Denbury Resources Inc. (NYSE:DNR) ("Denbury" or the "Company")
today announced adjusted net income(1) (a non-GAAP measure) of $93
million for the fourth quarter of 2014, or $0.27 per diluted share.
On a GAAP basis, the Company recorded quarterly net income of $364
million, or $1.04 per diluted share, on quarterly revenues of $480
million. Adjusted net income(1) for the fourth quarter of 2014
differs from GAAP net income primarily due to the exclusion of a
$451 million (pre-tax) gain on noncash fair value adjustments on
commodity derivatives (a non-GAAP measure)(1).
Sequential and year-over-year comparisons of selected quarterly
financial items are shown in the following table:
|
Quarter Ended |
(in millions, except per share
amounts) |
Dec. 31, 2014 |
Sep. 30, 2014 |
Dec. 31, 2013 |
Revenues |
$480 |
$633 |
$596 |
Net income |
364 |
269 |
90 |
Adjusted net income(1) (non-GAAP
measure) |
93 |
91 |
100 |
Net income per diluted share |
1.04 |
0.77 |
0.25 |
Adjusted net income per diluted share(1)
(non-GAAP measure) |
0.27 |
0.26 |
0.27 |
Cash flow from operations |
338 |
340 |
349 |
Adjusted cash flow from operations(1)(2)
(non-GAAP measure) |
350 |
316 |
295 |
(1) A non-GAAP measure. See accompanying Schedules that
reconcile GAAP to non-GAAP measures along with a statement
indicating why the Company believes the non-GAAP measures provide
useful information for investors.
(2) Adjusted cash flow from operations reflects cash flow from
operations before working capital changes, but is not adjusted for
nonrecurring items.
Adjusted net income(1) for the fourth quarter of 2014 increased
by $2 million on a sequential-quarter basis and decreased by $7
million when compared to the prior-year fourth quarter. The
change versus prior-year was primarily due to 2014 fourth quarter
decreases in oil revenues as a result of lower realized prices and
increases in depletion, depreciation and amortization ("DD&A"),
largely offset by settlements on our commodity derivatives and
lower lease operating expenses.
Denbury's full-year 2014 adjusted net income(1) was $365
million, or $1.04 per diluted share. On a GAAP basis, the
Company recorded full-year 2014 net income of $635 million, or
$1.81 per diluted share, on annual revenues of $2.4
billion. Adjusted net income(1) for the full-year 2014 differs
from GAAP net income for the year primarily due to the exclusion of
a $554 million (pre-tax) gain on noncash fair value adjustments on
commodity derivatives(1), and the exclusion of a $114 million
(pre-tax) loss on the early extinguishment of debt. Adjusted
net income(1) for full-year 2014 decreased by $174 million compared
to the same measure in 2013, primarily due to decreases in oil
revenues as a result of lower realized prices, as well as increases
in DD&A, interest expense, and lease operating expenses in the
same year.
Year-over-year comparisons of selected annual financial items
are shown in the following table:
|
Year Ended |
(in millions, except per share
amounts) |
Dec. 31, 2014 |
Dec. 31, 2013 |
Revenues |
$2,417 |
$2,494 |
Net income |
635 |
410 |
Adjusted net income(1) (non-GAAP
measure) |
365 |
539 |
Net income per diluted share |
1.81 |
1.11 |
Adjusted net income per diluted share(1)
(non-GAAP measure) |
1.04 |
1.46 |
Cash flow from operations |
1,223 |
1,361 |
Adjusted cash flow from operations(1)(2)
(non-GAAP measure) |
1,269 |
1,272 |
Management Comment
Phil Rykhoek, Denbury's President and CEO, commented, "The
significant decrease in global oil prices during the second half of
2014 and early 2015 have impacted the entire
industry. However, we have seen this happen before and
therefore we have taken what we believe are prudent and proactive
measures in this uncertain price environment to preserve our
liquidity and financial strength, such as our earlier decisions to
reduce 2015 capital spending by approximately 50% and to maintain
our dividend rate at the same level as in 2014. As we look
back upon 2014, we see a year in which oil prices reached $107 per
barrel ("Bbl") mid-year, then proceeded to fall over 50% by year
end, and further to the mid-$40 per barrel range in the new year.
The magnitude of this price drop in such a short period of time
obviously presents many challenges in planning for both our
near-term and long-term development projects. We believe that
our adjustments to capital and dividends, coupled with Denbury's
strong hedge position, will generate more than adequate cash flows
to cover capital expenditures and dividends in 2015 at current
strip prices.
