Denbury Resources Announces Third Quarter 2003 Results.Energy Editors/Business Editors DALLAS--(BUSINESS WIRE)--Nov. 3, 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 third quarter 2003 financial and operating results. The Company posted earnings for the quarter of $15.1 million, or $0.28 per common share, as compared to earnings of $13.5 million, or $0.25 per common share, for the third quarter of 2002. 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 quarter was $45.6 million, as compared to $44.2 million during the third quarter of 2002. (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 GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ), which is the 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 the non-GAAP measure). Net cash flow provided by operations, the GAAP measure, totaled $49.8 million during the third quarter of 2003, as compared to $44.4 million during the third quarter of 2002. Third Quarter 2003 Financial Results During late July July: see month. and early August 2003, Denbury upgraded its CO2 facility at Jackson Jackson. 1 City (1990 pop. 37,446), seat of Jackson co., S Mich., on the Grand River; inc. 1857. It is an industrial and commercial center in a farm region. Dome dome, a roof circular or (rarely) elliptical in plan and usually hemispherical in form, placed over a circular, square, oblong, or polygonal space. Domes have been built with a wide variety of outlines and of various materials. , increasing the CO2 processing capacity of its facility by approximately 50%, from around 200 MMcf/d to approximately 300 MMcf/d. This upgrade was performed several months ahead of the original schedule to handle the higher than expected production volumes from its CO2 wells drilled during late 2002 and early 2003. At the same time, the Company increased the size of its CO2 processing facility at Mallalieu Mallalieu is a surname, and may refer to:
This page or section lists people with the surname Mallalieu. Field, increasing the amount of CO2 that the Company can recycle re·cy·cle tr.v. re·cy·cled, re·cy·cling, re·cy·cles 1. To put or pass through a cycle again, as for further treatment. 2. To start a different cycle in. 3. a. at that field from approximately 28 MMcf/d to approximately 108 MMcf/d. With the completion of the Company's third CO2 well, the Barksdale Barksdale as a personal name can refer to:
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. the Company's CO2 production and associated injections for approximately one week in late July, the Company's oil production from 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. recovery decreased slightly in the third quarter to 4,227 BOE/d. However, with the increased CO2 production, oil production from these tertiary recovery properties is preliminarily estimated to average approximately 5,400 BOE/d during the month of October October: see month. 2003, the Company's highest monthly average to date. Denbury's overall third quarter 2003 average daily production of 33,116 BOE/d was 7% lower than the 35,506 BOE/d production average for the comparable period in 2002. Production decreased due to normal 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 , less than expected production increases from first half exploration and development results, unexpected delays offshore and the one-week temporary CO2 curtailment Curtailment The act of contracting or reducing operations of a company in the hope of bringing it financial or operational stability. This management technique is often used when a company has grown too fast and is unable to effectively manage its operations. (see above). Property sales have also contributed to the production decrease. During the first nine months of 2003, the Company sold over $29 million of properties, principally the 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 sold in February February: see month. , with estimated aggregate production from these properties of approximately 2,000 BOE/d. Commodity prices were higher in the third quarter of 2003 as compared to prices in the third quarter of the prior year. NYMEX See New York Mercantile Exchange. NYMEX See New York Mercantile Exchange (NYM). oil prices averaged over $30.00 per Bbl, and natural gas prices averaged just under $5.00 per Mcf in the third quarter of 2003, as compared to NYMEX averages of around $28.25 per Bbl and $3.20 per Mcf in the third quarter of 2002. Denbury's weighted average price 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 was $7.05 higher per BOE (excluding hedges) in the third quarter of 2003 than in the comparable period of 2002. However, approximately $3.95 per BOE of this increase was paid out on the Company's hedges in the current quarter of 2003, as compared to only $0.07 per BOE of hedge payments in the comparable 2002 period. Net of these hedge payments, the net realized per BOE price increase received by the Company between the respective third quarters was $3.17 per BOE. Partially offsetting higher revenues were increases in certain expenses. 