Energy Prospectus

Dan,
Do you still plan to take a new look at Denbury?
Thanks.

I just highlighted it on my very long "To Do List".

Working on DNR today.

From the 1st quarter 10-Q:

Oil Price Impact on Our Business. Our financial results are significantly impacted by changes in oil prices, as 97% of our
production is oil. Oil prices have continued to improve from the levels experienced over the last few years, when oil prices generally
ranged between $40-$50 per Bbl. NYMEX oil prices averaged approximately $63 per Bbl in the first quarter of 2018 compared
to approximately $52 per Bbl in the first quarter of 2017. Increases in oil prices impact all aspects of our business; most notably
our cash flow from operations, revenues, and capital budgeting decisions. Our 2018 capital spending has been budgeted at
approximately $300 million to $325 million, excluding capitalized interest and acquisitions, roughly a 30% increase over 2017
capital spending levels. We utilized a NYMEX oil price estimate of $55 per Bbl in developing our 2018 budget, which based on
our current projections would generate a level of cash flow that would fully fund our development capital spending plans. With
this capital spending level, we currently anticipate our 2018 production to average between 60,000 and 64,000 BOE/d. We have
hedged various portions of our estimated oil production through 2019 in order to protect against the volatility in oil prices and to
provide greater certainty around levels of our cash flow in order to execute on our planned 2018 capital spending.

Operating Highlights. We recognized net income of $39.6 million, or $0.09 per diluted common share, during the first
quarter of 2018, compared to net income of $21.5 million, or $0.05 per diluted common share, during the first quarter of 2017.
The primary drivers of our change in operating results between the comparative first quarters of 2018 and 2017 were the following:

• Oil and natural gas revenues in the first quarter of 2018 improved by $73.8 million, or 28%, principally driven by a 28%
improvement in realized oil prices, along with a 1% increase in average daily production volumes. Our net realized oil price
relative to NYMEX prices improved by $2.93 per Bbl from the prior-year period to $1.29 per Bbl above NYMEX.

• Commodity derivatives expense increased by $73.4 million ($48.8 million of expense in the current-year period compared to
$24.6 million of income in the prior-year period). This increase in expense was the result of losses from noncash fair value
adjustments between the periods of $67.0 million and a $6.4 million increase in payments on derivative settlements.

• General and administrative expenses decreased $8.0 million, primarily as a result of lower employee-related costs due to a
workforce reduction in August 2017.

• Interest expense, net, decreased on a GAAP basis by $9.9 million primarily due to the exchange transactions completed during
December 2017 and January 2018. See Results of Operations – Interest and Financing Expenses for further discussion.

We generated $91.6 million of cash flows from operating activities in the first quarter of 2018, an increase of $67.4 million
from the first quarter of 2017 levels. The increase in cash flows from operations was due primarily to higher oil and natural gas
revenues of $73.8 million, a $9.9 million decrease in interest expense, and an $8.0 million decrease in general and administrative
expenses, slightly offset by an increase in derivative settlement payments of $6.4 million, a $4.9 million increase in taxes other
than income and a $4.5 million increase in lease operating expenses.

2018 Debt Reduction Transactions. In early January 2018, we closed transactions in which $174.3 million aggregate principal
amount of our existing senior subordinated notes were exchanged for $74.1 million aggregate principal amount of 9¼% Senior
Secured Second Lien Notes due 2022 (the “2022 Senior Secured Notes”) and $59.4 million aggregate principal amount of new
5% Convertible Senior Notes due 2023 (the “2023 Convertible Senior Notes”).

In the last 3 months, only 2 ranked analysts set 12-month price targets for DNR. The average price target among the analysts is $3.50. DNR is trading for $4.38 today.

I have updated my forecast/valuation model for Denbury Resources (DNR) and posted it to the EPG website.
My valuation is $7.00/share.

Things to focus on:
1. Denbury has a lot of debt. This is why the Wall Street Gang has it in the "Penalty Box".
2. Denbury is now generating more than enough cash flow from operations to cover this year's $325 million capital program.
3. Based on my forecast, Denbury should generate approximately $550 million of cash flow from operations. That is more than enough to keep the debt holders at bay.
4. This is the big one to focus on: Denbury sells their oil into the Gulf Coast market at a small discount to Brent. However, this year they have a high percentage of their oil hedged, so they will not benefit much from this. If Brent goes to $80/bbl in 2019 (Raymond James forecast), Denbury will get a BIG SURGE in cash flow from operations (to over $850 million) in 2019. As I posted this morning, Morgan Stanley's top energy analyst has raise his 2019 price forecast for Brent to $90/bbl.

Conclusion: Denbury has walked though "The Valley of Death" and they have survived another brutal oil price cycle. Their 12-31-2017 Proven Reserves report (PV-10 of $2.5 Billion) supports the current debt level. If they continue to stay focused and keep paying down their debt, the company will be fine. This is a prime example of how leverage works both ways. If you believe that oil prices will remain elevated, then there is upside here.

One more thing: DNR is heavily weighted to oil. It is ~97% of their production. During the last cycle "Rebound Phase" DNR more than tripled in price. Where it goes this time is tied directly to Brent.