2014 PERFORMANCE CASH AWARD 2004 OMNIBUS STOCK AND INCENTIVE PLAN FOR DENBURY RESOURCES INC.

$ _________ Maximum Performance Cash    Date of Grant: January 3, 2014

This PERFORMANCE CASH AWARD (this “Award”) made effective on the Date of Grant by Denbury Resources Inc. (the “Company”) in favor of «Officer_Name» (“Holder”).

WHEREAS, in accordance with Section 17 of the 2004 Omnibus Stock and Incentive Plan for Denbury Resources Inc., as amended and/or restated (the “Plan”), the Committee may grant performance-based Awards;

WHEREAS, the Committee desires to grant to Holder an Award under which Holder can earn a maximum of $__________ based on the performance factors set forth in this Award, and subject to all of the provisions, including without limitation the Vesting provisions, of the Plan and this Award; and

WHEREAS, the Company and Holder understand and agree that this Award is in all respects subject to the terms, definitions and provisions of the Plan, all of which are incorporated herein by reference, except to the extent otherwise expressly provided in this Award.

NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties agree as follows:

(a) “Actual Reported Production” means production of oil, condensate, natural gas liquids (“NGLs”), natural gas, synthetic oil, and synthetic gas expressed on a BOE-per-day basis, as reported in each Peer Company’s and the Company’s Form 10-K for the Performance Period, excluding production generated from each such company’s equity-method investee(s), if any.

(b) “BOE” means Barrels of Oil Equivalent, and for all purposes hereof, will be calculated using the ratio of one barrel of crude oil, condensate or NGLs to six thousand cubic feet of natural gas.

(c) “Calculated Estimate of General and Administrative Expense” means for each Non-Upstream-Focused Company, individually, (i) the quotient (rounded to four decimals and expressed as a percentage) of (x) its oil and natural gas revenues derived from exploration and production activities (as disclosed in its Form 10-K for the Performance Period in accordance with Financial Accounting Standards Board Codification (“FASC”) 932-235-50 (”FAS 69”) in its Form 10-K for the Performance Period), divided by (y) its total revenues reported on its consolidated income statement in its Form 10-K for the Performance Period; multiplied by (ii) its total general and administrative expenses for the Performance Period as reported on its consolidated income statement in its Form 10-K.

(d) “Change in Future Development Costs” means for each Peer Company and the Company, future development costs at December 31, 2014 less future development costs at December 31, 2013, as reported in each Peer Company’s and the Company’s Form 10-K disclosure of its standardized measure of discounted future net cash flows from proved oil, condensate, natural gas liquid (“NGL”), natural gas, synthetic oil, and synthetic gas (or other nonrenewable natural resources that are intended to be upgraded into synthetic oil and gas) reserves.

(e) “Change in Unproved Properties” means for each Peer Company and the Company, the balance of unproved or unevaluated oil and natural gas properties at December 31, 2014 less the balance of unproved or unevaluated oil and natural gas properties at December 31, 2013, as reported on each Peer Company’s and the Company’s Form 10-K.

(f) “CO₂ Discovery and Operating Expenses” means expense related to the exploration or production of CO₂ included in the Company’s Statement of Operations in its Form 10-K.

(g) “Committee Percentage Point Reduction” means the number (if any) of Performance Percentage Points (not in excess of the Committee Percentage Point Reduction Limitation) by which the Committee reduces Holder’s Performance Percentage Points in accordance with Section 7 hereof.

(h) “Committee Percentage Point Reduction Limitation” means the lesser of (i) forty (40) Performance Percentage Points, or (ii) the product of (x) Holder’s Performance Percentage Points earned during the Performance Period as determined prior to the application of the Committee Percentage Point Reduction, multiplied by (y) twenty-five percent (25%).

