Denbury to improve balance sheet by paying down debt with asset funds

By Devika Patel

Knoxville, Tenn., Aug. 8 – Denbury Resources Inc. leadership plans to pay down its bank debt with proceeds from a planned asset sale within the next 12 months as part of a bid to enhance the company’s balance sheet.

Denbury’s management intends to have outstanding borrowings reduced to between $425 million and $475 million and have availability of nearly $550 million.

The company had total debt principal of approximately $3 billion as of June 30, with $490 million outstanding on its bank credit facility and nearly $500 million of remaining borrowing base availability.

“Based on our projections, we can expect to end the year with bank debt of between $425 million and $475 million and availability on the bank line approaching $550 million,” senior vice president and chief financial officer Mark C. Allen said on the company’s second quarter earnings conference call on Tuesday.

“In addition, we have signed an agreement to begin actively marketing for sale certain non-productive surface acreage ideally suited for commercial development in the Houston area, which we anticipate would be used to pay down a portion of the outstanding borrowings on our bank credit facility within the next 12 months,” Allen said.

The debt paydowns are part of the company’s plan to improve its balance sheet.

“While we have adequate liquidity, and our debt service is manageable with no near-term maturities, to be sustainable in a $50 oil price environment, we must improve our balance sheet,” president and chief executive officer Chris Kendall said on the call.

“Improving our balance sheet can take many forms and there is not likely to be one silver bullet that immediately fixes everything but we’ll continue to seek opportunities to meaningfully improve our balance sheet,” Kendall said.

Denbury is a Plano, Texas-based oil and natural gas company emphasizing carbon dioxide-enhanced oil recovery.

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