Denbury Resources Inc. (NYSE:DNR) (“Denbury” or the “Company”)
today announced adjusted net income(1) (a non-GAAP measure) of $23
million for the first quarter of 2015, or $0.07(1)(2) per diluted
share. On a GAAP basis, the Company recorded a net loss of
$108 million, or $0.31 per diluted share, on quarterly revenues of
$304 million. Adjusted net income(1) for the first quarter of
2015 differs from GAAP net income due to the exclusion of (1) a
$146 million (pre-tax) write-down of oil and natural gas properties
and (2) a $65 million (pre-tax) loss on noncash fair value
adjustments on commodity derivatives(1) (a non-GAAP measure).
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) |
|
March 31, 2015 |
|
Dec. 31, 2014 |
|
March 31, 2014 |
Revenues |
|
$ |
304 |
|
|
$ |
480 |
|
|
$ |
635 |
|
Net income (loss) |
|
|
(108 |
) |
|
|
364 |
|
|
|
58 |
|
Adjusted net income(1)
(non-GAAP measure) |
|
|
23 |
|
|
|
93 |
|
|
|
89 |
|
Net income (loss) per
diluted share |
|
|
(0.31 |
) |
|
|
1.04 |
|
|
|
0.17 |
|
Adjusted net income per
diluted share(1)(2) (non-GAAP measure) |
|
|
0.07 |
|
|
|
0.27 |
|
|
|
0.25 |
|
Cash flows from
operations |
|
|
138 |
|
|
|
338 |
|
|
|
215 |
|
Adjusted cash flows
from operations(1)(3) (non-GAAP measure) |
|
|
195 |
|
|
|
350 |
|
|
|
289 |
|
Adjusted net income(1) for the first quarter of
2015 decreased $70 million on a sequential-quarter basis and $66
million when compared to the prior-year first quarter. The
differences in both periods were primarily due to decreases in oil
revenues as a result of significantly lower realized oil prices,
partially offset by higher cash receipts on settlement of
derivative contracts and reductions in operating expenses.
Adjusted cash flows from operations(1)(3) (a non-GAAP
measure) for the first quarter of 2015 decreased $155 million on a
sequential-quarter basis and $94 million when compared to the
prior-year first quarter as a result of the same items that drove
changes in adjusted net income(1). The sequential-quarter
change was further impacted by a change in current income taxes, as
we recorded a $43 million current income tax benefit in the fourth
quarter of 2014 due to the recognition of reinstated bonus
depreciation.
(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) For the three months ended March 31, 2015, calculated using
average diluted shares outstanding of 352.1 million.
(3) Adjusted cash flow from operations reflects cash flow from
operations before working capital changes but is not adjusted for
nonrecurring items.
MANAGEMENT COMMENT
Phil Rykhoek, Denbury’s President and CEO,
commented, “We are pleased with our first quarter results, as they
were generally in line or better than our expectations. We
were particularly pleased with the reductions we have seen in our
base lease operating costs, which on a per-barrel basis were down
7% sequentially and down 18% from year-ago levels. As
expected, our total and tertiary production were essentially flat
compared to levels in the fourth quarter of 2014. Based on
our production levels for the first quarter of 2015 and our
estimates for the remainder of the year, we feel confident that our
original guidance for the full year is achievable. Our
innovation and improvement teams have uncovered additional ways to
reduce costs and boost operational efficiency, and although many of
these will take time to be realized, there are some ideas that are
providing near-term benefits. We are more than half complete
with our detailed asset-level reviews, and we are encouraged by the
findings and accomplishments thus far.