(i) “Development Capital Expenditures” means, for each Fiscal Year period within the Performance Period, the sum of the amounts of the line items presented in the “Cash Flow Used for Investing Activities” (or similar) section of the Company’s Statement of Cash Flows in its Form 10-K for such Fiscal Year that represent the Company’s oil and natural gas and CO₂ development activities (which for example included in the Company’s Form 10-K for 2013 capital expenditures for oil and gas; CO₂ properties; and pipelines and plants), as such line items showing amounts of capital expenditures may change from year to year, adjusted to include the change in accruals related to those expenditures during the Fiscal Year (as disclosed in the Company’s financial statement footnotes filed in its Form 10-K). As a point of clarification, Development Capital Expenditures should include all capital expenditures incurred during the Fiscal Year, regardless of whether those capital expenditures were paid in cash during the year or recorded as a liability for future payment. Development Capital Expenditures do not include cash outflows incurred to acquire, or invest in, businesses or properties.

(j) “Disability” means, without limitation, the same as it does in the Plan.

(m) “Fiscal Year” means the 12-month period adopted by the Company for financial reporting purposes.

(n) “General and Administrative Expense” means the general and administrative expense included in the Company’s consolidated Statement of Operations in its Form 10-K filing.

(o) “Lease Operating Expense” means the lease operating expense related to the production of oil, natural gas, natural gas liquids, synthetic oil and synthetic gas included in the Company’s Statement of Operations in its Form 10-K.

(p) “Non-Upstream-Focused Company” means the Peer Companies so designated in Appendix B.

(r) “Payment Date” means the date on which Performance Cash Vested and earned under this Award is paid to Holder, which shall be any date selected by the Committee which is not later than 30 days after the Vesting Date or such later date as may be caused by unusual circumstances beyond the reasonable control of the Committee.

(s) “Performance Cash” means the amount of cash subject to this Award, as shown on the first page of this Award.

(t) “Performance Measures” include the following: the (i) Production Measure, (ii) Total Cost Measure, (iii) Capital Efficiency Ratio Measure and (iv) Reserve Replacement Measure, as set forth herein; provided, further, that when reference to a specific Performance Measure is intended, reference will be made to such specific Performance Measure.

(u) “Performance Percentage” means the excess of (i) Holder’s aggregate Performance Percentage Points, over (ii) the Committee Percentage Points Reduction, if any, determined as of the last day of the Performance Period.

(v) “Performance Percentage Points” means, collectively, the points, designated as Performance Percentage Points, earned with respect to each Performance Measure during the Performance Period.

(w) “Performance Period” means the period beginning on January 1, 2014, and ending on December 31, 2014.

(x) “Performance Period Finding and Development Cost” means, as reported in each Peer Company’s and the Company’s Form 10-K in accordance with FAS 69 for the Performance Period and excluding any costs generated by each such company’s equity method investee(s), if any, (x) the sum of (i) its property acquisition, exploration and development costs incurred (including asset retirement obligations), (ii) its Change in Future Development Costs, and (iii) its depletion and depreciation expense related to CO₂ properties and CO₂ pipelines, if any, less (y) its Change in Unproved Properties.

(y) “Performance Period Net Reserve Additions” means as reported in each Peer Company’s and the Company’s Form 10-K in accordance with FAS 69 for the Performance Period the sum of (i) its oil, condensate, NGL, natural gas, synthetic oil, synthetic gas (or other nonrenewable natural resources that are intended to be upgraded into synthetic oil and gas) proved reserve extensions and discoveries; (ii) its proved reserves from improved recovery; (iii) its revisions of previous proved reserves estimates and (iv) acquisition of minerals in place; each excluding those owned by an equity method investee(s), expressed on a BOE basis.

(z) “Performance Period Pretax Operating Income” means, (a) for Upstream-Focused Companies, pre-tax income, as reported on the consolidated Income Statement in each Peer Company’s and the Company’s Form 10-K for the Performance Period, adjusted to exclude the following items, as applicable: (i) interest income and expense; (ii) exploration expense; (iii) depletion, depreciation, amortization and accretion expense; (iv) commodity derivative gains and losses; (v) impairment charges; (vi) gains and losses incurred on the extinguishment of debt; and (vii) gains and losses incurred on the purchase or sale of assets, and (b) for Non-Upstream-Focused Companies, pre-tax income, as reported by the Peer Company or the Company in accordance with FASC 932-235-50 (previously FAS 69), adjusted to exclude the following items, as applicable: (i) interest income and expense; (ii) exploration expense; (iii) depletion, depreciation, amortization and accretion expense; (iv) commodity derivative gains and losses; (v) impairment charges; (vi) gains and losses incurred on the extinguishment of debt; (vii) gains and losses incurred on the purchase or sale of assets, and (vii) general and administrative expenses. Performance Period Pretax Operating Income for Non-Upstream-Focused Entities will also be reduced by such company’s Calculated Estimate of General and Administrative Expense. Performance Period Pretax Operating Income will include all operations of each such company, other than those related to an equity-method investment, including operations that qualify as discontinued operations under generally accepted accounting principles in the United States of America.

