Newfield Acquires Gulf of Mexico Assets from Denbury

Newfield Exploration has acquired all of the outstanding stock of Denbury Offshore, Inc., the subsidiary of Denbury Resources, Inc. that holds all of its Gulf of Mexico assets. After purchase price adjustments, total consideration is expected to be approximately $187 million, inclusive of the purchase of approximately $5 million in working capital.

"The Denbury Gulf of Mexico assets are an excellent fit with our offshore operations and this will lead to substantial operating costs savings," said David A. Trice, Newfield President and CEO. "These cost savings coupled with the hedging of the expected natural gas production from these properties at a weighted average price of $6.26 per Mcf through December 2005 will ensure a quick payout and a superior rate of return on this acquisition. The acquired assets include operatorship and high working interests in several mature, giant fields. We will conduct detailed field studies to identify additional exploitation and exploration opportunities."

The transaction adds approximately 50 MMcfe/d of net gas production, of which 97 percent is natural gas. The acquisition was financed through cash on hand and the Company's revolving credit facility.

Transaction Highlights:

  • 38 Gulf of Mexico blocks, of which 32 are Company-operated.
  • 16 total fields. 90% of the reserves and 95% of the production come from seven fields.
  • 80% of the wells are Company-operated.
  • 95% of the reserves are Company-operated.
  • Average working interest in the properties is >75%.
  • Properties can be managed without additional G&A expense.

  • As a result of this transaction, Newfield increased its 2004 production guidance to 235-245 Bcfe, an increase of 7 - 11 percent over 2003 production of 220.6 Bcfe.