“We recently completed our borrowing base
redetermination with the lenders under our bank credit facility and
amended certain financial covenants in our bank agreement in order
to provide us more flexibility if oil prices continue to remain low
over the next several years. Due to the lower oil prices used
by our banks in their evaluation, our borrowing base was reduced
from $3.0 billion to $2.6 billion; however, as we have historically
only asked for lender commitments of $1.6 billion, this reduction
has no impact on our liquidity. More importantly, we have
worked with our lenders to adjust certain covenants, primarily our
debt to EBITDAX coverage limit, to put us in a much better covenant
position for the next several years if oil prices remain at
relatively low levels, while still providing us access to our $1.6
billion credit facility. Although we currently have no issues
meeting our covenants, we believe this should provide us adequate
flexibility to manage through this lower oil price environment and
alleviate any potential concerns around our bank credit
facility.
“We have used the recent improvement in oil
prices to add to our existing hedging positions in the second and
third quarters of 2016. Although we are not looking to hedge
all of our production at current levels, we believe it is prudent
to begin locking in some predictability to our cash flows.
Our strategy to secure more predictable future cash flows has been
consistent, and we will continue to look for opportunities to
further extend these positions.
“We are off to a great start to this year, and
we are excited about the opportunities that lie before us.
Our employees are working hard to make Denbury the most efficient
it can be, and we are energized by the innovative ideas our
employees are generating. Our hedges are providing a
significant buffer during this period of lower oil prices, and
based on current prices and projections we expect to generate
significant excess cash after capital expenditures and dividends in
2015.”
PRODUCTION
Denbury’s total production for the first quarter
of 2015 averaged 74,356 barrels of oil equivalent per day
(“BOE/d”), which included 41,827 Bbls/d from tertiary properties
and 32,529 BOE/d from non-tertiary properties. Total
production during the first quarter of 2015 increased slightly
compared to the first quarter of 2014, in spite of a decrease in
Denbury’s ownership interest in Delhi Field due to the November 1,
2014 contractual reversionary assignment of approximately 25% of
Denbury’s interest to the seller of the field. First quarter
of 2015 production was 95% oil, unchanged from oil production
during the first and fourth quarters of 2014.
Tertiary oil production during the first quarter
of 2015 was relatively unchanged on a sequential-quarter basis and
up 5%, or 1,935 Bbls/d, from the first quarter of 2014. The
tertiary production increase over first quarter of 2014 production
levels was primarily due to production growth at Heidelberg, Oyster
Bayou, Tinsley, and Bell Creek fields, partially offset by mature
area production declines and the reversionary assignment of
approximately 25% of Denbury’s interest in Delhi Field.
Non-tertiary oil equivalent production was down
1%, or 473 BOE/d, from the fourth quarter of 2014 levels and down
4%, or 1,297 BOE/d, from the prior-year first quarter levels.
These decreases in non-tertiary oil-equivalent production were
primarily due to declines at Denbury’s Mississippi non-tertiary
fields and Cedar Creek Anticline. The year-over-year
quarterly comparison was further impacted by natural gas production
at Riley Ridge, which remained shut-in during the first quarter of
2015.
REVIEW OF FINANCIAL RESULTS
Oil and natural gas revenues, excluding the
impact of derivative contracts, decreased 52% when comparing the
first quarters of 2015 and 2014, as the 53% decline in realized
commodity prices more than offset the slight increase in
production. Denbury’s average realized oil price, excluding
derivative settlements, was $46.02 per Bbl in the first quarter of
2015, compared to $70.80 per Bbl in the fourth quarter of 2014 and
$97.69 per Bbl in the prior-year first quarter. Including
derivative settlements, Denbury’s average realized oil price was
$69.28 per Bbl in the first quarter of 2015, compared to $86.67 in
the fourth quarter of 2014 and $93.46 per Bbl in the prior-year
first quarter. The oil price realized relative to NYMEX oil
prices (the Company’s NYMEX oil price differential) in the first
quarter of 2015 was $2.81 per Bbl below NYMEX prices, compared to a
differential of $2.24 per Bbl below NYMEX in the fourth quarter of
2014 and $0.91 per Bbl below NYMEX in the first quarter of
2014.
