PLANO, Texas, May 1, 2012 (GLOBE NEWSWIRE) -- Denbury Resources Inc. (NYSE:DNR) ("Denbury" or the "Company") today announced that it has entered into an agreement to acquire Thompson Field in Fort Bend County, Texas from a private seller for $360 million in cash and a production payment, described below. The acquisition is expected to close in early June and is subject to satisfactory completion of due diligence reviews and customary closing conditions. The purchase price is subject to standard purchase price adjustments for revenues and costs between the June 1, 2012 effective date and the closing date of the transaction.
Denbury plans to fund the purchase with approximately $213 million of the cash received from its 2012 non-core property sales and borrowings under its revolving credit facility. A significant portion of the purchase that will be funded with proceeds from the property sales is anticipated to qualify as a like-kind exchange. This qualification is expected to allow Denbury to defer paying approximately $30 million of cash taxes in 2012 on the taxable gains realized from the property sales.
Transaction Highlights
Phil Rykhoek, Denbury's President and CEO, commented, "We are excited about the opportunity Thompson Field presents and its strategic fit with our operations in the Gulf Coast region. Thompson Field is in close proximity to the Green Pipeline which will allow it to be connected to this CO2 transportation system with a minimal level of pipeline infrastructure spending. Further, in light of their similarities, we expect to use the knowledge gained from our CO2 flood at Hastings Field to optimize the planned CO2 flood of the Thompson Field. The acquisition adds to our deep inventory of tertiary development projects in the Gulf Coast region that we plan to develop with our natural source of CO2 from Jackson Dome and anthropogenic CO2 sources in the region. While we are still in the process of incorporating the field into our development plan, we anticipate first tertiary oil production will not occur prior to 2017. The acquisition bolsters our ability to deliver consistent growth in tertiary oil production and proved reserves for the remainder of the decade."
Conference Call
Denbury management will discuss the transaction on the Company's first quarter 2012 results conference call that is scheduled for Thursday, May 3, 2012 at 10:00 A.M. (Central). Interested parties are invited to listen to a live broadcast of the conference call that will be accessible through the Company's website at www.denbury.com.
Denbury Resources Inc. is a growing independent oil and natural gas company. The Company is the largest combined oil and natural gas operator in both Mississippi and Montana, owns the largest reserves of CO2 used for tertiary oil recovery east of the Mississippi River, and holds significant operating acreage in the Rocky Mountain and Gulf Coast regions. The Company's goal is to increase the value of acquired properties through a combination of exploitation, drilling and proven engineering extraction practices, with its most significant emphasis relating to tertiary oil recovery operations. For more information about Denbury, please visit www.denbury.com.
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This press release contains forward-looking statements that involve risks and uncertainties including estimated oil reserve potential, original oil in place, future volumes recoverable with a CO2 flood, and daily production volumes of the acquired assets, and other risks and uncertainties detailed in the Company's filings with the Securities and Exchange Commission, including Denbury's most recent reports on Form 10-K and Form 10-Q. These risks and uncertainties are incorporated by this reference as though fully set forth herein. These statements are based on engineering, geological, financial and operating assumptions that management believes are reasonable based on currently available information; however, management's assumptions and the Company's future performance are both subject to a wide range of business risks, and there is no assurance that these goals and projections can or will be met. Actual results may vary materially. The estimates of potential reserves in this press release, comprised of proved, probable and possible reserves based on the most recent drilling and technical data available to the Company, are more speculative than estimates of proved reserves and are subject to greater uncertainties, and accordingly the likelihood of recovering these reserves is subject to substantially greater risk.