Denbury Resources Inc. (NYSE: DNR) (“Denbury” or the “Company”)
today announced net income of $147 million, or $0.32 per diluted
share, for the second quarter of 2019. Adjusted net income(1)
(a non-GAAP measure) was $59 million, or $0.13(1)(2) per diluted
share, with the difference from GAAP net income primarily due to a
$100 million noncash gain on debt extinguishment ($78 million after
tax) and a $26 million gain from noncash fair value adjustments
($20 million after tax) on the Company’s commodity derivative
positions (see reconciliation of GAAP and non-GAAP measures in
tables beginning on page 9 of this press release).
SECOND QUARTER AND RECENT
HIGHLIGHTS
- Production of 59,719 barrels of oil equivalent (“BOE”) per day
(“BOE/d”), up 1% from 1Q 2019
- Strong production response from Bell Creek Phase Five CO2 flood
expansion; Bell Creek production up nearly 50% from 2Q 2018 and 28%
from 1Q 2019
- Generated Adjusted EBITDAX(1) of $169 million, the highest
quarterly level since 3Q 2015
- Reduced combined lease operating expenses and general and
administrative expenses by nearly $9 million from 1Q 2019
- Generated cash flow from operations of $149 million and free
cash flow(1) of $38 million after considering development capital
expenditures, capitalized interest and interest treated as debt
reduction
- Significantly improved debt maturity profile through exchanges
that reduced the principal balance of senior subordinated notes by
$120 million and extended the maturities of an additional $348
million of those notes to 2024
- Entered into new contracts of $38 million for Houston acreage
sales, bringing total value to date of acreage closed or under
contract to $52 million
- Completed sale of Citronelle Field for $10 million on July 1,
2019
SELECTED QUARTERLY COMPARATIVE
DATA
|
|
Quarter Ended |
(in
millions, except per-share and per-unit data) |
|
June 30, 2019 |
|
March 31, 2019 |
|
June 30, 2018 |
Net income (loss) |
|
$ |
147 |
|
|
$ |
(26 |
) |
|
$ |
30 |
|
Adjusted net income(1) (non-GAAP measure) |
|
59 |
|
|
45 |
|
|
61 |
|
Adjusted EBITDAX(1) (non-GAAP measure) |
|
169 |
|
|
138 |
|
|
153 |
|
Net income (loss) per diluted
share |
|
0.32 |
|
|
(0.06 |
) |
|
0.07 |
|
Adjusted net income per diluted share(1)(2) (non-GAAP measure) |
|
0.13 |
|
|
0.10 |
|
|
0.13 |
|
Cash flows from
operations |
|
149 |
|
|
64 |
|
|
154 |
|
Adjusted cash flows from operations less special items(1) (non-GAAP
measure) |
|
145 |
|
|
120 |
|
|
134 |
|
Development capital
expenditures |
|
77 |
|
|
61 |
|
|
82 |
|
|
|
|
|
|
|
|
Oil, natural gas, and related
product sales |
|
$ |
330 |
|
|
$ |
295 |
|
|
$ |
376 |
|
CO2, purchased oil sales and
other |
|
13 |
|
|
10 |
|
|
11 |
|
Total revenues and other income |
|
$ |
343 |
|
|
$ |
305 |
|
|
$ |
387 |
|
|
|
|
|
|
|
|
Receipt (payment) on
settlements of commodity derivatives |
|
$ |
(2 |
) |
|
$ |
8 |
|
|
$ |
(55 |
) |
|
|
|
|
|
|
|
Average realized oil price per
barrel (excluding derivative settlements) |
|
$ |
62.22 |
|
|
$ |
56.50 |
|
|
$ |
68.24 |
|
Average realized oil price per
barrel (including derivative settlements) |
|
61.92 |
|
|
58.09 |
|
|
58.23 |
|
|
|
|
|
|
|
|
Total production (BOE/d) |
|
59,719 |
|
|
59,218 |
|
|
61,994 |
|
Total continuing production
(BOE/d)(3) |
|
59,313 |
|
|
58,762 |
|
|
61,159 |
|
(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 weighted average
diluted shares outstanding of 467.4 million, 455.5 million, and
457.2 million for the three months ended June 30, 2019, March 31,
2019, and June 30, 2018, respectively.(3)
Continuing production excludes production from Citronelle Field
sold on July 1, 2019 and production from Lockhart Crossing Field
sold in the third quarter of 2018.
MANAGEMENT COMMENT
Chris Kendall, Denbury’s President and CEO,
commented, “Denbury performed extremely well on our key priorities
in the second quarter. Thanks to the efforts of our team
members across the business, every facet of execution was superb,
and I am proud of our sustained HSE performance, disciplined
capital allocation, reduced operating and G&A costs, and
production outperformance led by record levels at Bell Creek.
Further, due to our robust first half 2019 production and
expectations for the remainder of the year, we have decided to
increase the mid-point of our previously announced production
guidance. Our well-positioned portfolio of assets and high
quality, oil-levered production delivered strong price
realizations, and when combined with reduced costs led to our
highest quarterly EBITDAX level in nearly four years.
Denbury’s sustained ability to generate free cash flow continues to
be a distinguishing characteristic, giving us meaningful capacity
to reduce debt. We made significant progress on improving our
balance sheet through an exchange that substantially reduced our
2021 and 2022 subordinated debt maturities, and we are nearly
complete with the mainline pipe procurement for our cornerstone
Cedar Creek Anticline EOR development, remaining on track with our
milestone for first CO2 injection by early 2021.
“Denbury’s leadership in CO2 enhanced oil
recovery is significant, considering the growing movement to
address CO2 emissions. Our current operations annually
utilize more than 3 million tons of industrial sourced CO2 that
could otherwise have been emitted into the atmosphere, a remarkable
figure that we expect will continue to grow over time.
Denbury’s oil fields, pipeline infrastructure, and both surface and
subsurface CO2 management expertise position us well to be the
leader in the effort to capture, transport and utilize CO2. I
am excited about where the Company is today and even more excited
about the opportunities for the future.”
REVIEW OF OPERATING AND FINANCIAL
RESULTS
Denbury’s production averaged 59,719 BOE/d
during second quarter 2019, an increase of 1% on a
sequential-quarter basis. Total continuing production, which
excludes Citronelle Field sold July 1, 2019, was 59,313 BOE/d, a
decrease of 3% compared to continuing production in the prior-year
second quarter. Continuing production from tertiary oil
production increased 4% sequentially and 1% from the prior-year
second quarter, driven primarily by increased production from Bell
Creek’s phase five development. Further production
information is provided on page 15 of this press release.
Denbury’s average realized oil price, excluding
derivative contracts, was $62.22 per barrel (“Bbl”) in second
quarter 2019, compared to $56.50 per Bbl in the prior quarter, and
$68.24 per Bbl in second quarter 2018. Including derivative
settlements, Denbury’s average realized oil price was $61.92 per
Bbl in second quarter 2019, compared to $58.09 per Bbl in the prior
quarter, and $58.23 per Bbl in second quarter 2018.
