price per MMbtu, unless otherwise indicated.
Oil and natural gas terms used in this prospectus are defined in
the Glossary of Oil and Gas Terms section.
Denbury
Denbury is a Delaware corporation engaged in the acquisition,
development, operation and exploration of oil and natural gas
properties in the Gulf Coast region of the United States,
primarily in Mississippi, Louisiana, Texas and Alabama. We are
the largest oil and natural gas producer in Mississippi, and we
own the largest reserves of
CO2
used for tertiary oil recovery east of the Mississippi River.
Our goal is to increase the value of acquired properties through
a combination of exploitation, drilling and proven engineering
extraction processes, with our most significant emphasis
relating to tertiary recovery operations.
Since we acquired our first
CO2
tertiary flood in Mississippi in 1999, we have gradually
increased our emphasis on these types of operations. Our
tertiary operations have grown to the point that, as of
December 31, 2009, approximately 65% of our proved reserves
were proved tertiary oil reserves. As of December 31, 2009,
we had total tertiary-related proved oil reserves of
approximately 134.5 MMBbls. Our production from tertiary
operations has increased from approximately 1,350 Bbls/d in
1999, the then existing production at Little Creek Field at the
time of acquisition, to a preliminary estimated average of
approximately 26,300 Bbls/d during the fourth quarter of
2009. We expect this production to continue to increase for
several years as we expand our tertiary operations to additional
fields that we own. We believe that there are many additional
oil fields in our operating areas that can be acquired and
flooded with
CO2,
providing potential growth opportunities beyond our existing
inventory of oil fields.
Our estimated total proved reserves at December 31, 2009
were 192.9 MMBbls of oil and 88 Bcf of natural gas,
based on the average first-day-of-the-month prices for each
month during 2009 which for NYMEX oil was a price of $61.18 per
barrel adjusted to prices received by field and for natural gas
was a Henry Hub cash price of $3.87 per MMBtu, also adjusted to
prices received by field. On a BOE basis, our proved reserves
were 207.5 MMBOE at December 31, 2009, of which
approximately 93% was oil and approximately 62% was proved
developed.
Strategy
Denburys strategy is focused on the following fundamental
principles:
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remain focused in specific regions where Denbury either has, or
believes it can create, a competitive advantage as a result of
its ownership or use of
CO2
reserves, oil fields and
CO2
infrastructure;
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acquire properties where management believes additional value
can be created through tertiary recovery operations and a
combination of other exploitation, development, exploration and
marketing techniques;
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acquire properties that give Denbury a majority working interest
and operational control or where management believes Denbury can
ultimately obtain them;
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maximize the value of company properties by increasing
production and reserves while controlling costs; and
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maintain a highly competitive team of experienced and
incentivized personnel.
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The
merger
On October 31, 2009, we entered into a merger agreement
with Encore, pursuant to which Encore will merge with and into
Denbury in a transaction valued at approximately
$4.5 billion at that time. As a result of
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the merger, Encore will cease to exist and Denbury will continue
as a public company. The following description of the merger
agreement does not purport to be complete and is qualified in
its entirety by reference to the full text of the merger
agreement, which has been filed as Exhibit 2.1 to
Denburys
Form 8-K
on November 5, 2009 incorporated herein by reference.
Based on the number of shares of Encore common stock outstanding
as of a recent date, and including cash payments to Encore stock
option holders, the transaction value of the merger is
approximately $4.5 billion and the merger consideration will be
approximately $890 million in cash and between 115 and
146 million in shares of Denbury common stock, due to the
share exchange ratio in the merger being subject to a collar
calculated with reference to future average prices of Denbury
common stock.
The merger is subject to a number of closing conditions,
including, among others, the adoption of the merger agreement by
Encores and Denburys stockholders; no pending stop
order or proceeding seeking a stop order relating to our
registration statement on
Form S-4;
the receipt of tax opinions from counsel for each of Denbury and
Encore to the effect that the merger will be treated as a
reorganization under Section 368(a) of the Internal Revenue
Code of 1986, as amended (the Code), and that each
of Denbury and Encore will be a party to the reorganization
within the meaning of Section 368(b) of the Code;
Denburys receipt of the financing contemplated by the
merger agreement; and other customary conditions, including the
absence of a material adverse effect on Denbury or Encore.
The acquisition of Encore by Denbury positions the combined
company as one of the largest crude oil-focused, independent
North American exploration and production companies, with oil
constituting approximately 79% of its combined proved reserves
and with future growth predominantly in oil. The merger will
nearly double (prior to the acquisition of a 95% interest in the
Conroe field) Denburys inventory of oil reserves
potentially recoverable with
CO2
tertiary operations. The acquisition also creates one of the
largest
CO2
enhanced oil recovery (EOR) platforms in both the
Gulf Coast and Rocky Mountain regions, complemented by
Denburys ownership and control of the Jackson Dome
CO2
source in Mississippi and
CO2
supply contracts with potential anthropogenic sources of
CO2
in the Gulf Coast, Midwest and Rockies. Denbury expects the
combined companys size and scale, access to capital and
geographic presence to facilitate larger
CO2
projects, additional property acquisitions and opportunities to
partner with
CO2
emitters, in both the Gulf Coast and Rocky Mountain regions.
We have received a financing commitment, subject to customary
conditions, to underwrite a new $1.6 billion senior secured
revolving credit facility (the newly committed credit
facility). We have been advised by the co-arrangers of
this newly committed credit facility, J.P. Morgan and Bank
of America, N.A., that the syndication phase is complete, and
documentation for this facility is being prepared. The newly
committed credit facility is subject to final documentation and
satisfaction of closing conditions. Denbury anticipates
finalizing this facility prior to the Denbury and Encore
stockholder meetings.
We expect to finance the Encore acquisition, related costs and
repayment of certain Encore debt with a combination of
borrowings under our newly committed credit facility and an
offering of $1.0 billion of senior subordinated notes due
2020 announced February 2, 2010, and, if and to the extent
we do not receive the proceeds from our notes offering, with a
bridge loan for which we have received a financing commitment.
Encore
Encore is a Delaware corporation engaged in the acquisition and
development of oil and natural gas reserves from onshore fields
in the United States. Since 1998, Encore has acquired producing
properties with proven reserves and leasehold acreage and grown
the production and proven reserves by drilling, exploring,
reengineering or expanding existing waterflood projects and
applying tertiary recovery techniques. Encores properties
and its oil and natural gas reserves are located in four core
areas:
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the Cedar Creek Anticline, or CCA, in the Williston Basin in
Montana and North Dakota;
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the Permian Basin in west Texas and southeastern New Mexico;
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the Rockies, which includes non-CCA assets in the Williston, Big
Horn and Powder River Basins in Wyoming, Montana and North
Dakota and the Paradox Basin in southeastern Utah; and
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the Mid-Continent region, which includes the Arkoma and Anadarko
Basins in Oklahoma, the North Louisiana Salt Basin and the East
Texas Basin.
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Encores estimated total proved reserves at
December 31, 2009 were 147.1 MMBbls of oil and
439.1 Bcf of natural gas, based on the average
first-day-of-the-month prices for each month during 2009, which
reflect an oil price of $61.18 per barrel and a natural gas cash
price of $3.83 per MMBtu. On a BOE basis, Encores proved
reserves were 220.3 MMBOE at December 31, 2009, of
which approximately 67% was oil and approximately 80% was proved
developed.