"While 2014 certainly had some challenges, Denbury had several
positive accomplishments. Denbury's 2014 average daily
enhanced oil recovery ("EOR") production increased by 7% to a new
record level of 41,079 barrels per day ("Bbls/d"). Also, one
of our primary objectives in 2014 was to reduce our operating costs
and we have successfully lowered our base lease operating expenses
on a sequential-quarter basis throughout 2014. For the fourth
quarter of 2014, our base lease operating expenses, excluding Delhi
Field remediation costs, averaged $22.64 per barrel of oil
equivalent ("BOE"), our lowest level in over a year and 14% lower
than fourth quarter of 2013. We anticipate there may be
further improvements we can make in this area. For 2014, we
also generated adjusted cash flow from operations(1) in excess of
our capital expenditures and dividend payments by approximately
$107 million, demonstrating our disciplined approach around
balancing our cash flows, capital spending and dividends.
"Our proved reserves at December 31, 2014 were 438 million BOE
("MMBOE"), down approximately 30 MMBOE from last year-end primarily
due to our production and the absence of any significant new
tertiary flood bookings this year. As we have mentioned
throughout the year, we did not expect any meaningful reserve
bookings in 2014 based on our development plans, as our EOR reserve
additions generally correlate with a production response from a new
EOR flood.
"During these times of lower oil prices, we must continue to
innovate and find new ways to make our business more efficient for
the long-term; consequently, we have created innovation teams to
undertake a bottoms-up review of each asset to find those
opportunities. Our findings to date give us confidence that
there are ways to do more with less, while also generating new
ideas which require further testing and investigation, but which
could have meaningful impacts on our business. We remain confident
in our employees, assets and our long-term business model, and
believe that this downturn in prices will allow us to sharpen our
focus on our initiatives and make a real impact on our future
results."
Production
Denbury's total production for the fourth quarter of 2014
averaged 74,875 barrels of oil equivalent per day ("BOE/d"), a 5%
increase over fourth quarter of 2013 levels. Tertiary
production for the fourth quarter of 2014 averaged 41,873 Bbls/d,
up approximately 8% from the prior-year fourth quarter amounts, as
production increases at Bell Creek, Oyster Bayou, Tinsley,
Heidelberg and Hastings fields more than offset production declines
in mature properties and the reversionary assignment of
approximately 25% of our interest in the Delhi Field. Fourth
quarter of 2014 production was 95% oil, unchanged from the same
prior-year period. Denbury's average annual production rate
for 2014 was 74,432 BOE/d, up 6% from the prior year's level
primarily due to production increases from the Company's tertiary
oil fields in 2014 and receiving only nine months of production in
2013 from the purchase of additional interests in Cedar Creek
Anticline in late March 2013.
Review of Financial Results
Oil and natural gas revenues, excluding the impact of derivative
contracts, decreased 20% when comparing the fourth quarters of 2014
and 2013, as the substantial decrease in realized oil prices in the
2014 quarter more than offset an increase in
production. Denbury's average realized oil price, excluding
derivative contracts, was $70.80 per Bbl in the fourth quarter of
2014, compared to $93.00 per Bbl in the prior-year fourth
quarter. Including derivative settlements, Denbury's average
oil price realized was $86.67 per Bbl in the 2014 fourth quarter,
compared to $93.00 per Bbl in the prior-year fourth quarter.
The oil price realized relative to NYMEX oil prices (the
Company's NYMEX oil price differential) moved in a favorable
direction in the fourth quarter of 2014, to $2.24 per Bbl below
NYMEX prices, compared to $4.57 per Bbl below NYMEX prices in the
prior-year fourth quarter, although on an annual basis the
Company's oil price differential averaged $2.21 per Bbl below NYMEX
in 2014 as compared to $2.62 per Bbl above NYMEX in 2013.
Lease operating expenses, excluding Delhi Field remediation
costs, decreased to $22.64 per BOE in the fourth quarter of 2014
from $26.24 per BOE in the fourth quarter of 2013. This
decrease was primarily due to lower tertiary workover costs and
lower carbon dioxide ("CO2") costs. Delhi Field remediation
costs associated with the 2013 incident at Delhi Field were $3
million, or $0.40 per BOE, in the fourth quarter of 2014, compared
to $16 million, or $2.43 per BOE, in the fourth quarter of 2013.
Tertiary operating expenses, excluding Delhi Field
remediation costs, averaged $24.10 per Bbl in the fourth quarter of
2014, down from $28.72 per Bbl in the prior-year fourth
quarter. The decrease in tertiary operating expenses between
the periods was primarily the result of increased production, lower
workover costs and lower CO2 costs.
General and administrative expenses were $35 million in the
fourth quarter of 2014, increasing $1 million from the prior-year
fourth quarter and, on a per-BOE basis, were $5.13 per BOE in the
fourth quarter of 2014, down from $5.17 per BOE in the prior-year
fourth quarter. On an annual basis, general and administrative
expenses increased by 9% on an absolute-dollar basis, primarily due
to higher compensation-related costs from increases in headcount,
insurance, and professional services, as well as the prior year
including a $1.9 million insurance reimbursement.