The Company’s average realized oil price during
the second quarter 2019 was $2.35 per Bbl above NYMEX WTI oil
prices, compared to $1.63 per Bbl above NYMEX WTI in the prior
quarter, and $0.39 per Bbl above NYMEX WTI in second quarter
2018. The differential improvement over second quarter 2018
was due primarily to strengthening in Gulf Coast premium prices,
which represents approximately 60% of the Company’s crude oil
production.
Total lease operating expenses in second quarter
2019 were $118 million, or $21.70 per BOE, a decrease of $7
million, or 6%, on an absolute-dollar basis compared to the prior
quarter, primarily impacted by lower CO2 expense, lower power and
fuel costs, and reduced workover expense. When compared to
second quarter 2018, lease operating expenses decreased $2 million,
or 2%, on an absolute-dollar basis, primarily impacted by lower CO2
expense, lower power and fuel costs, and the reduction in costs
from Lockhart Crossing Field, which was sold in the third quarter
of 2018.
General and administrative expenses were $18
million in second quarter 2019, a $1 million decrease from the
prior quarter, and a $2 million decrease compared to second quarter
2018, primarily due to downward adjustments in performance-based
compensation and the Company’s continued focus on cost
reduction.
The Company recorded a $100 million noncash gain
on debt extinguishment (net of transaction costs) during second
quarter 2019 as part of a series of debt exchanges, representing a
net discount on the newly issued notes – see Recent Debt
Transactions and Bank Credit Facility below.
Interest expense, net of capitalized interest,
totaled $20 million in second quarter 2019, a $3 million increase
from the prior quarter and an increase of $4 million compared to
second quarter 2018. The sequential increase was primarily
due to lower capitalized interest, and the increase from the prior
year was primarily due to an increase in the weighted-average
interest rate associated with the issuance in August 2018 of 7½%
Senior Secured Second Lien Notes due 2024. Interest expense
includes the amortization of discounts of approximately $0.5
million during second quarter 2019 and excludes approximately $21
million and $22 million in the second quarters of 2019 and 2018,
respectively, of interest recorded as a reduction of debt for
financial reporting purposes and not as interest expense, due to
the accounting associated with debt exchange transactions. A
schedule detailing the components of interest expense is included
on page 17 of this press release.
Depletion, depreciation, and amortization
(“DD&A”) was $58 million during second quarter 2019, compared
to $53 million in second quarter 2018 and $57 million in first
quarter 2019. The sequential-quarter and prior-year increases
were due primarily to an increase in depletable costs.
Denbury’s effective tax rate for the second
quarter 2019 was approximately 31%, higher than the Company’s
estimated statutory rate of 25% due primarily to a valuation
allowance applied against a portion of the Company’s business
interest expense deduction that it estimates will be disallowed in
the current year as a result of limitations enacted under the Tax
Cuts and Jobs Act. As a result of this, the Company currently
expects that its effective tax rate for the remainder of 2019 will
be approximately 30%, depending in part on taxable income.
RECENT DEBT TRANSACTIONS AND BANK CREDIT
FACILITY
During June 2019, Denbury closed a series of
debt exchanges to extend the maturities of its long-term debt and
reduce the Company’s debt principal. As part of these
transactions, the Company exchanged a total of $468 million
aggregate principal amount of then existing senior subordinated
notes for $103 million aggregate principal amount of new 7¾% Senior
Secured Second Lien Notes due 2024 (the “7¾% Senior Secured
Notes”), $246 million aggregate principal amount of new 6⅜%
Convertible Senior Notes due 2024 (the “2024 Convertible Senior
Notes”) and $120 million of cash on hand. The exchanged
subordinated notes consisted of $152 million aggregate principal
amount of 6⅜% Senior Subordinated Notes due 2021, $220 million
aggregate principal amount of 5½% Senior Subordinated Notes due
2022 and $96 million aggregate principal amount of 4⅝% Senior
Subordinated Notes due 2023. In addition, as part of creating
a more liquid series of secured second lien debt due in 2024, in
June and July 2019, the Company also exchanged $429 million of 7½%
Senior Secured Second Lien Notes due 2024 for roughly the same
amount of 7¾% Senior Secured Notes. The 7¾% Senior Secured
Notes and 2024 Convertible Senior Notes were recorded on the
Company’s balance sheet at discounts to their principal amounts of
$30 million and $80 million, respectively, which will be amortized
as interest expense over the terms of these notes.
As of June 30, 2019, the Company had $80 million
of outstanding borrowings on its $615 million senior secured bank
credit facility, compared to no outstanding borrowings as of
December 31, 2018 and March 31, 2019, leaving $480 million of
liquidity available after consideration of $55 million of currently
outstanding letters of credit.
2019 CAPITAL BUDGET, ESTIMATED
PRODUCTION AND CITRONELLE FIELD SALE
The Company’s 2019 capital budget, excluding
acquisitions and capitalized interest, remains unchanged from the
previously estimated range of approximately $240 million to $260
million. The capital budget consists of approximately $200
million for tertiary and non-tertiary field investments and CO2
supply, plus approximately $50 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 $138
million (55%) has been incurred through the second quarter 2019,
which is significantly less than cash flow from operations.
Based on the Company’s strong production
performance during the first half of 2019 and expectations for the
remainder of 2019, the Company increased the mid-point of its
production guidance range to 58,250 BOE/d, from the previous
mid-point of 58,000 BOE/d, and tightened its 2019 estimated
production guidance range to 57,000 – 59,500 BOE/d (after adjusting
approximately 400 BOE/d of estimated production for the second half
of 2019 for the sale of Citronelle Field), from the previous
estimate of 56,000 – 60,000 BOE/d.
On July 1, 2019, Denbury completed the sale of
Citronelle Field for $10 million, while eliminating a similar
amount of discounted future abandonment costs. For the first
six months of 2019, Citronelle Field produced approximately 400
BOE/d, and had one of the Company’s highest per-unit operating
costs.
CONFERENCE CALL AND CONFERENCE
ATTENDANCE
Denbury management will host a conference call
to review and discuss second quarter 2019 financial and operating
results, as well as financial and operating guidance for 2019,
today, Wednesday, August 7, at 10:00 A.M. (Central).
Additionally, Denbury will post presentation materials on its
website which will be referenced during the conference call.
Individuals who would like to participate should dial 800.230.1093
or 612.332.0226 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 426564.
Chris Kendall, President and Chief Executive
Officer, will present at EnerCom’s The Oil & Gas Conference on
Tuesday, August 13, 2019, at 8:25 A.M. (Mountain Time). An
updated corporate presentation for the conference will be posted to
the Company’s website the morning of Tuesday, August 13, 2019, and
a link to the live webcast of the presentation will be available in
the investor relations section of the Company’s website at
www.denbury.com.
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.
