/s/  Phil Rykhoek

IMPORTANT

 

Your vote is important. Whether or not you plan to attend the special meeting, please complete, sign and date the enclosed proxy and return it promptly in the enclosed postage-paid envelope. You may also cast your vote by telephone or over the Internet by following the instructions on your proxy card. If you vote by telephone or over the Internet, you do not need to submit your proxy card. Remember, your vote is important, so please act today!

/s/  I. Jon Brumley

IMPORTANT

 

Your vote is important. Whether or not you plan to attend the special meeting, please complete, sign and date the enclosed proxy and return it promptly in the enclosed postage-paid envelope. You may also cast your vote by telephone or over the Internet by following the instructions on your proxy card. If you vote by telephone or over the Internet, you do not need to submit your proxy card. Please do not send any stock certificates at this time. Remember, your vote is important, so please act today!

 

This summary highlights selected information from this document and may not contain all of the information that is important to you. To understand the merger fully and for a more complete description of the terms of the merger, you should read carefully this entire document and the other available information referred to under “Where You Can Find More Information.” We encourage you to read the merger agreement, the legal document governing the merger, which is included as Annex A to this document and incorporated by reference herein. We have included page references in the discussion below to direct you to more complete descriptions of the topics presented in this summary. We have defined certain oil and gas industry terms used in this document in the “Glossary of Oil and Gas Terms.”

 

Denbury Resources Inc.

5100 Tennyson Pkwy., Suite 1200

Plano, Texas 75024

(972) 673-2000

 

Denbury is a Delaware corporation engaged in the acquisition, development, operation and exploration of oil and natural gas properties in the Gulf Coast region of the United States, primarily in Mississippi, Louisiana, Texas and Alabama. Denbury is the largest oil and natural gas producer in Mississippi, and it owns the largest reserves of CO₂ used for tertiary oil recovery east of the Mississippi River. Denbury’s goal is to increase the value of acquired properties through a combination of exploitation, drilling and proven engineering extraction processes, with its most significant emphasis relating to tertiary recovery operations.

 

Since Denbury acquired its first CO₂ tertiary flood in Mississippi in 1999, it has gradually increased its emphasis on these types of operations. Denbury’s tertiary operations have grown to the point that, as of December 31, 2008, approximately 50% of its proved reserves were proved tertiary oil reserves. As of December 31, 2008, Denbury had total tertiary-related proved oil reserves of approximately 125.8 MMBbls. Denbury’s production from tertiary operations has increased from approximately 1,350 Bbls/d in 1999, the then existing production at Little Creek Field at the time of acquisition, to an average of 24,347 Bbls/d during the third quarter of 2009. Denbury expects this production to continue to increase for several years as Denbury expands its tertiary operations to additional fields that it owns. Denbury believes that there are many additional oil fields in its operating areas that can be acquired and flooded with CO₂, providing potential growth opportunities beyond its existing inventory of oil fields.

 

Denbury’s estimated total proved reserves at December 31, 2008 were 179.1 MMBbls of oil and 428 Bcf of natural gas, based on the December 31, 2008 NYMEX oil price of $44.60 per barrel adjusted to prices received by field and a Henry Hub natural gas cash price of $5.71 per MMBtu, also adjusted to prices received by field. On a BOE basis, Denbury’s proved reserves were 250.5 MMBOE at December 31, 2008, of which approximately 72% was oil and approximately 58% was proved developed. Denbury recently announced information concerning its 2009 year-end proved reserves and estimated production. See “Denbury — The Combined Company — Recent Events” beginning on page 45.

 

Denbury continues to emphasize its tertiary recovery operations because management believes these operations (i) are lower risk and more predictable than most traditional exploration and development activities, and (ii) provide a reasonable rate of return at relatively low oil prices. In addition, Denbury has virtually no competition for this type of activity in its geographic area, as generally, from east Texas to Florida, there are no known significant sources of CO₂ other than those that Denbury owns. Denbury believes that if significant sources of man-made CO₂ are captured and become available in the future, tertiary recovery operations provide an economical way to sequester these greenhouse gases, while recovering additional oil. Denbury has acquired several old oil fields in its areas of operations with potential for tertiary recovery and plans to acquire additional fields. Denbury also continues to expand its CO₂ pipeline infrastructure to transport CO₂.

