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Denbury (DNR) Q1 Earnings Beat, Sales Lag, Stock Down 5.8%

Zacks Equity Research

Denbury Resources Inc. DNR reported earnings of 10 cents per share in first-quarter 2019 (excluding one-time items), beating the Zacks Consensus Estimate of 8 cents on the back of higher commodity price realizations. However, the bottom line declined from the year-ago figure of 12 cents, primarily due to higher expenses.

Total revenues were $305.5 million, down from $353.2 million in the year-ago quarter. Also, the top line missed the Zacks Consensus Estimate of $312 million. Notably, sales were affected by lower production volumes.

The stock tumbled 5.8% yesterday following the company’s earnings release, as overall results failed to impress investors.

Denbury Resources Inc. Price, Consensus and EPS Surprise

Denbury Resources Inc. Price, Consensus and EPS Surprise | Denbury Resources Inc. Quote

Operational Performance

Production Declines

During the quarter, production averaged 59,218 barrels of oil equivalent per day (Boe/d) compared with 60,338 Boe/d in the prior-year period.

Oil production averaged 57,414 barrels per day (BPD), down from the year-ago level of 58,354 BPD. Natural gas daily production averaged 10,827 thousand cubic feet (Mcf/d), lower than the year-ago period’s 11,904 Mcf/d.

The company’s production from tertiary operations averaged 37,073 Boe/d, down from 38,262 Boe/d in the year-ago quarter.

Price Realization Marginally Up

Oil price realization (including the impact of hedges) averaged $58.09 per barrel in the quarter, marginally increasing from the year-ago level of $57.89. Gas prices rose to $2.68 per Mcf from $2.44 in the year-ago quarter. On an oil-equivalent basis, overall price realization was $56.81 per barrel, slightly higher than the year-earlier level of $56.47.  

Total Expenses Rise

During the quarter, total expenses were $341.9 million, up from $299.6 million in the year-ago period. The surge can be attributed to higher lease operating expenses, which resulted from increased CO2 costs.

Capital Expenditure

Oil and natural gas capital investments were approximately $59.6 million compared with $47.3 million in the year-ago quarter. Total capital spending (excluding capitalized interest) was $61.2 million, higher than $47.7 million in first-quarter 2018.

Financials

Cash flow from operations was $64.4 million, down from $91.6 million in the year-ago quarter.

As of Mar 31, 2019, cash balance was $5.7 million and total debt was $2,525.7 million. It also had a bank credit facility of $615 million.

Guidance

Denbury expects to generate more than $150 million of free cash flow in full-year 2019. The company reiterated its 2019 production guidance in the range of 56,000-60,000 Boe/d. Capital expenditure is estimated in the range of $240-$260 million, down 20-25% from the 2018 capital spending level.

Zacks Rank and Stocks to Consider

Currently, Denbury carries a Zacks Rank #3 (Hold). Prospective players in the energy space worth considering include Cactus, Inc. WHD, Hess Corporation HES and Apache Corporation APA, each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.  

Cactus’ earnings growth is projected at 11.8% through 2019.

Hess’ earnings are expected to grow 90.5% through 2019.

Apache beat the Zacks Consensus Estimate in each of the last four quarters, with average positive earnings surprise of 31%.

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Denbury Resources Inc. (DNR) : Free Stock Analysis Report
 
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