Denbury Resources Inc., Dallas, (NYSE: DNR) plans to acquire oil properties in Mississippi and Alabama for $250 million from an undisclosed seller. The acquisition is expected to close by the end of January 2006. The purchase includes controlling interests in the Tinsley Field near Jackson, Miss.; the Citronelle Field in southwest Alabama; and the South Cypress Creek Field in eastern Mississippi. All three fields are potential carbon dioxide tertiary flood candidates with reserve potential from the CO2 tertiary floods of approximately 60- to 75 million net barrels of oil equivalent. The acquisition also includes an eight-inch pipeline from the company's Jackson Dome area to the Tinsley Field. Based on initial company estimates, these properties have estimated conventional (non-CO2) proved reserves of 14.3 million barrels of oil equivalent. The fields have current production of approximately 2,200 barrels of oil equivalent per day, increasing the company's preliminary 2006 production forecast to 37,000 barrels per day, a 24% increase over 2005's estimated average production. Denbury will operate all three fields and own the majority of the working interest. Standard & Poor's reports its rating on Denbury of BB/Stable/-- will not be affected by this acquisition because it expects the transaction to be financed in a manner that is consistent with the expectations for the current ratings.
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