Rationale
for the merger
We believe that merging Encore into Denbury advances our
strategy, as described below:
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Encore owns legacy oil assets in Montana, North Dakota and
Wyoming with over 6 billion barrels of original oil in
place, assets that are distinguished by their long reserve life
and low decline rates and that have significant potential for
recovery of crude oil through
CO2
EOR.
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The merger will create one of the largest crude oil focused
independent exploration and production companies in North
America. The proved oil and gas reserves of the combined company
are expected to be approximately 79% oil reserves, an advantage
in light of the better profit margin for oil as reflected in
both the short-term and long-term marketplace for oil versus
natural gas.
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The merger will expand Denburys EOR platform, which is
already one of the countrys largest, by adding another
core area of focus, the Rocky Mountain region. Both
Denburys Gulf Coast core EOR area and the Rocky Mountain
region have a significant number of oil fields that are future
acquisition candidates for
CO2
flooding, providing multiple future growth opportunities for a
company of Denburys post-merger scale and geographic
presence.
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The merger will nearly double Denburys potential oil
reserves (prior to the Conroe purchase discussed below)
recoverable through EOR. Denbury expects its significant
expertise in EOR in the Gulf Coast to be directly applicable to
Encores Rocky Mountain oilfield assets.
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Encores Bakken oil properties and Haynesville gas
properties both provide reserves and production potential from
shale formations, as Encore owns over 300,000 acres in the
Bakken area (one of the largest positions in the field) and over
19,000 acres in the Haynesville area of north Louisiana.
Denbury anticipates that these shale assets will provide
short-term production growth and cash flow while longer-term EOR
assets are developed, and will provide potentially significant
incremental reserve growth.
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Denbury anticipates that EOR production from Encore properties
will provide production growth beginning in 2015, the time at
which Denburys current Gulf Coast EOR production is
presently predicted to peak.
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The merger will establish a leading North American
CO2
EOR company at a critical juncture in the environmental policy
shift regarding carbon capture and storage. Denbury anticipates
that the merger will enhance Denburys position as a buyer
of choice of mature oil properties that can benefit from EOR,
and a leading partner for
CO2
emitters in offsetting their carbon footprints.
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Denbury anticipates that the increased size, scale and
diversification of the combined company will allow it to
ultimately reduce its cost of capital and its operating costs
per equivalent barrel. Additionally, Denbury anticipates that it
will be in a position to undertake larger
CO2
projects because of the combined companys larger size.
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Denbury believes the merger is advantageous as it anticipates
that post-merger the combined companys cash flow and
proved reserves per share will be accretive to Denbury
stockholders. Denbury expects the combined company reserves and
production to double, with the net increase in outstanding
Denbury
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shares resulting from the merger ranging from approximately 45%
to 60%, depending on the number of shares ultimately issued in
the acquisition.
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Denbury expects the combined company reserves and production to
double.
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Denbury expects the anticipated capital structure of the company
after the merger will provide significant liquidity and an
opportunity to focus capital deployment on those projects with
the optimal return opportunities.
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As part of the merger, Denbury will acquire the general partner
of Encore Energy Partners LP (ENP) and an
approximately 46% limited partner interest in that entity. ENP
affords a potential financing vehicle for the combined company
as a master limited partnership designed to provide a reduced
cost of capital for purchase of assets from the large inventory
of properties that will be owned by the combined company.
Dropdowns of acquired assets to ENP may provide Denbury an
attractive way to reduce its debt incurred as part of the
merger, to the extent ENP sells additional units to the public
instead of purchasing assets by incurring incremental debt.
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The diversified nature of Encores oil and natural gas
assets, many of which are located in areas generally highly
regarded in the industry, should enhance Denburys ability
to sell a portion of the acquired assets to third parties in
order to reduce the debt incurred to finance the merger, while
allowing Denbury to retain acquired assets that it judges to be
core to its strategy.
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Denbury anticipates that combining the companies will produce
significant synergies, leading to reduced costs in the corporate
general and administrative area (including accounting fees,
legal fees and executive management team costs) and in the
operational area (including engineering costs and discounts for
purchasing goods and services on a larger scale).
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Integration of the companies should be facilitated by the two
companies being headquartered within the same greater
metropolitan area.
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Recent
developments
Proposed
Genesis sale
On December 17, 2009, we and one of our subsidiaries
entered into a definitive agreement to sell all of the
subsidiarys Class A membership interests in Genesis
Energy, LLC, the general partner of Genesis Energy, L.P., or
Genesis, to an affiliate of Quintana Capital Group L.P. for net
proceeds of approximately (1) $100 million less
(2) adjustments currently estimated to be up to
approximately $18 million (including those related to
Genesis management incentive compensation and other selling
costs), which upon closing will give the buyer control of
Genesis general partner. The sale of the general partner
does not include the sale of approximately 10% of the
outstanding common units of Genesis we hold. The agreement
contains termination rights for both parties, including such
rights based on the failure to close the transaction by
February 28, 2010, and is subject to certain closing
conditions.
Conroe
purchase
On December 18, 2009, we purchased a 95% interest in the
Conroe Field, a significant potential tertiary flood north of
Houston, Texas, for approximately $256.4 million in cash
plus 11,620,000 shares of Denbury common stock. As part of
the transaction, we agreed to provide the sellers with resale
registration rights covering those shares. However, the sellers
may not sell any of these shares until the earlier of the
closing of the Encore merger, its termination or, under certain
circumstances, June 28, 2010. We have estimated that the
purchased interests have significant estimated net reserve
potential from
CO2
tertiary recovery. We have also preliminarily estimated that the
acquired Conroe Field interests had approximately 20 MMBOE
of proved conventional reserves as of December 1, 2009,
based on NYMEX oil futures prices near that time, nearly all of
which are proved developed. The Conroe Field assets are
currently producing around 2,500 BOE/d net to our acquired
interests. We will need to build a pipeline to transport
CO2
to this field, preliminarily estimated to cover approximately
80 miles, as an extension of Denburys Green pipeline.
Based on our preliminary
4
estimates, we will spend an additional $750 million to
$1.0 billion, including the cost of the
CO2
pipeline, to develop the Conroe Field as a tertiary flood.
Barnett
sale
On December 30, 2009, we sold our remaining 40% interest in
our Barnett Shale natural gas assets for $210 million in
cash to the privately held company that had purchased the 60%
interest in our Barnett Shale natural gas assets in mid-2009.
Production attributable to the 40% interest in the Barnett Shale
natural gas assets sold averaged approximately 4,596 BOE/d
during the third quarter of 2009.
Fourth
quarter production
Based on the preliminary unaudited data, our estimated average
daily production rate for our tertiary oil production during the
fourth quarter of 2009 is approximately 26,300 Bbls/d. Our
preliminarily estimated fourth quarter total production is
approximately 44,940 BOE/d, resulting in an average annual
production rate of approximately 48,280 BOE/d.
Encores estimated fourth quarter production averaged
45,143 BOE/d, consisting of 27,913 Bbls/d and
103,382 Mcf of natural gas per day.
Financial
information
The unaudited pro forma combined financial information and the
notes thereto, together with the consolidated historical
financial statements of Encore, which are part of two Current
Reports on
Form 8-K
filed with the SEC on February 2, 2010 are incorporated by
reference herein.
