Edgar Filing: DENBURY RESOURCES INC

Filed Pursuant to Rule 424(b)(3)
Registration Number 333-107676

PROSPECTUS SUPPLEMENT

(To Prospectus Supplement dated January 13, 2004)

9,274,314 Shares

(DENBURY RESOURCES INC. LOGO)

DENBURY RESOURCES INC.

Common Stock

--------------------------------------------------------------------------------

The selling shareholders named in this prospectus supplement are selling
9,274,314 shares of common stock of Denbury Resources Inc. We will not receive
any of the proceeds from the sale of these shares.

Our common stock is listed on the New York Stock Exchange under the symbol
"DNR." On March 22, 2004, the last reported sale price of our common stock on
the New York Stock Exchange was $15.58 per share.

Investing in the shares involves risks. See "Risk Factors" beginning on page S-4
of this prospectus supplement and page 1 of the accompanying prospectus.

PER SHARE TOTAL
--------- ------------

Price to public............................................. $15.17 $140,691,343
Underwriting discounts and commissions...................... $ 0.15 $ 1,391,147
Proceeds, before expenses, to selling shareholders.......... $15.02 $139,300,196

Denbury has agreed to pay expenses incurred by the selling shareholders in
connection with this offering.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

Lehman Brothers expects to deliver the shares on or about March 26, 2004.

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LEHMAN BROTHERS

March 22, 2004

TABLE OF CONTENTS

PAGE
----

PROSPECTUS SUPPLEMENT
Summary..................................................... S-1
Risk Factors................................................ S-4
Use of Proceeds............................................. S-10
Selling Shareholders........................................ S-10
Underwriting................................................ S-11
Legal Matters............................................... S-12
Glossary.................................................... S-13

PROSPECTUS
About This Prospectus....................................... i
Where You Can Find More Information......................... i
Risk Factors................................................ 1
Forward-Looking Statements.................................. 2
The Company................................................. 3
Use of Proceeds............................................. 4
Description of Capital Stock................................ 4
Selling Shareholders........................................ 6
Plan of Distribution........................................ 7
Legal Opinions.............................................. 8
Experts..................................................... 8

This document is in two parts. The first part is this prospectus
supplement, which describes the specific terms of this offering. The second part
is the accompanying prospectus, which gives a general description of the common
stock held by the selling shareholders. If the description of the offering
varies between this prospectus supplement and the accompanying prospectus, you
should rely on the information in this prospectus supplement.

You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We have
not authorized anyone to provide you with additional or different information.
If anyone provides you with additional, different or inconsistent information,
you should not rely on it. The selling shareholders are offering to sell the
shares, and seeking offers to buy the shares, only in jurisdictions where offers
and sales are permitted. You should not assume that the information we have
included in this prospectus supplement or the accompanying prospectus is
accurate as of any date other than the dates shown in these documents or that
any information we have incorporated by reference is accurate as of any date
other than the date of the document incorporated by reference. Our business,
financial condition, results of operations and prospects may have changed since
that date.

SUMMARY

This summary does not contain all of the information that you should
consider before investing in our common stock. You should read this entire
prospectus supplement and the accompanying prospectus carefully, including the
matters discussed under the caption "Risk Factors" and the detailed information
and financial statements included or incorporated by reference in this
prospectus supplement and the accompanying prospectus. When used in this
prospectus supplement, the terms "we," "our" and "us" except as otherwise
indicated or as the context otherwise indicates, refer to Denbury Resources Inc.
and its subsidiaries. Oil and natural gas terms used in this prospectus
supplement are defined in the "Glossary" section.

THE COMPANY

We are an independent oil and natural gas company engaged in acquisition,
development and exploration activities in the U.S. Gulf Coast region. We are the
largest producer of oil and natural gas in Mississippi and have significant
operations onshore Louisiana and in the offshore Gulf of Mexico. Our strategy is
to increase the value of our properties in our core areas through a combination
of acquisitions, exploitation, drilling and proven engineering extraction
processes, including secondary (waterflood) and tertiary (carbon dioxide or
CO(2) injection) recovery techniques.

We believe that CO(2) flooding is the most efficient tertiary recovery
mechanism for crude oil. Our ownership of critical CO(2) assets, our dominant
position as the largest producer in Mississippi and our inventory of prospects
have positioned us to increase our reserves there at attractive finding costs.
In our CO(2) operations in Mississippi, we believe that there are significant
additional reserves in fields controlled by us along our CO(2) pipeline in
addition to our proved reserves in this area.

We have a well-balanced portfolio of development, exploitation and
exploration projects, including long-lived oil and shorter-lived natural gas
properties. We operate our largest fields, which gives us a significant
advantage through being able to control our cost structure and the timing of
major operational decisions. A key to our growth has been our strategy of
exploitation and development of acquired properties, with a goal of doubling the
reserves in place at the time of acquisition.

As of December 31, 2003, we had estimated proved reserves of 128.2 MMBOE,
with a PV-10 Value of $1.57 billion. Of these proved reserves, 61% are proved
developed and 29% are natural gas. Our fourth quarter 2003 average production
was 34,590 BOE/d, which was 55% oil and 45% natural gas. From December 31, 1999
through December 31, 2003, we had a 12% compounded annual growth rate in net
asset value per share, based on the year-end PV-10 Value of our proved reserves
using constant prices of $27.50 per barrel of oil and $4.50 per Mcf of natural
gas in each period. We are continuing to focus upon growth in our net asset
value per share, through both debt reduction and increases in our reserve value
using constant prices.

We manage our operations and financial resources conservatively to enable
us to execute our business plan over the entire commodity price cycle. Our goal
is to maintain a ratio of debt to operating cash flow of not more than
approximately 2.0 to 1.0. We hedge a portion of our commodity price risk to help
protect a base level of cash flow for budgeted capital expenditures and
projected economics of properties we acquire.

Effective December 29, 2003, we completed a tax-free internal
reorganization to form a holding company structure. The reorganization did not
affect our listing on the NYSE, nor did it affect our shareholders' proportional
ownership of us, their stock certificates or their rights and interests in us.

2003 RESULTS AND RECENT DEVELOPMENTS

Our earnings for 2003 were $56.6 million or $1.05 per share, a 21% increase
over 2002 net income of $46.8 million or $0.88 per share. For 2003, higher
commodity prices more than offset a 2% decline in production and higher
operating expenses, resulting in a 24% increase in cash flow from operations as
compared to 2002. Finding costs and the related depreciation and amortization
expense on a per BOE basis increased in 2003 because of higher expenditure
levels in 2003 than in 2002 in the offshore Gulf of Mexico,

S-1

which typically has higher finding costs, and because some of our higher
potential exploration targets failed to materialize. Our finding and development
costs related to our tertiary operations were relatively low (just over $5.00
per BOE for 2003 including the related future development costs), but they were
not sufficient to offset the higher finding and development costs of the
offshore and other natural gas properties.

In March 2004, we hired an investment banker to assist us with the sale of
our offshore Gulf of Mexico operations to better focus on our core operations,
particularly our tertiary recovery properties. No buyer has been identified as
yet, and if the sales price is less than anticipated, we may withdraw the sales
package. As of December 31, 2003, our offshore properties that we intend to sell
included interests in 81 producing wells, which had average daily production
during 2003 of 45.5 million cubic feet of natural gas equivalent per day
("MMcfe/d"), although with our recent well completions offshore, production for
January and February averaged just over 50 MMcfe/d. As of December 31, 2003, we
had 96.1 Bcfe of proved reserves offshore.

Our principal executive office is located at 5100 Tennyson Parkway, Suite
3000, Plano, Texas 75024 and our telephone number is 972-673-2000.

S-2

THE OFFERING

Common stock offered by the
selling shareholders: 9,274,314 shares

Common stock outstanding on
March 15, 2004: 54.5 million shares(1)

Use of proceeds: We will not receive any of the proceeds from
the sale of shares by the selling shareholders.
The selling shareholders will receive all net
proceeds from the sale of shares of our common
stock offered in this prospectus supplement.

