United States: Texas developer Denbury Resources to acquire Rocky Mountain oil producer Encore in $2.64B deal.Byline: manish03 Oil and gas developer Denbury Resources Inc. said Sunday it will pay $2.64 billion in cash and stock to purchase Encore Acquisition Co., in a move to become one of the largest independent oil exploration and production companies in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. . Encore shareholders will receive $50 for each share held, including $15 in cash and $35 in stock. The purchase price represents a 35 percent premium to the stock's closing price Friday. Based on Encore's 52.8 million common shares outstanding at July 31, the acquisition is valued at about $2.64 billion. Denbury also plans to assume more than $1 billion in Encore debt and will take over Encore's minority stake in Fort Worth, Texas-based Encore Energy Partners LP, valued at nearly a half billion dollars. In total, the companies are estimating the deal is worth $4.5 billion. Denbury operates mainly in Mississippi, and holds interests in the Barnett Shale The Barnett Shale is a geological formation of economic significance. It consists of sedimentary rocks of Mississippian age in the U.S. State of Texas. The formation is estimated to stretch from the city of Dallas to west of the city of Fort Worth and south, covering 5,000 square region near Fort Worth, Texas Fort Worth is the fifth-largest city in the state of Texas, 18th-largest city in the United States[1], and voted one of "America’s Most Livable Communities. , and properties onshore in Louisiana, Alabama and Southeast Texas Southeast Texas is a subregion of East Texas located in the southeast corner of the U.S. state of Texas. The subregion is geographically centered around the Houston–Sugar Land–Baytown and Beaumont–Port Arthur metropolitan areas. . It owns hefty reserves of carbon dioxide carbon dioxide, chemical compound, CO2, a colorless, odorless, tasteless gas that is about one and one-half times as dense as air under ordinary conditions of temperature and pressure. , which Denbury injects into older oil wells to boost oil production, a method known as tertiary production. Fort Worth, Texas-based Encore buys and develops oil and natural gas reserves from onshore fields in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . The combined company will continue to be known as Denbury Resources Inc. and remain headquartered in Plano, Texas. "Encore has built an enviable asset portfolio in the Rockies, anchored by mature legacy crude oil assets, and our combined size and scale of operations will allow us to undertake significantly larger CO2 projects in the Gulf Coast and the Rockies," said Denbury CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Phil Rykhoek, in a statement. Denbury said it will finance the deal with a combination of equity and debt. It said J.P. Morgan has committed to providing a new $1.6 billion bank revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility and a $1.25 billion in debt financing Debt Financing When a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise to repay . The latter will be used to fund the cash portion of the purchase price, and replace $825 million worth of outstanding subordinated notes as well as replace a bank credit line which has about $180 million outstanding. Denbury expects to issue between 115 million and 146 million shares of common stock to fund the equity portion of the deal, which would boost its total shares outstanding to between 364.4 million and 395.4 million. Denbury said it will sell off the companies' non-core oil and gas properties next year and use the estimated $500 million in proceeds to pay down its debt. The combined company may choose to sell some of the properties to Encore Energy Partners. The boards of both Denbury and Encore have approved the deal, which is expected to close in the first quarter of 2010, subject to shareholders' approval. After the acquisition is complete, Denbury stockholders will own between 63 percent and 68 percent of the new company and Encore stockholders will own between 32 percent and 37 percent. Denbury's board and senior management will remain uncha Copyright : Euclid Infotech Pvt. Ltd. Provided by Syndigate.info an Albawaba.com company |
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