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 ("CO 2") flooding and close to Denbury's existing or planned CO 2 pipelines. In addition, Denbury has agreed in principle to either purchase an interest in the CO 2 reserves in ExxonMobil's LaBarge Field in southwestern Wyoming or purchase incremental CO 2 from that field, on terms and conditions to be mutually agreed upon by the parties. The purchase of an interest in CO 2 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 CO 2 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 CO 2 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.
Asset HighlightsWebster Field – Gulf Coast Region:
- Webster Field was discovered in 1937 by Humble Oil and oil production from the field peaked in the late 1970s at over 67,000 barrels per day ("Bbls/d"). Denbury is acquiring a nearly 100% working interest and nearly 80% net after royalty interest in the field which is located approximately eight miles northeast of both Denbury's Hastings CO 2 flood and the Green Pipeline which transports CO 2 from Denbury's source in Mississippi.
- Net to Denbury's acquired interest, the field is producing approximately 1,000 BOE/d, approximately 86% of which is oil. Conventional (non-tertiary) proved reserves are estimated at approximately 3 million barrels of oil equivalent, all of which are proved developed producing.
- Webster Field is similar to Denbury's Hastings and Thompson fields, producing oil from the Frio zone at similar depths, and is also believed to be an ideal candidate for a CO 2 flood. Denbury estimates the field's original oil in place ("OOIP") at approximately 900 million barrels and the zones initially targeted for CO 2 flood are estimated to have approximately 550 million barrels of OOIP. Based upon an estimated recovery factor of between 13% and 17% of the OOIP for the targeted Frio zones, Denbury estimates that a CO 2 flood of Webster Field could potentially recover an estimated 60 million to 75 million barrels of oil, net to its interest.
- Hartzog Draw Field, located in the Powder River Basin of northeastern Wyoming, was discovered in 1975 and oil production from the field peaked in 1978 at over 35,000 Bbls/d. In the transaction Denbury is receiving an 83% working interest and 71% net after royalty interest in the oil producing Shannon Sandstone zone and a 67% working interest and 53% net after royalty interest in the natural gas producing Big George Coal zone. The field is located approximately 12 miles from Denbury's Greencore Pipeline which is under construction and anticipated to be completed in late 2012, and which will transport CO 2 from Denbury's source near Lost Cabin, Wyoming to its Bell Creek Field in Montana.
- Net to Denbury's acquired interest, the field is producing approximately 2,600 BOE/d, approximately 52% of which is oil. Conventional (non-tertiary) proved reserves are estimated at approximately 7 million barrels of oil equivalent, all of which are proved developed producing and 58% of which is oil.
- Denbury estimates the Hartzog Draw Field's OOIP at approximately 370 million barrels and, based upon an estimated recovery factor of between 8% and 11% of this amount, that a CO 2 flood of the field could potentially recover an estimated 20 million to 30 million barrels of oil, net to its interest.
- ExxonMobil has agreed in principle to either sell Denbury roughly one-third of the LaBarge field CO 2 reserves or to expand the volume of CO 2 it will sell to Denbury under an existing sales contract, subject to completion of definitive documentation. Based on the current capacity of the LaBarge plant and availability, either option would allow for the delivery of up to 115 MMcf/d of CO 2. The CO 2 would initially be used to flood Denbury's Bell Creek Field and the Hartzog Draw Field being acquired in this transaction.
CONTACT: DENBURY CONTACTS: Phil Rykhoek, President and CEO 972.673.2000 Mark Allen, Senior Vice President and CFO 972.673.2000 Jack Collins, Executive Director, Investor Relations 972.673.2028