New York Stock Exchange
symbol: DNR
---------------

(1) As of March 15, 2004, options to acquire approximately 5.9 million shares of
common stock at a weighted average exercise price of $10.12 per share were
outstanding.

S-3

RISK FACTORS

There are a number of risks associated with investing in Denbury and in our
industry. You should consider carefully the following risk factors, in addition
to the risk factors and other information contained in this prospectus
supplement, in the accompanying prospectus and in the documents that are
incorporated by reference, before you decide to purchase our stock.

OIL AND NATURAL GAS PRICES ARE VOLATILE. A SUBSTANTIAL DECREASE IN OIL AND
NATURAL GAS PRICES COULD ADVERSELY AFFECT OUR FINANCIAL RESULTS.

Our future financial condition, results of operations and the carrying
value of our oil and natural gas properties depend primarily upon the prices we
receive for our oil and natural gas production. Oil and natural gas prices
historically have been volatile and are likely to continue to be volatile in the
future, especially given current world geopolitical conditions. Our cash flow
from operations is highly dependent on the prices that we receive for oil and
natural gas. This price volatility also affects the amount of our cash flow
available for capital expenditures and our ability to borrow money or raise
additional capital. The amount we are able to borrow or have outstanding under
our bank credit facility is subject to semi-annual redeterminations based on
current prices at the time of redetermination. In the short-term, our production
is relatively balanced between oil and natural gas, but long-term, oil prices
are likely to affect us more than natural gas prices because approximately 71%
of our reserves are oil. The prices for oil and natural gas are subject to a
variety of additional factors that are beyond our control. These factors
include:

- the level of consumer demand for oil and natural gas;

- the domestic and foreign supply of oil and natural gas;

- the ability of the members of the Organization of Petroleum Exporting
Countries to agree to and maintain oil price and production controls;

- the price of foreign oil and natural gas;

- domestic governmental regulations and taxes;

- the price and availability of alternative fuel sources;

- weather conditions;

- market uncertainty;

- political conditions or hostilities in oil and natural gas producing
regions, including the Middle East; and

- worldwide economic conditions.

These factors and the volatility of the energy markets generally make it
extremely difficult 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 oil and natural gas that we can produce
economically and, as a result, could have a material adverse effect on our
financial condition, results of operations and reserves. If the oil and natural
gas industry experiences significant price declines, we may, among other things,
be unable to meet our financial obligations or make planned expenditures.

WE COULD INCUR A WRITE-DOWN OF THE CARRYING VALUES OF OUR PROPERTIES IN THE
FUTURE DEPENDING ON OIL AND NATURAL GAS PRICES, WHICH COULD NEGATIVELY IMPACT
OUR NET INCOME.

Under the full cost method of accounting, SEC accounting rules require us
to review the carrying value of our oil and gas properties on a quarterly basis
for possible write-down or impairment. Under these rules, capitalized costs of
proved reserves may not exceed a ceiling calculated at the present value of
estimated future net revenues from those proved reserves, determined using a 10%
per year discount and unescalated prices in effect as of the end of each fiscal
quarter (PV-10 Value). Capital costs in excess of the ceiling must be
permanently written down. The changes in oil and natural gas prices have a
significant impact on our
S-4

PV-10 Value, and thus a decline in prices could cause a write-down which would
negatively affect our net income.

OUR PRODUCTION WILL DECLINE IF OUR ACCESS TO SUFFICIENT AMOUNTS OF CARBON
DIOXIDE IS LIMITED.

The crude oil production from our tertiary recovery projects depends on our
having access to sufficient amounts of CO(2). Our ability to produce this oil
would be hindered if our supply of CO(2) were limited due to problems with our
current CO(2) producing wells and facilities, including compression equipment,
or catastrophic pipeline failure. Our anticipated future production growth is
also dependent on our ability to increase the production volumes of CO(2). If
our crude oil production were to decline, it could have a material adverse
effect on our financial condition and results of operations.

ESTIMATING OUR RESERVES, PRODUCTION AND FUTURE NET CASH FLOW IS DIFFICULT TO DO
WITH ANY CERTAINTY.

Estimating quantities of proved oil and natural gas reserves is a complex
process. It requires interpretations of available technical data and various
assumptions, including assumptions relating to economic factors, such as future
commodity prices, production costs, severance and excise taxes, capital
expenditures and workover and remedial costs, and the assumed effect of
governmental regulation. There are numerous uncertainties about when a property
may have proved reserves as compared to potential or probable reserves,
particularly relating to our tertiary recovery operations. Actual results most
likely will vary from our estimates. Also, the use of a 10% discount factor for
reporting purposes, as prescribed by the SEC, may not necessarily represent the
most appropriate discount factor, given actual interest rates and risks to which
our business or the oil and natural gas industry in general are subject. Any
significant inaccuracies in these interpretations or assumptions or changes of
conditions could cause the quantities and net present value of our reserves to
be overstated.

The reserve data included in documents incorporated by reference represent
only estimates. You should not assume that the present values referred to in
this prospectus supplement and other documents incorporated by reference
represent the current market value of our estimated oil and natural gas
reserves. In accordance with requirements of the SEC, the estimates of present
values are based on prices and costs as of the date of the estimates. Actual
future prices and costs may be materially higher or lower than the prices and
cost as of the date of the estimate.

At December 31, 2003, approximately 39% of our estimated proved reserves
were undeveloped. Recovery of undeveloped reserves requires significant capital
expenditures and may require successful drilling operations. The reserve data
assumes that we can and will make these expenditures and conduct these
operations successfully, but these assumptions may not be accurate, and this may
not occur.

OUR FUTURE PERFORMANCE DEPENDS UPON OUR ABILITY TO FIND OR ACQUIRE ADDITIONAL
OIL AND NATURAL GAS RESERVES THAT ARE ECONOMICALLY RECOVERABLE AND HAVING THE
CAPITAL RESOURCES TO DEVELOP THESE RESERVES.

Unless we successfully replace the reserves that we produce, our reserves
will decline, resulting eventually in a decrease in oil and natural gas
production and lower revenues and cash flows from operations. We historically
have replaced reserves through both drilling and acquisitions. We may not be
able to continue to replace reserves at acceptable costs. The business of
exploring for, developing or acquiring reserves is capital intensive. We may not
be able to make the necessary capital investment to maintain or expand our oil
and natural gas reserves if cash flows from operations are reduced, due to lower
oil or natural gas prices or otherwise, or if external sources of capital become
limited or unavailable. Further, the process of using CO(2) for tertiary
recovery and the related infrastructure requires significant capital investment,
often one to two years prior to any resulting production and cash flows from
these projects, heightening potential capital constraints. If we do not continue
to make significant capital expenditures, or if our outside capital resources
become limited, we may not be able to maintain our growth rate. In addition, our
drilling activities are subject to numerous risks, including the risk that no
commercially productive oil or natural gas reserves will be encountered.
Exploratory drilling involves more risk than development drilling because
exploratory drilling is designed to test formations for which proved reserves
have not been discovered.

S-5

OUR FAILURE, IN THE LONG TERM, TO COMPLETE FUTURE ACQUISITIONS SUCCESSFULLY
COULD REDUCE OUR EARNINGS AND SLOW OUR GROWTH.

