Denbury Resources Acquires Matrix Oil & Gas

Denbury Resources Inc. announced that it has entered into a definitive agreement to acquire privately-held Matrix Oil & Gas, Inc. of Covington, Louisiana for approximately $163 million in cash and stock, including the assumption of Matrix's liabilities. Matrix is an exploration and production company that primarily focuses on the offshore Gulf of Mexico with an interest in 19 offshore blocks and two onshore fields. At April 1, 2001 based on initial Company estimates, Matrix had an estimated proved reserve base of 78.7 billion cubic feet equivalent (Bcfe), 91% of which was natural gas and 70% of which was proved developed. Matrix produced 40 MMcfe/d during the first quarter of 2001, 94% of which was natural gas. The acquisition, accounted for as a purchase, increases Denbury's relative position in the Gulf of Mexico and is expected to close during July 2001, the effective date of the acquisition.

The acquisition adds quality natural gas assets in the Gulf of Mexico shelf, a growing focus area for Denbury. After the closing of the transaction, approximately 15% of Denbury's reserves and 25% of its daily production will be offshore.

The transaction is expected to be immediately accretive on a per share basis to Denbury's earnings, cash flow, production, net asset value and reserves.

Matrix's business principles and culture are very similar to Denbury's. Matrix's experienced management and technical team have a proven track record of adding value in the offshore area and most are expected to be retained by Denbury.

The adjusted 2001 average daily production for Denbury is now forecast to be 31,900 BOE/d, a 49% increase over 2000's record level.

Pro forma combined reserves are over 100 million BOE, 29% of which is natural gas. In addition to Matrix's 78.7 Bcfe of estimated proved reserves, significant probable reserves have been identified.

Matrix operates approximately 96% of its proved reserves and 88% of its current net production.

Matrix's estimated inception to date finding and development cost through December 31, 2000 is approximately $0.82 per Mcfe ($1.35 per Mcfe including future development and abandonment cost).

Under the agreement, Matrix's common shareholders will receive approximately $92.7 million, composed of 5,660,000 Denbury common shares, subject to adjustment, and $30.4 million in cash. The number of shares of Denbury common stock may be adjusted up or down, within certain limits, if the average stock price for Denbury during the twenty days prior to closing is outside of a range of $11.00 to $13.00 per share. In addition, Denbury will redeem Matrix's preferred stock at a cost of approximately $32.4 million, redeem outstanding stock options at a cost of approximately $7.3 million, and retire $25.0 million of Matrix's outstanding bank debt. The total estimated cash cost to Denbury, including estimated transaction expenses, of $101 million will be financed with debt available under the Company's bank credit facility. Credit Suisse First Boston acted as Denbury's financial advisor in the transaction.