Unassociated Document


    
      
Exhibit
10.3

     

     

    PRODUCTION PAYMENT PURCHASE
AND SALE AGREEMENT

    


    


    This
PRODUCTION PAYMENT PURCHASE AND
SALE AGREEMENT (the “Agreement”), executed
as of November 14, 2003, and effective September 1, 2003 (the “Effective Date”), is
between DENBURY RESOURCES
INC. (“Denbury”), a Delaware
corporation, whose address is 5100 Tennyson Parkway, Suite 3000, Plano, Texas
75024, and GENESIS CRUDE OIL,
L.P. (“Genesis”), a Delaware
limited partnership, whose address is 500 Dallas, Suite 2500, Houston, Texas
77002.  Denbury and Genesis are sometimes referred to individually as
a “Party” and collectively as the “Parties”.

    


    FOR AND
IN CONSIDERATION of the payments and mutual covenants to be made in this
Agreement by the Parties and the benefits derived by the Parties from this
Agreement, the Parties agree as follows:

    


    RECITALS

    


    A.       
    Denbury owns certain undivided oil, gas and mineral
leasehold, royalty and mineral interests in and to those lands commonly referred
to as the Hollybush field, the South Pisgah field and the Goshen Springs field,
as more particularly described in Exhibit A attached to
the Assignment (as defined below).

    


    B.         
   Denbury is currently engaged in a program with respect to the
Subject Interests (as defined below) on the Subject Lands (as defined below) for
the exploration, development, production and sale of carbon
dioxide.

    


    C.          
  Denbury desires to sell and convey and Genesis desires to purchase
and pay for (1) all of Denbury’s rights, title and interests in and to certain
contracts covering the sale of carbon dioxide by
Denbury, and (2) a volumetric production payment in and to the carbon
dioxide that
is produced, saved and sold from the Subject Interests, upon and subject to the
terms and conditions provided in the Assignment and this Agreement.

    


    I.

    CERTAIN
DEFINITIONS

    


    1.1         
  For purposes of this Agreement, the following capitalized terms
shall have the meanings herein ascribed to them and the capitalized terms
defined in the opening paragraph and subsequent paragraphs by inclusion in
quotation marks and parentheses shall have the meanings ascribed to
them:

    


    “Additional Volumes”
shall have the meaning given to such term in Section
4.4.

    


    “Airgas Contract”
means the Industrial Sale Contract identified as the Airgas Contract in Exhibit A to the
Contracts Assignment, as the same may have been amended prior to the date
hereof.

    


    “Assigned Contract
Interests” shall have the meaning given to such term in Section
4.1.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    “Assignment” means the
Assignment of Production Payment to be entered into between Denbury and Genesis
in the form attached hereto as Exhibit
A.

    


    “Audited Party” shall
have the meaning given to such term in Section
12.3.

    


    “Bank One Liens” means
the liens created under or pursuant to that certain Third Amended and Restated
Credit Agreement dated as of September 12, 2002 among Denbury, as borrower, the
financial institutions listed therein, Bank One, N.A., as Administrative Agent,
Credit Lyonnais New York Branch, and Fortis Capital Corp., as Syndication Agent,
and Union Bank of California, as amended by instrument dated effective as of
April 30, 2003, and as otherwise amended, supplemented or modified from time to
time.

    


    “BOC-Brandon Contract”
means the Industrial Sale Contract identified as the BOC-Brandon Contract in
Exhibit A to
the Contracts Assignment, as the same may have been amended prior to the date
hereof.

    


    “Call Option” shall
have the meaning given to such term in Section
2.4.

    


    “Call Settlement Date”
shall have the meaning given to such term in Section
2.4.

    


    “Claims” shall have
the meaning given to such term in Section
9.1.

    


    “Closing” shall have
the meaning given to such term in Section
10.1.

    


    “Closing Date” shall
have the meaning given to such term in Section
10.1.

    


    “CO2”
shall have the meaning given to such term in the Assignment.

    


    “Contracts Assignment”
means the Assignment of Contracts and Bill of Sale to be entered into between
Denbury and Genesis attached hereto as Exhibit
C.

    


    “Daily Maximum
Quantity” shall have the meaning given to such term in the
Assignment.

    


    “Day” shall have the
meaning given to such term in the Assignment.

    


    “Deficiency” shall
have the meaning given to such term in Section
4.4.

    


    “Delivery Points”
shall have the meaning given to such term in the T&P Agreement.

    


    “Denbury Indemnified
Party” shall have the meaning given to such term in Section
9.2.

    


    “Denbury Pipeline”
shall have the same meaning as “Transporter’s Pipeline” as such term is defined
in the T&P Agreement.

    


    “Effective Date” shall
have the meaning given to such term in the opening paragraph of this
Agreement.

    


    “Environmental Claims”
shall have the meaning given to such term in Section
5.14.


    
      
         


      

      
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    “Environmental
Contaminants” shall have the meaning given to such term in Section
5.14.

    


    “Environmental Laws”
means all federal, state and local Governmental Requirements regulating or
otherwise pertaining to the environment, including without limitation the
following as from time to time amended and all others whether similar or
dissimilar and whether now existing or hereafter enacted:  the Oil
Pollution Act of 1990, as amended (“OPA”); the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended by the Superfund Amendments and Reauthorization Act of 1986; the
Resource Conservation and Recovery Act of 1976, as amended by the Used Oil
Recycling Act of 1980, the Solid Waste Disposal Act amendments of 1980, and the
Hazardous and Solid Waste Amendments of 1984; the Hazardous Materials
Transportation Act, as amended; the Toxic Substance Control Act, as amended; the
Clean Air Act, as amended; the Clean Water Act, as amended; and all regulations
promulgated pursuant thereunder.

    


    “Environmental
Liabilities” shall have the meaning given to such term in Section
5.14.

    


    “Environmental
Permits” shall have the meaning given to such term in Section
5.14.

    


    “Excess Volumes” shall
have the meaning given to such term in the Assignment.

    


    “Genesis Indemnified
Party” shall have the meaning given to such term in Section
9.1.

    


    “Governmental
Authority” means any nation or government, any state or other political
subdivision thereof and any person exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to
government.

    


    “Governmental
Requirement” means any law, statute, code, ordinance, order,
determination, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, authorization or other directive or requirement,
energy regulations and occupational, safety and health standards or controls, of
any Governmental Authority.

    


    “Industrial Sale
Contracts” shall have the meaning given to such term in the Contracts
Assignment.

    


    “Jackson Dome Plant”
means the Jackson Dome Processing Plant owned by Denbury located in Brandon,
Rankin County, Mississippi.

    


    “Leases” means the
leases described, referred to or identified in Exhibit A to the
Assignment, together with any renewals or extensions of such leases, and any
replacement leases, insofar and only insofar as they cover the Subject Lands (or
portion thereof).

    


    “Lost Interest” shall
have the meaning given to such term in Section
11.10.

    


    “Master Documents”
means this Agreement and all agreements executed in connection herewith or
pursuant hereto, including, but not limited to the Assignment, the Contracts
Assignment, and the T&P Agreement.


    
      
         


      

      
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    “Material Adverse
Effect” means a material adverse effect upon (a) the validity or
enforceability of the Master Documents, or (b) the financial condition of
Denbury or Genesis, as applicable, or (c) the ability of Denbury or Genesis, as
applicable, to perform its obligations under the Master Documents.

    


    “MCF” shall have the
meaning given to such term in the Assignment.

    


    “Month” means a period
beginning on the first Day of a calendar month and ending at the beginning of
the first Day of the next succeeding calendar month.

    


    “Permitted Liens”
means (a) lessor’s royalties, overriding royalties, and division orders covering
oil, gas and other hydrocarbons, reversionary interests and similar burdens
existing as of the Effective Date; (b) operating agreements, unit agreements and
similar agreements, and any and all federal and state regulatory orders and
rules (including forced pooling orders) to which the Subject Interests are
subject; (c) liens for Taxes or assessments not due or pursuant to which Denbury
is not delinquent; (d) preferential rights to purchase and required third-party
consents to assignments and similar agreements with respect to which (1) waivers
or consents have been obtained from the appropriate parties, or (2) required
notice has been given to the holders of such rights and the appropriate time
period for asserting such rights has expired without an exercise of such rights;
(e) all rights to consent by, required notices to, filings with, or other
actions by governmental entities in connection with the sale or conveyance of
oil, gas and mineral leases or interests therein if the same are customarily
obtained after such sale or conveyance; (f) easements, rights-of-way,
servitudes, permits, surface leases and other rights in respect of surface
operations, pipelines, grazing, logging, canals, ditches, reservoirs or the
like; and easement for streets, alleys, highways, pipelines, telephone lines,
power lines, railways and other easements and rights-of-way, on, over or in
respect of any of the Subject Interests; (g) liens of operators relating to
obligations not due or pursuant to which Denbury is not delinquent; (h) title
problems commonly encountered in the oil and gas business which would not be
considered material by a reasonable and prudent person engaged in the business
of the ownership, development and operation of oil and gas properties with
knowledge of all the facts and appreciation of their legal significance; and (i)
the Bank One Liens.

