Denbury has entered into an agreement to sell its Haynesville and East Texas natural gas assets for approximately $217.5 million to a private oil and gas company. The sale is expected to close in 30 to 45 days and is subject to satisfactory completion of customary due diligence and closing conditions.
The agreement contemplates an effective date of September 1, 2010, and consequently operating net revenue after September 1, net of capital expenditures, along with other purchase price adjustments, will be accounted for as adjustments to the ultimate sales price.
Production attributable to the properties to be sold averaged approximately 34 MMcfe/d during the second quarter of 2010. The Company expects to utilize a Section 1031 like-kind-exchange with a portion of the proceeds expected from the sale of the Haynesville and East Texas assets and the previously announced Riley Ridge acquisition in order to reduce the estimated taxable gain on the sale.
The Company plans to use the balance of proceeds from the sale to repay most of its currently outstanding bank debt. RBC Richardson Barr acted as advisor to Denbury on the asset sale.
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