Denbury Resources Inc. (DNR) announced the initiation of quarterly dividend and raised the bar on share repurchase with a view to enhance shareholder value.
The company would dish out a quarterly dividend of 6.25 cents per share or 25 cents annualized, beginning first quarter 2014. Based on its current financial projections and commodity price outlook, the company expects to grow its regular annual dividend rate to between 50 cents and 60 cents per share in 2015 and at a sustainable rate thereafter.
Alongside the company has also approved an increase in the dollar amount of the remaining share repurchases authorized under its multi-year share repurchase program. The increase – to $250 million from $109 million –raises the total amount authorized under the program since it commenced in Oct 2011 to $912 million. Of the total, Denbury spent $662 million as of Sep 30, 2013, to acquire a total of 43 million common shares, or about 11% of shares outstanding at Sep 30, 2011, at an average cost of $15.48 per share.
Separately, the company also appointed John Dielwart a 35-year oil and gas veteran to its board of directors. The appointment, effective Nov 8, 2013, raises the number of directors to 10.
Plano, Texas-based Denbury Resources is a growing exploration and production company engaged in the acquisition, development, operation and exploration of oil and natural gas properties in the Gulf Coast and Rocky Mountain region of the U.S. It is the largest oil producer in Mississippi, with further properties in Louisiana, Alabama and Southeast Texas.
Denbury has a relatively low-risk business model as it produces oil by applying tertiary recovery techniques to mature fields. Tertiary operations remain the company’s principal focus. The third quarter saw increased production from tertiary operations on continued field development and expansion of facilities in Delhi, Hastings and Oyster Bayou fields.
Denbury carries a Zacks #3 Rank (short-term Hold rating). However, there are other stocks in the oil and gas sector – Blueknight Energy Partners, L.P. (BKEP), Pacific Drilling S.A. (PACD) and Abraxas Petroleum Corp. (AXAS) – which hold a Zacks Rank #1 (Strong Buy) and are expected to perform better.
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