Denbury Resources Inc. (NYSE:DNR) (“Denbury” or the “Company”)
today announced an adjusted net loss(1) (a non-GAAP measure) of $9
million for the first quarter of 2016, or $0.03(1)(2) per diluted
share. On a GAAP basis, the Company recorded a net loss of
$185 million, or $0.53 per diluted share. Adjusted net
loss(1) for the first quarter of 2016 differs from the GAAP measure
of net loss primarily due to the exclusion of (1) a $256 million
($160 million after tax) write-down of oil and natural gas
properties, (2) a $95 million ($59 million after tax) gain on debt
extinguishment, and (3) a $95 million ($59 million after tax) loss
on noncash fair value adjustments on commodity derivatives(1) (a
non-GAAP measure).
Sequential and year-over-year comparisons of
selected quarterly financial items are shown in the following
table:
|
|
Quarter Ended |
($ in
millions, except per-share and unit data) |
|
March 31, 2016 |
|
Dec. 31, 2015 |
|
March 31, 2015 |
Net loss |
|
$ |
(185 |
) |
|
$ |
(885 |
) |
|
$ |
(108 |
) |
Adjusted net income
(loss)(1) (non-GAAP measure) |
|
(9 |
) |
|
(3 |
) |
|
23 |
|
Net loss per diluted
share |
|
(0.53 |
) |
|
(2.56 |
) |
|
(0.31 |
) |
Adjusted net income
(loss) per diluted share(1)(2) (non-GAAP measure) |
|
(0.03 |
) |
|
(0.01 |
) |
|
0.07 |
|
Cash flows from
operations(3) |
|
2 |
|
|
165 |
|
|
138 |
|
Adjusted cash flows
from operations(1)(4) (non-GAAP measure) |
|
57 |
|
|
129 |
|
|
195 |
|
|
|
|
|
|
|
|
Revenues |
|
$ |
194 |
|
|
$ |
266 |
|
|
$ |
304 |
|
Receipt on settlements
of commodity derivatives |
|
72 |
|
|
78 |
|
|
148 |
|
Revenues and commodity
derivative settlements combined |
|
$ |
266 |
|
|
$ |
344 |
|
|
$ |
452 |
|
|
|
|
|
|
|
|
Average realized oil
price per barrel (excluding derivative settlements) |
|
$ |
30.71 |
|
|
$ |
40.41 |
|
|
$ |
46.02 |
|
Average realized oil
price per barrel (including derivative settlements) |
|
42.71 |
|
|
52.67 |
|
|
69.28 |
|
Lease operating
expenses per BOE |
|
16.23 |
|
|
19.31 |
|
|
21.08 |
|
|
|
|
|
|
|
|
Total production
(BOE/d) |
|
69,351 |
|
|
72,002 |
|
|
74,356 |
|
|
|
|
|
|
|
|
|
|
|
(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) Calculated using average diluted shares outstanding of
352.1 million for the three months ended March 31, 2015. |
(3)
Includes severance-related payments associated with the 2016
workforce reduction of approximately $9 million during the three
months ended March 31, 2016. Excluding severance-related
payments, this amount would have been $66 million. |
(4) Adjusted cash flows from operations reflects cash flows
from operations before working capital changes. |
|
Adjusted net loss(1) for the first quarter of
2016 decreased $6 million on a sequential-quarter basis and $32
million when compared to the prior-year first quarter. The
changes during both comparative periods were primarily driven by
lower oil revenues in the first quarter of 2016 as a result of the
decline in realized oil prices and a reduction in receipt on
settlements from the Company’s derivative contracts. These
decreases were partially offset by reductions in lease operating
costs, depletion, depreciation and amortization, general and
administrative expenses, and taxes other than income.
Adjusted cash flows from operations(1)(2) (a non-GAAP measure)
decreased $72 million on a sequential-quarter basis and decreased
$138 million from the level in the prior-year first quarter,
primarily as a result of lower revenues and hedging receipts,
offset in part by a decrease in many of the Company’s operating
expenses.
(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 flows from operations reflects cash flows
from operations before working capital changes. |
|
|
|
MANAGEMENT COMMENT
Phil Rykhoek, Denbury’s President and CEO,
commented, “I am very pleased with our first quarter results as we
maintained our focus on our core objectives for 2016, which include
lowering costs, preserving cash and liquidity, and reducing
leverage. Although the oil commodities market has improved
slightly, we are continuing to operate under the assumption that
prices could stay low for an extended period of time.
