Denbury sells assets, cuts 2009 production

NEW YORK - Denbury Resources Inc. on Monday lowered its 2009 production outlook and said its borrowing base was cut after it sold a large portion of its Barnett Shale natural gas assets.

The oil and gas developer said last week it completed three-quarters of its previously announced $270 million sale of 60 percent of its Barnett assets to Talon Oil & Gas LLC.

In May, the company said selling the properties in northern Texas will allow it to focus on its core oil operations, which are more profitable and carry lower risk. Production related to the sold properties averaged about 45.7 millions of cubic feet equivalent per day in 2008, about 16 percent of Denbury's 2008 production, the company said.

The sale will result in lost output, prompting Denbury to slash its production outlook by 3,500 barrels of oil equivalent per day (BOE/d) to an adjusted average of 47,500 BOE/d. In addition, the company's bank borrowing base was reduced to $900 million from $1 billion, but the bank commitment amount is unchanged at $750 million.

"This sale further enables us to concentrate our investment and management focus on our tertiary operations where we have lower risk, virtually no competition in our areas of operation and higher profitability," said Phil Rykhoek, Denbury's CEO.

Shares of Denbury fell 52 cents, or 3.8 percent, to $13.31 in morning trading.

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