Dallas-based Denbury Resources Inc. estimated that its discovery well in North Padre Island Block A-9 offshore Texas in the Gulf of Mexico has total potential natural gas reserves of 90 Bcf (34 Bcf net to Denbury).

The company is currently in the process of reviewing well data with its independent engineers as part of the preparation of its year-end reserves, but it anticipates that little, if any, of these reserves will be proven at year-end, primarily due to the lack of production flow tests. Positive results from future wells, flows tests and production results will be required in order to classify these potential natural gas reserves as proven. None of this testing is expected until late 2003.

Denbury is expected to spud its second well in this field in a different fault block within the next week which, if successful, could add an additional 35 Bcf of gross reserve potential (13 Bcf net). This second well should reach total depth by late January. There may also be additional wells drilled in this field in late 2003 or during 2004 to test other additional potential in the block. The production facilities necessary to produce any reserves in this block are not expected to be installed until late 2003.

Separately, Denbury announced that as part of its regular hedging program it has recently hedged natural gas for calendar 2005 in the form of a no-cost natural gas collar for 15 MMcf/d, consisting of a price floor of $3.00 per MMBtu and an average price ceiling of $5.50 per MMBtu. Although it has not completed its production forecast for 2005, the company expects that this hedge will cover between 10% and 15% of its anticipated 2005 natural gas production.

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