“Most significantly this quarter, our normalized
per-barrel operating expenses came down for the ninth consecutive
quarter, to $16.23 per barrel of oil equivalent (“BOE”). This
substantial decrease of 16% from the prior quarter is largely due
to cost reductions across all of our lease operating expense
categories, coupled with the impact of shutting in uneconomic wells
during the last part of 2015 and early 2016. We continue to
focus on every aspect of our operations to reduce lease operating
expenses, which we expect to average between $17.00 and $18.50 per
BOE for 2016, as we anticipate higher workover levels and gradual
production declines for the remainder of the year. In
addition, we continued to work on reducing our general and
administrative expenses during the first quarter, and expect to see
the full magnitude of those savings in the second quarter.
Our costs are definitely moving in the right direction.
“As we stated on our fourth quarter call, we
have been actively looking for opportunities to monetize the
discount the market has placed on our subordinated debt to improve
our balance sheet without sacrificing liquidity. During the
first quarter, we spent approximately $56 million drawn under our
bank credit facility to repurchase over $152 million of our
outstanding senior subordinated notes on the open market, resulting
in a net debt reduction of $97 million. These repurchases
allowed us to extinguish this debt at an average price of 36 cents
on the dollar. This week, we entered into private
transactions with a small group of our debt holders, swapping a new
second lien note plus equity for their subordinated debt, which
will result in additional net debt reduction of $391 million.
This is a significant positive series of transactions, and under
our bank credit agreement we still have $469 million of junior lien
capacity available for potential future use, depending on market
conditions.”
PRODUCTION
Denbury’s total production for the first quarter
of 2016 averaged 69,351 BOE per day (“BOE/d”), including 40,464
barrels per day (“Bbls/d”) from tertiary properties and 28,887
BOE/d from non-tertiary properties. Total production during
the first quarter of 2016 decreased 4% sequentially and 7% when
compared to the first quarter of 2015. The decline was
primarily due to natural production declines based upon the
Company’s current investment level, coupled with production shut-in
due to economics, as oil prices declined further during the
quarter. The Company estimated approximately 2,800 BOE/d of
production was shut-in as of March 31, 2016 attributable to
uneconomic wells, resulting in a decrease to quarterly production
of approximately 1,100 BOE/d. The Company estimates that
approximately one-half of the production currently shut-in is
profitable at $50 per Bbl, approximately two-thirds at $60 per Bbl,
with the remainder requiring an oil price in excess of $60 per Bbl
in order to be economic. These decreases were partially
offset by production increases at Bell Creek Field in the Rocky
Mountain region. First quarter of 2016 production was 95%
oil, consistent with oil production in the same prior-year
period.
Tertiary oil production during the first quarter
of 2016 decreased 2%, or 713 Bbls/d, on a sequential-quarter basis
and 3%, or 1,363 Bbls/d, from the first quarter of 2015. On a
sequential-quarter basis, the decrease was primarily driven by
natural production declines, partially offset by increased
production at Bell Creek Field in the Rocky Mountain region.
Non-tertiary oil-equivalent production was down
6%, or 1,938 BOE/d, on a sequential-quarter basis and 11%, or 3,642
BOE/d, from first quarter of 2015. This decrease was
primarily due to wells shut-in for economics as well as natural
production declines.
REVIEW OF FINANCIAL RESULTS
Oil and natural gas revenues, excluding the
impact of derivative contracts, decreased 37% when comparing the
first quarters of 2016 and 2015, primarily due to a 30% decline in
realized commodity prices and a 7% decrease in production.
Denbury’s average realized oil price per Bbl, excluding derivative
settlements, was $30.71 in the first quarter of 2016, compared to
$40.41 in the fourth quarter of 2015 and $46.02 in the prior-year
first quarter. Including derivative settlements, Denbury’s
average realized oil price per Bbl was $42.71 in the first quarter
of 2016, compared to $52.67 in the fourth quarter of 2015 and
$69.28 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 2016 was $3.02 per Bbl
below NYMEX prices, compared to a differential of $1.74 per Bbl
below NYMEX in the fourth quarter of 2015 and $2.81 per Bbl below
NYMEX in the first quarter of 2015, largely due to lower premiums
associated with production sold at the Light Louisiana Sweet
index.
The Company’s total lease operating expenses in
the first quarter of 2016 averaged $16.23 per BOE, a decrease of
16% from the $19.31 per-BOE average in the fourth quarter of 2015
and 23% from the $21.08 per-BOE average in the first quarter of
2015. This reduction in lease operating costs represents
decreases across all lease operating expense categories and is
primarily due to the Company’s cost reduction initiatives, combined
with the impact of shutting in uneconomic wells during the last
part of 2015 and early 2016.
