Denbury Resources Inc. (DNR) reported weaker-than-expected first quarter results. Earnings per share, excluding one-time items, came in at 6 cents, below the Zacks Consensus Estimate of 8 cents and the year-earlier earnings of 19 cents. The lower-than-expected results were mainly due to higher expenses. However, revenues from operations increased approximately 96% year over year to $335.4 million.
Operational Performance
Production during the quarter averaged 53.1 thousand oil-equivalent barrels per day (MBOE/d), a decrease of 1% year over year. Of the total quarterly production, approximately 83% was oil. Tertiary production for the quarter averaged 27 thousand barrels per day (MBbl/d), up 20% from the year-earlier level. The company raised its tertiary production target for this year to 27.8 MBbl/d due to sound production results from Delhi Field in Louisiana.
Denbury’s realized oil prices (including the impact of hedges) averaged $60.60 per barrel, down 6% year over year. However, realized gas prices increased 51% to $6.18 per Mcf. On an oil equivalent basis, realized price was $56.70 per barrel, up 7% from the year-earlier level.
Excluding acquisitions, Denbury expects its 2010 capital budget to be $1 billion. Of this, 60% is earmarked for tertiary operations. The company expects to complete a $900 million asset sale this month, which helps to drive down the existing debt level.
Outlook
We maintain our Neutral recommendation for Denbury shares following the quarterly results. Given our favorable outlook for oil, the company’s oil-centric niche business model will enhance value for shareholders.
Read the full analyst report on “DNR”
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