Interest expense, before capitalized interest, was $50 million
in the fourth quarter of 2014 as compared to $54 million in the
fourth quarter of 2013, due primarily to a lower average interest
rate on the Company's debt, which decreased to 5.3% in the fourth
quarter of 2014 from 6.2% in the fourth quarter of 2013, offset in
part by a $286 million increase in average debt
outstanding. Capitalized interest was $7 million in the fourth
quarter of 2014, compared to $15 million in the prior-year fourth
quarter, resulting in net interest expense of $43 million in the
fourth quarter of 2014, compared to $40 million in the prior-year
fourth quarter. The decrease in the average interest rate was
primarily due to the Company's April 2014 refinancing of its $996
million in 8¼% Notes with $1.25 billion of 5½% Notes.
Denbury's overall DD&A rate was $22.81 per BOE in the fourth
quarter of 2014, compared to $21.98 per BOE in the prior-year
fourth quarter. The increase was primarily driven by higher
finding and development costs, which were primarily attributable to
the reserve additions at Bell Creek in late 2013 that resulted in
the transfer of most of that field's development costs from
unevaluated to proved properties.
Denbury recorded a noncash pre-tax gain of $451 million in the
fourth quarter of 2014 due to changes in the fair values of the
Company's derivative contracts, compared to a noncash pre-tax gain
of $6 million on fair value changes in the prior-year fourth
quarter. Cash received on settlements of derivative contracts
was $104 million in the fourth quarter of 2014 and there were no
such receipts or payments on our derivative contracts in the fourth
quarter of 2013.
Denbury's effective tax rate for the fourth quarter of 2014 was
37.4%, up from 30.7% in the prior-year fourth quarter as that
period had a true-up due to a change in our estimated statutory
rate. The Company's estimated statutory rate remained at 38%,
consistent with the prior-year fourth quarter. Current income
taxes represented a $43 million benefit in the fourth quarter of
2014, as the Company was able to carry back net operating losses
due to the recognition of reinstated bonus depreciation, which
became available in December 2014.
Year-End 2014 Proved Reserves
Denbury's total estimated proved oil and natural gas reserves at
December 31, 2014 were 438 MMBOE, consisting of 362 million barrels
of crude oil, condensate and natural gas liquids (together,
"liquids"), and 452 billion cubic feet (or 76 MMBOE) of natural
gas. Reserves were 83% liquids and 77% proved developed, and 49% of
such reserves were attributable to Denbury's CO2 tertiary
operations. The net reduction of total proved reserves of 30
MMBOE during 2014 was primarily the result of 27 MMBOE of 2014
production, in addition to 3 MMBOE, net, of other revisions and
additions.
|
MMBOE |
Balance at December 31, 2013 |
468 |
Improved recovery |
1 |
2014 production |
(27) |
Other revisions |
(4) |
Balance at December 31,
2014 |
438 |
The estimated discounted net present value of Denbury's proved
reserves at December 31, 2014, before projected income taxes, using
a 10% per annum discount rate ("PV-10 Value")(1) (a non-GAAP
measure), was $8.7 billion, as compared to $10.6 billion at
December 31, 2013. PV-10 Value(1) and estimated proved
reserves for 2014 were computed using first-day-of-the-month
12-month average prices of $94.99 per Bbl for oil (based on NYMEX
prices) and $4.30 per million British thermal unit ("MMBtu") for
natural gas (based on Henry Hub cash prices), adjusted for prices
received at the field (an average of $91.89 per Bbl for oil and
$4.30 per thousand cubic feet ("Mcf") for natural gas).
Comparative prices for year-end 2013 were $96.94 per Bbl of
oil and $3.67 per MMBtu for natural gas, adjusted for prices
received at the field (an average of $100.35 per Bbl for oil and
$3.43 per Mcf for natural gas). Although the NYMEX oil price
used in the 2014 and 2013 reserve reports decreased by less than $2
between the reports, the change in the Company's NYMEX
differentials decreased by approximately $6.50 per Bbl between the
2014 and 2013 reports, causing a significant portion of the
reduction in PV-10 Value(1) between the two reports. In
addition, the Company's 2014 reserve report reflects its lower
capital spending plans for 2015, which defers certain projects to
future years and decreases the PV-10 Value(1) associated with those
projects.
Denbury's estimated proved CO2 reserves at year-end 2014,
on a gross working interest or 8/8th's basis for operated fields,
together with its overriding royalty interest in LaBarge Field in
Wyoming, totaled 8.7 trillion cubic feet ("Tcf"), reduced from
December 31, 2013 CO2 reserves of 9.3 Tcf, primarily due to
2014 production. Of these total CO2 reserves, 5.7 Tcf
are located in the Gulf Coast region and 3.0 Tcf in the Rocky
Mountain region. In addition to these proved
CO2 reserves, Denbury is currently purchasing CO2 from
two industrial facilities in the Gulf Coast region and a gas
processing facility in the Rocky Mountain region, all under
long-term contractual agreements. Although there are no
proved CO2 reserves associated with these long-term
agreements, they currently supply approximately 10% of the
CO2 Denbury is using for its tertiary operations.