    


    “Person” means any
individual, natural person, corporation, joint venture, partnership, limited
partnership, trust, estate, business trust, association, governmental entity or
other entity.

    


    “Personal Property”
shall mean improvements, machinery, equipment, gathering lines, tanks, fixtures
and other personal property and equipment of every kind and nature now or
hereafter used or held for use in connection with the exploration, development
or operation of the Subject Interests; provided, however, that the term
“Personal Property” shall not include the Denbury Pipeline or the Jackson Dome
Plant.

    


    “Praxair Contract”
means the Industrial Sale Contract identified as the Praxair Contract in Exhibit A to the
Contracts Assignment, as the same may have been amended prior to the date
hereof.

    


    “Production Payment”
shall have the meaning given to such term in the Assignment.

    


    “Production Payment
Gas” shall have the meaning given to such term in the
Assignment.


    
      
         


      

      
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    “Receipt Point” shall
have the meaning given to such term in the T&P Agreement.

    


    “Reserve
Report”  shall mean “Data on Estimated Proved Carbon Dioxide
Reserves as of December 31, 2002” of the Appraisal Report as of December 31,
2002 on Certain Properties Owned by Denbury Resources Inc., SEC Case, of
DeGolyer and MacNaughton dated February 4, 2003.

    


    “Retained Obligations”
shall have the meaning given to such term in Section
11.12.

    


    “Scheduled Delivery
Volumes” shall have the meaning given to such term in the
Assignment.

    


    “Subject Interests”
shall have the meaning given to such term in the Assignment.

    


    “Subject Lands” shall
have the meaning given to such term in the Assignment.

    


    “Taxes” shall have the
meaning given to such term in the Assignment.

    


    “Term” shall have the
meaning given to such term in the Assignment.

    


    “T&P Agreement”
means the Carbon Dioxide Transportation Agreement to be entered into between
Denbury and Genesis in the form attached hereto as Exhibit
D.

    


    “Transportation Fee”
shall have the meaning given to such term in the T&P Agreement.

    


    II.

    PURCHASE
AND SALE OF THE PRODUCTION PAYMENT

    


    2.1      
     Subject to the terms of this Agreement, Denbury
agrees to sell and convey and Genesis agrees to purchase and pay for the
Production Payment.

    


    2.2         
  The Production Payment will be assigned by Denbury to Genesis
pursuant to the Assignment.

    


    2.3        
   Genesis shall look solely to the receipt of Production Payment
Gas as provided herein for satisfaction and discharge of the Production Payment,
and Genesis shall not have any other recourse against Denbury for the payment
and discharge of the Production Payment.  However, the foregoing
provision shall not relieve Denbury of any obligation to respond in damages for
any breach of any of the covenants, agreements and obligations of Denbury
hereunder or under any other Master Document.

    


    2.4       
    Genesis hereby grants Denbury the option to repurchase
the Production Payment pursuant to the terms of this Section 2.4 (the
“Call
Option”).  If pursuant to Section 2.8 of the T&P Agreement,
the Transporter (as defined in the T&P Agreement) elects to exercise its
Call Option (or is deemed to have elected to exercise its Call Option), Denbury
shall notify Genesis of the date on which the repurchase will be consummated
(the “Call Settlement
Date”), which date must be a Business Day and must occur no sooner than
five Business Days and no later than 30 days after the date on which Transporter
delivered (or was deemed to have delivered) notice of its intent to exercise the
Call Option.  On the Call Settlement Date, Genesis and Denbury shall
execute documentation sufficient to terminate the Production Payment and the
other Master Documents, cause the reconveyance to and assumption by Denbury of
the Industrial Sale Contracts, and contemporaneously therewith, Denbury shall
pay to Genesis in immediately available funds, a purchase price equal to the
estimated cash flow from the remaining volumes obligated to be delivered
pursuant to the Production Payment discounted to present net value using a
fifteen percent (15%) per annum discount rate.  The estimated cash
flow from the remaining volumes obligated to be delivered pursuant to the
Production Payment shall be based upon a forecast prepared by Denbury and
furnished to Genesis, and if Genesis objects to such forecast, then such matter
may be submitted to and resolved in accordance with the arbitration provisions
contained in Article
XIV.


    
      
         


      

      
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    2.5       
    In the event of any express conflict between the terms
and provisions of this Agreement and the terms and provisions of the Assignment,
the terms and provisions of the Assignment shall control.  The
inclusion in this Agreement of provisions not addressed in the Assignment shall
not be deemed a conflict, and all such additional provisions contained herein
shall be given full force and effect.

    


    III.

    PROCESSING
AND TRANSPORTATION OF PRODUCTION PAYMENT GAS

    


    3.1         
  After Closing, Denbury agrees to transport Production Payment Gas
from the Receipt Points, and redeliver Production Payment Gas at the Delivery
Points, in accordance with the provisions of the T&P
Agreement.  All Production Payment Gas shall be delivered by Denbury
to the Delivery Points in compliance with the requirements set out in the
T&P Agreement with respect to pressure, quantity and quality
specifications.  Under the T&P Agreement, Genesis will pay Denbury
a Transportation Fee (as adjusted in accordance with the terms of the T&P
Agreement), which initially shall be $0.16 per MCF, for transportation of the
Production Payment Gas from the Receipt Points, processing of the Production
Payment Gas through the Jackson Dome Plant, and redelivery of the Production
Payment Gas to or on behalf of Genesis at the Delivery Points.

    


    3.2       
    The processing and transportation of Production Payment
Gas by Denbury as described in this Article shall be subject to the terms and
provisions contained in this Article, as such terms and provisions may be
further described or supplemented by the T&P Agreement.  In the
event of any conflict between the terms and provisions of this Article and the
terms and provisions of the T&P Agreement, the terms and provisions of the
T&P Agreement shall control. The inclusion in this Agreement of provisions
not addressed in the T&P Agreement shall not be deemed a conflict, and all
such additional provisions contained herein shall be given full force and
effect.

    


    IV.

    ASSIGNMENT
OF INDUSTRIAL SALE CONTRACTS

    


    4.1        
   At Closing, Denbury will assign to Genesis all of its rights
and interests in and to the Industrial Sale Contracts (the “Assigned Contract
Interests”), subject to the terms and conditions contained in the
Industrial Sale Contracts.  The Assigned Contract Interests will be
assigned by Denbury to Genesis pursuant to the Contracts
Assignment.  Notwithstanding such assignment, Denbury shall be
obligated to continue to comply with the Retained Obligations.


    
      
         


      

      
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    4.2        
   At Closing, Genesis will assume the cost and responsibilities
of administering the Assigned Contract Interests with respect to rights and
obligations arising after the Effective Date and will report the sales and
values of such sales to Denbury on a Monthly basis on or before the 10th day of
each succeeding Month, in a manner and format agreed upon between the Parties,
in order that Denbury can timely pay royalties attributable to the Production
Payment Gas sold pursuant to the Industrial Sale
Contracts.  Notwithstanding anything herein to the contrary, without
the prior written consent of Denbury, Genesis shall not amend or otherwise
modify any terms or provisions of any of the Industrial Sale Contracts if such
amendment or modification of the Industrial Sale Contracts shall in any manner
whatsoever, directly or indirectly, modify the Retained Obligations or otherwise
increase any obligations of Denbury under any of the Master Documents, including
but not limited to any increase of the sales and delivery requirements under the
Industrial Sale Contracts.  If Denbury elects not to consent to any
proposed amendment, Denbury shall provide a written explanation setting out the
reasons for such election.

    


    4.3       
    In the event of any conflict between the terms and
provisions contained in this Article and the terms and provisions of the
Contracts Assignment, the terms and provisions contained in the Contracts
Assignment shall control.  The inclusion in this Agreement of
provisions not addressed in the Assignment shall not be deemed a conflict, and
all such additional provisions contained herein shall be given full force and
effect.

