As filed with the Securities and Exchange Commission on April 25, 1997
Registration No. 33-93722
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
POST-EFFECTIVE AMENDMENT NO. 3
to Form S-1 On Form S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------
DENBURY RESOURCES INC.
(Exact name of Registrant as specified in its charter)
Canada 1311 Not applicable
(State of incorporation) (Primary standard industrial (I.R.S. employer
classification code number) identification no.)
17304 Preston Road, Suite 200 PHIL RYKHOEK, C.F.O.
Dallas, Texas 75252 Denbury Resources Inc.
(972) 713-3000 17304 Preston Rd., Suite 200
(Address and telephone number Dallas, Texas 75252
of Registrant's principal (972) 713-3000; Facsimile (972) 713-3051
executive offices) (Name, address and telephone number
of Agent for Service)
Copies to:
DONALD W. BRODSKY
DEIDRE L. TREADWELL
Jenkens & Gilchrist,
A Professional Corporation
1100 Louisiana, Suite 1800
Houston, TX 77002
(713) 951-3300; Facsimile: (713) 951-3314
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement of the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.|_|
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box: |_|
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
[GRAPHIC OMITTED]
DENBURY RESOURCES INC.
705,642 Common Shares
150,000 Common Share Purchase Warrants
Denbury Resources Inc. (the "Company" or "Denbury") is a Canadian
corporation engaged in the business of oil and natural gas exploration,
development and production in the states of Mississippi, Louisiana and Texas
through its indirectly wholly owned subsidiary, Denbury Management, Inc.
("Denbury Management"), a Texas corporation. The dollar disclosures contained
herein are reported in U.S. dollars unless otherwise noted and all share
information contained in this prospectus has been adjusted to reflect a
one-for-two reverse split of the Common Shares, effective on October 10, 1996.
This Prospectus relates to the resale from time to time by shareholders
("Selling Shareholders") of up to 555,642 common shares (the "Common Shares") of
the Company acquired by the Selling Shareholders upon the exercise of 555,642
Special Warrants. The Special Warrants were issued to a limited number of
accredited investors pursuant to exemptions from the registration and prospectus
delivery requirements under applicable Canadian and U.S. laws. Each Special
Warrant entitled the holder thereof to acquire one Common Share at no additional
cost, based upon the terms and conditions set forth in the warrant indenture.
The gross cash proceeds to the Company from the sale of the Special Warrants,
$2,750,000, have already been received by the Company. The Company will not
receive any proceeds from the sale of these securities. Of the Common Shares
issued upon the exercise of the Special Warrants, 29,036 were issued to
Southcoast Capital Corporation pursuant to an Agency Agreement with the Company
in payment of their fee for the placement of the Special Warrants.
This Prospectus also relates to the resale of 150,000 Common Share Purchase
Warrants and the 150,000 Common Shares to be issued upon exercise of the 150,000
Common Share Purchase Warrants. The 150,000 Common Share Purchase Warrants were
issued to Internationale Nederlanden (U.S.) Capital Corporation ("INCC")
effective May 5, 1995, as part of the consideration for the extension of credit
by INCC to Denbury Management. Each Common Share Purchase Warrant entitles INCC
to acquire one Common Share for Cdn. $8.40 at any time within five years of
issuance.
The Common Shares may be offered from time to time by the Selling
Shareholders, a limited number of United Stated and Canadian institutional
investors and one individual, who have acquired them upon exercise of the
Special Warrants and who will acquire them upon exercise of the Common Share
Purchase Warrants. Common Share Purchase Warrants may also be offered from time
to time by INCC.
Since the beginning of this offering, 518,572 Common Shares have been sold
by the selling shareholders, including 75,000 Common Shares issued to INCC on
the exercise of 75,000 Common Share Purchase Warrants. Thus, 187,070 Common
Shares and 75,000 Common Share Purchase Warrants remain available for resale
hereunder.
The outstanding Common Shares of the Company are listed on The Toronto
Stock Exchange (the "TSE") under the trading symbol "DNR" and on the Nasdaq
National Market System ("NASDAQ") under the symbol "DENRF". The closing price of
the Common Shares on the TSE and NASDAQ (as reported by such exchange) on April
24, 1997, was Cdn. $18.85 and U.S. $13.50, respectively. The Company has applied
for listing on the New York Stock Exchange with trading expected to commence on
May 8, 1997 under the trading symbol "DNR", at which time the Company will
suspend trading on NASDAQ.
Investment in the Common Shares or the Common Share Purchase Warrants
should be considered speculative. See "Risk Factors" on Page 5 of this
Prospectus for a discussion of certain factors that should be considered in
evaluating an investment in these securities.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is April __, 1997.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended, and in accordance therewith files reports,
proxy statements and other information with the Securities and Exchange
Commission (the "SEC"). Such reports, proxy statements and other information can
be inspected and copied at the public reference facilities maintained by the SEC
at 450 5th Street, N.W., Room 1024, Washington, D.C. 20549, and at the following
regional offices of the SEC: 7 World Trade Center, 13th Floor, New York, New
York 10048 and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661, at prescribed rates. In addition, such materials filed
electronically by the Company with the SEC are available at the SEC's World Wide
Web site at http://www.sec.gov. The Company's Common Shares will be traded on
the NASDAQ National Market System through at least May 7, 1997 and such reports,
proxy statements and other information may be inspected at the National
Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006. The Company's Common Shares are expected to commence trading on the New
York Stock Exchange on May 8, 1997 and thereafter, such reports, proxy
statements and other information may be inspected at the offices of the New York
Stock Exchange, Inc., 20 Broad Street, New York, NY 10005.
