Denbury Resources Inc. (DNR) – a predominantly oil exploration and production company – reported third-quarter 2014 earnings of 26 cents per share (excluding one-time items), sneaking past the Zacks Consensus Estimate of 25 cents. The outperformance was mainly due to higher production. However, the bottom line was down from the year-earlier figure of 45 cents amid lower price realization.
Third-quarter total revenue of $637.7 million decreased from $684.8 million a year ago but again just about surpassed the Zacks Consensus Estimate of $637 million.
Operational Performance
During the reported quarter, production averaged 73,810 barrels of oil equivalent per day (Boe/d) versus 71,531 Boe/d in the prior-year quarter.
Oil production averaged 70,619 barrels per day (or 96% of total volume), up 4.3% from the year-ago level. Natural gas production averaged 19,147 thousand cubic feet/Mcf (down 16.6%), on a daily basis.
The company’s production from tertiary operations averaged 41,627 barrels per day, representing an 11% increase year over year. Contribution from continued field development and expansion of facilities in Hastings, Heidelberg, Oyster Bayou and Tinsley fields as well as production in the Rocky Mountain region in Bell Creek Field, supported the increase.
Oil price realization (including the impact of hedges) averaged $90.92 per barrel in the quarter, reflecting a fall of 14.1% year over year, while gas prices rose 6.8% year over year to $3.61 per Mcf. On an oil equivalent basis, the overall price realization was $87.93 per barrel, down 13.1% from the year-earlier level of $101.22 per barrel.
Financials
Cash flow from operations was $885.1 million in the first nine months of 2014 versus $1,012.2 million in the year-ago period. Oil & natural gas capital investments were approximately $264.2 million (before acquisitions), down from the year-earlier level of $257.3 million.
Cash balance as of Sep 30, 2014, was $19.4 million and total debt was $3,594.9 million, representing a debt-to-capitalization ratio of 40.2%.
Guidance
Denbury believes that full-year 2014 production will be around 74,283 Boe/d, in line with the year-to-date daily output rate. The full-year capital expenditure is still expected at $1.1 billion.
Zacks Rank & Stock Picks
Denbury currently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.
Meanwhile, one can look at better-ranked players in the same industry like Cobalt International Energy Inc. (CIE), Midstates Petroleum Company Inc. (MPO) and Torchlight Energy Resources Inc. (TRCH). All these stocks sport a Zacks Rank #2 (Buy).
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