UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☑ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~June~~September 30, 2020

☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _______ to ________

Commission file number: 001-12935

DENBURY ~~RESOURCES~~ INC.

(Exact name of registrant as specified in its charter)



Delaware		20-0467835
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

~~5320~~5851 Legacy ~~Drive,~~Circle,
Plano,	TX	75024
(Address of principal executive offices)		(Zip Code)



Registrant’s telephone number, including area code:	(972)	673-2000

Securities registered pursuant to Section 12(b) of the Act:



Title of Each Class:	Trading Symbol:	Name of Each Exchange on Which Registered:
Common Stock $.001 Par Value	DNR*DEN	New York Stock Exchange

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer	☑	Accelerated filer	☐	Non-accelerated filer	☐	Smaller reporting company	☐	Emerging growth company	☐
				(Do not check if a smaller reporting company)

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

The number of shares outstanding of the registrant’s Common Stock, $.001 par value, as of ~~July~~October 31, 2020, was ~~507,063,311.~~49,999,999.

* On July 31, 2020, the New York Stock Exchange (“NYSE”) notified Denbury Resources Inc. (“Denbury”) that the NYSE would apply to the Securities and Exchange Commission (the “SEC”) to delist the common stock of Denbury. The delisting will be effective 10 days after a Form 25 is filed with the SEC by the NYSE. The deregistration of Denbury’s common stock under Section 12(b) of the Exchange Act will be effective 90 days, or such shorter period as the SEC may determine, after filing of the Form 25. Upon deregistration of Denbury’s common stock under Section 12(b) of the Exchange Act, its common stock will remain registered under Section 12(g) of the Exchange Act.

Denbury ~~Resources~~ Inc.

Table of Contents




		Page

	PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements
	Unaudited Condensed Consolidated Balance Sheets ~~as of~~ ~~June 30, 2020 and December 31, 2019~~	3
	Unaudited Condensed Consolidated Statements of Operations ~~for the~~ ~~Three and Six Months Ended June 30, 2020 and 2019~~	4
	~~Unaudited Condensed Consolidated Statements of Cash Flows for the~~ ~~Six Months Ended June 30, 2020 and 2019~~	5
	Unaudited Condensed Consolidated Statements of ~~Changes in Stockholders’ Equity for the~~ Cash Flows~~Three and Six Months Ended June 30, 2020 and 2019~~	67
	Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity	8
	Notes to Unaudited Condensed Consolidated Financial Statements	710
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2337
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	4461
Item 4.	Controls and Procedures	4663

	PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	4764
Item 1A.	Risk Factors	4764
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5266
Item 3.	Defaults Upon Senior Securities	5266
Item 4.	Mine Safety Disclosures	5266
Item 5.	Other Information	5266
Item 6.	Exhibits	5367
	Signatures	5569

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Denbury ~~Resources~~ Inc.

Unaudited Condensed Consolidated Balance Sheets

(In thousands, except par value and share data)

June 30, December 31,
2020 2019
Assets
Current assets
Cash and cash equivalents $ 209,276

$ 516
Accrued production receivable 77,344

139,407
Trade and other receivables, net 34,449

18,318
Derivative assets 47,655
11,936
Other current assets 20,724

10,434
Total current assets 389,448

180,611
Property and equipment

Oil and natural gas properties (using full cost accounting)

Proved properties 11,702,063

11,447,680
Unevaluated properties 645,847

872,910
CO₂ properties
1,198,981

1,198,846
Pipelines and plants 2,339,761

2,329,078
Other property and equipment 216,294

212,334
Less accumulated depletion, depreciation, amortization and impairment (12,570,062 )
(11,688,020 )
Net property and equipment 3,532,884

4,372,828
Operating lease right-of-use assets 32,587
34,099
Other assets 103,116

104,329
Total assets $ 4,058,035

$ 4,691,867
Liabilities and Stockholders’ Equity
Current liabilities

Accounts payable and accrued liabilities $ 160,694

$ 183,832
Oil and gas production payable 40,652

62,869
Derivative liabilities 7,691

8,346
Current maturities of long-term debt (including future interest payable of $119,454 and $86,054, respectively – see Note 4) 2,366,330

102,294
Operating lease liabilities 7,807
6,901
Total current liabilities 2,583,174

364,242
Long-term liabilities

Long-term debt, net of current portion (including future interest payable of $0 and $78,860, respectively – see Note 4) 145,922

2,232,570
Asset retirement obligations 177,030

177,108
Deferred tax liabilities, net 306,186

410,230
Operating lease liabilities 38,584
41,932
Other liabilities 2,720

53,526
Total long-term liabilities 670,442

2,915,366
Commitments and contingencies (Note 9)

Stockholders’ equity
Preferred stock, $.001 par value, 25,000,000 shares authorized, none issued and outstanding —

—
Common stock, $.001 par value, 750,000,000 shares authorized; 509,553,960 and 508,065,495 shares issued, respectively 510

508
Paid-in capital in excess of par 2,754,749

2,739,099
Accumulated deficit (1,944,772 )
(1,321,314 )
Treasury stock, at cost, 1,828,444 and 1,652,771 shares, respectively (6,068 )
(6,034 )
Total stockholders’ equity
804,419

1,412,259
Total liabilities and stockholders’ equity $ 4,058,035

$ 4,691,867



	Successor			Predecessor
	September 30, 2020			December 31, 2019
Assets
Current assets
Cash and cash equivalents	$	21,860		$	516
Restricted cash	10,662			0
Accrued production receivable	74,296			139,407
Trade and other receivables, net	34,788			18,318
Derivative assets	26,778			11,936
Other current assets	11,730			10,434
Total current assets	180,114			180,611
Property and equipment
Oil and natural gas properties (using full cost accounting)
Proved properties	796,687			11,447,680
Unevaluated properties	98,656			872,910
CO₂ properties	187,397			1,198,846
Pipelines	132,669			2,329,078
Other property and equipment	97,770			212,334
Less accumulated depletion, depreciation, amortization and impairment	(4,446		)	(11,688,020		)
Net property and equipment	1,308,733			4,372,828
Operating lease right-of-use assets	1,225			34,099
Derivative assets	1,147			0
Intangible assets, net	99,655			22,139
Other assets	86,996			82,190
Total assets	$	1,677,870		$	4,691,867

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Table of Contents

Denbury ~~Resources~~Inc.

Unaudited Condensed Consolidated Balance Sheets (continued)

(In thousands, except par value and share data)



	Successor		Predecessor
	September 30, 2020		December 31, 2019
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable and accrued liabilities	$	166,385	$	183,832
Oil and gas production payable	45,013		62,869
Derivative liabilities	5,739		8,346
Current maturities of long-term debt (including future interest payable of $0 and $86,054, respectively – see Note 6)	73,511		102,294
Operating lease liabilities	763		6,901
Total current liabilities	291,411		364,242
Long-term liabilities
Long-term debt, net of current portion (including future interest payable of $0 and $78,860, respectively – see Note 6)	102,456		2,232,570
Asset retirement obligations	158,757		177,108
Derivative liabilities	584		0
Deferred tax liabilities, net	3,836		410,230
Operating lease liabilities	463		41,932
Other liabilities	22,186		53,526
Total long-term liabilities	288,282		2,915,366
Commitments and contingencies (Note 12)
Stockholders’ equity
Predecessor preferred stock, $.001 par value, 25,000,000 shares authorized, none issued and outstanding	—		0
Predecessor common stock, $.001 par value, 750,000,000 shares authorized; 508,065,495 shares issued	—		508
Predecessor paid-in capital in excess of par	—		2,739,099
Predecessor treasury stock, at cost, 1,652,771 shares	—		(6,034		)
Successor preferred stock, $.001 par value, 50,000,000 shares authorized, none issued and outstanding	0		—
Successor common stock, $.001 par value, 250,000,000 shares authorized; 49,999,999 shares issued	50		—
Successor paid-in-capital in excess of par	1,095,369		—
Retained earnings (accumulated deficit)	2,758		(1,321,314		)
Total stockholders’ equity	1,098,177		1,412,259
Total liabilities and stockholders’ equity	$	1,677,870	$	4,691,867

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Table of Contents

Denbury Inc.

