Denbury Resources Announces Second Quarter Results And Significant Increase in Proven CO2 Reserves.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 second quarter 2004 financial and operating results. The Company posted strong earnings for the quarter of $19.4 million, or $0.35 per common share, as compared to earnings of $5.1 million or $0.10 per common share for the second quarter of 2003. Net cash flow provided by operations, a GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). measure, totaled $53.2 million during the second quarter of 2004, as compared to $60.5 million during the second quarter of 2003. 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 for the second quarter of 2004 (before changes in assets and liabilities) was a near-record high, totaling $63.1 million, a 29% increase over the $49.0 million generated in the second quarter of 2003. (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 a 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, which is a non-GAAP measure). Production Production for the quarter was 36,602 BOE/d, virtually the same as production during the prior quarter and 4% higher than the second quarter of 2003 average of 35,050 BOE/d. 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 increased 5% over levels in the prior quarter and 46% when compared to second quarter of 2003 tertiary production, averaging 6,603 Bbls/d in the second quarter of 2004, primarily as a result of production increases at Mallalieu Mallalieu is a surname, and may refer to:
This page or section lists people with the surname Mallalieu. Field. Production from 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 increased 7% over levels in the prior quarter, averaging 9,114 BOE/d, as a result of several recent well completions. Denbury Offshore, Inc., the subsidiary that held the Company's offshore assets Oil and gas facilities, mining and industrial installations, ocean thermal energy conversion facilities, deep water ports, aids to navigation, and nuclear power plants located or in operation seaward of the coastline. , was sold on July July: see month. 20, 2004. Partially offsetting these increases were declines in other areas resulting from property sales and general 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 , the single largest factor being expected depletion at Thornwell Thornwell Orphanage opened in Clinton, South Carolina on October 1, 1875, to ten children orphaned by the American Civil War. It was founded by Reverend William Plumer Jacobs and named for noted theologian James Henley Thornwell. Dr. Field, 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. , which declined
over 1,000 BOE/d from first quarter 2004 production levels.Second Quarter 2004 Financial Results In the second quarter of 2004, revenues increased $18.6 million over second quarter 2003 amounts, primarily as a result of higher commodity prices, partially offset by higher hedge payments. During the second quarter of 2004, the most significant payments on hedges were oil related, primarily for oil swaps put in place at the time of the COHO property acquisition in 2002. Realized commodity prices on 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 basis were at record levels, averaging $35.75 per BOE in the second quarter, as compared to an average of $29.71 per BOE in the second quarter of 2003. NYMEX See New York Mercantile Exchange. NYMEX See New York Mercantile Exchange (NYM). oil prices were 32% higher in the second quarter of 2004 than in the prior year second quarter, and NYMEX natural gas prices were 8% higher. 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 to $7.36 per BOE in the second quarter of 2004 primarily as a result of repairs and maintenance on offshore platforms and higher utility costs, up from $7.23 per BOE in the second quarter of 2003. The increased activity on tertiary operations and general cost inflation in the industry also contributed to the overall increase in operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. per BOE. Production taxes increased in the second quarter of 2004 along with the increase in commodity prices. General and administrative expenses increased, averaging $1.25 per BOE in the second quarter of 2004, up from $1.06 per BOE in the prior year's second quarter. The majority of the increase relates to severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when costs for a portion of the Company's offshore professional and technical staff that were terminated ter·mi·nate v. ter·mi·nat·ed, ter·mi·nat·ing, ter·mi·nates v.tr. 1. To bring to an end or halt: prior to June June: see month. 30, 2004. During 2004, the Company has also incurred additional general and administrative expense associated with the corporate restructure in December December: see month. 2003, the sale of stock by the Texas Pacific Group in March 2004, and additional costs to comply with the requirements of the Sarbanes-Oxley Act See SOX. . 