Denbury’s strategy is focused on the following fundamental principles:

 

 

Denbury’s common stock is listed on the New York Stock Exchange under the symbol “DNR.”

 

Encore Acquisition Company

777 Main Street, Suite 1400

Fort Worth, Texas 76102

(817) 877-9955

 

Encore is a Delaware corporation engaged in the acquisition and development of oil and natural gas reserves from onshore fields in the United States. Since 1998, Encore has acquired producing properties with proven reserves and leasehold acreage and grown the production and proven reserves by drilling, exploring, reengineering or expanding existing waterflood projects and applying tertiary recovery techniques. Encore’s properties and its oil and natural gas reserves are located in four core areas:

 

 

Encore’s estimated total proved reserves at December 31, 2008 were 134.5 MMBbls of oil and 307.5 Bcf of natural gas, based on December 31, 2008 spot market prices of $44.60 per barrel for oil and $5.62 per Mcf for natural gas. On a BOE basis, Encore’s proved reserves were 185.7 MMBOE at December 31, 2008, of which approximately 72% was oil and approximately 80% was proved developed. Encore recently announced information concerning its 2009 year-end proved reserves and estimated fourth quarter 2009 production. See “Denbury — The Combined Company — Recent Events” beginning on page 45.

 

Encore’s common stock is listed on the New York Stock Exchange under the symbol “EAC.”

 

Denbury and Encore have agreed to combine their businesses pursuant to the merger agreement described in this joint proxy statement/prospectus. Pursuant to the merger agreement, Encore will merge with and into Denbury. As a result of the merger, Encore will cease to exist and Denbury will continue as a public company. The merger agreement is attached as Annex A to this joint proxy statement/prospectus and is incorporated by reference herein. Denbury and Encore encourage you to read the merger agreement in its entirety because it is the legal document that governs the merger.

Merger Consideration (Page 93)

 

Under the merger agreement, Encore stockholders may elect to receive consideration consisting of cash, shares of Denbury common stock or a combination of both in exchange for their shares of Encore common stock, subject to the proration feature described below. Encore stockholders electing to receive a mix of cash and stock consideration and non-electing stockholders will receive $15.00 in cash and between 2.0698 and 2.6336 shares of Denbury common stock in exchange for each Encore share. Subject to proration, Encore stockholders electing to receive all cash will receive $50.00 per Encore share and Encore stockholders electing to receive only Denbury common stock will receive between 2.9568 and 3.7622 shares of Denbury common stock in exchange for each Encore share. The actual number of shares of Denbury common stock to be issued to Encore stockholders receiving either all stock or a mix of cash and stock consideration will be determined under a collar mechanism based upon the Denbury 20-day average price. For a more complete description of what Encore stockholders will be entitled to receive pursuant to the merger, see “Terms of the Merger Agreement — Conversion of Encore Stock” on page 93.

 

The aggregate cash consideration to be received by Encore stockholders pursuant to the merger will be fixed at an amount equal to the product of $15.00 and the number of issued and outstanding shares of Encore common stock immediately prior to closing of the merger, which cash amount is expected to be approximately $833.1 million, excluding approximately $56.2 million in cash payments to Encore stock option holders. Accordingly, if Encore stockholders elect, in the aggregate, to receive cash in an amount greater than the aggregate cash consideration payable under the merger agreement, or less than the aggregate cash consideration payable under the merger agreement, then those holders electing to receive either all cash or all stock consideration, as the case may be, will be pro rated down and will receive the undersubscribed form of merger consideration as a portion of the overall consideration they receive for their shares. As a result, Encore stockholders that make a valid election to receive all cash or all stock consideration may not receive merger consideration entirely in the form elected. See “Risk Factors — Encore stockholders electing to receive only cash or only Denbury common stock may receive a form or combination of consideration different from the form they elect” on page 34.