    


    4.4       
    If at any time or from time to time during the Term
Genesis determines that 167.5 million MCF is not sufficient to satisfy the sales
and delivery requirements of the Industrial Sale Contracts (a “Deficiency”), Genesis
shall promptly furnish Denbury with written notice of such determination, and
such notice shall contain sufficient detail that is reasonably calculated to
enable Denbury to determine the basis for Genesis’ determination of such
Deficiency.  If, after receipt of such notice, Denbury agrees with
Genesis’ assessment of a Deficiency, Denbury agrees to amend the Production
Payment to include such additional volumes of CO2 that are
necessary to enable Genesis to satisfy the sales and delivery requirements of
the Industrial Sale Contracts.  If Denbury fails to agree with
Genesis’ assessment of a Deficiency, then such matter shall be resolved pursuant
to Article
XIV.  The agreed-upon amount of additional volumes necessary to
enable Genesis to satisfy the sales and delivery requirements of the Industrial
Sale Contracts (the “Additional Volumes”)
shall be sold by Denbury to Genesis on the same terms and conditions, mutatis
mutandis, as applicable to the Production Payment by virtue of this Agreement,
and the value of, and consequently the consideration to be paid by Genesis to
Denbury for, the Additional Volumes shall be calculated based on estimated cash
flow from the Additional Volumes discounted to present net value using a fifteen
percent (15%) per annum discount rate.  Notwithstanding the foregoing,
if it is determined that the Deficiency has occurred, in whole or in part, as a
result of the sale by Genesis of Excess Volumes, Denbury shall not be obligated
to deliver those Additional Volumes which are attributable to the sale of Excess
Volumes by Genesis.


    
      
         


      

      
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    V.

    REPRESENTATIONS
AND WARRANTIES OF DENBURY

    


    Denbury
hereby represents and warrants to Genesis as follows:

    


    5.1         
  Denbury is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.  Denbury
possesses the legal right, power and authority, and qualifications to conduct
its business and own its properties (including the Subject Interests), except
where the failure to so possess would not, individually or collectively, have a
Material Adverse Effect.  Denbury has the legal right, power and
authority (i) to execute and deliver the Assignment and to convey to Genesis the
Production Payment and all of the rights and privileges appurtenant thereto and
(ii) to execute and deliver this Agreement and the other Master Documents and to
perform all of its obligations hereunder and thereunder.

    


    5.2         
  The execution, delivery and performance by Denbury of this Agreement
and the other Master Documents are within its corporate powers and authority,
have been duly authorized by all necessary board of director action on the part
of Denbury and do not and will not (i) violate any Governmental Requirement
currently in effect having applicability to Denbury, other than violations which
would not, individually or collectively, cause a Material Adverse Effect, or
(ii) violate any provision of Denbury’s articles of incorporation, bylaws, or
other governing documents, or (iii) result in a breach of or constitute a
default (excluding breaches or defaults which, individually or collectively,
would not have a Material Adverse Effect) under any indenture, bank loan, or
credit agreement or farm-out agreement, program agreement or operating
agreement, or any other agreement or instrument to which Denbury is a party or
by which Denbury or its properties may be currently bound or affected, or (iv)
other than the Master Documents and/or other than matters which would not
individually or collectively cause a Material Adverse Effect, result in or
require the creation or imposition of any mortgage, lien, pledge, security
interest, charge, or other encumbrance upon or of any of the properties or
assets of Denbury (including the Subject Interests).

    


    5.3       
    This Agreement and the other Master Documents have been
duly executed and delivered by Denbury, and this Agreement and the Master
Documents constitute the legal, valid, and binding acts and obligations of
Denbury enforceable against Denbury in accordance with their terms, subject,
however, to bankruptcy, insolvency, reorganization, and other laws affecting
creditors’ rights generally and general principles of equity.  There
are no bankruptcy, insolvency, reorganization, receivership or arrangement
proceedings pending, being contemplated by or, to Denbury’s knowledge,
threatened against Denbury.

    


    5.4         
  Denbury is not in default under any Governmental Requirement,
indenture, agreement, or instrument which would reasonably be expected to cause
a Material Adverse Effect nor does any fact or condition exist at this time that
would reasonably be expected to cause a Material Adverse Effect in the future
under any Governmental Requirement, indenture, agreement or instrument; and all
consents and waivers of preferential purchase or other rights required in
connection with the valid conveyance to Genesis of the Production Payment or the
execution and delivery of this Agreement and the other Master Documents have
been obtained or the time for giving such consents or waivers has expired
following a written request therefor, other than those consents and waivers
which if not obtained, would not individually or collectively have a Material
Adverse Effect.


    
      
         


      

      
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    5.5        
   All advance notifications to third parties of the transactions
contemplated herein and in the other Master Documents required in connection
with the valid conveyance to Genesis of the Production Payment or execution and
delivery of this Agreement and the other Master Documents have been timely and
properly given, other than those notifications which, if not obtained, would not
individually or collectively have a Material Adverse Effect.

    


    5.6         
  All authorizations, consents, approvals, licenses, and exemptions
of, and filings or registrations with, any Governmental Authority, that are
required for the valid execution and delivery by Denbury of, or the performance
by Denbury of its obligations under, this Agreement or the other Master
Documents have been obtained or performed or the period for objection thereto
expired, other than those which, if not obtained or performed, would not
individually or collectively have a Material Adverse Effect.

    


    5.7        
   To Denbury’s knowledge, the Reserve Report (i) was prepared in
accordance with customary engineering practices, and (ii) is based on historical
information that is accurate and complete in all material
respects.  The Subject Interests constitute all of the properties and
interests reflected in the Reserve Report that relate to the production of
CO2.  Set
forth on Exhibit
B is a true and correct statement of Denbury's working interest and net
revenue interest in and to each well noted on Exhibit B except to
the extent that such interest is incorrect as the result of an act or omission
that does not arise by, through or under Denbury and except for discrepancies
which would not be considered material by a reasonable and prudent person
engaged in the business of the ownership, development and operation of oil and
gas properties with knowledge of all the facts and appreciation of their legal
significance.  The interests reflected on Exhibit B are owned
by Denbury free and clear of any lien or encumbrance arising by, through or
under Denbury, other than Permitted Liens.

    


    5.8        
   All Taxes imposed or assessed with respect to or measured by
or charged against or attributable to the Subject Interests, the Personal
Property, the Denbury Pipeline and the Jackson Dome Plant have been duly paid,
except for Taxes not yet due and payable or pursuant to which Denbury is not
delinquent.

    


    5.9        
   There are no suits or proceedings pending or, to Denbury’s
knowledge, threatened against Denbury, the Subject Interests, the Denbury
Pipeline, the Jackson Dome Plant or any of the Personal Property before any
Governmental Authority, that, if decided adversely to the interest of Denbury,
would reasonably be expected to have a Material Adverse Effect; provided,
however, that notwithstanding the foregoing, Schedule 5.9 includes
a list of current litigation affecting Denbury, the Subject Interests, the
Denbury Pipeline, the Jackson Dome Plant or the Personal Property.

    


    5.10          Except
with respect to those matters which would not individually or collectively have
a Material Adverse Effect, (i) the Leases are in full force and effect, and (ii)
Denbury has complied with the terms of all Governmental Requirements applicable
to Denbury or applicable directly to the Subject Interests.


    
      
         


      

      
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    5.11          All
rents and royalties with respect to the Leases have been paid in a timely manner
(excluding any failures to pay which would not individually or collectively have
a Material Adverse Effect), and all liabilities of any kind or nature incurred
with respect to the Leases have been paid before delinquent (excluding any
liabilities or failures to pay which would not individually or collectively have
a Material Adverse Effect); Denbury has not received any notice of default or
claimed default with respect to the Subject Interests or any part thereof that
would reasonably be expected to result in a Material Adverse Effect; and except
for matters which would not individually or collectively have a Material Adverse
Effect, all wells, facilities and equipment which constitute part of the
Personal Property and the Denbury Pipeline and the Jackson Dome Plant are in
good repair and working condition and have been designed, installed and
maintained in accordance with generally accepted industry standards and all
applicable Governmental Requirements.

    


    5.12          Denbury
has not violated any Governmental Requirement or failed to obtain any license,
permit, franchise or other governmental authorization required for the ownership
or operation of any of the Personal Property or the Denbury Pipeline or the
Jackson Dome Plant, except for violations which would not individually or
collectively have a Material Adverse Effect.  Except for matters which
would not individually or collectively have a Material Adverse Effect, the
Personal Property, the Denbury Pipeline and the Jackson Dome Plant have each
been maintained, operated and developed in conformity with all applicable
Governmental Requirements of all Governmental Authorities having jurisdiction
and in conformity with the provisions of all leases, subleases or other
contracts comprising a part of the Subject Interests.