Taxes other than income, which includes ad
valorem, production, and franchise taxes, decreased $4 million on a
sequential-quarter basis and decreased $7 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 $34
million in the first quarter of 2016, which includes
severance-related payments of $9 million associated with a
workforce reduction in late-February 2016. Excluding these
severance payments, general and administrative expenses were $25
million ($3.90 per BOE), representing a $22 million (47%) reduction
from the prior-year first quarter level. This reduction is
due largely to an approximate 27% reduction in headcount since
March 31, 2015, which has resulted in lower employee compensation
and related costs.
Interest expense, net of capitalized interest,
increased to $42 million in the first quarter of 2016, compared to
$40 million in the first quarter of 2015, primarily due to a
decrease in capitalized interest during the period which more than
offset the decrease in cash interest due to a $290 million decrease
in average debt outstanding. Capitalized interest during the
first quarter of 2016 was $6 million, compared to $8 million in the
prior-year first quarter, due to reduced development activity.
As a result of the continued decrease in
commodity pricing from fourth quarter 2014 levels, the Company
recognized full cost pool ceiling test write-downs of $256 million
and $146 million during the first quarters of 2016 and 2015,
respectively. In determining these write-downs, the Company
is required to use the average rolling first-day-of-the-month oil
and natural gas prices for the preceding 12 months, after
adjustments for market differentials by field. The preceding
12-month price averaged $44.03 per Bbl for crude oil and $2.22 per
thousand cubic feet (“Mcf”) for natural gas for the period ended
March 31, 2016, down from $48.11 per Bbl for crude oil and $2.45
per Mcf for natural gas for the period ended December 31, 2015.
Denbury’s overall depletion, depreciation, and
amortization (“DD&A”) rate was $12.26 per BOE in the first
quarter of 2016, compared to $22.41 per BOE in the prior-year first
quarter and $16.96 per BOE in the fourth quarter of 2015, with the
decreases primarily driven by a reduction in depletable costs
resulting from the full cost pool ceiling test write-downs
recognized during 2015 and an overall reduction in future
development costs, partially offset by reductions in proved oil and
natural gas reserve quantities.
Receipts on settlements of oil and natural gas
derivative contracts were $72 million in the first quarter of 2016,
compared to receipts of $78 million in the fourth quarter of 2015
and receipts of $148 million in the prior-year first quarter.
These settlements resulted in an increase in average net realized
prices of $11.44 per BOE in the first quarter of 2016, an increase
of $11.84 per BOE in the fourth quarter of 2015, and an increase of
$22.19 per BOE in the first quarter of 2015.
Denbury’s effective tax rate for the first
quarter of 2016 was 33.9%, down from 37.4% in the prior-year first
quarter. The effective tax rate for the first quarter of 2016
was lower than the Company’s statutory rate of 38% primarily due to
the impact of a tax shortfall on the Company’s stock-based
compensation deduction (e.g., compensation expense recognized in
the financial statements was greater than the actual compensation
realized, resulting in a shortfall in the income tax deduction for
stock awards that vested during the quarter).
2016 CAPITAL BUDGET AND ESTIMATED
PRODUCTION
The Company’s 2016 capital budget, excluding
acquisitions and capitalized interest, remains unchanged from the
previously disclosed amount of $200 million. The capital
budget consists of approximately $145 million of tertiary,
non-tertiary, and CO2 supply and pipeline projects, plus
approximately $55 million of estimated capitalized costs (including
capitalized internal acquisition, exploration and development costs
and pre-production tertiary startup costs). Of this combined
capital expenditure amount, approximately $52 million (26%) has
been incurred through the first quarter of 2016. Denbury’s
estimated 2016 production is also unchanged from previously
disclosed estimates of between 64,000 and 68,000 BOE/d.
BANK CREDIT FACILITY AND OTHER LONG-TERM
DEBT
As of March 31, 2016, the Company had $310
million outstanding under its senior secured bank credit facility,
an increase of $135 million from the level outstanding as of
December 31, 2015. The increase in borrowings includes $56
million utilized to repurchase over $152 million in aggregate
principal amount of senior subordinated notes in open-market
transactions, with the remainder primarily used for working capital
outflows in the first quarter of 2016 associated with accrued
compensation, ad valorem taxes and semi-annual interest payments on
the Company’s senior subordinated notes.
