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Denbury Resources' CEO Discusses Q1 2012 Results - Earnings Call Transcript

Stocks in this article: DNR

And before that, let me remind you that today's call will include forward-looking statements that are based on the best and most reasonable information we have today. There are numerous factors that could cause actual results to differ materially from what is discussed. You can read our full disclosure on forward-looking statements and risk factors associated with our business in our corporate presentation, our latest 10-K and today's press release, all of which are posted to our website, www.denbury.com.

In addition, I'll remind you that over the course of today's call, we will reference certain non-GAAP measures. Reconciliations and disclosures on these measures is provided in today's release.

With that, let me turn the call over to Phil.

Phil Rykhoek

Thanks, Jack. As you can see from our first quarter, we're starting off the year on a positive note. But before I get into the quarterly results, let me briefly talk about the acquisition we announced a couple of days ago. Tuesday, we announced we agreed to acquire Thompson Field for $360 million plus a production payment. This is a significant strategic acquisition for us and exactly the type of deal that we want to do for the following reasons.

First and foremost, Thompson Field is desirable because it's a large field located only 18 miles from the termination of our Green Pipeline, meaning that there will be minimal additional required pipeline infrastructure to plug this field. It's a field technically similar to Hastings, meaning that what we learned at Hastings, we'll usually transfer over. It's a large field with an estimated 650 million barrels of oil in place, and it is one of our top 10 desired fields in the Gulf Coast area. As our review has been rather limited thus far, we've not yet determined how much of the field will be floodable, but we are comfortable saying we can target at least 300 million barrels of original oil in place. That would translate into an EOR target of 30 million to 60 million barrels, or expressed in other way, it's an estimated recovery approximate equal to Tinsley Field. While significant, I believe that with further review, we will additional floodable areas at Thompson and the projected EOR recoveries should increase. Although initial EOR production is a few years away, this will fit in nicely with our Gulf Coast program, extending our peak EOR production from that area.

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