The Company has filed with the SEC a Registration Statement on Form S-3 (of
which this Prospectus is a part) under the Securities Act of 1933, as amended,
with respect to the securities offered hereby. This Prospectus does not contain
exhibits and schedules and certain other information which is part of the
Registration Statement and which have been omitted from this Prospectus as
permitted by the rules and regulations of the SEC. Statements contained herein
concerning the contents of any contract, agreement or other document filed as an
exhibit to the Registration Statement are necessarily summaries of such
contracts, agreements or documents and are qualified in their entirety by
reference to each such exhibit. The Registration Statement and the exhibits and
schedules forming a part thereof can be obtained from the SEC.
INFORMATION INCORPORATED BY REFERENCE
The following documents which have been filed with the Commission are
incorporated herein by reference: The Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1996 and the description of the Common Shares
contained in the Company's final prospectus dated October 24, 1996, filed as
part of the Company's Form S-1 Registration Statement No. 33-12005.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 and
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of Common Shares to be made hereunder shall be
deemed to be incorporated herein by reference and made a part hereof from the
date of filing.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained therein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
Any person receiving a copy of this Prospectus may obtain without charge a
copy of any document or part thereof incorporated herein by reference (other
than exhibits to such documents unless such exhibits are specifically
incorporated by reference into the information the Registration Statement
incorporates), upon written or oral request. Requests should be directed to Phil
Rykhoek, Chief Financial Officer and Corporate Secretary, Denbury Resources
Inc., 17304 Preston Road, Suite 200, Dallas Texas, 75252, (972)713-3000.
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety and should be read in
conjunction with the detailed information appearing elsewhere in this
Prospectus. Investors should carefully consider the information set forth under
"Risk Factors". All dollar amounts in this Prospectus, unless otherwise
indicated, are expressed in United States dollars and all financial data is
presented in accordance with generally accepted accounting principles in Canada.
All share information contained in this Prospectus has been adjusted to reflect
a one-for-two reverse split of the Common Shares, effective on October 10, 1996.
The terms "Denbury" and the "Company" refer to Denbury Resources Inc., a
Canadian corporation, and all references to the operations and assets of the
Company include those of its wholly-owned subsidiaries. Certain terms used
therein are defined in the Glossary included elsewhere in this Prospectus. The
executive offices of the Company are located at 17304 Preston Road, Suite 200,
Dallas, Texas 75252, and its telephone number is (972) 713-3000. The Company's
Canadian office is located at 2550, 140 Fourth Avenue, S.W., Calgary, Alberta
T2P 3N3, and the telephone number is (403) 266-1101.
THE COMPANY
Denbury is an independent energy company engaged in acquisition,
development and exploration activities in the U.S. Gulf Coast region. Since
1993, after having disposed of its Canadian oil and natural gas properties, the
Company has focused its operations primarily onshore in Louisiana and
Mississippi. Over the last three years, the Company has achieved rapid growth in
proved reserves, production and cash flow by concentrating on the acquisition of
properties which it believes have significant upside potential and through the
efficient development, enhancement and operation of those properties.
For the three-year period ended December 31, 1996, the Company increased
its proved reserves by 56% per annum, from 11.2 MMBOE at December 31, 1994 to
27.4 MMBOE. Over the same three-year period, the Company also increased its
average daily production by 69% per annum, from 2,858 BOE/d to 8,167 BOE/d. For
the three-year period ended December 31, 1996, Adjusted EBITDA grew at an annual
rate of 120%, from $7.2 million to $34.9 million.
As of December 31, 1996, the Company had proved reserves of 15.1 MMBbls and
74.1 Bcf. At such date, the PV10 Value was $316.1 million, of which $267.7
million was attributable to proved developed reserves. Denbury operates wells
comprising approximately 68% of its PV10 Value. The twelve largest fields owned
by the Company constitute approximately 80% of its estimated proved reserves and
within these twelve fields, Denbury owns an average working interest of 84%.
THE OFFERING
Common Shares Issued
and Outstanding: 20,118,796 Common Shares of the Company were outstanding
as of March 31, 1997. As of the same date, an additional
2,392,275 shares were issuable pursuant to outstanding
subscriptions, warrants, options or other rights to
purchase Common Shares.
<PAGE>
Securities Offered for
Resale: 555,642 Common Shares owned by the Selling Shareholders
resulting from exercise of the Special Warrants and
150,000 Common Shares issuable upon the exercise of
150,000 Common Share Purchase Warrants.
150,000 Common Share Purchase Warrants.
As of the date of this Prospectus, only 187,070 Common
Shares, including 75,000 Common Shares issuable upon the
exercise of the remaining 75,000 Common Share Purchase
Warrants, remained available for resale.
Common Share Purchase
Warrants: A total of 150,000 Common Share Purchase Warrants were
issued effective May 5, 1995, to Internationale
Nederlanden (U.S.) Capital Corporation ("INCC") which
gives INCC the right to acquire one Common Share at any
time until May 5, 2000, for a price of Cdn. $8.40. As of
the date of this Prospectus, 75,000 of the Common Share
Purchase Warrants had been exercised.
Trading Market: The Common Shares are listed on NASDAQ under the symbol
"DENRF" and on the Toronto Stock Exchange under the
symbol "DNR". The Company has applied for listing on The
New York Stock Exchange with trading expected to
commence on May 8, 1997 under the trading symbol "DNR",
at which time the Company will suspend trading on
NASDAQ.
