Denbury Announces 2022 Capital Plan and Production Guidance, Focused on Progressing Strategic EOR and CCUS Initiatives
February 24 2022 - 06:32AM
Business Wire
Denbury Inc. (NYSE: DEN) (“Denbury” or “the Company”) today
announced its 2022 capital budget range for oil and natural gas
development expenditures of $290 million to $320 million; at the
midpoint comprised of $115 million for continuation of the Cedar
Creek Anticline (“CCA”) EOR development and $190 million for other
tertiary and non-tertiary oil-focused development projects,
capitalized internal costs and CO2 sources and pipelines. This
compares to total oil and natural gas development expenditures of
$252 million in 2021, of which $123 million was invested in the CCA
EOR development and $129 million in other tertiary and non-tertiary
oil-focused development projects, capitalized internal costs and
CO2 sources and pipelines. In addition to oil and natural gas
development capital, the Company currently anticipates 2022
expenditures of approximately $50 million in connection with its
strategic carbon capture, utilization, and storage (“CCUS”)
initiatives, which could flex higher based on the progress and
timing of various CCUS agreements, including the development of new
sequestration sites.
Chris Kendall, Denbury’s President and Chief Executive Officer,
commented, “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. 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.”
Denbury completed the 105-mile CCA CO2 Pipeline from the Bell
Creek field to CCA in 2021. CCA EOR investment in 2022 totals an
estimated $115 million, primarily consisting of the construction of
field CO2 recycle facilities and infrastructure, capitalized Phase
1 CO2 costs, and the implementation of a development pilot in the
Interlake formation. Based on the strong progress of the CCA
project to date, certain of the 2022 CCA investments have been
accelerated from initial plan. The cost of the CO2 injected into
Phase 1 prior to tertiary production will be capitalized and is
anticipated at $25 million in 2022. After tertiary production
commences, expected in the second half of 2023, the cost of
injected CO2 will be treated as lease operating expense.
Excluding the CCA EOR development, 2022 planned oil and natural
gas capital expenditures total $190 million, an increase of more
than 45 percent from 2021 and 125 percent from 2020. The Company
has previously disclosed its estimated capital level to sustain
production roughly flat year on year as ranging between $175
million to $200 million, currently estimated to be on the higher
end of that range based on prevailing market conditions.
2022 tertiary development, excluding CCA, includes investments
in the Heidelberg, Cranfield, and Soso fields in Mississippi and
Oyster Bayou in Texas, amongst others. Non-tertiary development
investments include projects at the Webster and Thompson fields in
Texas as well as in the CCA waterflood areas in Montana.
The Company’s anticipated CCUS capital expenditures for 2022 of
approximately $50 million is expected to be primarily directed
toward acquiring, testing and Class VI permitting of multiple
sequestration sites, including seismic and stratigraphic test
wells. In addition, Denbury may make equity investments in certain
CCUS partnerships to drive additional value in new project
areas.
Sales volumes for 2022 are anticipated to range between 46,000
and 49,000 barrels of oil equivalent per day, with 97 to 98 percent
of the volumes expected to be oil. The midpoint of the 2022 range
is down slightly from 2021 primarily due to underinvestment in 2020
and 2021. 2022 sales volumes are anticipated to build through the
year.
Detailed guidance is included in the Company’s supplemental
materials which will be posted to the Denbury website before market
open today.
ABOUT DENBURY
Denbury is an independent energy company with operations and
assets focused on Carbon Capture, Use and Storage (CCUS) and
Enhanced Oil Recovery (EOR) in the Gulf Coast and Rocky Mountain
regions. For over two decades, the Company has maintained a unique
strategic focus on utilizing CO2 in its EOR operations and since
2012 has been active in CCUS through the injection of captured
industrial-sourced CO2. The Company currently injects over three
million tons of captured industrial-sourced CO2 annually, and its
objective is to fully offset its Scope 1, 2, and 3 CO2 emissions
within this decade, primarily through increasing the amount of
captured industrial-sourced CO2 used in its operations. For more
information about Denbury, visit www.denbury.com.
Follow Denbury on Twitter and Linkedin.
This press release contains forward-looking statements that
involve risks and uncertainties, including estimates of 2022
capital expenditures and production levels, and they are based on
engineering, geological, financial and operating assumptions that
management of both parties believe are reasonable based on
currently available information; however, their achievement are
subject to a wide range of business risks, and there is no
assurance that these goals and projections can or will be met.
Actual results may vary materially. In addition, any
forward-looking statements represent the parties’ estimates only as
of today and should not be relied upon as representing its
estimates as of any future date. The parties assume no obligation
to update these forward-looking statements.
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version on businesswire.com: https://www.businesswire.com/news/home/20220224005165/en/
DENBURY IR CONTACTS: Brad Whitmarsh, 972.673.2020,
brad.whitmarsh@denbury.com Beth Bierhaus, 972.673.2554,
beth.bierhaus@denbury.com
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