5
RISK
FACTORS
Investing in our common stock involves risks. Before
purchasing any of our common stock, you should carefully
consider the risk factors that are incorporated by reference
herein from Item 1.A., captioned Risk Factors,
of our Annual Report on
Form 10-K
for the year ended December 31, 2008 and our Quarterly
Reports on
Form 10-Q
for the quarters ended March 31, 2009, June 30, 2009
and September 30, 2009. There are additional risk factors
related to our indebtedness and the merger, as described
below.
Risks
Relating to our Business
Our
level of indebtedness may adversely affect operations and limit
our growth.
Denbury will be more leveraged after the merger than it has been
historically. Upon closing of the merger and the revolving
credit facility contemplated by the merger agreement, we will
have $1.975 billion of revolving credit facilities.
Borrowings under the newly committed credit facility combined
with Denburys existing debt under the committed bridge
facility or other financing arrangements are expected to be
approximately $3.5 billion of total pro forma combined
long-term debt after the completion of the merger. This level of
indebtedness could result in Denbury having difficulty accessing
capital markets or raising capital on favorable terms and
Denburys financial results could be negatively affected by
its inability to raise capital or because of the cost of such
capital.
Our substantial debt following the merger and the related
financing could have important consequences for us. For example,
it could:
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increase our vulnerability to general adverse economic and
industry conditions;
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limit our ability to fund future working capital and capital
expenditures, to engage in future acquisitions or development
activities, or to otherwise realize the value of our assets and
opportunities fully because of the need to dedicate a
substantial portion of our cash flow from operations to payments
on our debt or to comply with any restrictive terms of our debt;
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limit our flexibility in planning for, or reacting to, changes
in the industry in which we operate; or
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place us at a competitive disadvantage as compared to our
competitors that have less debt.
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Realization of any of these factors could adversely affect our
financial condition. In addition, although we and Encore both
have hedges in place for 2010 and 2011, these hedges have
varying floors and ceilings and will only partially protect the
combined companys cash flow. A decline in commodity prices
may require that we reduce our planned capital expenditures,
which may have a corresponding negative effect on our
anticipated production growth.
If we are unable to generate sufficient cash flow or otherwise
obtain funds necessary to make required payments on our
indebtedness or if we otherwise fail to comply with the various
covenants in such indebtedness, including covenants in our
senior secured credit facilities, we would be in default. This
default would permit the holders of such indebtedness to
accelerate the maturity of such indebtedness and could cause
defaults under other indebtedness or result in our bankruptcy.
Our ability to meet our obligations will depend upon our future
performance, which will be subject to prevailing economic
conditions, commodity prices, and to financial, business and
other factors, including factors beyond our control.
Upon consummation of the merger, we and all of our restricted
subsidiaries must comply with various restrictive covenants
contained in our revolving credit facilities, the indentures
related to our senior subordinated notes and any of our future
debt arrangements. These covenants will, among other things,
limit our ability and the ability of and all of our restricted
subsidiaries to:
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incur additional debt or liens;
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pay dividends;
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make payments in respect of or redeem or acquire any debt or
equity issued by Denbury;
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sell assets;
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make loans or investments; and
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acquire or be acquired by other companies.
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Risks
Relating to the Merger
Denbury
and Encore are parties to pending lawsuits in connection with
the merger.
Three shareholder lawsuits styled as class actions have been
filed against Encore and its board of directors. The lawsuits
are entitled Sanjay Israni, Individually and On Behalf of All
Others Similarly Situated vs. Encore Acquisition Company et al.
(filed November 4, 2009 in the District Court of
Tarrant County, Texas), Teamsters Allied Benefit Funds,
Individually and On Behalf of All Others Similarly Situated vs.
Encore Acquisition Company et al. (filed November 5,
2009 in the Court of Chancery in the State of Delaware) and
Thomas W. Scott, Jr., individually and on behalf of all
others similarly situated v. Encore Acquisition Company et
al. (filed November 6, 2009 in the District Court of
Tarrant County, Texas). The Teamsters and Scott
lawsuits also name Denbury as a defendant. The complaints
generally allege that (1) Encores directors breached
their fiduciary duties in negotiating and approving the merger
and by administering a sale process that failed to maximize
shareholder value and (2) Encore, and, in the case of the
Teamsters and Scott complaints, Denbury aided and
abetted Encores directors in breaching their fiduciary
duties. The Teamsters complaint also alleges that
Encores directors and executives stand to receive
substantial financial benefits if the transaction is consummated
on its current terms.
The plaintiffs in these lawsuits seek, among other things, to
enjoin the merger and to rescind the merger agreement. Encore
and Denbury believe that the lawsuits are without merit and that
they have valid defenses to all claims. Encore and Denbury will
defend this litigation vigorously.
A shareholder suit regarding a compensation matter brought as a
derivative action on behalf of Denbury against Denburys
board of directors, entitled Harbor Police Retirement
System v. Gareth Roberts, et al, in the District Court
of Dallas County, Texas, was amended in January 2010, to
generally allege breach of the Denbury directors fiduciary
duties based upon the further allegation that the directors
approved an unreasonably high purchase price in the merger. The
plaintiff seeks monetary damages and equitable relief. Denbury
believes these allegations are without merit and that its
directors have valid defenses to all claims. Denbury and its
directors intend to defend this litigation vigorously.
Business
uncertainties and contractual restrictions while the merger is
pending may have an adverse effect on Encore or
Denbury.
Uncertainty about the effect of the merger on employees,
suppliers, partners, regulators and customers may have an
adverse effect on Encore. These uncertainties may impair
Encores ability to attract, retain and motivate key
personnel until the merger is consummated and could cause
suppliers, customers and others that deal with Encore to defer
purchases or other decisions concerning Encore or seek to change
existing business relationships with Encore. In addition, the
merger agreement restricts both Denbury and Encore from making
certain acquisitions and taking other specified actions without
the others approval. Because these restrictions could
prevent either party from pursuing attractive business
opportunities that may arise prior to the completion of the
merger, the overall value of the combined company could be
negatively impacted.
Risks
Relating to the Combined Company After the Merger
We may
not realize the benefits of integrating our
companies.
To be successful after the merger, Denbury will need to combine
and integrate our operations and the operations of Encore into
one company. Integration will require substantial management
attention and could detract attention from the
day-to-day
business of the combined company. We could encounter
difficulties in the integration process, such as the need to
revisit assumptions about reserves, future production, revenues,
capital expenditures and operating costs, including synergies,
the loss of key employees or commercial
7
relationships or the need to address unanticipated liabilities.
If we cannot successfully integrate our business with
Encores business, we may fail to realize the expected
benefits of the merger.
The
combined company may be unable to secure sufficient amounts of
carbon dioxide to expand its
CO2
EOR operations into the Rocky Mountain region.
Our long-term growth strategy is focused on our
CO2
tertiary recovery operations. Production of crude oil from the
expansion of our tertiary operations into the Rocky Mountain
region depends on having access to sufficient amounts of
CO2
in this region. The ability to produce this oil and execute this
growth strategy would be hindered if we were unable to obtain
necessary
CO2
volumes in the Rocky Mountain region at a cost that is
economically viable.
The
combined company may experience an impairment of its
goodwill.