Risk Factors: An investment in the Common Shares involves certain
risks. See "Risk Factors."
<PAGE>
RISK FACTORS
In addition to other information set forth elsewhere in this Prospectus,
the following factors relating to the Company should be considered when
evaluating an investment in the Common Shares and Common Share Purchase Warrants
offered hereby.
Price Fluctuations and Markets
The Company's revenue, profitability and future rate of growth are
substantially dependent upon the price of, and demand for, oil, natural gas and
natural gas liquids. Historically the markets for oil and natural gas have been
volatile and are likely to continue to be volatile in the future. The prices for
oil and natural gas are subject to wide fluctuations in response to relatively
minor changes in the supply of and demand for oil and natural gas, market
uncertainty and a variety of additional factors that are beyond the control of
the Company. These factors include the level of consumer product demand, weather
conditions, domestic and foreign governmental relations and taxes, the price and
availability of alternative fuels, political conditions in the Middle East and
other petroleum producing areas, the foreign supply of oil and natural gas, the
price of foreign imports and overall economic conditions. It is impossible to
predict future oil and natural gas price movements with any certainty. Declines
in oil and natural gas prices would not only reduce revenue, but could reduce
the amount of the Company's oil and natural gas that can be produced
economically and could, therefore, have a material adverse effect on the
Company's financial condition, results of operations and reserves. In an effort
to minimize the effect of price volatility, the Company has in the past entered
into hedging arrangements from time to time. The Company did not have any
financial hedging contracts in place as of the date of this Prospectus, although
it may have such contracts in the future.
The availability of a ready market for the Company's oil and natural gas
production also depends on a number of factors, including the demand for and
supply of oil and natural gas and the proximity of reserves to, and the capacity
of, oil and natural gas gathering systems, pipelines or trucking and terminal
facilities. Wells may be temporarily shut-in for lack of a market or due to
inadequacy or unavailability of pipeline or gathering system capacity.
Need to Replace Reserves
The Company's future success depends on its ability to find, develop or
acquire additional oil and natural gas reserves that are recoverable on an
attractive economic basis. Unless the Company successfully replaces the reserves
that it produces (through development, exploration or acquisitions), the
Company's proved reserves will decline. Furthermore, approximately 49% of the
Company's proved developed reserves at December 31, 1996 are located in the
lower Gulf Coast geosyncline in southern Louisiana which is characterized by
relatively rapid decline rates. Approximately 55% of the Company's total proved
reserves at December 31, 1996 were either proved undeveloped or proved developed
non-producing. Recovery of such reserves will require significant capital
expenditures and successful drilling operations. There can be no assurance that
the Company will continue to be successful in its effort to develop or replace
its proved reserves.
Drilling and Operating Risks
Drilling activities are subject to many risks, including the risk that no
commercially productive reservoirs will be encountered. There can be no
assurance that new wells drilled by the Company will be productive or that the
Company will recover all or any portion of its investment. Drilling for oil and
natural gas may involve unprofitable efforts, not only from dry wells but from
wells that are productive but do not produce sufficient net revenues to return a
profit after drilling, operating and other costs. The cost of drilling,
completing and operating wells is often uncertain. The Company's drilling
operations may be curtailed, delayed or canceled as a result of numerous
factors, many of which are beyond the Company's control, including title
problems, weather conditions, compliance with governmental requirements and
shortages or delays in the delivery of equipment and services.
<PAGE>
The Company's operations are subject to all of the risks normally incident
to the operation and development of oil and natural gas properties and the
drilling of oil and natural gas wells, including encountering unexpected
formations or pressures, blow-outs, the release of contaminants into the
environment, cratering and fires, all of which could result in personal
injuries, loss of life, damage to property of the Company and others, and the
imposition of fines and penalties pursuant to environmental legislation. The
Company is not fully insured against all of these risks, nor are all such risks
insurable. Although the Company maintains liability insurance in an amount which
it considers adequate, the nature of these risks is such that liabilities could
exceed policy limits, or as in the case of environmental fines and penalties, be
uninsurable, in which event the Company could incur significant costs that could
have a material adverse effect upon its financial condition. The Company
believes that it has proper procedures in place and that its operating staff
carries out their work in a manner designed to mitigate these risks.
The Company has focused its oil and natural gas operations in certain key
areas and currently receives approximately 80% of its production from 12 fields.
Any interruption to these key areas could materially adversely affect the
operations of the Company. In the majority of the Company's Mississippi fields,
significant amounts of saltwater are produced which require disposal. Currently,
the Company is able to dispose of such saltwater economically, but should it be
unable to do so in the future, production from these fields would become
uneconomical.
Uncertainty of Estimates of Oil and Natural Gas Reserves
Estimates of the Company's proved developed oil and natural gas reserves
and future net revenues therefrom are based on reserve reports prepared by
independent petroleum engineers. The estimation of reserves requires substantial
judgment on the part of the petroleum engineers, resulting in imprecise
determinations, particularly with respect to new discoveries. Different reserve
engineers may make different estimates of reserve quantities and revenues
attributable thereto based on the same data. The accuracy of any reserve
estimate depends on the quality of available data as well as engineering and
geological interpretation and judgment. The Company's reserves are primarily
water-drive reservoirs which can increase the uncertainty of the estimates that
have been prepared. Results of drilling, testing and production or price changes
subsequent to the date of the estimate may result in revisions to such
estimates. The estimates of future net revenues reflect oil and natural gas
prices as of the date of estimation, without escalation. There can be no
assurance, however, that such prices will be realized or that the estimated
production volumes will be produced during the periods indicated. Future
performance that deviates significantly from the reserve reports could have a
material adverse effect on the Company.
