Denbury Eyes Encore

2 November 2009 (Last Updated November 2nd, 2009 18:30)

Denbury Resources has signed a definitive merger agreement to acquire Encore Acquisition for nearly $4.5bn. The transaction includes $1.3bn in Encore's debt and nearly $400m for a minority stake in Encore Energy Partners, according to a report by Reuters. Denbury will f

Denbury Resources has signed a definitive merger agreement to acquire Encore Acquisition for nearly $4.5bn.

The transaction includes $1.3bn in Encore's debt and nearly $400m for a minority stake in Encore Energy Partners, according to a report by Reuters.

Denbury will fund the acquisition through equity and debt, and has obtained a commitment letter from JPMorgan for $1.25bn bridge financing and a $1.6bn bank revolving credit facility.

The combined company will continue to be referred to as Denbury Resources and will have its headquarters in Plano, Texas.

The merger is expected to strengthen Denbury's position as one of the biggest crude oil focused, independent North American exploration and production companies.

The acquisition will also establish one of the biggest CO2 enhanced oil recovery (EOR) platforms diversified across the Rocky Mountain and Gulf Coast regions.

The combined companies will hold more than 500 million BOE of extra potential barrels recoverable with CO2 tertiary operations.

Denbury CEO Phil Rykhoek told Reuters that the addition of Encore properties would more than double the present inventory of oil reserves recoverable with CO2, and expand future growth potential with a second new core EOR area in the Rockies.

The acquisition is expected to start in the first quarter of 2010.