Denbury Reports Second Quarter 2022 Financial and Operational Results

Board authorizes $100 million increase in share repurchase program to $350 million

Denbury Inc. (NYSE:DEN) ("Denbury" or the "Company") today provided its second quarter 2022 financial and operating results.

HIGHLIGHTS

• Second quarter 2022 cash flows provided by operating activities totaled $150 million, and adjusted cash flows from operations⁽¹⁾, excluding working capital changes, totaled $145 million.
• Generated $55 million of free cash flow⁽¹⁾ during the second quarter and $106 million year-to-date.
• Repurchased $100 million of the Company's shares (3.2% of March 2022 shares outstanding) in June and July 2022 at $61.92 per share, with $29 million repurchased in the second quarter.
• Exited the second quarter with zero debt, a reduction of $35 million from the first quarter 2022.
• Delivered sales volumes of 46,561 barrels of oil equivalent per day ("BOE/d"), 97% crude oil.
• Increased injection of industrial-sourced CO₂ used in the Company's Enhanced Oil Recovery ("EOR") operations to 1.2 million metric tons for the quarter, up 27% from the first quarter of 2022, with the increase primarily driven by the Company's Cedar Creek Anticline ("CCA") EOR development.
• Signed a definitive agreement for a planned CO₂ storage site near Donaldsonville, Louisiana, covering approximately 18,000 acres and located less than five miles from the Company's Green Pipeline.

EXECUTIVE COMMENT

Chris Kendall, the Company's President and CEO, commented, "In the second quarter, Denbury maintained excellent safety performance, continued to advance our CCUS business, made significant progress on our capital development program, and delivered robust financial results. Strong oil prices have meaningfully increased our cash flow outlook and positioned us to return significant capital to our shareholders, while still investing for moderate production growth and rapidly growing our CCUS business. During June and July 2022, we repurchased $100 million of the Company's outstanding shares, and I'm pleased that our Board recently increased our share repurchase authorization by the same amount.

"Despite inflation headwinds and the ongoing supply chain issues affecting our industry and businesses globally, our teams have executed well on our 2022 capital program, which we expect will drive increased production in the latter part of this year. The development of our major EOR project at Cedar Creek Anticline is progressing well, and we are excited about the expected production and cash flow benefit to our business beginning next year and for decades to come.

"On the CCUS front, we continue to expand what we believe is the industry's superior CCUS platform, adding another planned CO₂ storage site in the emissions-intensive Louisiana industrial corridor. With multiple ongoing industrial customer negotiations, we remain on track to substantially exceed our 2022 goals for CO₂ offtake. Our proven track record in providing highly reliable CO₂ transportation and secure underground injection, combined with our ideally-placed infrastructure, is unmatched in the industry and positions us well for continued success and growth in CCUS."

SECOND QUARTER FINANCIAL AND OPERATIONAL RESULTS

Total revenues and other income in the second quarter of 2022 were $482 million, a 17% increase over first quarter 2022 levels, supported by higher oil price realizations. The Company's average oil price differential in both the Rocky Mountain and Gulf Coast regions was better than expected and strengthened significantly during the second quarter based on improved local markets for the Company's high-quality production. Denbury's second quarter 2022 average pre-hedge realized oil price was $108.81 per barrel ("Bbl"), which was $0.09 per Bbl above the average NYMEX WTI oil price for the period.

Denbury's oil and natural gas sales volumes averaged 46,561 BOE/d during the second quarter of 2022, in line with expectations. Oil represented 97% of the Company's second quarter 2022 volumes, and approximately 28% of the Company's oil was attributable to the injection of industrial-sourced CO₂ in its EOR operations, resulting in carbon-negative or blue oil. Second quarter sales volumes were slightly lower compared to the first quarter of 2022, as the Gulf Coast volumes were impacted by compressor downtime and well repair activities, while volumes in the Rocky Mountain region increased primarily due to CO₂ flood response at Grieve, development and workover activities at Beaver Creek, as well as reduced weather downtime at CCA.

Lease operating expenses ("LOE") in the second quarter of 2022 totaled $124 million, which included a benefit of approximately $7 million as a result of a settlement of a 2013 insurance claim related to property damage at our Delhi field. Excluding this benefit, LOE per BOE was $30.93, up from the first quarter of 2022 primarily as a result of service cost inflation, higher workover activity levels, increased power and fuel costs and increased CO₂ costs.

General and administrative ("G&A") expenses were $19 million in the second quarter of 2022, slightly higher than the first quarter of 2022 due primarily to an increase in stock-based compensation.

On a pre-hedge basis, per barrel cash operating margins (revenues less LOE, production and ad valorem taxes, transportation and marketing expenses, and G&A and interest costs) expanded 22% in the quarter to $61.31 per BOE, excluding the insurance reimbursement item impacting LOE.

Commodity derivatives expense in the second quarter of 2022 totaled $57 million, comprised of cash payments of $128 million on hedges that settled in the quarter and a non-cash fair value gain of $71 million. The non-cash fair value gain primarily represented the expiration of hedge contracts during the second quarter of 2022. Depletion, depreciation, and amortization was $35 million, or $8.35 per BOE for the quarter, relatively consistent with the first quarter of the year.

The Company's second quarter 2022 effective income tax rate was approximately 14%, consistent with expectations and lower than the Company's 25% statutory rate due to a $19 million valuation allowance release during the second quarter of 2022. Current taxes totaled $3 million for the second quarter of 2022, or 12% of total income taxes.