Lease operating expenses averaged $21.08 per BOE
in the first quarter of 2015, a decrease of 7% from the $22.64
per-BOE average, excluding Delhi Field remediation costs, in the
fourth quarter of 2014 and a decrease of 18% from the $25.68
per-BOE average in the first quarter of 2014. These
year-over-year and sequential quarter decreases were primarily due
to a general decrease in most categories of lease operating
expenses, the most significant of which include (1) a decrease in
well workover costs, (2) lower power cost and usage, (3) lower
carbon dioxide (“CO2”) expense resulting from a decrease in Gulf
Coast region CO2 injection volumes and a decrease in the cost of
CO2 during both comparative periods, and (4) lower third-party
contractor and vendor expenses such as contract labor and chemical
costs. These reductions in lease operating expenses are a
result of cost reduction efforts, as well as general market price
decreases in many of these costs.
Taxes other than income, which includes ad
valorem, production, and franchise taxes, decreased $6 million on a
sequential-quarter basis and $19 million from the prior-year first
quarter level. The levels of taxes other than income during
most periods are generally aligned with fluctuations in oil and
natural gas revenues.
General and administrative expenses were $46
million in the first quarter of 2015, increasing $3 million from
the prior-year first quarter level, primarily due to higher
employee-related costs and professional service fees during the
first quarter of 2015.
Interest expense, before capitalized interest,
was $49 million in the first quarter of 2015, compared to $55
million in the first quarter of 2014, due primarily to a reduction
in the average interest rate to 5.1% from 5.8% between periods,
offset in part by a $94 million increase in average debt
outstanding. 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.
Capitalized interest was $8 million in the first quarter of 2015,
compared to $6 million in the prior-year first quarter, resulting
in net interest expense of $40 million in the first quarter of
2015, compared to $49 million in the prior-year first quarter.
Denbury’s overall depletion, depreciation, and
amortization (“DD&A”) rate was $22.41 per BOE in the first
quarter of 2015, compared to $21.27 per BOE in the prior-year first
quarter, the increase primarily driven by higher development
costs. On a sequential-quarter basis, the DD&A rate
decreased slightly from the fourth quarter of 2014 rate of $22.81
per BOE.
During the first quarter of 2015, Denbury
recognized a full cost pool ceiling test write-down of $146 million
as a result of the decrease in commodity prices during the fourth
quarter of 2014 and continued decline in the first quarter of
2015. Although the Company’s oil and natural gas derivative
contracts have an estimated fair value of $441 million as of March
31, 2015, the benefit is not included in the ceiling test, as
Denbury does not designate these contracts as hedge instruments for
accounting purposes. If oil prices remain at or near
late-April 2015 levels for the remainder of 2015, the Company
expects that it could record significantly larger full cost pool
ceiling test write-downs in subsequent quarters, as the 12-month
average price used in determining the full cost ceiling value will
continue to decline during each rolling quarterly period in
2015. The possibility and amount of any future
write-down or impairment is difficult to predict and reasonably
estimate, and will depend, in part, upon oil and natural gas prices
and revisions to previous reserve estimates and future capital
expenditures and operating costs.
Receipts on settlements of oil and natural gas
derivative contracts were $148 million in the first quarter of
2015, compared to receipts of $104 million in the fourth quarter of
2014 and payments of $27 million in the prior-year first
quarter. These settlements resulted in an increase in average
net realized oil prices of $23.26 per Bbl in the first quarter of
2015, an increase of $15.87 per Bbl in the fourth quarter of 2014,
and a decrease of $4.23 per Bbl in the first quarter of 2014.
Changes in the fair values of the Company’s derivative contracts in
the first quarter of 2015 resulted in a noncash pre-tax loss of $65
million driven by the expiration and settlement of contracts noted
above, compared to a noncash pre-tax fair value gain of $451
million in the fourth quarter of 2014 and a noncash pre-tax fair
value loss of $50 million in the prior-year first quarter.
