Denbury Resources Announces First Quarter Results.DALLAS -- 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 first quarter 2008 financial and operating results. The Company posted quarterly earnings for the first quarter of 2008 of $73.0 million, or $0.30 per basic common share, 339% higher than first quarter 2007 net income of $16.6 million, or $0.07 per basic common share. The higher net income in the 2008 period was attributable to higher oil prices and higher production levels, partially offset by a $38.7 million ($24.4 million after tax) non-cash fair value charge on the Company's derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. contracts, incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. net cash payments on the same and higher overall expenses. Included in the first quarter of 2007 was a non-cash fair value charge of approximately $35.2 million ($21.4 million after tax). 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 first quarter of 2008 of $186.7 million increased 79% over first quarter 2007 adjusted cash flow from operations of $104.2 million. Net cash flow provided by operations, the GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). measure, totaled $206.3 million during the first quarter of 2008, as compared to $93.3 million for the same measure during the first quarter of 2007. Adjusted cash flow and cash flow from operations differ in that the latter measure includes the changes in receivables, 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 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 to adjusted cash flow from operations, which is the non-GAAP measure). Production Production for the quarter was 44,900 BOE/d, approximately the same as fourth quarter of 2007 production after adjusting for production from our Louisiana natural gas properties, 70% of which were sold in December 2007 and 30% in February 2008, and a 17% increase over the first quarter of 2007 average of 38,305 BOE/d (a 33% increase after adjusting for the Louisiana sale). The sold Louisiana properties produced 5,097 BOE/d in the fourth quarter of 2007 and only 302 BOE/d was recorded in the first quarter of 2008 representing the production prior to closing for the remaining portion of that sale in February. Oil 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. operations averaged 17,156 BOE/d, an increase of 46% over 2007's first quarter tertiary production level, and about the same as fourth quarter 2007 tertiary production levels of 17,428 BOE/d. The Company's tertiary production was about the same as the fourth quarter levels as a result of various operational issues and delays, coupled with normal and expected fluctuations in the forecasted production growth curve. Average 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 increased 84% to 12,801 BOE/d in the first quarter of 2008 as compared to average production of 6,971 BOE/d for the first quarter of 2007. The Barnett production was about the same as fourth quarter 2007 production of 12,729 BOE/d, as expected, as the Barnett production is not expected to fluctuate significantly during 2008 based on the Company's plans to drill between 45 and 50 wells this year. The balance of the Company's other production declined slightly from fourth quarter 2007 levels, as expected. First Quarter 2008 Financial Results Oil and natural gas revenues, excluding any derivative contracts, increased 85% between the respective first quarters as higher commodity prices increased revenue by 67% and the higher production increased revenue by 18%. The Company paid $8.0 million on its derivative contract settlements in the first quarter of 2008 as compared to cash receipts of $8.3 million on derivative contracts during the first quarter of 2007. The $38.7 million non-cash fair value charge to earnings in the first quarter of 2008 and the $35.2 million non-cash fair value charge in the first quarter of 2007 were both primarily attributable to the Company's natural gas swaps for each calendar year entered into the year before and the resultant This article is about the resultant of polynomials. For the result of adding two or more vectors, see Parallelogram rule. For the technique in organ building, see Resultant (organ). In mathematics, the resultant of two monic polynomials decline in value as a result of the increase in natural gas prices during the period. Company-wide oil price differentials (Denbury's net oil price received as compared to NYMEX See New York Mercantile Exchange. NYMEX See New York Mercantile Exchange (NYM). prices) improved slightly during the first quarter of 2008 over the fourth quarter of 2007 levels, averaging $6.50 per Bbl below NYMEX as compared to $7.27 per Bbl below NYMEX during the fourth quarter of 2007. However, the differentials were both significantly worse than the $3.73 per Bbl differential in the first quarter of 2007, as oil differentials were unusually low during the first three quarters of 2007 due to anomalies in the crude oil market during that time. The Company's average NYMEX natural gas differential was a negative variance The discrepancy between what a party to a lawsuit alleges will be proved in pleadings and what the party actually proves at trial. In Zoning law, an official permit to use property in a manner that departs from the way in which other property in the same locality of $0.90 per Mcf in the first quarter of 2008 as compared to a negative variance of $0.51 per Mcf during the first quarter of 2007 and a negative variance of $0.55 per Mcf during the fourth quarter of 2007. This negative variance is partially due to natural gas prices which increased during the first quarter of 2008. Since most of the Company's natural gas is sold on an index price that is set near the first of each month and fixed for the entire month, variances become more favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. if NYMEX natural gas prices decline throughout the quarter. Further, the sale of the Company's Louisiana natural gas properties also contributed to a higher negative variance as the sold properties typically received above NYMEX pricing. 