The acquisition is expected to provide Denbury with a new core position in the oil window of the Eagle Ford.
The combined company is estimated to have an enterprise value of $6bn.
Denbury president and CEO Chris Kendall said: “This transaction marks a defining moment for Denbury, meeting multiple strategic objectives to create a balanced, resilient, and growing business with significant scale, while reinforcing our position as the highest oil-weighted producer in our peer group.
“Penn Virginia’s Eagle Ford assets will add many years of high value, low breakeven development to our portfolio, complementing Denbury’s long-lived, high-margin assets.”
As of 31 December 2017, the combined proved oil, natural gas liquids and natural gas reserves of the two companies were 343 million barrels of oil equivalent (mmboe).
The transaction is anticipated to be financed through a combination of equity, debt and cash. It is expected to be completed in the first quarter of 2019.
Denbury is an independent oil and natural gas company with operations focused in the Gulf Coast and Rocky Mountain regions.
The acquisition is expected to add a significant inventory of short cycle unconventional development opportunities to Denbury’s medium cycle enhanced oil recovery (EOR) project portfolio.
The merger will also enable the firm to leverage EOR expertise in the emerging Eagle Ford Shale EOR play.
Kendall said: “Through this combination, we plan to focus Denbury’s significant enhanced oil recovery expertise on the prolific Eagle Ford shale, positioning us at the forefront of this exciting new arena for EOR. Denbury’s passion for improved oil recovery and our deep technical knowledge give us a strong advantage on this new frontier.”
In June, the company announced that it was moving ahead with Cedar Creek Anticline CO2 EOR development in eastern Montana and western North Dakota, US.
The company’s portion of CCA covers nearly 175,000 acres. It is estimated to have up to five billion barrels of original oil in place.
