2010-04-05-2010-04-05-2010-05-14
Acquired assets in Permian Basin in W. TX & NM, gaining 54 MMBOE proved, 13,000 BOE/d.
Alan Smith's Quantum Resources Management LLC, Houston, plans to acquire oil and gas properties in the Permian Basin from Denbury Resources Inc., Plano, Texas (NYSE: DNR) for $900 million.
The properties were part of Denbury's recent acquisition of Encore Acquisition Co.
The assets are primarily in the Permian Basin in West Texas and southeastern New Mexico; the Midcontinent area including the Anadarko Basin in Oklahoma, Texas and Kansas; and the East Texas Basin. Primary fields in the Permian include Fuhrman-Mascho, Howard Glasscock, Cowden North, Pegasus and Brown Bassett. East Texas fields include Gladewater and Overton. The primary Anadarko field is Norge-Marchand.
Total proved reserves as of year-end 2009 are 54 million barrels of oil equivalent (64% gas). Production is approximately 13,000 BOE per day (66% gas). Quantum will hedge a significant portion of the production for five years.
The sale properties do not include Denbury's Haynesville shale, Paradox Basin, Cleveland sand play and Tuscaloosa marine shale properties.
Quantum president and chief executive Alan Smith says, "This is a significant transaction in the core areas where we want to further build Quantum Resources. With these types of legacy assets, it gives us a great foundation to do additional acquisitions within these core areas. This is right down the fairway for us."
Denbury chief executive Phil Rykhoek says, "We are pleased that we were able to reach an agreement to sell these former Encore properties at an equitable price so quickly. This transaction significantly reduces our debt, frees up our bank credit line, restores our balance sheet to leverage ratios more in line with pre-acquisition levels, and allows us to focus our attention on our core assets."
He adds that the company plans to market the Haynesville assets that were not part of this package.
Closing is expected in May. The effective date is May 1.
Denbury plans to use proceeds to pay debt. RBC Richardson Barr is advisor to Denbury.
Privately held Quantum was formed in 2006 and focuses on long-lived, mature, domestic, onshore, oil and gas properties. The company moved from Denver to Houston last year and changed management teams at that time when Smith was hired.