 

Denbury will not issue any fractional shares of its common stock to any holder of Encore common stock upon completion of the merger. For each fractional share that would otherwise be issued, Denbury will pay cash (without interest) in an amount equal to the product of (i) the fractional share and (ii) the closing price for a share of Denbury common stock on the business day immediately preceding the closing date. See “Terms of the Merger Agreement — Surrender of Shares; Stock Transfer Books” beginning on page 96.

 

Completion and Delivery of the Election Form (Page 95)

 

If you are an Encore stockholder, you have received or will receive (together with this joint proxy statement/prospectus or in a separate mailing) an election form with instructions for making cash and stock elections. You must complete properly and deliver to the exchange agent your election form along with your stock certificates (or a properly completed notice of guaranteed delivery). Do not send your stock certificates or election form with your proxy card.

 

Election forms and stock certificates (or a properly completed notice of guaranteed delivery) must be received by the exchange agent by the election deadline, which is 5:00 p.m., New York time, on March 2, 2010. Once you tender your stock certificates to the exchange agent, you may not transfer your shares of Encore common stock until the merger is completed, unless you revoke your election by a written notice to the exchange agent that is received prior to the election deadline.

 

If you fail to submit a properly completed election form prior to the election deadline, you will be deemed not to have made an election. As a holder making no election, you will receive the mixed cash and stock consideration.

 

If you own shares of Encore common stock in “street name” through a broker or other nominee and you wish to make an election, you should seek instructions from the broker or other nominee holding your shares concerning how to make your election.

If the merger is not completed, stock certificates will be returned by the exchange agent by first class mail or through book-entry transfer (in the case of shares of Encore common stock delivered in book-entry form to the exchange agent).

 

Treatment of Stock Options and Restricted Stock (Page 94)

 

At the effective time of the merger, each outstanding option to purchase shares of Encore common stock, whether or not then exercisable or vested, will be converted into an obligation of Denbury to pay the option holder an amount in cash equal to the product of (i) the number of shares of Encore common stock subject to the option and (ii) the excess, if any, of the aggregate consideration per share (or with respect to certain pre-2005 options, the highest price per share paid within 60 days prior to the merger) over the exercise price per share previously subject to the option.

 

Immediately prior to the effective time of the merger, each outstanding award of Encore restricted stock will become fully vested and each holder will have the right to make the same elections as a holder of Encore common stock, except that any shares of Encore restricted stock granted as a 2009 bonus pursuant to the Encore annual incentive program will be converted into a number of restricted shares of Denbury common stock determined by multiplying (i) the number of restricted shares of Encore common stock subject to that grant by (ii) the exchange ratio used in determining the consideration payable to Encore stockholders who have elected to receive only common stock consideration.

 

Board Recommendations (Pages 58 and 61)

 

Encore.  Encore’s board of directors has unanimously adopted a resolution approving the merger agreement, declared the merger agreement advisable and determined that the merger agreement and the transactions contemplated by it are fair to and in the best interests of Encore and its stockholders and recommends unanimously that Encore stockholders vote at the special meeting to adopt the merger agreement and approve any adjournment of the special meeting, if necessary or appropriate to solicit additional proxies. See “The Merger — Background of the Merger” beginning on page 47. As described under the heading “The Merger — Interests of Certain Persons in the Merger that May be Different from Your Interests” beginning on page 81 of this joint proxy statement/prospectus, Encore’s directors and executive officers will receive financial benefits that may be different from, or in addition to, those of Encore stockholders.

 

Denbury.  Denbury’s board of directors has unanimously adopted a resolution approving the merger agreement and the transactions contemplated by it, declared the merger agreement advisable and recommends unanimously that Denbury stockholders vote at the special meeting to adopt the merger agreement, which provides for, among other things, the merger of Encore with and into Denbury and the issuance of Denbury common stock to Encore stockholders as part of the merger consideration. See “The Merger — Background of the Merger” beginning on page 47. In addition, Denbury’s board of directors recommends unanimously that Denbury stockholders vote to approve any adjournment of the special meeting, if necessary or appropriate to solicit additional proxies.

