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Denbury Inks $50M Deal to Divest Stakes in Texas Oil Fields

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Denbury Resources Inc. announced that it has recently signed an agreement with Navitas Petroleum.

Per the deal, Denbury will be divesting roughly 50% of its rights in four oil fields — Webster, Thompson, Manvel and East Hastings — in southeast Texas. Although the deal awaits customary closing conditions, the company expects the accord to close by early March 2020.

From the sale, the upstream energy player will get a consideration of $50 million in cash. Denbury will also have a carried interest in 10 wells, where drilling operations will be done by Navitas.

Investors should know that although Israel's Navitas is expected to drill and complete these wells, the operatorship of the fields will be retained by Denbury.  

For the first nine months of 2019, the resources to be sold produced 1,050 barrels of oil equivalent per day. Moreover, the company’s estimated proved reserves in those properties are roughly 3.7 million barrels of oil as of Dec 31, 2018.

Denbury added that it will be able to speedup explorations in unproven acres in those oil fields once it consummates partnership with Navitas’ experienced team. The company also announced plans of allocating the divestment proceeds to lower debt burden and make the capital budget for 2020 more flexible.

Headquartered in Plano, TX, Denbury is an upstream energy player with operations in the Gulf Coast and the Rocky Mountain area. Currently, the stock carries a Zacks Rank #3 (Hold). Meanwhile, some better-ranked players in the energy space are Murphy USA Inc MUSA, California Resources Corporation CRC and CNX Resources Corporation CNX. While Murphy USA sports a Zacks Rank #1 (Strong Buy), California Resources and CNX Resources carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Murphy USA’s earnings beat the Zacks Consensus Estimate in three of the prior four quarters.

California Resources’ earnings beat the Zacks Consensus Estimate in three of the past four quarters.

CNX Resources’ earnings surpassed the Zacks Consensus Estimate in two of the prior four quarters. It has a positive earnings surprise of 34.8%, on average, for the trailing four quarters.

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