CAPITAL EXPENDITURES

Second quarter 2022 capital expenditures, excluding capitalized interest, totaled $89 million, with $86 million related to oil and gas development capital and $3 million related to CCUS business activities. Capital expenditures at the CCA EOR project totaled $21 million for the second quarter of 2022, including field development and infrastructure expenditures, as well as the capitalization of pre-production CO₂ injection. CO₂ injection at the CCA EOR project continues to progress well, with oil production response still expected during the second half of 2023.

Non-CCA oil and gas development capital increased 74% from the first quarter of the year with focus on expansion in existing EOR assets, including Beaver Creek, Cranfield, Heidelberg and Soso field activities.

FINANCIAL POSITION, LIQUIDITY AND SHARE REPURCHASES

Denbury ended the second quarter 2022 with no debt and $738 million of financial liquidity (including cash on hand and borrowing capacity under the Company's bank credit facility). The Company repurchased $29 million of its common stock during the second quarter and a total of $100 million, or 1.6 million shares (3.2% of March 2022 shares outstanding), through July 2022.

Denbury's Board of Directors recently authorized a $100 million increase in the share repurchase program raising the total authorization to $350 million (which represents approximately 10% of Denbury's current market capitalization). $250 million is available for repurchase under the plan. The timing and amount of any share repurchases will be determined by Denbury's management at its discretion based on ongoing assessments of the capital needs of the business, the market price of Denbury's common stock and general market conditions.

During the second quarter, the Company amended its bank credit agreement, which among other things: (i) increased the borrowing base and lender commitments from $575 million to $750 million, (ii) extended the maturity date from January 30, 2024, to May 4, 2027, and (iii) relaxed certain covenants, such as permitting the Company to implement shareholder returns and make other unlimited restricted payments and investments so long as certain leverage and availability requirements are met.

OUTLOOK

Denbury is increasing its anticipated full-year 2022 oil and gas capital expenditures to $360 million, up from the previously-guided $320 million. Approximately half of the increase is due to overall service cost inflation impacting the Company's operations, primarily related to labor and steel costs. The remainder of the increase is associated with CCA EOR development capital, where the Company is accelerating the purchase of compression equipment and the construction of CO₂ recycle facilities to mitigate timing risks associated with ongoing supply chain disruptions and to ensure the field is ready to process the expected oil production response. The Company anticipates oil and gas capital expenditures to peak in the third quarter of the year.

Capital expenditures for the CCUS business are planned at $50 million for 2022, but could increase depending on activity levels in the second half of the year. Denbury's current plans for 2022 include drilling one or more stratigraphic test wells in the Company's potential CO₂ sequestration sites.

The Company's full-year 2022 production guidance range is unchanged at between 46,000 and 49,000 BOE/d. For the third quarter, the Company anticipates sales volumes will be roughly flat compared to the second quarter of the year before increasing significantly in the fourth quarter, driven by incremental production from multiple projects in the Company's 2022 capital program.

Updates to Denbury's 2022 guidance can be found in the supporting materials on Denbury's website.

CONFERENCE CALL AND WEBCAST

Denbury management will host a conference call and webcast to review second quarter 2022 financial and operating results and its outlook for future periods, today, Thursday, August 4, at 11:00 a.m. Central Time (12:00 p.m. Eastern Time). Additionally, Denbury will post supporting materials on its website before market open today. The webcast will be available, both live and for replay, on the Investor Relations page of the Company's website at www.denbury.com. Individuals who would like to participate in the conference call should dial the following numbers shortly before the scheduled start time: 844.200.6205 or 929.526.1599 with access code 048168.

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 also been active in CCUS through the injection of captured industrial-sourced CO₂. The Company currently injects over four million tons of captured industrial-sourced CO₂ annually, with an objective to fully offset its Scope 1, 2, and 3 CO₂ emissions by 2030, primarily through increasing the amount of captured industrial-sourced CO₂ used in its operations. For more information about Denbury, visit www.denbury.com.

This press release and updated supporting materials, other than historical information, contains forward-looking statements that involve risks and uncertainties including: expectations as to future oil prices, operating costs, production levels and cash flows; anticipated levels of 2022 capital expenditures, lease operating expenses and general and administrative expenses, along with other financial forecasts; future tax benefits; the expected timing of first tertiary production at CCA; statements or predictions related to the ultimate economics of proposed carbon capture, use and storage arrangements and the CO₂ volumes covered by such arrangements; and other risks and uncertainties detailed in the Company's filings with the Securities and Exchange Commission, including Denbury's most recent report on Form 10-K. These risks and uncertainties are incorporated by this reference as though fully set forth herein. These statements are based on oil pricing, financial and market, engineering, geological and operating assumptions that management believes are reasonable based on currently available information; however, management's assumptions and the Company's future performance are both subject to a wide range of risks, and there is no assurance that these goals and projections can or will be met. Actual results may vary materially, especially in light of the Russian war against Ukraine, changes in European energy supplies, rising levels of economic uncertainty due to inflation, rising interest rates, and the continuing impact of COVID-19. In addition, any forward-looking statements represent the Company's estimates only as of today and should not be relied upon as representing its estimates as of any future date. Denbury assumes no obligation to update its forward-looking statements.

FINANCIAL AND STATISTICAL DATA TABLES AND RECONCILIATION SCHEDULES

The following tables include selected unaudited financial and operational information for the comparative three and six-month periods ended June 30, 2022 and 2021. All sales volumes and dollars are expressed on a net revenue interest basis with gas volumes converted to equivalent barrels at 6:1.

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