Denbury Resources entered into a definitive agreement in December 2019 to sell a 50% of its nearly 100% interest in four southeast Texas oil fields to Navitas Petroleum for $50 million in cash. Denbury will remain the operator of the fields, but Navitas will fund 100% of capital required and complete an initial 10 horizontal wells across the fields with the first well spudded within six months and all ten completed within 18 months of closing. Denbury will receive a 6.25% royalty interest prior to the combined payout of wells drilled in a specific field. Subsequent to payout, Denbury will fund the cost of its 50% interest in each well. Navitas must drill at least one well in each field. Navitas will have the opportunity to continue development after the initial period with up to six separate extensions of 10 wells each.
Denbury will retain 100% of the Webster EOR project, but Navitas may elect to participate in future EOR projects. Production associated with the interest to be sold averaged 1,050 barrels of oil equivalent per day for the first nine months of 2019 with provide reserves of 3.7 million barrels of oil at the end of 2018. Denbury has rights to 100% of the surface acreage sales at the Webster field. The deal closed on schedule in March 2020 with net cash to Denbury of $40 million after adjusting for interim cash flow.