Denbury Resources Inc.’s (DNR) third-quarter 2013 adjusted earnings of 45 cents per share (excluding one-time items) beat the Zacks Consensus Estimate of 42 cents. Also, the quarterly results were 36.4% higher than the year-earlier adjusted earnings of 33 cents.
Third-quarter total revenue of $684.8 million comfortably surpassed both the year-over-year figure of $600.4 million and the Zacks Consensus Estimate of $663.0 million.
Operational Performance
During the reported quarter, continuing production averaged 71,531 barrels of oil equivalent per day (Boe/d) versus 56,024 Boe/d in the prior-year quarter.
Oil production averaged 67,705 barrels per day flattish with the year-ago level. Natural gas production averaged 22,957 thousand cubic feet (down 25.3%), on a daily basis.
The company’s production from tertiary operations averaged 37,513 barrels per day, which represents a 7.8% increase year over year. The upside came from contributions from continued field development and expansion of facilities in Oyster Bayou, Hastings, Delhi and Heidelberg fields.
Oil price realization (including the impact of hedges) averaged $105.80 per barrel in the quarter, showing a rise of 13.8% year over year, while gas prices contracted 38.9% year over year to $3.38 per Mcf. On an oil equivalent basis, the overall price realization was $101.22 per barrel, up almost 14% from the year-earlier level of $88.77 per barrel.
Financials
Cash flow from operations was $305.5 million in the reported quarter versus $293.5 million in the year-ago quarter. Oil & natural gas capital investments were $257.3 million (before acquisitions and capitalized interest), down from the year-earlier level of $347.1 million.
Cash balance as of Sep 30, 2013 was $26.5 million and long-term debt was $3,274.5 million, representing a debt-to-capitalization ratio of 38.3%.
Guidance
Denbury expects 2013 production in the range of 68,700–71,700 Boe/d. The company’s tertiary production target is 36,500–39,500 Boe/d. Capital expenditure budget has been reiterated at $1.06 billion, of which about 85% is apportioned for tertiary projects. The remainder is for conventional projects, with special emphasis on Cedar Creek Anticline.
Zacks Rank
Denbury carries a Zacks #2 Rank (short-term Buy rating). There are other stocks in the oil and gas sector – SM Energy Company (SM), Ocean Rig UDW Inc. (ORIG) and TransAtlantic Petroleum Ltd. (TAT) – which hold a Zacks Rank #1 (Strong Buy) and are expected to perform better.
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