Transaction Combines Complementary
Businesses to Create Scale, Financial Strength and Operating
Flexibility to Drive Sustainable Growth and Value
Denbury Resources Inc. (NYSE: DNR) (“Denbury”) and Penn Virginia
Corporation (NASDAQ: PVAC) (“Penn Virginia”) today announced that
they have jointly filed a definitive joint proxy
statement/prospectus with the Securities and Exchange
Commission (“SEC”) in connection with Denbury’s proposed
acquisition of Penn Virginia.
Special meetings of Denbury stockholders and
Penn Virginia shareholders have been set for Wednesday, April
17, 2019 to approve the previously announced merger (in the case of
Penn Virginia shareholders), issuance of Denbury common stock in
connection with the merger (in the case of Denbury stockholders),
and other matters related to the merger. All Denbury
stockholders and Penn Virginia shareholders of record as of the
close of business on February 19, 2019 will be entitled to notice
of their respective special meetings, and to vote their shares
either in person or by proxy at their respective special
meetings. The Denbury special meeting will be held at 10:00
a.m. Central Time at the offices of Denbury located at 5320 Legacy
Drive, Plano, Texas 75024, and the Penn Virginia special meeting
will be held at 10:00 a.m. Central Time at the Houston Marriott
Energy Corridor, located at 16011 Katy Freeway, Houston, Texas
77094.
Along with other information detailing the
benefits of the transaction, the definitive proxy
statement/prospectus includes updated preliminary pro forma
estimates for the combined company that reflect operating metrics
under an assumed oil price environment of $55 to $60 per barrel,
including:
- 5% to 10% compound annual production growth through 2021, prior
to considering incremental Eagle Ford enhanced oil recovery
upside
- Average daily production of 94 to 102 MBOE per day by 2021
- Operating cash flow of $750 million to $950 million by 2021 –
well in excess of planned capital expenditures
- Debt to EBITDAX ratio of approximately 2.5x or lower by
2021
Chris Kendall, Denbury’s President and CEO,
commented, “Our confidence in the compelling nature of the
combination with Penn Virginia has only increased in the current
oil market environment. This transaction will create a
resilient company with a sustainable operating model and a solid
financial profile. By adding scale in the attractive Eagle
Ford basin, we are building a platform that is ripe to benefit from
our enhanced oil recovery expertise and access to our leading CO2
resource and capabilities. Combining those assets with
Denbury’s highly resilient set of long-lived, low-decline assets
will deliver a lower cost of capital, a strong liquidity position
and compelling cash flow profile to deliver significant value to
stockholders of both businesses.”
The Boards of Directors of Denbury and Penn
Virginia recommend that Denbury’s stockholders and Penn Virginia’s
shareholders, respectively, vote “FOR” all proposals relating to
the transaction.
The definitive joint proxy statement/prospectus
is available through the SEC’s EDGAR system
on www.sec.gov and via Denbury’s and Penn Virginia’s
respective investor relation websites
at www.denbury.com/investor-relations or
https://ir.pennvirginia.com/, and is being mailed to Denbury
stockholders and Penn Virginia shareholders on or about March 4,
2019.
TRANSACTION DETAILS
As previously announced, under the terms of the
definitive merger agreement, shareholders of Penn Virginia will
receive, subject to proration, a combination of 12.4 shares of
Denbury common stock and $25.86 of cash for each share of Penn
Virginia common stock. Penn Virginia shareholders will have
the option to receive all stock or all cash, subject to proration
such that the overall mix of consideration does not result in more
or less than $400 million in cash being paid. The stock
portion of the consideration received by Penn Virginia’s
shareholders is expected to be tax-free. Upon closing of the
transaction, Denbury stockholders will own approximately 71% of the
combined company, and Penn Virginia shareholders will own
approximately 29%.
The transaction is subject to the approval of
Penn Virginia shareholders and is subject to approval by Denbury’s
stockholders of the issuance of common stock and an amendment to
Denbury’s charter to increase its authorized shares. The
transaction is also subject to customary closing conditions.
ADVISORS
Guggenheim Securities, LLC is lead financial
advisor to Denbury. J.P. Morgan Securities LLC is providing
financial advice to Denbury with respect to capital structure and
financial aspects of the transaction and provided a financing
commitment letter for a new $1.2 billion bank revolving credit
facility and a $400 million senior secured second lien bridge
loan. Jefferies LLC is financial advisor to Penn
Virginia. Vinson & Elkins LLP is legal counsel to
Denbury. Skadden, Arps, Slate, Meagher & Flom LLP and
Gibson, Dunn & Crutcher LLP are legal counsel to Penn
Virginia.
