Oil Company Denbury to Buy Encore for $3.2 Billion - Futures and Commodities * US * News * Story

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Oil Company Denbury to Buy Encore for $3.2 Billion

Published: Sunday, 1 Nov 2009 | 10:08 PM ET

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By: Reuters

Denbury Resources [DNR Loading... () ] has agreed to buy Encore Acquisition [EAC Loading... () ]for $3.2 billion to create one of North America's largest oil production and exploration companies.

Ana Maria Otero / AP

Under the deal, Encore shareholders will get $50 per share, comprised of $15 in cash and $35 in Denbury common stock, the two companies said on Sunday.

The transaction is expected to close in the first quarter of next year.

The companies value the total transaction at $4.5 billion. That number includes $1.3 billion in Encore's debt and about $400 million for a minority interest in Encore Energy Partners[ENP Loading... () ], Encore's Chief Financial Officer Bob Reeves said in an email.

Denbury plans to finance the deal with equity and debt, and has received a commitment letter from JPMorgan for a $1.6 billion bank revolving credit facility and $1.25 billion bridge financing.

JPMorgan also advised Denbury. Barclays Capital advised Encore.

"The combined companies have a unique blend of large oil fields with huge upside potential," said Encore Chief Executive Jonny Brumley in a statement.