Denbury Resources Announces Record Quarterly Earnings and Cash Flow Significant Increases in Estimated Proved Reserve.Business Editors DALLAS--(BUSINESS WIRE)--Aug. 3, 2000 Denbury Resources Inc. (NYSE NYSE See: New York Stock Exchange :DNR See dynamic noise reduction and domain name resolver. ) (TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :DNR) ("Denbury" or the "Company") today announced its highest quarterly earnings and cash flow in its ten year history. Second Quarter Results Denbury posted a quarterly profit of $13.6 million ($0.30 per share) for the second quarter of 2000, a 27 fold increase from second quarter 1999 net income of $492,000 ($0.01 per share). 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 (excluding the changes in working capital items) for the current quarter was also a record quarterly high at $21.3 million ($0.47 per share), a 223% increase from second quarter 1999 cash flow of $6.6 million ($0.16 per share). Second quarter 2000 results were 18% higher than first quarter 2000 net income of $11.5 million and 9% higher than first quarter cash flow of $19.6 million. The improved financial results were primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the strong oil and natural gas prices and the fifth consecutive quarterly increase in production. Production for the second quarter of 2000 averaged 19,580 barrels of oil equivalent per day ("BOE/d"), a 22% increase from the second quarter of 1999 average of 16,013 BOE/d and a 2% increase from the prior quarter average of 19,121 BOE/d. Reserves Up Since 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. 1999 As of June June: see month. 30, 2000, the engineering firm of DeGolyer and MacNaughton prepared a reserve report for the Company on its four largest fields, Heidelberg Heidelberg (hī`dəlbĕrkh), city (1994 pop. 139,430), Baden-Württemberg, SW Germany, picturesquely situated on the Neckar River. Manufactures include machinery, precision instruments, leather goods, and tobacco and wood products. , Eucutta, Little Creek and Lirette, which as of December December: see month. 31, 1999 comprised 78% of the Company's total value on both a 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 and PV10 (estimated future net revenues discounted at 10%) basis. For comparative purposes, the June 30, 2000 reserve report was prepared using the same unescalated price scenario A scenario (from Italian, that which is pinned to the scenery) is a synthetic description of an event or series of actions and events. In the Commedia dell'arte used in the December 31, 1999 SEC report which was based on a NYMEX See New York Mercantile Exchange. NYMEX See New York Mercantile Exchange (NYM). oil price of $25.60 per barrel barrel: see English units of measurement. ("Bbl") and a NYMEX natural gas price of $2.12 per million British thermal units British thermal unit, abbr. Btu, unit for measuring heat quantity in the customary system of English units of measurement, equal to the amount of heat required to raise the temperature of one pound of water at its maximum density [which occurs at a temperature of 39. ("MMBtu"). Using these prices, following are the comparative values of 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. at December 31, 1999 and June 30, 2000 for these four fields:
Jan. to
June, 2000
December 31, 1999 June 30, 2000 Production
------------------ ----------------- ----------
Field MBOE PV10 (000s) MBOE PV10 (000s) (MBOE)
------------ ------- -------- ------ -------- -------
Heidelberg 32,789 $238,192 47,470 $270,475 1,236
Eucutta 4,902 41,672 6,303 52,905 401
Little Creek 6,146 58,440 8,505 86,554 353
Lirette 2,890 21,027 2,062 14,736 240
------- --------- ------- --------- -------
Four Field Total 46,727 $359,331 64,340 $424,670 2,230
======= ========= ======= ========= =======
DeGolyer and MacNaughton noted that the increases in reserves could be attributed to the classification of reserves as proved due to the positive performance of the waterflood Wa´ter`flood` n. 1. A flood of water; an inundation. at Heidelberg, and the expansion and performance of the carbon dioxide carbon dioxide, chemical compound, CO2, a colorless, odorless, tasteless gas that is about one and one-half times as dense as air under ordinary conditions of temperature and pressure. flood flood, in hydrology flood, inundation of land by the rise and overflow of a body of water. Floods occur most commonly when water from heavy rainfall, from melting ice and snow, or from a combination of these exceeds the carrying capacity of the river at Little Creek. Some of these reserves had been previously classified as probable PROBABLE. That which has the appearance of truth; that which appears to be founded in reason. . Other additions are the result of new completions at Eucutta East and Heidelberg. The PV10 value of these same four fields using unescalated oil and natural gas prices as of June 30, 2000 was $657.8 million based on a NYMEX oil price of $32.50 per barrel and a NYMEX natural gas price of $4.46 per MMBtu. Operational Highlights Product prices were significantly higher during 2000, as compared to 1999, with an average net realized unhedged oil price of $24.26 per Bbl for the second quarter of 2000 as compared to an average of $12.36 per Bbl in the second