We expect to recognize a substantial amount of goodwill in
connection with consummation of the merger and the allocation of
the purchase price thereto. We test goodwill for impairment
annually during the fourth quarter, or between annual tests if
an event occurs or circumstances change that may indicate the
fair value of a reporting unit is less than the carrying amount.
The need to test for impairment can be based on several
indicators, including but not limited to a significant reduction
in the price of oil or natural gas, a full cost ceiling
write-down of oil and natural gas properties, unfavorable
revisions to oil and natural gas reserves and significant
changes in the expected timing of production, or changes in the
regulatory environment.
Fair value calculated for the purpose of testing for impairment
of our goodwill is estimated using the expected present value of
future cash flows method and comparative market prices when
appropriate. A significant amount of judgment is involved in
performing these fair value estimates for goodwill since the
results are based on estimated future cash flows and assumptions
related thereto. Significant assumptions include estimates of
future oil and natural gas prices, projections of estimated
quantities of oil and natural gas reserves, estimates of future
rates of production, timing and amount of future development and
operating costs, estimated availability and cost of
CO2,
projected recovery factors of reserves and risk-adjusted
discount rates. We base our fair value estimates on projected
financial information which we believe to be reasonable.
However, actual results may differ from those projections.
SELLING
STOCKHOLDERS
This prospectus covers the offering for resale of up to
11,620,000 shares of common stock by the selling
stockholders. The selling stockholders may sell all, some or
none of the shares of common stock covered by this prospectus.
Please read Plan of Distribution. We will pay the
costs, fees and expenses incurred in connection with the
registration of the shares of common stock offered by this
prospectus, including reasonable fees and expenses of one
counsel for the selling stockholders. Brokerage commissions and
similar selling expenses, if any, attributable to the sale of
shares of common stock will be borne by the selling stockholders.
No such sales may occur unless the registration statement of
which this prospectus is a part is effective at the time a
selling stockholder offers or sells such shares of common stock
and a final prospectus had been delivered.
We are registering the shares of common stock covered by this
prospectus for the selling stockholders. The shares were issued
to the selling stockholders as partial consideration pursuant to
a purchase and sale agreement dated December 18, 2009, for
our acquisition from them of certain properties. We entered into
a registration rights agreement in connection with that purchase
and sale agreement, under which we agreed to register the shares
for resale pursuant to Rule 415 within two days following
the effective date of our
Form S-4
registration statement filed in connection with the merger of
Encore with and into Denbury.
The selling stockholders have agreed not to sell, offer to sell,
contract to sell, pledge or otherwise dispose of or transfer any
of the shares of stock covered by this prospectus until the
earlier of (i) the second business
8
day following the date on which the merger of Encore with and
into Denbury is closed, (ii) the date on which the merger
agreement is terminated or expires, or (iii) May 31,
2010, subject to certain provisions in the registration rights
agreement which could extend this date to no later than
June 28, 2010.
The following table sets forth the name of each selling
stockholder, the number of shares of our common stock owned and
the percentage of shares of common stock outstanding owned by
each selling stockholder prior to the offering, the number of
shares of common stock being offered for each selling
stockholders account, and the amount to be owned and the
percentage of shares of common stock outstanding owned by each
selling stockholder following the completion of the offering
(assuming each selling stockholder sells all of the shares of
common stock covered by this prospectus). The percentages of
shares of common stock outstanding have been calculated based on
261.8 million shares of common stock outstanding as of
December 31, 2009. Other than the sale of certain assets to
Denbury on December 18, 2009, as described in
Summary Recent developments, and the
registration rights agreement entered into by Denbury and the
selling stockholders in connection therewith, none of the
selling stockholders has held any position or office with, been
employed by or otherwise had a material relationship with us or
any of our affiliates during the three years prior to the date
of this prospectus.
The information provided in the table below with respect to the
selling stockholders has been obtained solely from the selling
stockholders and we have not sought to verify this information.
Additionally, some or all of the selling stockholders may have
sold or transferred some or all of the shares of common stock
listed below in exempt or non-exempt transactions since the date
on which the information was provided to us. Other information
about the selling stockholders may change over time.
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Shares of Common Stock
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Owned Prior to
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This Offering
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Number of
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Shares of
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Percentage of
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Number of Shares of
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Common
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Common
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Shares of
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Common Stock
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Stock
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Stock
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Common Stock
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Beneficially Owned
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Beneficially
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Beneficially
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That may be
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Following
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Name of Selling Stockholder
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Owned
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Owned
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Sold in This Offering
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This Offering
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Agee Family Interests, L.P.(1)(2)
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2,297,858
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*
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2,297,858
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0
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K & B Agee Partners, L.P.(1)
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1,102,972
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*
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1,102,972
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0
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Agee Family Foundation(1)(4)
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333,333
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*
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333,333
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0
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Richard E. Agee(1)(2)(4)
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1,575,550
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*
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1,575,550
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0
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Bart Agee(1)(3)
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233,262
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*
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233,262
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0
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Judith T. Agee(1)(2)(4)
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365,804
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*
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365,804
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0
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Quantum Energy Partners III, LP(5)
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4,661,499
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1.8
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%
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4,661,499
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0
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Wapiti Parallel Partners(6)
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561,487
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*
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561,487
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0
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D.E. Shaw AQ SP
Series 3-02,
L.L.C.(7)
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488,235
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*
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488,235
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0
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TOTAL
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11,620,000
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4.4
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%
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11,620,000
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0
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* |
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Less than 1%. |
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(1) |
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In the aggregate, the Agee family and certain Agee family
entities beneficially own 5,908,779 shares of common stock,
which is equal to approximately 2.3% of all Denbury shares of
common stock outstanding. |
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(2) |
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Agee Holdings, LLC is the general partner of Agee Family
Interests, L.P. Richard E. Agee is the President of Agee
Holdings, LLC, Judith T. Agee is Vice President of Agee
Holdings, LLC, and Richard E. Agee and Judith T. Agee are the
members of the Board of Management of Agee Holdings, LLC. Each
of Agee Holdings, LLC, Richard E. Agee and Judith T. Agee
disclaims beneficial ownership of the shares owned by
Agee Family Interest, L.P., except to the extent of their
pecuniary interest therein. |
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(3) |
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Agee Investments, LLC is the general partner of K & B
Agee Partners, L.P. Bart Agee is the President of Agee
Investments, LLC, and Bart Agee and Kristine G. Agee are the
members of the Board of |
9
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Management of Agee Investments, LLC. Each of Agee Investments,
LLC, Bart Agee and Kristine G. Agee disclaims beneficial
ownership of the shares owned by K & B Agee Partners,
L.P., except to the extent of their pecuniary interest therein. |
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(4) |
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Judith T. Agee is the President of the Agee Family Foundation
and Richard E. Agee is the Vice President of the Agee Family
Foundation. Each of Judith T. Agee and Richard E. Agee disclaims
beneficial ownership of the shares owned by the Agee Family
Foundation. |
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(5) |
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Quantum Energy Management III, LP (QEM III LP), as
the general partner of the Selling Stockholder and Quantum
Energy Management III, LLC (QEM III LLC), as the
general partner of QEM III LP, have voting and dispositive power
with respect to the shares of common stock beneficially
owned by the Selling Stockholder. |
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(6) |
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QEM III LP, as the managing general partner of the Selling
Stockholder and QEM III LLC, as the general partner of QEM III
LP, have voting and dispositive power with respect to the
shares of common stock beneficially owned by the Selling
Stockholder. |
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(7) |
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Includes 488,235 shares of common stock held directly by D.