During the first week of May 2016, the Company
entered into privately negotiated exchange agreements to exchange
$923 million in aggregate principal amount of its outstanding
senior subordinated notes for $531 million in aggregate principal
amount of the Company’s new 9% Senior Secured Second Lien Notes due
2021 plus 37 million shares of the Company’s common stock.
These amounts have been updated from the amounts discussed in the
Company’s May 3, 2016 press release to reflect additional amounts
exchanged by holders who entered into May 3rd exchanges or who
needed to complete necessary documentation in process.
Combined with the repurchases of senior subordinated notes in
open-market transactions during February and March 2016, these
transactions will result in a net reduction of the Company’s debt
of approximately $488 million.
CONFERENCE CALL AND ANNUAL MEETING
INFORMATION
Denbury management will host a conference call
to review and discuss first quarter 2016 financial and operating
results, as well as financial and operating guidance for the
remainder of 2016, today, Thursday, May 5, at 10:00 A.M.
(Central). Additionally, Denbury has published presentation
materials which will be referenced during the conference
call. 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 webcast of the conference call and
accompanying slide presentation, please visit the investor
relations section of the Company’s website at
www.denbury.com. The webcast will be archived on the website,
and a telephonic replay will be accessible for at least one month
after the call by dialing 800.475.6701 or 320.365.3844 and entering
confirmation number 324021.
Denbury’s 2016 Annual Meeting of Stockholders
will be held on Tuesday, May 24, 2016, at 8:00 A.M. (Central), at
Denbury’s corporate offices located at 5320 Legacy Drive, Plano,
Texas.
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 2016 production
and capital expenditures, estimated cash generated from operations
in 2016, 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, 2016 and 2015
and the three month period ended December 31, 2015. 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, |
|
Dec. 31, |
In
thousands, except per-share data |
|
2016 |
|
2015 |
|
2015 |
Revenues and
other income |
|
|
|
|
|
|
Oil sales |
|
$ |
184,816 |
|
|
$ |
292,270 |
|
|
$ |
254,294 |
|
Natural gas sales |
|
2,987 |
|
|
5,200 |
|
|
3,983 |
|
CO2 sales and transportation
fees |
|
6,272 |
|
|
6,972 |
|
|
7,358 |
|
Interest income and other
income |
|
769 |
|
|
3,207 |
|
|
3,982 |
|
Total revenues and other
income |
|
194,844 |
|
|
307,649 |
|
|
269,617 |
|
Expenses |
|
|
|
|
|
|
Lease operating expenses |
|
102,447 |
|
|
141,084 |
|
|
127,887 |
|
Marketing and plant operating
expenses |
|
13,194 |
|
|
11,685 |
|
|
15,388 |
|
CO2 discovery and operating
expenses |
|
607 |
|
|
947 |
|
|
1,648 |
|
Taxes other than income |
|
20,092 |
|
|
26,679 |
|
|
24,151 |
|
General and administrative
expenses |
|
33,901 |
|
|
46,280 |
|
|
27,430 |
|
Interest, net of amounts
capitalized of $5,780, $8,409 and $6,918, respectively |
|
42,171 |
|
|
40,099 |
|
|
40,081 |
|
Depletion, depreciation, and
amortization |
|
77,366 |
|
|
149,958 |
|
|
112,356 |
|
Commodity derivatives expense
(income) |
|
22,826 |
|
|
(83,076 |
) |