quarter of 1999. The net realized unhedged oil price also increased $0.34 per Bbl between the first and second quarters of 2000 even though the average NYMEX oil price decreased $0.07 per Bbl, primarily as a result of improved oil contracts. The Company's average net unhedged natural gas price was $3.54 per thousand cubic feet ("Mcf") for the second quarter of 2000 as compared to an average of $2.22 per Mcf in the second quarter of 1999 and $2.63 per Mcf for the prior quarter. The Company recorded a loss of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $4.7 million during the second quarter of 2000 on its hedging hedging, in commerce, method by which traders use two counterbalancing investment strategies so as to minimize any losses caused by price fluctuations. It is generally used by traders on the commodities market. activities, which lowered its average price received per Bbl by $2.15 and its average price received per Mcf by $0.71. The Company's hedging positions were unchanged from the first quarter. Production increased for the fifth consecutive quarter with average daily production of 19,580 BOE/d, a 22% increase from the second quarter of 1999 and a 2% increase from the prior quarter. The production at Heidelberg Field 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 , the Company's largest field, increased for the tenth Tenth can mean: In mathematics:
In addition, three gas wells were drilled offshore during the quarter, bringing total capital expenditures for the quarter to $21.9 million. The total capital expenditures for the six months ended June 30, 2000 totaled $38.1 million, $2.8 million less than the cash flow generated from operations for the same period. Bank debt was reduced by $4.0 million during the second quarter with these excess funds generated from operations and from other working capital. 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 $3.5 million (63%) during the second quarter of 2000, as compared to the second quarter of 1999, due to the addition of Little Creek Field in September September: see month. 1999 (a 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 operation which has higher operating expenses than the Company average) and increased operating expenses at Heidelberg Field. Expenses at Heidelberg increased due to the expansion of the waterflood activities in 1999 and 2000, increased workover expenses and wells added as a result of the drilling activity during the past twelve months. Production taxes increased 87% between the two respective quarters along with the increase in the commodity prices. Most expenses either decreased or were relatively unchanged between the first and second quarters of 2000, with the most significant decrease occurring in depreciation and 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 expense ("DD&A"). The DD&A rate decreased for the second quarter to $4.21 per BOE, bringing the six month average to $4.35 per BOE, down from the first quarter average of $4.50 per BOE. This decrease is primarily a result of the 19.8 MMBOE MMBOE Million Barrels of Oil Equivalent (energy and petroleum industry) increase in proved reserves since December 31, 1999 (including the 2.2 MMBOE produced during the first six months of 2000) on the Company's four largest fields as evaluated by the independent engineering firm of DeGolyer and MacNaughton. Outlook The Company's current development and exploration budget for the last half of 2000 is $33 million. Any acquisitions made by the Company will be in addition to this base capital budget and will be funded by the Company's available bank credit line of $86.5 million as of June 30, 2000. Management expects that production growth will continue in the second half of the year, particularly for natural gas, as production is expected to commence late in the year from two projects in the 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 . "Assuming favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. oil and natural gas prices, I am confident that we can continue to achieve predictable increases in production as the cornerstone cornerstone Ceremonial building block, dated or otherwise inscribed, usually placed in an outer wall of a building to commemorate its dedication. Often the stone is hollowed out to contain newspapers, photographs, or other documents reflecting current customs, with a view to of our strategy for long term increases in stockholder value," stated Gareth Roberts Gareth Roberts may refer to:
tr.v. max·i·mized, max·i·miz·ing, max·i·miz·es 1. To increase or make as great as possible: shareholder value and the stock price for the benefit for all stockholders." Conference Call You are invited to listen to our conference call that 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 on Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , August 4, 2000 at 10:00 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 may be accessed 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. Following is a table of financial highlights for the respective three and six month periods ended June 30, 2000 and June 30, 1999. All dollar amounts are in U.S. dollars and production volumes and dollars are expressed on a net revenue interest basis with gas volumes converted to equivalent barrels at 6:1 ("BOE").
