Denbury buys $1.7B Eagle Ford assets for future EOR work

By Luke Geiver | October 29, 2018

The possibility of enhanced oil recovery operations in the Eagle Ford is worth $1.7 billion to Denbury Resources. The Texas-based exploration and production company that has spent the past several years testing and perfecting a CO2-based EOR process will acquire Penn Virginia Corp. and its 560 lower Eagle Ford drilling locations.

“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,” said Chris Kendall, president and CEO of Denbury.

Although Denbury is excited for the current producing assets and the unconventional development options it will gain through the acquisition, the company is also looking to EOR with the purchase.

“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,” Kendall said. “Denbury’s passion for improved oil recovery and our deep technical knowledge give us a strong advantage on this new frontier.”

Denbury, or other producers, are currently operating multiple EOR projects at various scale near the acquired acreage. Most of the EOR work is utilizing hydrocarbon gas reinjected into the wells. Denbury typically relies on CO2 for its EOR operations. The company has extensive infrastructure for CO2 in the Gulf Coast.

Penn Virginia’s assets in the deal include 84,060 net acres in the oil window of the Eagle Ford. Roughly 87 percent of the liquids produced in the assets contain three-fourths oil.

In addition to the Eagle Ford EOR work, Denbury also operates a CO2 pipeline and EOR injection field in Montana’s Bell Creek field.

In July, Penn Virginia Corp.’s board revealed plans to evaluate strategic alternatives to its operations that the board said had been improved and were peer-leading.