Denbury Resources Inc. announced its third quarter 2006 financial and operating results. Production of 37,561 BOE/d in the third quarter of 2006, a Company quarterly record, was slightly higher than production in this year's second quarter. The Company also posted near-record earnings for the quarter of $59.3 million, or $0.50 per basic common share, as compared to earnings of $38.5 million, or $0.34 per basic common share, for the third quarter of 2005.

Included in third quarter 2006 results are several non-cash items (discussed below) which were not present in the prior year period's results: (i) a $14.6 million gain associated with mark-to-market fair value adjustments related to the Company's oil and natural gas derivative contracts, (ii) $2.0 million of stock compensation expense related to the adoption of SFAS No. 123(R) effective January 1, 2006, and (iii) $3.7 million of capitalized interest relating to significant unevaluated properties associated with the Company's 2006 acquisitions.

Adjusted cash flow from operations (cash flow from operations before changes in assets and liabilities, a non-GAAP measure) for the third quarter of 2006 was $119.0 million, a 36% increase over third quarter of 2005 adjusted cash flow from operations of $87.3 million. Net cash flow provided by operations, the GAAP measure, totaled $135.4 million during the third quarter of 2006, a Company quarterly record, as compared to $76.3 million during the third quarter of 2005.

The difference between the adjusted cash flow and cash flow from operations is due primarily to the changes in receivables, accounts payable and accrued liabilities during the quarter. (Please see the accompanying schedules for a reconciliation of net cash flow provided by operations, as defined by generally accepted accounting principles (GAAP), which is the GAAP measure, as opposed to adjusted cash flow from operations, which is the non-GAAP measure).

Third Quarter 2006 Financial Results

Earnings and cash flow from operations were at near-record levels for the third quarter of 2006, primarily as a result of record quarterly production and high commodity prices (although commodity prices were approximately the same on a BOE basis between the respective third quarters). The Company set a new quarterly production level during the third quarter, averaging 37,561 BOE/d, a 37% increase over third quarter 2005 levels. Third quarter of 2005 production was negatively affected by Hurricanes Katrina and Rita, with an estimated 3,800 BOE/d of production deferred during that period.

If last year's third quarter production is adjusted to include the estimated deferred production, the production increase between the comparative quarters is reduced to approximately 21%, or an increase of approximately 6,400 BOE/d. Approximately one-third of the production increase was attributable to the acquisition that closed January 31, 2006, which added 2,339 BOE/d to the third quarter average. This was supplemented by higher production in the Company's Barnett Shale area and higher natural gas production in Louisiana following several exploratory successes during 2005.

Oil production from the Company's tertiary operations averaged 10,114 BOE/d in the third quarter of 2006, a 14% increase over third quarter 2005 levels, but approximately the same as second quarter of 2006 tertiary production. The Company does not believe that these temporary fluctuations in tertiary production indicate any issue with the proved and potential oil reserves recoverable with CO2 because the correlation between historical oil production and CO2 injections remains high, as expected. The lag in production is due to a series of different types of delays in obtaining equipment or completing facilities causing the Company's CO2 injections to be below forecasted amounts.

Production from the Barnett Shale increased to 4,952 BOE/d in the third quarter of 2006, a 130% increase from 2,150 BOE/d produced in the third quarter of 2005, and a 7% increase over second quarter 2006 production levels, as a result of the increased drilling activity during late 2005 and 2006.

In addition, the Company's onshore Louisiana production for the third quarter of 2006 averaged 8,221 BOE/d, a 59% increase over the 5,169 BOE/d produced in the third quarter of 2005, but slightly less than the second quarter of 2006 peak rate of 8,623 BOE/d, with the most significant production increases at Thornwell and South Chauvin Fields as a result of 2005 drilling activity in those areas.