Denbury’s effective tax rate for the first
quarter of 2015 was 37.4% and the estimated statutory rate remained
at 38%, both unchanged from the prior-year first quarter.
2015 PRODUCTION AND CAPITAL EXPENDITURE
ESTIMATES
Denbury’s estimated 2015 production is unchanged
from previously disclosed estimates shown in the following
table.
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 |
Denbury’s full-year 2015 capital expenditure
budget remains unchanged from the previously disclosed amount of
$550 million. The capital budget consists of $465 million of
tertiary, non-tertiary, and CO2 supply and pipeline projects, plus
approximately $85 million of estimated capitalized costs (including
capitalized internal acquisition, exploration and development
costs; capitalized interest; and pre-production startup costs
associated with new tertiary floods). Of this combined
capital expenditure amount, $111 million (approximately 20%) has
been spent through the first quarter of 2015.
BANK CREDIT FACILITY
In connection with the recently completed borrowing base
redetermination under Denbury’s Bank Credit Agreement, the Company
elected to maintain the level of aggregate lender commitments at
$1.6 billion; however, due to a reduction in oil prices used by the
Company’s lenders in determining the borrowing base value of proved
reserves attributable to oil and natural gas properties, the
borrowing base was reduced from the previous level of $3.0 billion
to $2.6 billion. Because the Company continues to maintain a
significant cushion between the borrowing base and aggregate lender
commitments, this borrowing base reduction has no impact on the
Company’s liquidity. Redeterminations under the Company’s
Bank Credit Agreement occur annually, making the next scheduled
redetermination in May 2016.
In conjunction with the May 2015 redetermination, Denbury also
entered into the First Amendment to the Bank Credit Agreement (the
"First Amendment"). This First Amendment restructures certain
financial covenants in 2016, 2017, and 2018 in order to provide
more flexibility in managing the Company’s balance sheet and
managing the credit extended by the lenders if oil prices remain
low over the next several years. The covenant changes
included in the First Amendment were as follows:
- In 2016 and 2017, suspend the maximum permitted ratio of
consolidated total net debt to consolidated EBITDAX covenant of
4.25 to 1.0 and replace it with a maximum permitted ratio of
consolidated senior secured debt to consolidated EBITDAX covenant
of 2.5 to 1.0 during the same time period. Currently, only debt
under the Company’s Bank Credit Agreement would be considered
consolidated senior secured debt for purposes of this ratio.
- Beginning in the first quarter of 2018, reinstate the ratio of
consolidated total net debt to consolidated EBITDAX covenant
utilizing an annualized EBITDAX amount for the first quarter of
2018 and building to a trailing four quarters by the end of 2018,
with the maximum permitted ratios being 6.0 to 1.0 for the first
quarter ended March 31, 2018, 5.5 to 1.0 for the second quarter
ended June 30, 2018, and 5.0 to 1.0 for the third and fourth
quarters ended September 30 and December 31, 2018, and returning to
4.25 to 1.0 for the first quarter ended March 31, 2019.
- In 2016 and 2017, institute a minimum permitted ratio of
consolidated EBITDAX to consolidated interest charges of 2.25 to
1.0.
CONFERENCE CALL AND ANNUAL MEETING
INFORMATION
Denbury management will host a conference call
to review and discuss first quarter 2015 financial and operating
results, as well as financial and operating guidance for the
remainder of 2015, today, Wednesday, May 6, 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
324017.
