1 october 2005 energy summit 2005: louisiana’s integration with global energy markets
TRANSCRIPT
1
October 2005
Energy Summit 2005: Louisiana’s Integration Energy Summit 2005: Louisiana’s Integration with Global Energy Marketswith Global Energy Markets
2
I. Corporate Overview
II. Historical Perspective
III. Beginnings of CO2
IV. Current Presence
V. The Future
VI. Questions or Comments
Table of Contents
3
Company Snapshot
►Market Cap (7/31/05): Approx. $2.7 Billion
►Proved Reserves (12/31/04):
129.4 Million BOE – (55% Developed) (101 MMBbls Oil / 168 Bcf Gas)
►Production (2Q05): 30,469 BOE per Day
►Production Profile (2Q05): Approx. 68% Oil / 32% Gas
►Total Debt (7/31/05): $245 Million*
►Unused Bank Borrowing Base (7/31/05):
$180 Million
* Excludes approximately $7 million of capital leases.
4
Historical Perspective
New Orleans
BatonRouge
L O U I S I A N A
M I S S I S S I P P I
Jackson
Meridian ► Denbury was Founded in 1990
► Acquisition and Exploitation Company
Goal – Double the Reserves Acquired
► Geological Focus on Exploiting What
Others had Left Behind
► Major Oil Companies were Exiting MS
► Acquisition Opportunities were Plentiful
► Acquisitions were Funded with Debt and
then Subsequently the Debt was Repaid by
Issuing Equity
► Reserves Grew from Essentially Nothing in
1990 to almost 65 MMBoes at 12/31/97
27+ MMBoes Attributed to Heidelberg
Field which was Purchased on 12/31/97
Then 1998 Occurred!!!
Year End Reserves were 36+ MMBOes
Oil Price - Averaged $7.40/Bbl net to
field
McComb
Operating Areas 1998
5
Beginnings of CO2
6
Beginnings of CO2…..
►Company Financial Strategy ChangedLive within Cash Flow for OperationsAcquisitions were still plentifulEquity Markets were all but Closed to Oil and Gas Companies
►Cash Flow was Significantly Low due to Oil PricesNo Employees were Laid-OffBegan Studying all of our AssetsRe-discovered some CO2 Studies and CO2 Pilot Projects that had been
Performed in our East MS AssetsBegan Looking for Ways to Develop this PotentialCO2 Source was 90 miles Away
►Several Years Earlier DRI Reviewed a CO2 Flood AcquisitionActive CO2 Flood in West MSAcquired Little Creek FieldEducate Ourselves on an Active Flood Prior to Spending the Capital to
Build a 90 Mile Pipeline.
7
Beginnings of CO2…..
►Why CO2?
Low Risk Profile– Millions of Barrels of Oil had Already Been Produced From
Prospective Fields
Applicable to Many of the Fields DRI Already Owned and Operated
Essentially No Competition for CO2 Assets
Large Volume of CO2 Available
8
Current Presence
9
Southwest Mississippi CO2
(1)
Reserve Growth (MMBOE)
32
28
0
10
20
30
40
50
60
70
80
90
100
Acquisition Development UnriskedPotential
88
60
28
(1) Based on 12/31/04 SEC proved reserves plus inception to date production
Gross Oil Production
1,000
10,000
100,000
