S&P rates Denbury notes B+

Standard & Poor's said it assigned its B+ rating to Denbury Resources Inc.'s proposed $150 million senior subordinated notes due 2015 and affirmed its BB corporate credit and B+ subordinated debt ratings.

The outlook is stable.

Proceeds from the note offering will partially finance Denbury's $250 million acquisition of oil and gas properties in Mississippi and Alabama, which is expected to close in late January. Denbury will finance the remainder of the acquisition through a combination of cash on hand and revolver borrowings.

The ratings on Denbury reflect its midsize reserve base, high lifting costs and the high cyclicality inherent in the oil and gas exploration and production industry, the agency said.

S&P said these weaknesses are tempered by the low-risk nature of the company's reserve base, meaningful and steady production growth, competitive finding and development costs and an improved capital structure.

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