Plano, Texas-based oil and gas company Denbury Resources Inc. (NYSE:DNR)
agreed to acquire Encore Acquisition Co. (NYSE:EAC) for about $4.5 billion. The deal value includes a collar mechanism, about $1.2 billion in debt and the value of Encore's minority stake in Encore Energy Partners LP (NYSE:ENP). Fort Worth's Encore Acquisition develops onshore North American oil and natural gas reserves.
In a statement, Denbury CEO Phil Rykhoek said, "Encore has built an enviable asset portfolio in the Rockies, anchored by mature legacy crude oil assets, and our combined size and scale of operations will allow us to undertake significantly larger CO2 projects in the Gulf Coast and the Rockies." Encore CEO Jonny Brumley added, "The combined companies have a unique blend of large oil fields ... the transaction recognizes the value Encore."
Denbury received a commitment letter for an underwritten financing from J.P. Morgan Chase & Co. (NYSE:JPM) for a new $1.6 billion bank revolving credit facility and a $1.25 billion bridge financing to subordinated debt facility.
As Dirk Leasure, just named
head of the financial sponsors group at BMO Capital Markets, recently pointed out to us -- it helps to be able to provide financing as well as advice on deals in this economic climate. J.P. Morgan Securities Inc. advised Denbury, while Barclays Capital advised Encore. Baker & Hostetler LLP counseled Denbury and Baker Botts LLP counseled Encore.
For
analysis of this transaction, see The Deal Pipeline (subscription required). -
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