    


    5.13          Since
the December 31, 2002, there has not been any reduction in the rate of
production of CO2 from any
of the Subject Interests that would reasonably be expected to have a Material
Adverse Effect.

    


    5.14          Except
as set forth on Schedule 5.14 and
except with respect to those matters which would not individually or
collectively reasonably be expected to result in a Material Adverse Effect, to
Denbury’s knowledge:  (i) Denbury has obtained and maintained in
effect all environmental and health and safety permits, licenses, approvals,
consents, certificates and other authorizations required in connection with
Denbury’s ownership or operation of the Subject Lands (“Environmental
Permits”); (ii) Denbury’s operations on the Subject Lands are in
compliance in all material respects with all applicable Environmental Laws and
with all terms and conditions of all applicable Environmental Permits, and all
prior instances of material non-compliance have been fully and finally resolved
to the satisfaction of all Governmental Authorities with jurisdiction over such
matters; (iii) Denbury’s operations on the Subject Lands are not subject to any
third party environ­mental or health and safety claim, demand, filing,
investigation, administrative proceeding, action, suit or other legal
proceeding, whether direct, indirect, contingent, pending, threatened or
otherwise (“Environmental
Claim”), or Environmental Liabilities (as defined herein), arising from,
based upon, associated with or related to Denbury’s operations on the Subject
Lands; (iv) Denbury has not received any notice of any Environmental Claim,
Environmental Liabilities or any violation or non-compliance with any
Environmental Law or the terms or conditions of any Environmental Permit,
arising from, based upon, associated with or related to Denbury’s operations on
the Subject Lands; (v) no pollutant, waste, contaminant, or hazardous, extremely
hazardous, or toxic material, substance, chemical or waste identified, defined
or regulated as such under any Environmental Law (“Environmental
Contaminants”) is present on, or has been handled, managed, stored,
transported, processed, treated, disposed of, released, migrated or has escaped
on, in, from, or under the Subject Lands as a result of Denbury’s operations on
the Subject Lands in a manner that has caused an Environmental Claim,
Environmental Liabilities or a violation of any applicable Environmental Law;
and (iv) the executive management of Denbury is not aware of any facts,
conditions or circumstances in connection with, related to or associated with
any of the Properties or the ownership or operation, that as of the date of this
Agreement could reasonably be expected to give rise to any material
Environmental Claim or Environmental Liabilities.  As used in this
Agreement, the term “Environmental
Liabilities” shall mean any and all liabilities arising from, based upon,
associated with or related to (i) any Environmental Claim, (ii) any applicable
Environmental Permit, (iii) any applicable Environ­mental Law or (iv) the
presence, handling, management, storage, transportation, processing, treatment,
disposal, release, threatened release, migration or escape of Environmental
Contaminants (including, without limitation, all costs arising under any theory
of recovery, in law or at equity), whether based on negligence, strict
liability, or otherwise, including, without limitation, remediation, removal,
response, restoration, abate­ment, investigative, monitoring, personal
injury, and property damage costs and all other related costs, expenses, losses,
damages, penalties, fines, liabilities and obligations (including interest paid
or accrued, attorneys’ fees, and court costs).


    
      
         


      

      
        10

        
          

        

      

      
         


      

    


    5.15          Denbury
has good title to each of the Industrial Sale Contracts, free and clear of all
liens, encumbrances or claims (other than (i) Permitted Liens and (ii) the right
of first refusal set out in the Airgas Contract), and each Industrial Sale
Contract is, in full force and effect and enforceable against Denbury and, to
Denbury’s knowledge, the counterparty thereto.  The Industrial Sale
Contracts have been conveyed to Genesis free and clear of the Bank One
Liens.

    


    5.16          Except
as set forth on Schedule 5.9 or
Exhibit A to the Contracts Assignment, (a) there are no have been no amendments
or modifications to the Industrial Sale Contracts; and (b) there are no breaches
or defaults under any Industrial Sale Contract by Denbury or any counterparty to
any Industrial Sale Contract which would reasonably be expected to prevent the
practical realization by Genesis of the benefits intended to be provided to
Genesis under such Industrial Sale Contract.

    


    5.17          Upon
due execution and delivery by Denbury of the Assignment, under Mississippi law,
(i) the Assignment will constitute the legal, valid, and binding conveyance of
the Production Payment and will constitute a burden upon all of the CO2 production
from the Subject Interests, and (ii) the Production Payment will constitute real
property.

    


    5.18          Except
with respect to the Industrial Sale Contracts and/or as set forth in Schedule 5.18, (i)
neither the Subject Interests, the CO2
attributable thereto nor the Denbury Pipeline are subject, committed or
dedicated to any contract, agreement or arrangement regarding the transportation
or sale of CO2
production; (ii) no third party has any call, right of first refusal or
preferential right to purchase or transport any such CO2 that has
not been waived or the time for giving such consents or waivers has expired in
accordance with the terms of such call or rights; and (iii) no third party has
any purchase option with respect to any such CO2 or the
Denbury Pipeline.


    
      
         


      

      
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    VI.

    REPRESENTATIONS
AND WARRANTIES OF GENESIS

    


    Genesis
hereby represents and warrants to Denbury as follows:

    


    6.1          
 Genesis is a limited partnership duly formed and validly existing under
the laws of the State of Delaware.  Genesis possesses the legal right,
power and authority, and qualifications to conduct its business and own its
properties, except where the failure to so possess would not, individually or
collectively, have a Material Adverse Effect.  Genesis has the legal
right, power and authority to execute and deliver this Agreement, the Assignment
and the other Master Documents and to perform all of its obligations hereunder
and thereunder, including unanimous approval of the transactions by the audit
committee of Genesis Energy, Inc., the general partner of Genesis, such audit
committee consisting solely of independent directors (the “Audit
Committee”).

    


    6.2           
The execution, delivery and performance by Genesis of this Agreement and the
other Master Documents are within its powers and authority, have been duly
authorized by all necessary board of director action on the part of Genesis
Energy, Inc., (in its capacity as general partner of Genesis) and by the Audit
Committee and do not and will not (i) violate any Governmental Requirement
currently in effect having applicability to Genesis, other than violations which
would not, individually or collectively, cause a Material Adverse Effect, or
(ii) violate Genesis' limited partnership agreement or other governing
documents, or (iii) result in a breach of or constitute a default (excluding
breaches or defaults which, individually or collectively, would not have a
Material Adverse Effect) under any indenture, bank loan, or credit agreement or
farm-out agreement, program agreement or operating agreement, or any other
agreement or instrument to which Genesis is a party or by which Genesis or its
properties may be currently bound or affected.

    


    6.3           
Genesis is not in default under any Governmental Requirement, indenture,
agreement, or instrument that would reasonably be expected to cause a Material
Adverse Effect nor does any fact or condition exist at this time that would
reasonably be expected to cause a Material Adverse Effect now or in the future
under any Governmental Requirement, indenture, agreement or instrument; and all consents or
approvals under such indentures, agreements, and instruments necessary to permit
the valid execution, delivery, and performance by Genesis of the Master
Documents have been obtained.

    


    6.4        
   This Agreement and the other Master Documents have been duly
executed and delivered by Genesis, and this Agreement and the Master Documents
constitute the legal, valid, and binding acts and obligations of Genesis
enforceable against Genesis in accordance with their terms, subject, however, to
bankruptcy, insolvency, reorganization, and other laws affecting creditors’
rights generally and general principles of equity.  There are no
bankruptcy, insolvency, reorganization, receivership or arrangement proceedings
pending, being contemplated by or, to the knowledge of Genesis, threatened
against Genesis.

    


    6.5          
 All authorizations, consents, approvals, licenses, and exemptions of, and
filings or registrations with, any Governmental Authority, that are required for
the valid execution and delivery by Genesis of, or the performance by Genesis of
its obligations under, this Agreement or the other Master Documents have been
obtained or performed or the period for objection thereto expired, other than
those which, if not obtained or performed, would not individually or
collectively have a Material Adverse Effect; and no consent or vote of the
limited partners of Genesis is required for the execution, delivery or
performance by Genesis of this Agreement and the other Master Documents under
Genesis’ limited partnership agreement or other documents to which Genesis is a
party.