|
(21,821 |
) |
Gain on debt extinguishment |
|
(94,991 |
) |
|
— |
|
|
— |
|
Write-down of oil and natural gas
properties |
|
256,000 |
|
|
146,200 |
|
|
1,327,000 |
|
Other expenses |
|
1,544 |
|
|
— |
|
|
9,599 |
|
Total expenses |
|
475,157 |
|
|
479,856 |
|
|
1,663,719 |
|
Loss before
income taxes |
|
(280,313 |
) |
|
(172,207 |
) |
|
(1,394,102 |
) |
Income tax provision
(benefit) |
|
|
|
|
|
|
Current income taxes |
|
(5 |
) |
|
1,575 |
|
|
(9,418 |
) |
Deferred income taxes |
|
(95,115 |
) |
|
(66,036 |
) |
|
(499,607 |
) |
Net
loss |
|
$ |
(185,193 |
) |
|
$ |
(107,746 |
) |
|
$ |
(885,077 |
) |
|
|
|
|
|
|
|
Net loss per
common share |
|
|
|
|
|
|
Basic |
|
$ |
(0.53 |
) |
|
$ |
(0.31 |
) |
|
$ |
(2.56 |
) |
Diluted |
|
$ |
(0.53 |
) |
|
$ |
(0.31 |
) |
|
$ |
(2.56 |
) |
|
|
|
|
|
|
|
Dividends
declared per common share |
|
$ |
— |
|
|
$ |
0.0625 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding |
|
|
|
|
|
|
Basic |
|
347,235 |
|
|
350,688 |
|
|
345,876 |
|
Diluted |
|
347,235 |
|
|
350,688 |
|
|
345,876 |
|
|
|
|
|
|
|
|
|
|
|
DENBURY RESOURCES INC. |
SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES
(UNAUDITED) |
|
Reconciliation of net loss (GAAP measure) to adjusted net
income (loss) (non-GAAP measure)(1): |
|
|
|
Three Months Ended |
|
|
March 31, |
|
Dec. 31, |
In thousands |
|
|
2016 |
|
|
|
2015 |
|
|
|
2015 |
|
Net loss
(GAAP measure) |
|
$ |
(185,193 |
) |
|
$ |
(107,746 |
) |
|
$ |
(885,077 |
) |
Noncash fair value adjustments on
commodity derivatives |
|
|
95,053 |
|
|
|
65,389 |
|
|
|
56,585 |
|
Interest income and other income –
noncash fair value adjustment – contingent liability |
|
— |
|
|
— |
|
|
|
(1,250 |
) |
General and administrative expenses
– severance |
|
|
9,315 |
|
|
— |
|
|
— |
|
Interest expense – write-off of
debt issuance costs |
|
|
1,044 |
|
|
— |
|
|
— |
|
Gain on debt
extinguishment |
|
(94,991 |
) |
|
— |
|
|
— |
|
Write-down of oil and natural gas
properties |
|
|
256,000 |
|
|
|
146,200 |
|
|
|
1,327,000 |
|
Other expenses – loss on
sublease |
|
|
1,107 |
|
|
— |
|
|
— |
|
Other expenses – impairment of
assets |
|
— |
|
|
— |
|
|
|
8,705 |
|
Estimated income taxes on above
adjustments to net loss and other discrete tax items |
|
|
(91,432 |
) |
|
|
(80,404 |
) |
|
|
(508,542 |
) |
Adjusted
net income (loss) (non-GAAP measure) |
|
$ |
(9,097 |
) |
|
$ |
23,439 |
|
|
$ |
(2,579 |
) |
|
(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 |
|
|
March 31, |
|
Dec. 31, |
In thousands |
|
|
2016 |
|
|
|
2015 |
|
|
|
2015 |
|
Net loss
(GAAP measure) |
|
$ |
(185,193 |
) |
|
$ |
(107,746 |
) |
|
$ |
(885,077 |
) |
Adjustments to reconcile to adjusted cash flows from
operations |
|
|
|
|
|
|
Depletion,
depreciation, and amortization |
|
77,366 |
|
|
|
149,958 |
|
|
|
112,356 |
|
Deferred income
taxes |
|
(95,115 |
) |
|
|
(66,036 |
) |
|
|
(499,607 |
) |
Stock-based
compensation |
|
859 |
|
|
|
7,849 |
|
|
|
7,967 |
|
Noncash fair value adjustments on
commodity derivatives |
|
|
95,053 |
|
|
|
65,389 |
|
|
|
56,585 |
|
Gain on debt
extinguishment |
|
(94,991 |
) |
|
— |
|
|
— |
|
Write-down of oil and natural gas
properties |
|
|
256,000 |
|
|
|
146,200 |
|
|
|
1,327,000 |
|
Other |
|
|
2,890 |
|
|
|
(138 |
) |
|
|
10,111 |
|
Adjusted
cash flows from operations (non-GAAP measure)(2) |