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 was 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 report on Form 10-K. 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 month periods ended March 31, 2015 and
2014. 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-Q:
|
|
Three Months Ended |
|
|
March 31, |
In
thousands, except per share data |
|
2015 |
|
2014 |
Revenues and
other income |
|
|
|
|
Oil sales |
|
$ |
292,270 |
|
|
$ |
613,980 |
|
Natural gas sales |
|
5,200 |
|
|
9,866 |
|
CO2 and helium sales and
transportation fees |
|
6,972 |
|
|
10,761 |
|
Interest income and other
income |
|
3,207 |
|
|
7,137 |
|
Total revenues and other
income |
|
307,649 |
|
|
641,744 |
|
Expenses |
|
|
|
|
Lease operating expenses |
|
141,084 |
|
|
170,379 |
|
Marketing and plant operating
expenses |
|
11,685 |
|
|
16,786 |
|
CO2 and helium discovery and
operating expenses |
|
947 |
|
|
5,205 |
|
Taxes other than income |
|
26,679 |
|
|
45,945 |
|
General and administrative
expenses |
|
46,280 |
|
|
43,693 |
|
Interest, net of amounts
capitalized of $8,409 and $5,756, respectively |
|
40,099 |
|
|
48,834 |
|
Depletion, depreciation, and
amortization |
|
149,958 |
|
|
141,130 |
|
Commodity derivatives expense
(income) |
|
(83,076 |
) |
|
76,669 |
|
Write-down of oil and natural gas
properties |
|
146,200 |
|
|
— |
|
Total expenses |
|
479,856 |
|
|
548,641 |
|
Income (loss)
before income taxes |
|
(172,207 |
) |
|
93,103 |
|
Income tax provision
(benefit) |
|
|
|
|
Current income taxes |
|
1,575 |
|
|
4,618 |
|
Deferred income taxes |
|
(66,036 |
) |
|
30,175 |
|
Net income
(loss) |
|
$ |
(107,746 |
) |
|
$ |
58,310 |
|
|
|
|
|
|
Net income
(loss) per common share |
|
|
|
|
Basic |
|
$ |
(0.31 |
) |
|
$ |
0.17 |
|
Diluted |
|
$ |
(0.31 |
) |
|
$ |
0.17 |
|
|
|
|
|
|
Dividends
declared per common share |
|
$ |
0.0625 |
|
|
$ |
0.0625 |
|
|
|
|
|
|
Weighted
average common shares outstanding |
|
|
|
|
Basic |
|
350,688 |
|
|
350,747 |
|
Diluted |
|
350,688 |
|
|
352,925 |
|
DENBURY RESOURCES
INC.SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Reconciliation of net income (loss) (GAAP
measure) to adjusted net income (non-GAAP measure)(1):
|
|
Three Months Ended |
|
|
March 31, |
|
Dec. 31, |
In
thousands |
|
2015 |
|
2014 |
|
2014 |
Net income (loss) (GAAP
measure) |
|
$ |
(107,746 |
) |
|
$ |
58,310 |
|
|
$ |
363,633 |
|
Noncash fair value adjustments on
commodity derivatives |
|
65,389 |
|
|
49,500 |
|
|
(450,754 |
) |
Interest income and other income –
noncash fair value adjustment – contingent liability |
|
— |
|
|
— |
|
|
(1,250 |
) |
Lease operating expenses – Delhi
Field remediation |
|
— |
|
|
— |
|
|
2,772 |
|
Write-down of oil and natural gas
properties |
|
146,200 |
|
|
— |
|
|
— |
|
Other expenses – impairment of
assets |
|
— |
|
|
— |
|
|
12,816 |
|
Estimated income taxes on above
adjustments to net income (loss) |
|
(80,404 |
) |
|
(18,810 |
) |
|
165,838 |
|
Adjusted net income
(non-GAAP measure) |
|
$ |
23,439 |
|
|
$ |
89,000 |
|
|
$ |
93,055 |
|
(1) See “Non-GAAP Measures” at the end of this
report.