Acquisition Risks
The Company's rapid growth in recent years has been attributable in
significant part to acquisitions of producing properties. The Company expects to
continue to evaluate and, where appropriate, pursue acquisition opportunities on
terms management considers favorable to the Company. There can be no assurance
that suitable acquisition candidates will be identified in the future, nor that
they will be integrated successfully into the Company's operations or successful
in achieving desired profitability objectives. In addition, the Company competes
against other companies for acquisitions, and there can be no assurance that the
Company will be successful in the acquisition of any material property
interests.
The successful acquisition of producing properties requires an assessment
of recoverable reserves, exploration potential, future oil and natural gas
prices, operating costs, potential environmental and other liabilities and other
factors beyond the Company's control. In connection with such an assessment, the
Company performs a review of the subject properties that it believes to be
generally consistent with industry practices. Nonetheless, the resulting
assessments are necessarily inexact and their accuracy inherently uncertain, and
such a review may not reveal all existing or potential problems, nor will it
necessarily permit a buyer to become sufficiently familiar with the properties
to fully assess their merits and deficiencies. Inspections may not always be
performed on every platform or well, and structural and environmental problems
are not necessarily observable even when an inspection is undertaken.
Additionally, significant acquisitions can change the nature of the
operations and business of the Company depending upon the character of the
acquired properties, which may be substantially different in operating and
geologic characteristics or geographic location than existing properties. While
it is the Company's current intent to concentrate on acquiring producing
properties with development and exploration potential located in the Gulf Coast
region, there is no assurance that the Company will not pursue acquisitions or
properties located in other geographic regions.
<PAGE>
Substantial Capital Requirements
In the future, the Company will require additional funds to develop,
maintain and acquire additional interests in existing or newly-acquired
properties. During the last three years, the Company's capital expenditures have
averaged five times more than its cash flow from operations (exclusive of the
changes in non-cash working capital balances). Historically, the Company has
funded these expenditures principally through debt and equity. As of March 31,
1997, the Company had a $60.0 million borrowing base on its Credit Facility,
$59.3 million of which was available. The borrowing base on this facility will
be redetermined semi-annually by the lender in its sole discretion and there can
be no assurance the borrowing base will be maintained at its present level.
Although the Company carefully monitors its capital requirements and plans
its expenditures accordingly, and believes that it will be able to meet all of
its obligations in the future, there can be no assurance that additional capital
will always be available to the Company in the future or that it will be
available on terms that are acceptable to the Company. Should outside capital
resources be limited, the rate of Company growth would substantially decline,
and there can also be no assurance that the Company would be able to continue to
increase its oil and natural gas production or oil and natural gas reserves.
Numerous factors affect the cost and availability of capital, including market
conditions, the Company's results of operations and the rate of the Company's
drilling successes.
Controlling Shareholder
In December 1995, the Company completed a $40.0 million private placement
of securities to partnerships affiliated with the Texas Pacific Group ("TPG")
consisting of convertible preferred shares, Common Shares and warrants (the "TPG
Placement"). The convertible preferred shares were converted into approximately
2.8 million Common Shares in October, 1996. TPG also bought an additional
800,000 Common Shares directly from the Company in October 1996 as part of a
public offering. As of the date of this prospectus, TPG is the beneficial owner
of approximately 41% of the Common Shares outstanding. TPG is entitled to
nominate a minimum of three of seven representatives to the Company's Board of
Directors as long as TPG maintains certain ownership levels. The current Board
of Directors has six members of which three members were nominated by TPG. In
addition, certain transactions, including changes to the number of board
members, amendments to the Company's Articles of Continuance, certain issuances
of debt, certain acquisitions and dispositions, and most issuances of equity,
require the two-thirds majority of the Board of Directors, which cannot be
obtained without the approval of at least one TPG representative. Additionally,
TPG has the right, but not the obligation to maintain its pro rata ownership
interest in the equity securities of the Company in the event the Company issues
any additional equity securities or securities convertible into Common Shares of
the Company by purchasing additional shares on the same terms and conditions.
However, this right expires should TPG's ownership interest fall below 20%.
Shares Eligible for Future Sale
The Company had 20,118,796 Common Shares outstanding as of March 31, 1997.
As of such date, TPG had beneficial ownership of 8,408,038 Common Shares of
which 7,608,038 Common Shares are "restricted" securities within the meaning of
the Securities Act as a result of the issuance thereof in a private transaction.
The Company believes that such "restricted" Common Shares are eligible for sale
on the open market from time to time under Rule 144.
In addition, the Company has granted certain registration rights to TPG.
After December 21, 1997 and until December 21, 2000, TPG has the right, subject
to certain conditions, to demand that its stock be registered under the
Securities Act on one occasion. TPG also has "piggyback" registration rights
and, subject to certain conditions, may participate in a future registration by
the Company of Common Shares (or securities convertible into or exchangeable
for, or options, warrants or other rights to acquire, Common Shares) under the
Securities Act.
<PAGE>
The sale of a substantial number of Common Shares or the availability of a
substantial number of shares for sale may adversely affect the market price of
the Common Shares and could impair the Company's ability to raise additional
capital through the sale of its equity securities.
