Denbury Resources Announces Third Quarter 2002 Results.Business/Energy Editors DALLAS--(BUSINESS WIRE)--Nov. 5, 2002 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 third quarter 2002 financial and operating results. The Company posted earnings for the quarter of $13.5 million, or $0.25 per common share, just slightly less than the comparative prior year quarter of $13.9 million, or $0.27 per common 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 for the quarter (excluding the changes in assets and liabilities) was $44.2 million, or $0.83 per common share, as compared to cash flow for the third quarter of 2001 of $48.7 million, or $0.93 per common share. The slightly lower results in 2002 can be primarily attributed to (i) higher hedging gains in the third quarter of 2001 related to the price floors purchased for the Matrix acquisition, (ii) lower than anticipated production in the third quarter of 2002 due to production shut-ins related to Tropical Storm tropical storm n. A cyclonic storm having winds ranging from approximately 48 to 121 kilometers (30 to 75 miles) per hour. tropical storm Isidore Isidore (also Isidor) is a male name of Greek origin ("Gift of Isis"). A number of people have gone under the name Isidore:
Production Denbury's third quarter 2002 average daily production of 35,506 BOE/d was 1% higher than the 35,112 BOE/d average for the comparable period in 2001, and approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. the same as the 2002 second quarter's average of 35,526 BOE/d. The properties from the COHO acquisition, which closed in August 2002, added approximately 1,230 BOE/d to the third quarter of 2002 average production, but this increase was offset by the losses in production due to Tropical Storm Isidore. The shut-ins of primarily offshore natural gas properties also affected the balance of Denbury's oil and natural gas production slightly, with third quarter 2002 production averaging 53% oil and 47% natural gas. Production from our CO2 properties was up 60% year over year, but down 9% from the second quarter of 2002 level. Production on these properties declined slightly to 3,895 BOE/d for the third quarter of 2002 from the second quarter of 2002 average of 4,278 BOE/d due to a temporary lack of deliverability of CO2 and facility maintenance work performed at Little Creek Field during the quarter, which required the field to be shut-in shut-in n. A person confined indoors by illness or disability. adj. 1. Confined to a home or hospital, as by illness. 2. Disposed to avoid social contact; excessively withdrawn or introverted. for a few days. Production had begun to rebound rebound (rē´bownd), n/v 1. a recovery from illness. n 2. an outbreak of fresh reflex activity after withdrawal of a stimulus rebound adjective by September September: see month. as additional CO2 volumes became available. During the third quarter of 2002 the Company added additional compression equipment for its CO2 production and drilled an additional CO2 well which is expected to commence production in late November November: see month. or early December December: see month. . By 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. , the Company expects to be able to increase its daily CO2 production from the third quarter of 2002 average of 112 MMcf/d to around 160 MMcf/d (September 2002 averaged 121 MMcf/d with the additional compression). The Company plans to commence the drilling of another CO2 well immediately following the completion of the current one, with two to three more wells tentatively ten·ta·tive adj. 1. Not fully worked out, concluded, or agreed on; provisional: tentative plans. 2. Uncertain; hesitant. scheduled for 2003. Third Quarter 2002 Financial Results Oil and natural gas revenues increased $6.6 million, or 10%, between the comparable third quarters, primarily due to higher realized commodity prices. On 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, our net realized commodity prices were 9% higher in the third quarter of 2002 than in the third quarter of 2001, even though NYMEX See New York Mercantile Exchange. NYMEX See New York Mercantile Exchange (NYM). oil prices were up only 5% and NYMEX natural gas prices were up 9%. This was possible because the Company's net realized oil price discount to NYMEX was lower than historical averages as a result of certain oil indices and prices. The Company is unable to predict the movement of these indices, but would expect that its oil price discount to NYMEX would increase in the future to a level more in line with historical averages. The Company's oil price discount did increase during the third quarter, after a historically low price differential in the second quarter of 2002. However, in spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite higher oil and natural gas revenues, total revenues were almost the same in the comparable third quarters due to the large gain from natural gas hedges ($7.2 million) in the third quarter of 2001, as compared to a small loss primarily on oil hedges ($218,000) in the third quarter of 2002. Between the respective third quarters, 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 20% on a per BOE basis, primarily due to increased operating expenses on the properties acquired from COHO and additional facility maintenance work performed at Little Creek Field during the quarter. Production taxes and marketing expenses decreased 11% on a per BOE basis primarily due to a reduction in Louisiana Louisiana (ləwē'zēăn`ə, l  ē'–), state in the S central United States. It is bounded by Mississippi, with the Mississippi R. natural gas severance tax severance taxn. A tax imposed by a state on the extraction of natural resources, such as oil, coal, or gas, that will be used in other states. rates effective July July: see month. 