Acquisitions are an essential part of our long-term growth strategy, and
our ability to acquire additional properties on favorable terms is key to our
long-term growth. There is intense competition for acquisition opportunities in
our industry. The level of competition varies depending on numerous factors.
Depending on conditions in the acquisition market, it may be difficult or
impossible for us to identify properties for acquisition or we may not be able
to make acquisitions on terms that we consider economically acceptable.
Competition for acquisitions may increase the cost of, or cause us to refrain
from, completing acquisitions. Our strategy of completing acquisitions is
dependent upon, among other things, our ability to obtain debt and equity
financing and, in some cases, regulatory approvals. Our ability to pursue our
long-term growth strategy may be hindered if we are not able to obtain financing
or regulatory approvals. Our ability to grow through acquisitions and manage
growth will require us to continue to invest in operational, financial and
management information systems and to attract, retain, motivate and effectively
manage our employees. The inability to manage the integration of acquisitions
effectively could reduce our focus on subsequent acquisitions and current
operations, which, in turn, could negatively impact our earnings and growth. Our
financial position and results of operations may fluctuate significantly from
period to period, based on whether or not significant acquisitions are completed
in particular periods.

THERE ARE RISKS IN ACQUIRING OIL AND NATURAL GAS PROPERTIES.

Our long-term business strategy includes growing our reserve base through
acquisitions. We are continually identifying and evaluating acquisition
opportunities such as our August 2002 COHO acquisition and the acquisition of
Matrix Oil and Gas, Inc. in 2001. However, the magnitude of these acquisitions,
together with the inherent difficulty in evaluating the acquired properties and
forecasting reserves, may result in our inability to achieve or maintain
targeted production levels. In that case, our ability to realize the total
economic benefit from an acquisition may be reduced or eliminated.

The acquisition of oil and gas properties involves uncertainties and
requires an assessment of several factors, including recoverable reserves,
future oil and gas prices, operating costs, potential environmental and other
liabilities and other factors beyond our control. These assessments are
necessarily inexact, and it is generally not possible to review in detail every
individual property involved in an acquisition. We generally assume preclosing
liabilities and often are not entitled to contractual indemnification for
preclosing liabilities, including environmental liabilities. Often, we acquire
interests in properties on an "as is" basis with limited or no remedies for
breaches of representations and warranties. Price volatility also makes it
difficult to budget for and project the return on acquisitions and development
and exploration projects. We will not be able to assure you that our
acquisitions will achieve desired profitability objectives. We may assume
cleanup or reclamation obligations in connection with these acquisitions, and
the scope and cost of these obligations may ultimately be materially greater
than estimated at the time of the acquisition.

Acquisitions may involve a number of other special risks, including:

- diversion of management attention from existing operations;

- unexpected losses of key employees, customers and suppliers of the
acquired business;

- conforming the financial, technological and management standards,
processes, procedures and controls of the acquired business with those of
our existing operations; and

- increasing the scope, geographic diversity and complexity of our
operations.

OIL AND NATURAL GAS DRILLING AND PRODUCING OPERATIONS INVOLVE VARIOUS RISKS.

Drilling activities are subject to many risks, including the risk that no
commercially productive reservoirs will be discovered. There can be no assurance
that new wells drilled by us will be productive or that we will recover all or
any portion of our investment in such wells. Drilling for oil and natural gas
may involve unprofitable efforts, not only from dry wells but also from wells
that are productive but do not produce

S-6

sufficient net reserves to return a profit after deducting drilling, operating
and other costs. The seismic data and other technologies we use do not allow us
to know conclusively prior to drilling a well that oil or natural gas is present
or may be produced economically. The cost of drilling, completing and operating
a well is often uncertain, and cost factors can adversely affect the economics
of a project. Further, our drilling operations may be curtailed, delayed or
canceled as a result of numerous factors, including:

- unexpected drilling conditions;

- title problems;

- pressure or irregularities in formations;

- equipment failures or accidents;

- adverse weather conditions;

- compliance with environmental and other governmental requirements; and

- cost of, or shortages or delays in the availability of, drilling rigs,
equipment and services.

Our operations are subject to all 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 well blowouts, cratering and
explosions, pipe failure, fires, formations with abnormal pressures,
uncontrollable flows of oil, natural gas, brine or well fluids, release of
contaminants into the environment and other environmental hazards and risks.

The nature of these risks is such that some liabilities could exceed our
insurance policy limits, or, as in the case of environmental fines and
penalties, cannot be insured. We could incur significant costs that could have a
material adverse effect upon our financial condition due to these risks.

Our CO(2) tertiary recovery projects require a significant amount of
electricity to operate the facilities. If these costs were to increase
significantly, it could have a material adverse effect upon the profitability of
these operations.

WE ARE SUBJECT TO COMPLEX FEDERAL, STATE AND LOCAL LAWS AND REGULATIONS THAT
COULD ADVERSELY AFFECT OUR BUSINESS.

Exploration for and development, exploitation, production and sale of oil
and natural gas in the United States are subject to extensive federal, state and
local laws and regulations, including complex tax laws and environmental laws
and regulations. Existing laws or regulations, as currently interpreted or
reinterpreted in the future, or future laws or regulations could harm our
business, results of operations and financial condition. We may be required to
make large expenditures to comply with environmental and other governmental
regulations. In addition, in connection with the Matrix acquisition, we acquired
several offshore properties which are regulated by the Minerals Management
Service of the U.S. Department of Interior. Accordingly, our offshore properties
will undergo more frequent on-site governmental reviews and will be subject to a
greater number of compliance procedures, which could result in increased
compliance or operating costs or production being delayed or suspended.

Matters subject to regulation include oil and gas production and saltwater
disposal operations and our processing, handling and disposal of hazardous
materials, such as hydrocarbons and naturally occurring radioactive materials,
discharge permits for drilling operations, spacing of wells, environmental
protection, reports concerning operations, and taxation. Under these laws and
regulations, we could be liable for personal injuries, property damage, oil
spills, discharge of hazardous materials, reclamation costs, remediation and
clean-up costs and other environmental damages.

S-7

SHORTAGES OF OIL FIELD EQUIPMENT, SERVICES AND QUALIFIED PERSONNEL COULD REDUCE
OUR CASH FLOW AND ADVERSELY AFFECT RESULTS OF OPERATIONS.

The demand for qualified and experienced field personnel to drill wells and
conduct field operations, geologists, geophysicists, engineers and other
professionals in the oil and natural gas industry can fluctuate significantly,
often in correlation with oil and natural gas prices, causing periodic
shortages. There have also been shortages of drilling rigs and other equipment,
as demand for rigs and equipment has increased along with the number of wells
being drilled. These factors also cause significant increases in costs for
equipment, services and personnel. Higher oil and natural gas prices generally
stimulate increased demand and result in increased prices for drilling rigs,
crews and associated supplies, equipment and services. We cannot be certain when
we will experience these issues and these types of shortages or price increases
could significantly decrease our profit margin, cash flow and operating results
or restrict our ability to drill those wells and conduct those operations which
we currently have planned and budgeted.

WE DEPEND ON OUR KEY PERSONNEL.

We believe our continued success depends on the collective abilities and
efforts of our senior management. The loss of one or more key personnel could
have a material adverse effect on our results of operations. We do not have any
employment agreements and do not maintain any key man life insurance policies.
Additionally, if we are unable to find, hire and retain needed key personnel in
the future, our results of operations could be materially and adversely
affected.

AFTER THIS OFFERING, REPRESENTATIVES OF THE TEXAS PACIFIC GROUP WILL HAVE THE
ABILITY TO BLOCK SIGNIFICANT TRANSACTIONS OR CORPORATE ACTIONS.

Representatives of the Texas Pacific Group currently hold three of eight
seats on our board of directors, and two of their representatives have been
nominated to stand for election to a reduced six-member board at our upcoming
annual meeting scheduled for May 12, 2004. Our certificate of incorporation
requires a two-thirds majority vote by the board of directors on many
significant transactions, including amending our charter or bylaws, issuing
equity securities, creating any series of preferred stock, issuing debt in
excess of 10% of our assets, making acquisitions or dispositions with a purchase
price in excess of 20% of our assets, or increasing or decreasing the size of
our board. As a result of these provisions of our certificate of incorporation,
representatives of the Texas Pacific Group now have, and after our upcoming
annual meeting likely will still have, a significant influence on our business
and affairs and possess the potential ability to join with another director to
block future transactions, issuances of securities or changes in our
organizational documents.