Dependence on Key Personnel
The Company believes that its continued success will depend to a
significant extent upon the abilities and continued efforts of its board of
directors and its senior management, particularly Gareth Roberts, its Chief
Executive Officer and President. The Company does not have any employment
agreements and does not maintain any key man life insurance. The loss of the
services from any of its key personnel could have a material adverse effect on
the Company's results of operations. The success of the Company will also
depend, in part, upon the Company's ability to find, hire and retain additional
key management personnel who are also being sought by other businesses. The
inability to find, hire and retain such personnel could have a material adverse
effect upon the Company's results of operations.
Competition
The Company operates in a highly competitive environment. The Company
competes with major integrated and independent energy companies for the
acquisition of desirable oil and natural gas properties, as well as for the
equipment and labor required to develop and operate such properties. Many of
these competitors have financial and other resources substantially greater than
those of the Company.
Governmental and Environmental Regulation
The production of oil and natural gas is subject to regulation under a wide
range of United States federal and state statutes, rules, orders and
regulations. State and federal statutes and regulations require permits for
drilling, reworking and recompletion operations, drilling bonds and reports
concerning operations. Most states in which the Company owns and operates
properties have regulations governing conservation matters, including provisions
for the unitization or pooling of oil and natural gas properties, the
establishment of maximum rates of production from oil and natural gas wells and
the regulation of the spacing, plugging and abandonment of wells. Many states
also restrict production to the market demand for oil and natural gas and
several states have indicated interest in revising applicable regulations in
light of the persistent oversupply and low prices for oil and natural gas
production. These regulations may limit the rate at which oil and natural gas
could otherwise be produced from the Company's properties. Some states have also
enacted statutes prescribing ceiling prices for natural gas sold within the
state.
Various federal, state and local laws and regulations relating to the
protection of the environment may affect the Company's operations and costs. In
particular, the Company's production operations, its salt water disposal
operations and its use of facilities for treating, processing or otherwise
handling hydrocarbons and wastes therefrom are subject to stringent
environmental regulation. The majority of the Company's Louisiana activity is
conducted in a marsh environment where environmental regulations are somewhat
greater. Although compliance with these regulations increases the cost of
Company operations, such compliance has not had a material effect on the
Company's capital expenditures, earnings or competitive position. Environmental
regulations have historically been subject to frequent change by regulatory
authorities and the Company is unable to predict the ongoing cost of complying
with these laws and regulations or the future impact of such regulations on its
operations. A significant discharge of hydrocarbons into the environment could,
to the extent such event is not insured, subject the Company to substantial
expense.
<PAGE>
Authorization and Discretionary Issuance of Preferred Shares; Anti-Takeover
Provisions
The Company's Articles of Continuance authorize the future issuance of an
unlimited number of First Preferred Shares and Second Preferred Shares
(collectively, the "Preferred Shares"), with such designations, rights,
privileges, restrictions and conditions as may be determined from time to time
by the Board of Directors. Accordingly, the Board of Directors is empowered,
without shareholder approval, to issue Preferred Shares with dividend,
liquidation, conversion, voting or other rights that could adversely affect the
voting power or other rights of holders of the Company's Common Shares. In the
event of issuance, the Preferred Shares could be utilized, under certain
circumstances, as a method of discouraging, delaying or preventing a change in
control of the Company. Such actions could have the effect of discouraging bids
for the Company, thereby preventing shareholders from receiving the maximum
value for their shares. Although the Company has no present intention to issue
any additional Preferred Shares, there can be no assurance that the Company will
not do so in the future.
The Investment Canada Act includes provisions that are intended to
encourage persons considering unsolicited tender offers or other unilateral
takeover proposals to negotiate with the Company's Board of Directors rather
than pursue non-negotiated takeover attempts. These existing anti-takeover
provisions may have a significant effect on the ability of a shareholder to
benefit from certain kinds of transactions that may be opposed by the incumbent
Board of Directors.
No Dividends
During the last five fiscal years, the Company has not paid any dividends
on its outstanding Common Shares, nor does the Company intend to do so. In
addition, the Company is restricted from doing so under its Credit Facility. The
Company currently intends to retain its cash for the continued expansion of its
business, including exploration, development and acquisition activities.
Forward-Looking Information
All statements other than statements of historical fact contained in this
Prospectus are forward-looking statements. Forward-looking statements in this
Prospectus generally are accompanied by words such as "anticipate," "believe,"
"estimate," "project" or "expect" or similar statements. Although the Company
believes that the expectations reflected in such forward-looking statements are
reasonable, no assurance can be given that such expectations will prove correct.
Factors that could cause the Company's results to differ materially from the
results discussed in such forward-looking statements include the aforementioned
risks described under "Risk Factors," such as the fluctuations of the prices
received or demand for the Company's oil and natural gas, the uncertainty of
drilling results and reserve estimates, operating hazards, acquisition risks,
requirements for capital, general economic conditions, the competition from
other exploration, development and production companies and the effects of
governmental and environmental regulation. All forward-looking statements in
this Prospectus are expressly qualified in their entirety by the cautionary
statements in this paragraph.
<PAGE>
DESCRIPTION OF SECURITIES
General
The authorized share capital of Denbury consists of an unlimited number of
Common Shares, of which 20,118,796 were issued and outstanding as of March 31,
1997, and two classes of preferred shares, unlimited in number and issuable in
series. In addition to the issued and outstanding Common Shares, options to
purchase Common Shares and other forms of convertible securities for Common
Shares are outstanding.
