Denbury Resources Announces 2005 Results.DALLAS Dallas, city (1990 pop. 1,006,877), seat of Dallas co., N Tex., on the Trinity River near the junction of its three forks; inc. 1871. The second largest Texas city, after Houston, and the eighth largest U.S. -- Denbury Resources Inc. (NYSE NYSE See: New York Stock Exchange :DNR See dynamic noise reduction and domain name resolver. ) ("Denbury" or the "Company") today announced its fourth quarter and 2005 financial and operating results. The Company posted earnings for the full year 2005 of $166.5 million or $1.49 per share, approximately double 2004 net income of $82.4 million, or $0.75 per share, the increase primarily due to higher commodity prices. Fourth quarter 2005 net income was $57.2 million, or $0.51 per share, more than two-and-one-half times fourth quarter 2004 net income of $22.5 million, or $0.20 per share. Adjusted cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses (cash flow from operations before changes in assets and liabilities, a non-GAAP measure) for the fourth quarter of 2005 was $104.7 million, more than double fourth quarter 2004 adjusted cash flow from operations of $48.5 million. Net cash flow provided by operations, the GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). measure, totaled $129.7 million during the fourth quarter of 2005, as compared to $17.7 million during the fourth quarter of 2004. The difference between the respective adjusted cash flow from operations and cash flow from operations is primarily due to increases or decreases in accounts payables Payables Related: Accounts payable and accrued liabilities Accrued liabilities are liabilities which have occurred, but have not been paid or logged under accounts payable during an accounting period; in other words, obligations for goods and services provided to a company for which invoices have not yet been received. during the quarter. (Please see the accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. schedules for a reconciliation of net cash flow provided by operations, as defined by generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP), which is the GAAP measure, as opposed op·pose v. op·posed, op·pos·ing, op·pos·es v.tr. 1. To be in contention or conflict with: oppose the enemy force. 2. to adjusted cash flow from operations, which is the non-GAAP measure discussed above). Review of Financial Results Denbury's fourth quarter 2005 production averaged 20,808 Bbls/d and 65.0 MMcf/d, or 31,649 BOE/d, a 16% increase over third quarter 2005 production levels, both of which were negatively impacted by the two hurricanes, and a 9% increase over fourth quarter 2004 production levels. Production from the Company's tertiary tertiary (tûr`shēârē), in the Roman Catholic Church, member of a third order. The third orders are chiefly supplements of the friars—Franciscans (the most numerous), Dominicans, and Carmelites. recovery operations Operations conducted to search for, locate, identify, rescue, and return personnel, sensitive equipment, or items critical to national security. set another quarterly record in the fourth quarter of 2005, averaging 9,939 BOE/d, a 12% increase over third quarter 2005 levels, and a 37% increase over the fourth quarter of 2004 average of 7,242 BOE/d. Production from the Barnett Shale The Barnett Shale is a geological formation of economic significance. It consists of sedimentary rocks of Mississippian age in the U.S. State of Texas. The formation is estimated to stretch from the city of Dallas to west of the city of Fort Worth and south, covering 5,000 square averaged 18.3 MMcfe/d (3,048 BOE/d) during the fourth quarter of 2005, more than a threefold increase over the 5.8 MMcfe/d (962 BOE/d) average production during the fourth quarter of 2004. Production in Louisiana Louisiana (ləwē'zēăn`ə, l  ē'–), state in the S central United States. It is bounded by Mississippi, with the Mississippi R. reversed its downward trend as
a result of recent drilling successes there, averaging 6,992 BOE/d, a
35% increase over third quarter of 2005 levels and just slightly less
than the average production in the fourth quarter of 2004. Production
during the fourth quarter of 2005 was 66% oil, on trend with prior
