Denbury Resources on Monday closed the first phase of its previously announced Bakken sale and asset exchange with Exxon Mobil Corporation and its wholly-owned subsidiary XTO Energy. In the first of two closings, ExxonMobil paid cash of approximately $1.3 billion (which includes preliminary closing adjustments) and transferred to Denbury ExxonMobil's operating interests in Webster Field in Texas and Hartzog Draw Field in Wyoming.
For the second phase closing, which is expected to take place prior to year-end, Denbury retained approximately 17.5 percent of its pre-closing interest in Bakken area assets, and ExxonMobil withheld $350 million of cash consideration for such Bakken area assets. The parties continue to work to finalize an agreement and documentation pursuant to which Denbury will receive an interest in the CO2 reserves in ExxonMobil's LaBarge Field in Wyoming in exchange for the retained Bakken interests, together with any necessary cash adjustments. Barring this exchange taking place in the second phase closing as expected, Denbury would sell its retained 17.5 percent Bakken area interest to ExxonMobil for the $350 million of cash which has been withheld.
Denbury continues to pursue using a portion of the cash proceeds from the first phase closing to purchase interests in additional oil fields in the Gulf Coast or Rocky Mountain regions that are well suited for CO2 enhanced oil recovery which would qualify for like-kind exchange treatment for federal income tax purposes. Accordingly, a substantial amount of the cash paid in the first phase closing is being held in qualified trust accounts to fund any future potential asset purchases.
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