|
|
56,869 |
|
|
|
195,476 |
|
|
|
129,335 |
|
Net change in assets and
liabilities relating to operations |
|
|
(54,840 |
) |
|
|
(57,712 |
) |
|
|
35,572 |
|
Cash flows from operations (GAAP measure) |
$ |
2,029 |
|
|
$ |
137,764 |
|
|
$ |
164,907 |
|
|
(1) See "Non-GAAP Measures" at the end of this
report. |
(2) Excluding severance-related payments, adjusted cash
flows from operations would have totaled approximately $66 million
during the three months ended March 31, 2016. |
|
|
|
|
|
|
|
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 |
|
|
2016 |
|
|
|
2015 |
|
|
|
2015 |
|
Receipt
on settlements of commodity derivatives |
|
$ |
72,227 |
|
|
$ |
148,465 |
|
|
$ |
78,406 |
|
Noncash
fair value adjustments on commodity derivatives (non-GAAP
measure) |
|
|
(95,053 |
) |
|
|
(65,389 |
) |
|
|
(56,585 |
) |
Commodity derivatives income
(expense) (GAAP measure) |
|
$ |
(22,826 |
) |
|
$ |
83,076 |
|
|
$ |
21,821 |
|
|
|
|
|
|
|
|
(1) See "Non-GAAP Measures" at the end of this
report. |
|
OPERATING HIGHLIGHTS (UNAUDITED) |
|
|
|
Three Months Ended |
|
|
March 31, |
|
Dec. 31, |
|
|
2016 |
|
2015 |
|
2015 |
Production
(daily – net of royalties) |
|
|
|
|
|
|
Oil (barrels) |
|
66,139 |
|
|
70,564 |
|
|
68,398 |
|
Gas (mcf) |
|
19,270 |
|
|
22,752 |
|
|
21,623 |
|
BOE (6:1) |
|
69,351 |
|
|
74,356 |
|
|
72,002 |
|
Unit sales
price (excluding derivative settlements) |
|
|
|
|
|
|
Oil (per barrel) |
|
$ |
30.71 |
|
|
$ |
46.02 |
|
|
$ |
40.41 |
|
Gas (per mcf) |
|
1.70 |
|
|
2.54 |
|
|
2.00 |
|
BOE (6:1) |
|
29.76 |
|
|
44.45 |
|
|
38.99 |
|
Unit sales
price (including derivative settlements) |
|
|
|
|
|
|
Oil (per barrel) |
|
$ |
42.71 |
|
|
$ |
69.28 |
|
|
$ |
52.67 |
|
Gas (per mcf) |
|
1.70 |
|
|
2.91 |
|
|
2.64 |
|
BOE (6:1) |
|
41.20 |
|
|
66.64 |
|
|
50.83 |
|
NYMEX
differentials |
|
|
|
|
|
|
Gulf Coast region |
|
|
|
|
|
|
Oil (per barrel) |
|
$ |
(1.95 |
) |
|
$ |
(0.29 |
) |
|
$ |
(0.87 |
) |
Gas (per mcf) |
|
(0.26 |
) |
|
(0.24 |
) |
|
(0.07 |
) |
Rocky Mountain region |
|
|
|
|
|
|
Oil (per barrel) |
|
$ |
(5.04 |
) |
|
$ |
(7.75 |
) |
|
$ |
(3.41 |
) |
Gas (per mcf) |
|
(0.34 |
) |
|
(0.35 |
) |
|
(0.52 |
) |
Total company |
|
|
|
|
|
|
Oil (per barrel) |
|
$ |
(3.02 |
) |
|
$ |
(2.81 |
) |
|
$ |
(1.74 |
) |
Gas (per mcf) |
|
(0.29 |
) |
|
(0.28 |
) |
|
(0.23 |
) |
|
|
|
|
|
|
|
|
|
|
DENBURY RESOURCES INC. |
OPERATING HIGHLIGHTS (UNAUDITED) |
|
|
|
Three Months Ended |
|
|
March 31, |
|
Dec. 31, |
Average Daily Volumes (BOE/d) (6:1) |
|
2016 |
|
2015 |
|
2015 |
Tertiary oil
production |
|
|
|
|
|
|
Gulf Coast
region |
|
|
|
|
|
|
Mature properties (1) |
|
9,666 |
|
|
10,801 |
|
|
10,403 |
|
Delhi |
|
3,971 |
|
|
3,551 |
|
|
3,898 |
|
Hastings |
|
5,068 |
|
|
4,694 |
|
|
5,082 |
|
Heidelberg |
|
5,346 |
|
|
6,027 |
|
|
5,635 |
|
Oyster Bayou |
|
5,494 |
|
|
5,861 |
|
|
5,831 |
|
Tinsley |
|
7,899 |
|
|
8,928 |
|
|
7,522 |
|
Total Gulf Coast region |
|
37,444 |
|
|
39,862 |
|
|
38,371 |
|
Rocky Mountain
region |
|
|
|
|
|
|
Bell Creek |
|
3,020 |
|
|
1,965 |
|
|
2,806 |
|
Total Rocky Mountain region |
|
3,020 |
|
|
1,965 |
|
|
2,806 |
|
Total tertiary oil
production |
|
40,464 |
|
|
41,827 |
|
|
41,177 |
|
Non-tertiary
oil and gas production |
|
|
|
|
|
|
Gulf Coast
region |
|
|
|
|
|
|