Unaudited Condensed Consolidated Statements of Operations

(In thousands, except per share data)

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Revenues and other income
Oil, natural gas, and related product sales $ 109,387
$ 330,421
$ 339,011
$ 624,998
CO₂sales and transportation fees
6,504
7,986
14,532
16,556
Purchased oil sales 1,490
2,591
5,211
2,806
Other income 494
2,367
1,322
4,457
Total revenues and other income 117,875
343,365
360,076
648,817
Expenses

Lease operating expenses 81,293
117,932
190,563
243,355
Transportation and marketing expenses 9,388
11,236
19,009
22,009
CO₂ discovery and operating expenses
885
581
1,637
1,137
Taxes other than income 10,372
25,517
30,058
49,302
Purchased oil expenses 1,450
2,564
5,111
2,777
General and administrative expenses 23,776
17,506
33,509
36,431
Interest, net of amounts capitalized of $8,729, $8,238, $18,181 and $18,772, respectively 20,617
20,416
40,563
37,814
Depletion, depreciation, and amortization 55,414
58,264
152,276
115,561
Commodity derivatives expense (income) 40,130
(24,760 ) (106,641 ) 58,617
Gain on debt extinguishment —
(100,346 ) (18,994 ) (100,346 )
Write-down of oil and natural gas properties 662,440
—
734,981
—
Other expenses 11,290
2,386
13,784
6,524
Total expenses 917,055
131,296
1,095,856
473,181
Income (loss) before income taxes (799,180 ) 212,069
(735,780 ) 175,636
Income tax provision (benefit) (101,706 ) 65,377
(112,322 ) 54,618
Net income (loss) $ (697,474 ) $ 146,692
$ (623,458 ) $ 121,018

Net income (loss) per common share

Basic $ (1.41 ) $ 0.32
$ (1.26 ) $ 0.27
Diluted $ (1.41 ) $ 0.32
$ (1.26 ) $ 0.26

Weighted average common shares outstanding

Basic 495,245
452,612
494,752
452,169
Diluted 495,245
467,427
494,752
461,460

~~See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.~~

~~Table of Contents~~

~~Denbury Resources Inc.~~

~~Unaudited Condensed Consolidated Statements of Cash Flows~~

~~(In thousands)~~

Six Months Ended June 30,
2020 2019
Cash flows from operating activities

Net income (loss)
$ (623,458 ) $ 121,018
Adjustments to reconcile net income (loss) to cash flows from operating activities

Depletion, depreciation, and amortization
152,276
115,561
Write-down of oil and natural gas properties 734,981
—
Deferred income taxes
(106,513 ) 52,545
Stock-based compensation
3,540
6,865
Commodity derivatives expense (income)
(106,641 ) 58,617
Receipt on settlements of commodity derivatives
70,267
6,657
Gain on debt extinguishment (18,994 ) (100,346 )
Debt issuance costs and discounts
9,921
2,901
Other, net
(1,642 ) (57 )
Changes in assets and liabilities, net of effects from acquisitions

Accrued production receivable
62,063
(9,909 )
Trade and other receivables
(16,162 ) (271 )
Other current and long-term assets
(4,552 ) (3,389 )
Accounts payable and accrued liabilities
(60,295 ) (33,320 )
Oil and natural gas production payable
(22,217 ) 1,746
Other liabilities
237
(5,618 )
Net cash provided by operating activities
72,811
213,000

Cash flows from investing activities

Oil and natural gas capital expenditures
(79,897 ) (148,254 )
Pipelines and plants capital expenditures (10,962 ) (10,591 )
Net proceeds from sales of oil and natural gas properties and equipment 40,971
431
Other
(105 ) (725 )
Net cash used in investing activities
(49,993 ) (159,139 )

Cash flows from financing activities

Bank repayments
(226,000 ) (281,000 )
Bank borrowings
491,000
361,000
Interest payments treated as a reduction of debt (42,506 ) (42,558 )
Cash paid in conjunction with debt repurchases (14,171 ) —
Cash paid in conjunction with debt exchange —
(120,007 )
Costs of debt financing (299 ) (9,332 )
Pipeline financing and capital lease debt repayments
(7,015 ) (7,273 )
Other
(9,230 ) 12,899
Net cash provided by (used in) financing activities
191,779
(86,271 )
Net increase (decrease) in cash, cash equivalents, and restricted cash
214,597
(32,410 )
Cash, cash equivalents, and restricted cash at beginning of period
33,045
54,949
Cash, cash equivalents, and restricted cash at end of period
$ 247,642
$ 22,539



	Successor			Predecessor
	Period from Sept. 19, 2020 through			Period from July 1, 2020 through			Three Months Ended
	Sept. 30, 2020			Sept. 18, 2020			Sept. 30, 2019
Revenues and other income
Oil, natural gas, and related product sales	$	22,321		$	153,090		$	293,192
CO₂sales and transportation fees	967			6,517			8,976
Oil marketing sales	151			3,332			5,468
Other income	94			7,097			7,817
Total revenues and other income	23,533			170,036			315,453
Expenses
Lease operating expenses	11,484			59,708			117,850
Transportation and marketing expenses	1,344			8,155			10,067
CO₂ operating and discovery expenses	242			955			879
Taxes other than income	2,073			13,473			22,010
Oil marketing expenses	139			3,288			5,436
General and administrative expenses	1,735			15,013			18,266
Interest, net of amounts capitalized of $183, $4,704 and $8,773, respectively	334			7,704			22,858
Depletion, depreciation, and amortization	5,283			36,317			55,064
Commodity derivatives expense (income)	(4,035		)	4,609			(43,155		)
Gain on debt extinguishment	0			0			(5,874		)
Write-down of oil and natural gas properties	0			261,677			0
Reorganization items, net	0			849,980			0
Other expenses	2,164			22,084			2,140
Total expenses	20,763			1,282,963			205,541
Income (loss) before income taxes	2,770			(1,112,927		)	109,912
Income tax provision (benefit)	12			(303,807		)	37,050
Net income (loss)	$	2,758		$	(809,120	)	$	72,862

Net income (loss) per common share
Basic	$	0.06		$	(1.63	)	$	0.16
Diluted	$	0.06		$	(1.63	)	$	0.14

Weighted average common shares outstanding
Basic	50,000			497,398			455,487
Diluted	50,000			497,398			547,205

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Table of Contents

Denbury Inc.

Unaudited Condensed Consolidated Statements of Operations

(In thousands, except per share data)



	Successor			Predecessor
	Period from Sept. 19, 2020 through			Period from Jan. 1, 2020 through			Nine Months Ended
	Sept. 30, 2020			Sept. 18, 2020			Sept. 30, 2019
Revenues and other income
Oil, natural gas, and related product sales	$	22,321		$	492,101		$	918,190
CO₂sales and transportation fees	967			21,049			25,532
Oil marketing sales	151			8,543			8,274
Other income	94			8,419			12,274
Total revenues and other income	23,533			530,112			964,270
Expenses
Lease operating expenses	11,484			250,271			361,205
Transportation and marketing expenses	1,344			27,164			32,076
CO₂ operating and discovery expenses	242			2,592			2,016
Taxes other than income	2,073			43,531			71,312
Oil marketing expenses	139			8,399			8,213
General and administrative expenses	1,735			48,522			54,697
Interest, net of amounts capitalized of $183, $22,885 and $27,545, respectively	334			48,267			60,672
Depletion, depreciation, and amortization	5,283			188,593			170,625
Commodity derivatives expense (income)	(4,035		)	(102,032		)	15,462
Gain on debt extinguishment	0			(18,994		)	(106,220		)
Write-down of oil and natural gas properties	0			996,658			0
Reorganization items, net	0			849,980			0
Other expenses	2,164			35,868			8,664
Total expenses	20,763			2,378,819			678,722
Income (loss) before income taxes	2,770			(1,848,707		)	285,548
Income tax provision (benefit)	12			(416,129		)	91,668
Net income (loss)	$	2,758		$	(1,432,578	)	$	193,880

Net income (loss) per common share
Basic	$	0.06		$	(2.89	)	$	0.43
Diluted	$	0.06		$	(2.89	)	$	0.41

Weighted average common shares outstanding
Basic	50,000			495,560			453,287
Diluted	50,000			495,560			490,054

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Table of Contents

Denbury ~~Resources~~Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

(In thousands)



	Successor			Predecessor
	Period from Sept. 19, 2020 through			Period from Jan. 1, 2020 through			Nine Months Ended
	Sept. 30, 2020			Sept. 18, 2020			Sept. 30, 2019
Cash flows from operating activities
Net income (loss)	$	2,758		$	(1,432,578	)	$	193,880
Adjustments to reconcile net income (loss) to cash flows from operating activities
Noncash reorganization items, net	0			810,909			0
Depletion, depreciation, and amortization	5,283			188,593			170,625
Write-down of oil and natural gas properties	0			996,658			0
Deferred income taxes	6			(408,869		)	90,454
Stock-based compensation	0			4,111			9,866
Commodity derivatives expense (income)	(4,035		)	(102,032		)	15,462
Receipt on settlements of commodity derivatives	6,660			81,396			14,714
Gain on debt extinguishment	0			(18,994		)	(106,220		)
Debt issuance costs and discounts	114			11,571			7,607
Other, net	589			439			(6,862		)
Changes in assets and liabilities, net of effects from acquisitions
Accrued production receivable	38,537			26,575			(1,428		)
Trade and other receivables	1,366			(22,343		)	(147		)
Other current and long-term assets	705			743			27
Accounts payable and accrued liabilities	(7,980		)	(16,102		)	(33,167		)
Oil and natural gas production payable	(11,064		)	(6,792		)	(1,819		)
Other liabilities	(29		)	123			(9,414		)
Net cash provided by operating activities	32,910			113,408			343,578

Cash flows from investing activities
Oil and natural gas capital expenditures	(2,125		)	(99,582		)	(204,904		)
Pipelines and plants capital expenditures	(6		)	(11,601		)	(25,965		)
Net proceeds from sales of oil and natural gas properties and equipment	880			41,322			10,494
Other	(309		)	12,747			5,797
Net cash used in investing activities	(1,560		)	(57,114		)	(214,578		)

Cash flows from financing activities
Bank repayments	(55,000		)	(551,000		)	(641,000		)
Bank borrowings	0			691,000			691,000
Interest payments treated as a reduction of debt	0			(46,417		)	(59,808		)
Cash paid in conjunction with debt repurchases	0			(14,171		)	0
Cash paid in conjunction with debt exchange	0			0			(125,268		)
Costs of debt financing	0			(12,482		)	(11,017		)
Pipeline financing and capital lease debt repayments	(54		)	(51,792		)	(10,279		)
Other	0			(9,363		)	5,470
Net cash provided by (used in) financing activities	(55,054		)	5,775			(150,902		)
Net increase (decrease) in cash, cash equivalents, and restricted cash	(23,704		)	62,069			(21,902		)
Cash, cash equivalents, and restricted cash at beginning of period	95,114			33,045			54,949
Cash, cash equivalents, and restricted cash at end of period	$	71,410		$	95,114		$	33,047

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Table of Contents

Denbury Inc.

Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity

(Dollar amounts in thousands)


	Common Stock ($.001 Par Value)					Paid-In Capital in Excess of Par		Retained Earnings (Accumulated Deficit)			Treasury Stock (at cost)							Common Stock ($.001 Par Value)					Paid-In Capital in Excess of Par			Retained Earnings (Accumulated Deficit)			Treasury Stock (at cost)
	Shares		Amount			Paid-In Capital in Excess of Par		Retained Earnings (Accumulated Deficit)			Shares	Amount			Total Equity			Shares		Amount			Paid-In Capital in Excess of Par			Retained Earnings (Accumulated Deficit)			Shares		Amount			Total Equity
Balance – December 31, 2019	508,065,495		$	508		$	2,739,099	$	(1,321,314	)	1,652,771	$	(6,034	)	$	1,412,259
Issued or purchased pursuant to stock compensation plans	312,516		—			—		—			—	—			—
Balance – December 31, 2019 (Predecessor)																		508,065,495		$	508		$	2,739,099		$	(1,321,314	)	1,652,771		$	(6,034	)	$	1,412,259
Issued pursuant to stock compensation plans																		312,516		—			—			—			—		—			—
Issued pursuant to directors’ compensation plan	37,367		—			—		—			—	—			—			37,367		—			—			—			—		—			—
Stock-based compensation	—		—			3,204		—			—	—			3,204			—		—			3,204			—			—		—			3,204
Tax withholding – stock compensation	—		—			—		—			175,673	(34		)	(34		)
Tax withholding for stock compensation plans																		—		—			—			—			175,673		(34		)	(34		)
Net income	—		—			—		74,016			—	—			74,016			—		—			—			74,016			—		—			74,016
Balance – March 31, 2020	508,415,378		508			2,742,303		(1,247,298		)	1,828,444	(6,068		)	1,489,445
Balance – March 31, 2020 (Predecessor)																		508,415,378		508			2,742,303			(1,247,298		)	1,828,444		(6,068		)	1,489,445
Canceled pursuant to stock compensation plans	(6,218,868	)	(6		)	6		—			—	—			—			(6,218,868	)	(6		)	6			—			—		—			—
Issued pursuant to notes conversion	7,357,450		8			11,453		—			—	—			11,461			7,357,450		8			11,453			—			—		—			11,461
Stock-based compensation	—		—			987		—			—	—			987			—		—			987			—			—		—			987
Net loss	—		—			—		(697,474		)	—	—			(697,474		)	—		—			—			(697,474		)	—		—			(697,474		)
Balance – June 30, 2020	509,553,960		$	510		$	2,754,749	$	(1,944,772	)	1,828,444	$	(6,068	)	$	804,419
Balance – June 30, 2020 (Predecessor)																		509,553,960		510			2,754,749			(1,944,772		)	1,828,444		(6,068		)	804,419
Canceled pursuant to stock compensation plans																		(95,016	)	—			—			—			—		—			—
Issued pursuant to notes conversion																		14,800		—			40			—			—		—			40
Stock-based compensation																		—		—			10,126			—			—		—			10,126
Tax withholding for stock compensation plans																		—		—			—			—			567,189		(134		)	(134		)
Net loss																		—		—			—			(809,120		)	—		—			(809,120		)
Cancellation of Predecessor equity																		(509,473,744	)	(510		)	(2,764,915		)	2,753,892			(2,395,633	)	6,202			(5,331		)
Issuance of Successor equity																		49,999,999		50			1,095,369			—			—		—			1,095,419
Balance – September 18, 2020 (Predecessor)																		49,999,999		$	50		$	1,095,369		$	—		—		$	—		$	1,095,419


Balance – September 19, 2020 (Successor)																		49,999,999		$	50		$	1,095,369		$	—		—		$	—		$	1,095,419
Net income																		—		—			—			2,758			—		—			2,758
Balance – September 30, 2020 (Successor)																		49,999,999		$	50		$	1,095,369		$	2,758		0		$	0		$	1,098,177

Adopted an amended and restated certificate of incorporation and bylaws which reserved for issuance 250,000,000 shares of common stock, par value $0.001 per share, of Denbury (the “New Common Stock”) and 50,000,000 shares of preferred stock, par value $0.001 per share;

Cancelled all outstanding senior secured second lien notes, convertible senior notes, and senior subordinated notes issued by the Predecessor and related registration rights. In accordance with the Plan, claims against and interests in the Predecessor were treated as follows:

Entered into a new senior secured revolving credit agreement with a syndicate of banks (the “Successor Bank Credit Agreement”) with total aggregate commitments of $575 million;

Appointed a new board of directors (the “Board”) consisting of four new independent members: Anthony Abate, Caroline Angoorly, Brett Wiggs and James N. “Jim” Chapman, and three continuing members: Dr. Kevin O. Meyers (Chairman of the Board), Lynn A. Peterson and Chris Kendall, Denbury’s President and Chief Executive Officer; and

Adopted a framework for a management incentive plan which will reserve primarily for employees and directors a pool of shares of New Common Stock representing up to 10% of the New Common Stock, determined on a fully diluted and fully distributed basis, with initial awards from within this pool to be issued within 60 days of emergence.

Reclassification of pre-petition liabilities that are unsecured, under-secured or where it cannot be determined that the liabilities are fully secured, to a separate line item in the Unaudited Condensed Consolidated Balance Sheet titled “Liabilities subject to compromise”; and

Segregation of Reorganization items, net as a separate line in the Unaudited Condensed Consolidated Statements of Operations.

~~Reduced budgeted 2020 capital spending by $80 million, or 44%, to approximately $95 million to $105 million;~~

Implemented cost reduction measures including shutting down compressors or delaying well repairs and workovers that are uneconomic and reducing our workforce to better align with current and projected near-term needs;

Restructured approximately 50% of our three-way collars covering 14,500 barrels per day (“Bbls/d”) into fixed-price swaps for the second quarter through the fourth quarter of 2020 in order to increase downside protection. Our current hedge portfolio covers 35,500 Bbls/d for the second half of 2020, with over half of those contracts consisting of fixed-price swaps and the remainder consisting of three-way collars;

~~Evaluated production economics at each field and shut-in production beginning in late March 2020 that was uneconomic to produce or repair based on prevailing oil prices; and~~

~~Conducted a complete market-based review of strategic alternatives, including a comprehensive restructuring, to enhance our liquidity and strengthen our capital structure.~~

~~Reaffirmed~~exceeds the then-effective borrowing base, ~~under~~we would be required to repay the excess amount over a period not to exceed six months. The Successor Bank Credit Agreement ~~at $615 million until the next scheduled~~matures on January 30, 2024.

~~Reduced (until the fall 2020 borrowing base redetermination date) the maximum~~deficiency exists; (2) our total leverage ratio is 2 to 1 or lower; and (3) availability under the Successor Bank Credit Agreement ~~to the sum of $275 million plus the total amount of outstanding letters of credit under the~~is at least 20%. The Successor Bank Credit Agreement ~~from time to time (not to exceed $100 million); and~~

~~Added dollar~~also limits ~~(until the fall 2020 borrowing base redetermination date) on~~ our ability to, ~~use~~among other things, incur and repay other indebtedness; grant liens; engage in certain ~~baskets~~mergers, consolidations, liquidations and dissolutions; engage in ~~the negative covenants governing dispositions, hedge terminations, investments,~~sales of assets; make acquisitions and investments; make other restricted payments (including redeeming, repurchasing or retiring our common stock); and ~~redemptions of junior lien debt and unsecured debt.~~

A Consolidated Total Debt to Consolidated EBITDAX covenant, with such ratio not to exceed ~~5.25 to 1.0 through December 31, 2020 and 4.50 to 1.0 thereafter;~~

A consolidated senior secured debt to consolidated EBITDAX covenant, with such ratio not to exceed 2.5 to 1.0. Only debt under our Bank Credit Agreement is considered consolidated senior secured debt for purposes of this ratio;

~~A minimum permitted ratio of consolidated EBITDAX to consolidated interest charges of 1.25 to 1.0;~~3.5 times; and

A requirement to maintain a current ratio (i.e., Consolidated Current Assets to Consolidated Current Liabilities) of 1.0 ~~to 1.0.~~times.