1,000,000
1999 2000 2001 2002 2003 2004 2005
BO
PM
DRI Operated Only
JacksonDome
CO
2 P
ipel
ine
MallalieuBrookhaven
Little CreekLazy Creek
Lockhart Crossing
McComb
Jackson
New Orleans
BatonRouge
Meridian
McComb M I S S I S S I P P I
L O U I S I A N A
Smithdale
10
0
20
40
60
80
100
120
140
1998 1999 2000 2001 2002 2003 2004
CO2 Non-CO2
Proved Reserves (SEC Pricing)
36.4
60.2
87.4 90.7
114.2
Net Proved Reserves (MMBOE)
112.2
129.4
Excludes All Historical Offshore
- 10 10 22 24 31 39CO2, % of Total Reserves
11
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
1999 2000 2001 2002 2003 2004 2Q05
Sweet Heavy or Sour Natural Gas Offshore - Sold 7/04
Average Daily Production(B
OE
/d)
16,748
21,399
31,185
35,573 34,704
Increasing Volumes of Light Sweet Oil from Tertiary CO2 Flooding
(1) Defined as less than $2.00 NYMEX variance
(1)
28,086
30,469
12
2003 2004
8-7
9-12
9-13
PILOT
TEST SITE 1
8-28-38-4
8-6
8-8
8-108-11A
8-14
8-16
16-4
2004
2001MANIFOLD S ITE 1
2002
MANIFOLD S ITE 1
MANIFOLD S ITE 2
8-9
8-15A
9-14
SWD8-15C
8-15SI-SWD
19-424-1
19-9
12-15
12-10
12-16
7-147-13
13-2
13-7
13-10
13-8
13-1
18-5
18-1218-11
18-10A
18-9
18-1 17-4
17-1117-12
18-14
19-120-4
17-1417-1318-16
18-10
8-12
8-13
17-3 17-1
17-6 ST
17-10
17-15 S/T
17-2B
7-6
18-2
22-219-2 S/T
7-37-2 7-1
12-1
12-8
20-220-1
21-6
16-15
16-1615-14
15-9
15-16
21-1
13-16
20-12
20-3
19-8 20-5 20-6
20-11
19-16
17-9
17-16
21-4
21-5
MAINFACILITY
1
12
13
24
10 11
1415161718
19
2
20 21 22 23
26272829
3456
7 8 9
1
1
1
1
1
1
3 1
2
4
5
3 6
7
89
10
11
1
2
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1
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1
1
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1
1
2
1
1
1
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214
15B
11
1
7-10
17-5
18-7
17-7
18-3
7-5
7-11
12-9
19-3
19-7 20-7
1
2
3
4
5
6
7
8 9 10
11
12
13
1415
1
2
3
4
5
30
20
40
20
10
0
10
20
30
40
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3020
0
10
20
30
40
30
20
10
0 30
2010
0
0
10
20
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50
0
30
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01020
30405040
0
10
20
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0
10
20
4040
50
50
40
30
20
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20
30
3020
100
4040
30
20
-10108'
O/W
O/W
O/W
10
10
20
30
3 2
1110
Mallalieu, West FieldMallalieu, West Unit: 3,574 Acres
Phase I
PilotPhase V
Phase II
Phase IV
Phase III
ACTIVE CO2 INJECTOR WELLS
LEGEND
WATER INJECTOR WELL
ACTIVE CO2 PRODUCERS
13
131
160
240 166
526 22420.0
96.3
111
95.4135
339 181 132
327
209
439
22789.6
391
534
218
21192.5
1
12
13
24
25
6N 8E
161718
19 2021
282930
456
78 9
01A
01B
07-0107-0207-03
07-0507-06
07-07 GIW
07-0907-10
07-11 GIW
07-13 07-14 07-16ST GIW
08-0208-0308-04
08-06