1, 2002. General and administrative expenses increased 6% on a per BOE basis between the respective quarters, as a result of higher personnel costs resulting from the Matrix and COHO acquisitions, and a lower percentage of overhead allocated to operations as a result of the lower capital budget and less drilling activity in 2002 as compared to 2001. Net cash interest expense decreased 3% on a per BOE basis in 2002, in spite of higher debt levels due to the Matrix and COHO acquisitions, as a result of higher interest and other income in 2002 and a higher percentage of non-cash interest expense following the issuance of $75 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". at a discount in August 2001. With the addition of the properties acquired in the COHO acquisition, the DD&A rate for the third quarter of 2002 dropped by $0.30 per BOE, from the $7.35 per BOE average rate during the first half of 2002, to reflect the lower cost per barrel of the properties acquired in the COHO acquisition. For the comparative nine month periods, the DD&A rate per BOE was higher in 2002 primarily as a result of the Matrix acquisition in July 2001. Outlook Denbury's 2002 development and exploration budget is currently set at $118 million, (including approximately $6 million of 2001 projects carried over to 2002), of which approximately $83.2 million has been spent through September 30. The Company is in the process of finalizing its 2003 development budget, which is projected to be about $130 million. In August 2002, the Company acquired COHO Energy Inc.'s Gulf Coast properties auctioned in the U.S. Bankruptcy Court bankruptcy court n. the specialized Federal court in which bankruptcy matters under the Federal Bankruptcy Act are conducted. There are several bankruptcy courts in each state, and each one's territory covers several counties. in Dallas, Texas “Dallas” redirects here. For other uses, see Dallas (disambiguation). The City of Dallas (pronounced [ˈdæl.əs] or [ˈdæl. , which included nine fields, eight of which are located 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 and one in Texas. The net purchase price, adjusted for interim cash flow from the June June: see month. 1, 2002 effective date, and purchase adjustments to date, was $48.2 million. As previously announced, the Company's initial estimates indicate the acquisition includes net proven reserves of approximately 14.4 million barrels of oil, with current production, net to the Company, of between 4,000 and 4,500 barrels of oil per day. The Company is pursuing selling 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. , Bentonia and Glazier fields, three of the acquired COHO fields, along with some of its other minor properties before year-end 2002, assuming that, in the Company's opinion, the prices bid for the properties are adequate. The estimated aggregate 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. on the fields that may be sold is approximately 8.0 million barrels with current production of approximately 2,300 BOE/d. The Company currently estimates that these sales will produce net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of as much as $45 million, depending on the level of interest, commodity prices at the time, and the bids that it obtains. The Company plans to use any proceeds that it obtains from property sales to reduce its bank debt. Denbury's total debt is currently $375 million ($200 million of subordinated debt and $175 million of bank debt), with $45 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 bank borrowing base of $220 million. In September 2002, the maturity date of the Company's bank credit line was extended from December 2003 to April 2006. The borrowing base remained the same as the Company does not anticipate needing the 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. borrowing capacity as it plans to reduce debt during the next several months. Due to Hurricane Lili This article is about the Atlantic hurricane in 2002. For other storms of the same name, see Hurricane Lili (disambiguation) Hurricane Lili was a powerful hurricane during the 2002 Atlantic hurricane season that caused damage across the Caribbean and into Louisiana. in early October October: see month. and the projected effect and timing of prospective property sales, the Company is expecting its fourth quarter production to be around 37,000 BOE/d, a 6% increase over the prior year's fourth quarter production. Were it not for the hurricane hurricane, tropical cyclone in which winds attain speeds greater than 74 mi (119 km) per hr. Wind speeds reach over 190 mi (289 km) per hr in some hurricanes. , the Company's production projection projection, in psychology: see defense mechanism. See rear-projection TV, front-projection TV and LCD panel. (theory) projection - In domain theory, a function, f, which is (a) idempotent, i.e. would be at least 1,500 BOE/d higher. Based on this forecasted average for the fourth quarter, the Company's average production for 2002 will be approximately 15% higher than 2001 average production levels. Gareth Roberts Gareth Roberts may refer to:
Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. tertiary development plan for those fields in Southwest Southwest or south west is the ordinal direction halfway between south and west, the opposite of northeast. Southwest or south west may also refer to:
n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that our property sales will be completed by year-end, allowing us to end 2002 with higher production and reserves than the prior year but with lower debt, consistent with our primary goal of increasing net asset value per share. Our development budget for 2003, preliminarily set at $130 million, should be considerably less than cash flow, assuming current prices hold, and should allow us to reduce our debt to our target of $300 million. Details of next year's development budget will be finalized See finalization. in the next few weeks, as soon as we have finished picking the best projects out of about $250 million of opportunities identified by our staff." Conference Call The public is invited to listen to the Company's conference call set for today, November 5, 2002, at 9:00 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 respective three and nine month periods ended September 30, 2002 and September 30, 2001. 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.