 

 

In deciding to recommend the merger, each of Denbury and Encore considered an opinion from its financial advisor.

 

Opinion of Encore’s Financial Advisor

 

Barclays Capital Inc., or Barclays Capital, rendered its opinion to Encore’s board of directors that, as of October 31, 2009, based upon and subject to the qualifications, limitations and assumptions stated in its opinion, the merger consideration to be received by the stockholders of Encore was fair, from a financial point of view, to such stockholders.

 

The full text of the written opinion of Barclays Capital, dated October 31, 2009, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in

connection with the opinion, is attached as Annex B to this joint proxy statement/prospectus. Barclays Capital provided its opinion for the information and assistance of Encore’s board of directors in connection with its consideration of the merger. The Barclays Capital opinion is not a recommendation as to how any holder of Encore’s common stock should vote with respect to the merger, adoption of the merger agreement or any other matter.

 

Pursuant to a letter agreement dated October 9, 2009, Encore engaged Barclays Capital to act as its financial advisor in connection with the contemplated transaction. As compensation for its services in connection with the merger, Encore paid Barclays Capital $1.0 million upon the delivery of Barclays Capital’s fairness opinion. Additional compensation of $12.5 million will be payable on completion of the merger, against which the amount paid for the opinion will be credited. In addition, Encore has agreed to reimburse Barclays Capital for its expenses, including attorneys’ fees and disbursements, and to indemnify Barclays Capital and related persons against various liabilities.

 

Opinion of Denbury’s Financial Advisor

 

Pursuant to an engagement letter dated October 30, 2009, Denbury retained J.P. Morgan Securities Inc., or J.P. Morgan, as its financial advisor in connection with the proposed merger and to deliver a fairness opinion in connection with the merger.

 

At the meeting of Denbury’s board of directors on October 31, 2009, J.P. Morgan rendered its oral opinion, subsequently confirmed in writing, to Denbury’s board of directors that, as of that date and based upon and subject to the factors and assumptions set forth in its opinion, the consideration to be paid by Denbury in the proposed merger was fair, from a financial point of view, to Denbury.

 

The full text of the written opinion of J.P. Morgan, which sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations on the review undertaken by J.P. Morgan in connection with its opinion, is attached as Annex C to this joint proxy statement/prospectus and is incorporated herein by reference. Denbury stockholders are urged to read the opinion carefully and in its entirety.

 

J.P. Morgan’s written opinion is addressed to Denbury’s board of directors, is directed only to the consideration to be paid by Denbury in the merger and does not constitute a recommendation to any Denbury stockholder as to how that stockholder should vote at the Denbury special meeting. The summary of the opinion of J.P. Morgan set forth in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of the opinion.

 

For services rendered in connection with the merger, Denbury has agreed to pay J.P. Morgan $12.0 million, $3.0 million of which was paid after the public announcement of the proposed merger, and the remainder of which will become payable only if the merger is consummated. In addition, Denbury has agreed to reimburse J.P. Morgan for its expenses incurred in connection with its services, including the fees and disbursements of counsel, and will indemnify J.P. Morgan against certain liabilities, including liabilities arising under the Federal securities laws.

 

Denbury’s board of directors and executive officers will remain the same following the merger as they are immediately before the merger becomes effective.

 

Denbury.  The Denbury special meeting will be held for the following purposes:

 

 

Encore.  The Encore special meeting will be held for the following purposes:

 

 

 

Denbury.  You may vote at the special meeting of Denbury stockholders if you owned Denbury common stock at the close of business on February 3, 2010.

 

Encore.  You may vote at the special meeting of Encore stockholders if you owned Encore common stock at the close of business on February 3, 2010.