2015 Production and Capital Expenditures
Denbury's 2015 production estimates are unchanged from the
ranges disclosed at its November 2014 annual analyst day.
Operating Area |
|
2015 Estimated Production
(BOE/d) |
|
Tertiary |
|
42,100 – 43,700 |
|
Cedar Creek Anticline |
|
18,000 – 18,800 |
|
Gulf Coast Non-Tertiary |
|
8,300 – 8,700 |
|
Other Rockies Non-Tertiary |
|
4,100 – 4,300 |
|
Total Production |
|
72,500 – 75,500 |
|
Also, Denbury's 2015 capital spending budget remains at $550
million, unchanged from its previous guidance.
Conference Call Information
Denbury will host a conference call to review and discuss fourth
quarter 2014 financial and operating results, as well as 2015
financial and operating guidance, today, Thursday, February 19, at
10:00 A.M. (Central). Individuals who would like to
participate should dial 800.230.1096 or 612.332.0725 ten minutes
before the scheduled start time. To access a live audio
webcast of the conference call, please visit the investor relations
section of the Company's website at www.denbury.com. The audio
webcast will be archived on the website for at least 30 days, and a
telephonic replay will be accessible for one month after the call
by dialing 800.475.6701 or 320.365.3844 and entering confirmation
number 324016.
Conference Presentation
Phil Rykhoek will be presenting at the Credit Suisse 20th Annual
Energy Summit on Tuesday, February 24, 2015 at 8:35 A.M. (Mountain)
in Vail, Colorado. The slides for the presentation will be
published to the Company's website at www.denbury.com. A live
audio webcast of the presentation will be available on the
Company's website and will be archived there for approximately 30
days after the presentation.
Annual Meeting Information
Denbury's 2015 Annual Meeting of Stockholders will be held on
Tuesday, May 19, 2015, at 3:00 P.M. (Central), at Denbury's
corporate offices located at 5320 Legacy Drive, Plano,
Texas. The record date for determination of shareholders
entitled to vote at the annual meeting is the close of business on
Tuesday, March 24, 2015.
Denbury is an independent oil and natural gas company with
operations focused in two key operating areas: the Gulf Coast and
Rocky Mountain regions. The Company's goal is to increase the
value of its properties through a combination of exploitation,
drilling and proven engineering extraction practices, with the most
significant emphasis relating to CO2 enhanced oil recovery
operations. For more information about Denbury, please visit
www.denbury.com.
This press release, other than historical financial information,
contains forward-looking statements that involve risks and
uncertainties including estimated 2015 production and capital
expenditures, estimated cash generated from operations in 2015 and
other risks and uncertainties detailed in the Company's filings
with the Securities and Exchange Commission, including Denbury's
most recent reports on Form 10-K and Form 10-Q. These risks
and uncertainties are incorporated by this reference as though
fully set forth herein. These statements are based on
engineering, geological, financial and operating assumptions that
management believes are reasonable based on currently available
information; however, management's assumptions and the Company's
future performance are both subject to a wide range of business
risks, and there is no assurance that these goals and projections
can or will be met. Actual results may vary
materially. In addition, any forward-looking statements
represent the Company's estimates only as of today and should not
be relied upon as representing its estimates as of any future
date. Denbury assumes no obligation to update its
forward-looking statements.
Financial and Statistical Data Tables and Reconciliation
Schedules
Following are unaudited financial highlights for the comparative
three and twelve month periods ended December 31, 2014 and
2013. All production volumes and dollars are expressed on a
net revenue interest basis with gas volumes converted to equivalent
barrels at 6:1.