(aa) “Performance Period Pretax Operating Income per BOE” means for each Peer Company and for the Company, its Performance Period Pretax Operating Income divided by its Actual Reported Production.

(ab) “Plant Operating Expense” means operating expenses related to the operation of the Riley Ridge gas processing facility or other gas production or separation facilities, as reported in the Company’s trial balance.

(ac) “Post Separation Change in Control” means a Change in Control which follows Holder’s Separation, but results from the Commencement of a Change in Control that occurs prior to Holder’s Separation. For all purposes of this Award, the term “Commencement of a Change in Control” means the date on which any material action, including without limitation through a written offer, open-market bid, corporate action, proxy solicitation or otherwise, is taken by a “person” (as defined in Section 13(d) or Section 14(d)(2) of the 1934 Act), or a “group” (as defined in Section 13(d)(3) of the 1934 Act), or their affiliates, to commence efforts that, within 12 months after the date of such material action, leads to a Change in Control involving such person, group, or their affiliates.

    

(ad) “Target Performance Cash” means $_______ of Performance Cash, which is the amount of Performance Cash which will be Earned if Holder’s Performance Percentage is 100%.

(ae) “Upstream-Focused Companies” means the Company and those companies so designated in Appendix B.

(af) “Vesting Date” means March 31, 2015.

(a)Production Based Performance Percentage Points. The Performance Percentage Points which will be credited to Holder with respect to the Production Measure are set forth in the following Chart based on the Average Annual Production Percentage. The “Average Annual Production Percentage” means the quotient (rounded to four decimal places and then expressed as a percentage) of (x) the Adjusted Production for such Performance Period, divided by (y) the Production Target for such Performance Period specified in Appendix C to this Award.

(b)Adjusted Production. For purposes of this Award, the “Adjusted Production” shall be equal to (i) the Actual Reported Production of the Company as reported in the Company’s Form 10-K for the Performance Period, minus (ii) the average daily production related to a property acquired during such Performance Period, such amount to be the lesser of (a) the actual daily production for such Performance Period from the acquired property or incremental property interest (if a partial interest) or (b) the forecasted daily production (as may be publicly disclosed at the first to occur of disclosure of the Company’s agreement to purchase the property, or its purchase of the property) related thereto for such Performance Period for the property, plus (iii) that portion of the Production Target which is directly attributable to any property disposed of or sold during such Performance Period for the period during which the Company did not own the property.

(a)Total Cost Based Performance Percentage Points. The Performance Percentage Points which will be credited to Holder with respect to the Total Cost Measure are set forth in the following Chart based on the Total Cost. The “Total Cost” means (rounded to the nearest whole dollar), (i) for the Performance Period, the sum of (v) Development Capital Expenditures, (w) Lease Operating Expense, (x) Plant Operating Expense, (y) CO₂ Discovery and Operating Expense and (z) General and Administrative Expense, in each case incurred during the Performance Period plus (ii) Adjustments to Total Cost for the Performance Period.

(b)Adjustments to Total Cost. For purposes of this Award, “Adjustments to Total Cost” means (i) for properties sold during the Performance Period, the Development Capital Expenditures, Lease Operating Expense, Plant Operating Expense, CO₂ Discovery and Operating Expense, and General and Administrative Expense contained in budget for the Performance Period for that portion of such Performance Period during which the Development Capital Expenditures, Lease Operating Expense, Plant Operating Expense, CO₂ Discovery and Operating Expense, and General and Administrative expense related to such properties are not included in the Company’s cash flows or financial results minus (ii) for the Performance Period, the sum of Development Capital Expenditures, Lease Operating Expense, Plant Operating Expense, CO₂ Discovery and Operating Expense, and General and Administrative Expenses incurred by the Company related to properties acquired during the Performance Period.

