PLANO, Texas, Sept. 20, 2012 (GLOBE NEWSWIRE) — Denbury Resources Inc. (NYSE:DNR) (“Denbury” or the “Company”) announced that it has entered into an agreement to sell its Bakken assets in North Dakota and Montana to Exxon Mobil Corporation and its wholly owned subsidiary XTO Energy Inc. (collectively, “ExxonMobil”). Denbury will receive $1.6 billion in cash, subject to closing adjustments, and ExxonMobil’s operating interests in Webster Field in Texas and Hartzog Draw Field in Wyoming, both of which are ideal candidates for carbon dioxide (“CO2”) flooding and close to Denbury’s existing or planned CO2 pipelines. In addition, Denbury has agreed in principle to either purchase an interest in the CO2 reserves in ExxonMobil’s LaBarge Field in southwestern Wyoming or purchase incremental CO2 from that field, on terms and conditions to be mutually agreed upon by the parties. The purchase of an interest in CO2 reserves would reduce the amount of cash received by Denbury.
The transactions are subject to satisfactory completion of customary title and environmental due diligence, as well as the satisfaction of customary closing conditions and, in the case of the LaBarge Field CO2 transaction, the entering into of definitive agreements. The transactions are expected to close late in the fourth quarter of 2012 with a July 1, 2012 effective date. The sale price is subject to standard adjustments for revenues and costs of the respective assets from the effective date to the closing date.
Denbury intends to use the cash proceeds from the transaction to pursue the purchase of additional oil fields in the Gulf Coast or Rocky Mountain regions that are suited for CO2 flooding, to fund capital expenditures, and/or to repay outstanding debt under its bank credit facility. Additionally, Denbury plans to resume its stock repurchase program begun in October 2011 under which $195 million of the $500 million of authorized repurchases have been made. Assuming no additional assets are acquired with the cash proceeds in a manner that would qualify for like-kind exchange treatment for federal income tax purposes, Denbury estimates that its after-tax cash proceeds from the transaction (without giving effect to closing adjustments) will be approximately $1.1 billion.
Proved reserves attributed to Denbury’s Bakken assets being sold were approximately 96 million barrels of oil equivalent as of December 31, 2011 and were 84% oil and natural gas liquids and 26% proved developed producing. Average production from the properties in the first half of 2012 was about 15,400 barrels of oil equivalent per day (“BOE/d”), of which 88% was oil and natural gas liquids. Denbury’s previously issued 2012 annual production guidance assumed average daily production from the Bakken properties of between 14,350 BOE/d and 16,350 BOE/d.