Denbury Resources Inc, a US oil and natural-gas producer, said it would buy Encore Acquisition Co for about US$4.5 billion to add fields in the Rocky Mountains and Gulf of Mexico.
Encore stockholders will get US$50 per share, i.e., US$15 in cash and US$35 in Denbury common stock, the companies said in a joint press release distributed via Business Wire.
Encore closed at US$37.07 a share on Saturday. The stock is up 45 percent this year.
The acquisition will double oil reserves for Plano, Texas-based Denbury, a specialist in extracting crude from mature fields. Denbury said it would postpone its third-quarter earnings release and conference call because of the transaction, which will allow Denbury to undertake larger projects using carbon dioxide to get oil in a process known as enhanced oil recovery.
“With the addition of the Encore properties, we more than double our current inventory of oil reserves recoverable with carbon dioxide and greatly expand our future growth potential with a second new core EOR area in the Rockies,” Denbury CEO Phil Rykhoek said in the statement. The combined companies will have total reserves of more than 500 million barrels of oil equivalent, he said.
Trading in bullish options on Encore jumped to a 17-month high last week before Denbury announced that it would purchase the company. Call trading rose to 3,338 contracts on Tuesday, the most since May last year. After US markets closed that day, Encore reported less profit than analysts estimated on average, and the shares plunged 7.1 percent the next day.
Denbury is the biggest oil and natural gas operator in Mississippi and has Barnett shale natural-gas assets in Texas, the company’s Web site said. Encore has operates oil and natural gas projects in the Rockies, Mid-Continent and Permian basins.
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