E. Shaw AQ-SP
Series 3-02,
L.L.C. (the Subject Shares). D. E. Shaw AQ-SP
Series 3-02,
L.L.C. has power to vote or direct the vote of (and the power to
dispose or direct the disposition of) the Subject Shares. D. E.
Shaw & Co., L.P., as investment adviser to D. E. Shaw
AQ-SP
Series 3-02,
L.L.C., may be deemed to have the shared power to vote or direct
the vote of (and the shared power to dispose or direct the
disposition of) the Subject Shares. Anne Dinning, Julius Gaudio,
Lou Salkind, Maximilian Stone, and Eric Wepsic, or their
designees, exercise voting and investment control over the
Subject Shares on D. E. Shaw & Co., L.P.s
behalf. As general partner of D. E. Shaw & Co., L.P.,
D. E. Shaw & Co., Inc. may be deemed to have the
shared power to vote or to direct the vote of (and the shared
power to dispose or direct the disposition of) the Subject
Shares. Neither D. E. Shaw & Co., L.P. nor D. E.
Shaw & Co., Inc. owns any common stock directly, and
each such entity disclaims beneficial ownership of the Subject
Shares. David E. Shaw does not own any common stock directly. By
virtue of David E. Shaws position as President and sole
shareholder of D. E. Shaw & Co., Inc., which
is the general partner of D. E. Shaw & Co., L.P.,
which in turn is the investment adviser of D. E. Shaw AQ-SP
Series 3-02,
L.L.C., David E. Shaw may be deemed to have the shared power to
vote or direct the vote of (and the shared power to dispose or
direct the disposition of) the Subject Shares. David E. Shaw
disclaims beneficial ownership of the Subject Shares. The
address for the D. E. Shaw group is 120 West Forty Fifth
Street, 39th floor, New York, New York 10036. |
Selling stockholders who are registered broker-dealers are
underwriters within the meaning of the Securities
Act. In addition, selling stockholders who are affiliates of
registered broker-dealers are underwriters within
the meaning of the Securities Act if such selling stockholder
(a) did not acquire its shares of common stock in the
ordinary course of business or (b) had an agreement or
understanding, directly or indirectly, with any person to
distribute the common stock. To our knowledge, no selling
stockholder who is a registered broker-dealer or an affiliate of
a registered broker-dealer received any securities as
underwriting compensation.
Because the selling stockholders may offer all or some of their
shares of our common stock from time to time, we cannot estimate
the number of shares of our common stock that will be held by
the selling stockholders upon the termination of any particular
offering by such selling stockholder. Please refer to Plan
of Distribution.
All expenses incurred in connection with the registration of the
common stock owned by the selling stockholders will be borne by
us.
USE OF
PROCEEDS
The common stock to be offered and sold using this prospectus
will be offered and sold by the selling stockholders named in
this prospectus or in any supplement to this prospectus. We will
not receive any proceeds from the sale of shares of our common
stock by the selling stockholders.
10
DESCRIPTION
OF CAPITAL STOCK
General
As of December 31, 2009, we are authorized to issue up to
625,000,000 shares of stock, including up to
600,000,000 shares of common stock, par value $.001 per
share, and up to 25,000,000 shares of preferred stock, par
value $.001 per share. As of December 31, 2009, we had
261.8 million shares of common stock and no shares of
preferred stock outstanding. This excludes 10.8 million
shares of common stock subject to options and stock appreciation
rights under our option plan outstanding as of December 31,
2009, at a weighted average option price of $10.77 per share.
The number of Denburys outstanding shares of common stock
after the merger will be much greater than before the merger.
Based on the number of shares of Encore common stock outstanding
as of January 13, 2010, Denbury would issue to Encore
stockholders between 115 million and 146 million
shares of Denbury common stock in the merger, which will
represent an increase in the Denbury aggregate shares
outstanding of between 44% and 56%, respectively.
Common
Stock
The following is a summary of the key terms and provisions of
our common stock. You should refer to the applicable provisions
of our Restated Certificate of Incorporation, bylaws and the
Delaware General Corporation Law for a complete statement of the
terms and rights of our capital stock.
Voting Rights. Each holder of common stock is
entitled to one vote per share. Subject to the rights, if any,
of the holders of any series of preferred stock pursuant to
applicable law or the provision of the certificate of
designation creating that series, all voting rights are vested
in the holders of shares of common stock. Holders of shares of
common stock have non-cumulative voting rights, which means that
the holders of more than 50% of the shares voting for the
election of directors can elect 100% of the directors, and the
holders of the remaining shares voting for the election of
directors will not be able to elect any directors.
Dividends. Dividends may be paid to the
holders of common stock when, as and if declared by the board of
directors out of funds legally available for their payment,
subject to the rights of holders of any preferred stock. We have
never declared a cash dividend and intend to continue our policy
of using retained earnings for expansion of our business.
Certain of our debt instruments restrict the payment of cash
dividends.
Rights upon Liquidation. In the event of our
voluntary or involuntary liquidation, dissolution or winding up,
the holders of our common stock will be entitled to share
equally, in proportion to the number of shares of common stock
held by them, in any of our assets available for distribution
after the payment in full of all debts and distributions and
after the holders of all series of outstanding preferred stock,
if any, have received their liquidation preferences in full.
Non-Assessable. All outstanding shares of
common stock are fully paid and non-assessable.
Anti-takeover measures. Our Restated
Certificate of Incorporation requires a majority vote of not
less than two-thirds of the Board on many significant
transactions, including amending our charter or bylaws, issuing
equity securities, creating any series of preferred stock,
issuing debt in excess of 10% of our assets, making acquisitions
or dispositions with a purchase price in excess of 20% of our
assets, or increasing or decreasing the size of our Board.
Because a smaller number of directors than a majority can join
together to block future transactions, issuances of securities
or changes in our organizational documents, there is an
increased possibility that these transactions will not be
accomplished.
No Preemptive Rights. Holders of common stock
are not entitled to preemptive purchase rights in future
offerings of our common stock.
Listing. Our outstanding shares of common
stock, including the shares offered under this prospectus, are
listed on the New York Stock Exchange under the symbol
DNR.
Transfer
Agent
American Stock Transfer and Trust Company, LLC is the
transfer agent and registrar for our common stock.
11
PLAN OF
DISTRIBUTION
We are registering the shares of stock covered by this
prospectus on behalf of the selling stockholders to permit the
resale of these shares of stock by the selling stockholders from
time to time after the date of this prospectus. As used in this
prospectus, selling stockholders includes donees,
transferees and pledgees selling shares of common stock received
from a named selling stockholder after the date of this
prospectus. The shares were issued to the selling stockholders
as partial consideration pursuant to a purchase and sale
agreement dated December 18, 2009 for the acquisition of
certain properties. We entered into a registration rights
agreement in connection with that purchase and sale agreement,
under which we agreed to register the shares and to indemnify
the selling stockholders against certain liabilities related to
the selling of the stock, including liabilities arising under
the Securities Act. Under the registration rights agreement, we
also agreed to pay the costs and fees of registering the shares
of stock, including reasonable fees and expenses of one counsel
for the selling stockholders; however, the selling stockholders
will pay any brokerage commissions or underwriting discounts
relating to the sale of the shares of stock. Subject to limited
exceptions, we are only obligated to pay the costs and fees
associated with one underwritten offering. We will not receive
any of the proceeds from the sale by the selling stockholders of
the shares of stock.