 

 

Denbury.  Each share of Denbury common stock outstanding as of the record date will be entitled to one vote at the Denbury special meeting. Adoption of the merger agreement, which provides for, among other things, the merger of Encore with and into Denbury and the issuance of Denbury common stock to Encore stockholders as part of the merger consideration, requires the affirmative vote of a majority of the then outstanding shares of Denbury common stock that are entitled to vote as of the record date. Any adjournment of the special meeting, if necessary or appropriate to solicit additional proxies requires the affirmative vote of the holders of Denbury common stock representing a majority of the votes present in person or by proxy at the special meeting entitled to vote.

 

If a Denbury stockholder abstains from voting, that action will be the equivalent of a vote “against” all of the matters to be voted upon. A broker non-vote will be the equivalent of a vote “against” the adoption of the merger agreement. A broker non-vote will have no effect on any adjournment of the special meeting, if necessary or appropriate to solicit additional proxies.

 

Encore.  Each share of Encore common stock outstanding as of the record date is entitled to one vote at the Encore special meeting. Adoption of the merger agreement by Encore stockholders requires the affirmative vote of a majority of the then outstanding shares of Encore common stock that are entitled to vote as of the record date. Any adjournment of the special meeting, if necessary or appropriate to solicit additional proxies requires the affirmative vote of the holders of Encore common stock representing a majority of the votes present in person or by proxy at the special meeting entitled to vote.

 

If an Encore stockholder abstains from voting, that action will be the equivalent of a vote “against” all of the matters to be voted upon. A broker non-vote will be the equivalent of a vote “against” adopting the merger

agreement, but will have no effect on any adjournment of the special meeting, if necessary or appropriate to solicit additional proxies.

 

An abstention occurs when a stockholder abstains from voting (either in person or by proxy) on one or more of the proposals. Broker non-votes occur when a bank, broker or other nominee returns a proxy but does not have authority to vote on a particular proposal.

 

Denbury.  As of the record date for the Denbury special meeting, there were 262,392,777 shares of Denbury common stock outstanding. Directors and executive officers of Denbury beneficially owned approximately 3.2% of the outstanding shares of Denbury common stock on the record date.

 

Encore.  As of the record date for the Encore special meeting, there were 55,542,510 shares of Encore common stock outstanding. Directors and executive officers of Encore beneficially owned approximately 8.6% of the outstanding shares of Encore common stock on the record date.

 

 

You should be aware of and consider carefully the risks relating to the merger described under “Risk Factors.” These risks include possible difficulties in combining two companies that have previously operated independently.

 

 

Denbury and Encore each expect the merger to be a tax free reorganization pursuant to Section 368(a) of the Code to the extent Encore stockholders receive Denbury common stock pursuant to the merger.

 

Please review carefully the information under the caption “Material U.S. Federal Income Tax Consequences of the Merger” for a description of the material United States federal income tax consequences of the merger. The tax consequences to you will depend on your own situation. Please consult your tax advisors for a full understanding of the tax consequences of the merger to you.

 

 

The merger will be accounted for as an acquisition of Encore by Denbury using the “acquisition” method of accounting. Encore uses the successful efforts method of accounting for its oil and natural gas properties. Denbury uses, and will continue to use, post-merger, the full cost method of accounting for its oil and gas properties.

 

 

Encore stockholders will, under certain circumstances, be entitled under Delaware law to exercise appraisal rights and receive payment for the fair value of their Encore shares if the merger is completed. However, under Section 262 of the DGCL, appraisal rights are only available in connection with the merger if, among other things, holders of Encore stock are required to accept cash consideration for their Encore shares (other than cash paid in lieu of fractional shares). Accordingly, Denbury reserves the right to take the position that appraisal rights are not available if, after application of the proration provisions of the merger agreement, all stockholders who elected to receive all stock consideration and all stockholders who demanded appraisal of their shares could have received consideration consisting of only Denbury common stock and cash paid in lieu of receiving fractional shares of Denbury common stock as a result of the merger. Encore stockholders who

wish to seek appraisal of their shares are in any case urged to seek the advice of counsel with respect to the availability of appraisal rights.

