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Denbury Resources Reveals 2022 Plans

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US independent Denbury Resources reported a slight increase in its 2022 capital expenditures for oil and natural gas development to $290 million to $320 million, up from $252 million in 2021.

At the midpoint of that range, $115 million will be dedicated to the Cedar Creek Anticline (CCA) enhanced oil recovery (EOR) development.

The increased budget will go toward other tertiary and non-tertiary oil-focused development projects, capitalized internal costs, and carbon dioxide sources and pipelines, which will receive $190 million this year. Last year, $129 million was allocated to this group.

Denbury also anticipates 2022 expenditures of at least $50 million in connection to its strategic carbon capture, utilization, and storage (CCUS) initiatives.

“Our 2022 capital program is designed to invest in our current operations at a sustaining level for the first time in several years, to continue the development of our cornerstone CCA EOR project, and to make strategic investments that further advance our leadership in CCUS,” said Chris Kendall, Denbury’s president and CEO.

“Based on our current oil price expectations, we anticipate accomplishing these three objectives while generating significant free cash flow, which will further strengthen our company for transformational growth in CCUS.”

In 2021, Denbury completed 105 miles of carbon dioxide pipeline for the CCA EOR project.

New expenditures to the project will go toward the construction of field carbon dioxide recycle facilities and infrastructure, capitalized Phase 1 carbon dioxide costs, and the implementation of a development pilot.

Carbon dioxide injected during Phase 1 will be treated as a capital expense, but as tertiary production begins, likely in the second half of 2023, costs will be treated as a lease operating expense.

The CCUS expenditures will go toward acquiring, testing, and Class VI permitting of several sequestration sites.

Denbury Carbon Solutions, the company’s CCUS business, also established new agreements in carbon dioxide transportation, utilization, and storage services.

The company’s 2022 goals for its carbon solutions business include reaching agreements for transportation and storage of carbon dioxide emissions totaling more than 10 million tons per year; securing carbon dioxide sequestration sites with a total storage potential of at least 1.2 billion tons; and progressing pre-development activities on several potential sequestration sites, with Class VI permitting processes beginning in 2022.

“In our existing Gulf Coast enhanced oil recovery business, we can inject upwards of 10 million tons of captured industrial CO2 per year, under existing permits and regulations, making us the only CCUS company that can provide an integrated CO2 solution and certainty of takeaway today,” Kendall said.

Several sequestration agreements have already been signed in 2022, including for a site east of Donaldsonville, Louisiana, with an estimated capacity of more than 150 million tons of carbon dioxide and first injection targeted for 2025.

For more information visit www.denbury.com