Denbury to Sell Encore Properties for $900MM

Denbury has entered into an agreement with Quantum Resources Management to sell certain of its oil and natural gas properties recently acquired in the merger with Encore Acquisition Company for a sales price of $900 million (before closing adjustments). The properties to be sold are primarily located in the Permian Basin in West Texas and southeastern New Mexico; the Mid-continent area, which includes the Anadarko Basin in Oklahoma, Texas and Kansas; and the East Texas Basin. The sale properties do not include the Company's Haynesville Shale, Paradox Basin, Cleveland Sand Play and Tuscaloosa Marine Shale properties. The sale is expected to close in May 2010 and is subject to satisfactory completion of customary due diligence and closing conditions. The agreement contemplates an effective date of May 1, 2010, and consequently operating net revenues after May 1, net of capital expenditures, along with any other purchase price adjustments, will be accounted for as an adjustment to the ultimate sales price.

Production attributable to the properties being sold is estimated at approximately 13,000 barrels of oil equivalent per day (approximately 2/3rds natural gas) and the December 31, 2009 proved reserves on these properties based on SEC prices as of that date were estimated to be approximately 54 million barrels of oil equivalent (approximately 64% natural gas). The proceeds from the sale will primarily be used to pay down the Company's $1.6 billion bank credit facility, which had $800 million outstanding at March 31, 2010. The Company's bank credit facility may be re-determined by the Company’s lenders as a result of the sale and could potentially be reduced; however, the Company currently believes that any such reduction would be minor relative to the sales proceeds. RBC Richardson Barr acted as advisor to Denbury on the asset sale.


Our Privacy Pledge

Most Popular Articles

From the Career Center
Jobs that may interest you
United States Houston: Account Rep, Bus Dev, Sr
Expertise: Business Development|Sales
Location: Houston, TX
Business Development Manager
Expertise: Business Development|Construction Manager|Sales
Location: Tempe, AZ
SXL- Manager, Business Development
Expertise: Business Development
Location: Newtown Square, PA
search for more jobs

Brent Crude Oil : $50.47/BBL 0.98%
Light Crude Oil : $49.72/BBL 1.09%
Natural Gas : $2.76/MMBtu 1.09%
Updated in last 24 hours