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. an additional $1.6 million of severance and other 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. expenses in the third quarter as a result of the offshore sale. Interest expense decreased on a gross and per BOE basis as a result of lower overall interest rates, primarily related to the 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 Refinancing An extension and/or increase in amount of existing debt. in 2003, and lower average debt levels as a result of the $50 million reduction in debt during 2003. Depreciation, depletion and amortization expense ("DD&A") increased in the second quarter of 2004 to $8.46 per BOE, primarily as a result of the higher percentage of expenditures on offshore properties during 2003 and 2004, which typically have a higher finding and development cost per BOE, and general upward cost revisions for future development costs in the Company's mid-year reserve estimates. The second quarter 2004 DD&A rate is more comparable to the fourth quarter of 2003 DD&A rate of $8.00 per BOE than to the second quarter of 2003 DD&A rate of $7.25 per BOE. The Company incurred $7.1 million of charges in the second quarter of 2004 relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc its oil and natural gas hedges, primarily caused by the early retirement in June 2004 of 20 MMcf/d of its 2004 natural gas hedges related to the Company's offshore production that was sold in July 2004. The Company recognized current income tax expense of $977,000 in the second quarter of 2004 related to state income taxes and alternative minimum taxes due that cannot be offset by the Company's regular tax net loss carryforwards Loss Carryforward An accounting technique with which a company applies net operating losses of the current year to future year's profits in order to reduce tax liability. Notes: or enhanced oil recovery Enhanced Oil Recovery (EOR) is a generic term for techniques for increasing the amount of oil that can be extracted from an oil field. Using EOR, 30-60 %, or more, of the reservoir's original oil can be extracted [1] compared with 20-40% [2] credits. The Company expects to pay approximately $22 million of income taxes in the third quarter related to the offshore sale. Additional CO2 Reserves The Company is in the process of completing one additional CO2 well and one is nearing total depth, both of which are expected to add incremental production capacity and additional reserves. The Company's preliminary estimates are that the first well will add approximately 700 Bcf of additional CO2 reserves, representing a significant increase from the Company's total proved CO2 reserves of 1.6 Tcf at Dec. 31, 2003. The Company expects the second well to add approximately 300 Bcf of additional CO2 reserves. The Company projects that it will have the capability to produce a total of approximately 350 MMcf/d of CO2 after completion of these two wells. 2004 Outlook Denbury's 2004 development and exploration budget remains at its current level of $205 million. Any acquisitions made by the Company will increase these capital budget amounts. Denbury's current total debt (following completion of the offshore sale) is $225 million, with $175 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 adjusted bank borrowing base and approximately $75 million of cash generated from the offshore sale. The Company plans to invest this cash over the next one to two years by increasing its development activity to a level higher than its anticipated cash flow, focusing primarily on its tertiary operations. The Company expects its production during the third quarter of 2004 to be approximately 27,500 BOE/d, excluding any production relating to the offshore operations for the interim period of July 1 through closing of the offshore sale on July 20, 2004. Fourth quarter production is expected to increase to between 28,000 and 28,500 BOE/d. Gareth Roberts Gareth Roberts may refer to:
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 . We are working diligently dil·i·gent adj. Marked by persevering, painstaking effort. See Synonyms at busy. [Middle English, from Old French, from Latin d on our plans for a CO2 pipeline to that part of the state, and hope to commence construction operations in the fourth quarter, with completion anticipated twelve to eighteen months thereafter. Financially, the sale of our offshore assets has made us stronger than we have ever been, allowing us to develop our inventory of CO2 projects without the need to hedge as aggressively as in past years. Our future has never looked better." Conference Call The public is invited to listen to the Company's conference call set for today, July 29, 2004, 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 three and six month periods ended June 30, 2004 and 2003. All production volumes and dollars are expressed on a net revenue interest basis with gas volumes converted at 6:1.