The selling stockholders have agreed not to sell, offer to sell,
contract to sell, pledge or otherwise dispose of or transfer any
of the shares of stock covered by this prospectus until the
earlier of (i) the second business day following the date
on which the merger of Encore with and into Denbury is closed,
(ii) the date on which the merger agreement is terminated
or expires, or (iii) May 31, 2010, subject to certain
provisions in the registration rights agreement which could
extend this date to no later than June 28, 2010.
The selling stockholders may sell the stock being offered hereby
in one or more of the following ways at various times:
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to underwriters for resale to the public or to institutional
investors;
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directly to institutional investors; or
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through agents to the public or to institutional investors.
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Any such underwriter, dealer or agent may be deemed to be an
underwriter within the meaning of the Securities Act.
Each selling stockholder may offer its shares of stock in one or
more offerings pursuant to one or more prospectus supplements,
if required by applicable law, and any such prospectus
supplement will set forth the terms of the relevant offering to
the extent required. To the extent the shares of stock offered
pursuant to a prospectus supplement remain unsold, the selling
stockholders may offer those shares of stock on different terms
pursuant to another prospectus supplement.
The selling stockholders may act independently of each other,
and will act independently of us, in making decisions with
respect to the timing, manner and size of each sale. The selling
stockholders may sell the stock on the New York Stock Exchange
or otherwise, at market prices prevailing at the time of sale,
at prices related to the prevailing market prices, or at
negotiated prices. If underwriters are used in the sale, the
stock will be acquired by the underwriters for their own account
and may be resold at various times in one or more transactions,
including negotiated transactions, at a fixed public offering
price or prices, which may be changed, at market prices
prevailing at the time of sale, at prices related to such
prevailing market prices, or at negotiated prices. A
distribution of the stock by the selling stockholders may also
be effected through the issuance by the selling stockholders or
others of derivative securities, including without limitation,
warrants, exchangeable securities, forward delivery contracts
and the writing of options.
In addition, the selling stockholders may sell some or all of
the shares of stock covered by this prospectus:
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through a block trade in which a broker-dealer will attempt to
sell as agent, but may position or resell a portion of the
block, as principal, in order to facilitate the transaction;
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through purchases by a broker-dealer, as principal, and resale
by the broker-dealer for its account;
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12
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through ordinary brokerage transactions and transactions in
which a broker solicits purchasers;
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through privately negotiated transactions;
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on any national securities exchange or quotation service on
which the shares of common stock may be listed or quoted at the
time of sale;
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in the
over-the-counter
market;
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in transactions otherwise than on these exchanges or systems or
in the
over-the-counter
market;
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through the issuance by the selling stockholders or others of
derivative securities, including, without limitation, warrants,
exchangeable securities, forward delivery contracts and the
writing of options (whether listed on an options exchange or
otherwise);
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through an exchange distribution in accordance with the rules of
the applicable exchange;
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through short sales;
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through agreements between broker-dealers and the selling
stockholders to sell a specified number of such shares of stock
at a stipulated price per share;
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as a distribution to such selling stockholders partners,
members, or equity owners;
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through a combination of any such methods of sale; and
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by any other method permitted pursuant to applicable law.
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The selling stockholders may also enter into hedging
transactions. For example, a selling stockholder may:
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enter into transactions with a broker-dealer or affiliate
thereof in connection with which such broker-dealer or affiliate
will engage in short sales of the stock pursuant to this
prospectus, in which case such broker-dealer or affiliate may
use shares of stock received from the selling stockholder to
close out its short positions;
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sell stock short itself and redeliver such shares to close out
its short positions;
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enter into option or other types of transactions that require
the selling stockholder to deliver stock to a broker-dealer or
an affiliate thereof, who will then resell or transfer the stock
under this prospectus; or
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loan or pledge the stock to a broker-dealer or an affiliate
thereof, who may sell the loaned shares or, in an event of
default in the case of a pledge, sell the pledged shares
pursuant to this prospectus.
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In addition, a selling stockholder may enter into derivative or
hedging transactions with third parties, or sell securities not
covered by this prospectus to third parties in privately
negotiated transactions. In connection with such a transaction,
the third parties may sell securities covered by and pursuant to
this prospectus and an applicable prospectus supplement. If so,
the third party may use securities borrowed from a selling
stockholder or others to settle such sales and may use
securities received from a selling stockholder to close out any
related short positions. A selling stockholder may also loan or
pledge securities covered by this prospectus and an applicable
prospectus supplement to third parties, who may sell the loaned
securities or, in an event of default in the case of a pledge,
sell the pledged securities pursuant to this prospectus and the
applicable prospectus supplement.
The applicable prospectus supplement will set forth the terms of
the offering of the stock covered by this prospectus, including:
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the name or names of any underwriters, dealers or agents and the
amounts of securities underwritten or purchased by each of them,
if any; and
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the public offering price of the stock and the proceeds to the
selling stockholders and any discounts, commissions or
concessions or other items constituting compensation allowed,
reallowed or paid to underwriters, dealers or agents, if any.
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13
Any public offering price and any discounts, commissions,
concessions or other items constituting compensation allowed or
reallowed or paid to underwriters, dealers or agents may be
changed from time to time.
The selling stockholders may negotiate and pay
broker-dealers commissions, discounts or concessions for
their services. Broker-dealers engaged by the selling
stockholders may allow other broker-dealers to participate in
resales. The selling stockholders and any broker-dealers
involved in the sale or resale of the stock may qualify as
underwriters within the meaning of
Section 2(a)(11) of the Securities Act. In addition, the
broker-dealers commissions, discounts or concessions may
qualify as underwriters compensation under the Securities
Act. If any selling stockholder qualifies as an
underwriter, it will be subject to the prospectus
delivery requirements of Section 5(b)(2) of the Securities
Act.
In addition to selling its stock under this prospectus, a
selling stockholder may:
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agree to indemnify any broker-dealer or agent against certain
liabilities related to the selling of the stock, including
liabilities arising under the Securities Act;
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transfer its stock in other ways not involving market makers or
established trading markets, including directly by gift,
distribution, or other transfer;
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sell its stock under Rule 144 of the Securities Act rather
than under this prospectus, if the transaction meets the
requirements of Rule 144; or
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sell its stock by any other legally available means.
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LEGAL
MATTERS
Certain legal matters with respect to the common stock offered
hereby are being passed upon for us by Baker &
Hostetler LLP, Houston, Texas.
EXPERTS
Denbury
The consolidated financial statements and managements
assessment of the effectiveness of internal control over
financial reporting (which is included in Managements
Report on Internal Control over Financial Reporting),
incorporated in this prospectus by reference to the Denbury
Resources Inc. Annual Report on
Form 10-K
for the year ended December 31, 2008, have been so
incorporated in reliance on the report of PricewaterhouseCoopers
LLP, an independent registered public accounting firm, given on
the authority of said firm as experts in auditing and accounting.
Certain information with respect to the oil and natural gas
reserves associated with Denburys oil and gas properties
is derived from the reports of DeGolyer and MacNaughton, an
independent petroleum engineering firm, and has been included in
this document on the authority of said firm as experts with
respect to the matters covered by such reports and in giving
such reports.