Level 1 – Quoted prices in active markets for identical assets or liabilities as of the reporting date.

Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. Instruments in this category include non-exchange-traded oil derivatives that are based on NYMEX and regional pricing other than NYMEX (e.g., Light Louisiana Sweet). Our costless collars and the sold put features of our three-way collars are valued using the Black-Scholes model, an industry standard option valuation model that takes into account inputs such as contractual prices for the underlying instruments, maturity, quoted forward prices for commodities, interest rates, volatility factors and credit worthiness, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace.

Level 3 – Pricing inputs include significant inputs that are generally less observable. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. As of December 31, 2019, instruments in this category included non-exchange-traded three-way collars that were based on regional pricing other than NYMEX (e.g., Light Louisiana Sweet). The valuation models utilized for three-way collars were consistent with the methodologies described above; however, the implied volatilities utilized in the valuation of Level 3 instruments were developed using a benchmark, which was considered a significant unobservable input.

Eliminated approximately $2.1 billion of bond debt by issuing equity and/or warrants to the holders of that debt;

Significantly improved leverage ratios;

Reduced ongoing annual interest expense by approximately $165 million, significantly lowering our cash flow breakeven level;

Eliminated approximately $9 million from ongoing general and administrative expenses by terminating certain office leases and relocating our corporate headquarters; and

Established a new $575 million senior secured bank credit facility with $436.7 million of availability at September 30, 2020 after outstanding letters of credit.

Reduced budgeted 2020 capital spending by $80 million, or 44%, to approximately $95 million to $105 million;

Implemented cost reduction measures including shutting down compressors, ~~or delaying~~delayed uneconomic well repairs and workovers ~~that are uneconomic~~ and ~~reducing~~reduced our workforce to better align with current and projected near-term needs;

Restructured approximately 50% of our three-way collars covering 14,500 barrels per day (“Bbls/d”) into fixed-price swaps for the second quarter through the fourth quarter of 2020 in order to increase downside ~~protection. Our current hedge portfolio covers 35,500 Bbls/d for the second half of 2020, with over half of those contracts consisting of fixed-price swaps~~oil price protection; and ~~the remainder consisting of three-way collars;~~

Evaluated production economics at each field and shut-in production beginning in late March 2020 that was uneconomic to produce or repair based on ~~prevailing~~then-prevailing oil ~~prices;~~prices.

A $261.7 million full cost pool ceiling test write-down during the predecessor period as a reorganized entity to the holders of that debt. The Plan and the related disclosure statement were each filed with the Bankruptcy Court on July 30, 2020. We expect to continue operations in the normal course for the durationresult of the ~~Chapter 11 Restructuring. On July 31, 2020, the Bankruptcy Court entered orders approving certain customary “first day” relief to enable Denbury to operate~~decline in the ordinary course during the Chapter 11 Restructuring, including approval on an interim basis of post-petition financing under a debtor-in-possession (“DIP”) facility (the “DIP Facility”) and use of cash collateral of Denbury’s lenders and secured noteholders. Denbury is currently soliciting votes to accept a proposed chapter 11 plan (the “Plan”) from holders of claims and interests entitled to vote. The hearing to confirm the Plan and the final hearing on approval of the DIP Facility and use of cash collateral is currently scheduled for September 2, 2020. For more information on the Chapter 11 Restructuring and related matters, refer to Note 1, ~~Basis of Presentation~~ – ~~Entry into Restructuring Support Agreement and Voluntary Reorganization under Chapter 11 of the Bankruptcy Code, and Note 4,~~ ~~Long-Term Debt, to the condensed consolidated financial statements.~~NYMEX oil prices.

Oil and natural gas revenues decreased by ~~$221.0~~$117.8 million ~~(67%~~(40%), with ~~51%~~28% of the decrease due to lower commodity prices and ~~16%~~12% of the decrease due to lower ~~production, offset in part by an improvement in derivative commodity settlements of $47.2 million from the prior-year period;~~production;

~~A $662.4 million full cost pool ceiling test write-down as a result of the decline in NYMEX oil prices;~~

Commodity derivatives expense increased by $64.9 million ($40.1 million of expense during the second quarter of 2020 compared to $24.8 million of income during the second quarter of 2019), resulting from $112.1 million of incremental noncash fair value losses partially offset by a $47.2 million increase in cash receipts upon settlement between the second quarters of 2019 and 2020;

~~Reductions across numerous expense categories, the most significant being $36.6 million in lease operating expenses and $15.1 million in taxes other than income; and~~

~~A non-cash gain on debt extinguishment, net of transaction costs, of $100.3 million in the prior-year period related to our June 2019 notes exchanges.~~


•	Lease operating expenses decreased by $46.7 million (40%), primarily due to lower expenses for workovers, CO₂, power and fuel, and labor costs as well as a $15.4 million insurance recovery of costs incurred in 2013.

~~Second Quarter~~October 2020 ~~Conversion~~Restructuring of ~~6⅜% Convertible Senior Notes due 2024.~~ CO~~During~~₂ Pipeline Agreements. In late October 2020, we restructured our CO₂ pipeline financing arrangements with Genesis Energy, L.P. (“Genesis”), whereby (1) Denbury reacquired the ~~second quarter~~NEJD pipeline system from Genesis in exchange for $70 million to be paid in four equal payments during 2021, representing full settlement of ~~2020, holders~~all remaining obligations under the NEJD secured financing lease; and (2) Denbury reacquired the Free State Pipeline from Genesis in exchange for a one-time payment of ~~$19.9~~$22.5 million aggregate principal amount outstanding of our 6⅜% Convertible Senior Notes due 2024 (the “2024 Convertible Senior Notes”) converted their notes into shares of Denbury common stock, at the rates specified in the indenture for the notes, resulting in the issuance of 7.4 million shares of our common stock upon conversion. The debt principal balance net of debt discounts totaling $13.9 million, was reclassified to “Paid-in capital in excess of par” and “Common stock” in our Unaudited Condensed Consolidated Balance Sheets upon the conversion of the notes into shares of Denbury common stock. As of Juneon October 30, ~~2020, there was $225.7 million 2024 Convertible Senior Notes outstanding.~~2020.

~~First Quarter~~ Delhi Insurance Receivable. During August 2020, ~~Repurchases~~we recorded insurance reimbursements totaling $16.1 million ($15.4 million net to Denbury’s interest) for previously-incurred well control costs, cleanup costs, and damages associated with a 2013 incident at Delhi Field. Denbury’s portion of ~~Senior Secured Notes~~the insurance recovery of $15.4 million was recorded as a reduction to lease operating expenses.

Houston Area Land Sales. ~~During March~~We have been actively marketing for sale non-producing surface acreage primarily around the Houston area. On July 24, 2020, we ~~repurchased~~completed the sale of a portion of this acreage for gross proceeds of approximately $14 million, and completed the sale on an additional portion for gross proceeds of approximately $11 million on October 30, 2020. To date, we have closed acreage sales for total gross proceeds of ~~$30.2~~approximately $45 million, ~~aggregate principal amount~~and we currently have an additional $4 million under contract which is expected to close in the fourth quarter of our 9% Senior Secured Second Lien Notes due 2021 (the “2021 Senior Secured Notes”) in open-market transactions for a total purchase price of $14.2 million, excluding accrued interest. In connection with these transactions, we recognized a $19.0 million gain on debt extinguishment, net of unamortized debt issuance costs and future interest payable written off.2020.

First Quarter 2020 Sale of Working Interests in Certain Texas Fields. On March 4, 2020, we closed a farm-down transaction for the sale of half of our nearly 100% working interest positions in four southeast Texas oil fields (consisting of Webster, Thompson, Manvel and East Hastings) for $40 million net cash and a carried interest in ten wells to be drilled by the purchaser (the “Gulf Coast Working Interests Sale”).

~~Table of Contents~~

~~Denbury Resources Inc.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

~~Houston Area Land Sales~~. ~~We have been actively marketing for sale non-producing surface acreage primarily around the Houston area.~~ On July 24, 2020, we completed the sale of a portion of this acreage for gross proceeds of approximately $14 million. To date, we have closed acreage sales for total gross proceeds of approximately $34 million, and we currently have an additional $18 million under contract which is expected to close in the second half of 2020.

~~Suspension of Trading on the NYSE~~. Our common stock was traded on the New York Stock Exchange (the “NYSE”) under the symbol “DNR” until July 29, 2020. On July 31, 2020, the NYSE notified us of its determination to commence proceedings to delist our common stock from the NYSE, and as of July 31, 2020 to indefinitely suspend trading of our common stock on the NYSE. Suspension of trading in our common stock and delisting proceedings were undertaken by the NYSE in accordance with Section 802.01D of the NYSE Listed Company Manual due to our filing of the Chapter 11 Restructuring on July 30, 2020. Our common stock now trades on the OTC Pink Open Market under the symbol “DNRCQ”. We can provide no assurance that we are current in its reporting obligations or that the trading volume of our common stock will be sufficient to provide for an efficient trading market.