08-06A08-07 GIW 08-08
08-08A
08-09 GIW08-1008-11 GIW
08-11A
08-12
08-13 08-1408-14A 08-15
08-15A GIW
08-16
09-06
09-12
09-13
09-14 GIW
1
1
1
1
1
1 1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
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1
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1
1
1
1
1
1
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1
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10
11
12-01
12-08 GIW
12-0912-10
12-15
12-16 GIW
13-0113-02
13-07
13-08 GIW
13-10
13-16 GIW
15B
17-0117-0217-02A17-02B
17-0317-04
17-05
17-06ST
17-07 GIW
17-0917-1017-1117-12 GIW
17-13 17-14 17-15ST GIW 17-16
18-0118-0218-03ST GIW
18-05 18-07 GIW
18-09
18-10
18-10A18-11A GIW18-12
18-14 18-16
19-0119-02
19-03 GIW19-04
19-0519-06 19-07 GIW 19-08
19-09
19-09A
19-13
19-16
2
2
2
2
2
22
2
2
20-0120-0220-0320-04 GIW
20-05 20-0620-07 GIW
20-0920-10 GIW
20-11
20-12 GIW
20-13 GIW
21-04 GIW
21-0521-06
24-01
3
5
56
7
89
Mallalieu, West FieldCO2 Injection WTR InjectionPDP PNP PUD DPL/P&A
As of 12/31/02: 899 BOPD As of 07/18/05: 5,295 BOPD1
12
13
24
25
161718
19 20 21
282930
456
7 8 9
160,
238,
274,
5219
7284
9315
8325
7757
1,
92,1,
1,
132,
5799
9135
17-06ST
07-09
17-11 17-10
18-01
07-10
07-14
18-10
18-09
17-05
17-12
18-07
17-07
19-04
19-08
07-11
18-03ST
18-16
07-16ST
18-11
08-0208-03
08-06
08-06A08-08
08-1008-12
08-1408-13 08-16
09-09
17-02
09-13
09-12
18-10
17-03
5
618-14
12-15
07-05
12-09
07-13
18-04
18-05
18-12
19-01
17-13 17-14
19-02
20-12
20-11
20-0620-07
20-03
19-16
12-10
07-06
20-10
17-15ST
13-02
13-07
20-13
13-10
08-11
08-15A
08-07
17-02B
08-15
17-01
08-11A
08-14A
08-08A
08-16H
17-02A17-04
13-08
24-01
19-06
20-04
12-16
18-02
20-09
07-0107-0207-03
07-07
08-09
09-14
1
1
4
1
1
1
11
1
1
1
2
1
21
2
01B
231
1
18-10A
9517-161
1
11
1
1
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2
1 1
20-02 1 1
11
2
120-05
3
1
1
1
1
117-09
13-01
1
03-06
03-01
10
1
7122
1
1
19-131
11
8
2
12-01
1
15B2
1
12
13
24
25
161718
19 20 21
282930
456
7 8 9
160,
238,
274,
5219
7284
9315
8325
7757
1,
92,1,
1,
132,
5799
9135
17-06ST
07-09
17-11 17-10
18-01
07-10
07-14
18-10
18-09
17-05
17-12
18-07
17-07
19-04
19-08
07-11
18-03ST
18-16
07-16ST
18-11
08-0208-03
08-06
08-06A08-08
08-1008-12
08-1408-13 08-16
09-09
17-02
09-13
09-12
18-10
17-03
5
618-14
12-15
07-05
12-09
07-13
18-04
18-05
18-12
19-01
17-13 17-14
19-02
20-12
20-11
20-0620-07
20-03
19-16
12-10
07-06
20-10
17-15ST
13-02
13-07
20-13
13-10
08-11
08-15A
08-07
17-02B
08-15
17-01
08-11A
08-14A
08-08A
08-16H
17-02A17-04
13-08
24-01
19-06
20-04
12-16
18-02
20-09
07-0107-0207-03
07-07
08-09
09-14
1
1
4
1
1
1
11
1
1
1
2
1
21
2
01B
231
1
18-10A
9517-161
1
11
1
1
01A1
2
1 1
20-02 1 1
11
2
120-05
3
1
1
1
1
117-09
13-01
1
03-06
03-01
10
1
7122
1
1
19-131
11
8
2
12-01
1
15B2
1
12
13
24
25
161718
