Denbury Resources Inc. (DNR) has agreed to pay $115 million for a 42.5% stake in a Wyoming gas field and nearly one-third of the carbon dioxide rights on nearby land.
The seller wasn't disclosed in a statement, and a Denbury spokesman wasn't immediately available for comment, but Cimarex Energy Co. (XEC) is building a gas plant in western Wyoming. The plant will separate methane and helium from two nearby gas wells. Meanwhile, carbon dioxide and hydrogen sulfide gas would be pumped underground.
Exxon Mobil Corp. (XOM) has objected to the effort, contending it will result in more waste gas in a nearby Exxon well.
Denbury Chief Executive Phil Rykhoek said the company's acquisition "provides us with our second source of CO2 in the Rockies, a source with significant expansion potential. We plan to continue our evaluation of other potential sources of CO2 in this region before we commence construction of CO2 separation facilities at Riley Ridge, thus today, we do not have a definitive development timetable for these CO2 reserves."
The oil and gas company expects development costs of $56 million through 2011. The acquisition will be funded through Denbury's credit lines.
It concluded a $4.5 billion acquisition of Encore in March, making Denbury one of the largest oil-focused independents.
Shares closed Tuesday at $15.91 and were inactive premarket. The stock is down 1.1% the past year.
-By Kevin Kingsbury, Dow Jones Newswires; 212-416-2354; email@example.com