Alvarez & Marsal is serving as restructuring advisor, Evercore is acting as financial advisor and Kirkland & Ellis is acting as legal counsel to Denbury Resources, which entered into a restructuring support agreement with funded debtholders holding 100% of revolving credit facility loans, approximately 67.2% of second lien notes and approximately 70.8% of convertible notes for a pre-packaged plan that will eliminate the company’s $2.1 billion of bond debt.

To implement the balance sheet restructuring contemplated by the RSA, Denbury Resources is soliciting approval of the pre-packaged plan and expects to file voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas.

Denbury also expects to continue normal operations throughout the court-supervised process. Pursuant to its commitment letter, Denbury’s existing lenders will provide a debtor-in-possession revolving loan that will “roll” into an exit facility with up to $615 million in availability. Following court approval, Denbury expects this financing, together with cash flow from operations, will support the business during the court-supervised process. Denbury will continue to evaluate the operating environment and make adjustments, as necessary, to adapt to the impact of COVID-19, OPEC+ actions and other factors affecting its business.

“Denbury has developed a distinctive strategy focused on CO2 enhanced oil recovery (EOR), reinforced by a portfolio of high quality, low decline assets,” Chris Kendall, president and CEO of Denbury Resources, said. “Recently our entire industry has been highly impacted by the global oil demand destruction caused by the COVID-19 pandemic, driving record low oil prices and rapid changes in energy market conditions. In response to this extraordinarily difficult business environment, we have taken multiple proactive steps at Denbury to preserve liquidity, including by reducing our capital spending and general and administrative costs and optimizing operations. This is in addition to many similar actions taken by the company over the last several years as we navigated significant oil price volatility and made consistent progress in reducing leverage. However, even after taking these steps, it became apparent that a comprehensive financial restructuring would be necessary to address our legacy debt burden and create a clear path forward for the company.

“The difficult decision to undertake this financial restructuring process follows a comprehensive review of alternatives, and we believe it is an important and necessary step that will best position our company for long-term success. As we undertake the process, we are pleased to have the support of our lenders and bondholder groups, which will enable us to complete the financial restructuring on an expedited basis. Our dedicated team continues to perform at a high level, remaining highly focused on safe, responsible and efficient operations, and we are committed to working with our service providers and vendors in the same manner as we have in the past.

“We are confident that this process will significantly reduce our debt, strengthen our balance sheet and position Denbury for a strong future. Looking forward, I believe that Denbury’s unique CO2 EOR focused strategy will continue to differentiate us from the industry, providing an advantageous solution that significantly reduces the CO2 emissions associated with the production of oil, underpinning our target of reaching full carbon neutrality in this decade.”

Denbury intends to seek court approval to pay suppliers in full under normal terms for goods and services provided on or after the filing date. Under terms of the pre-packaged plan, which is subject to court approval, general unsecured pre-petition claims will also be paid in full in the ordinary course.

Denbury Resources is an independent oil and natural gas company with operations focused in the Gulf Coast and Rocky Mountain regions.