Denbury Resources Announces Record Production Levels First Quarter 2003 Results.Energy Editors/Business Editors DALLAS--(BUSINESS WIRE)--May 1, 2003 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 2003 financial and operating results. The Company's production increased slightly over the prior quarter's production, averaging 36,093 barrels of oil equivalent per day ("BOE/d") in the first quarter of 2003, the Company's highest quarterly-average to date. The Company posted earnings for the quarter of $21.1 million, or $0.39 per common share, as compared to earnings of $4.5 million, or $0.09 per common share for the first quarter of 2002, with the increase primarily due to higher commodity prices. 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 for the quarter was $35.5 million, as compared to cash flow from operations during the first quarter of 2002 of $12.0 million. Continued Production Increases Denbury's first quarter 2003 average daily production of 36,093 BOE/d was 2% higher than the 35,361 BOE/d production average for the comparable period in 2002 and 1% higher than fourth quarter 2002 production, despite the sale of Laurel Laurel, cities, United States Laurel. 1 Town (1990 pop. 19,438), Prince Georges co., central Md., about halfway between Washington, D.C., and Baltimore; patented in the late 1600s, inc. 1870. Field effective January January: see month. 31, 2003. Production from Laurel Field had been averaging between 1,500 and 1,700 BOE/d since the Company acquired it in August 2002. The Company recognized higher production from its offshore, 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 Louisiana (ləwē'zēăn`ə, l  ē'–), state in the S central United States. It is bounded by Mississippi, with the Mississippi R. and
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. oil recovery properties, with increases there more than
offsetting the lost production from the Laurel Field sale. The
Company's first quarter 2003 production was negatively affected by
a mechanical failure in two of the Company's Louisiana gas wells,
lowering overall production (primarily natural gas) by approximately 500
BOE/d. These two workovers were significant factors in the increase in
the quarter's operating expenses Operating expensesThe amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. 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 . First quarter 2003 production was weighted slightly towards oil, with 54% of production oil and 46% natural gas. The Company's tertiary recovery projects at Little Creek and Mallalieu Mallalieu is a surname, and may refer to:
This page or section lists people with the surname Mallalieu. Fields demonstrated additional response in the first quarter as a result of 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. CO2 injections made possible by the completion of one CO2 well, the Denkmann #1, in December December: see month. 2002 and another CO2 well, the IP 15-4 #1, late in the first quarter of 2003. Total CO2 production increased from around 120 million cubic feet of CO2 per day ("MMcf/d") late in 2002 to approximately 175 MMcf/d by mid-April Noun 1. mid-April - the middle part of April period, period of time, time period - an amount of time; "a time period of 30 years"; "hastened the period of time of his recovery"; "Picasso's blue period" Apr, April - the month following March and preceding May . Oil production from the tertiary projects averaged 4,345 Bbls/d in the first quarter of 2003, a 12% increase over the 2002 fourth quarter average of 3,863 Bbls/d for these projects. During the months of March and April 2003, oil production from Little Creek and Mallalieu was even higher, averaging between 4,500 and 4,750 Bbls/d. First Quarter 2003 Financial Results Commodity prices were significantly higher in the first quarter of 2003 as compared to prices in the first quarter of the prior year. NYMEX See New York Mercantile Exchange. NYMEX See New York Mercantile Exchange (NYM). oil prices averaged almost $34.00 per Bbl and natural gas prices averaged almost $6.00 per Mcf in the first quarter of 2003, as compared to NYMEX averages of around $21.50 per Bbl and $2.50 per Mcf in the first quarter of 2002. On a weighted average price per BOE net to the Company, prices were $18.41 per BOE higher in the first quarter of 2003 than in the comparable period of 2002. However, the Company recognized only a portion of this benefit, as it paid out approximately $8.52 per BOE on its oil and natural gas hedges in the current quarter, as compared to cash receipts of $0.83 per BOE in the prior year quarter, leaving a net realized price increase of approximately $9.06 per BOE. Partially offsetting the higher revenues were increases in several expense items. Lease operating expenses increased from $4.85 per BOE in the first quarter of 2002 to $6.90 per BOE in the first quarter of 2003. The two aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. workovers totaling approximately $850,000 were the biggest source of the increase, although continued high expenses on the properties acquired from COHO, continued expansion of CO2 tertiary projects, which typically have a higher than average cost per BOE, and higher lease fuel costs also contributed to the higher than historical operating costs operating costs npl → gastos mpl operacionales . The Company expects to incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. between $1.8 million and $2.0 million of additional expense in the second quarter of 2003 on the two workovers, which were not completed until late April. The Company anticipates that its lease operating expenses on a per BOE basis will decrease later this year, assuming normal operating parameters. General and administrative expenses also increased, averaging $1.17 per BOE in the first quarter of 2003, up from $1.01 per BOE in the prior year's first quarter. The increase relates to expenses associated with the recent sale of stock by the Texas Pacific Group, higher 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. expenses than in the prior year for items such as engineering fees and audit fees, and an overall increase in personnel and associated expenses. Late in the first quarter, the Company issued $225 million of 7.5% subordinated notes due 2013 and called its existing $200 million principal amount of 9% subordinated notes due 2008. The old notes were retired on April 16th and the refinancing Refinancing An extension and/or increase in amount of existing debt. is expected to save approximately $2.6 million per year in interest expense. As a result of the refinancing, the Company anticipates an $11 million after tax charge in the second quarter of 2003 relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the call premium paid to retire the old notes and the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of unamortized discount on the old notes. The Company recognized current income tax expense of $2.7 million in the first quarter of 2003, as compared to a benefit of $481,000 in the first quarter of 2002. The current income taxes relate to anticipated alternative minimum taxes due for 2003, due to the Company utilizing almost all of its remaining alternative minimum tax loss carryforwards tax loss carryforward See carryforward. in 2002. On January 1, 2003, the Company implemented SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System No.143, "Accounting for Asset Retirement Obligations Asset Retirement Obligations provide for future disposal of assets as required by SFAS 143 [1]. Firms must recognize the ARO liability in the period it was acquired, generally acquisition. ." As a result, the Company recorded a liability of $41.0 million representing the discounted present value of the retirement obligations and an increase to oil and gas properties of $34.4 million. The liability will be accreted to its future value each period and the 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. cost is depreciated Depreciated may refer to:
2003 Outlook Denbury's 2003 development and exploration budget is currently set at $138 million, including approximately $8 million of projects carried over from 2002. Any acquisitions made by the Company will increase these capital budget amounts. During the first quarter of 2003, the Company made two minor acquisitions consisting of incremental interests in two offshore blocks at an aggregate cost of approximately $3.2 million. Denbury's total debt as of May 1, 2003 is approximately $350 million, with $95 million undrawn un·draw tr.v. un·drew , un·drawn , un·draw·ing, un·draws To draw to one side, as a curtain. Adj. 1. undrawn - not represented in a drawing undelineated - not represented accurately or precisely on its recently reaffirmed bank borrowing base of $220 million. Even though the Company added approximately $15 million of additional debt as part of its recent 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". refinancing, the Company still expects to reduce its debt during 2003 to its target of $300 million, based on anticipated cash flow computed using the current commodity prices. At this time, the Company is leaving its targeted 2003 average production level unchanged at 37,500 BOE/d. Gareth Roberts Gareth Roberts may refer to:
The price at which parties to a futures contract agree to transact upon the settlement date. , we expect to generate $50 million to $60 million of excess cash flow above our current $138 million budget. While we may consider a modest increase to our capital expenditure budget of $10 million to $15 million, any remaining excess cash flow will be used to repay debt and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. fund, or partially fund, any potential acquisitions. Most significantly, the production from our tertiary recovery projects is increasing as we were able to increase our CO2 injections with the incremental production from our recently completed CO2 wells. Since these CO2 wells are performing better than anticipated, we are now ahead of schedule on CO2 production. In addition, we have a third CO2 well in progress that has reached total depth and is undergoing completion operations." Conference Call The public is invited to listen to the Company's conference call set for today, May 1, 2003, 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:
Financial and Statistical Data Tables Following are financial highlights for the comparative first quarters ended March 31, 2003 and 2002. All production volumes and dollars are expressed on a net revenue interest basis with gas volumes converted to equivalent barrels at 6:1.