Encore
The consolidated financial statements of Encore Acquisition
Company appearing in Denbury Resources Inc.s Current
Report on
Form 8-K
dated February 2, 2010 and the effectiveness of Encore
Acquisition Companys internal control over financial
reporting as of December 31, 2008 have been audited by
Ernst & Young LLP, independent registered public
accounting firm, as set forth in their reports thereon, included
therein, and incorporated herein by reference. Such consolidated
financial statements and Encore Acquisition Company
managements assessment of the effectiveness of internal
control over financial reporting as of December 31, 2008
are incorporated herein by reference in reliance upon such
reports given on the authority of such firm as experts in
accounting and auditing.
Certain information with respect to the oil and natural gas
reserves associated with Encores oil and gas properties is
derived from the reports of Miller and Lents, Ltd., an
independent petroleum engineering firm, and has been included in
this document on the authority of said firm as experts with
respect to the matters covered by such reports and in giving
such reports.
14
GLOSSARY
OF OIL AND GAS TERMS
The following are abbreviations and definitions of certain terms
commonly used in the oil and gas industry and in this document:
Bbls/d. Barrels of oil produced per day.
Bcf. One billion cubic feet of gas or
CO2.
BOE. One barrel of oil equivalent, using the
ratio of one barrel of crude oil, condensate or natural gas
liquids to six Mcf of natural gas.
BOE/d. BOE per day.
CO2. Carbon
dioxide.
Development costs.* Costs incurred to obtain
access to proved reserves and to provide facilities for
extracting, treating, gathering and storing the oil and gas.
Field.* An area consisting of a single
reservoir or multiple reservoirs all grouped on or related to
the same individual geological structural feature
and/or
stratigraphic condition.
MBbls. One thousand barrels of crude oil or
other liquid hydrocarbons.
Mcf. One thousand cubic feet of natural gas or
CO2.
MMBbls. One million barrels of crude oil or
other liquid hydrocarbons.
MMBOE. One million BOEs.
MMBtu. One million British thermal units. One
British thermal unit is the amount of heat required to raise the
temperature of a one pound mass of water from 58.5 to 59.5
degrees Fahrenheit.
NYMEX. New York Mercantile Exchange.
Proved developed reserves.* Crude oil, natural
gas and natural gas liquids reserves that can be expected to be
recovered through existing wells with existing equipment and
operating methods.
Reserve life. A measure of the productive life
of an oil and gas property or a group of properties, expressed
in years. Reserve life is calculated by dividing proved reserve
volumes at year-end by production for that year.
Reservoir. A porous and permeable underground
formation containing a natural accumulation of producible oil
and/or gas
that is confined by impermeable rock or water barriers and is
individual and separate from other reservoirs.
Tertiary recovery operations. An enhanced
recovery operation that normally occurs after waterflooding, in
which chemicals or natural gases
(CO2)
are used as the injectant.
* This definition is an abbreviated version of the
complete definition as defined by the SEC in
Rule 4-10(a)
of
Regulation S-X.
For the complete definition see:
http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=
ecfr&sid=20c66c74f60c4bb8392bcf9ad6fccea3&rgn=div5&view= text&node=
17:2.0.1.1.8&id-no=
17#17:2.0.1.1.8.0.21.43.
15
Part II
Information not required in prospectus
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Item 14.
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Other
expenses of issuance and distribution
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The following table sets forth the costs and expenses payable by
us in connection with the sale of securities being registered
hereby. All amounts are estimates, except the registration fee.
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SEC Registration Fee
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$
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11,227
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Accounting Fees
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50,000
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Legal Fees and Expenses
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50,000
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Printing and Engraving Fees and Expenses
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30,000
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Miscellaneous
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8,773
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Total
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$
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150,000
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Item 15.
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Indemnification
of officers and directors
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Section 145 of the Delaware General Corporation Law (the
DGCL), empowers us under specified circumstances, to
indemnify our directors, officers, employees and agents in
connection with actions, suits or proceedings brought against
them or threatened by reason of the fact that they were our
directors, officers, employees or agents, so long as they acted
in good faith and in a manner that they reasonably believed to
be in, or not opposed to, the best interests of our Company, and
with respect to any criminal action, that they had no reasonable
cause to believe their conduct was unlawful. With respect to
suits by or in the right of our Company, however,
indemnification is generally limited to attorneys fees and
other expenses and is not available if such person is adjudged
to be liable to us, unless a court determines that
indemnification is appropriate.
Article IX of our Restated Certificate of Incorporation
requires indemnification of directors, officers and other
employees to the fullest extent permitted by Section 145 of
the DGCL. Furthermore, Article IX explicitly provides that:
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we may advance expenses, including reasonable attorneys
fees, to individuals entitled to indemnification;
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we may not take any action to diminish or reduce the rights of
individual entitled to indemnification after the occurrence of
the events to which the indemnification relates; and
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any person entitled to indemnification by us may bring suit
against us if we do not pay them within 30 days after
receiving a written demand for indemnification and, if
successful, such person may recover their expenses for such
suit, including attorneys fees, from us. In the suit, we
will have the burden of proving any defense that the person is
not eligible for indemnification under the DGCL.
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Additionally, we maintain directors and officers insurance which
includes coverage for liability under the federal securities
laws.
Article X of our Certificate of Incorporation limits the
personal liability of a director to us or our stockholders for
monetary damages for breach of fiduciary duty as a director
provided that a directors liability may not be limited
(i) for any breach of the directors duty of loyalty
to us or our stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174
(relating to liability for unauthorized acquisitions or
redemptions of, or dividends on, capital stock) of the DGCL or
(iv) for any transaction from which the director derived an
improper personal benefit.
II-1
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Exhibit
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No.
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Document Description
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3
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.1
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Restated Certificate of Incorporation of Denbury Resources Inc.
filed with the Delaware Secretary of State on December 29, 2003
(incorporated by reference as Exhibit 3.1 of our Form 8-K filed
December 29, 2003).
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3
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.2
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Certificate of Amendment of Restated Certificate of
Incorporation of Denbury Resources Inc. filed with the Delaware
Secretary of State on October 20, 2005 (incorporated by
reference as Exhibit 3(a) of our Form 10-Q filed November 8,
2005).
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3
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.3
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Certificate of Amendment of Restated Certificate of
Incorporation of Denbury Resources Inc. filed with the Delaware
Secretary of State on November 21, 2007 (incorporated by
reference as Exhibit 3(c) of our Form 10-K filed February
29, 2008).
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3
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.4
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Bylaws of Denbury Resources Inc., a Delaware corporation,
adopted December 29, 2003 (incorporated by reference as Exhibit
3.2 of our Form 8-K filed December 29, 2003).
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*5
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.1
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Opinion of Baker & Hostetler LLP as to the validity of the
Securities being registered.
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*23
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.1
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Consent of PricewaterhouseCoopers LLP.
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*23
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.2
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Consent of DeGolyer and MacNaughton.
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*23
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.3
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Consent of Ernst & Young LLP.
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*23
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.4
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Consent of Miller and Lents, Ltd.
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*23
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.5
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Consent of Miller and Lents, Ltd.
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*23
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.6
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Consent of Baker & Hostetler LLP (included in Exhibit 5.1).