FINANCIAL AND STATISTICAL DATA TABLES
AND RECONCILIATION SCHEDULES
Following are unaudited financial highlights for
the comparative three and six-month periods ended June 30, 2019 and
2018 and the three-month period ended March 31, 2019. 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 (along with additional required disclosures)
included or to be included in the Company’s periodic reports:
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
March 31, |
|
June 30, |
In
thousands, except per-share data |
|
2019 |
|
2018 |
|
2019 |
|
2019 |
|
2018 |
Revenues and other
income |
|
|
|
|
|
|
|
|
|
|
Oil sales |
|
$ |
328,571 |
|
|
$ |
373,286 |
|
|
$ |
291,965 |
|
|
$ |
620,536 |
|
|
$ |
710,692 |
|
Natural gas sales |
|
1,850 |
|
|
2,279 |
|
|
2,612 |
|
|
4,462 |
|
|
4,894 |
|
CO2 sales and transportation fees |
|
7,986 |
|
|
6,715 |
|
|
8,570 |
|
|
16,556 |
|
|
14,267 |
|
Purchased oil sales |
|
2,591 |
|
|
346 |
|
|
215 |
|
|
2,806 |
|
|
1,403 |
|
Other income |
|
2,367 |
|
|
4,437 |
|
|
2,090 |
|
|
4,457 |
|
|
9,041 |
|
Total revenues and other income |
|
343,365 |
|
|
387,063 |
|
|
305,452 |
|
|
648,817 |
|
|
740,297 |
|
Expenses |
|
|
|
|
|
|
|
|
|
|
Lease operating expenses |
|
117,932 |
|
|
120,384 |
|
|
125,423 |
|
|
243,355 |
|
|
238,740 |
|
Transportation and marketing expenses |
|
11,236 |
|
|
10,062 |
|
|
10,773 |
|
|
22,009 |
|
|
20,555 |
|
CO2 discovery and operating expenses |
|
581 |
|
|
500 |
|
|
556 |
|
|
1,137 |
|
|
962 |
|
Taxes other than income |
|
25,517 |
|
|
27,234 |
|
|
23,785 |
|
|
49,302 |
|
|
54,553 |
|
Purchased oil expenses |
|
2,564 |
|
|
289 |
|
|
213 |
|
|
2,777 |
|
|
1,162 |
|
General and administrative expenses |
|
17,506 |
|
|
19,412 |
|
|
18,925 |
|
|
36,431 |
|
|
39,644 |
|
Interest, net of amounts capitalized of $8,238, $8,851, $10,534,
$18,772 and $17,303, respectively |
|
20,416 |
|
|
16,208 |
|
|
17,398 |
|
|
37,814 |
|
|
33,447 |
|
Depletion, depreciation, and amortization |
|
58,264 |
|
|
52,944 |
|
|
57,297 |
|
|
115,561 |
|
|
105,395 |
|
Commodity derivatives expense (income) |
|
(24,760 |
) |
|
96,199 |
|
|
83,377 |
|
|
58,617 |
|
|
145,024 |
|
Gain on debt extinguishment |
|
(100,346 |
) |
|
— |
|
|
— |
|
|
(100,346 |
) |
|
— |
|
Other expenses |
|
2,386 |
|
|
4,178 |
|
|
4,138 |
|
|
6,524 |
|
|
7,564 |
|
Total expenses |
|
131,296 |
|
|
347,410 |
|
|
341,885 |
|
|
473,181 |
|
|
647,046 |
|
Income (loss) before
income taxes |
|
212,069 |
|
|
39,653 |
|
|
(36,433 |
) |
|
175,636 |
|
|
93,251 |
|
Income tax provision
(benefit) |
|
|
|
|
|
|
|
|
|
|
Current income taxes |
|
3,354 |
|
|
(754 |
) |
|
(1,281 |
) |
|
2,073 |
|
|
(1,786 |
) |
Deferred income taxes |
|
62,023 |
|
|
10,185 |
|
|
(9,478 |
) |
|
52,545 |
|
|
25,237 |
|
Net income
(loss) |
|
$ |
146,692 |
|
|
$ |
30,222 |
|
|
$ |
(25,674 |
) |
|
$ |
121,018 |
|
|
$ |
69,800 |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
common share |
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.32 |
|
|
$ |
0.07 |
|
|
$ |
(0.06 |
) |
|
$ |
0.27 |
|
|
$ |
0.17 |
|
Diluted |
|
$ |
0.32 |
|
|
$ |
0.07 |
|
|
$ |
(0.06 |
) |
|
$ |
0.26 |
|
|
$ |
0.15 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding |
|
|
|
|
|
|
|
|
|
|
Basic |
|
452,612 |
|
|
433,467 |
|
|
451,720 |
|
|
452,169 |
|
|
413,217 |
|
Diluted |
|
467,427 |
|
|
457,165 |
|
|
451,720 |
|
|
461,460 |
|
|
454,466 |
|
DENBURY RESOURCES
INC.CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
Six Months Ended |
|
|
June 30, |
In
thousands |
|
2019 |
|
2018 |
Cash flows from
operating activities |
|
|
|
|
Net income |
|
$ |
121,018 |
|
|
$ |
69,800 |
|
Adjustments to reconcile net income to cash flows from operating
activities |
|
|
|
|
Depletion, depreciation, and amortization |
|
115,561 |
|
|
105,395 |
|
Deferred income taxes |
|
52,545 |
|
|
25,237 |
|
Stock-based compensation |
|
6,865 |
|
|
5,152 |
|
Commodity derivatives expense |
|
58,617 |
|
|
145,024 |
|
Receipt (payment) on settlements of commodity derivatives |
|
6,657 |
|
|
(88,127 |
) |
Gain on debt extinguishment |
|
(100,346 |
) |
|
— |
|
Debt issuance costs and discounts |
|
2,901 |
|
|
2,268 |
|
Other, net |
|
(57 |
) |
|
(5,107 |
) |
Changes in assets and liabilities, net of effects from
acquisitions |
|
|
|
|
Accrued production receivable |
|
(9,909 |
) |
|
(17,385 |
) |
Trade and other receivables |
|
(271 |
) |
|
(320 |
) |
Other current and long-term assets |
|
(3,389 |
) |
|
(5,627 |
) |
Accounts payable and accrued liabilities |
|
(33,320 |
) |
|
14,999 |
|
Oil and natural gas production payable |
|
1,746 |
|
|
(4,501 |
) |
Other liabilities |
|
(5,618 |
) |
|
(1,182 |
) |
Net cash provided by
operating activities |
|
213,000 |
|
|
245,626 |
|
|
|
|
|
|
Cash flows from
investing activities |
|
|
|
|
Oil and natural gas capital expenditures |
|
(148,254 |
) |
|
(134,458 |
) |
Pipelines and plants capital expenditures |
|
(10,591 |
) |
|
(7,882 |
) |
Net proceeds from sales of oil and natural gas properties and
equipment |
|
431 |
|
|
2,077 |
|
Other |
|
(725 |
) |
|
5,365 |
|
Net cash used in
investing activities |
|
(159,139 |
) |
|
(134,898 |
) |
|
|
|
|
|
Cash flows from
financing activities |
|
|
|
|
Bank repayments |
|
(281,000 |
) |
|
(1,153,653 |
) |
Bank borrowings |
|
361,000 |
|
|
1,093,653 |
|
Interest payments treated as a reduction of debt |
|
(42,558 |
) |
|
(37,233 |
) |
Payments upon settlement of notes exchange |
|
(120,007 |
) |
|
— |
|
Costs of debt financing |
|
(9,332 |
) |
|
— |
|
Pipeline financing and capital lease debt repayments |
|
(7,273 |
) |
|
(12,625 |
) |
Other |
|
12,899 |
|
|
(628 |
) |
Net cash used in
financing activities |
|
(86,271 |
) |
|
(110,486 |
) |
Net increase
(decrease) in cash, cash equivalents, and restricted
cash |
|
(32,410 |
) |
|
242 |
|
Cash, cash equivalents, and
restricted cash at beginning of period |
|
54,949 |
|
|
15,992 |
|
Cash, cash
equivalents, and restricted cash at end of period |
|
$ |
22,539 |
|
|
$ |
16,234 |
|
DENBURY RESOURCES
INC.SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Reconciliation of net income (loss) (GAAP
measure) to adjusted net income (non-GAAP measure)
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. Management believes that adjusted net income
(loss) may be helpful to investors by eliminating the impact of
noncash and/or special or unusual items not indicative of the
Company’s performance from period to period, 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, as a substitute for, or more meaningful
than, net income or any other measure reported in accordance with
GAAP, but rather to provide additional information useful in
evaluating the Company’s operational trends and performance.