DENBURY RESOURCES INC.
Denbury is an independent oil and natural gas
company with operations focused in two key operating areas: the
Gulf Coast and Rocky Mountain regions. Denbury’s goal is to
increase the value of its properties through a combination of
exploitation, drilling and proven engineering extraction practices,
with the most significant emphasis relating to CO2 enhanced oil
recovery operations. For more information about Denbury,
please visit www.denbury.com. The information on Denbury’s
website is not part of this release.
PENN VIRGINIA CORPORATION
Penn Virginia is a pure-play independent oil and
gas company engaged in the development and production of oil, NGLs
and natural gas, operating in the Eagle Ford shale in south
Texas. For more information about Penn Virginia, please visit
www.pennvirginia.com. The information on Penn Virginia’s
website is not part of this release.
NO OFFER OR SOLICITATION
This communication relates to the proposed
business combination transaction (the “Transaction”) between
Denbury and Penn Virginia. This communication is for
informational purposes only and does not constitute an offer to
sell or the solicitation of an offer to buy any securities or a
solicitation of any vote or approval, in any jurisdiction, pursuant
to the Transaction or otherwise, nor shall there be any sale,
issuance, exchange or transfer of the securities referred to in
this document in any jurisdiction in contravention of applicable
law. No offer of securities shall be made except by means of
a prospectus meeting the requirements of Section 10 of the
Securities Act, as amended (the “Securities Act”).
ADDITIONAL INFORMATION AND WHERE TO FIND
IT
In connection with the proposed Transaction,
Denbury filed with the SEC a registration statement on Form S-4
(File No. 333-228935) that was originally filed on December 21,
2018 and amended on January 16, 2019, which includes a joint proxy
statement of Denbury and Penn Virginia and a prospectus of
Denbury. The registration statement became effective as of
the close of business on February 4, 2019. Denbury and Penn
Virginia may also file other documents with the SEC regarding the
Transaction. The Transaction will be submitted to Denbury’s
stockholders and Penn Virginia’s shareholders for their
consideration. A definitive joint proxy statement/prospectus
was sent to the stockholders of Denbury and shareholders of Penn
Virginia on or about March 4, 2019. This document is not a
substitute for the registration statement and joint proxy
statement/prospectus filed with the SEC or any other documents that
Denbury or Penn Virginia may file with the SEC or send to
stockholders of Denbury or shareholders of Penn Virginia in
connection with the Transaction. INVESTORS AND SECURITY
HOLDERS OF DENBURY AND PENN VIRGINIA ARE URGED TO READ THE
REGISTRATION STATEMENT AND THE JOINT PROXY STATEMENT/PROSPECTUS
REGARDING THE TRANSACTION AND ALL OTHER RELEVANT DOCUMENTS THAT ARE
FILED OR WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR
SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
TRANSACTION AND RELATED MATTERS.
Investors and security holders will be able to
obtain free copies of the registration statement and the joint
proxy statement/prospectus and all other documents filed or that
will be filed with the SEC by Denbury or Penn Virginia through the
website maintained by the SEC at www.sec.gov. Copies of
documents filed with the SEC by Denbury will be made available free
of charge on Denbury’s website at www.denbury.com or by
directing a request to John Mayer, Director of Investor Relations,
Denbury Resources Inc., 5320 Legacy Drive, Plano, Texas 75024, Tel.
No. (972) 673-2000. Copies of documents filed with the SEC by
Penn Virginia will be made available free of charge on Penn
Virginia’s website at www.pennvirginia.com, under the heading “SEC
Filings,” or by directing a request to Investor Relations, Penn
Virginia Corporation, 16285 Park Ten Place, Houston, Texas 77084,
Suite 500, Tel. No. (713) 722-6500.
PARTICIPANTS IN SOLICIATION
Denbury, Penn Virginia and their respective
directors and executive officers may be deemed to be participants
in the solicitation of proxies in respect to the Transaction.