OUR LEVEL OF INDEBTEDNESS MAY ADVERSELY AFFECT OPERATIONS AND LIMIT OUR GROWTH.

As of March 22, 2004, we had approximately $140 million of borrowing
capacity available under our bank credit facility at the current borrowing base
of $220 million. The next semi-annual redetermination of the borrowing base will
be on April 1, 2004. Our bank borrowing base is adjusted at the banks'
discretion and is based in part upon external factors over which we have no
control. In the event our then redetermined borrowing base is less than our
outstanding borrowings under the facility, we will be required to repay the
deficit over a period of six months. We may also incur additional indebtedness
in the future under our bank credit facility in connection with our acquisition,
development, exploitation and exploration of oil and natural gas producing
properties.

As of December 31, 2003 our long-term debt comprised approximately 40% of
our total capitalization (excluding accumulated other comprehensive loss
included in stockholders' equity on our balance sheet).

If oil and natural gas prices were to decline significantly, particularly
for an extended period of time, our degree of leverage could increase
substantially. This could have important consequences to shareholders, including
but not limited to, reduced cash flow, which could reduce our capital
expenditures, our future production growth, our ability to borrow funds, and
increase our vulnerability to general economic conditions.

S-8

OUR USE OF HEDGING ARRANGEMENTS COULD RESULT IN FINANCIAL LOSSES OR REDUCE OUR
INCOME.

To reduce our exposure to fluctuations in the prices of oil and natural
gas, we currently and may in the future enter into hedging arrangements for a
portion of our oil and natural gas production. Hedging arrangements expose us to
risk of financial loss in some circumstances, including when:

- production is less than expected;

- the counter-party to the hedging contract defaults on its contract
obligations (as was the case with respect to our hedges placed in 2001
with an Enron subsidiary as counter-party, which resulted in our
suffering a loss); or

- there is a change in the expected differential between the underlying
price in the hedging agreement and actual prices received.

In addition, these hedging arrangements may limit the benefit we would
receive from increases in the prices for oil and natural gas.

THE LOSS OF MORE THAN ONE OF OUR LARGE OIL AND NATURAL GAS PURCHASERS COULD HAVE
A MATERIAL ADVERSE EFFECT ON OUR OPERATIONS.

For the year ended December 31, 2003, two purchasers each accounted for
more than 10% of our oil and natural gas revenues and in the aggregate, for 28%
of these revenues. A loss of these purchasers could have a material adverse
effect on the prices that we are able to obtain on our production.

S-9

USE OF PROCEEDS

We will not receive any of the proceeds from the sale of shares by the
selling shareholders. The selling shareholders will receive all net proceeds
from the sale of shares of our common stock offered in this prospectus
supplement.

SELLING SHAREHOLDERS

The following table sets forth information concerning ownership of our
capital stock as of March 15, 2004 by each selling stockholder. As of March 15,
2004, there were approximately 54.5 million shares of our common stock
outstanding. The percentages shown below reflect the selling shareholders'
ownership of our issued and outstanding common stock.

SHARES OWNED
IMMEDIATELY AFTER
SHARES OWNED AS OF SALE OF ALL SHARES
MARCH 15, 2004 TO BE OFFERED
----------------------- --------------------
PERCENT OF SHARES TO BE PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER(1) SHARES OUTSTANDING OFFERED SHARES OUTSTANDING
--------------------------------------- --------- ----------- ------------ ------ -----------

TPG Partners, L.P. .................... 2,696,861 4.9% 2,696,861 0 0%
TPG Parallel I, L.P. .................. 268,762 * 268,762 0 0%
TPG Investors II, L.P. ................ 560,682 1.0% 560,682 0 0%
TPG Parallel II, L.P. ................. 366,813 * 366,813 0 0%
TPG Partners II, L.P. ................. 5,375,140 9.9% 5,375,140 0 0%
TPG 1999 Equity Partners II, L.P. ..... 6,056 * 6,056 0 0%
--------- ---- --------- ---- ----
Texas Pacific Group Totals............. 9,274,314 17.0% 9,274,314 0 0%
========= ==== ========= ==== ====

---------------

* Less than one percent

(1) TPG Advisors, Inc. is the sole general partner of TPG GenPar, L.P., which in
turn is the sole general partner of TPG Partners, L.P. and TPG Parallel I,
L.P. TPG Advisors II, Inc. is the sole general partner of TPG 1999 Equity
Partners II, L.P. and TPG GenPar II, L.P., which in turn is the sole general
partner of TPG Investors II, L.P., TPG Parallel II, L.P., and TPG Partners
II, L.P. Messrs. David Bonderman, a former director of Denbury, William
Price, a director of Denbury and James Coulter are the sole directors and
shareholders of TPG Advisors, Inc. and TPG Advisors II, Inc. The address for
all of the selling shareholders listed above is 301 Commerce Street, Suite
3300, Fort Worth, Texas 76102.

As of March 15, 2004, TPG held approximately 17% of our outstanding common
stock, and representatives of TPG occupied three of eight seats on our board of
directors, giving them significant influence over our corporate and management
polices and enough voting power on our board of directors to veto actions
requiring two-thirds board approval, such as mergers, consolidations, sales of
all or substantially all of our assets, asset purchases and equity or debt
issuances. Since December 1995, TPG has made four separate investments in our
common stock.

S-10

UNDERWRITING

We and the selling shareholders have entered into an underwriting agreement
with Lehman Brothers Inc. ("Lehman Brothers"), as underwriter, with respect to
the shares being offered by this prospectus supplement. Subject to certain
conditions, the selling shareholders have agreed to sell to Lehman Brothers, and
Lehman Brothers has agreed to purchase from the selling shareholders, the
9,274,314 shares of common stock offered hereby. The underwriting agreement
provides that the obligations of the underwriter are subject to conditions that
the underwriter will purchase all of the shares of common stock offered hereby,
if any of these shares are purchased.

COMMISSIONS AND EXPENSES

We have been advised by the underwriter that it proposes to offer the
shares directly to the public at the price to public presented on the cover of
this prospectus supplement and to selected dealers at the offering price less a
selling concession not in excess of $0.09 per share. After the offering, the
underwriter may change the public offering price and other offering terms.

The following table summarizes the underwriting discounts and commissions
the selling shareholders will pay to the underwriter. The underwriting fee is
the difference between the initial price to the public and the amount the
underwriter pays the selling shareholders for the shares.

Per share........................................ $0.15
Total............................................ $1,391,147

We estimate that the total expenses of the offering, excluding underwriting
discounts and commissions, will be approximately $125,000. We have agreed to pay
expenses incurred in connection with the offering that are customarily paid by
the registering company. We will not pay any underwriting discounts or
commissions.

NEW YORK STOCK EXCHANGE LISTING

Our common stock is traded on the New York Stock Exchange under the symbol
"DNR."

ELECTRONIC DISTRIBUTIONS

A prospectus in electronic format may be made available on the Internet
sites or through other online services maintained by Lehman Brothers and/or
selling group members participating in this offering, or by their affiliates. In
those cases, prospective investors may view offering terms online and, depending
upon the particular underwriter or selling group member, prospective investors
may be allowed to place orders online. Lehman Brothers may agree with the
selling shareholders to allocate a specific number of shares for sale to online
brokerage account holders. Any such allocation for online distributions will be
made by Lehman Brothers on the same basis as other allocations.

Other than this prospectus supplement and the accompanying prospectus in
electronic format, the information on Lehman Brothers' or any selling group
member's Web site and any information contained in any other Web site maintained
by Lehman Brothers or a selling group member is not part of this prospectus
supplement or the accompanying prospectus or the registration statement of which
they form a part, has not been approved and/or endorsed by us or Lehman Brothers
or any selling group member in its capacity as underwriter or selling group
member and should not be relied upon by investors.