    
      
         


      

      
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    6.6      
     There are no suits or proceedings pending or, to
Genesis' knowledge, threatened against Genesis before any Governmental
Authority, that if decided adversely to the interest of Genesis would reasonably
be expected to have a Material Adverse Effect.

    


    6.7       
    The Production Payment to be acquired by Genesis
pursuant to this Agreement is being acquired for Genesis’ own account and for
investment and not for distribution in violation of applicable securities
laws.

    


    VII.

    PAYMENT
TO DENBURY

    


    7.1       
    As consideration for the sale of the Production Payment
to Genesis and the assignment of the Assigned Contract Interests to Genesis by
Denbury, Genesis shall pay to Denbury at Closing, $24,925,000 in
cash.

    


    VIII.

    DISCLAIMER
OF WARRANTIES

    


    8.1          
 Denbury has allowed Genesis the opportunity to review the title to the
Subject Interests, to satisfy itself as to all matters pertaining to the
transactions contemplated by this Agreement, including but not limited to the
sufficiency of CO2 reserves
attributable to the Subject Interests to satisfy the CO2 delivery
requirements under the Assigned Contract Interests, and to conduct other due
diligence with respect to the Production Payment, the Subjects Interests, the
Subject Lands, the Denbury Pipeline, the Jackson Dome Plant and the Industrial
Sale Contracts as Genesis deems necessary to consummate the transactions
contemplated by this Agreement.

    


    8.2      
     OTHER THAN THE EXPRESS REPRESENTATIONS AND
WARRANTIES PROVIDED BY DENBURY HEREIN AND IN THE OTHER MASTER DOCUMENTS, DENBURY
MAKES NO WARRANTIES AS TO (i) THE PRESENCE, QUALITY AND QUANTITY OF CO2 RESERVES
ATTRIBUTABLE TO THE SUBJECT INTERESTS, (ii) THE AMOUNT, VALUE, QUALITY,
QUANTITY, VOLUME OR DELIVERABILITY OF ANY CO2 OR CO2 RESERVES
IN, UNDER OR ATTRIBUTABLE TO THE SUBJECT LANDS, (iii) THE GEOLOGICAL OR
ENGINEERING CONDITION OF THE SUBJECT LANDS, (iv) THE ABILITY OF THE SUBJECT
LANDS TO PRODUCE CO2, INCLUDING
WITHOUT LIMITATION, PRODUCTION RATES, DECLINE RATES AND RECOMPLETION
OPPORTUNITIES, (v) ANY PROJECTIONS AS TO EVENTS THAT COULD OR COULD NOT OCCUR,
(vi) THE ACCURACY, COMPLETENESS, OR MATERIALITY OF ANY DATA, INFORMATION OR
RECORDS FURNISHED TO GENESIS IN CONNECTION WITH THE SUBJECT INTERESTS, SUBJECT
LANDS, THE DENBURY PIPELINE AND JACKSON DOME PLANT, INCLUDING INFORMATION
CONTAINED IN ANY EXHIBIT OF THIS AGREEMENT, ANY SEISMIC DATA AND DENBURY’S
INTERPRETATION OR ANALYSIS OF SAME, OR (vii) ANY OTHER MATTERS CONTAINED IN OR
OMITTED FROM ANY INFORMATION OR MATERIAL FURNISHED TO GENESIS BY
DENBURY.  ANY DATA, INFORMATION OR OTHER RECORDS FURNISHED BY DENBURY
ARE PROVIDED TO GENESIS AS A CONVENIENCE AND GENESIS’ RELIANCE ON OR USE OF THE
SAME IS AT GENESIS’ SOLE RISK.


    
      
         


      

      
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    IX.

    INDEMNITY

    


    9.1      
     Denbury hereby indemnifies Genesis and its
successors and assigns and affiliates (each a “Genesis Indemnified
Party”) against, and agrees to defend and hold each Genesis Indemnified
Party harmless from and against, any and all obligations, liabilities, claims,
demands, suits, debts, accounts, liens or encumbrances, and all costs and
expenses, including reasonable attorneys’ fees relating thereto (collectively,
“Claims”), that
any Genesis Indemnified Party may suffer or incur and that result from (a) the
ownership or operation of the Subject Interests, (b) the ownership of the
Industrial Sale Contracts prior to the Effective Date, (c) any inaccuracy of any
representation or warranty of Denbury contained in this Agreement or in any
other Master Document, (d) any breach of any covenant or agreement of Denbury
contained in this Agreement or in any other Master Document, including but not
limited to the covenants relating to the Retained Obligations; provided,
however, that such indemnification shall not be construed to cover or include
any of the matters identified in Section 8.2 (including but not limited to
disclaimers of warranties relating to CO2 reserves
or production) or any Claims to the extent, but only to the extent, such Claims
are determined to be not payable because they fall within the scope of the force
majeure provisions contained in the Master Documents or the Industrial Sale
Contracts.

    


    9.2        
   Genesis hereby indemnifies Denbury and its successors and
assigns and Affiliates (each a “Denbury Indemnified
Party”) against, and agrees to defend and hold each Denbury Indemnified
Party harmless from and against, any and all Claims that each Denbury
Indemnified Party may suffer or incur and that result from (a) except to the
extent of any Claims arising solely as a result of Denbury’s execution of the
Assignment, the ownership or operation of the Production Payment, (b) except to
the extent of any Claims arising as a result of Denbury’s failure to comply with
the Retained Obligations, the ownership of the Industrial Sale Contracts after
the Effective Date, (c) any inaccuracy of any representation or warranty of
Genesis contained in this Agreement or any other Master Document, or (d) any
breach of any covenant or agreement of Genesis contained in this Agreement or
any other Master Document; provided, however, that such indemnification shall
not be construed to cover or include any Claims to the extent, but only to the
extent, such Claims are determined to be not payable because they fall within
the scope of  the force majeure provisions contained in the Master
Documents or the Industrial Sale Contracts.

    


    9.3        
   No person entitled to indemnification hereunder or otherwise
to damages in connection with or with respect to the transactions contemplated
in the Agreement and the other Master Documents  shall settle,
compromise or take any other action with respect to any Claim that could
prejudice or otherwise adversely impact the ability of the person providing such
indemnification or potentially liable for such damages to defend or otherwise
settle or compromise with respect to such Claim.


    
      
         


      

      
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    9.4        
   Each Party entitled to indemnification hereunder or otherwise
to damages in connection with the transactions contemplated in Agreement or the
other Master Documents shall take all reasonable steps to mitigate all losses,
costs, expenses and damages after becoming aware of any event or circumstance
that could reasonably be expected to give rise to any losses, costs, expenses
and damages that are indemnifiable or recoverable hereunder or in connection
herewith.

    


    9.5       
    The indemnification provisions provided for in this
Agreement shall be applicable whether or not the losses, costs, expenses and
damages in question arose solely or in part from the gross, active, passive or
concurrent negligence, strict liability or other fault of Genesis or Denbury, as
applicable.  The parties acknowledge that this statement complies with
the express negligence rule and is conspicuous.

    


    X.

    CLOSING

    


    10.1          Unless
the Parties otherwise agree in writing, the closing of the transactions
contemplated by this Agreement (the “Closing”) will occur
on the date this Agreement is executed as first set forth above (the “Closing
Date”)

    


    10.2          At
Closing, the following events shall occur, each being a condition precedent to
the others and each being deemed to have occurred simultaneously with the
others:

    


    (a) 
          Genesis shall
deliver to Denbury the cash consideration described in Section 7.1 by wire
transferring immediately available funds to the account of Denbury pursuant to
wiring instructions furnished by Denbury to Genesis prior to the Closing
Date;

    


    (b)  
         The Parties shall execute,
acknowledge and deliver the Assignment and the Contracts
Assignment;

    


    (c)    
       The Parties shall execute and deliver
the T&P Agreement;

    


    (d)     
      Denbury shall obtain and deliver to Genesis
multiple executed originals of the Agreement with Lenders executed by the
holders of the Bank One Liens, in form and substance substantially similar to
the Agreement with Lenders attached hereto as Exhibit
F;

    


    (e)       
    Denbury shall obtain and deliver to Genesis multiple
executed originals of an acceptable release of liens with respect to the Bank
One Liens encumbering the Subject Interests conveyed to Genesis pursuant to the
Assignment; and


    
      
         


      

      
        15

        
          

        

      

      
         


      

    


    (f)         
   The Parties shall execute and deliver any other documents or
instruments necessary or appropriate to effect or support the transactions
contemplated in this Agreement.