Mississippi |
|
978 |
|
|
1,761 |
|
|
1,800 |
|
Texas |
|
6,148 |
|
|
6,490 |
|
|
6,470 |
|
Other |
|
549 |
|
|
1,006 |
|
|
800 |
|
Total Gulf Coast region |
|
7,675 |
|
|
9,257 |
|
|
9,070 |
|
Rocky Mountain
region |
|
|
|
|
|
|
Cedar Creek Anticline |
|
17,778 |
|
|
18,522 |
|
|
17,875 |
|
Other |
|
3,434 |
|
|
4,750 |
|
|
3,880 |
|
Total Rocky Mountain region |
|
21,212 |
|
|
23,272 |
|
|
21,755 |
|
Total non-tertiary
production |
|
28,887 |
|
|
32,529 |
|
|
30,825 |
|
Total
production |
|
69,351 |
|
|
74,356 |
|
|
72,002 |
|
|
|
|
|
|
|
|
|
|
|
(1) Total mature properties include
Brookhaven, Cranfield, Eucutta, Little Creek, Lockhart Crossing,
Mallalieu, Martinville, McComb and Soso fields. |
|
DENBURY RESOURCES INC. |
PER-BOE DATA (UNAUDITED) |
|
|
|
Three Months Ended |
|
|
March 31, |
|
Dec. 31, |
|
|
2016 |
|
2015 |
|
2015 |
Oil and natural gas
revenues |
|
$ |
29.76 |
|
|
$ |
44.45 |
|
|
$ |
38.99 |
|
Receipt on settlements
of commodity derivatives |
|
11.44 |
|
|
22.19 |
|
|
11.84 |
|
Lease operating
expenses |
|
(16.23 |
) |
|
(21.08 |
) |
|
(19.31 |
) |
Production and ad
valorem taxes |
|
(2.72 |
) |
|
(3.42 |
) |
|
(3.33 |
) |
Marketing expenses, net
of third-party purchases, and plant operating expenses |
|
(1.84 |
) |
|
(1.47 |
) |
|
(2.02 |
) |
Production netback |
|
20.41 |
|
|
40.67 |
|
|
26.17 |
|
CO2 sales, net of
operating and exploration expenses |
|
0.89 |
|
|
0.90 |
|
|
0.86 |
|
General and
administrative expenses |
|
(5.37 |
) |
|
(6.92 |
) |
|
(4.14 |
) |
Interest expense,
net |
|
(6.68 |
) |
|
(5.99 |
) |
|
(6.05 |
) |
Other |
|
(0.24 |
) |
|
0.55 |
|
|
2.68 |
|
Changes in assets and
liabilities relating to operations |
|
(8.69 |
) |
|
(8.62 |
) |
|
5.37 |
|
Cash flows from operations |
|
0.32 |
|
|
20.59 |
|
|
24.89 |
|
DD&A |
|
(12.26 |
) |
|
(22.41 |
) |
|
(16.96 |
) |
Write-down of oil and
natural gas properties |
|
(40.56 |
) |
|
(21.85 |
) |
|
(200.33 |
) |
Deferred income
taxes |
|
15.07 |
|
|
9.87 |
|
|
75.42 |
|
Gain on debt
extinguishment |
|
15.05 |
|
|
— |
|
|
— |
|
Noncash fair value
adjustments on commodity derivatives |
|
(15.06 |
) |
|
(9.78 |
) |
|
(8.55 |
) |
Other noncash
items |
|
8.10 |
|
|
7.48 |
|
|
(8.08 |
) |
Net loss |
|
$ |
(29.34 |
) |
|
$ |
(16.10 |
) |
|
$ |
(133.61 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
CAPITAL EXPENDITURE SUMMARY (UNAUDITED) (1) |
|
|
|
Three Months Ended |
|
|
March 31, |
|
Dec. 31, |
In
thousands |
|
2016 |
|
2015 |
|
2015 |
Capital expenditures by
project |
|
|
|
|
|
|
Tertiary oil fields |
|
$ |
31,964 |
|
|
$ |
42,900 |
|
|
$ |
66,484 |
|
Non-tertiary fields |
|
5,873 |
|
|
30,984 |
|
|
26,468 |
|
Capitalized internal costs (2) |
|
14,473 |
|
|
18,412 |
|
|
16,088 |
|
Oil and natural gas capital
expenditures |
|
52,310 |
|
|
92,296 |
|
|
109,040 |
|
CO2 pipelines |
|
— |
|
|
779 |
|
|
4,309 |
|
CO2 sources (3) |
|
— |
|
|
9,852 |
|
|
5,957 |
|
Other |
|
8 |
|
|
(238 |
) |
|
574 |
|
Capital expenditures,
before acquisitions and capitalized interest |
|
52,318 |
|
|
102,689 |
|
|
119,880 |
|
Acquisitions of oil and
natural gas properties |
|
224 |
|
|
261 |
|
|
3,010 |
|
Capital expenditures,
before capitalized interest |
|
52,542 |
|
|
102,950 |
|
|
122,890 |
|
Capitalized
interest |
|
5,780 |
|
|
8,409 |
|
|
6,918 |
|
Capital expenditures,