Information regarding Denbury’s directors and
executive officers is contained in the proxy statement for
Denbury’s 2018 Annual Meeting of Stockholders filed with the SEC on
April 12, 2018, and certain of its Current Reports on Form
8-K. You can obtain free copies of these documents at the
SEC’s website at www.sec.gov or by accessing Denbury’s website
at www.denbury.com. Information regarding Penn Virginia’s
executive officers and directors is contained in the proxy
statement for Penn Virginia’s 2018 Annual Meeting of Shareholders
filed with the SEC on March 28, 2018, and certain of its Current
Reports on Form 8-K. You can obtain free copies of these
documents at the SEC’s website at www.sec.gov or by accessing
Penn Virginia’s website at www.pennvirginia.com.
Investors may obtain additional information
regarding the interests of those persons and other persons who may
be deemed participants in the Transaction by reading the joint
proxy statement/prospectus regarding the Transaction. You may
obtain free copies of this document as described above.
FORWARD LOOKING STATEMENTS
The foregoing contains “forward-looking
statements” within the meaning of Section 27A of the Securities Act
and Section 21E of the Securities Exchange Act of 1934, as
amended. All statements, other than statements of historical
fact, included in this communication that address activities,
events or developments that Denbury or Penn Virginia expects,
believes or anticipates will or may occur in the future are
forward-looking statements. Words such as “estimate,”
“project,” “predict,” “believe,” “expect,” “anticipate,”
“potential,” “create,” “intend,” “could,” “may,” “foresee,” “plan,”
“will,” “guidance,” “look,” “outlook,” “goal,” “future,” “assume,”
“forecast,” “build,” “focus,” “work,” “continue” or the negative of
such terms or other variations thereof and words and terms of
similar substance used in connection with any discussion of future
plans, actions, or events identify forward-looking
statements. However, the absence of these words does not mean
that the statements are not forward-looking. These
forward-looking statements include, but are not limited to,
statements regarding the Transaction, pro forma descriptions of the
combined company and its operations, integration and transition
plans, synergies, opportunities and anticipated future
performance. There are a number of risks and uncertainties
that could cause actual results to differ materially from the
forward-looking statements included in this communication.
These include the expected timing and likelihood of completion of
the Transaction, including the ability to successfully integrate
the businesses, the occurrence of any event, change or other
circumstances that could give rise to the termination of the merger
agreement, the possibility that stockholders of Denbury may not
approve the issuance of new shares of common stock in the
Transaction or the amendment of Denbury’s charter or that
shareholders of Penn Virginia may not approve the merger, the risk
that the parties may not be able to satisfy the conditions to the
Transaction in a timely manner or at all, the risk that any
announcements relating to the Transaction could have adverse
effects on the market price of Denbury’s common stock or Penn
Virginia’s common stock, the risk that the Transaction and its
announcement could have an adverse effect on the ability of Denbury
and Penn Virginia to retain customers and retain and hire key
personnel and maintain relationships with their suppliers and
customers and on their operating results and businesses generally,
the risk the pending Transaction could distract management of both
entities from ongoing business operations or cause them to incur
substantial costs, the risk that problems may arise in successfully
integrating the businesses of the companies, which may result in
the combined company not operating as effectively and efficiently
as expected, the risk that the combined company may be unable to
achieve synergies or it may take longer than expected to achieve
those synergies and other important factors that could cause actual
results to differ materially from those projected. All such
factors are difficult to predict and are beyond Denbury’s or Penn
Virginia’s control, including those detailed in Denbury’s annual
reports on Form 10-K, quarterly reports on Form 10-Q and current
reports on Form 8-K that are available on its website at
www.denbury.com and on the SEC’s website at www.sec.gov, and
those detailed in Penn Virginia’s annual reports on Form 10-K,
quarterly reports on Form 10-Q and current reports on Form 8-K that
are available on Penn Virginia’s website at
www.pennvirginia.com and on the SEC’s website at
www.sec.gov. All forward-looking statements are based on
assumptions that Denbury or Penn Virginia believe to be reasonable
but that may not prove to be accurate. Any forward-looking
statement speaks only as of the date on which such statement is
made, and Denbury and Penn Virginia undertake no obligation to
correct or update any forward-looking statement, whether as a
result of new information, future events or otherwise, except as
required by applicable law. Readers are cautioned not to
place undue reliance on these forward-looking statements that speak
only as of the date hereof.
DENBURY CONTACTS:Mark C. Allen,
Executive Vice President and Chief Financial Officer,
972.673.2000John Mayer, Director of Investor Relations,
972.673.2383
PENN VIRGINIA CONTACTS: Steve Hartman,
Senior Vice President and Chief Financial Officer, 713.722.6500
Clay Jeansonne, Investor Relations, 713.722.6540
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