19 20 21
282930
456
7 8 9
160,
238,
274,
5219
7284
9315
8325
7757
1,
92,1,
1,
132,
5799
9135
17-06ST
07-09
17-11 17-10
18-01
07-10
07-14
18-10
18-09
17-05
17-12
18-07
17-07
19-04
19-08
07-11
18-03ST
18-16
07-16ST
18-11
08-0208-03
08-06
08-06A08-08
08-1008-12
08-1408-13 08-16
09-09
17-02
09-13
09-12
18-10
17-03
5
618-14
12-15
07-05
12-09
07-13
18-04
18-05
18-12
19-01
17-13 17-14
19-02
20-12
20-11
20-0620-07
20-03
19-16
12-10
07-06
20-10
17-15ST
13-02
13-07
20-13
13-10
08-11
08-15A
08-07
17-02B
08-15
17-01
08-11A
08-14A
08-08A
08-16H
17-02A17-04
13-08
24-01
19-06
20-04
12-16
18-02
20-09
07-0107-0207-03
07-07
08-09
09-14
1
1
4
1
1
1
11
1
1
1
2
1
21
2
01B
231
1
18-10A
9517-161
1
11
1
1
01A
1
2
1 1
20-02 1 1
11
2
120-05
3
1
1
1
1
117-09
13-01
1
03-06
03-01
10
1
7122
1
1
19-131
11
8
2
12-01
1
15B2
1
12
13
24
25
161718
19 20 21
282930
456
7 8 9
160,
238,
274,
5219
7284
9315
8325
7757
1,
92,1,
1,
132,
5799
9135
17-06ST
07-09
17-11 17-10
18-01
07-10
07-14
18-10
18-09
17-05
17-12
18-07
17-07
19-04
19-08
07-11
18-03ST
18-16
07-16ST
18-11
08-0208-03
08-06
08-06A08-08
08-1008-12
08-1408-13 08-16
09-09
17-02
09-13
09-12
18-10
17-03
5
618-14
12-15
07-05
12-09
07-13
18-04
18-05
18-12
19-01
17-13 17-14
19-02
20-12
20-11
20-0620-07
20-03
19-16
12-10
07-06
20-10
17-15ST
13-02
13-07
20-13
13-10
08-11
08-15A
08-07
17-02B
08-15
17-01
08-11A
08-14A
08-08A
08-16H
17-02A17-04
13-08
24-01
19-06
20-04
12-16
18-02
20-09
07-0107-0207-03
07-07
08-09
09-14
1
1
4
1
1
1
11
1
1
1
2
1
21
2
01B
231
1
18-10A
9517-161
1
11
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1
2
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120-05
3
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03-01
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1
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1
1
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11
8
2
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1
15B21
12
13
24
25
161718
19 20 21
282930
456
7 8 9
160,
238,
274,
5219
7284
9315
8325
7757
1,
92,1,
1,
132,
5799
9135
17-06ST
07-09
17-11 17-10
18-01
07-10
07-14
18-10
18-09
17-05
17-12
18-07
17-07
19-04
19-08
07-11
18-03ST
18-16
07-16ST
18-11
08-0208-03
08-06
08-06A08-08
08-1008-12
08-1408-13 08-16
09-09
17-02
09-13
09-12
18-10
17-03
5
618-14
12-15
07-05
12-09
07-13
18-04
18-05
18-12
19-01
17-13 17-14
19-02
20-12
20-11
20-0620-07
20-03
19-16
12-10
07-06
20-10
17-15ST
13-02
13-07
20-13
13-10
08-11
08-15A
08-07
17-02B
08-15
17-01
08-11A
08-14A
08-08A
08-16H
17-02A17-04
13-08
24-01
19-06
20-04
12-16
18-02
20-09
07-0107-0207-03
07-07
08-09
09-14
1
1
4
1
1
1
11
1
1
1
2
1
21
2
01B
231
1
18-10A
9517-161
1
11
1
1
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2
1 1
20-02 1 1
11
2
120-05
3
1
1
1
1
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1
03-06