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 between the comparable first quarters on both a 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 basis and on an absolute dollar basis. Lease operating expenses averaged $16.15 per BOE in the first quarter of 2008, up from $14.66 per BOE in the first quarter of 2007, and an average of $13.78 per BOE during the fourth quarter of 2007. The increase over prior year's first quarter level was primarily a result of (i) the Company's increasing emphasis on tertiary operations with their inherently higher operating costs operating costs npl → gastos mpl operacionales , (ii) higher overall industry and personnel costs, and (iii) additional lease payments for certain of our new tertiary production facilities. A significant portion of the increased cost on a per BOE basis also resulted from the sale of the Louisiana natural gas properties. If the sold properties were excluded from the first quarter of 2007 results, the Company's operating costs during that period would have been approximately $1.41 per BOE higher than as reported, or $16.07 per BOE, more in line with the current quarter results. Historically, the Company expensed all costs associated with injecting CO2 used in its tertiary operations. Beginning January 1, 2008, the Company began capitalizing injection costs in fields that had not yet seen an oil production response to the CO2 injections. After a production response occurs, all subsequent injection costs will be expensed. Had we continued with the prior accounting methodology of expensing all tertiary injectant in·jec·tant n. A substance injected, as into the skin. costs, we would have expensed an additional $2.9 million in the first quarter of 2008, or approximately $0.70 per BOE, as there were significant injectant costs during the period in fields without production, primarily the two new tertiary floods at Tinsley and Lockhart Crossing Fields. During the first quarter of 2007, the accounting methodology was not material as only $116,000 would have been capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. under the new procedure. Production taxes and marketing expenses generally change in proportion to production volumes and commodity prices, the primary reason for the increase in the first quarter of 2008. General and administrative expenses increased 18% on a BOE basis between the two first quarter periods, averaging $3.92 per BOE in the first quarter of 2008, up from $3.32 per BOE in the prior year's first quarter. The majority of the increase relates to higher personnel related costs as a result of salary increases and continued growth in the Company's total number of employees. The Company's average debt level was 25% higher in the first quarter of 2008 as compared to debt levels in the first quarter of 2007. Because of the significant expenditures made during 2006 and 2007 on unevaluated properties, the Company capitalized $7.3 million of interest expense in the first quarter of 2008 related to these unevaluated properties (including CO2 pipelines under construction), as compared to $4.0 million during the first quarter of 2007, more than offsetting the higher debt levels and reducing the Company's overall interest expense between the two periods by 19%. 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 $8.8 million (21%) in the first quarter of 2008 as compared to DD&A in the prior year first quarter. The DD&A rate on oil and natural gas properties in the first quarter of 2008 was $11.00 per BOE, up from $10.64 per BOE in the prior year first quarter, and up slightly from the $10.96 per BOE rate during the fourth quarter of 2007. No incremental tertiary 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. were booked during the first quarter of 2008. 2008 Outlook The Company reaffirms its production guidance for 2008 of 49,000 BOE/d. This production target represents a 25% increase in production over the Company's 2007 production levels after adjusting for the Louisiana property sale. Production from the Company's tertiary operations is expected to increase from a 2007 average of 14,767 BOE/d to a projected 2008 range between 22,000 BOE/d and 25,000 BOE/d, a 49% to 69% increase, although based on production rates to date during 2008, the Company currently expects the annual tertiary production to be at the lower end of this range. Denbury's 2008 development and exploration budget remains at approximately $900 million, of which approximately 72% is related to tertiary operations. Any acquisitions made by the Company would be in addition to these current capital budget amounts. Denbury's total debt (principal amount excluding capital leases) as of April 30, 2008 was approximately $656 million, consisting of $525 million of subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". and $131 million of bank debt. Gareth Roberts Gareth Roberts may refer to:
Conference Call The public is invited to listen to the Company's conference call set for today, May 1, 2008 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 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:
Financial and Statistical Data Tables Following are financial highlights for the comparative first quarters ended March 31, 2008 and 2007. All production volumes and dollars are expressed on a net revenue interest basis with gas volumes converted at 6:1. [TABLE OMITTED] [TABLE OMITTED] 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 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. Denbury Resources Inc. (www.denbury.com) is a growing independent oil and natural gas company. The Company 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 significant operating acreage in the Barnett Shale play near Fort Worth, Texas Fort Worth is the fifth-largest city in the state of Texas, 18th-largest city in the United States[1], and voted one of "America’s Most Livable Communities. , 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 and Alabama, and properties in Southeast Texas Southeast Texas is a subregion of East Texas located in the southeast corner of the U.S. state of Texas. The subregion is geographically centered around the Houston–Sugar Land–Baytown and Beaumont–Port Arthur metropolitan areas. . The Company's goal is to increase the value of acquired properties through a combination of exploitation, drilling and proven engineering extraction practices, with its most significant emphasis relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc tertiary recovery operations Operations conducted to search for, locate, identify, rescue, and return personnel, sensitive equipment, or items critical to national security. . This press release, other than historical financial information, contains forward looking statements that involve risks and uncertainties including expected reserve quantities and values relating to the Company's proved reserves, the Company's potential reserves from its tertiary operations, forecasted 2008 production levels relating to the Company's tertiary operations and overall production, estimated capital expenditures for 2008 or future years, 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 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. and Form 10-Q Form 10-Q See 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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