Mikaila Adams
OGFJ Associate Editor
Dallas-based Denbury Resources Inc. is offering $1 billion in Senior Subordinated Notes with the intent to use $400 million in proceeds to held finance a portion of its pending merger with Encore Acquisition Co.
Denbury expects to complete the offering by the early part of next week. The notes will be due 2020.
Net proceeds will be placed in escrow pending the closing of the oil and gas company’s merger with Encore Acquisition Co. Upon closing, Encore Acquisition will be rolled into Denbury and $400 million of the escrowed proceeds will be used to finance a portion of the merger consideration.
The merger agreement, announced last fall, is valued at roughly $4.5 billion, including the assumption of debt and the value of the minority interest in Encore Energy Partners LP.
The deal will create one of North America's largest crude-oil focused, independent oil production and exploration companies, as well as one of the largest CO2 enhanced oil recovery (EOR) platforms diversified across the Gulf Coast and Rocky Mountain regions, complemented by ownership and control of the Jackson Dome CO2 source in Mississippi and CO2 sequestration contracts secured with anthropogenic sources in the Gulf Coast, Midwest and Rockies.
Denbury is the largest oil and natural gas operator in Mississippi, owns the largest reserves of CO2 used for tertiary oil recovery east of the Mississippi River, and holds significant operating acreage onshore Alabama and properties in Southeast Texas.
Around the time the senior subordinated notes offering closes, the company intends to offer to purchase three series of Encore's outstanding senior subordinated notes (other than Encore's 9.5% Senior Subordinated Notes due 2016). The remaining $600 million of escrowed proceeds will be used to fund repurchases pursuant to these offers or any change of control offers to be made upon consummation of the merger.
J.P. Morgan Securities Inc., Banc of America Securities LLC, RBC Capital Markets Corp., UBS Securities LLC and Wells Fargo Securities, LLC are acting as joint book-running managers, with BNP Paribas Securities Corp., Credit Suisse Securities (USA) LLC, Scotia Capital (USA) Inc., Calyon Securities (USA) Inc., Capital One Southcoast, Inc., BBVA Securities Inc., Comerica Securities, Inc., ING Financial Markets LLC and Sun Trust Robinson Humphrey, Inc. acting as co-managers.