FINANCIAL HIGHLIGHTS
(Amounts in thousands of U.S. dollars)
Three Months Ended
June 30, Percentage
2000 1999 Change
------- ------- ------------
Revenues:
Oil sales 29,801 12,444 + 139%
Gas sales 7,384 5,414 + 36%
Interest and other income 365 370 - 1%
------ ------ ---------
Total revenues 37,550 18,228 + 106%
------ ------ ---------
Expenses:
Operating costs 9,104 5,601 + 63%
Production taxes 1,654 886 + 87%
General and administrative 1,903 1,669 + 14%
Interest 3,610 3,820 - 5%
Depletion and depreciation 7,505 5,610 + 34%
Franchise taxes 151 150 N/A
------ ------ ---------
Total expenses 23,927 17,736 + 35%
------ ------ ---------
Income (loss) before income taxes 13,623 492 + 2669%
Income tax provision 20 -- N/A
------ ------ ---------
NET INCOME (LOSS) 13,603 492 + 2665%
====== ====== =========
Net income (loss) per common
share:
Basic 0.30 0.01 + 2900%
Diluted 0.30 0.01 + 2900%
Weighted average common shares
outstanding:
Basic 45,799 41,407 + 11%
Diluted 46,099 41,475 + 11%
Production (daily - net of
royalties)
Oil (barrels) 14,809 11,541 + 28%
Gas (mcf) 28,630 26,828 + 7%
BOE (6:1) 19,580 16,013 + 22%
Unit sales price
Oil (per barrel) 22.11 11.85 + 87%
Gas (per mcf) 2.83 2.22 + 27%
Cash flow from operations (1) 21,340 6,598 + 223%
Cash flow per common share: (2)
Basic 0.47 0.16 + 194%
Diluted 0.46 0.16 + 188%
Oil & gas capital investments 21,874 12,912 + 69%
Total debt 148,500 142,500 + 4%
Stockholders' equity 98,173 64,781 + 52%
BOE data (6:1)
Revenue 20.87 12.26 + 70%
Operating costs (5.11) (3.84) + 33%
Production taxes (0.93) (0.61) + 52%
------ ------ ---------
Production netback 14.83 7.81 + 90%
General and administrative (1.15) (1.25) - 8%
Net cash interest expense (1.69) (2.22) - 24%
Other (0.01) 0.19 N/A
------ ------ ----------
Cash flow 11.98 4.53 + 164%
====== ====== ==========
(1) Exclusive of the net change in non-cash working capital
balances
(2) Cash flow from operations excluding change in working capital
balances divided by average common shares outstanding.
Six Months Ended
June 30, Percentage
2000 1999 Change
------- ------ ---------
Revenues:
Oil sales 58,190 20,976 + 177%
Gas sales 14,197 11,585 + 23%
Interest and other income 930 731 + 27%
------ ------ ---------
Total revenues 73,317 33,292 + 120%
------ ------ ---------
Expenses:
Operating costs 18,136 10,913 + 66%
Production taxes 3,311 1,429 + 132%
General and administrative 3,875 3,560 + 9%
Interest 7,218 8,678 - 17%
Depletion and depreciation 15,330 10,945 + 40%
Franchise taxes 289 304 - 5%
------ ------ ---------
Total expenses 48,159 35,829 + 34%
------ ------ ---------
Income (loss) before income
taxes 25,158 (2,537) N/A
Income tax provision 40 -- N/A
------ ------ ---------
NET INCOME (LOSS) 25,118 (2,537) N/A
====== ====== =========
Net income (loss) per common
share:
Basic 0.55 (0.07) N/A
Diluted 0.55 (0.07) N/A
Weighted average common shares
outstanding:
Basic 45,759 34,145 + 34%
Diluted 45,885 34,145 + 34%
Production (daily - net of
royalties)
Oil (barrels) 14,595 10,914 + 34%
Gas (mcf) 28,535 28,812 - 1%
BOE (6:1) 19,351 15,716 + 23%
Unit sales price
Oil (per barrel) 21.91 10.62 + 106%
Gas (per mcf) 2.73 2.22 + 23%
Cash flow from operations (1) 40,902 9,095 + 350%
Cash flow per common share: (2)
Basic 0.89 0.27 + 230%
Diluted 0.89 0.27 + 230%
Oil & gas capital investments 38,104 19,390 + 97%
BOE data (6:1)
Revenue 20.55 11.44 + 80%
Operating costs (5.15) (3.84) + 34%
Production taxes (0.94) (0.50) + 88%
------ ------ ---------
Production netback 14.46 7.10 + 104%
General and administrative (1.18) (1.36) - 13%
Net cash interest expense (1.66) (2.65) - 37%
Other (0.01) 0.11 N/A
------ ------ ---------
Cash flow 11.61 3.20 + 263%
====== ====== =========
(1) Exclusive of the net change in non-cash working capital
balances
(2) Cash flow from operations excluding change in working capital
balances divided by average common shares outstanding.
Denbury is an independent oil and gas company with its primary operations in the states of Mississippi and Louisiana Louisiana (ləwē'zēăn`ə, l  ē'–), state in the S central United States. It is bounded by Mississippi, with the Mississippi R. .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 budgeted capital expenditures, expected production and financial results and other risks and uncertainties detailed in the Company's filings with the Securities and Exchange Commission, including the reports on Form 10-Q Form 10-Q See 10-Q. . These reports are incorporated by this reference as though fully set forth herein. These statements are based on assumptions concerning commodity prices, drilling results and production costs 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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