There are no limitations imposed by Canadian legislation or regulations or
by the Articles of Continuance or By-laws of the Company on the right of holders
of either the Common Shares or the Common Share Purchase Warrants who are not
residents of Canada to hold or vote the Common Shares or to hold the Common
Share Purchase Warrants.
The following is a general description of the material rights, privileges,
restrictions and conditions attaching to the securities being offered hereby.
Common Shares
The holders of the Common Shares are entitled to one vote for each Common
Share held at all meetings of shareholders of the Company, other than meetings
of the holders of any other class of shares meeting as a class or the holders of
one or more series of any class of shares meeting as a series; are entitled to
any dividends that may be declared by the board of directors thereon; and in the
event of liquidation, dissolution or winding-up of the Company, are entitled,
subject to the rights of the holders of shares ranking prior to the Common
Shares, to share rateably in such assets of the Company as are available for
distribution. The holders of Common Shares have no preemptive rights. TPG was
granted certain demand and "piggyback" registration rights and preemptive rights
in connection with the TPG Placement.
Common Share Purchase Warrants
A total of 150,000 $8.40 Common Share Purchase Warrants are being
registered hereby. Each Common Share Purchase Warrant entitles the holder to
purchase one Common Share at a price of Cdn. $8.40 per share, subject to
adjustment in certain circumstances, during the period that commenced on May 5,
1995, and which ends on May 5, 2000. As of March 31, 1997, there were 75,000
Common Share Purchase Warrants outstanding with these terms. In addition, there
are 625,000 Common Share Purchase Warrants outstanding entitling the holder to
purchase Common Shares at a price of U.S. $7.40 per share, subject to adjustment
in certain circumstances, during the period that commenced on December 21, 1995
and which ends on December 21, 1999. The $8.40 Common Share Purchase Warrants
are being registered hereby in accordance with a Registration Rights Agreement
between the Company and Internationale Nederlanden (U.S.) Capital Corporation
which required the Company to maintain a continuously effective registration
statement for a two-year period.
The exercise price and number of Common Shares issuable on exercise of the
$8.40 Common Share Purchase Warrants are subject to adjustment in certain
circumstances, including in the event of a stock dividend or other distribution
to all shareholders of assets or debt instruments of the Company,
recapitalization, reorganization, merger or consolidation of the Company.
Additionally, such adjustments shall be made upon the issuance of rights,
options or warrants to all or substantially all of the holders of outstanding
Common Shares entitling them to purchase Common Shares at a price per share that
is less than 92.5% of the Current Market Prices (as defined in the $8.40 Common
Share Purchase Warrant Certificate).
<PAGE>
SELLING SECURITY HOLDERS AND
PLAN OF DISTRIBUTION
In April 1995, the Company privately offered and sold to investors in the
United States and Canada (collectively, the "Selling Shareholders"), consisting
of certain institutional investors and one individual, 614,142 Special Warrants
to purchase Common Shares of the Company. During May 1995, the Company also
issued 150,000 Common Share Purchase Warrants to Internationale Nederlanden
(U.S.) Capital Corporation (INCC). Each of the Special Warrants were, and the
Common Share Purchase Warrants may be, exchanged for one Common Share for each
warrant. In both cases, the Company agreed to file with the Securities and
Exchange Commission a Registration Statement covering resales of the Common
Shares and, in the case of the Common Share Purchase Warrants, covering resales
of the Common Share Purchase Warrants themselves. No Selling Shareholder has had
a position, office or other material relationship with the Company or any of its
affiliates within the three years preceding the date of this Prospectus, except
that INCC, as part of the transaction whereby it became a security holder,
extended a $22,000,000 credit facility to Denbury Management, and
contemporaneously therewith, entered into an oil swap contract with Denbury
Management for varying amounts of oil per month at $18.83. As of the date of
this Prospectus, INCC was one of three banks that is a party to the Company's
bank credit agreement. The Company did not have any type of hedging contracts in
place as of the date of this Prospectus. None of the Selling Shareholders owned
any Common Shares or warrants prior to the April and May 1995 purchases.
Assuming each Selling Shareholder sells all the Common Shares and/or the Common
Share Purchase Warrants to be offered for its account pursuant hereto and
acquires no additional Common Shares or warrants, none of the Selling
Shareholders, except for Roytor & Co. as indicated below, will own any Common
Shares after completion of the resale.
The following table sets forth information, as of the date hereof,
regarding the Selling Shareholders, the number of securities to be offered for
the account of each and the type of securities owned.
<TABLE>
<CAPTION>
Amount and Type to be Amount and % of
Offered for Selling Class to be
Shareholders' Account Owned After Resale
<S> <C> <C>
Lester F. Alexander 540 Common -0-
Frank Bracken 915 Common -0-
Janet F. Clark 810 Common -0-
Richard Funchess 203 Common -0-
Mathew P. LeCorgne 810 Common -0-
G. Walter Lowenbaum 332 Common -0-
Stephen A. Neal 2,077 Common -0-
Roytor & Co. 106,383 Common 71,950 *
Internationale 75,000 Common -0-
Nederlanden (U.S.) Purchase
Capital Corporation Warrants and/or
Common Shares
<FN>
* Represents less than 1% of the
outstanding Common Shares
</FN>
</TABLE>
All or a portion of the Common Shares or Common Share Purchase Warrants may
be sold from time to time (i) on any exchange on which the Company is listed at
prevailing market prices, (ii) otherwise than on any exchange on which the
Company is listed at prevailing market prices or negotiated prices, (iii) in
block transactions, ordinary brokerage transactions, sales-to-broker dealers
acting as principals or otherwise, (iv) in underwritten transactions, or (v) by
a combination of the foregoing methods of sale. The Company will receive no
portions of the proceeds of any sales of Common Shares or Common Share Purchase
Warrants by the Selling Shareholders, but will bear all expenses of registering
the Common Shares under the Securities Act of 1933, as amended.