FINANCIAL HIGHLIGHTS
(Amounts in thousands of U.S. dollars)
Three Months
Ended
September 30,
----------------- Percentage
2002 2001 Change
-------- -------- ----------
Revenues
Oil sales 42,372 34,442 + 23%
Gas sales 29,781 31,112 - 4%
CO2 sales 2,182 1,455 + 50%
Gain (loss) on settlements of derivative
contracts (218) 7,217 - 103%
Interest and other income 409 92 + 345%
-------- -------- ----------
Total revenues 74,526 74,318 + - %
-------- -------- ----------
Expenses
Lease operating costs 17,714 14,671 + 21%
Production taxes and marketing expense 2,969 3,292 - 10%
CO2 operating costs 431 373 + 16%
General and administrative 2,692 2,519 + 7%
Interest 6,860 6,330 + 8%
Depletion and depreciation 23,031 22,694 + 1%
Amortization of derivative contracts and
other non-cash hedging adjustments (1,133) 1,969 - 158%
Franchise taxes 342 330 + 4%
-------- -------- ----------
Total expenses 52,906 52,178 + 1%
-------- -------- ----------
Income before income taxes 21,620 22,140 - 2%
Income tax provision (benefit)
Current income taxes 20 (1,500) + 101%
Deferred income taxes 8,141 9,692 - 16%
-------- -------- ----------
NET INCOME 13,459 13,948 - 4%
======== ======== ==========
Net income per common share
Basic 0.25 0.27 - 7%
Diluted 0.25 0.26 - 4%
Weighted average common shares
Basic 53,354 52,169 + 2%
Diluted 54,562 53,154 + 3%
Production (daily - net of royalties)
Oil (barrels) 18,930 16,877 + 12%
Gas (mcf) 99,452 109,406 - 9%
BOE (6:1) 35,506 35,112 + 1%
Three Months
Ended
September 30,
--------------- Percentage
2002 2001 Change
------- ------- ----------
Unit sales price (including hedges)
Oil (per barrel) 24.18 22.18 + 9%
Gas (per mcf) 3.26 3.81 - 14%
Unit sales price (excluding hedges)
Oil (per barrel) 24.33 22.18 + 10%
Gas (per mcf) 3.25 3.09 + 5%
Cash flow from operations (1) 44,177 48,670 - 9%
Cash flow per common share (2)
Basic 0.83 0.93 - 11%
Diluted 0.81 0.92 - 12%
Oil & gas capital investments 77,418 193,716 - 60%
CO2 capital investments 5,459 2,982 + 83%
Cash 22,924 23,737 - 3%
Working capital
(excluding deferred taxes
and derivatives) 19,400 7,427 + 161%
Total assets 862,748 795,765 + 8%
Total long-term debt (excluding discount) 375,000 320,870 + 17%
Total stockholders' equity 358,934 355,441 + 1%
BOE data (6:1)
Revenue 22.09 20.29 + 9%
Gain (loss) on settlements of derivative
contracts (0.07) 2.23 - 103%
Lease operating costs (5.43) (4.54) + 20%
Production taxes and marketing expense (0.91) (1.02) - 11%
------- ------- --------
Production netback 15.68 16.96 - 8%
CO2 operating cash flow 0.54 0.34 + 59%
General and administrative expense (0.93) (0.88) + 6%
Net cash interest expense (1.77) (1.82) - 3%
Current income taxes and other - 0.47 N/A
------- ------- --------
Cash flow from operations (1) 13.52 15.07 - 10%
======= ======= ========
(1) Excluding the changes in assets and liabilities.
