Denbury to Buy Rockies Oilfields From ConocoPhillips

Denbury Resources Inc., the Plano, Texas-based company that uses carbon dioxide to boost output from mature oil fields, agreed to buy acreage in North Dakota and Montana from ConocoPhillips for $1.05 billion to expand its presence in the Rocky Mountains.

Denbury plans to close the deal this quarter using $1.3 billion in cash raised in December from selling assets to Exxon Mobil Corp., according to a statement today. By buying more oil fields, Denbury may be able to defer more than $400 million in taxes, according to the statement.

Denbury increased production in each of 2012’s first three quarters by using carbon dioxide, known as CO2, to help crude flow more easily from old fields. In about five years, Denbury plans to reverse the ConocoPhillips’ fields 7 percent to 9 percent annual decline, Ernesto Alegria, a spokesman for Denbury, said today in a telephone interview.

“We are now purely focused on what we do best, C02-enhanced oil recovery,” Denbury Chief Executive Officer Phil Rykhoek said in today’s statement. The company expects the acquisition will produce 140 million to 180 million barrels of crude, he said.

The 86,000 acres Denbury is acquiring yielded the equivalent of about 11,000 barrels of oil a day, offsetting 12,500 barrels of average daily production lost in the Exxon sale, according to slides posted today on the company’s website.

Shares Rise

“It’s a net positive for Denbury shares,” Tim Rezvan, a New York-based analyst for Sterne Agee & Leach Inc. who rates them a buy and owns none, said today in a telephone interview. “They’ve replaced production they sold and reduced tax leakage from the sales.”

Denbury rose 5.2 percent to $17.76 at the close in New York, the most since Aug. 3. ConocoPhillips gained 1 percent to $59.03.

The sale will add $120 million to fourth-quarter results, ConocoPhillips, based in Houston, said today in a separate statement.

ConocoPhillips has announced sales of as much as $12.5 billion of assets in the past year, according to data compiled by Bloomberg. The company targeted $8 billion to $10 billion of divestitures from 2012 to 2013 as it sought to remake itself, selling assets and spinning off its refining business.

The sale doesn’t include assets in the Bakken formation, according to ConocoPhillips.

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