Denbury sells offshore unit
Newfield agrees to buy out stock of Denbury Offshore
Denbury Resources has sold its wholly-owned offshore operating subsidiary to Texas-based independent Newfield Exploration for about $200 million.
The sale completes the auction of its offshore properties previously announced by Denbury in March. The company has received, or expects to receive, an additional $2.8 million during 2004 from the sale of other offshore assets in separate transactions.
Denbury Offshore held all of the company's offshore assets, except for a recently drilled discovery well at High Island A-6 and all of its deep rights below 18,000 feet at West Delta block 27 in the US Gulf of Mexico.
Both of these assets were excluded from the sale to Newfield. The sale of these assets to an undisclosed third party is currently under negotiation.
Denbury Offshore had total proven reserves of 96.2 billion cubic feet equivalent, including $82 million of future development and plugging and abandonment costs, as of 31 December 2003.
In addition, Denbury's offshore unit had average production of 51.1 million cubic feet equivalent of natural gas per day during the first quarter of 2004, with preliminary estimates of production of 50 to 55 MMcfde for the second quarter of 2004.
Denbury plans to retire its bank debt with the proceeds from the sale, reducing its total debt to $225 million. The company's bank borrowing base is expected to be adjusted from $220 million to $175 million as a result of the sale.
Denbury's president and chief executive Gareth Roberts said the company now plans to focus on its lower risk tertiary operations onshore US. Specifically, the company plans to use the additional capital to accelerate development of its carbon dioxide reserves and production, accelerate the second phase of its tertiary operations, and invest additional funds in our Barnett Shale acreage in Texas and other areas of operations.