<PAGE>
No underwriter has been engaged by the Company to participate in the resale
of the Common Shares or Common Share Purchase Warrants, although the Selling
Shareholders may, at their discretion, engage an underwriter. The Selling
Shareholders will bear all commissions and other fees payable to brokers and
dealers and all taxes payable in connection with resales of the Common Shares or
Common Share Purchase Warrants.
LEGAL MATTERS
The legality of the Common Shares offered hereby have been passed upon for
the Company by Burnet, Duckworth & Palmer, Calgary, Alberta.
EXPERTS
The consolidated financial statements and schedule, incorporated in this
Prospectus by reference to the Annual Report on Form 10-K of Denbury Resources
Inc. for the year ended December 31, 1996, have been audited by Deloitte &
Touche, Chartered Accountants, Calgary, Alberta, Canada, as stated in their
reports appearing therein and have been so included in reliance upon the reports
of such firm given upon their authority as experts in accounting and auditing.
<PAGE>
GLOSSARY
The terms defined in this section are used throughout this Prospectus.
Adjusted EBITDA. Adjusted EBITDA represents earnings before interest
income, interest expense, income taxes, depletion and depreciation, gain on sale
of oil and gas properties, imputed preferred dividends and losses on early
extinguishment of debt.
Bbl. One stock tank barrel, of 42 U.S. gallons liquid volume, used herein
in reference to crude oil or other liquid hydrocarbons.
Bbls/d. Barrels of oil produced per day.
Bcf. One billion cubic feet of natural gas.
BOE. One barrel of oil equivalent using the ratio of one barrel of crude
oil, condensate or natural gas liquids to 6 Mcf of natural gas.
BOE/d. BOEs produced per day.
Btu. British thermal unit, which is the heat required to raise the
temperature of a one-pound mass of water from 58.5 to 59.5 degrees Fahrenheit.
Cdn. Canadian.
Mcf. One thousand cubic feet of natural gas.
Mcf/d. One thousand cubic of natural gas produced per day.
MMBbl. One million barrels of crude oil or other liquid hydrocarbons.
MMBOE. One million BOEs.
PV10 Value. When used with respect to oil and natural gas reserves, PV10
Value means the estimated future gross revenue to be generated from the
production of proved reserves, net of estimated production and future
development costs, using prices and costs in effect at the determination date,
without giving effect to non-property related expenses such as general and
administrative expenses, debt service and future income tax expense or to
depreciation, depletion and amortization, discounted using an annual discount
rate of 10% in accordance with the guidelines of the SEC.
Proved Developed Reserves. Reserves that can be expected to be recovered
through existing wells with existing equipment and operating methods.
Proved Reserves. The estimated quantities of crude oil, natural gas and
natural gas liquids which geological and engineering data demonstrate with
reasonable certainty to be recoverable in future years from known reservoirs
under existing economic and operating conditions.
<PAGE>
No dealer, salesman, or other person has been authorized to give any information
or to make any representations other than those contained in this Prospectus
and, if given or made, such information or representations must not be relied
upon as having been authorized by the Company or the Selling Shareholder. This
Prospectus does not constitute an offer to sell or a solicitation of an offer to
buy any securities other than the securities to which it relates nor does it
constitute an offer or solicitation by anyone in any jurisdiction in which such
offer or solicitation would be unlawful or to any person to whom it is unlawful
to make such offer or solicitation. Neither the delivery of this Prospectus nor
any offer or sale made hereunder at any time shall imply that information herein
is correct as of any time subsequent to the date hereof.
--------------------
TABLE OF CONTENTS
Page
AVAILABLE INFORMATION...................................................... 2
INFORMATION INCORPORATED BY REFERENCE...................................... 2
PROSPECTUS SUMMARY......................................................... 3
THE COMPANY................................................................ 3
THE OFFERING............................................................... 3
RISK FACTORS............................................................... 5
DESCRIPTION OF SECURITIES.................................................. 10
SELLING SECURITY HOLDERS................................................... 11
LEGAL MATTERS.............................................................. 12
EXPERTS.................................................................... 12
GLOSSARY................................................................... 13
<PAGE>
705,642
Common Shares
150,000 Common Share
Purchase Warrants
PROSPECTUS
[GRAPHIC OMITTED]
April __, 1997
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The estimated expenses in connection with the issuance and distribution of
the securities being registered (other than underwriting discounts and
commissions) are set forth in the following itemized table:
<TABLE>
<S> <C>
SEC Registration Fee......................................... $ 1,611
NASDAQ System Listing Fee.................................... 50,000
Transfer Agent's Fees........................................ 3,000
Accounting Fees.............................................. 45,000
Legal Fees................................................... 100,000
Engineering Fees............................................. 15,000
Printing..................................................... 1,200
Miscellaneous................................................ 5,000
----------
Total..................................................... $ 220,811
==========
</TABLE>
Item 15. Indemnification of Directors and Officers
Section 124(1) of the Canada Business Corporations Act ("CBCA") provides
that, except in respect of an action by or on behalf of a corporation or body
corporate to procure a judgment in its favor, a corporation may indemnify a
director or officer of the corporation, a former director or officer of the
corporation or a person who acts or acted at the corporation's request as a
director or officer of a body corporate of which the corporation is or was a
shareholder or creditor, and his heirs and legal representatives, against all
costs, charges, and expenses, including an amount paid to settle an action or
satisfy a judgment, reasonably incurred by him in respect of any civil, criminal
or administrative action or proceeding to which he is made a party by reason of
being or having been a director or officer of such corporation or body
corporate, if:
(a) he acted honestly and in good faith with a view to the best interests of
the corporation; and
(b) in a case of a criminal or administrative action or proceeding that is
enforced by a monetary penalty, he had reasonable grounds for believing
that his conduct was lawful.
