Denbury Closes on First Phase of Exxon Asset Sale

PLANO, Texas (AP) -- Denbury Resources (NYSE: DNR  ) said Monday that it closed on the first phase of its deal to sell its holdings in the Bakken oil field to ExxonMobil (NYSE: XOM  ) for more than a billion dollars in cash, plus other assets.

Plano, Texas-based Denbury said that in the first of two closings ExxonMobil paid $1.3 billion in cash and transferred to Denbury its operating interests in Webster Field in Texas and Hartzog Draw Field in Wyoming.

The second phase of the deal is expected to close by the end of the year.

Denbury kept about 17.5 percent of its pre-closing interest in Bakken area assets and ExxonMobil withheld $350 million of cash for those assets. The companies continue to work toward a deal where Denbury will get an interest in the carbon dioxide reserves in ExxonMobil's LaBarge Field in Wyoming in exchange for the retained Bakken interests, along with any necessary cash adjustments, Denbury said.

If that doesn't happen, Denbury plans to sell its retained 17.5 percent Bakken area interest to ExxonMobil for the $350 million withheld.

The acquisition is expected to boost Irving, Texas-based Exxon's holdings in the massive North Dakota and Montana oil field by 50 percent, increasing its U.S. oil production by 3 percent and making it one of the biggest leaseholders in the Bakken field.

Oil production in the Bakken has soared in recent years, recently passing 600,000 barrels per day, or about 10 percent of total U.S. production. That's helped fuel the biggest jump in domestic oil production in more than 40 years. North Dakota recently passed Alaska and California to become the second biggest oil producing state in the U.S., behind Texas.

Denbury said it still plans to use some of the cash proceeds from the first phase of the sale to buy interests in additional oil fields on the Gulf Coast or Rocky Mountain regions that are well suited for CO2-enhanced oil recovery, in which carbon dioxide is injected into geological formations holding crude.

In afternoon trading, Denbury shares fell 1 cent to $15.42, while Exxon shares fell 56 cents to $87.58.


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