|
|
Three Months Ended |
|
|
June 30, |
|
March 31, |
|
|
2019 |
|
2018 |
|
2019 |
In
thousands, except per-share data |
|
Amount |
|
Per Diluted Share |
|
Amount |
|
Per Diluted Share |
|
Amount |
|
Per Diluted Share |
Net income (loss)
(GAAP measure)(1) |
|
$ |
146,692 |
|
|
$ |
0.32 |
|
|
$ |
30,222 |
|
|
$ |
0.07 |
|
|
$ |
(25,674 |
) |
|
$ |
(0.06 |
) |
Adjustments to reconcile to
adjusted net income (non-GAAP measure) |
|
|
|
|
|
|
|
|
|
|
|
|
Noncash fair value losses (gains) on commodity derivatives(2) |
|
(26,309 |
) |
|
(0.06 |
) |
|
41,429 |
|
|
0.09 |
|
|
91,583 |
|
|
0.20 |
|
Gain on debt extinguishment(3) |
|
(100,346 |
) |
|
(0.21 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Other adjustments(4) |
|
1,399 |
|
|
0.00 |
|
|
(26 |
) |
|
0.00 |
|
|
3,055 |
|
|
0.00 |
|
Estimated income taxes on above adjustments to net income (loss)
and other discrete tax items(5) |
|
37,692 |
|
|
0.08 |
|
|
(10,654 |
) |
|
(0.03 |
) |
|
(23,708 |
) |
|
(0.04 |
) |
Adjusted net income
(non-GAAP measure) |
|
$ |
59,128 |
|
|
$ |
0.13 |
|
|
$ |
60,971 |
|
|
$ |
0.13 |
|
|
$ |
45,256 |
|
|
$ |
0.10 |
|
|
|
Six Months Ended |
|
|
June 30, |
|
|
2019 |
|
2018 |
In
thousands, except per-share data |
|
Amount |
|
Per Diluted Share |
|
Amount |
|
Per Diluted Share |
Net Income (GAAP
measure)(1) |
|
$ |
121,018 |
|
|
$ |
0.26 |
|
|
$ |
69,800 |
|
|
$ |
0.15 |
|
Adjustments to reconcile to
adjusted net income (non-GAAP measure) |
|
|
|
|
|
|
|
|
Noncash fair value losses on commodity derivatives(2) |
|
65,274 |
|
|
0.14 |
|
|
56,897 |
|
|
0.13 |
|
Gain on debt extinguishment(3) |
|
(100,346 |
) |
|
(0.22 |
) |
|
— |
|
|
— |
|
Other adjustments(4) |
|
4,454 |
|
|
0.01 |
|
|
2,049 |
|
|
0.00 |
|
Estimated income taxes on above adjustments to net income and other
discrete tax items(5) |
|
13,984 |
|
|
0.04 |
|
|
(13,794 |
) |
|
(0.03 |
) |
Adjusted net income
(non-GAAP measure) |
|
$ |
104,384 |
|
|
$ |
0.23 |
|
|
$ |
114,952 |
|
|
$ |
0.25 |
|
(1) Diluted net income per common share includes
the impact of potentially dilutive securities including nonvested
restricted stock, nonvested performance-based equity awards, and
shares into which the Company’s convertible senior notes are
convertible. The basic and diluted earnings per share
calculations are included on page 10. (2) The net change
between periods of the fair market values of open commodity
derivative positions, excluding the impact of settlements on
commodity derivatives during the period.(3) Gain on extinguishment
related to the Company’s June 2019 debt exchange.(4) Other
adjustments include (a) $1 million of transaction costs related to
the Company’s privately negotiated debt exchanges and <$1
million of costs associated with the helium supply contract ruling
during the three months ended June 30, 2019, (b) $3 million gain on
land sales, offset by a similar amount of other expense accrued for
litigation matters during the three months ended June 30, 2018, and
(c) $1 million of expense related to an impairment of assets and
<$1 million of costs associated with a helium supply contract
court ruling during the three months ended March 31, 2019.
The six months ended June 30, 2018 were further impacted by $2
million of transaction costs related to the Company’s privately
negotiated debt exchanges during the three months ended March 31,
2018.(5) The estimated income tax impacts on adjustments to net
income (loss) are generally computed based upon a statutory rate of
25% with the exception of (a) the periodic tax impacts of a
shortfall (benefit) on the stock-based compensation deduction which
totaled <$1 million and <($1) million during the three months
ended June 30, 2019 and June 30, 2018, respectively, and <$1
million and $1 million for the six months ended June 30, 2019 and
2018, respectively, and (b) $22 million of tax expense associated
with the gain on debt extinguishment and $9 million of valuation
allowances established against a portion of the Company’s business
interest expense deduction during the three and six months ended
June 30, 2019.
