Denbury Resources Inc.’s DNR second-quarter 2015 adjusted earnings of 13 cents per share (excluding one-time items) beat the Zacks Consensus Estimate of 11 cents. However, quarterly results were lower than the year-earlier adjusted earnings of 26 cents mainly due to lower price realization.
Second-quarter total revenue of $374 million decreased from $669 million a year ago and missed the Zacks Consensus Estimate of $479 million.
Operational Performance
During the reported quarter, production averaged 73,716 barrels of oil equivalent per day (Boe/d) compared with 75,320 Boe/d in the prior-year quarter. Production comprised 95% oil compared to 94% oil in the prior-year period.
Oil production averaged 69,837 barrels per day, down from the year-ago level of 71,051 barrels per day. Natural gas production averaged 23,273 thousand cubic feet (down from 25,614 thousand cubic feet in the year-ago period), on a daily basis.
Tertiary oil production increased 2% year over year, or 757 barrels per day, primarily on production growth at Hastings, Heidelberg, Oyster Bayou, Tinsley and Bell Creek fields. This was partially offset by production declines at the company’s mature properties and the reversionary assignment of approximately 25% of Denbury’s interest in Delhi Field.
Oil price realization (including the impact of hedges) averaged $76.30 per barrel in the quarter, down from $92.32 per barrel in the year-ago quarter, while gas prices fell to $2.89 per Mcf from $4.27 in the year-ago period. On an oil equivalent basis, the overall price realization was $73.20 per barrel, down from the year-earlier level of $88.54 per barrel.
Financials
Cash flow from operations was $426.7 million in the first half of 2015 against $544.7.0 million a year ago. Cash balance as of Jun 30, 2015 was $4.4 million and total debt was $3,509.2 million.
Guidance
Denbury expects 2015 production in the range of 72,500–75,500 Boe/d. The company estimates tertiary production in the range of 42,100–43,700 Boe/d. The capital expenditure budget has been reiterated at $550 million, $465 million of which has been apportioned for tertiary, non-tertiary, CO2 supply and pipeline projects. The remainder is estimated capitalized costs.
Zacks Rank
Denbury currently carries a Zacks Rank #3 (Hold). Some better-ranked players in the energy sector are Valero Energy Partners LP VLP, Seadrill Partners LLC SDLP and Alon USA Energy Inc. ALJ. Each of these stocks sports a Zacks Rank #1 (Strong Buy).
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