Sunday, November 1, 2009

Oil company Denbury To Buy Encore For $3.2 Billion

. Sunday, November 1, 2009

By stockOzone team

Denbury Resources Inc (DNR.N) has agreed to buy Encore Acquisition Co (EAC.N) for $3.2 billion to create one of North America's largest oil production and exploration companies.

Under the deal, Encore shareholders will get $50 per share, comprised of $15 in cash and $35 in Denbury common stock, the two companies said on Sunday.

The transaction is expected to close in the first quarter of next year.

The companies value the total transaction at $4.5 billion. That number includes $1.3 billion in Encore's debt and about $400 million for a minority interest in Encore Energy Partners LP (ENP.N), Encore's Chief Financial Officer Bob Reeves said in an email.

Denbury plans to finance the deal with equity and debt, and has received a commitment letter from JPMorgan (JPM.N) for a $1.6 billion bank revolving credit facility and $1.25 billion bridge financing.

JPMorgan also advised Denbury. Barclays Capital (BARC.L) advised Encore.

"The combined companies have a unique blend of large oil fields with huge upside potential," said Encore Chief Executive Jonny Brumley in a statement.

The combined company will continue to be known as Denbury Resources and will be headquartered in Plano, Texas.

Together, the companies will have over 500 million BOE (barrels of oil equivalent) of additional potential barrels recoverable with CO2 tertiary operations.

Disclosure: Author does not own any of the stocks discussed here.

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