BASIC AND DILUTED NET INCOME PER COMMON
SHARE
|
|
Three Months Ended |
|
|
June 30, |
|
March 31, |
|
|
2019 |
|
2018 |
|
2019 |
In
thousands, except per-share data |
|
Amount |
|
Per Diluted Share |
|
Amount |
|
Per Diluted Share |
|
Amount |
|
Per Diluted Share |
Numerator |
|
|
|
|
|
|
|
|
|
|
|
|
Net income – basic |
|
$ |
146,692 |
|
|
$ |
0.32 |
|
|
$ |
30,222 |
|
|
$ |
0.07 |
|
|
$ |
(25,674 |
) |
|
$ |
(0.06 |
) |
Effect of potentially dilutive
securities |
|
|
|
|
|
|
|
|
|
|
|
|
Interest on convertible senior notes, net of tax |
|
548 |
|
|
0.00 |
|
|
130 |
|
|
0.00 |
|
|
— |
|
|
— |
|
Net income – diluted |
|
$ |
147,240 |
|
|
$ |
0.32 |
|
|
$ |
30,352 |
|
|
$ |
0.07 |
|
|
$ |
(25,674 |
) |
|
$ |
(0.06 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding – basic |
|
452,612 |
|
|
|
|
433,467 |
|
|
|
|
451,720 |
|
|
|
Effect of potentially dilutive
securities |
|
|
|
|
|
|
|
|
|
|
|
|
Restricted stock and performance-based equity awards |
|
2,835 |
|
|
|
|
8,586 |
|
|
|
|
— |
|
|
|
Convertible senior notes(1) |
|
11,980 |
|
|
|
|
15,112 |
|
|
|
|
— |
|
|
|
Weighted average common shares
outstanding – diluted |
|
467,427 |
|
|
|
|
457,165 |
|
|
|
|
451,720 |
|
|
|
|
|
Six Months Ended |
|
|
June 30, |
|
|
2019 |
|
2018 |
In
thousands, except per-share data |
|
Amount |
|
Per Diluted Share |
|
Amount |
|
Per Diluted Share |
Numerator |
|
|
|
|
|
|
|
|
Net income – basic |
|
$ |
121,018 |
|
|
$ |
0.27 |
|
|
$ |
69,800 |
|
|
$ |
0.17 |
|
Effect of potentially dilutive
securities |
|
|
|
|
|
|
|
|
Interest on convertible senior notes, net of tax |
|
548 |
|
|
(0.01 |
) |
|
539 |
|
|
(0.02 |
) |
Net income – diluted |
|
$ |
121,566 |
|
|
$ |
0.26 |
|
|
$ |
70,339 |
|
|
$ |
0.15 |
|
|
|
|
|
|
|
|
|
|
Denominator |
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding – basic |
|
452,169 |
|
|
|
|
413,217 |
|
|
|
Effect of potentially dilutive
securities |
|
|
|
|
|
|
|
|
Restricted stock and performance-based equity awards |
|
3,301 |
|
|
|
|
6,877 |
|
|
|
Convertible senior notes(1) |
|
5,990 |
|
|
|
|
34,372 |
|
|
|
Weighted average common shares
outstanding – diluted |
|
461,460 |
|
|
|
|
454,466 |
|
|
|
- For the three and six months ended June 30, 2019, convertible
senior notes represent the prorated portion of the approximately 91
million shares of the Company’s common stock issuable upon full
conversion of the Company’s convertible senior notes.
DENBURY RESOURCES
INC.SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Reconciliation of cash flows from operations
(GAAP measure) to adjusted cash flows from operations (non-GAAP
measure) to adjusted cash flows from operations less interest
treated as debt reduction (non-GAAP measure) and free cash flow
(non-GAAP measure)
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. Adjusted cash flows from operations less interest
treated as debt reduction is an additional non-GAAP measure that
removes interest associated with the Company’s senior secured
second lien notes and convertible senior notes not reflected as
interest expense for financial reporting purposes and other special
items. Free cash flow is a non-GAAP measure that represents
adjusted cash flows from operations less interest treated as debt
reduction, development capital expenditures and capitalized
interest, but before acquisitions. Management believes that
it is important to consider these additional measures, along with
cash flows from operations, as it believes the non-GAAP measures
can often be a better way to discuss changes in operating trends in
its business caused by changes in production, prices, operating
costs and related factors, without regard to whether the earned or
incurred item was collected or paid during that period.
|
|
Three Months Ended |
|
Six Months Ended |
In
thousands |
|
June 30, |
|
March 31, |
|
June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2019 |
|
2018 |
Net income (loss)
(GAAP measure) |
|
$ |
146,692 |
|
|
$ |
30,222 |
|
|
$ |
(25,674 |
) |
|
$ |
121,018 |
|
|
$ |
69,800 |
|
Adjustments to reconcile to
adjusted cash flows from operations |
|
|
|
|
|
|
|
|
|
|
Depletion, depreciation, and amortization |
|
58,264 |
|
|
52,944 |
|
|
57,297 |
|
|
115,561 |
|
|
105,395 |
|
Deferred income taxes |
|
62,023 |
|
|
10,185 |
|
|
(9,478 |
) |
|
52,545 |
|
|
25,237 |
|
Stock-based compensation |
|
3,602 |
|
|
2,560 |
|
|
3,263 |
|
|
6,865 |
|
|
5,152 |
|
Noncash fair value losses (gains) on commodity derivatives |
|
(26,309 |
) |
|
41,429 |
|
|
91,583 |
|
|
65,274 |
|
|
56,897 |
|
Gain on debt extinguishment |
|
(100,346 |
) |
|
— |
|
|
— |
|
|
(100,346 |
) |
|
— |
|
Other |
|
673 |
|
|
(3,138 |
) |
|
2,171 |
|
|
2,844 |
|
|
(2,839 |
) |
Adjusted cash flows
from operations (non-GAAP measure) |
|
144,599 |
|
|
134,202 |
|
|
119,162 |
|
|
263,761 |
|
|
259,642 |
|
Net change in assets and liabilities relating to operations |
|
4,035 |
|
|
19,797 |
|
|
(54,796 |
) |
|
(50,761 |
) |
|
(14,016 |
) |
Cash flows from
operations (GAAP measure) |
|
$ |
148,634 |
|
|
$ |
153,999 |
|
|
$ |
64,366 |
|
|
$ |
213,000 |
|
|
$ |
245,626 |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted cash flows
from operations (non-GAAP measure) |
|
$ |
144,599 |
|
|
$ |
134,202 |
|
|
$ |
119,162 |
|
|
$ |
263,761 |
|
|
$ |
259,642 |
|
Interest on notes treated as debt reduction |
|
(21,355 |
) |
|
(21,614 |
) |
|
(21,279 |
) |
|
(42,634 |
) |
|
(43,663 |
) |
Adjusted cash flows
from operations less interest treated as debt reduction (non-GAAP
measure) |
|
123,244 |
|
|
112,588 |
|
|
97,883 |
|
|
221,127 |
|
|
215,979 |
|
Development capital expenditures |
|
(76,856 |
) |
|
(81,593 |
) |
|
(61,163 |
) |
|
(138,019 |
) |
|
(129,220 |
) |
Capitalized interest |
|
(8,238 |
) |
|
(8,851 |
) |
|
(10,534 |
) |
|
(18,772 |
) |
|
(17,303 |
) |
Free cash flow
(non-GAAP measure) |
|
$ |
38,150 |
|
|
$ |
22,144 |
|
|
$ |
26,186 |
|
|
$ |
64,336 |
|
|
$ |
69,456 |
|
DENBURY RESOURCES
INC.SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Reconciliation of commodity derivatives income
(expense) (GAAP measure) to noncash fair value gains (losses) on
commodity derivatives (non-GAAP measure)
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 gains (losses) 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 gains (losses) 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 (loss) to present
those measures on a comparative basis across companies, as well as
to assess compliance with certain debt covenants.
