Denbury Resources acquires fields in Mississippi, Texas

By the OGJ Online Staff

HOUSTON, Apr. 18 -- Denbury Resources Inc., Dallas, Wednesday said it acquired nearly 100% in West Mallalieu and Olive fields in southwestern Mississippi, and acquired 14,000 leasehold acres in the Barnet Shale gas play near Fort Worth, Tex.

It did not name the sellers.

Denbury acquired the two Mississippi oil fields for $3.8 million with the intent of expanding its tertiary carbon dioxide injection operations. These fields are within 5 miles of Denbury�s CO₂ operations at Little Creek field.

Initial development is planned for West Mallalieu field later this year, with $30 million expected to be spent over 3 years. Denbury estimates 8 million bbl of oil should be recoverable from West Mallalieu.

The acquisition of Olive Field provides equipment and the potential to recover previously injected CO₂.

The acquisition of these fields is part of Denbury's strategy to implement CO₂ recovery operations throughout the major Lower Tuscaloosa oil fields of southwest Mississippi. These fields have produced more than 245 million bbl of light sweet crude and are all close to being depleted or abandoned.

The CO₂ will be delivered from reserves acquired in February from Airgas Inc. That acquisition included 10 producing CO₂ wells near Jackson, Miss., and a 183-mile, 20 in. pipeline carrying CO₂ to Little Creek field, the state's largest CO₂ enhanced oil recovery project.

Denbury estimated the acquisition included 1 tcf of usable CO₂ reserves and substantial nonproducing reserves that could be developed with addition of treating facilities (OGJ, Mar. 12, 2001, p. 39).

Denbury operates the only active CO₂ operation in the basin at Little Creek field. It estimates 80-100 million bbl of additional oil reserves may be available in fields in this part of the state through tertiary recovery operations.

In the Barnett Shale deal, Denbury acquired 14,000 acres in the Barnett shale gas play in the Fort Worth basin in Wise, Jack, Parker, and Johnson counties in North Texas and is leasing additional acreage in the area.

Denbury views this acreage position as the first step in creating a new strategic operating area. This basin has more than 20 rigs drilling for gas. Denbury is drilling its first well in this basin with plans to drill 3-4 additional wells in 2001. Denbury is the operator, with an average 75% working interest on the 14,000 acres.