Denbury Resources Inc. is selling its Haynesville and East Texas natural gas assets for $217.5 million to an undisclosed private oil and gas company. The sale is expected to close within 45 days with an effective date of Sept. 1, 2010.
Production attributable to the properties averaged 34 MMcfe/d during the second quarter.
“With this sale, we have nearly completed our planned divestiture program relating to the Encore assets acquired this March [see Daily GPI, Nov. 3, 2009], all designed to reduce our leverage incurred from the Encore acquisition and to focus our capital investments and energy on our core tertiary operations and the acquired Bakken assets where we believe we have lower risk, greater predictability and higher profitability,” said CEO Phil Rykhoek. “Given the continued strength in oil prices versus natural gas prices and our significant inventory of tertiary projects and Bakken drilling locations, we want to focus our time and money on these properties rather than in the Haynesville.”
A portion of the sale proceeds will be used to repay most of the company’s outstanding bank debt, Denbury said. RBC Richardson Barr acted as adviser to Denbury.
Denbury said that because of the sale, it expects to terminate a portion of its remaining 2010 and 2011 gas hedges and expects to realize between $10 million and $15 million from the termination.
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