quarters since the sale of Denbury's offshore properties in July July: see month. 2004.Total revenues in the fourth quarter of 2005 increased $86.4 million (95%), as compared to revenues in the fourth quarter of 2004, primarily as a result of higher commodity prices, but also assisted by lower hedging payments and higher production levels. In the fourth quarter of 2005, NYMEX See New York Mercantile Exchange. NYMEX See New York Mercantile Exchange (NYM). oil prices averaged approximately $60.00 per Bbl, and natural gas NYMEX prices averaged approximately $12.85 per Mcf, as compared to NYMEX averages of approximately $48.35 per Bbl and $7.25 per Mcf in the fourth quarter of 2004. Denbury's weighted average net price received per BOE BOE Based on Experience BOE Board of Education BOE Boletín Oficial del Estado (Spanish) BOE Bank of England BOE Board of Equalization BOE Board of Elections BOE Barrel of Oil Equivalent BOE Bind on Equip was $17.50 higher per BOE (excluding hedges) in the fourth quarter of 2005 than in the comparable period of 2004. Hedge payments also decreased significantly, paying out $7.70 less per BOE on hedges during the 2005 quarterly period than made a year earlier, increasing the net realized revenue price per BOE between the respective fourth quarters by $25.20 per BOE. Oil price differentials (Denbury's net oil price received as compared to NYMEX prices) deteriorated during the last half of 2004 and remained substantial during 2005, principally because the price of heavy, sour crude Sour Crude The name given to barrels of crude oil that do not meet certain content requirements, such as low levels of sulfur and hydrogen. Notes: Sour crude future contracts are not as popular as sweet crude oil contracts, as this type of oil is harder to refine compared produced primarily in the Company's East Mississippi Mississippi, state, United States Mississippi (mĭs'əsĭp`ē), one of the Deep South states of the United States. It is bordered by Alabama (E), the Gulf of Mexico (S), Arkansas and Louisiana, with most of the border formed by properties dropped significantly relative to NYMEX prices. The Company's average NYMEX differential was $6.17 per Bbl during the fourth quarter of 2005, only slightly better than the average of $6.48 per Bbl during the fourth quarter of 2004. For the full year periods, the average oil price differential was $6.33 per Bbl during 2005 as compared to $4.94 per Bbl during 2004. The Company incurred more expenses in every category during the fourth quarter of 2005, as compared to the fourth quarter of 2004, partially offsetting the significantly higher revenue. Lease operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. increased $12.6 million (62%) on a gross basis as a result of general cost inflation in the industry, an increasing emphasis on tertiary operations, increasing lease payments for certain of our tertiary operating facilities, and higher workover costs. On a per BOE basis, operating costs operating costs npl → gastos mpl operacionales increased to $11.28 per BOE, a 48% increase over the $7.60 per BOE during the fourth quarter of 2004. Higher commodity prices translated into higher energy and fuel costs in the Company's tertiary operations and into higher royalty costs for CO2 (most of which correlate with oil prices), contributing to the higher operating costs. Production taxes and marketing expenses also increased primarily as a result of higher commodity prices. General and administrative expenses increased $0.8 million (12%) between the fourth quarter of 2004 and 2005, averaging $2.44 per BOE in the fourth quarter of 2005, up slightly from $2.38 per BOE in the comparable quarter of 2004. The increase is primarily related to additional personnel added during 2005 and general cost inflation, coupled with continued high costs related to the Sarbanes-Oxley Act See SOX. and incremental costs Costs which are additional costs to the Service appropriations that would not have been incurred absent support of the contingency operation. See also financial management. related to the Company's new software system. Depletion depletion n. when a natural resource (particularly oil) is being used up. The annual amount of depletion may, ironically, provide a tax deduction for the company exploiting the resource because if the resource they are exploiting runs out, they will no longer be able , depreciation and amortization ("DD&A") expenses increased $7.3 million (34%) in the fourth quarter of 2005 as compared to DD&A in the prior year fourth quarter. The DD&A rate in the fourth quarter of 2005 was $9.80 per BOE, up from the $7.98 per BOE rate in the prior year fourth quarter. DD&A expense on a per BOE basis increased primarily due to rising costs in the industry for both 2005 expenditures and upward revisions of future development costs. During the fourth quarter of 2005, the Company paid out $10.1 million on its hedges, offset in-part by non-cash income of $9.2 million for fair market value adjustments associated with these hedges. Additionally, the Company recognized non-cash expense Noun 1. non-cash expense - an expense (such as depreciation) that is not paid for in cash disbursal, disbursement, expense - amounts paid for goods and services that may be currently tax deductible (as opposed to capital expenditures) of $9.4 million for fair value adjustments for hedges put in place during the fourth quarter of 2005. Comparatively, in the fourth quarter of 2004, the Company made hedge payments of $29.8 million, offset in-part by non-cash income associated with fair value adjustments of $7.1 million. 