Oil & gas exploration and production (E&P) company,
Denbury Resources Inc.
) said that it has increased the offering of its senior
subordinated notes to $1.25 billion from $1.1 billion announced
earlier in the day. The company also stated that the notes, due
May 2022, are priced at 100% of principal value and carry an
interest rate of 5.5%. Denbury expects the offering to close on
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The company said that the funds generated from this offering
would be used to buy back the 2020 due, 81/4% senior subordinated
notes, the cash tender offer for which was announced earlier on
the same day. Denbury intends to purchase all of the outstanding
notes worth $996.3 million.
Denbury further added that if it fails to repurchase all the
outstanding notes under the tender offer, it would utilize the
net proceeds to redeem the remaining of the 2020 notes. Denbury
would use the remaining funds to lower its debt levels under its
bank credit facility and for other corporate purposes.
Plano, TX-based Denbury is a growing E&P company engaged in
the acquisition, development, operation, and exploration of oil
and natural gas properties in the Gulf Coast and Rocky Mountain
regions of the U.S. It is the largest oil producer in
Mississippi, with further properties in Louisiana, Alabama and
Denbury has a strong financial position, low-risk investments and
an active divestment policy that works in its favor. However,
with the company reporting poor numbers last quarter due to weak
realizations and higher expenses, we remain cautious on the
Denbury currently carries a Zacks Rank #3 (Hold), implying that
it is expected to perform in line with the broader U.S. equity
market over the next one to three months.
Meanwhile, one can consider better-ranked players in the E&P
Miller Energy Resources, Inc.
Abraxas Petroleum Corp.
Clayton Williams Energy, Inc.
). While Miller Energy sports a Zacks Rank #1 (Strong Buy),
Abraxas and Clayton Williams hold a Zacks Rank #2 (Buy).