STAMP TAXES

Purchasers of the shares of our common stock offered by this prospectus
supplement may be required to pay stamp taxes and other charges under the laws
and practices of the country of purchase, in addition to the offering prices
described on the cover of this prospectus supplement. Accordingly, we urge you
to consult a tax advisor with respect to whether you may be required to pay
those taxes or charges, as well as any other tax consequences that may arise
under the laws of the country of purchase.

S-11

STABILIZATION AND SHORT POSITIONS

In connection with this offering, the underwriter may engage in
over-allotment, stabilizing transactions and covering transactions, or purchases
for the purpose of pegging, fixing or maintaining the price of the shares of
common stock offered hereby, in accordance with Regulation M under the
Securities Exchange Act of 1934, as amended:

- Over-allotment involves sales by the underwriter of shares of common
stock in excess of the number of shares the underwriter is obligated to
purchase, which creates a short position. The underwriter may close out
any short position by purchasing shares of common stock in the open
market.

- Stabilizing transactions permit bids to purchase the underlying security
so long as the stabilizing bids do not exceed a specified maximum.

- Covering transactions involve purchases of the shares in the open market
after the distribution has been completed in order to cover short
positions.

These stabilizing transactions and covering transactions may have the
effect of raising or maintaining the market price of our common stock or
preventing or retarding a decline in the market price of our common stock. As a
result, the price of our common stock may be higher than the price that might
otherwise exist in the open market. These transactions, if commenced, may be
discontinued at any time.

Neither we nor the underwriter make any representation or prediction as to
the direction or magnitude of any effect that the transactions described above
may have on the price of our common stock. In addition, neither we nor the
underwriter make any representation that the underwriter will engage in these
stabilizing transactions or that any transaction, once commenced, will not be
discontinued without notice.

INDEMNIFICATION

We and the selling shareholders have agreed to indemnify the underwriter
against some specified types of liabilities, including liabilities under the
Securities Act, and to contribute to payments the underwriter may be required to
make in respect of these liabilities.

LEGAL MATTERS

The validity of the shares of common stock to be sold in the offering will
be passed upon for us by our counsel, Jenkens and Gilchrist, A Professional
Corporation, Houston, Texas. Certain legal matters in connection with the
offering will be passed upon for the underwriter by Andrews Kurth LLP, Houston,
Texas.

S-12

GLOSSARY

The terms defined in this section are used throughout this prospectus
supplement:

Bbl One stock tank barrel of 42 U.S. gallons liquid
volume, used herein in reference to crude oil
or other liquid hydrocarbons.

Bcfe One billion cubic feet of natural gas
equivalent using the ratio of one barrel of
crude oil, condensate of natural gas liquids to
6Mcf of natural gas.

BOE One barrel of oil equivalent using the ratio of
one barrel of crude oil, condensate or natural
gas liquids to 6Mcf of natural gas.

BOE/d BOEs produced per day.

Mcf One thousand cubic feet of natural gas.

MMBOE One million BOEs.

MMcfe/d One million cubic feet of natural gas
equivalent using the ratio of one barrel of
crude oil, condensate or natural gas liquids to
6Mcf of natural gas produced per day.

PV-10 Value When used with respect to oil and natural gas
reserves, PV-10 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, before income taxes, and without giving
effect to non-property-related expenses,
discounted to a present value using an annual
discount rate of 10% in accordance with the
guidelines of the Securities and Exchange
Commission.

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.

Proved Undeveloped Reserves Reserves that are expected to be recovered from
new wells on undrilled acreage or from existing
wells where a relatively major expenditure is
required.

S-13

PROSPECTUS

17,274,314 SHARES

(DENBURY RESOURCES INC. LOGO)

DENBURY RESOURCES INC.

COMMON STOCK

The selling shareholders named in this prospectus may sell up to 17,274,314
shares of common stock of Denbury from time to time under this prospectus.
Denbury will not receive any of the proceeds from the sale of the common stock
by the selling shareholders.

We will provide specific terms of offerings of common stock hereunder in
supplements to this prospectus, which will include the initial offering price,
aggregate amount of the offering, risk factors and the agents, dealers or
underwriters, if any, to be used in connection with the sale of these common
stock. You should read this prospectus and any supplement carefully before you
invest.

Our common stock is traded on the New York Stock Exchange under the symbol
"DNR."

This prospectus may not be used to sell common stock unless accompanied by
a supplement to this prospectus.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES, OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

The date of this prospectus is January 13, 2004

You should rely only on the information contained in or incorporated by
reference in this prospectus and in any prospectus supplement. We have not
authorized anyone to provide you with different information. We are not making
an offer of this common stock in any state where the offer is not permitted. You
should not assume that the information contained in or incorporated by reference
in this prospectus is accurate as of any date other than the date on the front
of this prospectus or the applicable prospectus supplement.

TABLE OF CONTENTS

PAGE
----

About This Prospectus....................................... i
Where You Can Find More Information......................... i
Risk Factors................................................ 1
Forward-Looking Statements.................................. 2
The Company................................................. 3
Use of Proceeds............................................. 4
Description of Capital Stock................................ 4
Selling Shareholders........................................ 6
Plan of Distribution........................................ 7
Legal Opinions.............................................. 8
Experts..................................................... 8

ABOUT THIS PROSPECTUS

This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission using a "shelf" registration process. Under
this shelf process, one or more selling shareholders may resell up to 17,274,314
shares of our common stock that they own in one or more offerings. In addition,
a separate prospectus for the Company has been included in this registration
statement under which the Company may sell up to $150 million of securities
described in that prospectus. This prospectus provides you with a general
description of the common stock such selling shareholders may offer. Each time
the selling shareholders sell common stock, we will provide a prospectus
supplement that will contain specific information about the terms of that
offering. The prospectus supplement may also add, update or change information
contained in this prospectus. You should read both this prospectus and any
prospectus supplement, together with additional information described under the
heading "WHERE YOU CAN FIND MORE INFORMATION."

As used in this prospectus, "Denbury," "we," "us," and "our" refer to
Denbury Resources Inc. and its subsidiaries.

WHERE YOU CAN FIND MORE INFORMATION

We are subject to the informational requirements of the Securities Exchange
Act of 1934, which requires us to file annual, quarterly and special reports,
proxy statements and other information with the SEC. You may read and copy any
document that we file at the Public Reference Room of the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for
further information on the operation of its public reference room. You may view
our reports electronically at the SEC's Internet site at http://www.sec.gov, or
at our own website at http://www.denbury.com.

This prospectus constitutes part of a Registration Statement on Form S-3
filed with the SEC under the Securities Act of 1933. It omits some of the
information contained in the Registration Statement, and reference is made to
the Registration Statement for further information with respect to us and the
common stock we are offering. Any statement contained in this prospectus
concerning the provisions of any document

filed as an exhibit to the Registration Statement or otherwise filed with the
SEC is not necessarily complete, and in each instance reference is made to the
copy of the filed document.

The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information that we file
with the SEC will automatically update and supersede this information and the
information in the prospectus. We incorporate by reference (excluding any
information furnished pursuant to Item 9 or Item 12 of any Report on Form 8-K)
the documents listed below and any future filings made with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until
we sell all the common stock covered by this prospectus:

1. Our Annual Report on Form 10-K for the year ended December 31,
2002;

2. Our Quarterly Reports on Form 10-Q for the quarters ended March 31
and June 30, 2003;

3. The description of our common stock contained in Amendment No. 1 to
our registration statement on Form 8-A filed on April 21, 1999, including
any amendment or report filed before or after the date of this prospectus
for the purpose of updating the description;

4. Current Reports on Form 8-K dated March 11, 2003, March 17, 2003,
March 19, 2003, May 1, 2003, July 31, 2003, August 12, 2003, and September
22, 2003; and

5. Information under the caption "Security Ownership of Certain
Beneficial Owners and Management" on pages 13 and 14 of our Definitive
Proxy Statement dated April 11, 2003.

