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Denbury wants to reduce debt further, but high prices pose difficulty
New York, March 1 – Denbury Resources Inc. said that it “would like to reduce our debt further if possible” but that the current trading levels pose a hurdle to carrying out any transactions.
The company reduced its debt by $530.4 million principal amount during 2016, according to a 10-K filing with the Securities and Exchange Commission.
Lower borrowings are necessary, Denbury explained, because of the decline in oil prices from the highs set in 2014.
The actions during 2016 represented “significant progress,” but the company hopes to continue the reductions.
However, it said in the filing, “Our subordinated debt is currently trading significantly higher than it was during the first half of 2016, making it more difficult to make accretive exchanges or repurchases of this debt.”
Denbury plans to monitor the market and take opportunistic actions in response to market conditions.
Possible transactions include purchases of subordinated debt in the open market, cash tenders or public or privately negotiated exchanges, and debt reduction with the proceeds of equity issuances, asset sales and other cash-generating activities. Borrowings under the company’s credit facility may also be used to fund repurchases.
Additionally, the company may consider other forms of capital such as additional second-lien notes or other senior notes.
During 2016, Denbury bought back notes in the market and issued senior secured second-lien notes and shares in exchange for outstanding senior subordinated notes.
Denbury is a Plano, Texas-based oil and natural gas company emphasizing carbon dioxide-enhanced oil recovery.
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