(a)Capital Efficiency Ratio. The “Capital Efficiency Ratio” means, for the Company and each Peer Company, expressed as a percentage for each such company, the quotient of (i) its Performance Period Pretax Operating Income per BOE, divided by (ii) its Finding and Development Cost per BOE. The Capital Efficiency Ratio of the Company and each Peer Company is to be calculated as soon as practicable following the Performance Period. Once calculated for the Company and for each Peer Company, the exact Capital Efficiency Ratio, expressed as a percentage, for each such company shall be listed in Column 3 of the table below in descending order of their respective Capital Efficiency Ratio from the highest percentage to the lowest percentage. Column 2 of the table below shall reflect each such company’s name. The Company’s “Capital Efficiency Percentage” will be that percentage opposite the ranking of the Company in column 1 of the table below, shown in the appropriate “Number of Companies” Column. The appropriate “Number of Companies” Column is the column with the number equivalent to the sum of a) the number of Peer Companies plus b) one (the Company).

(b)Performance Percentage Points. The Performance Percentage Points which will be credited to Holder with respect to the Capital Efficiency Percentage are set forth in the following Chart:

 

The Performance Percentage Points Holder will earn with respect to the Reserve Replacement Measure will be based on the Company’s Reserve Replacement Percentage for the entire Performance Period. “Reserve Replacement Percentage” means the quotient (rounded up to 3 decimal places and then expressed as a percentage) of (i) the Company’s Final Reserves less its Initial Reserves, divided by (ii) Actual Reported Production for the Company for the Performance Period.

(a)Performance Percentage Points. The Performance Percentage Points which will be awarded Holder for the Performance Period with respect to the Reserve Replacement Measure are set forth in the following Chart:

(b)Initial Reserves. For purpose of this Award, “Initial Reserves” means the total Company proved oil, condensate, NGL, and natural gas reserve quantities as of December 31, 2013 (expressed in BOEs) as estimated by DeGolyer and MacNaughton, independent petroleum engineers, and disclosed in the Company’s Form 10-K Report for 2013.

(c)Final Reserves. For purposes of this Award, “Final Reserves” means the sum of (i) the total Company proved oil, condensate, NGL, and natural gas reserve quantities on the last day of the Performance Period (expressed in BOEs) as estimated by DeGolyer and MacNaughton or the Company’s then-current independent petroleum engineer as disclosed in the Form 10-K for the Performance Period, determined using the same price deck as was used by the Company in calculating the Initial Reserves, plus (ii) the Uneconomic Reserves, plus (iii) the Disposed Reserves, plus (iv) Total Production. The “Uneconomic Reserves” are those proved oil, condensate, NGL, and natural gas reserves (expressed in BOEs) which were included in the Initial Reserves, but are not considered proved reserves on the last day of the Performance Period solely because the price deck used to price oil and natural gas products and/or the prices used to estimate the capital costs required to develop the proved reserves as of the last day of the Performance Period have changed from those used in the Initial Reserve report such that the extraction of such otherwise proved reserves is uneconomic (i.e., Uneconomic Reserves cannot be reserves excluded from the Final Reserves because drilling activity during the period changed the status or evaluation of the reserves, or because the Company no longer holds the acreage or interest, or because factors other than commodity prices or changes in the estimated capital costs have made the project uneconomic). The “Disposed Reserves” are those proved oil, condensate, NGL, and natural gas reserves quantities (expressed in BOEs) which were sold during the Performance Period and reported as such in the Company’s Form 10-K.

Notwithstanding any provision hereof to the contrary, the Committee, in its sole discretion, by written notice to Holder prior to the Vesting Date, may reduce Holder’s otherwise earned Performance Percentage Points by applying a Committee Percentage Point Reduction.