    


    10.3          Promptly
following the Closing, Genesis will cause counterparts of the Assignment, a
mutually agreeable Memorandum of T&P Agreement, Agreement with Lenders and
financing statements to be filed for record in all appropriate records in
appropriate filing locations.  Genesis will pay for all documentary,
filing and recording fees required in connection with the filing and recording
of the Master Documents.

    


    XI.

    COVENANTS
AND AGREEMENTS OF DENBURY

    


    During
the Term, and unless Genesis otherwise agrees in writing, Denbury covenants as
follows, and agrees and undertakes, to perform each and all of the following
covenants at Denbury’s sole and entire cost and expense:

    


    11.1          Denbury
will (without regard to the burden of the Production Payment) conduct and carry
on the development, maintenance and operation of the Subject Interests with
reasonable and prudent business judgment and in accordance with good oil and gas
field practices and all applicable Governmental Requirements, and will drill
such wells as a reasonably prudent operator would drill from time to time in
order to develop the Subject Interests and to protect them from drainage.
Nothing contained in this Section, however, shall be deemed to prevent or
restrict Denbury from electing not to participate in any operation that is to be
conducted under the terms of any operating agreement, unit operating agreement,
contract for development or similar instrument affecting or pertaining to the
Subject Interests (or any portion thereof) and allowing consenting parties to
conduct nonconsent operations thereon, if such election is made by Denbury in
good faith and in conformity with sound field practices. After the date of this
Agreement, Denbury shall not enter into any transaction(s) or agree to any
arrangements which, after taking into account then current required third party
sales (including sales under the Industrial Sale Contracts) and Denbury’s and
its affiliates’ usage, would result or be reasonably anticipated to result in an
inability of Denbury to deliver the Scheduled Delivery Volumes to
Genesis.

    


    11.2          Denbury
shall not voluntarily abandon any well heretofore or hereafter completed for
production of CO2 on any of
the Subject Lands or surrender, abandon or release any Subject Interest or any
part thereof; provided however, that nothing in this Agreement shall obligate
Denbury to continue to operate any well or to operate or maintain in force or
attempt to maintain in force any Lease when, in Denbury’s reasonable opinion,
exercised in good faith and as would a prudent operator not burdened by the
Production Payment, such well or Lease ceases to produce or is not capable of
producing in paying quantities (without regard to the burden of the Production
Payment) and it would not be economically practical, in Denbury’s reasonable
judgment (determined without regard to the burden of the Production Payment), to
restore the productivity of such well by reworking, reconditioning, deepening,
or plugging back such well.  The expiration of a Lease in accordance
with its terms and conditions shall not be considered to be a voluntary
surrender or abandonment of such lease.


    
      
         


      

      
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    11.3          With
respect to all oil, gas and mineral leases included in the Subject Interests,
Denbury will in all material respects comply with, or cause to be complied with,
all pertinent Governmental Requirements that from time to time are promulgated
to regulate the production and sale or production or sale of CO2.

    


    11.4          Certain
of the Subject Interests may have been heretofore pooled and unitized for the
production of CO2.  Such
Subject Interests are and shall be subject to the terms and provisions of such
pooling and unitization agreements, and the Production Payment shall apply to
and affect only that portion of the production from such units that accrues to
such Subject Interests as burdened, encumbered or otherwise affected by any and
all applicable pooling and unitization agreements.  Denbury shall have
the right and power to pool and unitize any of the Subject Interests and to
alter, change or amend or terminate any pooling or unitization agreements
heretofore or hereafter entered into, as to all or any part of the Subject
Lands, upon such terms and provisions as Denbury shall in its sole discretion
determine.  If and whenever through the exercise of such right and
power, or pursuant to any Governmental Requirement hereafter enacted, any of the
Subject Interests are pooled or unitized in any manner, the Production Payment,
insofar as it affects such pooled or unitized Subject Interests shall also be
pooled and unitized, and in any such event such Production Payment shall apply
to and affect only the production that accrues to such Subject Interests, as
burdened, encumbered or otherwise affected by such pooling and
unitization.

    


    11.5          Denbury
shall pay, or cause to be paid, before delinquent, all Taxes, except Taxes being
contested in good faith.  In the event that after the expiration of
the Term, additional Taxes should be charged against Genesis which are
attributable to Production Payment Gas produced during the Term and delivered to
Genesis at the Receipt Point(s), Denbury shall be obligated to pay such
Taxes.

    


    11.6          Subject
to the provisions of Section 2.4 hereof
and Section 2.8 of the T&P Agreement, Denbury will at all times maintain,
preserve and keep all Personal Property, the in good repair, working order and
condition in all material respects, and promptly make all necessary and proper
repairs, renewals, replacements and substitutions, to the end that the value of
such Personal Property, shall in all material respects be fully preserved and
kept in such condition as at all times to permit the most efficient and
economical use and operation thereof.

    


    11.7          Denbury
will (i) use all commercially reasonable efforts to promptly pay, or cause to be
paid, as and when due and payable all material rentals and royalties payable in
respect of the Subject Interests or the production therefrom, and all material
costs, expenses and liabilities for labor and material to the extent that the
same are attributable to the Subject Interests, the Personal Property, the
Denbury Pipeline or the Jackson Dome Plant, (ii) never permit any lien (other
than Permitted Liens) to be affixed or burden the Subject Interests or Personal
Property, even though inferior to the Production Payment, for any such bills
which may be legally due and payable (other than Permitted Liens or liens which,
individually or collectively, could not have a Material Adverse Effect), and
(iii) never permit to be created or to exist in respect to any of the Subject
Interests or the Personal Property, any other or additional lien on a parity
with or superior to the Production Payment, except for Permitted Liens or other
than liens which, individually or collectively, could not have a Material
Adverse Effect.


    
      
         


      

      
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    11.8          Denbury
shall not resign as operator of any Subject Interest operated by Denbury until
and unless the successor operator has been approved in writing by Genesis, such
approval not to be unreasonably withheld or delayed.

    


    11.9          Denbury
agrees to furnish Genesis, upon request, with copies of all electrical logs,
core analyses, and completion reports relating to any well now or hereafter
drilled upon the Subject Lands.  Denbury agrees to furnish Genesis,
upon request, with full information regarding the condition of the wells and the
lease operations relating to the Subject Interests.  The reasonable
cost of copying any data and information described in this Section shall be paid
by Genesis.  Furthermore, Denbury’s disclosure of the data and
information described in this Section is subject to and may be limited by any
confidentiality obligations or other restrictions to which Denbury may be
subject.

    


    11.10        In
the event that any Lease or other interest that constitutes a part of the
Subject Interests should expire or terminate for any reason (a “Lost Interest”), and
within one (1) year from date of such expiration or termination of such Lost
Interest, Denbury should reacquire such Lost Interest, then such Lost Interest
shall be charged and burdened with the Production Payment to the same extent
that the Lost Interest was charged and burdened with the Production Payment, and
Denbury agrees to execute such documents and agreements as may be necessary or
appropriate to effect the intent and purpose of this section.

    


    11.11        Airgas
Obligations.

    


    
      	
            	
              (a)

            	
              Section
      4.2 of the Airgas Contract provides that Airgas at no time will pay a
      price for CO2
      delivered under the terms of the Airgas Contract that is greater than the
      lowest price paid by any other customer of the Seller (as defined therein)
      or its affiliates receiving CO2 from
      the Source Field (as such terms are defined in the Airgas
      Contract).  Section 4.2 of the Airgas Contract is hereafter
      referred to as the “Favored Nations Clause.”  If at any time
      during the Term Denbury triggers the Favored Nations Clause, then Denbury
      agrees to (i) immediately notify Genesis of such sales and (ii) reimburse
      Genesis for the incremental reduction of proceeds received by Genesis
      under the Airgas Contract resulting from the payment of a reduced price by
      Airgas.  If at any time and from time to time Airgas notifies
      Genesis that it is entitled to a lower price pursuant to the Favored
      Nations Clause (a “Reduced Price
      Notice”), Genesis will immediately furnish the Reduced Price Notice
      to Denbury.  Genesis agrees not to take any action with respect
      to the Reduced Price Notice until Denbury has had an opportunity to review
      the matter described in the Reduced Price Notice and, if it deems
      appropriate, to contest such
matter.