(2) Cash flow from operations excluding the changes in assets and
liabilities divided by average common shares outstanding.
FINANCIAL HIGHLIGHTS
(Amounts in thousands of U.S. dollars)
Nine Months Ended
September 30,
------------------- Percentage
2002 2001 Change
--------- --------- ----------
Revenues
Oil sales 107,608 104,198 + 3%
Gas sales 86,569 104,794 - 17%
CO2 sales 5,568 3,738 + 49%
Gain on settlements of derivative
contracts 2,430 7,835 - 69%
Interest and other income 1,251 340 + 268%
--------- --------- ----------
Total revenues 203,426 220,905 - 8%
--------- --------- ----------
Expenses
Lease operating costs 50,266 39,558 + 27%
Production taxes and marketing expense 8,880 8,432 + 5%
CO2 operating costs 960 708 + 36%
General and administrative 8,474 6,924 + 22%
Interest 20,086 15,575 + 29%
Depletion and depreciation 70,162 47,687 + 47%
Amortization of derivative contracts
and other non-cash hedging adjustments (3,226) 5,833 - 155%
Franchise taxes 1,070 905 + 18%
--------- --------- ----------
Total expenses 156,672 125,622 + 25%
--------- --------- ----------
Income before income taxes 46,754 95,283 - 51%
Income tax provision (benefit)
Current income taxes (428) 900 - 148%
Deferred income taxes 15,679 34,355 - 54%
--------- --------- ----------
NET INCOME 31,503 60,028 - 48%
========= ========= ==========
Net income per common share
Basic 0.59 1.25 - 53%
Diluted 0.58 1.22 - 52%
Weighted average common shares
Basic 53,170 48,127 + 10%
Diluted 54,193 49,244 + 10%
Production (daily - net of royalties)
Oil (barrels) 18,201 16,536 + 10%
Gas (mcf) 103,581 80,268 + 29%
BOE (6:1) 35,465 29,914 + 19%
Nine Months
Ended
September 30,
--------------- Percentage
2002 2001 Change
------- ------- ----------
Unit sales price (including hedges)
Oil (per barrel) 21.70 23.08 - 6%
Gas (per mcf) 3.14 5.14 - 39%
Unit sales price (excluding hedges)
Oil (per barrel) 21.66 23.08 - 6%
Gas (per mcf) 3.06 4.78 - 36%
Cash flow from operations (1) 116,124 148,846 - 22%
Cash flow per common share (2)
Basic 2.18 3.09 - 29%
Diluted 2.14 3.02 - 29%
Oil & gas capital investments 129,336 265,932 - 51%
CO2 capital investments 11,393 44,991 - 75%
BOE data (6:1)
Revenue 20.06 25.59 - 22%
Gain on settlements of derivative contracts 0.25 0.96 - 74%
Lease operating costs (5.19) (4.85) + 7%
Production taxes and marketing expense (0.92) (1.03) - 11%
------- ------- ----------
Production netback 14.20 20.67 - 31%
CO2 operating cash flow 0.48 0.37 + 30%
General and administrative expense (0.99) (0.96) + 3%
Net cash interest expense (1.75) (1.76) - 1%
Current income taxes and other 0.05 (0.10) - 150%
------- ------- ----------
Cash flow from operations (1) 11.99 18.22 - 34%
======= ======= ==========
(1) Excluding the changes in assets and liabilities.
(2) Cash flow from operations excluding the changes in assets and
liabilities divided by average common shares outstanding.
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, holds key operating acreage 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 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 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 that involve risks such as those involved in drilling activity, debt reduction and those due to price volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the , 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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