Reconciliation of cash flows from operations
(GAAP measure) to adjusted cash flows from operations (non-GAAP
measure)(1):
|
|
Three Months Ended |
In thousands |
|
March 31, |
|
Dec. 31, |
|
2015 |
|
2014 |
|
2014 |
Net income (loss) (GAAP
measure) |
|
$ |
(107,746 |
) |
|
$ |
58,310 |
|
|
$ |
363,633 |
|
Adjustments to
reconcile to adjusted cash flows from operations |
|
|
|
|
|
|
Depletion, depreciation, and
amortization |
|
149,958 |
|
|
141,130 |
|
|
157,118 |
|
Deferred income taxes |
|
(66,036 |
) |
|
30,175 |
|
|
261,006 |
|
Stock-based compensation |
|
7,849 |
|
|
8,346 |
|
|
4,409 |
|
Noncash fair value adjustments on
commodity derivatives |
|
65,389 |
|
|
49,500 |
|
|
(450,754 |
) |
Write-down of oil and natural gas
properties |
|
146,200 |
|
|
— |
|
|
— |
|
Other |
|
(138 |
) |
|
1,223 |
|
|
14,391 |
|
Adjusted cash flows
from operations (non-GAAP measure) |
|
195,476 |
|
|
288,684 |
|
|
349,803 |
|
Net change in assets and
liabilities relating to operations |
|
(57,712 |
) |
|
(73,826 |
) |
|
(12,075 |
) |
Cash flows from
operations (GAAP measure) |
|
$ |
137,764 |
|
|
$ |
214,858 |
|
|
$ |
337,728 |
|
(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):
|
|
Three Months Ended |
|
|
March 31, |
|
Dec. 31, |
In
thousands |
|
2015 |
|
2014 |
|
2014 |
Receipt (payment) on
settlements of commodity derivatives |
|
$ |
148,465 |
|
|
$ |
(27,169 |
) |
|
$ |
103,676 |
|
Noncash fair value
adjustments on commodity derivatives (non-GAAP measure) |
|
(65,389 |
) |
|
(49,500 |
) |
|
450,754 |
|
Commodity derivatives income
(expense) (GAAP measure) |
|
$ |
83,076 |
|
|
$ |
(76,669 |
) |
|
$ |
554,430 |
|
(1) See “Non-GAAP Measures” at the end of this
report.
OPERATING HIGHLIGHTS
(UNAUDITED)
|
|
Three
Months Ended |
|
|
March 31, |
|
|
2015 |
|
2014 |
Production
(daily – net of royalties) |
|
|
|
|
Oil (barrels) |
|
70,564 |
|
|
69,834 |
|
Gas (mcf) |
|
22,752 |
|
|
23,299 |
|
BOE (6:1) |
|
74,356 |
|
|
73,718 |
|
Unit sales
price (excluding derivative settlements) |
|
|
|
|
Oil (per barrel) |
|
$ |
46.02 |
|
|
$ |
97.69 |
|
Gas (per mcf) |
|
2.54 |
|
|
4.71 |
|
BOE (6:1) |
|
44.45 |
|
|
94.03 |
|
Unit sales
price (including derivative settlements) |
|
|
|
|
Oil (per barrel) |
|
$ |
69.28 |
|
|
$ |
93.46 |
|
Gas (per mcf) |
|
2.91 |
|
|
4.41 |
|
BOE (6:1) |
|
66.64 |
|
|
89.93 |
|
NYMEX
differentials |
|
|
|
|
Gulf Coast region |
|
|
|
|
Oil (per barrel) |
|
$ |
(0.29 |
) |
|
$ |
3.05 |
|
Gas (per mcf) |
|
(0.24 |
) |
|
0.31 |
|
Rocky Mountain region |
|
|
|
|
Oil (per barrel) |
|
$ |
(7.75 |
) |
|
$ |
(9.06 |
) |
Gas (per mcf) |
|
(0.35 |
) |
|
(0.51 |
) |
Total company |
|
|
|
|
Oil (per barrel) |
|
$ |
(2.81 |
) |
|
$ |
(0.91 |
) |
Gas (per mcf) |
|
(0.28 |
) |
|
(0.02 |
) |
DENBURY RESOURCES
INC.OPERATING HIGHLIGHTS (UNAUDITED)
|
|
Three Months Ended |
|
|
March 31, |
Average Daily Volumes (BOE/d) (6:1) |
|
2015 |
|
2014 |
Tertiary oil
production |
|
|
|
|