            


    

    


    
      	
            	
              (b)

            	
              Section
      11.4 of the Airgas Contract (the “RFR Provision”)
      provides that Airgas shall have the right to exercise its rights under the
      Right of First Refusal and Option to Purchase Agreement (as defined
      therein) upon the occurrence of certain events.  Each Party
      agrees to notify the other Party if it receives the notice provided in the
      RFR Provision or if it becomes aware that Airgas has failed to receive 75%
      of its daily requirements of CO2  on
      more than 45 days in any rolling 12-month period (an “RFR Delivery
      Failure”).  If Genesis is the cause of the RFR Delivery
      Failure (for reasons other than force majeure (as defined in the Airgas
      Contract)), then for so long as Genesis allows such RFR Delivery Failure
      to continue, Denbury shall have the right to make direct deliveries to
      Airgas in satisfaction of the delivery requirements in the Airgas Contract
      and all volumes delivered by Denbury pursuant to this sentence shall
      reduce the Scheduled Delivery Volumes otherwise deliverable pursuant to
      the Production Payment and, furthermore, for purposes of the Term, the
      total aggregate volumes included in the Term shall be reduced by an amount
      equal to 200% of the volumes so delivered pursuant to this
      sentence.  If Denbury is the cause of the RFR Delivery Failure
      (for reasons other than (i) force majeure (as defined in the Airgas
      Contract) or (ii) a lack of reserves or insufficient
      deliverability  of reserves (provided such lack of reserves or
      insufficient deliverability of reserves is not the result of a failure of
      Denbury to comply with covenants set out in Article XI)), and Airgas
      exercises its purchase rights in accordance with the RFR Provision, then,
      in addition to any other remedies that may be available, the Parties shall
      use good faith efforts to reach an agreement with respect to the
      allocation of proceeds paid by Airgas and their application to the
      Production Payment after it exercises its rights under the RFR Provision,
      and if the Parties are unable to reach such agreement, then such matter
      shall be resolved in accordance with the arbitration provisions contained
      in Article
      XIV.

            


    


    
      
         


      

      
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              (c)

            	
              Notwithstanding
      anything herein to the contrary, without the prior written consent of the
      other Party hereto, no Party shall amend or otherwise modify any terms or
      provisions of the Right of First Refusal and Option to Purchase
      Agreement.

            


    

    


    11.12        Denbury
acknowledges that, pursuant to this Agreement and the Contracts Assignment,
Genesis is acquiring all of Denbury’s rights, interest and obligations in the
Industrial Sale Contracts.  Notwithstanding such acquisition, there
are certain covenants and obligations under the Industrial Sale Contracts that
must be satisfied by the owner or operator of the Subject
Interests.  Accordingly, Denbury covenants that, until the termination
of each such Industrial Sale Contract and subject to the applicable force
majeure provisions in the applicable Industrial Sale Contracts, it will fully
and timely perform each and every covenant and agreement in each Industrial Sale
Contract which must be performed by the Seller (as defined in each Industrial
Sale Contract) and which relates to the ownership and operations of each Source
Field, the production of carbon dioxide from each Source Field, and/or the
measurement, metering, testing and other transportation services related
thereto, including but not limited to the obligations and covenants in (a)
Sections 2.5, 3.3, 5.3, 6.1, 6.2, 6.3, 6.4, 6.5, 6.6, 6.7, 7.1, 7.2, 7.3, 7.4,
8.1, 8.2 and 9.2 of the Airgas Contract; (b) Sections 2.5, 5.3, 6.1, 6.2, 6.3,
6.4, 6.5, 6.6, 6.7, 7.1, 7.2, 7.3, 7.4, 8.1 and 8.2 of the BOC-Brandon Contract;
and (c) Sections 2.5, 5.3, 6.1, 6.2, 6.3, 6.4, 6.5, 6.6, 6.7, 7.1, 7.2, 7.3,
7.4, 8.1 and 8.2 of the Praxair Contract. The covenants and agreements of
Denbury described in this section are collectively referred to herein as the
“Retained
Obligations”.

    


    11.13        Denbury
shall not sell CO2 to any
Buyer (as such term is defined in each of the Industrial Sale Contracts), unless
each Buyer has purchased from Genesis, pursuant to each of the Industrial Sale
Contracts, the total Daily Contract Quantity and Additional Volumes (as such
terms are defined in each of the Industrial Sale Contracts) under each
Industrial Sale Contract; provided, however, that notwithstanding the foregoing,
Denbury shall be permitted to sell CO2 to any
such Buyers pursuant to and in accordance with the terms of the following
contracts (and any amendments, replacements or renewals thereof that perpetuate
only the rights and obligations currently existing under such contracts): (i)
Contract for Sale of Carbon Dioxide Gas dated November ___, 1995 (presumed to be
effective February 1, 1996), by and between Pennzoil Exploration and Production
Company, as Seller, and Pisgah Partners, L.P., as Buyer; (ii) Contract for Sale
of Carbon Dioxide Gas dated December 18, 2000, by and between Magna Carta Group
LLC, as Seller, and Messer Greisheim Industries, Inc., as Buyer; and (iii)
Carbon Dioxide Sale and Purchase Contract dated and effective February 1, 1996,
by and between Shell Western E&P Inc., as Seller, and Liquid Carbonic
Industries Corporation, as Buyer, as amended by Amendment No. 1 dated as of
December 1, 1996, between Seller and Buyer.


    
      
         


      

      
        19

        
          

        

      

      
         


      

    


    11.14        For
so long as the Industrial Sale Contracts are in force and effect, the Production
Payment Gas delivered by Denbury to Genesis shall meet the minimum quality
specification set forth in the Industrial Sale Contracts.

    


    XII.

    EXCHANGE
OF INFORMATION; AUDIT RIGHTS

    


    12.1         
After Closing, (a) Denbury will keep Genesis advised of Denbury’s activities in
the fields encompassing the Subject Lands insofar as such activities relate to
the terms and provisions of this Agreement, (b) each Party shall promptly give,
or cause to be given to the other Party, written notice of any event or
circumstance, including, but not limited to every adverse claim or demand made
by any Person or any Governmental Authority, that could reasonably be expected
to have a Material Adverse Effect, (c) each Party shall give or cause to be
given to the other Party written notice of every default under any Industrial
Sale Contract and every adverse claim or demand made by any Person or any
Governmental Authority related to any Industrial Sale Contract, promptly upon
obtaining knowledge of such default, claim or demand and shall include in such
notice a description in reasonable detail of the default, claim or demand and if
such Party obtained knowledge of such default, claim or demand as a result of
the receipt of a written notice, a copy of such written notice, and (d) each
Party shall also provide information to the other Party as needed to confirm
compliance with each Party’s obligations under this Agreement and the other
Master Documents, to keep the other Party updated as to matters relating to this
Agreement and the other Master Documents, from time to time, and in response to
reasonable inquiries by the other Party.

    


    12.2          After
Closing, each Party, by notice in writing to the other Party, shall have the
right to audit the other Party’s accounts and records relating to the Production
Payment, the Industrial Sale Contracts, and compliance with this Agreement and
the other Master Documents.  Audit rights pertaining to the T&P
Agreement are subject to the terms and provisions with respect to auditing as
set forth in the T&P Agreement.  Audit rights otherwise pertaining
to the Production Payment, the Industrial Sale Contracts, or other compliance
issues under this Agreement and the other Master Documents are subject to the
terms of Section
12.3.

    


    12.3          Audits
shall not be conducted more than twice each year without prior approval of the
Party whose records are being audited (the “Audited Party”), and
shall be made at the expense of the Party conducting the audit.  The
Audited Party shall reply in writing to an audit report within thirty (30) days
after receipt of such report.  The Parties will endeavor to agree upon
and make any adjustments revealed to be necessary by any audit reports submitted
by the Audited Party pursuant to the provisions of this Section.  If
the Parties cannot agree on any adjustment, the disputed adjustment will not be
made, and such disputed adjustment shall be resolved in accordance with the
dispute resolution provisions described in Section
14.1.


    
      
         


      

      
        20

        
          

        

      

      
         


      

    


    XIII.

    NOTICES

    


    13.1          All
notices under this Agreement must be in writing.  Any notice with
respect solely to the matters in the T&P Agreement shall be in accordance
with the provisions pertaining to notices set forth in the T&P
Agreement.  Any other notice under this Agreement may be given by
personal delivery, facsimile or email transmission, U.S. mail (postage prepaid),
or commercial delivery service, and will be deemed duly given when received by
the Party charged with such notice and addressed as follows:

    


    
      	
            	
              If
      to Denbury:

            	
              Denbury
      Resources Inc.

            


    

    5100
Tennyson Parkway, Suite 3000

    Plano, TX
75024

    Attn: Ray
Dubuisson

    Telephone:       972-673-2044

    
      	
               
      

            	
              Fax:                   
      972-672-2299

            


    

    
      	
               
      

            	
              email:                
      rayd@denbury.com

            


    

    


    
      	
            	
              If
      to Genesis:

            	
              Genesis
      Crude Oil, L.P.

