Denbury Beats Overall, Volume Falls - Analyst Blog
February 23 2012 - 6:49AM
Zacks
Denbury Resources Inc. (DNR) has reported
record fourth-quarter 2011 adjusted earnings of 45 cents per share
(excluding one-time items), beating our expectation of 33 cents.
The quarterly results were also well above the year-earlier
adjusted earnings of 22 cents, attributable to overall higher price
realization.
For the full year 2012, adjusted profit was $1.43 per share
versus 61 cents in the prior year period. The reported figure
comfortably surpassed our expectation of $1.33.
Total revenue jumped 19% to $617.3 million from the year-ago
level of $519.1 million and comfortably surpassed the Zacks
Consensus Estimate of $576 million. Full year 2011 total revenue
expanded 20% year over year to $2,309.3 million, beating the Zacks
Consensus Estimate of $2,263 million.
Operational Performance
During the quarter, production averaged 67,234 barrels of oil
equivalent per day (Boe/d), down 12% year over year, attributable
to the sale of assets in 2010. Oil production averaged 62,901
barrels (down 3% from the year-ago level) and natural gas averaged
25,998 thousand cubic feet (down 62%), on a daily basis.
Oil price realization (including the impact of hedges) averaged
$102.86 per barrel in the quarter, showing an improvement of 30%
year over year, while gas prices increased 6% to $7.65 per Mcf. On
an oil equivalent basis, the overall price realization was $99.18
per barrel, up 34% from the year-earlier level of $73.79 per
barrel.
Financials
Cash flow from operations was $386.9 million in the reported
quarter versus $247.5 million in the year-ago quarter. Capital
investment was $461.5 million, up from the year-earlier level of
$237.4 million. Denbury's 2012 capital expenditure budget iremains
unchanged at $1.35 billion, excluding acquisitions.
Cash balance at the end of 2011 was $18.7 million and long-term
debt was $2,436.4 million, representing a debt-to-capitalization
ratio of 33.6% (versus 30.4% in the preceding quarter).
Outlook
With its own in-house CO2 reserve base, Denbury enjoys a
significant competitive advantage in acquiring and exploiting
mature oil reservoirs. Tertiary operations remain the company's
principal focus with particular emphasis on the Gulf Coast, Rocky
Mountains and Bakken Shale holdings.
Denbury reaffirmed its 2012 production guidance in the 70,250
Boe/d and 75,250 Boe/d, The company’s tertiary production target
was in the 33,000 Boe/d and 36,000 Boe/d range, and Bakken
production was set in between 12,750 Boe/d and 14,750 Boe/d.
However, we see limited upside potential for shares due to its
sensitivity to oil price volatility, along with drilling results,
costs, geo-political risks and project timing delays. Additionally,
competition from Pioneer Natural Resources (PXD)
and Newfield Exploration Co. (NFX) is also a cause
for concern.
We currently reiterate our long-term Neutral rating on Denbury
shares. The company carries a Zacks #2 Rank (short-term Buy
rating).
DENBURY RES INC (DNR): Free Stock Analysis Report
NEWFIELD EXPL (NFX): Free Stock Analysis Report
PIONEER NAT RES (PXD): Free Stock Analysis Report
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