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*24
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Power of Attorney (included on signature page).
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(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made of securities registered hereby, a post-effective
amendment to this registration statement:
(i) to include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Securities and Exchange Commission
pursuant to Rule 424(b) under the Securities Act of 1933
if, in the aggregate, the changes in volume and price represent
no more than a 20% change in the maximum aggregate offering
price set forth in the Calculation of Registration
Fee table in the effective registration statement; and
(iii) to include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
provided, however, that the undertakings set forth in
paragraphs (i), (ii) and (iii) do not apply if the
information required to be included in a post-effective
amendment by those paragraphs is contained in reports filed with
or furnished to the Commission by the Registrant pursuant to
section 13 or section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in this
registration statement, or is contained in a form of prospectus
filed pursuant to Rule 424(b) that is part of the
registration statement.
II-2
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under
the Securities Act of 1933 to any purchaser:
(A) Each prospectus filed by a registrant pursuant to
Rule 424(b)(3) shall be deemed to be part of the
registration statement as of the date the filed prospectus was
deemed part of and included in the registration
statement; and
(B) Each prospectus required to be filed pursuant to
Rule 424(b)(2), (b)(5) or (b)(7) as part of a registration
statement in reliance on Rule 430B relating to an offering
made pursuant to Rule 415(a)(1)(i), (vii) or
(x) for the purpose of providing the information required
by Section 10(a) of the Securities Act of 1933 shall be
deemed to be part of and included in the registration statement
as of the earlier of the date such form of prospectus is first
used after effectiveness or the date of the first contract of
sale of securities in the offering described in the prospectus.
As provided in Rule 430B, for liability purposes of the
issuer and any person that is at that date an underwriter, such
date shall be deemed to be a new effective date of the
registration statement relating to the securities in the
registration statement to which the prospectus relates, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof. Provided,
however, that no statement made in a registration statement
or prospectus that is part of the registration statement or made
in a document incorporated or deemed incorporated by reference
into the registration statement or prospectus that is part of
the registration statement will, as to a purchaser with a time
of contract of sale prior to such effective date, supersede or
modify any statement that was made in the registration statement
or prospectus that was part of the registration statement or
made in any such document immediately prior to such effective
date.
(5) That, for the purpose of determining liability of a
registrant under the Securities Act of 1933 to any purchaser in
the initial distribution of the securities the undersigned
registrant undertakes that in a primary offering of securities
of the undersigned registrant pursuant to this registration
statement, regardless of the underwriting method used to sell
the securities to the purchaser, if the securities are offered
or sold to such purchaser by means of any of the following
communications, the undersigned registrant will be a seller to
the purchaser and will be considered to offer or sell such
securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the
undersigned registrant relating to the offering required to be
filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering
prepared by or on behalf of the undersigned registrant or used
or referred to by the undersigned registrant;
(iii) The portion of any other free writing prospectus
relating to the offering containing material information about
the undersigned registrant or its securities provided by or on
behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the
offering made by the undersigned registrant to the purchaser.
(b) The undersigned registrant hereby understands that, for
purposes of determining any liability under the Securities Act
of 1933, each filing of the registrants annual report
pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plans annual report pursuant
to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in this
registration statement shall be deemed to be a new registration
statement
II-3
relating to the securities offered herein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
(d) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to
be part of this registration statement as of the time it was
declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered
herein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
II-4
Signatures
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing on
Form S-3
and has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the
City of Plano, State of Texas, on February 2, 2010.
DENBURY RESOURCES INC.
Mark C. Allen
Senior Vice President and Chief Financial Officer
Each person whose signature appears below hereby constitutes and
appoints Phil Rykhoek and Mark C. Allen, and each of them, as
his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him or her
and in his or her name, place and stead, in any and all
capacities, to sign any and all amendments (including, without
limitation, post-effective amendments) to this registration
statement, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and
Exchange Commission, and hereby grants to such attorneys-in-fact
and agents, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to
be done, as fully to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents, or their or his or her
substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
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Signatures
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Title
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Date
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/s/ Phil
Rykhoek
Phil
Rykhoek
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Chief Executive Officer
(Principal Executive Officer)
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February 2, 2010
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/s/ Mark
C. Allen
Mark
C. Allen
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|
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
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February 2, 2010
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/s/ Alan
Rhoades
Alan
Rhoades
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|
Vice President Accounting
(Principal Accounting Officer)
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February 2, 2010
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/s/ Gareth
Roberts
Gareth
Roberts
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Co-Chairman of the Board of Directors
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|
February 2, 2010
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|
|
|
|
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/s/ Wieland
Wettstein
Wieland
Wettstein
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|
Co-Chairman of the Board of Directors
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|
February 2, 2010
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|
|
|
|
|
/s/ Michael
L. Beatty
Michael
L. Beatty
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|
Director
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|
February 2, 2010
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|
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|
/s/ Michael
B. Decker
Michael
B. Decker
|
|
Director
|
|
February 2, 2010
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|
|
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|
|
/s/ Ronald
G. Greene
Ronald
G. Greene
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|
Director
|
|
February 2, 2010
|
II-5
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Signatures
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|
Title
|
|
Date
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|
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|
|
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|
/s/ David
I. Heather
David
I. Heather
|
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Director
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|
February 2, 2010
|
|
|
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|
/s/ Greg
McMichael
Greg
McMichael
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|
Director
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|
February 2, 2010
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|
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|
/s/ Randy
Stein
Randy
Stein
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|
Director
|
|
February 2, 2010
|
II-6
Index to
Exhibits
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|
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Exhibit
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|
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No.
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|
Document Description
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|
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3
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.1
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Restated Certificate of Incorporation of Denbury Resources Inc.
filed with the Delaware Secretary of State on December 29, 2003
(incorporated by reference as Exhibit 3.1 of our Form 8-K filed
December 29, 2003).
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|
3
|
.2
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|
Certificate of Amendment of Restated Certificate of
Incorporation of Denbury Resources Inc. filed with the Delaware
Secretary of State on October 20, 2005 (incorporated by
reference as Exhibit 3(a) of our Form 10-Q filed November 8,
2005).
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|
3
|
.3
|
|
Certificate of Amendment of Restated Certificate of
Incorporation of Denbury Resources Inc. filed with the Delaware
Secretary of State on November 21, 2007 (incorporated by
reference as Exhibit 3(c) of our Form 10-K filed February
29, 2008).
|
|
3
|
.4
|
|
Bylaws of Denbury Resources Inc., a Delaware corporation,
adopted December 29, 2003 (incorporated by reference as Exhibit
3.2 of our Form 8-K filed December 29, 2003).
|
|
*5
|
.1
|
|
Opinion of Baker & Hostetler LLP as to the validity of the
Securities being registered.
|
|
*23
|
.1
|
|
Consent of PricewaterhouseCoopers LLP.
|
|
*23
|
.2
|
|
Consent of DeGolyer and MacNaughton.
|
|
*23
|
.3
|
|
Consent of Ernst & Young LLP.
|
|
*23
|
.4
|
|
Consent of Miller and Lents, Ltd.
|
|
*23
|
.5
|
|
Consent of Miller and Lents, Ltd.
|
|
*23
|
.6
|
|
Consent of Baker & Hostetler LLP (included in Exhibit 5.1).
|
|
*24
|
|
|
Power of Attorney (included on signature page).
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