Tickers in this Article: ERF, WMB, DNR, OAS
Although Denbury Resource's (NYSE:DNR) main focus is on enhanced oil recovery operations, the company has a growing acreage position in the Williston Basin that is prospective for the Bakken and other formations. IN PICTURES: 8 Tips For Starting Your Own Business

Summary
Denbury Resources has 275,000 net acres under lease that is prospective for the Bakken formation. This leasehold is split between various parts of the play, with approximately 76,000 net acres in the Almond and northeast Foothills area, and the balance in what the company considers the core area of the play.

The company estimates that it has total potential reserves of 350 million barrels of oil equivalent (BOE) on its properties, and is currently operating five rigs in the play. Denbury Resources reported average daily production of 4,657 BOE per day in the third quarter of 2010.

2011 Plans
Denbury Resources is focusing in 2011 in the core area where it has 73,000 net acres in the Camp and Cherry Hills areas. The rest of its Bakken acreage is held by production and the company is not under any time pressure to drill there.

Denbury Resources recently reported a well completed to the middle Bakken formation in the Camp area. The well produced at an initial production rate of 1,328 BOE, and an average of 418 BOE per day during the first 30 days of production.

Denbury Resources has been completing recent wells with a 21 stage hydraulic fracturing operation, and will start using 24 stages beginning in 2011. The company has six wells currently being completed and another five wells being drilled. These wells are concentrated in the Cherry, Murphy Creek and Charlson areas of the play.

Capital Expenditures
Denbury Resources has allocated $300 million in capital to develop the Bakken formation in 2011. These funds will be used to drill between 40 and 45 operated wells, mostly in the Camp and Cherry areas. The company will also participate in between 70 and 80 non-operated wells in 2011.

Wells Costs
Denbury Resources estimates that its cost to drill and complete a well in the Bakken in 2011 will range from $6.8 million to $7.8 million. The company is also conducting refracing operations on six wells that were originally completed with only one hydraulic fracturing stage.

Acquisitions
Other companies have been anxious to get into the Bakken formation. Williams (NYSE:WMB) recently purchased approximately 86,000 net acres for $925 million. Enerplus Resources Fund (NYSE:ERF) recently closed on the purchase of 46,500 net acres in the Bakken for $456 million. Oasis Petroleum (NYSE:OAS) acquired 10,000 net acres in Montana for $30 million. The properties have current production of 200 BOE per day.

Bottom Line
Although Denbury Resources has spent the last decade becoming a leader in enhanced oil recovery in the Gulf Coast area, the company has also started to develop properties in the Williston Basin where it is working on the Bakken formation. (To learn more, see Oil And Gas Industry Primer.)


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