Vanguard to acquire Denbury's 46 -% Encore Energy stake for $380 mn

Denbury Resources Inc, an independent US oil and natural gas exploration company, today said that it will sell its 46 per cent stake in Encore Energy Partners to Vanguard Natural Resources, for $380 million in order to repay bank debt.

Texas-based Denbury had acquired the 46-per cent stake worth $400 million in Encore Energy Partners as part of its $4.5 billion buyout of Encore Acquisition Company in November 2009. (See: Denbury Resources to acquire Encore for $4.5 billion)

After the acquisition, Denbury sold in April 2010 certain oil assets of Encore Acquisition to Houston-based Quantum Resources Management LLC for $900 million, (See: Denbury strikes $900-million partial asset sale deal with Quantum Resources) to pay down the company's $1.6 billion bank credit facility, which had $800 million outstanding as on 31 March 2010.

Denbury, which currently has a long-term debt of around $2.8 billion, said it will use the net proceeds from the current sale of its stake in Encore Energy Partners to repay outstanding bank debt and to fund any shortfall between its anticipated cash flows from operations and planned capital expenditures during 2011.

Encore Energy Partners assets consist primarily of producing and non-producing oil and natural gas properties in the Big Horn Basin in Wyoming and Montana, the Williston Basin in North Dakota and Montana, the Permian Basin in West Texas and New Mexico, and the Arkoma Basin in Arkansas and Oklahoma.