CAPITAL RESOURCES AND LIQUIDITY

Overview. Our primary sources of capital and liquidity are our cash flow from operations and ~~cash on hand, which~~availability under our Successor bank credit facility. In 2020 our liquidity has been supplemented by $40 million of proceeds from our March 2020 sale of working interests in four southeast Texas fields and ~~periodically~~ by $25 million of proceeds from sales of non-producing surface ~~land with no active oil and natural gas operations.~~acreage primarily around the Houston area. Our most significant cash outlays relate to our development capital expenditures and current period operating ~~expenses, and~~expenses. In conjunction with our ~~debt service obligations.~~

emergence from bankruptcy, we established a new $575 million senior secured bank credit facility, under which we had $85 million borrowed as of September 30, 2020, leaving us with $436.7 million of availability after consideration of $53.3 million of outstanding letters of credit. As discussed in the Overview above, NYMEX oil prices have decreased significantly since the beginning of 2020, decreasing from nearly $60 per barrel in early January to around $25 per barrel in mid-May (although considerably lower during the month of April 2020), before rebounding to nearly $40 per Bbl at the end of June 2020. This decrease in the market prices for our production directly ~~reduces~~reducing our operating cash flow; however, we have taken significant actions to reduce capital expenditures and operating expenses in order to adjust our spending levels such that our spending for ongoing operations is below our cash flow generated from operations.

New Senior Secured Bank Credit Agreement. In connection with our emergence from Chapter 11 proceedings on September 18, 2020, we entered into a bank credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and ~~indirectly impacts our~~ other ~~sources of potential liquidity, such as possibly lowering our borrowing capacity under our~~lenders party thereto (the “Bank Credit Agreement”). The Bank Credit Agreement is a senior secured revolving credit facility ~~as our~~with an initial borrowing ~~capacity~~base and ~~borrowing costs are generally related to the estimated value~~lender commitments of ~~our proved reserves.~~

In this low oil price environment, we have taken various steps to preserve our liquidity including (1) by reducing our 2020 budgeted development capital spending by 44% from initial levels and to less than half of 2019 levels, (2) by deferring the Cedar Creek Anticline CO₂ tertiary flood development project beyond 2020, (3) by continuing to focus on reducing our operating and overhead costs, (4) by restructuring certain of our three-way collars covering 14,500 Bbls/d into fixed-price swaps for the second through fourth quarters of 2020 to increase downside protection against current and potential further declines in oil prices, (5) by evaluating production economics and shutting in production beginning in late March that was uneconomic to produce or repair based on prevailing oil prices, and (6) by conducting a complete market-based review of strategic alternatives, including a comprehensive restructuring, to enhance our liquidity and strengthen our capital structure.

~~Chapter 11 Restructuring and Effect of Automatic Stay.~~ On July 30, 2020, Denbury filed for relief under chapter 11 of the Bankruptcy Code in the United State Bankruptcy Court for the Southern District of Texas. The commencement of a voluntary proceeding in bankruptcy constituted an immediate event of default$575 million. Additionally, under the Bank Credit Agreement, ~~the indentures governing the Company’s senior secured second lien notes, convertible senior notes,~~letters of credit are available in an aggregate amount not to exceed $100 million, and ~~senior subordinated notes and the agreements governing our NEJD pipeline lease financing. In conjunction with the negotiation of the RSA, the Company did~~short-term swingline loans are available in an aggregate amount not ~~make the $7.8~~to exceed $25 million, interest payment due on our 6⅜% Convertible Senior Notes due 2024 on June 30, 2020, and the $3.1 million interest payment due on our 4⅝% Senior Subordinated Notes due 2023 on July 15, 2020. Any efforts to enforce payment obligations related to the acceleration of the Company’s debt have been automatically stayed as a result of the filing of the Chapter 11 Restructuring, and the creditors’ rights of enforcement areeach subject to the ~~applicable provisions of~~available commitments under the ~~Bankruptcy Code. Refer to Note 1,~~ Bank Credit Agreement. Availability~~Basis of Presentation~~ – ~~Entry into Restructuring Support Agreement and Voluntary Reorganization under Chapter 11 of the Bankruptcy Code,~~ ~~to the condensed consolidated financial statements for more information on the Chapter 11 Restructuring.~~

We expect to continue operations in the normal course for the duration of the Chapter 11 Restructuring. On July 31, 2020, the Bankruptcy Court entered orders approving certain customary “first day” relief to enable Denbury to operate in the ordinary course during the Chapter 11 Restructuring, including approval on an interim basis of post-petition financing under a DIP Facility and use of cash collateral of Denbury’s lenders and secured noteholders. Denbury is currently soliciting votes to accept the Plan from holders of claims and interests entitled to vote. On July 31, 2020, the Bankruptcy Court entered orders designed to assist

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Table of Contents

Denbury ~~Resources~~ Inc.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

the Company in preserving certain of its tax attributes, including its net operating losses and tax credits, by establishing procedures and notice requirements prohibiting stockholders and potential stockholders with beneficial ownership or rights to acquire 4.5% or more of the Company’s issued and outstanding shares of common stock on June 30, 2020 from increasing or decreasing their ownership of the Company’s common stock without providing prior notice of the proposed transactions, which transfers then may require prior consent of the Bankruptcy Court. Any actions in violation of these procedures (including the notice requirements) are null and void ab initio and may be punished by contempt or other sanctions imposed by the Bankruptcy Court. For details of the procedures, see Exhibit 10(f) to this Form 10-Q, which is incorporated by reference herein. The final hearing on approval of the DIP Facility and use of cash collateral is currently scheduled for September 2, 2020.

~~Going Concern.~~ As discussed above, the filing of the Chapter 11 Restructuring on July 30, 2020 constituted an event of default under all of our outstanding debt agreements, resulting in the automatic and immediate acceleration of the Company’s debt outstanding, with the exception of our capital leases and our obligations under our Free State pipeline transportation agreement. At that date, the Company did not have sufficient cash on hand or available liquidity to repay such debt.

Our operations and ability to develop and execute our business plan are subject to risk and uncertainty associated with the Chapter 11 Restructuring. The outcome of the Chapter 11 Restructuring is subject to factors that are outside of the Company’s control, including actions of the Bankruptcy Court and the Company’s creditors. There can be no assurance that we will confirm and consummate the Plan as contemplated by the RSA or complete another plan of reorganization with respect to the Chapter 11 Restructuring. As a result, we have concluded that management’s plans do not alleviate substantial doubt about our ability to continue as a going concern.

The condensed consolidated financial statements as of June 30, 2020 included in this Quarterly Report on Form 10-Q have been prepared on a going concern basis of accounting, and do not reflect any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result if we are unable to continue as a going concern.

~~DIP Facility.~~ Under the RSA, the lenders under the Company’s Bank Credit Agreement agreed to provide the Company and its subsidiaries with a senior secured super priority debtor-in-possession revolving credit facility in an aggregate principal amount of up to $615 million. The DIP Facility was approved on an interim basis by the Bankruptcy Court on July 31, 2020 and, on August 4, 2020, $185 million of our outstanding loans and all of our approximately $95 million of outstanding letters of credit under Denbury’s pre-petition revolving Bank Credit Agreement were “rolled up” into the DIP Facility. Immediately thereafter, ~~Denbury initiated a repayment of $150 million of amounts borrowed under the DIP Facility with cash on hand~~. On August 7, 2020, the beneficiary of the $41.3 million letter of credit issued as “financial assurances” under the NEJD pipeline lease financing drew the full amount of such letter of credit in accordance with its terms as a result of the Chapter 11 Restructuring, which resulted in Denbury borrowing an identical amount under the DIP Facility. The Plan contemplates that, upon emergence from the Chapter 11 Restructuring, the DIP Facility be replaced with a committed exit facility. The proceeds of all or a portion of the DIP Facility may be used for, among other things, post-petition working capital, permitted investments, general corporate purposes, letters of credit, administrative costs and premiums, expenses and fees for the transactions contemplated by the Chapter 11 Restructuring, payment of court-approved adequate protection obligations, and other such purposes consistent with the DIP Facility.

~~Exit Financing.~~ On July 28, 2020, prior to the commencement of the Chapter 11 Restructuring, the Company entered into an Exit Commitment Letter with the consenting lenders of the Company’s Bank Credit Agreement and/or their affiliates, which is subject to the satisfaction of certain customary conditions, including the approval of the Bankruptcy Court. As part of the RSA, the consenting lenders of the Company’s Bank Credit Agreement and/or their affiliates have agreed to provide, on a committed basis, the Company with the Exit Facility on the terms set forth in the exit term sheet attached to the RSA (the “Exit Facility Term Sheet”). The Exit Facility Term Sheet provides for, among other things, post-emergence financing in the form of a senior secured revolving credit facility in an aggregate principal amount of up to $615 million (the “Exit Facility”), subject to an initial borrowing base redetermination at the closing of the Exit Facility. Any loans drawn under the Exit Facility will be non-amortizing.

The effectiveness of the Exit Facility will be subject to customary closing conditions, including consummation of the Plan. The foregoing description of the Exit Facility Term Sheet does not purport to be complete and is qualified in its entirety by reference to the final, executed documents memorializing the Exit Facility, to be included in a supplement to the Plan to be filed with the Bankruptcy Court.

