Denbury Resources Inc., Plano, Tex., reported it would acquire and merge with Penn Virginia Corp. in a $1.7-billion deal that Denbury says would offer the combine short-cycle investment optionality and future enhanced oil recovery potential in the oil window of the Eagle Ford shale.
The combine would hold an industry-leading oil weighting with 94% liquids production and 90% oil production; 343 million boe of proved oil, natural gas liquids, and natural gas reserves as of Dec. 31, 2017; second-quarter production of 84,000 boe/d; and an estimated $6 billion enterprise value as of Oct. 26.
In the deal, which includes the assumption of debt, Penn Virginia shareholders will receive 12.4 shares of Denbury common stock and $25.86 cash for each share of Penn Virginia common stock. Penn Virginia shareholders will be permitted to elect all cash, all stock or a mix of stock and cash, subject to proration, which will result in the aggregate issuance of about 191.6 million Denbury shares and payment of $400 million in cash.
Upon closing of the transaction, expected in first-quarter 2019, Denbury stockholders will own about 71% of the combine, and Penn Virginia shareholders will own about 29%.
Denbury plans to finance the deal with a combination of equity (issued to Penn Virginia shareholders), debt and cash on hand.
In addition to customary closing conditions, the transaction is subject to the approval of Penn Virginia shareholders and to approval by Denbury’s stockholders of the issuance of common stock and an amendment to Denbury’s charter to increase its authorized shares. Denbury’s board will expand to 10 directors from eight to include two independent members of Penn Virginia’s board.