total |
|
$ |
58,322 |
|
|
$ |
111,359 |
|
|
$ |
129,808 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Capital expenditure amounts
include accrued capital. |
(2) Includes capitalized internal
acquisition, exploration and development costs and pre-production
tertiary startup costs. |
(3) Includes capital expenditures
related to the Riley Ridge gas processing facility. |
|
DENBURY RESOURCES INC. |
SELECTED BALANCE SHEET AND CASH FLOW DATA
(UNAUDITED) (1) |
|
|
|
March 31, |
|
December 31, |
In thousands |
|
|
2016 |
|
|
|
2015 |
|
Cash and
cash equivalents |
|
$ |
8,252 |
|
|
$ |
2,812 |
|
Total
assets |
|
|
5,538,547 |
|
|
|
5,886,364 |
|
|
|
|
|
|
Borrowings under senior secured bank credit facility |
$ |
310,000 |
|
|
$ |
175,000 |
|
Borrowings under senior subordinated notes (principal
only) |
|
2,699,995 |
|
|
|
2,852,250 |
|
Financing and capital leases |
|
275,216 |
|
|
|
283,090 |
|
Total debt (principal
only) |
$ |
3,285,211 |
|
|
$ |
3,310,340 |
|
|
|
|
|
|
Total stockholders' equity |
$ |
1,081,278 |
|
|
$ |
1,264,569 |
|
|
|
|
|
|
(1) Certain amounts as of December 31, 2015 have been
reclassified to conform to the current year presentation. On
the Company's Unaudited Condensed Consolidated Balance Sheets, (1)
beginning "Other current assets," "Deferred tax liabilities, net,"
"Paid-in capital in excess of par" and "Accumulated deficit" have
been adjusted for changes related to the timing of recognition of
excess tax benefits and accounting for forfeitures associated with
share-based payment transactions, (2) debt issuance costs
associated with the Company's senior subordinated notes have been
reclassified from "Other assets" to "Long-term debt, net of current
portion" and (3) deferred tax assets have been reclassified from
"Deferred tax assets, net" to "Deferred tax liabilities,
net." Such reclassifications were made as a result of the
adoption of new accounting pronouncements and had no impact on
previously reported net income or cash flows. |
|
|
|
|
|
|
|
Three Months Ended |
|
|
March 31, |
In thousands |
|
|
2016 |
|
|
|
2015 |
|
Cash provided by (used
in) |
|
|
|
|
|
|
Operating
activities |
$ |
2,029 |
|
|
$ |
137,764 |
|
Investing
activities |
|
(66,954 |
) |
|
|
(192,578 |
) |
Financing
activities |
|
70,365 |
|
|
|
37,682 |
|
|
|
|
|
|
Cash
dividends paid |
$ |
387 |
|
|
$ |
22,068 |
|
|
|
|
|
|
|
|
|
NON-GAAP MEASURES
Adjusted net income (loss) 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 write-down of oil and natural gas
properties, noncash fair value adjustments on the Company’s
commodity derivative contracts, gain on debt extinguishment,
severance payments, write-off of debt issuance costs, loss on
sublease, noncash fair value adjustments regarding a contingent
liability, and impairment of assets. Management believes that
adjusted net income (loss) 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
(loss) 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 Unaudited Condensed 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 Unaudited Condensed
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 C. Allen,
Senior Vice President and Chief Financial Officer, 972.673.2000John
Mayer, Investor Relations, 972.673.2383
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