~~Table of Contents~~

~~Denbury Resources Inc.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

~~Senior Secured Bank Credit Facility.~~ In December 2014, we entered into the Bank Credit Agreement, which has been amended periodically since that time. Under the terms of the RSA, the lenders under the Company’s Bank Credit Agreement agreed to provide the Company and its subsidiaries with the DIP Facility, which is to be replaced with the committed exit facility upon emergence from the Chapter 11 Restructuring. Refer to Note 1, ~~Basis of Presentation~~ – ~~Entry into Restructuring Support Agreement and Voluntary Reorganization under Chapter 11 of the Bankruptcy Code, for additional information.~~

~~In conjunction with the scheduled May 2020 redetermination on June 26, 2020, we entered into the Eighth Amendment to the Bank Credit Agreement (the “Eighth Amendment”) which among other things:~~

~~Reaffirmed the borrowing base~~ under the Bank Credit Agreement ~~at $615 million until the~~is subject to a borrowing base, which is redetermined semiannually on or around May 1 and November 1 of each year, with our next scheduled ~~or interim~~ redetermination ~~or other adjustment to the~~around May 1, 2021. The borrowing base is adjusted at the lenders’ discretion and is based, in ~~accordance~~part, upon external factors over which we have no control. The borrowing base is subject to a reduction by twenty-five percent (25%) of the principal amount of any unsecured or subordinated debt issued or incurred. The borrowing base may also be reduced if we sell borrowing base properties and/or cancel commodity derivative positions with an aggregate value in excess of 5% of the ~~terms of~~then-effective borrowing base between redeterminations. If our outstanding debt under the Bank Credit ~~Agreement;~~

~~Reduced (until~~Agreement exceeds the ~~fall 2020~~then-effective borrowing base, ~~redetermination date)~~we would be required to repay the ~~maximum~~excess amount over a period not to exceed six months. The Bank Credit Agreement matures on January 30, 2024.

The Bank Credit Agreement prohibits us from paying dividends on our common stock through September 17, 2021. Commencing on September 18, 2021, we may pay dividends on our common stock or make other restricted payments in an amount not to exceed “Distributable Free Cash Flow”, but only if (1) no event of default or borrowing base deficiency exists; (2) our total leverage ratio is 2 to 1 or lower; and (3) availability under the Bank Credit Agreement ~~to the sum of $275 million plus the total amount of outstanding letters of credit under the~~is at least 20%. The Bank Credit Agreement ~~from time to time (not to exceed $100 million); and~~

~~On June 29, 2020, we elected~~enter into commodity derivative agreements, in each case subject to draw $200 million (the “Credit Draw”) under the Bank Credit Agreement. As of June 30, 2020, we had $265.0 million of outstanding borrowings under our $275 million senior secured Bank Credit Agreement, leaving us with $10.0 million of available borrowing capacity, and $209.3 million of cash and cash equivalents on hand due to amounts drawn under the Bank Credit Agreement during the second quarter, compared to no outstanding borrowings as of December 31, 2019 and March 31, 2020 with nominal cash at those dates. In addition, we had $94.7 million outstanding letters of credit at June 30, 2020.customary exceptions.

The Bank Credit Agreement ~~contained~~is secured by (1) our proved oil and natural gas properties, which are held through our restricted subsidiaries; (2) the pledge of equity interests of such subsidiaries; (3) a pledge of our commodity derivative agreements; (4) a pledge of deposit accounts, securities accounts and commodity accounts of Denbury Inc. and such subsidiaries (as applicable); and (5) a security interest in substantially all other collateral that may be perfected by a Uniform Commercial Code filing, subject to certain exceptions.

The Bank Credit Agreement contains certain financial performance covenants, commencing with the fiscal quarter ending December 31, 2020 through the maturity of the facility, including the following:

A Consolidated Total Debt to Consolidated EBITDAX covenant, with such ratio not to exceed ~~5.25 to 1.0 through December 31, 2020 and 4.50 to 1.0 thereafter;~~

~~A minimum permitted ratio of consolidated EBITDAX to consolidated interest charges of 1.25 to 1.0;~~3.5 times; and

A requirement to maintain a current ratio (i.e., Consolidated Current Assets to Consolidated Current Liabilities) of 1.0 ~~to 1.0.~~times.

For purposes of computing the current ratio per the Bank Credit Agreement, Consolidated Current Assets exclude the current portion of derivative assets but include available borrowing capacity under ~~the senior secured bank credit facility,~~that agreement, and Consolidated Current Liabilities exclude the current portion of derivative liabilities as well as the current portions of long-term indebtedness outstanding.

Under these financial performance covenant calculations, as of June 30, 2020, our ratio of consolidated total debt to consolidated EBITDAX was 5.08 to 1.0 (with a maximum permitted ratio of 5.25 to 1.0), our consolidated senior secured debt to consolidated EBITDAX was 0.59 to 1.0 (with a maximum permitted ratio of 2.5 to 1.0), our ratio of consolidated EBITDAX to consolidated interest charges was 2.40 to 1.0 (with a required ratio of not less than 1.25 to 1.0), and our current ratio was 2.86 to 1.0 (with a required ratio of not less than 1.0 to 1.0).

The above description of our Bank Credit Agreement is qualified by the express language and defined terms contained in the Bank Credit Agreement, ~~and the amendments thereto, each of~~ which ~~are~~is filed as ~~exhibits~~an exhibit to our ~~periodic reports~~Form 8-K Report filed with the ~~SEC.~~

~~Table of Contents~~

~~Denbury Resources Inc.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

SEC on September 18, 2020.

Capital Spending. We currently anticipate that our full-year 2020 capital spending, excluding capitalized interest and acquisitions, will be approximately $95 million to $105 ~~million.~~million, approximately 78% of which has been incurred through 2020. This 2020 capital expenditure ~~amount of between $95 million to $105 million, which was revised~~budget reflects a reduction on March 31, 2020 ~~excluding capitalized interest and acquisitions, is an~~of $80 million, or 44%, ~~reduction~~ from the late-February 2020 estimate of between $175 million and $185 million in response to the more than 50% decline in NYMEX WTI prices during March 2020 as a result of the COVID-19 pandemic, which worsened an already deteriorated oil market that resulted from the early-March 2020 failure by the group of oil producing nations known as OPEC+ to reach an agreement over proposed oil production cuts. Oil prices are expected to continue to be volatile as a result of these events and the ongoing COVID-19 outbreak, and as changes in oil inventories, oil demand and economic performance are reported. The2020. Our current 2020 capital budget, excluding capitalized interest and acquisitions, provides for approximate spending as follows:

$35 million allocated for tertiary oil field expenditures;

$25 million allocated for other areas, primarily non-tertiary oil field expenditures including exploitation;


•	$10 million to be spent on CO₂ sources and pipelines; and

$30 million for other capital items such as capitalized internal acquisition, exploration and development costs and pre-production tertiary startup costs.

Table of Contents

Denbury Inc.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Capital Expenditure Summary. The following table reflects incurred capital expenditures (including accrued capital) for the ~~six~~nine months ended ~~June~~September 30, 2020 and 2019:


	Six Months Ended				Nine Months Ended
	June 30,				September 30,
In thousands	2020		2019		2020		2019
Capital expenditure summary
Tertiary oil fields	$	19,920	$	54,786	$	22,564	$	72,333
Non-tertiary fields	13,248		36,554		19,115		55,939
Capitalized internal costs⁽¹⁾	18,344		24,214		26,695		35,389
Oil and natural gas capital expenditures	51,512		115,554		68,374		163,661
CO₂ pipelines, sources and other	8,532		22,465		9,192		25,778
Capital expenditures, before acquisitions and capitalized interest	60,044		138,019		77,566		189,439
Acquisitions of oil and natural gas properties	80		97		95		122
Capital expenditures, before capitalized interest	60,124		138,116		77,661		189,561
Capitalized interest	18,181		18,772		23,068		27,545
Capital expenditures, total	$	78,305	$	156,888	$	100,729	$	217,106