FINANCIAL HIGHLIGHTS
(Amounts in thousands of U.S. dollars)
Three Months
Ended
March 31,
----------------- Percentage
2003 2002 Change
-------- -------- -----------
Revenues:
Oil sales 52,213 27,833 + 88%
Gas sales 59,511 23,077 + 158%
CO2 sales 2,189 1,490 + 47%
Gain (loss) on settlements of
derivative contracts (27,685) 2,636 - 1150%
Interest and other income 220 411 - 46%
-------- -------- ----- -----
Total revenues 86,448 55,447 + 56%
-------- -------- ----- -----
Expenses:
Lease operating expenses 22,402 15,428 + 45%
Production taxes and marketing
expense 3,896 2,614 + 49%
CO2 operating expenses 317 167 + 90%
General and administrative 3,428 2,849 + 20%
Interest 6,461 6,654 - 3%
Depletion and depreciation 23,553 22,926 + 3%
Amortization of derivative contracts
and other
non-cash hedging adjustments (1,510) (1,081) + 40%
Franchise taxes 363 367 - 1%
-------- -------- ----- -----
Total expenses 58,910 49,924 + 18%
-------- -------- ----- -----
Income before income taxes 27,538 5,523 + 399%
Income tax provision (benefit)
Current income taxes 2,730 (481) + 668%
Deferred income taxes 6,355 1,458 + 336%
-------- -------- ----- -----
Income before cumulative effect of a
change in accounting principle 18,453 4,546 + 306%
Cumulative effect on prior years of a
change in accounting principal, net of
income tax expense of $1,600 2,612 - NA
-------- -------- ----- -----
NET INCOME 21,065 4,546 + 363%
======== ======== ===== =====
Net income per common share - basic:
Income before cumulative effect of a
change in accounting principle 0.34 0.09 + 278%
Cumulative effect of a change in
accounting principle 0.05 - NA
-------- -------- -----------
Net income per common share -
basic 0.39 0.09 + 333%
======== ======== ===========
Three Months
Ended
March 31,
----------------- Percentage
2003 2002 Change
-------- -------- -----------
Net income per common share - diluted:
Income before cumulative effect of
a change in accounting principle 0.33 0.08 + 313%
Cumulative effect of a change in
accounting principle 0.05 - NA
-------- -------- -----------
Net income per common share -
diluted 0.38 0.08 + 375%
======== ======== ===========
Weighted average common shares:
Basic 53,639 52,994 + 1%
Diluted 55,049 53,724 + 2%
Production (daily - net of royalties)
Oil (barrels) 19,565 17,740 + 10%
Gas (mcf) 99,170 105,726 - 6%
BOE (6:1) 36,093 35,361 + 2%
Unit sales price (including hedges)
Oil (per barrel) 24.69 17.72 + 39%
Gas (per mcf) 4.54 2.65 + 71%
Unit sales price (excluding hedges)
Oil (per barrel) 29.65 17.43 + 70%
Gas (per mcf) 6.67 2.43 + 174%
Cash flow from operations 35,509 12,032 + 195%
Oil & gas capital investments 36,360 26,276 + 38%
CO2 capital investments 6,904 335 + 1961%
Proceeds from sales of oil and gas
properties 26,366 - NA
Cash and cash equivalents 161,170 14,369 + 1022%
Total assets 1,081,986 764,581 + 42%
Total debt (excluding discount) 475,000 346,000 + 37%
Total stockholders' equity 379,844 338,430 + 12%
BOE data (6:1)
Revenue 34.40 15.99 + 115%
Gain (loss) on settlements of
derivative contracts (8.52) 0.83 - 1127%
Lease operating costs (6.90) (4.85) + 42%
Production taxes and marketing
expense (1.20) (0.82) + 46%
--------- -------- ----------
Production netback 17.78 11.15 + 59%
CO2 operating margin 0.58 0.42 + 38%
General and administrative (1.17) (1.01) + 16%
Net cash interest expense (1.77) (1.76) + 1%
Current income taxes and other (0.83) 0.16 + 619%
Changes in assets and liabilities (3.66) (5.18) - 29%
--------- ------- -----------
Cash flow from operations 10.93 3.78 + 189%
========= ======= ===========
Denbury Resources Inc. (www.denbury.com) is a growing independent oil and gas company. The Company is the largest oil and natural gas operator in 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 , holds key operating acreage onshore Louisiana and has a growing presence in the offshore Gulf of Mexico Noun 1. Gulf of Mexico - an arm of the Atlantic to the south of the United States and to the east of Mexico Golfo de Mexico Atlantic, Atlantic Ocean - the 2nd largest ocean; separates North and South America on the west from Europe and Africa on the east areas. The Company increases the value of acquired properties in its core areas through a combination of exploitation drilling and proven engineering extraction practices. This press release, other than historical financial information, contains forward looking statements that involve risks such as those involved in drilling activity and those due to price volatility, and uncertainties as to drilling results, production levels, commodity prices, and financial results as detailed in the Company's filings with the Securities and Exchange Commission, including its 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 10-Q. These reports are incorporated by reference as though fully set forth herein. These statements are based on assumptions concerning commodity prices, existing market conditions, scheduling, drilling and completion results and costs and engineering 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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