Denbury has drilled and logged its initial well at North Padre Island Block A-9, offshore Texas and based on initial internal estimates, believes that it has made a new field discovery with total potential gross natural gas reserves of approximately 90 Bcf (34 Bcf net to the Company). The Company is currently in the process of reviewing this well data with its independent engineers as part of the preparation of its year-end reserves, but anticipates that little, if any, of these reserves will be proven at year-end primarily due to the lack of production flow tests. Positive results from future wells, flows tests and production results will be required in order to classify these potential natural gas reserves as proven. None of this testing is expected until late 2003.
The Company is expected to spud its second well in this field in a different fault block within the next week which, if successful, could add an additional 35 Bcf of gross reserve potential (13 Bcf net). This second well should reach total depth by late January. There may also be additional wells drilled in this field in late 2003 or during 2004 to test other additional potential in this block. The production facilities necessary to produce any reserves in this block are not expected to be installed until late 2003.