Denbury Resources Inc. (NYSE:DNR), an oil and gas exploration company, has pulled the Notes Exchange Offer that it had previously announced to its creditors, citing certain terms and conditions that went with the offer that were not fulfilled. Following the termination of the exchange offer, the company is returning notes that may have already been tendered to their owners. The notes exchange program would have seen holders of certain old notes maturing between 2021 and 2023 swap a portion of them for notes maturing on May 15, 2022.

Denbury targeted three groups of bond holders with the notes exchange offer. The deal would have benefited holders of certain bonds due 2021, holders of certain bonds due 2022 and 2023, which it collectively calls the Old Notes.

Had the deal gone through, the holders of the Old Notes would have exchanged them for newly-issued notes that would have matured earlier on the average. Denbury intended to issue the Old Notes holders with notes that are due in mid-May 2022.

However, the exchange offer will not proceed. Denbury pointed to terms and conditions on the initially signed documents to explain the termination of the deal.

As a result, Old Notes holders who may have started tendering their notes in exchange for the newer notes will have to get them back.

Pressure in the oil market

Denbury is pulling the plug on the exchange at a time when its industry is being battered from all directions. Soft Chinese economic data and a global oil oversupply are pulling down oil stocks and Denbury has not been spared. The stock is down more than 33% year to date.

Because OPEC refused to cut back oil production and new producers like Iran are now bringing their oil to the global market, the supply and demand imbalance is expected to stretch further, pulling down oil prices in the process. It is feared that the oil surplus could rise from the present 1 million barrels per day to 1.5 million barrels per day in by the middle of 2016.