Denbury Resources (NYSE:DNR) is developing the Bakken formation on its acreage in North Dakota as the company moves beyond the enhanced oil recovery (EOR) operations that the company was built on. The company is also active in a new shale play in the Gulf Coast area through a joint venture.

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Denbury Resources has 266,000 net acres under lease in North Dakota that is prospective for the Bakken formation. The company reported production of 5,728 barrels of oil equivalent (BOE) per day in the first quarter of 2011, and plans to increase that production to 8,700 BOE per day in 2011.

Denbury Resources is currently operating five rigs in the Bakken, and plans to add a sixth rig in the third quarter of 2011. The company may also add a seventh rig by the end of 2011.

Testing the Waters
Denbury Resources has budgeted $400 million in 2011 to develop the company's Bakken properties. These properties are spread over ten separate project areas but the company is focusing on five of these areas where it will drill 47 operated wells during the year. The company will also participate in more than 100 wells on a non operating basis.

One area that Denbury Resources has been developing is the Charlson project where the company has 15,000 net acres under lease. The company has completed three wells here in 2011, with initial production rates ranging from 1,501 to 1,939 BOE per day. Denbury Resources is currently drilling a fourth well here and expects to complete the well in June 2011.

At the Cherry project, where Denbury Resources has 66,000 net acres, the company has completed three Bakken wells in 2011, with two of the wells coming in with initial production rates above 2,000 BOE per day. The company is in the process of completing four other wells and drilling three more here.

Tuscaloosa Marine Shale
Denbury Resources recently entered into a joint venture with an unidentified party to develop 105,000 gross acres in the Tuscaloosa Marine Shale in Louisiana. The company is not required to contribute any capital into this joint venture in 2011.

Devon Energy (NYSE:DVN) is also involved with the Tuscaloosa Marine Shale and has approximately 250,000 net acres under lease. The company plans to drill two test wells in 2011.

Weyerhaeuser Company (NYSE:WY) has 65,000 net acres with exposure to this formation, and is looking to lease the acreage out to an operator to develop. Other companies that might have exposure to this play through legacy positions in the onshore Gulf Coast area include Swift Energy (NYSE:SFY).

Bottom Line
Denbury Resources is known mostly for its tertiary EOR operations in the United States but the company is trying to establish itself as a major player in the Bakken. The company also put its foot into a new shale play in Louisiana. (For related reading, also take a look at Devon Energy Unveils New Shale Play.)

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Tickers in this Article: DNR, DVN, WY, SFY

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