2006 Outlook Denbury's 2006 development and exploration budget (excluding acquisitions) is currently set at just under $500 million. Approximately 50% of the 2006 capital budget is related to tertiary operations, approximately 25% to the Barnett Shale area, with the balance split almost equally between the Company's other operating areas. The Company still anticipates that its average daily production for 2006 will be approximately 37,000 BOE/d, including approximately 2,000 BOE/d from the recent acquisition. This production target represents a 24% increase in production over the Company's 2005 production levels, or a 17% increase if you exclude the production contributed from the recent acquisition. Production from the Company's tertiary operations is expected to increase from a 2005 average of 9,215 BOE/d to a projected 2006 average of approximately 13,000 BOE/d, a 40% increase. Gareth Roberts Gareth Roberts may refer to:
1 City (1990 pop. 37,446), seat of Jackson co., S Mich., on the Grand River; inc. 1857. It is an industrial and commercial center in a farm region. Dome dome, a roof circular or (rarely) elliptical in plan and usually hemispherical in form, placed over a circular, square, oblong, or polygonal space. Domes have been built with a wide variety of outlines and of various materials. to East Mississippi, with which we plan to start our first East Mississippi CO2 injections next month; (iii) increased our CO2 tertiary oil production by 37% fourth quarter 2004 to fourth quarter 2005; (iv) purchased five additional oil fields This list of oil fields includes major fields of the past and present. The list is incomplete; there are more than 40,000 oil and gas fields of all sizes in the world[1]. that are part of future phases of our tertiary operations; (v) expanded our horizontal well drilling Well drilling is the process of drilling a hole in the ground for the extraction of a natural resource such as ground water, natural gas, or petroleum. Drilling for the exploration of the nature of the material underground (for instance in search of metallic ore) is best described in the Barnett Shale with plans to further accelerate that program during 2006; and (vi) replaced 313% of our 2005 production, increasing our proven reserves by 18% year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. over year-end, almost all from organic internal growth. All of these factors, combined with high commodity prices, helped our stock reach new highs during 2005 and early 2006." "Our decision to focus on tertiary operations continues to be a winning strategy and the backbone of our Company. Tertiary oil production continues to grow and we added over 12.5 million barrels of proved tertiary oil reserves Oil reserves refer to portions of oil in place that are claimed to be recoverable under economic constraints. Oil in the ground is not a "reserve" unless it is claimed to be economically recoverable, since as the oil is extracted, the cost of recovery increases incrementally this past year, and we expect our growth in tertiary oil production and reserves to continue. We are enthusiastic about the inventory of assets we have compiled, having added tertiary opportunities for Phases III, IV and beyond. We expect to grow our tertiary oil production approximately 40% during 2006 and our total corporate production by approximately 24%, predominately from internal organic growth. Our future continues to look bright." Conference Call The public is invited to listen to the Company's conference call set for today, February February: see month. 23, 2006, at 10:00 A.M. CDT CDT abbr. Central Daylight Time CDT Central Daylight Time CDT n abbr (US) (= Central Daylight Time) → hora de verano del centro; (BRIT . The call will be broadcast live over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at our Web site: www.denbury.com. If you are unable to participate during the live broadcast, the call will be archived on our Web site for approximately 30 days and will also be available for playback Playback could mean:
Annual Meeting The Company today announced its 2006 Annual Meeting of Shareholders will be held on Wednesday Wednesday: see week. , May 10th at 3:00 P.M., local time, at the offices of the Company located at 5100 Tennyson Parkway, Plano, Texas Plano (IPA: /ˈpleɪnoʊ/) is a wealthy suburb of Dallas, Texas, located to the north, mainly within Collin County, but also extending into Denton County. According to the 2000 U.S. . The record date for determination of shareholders entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: to vote at the annual meeting will be the close of business on March 27, 2006. Financial and Statistical Data Tables Following are financial highlights for the comparative fourth quarters and annual periods ended December 31, 2005 and December 31, 2004. All production volumes and dollars are expressed on a net revenue interest basis with gas volumes converted to equivalent barrels at 6:1.