Gulf Coast
region |
|
|
|
|
Mature properties |
|
|
|
|
Brookhaven |
|
1,612 |
|
|
1,877 |
|
Eucutta |
|
1,905 |
|
|
2,181 |
|
Mallalieu |
|
1,574 |
|
|
1,837 |
|
Other mature properties (1) |
|
5,710 |
|
|
6,283 |
|
Total mature properties |
|
10,801 |
|
|
12,178 |
|
Delhi |
|
3,551 |
|
|
4,708 |
|
Hastings |
|
4,694 |
|
|
4,618 |
|
Heidelberg |
|
6,027 |
|
|
5,325 |
|
Oyster Bayou |
|
5,861 |
|
|
4,055 |
|
Tinsley |
|
8,928 |
|
|
8,430 |
|
Total Gulf Coast region |
|
39,862 |
|
|
39,314 |
|
Rocky Mountain
region |
|
|
|
|
Bell Creek |
|
1,965 |
|
|
578 |
|
Total Rocky Mountain region |
|
1,965 |
|
|
578 |
|
Total tertiary oil
production |
|
41,827 |
|
|
39,892 |
|
Non-tertiary
oil and gas production |
|
|
|
|
Gulf Coast
region |
|
|
|
|
Mississippi |
|
1,761 |
|
|
2,513 |
|
Texas |
|
6,490 |
|
|
6,444 |
|
Other |
|
1,006 |
|
|
1,031 |
|
Total Gulf Coast region |
|
9,257 |
|
|
9,988 |
|
Rocky Mountain
region |
|
|
|
|
Cedar Creek Anticline |
|
18,522 |
|
|
19,007 |
|
Other |
|
4,750 |
|
|
4,831 |
|
Total Rocky Mountain region |
|
23,272 |
|
|
23,838 |
|
Total non-tertiary
production |
|
32,529 |
|
|
33,826 |
|
Total
production |
|
74,356 |
|
|
73,718 |
|
- Other mature properties include Cranfield, Little Creek,
Lockhart Crossing, Martinville, McComb and Soso fields.
DENBURY RESOURCES
INC.PER-BOE DATA (UNAUDITED)
|
|
Three Months Ended |
|
|
March 31, |
|
|
2015 |
|
2014 |
Oil and natural gas
revenues |
|
$ |
44.45 |
|
|
$ |
94.03 |
|
Receipt (payment) on
settlements of commodity derivatives |
|
22.19 |
|
|
(4.10 |
) |
Lease operating
expenses |
|
(21.08 |
) |
|
(25.68 |
) |
Production and ad
valorem taxes |
|
(3.42 |
) |
|
(6.39 |
) |
Marketing expenses, net
of third-party purchases, and plant operating expenses |
|
(1.47 |
) |
|
(1.84 |
) |
Production netback |
|
40.67 |
|
|
56.02 |
|
CO2 and helium sales,
net of operating and exploration expenses |
|
0.90 |
|
|
0.84 |
|
General and
administrative expenses |
|
(6.92 |
) |
|
(6.59 |
) |
Interest expense,
net |
|
(5.99 |
) |
|
(7.36 |
) |
Other |
|
0.55 |
|
|
0.60 |
|
Changes in assets and
liabilities relating to operations |
|
(8.62 |
) |
|
(11.13 |
) |
Cash flows from operations |
|
20.59 |
|
|
32.38 |
|
DD&A |
|
(22.41 |
) |
|
(21.27 |
) |
Write-down of oil and
natural gas properties |
|
(21.85 |
) |
|
— |
|
Deferred income
taxes |
|
9.87 |
|
|
(4.55 |
) |
Noncash fair value
adjustments on commodity derivatives |
|
(9.78 |
) |
|
(7.46 |
) |
Other noncash
items |
|
7.48 |
|
|
9.69 |
|
Net income (loss) |
|
$ |
(16.10 |
) |
|
$ |
8.79 |
|
CAPITAL EXPENDITURE SUMMARY
(UNAUDITED)
|
|
Three Months Ended |
|
|
March 31, |
In
thousands |
|
2015 |
|
2014 |
Capital expenditures by
project |
|
|
|
|
Tertiary oil fields |
|
$ |
42,900 |
|
|
$ |
123,901 |
|
Non-tertiary fields |
|
30,984 |
|
|
54,851 |
|
Capitalized interest and internal
costs (1) |
|
25,580 |
|
|
24,219 |
|
Oil and natural gas capital
expenditures |
|