(a)Performance Percentage Points Reduction. The Committee will make its determination of the Committee Percentage Point Reduction amount (if any) based on the Committee’s subjective evaluation of Company performance with respect to each of the four Additional Committee Evaluation Factors listed in (b) below. This evaluation will determine the amount of the Performance Percentage Points reduction (not to exceed the Committee Percentage Point Reduction Limitation) that will be the Committee Percentage Point Reduction for the Performance Period:

(b)For purposes of this Award, the “Additional Committee Evaluation Factors” are:

(a)Earned Performance Cash. The amount of Earned Performance Cash shall be equal to the product of (i) the Target Performance Cash, multiplied by (ii) the Performance Percentage. The Committee will determine and certify, and the Administrator will advise Holder, of Holder’s Performance Percentage as soon as reasonably possible thereafter.

(b)Change in Control. Notwithstanding the foregoing and any other provision hereof to the contrary, if a Change in Control occurs during the Performance Period then, regardless of the Performance Percentage at the date of the Change in Control, Holder will be entitled to receive delivery of all of the Target Performance Cash (notwithstanding any provision hereof to the contrary, none of which Target Performance Cash will be retained by the Company other than as payment for withholding) as soon as reasonably possible following such Change in Control, but in no event later than the 15th day of the third month after the end of the calendar year in which such Change in Control occurs, and Holder permanently shall forfeit the right to receive any other amounts of Performance Cash under this Award.

(a)No Separation Prior to the Vesting Date. If Holder does not Separate prior to the Vesting Date, Holder will be 100% Vested in the Earned Performance Cash.

(b)Retirement Vesting Date. In the event Holder reaches his Retirement Vesting Date prior to the Vesting Date, Holder will be entitled to receive Performance Cash in an amount equal to the Earned Performance Cash on the Vesting Date, based on the actual performance results certified by the Committee, without any right to receive any additional Performance Cash, and without any proration of the amount of Performance Cash earned in such circumstances. Notwithstanding the foregoing, in the event Holder Separates after Holder’s Retirement Vesting Date, but within 12 months of the Date of Grant, all rights to receive Performance Cash under this Award will be forfeited.

(c)Forfeiture. Except to the extent expressly provided in Sections 9(b) or (c), Holder permanently will forfeit all rights with respect to any Performance Cash upon the date of his Separation, if such Separation occurs prior to the Vesting Date.

(i)Death. If Holder Separates by reason of death prior to the Vesting Date, Holder’s Beneficiary will be entitled to receive Performance Cash in an amount equal to the Target Performance Cash (and does not have any right to receive any other amounts of Performance Cash under this Award) as soon as reasonably possible, but in no event more than 90 days after Holder’s death.

(ii)Disability. If Holder Separates by reason of a Disability prior to the Vesting Date, Holder will be entitled to receive Performance Cash in an amount equal to the Target Performance Cash (and does not have any right to receive any additional amounts of Performance Cash under this Award) as soon as reasonably possible but in no event later than the 15th day of the third month after the end of the calendar year following the Date on which the Committee determines that Holder is Disabled.

(iii)Post Separation Change in Control. If there is a Post Separation Change in Control, Holder will be entitled to receive Performance Cash in an amount equal to the Target Performance Cash (and does not have any right to receive any additional Performance Cash under this Award) as soon as reasonably possible after the date of the Change in Control but in no event later than the 15th day of the third month after the end of the calendar year in which such Change in Control occurs.

corporate structure, assets, or similar change, but only to the extent such action carries out the original purpose, intent and objectives of the Award, and, to the extent the Award is intended to qualify as “performance based” under Section 162(m) of the Internal Revenue Code, does not affect such qualification. All decisions and acts of the Committee shall be final and binding upon Holder and all other affected parties.

The undersigned hereby acknowledges (i) receipt of this Award, (ii) the opportunity to review the Plan, (iii) the opportunity to discuss this Award with a representative of the Company, and the undersigned’s personal advisors, to the extent the undersigned deems necessary or appropriate, (iv) the understanding of the terms and provisions of the Award and the Plan, and (v) the understanding that, by the undersigned’s signature below, the undersigned is agreeing to be bound by all of the terms and provisions of this Award and the Plan.

Without limitation, the undersigned agrees to accept as binding, conclusive and final all decisions, factual determinations, and/or interpretations (including, without limitation, all interpretations of the meaning of provisions of the Plan, or Award, or both) of the Committee regarding any questions arising under the Plan, or this Award, or both.