global oil demand are forward-looking statements, as that term is defined in Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that involve a number of risks and uncertainties. Such forward-looking statements may be or may concern, among other things, our ability to ~~obtain Bankruptcy Court approval with respect to motions or other requests made to the Bankruptcy Court~~capitalize on emerging from bankruptcy and ~~the risks attendant to the bankruptcy process,~~ our ability to confirm and consummate the Plan or an alternative restructuring transaction, the effects of the Chapter 11 Restructuring on our liquidity or results of operations or business prospects, the effects of the Chapter 11 Restructuring on our business and the interests of various constituents, the length of time that we will operate under chapter 11 protection, risks associated with third-party motions in the Chapter 11 Restructuring, the adequacy and restrictions of a DIP facility such as that contemplated by our lenders’ commitment letter, and the impact of all of these factors upon our ability to capitalize on the reorganization process and emerge as an entity equipped to operate as a going concernsucceed on a long-term basis, the extent and length of the drop in worldwide oil demand due to the COVID-19 coronavirus, financial forecasts, future hydrocarbon prices and their volatility, current or future liquidity sources or their adequacy to support our anticipated future activities, ~~our ability to refinance or extend the maturities of our long-term indebtedness which matures in 2021 and 2022,~~ possible future write-downs of oil and natural gas reserves, ~~and the effect of these factors upon our ability to continue as a going concern,~~ together with assumptions based on current and projected production levels, oil and gas prices and oilfield costs, current or future expectations or estimations of our cash flows or the impact of changes in commodity prices on cash flows, availability of capital, borrowing capacity, price and availability of advantageous commodity derivative contracts or the predicted cash flow benefits therefrom, forecasted capital expenditures, drilling activity or methods, including the timing and location thereof, the nature of any future asset purchases or sales or the timing or proceeds thereof, estimated timing of commencement of CO₂ flooding of particular fields or areas, ~~including Cedar Creek Anticline (“CCA”), or the availability of capital for CCA pipeline construction, or its ultimate cost or date of completion,~~ timing of CO₂ injections and initial production responses in tertiary flooding projects, development activities, finding costs, anticipated future cost savings, capital budgets, interpretation or prediction of formation details, production rates and volumes or forecasts thereof, hydrocarbon reserve quantities and values, CO₂ reserves and supply and their availability, potential reserves, barrels or percentages of recoverable original oil in place, ~~levels of tariffs or other trade restrictions, the likelihood, timing and impact of increased interest rates,~~ the impact of regulatory rulings or changes, outcomes of pending litigation, prospective legislation affecting the oil and gas industry, environmental regulations, mark-to-market values, competition, rates of return, estimated costs, changes in costs, future capital expenditures and overall economics, worldwide economic conditions, ~~the likelihood and extent of an economic slowdown,~~ and other variables surrounding operations and future plans. Such forward-looking statements generally are accompanied by words such as “plan,” “estimate,” “expect,” “predict,” “forecast,” “to our knowledge,” “anticipate,” “projected,” “preliminary,” “should,” “assume,” “believe,” “may” or other words that convey, or are intended to convey, the uncertainty of future events or outcomes. Such forward-looking information is based upon management’s current plans, expectations, estimates, and assumptions and is subject to a number of risks and uncertainties that could significantly and adversely affect current plans, anticipated actions, the timing of such actions and our financial condition and results of operations. As a consequence, actual results may differ materially from expectations, estimates or assumptions expressed in or implied by any forward-looking statements made by us or on our behalf. Among the factors that could cause actual results to differ materially are ~~our ability to refinance our senior debt maturing in 2021 and the related impact on our ability to continue as a going concern,~~ fluctuations in worldwide oil prices or in U.S. oil prices and consequently in the prices received or demand for our oil and natural gas; ~~evolving political and military tensions in the Middle East;~~ decisions as to production levels and/or pricing by OPEC or production levels by U.S. shale producers in future periods; levels of future capital expenditures; ~~trade disputes and resulting tariffs or international economic sanctions; effects and maturity dates of our indebtedness;~~ success of our risk management techniques; accuracy of our cost estimates; access to and terms of credit in the commercial banking or other debt markets; fluctuations in the prices of goods and services; the uncertainty of drilling results and reserve estimates; operating hazards and remediation costs; disruption of operations and damages from well incidents, hurricanes, tropical storms, floods, forest fires, or other natural occurrences; acquisition risks; requirements for capital or its availability; conditions in the worldwide financial, trade and credit markets; general economic conditions; competition; government regulations, including changes in tax or environmental laws or regulations; and unexpected delays, as well as the risks and uncertainties inherent in oil and gas drilling and production activities or that are otherwise discussed in this quarterly report, including, without limitation, the portions referenced above, and the uncertainties set forth from time to time in our other public reports, filings and public statements including, without limitation, the Company’s most recent Form 10-K.



	Successor	Predecessor
	Period from Sept. 19, 2020 through	Period from Jan. 1, 2020 through	Nine Months Ended
In thousands	Sept. 30, 2020	Sept. 18, 2020	Sept. 30, 2019
Stock appreciation rights	0	1,007	2,043
Restricted stock and performance-based equity awards	0	7,280	5,859
Convertible senior notes	0	87,888	0
Warrants⁽¹⁾	5,526	0	0



In thousands	Sept. 18, 2020
Enterprise value	$	1,280,856
Plus: Cash and cash equivalents	45,585
Less: Total debt	(231,022		)
Equity value	$	1,095,419



In thousands	Sept. 18, 2020
Enterprise value	$	1,280,856
Plus: Cash and cash equivalents	45,585
Plus: Current liabilities excluding current maturities of long-term debt	239,738
Plus: Non-interest bearing noncurrent liabilities	185,228
Reorganization value of the reconstituted Successor	$	1,751,407



	Predecessor
	Period from July 1, 2020 through
In thousands	Sept. 18, 2020
Gain on settlement of liabilities subject to compromise	$	(1,024,864	)
Fresh start accounting adjustments	1,834,423
Professional service provider fees and other expenses	11,267
Success fees for professional service providers	9,700
Loss on rejected contracts and leases	10,989
Valuation adjustments to debt classified as subject to compromise	757
DIP credit agreement fees	3,107
Acceleration of Predecessor stock compensation expense	4,601
Total reorganization items, net	$	849,980



	As of September 18, 2020
In thousands	Predecessor			Reorganization Adjustments				Fresh Start Adjustments				Successor
Assets
Current assets
Cash and cash equivalents	$	73,372		$	(27,787	)	⁽¹⁾	$	—			$	45,585
Restricted cash	—			10,662			⁽²⁾	—				10,662
Accrued production receivable	112,832			—				—				112,832
Trade and other receivables, net	36,221			—				0				36,221
Derivative assets	32,635			—				—				32,635
Other current assets	12,968			(539		)	⁽³⁾	—				12,429
Total current assets	268,028			(17,664		)		0				250,364
Property and equipment
Oil and natural gas properties (using full cost accounting)
Proved properties	11,723,546			—				(10,941,313		)		782,233
Unevaluated properties	650,553			—				(538,570		)		111,983
CO₂ properties	1,198,515			—				(1,011,169		)		187,346
Pipelines	2,339,864			—				(2,207,246		)		132,618
Other property and equipment	201,565			—				(104,152		)		97,413
Less accumulated depletion, depreciation, amortization and impairment	(12,864,141		)	—				12,864,141				0
Net property and equipment	3,249,902			—				(1,938,309		)	⁽¹⁰⁾	1,311,593
Operating lease right-of-use assets	1,774			0				69			⁽¹⁰⁾	1,843
Derivative assets	501			—				—				501
Intangible assets, net	20,405			—				79,678			⁽¹¹⁾	100,083
Other assets	81,809			8,241			⁽⁴⁾	(3,027		)	⁽¹²⁾	87,023
Total assets	$	3,622,419		$	(9,423	)		$	(1,861,589	)		$	1,751,407



	June 30,			December 31,
	2020			2019
Assets
Current assets
Cash and cash equivalents	$	209,276		$	516
Accrued production receivable	77,344			139,407
Trade and other receivables, net	34,449			18,318
Derivative assets	47,655			11,936
Other current assets	20,724			10,434
Total current assets	389,448			180,611
Property and equipment
Oil and natural gas properties (using full cost accounting)
Proved properties	11,702,063			11,447,680
Unevaluated properties	645,847			872,910
CO₂ properties	1,198,981			1,198,846
Pipelines and plants	2,339,761			2,329,078
Other property and equipment	216,294			212,334
Less accumulated depletion, depreciation, amortization and impairment	(12,570,062		)	(11,688,020		)
Net property and equipment	3,532,884			4,372,828
Operating lease right-of-use assets	32,587			34,099
Other assets	103,116			104,329
Total assets	$	4,058,035		$	4,691,867
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable and accrued liabilities	$	160,694		$	183,832
Oil and gas production payable	40,652			62,869
Derivative liabilities	7,691			8,346
Current maturities of long-term debt (including future interest payable of $119,454 and $86,054, respectively – see Note 4)	2,366,330			102,294
Operating lease liabilities	7,807			6,901
Total current liabilities	2,583,174			364,242
Long-term liabilities
Long-term debt, net of current portion (including future interest payable of $0 and $78,860, respectively – see Note 4)	145,922			2,232,570
Asset retirement obligations	177,030			177,108
Deferred tax liabilities, net	306,186			410,230
Operating lease liabilities	38,584			41,932
Other liabilities	2,720			53,526
Total long-term liabilities	670,442			2,915,366
Commitments and contingencies (Note 9)
Stockholders’ equity
Preferred stock, $.001 par value, 25,000,000 shares authorized, none issued and outstanding	—			—
Common stock, $.001 par value, 750,000,000 shares authorized; 509,553,960 and 508,065,495 shares issued, respectively	510			508
Paid-in capital in excess of par	2,754,749			2,739,099
Accumulated deficit	(1,944,772		)	(1,321,314		)
Treasury stock, at cost, 1,828,444 and 1,652,771 shares, respectively	(6,068		)	(6,034		)
Total stockholders’ equity	804,419			1,412,259
Total liabilities and stockholders’ equity	$	4,058,035		$	4,691,867



