Denbury is selling its interest in the entity which owns 100% interest of Encore’s general partner and approximately 20.9 million ENP common units, or approximately 46% of Encore’s outstanding common units.
Up to $80m of the total consideration to be paid by Vanguard in the sale may be paid in Vanguard common units, at the option of Vanguard.
Denbury said by virtue of its ownership of 100% of Encore’s general partnership interest, it consolidates 100% of Encore’s financial results with its financial results, even though its aggregate ownership represents approximately 46% of Encore’s common ownership.
Production attributable to Encore averaged 8,630 barrels of oil equivalent per day during the third quarter of 2010, and its proved reserves at 31 December 2009 were approximately 43 million barrels of oil equivalent (67% oil).
The transaction is expected to close on or before 31 December 2010, and Denbury plans to use the proceeds from the sale to repay outstanding bank debt and to fund any shortfall between its anticipated cash flows from operations and planned capital expenditures during 2011.
