Denbury Resources Inc.’s (DNR) second-quarter 2014 earnings of 26 cents per share (excluding one-time items) fell short of the Zacks Consensus Estimate of 27 cents. The bottom line was also lower than the year-earlier adjusted earnings of 41 cents. The decline was mainly due to lower price realization.
Second-quarter total revenue of $672.1 million increased from $650 million a year ago and surpassed the Zacks Consensus Estimate of $622 million.
Operational Performance
During the reported quarter, production averaged 75,320 barrels of oil equivalent per day (Boe/d) versus 74,052 Boe/d in the prior-year quarter.
Oil production averaged 71,051 barrels per day, up 1.7% from the year-ago level. Natural gas production averaged 25,614 thousand cubic feet (up 2.7%), on a daily basis.
The company’s production from tertiary operations averaged 40,897 barrels per day, representing a 5.5% 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 $92.32 per barrel in the quarter, reflecting a fall of 6.7% year over year, while gas prices rose 7.8% year over year to $4.27 per Mcf. On an oil equivalent basis, the overall price realization was $88.54 per barrel, down almost 6.5% from the year-earlier level of $94.70 per barrel.
Financials
Cash flow from operations was $544.7 million in the first half of 2014 versus $706.7 million in the year-ago period. Oil & natural gas capital investments were approximately $277.1 million (before acquisitions and capitalized interest), down from the year-earlier level of $293.3 million.
Cash balance as of Jun 30, 2014, was $12 million and total debt was $3,637.7 million, representing a debt-to-capitalization ratio of 41.7%.
Guidance
Denbury lowered its 2014 production to slightly below 76,500 Boe/d from 76,500–78,500 Boe/d. The full-year capital expenditure is expected at $1.1 billion.
Zacks Rank
Denbury currently carries a Zacks #2 Rank (Buy). There are other stocks in the oil and gas sector like, Weatherford International plc (WFT), Sasol Ltd. (SSL) and Cameron International Corp. (CAM), which hold a Zacks Rank #1 (Strong Buy) and are expected to outperform the market.
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