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
March 31, |
|
June 30, |
In
thousands |
|
2019 |
|
2018 |
|
2019 |
|
2019 |
|
2018 |
Receipt (payment) on
settlements of commodity derivatives |
|
$ |
(1,549 |
) |
|
$ |
(54,770 |
) |
|
$ |
8,206 |
|
|
$ |
6,657 |
|
|
$ |
(88,127 |
) |
Noncash fair value gains
(losses) on commodity derivatives (non-GAAP measure) |
|
26,309 |
|
|
(41,429 |
) |
|
(91,583 |
) |
|
(65,274 |
) |
|
(56,897 |
) |
Commodity derivatives income (expense) (GAAP measure) |
|
$ |
24,760 |
|
|
$ |
(96,199 |
) |
|
$ |
(83,377 |
) |
|
$ |
(58,617 |
) |
|
$ |
(145,024 |
) |
DENBURY RESOURCES
INC.SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Reconciliation of net income (loss) (GAAP
measure) to Adjusted EBITDAX (non-GAAP measure)
Adjusted EBITDAX is a non-GAAP financial measure
which management uses and is calculated based upon (but not
identical to) a financial covenant related to “Consolidated
EBITDAX” in the Company’s senior secured bank credit facility,
which excludes certain items that are included in net income
(loss), the most directly comparable GAAP financial measure.
Items excluded include interest, income taxes, depletion,
depreciation, and amortization, and items that the Company believes
affect the comparability of operating results such as items whose
timing and/or amount cannot be reasonably estimated or are
non-recurring. Management believes Adjusted EBITDAX may be
helpful to investors in order to assess the Company’s operating
performance as compared to that of other companies in the industry,
without regard to financing methods, capital structure or
historical costs basis. It is also commonly used by third
parties to assess leverage and the Company’s ability to incur and
service debt and fund capital expenditures. Adjusted EBITDAX
should not be considered in isolation, as a substitute for, or more
meaningful than, net income (loss), cash flow from operations, or
any other measure reported in accordance with GAAP. The
Company’s Adjusted EBITDAX may not be comparable to similarly
titled measures of another company because all companies may not
calculate Adjusted EBITDAX, EBITDAX or EBITDA in the same
manner. The following table presents a reconciliation of the
Company’s net income (loss) to Adjusted EBITDAX.
|
|
Three Months Ended |
|
Six Months Ended |
In
thousands |
|
June 30, |
|
March 31, |
|
June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2019 |
|
2018 |
Net income (loss) (GAAP
measure) |
|
$ |
146,692 |
|
|
$ |
30,222 |
|
|
$ |
(25,674 |
) |
|
$ |
121,018 |
|
|
$ |
69,800 |
|
Adjustments to reconcile to
Adjusted EBITDAX |
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
20,416 |
|
|
16,208 |
|
|
17,398 |
|
|
37,814 |
|
|
33,447 |
|
Income tax expense (benefit) |
|
65,377 |
|
|
9,431 |
|
|
(10,759 |
) |
|
54,618 |
|
|
23,451 |
|
Depletion, depreciation, and amortization |
|
58,264 |
|
|
52,944 |
|
|
57,297 |
|
|
115,561 |
|
|
105,395 |
|
Noncash fair value losses (gains) on commodity derivatives |
|
(26,309 |
) |
|
41,429 |
|
|
91,583 |
|
|
65,274 |
|
|
56,897 |
|
Stock-based compensation |
|
3,602 |
|
|
2,560 |
|
|
3,263 |
|
|
6,865 |
|
|
5,152 |
|
Gain on debt extinguishment |
|
(100,346 |
) |
|
— |
|
|
— |
|
|
(100,346 |
) |
|
— |
|
Noncash, non-recurring and other |
|
1,417 |
|
|
226 |
|
|
4,786 |
|
|
6,203 |
|
|
1,016 |
|
Adjusted EBITDAX (non-GAAP
measure) |
|
$ |
169,113 |
|
|
$ |
153,020 |
|
|
$ |
137,894 |
|
|
$ |
307,007 |
|
|
$ |
295,158 |
|
DENBURY RESOURCES
INC.OPERATING HIGHLIGHTS (UNAUDITED)
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
March 31, |
|
June 30, |
|
|
2019 |
|
2018 |
|
2019 |
|
2019 |
|
2018 |
Production (daily –
net of royalties) |
|
|
|
|
|
|
|
|
|
|
Oil (barrels) |
|
58,034 |
|
|
60,109 |
|
|
57,414 |
|
|
57,726 |
|
|
59,236 |
|
Gas (mcf) |
|
10,111 |
|
|
11,314 |
|
|
10,827 |
|
|
10,467 |
|
|
11,607 |
|
BOE (6:1) |
|
59,719 |
|
|
61,994 |
|
|
59,218 |
|
|
59,470 |
|
|
61,171 |
|
Unit sales price
(excluding derivative settlements) |
|
|
|
|
|
|
|
|
|
|
Oil (per barrel) |
|
$ |
62.22 |
|
|
$ |
68.24 |
|
|
$ |
56.50 |
|
|
$ |
59.39 |
|
|
$ |
66.29 |
|
Gas (per mcf) |
|
2.01 |
|
|
2.21 |
|
|
2.68 |
|
|
2.35 |
|
|
2.33 |
|
BOE (6:1) |
|
60.80 |
|
|
66.57 |
|
|
55.27 |
|
|
58.06 |
|
|
64.63 |
|
Unit sales price
(including derivative settlements) |
|
|
|
|
|
|
|
|
|
|
Oil (per barrel) |
|
$ |
61.92 |
|
|
$ |
58.23 |
|
|
$ |
58.09 |
|
|
$ |
60.03 |
|
|
$ |
58.07 |
|
Gas (per mcf) |
|
2.01 |
|
|
2.21 |
|
|
2.68 |
|
|
2.35 |
|
|
2.33 |
|
BOE (6:1) |
|
60.52 |
|
|
56.86 |
|
|
56.81 |
|
|
58.68 |
|
|
56.67 |
|
NYMEX
differentials |
|
|
|
|
|
|
|
|
|
|
Gulf Coast region |
|
|
|
|
|
|
|
|
|
|
Oil (per barrel) |
|
$ |
4.85 |
|
|
$ |
1.12 |
|
|
$ |
4.26 |
|
|
$ |
4.55 |
|
|
$ |
1.59 |
|
Gas (per mcf) |
|
0.10 |
|
|
0.04 |
|
|
(0.10 |
) |
|
0.00 |
|
|
0.07 |
|
Rocky Mountain region |
|
|
|
|
|
|
|
|
|
|
Oil (per barrel) |
|
$ |
(1.48 |
) |
|
$ |
(0.84 |
) |
|
$ |
(2.56 |
) |
|
$ |
(1.97 |
) |
|
$ |
(0.39 |
) |
Gas (per mcf) |
|
(1.13 |
) |
|
(1.25 |
) |
|
(0.28 |
) |
|
(0.67 |
) |
|
(1.08 |
) |
Total company |
|
|
|
|
|
|
|
|
|
|
Oil (per barrel) |
|
$ |
2.35 |
|
|
$ |
0.39 |
|
|
$ |
1.63 |
|
|
$ |
2.01 |
|
|
$ |
0.87 |
|
Gas (per mcf) |
|
(0.50 |
) |
|
(0.62 |
) |
|
(0.20 |
) |
|
(0.34 |
) |
|
(0.51 |
) |
DENBURY RESOURCES
INC.OPERATING HIGHLIGHTS (UNAUDITED)
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
March 31, |
|
June 30, |
Average Daily Volumes (BOE/d) (6:1) |
|
2019 |
|
2018 |
|
2019 |
|
2019 |
|
2018 |
Tertiary oil
production |
|
|
|
|
|
|
|
|
|
|
Gulf Coast
region |
|
|
|
|
|
|
|
|
|
|
Delhi |
|
4,486 |
|
|
4,391 |
|
|
4,474 |
|
|
4,480 |
|
|
4,281 |
|
Hastings |
|
5,466 |
|
|
5,716 |
|
|
5,539 |
|
|
5,502 |
|
|
5,710 |
|
Heidelberg |
|
4,082 |
|
|
4,330 |
|
|
3,987 |
|
|
4,035 |
|
|
4,387 |
|
Oyster Bayou |
|
4,394 |
|
|
4,961 |
|
|
4,740 |
|
|
4,566 |
|
|
5,008 |
|
Tinsley |
|
4,891 |
|
|
5,755 |
|
|
4,659 |
|
|
4,776 |
|
|
5,903 |
|
West Yellow Creek |
|
586 |
|
|
142 |
|
|
436 |
|
|
511 |
|
|
100 |
|
Mature properties(1) |
|
6,448 |
|
|
6,725 |
|
|
6,479 |
|
|
6,464 |
|
|
6,725 |
|
Total Gulf Coast region |
|
30,353 |
|
|
32,020 |
|
|
30,314 |
|
|
30,334 |
|
|
32,114 |
|
Rocky Mountain
region |
|
|
|
|
|
|
|
|
|
|
Bell Creek |
|
5,951 |
|
|
4,010 |
|
|
4,650 |
|
|
5,304 |
|
|
4,030 |
|
Salt Creek |
|
2,078 |
|
|
2,049 |
|
|
2,057 |
|
|
2,067 |
|
|
2,026 |
|
Other |
|
41 |
|
|
— |
|
|
52 |
|
|
46 |
|
|
— |
|
Total Rocky Mountain region |
|
8,070 |
|
|
6,059 |
|
|
6,759 |
|
|
7,417 |
|
|
6,056 |
|
Total tertiary oil
production |
|
38,423 |
|
|
38,079 |
|
|
37,073 |
|
|
37,751 |
|
|
38,170 |
|
Non-tertiary oil and
gas production |
|
|
|
|
|
|
|
|
|
|
Gulf Coast
region |
|
|
|
|
|
|
|
|
|
|
Mississippi |
|
1,025 |
|
|
901 |
|
|
1,034 |
|
|
1,030 |
|
|
888 |
|
Texas |
|
4,243 |
|
|
4,947 |
|
|
4,345 |
|
|
4,294 |
|
|
4,668 |
|
Other |
|
6 |
|
|
— |
|
|
10 |
|
|
8 |
|
|
21 |
|
Total Gulf Coast region |
|
5,274 |
|
|
5,848 |
|
|
5,389 |
|
|
5,332 |
|
|
5,577 |
|
Rocky Mountain
region |
|
|
|
|
|
|
|
|
|
|
Cedar Creek Anticline |
|
14,311 |
|
|
15,742 |
|
|
14,987 |
|
|
14,647 |
|
|
15,093 |
|
Other |
|
1,305 |
|
|
1,490 |
|
|
1,313 |
|
|
1,309 |
|
|
1,488 |
|
Total Rocky Mountain region |
|
15,616 |
|
|
17,232 |
|
|
16,300 |
|
|
15,956 |
|
|
16,581 |
|
Total non-tertiary
production |
|
20,890 |
|
|
23,080 |
|
|
21,689 |
|
|
21,288 |
|
|
22,158 |
|
Total continuing
production |
|
59,313 |
|
|
61,159 |
|
|
58,762 |
|
|
59,039 |
|
|
60,328 |
|
Property
sales |
|
|
|
|
|
|
|
|
|
|
Citronelle(2) |
|
406 |
|
|
388 |
|
|
456 |
|
|
431 |
|
|
388 |
|
Lockhart Crossing(3) |
|
— |
|
|
447 |
|
|
— |
|
|
— |
|
|
455 |
|
Total
production |
|
59,719 |
|
|
61,994 |
|
|
59,218 |
|
|
59,470 |
|
|
61,171 |
|
- Mature properties include Brookhaven, Cranfield, Eucutta,
Little Creek, Mallalieu, Martinville, McComb and Soso fields.
- Includes production from Citronelle Field sold in July
2019.
- Includes production from Lockhart Crossing Field sold in the
third quarter of 2018.
DENBURY RESOURCES
INC.PER-BOE DATA (UNAUDITED)
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
March 31, |
|
June 30, |
|
|
2019 |
|
2018 |
|
2019 |
|
2019 |
|
2018 |
Oil and natural gas
revenues |
|
$ |
60.80 |
|
|
$ |
66.57 |
|
|
$ |
55.27 |
|
|
$ |
58.06 |
|
|
$ |
64.63 |
|
Receipt (payment) on
settlements of commodity derivatives |
|
(0.28 |
) |
|
(9.71 |
) |
|
1.54 |
|
|
0.62 |
|
|
(7.96 |
) |
Lease operating expenses |
|
(21.70 |
) |
|
(21.34 |
) |
|
(23.53 |
) |
|
(22.61 |
) |
|
(21.56 |
) |
Production and ad valorem
taxes |
|
(4.33 |
) |
|
(4.50 |
) |
|
(4.13 |
) |
|
(4.23 |
) |
|
(4.55 |
) |
Transportation and marketing
expenses |
|
(2.07 |
) |
|
(1.78 |
) |
|
(2.02 |
) |
|
(2.04 |
) |
|
(1.86 |
) |
Production netback |
|
32.42 |
|
|
29.24 |
|
|
27.13 |
|
|
29.80 |
|
|
28.70 |
|
CO2 sales, net of operating
and exploration expenses |
|
1.36 |
|
|
1.10 |
|
|
1.51 |
|
|
1.43 |
|
|
1.20 |
|
General and administrative
expenses |
|
(3.22 |
) |
|
(3.44 |
) |
|
(3.55 |
) |
|
(3.38 |
) |
|
(3.58 |
) |
Interest expense, net |
|
(3.76 |
) |
|
(2.87 |
) |
|
(3.26 |
) |
|
(3.51 |
) |
|
(3.02 |
) |
Other |
|
(0.19 |
) |
|
(0.24 |
) |
|
0.53 |
|
|
0.17 |
|
|
0.15 |
|
Changes in assets and
liabilities relating to operations |
|
0.74 |
|
|
3.51 |
|
|
(10.28 |
) |
|
(4.72 |
) |
|
(1.27 |
) |
Cash flows from
operations |
|
27.35 |
|
|
27.30 |
|
|
12.08 |
|
|
19.79 |
|
|
22.18 |
|
DD&A |
|
(10.72 |
) |
|
(9.38 |
) |
|
(10.75 |
) |
|
(10.74 |
) |
|
(9.52 |
) |
Deferred income taxes |
|
(11.41 |
) |
|
(1.81 |
) |
|
1.78 |
|
|
(4.88 |
) |
|
(2.28 |
) |
Gain on debt
extinguishment |
|
18.46 |
|
|
— |
|
|
— |
|
|
9.32 |
|
|
— |
|
Noncash fair value gains
(losses) on commodity derivatives |
|
4.84 |
|
|
(7.34 |
) |
|
(17.18 |
) |
|
(6.07 |
) |
|
(5.14 |
) |
Other noncash items |
|
(1.53 |
) |
|
(3.41 |
) |
|
9.25 |
|
|
3.82 |
|
|
1.06 |
|
Net income (loss) |
|
$ |
26.99 |
|
|
$ |
5.36 |
|
|
$ |
(4.82 |
) |
|
$ |
11.24 |
|
|
$ |
6.30 |
|
CAPITAL EXPENDITURE SUMMARY
(UNAUDITED)(1)
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
March 31, |
|
June 30, |
In thousands |
|
2019 |
|
2018 |
|
2019 |
|
2019 |
|
2018 |
Capital expenditure
summary |
|
|
|
|
|
|
|
|
|
|
Tertiary oil fields |
|
$ |
28,758 |
|
|
$ |
45,813 |
|
|
$ |
26,028 |
|
|
$ |
54,786 |
|
|
$ |
64,086 |
|
Non-tertiary fields |
|
14,880 |
|
|
17,817 |
|
|
21,674 |
|
|
36,554 |
|
|
32,739 |
|
Capitalized internal
costs(2) |
|
12,324 |
|
|
8,662 |
|
|
11,890 |
|
|
24,214 |
|
|
22,747 |
|
Oil and natural gas capital
expenditures |
|
55,962 |
|
|
72,292 |
|
|
59,592 |
|
|
115,554 |
|
|
119,572 |
|
CO2 pipelines, sources and
other |
|
20,894 |
|
|
9,301 |
|
|
1,571 |
|
|
22,465 |
|
|
9,648 |
|
Capital expenditures,
before acquisitions and capitalized interest |
|
76,856 |
|
|
81,593 |
|
|
61,163 |
|
|
138,019 |
|
|
129,220 |
|
Acquisitions of oil and
natural gas properties |
|
68 |
|
|
(14 |
) |
|
29 |
|
|
97 |
|
|
21 |
|
Capital expenditures,
before capitalized interest |
|
76,924 |
|
|
81,579 |
|
|
61,192 |
|
|
138,116 |
|
|
129,241 |
|
Capitalized interest |
|
8,238 |
|
|
8,851 |
|
|
10,534 |
|
|
18,772 |
|
|
17,303 |
|
Capital expenditures, total |
|
$ |
85,162 |
|
|
$ |
90,430 |
|
|
$ |
71,726 |
|
|
$ |
156,888 |
|
|
$ |
146,544 |
|
- Capital expenditure amounts include accrued capital.
- Includes capitalized internal acquisition, exploration and
development costs and pre-production tertiary startup costs.
DENBURY RESOURCES
INC.INTEREST AND FINANCING EXPENSES
(UNAUDITED)
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
March 31, |
|
June 30, |
In thousands |
|
2019 |
|
2018 |
|
2019 |
|
2019 |
|
2018 |
Cash interest(1) |
|
$ |
48,371 |
|
|
$ |
45,542 |
|
|
$ |
47,948 |
|
|
$ |
96,319 |
|
|
$ |
92,145 |
|
Interest not reflected as
expense for financial reporting purposes(1) |
|
(21,355 |
) |
|
(21,614 |
) |
|
(21,279 |
) |
|
(42,634 |
) |
|
(43,663 |
) |
Noncash interest expense |
|
1,194 |
|
|
1,131 |
|
|
1,263 |
|
|
2,457 |
|
|
2,268 |
|
Amortization of debt
discount(2) |
|
444 |
|
|
— |
|
|
— |
|
|
444 |
|
|
— |
|
Less: capitalized
interest |
|
(8,238 |
) |
|
(8,851 |
) |
|
(10,534 |
) |
|
(18,772 |
) |
|
(17,303 |
) |
Interest expense, net |
|
$ |
20,416 |
|
|
$ |
16,208 |
|
|
$ |
17,398 |
|
|
$ |
37,814 |
|
|
$ |
33,447 |
|
- Cash interest includes interest which is paid semiannually on
the Company’s 9% Senior Secured Second Lien Notes due 2021, 9¼%
Senior Secured Second Lien Notes due 2022, and the Company’s
previously outstanding 5% Convertible Senior Notes due 2023 and 3½%
Convertible Senior Notes due 2024. As a result of the
accounting for certain exchange transactions in previous years,
most of the future interest related to these notes was recorded as
debt as of the debt issuance dates, which is reduced as semiannual
interest payments are made, and therefore not reflected as interest
for financial reporting purposes.
- Represents the amortization of debt discounts related to the
Company’s 7¾% Senior Secured Notes and 2024 Convertible Senior
Notes issued in June 2019. In accordance with FASC 470-50,
Modifications and Extinguishments, the 7¾% Senior Secured Notes and
new 2024 Convertible Senior Notes were recorded on the Company’s
balance sheet at a discount of $30 million and $80 million,
respectively, which will be amortized as interest expense over the
term of the notes.
SELECTED BALANCE SHEET DATA
(UNAUDITED)
|
|
June 30, |
|
December 31, |
In thousands |
|
2019 |
|
2018 |
Cash and cash equivalents |
|
$ |
341 |
|
|
$ |
38,560 |
|
Total assets |
|
4,732,034 |
|
|
4,723,222 |
|
|
|
|
|
|
Borrowings under senior
secured bank credit facility |
|
$ |
80,000 |
|
|
$ |
— |
|
Borrowings under senior
secured second lien notes (principal only)(1) |
|
1,623,251 |
|
|
1,520,587 |
|
Borrowings under senior
convertible notes (principal only)(2) |
|
245,548 |
|
|
— |
|
Borrowings under senior
subordinated notes (principal only) |
|
357,783 |
|
|
826,185 |
|
Financing and capital
leases |
|
174,310 |
|
|
185,435 |
|
Total debt (principal only) |
|
$ |
2,480,892 |
|
|
$ |
2,532,207 |
|
|
|
|
|
|
Total stockholders’
equity |
|
$ |
1,270,676 |
|
|
$ |
1,141,777 |
|
- Excludes $208 million and $250 million of future interest
payable on the notes as of June 30, 2019 and December 31, 2018
accounted for as debt for financial reporting purposes and also
excludes a $29 million discount to par on the 7¾% Senior Secured
Notes as of June 30, 2019.
- Excludes an $80 million discount to par on the 2024 Convertible
Senior Notes as of June 30, 2019.
DENBURY CONTACTS:
Mark C. Allen, Executive Vice President and Chief Financial Officer, 972.673.2000
John Mayer, Director of Investor Relations, 972.673.2383
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