You may request a copy of these filings at no cost, by writing or
telephoning Phil Rykhoek, Senior Vice President and Chief Financial Officer,
Denbury Resources Inc., 5100 Tennyson Pkwy., Ste. 3000, Plano, Texas 75024,
phone: (972) 673-2000.

RISK FACTORS

There are a number of risks associated with investing in Denbury and in our
industry. You should carefully review the more detailed description of risk
factors contained in the supplement to this prospectus.

STEEP OR PROLONGED DROPS IN PRICES CAN HARM US FINANCIALLY AND HURT OUR ABILITY
TO GROW.

Our revenue, profitability and cash flow depend upon the prices and demand
for oil and natural gas. The markets for oil and natural gas are very volatile,
as evidenced by the recent volatility in natural gas prices in response to the
war between the United States and Iraq. The changes in oil and natural gas
prices have a significant impact on the value of our reserves and a decline in
prices could cause a write-down of our oil and gas properties, which would
negatively affect our net income.

OUR CONTROLLING STOCKHOLDER STILL HOLDS A SIGNIFICANT PERCENTAGE OF OUR
OUTSTANDING COMMON STOCK.

Although between November 2002 and March 2003 affiliates of the Texas
Pacific Group have sold approximately 37% of the Denbury common stock that they
owned, they still beneficially own approximately 32% of our outstanding common
stock. Texas Pacific Group representatives currently hold three of eight seats
on our board of directors. As a result of this ownership and provisions of our
certificate of incorporation and bylaws, the Texas Pacific Group has
historically had the effective ability to elect all our directors and to control
our business and affairs, including decisions with respect to the acquisition or
disposition of assets, the future issuance of our common stock or other
securities, dividend policy and decisions with respect to our drilling,
operating and acquisition expenditure plans.

OIL AND NATURAL GAS DRILLING AND PRODUCING OPERATIONS INVOLVE VARIOUS RISKS.

Our drilling activities are subject to many risks, including the risk that
we will not discover commercially productive reservoirs. Operating and
developing oil and natural gas properties involves a number of inherent risks,
including the risk of personal injury, environmental contamination or loss of
wells. In addition, our drilling operations may be curtailed, delayed or
canceled as a result of other factors, including title problems, adverse weather
conditions, and compliance with environmental and other governmental
requirements. We may not be able to insure against all of these risks.

A FAILURE TO ACQUIRE PRODUCING PROPERTIES ON A PROFITABLE BASIS IN THE FUTURE
MAY SIGNIFICANTLY AFFECT OUR PROFITABILITY AND GROWTH.

Our significant growth in recent years is attributable in significant part
to our acquiring producing properties. Our ability to continue to make
successful acquisitions is influenced by many factors beyond our control.

ESTIMATING OUR RESERVES, PRODUCTION AND FUTURE NET CASH FLOW IS DIFFICULT TO DO
WITH ANY CERTAINTY.

Estimates of our proved developed oil and natural gas reserves and the
resulting future net revenues contained in this prospectus and elsewhere are
based on a number of uncertainties. A drop in prices or estimated production
volumes could materially adversely affect our revenues, profitability and
financial health.

OUR LEVEL OF INDEBTEDNESS MAY ADVERSELY AFFECT OPERATIONS AND LIMIT OUR GROWTH.

We make, and will continue to make, substantial capital expenditures to
acquire, develop, produce, explore and abandon our oil and natural gas reserves.
Our bank borrowing base is adjusted at the banks' discretion and is based in
part upon external factors over which we have no control. Further, our cash flow
from operations is highly dependent on the prices that we receive for oil and
natural gas. Any decrease in our revenues, as a result of lower oil or gas
prices or otherwise, could limit our ability to replace reserves or maintain
production at current levels. If our cash flow from operations drops
significantly, we may be unable to find additional debt or equity financing.

SHORTAGES OF OIL FIELD EQUIPMENT, SERVICES AND QUALIFIED PERSONNEL COULD REDUCE
OUR CASH FLOW AND ADVERSELY AFFECT RESULTS OF OPERATIONS.

Our ability to conduct operations in a timely and cost effective manner
depends on the availability of supplies, equipment and personnel. The oil and
gas industry is cyclical and experiences periodic shortages of drilling rigs and
other equipment, tubular goods, supplies and experienced personnel. Shortages
can delay operations and materially increase operating and capital costs.

OUR FUTURE SUCCESS DEPENDS ON OUR ABILITY TO FIND, DEVELOP OR ACQUIRE ADDITIONAL
OIL AND NATURAL GAS RESERVES THAT ARE ECONOMICALLY RECOVERABLE.

Unless we successfully replace the reserves that we produce, our reserves
will decline, resulting eventually in a decrease in oil and natural gas
production. This would lead to lower production and cash flow.

OUR PRODUCTION WILL DECLINE IF OUR ACCESS TO SUFFICIENT AMOUNTS OF CARBON
DIOXIDE IS LIMITED.

The crude oil production from our tertiary recovery projects depends on our
having access to sufficient amounts of carbon dioxide (CO(2)). Our ability to
produce this oil would be hindered if our supply of CO(2) were limited due to
problems with our current CO(2) producing wells and facilities, including
compression equipment, or catastrophic pipeline failure. Our anticipated future
production growth is also dependent on our ability to increase the production
volumes of CO(2). If our crude oil production were to decline, it could have a
material adverse effect on our financial condition and results of operations.

OUR USE OF HEDGING ARRANGEMENTS COULD RESULT IN FINANCIAL LOSSES OR REDUCE OUR
INCOME.

- production is less than expected;

- there is a change in the expected differential between the underlying
price in the hedging agreement and actual prices received.

In addition, these hedging arrangements may limit the benefit we would
receive from increases in the prices for oil and natural gas.

THE LOSS OF MORE THAN ONE OF OUR LARGE OIL AND NATURAL GAS PURCHASERS COULD HAVE
A MATERIAL ADVERSE EFFECT ON OUR OPERATIONS.

For the year ended December 31, 2002, two purchasers each accounted for
more than 10% of our oil and natural gas revenues and in the aggregate for 25%
of these revenues. We would not expect the loss of any single purchaser to have
a material adverse effect upon our operations. However, the loss of a large
single purchaser could potentially reduce the competition for our oil and
natural gas production, which in turn could negatively impact the prices we
receive.

FORWARD-LOOKING STATEMENTS

Some of the information included in this prospectus, any prospectus
supplement and the documents we have incorporated by reference contain
forward-looking statements. Forward-looking statements use forward-

looking terms such as "believe," "expect," "may," "intend," "will," "project,"
"budget," "should" or "anticipate" or other similar words. These statements
discuss "forward-looking" information such as:

- anticipated capital expenditures and budgets;

- future cash flows and borrowings;

- pursuit of potential future acquisition or drilling opportunities; and

- sources of funding for exploration and development.

These forward-looking statements are based on assumptions that we believe
are reasonable, but they are open to a wide range of uncertainties and business
risks, including the following:

- fluctuations of the prices received or demand for oil and natural gas;

- uncertainty of drilling results, reserve estimates and reserve
replacement;

- operating hazards;

- acquisition risks;

- availability and deliverability of CO(2);

- unexpected substantial variances in capital requirements;

- environmental matters; and

- general economic conditions.

Other factors that could cause actual results to differ materially from
those anticipated are discussed in our periodic filings with the SEC, including
our Annual Report on Form 10-K for the year ended December 31, 2002.

When considering these forward-looking statements, you should keep in mind
the risk factors and other cautionary statements in this prospectus, any
prospectus supplement and the documents we have incorporated by reference. We
will not update these forward-looking statements unless the securities laws
require us to do so.