SECOND QUARTER FINANCIAL HIGHLIGHTS
(Amounts in thousands, except per share and unit data)
Three Months
Ended
June 30, Percentage
-----------------
2004 2003 Change
-------- --------
Revenues:
Oil sales 58,529 43,922 + 33%
Gas sales 60,542 50,830 + 19%
CO2 sales and transportation fees 1,580 2,445 - 35%
Loss on settlements of derivative
contracts (18,239) (13,356) + 37%
Interest and other income 432 382 + 13%
-------- --------
Total revenues 102,844 84,223 + 22%
-------- --------
Expenses:
Lease operating expenses 24,530 23,048 + 6%
Production taxes and marketing expense 4,514 3,467 + 30%
CO2 operating costs 209 534 - 61%
General and administrative 4,178 3,376 + 24%
Interest 5,068 6,227 - 19%
Loss on early retirement of debt - 17,629 NA
Depletion, depreciation and accretion 28,161 23,130 + 22%
Amortization of derivative contracts and
other non-cash hedging adjustments 7,146 (751) + 100+%
-------- --------
Total expenses 73,806 76,660 - 4%
-------- --------
Income before income taxes 29,038 7,563 + 100+%
Income tax provision (benefit)
Current income taxes 977 (1,093) + 100+%
Deferred income taxes 8,672 3,527 + 100+%
-------- --------
NET INCOME 19,389 5,129 + 100+%
======== ========
Net income per common share:
Basic 0.35 0.10 + 100+%
Diluted 0.34 0.09 + 100+%
Weighted average common shares:
Basic 54,744 53,815 + 2%
Diluted 57,102 55,337 + 3%
Production (daily - net of royalties)
Oil (barrels) 18,730 18,957 - 1%
Gas (mcf) 107,230 96,558 + 11%
BOE (6:1) 36,602 35,050 + 4%
Unit sales price (including hedges)
Oil (per barrel) 26.56 23.93 + 11%
Gas (per mcf) 5.69 4.56 + 25%
Unit sales price (excluding hedges)
Oil (per barrel) 34.34 25.46 + 35%
Gas (per mcf) 6.20 5.78 + 7%
Three Months
Ended
June 30, Percentage
---------------
2004 2003 Change
------- -------
Non-GAAP Financial Measure (1)
Adjusted or discretionary cash flow from
operations (non-GAAP measure) 63,054 48,989 + 29%
Net change in assets and liabilities
relating to operations (9,844) 11,553 - 100+%
------- -------
Cash flow from operations (GAAP measure) 53,210 60,542 - 12%
======= =======
Oil & gas capital investments 44,049 43,972 NA
CO2 capital investments 6,938 6,469 + 7%
Proceeds from sales of oil and gas
properties 634 1,788 - 65%
BOE data (6:1)
Revenue 35.75 29.71 + 20%
Loss on settlements of derivative
contracts (5.48) (4.19) + 31%
Lease operating costs (7.36) (7.23) + 2%
Production taxes and marketing expense (1.36) (1.08) + 26%
------- -------
Production netback 21.55 17.21 + 25%
CO2 operating cash flow 0.41 0.60 - 32%
General and administrative (1.25) (1.06) + 18%
Net cash interest expense (1.35) (1.75) - 23%
Current income taxes and other (0.42) 0.36 - 100+%
Changes in asset and liabilities (2.96) 3.62 - 100+%
------- -------
Cash flow from operations 15.98 18.98 - 16%
======= =======
(1) See "Non-GAAP Measures" at the end of this report.
