DENBURY RESOURCES INC FORM 10-K (Annual Report) Filed 02/28/13 for the Period Ending 12/31/12 Address 5320 LEGACY DRIVE PLANO, TX 75024 Telephone 9726732000 CIK 0000945764 Symbol DNR SIC Code 1311 - Crude Petroleum and Natural Gas Industry Oil & Gas Operations Sector Energy Fiscal Year 12/31 http://www.edgar-online.com © Copyright 2013, EDGAR Online, Inc. All Rights Reserved. Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 2012 FORM 10-K (Mark One) Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 2012 OR Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _________ to________ Commission file number 1 -12935 DENBURY RESOURCES INC. (Exact name of Registrant as specified in its charter) Delaware 20-0467835 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 5320 Legacy Drive, Plano, TX 75024 (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: (972) 673-2000 Securities registered pursuant to Section 12(b) of the Act: Title of Each Class: Name of Each Exchange on Which Registered: Common Stock $.001 Par Value New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See definition of “large accelerated filer”, “accelerated filer”, and “small reporting company” in Rule 12-b2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes No The aggregate market value of the registrant’s common stock held by non-affiliates, based on the closing price of the registrant’s common stock as of the last business day of the registrant’s most recently completed second fiscal quarter was $5,050,462,439. The number of shares outstanding of the registrant’s Common Stock as of January 31, 2013 , was 373,462,597. DOCUMENTS INCORPORATED BY REFERENCE Document: Incorporated as to: 1. Notice and Proxy Statement for the Annual Meeting of Stockholders to be held May 22, 2013. 1. Part III, Items 10, 11, 12, 13, 14 Table of Contents Denbury Resources Inc. 2012 Annual Report on Form 10-K Table of Contents Page Glossary and Selected Abbreviations 3 PART I Item 1. Business and Properties 5 Item 1A. Risk Factors 27 Item 1B. Unresolved Staff Comments 34 Item 2. Properties 34 Item 3. Legal Proceedings 34 Item 4. Mine Safety Disclosures 34 PART II Item 5. Market for Registrant ’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 35 Item 6. Selected Financial Data 37 Item 7. Management ’s Discussion and Analysis of Financial Condition and Results of Operations 39 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 65 Item 8. Financial Statements and Supplementary Data 65 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 113 Item 9A. Controls and Procedures 113 Item 9B. Other Information 113 PART III Item 10. Directors, Executive Officers and Corporate Governance 114 Item 11. Executive Compensation 114 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 114 Item 13. Certain Relationships and Related Transactions, and Director Independence 114 Item 14. Principal Accountant Fees and Services 114 PART IV Item 15. Exhibits and Financial Statement Schedules 115 Signatures 122 - 2 - Table of Contents Denbury Resources Inc. Glossary and Selected Abbreviations Bbl One stock tank barrel, of 42 U.S. gallons liquid volume, used herein in reference to crude oil or other liquid hydrocarbons. Bbls/d Barrels of oil produced per day. Bcf One billion cubic feet of natural gas, CO 2 or helium. Bcfe One billion cubic feet of natural gas equivalent, using the ratio of one barrel of crude oil, condensate or natural gas liquids to 6 Mcf of natural gas. BOE One barrel of oil equivalent, using the ratio of one barrel of crude oil, condensate or natural gas liquids to 6 Mcf of natural gas. BOE/d BOEs produced per day. Btu British thermal unit, which is the heat required to raise the temperature of a one-pound mass of water from 58.5 to 59.5 degrees Fahrenheit. CO 2 Carbon dioxide. EOR Enhanced oil recovery. Finding and The average cost per BOE to find and develop proved reserves during a given period. It is calculated by dividing costs, Development Costs which includes the total acquisition, exploration and development costs incurred during the period plus future development and abandonment costs related to the specified property or group of properties, by the sum of (i) the change in total proved reserves during the period plus (ii) total production during that period. MBbls One thousand barrels of crude oil or other liquid hydrocarbons. MBOE One thousand BOEs. Mbtu One thousand Btus. Mcf One thousand cubic feet of natural gas, CO 2 or helium at a temperature base of 60 degrees Fahrenheit (°F) and at the legal pressure base (14.65 to 15.025 pounds per square inch absolute) of the state or area in which the reserves are located or sales are made. Mcf/d One thousand cubic feet of natural gas, CO 2 or helium produced per day. MMBbls One million barrels of crude oil or other liquid hydrocarbons. MMBOE One million BOEs. MMBtu One million Btus. MMcf One million cubic feet of natural gas, CO 2 or helium. MMcf/d One million cubic feet of natural gas, CO 2 or helium per day. Probable Reserves* Are those additional reserves that are less certain to be recovered than proved reserves but which, together with proved reserves, are as likely as not to be recovered. Proved Developed Reserves that can be expected to be recovered through existing wells with existing equipment and operating methods. Reserves* Proved Reserves* The estimated quantities of reserves that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Proved Undeveloped Reserves that are expected to be recovered from new wells on undrilled acreage or from existing wells where a relatively Reserves* major expenditure is required. - 3 - Table of Contents Denbury Resources Inc. PV-10 Value When used with respect to oil and natural gas reserves, PV-10 Value means the estimated future gross revenue to be generated from the production of proved reserves, net of estimated future production, development and abandonment costs, and before income taxes, discounted to a present value using an annual discount rate of 10%. PV-10 Values were prepared using average hydrocarbon prices equal to the unweighted arithmetic average of hydrocarbon prices on the first day of each month within the 12-month period preceding the reporting date. PV-10 Value is a non-GAAP measure and its use is further discussed in footnote 4 to the table included in Item 1, Estimated Net Quantities of Proved Oil and Natural Gas Reserves and Present Value of Estimated Future Net Revenues - Oil and Natural Gas Reserve Estimates . Tcf One trillion cubic feet of natural gas, CO 2 or helium. * 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://www.ecfr.gov/cgi -bin/text -idx?c=ecfr&rgn=div5&view=text&node=17:2.0.1.1.8&idno=17. - 4 - Table of Contents Denbury Resources Inc. PART I Item 1. Business and Properties GENERAL Denbury Resources Inc., a Delaware corporation, is a domestic independent oil and natural gas company with 409.4 MMBOE of estimated proved oil and natural gas reserves as of December 31, 2012 , of which 80% is oil. Our primary focus is on enhanced oil recovery utilizing CO 2 , and our operations are focused in two key operating areas: the Gulf Coast region and Rocky Mountain region.