99,464 |
|
|
202,971 |
|
CO2 pipelines |
|
779 |
|
|
3,244 |
|
CO2 sources (2) |
|
9,852 |
|
|
13,262 |
|
CO2 capitalized interest and
other |
|
1,003 |
|
|
1,146 |
|
Capital expenditures,
before acquisitions |
|
111,098 |
|
|
220,623 |
|
Acquisitions of oil and
natural gas properties |
|
261 |
|
|
— |
|
Capital expenditures,
total |
|
$ |
111,359 |
|
|
$ |
220,623 |
|
- Includes capitalized internal acquisition, exploration and
development costs; capitalized interest; and pre-production startup
costs associated with new tertiary floods.
- Includes capital expenditures related to the Riley Ridge gas
processing facility.
DENBURY RESOURCES
INC.SELECTED BALANCE SHEET AND CASH FLOW DATA
(UNAUDITED)
|
|
March 31, |
|
December 31, |
In
thousands |
|
2015 |
|
2014 |
Cash and cash
equivalents |
|
$ |
6,021 |
|
|
$ |
23,153 |
|
Total assets |
|
12,468,056 |
|
|
12,727,802 |
|
|
|
|
|
|
Borrowings under bank
credit facility |
|
$ |
465,000 |
|
|
$ |
395,000 |
|
Borrowings under senior
subordinated notes (principal only) |
|
2,852,734 |
|
|
2,852,735 |
|
Financing and capital
leases |
|
315,020 |
|
|
323,624 |
|
Total debt (principal only) |
|
$ |
3,632,754 |
|
|
$ |
3,571,359 |
|
|
|
|
|
|
Total stockholders'
equity |
|
$ |
5,583,481 |
|
|
$ |
5,703,856 |
|
|
|
Three Months Ended |
|
|
March 31, |
In
thousands |
|
2015 |
|
2014 |
Cash provided by (used
in) |
|
|
|
|
Operating activities |
|
$ |
137,764 |
|
|
$ |
214,858 |
|
Investing activities |
|
(192,578 |
) |
|
(236,754 |
) |
Financing activities |
|
37,682 |
|
|
17,601 |
|
|
|
|
|
|
Cash dividends
paid |
|
(22,068 |
) |
|
(21,727 |
) |
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 noncash fair value adjustments on the
Company’s commodity derivative contracts, fair value adjustments
regarding a contingent liability, adjustments to the Company's
current estimate of known Delhi Field remediation expenses,
write-down of oil and natural gas properties, and impairment of
assets. 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 flows from operations is a
non-GAAP measure that represents cash flows provided by operations
before changes in assets and liabilities, as summarized from the
Company’s Consolidated Statements of Cash Flows. Adjusted
cash flows from operations measures the cash flows 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 flows 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 represents only the net change between periods of the
fair market values of open commodity derivative positions, and
excludes the impact of 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 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 in calculating 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.
DENBURY CONTACTS:
Mark Allen, Senior Vice President and Chief Financial Officer, 972.673.2000
Ross Campbell, Manager of Investor Relations, 972.673.2825
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