SIX MONTH FINANCIAL HIGHLIGHTS
(Amounts in thousands, except per share and unit data)
Six Months Ended
June 30, Percentage
-----------------
2004 2003 Change
-------- --------
Revenues:
Oil sales 113,054 96,135 + 18%
Gas sales 116,253 110,341 + 5%
CO2 sales and transportation fees 2,941 4,634 - 37%
Loss on settlements of derivative
contracts (32,507) (41,041) - 21%
Interest and other income 758 602 + 26%
-------- --------
Total revenues 200,499 170,671 + 17%
-------- --------
Expenses:
Lease operating expenses 47,058 45,450 + 4%
Production taxes and marketing expense 8,581 7,363 + 17%
CO2 operating costs 353 851 - 59%
General and administrative 8,926 7,167 + 25%
Interest 10,149 12,688 - 20%
Loss on early retirement of debt -- 17,629 NA
Depletion, depreciation and accretion 55,485 46,683 + 19%
Amortization of derivative contracts and
other non-cash hedging adjustments 7,964 (2,261) + 100+%
-------- --------
Total expenses 138,516 135,570 + 2%
-------- --------
Income before income taxes 61,983 35,101 + 77%
Income tax provision
Current income taxes 3,096 1,637 + 89%
Deferred income taxes 17,194 9,882 + 74%
-------- --------
Income before cumulative effect of change
in accounting principle 41,693 23,582 + 77%
Cumulative effect of change in accounting NA
principle, net of income taxes of $1,600 -- 2,612
-------- --------
NET INCOME 41,693 26,194 + 59%
======== ========
Net income per common share -- basic:
Income before cumulative effect of change
in accounting principle 0.76 0.44 + 73%
Cumulative effect of change in accounting NA
principle -- 0.05
-------- --------
Net income per common share -- basic 0.76 0.49 + 55%
======== ========
Net income per common share -- diluted:
Income before cumulative effect of change
in accounting principle 0.73 0.42 + 74%
Cumulative effect of change in accounting NA
principle -- 0.05
-------- --------
Net income per common share -- diluted 0.73 0.47 + 55%
======== ========
Six Months Ended
June 30, Percentage
--------------------
2004 2003 Change
---------- ---------
Weighted average common shares:
Basic 54,566 53,728 + 2%
Diluted 56,739 55,186 + 3%
Production (daily -- net of royalties)
Oil (barrels) 19,067 19,259 - 1%
Gas (mcf) 105,344 97,857 + 8%
BOE (6:1) 36,624 35,569 + 3%
Unit sales price (including hedges)
Oil (per barrel) 25.72 24.32 + 6%
Gas (per mcf) 5.61 4.55 + 23%
Unit sales price (excluding hedges)
Oil (per barrel) 32.58 27.58 + 18%
Gas (per mcf) 6.06 6.23 - 3%
Non-GAAP Financial Measure: (1)
Adjusted or discretionary cash flow
from operations (non-GAAP measure) 121,974 96,355 + 27%
Net change in assets and liabilities
relating to operations (15,769) (304) - 100+%
---------- ---------
Cash flow from operations (GAAP
measure) 106,205 96,051 + 11%
========== =========
Oil & gas capital investments 91,962 80,333 + 14%
CO2 capital investments 27,141 13,373 + 100+%
Proceeds from sales of oil and gas
properties 1,146 28,154 - 96%
Cash and cash equivalents 27,940 19,348 + 44%
Total assets 1,081,184 944,685 + 14%
Total long-term debt (excluding
discount) 310,000 335,000 - 7%
Total stockholders' equity 478,107 381,213 + 25%
BOE data (6:1)
Revenue 34.40 32.07 + 7%
Loss on settlements of derivative
contracts (4.88) (6.37) - 23%
Lease operating costs (7.06) (7.06) NA
Production taxes and marketing expense (1.29) (1.15) + 12%
---------- ---------
Production netback 21.17 17.49 + 21%
CO2 operating cash flow 0.39 0.59 - 34%
General and administrative (1.34) (1.11) + 21%
Net cash interest expense (1.34) (1.76) - 24%
Current income taxes and other (0.58) (0.24) + 100+%
Changes in asset and liabilities (2.37) (0.05) + 100+%
---------- ---------
Cash flow from operations 15.93 14.92 + 7%
========== =========
(1) See "Non-GAAP Measures" at the end of this report.
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 Payables Related: Accounts payable . The Company believes that this is important to consider 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 operating costs npl → gastos mpl operacionales , 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 a growing independent oil and gas company. The Company is the largest oil and natural gas operator in Mississippi, owns the largest reserves of 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. 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 onshore Louisiana. 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, including secondary and tertiary recovery operations. 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, 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. , 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 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. |
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion