Denbury Resources (NYSE:DNR) is diversifying away from the company's core enhanced oil recovery operations and is active in the Williston Basin where it is working on the Bakken formation. The company expects double-digit production growth here in 2012. (To know more about oil industry, read A Guide To Investing In Oil Markets.)

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Bakken Summary
Denbury Resources has approximately 266,000 net acres under lease that is prospective for the Bakken formation in North Dakota. This includes 200,000 net acres in the company's core areas, and the balance in an extension area to the north. Denbury Resources estimates that its core areas have potential resources of 300 million barrels of oil equivalent (BOE).

Denbury Resources reported average daily production of 9,976 BOE per day in the third quarter of 2011, and expects this production to range from 12,750 to 14,750 BOE per day in 2012.

2012 Plans
Denbury Resources has established a capital budget of $1.35 billion for 2012, with $350 million allocated to develop the company's Bakken properties.

Denbury Resources is active in the Bakken on both an operated and non-operated basis and plans to operate six rigs in the play during 2012. The company will spend $195 million to drill 34 operated wells in 2012, and use an additional $155 million to participate in more than 100 non-operated wells.

One company that is active in the Bakken only on a non-operated basis is Northern Oil and Gas (NYSE_AMEX:NOG). The company was participating in 201 gross wells as of the beginning of November 2011.

Denbury Resources is improving the company's operational efficiency as it gains experience in the Bakken. The company reported an average spud-to-rig release time of 33 days in the third quarter of 2011, down from 40 days in the previous quarter.

Denbury Resources also reported an increase in the average initial production rate for Bakken wells in the third quarter of 2011, moving the gross rate to 2,197 BOE per day, compared to 1,496 BOE per day in the previous quarter.

Other Operators
The Bakken formation seems to get even more productive as operators gain experience in the play. Whiting Petroleum (NYSE:WLL) recently reported a well with an initial production rate over 7,009 BOE per day, setting a record for this formation.

One company that is at the start of a Bakken development program is Chesapeake Energy (NYSE:CHK), which recently disclosed that the company has 320,000 net acres under lease here. Chesapeake Energy is targeting a 400,000-net-acre position and has not yet disclosed any well results from this play.

The Bottom Line
Denbury Resources is happy with its enhanced oil recovery (EOR) operations, as the company is diversifying into the Bakken, one of the country's premier crude oil plays. This strategy will benefit the company and its shareholders in the long term. (To know more about oil and gas, read Oil And Gas Industry Primer.)

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At the time of writing, Eric Fox did not own shares in any of the companies mentioned in this article.

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