CASPER, Wyo. — Denbury Resources Inc. will pay $191 million to Cimarex Energy Co. for the Riley Ridge methane and helium plant under construction south of Big Piney, as well as some adjoining mineral interests.
Plano, Texas-based Denbury already owned a 42.5 percent interest in the facility, which is expected to come on-line within a few months.
The deal with Denver-based Cimarex means Denbury will own and operate the entire plant, which will produce carbon dioxide, natural gas and helium and carbon dioxide, or CO2.
Denbury purchased its initial stake in the Riley Ridge project from Wold Oil Property for $115 million last year.
The Riley Ridge project site and the adjoining acreage sits in the LaBarge Field, an area already producing natural gas, helium and CO2.
The Denbury purchase is a milestone for the company, which will soon begin construction of its Greencore CO2 pipeline across Wyoming.
The company also recently cut a string of deals for CO2 it will transport to oil fields in Wyoming — initially the Grieve field just west of Casper — and eventually to the company’s assets in the Bell Creek field in Montana.
The carbon dioxide is pumped underground to force out oil that is otherwise too costly to gather — a process known as enhanced oil recovery, or EOR.
Phil Ryhoek, Denbury’s chief executive, said the company will use the methane gas and helium sales to pay for ongoing development of the project, including the cost of extracting and compressing the CO2 for transport to the oil fields.
“We have come a long way in the Rockies in the last 15 months and look forward to continued success in this region,” he said.
Denbury estimates the plant site containes proven reserves of 250 billion cubic feet of natural gas, 8.9 billion cubic feet of helium and 1.4 trillion cubic feet of carbon dioxide.
The adjoining mineral rights likely include additional reserves of 250 billion to 300 billion cubic feet of natural gas, 9.5 billion to 11 billion cubic feet of helium and 1 trillion to 1.2 trillion cubic feet of carbon dioxide, according to company estimates.
Cimarex Energy will use the money it will make from the sale of the project to help fund leases and infrastructure in the Permian Basin centered in west Texas and in Oklahoma, the company said in a media release.
The acquisition is expected to close late this month. First production of natural gas and helium is expected to occur by the end of this year.