	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Revenues and other income
Oil, natural gas, and related product sales	$	109,387		$	330,421		$	339,011		$	624,998
CO₂sales and transportation fees	6,504			7,986			14,532			16,556
Purchased oil sales	1,490			2,591			5,211			2,806
Other income	494			2,367			1,322			4,457
Total revenues and other income	117,875			343,365			360,076			648,817
Expenses
Lease operating expenses	81,293			117,932			190,563			243,355
Transportation and marketing expenses	9,388			11,236			19,009			22,009
CO₂ discovery and operating expenses	885			581			1,637			1,137
Taxes other than income	10,372			25,517			30,058			49,302
Purchased oil expenses	1,450			2,564			5,111			2,777
General and administrative expenses	23,776			17,506			33,509			36,431
Interest, net of amounts capitalized of $8,729, $8,238, $18,181 and $18,772, respectively	20,617			20,416			40,563			37,814
Depletion, depreciation, and amortization	55,414			58,264			152,276			115,561
Commodity derivatives expense (income)	40,130			(24,760		)	(106,641		)	58,617
Gain on debt extinguishment	—			(100,346		)	(18,994		)	(100,346		)
Write-down of oil and natural gas properties	662,440			—			734,981			—
Other expenses	11,290			2,386			13,784			6,524
Total expenses	917,055			131,296			1,095,856			473,181
Income (loss) before income taxes	(799,180		)	212,069			(735,780		)	175,636
Income tax provision (benefit)	(101,706		)	65,377			(112,322		)	54,618
Net income (loss)	$	(697,474	)	$	146,692		$	(623,458	)	$	121,018

Net income (loss) per common share
Basic	$	(1.41	)	$	0.32		$	(1.26	)	$	0.27
Diluted	$	(1.41	)	$	0.32		$	(1.26	)	$	0.26

Weighted average common shares outstanding
Basic	495,245			452,612			494,752			452,169
Diluted	495,245			467,427			494,752			461,460


◦	Holders of secured pipeline lease claims received payment in full in cash, the collateral securing such pipeline lease claim, reinstatement, or such other treatment rendering such pipeline lease claim unimpaired (see Note 6, Long-Term Debt – Pipeline Financing Transactions, for discussion of subsequent pipeline transactions);


◦	Holders of senior secured second lien notes claims received their pro rata share of 47,499,999 shares representing 95% of the New Common Stock issued on the Emergence Date, subject to dilution on account of warrants and a to-be-adopted management incentive plan;


◦	Holders of subordinated notes claims received their pro rata share of 54.55% of the series B warrants (see below), reflecting up to a maximum of 3% of the reorganized company’s equity interests after giving effect to the exercise of the series A warrants;


◦	Holders of general unsecured claims received payment in full in cash, reimbursement, or such other treatment rendering such general unsecured claim unimpaired; and


◦	Holder of existing equity interests received their pro rata share of 45.45% of the series B warrants (see below), reflecting up to a maximum of 2.5% of the reorganized company’s equity interests after giving effect to the exercise of the series A warrants.


◦	Issued 2,631,579 series A warrants at an initial exercise price of $32.59 per share to former holders of the Predecessor’s convertible senior notes and 2,894,740 series B warrants at an initial exercise price of $35.41 per share to former holders of the Predecessor’s senior subordinated notes and Predecessor’s equity interests;


•	~~Deferred the Cedar Creek Anticline CO~~₂ ~~tertiary flood development project beyond 2020;~~


•	~~Trade and Other Claims~~. The holders of Denbury’s other secured, priority and trade vendor claims would have such obligations reinstated, paid in full in cash, or receive such other treatment to render such claims unimpaired.


•	~~Holders of Bank Credit Agreement Claims. The holders of obligations under the Bank Credit Agreement would have such obligations paid in full in cash or receive such other treatment to render such claims unimpaired.~~


•	~~Holders of Second Lien Notes Claims~~. The holders of obligations under senior secured second lien notes would receive their pro rata share of 95% of the reorganized company’s equity interests, subject to certain dilution on account of warrants and the management incentive plan.


•	~~Holders of Convertible Notes Claims~~. The holders of obligations under convertible senior notes would receive their pro rata share of (a) 5% of the reorganized company’s equity interests, subject to certain dilution on account of warrants and the management incentive plan and (b) 100% of the series A warrants on the terms set forth in the Plan.


•	~~Holders of Subordinated Notes Claims~~. If the class of subordinated notes claims votes to accept the Plan, holders of obligations under senior subordinated notes would receive their pro rata share of 54.55% of the series B warrants on the terms set forth in the Plan, reflecting 3% of the reorganized company’s equity interests after giving effect to the exercise of the Series A warrants.


•	~~Equity Holders.~~ If the classes of subordinated notes claims and equity interests both vote to accept the Plan, holders of existing equity interests would receive their pro rata share of 45.45% of the series B warrants on the terms set forth in the Plan, reflecting 2.5% of the reorganized company’s equity interests after giving effect to the exercise of the Series A warrants.


(1)	Shares shown under “convertible senior notes” represent the impact over the Predecessor periods of the approximately 90.9 million shares of the ~~Company’s~~Predecessor’s common stock issuable upon full conversion of ~~our~~the convertible senior notes which were issued on June 19, 2019.


(1)	Shares shown under “warrants” represent the impact over the Successor periods of the approximately 5.5 million shares of the Successor’s common stock issuable upon full exercise of the series A and series B warrants which were issued pursuant to the Plan to the Predecessor’s convertible senior notes, senior subordinated notes, and equity holders.


(1)	Represents the net cash payments that occurred on the Emergence Date as follows:



In thousands
Sources:
Cash proceeds from Successor Bank Credit Agreement	$	140,000
	140,000

Uses:
Payment in full of DIP Facility and pre-petition revolving bank credit facility	(140,000		)
Retained professional service provider fees paid to escrow account	(10,662		)
Non-retained professional service provider fees paid	(7,420		)
Accrued interest and fees on DIP Facility	(1,464		)
Debt issuance costs related to Successor Bank Credit Agreement	(8,241		)
	(167,787		)

Net uses	$	(27,787	)


(2)	Represents the transfer of funds to a restricted cash account utilized for the payment of fees to retained professional service providers assisting in the bankruptcy process.


(3)	Represents the write-off of costs related to the DIP Facility and a run-off policy for directors and officers’ insurance coverage, partially offset by the recording of prepaid amounts for non-retained professional service provider fees.


(4)	Represents debt issuance costs related to the Successor Bank Credit Agreement.


(5)	Adjustments to accounts payable and accrued liabilities as follows:



In thousands
Accrual of professional service provider fees	$	2,826
Payment of accrued interest and fees on DIP Facility	(1,464		)
Reinstatement of accounts payable and accrued liabilities from liabilities subject to compromise	101,431
Accounts payable and accrued liabilities	$	102,793


(6)	Liabilities subject to compromise were settled as follows in accordance with the Plan:



In thousands
Liabilities subject to compromise prior to the Emergence Date:
Settled liabilities subject to compromise
Senior secured second lien notes	$	1,629,417
Convertible senior notes	234,055
Senior subordinated notes	251,480
Total settled liabilities subject to compromise	2,114,952
Reinstated liabilities subject to compromise
Current maturities of long-term debt	73,199
Accounts payable and accrued liabilities	101,431
Oil and gas production payable	16,705
Operating lease liabilities, current	757
Long-term debt, net of current portion	42,610
Asset retirement obligations	180,408
Deferred tax liabilities	289,389
Operating lease liabilities, long-term	515
Other long-term liabilities	3,540
Total reinstated liabilities subject to compromise	708,554
Total liabilities subject to compromise	2,823,506

Issuance of New Common Stock to second lien note holders	(1,014,608		)
Issuance of New Common Stock to convertible note holders	(53,400		)
Issuance of series A warrants to convertible note holders	(15,683		)
Issuance of series B warrants to senior subordinated note holders	(6,398		)
Reinstatement of liabilities subject to compromise	(708,553		)
Gain on settlement of liabilities subject to compromise	$	1,024,864


(7)	Represents the cancellation of the Predecessor’s common stock, treasury stock, and related components of the Predecessor’s paid-in capital in excess of par. Paid-in capital in excess of par includes $4.6 million as a result of terminated Predecessor stock compensation plans.


(8)	Represents the Successor’s common stock and additional paid-in capital as follows:



In thousands
Capital in excess of par value of 47,499,999 issued and outstanding shares of New Common Stock issued to holders of the senior secured second lien note claims	$	1,014,608
Capital in excess of par value of 2,500,000 issued and outstanding shares of New Common Stock issued to holders of the convertible senior note claims	53,400
Fair value of series A warrants issued to convertible senior note holders	15,683
Fair value of series B warrants issued to senior subordinated note holders	6,398
Fair value of series B warrants issued to Predecessor equity holders	5,330
Total change in Successor common stock and additional paid-in-capital	1,095,419
Less: Par value of Successor common stock	(50		)
Change in Successor additional paid-in-capital	$	1,095,369


(9)	Reflects the cumulative net impact of the effects on accumulated deficit as follows: