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Denbury Agrees To Acquire Rocky Mountain Properties For $1.05 Billion

Stocks in this article: DNR

Builds on Leading Position in Cedar Creek Anticline Announces Energy Conference Presentation and Fourth Quarter Results Conference Call

PLANO, Texas, Jan. 15, 2013 (GLOBE NEWSWIRE) -- Denbury Resources Inc. (NYSE:DNR) ("Denbury" or the "Company") today announced that it has entered into an agreement to acquire producing property interests in the Cedar Creek Anticline ("CCA") of Montana and North Dakota from a wholly-owned subsidiary of ConocoPhillips for $1.05 billion cash. The assets to be purchased include additional interests in certain of Denbury's existing operated fields in CCA along with operating interests in other CCA fields.   

The acquisition is subject to satisfactory completion of customary title and environmental due diligence, as well as the satisfaction of customary closing conditions. The acquisition is expected to close near the end of the first quarter of 2013 with a January 1, 2013 effective date. The purchase price is subject to standard adjustments for revenues and costs of the properties to be acquired from the effective date to the closing date.

Denbury plans to fund the purchase out of the approximately $1.3 billion of cash received from its Bakken sale and asset exchange with ExxonMobil completed in December 2012, $1.05 billion of which was deposited in qualified trust accounts to allow for potential future asset purchases that would qualify for like-kind exchange treatment. The utilization of federal tax rules on like-kind exchanges for both the CCA properties to be acquired and the Rocky Mountain carbon dioxide ("CO 2") reserves acquired in the ExxonMobil exchange transaction is expected to allow Denbury to defer more than $400 million of the $500 million of cash taxes originally estimated on the Bakken transaction prior to completing the CO 2 reserves acquisition and agreeing to acquire the CCA properties.

Denbury estimates that at year-end 2012 the proved conventional (non-tertiary) reserves associated with the CCA properties to be acquired were approximately 42 million barrels of oil equivalent of which approximately 95% was oil and 4% natural gas liquids and 91% was proved developed producing. Net to the acquired interest, Denbury estimates current average production from the to-be-acquired properties at approximately 11,000 barrels of oil equivalent per day ("BOE/d"), of which 99% is oil and natural gas liquids. Assuming the acquisition closes at the end of the first quarter of 2013, Denbury estimates that its full-year 2013 average daily production would increase by approximately 7,700 BOE/d.  

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