(Bloomberg) -- As the old stock market adage has it, buy the rumor, sell the fact. For investors who bought shares of Denbury Resources Inc (NYSE:DNR). early Monday, it might be buy the fake news release, sell on the official denial.
At 5:51 a.m. New York time, a statement carried by press release service Accesswire and purporting to be from the Texan oil driller said the company received a takeover offer at $1.20 a a share.
Denbury’s stock more almost tripled in pre-market trading, only to pare those gains after CEO Chris Kendall told Bloomberg News the release was “completely fraudulent.” The company said it reported the matter to the New York Stock Exchange. Accesswire later rescinded the announcement, and a spokesman said an investigation is ongoing.
The early morning trading frenzy in Denbury stock came just as Chevron (NYSE:CVX) was announcing its takeover of Noble Energy Inc (NASDAQ:NBL). for about $5 billion to add shale assets. That deal -- confirmed by both companies -- marks the biggest U.S. oil deal in over a year and follows a tough period for many energy companies.
Denbury was grappling with a substantial debt load even before oil prices plunged amid the Covid-19 pandemic, and the shares have declined 82% this year. Last week, it elected to not make a $3 million interest payment on senior notes, triggering a 30-day grace period. Moody’s Investors Service and S&P Global Ratings have lower their credit ratings this month. S&P said it doesn’t expect the driller to pay the $8 million interest payment on its 6.375% senior notes due in 2024 within the 30-day grace period.
Denbury traded 9.5% higher at 25 cents as of 2:30 p.m. in New York, valuing the company at $127 million.
(Updates with S&P downgrade in fifth paragraph)
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