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    Denbury swaps Bakken oil shale acreage with ExxonMobil for CO2 resources

    Exxon Mobil Corp. has signed an agreement with Denbury Resources that increases its production acreage in the Bakken Shale and allows Denbury to increase its CO2 enhanced oil recovery efforts.

    ExxonMobil and its subsidiary, XTO Energy, signed an exchange agreement with Denbury Onshore LLC, a subsidiary of Denbury Resources Inc., to acquire 100% of the Bakken Shale assets Denbury acquired as part of its 2010 deal with Encore Acquisition Co. The assets consist of nearly 196,000 net acres in North Dakota and Montana, with expected production in the second half of 2012 of more than 15,000 oil equivalent barrels per day.

    In return, Denbury will receive $1.6 billion in cash and ExxonMobil's operating interests in Webster Field in Texas and Hartzog Draw Field in Wyoming, which currently produce about 3,600 net oil equivalent barrels per day of natural gas and liquids. In addition, Denbury has agreed in principle to either purchase an interest in the CO2 reserves in ExxonMobil's LaBarge Field in southwestern Wyoming or purchase incremental CO2 from that field, on terms and conditions to be mutually agreed upon by the parties. The purchase of an interest in CO2 reserves would reduce the amount of cash received by Denbury.

    The agreement increases ExxonMobil’s holdings in the Bakken region by about 50% to nearly 600,000 acres. The acreage will be operated by ExxonMobil subsidiary XTO Energy.

    When ExxonMobil bought XTO Energy in 2009, the company added the equivalent of 45 trillion cubic feet of gas from shale gas, tight gas, coal bed methane and shale oil to its portfolio.

    “This agreement provides a strategic addition to ExxonMobil’s North American unconventional resource base,” said Andrew P. Swiger, senior vice president of Exxon Mobil Corp.

    Phil Rykhoek, Denbury's President and CEO, commented, “With the sale of the Bakken assets, we will have even more control over the timing and magnitude of our capital expenditures, as we operate all of our remaining significant assets.”

    Denbury intends to use the cash proceeds from the transaction to pursue the purchase of additional oil fields in the Gulf Coast or Rocky Mountain regions that are suited for CO2 flooding, to fund capital expenditures, and/or to repay outstanding debt under its bank credit facility. Additionally, Denbury plans to resume its stock repurchase program begun in October 2011 under which $195 million of the $500 million of authorized repurchases have been made.

    The transactions are expected to close late in the fourth quarter of 2012 with a July 1, 2012 effective date.

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