 

If appraisal rights are available, Encore stockholders who desire to exercise their appraisal rights must not vote in favor of the adoption of the merger agreement, must submit a written demand for an appraisal before the vote on the adoption of the merger agreement and must continue to hold their Encore shares through the effective date of the merger. Encore stockholders must also comply with other procedures as required by Section 262 of the DGCL. If appraisal rights are available, Encore stockholders who validly demand appraisal of their shares in accordance with the DGCL and do not withdraw their demand or otherwise forfeit their appraisal rights will not receive the merger consideration. Instead, after completion of the proposed merger, the Court of Chancery of the State of Delaware will determine the fair value of their shares exclusive of any value arising from the proposed merger. This appraisal amount will be paid in cash and could be more than, the same as or less than the amount an Encore stockholder would be entitled to receive under the merger agreement.

 

The DGCL requirements for exercising appraisal rights are described in further detail in this joint proxy statement/prospectus, and the relevant section of the DGCL regarding appraisal rights is reproduced and attached as Annex D.

 

Denbury has received a financing commitment letter from J.P. Morgan and JPMorgan Chase Bank, N.A., or JPMorgan Chase, which is subject to various conditions, for a proposed new $1.6 billion senior secured revolving credit facility and a $1.25 billion bridge facility. In place of the bridge facility, on February 3, 2010, Denbury completed the public offering of $1 billion of its 81/4% Senior Subordinated Notes due 2020, which is scheduled to close on February 10, 2010. See “The Merger — Financing of the Merger” beginning on page 91 for more details on the notes offering. These financing sources will be used to fund the cash portion of the merger consideration (inclusive of payments due to Encore stock option holders), refinance certain of Encore’s existing debt, pay Encore’s severance costs, repay Denbury’s existing credit facility, pay merger-related transaction costs and provide additional liquidity. Encore will cooperate with Denbury’s efforts to secure the financing and Denbury will reimburse Encore for the expenses it incurs in performing those efforts.

 

The merger will be completed only if the conditions to the merger are satisfied or waived (if legally permissible), including, among others, the following:

 

 

 

Either party to the merger agreement may choose to complete the merger even though a condition has not been satisfied if the law allows Encore and Denbury to do so; however, neither Denbury nor Encore can give any assurance regarding when or if all of the conditions to the merger will either be satisfied or waived or that the merger will occur as intended.

 

 

The merger is subject to antitrust laws, including the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (which is referred to as the HSR Act in this joint proxy statement/prospectus). Denbury and Encore have made their respective filings under the HSR Act with the Antitrust Division of the United States Department of Justice, which is referred to as the Antitrust Division in this joint proxy statement/prospectus, and the United States Federal Trade Commission, which is referred to as the FTC in this joint proxy statement/prospectus. On November 30, 2009, the FTC granted early termination of the waiting period under the HSR Act.

 

Denbury and Encore can mutually agree to terminate the merger agreement at any time. Either Denbury or Encore can unilaterally terminate the merger agreement in various circumstances, including the following:

 

 

In addition, Encore may terminate the merger agreement if prior to the adoption of the merger agreement by Encore’s stockholders, Encore’s board of directors has effected a change in its recommendation and authorized Encore to enter into a definitive agreement with respect to a superior proposal.

 

On a termination of the merger agreement under certain circumstances, Encore may be required to pay Denbury a termination fee of either $60 million or $120 million or Denbury may be required to pay Encore a termination fee of either $60 million, $120 million or $300 million, in each case depending on the circumstances of the termination. In addition, Encore is obligated to reimburse Denbury for up to $10 million of its expenses related to the merger if specified termination events occur.

 

Encore’s directors and executive officers have interests in the merger that may be different from, or in addition to, the interests of holders of Encore common stock. These interests include certain Encore executive officers being entitled to receive specified severance and other benefits, following the effective time of the

merger. Severance benefits are paid only upon an executive officer’s termination for cause or good reason. Some of these benefits include the following:

 

Severance Benefits

 

 

Other Benefits

 

 

Encore’s board of directors was aware of these interests and considered them, among other matters, in making its recommendation. See “The Merger — Reasons for the Merger — Encore” beginning on page 55.