FOURTH QUARTER FINANCIAL HIGHLIGHTS
(Amounts in thousands of U.S. dollars, except per share
and unit data)
Three Months Ended
December 31, Percentage
----------------------
2005 2004 Change
------------ --------- ----------
Revenues:
Oil sales 103,076 75,645 + 36%
Gas sales 70,643 36,757 + 92%
CO2 sales and transportation
fees 2,278 1,654 + 38%
Loss on effective hedge
contracts -- (24,012) N/A
Interest and other income 1,230 830 + 48%
------------ ---------
Total revenues 177,227 90,874 + 95%
------------ ---------
Expenses:
Lease operating expenses 32,848 20,268 + 62%
Production taxes and marketing
expense 7,856 5,256 + 49%
CO2 operating expenses 829 730 + 14%
General and administrative 7,101 6,338 + 12%
Interest, net 4,660 4,551 + 2%
Depletion and depreciation 28,529 21,262 + 34%
Commodity derivative expense
(income) 10,348 (1,282) + + 100%
------------ ---------
Total expenses 92,171 57,123 + 61%
------------ ---------
Income before income taxes 85,056 33,751 + + 100%
Income tax provision
Current income taxes 9,857 884 + + 100%
Deferred income taxes 18,013 10,386 + 73%
------------ ---------
NET INCOME 57,186 22,481 + + 100%
============ =========
Net income per common share (2):
Basic 0.51 0.20 + + 100%
Diluted 0.48 0.19 + + 100%
Weighted average common shares
(2):
Basic 112,564 110,517 + 2%
Diluted 119,391 116,151 + 3%
Production (daily - net of
royalties):
Oil (barrels) 20,808 19,644 + 6%
Gas (mcf) 65,045 56,002 + 16%
BOE (6:1) 31,649 28,977 + 9%
Unit sales price (including
hedges):
Oil (per barrel) 53.84 29.63 + 82%
Gas (per mcf) 10.11 5.64 + 79%
Unit sales price (excluding
hedges):
Oil (per barrel) 53.84 41.86 + 29%
Gas (per mcf) 11.81 7.13 + 66%
Three Months Ended
December 31, Percentage
-------------------
2005 2004 Change
--------- --------- ----------
Non-GAAP Financial Measure (1)
Adjusted cash flow from
operations (non-GAAP measure) 104,675 48,472 + + 100%
Net change in assets and liabilities
relating to
operations 24,984 (30,791) - + 100%
--------- ---------
Cash flow from operations (GAAP
measure) 129,659 17,681 + + 100%
========= =========
Oil & gas capital investments 97,092 48,464 + + 100%
CO2 capital investments 28,857 7,299 + + 100%
Proceeds from sales of properties 15,582 9,296 + 68%
BOE data (6:1)
Revenues 59.66 42.16 + 42%
Loss on settlements of derivative
contracts (3.48) (11.18) - 69%
Lease operating expenses (11.28) (7.60) + 48%
Production taxes and marketing
expense (2.70) (1.97) + 37%
--------- ---------
Production netback 42.20 21.41 + 97%
CO2 operating margin 0.50 0.35 + 43%
General and administrative (2.44) (2.38) + 3%
Net cash interest expense (1.12) (1.28) - 13%
Current income taxes and other (3.19) 0.08 + + 100%
Changes in asset and liabilities
relating to operations 8.58 (11.55) - + 100%
--------- ---------
Cash flow from operations 44.53 6.63 + + 100%
========= =========
(1) See "Non-GAAP Measures" at the end of this report.
(2) 2004 adjusted for 2-for-1 stock split.
TWELVE MONTH FINANCIAL HIGHLIGHTS
(Amounts in thousands of U.S. dollars, except per share
and unit data)
Twelve Months Ended
December 31, Percentage
-------------------
2005 2004 Change
---------- -------- ----------
Revenues:
Oil sales 367,414 256,843 + 43%
Gas sales 181,641 187,934 - 3%
CO2 sales and transportation fees 8,119 6,276 + 29%
Loss on effective hedge contracts -- (70,469) N/A
Interest and other income 3,532 2,252 + 57%
---------- --------
Total revenues 560,706 382,836 + 46%
---------- --------
Expenses:
Lease operating expenses 108,550 87,107 + 25%
Production taxes and marketing
expense 27,582 18,737 + 47%
CO2 operating expenses 2,251 1,338 + 68%
General and administrative 28,540 21,461 + 33%
Interest, net 17,978 19,468 - 8%
Depletion and depreciation 98,802 97,527 + 1%
Commodity derivative expense 28,962 15,358 + 89%
---------- --------
Total expenses 312,665 260,996 + 20%
---------- --------
Income before income taxes 248,041 121,840 + + 100%
Income tax provision
Current income taxes 27,177 22,929 + 19%
Deferred income taxes 54,393 16,463 + + 100%
---------- --------
NET INCOME 166,471 82,448 + + 100%
========== ========
Net income per common share (2):
Basic 1.49 0.75 + 99%
Diluted 1.39 0.72 + 93%
Weighted average common shares (2):
Basic 111,743 109,741 + 2%
Diluted 119,634 114,603 + 4%
Production (daily - net of
royalties):
Oil (barrels) 20,013 19,247 + 4%
Gas (mcf) 58,696 82,224 - 29%
BOE (6:1) 29,795 32,951 - 10%
Unit sales price (including hedges):
Oil (per barrel) 50.30 27.36 + 84%
Gas (per mcf) 7.70 5.57 + 38%
Unit sales price (excluding hedges):
Oil (per barrel) 50.30 36.46 + 38%
Gas (per mcf) 8.48 6.24 + 36%
Twelve Months Ended
December 31, Percentage
--------------------
2005 2004 Change
---------- --------- ----------
Non-GAAP Financial Measure: (1)