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 from $5.43 per BOE in the third quarter of 2002 to $7.35 per BOE in the third quarter of 2003. The primary reason for the increase was the cost of various workovers and repairs, including a $700,000 tubing repair on a CO2 well charged to lease 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. . This tubing repair also affected CO2 operating expenses. Continued high expenses on the properties acquired from COHO, continued expansion of CO2 tertiary projects, which typically have a higher than average operating cost per BOE, and higher lease fuel costs due to high natural gas prices also contributed to the higher than historical operating costs operating costs npl → gastos mpl operacionales . Partially offsetting these higher operating expenses relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc CO2 operations are improved oil prices as a result of the gradually decreasing NYMEX differentials, partially relating to an increasing percentage of light sweet oil production from the Company's CO2 operations. The Company anticipates that its lease operating expenses on a per BOE basis will decrease in the fourth quarter of 2003, assuming a return to normal operating parameters. General and administrative expenses increased to an average of $1.13 per BOE in the third quarter of 2003, up from $0.93 per BOE in the comparable quarter of 2002. The increase primarily relates to 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 associated with the requirements of the Sarbanes-Oxley Act See SOX. and an overall increase in personnel and associated expenses. Interest expense decreased 22% in the third quarter of 2003 as compared to the third quarter of the prior year, as the Company recognized a full quarter of the interest rate savings that resulted from its 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 March and April. In addition to the interest rate reduction, the Company's overall average debt was also lower in third quarter of 2003 as a result of the Company's 2003 debt reduction plan. Offshore Update Five offshore wells scheduled to be drilled for the first seven months of 2003 were delayed while waiting for partner approvals and clearance of other logistical lo·gis·tic also lo·gis·ti·cal adj. 1. Of or relating to symbolic logic. 2. Of or relating to logistics. [Medieval Latin logisticus, of calculation issues. Two offshore wells have been drilled during the third quarter and early fourth quarter and were in the process of being completed as of October 31, 2003, as were the wells at North Padre Island Padre Island (päd`rē, păd`rē), low, sandy island, c.115 mi (185 km) long, less than 3 mi (4.8 km) wide, S Tex. It is characterized by large, irregular sand dunes, sparse vegetation, and a strong prevailing wind off the Gulf of Mexico. , Denbury's 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. 2002 discovery. The delay in these wells negatively affected the third quarter production, although with their anticipated production, fourth quarter production is expected to be higher than that in the third quarter. As of October 31, 2003, three offshore wells were expected to commence drilling within the next week or two, although since it is so late in the year, these wells will not have a meaningful production impact in 2003 even if they are successful. 2003 Outlook Denbury's 2003 development and exploration budget (excluding acquisitions) is currently set at $154 million, including approximately $8 million of projects carried over from 2002. During the first nine months of 2003, the Company made several minor acquisitions, primarily consisting of incremental interests in existing properties, at an aggregate cost of approximately $11 million. The 2004 budget has not been finalized See finalization. to date, but is expected to be in the range of $150 to $175 million, with as much as 50% of this budget related to CO2 operations. The Company expects its average daily production for the fourth quarter of 2003 to be between 34,500 BOE/d to 35,500 BOE/d, depending on the completion dates and ultimate production rates of the offshore wells currently being completed. Denbury's total debt as of September September: see month. 30, 2003 was $329 million, consisting of $225 million of subordinated debt and $104 million of bank debt, with $116 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. As of October 31, 2003, the Company's total debt was $325 million and is expected to be reduced to $305 million upon closing of the anticipated sale of CO2 to Genesis pursuant to a volumetric volumetric /vol·u·met·ric/ (vol?u-met´rik) pertaining to or accompanied by measurement in volumes. vol·u·met·ric adj. Of or relating to measurement by volume. production payment. Closing of this transaction is expected within the next two weeks. The Company expects to further reduce its debt during the remainder of 2003, ending the year with an anticipated debt level of around $300 million, its previously stated target. 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 . This strategy will have the impact of limiting our short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. production growth, but should benefit our long-term Long-term 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. production growth. Although our 2004 budget is not yet finalized, initial indications are that, without assuming exploration success, our production could be lower in 2004 than 2003. However, we are confident that this strategy will build value for our shareholders in the long-term. We continue to be enthusiastic about the future." Conference Call The public is invited to listen to the Company's conference call set for today, November November: see month. 3, 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 Denbury's Web site: www.denbury.com. If you are unable to participate during the live broadcast, the call will be archived on Denbury's 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, 2003 and September 30, 2002. 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.
THIRD QUARTER FINANCIAL HIGHLIGHTS
(Amounts in thousands of U.S. dollars, except per share and