            


    

    500
Dallas, Suite 2500

    Houston,
TX 77002

    Attn:  Mark
Gorman

    Telephone:       (713)
860-2500

    
      	
               
      

            	
              Fax:           
              (713)
  860-2640

            


    

    
      	
               
      

            	
              email:                
      mgorman@genesiscrudeoil.com

            


    

    


    13.2          Either
Party, by written notice to the other, may change the address or the individual
to which or to whom notices are to be sent under this Agreement.

    


    XIV.

    DISPUTE
RESOLUTION

    


    14.1          Except
as may be otherwise specifically provided herein, all disputes arising under or
in connection with this Agreement shall be resolved in accordance with the
procedures described in Exhibit E attached
hereto and incorporated herein by reference for all purposes.

    


    XV.

    CURTAILMENTS
AND INTERRUPTIONS

    


               15.1           If
Denbury is unable on any day, whether due to interrupted or curtailed service at
the Jackson Dome Plant, lack of deliverability from the producing wells, or lack
of capacity on the Denbury Pipeline, or any other reason, to transport all
volumes of CO2 tendered
for transportation through the Denbury Pipeline (inclusive of all volumes which
Denbury may tender for transportation for its own account), and excluding those
instances of inability to transport due to force majeure (in which cases the
specific provisions as to force majeure in the Master Documents or in the
relevant Industrial Sale Contracts will control), Denbury may interrupt or
curtail service or receipt or delivery of CO2, without
liability to or penalty payable to Genesis, in a manner (i) so that volumes
attributable to the Airgas Contract (“Airgas Volumes”) are
subject to curtailment only after complete curtailment of volumes attributable
to all other parties, and then Airgas Volumes will be curtailed only as may be
permitted under the Airgas Contract; (ii) so that the Excess Volumes and the
volumes attributable to each of the BOC Contract and the Praxair Contract will
be curtailed on a basis that is pro-rata to the volumes attributable to each of
those contracts set forth in Schedule 5.18 and
Denbury for its own account; provided that if the interruption or curtailment of
service is longer than 45 consecutive days, then any volumes which Denbury
tenders for transportation for its own account will not be included in the
proration under clause (ii) above unless and until 100% of the Scheduled
Delivery Volumes have been transported, determined in each case on a daily
basis.  In all circumstances above requiring curtailment, all
pro-rations of volumes shall be proportionately based on the actual average
volumes which have been transported during the 30 days before the interruption
or curtailment of service occur.


    
      
         


      

      
        21

        
          

        

      

      
         


      

    


    XVI.

    MISCELLANEOUS
PROVISIONS

    


    16.1          This
Agreement and the other Master Documents constitute the entire understanding
between the Parties relating to the subject matter hereof, and supersede all
prior negotiations, discussions, agreements and understandings between the
Parties, whether written or oral, regarding the subject matter of this
Agreement.

    


    16.2          This
Agreement may be amended, modified, and supplemented only by written instrument
executed by both Parties and explicitly referred to as an amendment to this
Agreement.

    


    16.3          The
waiver by either Party of any breach of the provisions of this Agreement shall
not constitute a continuing waiver of other breaches of the same or other
provisions of this Agreement.

    


    16.4          Neither
Party shall be liable to the other for any special, indirect, consequential or
punitive damages of any nature, or for attorneys’ fees.

    


    16.5          The
interests of the Parties in this Agreement, and the interests acquired by virtue
of this Agreement and the interests retained by Denbury in the Subject Lands,
may not be subsequently assigned, either in whole or in part, unless (i) any
such assignee expressly agrees in writing to assume and perform all of the
assignor's obligations under this Agreement and the other Master Documents, and
(ii) such assignment is made and accepted expressly subject and subordinate to
this Agreement and the other Master Documents.  Further, any
subsequent assignment, either in whole or in part, to an entity that is not as
financially creditworthy at the time of the assignment as the assignor shall
require the consent of the other party hereto, which consent may not be
unreasonably withheld or delayed.  Subject to the compliance with the
terms of clauses (i) and (ii) above, either Party may encumber or pledge its
respective interests in connection with a financing without the consent of the
other Party.  Any purported assignment, sale, conveyance or other
transfer in contravention of the foregoing terms shall be null and
void.  Subject to the foregoing, this Agreement binds and inures to
the benefit of the Parties and their respective permitted successors and
assigns, and nothing contained in this Agreement, express or implied, is
intended to confer upon any other person or entity any benefits, rights, or
remedies.


    
      
         


      

      
        22

        
          

        

      

      
         


      

    


    16.6          If
any provision of this Agreement is found by a court of competent jurisdiction to
be invalid or unenforceable, that provision will be deemed modified to the
extent necessary to make it valid and enforceable, and if it cannot be so
modified, it shall be deemed deleted and the remainder of the Agreement shall
continue and remain in full force and effect.

    


    16.7          This
Agreement shall be governed by and construed according to the laws of the State
of Texas, excluding any conflicts-of-law rule or principle that might apply the
law of another jurisdiction.  Venue for any arbitration, lawsuit or
other legal action in any way pertaining to this Agreement or any other Master
Document shall be in Dallas, Dallas County, Texas.

    


    16.8          The
Parties agree to do, execute, acknowledge and deliver all further acts,
conveyances and instruments as may be reasonably necessary or appropriate to
carry out the provisions of this Agreement.

    


    16.9          The
omission of certain provisions of this Agreement from the Assignment does not
constitute a conflict or inconsistency between this Agreement and the
Assignment, and will not effect a merger of the omitted
provisions.  To the fullest extent permitted by law, all provisions of
this Agreement are hereby deemed incorporated into the Assignment by
reference.  The headings and titles in this Agreement are for
convenience only and shall have no significance in interpreting or otherwise
affect the meaning of this Agreement.

    


    16.10        This
Agreement may be executed in counterparts, each of which shall constitute an
original and all of which shall constitute one document.

    


    16.11        This
Agreement may be circulated and executed by facsimile transmission, and in such
event, the signatures of the Parties on facsimiles shall be considered as
original and self-proving for all purposes.

    


    16.12        Genesis
and Denbury agree to treat the Subject Interest as a production payment under
Section 636(a) of the Code.  Both Genesis and Denbury agree (i) to
file all federal income tax and state income tax returns consistent with this
Section 16.12, and (ii) to use a comparable yield of 7.5% for purpose of
Treasury Regulation Section 1.1275-4(b).


    
      
         


      

      
        23

        
          

        

      

      
         


      

    


    This
Agreement is executed as of the date set out in the first paragraph of this
Agreement, but shall be effective as of the Effective Date.

    


    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        
                                                                          
                                                                            
                                                                              
                                                                                
                                                                                  
                                                                                    
                                                                                      
                                                                                        
                                                                                          
                                                                                            
                                                                                              
                                                                                                
                                                                                                  
                                                                                                    
                                                                                                      	 
      	
                                                                                                              DENBURY
      RESOURCES INC.

                                                                                                            
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                                                                                                              By:

                                                                                                            	
                                                                                                              /s/ Phil
      Rykhoek                                             

                                                                                                            
	 
      	 
      	
                                                                                                              Phil
      Rykhoek

                                                                                                            
	 
      	 
      	
                                                                                                              Senior
      Vice President and

                                                                                                            
	 
      	 
      	
                                                                                                                  Chief
      Financial Officer

                                                                                                            
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                                                                                                              GENESIS
      CRUDE OIL, L.P.

                                                                                                            
	 
      	
                                                                                                              By:

                                                                                                            	
                                                                                                              Genesis
      Energy, Inc.

                                                                                                            
	 
      	 
      	
                                                                                                              Its
      General Partner

                                                                                                            
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                                                                                                              By:

                                                                                                            	
                                                                                                                /s/  Mark J.
      Gorman      

                                                                                                            
	 
      	 
      	 
      	
                                                                                                              Name:

                                                                                                            	
                                                                                                              Mark
      J. Gorman

                                                                                                            
	 
      	 
      	 
      	
                                                                                                              Title:

                                                                                                            	
                                                                                                              President

                                                                                                            


                                                                                                    

                                                                                                  

                                                                                                

                                                                                              

                                                                                            

                                                                                          

                                                                                        

                                                                                      

                                                                                    

                                                                                  

                                                                                

                                                                              

                                                                            

                                                                          

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

     

    24