Section 124(2) of the CBCA provides that even if such a person is named in
an action by or on behalf of the corporation or body corporate to procure a
judgment in its favor, a corporation may indemnify such a person with court
approval if such person meets the standards set forth in Section 124(1).
Additionally, a person named in Section 124(1) is entitled to indemnity from the
corporation if the person seeking indemnity:
(a) was substantially successful on the merits in his defense of the action
or proceeding; and
(b) fulfills the conditions set forth above.
Section 5.02 of the Company's Bylaws contains the same standards set forth
in Section 124(1), but makes indemnification in such circumstances mandatory by
the Company.
II-1
<PAGE>
In addition to the above provisions, the Company has also entered into an
indemnity agreement with its officers and directors, which, subject to the CBCA,
sets forth the procedures by which a person may seek indemnity and clarifies the
situations in which a person may be entitled to indemnity by the Company.
The Corporation also maintains directors and officers insurance covering
each of its officers and directors. The insurance provides up to $10 million of
coverage for the officers and directors with deductibles ranging from zero to
$350,000, depending on the type of claim, and $10 million coverage for the
Corporation with a 25% co-insurance provision. The Corporation has paid for 100%
of the cost of this insurance.
Item 16. Exhibits
Exhibits.The following exhibits are filed as part of this report.
Exhibit No. Exhibit
4(a) "Common Shares" section of Schedule "A" to Articles of Amendment
of Newscope Resources Limited dated December 13, 1990, exhibited
in full at 3(a) (incorporated by reference as Exhibit 4(a) of the
Registrant's Registration Statement on Form F-1 dated August 25,
1995).
4(b) Section 1.05 of General By-Law No. 1, exhibited in full at 3(b)
(incorporated by reference as Exhibit 4(b) of the Registrant's
Registration Statement on Form F-1 dated August 25, 1995).
4(c) Pages 8-14 of General By-Law No. 1, exhibited in full at 3(b)
(incorporated by reference as Exhibit 4(c) of the Registrant's
Registration Statement on Form F-1 dated August 25, 1995).
5 Opinion of Burnett, Duckworth & Palmer (incorporated by reference
as Exhibit 5 of the Registrant's Registration Statement on Form
F-1 dated August 25, 1996).
23(a)* Consent of Deloitte & Touche.
* Filed herewith.
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement;
(i) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such information in
the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
II-2
<PAGE>
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
The undersigned registrant hereby undertakes, that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the 1933 Act may
be permitted to directors, officers and controlling persons of the Registrant
pursuant to the provisions described in Item 14 above, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
1933 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1933 Act and
will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, Denbury
Resources Inc., the Registrant, has duly caused this Post-Effective Amendment
No.3 to Registration Statement No. 33-93722 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Dallas, Texas, on the
25th day of April, 1997.
DENBURY RESOURCES INC.
By: /s/ Phil Rykhoek
--------------------------------
Phil Rykhoek
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated, in multiple counterparts with the effect
of one original.
Signatures Title Date
President and Chief Executive Officer,
/s/ Gareth Roberts Director and Authorized-Representative April 25, 1997
- ---------------------- (Principal Executive Officer)
Gareth Roberts
Chief Financial Officer and Secretary
/s/ Phil Rykhoek (Principal Financial and April 25, 1997
- ---------------------- Accounting Officer)
Phil Rykhoek
/s/ Ronald G. Greene Chairman of the Board and Director April 25, 1997
- ----------------------
Ronald G. Greene
/s/ Wieland Wettstein Director April 25, 1997
- ----------------------
Wieland Wettstein
/s/ David M. Stanton Director April 25, 1997
- ----------------------
David M. Stanton
By: /s/ Phil Rykhoek
-----------------------------
Phil Rykhoek
Attorney-in-Fact pursuant to
power of attorney contained in
Post-Effective Amendment No. 1
to Form F-1 on Form S-1 of this
Registration Statement
II-4
Exhibit 23(a)
Consent of Deloitte & Touche
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Post-Effective Amendment
No. 3 to Form S-1 on Form S-3 of Registration Statement No. 33-93722 of Denbury
Resources Inc. of our reports dated February 21, 1997, with respect to the
Consolidated Financial Statements and Schedule of Denbury Resources Inc.
appearing in the Annual Report on Form 10-K of Denbury Resources Inc. for the
year ended December 31, 1996, and to the reference to us under the heading
"Experts" in the Prospectus, which is part of such Registration Statement.
DELOITTE & TOUCHE
Chartered Accountants
Calgary, Alberta
April 25, 1997
