Denbury Resources Inc., Dallas, (NYSE: DNR) has completed 75% of its planned $270 million sale of Barnett shale assets to privately held Talon Oil & Gas LLC for net proceeds of approximately $197.5 million.
The company previously announced it had agreed to divest 60% of its Barnett shale natural gas properties, in northern Texas.
Production from Denbury’s interest in the properties averaged approximately 45.7 million cu. ft. equivalent (77% gas) during 2008, representing approximately 16% of the company’s annual production and 18% of its total proved reserves as of Dec. 31, 2008.
As a result of the sale, Denbury has lowered its 2009 production guidance by 3,500 bbl. of oil equivalent per day to 47,500 bbl. equivalent per day. The sale also led to Denbury’s bank borrowing base being reduced from $1 billion to $900 million; the bank amount, however, will remain $750 million.
As part of the deal, Denbury will transfer natural gas swaps for 2010 and 2011 to the buyer: 16 million cu. ft. per day at an average price of $5.65 per MMBtu and 13 million cu. ft. per day at an average price of $6.16 per MMBtu, respectively. The swaps’ net deficit market value of approximately $8.1 million was deducted from the sales price, and approximately 83% of these contracts were transferred in the initial closing.
The company initially used the proceeds to repay most of its outstanding bank debt of $220 million but says it ultimately plans to use cash from the sale to fund its tertiary operations.
Denbury says it is awaiting third-party consents to the sale in order to close on the remaining assets.
Denbury is the largest oil and natural gas operator in Mississippi and has acreage in the Barnett shale play near Fort Worth, Texas; onshore Louisiana and Alabama; and in southeastern Texas.
Recommended Reading
Shell Taps Bloom Energy’s SOEC Technology for Clean Hydrogen Projects
2024-03-07 - Shell and Bloom Energy’s partnership will investigate decarbonization solutions with the goal of developing large-scale, solid oxide electrolyzer systems for use at Shell’s assets.
Energy Transition in Motion (Week of March 1, 2024)
2024-03-01 - Here is a look at some of this week’s renewable energy news, including Chevron’s plans for a solar-to-hydrogen facility in California.
Could Concentrated Solar Power Be an Energy Storage Gamechanger?
2024-03-27 - Vast Energy CEO Craig Wood shares insight on concentrated solar power and its role in energy storage and green fuels.
Tangled Up in Blue: Few Developers Take FID on Hydrogen Projects
2024-04-03 - SLB, Linde and Energy Impact Partners discuss hydrogen’s future and the role natural gas will play in producing it.
Chevron, Brightmark JV Opens RNG Facility in Arizona
2024-04-10 - Eloy RNG produces RNG using anaerobic digesters at the Caballero Dairy in Arizona, Brightmark said April 10.