THE COMPANY

As of December 31, 2002, we had estimated proved reserves of 130.7 MMBOE,
with a PV-10 Value of $1.426 billion. Of these proved reserves, 66% are proved
developed and 25.6% are natural gas. Our first quarter
3

2003 average production was 36,093 BOE/d, which was 54% oil and 46% natural gas.
From 2000 to 2002, we had a 20% compounded annual growth rate in net asset value
per share, based on the year-end PV-10 Value of our proved reserves using
constant prices of $25.00 per barrel of oil and $4.00 per mcf of natural gas in
each period. We are continuing to focus upon growth in our net asset value per
share, principally through debt reduction and increases in our reserve value
using constant prices.

Our principal executive office is located at 5100 Tennyson Parkway, Suite
3000, Plano, Texas 75024 and our telephone number is 972-673-2000.

USE OF PROCEEDS

We will not receive any of the proceeds from the sale of common stock by
the selling shareholders. The selling shareholders will receive all net proceeds
from the sale of shares of our common stock offered in this prospectus.

DESCRIPTION OF CAPITAL STOCK

GENERAL

As of June 30, 2003, we are authorized to issue up to 125,000,000 shares of
stock, including up to 100,000,000 shares of common stock, par value $.001 per
share, and up to 25,000,000 shares of preferred stock, par value $.001 per
share. As of June 30, 2003, we had 53,973,381 shares of common stock and no
shares of preferred stock outstanding. As of that date, we also had
approximately 7,209,178 shares of common stock reserved for issuance to cover
the granting or exercising of options under our option plan, or in connection
with other awards under various employee or director incentive and compensation
plans. As of June 30, 2003, a total of 5,556,262 stock options were outstanding
under our option plan.

The following is a summary of the key terms and provisions of our equity
securities. You should refer to the applicable provisions of our certificate of
incorporation, bylaws, the Delaware General Corporation Law and the documents we
have incorporated by reference for a complete statement of the terms and rights
of our capital stock.

COMMON STOCK

Voting Rights. Each holder of common stock is entitled to one vote per
share. Subject to the rights, if any, of the holders of any series of preferred
stock pursuant to applicable law or the provision of the certificate of
designation creating that series, all voting rights are vested in the holders of
shares of common stock. Holders of shares of common stock have noncumulative
voting rights, which means that the holders of more than 50% of the shares
voting for the election of directors can elect 100% of the directors, and the
holders of the remaining shares voting for the election of directors will not be
able to elect any directors. As of June 30, 2003, the Texas Pacific Group held
approximately 32% of our outstanding common stock.

Dividends. Dividends may be paid to the holders of common stock when, as
and if declared by the board of directors out of funds legally available for
their payment, subject to the rights of holders of any preferred stock. Denbury
has never declared a cash dividend and intends to continue its policy of using
retained earnings for expansion of its business.

Rights upon Liquidation. In the event of our voluntary or involuntary
liquidation, dissolution or winding up, the holders of common stock will be
entitled to share equally, in proportion to the number of shares of common stock
held by them, in any of our assets available for distribution after the payment
in full of all debts

and distributions and after the holders of all series of outstanding preferred
stock, if any, have received their liquidation preferences in full.

Non-Assessable. All outstanding shares of common stock are fully paid and
non-assessable. Any additional common stock we offer and issue under this
prospectus will also be fully paid and non-assessable.

No Preemptive Rights. Holders of common stock are not entitled to
preemptive purchase rights in future offerings of our common stock.

Listing. Our outstanding shares of common stock are listed on the New York
Stock Exchange under the symbol "DNR." Any additional common stock we issue will
also be listed on the NYSE and any other exchange on which our common stock is
then traded.

PREFERRED STOCK

Our board of directors can, without approval of our shareholders, issue one
or more series of preferred stock and determine the number of shares of each
series and the rights, preferences and limitations of each series. Our
Certificate of Incorporation requires that the decision to create a series of
preferred stock must be made by no fewer than 2/3 of the members of the board of
directors. The following description of the terms of the preferred stock sets
forth certain general terms and provisions of our authorized preferred stock. If
we offer preferred stock, a description will be filed with the SEC and the
specific designations and rights will be described in a prospectus supplement,
including the following terms:

- the series, the number of shares offered and the liquidation value of the
preferred stock;

- the price at which the preferred stock will be issued;

- the dividend rate, the dates on which the dividends will be payable and
other terms relating to the payment of dividends on the preferred stock;

- the liquidation preference of the preferred stock;

- the voting rights of the preferred stock;

- whether the preferred stock is redeemable or subject to a sinking fund,
and the terms of any such redemption or sinking fund;

- whether the preferred stock is convertible or exchangeable for any other
securities, and the terms of any such conversion; and

- any additional rights, preferences, qualifications, limitations and
restrictions of the preferred stock.

The description of the terms of the preferred stock to be set forth in an
applicable prospectus supplement will not be complete and will be subject to and
qualified in its entirety by reference to the certificate of designation
relating to the applicable series of preferred stock. The registration statement
of which this prospectus forms a part will include the certificate of
designation as an exhibit or incorporate it by reference.

Undesignated preferred stock may enable our board of directors to render
more difficult or to discourage an attempt to obtain control of us by means of a
tender offer, proxy contest, merger or otherwise, and to thereby protect the
continuity of our management. The issuance of shares of preferred stock may
adversely affect the rights of the holders of our common stock. For example, any
preferred stock issued may rank prior to our common stock as to dividend rights,
liquidation preference or both, may have full or limited voting rights and may
be convertible into shares of common stock. As a result, the issuance of shares
of preferred stock may discourage bids for our common stock or may otherwise
adversely affect the market price of our common stock or any existing preferred
stock.

Any preferred stock will, when issued, be fully paid and non-assessable.

SELLING SHAREHOLDERS

As of June 30, 2003, the selling shareholders, which are all affiliates of
the Texas Pacific Group, are holders of 17,274,314 shares of our common stock,
or approximately 32% of our outstanding common stock. Texas Pacific Group
representatives currently hold three of eight seats on our board of directors
and it is our largest shareholder. As a result of their stock ownership and
provisions of our certificate of incorporation and bylaws, the Texas Pacific
Group has historically had the effective ability to elect all our directors and
to control our business and affairs.

The following table sets forth information concerning ownership of our
issued and outstanding common stock as of June 30, 2003 by each selling
shareholder. As of June 30, 2003, there were approximately 53,973,381 shares of
our common stock issued and outstanding. Also shown below is information on the
selling shareholders' ownership of our issued and outstanding common stock after
sale of all the shares offered hereunder.

SHARES OWNED
IMMEDIATELY AFTER
SHARES OWNED AS OF SALE OF ALL
JUNE 30, 2003 SHARES TO BE
------------------------ OFFERED
PERCENT OF SHARES TO BE -----------------
NAME AND ADDRESS OF BENEFICIAL OWNER(1) SHARES OUTSTANDING OFFERED SHARES PERCENT
--------------------------------------- ---------- ----------- ------------ ------- -------

TPG Partners, L.P......................... 5,023,167 9.3% 5,023,167 -- 0%
TPG Parallel I, L.P....................... 500,596 * 500,596 -- 0%
TPG Investors II, L.P..................... 1,044,325 1.9% 1,044,325 -- 0%
TPG Parallel II, L.P...................... 683,225 1.3% 683,225 -- 0%
TPG Partners II, L.P...................... 10,011,721 18.6% 10,011,721 -- 0%
TPG 1999 Equity Partners II, L.P.......... 11,280 * 11,280 -- 0%
---------- ---- ---------- ---- --
Texas Pacific Group Totals................ 17,274,314 32.0% 17,274,314 -- 0%
========== ==== ========== ==== ==

---------------

* Less than one percent

(1) TPG Advisors, Inc. is the sole general partner of TPG GenPar, L.P., which in
turn is the sole general partner of TPG Partners, L.P. and TPG Parallel I,
L.P. TPG Advisors II, Inc. is the sole general partner of TPG 1999 Equity
Partners II, L.P. and TPG GenPar II, L.P., which in turn is the sole general
partner of TPG Investors II, L.P., TPG Parallel II, L.P., and TPG Partners
II, L.P. Messrs. David Bonderman, a former director of Denbury, James
Coulter and William Price, a director of Denbury, are the sole directors and
shareholders of TPG Advisors, Inc. and TPG Advisors II, Inc. The address for
all of the selling shareholders listed above is 301 Commerce Street, Suite
3300, Fort Worth, Texas 76102.

