Denbury to buy Gulf Coast Thompson oil field

Denbury Resources Inc., Plano, Tex., has agreed to buy Thompson field in Fort Bend County, Tex., from a private seller for $360 million cash and a production payment. Closing is expected in early June.

Denbury plans to develop Thompson’s undeveloped conventional reserves, estimated at 17 million bbl net to the nearly 100% working interest being acquired, at a cost of $12 million/year while it designs a carbon dioxide flood. Implementing the flood could require a capital cost of $8-10/bbl, and the flood could recover 30-60 million bbl of oil based on performance of the company’s other Gulf Coast floods.

Thompson, producing 2,200 b/d of oil to the interest being acquired, lies 18 miles west of and at similar depth as Hastings field that Denbury is flooding with CO2 shipped via the Green Pipeline from Denbury’s source in Jackson Dome, Miss.

Discovered in the early 1930s, the 8,454-acre field peaked in 1974 at 41,000 b/d of oil. Denbury estimated original oil in place at 650 million bbl in Oligocene Frio. It estimated OOIP in the zones initially targeted for CO2 flooding at 300 million bbl.

The seller will receive a production payment of a 5% net revenue interest when oil production exceeds 3,000 b/d and the field is under CO2 flood, anticipated no earlier than 2017. Denbury said knowledge from Hastings will help it optimize the Thompson field flood.

Contact Alan Petzet at alanp@ogjonline.com.

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