03-01
10
1
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1
1
19-131
11
8
2
12-01
1
15B2
1
12
13
24
25
161718
19 20 21
282930
456
7 8 9
160,
238,
274,
5219
7284
9315
8325
7757
1,
92,1,
1,
132,
5799
9135
17-06ST
07-09
17-11 17-10
18-01
07-10
07-14
18-10
18-09
17-05
17-12
18-07
17-07
19-04
19-08
07-11
18-03ST
18-16
07-16ST
18-11
08-0208-03
08-06
08-06A08-08
08-1008-12
08-1408-13 08-16
09-09
17-02
09-13
09-12
18-10
17-03
5
618-14
12-15
07-05
12-09
07-13
18-04
18-05
18-12
19-01
17-13 17-14
19-02
20-12
20-11
20-0620-07
20-03
19-16
12-10
07-06
20-10
17-15ST
13-02
13-07
20-13
13-10
08-11
08-15A
08-07
17-02B
08-15
17-01
08-11A
08-14A
08-08A
08-16H
17-02A17-04
13-08
24-01
19-06
20-04
12-16
18-02
20-09
07-0107-0207-03
07-07
08-09
09-14
1
1
4
1
1
1
11
1
1
1
2
1
21
2
01B
231
1
18-10A
9517-161
1
11
1
1
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1
2
1 1
20-02 1 1
11
2
120-05
3
1
1
1
1
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1
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10
1
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1
1
19-131
11
8
2
12-01
1
15B2
1
12
13
24
25
161718
19 20 21
282930
456
7 8 9
160,
238,
274,
5219
7284
9315
8325
7757
1,
92,1,
1,
132,
5799
9135
17-06ST
07-09
17-11 17-10
18-01
07-10
07-14
18-10
18-09
17-05
17-12
18-07
17-07
19-04
19-08
07-11
18-03ST
18-16
07-16ST
18-11
08-0208-03
08-06
08-06A08-08
08-1008-12
08-1408-13 08-16
09-09
17-02
09-13
09-12
18-10
17-03
5
618-14
12-15
07-05
12-09
07-13
18-04
18-05
18-12
19-01
17-13 17-14
19-02
20-12
20-11
20-0620-07
20-03
19-16
12-10
07-06
20-10
17-15ST
13-02
13-07
20-13
13-10
08-11
08-15A
08-07
17-02B
08-15
17-01
08-11A
08-14A
08-08A
08-16H
17-02A17-04
13-08
24-01
19-06
20-04
12-16
18-02
20-09
07-0107-0207-03
07-07
08-09
09-14
1
1
4
1
1
1
11
1
1
1
2
1
21
2
01B
231
1
18-10A
9517-161
1
11
1
1
01A1
2
1 1
20-02 1 1
11
2
120-05
3
1
1
1
1
117-09
13-01
1
03-06
03-01
10
1
7122
1
1
19-131
11
8
2
12-01
1
15B2
1
12
13
24
25
161718
19 20 21
282930
456
7 8 9
160,
238,
274,
5219
7284
9315
8325
7757
1,
92,1,
1,
132,
5799
9135
17-06ST
07-09
17-11 17-10
18-01
07-10
07-14
18-10
18-09
17-05
17-12
18-07
17-07
19-04
19-08
07-11
18-03ST
18-16
07-16ST
18-11
08-0208-03
08-06
08-06A08-08
08-1008-12
08-1408-13 08-16
09-09
17-02
09-13
09-12
18-10
17-03
5
618-14
12-15
07-05
12-09
07-13
18-04
18-05
18-12
19-01
17-13 17-14
19-02
20-12
20-11
20-0620-07
20-03
19-16
12-10
07-06
20-10
17-15ST
13-02
13-07
20-13
13-10
08-11
08-15A
08-07
17-02B
08-15
17-01
08-11A
08-14A
08-08A
08-16H
17-02A17-04
13-08
24-01
19-06
20-04
12-16
18-02
20-09
07-0107-0207-03
07-07
08-09
09-14
1
1
4
1
1
1
11
1
1
1
2
1
21
2
01B
231
1
18-10A
9517-161
1
11
1
1
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2
1 1
20-02 1 1
11
2
120-05
3
1
1
1
1
117-09
13-01
1
03-06
03-01
10
1
7122
1
1
19-131
11
8