The selling shareholders are not obligated to sell the shares offered under
this prospectus and may choose not to sell any of the shares or only a portion
of the shares. SEC rules, however, require that we assume that the selling
shareholders sell all of the shares being offered hereunder.

The prospectus supplement for any offering of the common stock by selling
shareholders will include the following information:

- the names of the selling shareholders;

- the number of shares of common stock held by each of the selling
shareholders;

- the percentage of the outstanding common stock held by each of the
selling shareholders; and

- the number of shares of common stock offered by each of the selling
shareholders.

In April 1999, we entered into a registration rights agreement with the
Texas Pacific Group covering all 27,274,314 shares of our common stock that the
Texas Pacific Group then owned. The agreement provides the Texas Pacific Group
both demand and piggyback registration rights. Under the agreement, the Texas
Pacific Group has the demand right to cause us to file up to four registration
statements. To date, the Texas Pacific

Group has exercised two demands to be included in a shelf registration, one of
which is currently available for this offering. The Texas Pacific Group's
remaining demand rights expire on April 21, 2007, and are subject to black-out
periods. Under the registration rights agreement, we cannot grant any
registration rights to any other person on terms more favorable than those
granted to the Texas Pacific Group.

PLAN OF DISTRIBUTION

The selling shareholders may sell the common stock offered by this
prospectus and applicable prospectus supplements:

- through underwriters or dealers;

- through agents;

- directly to purchasers; or

- through a combination of any such methods of sale.

Any such underwriter, dealer or agent may be deemed to be an underwriter
within the meaning of the Securities Act of 1933.

The applicable prospectus supplement relating to the common stock will set
forth:

- their offering terms, including the name or names of any underwriters,
dealers or agents;

- the purchase price of the common stock and the proceeds to us from such
sale;

- any underwriting discounts, commissions and other items constituting
compensation to underwriters, dealers or agents;

- any initial public offering price;

- any discounts or concessions allowed or reallowed or paid by underwriters
or dealers to other dealers;

- any securities exchanges on which the common stock may be listed.

If underwriters or dealers are used in the sale, the common stock will be
acquired by the underwriters or dealers for their own account and may be resold
from time to time in one or more transactions in accordance with the rules of
the New York Stock Exchange:

- at a fixed price or prices which may be changed;

- at market prices prevailing at the time of sale;

- at prices related to such prevailing market prices; or

- at negotiated prices.

The common stock may be offered to the public either through underwriting
syndicates represented by one or more managing underwriters or directly by one
or more of such firms. Unless otherwise set forth in an applicable prospectus
supplement, the obligations of underwriters or dealers to purchase the common
stock will be subject to certain conditions precedent and the underwriters or
dealers will be obligated to purchase all the common stock if any is purchased.
Any public offering price and any discounts or concessions allowed or reallowed
or paid by underwriters or dealers to other dealers may be changed from time to
time.

Common stock may be sold directly by the selling shareholders or through
agents designated by the selling shareholders from time to time. Any agent
involved in the offer or sale of the common stock in respect of which this
prospectus and a prospectus supplement is delivered will be named, and any
commissions payable by the selling shareholders to such agent will be set forth,
in the prospectus supplement. Unless otherwise indicated in the prospectus
supplement, any such agent will be acting on a best efforts basis for the period
of its appointment.

If so indicated in the prospectus supplement, the selling shareholders will
authorize underwriters, dealers or agents to solicit offers from certain
specified institutions to purchase common stock from the selling shareholders at
the public offering price set forth in the prospectus supplement pursuant to
delayed delivery contracts providing for payment and delivery on a specified
date in the future. Such contracts will be subject to any conditions set forth
in the prospectus supplement and the prospectus supplement will set forth the
commission payable for solicitation of such contracts. The underwriters and
other persons soliciting such contracts will have no responsibility for the
validity or performance of any such contracts.

Underwriters, dealers and agents may be entitled under agreements entered
into with the selling shareholders to be indemnified by us against certain civil
liabilities, including liabilities under the Securities Act of 1933, or to
contribution by us to payments which they may be required to make. The terms and
conditions of such indemnification will be described in an applicable prospectus
supplement. Underwriters, dealers and agents may be customers of, engage in
transactions with, or perform services for, us in the ordinary course of
business.

Certain persons participating in any offering of common stock may engage in
transactions that stabilize, maintain or otherwise affect the price of the
common stock offered. In connection with any such offering, the underwriters or
agents, as the case may be, may purchase and sell common stock in the open
market. These transactions may include overallotment and stabilizing
transactions and purchases to cover syndicate short positions created in
connection with the offering. Stabilizing transactions consist of certain bids
or purchases for the purpose of preventing or retarding a decline in the market
price of the common stock; and syndicate short positions involve the sale by the
underwriters or agents, as the case may be, of a greater number of common stock
than they are required to purchase from us, as the case may be, in the offering.
The underwriters may also impose a penalty bid, whereby selling concessions
allowed to syndicate members or other broker-dealers for the common stock sold
for their account may be reclaimed by the syndicate if such common stock are
repurchased by the syndicate in stabilizing or covering transactions. These
activities may stabilize, maintain or otherwise affect the market price of the
common stock, which may be higher than the price that might otherwise prevail in
the open market, and if commenced, may be discontinued at any time. These
transactions may be effected on the New York Stock Exchange in the
over-the-counter market or otherwise. These activities will be described in more
detail in the sections entitled "Plan of Distribution" or "Underwriting" in the
applicable prospectus supplement.

LEGAL OPINIONS

Jenkens & Gilchrist, A Professional Corporation, will issue an opinion for
Denbury regarding the legality of the common stock offered by this prospectus
and applicable prospectus supplement. If the common stock is being distributed
in an underwritten offering, certain legal matters will be passed upon for the
underwriters by counsel identified in the applicable prospectus supplement.

EXPERTS

The consolidated financial statements incorporated in this prospectus by
reference from Denbury's Annual Report on Form 10-K for the year ended December
31, 2002, have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report, which is incorporated herein by reference, and have been
so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.

With respect to the unaudited interim financial information for the periods
ended March 31, 2003 and 2002 and June 30, 2003 and 2002 which is incorporated
herein by reference, Deloitte & Touche LLP have applied limited procedures in
accordance with professional standards for a review of such information.
However, as stated in their reports included in the Company's Quarterly Reports
on Form 10-Q for the quarters ended March 31, 2003 and June 30, 2003 and
incorporated by reference herein (which reports include an emphasis paragraph
regarding the adoption of Statement of Financial Accounting Standards No. 143,
"Accounting for Retirement Obligations"), they did not audit and they do not
express an opinion on

that interim financial information. Accordingly, the degree of reliance on their
report on such information should be restricted in light of the limited nature
of the review procedures applied. Deloitte & Touche LLP are not subject to the
liability provisions of Section 11 of the Securities Act of 1933 for their
reports on the unaudited interim financial information because those reports are
not "reports" or a "part" of the registration statement prepared or certified by
an accountant within the meaning of Sections 7 and 11 of the Act.

Certain estimates of our oil and natural gas reserves and related
information incorporated by reference in this prospectus have been derived from
engineering reports prepared by DeGoyler and MacNaughton as of December 31,
2002, 2001 and 2000, and all such information has been so included on the
authority of such firm as an expert regarding the matters contained in its
reports.

9,274,314 Shares

[DENBURY RESOURCES LOGO]

DENBURY RESOURCES INC.

Common Stock

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PROSPECTUS SUPPLEMENT
March 22, 2004
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LEHMAN BROTHERS

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