DENBURY RESOURCES
INC. |
CONSOLIDATED STATEMENTS
OF OPERATIONS (UNAUDITED) |
|
|
|
|
|
The following information is
based on GAAP reported earnings, with additional required
disclosures included in the Company's Form 10-K: |
|
|
|
|
|
|
Quarter Ended |
Year Ended |
|
December 31, |
December 31, |
In thousands, except per share
data |
2014 |
2013 |
2014 |
2013 |
Revenues and other
income |
|
|
|
|
Oil sales |
$ 461,843 |
$ 580,619 |
$ 2,338,367 |
$ 2,435,625 |
Natural gas sales |
7,750 |
6,971 |
34,106 |
30,609 |
CO2 and helium sales and
transportation fees |
10,682 |
8,091 |
44,643 |
27,950 |
Interest income and other
income |
3,409 |
3,441 |
18,089 |
22,943 |
Total revenues and other
income |
483,684 |
599,122 |
2,435,205 |
2,517,127 |
Expenses |
|
|
|
|
Lease operating expenses |
158,732 |
188,507 |
647,559 |
730,574 |
Marketing and plant operating
expenses |
14,116 |
12,987 |
64,379 |
49,246 |
CO2 and helium discovery and
operating expenses |
2,993 |
5,655 |
25,222 |
16,916 |
Taxes other than income |
32,940 |
44,013 |
169,701 |
176,231 |
General and administrative
expenses |
35,332 |
33,971 |
158,343 |
145,211 |
Interest, net of amounts
capitalized of $6,789, $14,501, $24,202, and $79,253,
respectively |
42,867 |
39,572 |
183,003 |
140,709 |
Depletion, depreciation, and
amortization |
157,118 |
144,543 |
592,972 |
509,943 |
Commodity derivatives expense
(income) |
(554,430) |
(5,850) |
(555,255) |
41,024 |
Loss on early extinguishment of
debt |
— |
— |
113,908 |
44,651 |
Other expenses |
12,816 |
5,950 |
12,816 |
20,242 |
Total expenses |
(97,516) |
469,348 |
1,412,648 |
1,874,747 |
Income before income
taxes |
581,200 |
129,774 |
1,022,557 |
642,380 |
Income tax provision (benefit) |
|
|
|
|
Current income taxes |
(43,439) |
(13,110) |
(42,907) |
10,257 |
Deferred income taxes |
261,006 |
52,892 |
429,973 |
222,526 |
Net income |
$ 363,633 |
$ 89,992 |
$ 635,491 |
$ 409,597 |
|
|
|
|
|
Net income per common
share |
|
|
|
|
Basic |
$ 1.04 |
$ 0.25 |
$ 1.82 |
$ 1.12 |
Diluted |
$ 1.04 |
$ 0.25 |
$ 1.81 |
$ 1.11 |
|
|
|
|
|
Dividends declared per common
share |
$ 0.0625 |
$ -- |
$ 0.2500 |
$ -- |
|
|
|
|
|
Weighted average common shares
outstanding |
|
|
|
|
Basic |
348,869 |
362,378 |
348,962 |
366,659 |
Diluted |
350,627 |
365,608 |
351,167 |
369,877 |
|
DENBURY RESOURCES
INC. |
SUPPLEMENTAL NON-GAAP
FINANCIAL MEASURES (UNAUDITED) |
|
|
|
|
|
|
Reconciliation of net income
(GAAP measure) to adjusted net income (non-GAAP measure)(1): |
|
|
|
|
|
|
|
Quarter Ended |
Year Ended |
|
December 31, |
Sept. 30, |
December 31, |
In thousands |
2014 |
2013 |
2014 |
2014 |
2013 |
Net income (GAAP measure) |
$ 363,633 |
$ 89,992 |
$ 268,748 |
$ 635,491 |
$ 409,597 |
Noncash fair value adjustments
on commodity derivatives |
(450,754) |
(5,850) |
(277,179) |
(553,834) |
40,362 |
Interest income and other
income – noncash fair value adjustment – contingent liability |
(1,250) |
— |
— |
(1,250) |
(7,500) |
Lease operating expenses –
Delhi Field remediation |
2,772 |
16,000 |
(9,906) |
(7,134) |
114,000 |
CO2 and helium discovery and
operating expenses – CO2 exploration costs |
— |
— |
— |
— |
835 |
Loss on early extinguishment of
debt |
— |
— |
— |
113,908 |
44,651 |
Other expenses – impairment of
assets |
12,816 |
3,000 |
— |
12,816 |
3,000 |
Other expenses – helium
contract-related charges |
— |
— |
— |
— |
9,207 |
Other expenses – acquisition
transaction costs |
— |
— |
— |
— |
2,414 |
Other expenses – accrued lease
exit obligation |
— |
3,217 |
— |
— |
3,217 |
Estimated income taxes on above
adjustments to net income |
165,838 |
(6,219) |
109,093 |
165,488 |
(80,839) |
Adjusted net income (non-GAAP measure) |
$ 93,055 |
$ 100,140 |
$ 90,756 |
$ 365,485 |
$ 538,944 |
|
|
|
|
|
|
(1) See "Non-GAAP Measures" at the end
of this report. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of cash flow from
operations (GAAP measure) to adjusted cash flow from operations
(non-GAAP measure)(1): |
|
|
|
|
|
|
|
Quarter Ended |
Year Ended |
|
December 31, |
Sept. 30, |
December 31, |
In thousands |
2014 |
2013 |
2014 |
2014 |
2013 |
Net income (GAAP measure) |
$ 363,633 |
$ 89,992 |
$ 268,748 |
$ 635,491 |
$ 409,597 |
