Plano-based Denbury completes majority of its Barnett Shale sale

by PegNews wire

FORT WORTH — Denbury Resources Inc. announced today that it has closed the sale of approximately three-quarters of its previously announced $270 million sale of 60% of its Barnett Shale natural gas assets, with net proceeds of approximately $197.5 million.

The company initially used the proceeds to repay most of its outstanding bank debt, which prior to closing was $220 million, but ultimately plans to re-invest the sale proceeds in its tertiary operations during 2010.

Phil Rykhoek, chief executive officer, stated, “This sale further enables us to concentrate our investment and management focus on our tertiary operations where we have lower risk, virtually no competition in our areas of operation and higher profitability. We plan to use these funds to increase our 2010 tertiary related spending beyond what we could accomplish using only cash flow. At current oil prices, our tertiary investments provide a better rate-of-return than the Barnett Shale, and we are more optimistic about near-term oil prices than natural gas prices. This has prompted us to further concentrate our focus on our core tertiary oil assets.

“The proceeds from this sale allow us to accelerate our tertiary program, and we anticipate production and reserve growth to follow. Additionally, this gives us both greater liquidity and flexibility in case of further decreases in commodity prices, and an unused bank credit line if attractive acquisition opportunities become available.”

Denbury Resources Inc. is a growing independent oil and natural gas company.

Source: Denbury Resources