Adjusted cash flow from
operations (non-GAAP measure) 343,383 200,193 + 72%
Net change in assets and liabilities
relating to
operations 17,577 (31,541) - + 100%
---------- ---------
Cash flow from operations (GAAP
measure) 360,960 168,652 + + 100%
========== =========
Oil & gas capital investments 379,236 178,070 + + 100%
CO2 capital investments 78,726 50,265 + 57%
Proceeds from sales of properties 17,447 197,575 - 91%
Cash and cash equivalents 165,089 33,039 + + 100%
Short-term investments -- 57,171 N/A
Total assets 1,505,069 992,706 + 52%
Total long-term debt (excluding
discount) 380,870 229,184 + 66%
Total stockholders' equity 733,662 541,672 + 35%
BOE data (6:1)
Revenues 50.49 36.88 + 37%
Loss on settlements of derivative
contracts (1.54) (7.01) - 78%
Lease operating expenses (9.98) (7.22) + 38%
Production taxes and marketing
expense (2.54) (1.55) + 64%
--------------------
Production netback 36.43 21.10 + 73%
CO2 operating margin 0.54 0.41 + 32%
General and administrative (2.62) (1.78) + 47%
Net cash interest expense (1.28) (1.34) - 4%
Current income taxes and other 1.50) (1.78) - 16%
Changes in asset and liabilities
relating to operations 1.62 (2.63) - + 100%
--------------------
Cash flow from operations 33.19 13.98 + + 100%
====================
(1) See "Non-GAAP Measures" at the end of this report.
(2) 2004 adjusted for 2-for-1 stock split.
Non-GAAP Measures Adjusted cash flow from operations is a non-GAAP measure that represents cash flow provided by operations before changes in assets and liabilities, as summarized from the Company's Consolidated Statements of Cash Flows. Adjusted cash flow from operations measures the cash flow earned or incurred from operating activities without regard to the collection or payment of associated receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed or payables. The Company believes that it is important to consider this measure separately, as it believes it 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. For a further discussion, see "Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial of Financial Condition and Results of Operations - Operating Results" in our latest Form 10-Q Form 10-Q See 10-Q. or Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. . Denbury Resources Inc. (www.denbury.com) is the largest oil and natural gas operator in Mississippi, owns the largest reserves of CO2 used for tertiary oil recovery east of the Mississippi River Mississippi River River, central U.S. It rises at Lake Itasca in Minnesota and flows south, meeting its major tributaries, the Missouri and the Ohio rivers, about halfway along its journey to the Gulf of Mexico. , and holds key operating acreage in the onshore on·shore adj. 1. Moving or directed toward the shore: an onshore wind. 2. Located on the shore: an onshore beacon; an onshore patrol. adv. Louisiana, Alabama Alabama, indigenous people of North America Alabama (ăləbăm`ə), indigenous people of North America whose language belongs to the Muskogean branch of the Hokan-Siouan linguistic stock (see Native American languages). , and Texas Barnett Shale areas. The Company increases the value of acquired properties in its core areas through a combination of exploitation drilling and proven engineering extraction extraction /ex·trac·tion/ (eks-trak´shun) 1. the process or act of pulling or drawing out. 2. the preparation of an extract. practices. This press release, other than historical financial information, contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve risks and uncertainties including expected reserve quantities and values relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the Company's proved reserves proved reserves The quantity of minerals expected to be recoverable under current economic and operating conditions. The amount of proved reserves is important in valuing the stock of a company with significant holdings in natural resources. , the Company's potential reserves from its tertiary operations, forecasted production levels relating to the Company's tertiary operations and overall production levels, estimated capital expenditures for 2006, and other risks and uncertainties detailed in the Company's filings with the Securities and Exchange Commission, including Denbury's most recent reports on Form 10-K and Form 10-Q. These risks and uncertainties are incorporated by this reference as though fully set forth herein. These statements are based on engineering, geological ge·ol·o·gy n. pl. ge·ol·o·gies 1. The scientific study of the origin, history, and structure of the earth. 2. The structure of a specific region of the earth's crust. 3. A book on geology. , 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. |
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