Adjustments to reconcile to
adjusted cash flow from operations |
|
|
|
|
Depletion, depreciation, and
amortization |
157,118 |
144,543 |
146,560 |
592,972 |
509,943 |
Deferred income taxes |
261,006 |
52,892 |
167,356 |
429,973 |
222,526 |
Stock-based compensation |
4,409 |
9,229 |
8,887 |
30,513 |
33,003 |
Noncash fair value adjustments
on commodity derivatives |
(450,754) |
(5,850) |
(277,179) |
(553,834) |
40,362 |
Loss on early extinguishment of
debt |
— |
— |
— |
113,908 |
44,651 |
Other |
14,391 |
4,610 |
1,820 |
19,787 |
11,705 |
Adjusted cash flow from operations (non-GAAP
measure) |
349,803 |
295,416 |
316,192 |
1,268,810 |
1,271,787 |
Net change in assets and
liabilities relating to operations |
(12,075) |
53,570 |
24,200 |
(45,985) |
89,408 |
Cash flow from operations (GAAP measure) |
$ 337,728 |
$ 348,986 |
$ 340,392 |
$ 1,222,825 |
$ 1,361,195 |
|
|
|
|
|
|
(1) See "Non-GAAP Measures" at the end
of this report. |
|
|
|
|
|
|
DENBURY RESOURCES
INC. SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Reconciliation of commodity derivatives income (expense) (GAAP
measure) to noncash fair value adjustments on commodity derivatives
(non-GAAP measure)(1):
|
|
|
|
|
|
|
|
Quarter Ended |
Year Ended |
|
December 31, |
Sept. 30, |
December 31, |
In thousands |
2014 |
2013 |
2014 |
2014 |
2013 |
Receipt (payment) on settlements of commodity
derivatives |
$ 103,676 |
$ — |
$ (24,914) |
$ 1,421 |
$ (662) |
Noncash fair value adjustments on commodity
derivatives (non-GAAP measure) |
450,754 |
5,850 |
277,179 |
553,834 |
(40,362) |
Commodity derivatives income
(expense) (GAAP measure) |
$ 554,430 |
$ 5,850 |
$ 252,265 |
$ 555,255 |
$ (41,024) |
|
|
|
|
|
|
(1) See "Non-GAAP Measures" at the end
of this report. |
|
|
|
|
|
|
|
OPERATING HIGHLIGHTS
(UNAUDITED) |
|
|
|
|
|
|
Quarter Ended |
Year Ended |
|
December 31, |
December 31, |
|
2014 |
2013 |
2014 |
2013 |
Production (daily – net of
royalties) |
|
|
|
|
Oil (barrels) |
70,909 |
67,860 |
70,606 |
66,286 |
Gas (mcf) |
23,796 |
21,638 |
22,955 |
23,742 |
BOE (6:1) |
74,875 |
71,466 |
74,432 |
70,243 |
Unit sales price (excluding
derivative settlements) |
|
|
|
|
Oil (per barrel) |
$ 70.80 |
$ 93.00 |
$ 90.74 |
$ 100.67 |
Gas (per mcf) |
3.54 |
3.50 |
4.07 |
3.53 |
BOE (6:1) |
68.17 |
89.37 |
87.33 |
96.19 |
Unit sales price (including
derivative settlements) |
|
|
|
|
Oil (per barrel) |
$ 86.67 |
$ 93.00 |
$ 90.82 |
$ 100.64 |
Gas (per mcf) |
3.60 |
3.50 |
3.99 |
3.53 |
BOE (6:1) |
83.22 |
89.37 |
87.38 |
96.16 |
NYMEX differentials |
|
|
|
|
Gulf Coast region |
|
|
|
|
Oil (per barrel) |
$ 1.20 |
$ (0.06) |
$ 1.73 |
$ 7.29 |
Gas (per mcf) |
(0.01) |
(0.15) |
0.05 |
0.02 |
Rocky Mountain region |
|
|
|
|
Oil (per barrel) |
$ (9.28) |
$ (14.00) |
$ (10.19) |
$ (8.10) |
Gas (per mcf) |
(0.73) |
(0.58) |
(0.53) |
(0.57) |
Total company |
|
|
|
|
Oil (per barrel) |
$ (2.24) |
$ (4.57) |
$ (2.21) |
$ 2.62 |
Gas (per mcf) |
(0.29) |
(0.31) |
(0.20) |
(0.19) |
|
|
|
|
|
|
|
|
DENBURY RESOURCES INC. OPERATING
HIGHLIGHTS (UNAUDITED) |
Quarter Ended |
Year Ended |
|
December 31, |
December 31, |
Average Daily Volumes (BOE/d)
(6:1) |
2014 |
2013 |
2014 |
2013 |
Tertiary oil production |
|
|
|
|
Gulf Coast region |
|
|
|
|
Mature properties |
|
|
|
|
Brookhaven |
1,579 |
2,026 |
1,759 |
2,223 |
Eucutta |
1,995 |
2,280 |
2,137 |
2,514 |
Mallalieu |
1,653 |
1,886 |
1,799 |
2,050 |
Other mature properties
(1) |
5,864 |
6,287 |
6,122 |
7,016 |
Total mature properties |
11,091 |
12,479 |
11,817 |
13,803 |
Delhi |
3,743 |
4,793 |
4,340 |
5,149 |
Hastings |
4,811 |
4,270 |
4,777 |
3,984 |
Heidelberg |
6,164 |
5,206 |
5,707 |
4,466 |
Oyster Bayou |
5,638 |
3,869 |
4,683 |
2,968 |
Tinsley |
8,767 |
7,809 |
8,507 |
8,051 |
Total Gulf Coast region |
40,214 |
38,426 |
39,831 |
38,421 |
Rocky Mountain region |
|
|
|
|
Bell Creek |
1,659 |
177 |
1,248 |
56 |
Total Rocky Mountain
region |
1,659 |
177 |
1,248 |
56 |
Total tertiary oil production |
41,873 |
38,603 |
41,079 |
38,477 |
Non-tertiary oil and gas
production |
|
|
|
|
Gulf Coast region |
|
|
|
|
Mississippi |
2,099 |
2,711 |
2,318 |
2,695 |
Texas |
6,677 |
5,994 |
6,290 |
6,540 |
Other |
1,082 |
1,041 |
1,061 |
