Denbury Ups '12 Yield Outlook - Analyst Blog
June 07 2012 - 9:30AM
Zacks
Oil and natural gas company
Denbury Resources Inc. (DNR) has raised its 2012
annual production guidance. The company expects total production
for 2012 in the range of 69,775–74,775 barrels of oil equivalent
per day (Boe/d).
The 1,150 Boe/d increment in
production estimate was made following the closure of its purchase
of Thompson Field in Fort Bend County, Texas. The raised guidance
reflects average daily production of about 2,000 barrels of oil
from the properties acquired, for the remainder of 2012. Denbury
targets its total production in the upper half of the company's
estimated range.
The acquisition of Thompson Field
cost the company approximately $360 million prior to purchase price
adjustments. Denbury proposes to fund the purchase with $213
million in cash (generated from its sale of non-core properties
earlier in 2012) and borrowing under its revolving credit facility.
The portion of the acquisition that was financed by the property
sale did not generate any tax liability on it, thereby facilitating
the company with a tax gain of $30 million in 2012.
The Thompson field in Fort Bend
County produces 2,200 barrels of oil per day and holds potential
conventional reserve capacity of around 17 million barrels of oil.
The 8,454 acre oilfield, which produces oil from the Frio zone, is
located 18 miles west of the Hastings field, and will be used to
enhance oil recovery by pumping carbon dioxide.
The Thompson field, discovered in
the early 1930s, was jointly owned and operated by Chevron
Corporation (CVX) and ExxonMobil
Corporation (XOM) from 1932 onwards. Later, both companies
sold their stakes in separate transactions to a private buyer, who
then sold it to Denbury in 1999 and 2003.
Denbury holds a Zacks #3 Rank,
which translates to a Hold rating for a period of one to three
months. For the long term, we maintain our Neutral
recommendation.
CHEVRON CORP (CVX): Free Stock Analysis Report
DENBURY RES INC (DNR): Free Stock Analysis Report
EXXON MOBIL CRP (XOM): Free Stock Analysis Report
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