Analysts at Credit Suisse maintain their “neutral” rating on Denbury Resources (NYSE: DNR), while raising their estimates for the company. The target price for DNR has been raised from $14 to $15.

Denbury Resources announced last week that it had entered into an agreement to acquire the Conroe oil field in Southeast Texas for $431 million, further extending its EOR project pipeline. DNR has also agreed to sell its remaining Barnett Shale gas assets for $210 million.

The analysts believe that Denbury Resources’ oil mix would increase, as the company is targeting to sell 500 million non-core assets after closing the EAC deal. Credit Suisse has raised its EPS estimate for 2010 from $0.32 to $0.36.

Denbury Resources (DNR) offers $15 a share in cash and $35 in Denbury stock for each share of Encore Acquisition Company (EAC). The exact exchange ratio for the shares would be in the range of 2.1 to 2.6 depending on the price of Denbury stock prior to closing. On the basis of DNR at $15.10 a share, its 200-day average of a week ago, the deemed price of $50 an Encore share exactly matches our Net Present Value (NPV) of $50 a share and translates to a McDep Ratio of 1.00.

As a result, we remove our buy recommendation on Encore stock. We congratulate Chairman Jon Brumley, who extends his long record of making money for investors, in this case with the help of his son, Chief Executive Jonny Brumley and the people of Encore. Investors earned about 22% a year in EAC stock as it appreciated to 3.6 times from July 1, 2003 to November 2, 2009. Normalized to a conservative financial structure, the debt-adjusted total return might be about 18% a year.

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday November 18.

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