2
12-01
1
15B2
Phase I
PilotPhase V
Phase II
Phase III
Phase IV
Phase I
PilotPhase V
Phase II
Phase IIIPhase IV
14
Jackson Dome (CO2 Source)
Current Rate: 263 MMscf/d as of 07/2005
Deliverability: 385 MMscf/d Sweet CO2
100 MMscf/d Sour CO2
485 MMscf/d Sweet/Sour CO2
Peak Rate: 665 MMscf/d in 2009
15
CO2 Business Model – Phase 2
Constructing East Mississippi CO2 Pipeline
Existing CO2 Pipeline
Cumulative Production
16
CO2 Business Model – Phases 1 & 2
Projected Net Oil Production
Combined Phases Yield Predictable Growth Thru 2011
25% Annual Production Growth (2004–2011)
Note: Forecast based on internal management estimates. Actual results may vary.
Ne
t B
OP
D
17
The Future
18
Future CO2 Projects
Region No. of ReservoirsEstimated
Recoverable (MMBbls)
Louisiana 128 1,430 – 3,240
Mississippi 17 150 – 330
Texas (District 3) 54 1,020 – 2,290
Total 199 2,600 – 5,860
Estimated Recoverable Reserves from CO2-EOR
Source: U.S. Department of Energy report dated March 2005 – “Basin Oriented Strategies for CO2 Enhanced Oil Recovery: Onshore Gulf Coast”.
Potential Expansion Throughout Gulf Coast Region
19
Current CO2 Sources & Pipelines
Great Plains Coal
GasificationPlant
LeBarge
Ridgeway CO2Discovery
McElmo Dome
Sheep Mountain
BravoDome
AmmoniaPlant
GasPlants
JacksonDome
Rockies5 Fields – Additional 2 Proposed
(Anadarko)19,520 Gross Bbls/d
Operators: Exxon/Chevron/MeritCO2 Source:
Natural/Manufacturing
Rockies
Permian Basin42 Fields
155,000 Gross Bbls/dOperator: Multiple (16)
CO2 Source: Natural
Permian Basin
Mid-Continent4 Fields
9,800 Gross Bbls/dOperators:
Exxon/Anadarko/ChaparralCO2 Source: Manufacturing
Mid-Continent
Eastern Gulf Coast3 Fields
12,000 Gross Bbls/dOperator: Denbury CO2 Source: Natural
Eastern Gulf Coast
CO2 to Canada
Prolific Natural Sources of CO2 are Associated with Volcanic Activity and are Very Rare
20
The Future….
►South LouisianaPositives
– Great Reservoirs
– Light Sweet Crude
– Tax Relief is Available
Negatives– Majority of Reservoirs are in water
locations (higher costs)
– No Distribution Network
– Most Likely CO2 Source will be
Industrial Waste
– Net Revenue Interest are low compared to other basins
– State Tax on Oil is 12.5% which is twice what most states collect
CO
2 P
ipel
ine
McComb
Jackson
New Orleans
BatonRouge
Meridian
Planned 80 Mile Pipeline
Potential 120 Mile Pipeline
JacksonDome
21
The Future….
►Other Areas
Essentially all Depletion Drive Oil Reservoirs are CO2 Candidates
►Where is the CO2 going to come from?
Naturally Occurring Sources– New Mexico, Arizona
Anthropogenic Sources– Refineries
– Separation from Conventional Gas Reservoirs, LaBarge
– Power Plants, CO2 Fired
– Chemical Plants
– Synthetic Fuel Sources
►The Sources are AvailableCost of Recovery?
Cost of Distribution?
22
Questions or Comments