 

Encore and its subsidiaries will not, and Encore and its subsidiaries will direct their respective officers, directors, investment bankers, attorneys, accountants, financial advisors, agents and other representatives not to, (i) directly or indirectly initiate, solicit, knowingly encourage or knowingly facilitate an acquisition proposal, (ii) participate or engage in discussions or negotiations with, or disclose any non-public information to, any other party with respect to an acquisition proposal, (iii) accept an acquisition proposal or (iv) enter into any agreement to do any of the foregoing with respect to an acquisition proposal. However, prior to obtaining adoption of the merger agreement by Encore’s stockholders, Encore or its board of directors may take any action described in clauses (ii) — (iv) above if Encore receives an unsolicited written acquisition proposal from a third party and Encore’s board of directors determines in good faith (after consultation with its financial advisors and outside legal counsel) that the proposal constitutes, or could reasonably be expected to lead to, a transaction more favorable to its stockholders than the merger.

 

In addition, prior to adoption of the merger agreement by Encore’s stockholders, Encore’s board of directors may effect a change in its recommendation of the merger in response to (i) a superior proposal or (ii) an intervening event if Encore’s board of directors concludes in good faith (after consultation with its outside legal counsel) that a failure to withdraw its recommendation would breach its fiduciary duties under applicable law.

 

Prior to obtaining adoption of the merger agreement by Denbury’s stockholders, Denbury’s board of directors may effect a change in its recommendation of the merger in response to an intervening event if it determines in good faith (after consultation with outside legal counsel and, if appropriate, its financial advisor) that a failure to withdraw its recommendation would breach its fiduciary duties under applicable law.

 

In general, the term “intervening event” means, with respect to either party, a material event or circumstance that was not known or reasonably foreseeable to the board of directors of that party on the date of the merger agreement (or, if known, the consequences of which were not known to or reasonably foreseeable by that board of directors), which event or circumstance, or material consequences thereof, become

known to the board of directors of that party prior to the time at which that party receives the applicable stockholder approval, but in no event will any of the following constitute an intervening event:

 

 

Denbury and Encore are both Delaware corporations. Upon completion of the merger, your rights as stockholders of Denbury will be governed by its certificate of incorporation and bylaws. Encore stockholders should consider that Denbury’s certificate of incorporation and bylaws differ in some material respects from Encore’s certificate of incorporation and bylaws.

 

Denbury

 

The following table sets forth Denbury’s selected consolidated historical financial information that has been derived from (1) Denbury’s consolidated financial statements as of December 31, 2008, 2007, 2006, 2005 and 2004 and the years then ended and (2) Denbury’s consolidated financial statements as of September 30, 2009 and 2008 and the nine month periods then ended. This disclosure does not include the effects of the merger. You should read this financial information in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and its consolidated financial statements and notes thereto in Denbury’s 2008 Annual Report on Form 10-K and Quarterly Report on Form 10-Q for the quarter ended September 30, 2009 incorporated by reference in this document.

 

 

 

 

 

 

Encore

 

The following table sets forth selected consolidated historical financial information that has been derived from (1) Encore’s consolidated financial statements as of December 31, 2008, 2007, 2006, 2005 and 2004 and the years then ended and (2) Encore’s consolidated financial statements as of September 30, 2009 and 2008 and the nine months then ended. This selected historical consolidated financial data does not include the effect of the merger. You should read this financial information in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and its consolidated financial statements and notes thereto in Encore’s Current Report on Form 8-K filed January 25, 2010, and Encore’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, which are incorporated by reference in this document.

 

 

 

 

 

 

 

 

 

The following tables set forth certain historical information with respect to Denbury’s and Encore’s oil and natural gas reserves, production and other data. The following information should be read in conjunction with the information contained in the financial statements and notes thereto incorporated by reference in this joint proxy statement/prospectus.

 

Denbury