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Denbury (DNR) Slips to Loss in Q4, Revenues Beat Estimates

Zacks Equity Research

Denbury Resources Inc. DNR – a predominantly oil exploration and production company – incurred fourth-quarter 2015 loss of 1 cent per share (excluding one-time items). The Zacks Consensus Estimate was of a break-even. The company reported earnings of 27 cents in the fourth quarter of 2014. The year-ago performance was mainly backed by higher production.

For full-year 2015, adjusted profit was 37 cents per share as against $1.04 in the previous year. The reported figure surpassed our expectation of 35 cents.
 
Fourth-quarter total revenue of $269.6 million decreased from $483.7 million a year ago and also came in below the Zacks Consensus Estimate of $348.0 million. For 2015, total revenue decreased 93.6% year over year to $1,257.6 million. Full-year revenues also lagged the Zacks Consensus Estimate of $1,684.0 million
 
Operational Performance

During the reported quarter, production averaged 72,002 barrels of oil equivalent per day (Boe/d) compared with 74,875 Boe/d in the prior-year quarter.

Oil production averaged 68,398 barrels per day (95% of the total volume), down 3.5% from the year-ago level. Natural gas production averaged 21,623 thousand cubic feet/Mcf (down 9.1%), on a daily basis.

The company’s production from tertiary operations averaged 41,177 barrels per day, down 1.7% year over year.

Oil price realization (including the impact of hedges) averaged $52.67 per barrel in the quarter, down 39.2% year over year. Gas prices, on the other hand, fell 26.7% year over year to $2.64 per Mcf. On an oil equivalent basis, the overall price realization was $50.83 per barrel, down 39% from the year-earlier level of $83.22 per barrel.

Financials

Cash flow from operations was $864 million in 2015 compared with $1,223 million in the prior year. Oil and natural gas capital investments for 2015 were approximately $465.1 million, down from the year-earlier level of $1,074.8 million. Cash balance as of Dec 31, 2015, was $2.8 million and total debt was $3,310.3 million.

Guidance

Denbury expects full-year 2016 production to decrease about 7–8% from the 2015 levels to 64,000–68,000 Boe/d. Full-year capital expenditure is still expected at $200 million.

Zacks Rank and Key Stock Picks

Denbury currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the same space are Cheniere Energy Partners LP. CQP, Braskem S.A. BAK and Enviva Partners, LP EVA. Each of these stocks sports a Zacks Rank #1 (Strong Buy).

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BRASKEM SA (BAK): Free Stock Analysis Report
 
CHENIERE ENERGY (CQP): Free Stock Analysis Report
 
DENBURY RES INC (DNR): Free Stock Analysis Report
 
ENVIVA PARTNERS (EVA): Free Stock Analysis Report
 
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