1,097 |
Total Gulf Coast region |
9,858 |
9,746 |
9,669 |
10,332 |
Rocky Mountain region |
|
|
|
|
Cedar Creek Anticline |
18,553 |
18,601 |
18,834 |
16,572 |
Other |
4,591 |
4,516 |
4,850 |
4,862 |
Total Rocky Mountain
region |
23,144 |
23,117 |
23,684 |
21,434 |
Total non-tertiary production |
33,002 |
32,863 |
33,353 |
31,766 |
Total production |
74,875 |
71,466 |
74,432 |
70,243 |
|
|
|
|
|
(1) Other mature properties
include Cranfield, Little Creek, Lockhart Crossing, Martinville,
McComb and Soso fields. |
|
DENBURY RESOURCES
INC. |
PER-BOE DATA
(UNAUDITED) |
|
|
|
|
|
|
Quarter Ended |
Year Ended |
|
December 31, |
December 31, |
|
2014 |
2013 |
2014 |
2013 |
Oil and natural gas revenues |
$ 68.17 |
$ 89.37 |
$ 87.33 |
$ 96.19 |
Receipt (payment) on settlements of commodity
derivatives |
15.05 |
— |
0.05 |
(0.03) |
Lease operating expenses – excluding Delhi
Field remediation |
(22.64) |
(26.24) |
(24.10) |
(24.05) |
Lease operating expenses – Delhi Field
remediation |
(0.40) |
(2.43) |
0.26 |
(4.45) |
Production and ad valorem taxes |
(4.25) |
(6.12) |
(5.72) |
(6.35) |
Marketing expenses, net of third-party
purchases, and plant operating expenses |
(1.61) |
(1.55) |
(1.76) |
(1.47) |
Production netback |
54.32 |
53.03 |
56.06 |
59.84 |
CO2 and helium sales, net of operating and
exploration expenses |
1.12 |
0.37 |
0.71 |
0.43 |
General and administrative expenses |
(5.13) |
(5.17) |
(5.83) |
(5.66) |
Interest expense, net |
(6.22) |
(6.02) |
(6.74) |
(5.49) |
Other |
6.69 |
2.72 |
2.50 |
0.48 |
Changes in assets and liabilities relating to
operations |
(1.75) |
8.15 |
(1.69) |
3.49 |
Cash flow from operations |
49.03 |
53.08 |
45.01 |
53.09 |
DD&A |
(22.81) |
(21.98) |
(21.83) |
(19.89) |
Deferred income taxes |
(37.89) |
(8.04) |
(15.83) |
(8.68) |
Loss on early extinguishment of debt |
— |
— |
(4.19) |
(1.74) |
Noncash fair value adjustments on commodity
derivatives |
65.44 |
0.89 |
20.39 |
(1.57) |
Other noncash items |
(0.98) |
(10.26) |
(0.16) |
(5.23) |
Net income |
$ 52.79 |
$ 13.69 |
$ 23.39 |
$ 15.98 |
|
|
CAPITAL EXPENDITURE
SUMMARY (UNAUDITED) |
|
|
|
|
|
|
Quarter Ended |
Year Ended |
|
December 31, |
December 31, |
In thousands |
2014 |
2013 |
2014 |
2013 |
Capital expenditures by project |
|
|
|
|
Tertiary oil fields |
$ 186,980 |
$ 106,505 |
$ 629,790 |
$ 534,878 |
Non-tertiary fields |
53,479 |
87,760 |
240,187 |
224,556 |
Capitalized interest and
internal costs (1) |
22,279 |
24,997 |
89,716 |
114,197 |
Oil and natural gas capital
expenditures |
262,738 |
219,262 |
959,693 |
873,631 |
CO2 pipelines |
21,060 |
17,773 |
45,672 |
57,136 |
CO2 sources (2) |
18,958 |
49,470 |
56,460 |
163,710 |
CO2 capitalized interest and
other |
1,416 |
13,821 |
4,247 |
49,021 |
Capital expenditures,
before acquisitions |
304,172 |
300,326 |
1,066,072 |
1,143,498 |
Property acquisitions (3) |
7,090 |
— |
8,773 |
1,032,218 |
Capital expenditures,
total |
$ 311,262 |
$ 300,326 |
$ 1,074,845 |
$ 2,175,716 |
|
|
|
|
|
(1) Includes capitalized
internal acquisition, exploration and development costs;
capitalized interest; and pre-production startup costs associated
with new tertiary floods. |
(2) Includes capital
expenditures related to the Riley Ridge gas processing
facility. |
(3) Property acquisitions
during the year ended December 31, 2013 include capital
expenditures of approximately $1.0 billion related to acquisitions
during the period that are not reflected as an Investing Activity
on Denbury's Consolidated Statements of Cash Flows due to the
movement of proceeds through a qualified intermediary to facilitate
like-kind-exchange treatment under federal income tax rules. |
|
DENBURY RESOURCES
INC. |
SELECTED BALANCE SHEET
AND CASH FLOW DATA (UNAUDITED) |
|
|
|
|
December 31, |
In thousands |
2014 |
2013 |
Cash and cash equivalents |
$ 23,153 |
$ 12,187 |
Total assets |
12,727,802 |
11,788,737 |
|
|
|
Borrowings under bank credit facility |
$ 395,000 |
$ 340,000 |
Borrowings under senior subordinated notes
(principal only) |
2,852,735 |
2,600,080 |
Financing and capital leases |
323,624 |
356,686 |
Total debt (principal
only) |
$ 3,571,359 |
$ 3,296,766 |
|
|
|
Total stockholders' equity |
$ 5,703,856 |
