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Denbury Resources' CEO Discusses Q4 2011 Results - Earnings Call Transcript

As you also probably know, because I'm sure you watch the market, the LLS differentials have been rather volatile contracting by more than half by the end of 2011 but then have begun to expand again recently. Of course, the Bakken differentials have also experienced some significant volatility. Mark will talk a little bit more about this in his comments but suffice it to say, we believe our exposure to LLS pricing will continue to benefit our overall oil price realization as we now have more than 70% of our crude sold on some basis other than WTI.

Our production growth this quarter was in line or exceeded expectations and the outlook is favorable. Craig will talk a bit more about that. Operating cost declined quarter-to-quarter, and so all of this contributes to a bottom line that significantly beat first call expectations.

A few weeks ago, we released our proved reserves, and Craig will hit the high points, but one number I always like to point out is that our proved PV-10 at year end was $10.6 billion. If you subtract our net debt, divide it into our expenditures, you'll see our proved net asset value per share is in excess of $20 per share. So what that means is if you buy the stock at today's price, you effectively get the 800 million barrels of unbooked potential that we have associated with our future EOR floods and the Bakken development for free. So while our stock has performed well in the last few months, we believe it still remains a bargain on a 3P net asset value base.

On this call, we'll give you many details about Q4 and brief in historical results, and I think you'll like all these numbers, but to me, the more important thing is the takeaway from this call, we are starting 2012 on a positive note, with both Oyster Bayou and Hastings coming on a couple of weeks early with good initial production rates. We've had good weather in North Dakota, that translates into positive production trends in the Bakken. So all that adds up to running a little ahead of schedule on our 2012 production goals.

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