Denbury Finalizes Second Phase of Bakken Exchange
Denbury Resources Inc. Monday announced the closing of the second and final phase of its previously announced Bakken sale and asset exchange with Exxon Mobil Corporation and its wholly-owned subsidiary XTO Energy Inc. (collectively, "ExxonMobil"). In the first closing, ExxonMobil retained $350 million cash and Denbury retained a 17.5 percent interest in the Bakken area assets to enable an exchange of the retained Bakken assets for roughly one-third of ExxonMobil's CO2 reserves in LaBarge Field in Wyoming. In this second phase closing, ExxonMobil exchanged the contemplated interest in the CO2 reserves and residual cash balances, after preliminary closing adjustments, for Denbury's retained interest in the Bakken area assets. Denbury has now transferred all of its Bakken area assets to ExxonMobil for approximately $1.3 billion of cash (which includes preliminary closing adjustments) along with ExxonMobil's operating interests in Webster Field in Texas and Hartzog Draw Field in Wyoming and a portion of its CO2 reserves in Wyoming.
Based on the current capacity of the LaBarge plant and subject to availability, Denbury expects that it could receive up to approximately 115 million cubic feet per day of CO2 from the plant. Denbury will pay ExxonMobil a fee to deliver the CO2 which will initially be used to flood its Bell Creek and Grieve fields along with the newly acquired Hartzog Draw Field. This additional Rocky Mountain CO2 supply will allow Denbury to accelerate the planned CO2 flood of Hartzog Draw Field and potentially defer a portion of the planned development of its Riley Ridge CO2 reserves.
Denbury continues to pursue using a portion of the cash proceeds from the transaction 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 transaction remains in qualified trust accounts to fund any future potential asset purchases.
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Company: Denbury Resources Inc. more info
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