$ 5,301,406 |
|
|
|
|
|
|
|
Year Ended |
|
December 31, |
In thousands |
2014 |
2013 |
Cash provided by (used in) |
|
|
Operating activities |
$ 1,222,825 |
$ 1,361,195 |
Investing activities |
(1,076,755) |
(1,275,309) |
Financing activities |
(135,104) |
(172,210) |
|
|
|
Cash dividends paid |
$ 87,044 |
$ — |
Non-GAAP Measures
Adjusted net income is a non-GAAP measure provided as a
supplement to present an alternative net income measure which
excludes expense and income items (and their related tax effects)
not directly related to the Company's ongoing operations. The
excluded items for the periods presented are those which reflect
the fair value adjustments on the Company's derivative contracts,
fair value adjustments regarding a contingent liability,
adjustments to the Company's current estimate of known Delhi Field
remediation expenses, the portion of CO2 and helium discovery and
operating expenses attributable to exploration costs, the cost of
early debt extinguishment, impairment of assets, helium
contract-related charges, transaction-related expenses, and lease
exit obligation charges. Management believes that adjusted net
income may be helpful to investors, and is widely used by the
investment community, while also being used by management, in
evaluating the comparability of the Company's ongoing operational
results and trends. Adjusted net income should not be considered in
isolation or as a substitute for net income reported in accordance
with GAAP, but rather to provide additional information useful in
evaluating the Company's operational trends and performance.
Adjusted cash flow from operations is a non-GAAP measure that
represents cash flow provided by operations before changes in
assets and liabilities, as summarized from the Company's
Consolidated Statements of Cash Flows. Adjusted cash flow from
operations measures the cash flow earned or incurred from operating
activities without regard to the collection or payment of
associated receivables or payables. Management believes that it is
important to consider this additional measure, along with cash flow
from operations, as it believes the non-GAAP measure can often be a
better way to discuss changes in operating trends in its business
caused by changes in production, prices, operating costs and so
forth, without regard to whether the earned or incurred item was
collected or paid during that period.
Noncash fair value adjustments on commodity derivatives is a
non-GAAP measure and is different from "Commodity derivatives
expense (income)" in the Consolidated Statements of Operations in
that the noncash fair value adjustments on commodity derivatives
represent only the net change between periods of the fair market
values of open commodity derivative positions, and exclude the
impact of cash settlements on commodity derivatives during the
period. Management believes that noncash fair value
adjustments on commodity derivatives is a useful supplemental
disclosure to "Commodity derivatives expense (income)" because the
GAAP measure also includes cash settlements on commodity
derivatives during the period; the non-GAAP measure is widely used
within the industry and by securities analysts, banks and credit
rating agencies within the calculation of EBITDA and in adjusting
net income to present those measures on a comparative basis across
companies, as well as to assess compliance with certain debt
covenants.
PV-10 Value is a non-GAAP measure and is different than the
Standardized Measure of Discounted Future Net Cash Flows
("Standardized Measure"), which measure at year-end 2014 will be
presented in Denbury's upcoming Form 10-K, in that PV-10 Value is a
pre-tax number, while the Standardized Measure includes the effect
of estimated future income taxes. Denbury's 2014 and 2013
year-end estimated proved oil and natural gas reserves and proved
CO2 reserves quantities were prepared by the independent
reservoir engineering firm of DeGolyer and MacNaughton.
CONTACT: DENBURY CONTACTS:
Mark Allen, Senior Vice President and CFO
972.673.2000
Ross Campbell, Manager of Investor Relations
972.673.2825
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