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Denbury Resources Inc. (DNR - Analyst Report) has closed its previously announced divestiture program with U.S. energy giant ExxonMobil Corporation (XOM - Analyst Report) and its subsidiary, XTO Energy.

Per the deal, Denbury received $1.3 billion in cash from the U.S. behemoth in the first of the two closings and ExxonMobil transferred its operating interests in Webster Field in Texas and Hartzog Draw Field in Wyoming to Denbury.

Plano, Texas-based Denbury has kept aside its 17.5% pre-closing interest in the Bakken area assets for the second phase of the agreement, which is scheduled to get sealed by the end of the year. In exchange, ExxonMobil withheld $350 million of cash for the concerned properties.

Again, in the second set of deal, Denbury will get a portion in the carbon dioxide (CO2) reserves in ExxonMobil's LaBarge Field in Wyoming. In return, ExxonMobil will get its hold over the Denbury’s retained Bakken interests. This deal will involve necessary cash adjustments.

However, upon failure of the second phase, Denbury aims to offload its retained 17.5% Bakken area interest to ExxonMobil for the withheld $350 million.

ExxonMobil will get its hold over 196,000 net acres in North Dakota and Montana. It is expected that the combined acreage will produce 15,000 barrels of oil and other hydrocarbons per day in the second half of 2012. The deal will boost ExxonMobil’s stake by 50% in the Bakken shale region to 600,000 acres.

Despite the collapse in natural gas prices, ExxonMobil –– the largest natural gas producer in the U.S., ahead of Chesapeake Energy Corporation (CHK - Analyst Report) –– expects unconventional gas to play a dominant role in future supplies owing to the rapid decline in conventional production.

Denbury plans to utilize portions of the cash proceeds from the first phase of the sale to acquire certain interests in other oil fields on the Gulf Coast or Rocky Mountain regions. These assets are appropriate for CO2-enhanced oil recovery, which involves injection of CO2 into geological formations holding crude.

For the long term, we maintain our Neutral recommendation. The company carries a Zacks #3 Rank (short-term Hold rating).

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