per unit data)
Three Months Ended
September 30,
------------------ Percentage
2003 2002 Change
------- ------- ----------
Revenues:
Oil sales 44,863 42,372 + 6%
Gas sales 43,933 29,781 + 48%
CO2 sales 2,238 2,182 + 3%
Loss on settlements of derivative NA
contracts (12,031) (218)
Interest and other income 387 409 - 5%
------- ------- ------
Total revenues 79,390 74,526 + 7%
------- ------- ------
Expenses:
Lease operating expenses 22,400 17,714 + 26%
Production taxes and marketing expense 3,761 2,969 + 27%
CO2 operating expenses 602 431 + 40%
General and administrative expenses 3,445 3,034 + 14%
Interest expense 5,358 6,860 - 22%
Depletion and depreciation 22,566 23,031 - 2%
Amortization of derivative contracts and
other non-cash hedging adjustments (1,441) (1,133) - 27%
------- ------- ------
Total expenses 56,691 52,906 + 7%
------- ------- ------
Income before income taxes 22,699 21,620 + 5%
Income tax provision (benefit)
Current income taxes (1,514) 20 NA
Deferred income taxes 9,064 8,141 + 11%
------- ------- ------
NET INCOME 15,149 13,459 + 13%
======= ======= ======
Net income per common share
Basic 0.28 0.25 + 12%
Diluted 0.27 0.25 + 8%
Three Months Ended
September 30,
------------------ Percentage
2003 2002 Change
------- ------- ----------
Weighted average common shares:
Basic 54,014 53,354 + 1%
Diluted 55,718 54,562 + 2%
Production (daily - net of royalties)
Oil (barrels) 18,051 18,930 - 5%
Gas (mcf) 90,393 99,452 - 9%
BOE (6:1) 33,116 35,506 - 7%
Unit sales price (including hedges)
Oil (per barrel) 24.60 24.18 + 2%
Gas (per mcf) 4.32 3.26 + 33%
Unit sales price (excluding hedges)
Oil (per barrel) 27.01 24.33 + 11%
Gas (per mcf) 5.28 3.25 + 62%
Non-GAAP Financial Measure: (1)
Adjusted or discretionary cash flow from
operations (non-GAAP measure) 45,611 44,177 + 3%
Net change in assets and liabilities
relating to operations 4,178 202 NA
------- ------- ------
Net cash flow from operations (GAAP
measure) 49,789 44,379 + 12%
------- ------- ------
Oil & gas capital investments 39,253 77,418 - 49%
CO2 capital investments 2,635 5,459 - 52%
Proceeds from sales of oil and gas
properties 1,173 - NA
Cash and cash equivalents 28,108 22,924 + 23%
Total assets 942,558 862,748 + 9%
Total debt (excluding discount) 329,000 375,000 - 12%
Total stockholders' equity 410,386 358,934 + 14%
BOE data (6:1)
Revenue 29.14 22.09 + 32%
Loss on settlements of derivative (3.95) (0.07) NA
contracts
Lease operating expense (7.35) (5.43) + 35%
Production taxes and marketing expense (1.23) (0.91) + 35%
------- ------- ------
Production netback 16.61 15.68 + 6%
CO2 operating margin 0.54 0.54 -
General and administrative expense (1.13) (0.93) + 22%
Net cash interest expense (1.55) (1.77) - 12%
Current income taxes and other 0.50 - NA
Changes in assets and liabilities 1.37 0.06 NA
------- ------- ------
Cash flow from operations 16.34 13.58 + 20%
======= ======= ======
(1) See "Non-GAAP Measures" at the end of this report.
NINE MONTH FINANCIAL HIGHLIGHTS
(Amounts in thousands of U.S. dollars, expect per share and
per unit data)
Nine Months Ended
September 30,
----------------- Percentage
2003 2002 Change
------- ------- ----------
Revenues:
Oil sales 140,998 107,608 + 31%
Gas sales 154,274 86,569 + 78%
CO2 sales 6,872 5,568 + 23%
Gain (loss) on settlements of
derivative contracts (53,072) 2,430 NA
Interest and other income 989 1,251 - 21%
------- ------- ------
Total revenues 250,061 203,426 + 23%
------- ------- ------
Expenses:
Lease operating expenses 67,850 50,266 + 35%
Production taxes and marketing expense 11,124 8,880 + 25%
CO2 operating expenses 1,453 960 + 51%
General and administrative 10,612 9,544 + 11%
Interest expense 18,046 20,086 - 10%
Loss on early retirement of debt 17,629 - NA
Depletion and depreciation 69,249 70,162 - 1%
Amortization of derivative contracts
and other non-cash hedging adjustments (3,702) (3,226) - 15%
------- ------- ------
Total expenses 192,261 156,672 + 23%
------- ------- ------
Income before income taxes 57,800 46,754 + 24%
Income tax provision (benefit)
Current income taxes 123 (428) NA
Deferred income taxes 18,946 15,679 + 21%
------- ------- ------
Income before cumulative effect of a
change in accounting principle 38,731 31,503 + 23%
Cumulative effect on prior years of a
change in accounting principal, net
of income tax expense of $1,600 2,612 - NA
------- ------- ------
NET INCOME 41,343 31,503 + 31%
======= ======= ======
Net income per common share - basic:
Income before cumulative effect of a
change in accounting principle 0.72 0.59 + 22%
Cumulative effect of a change in
accounting principle 0.05 - NA
------- ------- ------
Net income per common share - basic 0.77 0.59 + 31%
======= ======= ======
Nine Months Ended
September 30,
----------------- Percentage
2003 2002 Change
------- ------- ----------
Net income per common share - diluted:
Income before cumulative effect of a
change in accounting principle 0.70 0.58 + 21%
Cumulative effect of a change in
accounting principle 0.05 - NA
------- ------- ------
Net income per common share - diluted 0.75 0.58 + 29%
======= ======= ======
Weighted average common shares:
Basic 53,824 53,170 + 1%
Diluted 55,375 54,193 + 2%
Production (daily - net of royalties)
Oil (barrels) 18,852 18,201 + 4%
Gas (mcf) 95,341 103,581 - 8%
BOE (6:1) 34,742 35,465 - 2%
Unit sales price (including hedges)
Oil (per barrel) 24.41 21.70 + 12%
Gas (per mcf) 4.48 3.14 + 43%
Unit sales price (excluding hedges)
Oil (per barrel) 27.40 21.66 + 27%
Gas (per mcf) 5.93 3.06 + 94%
Non-GAAP Financial Measure: (1)
Adjusted or discretionary cash flow from
operations (non-GAAP measure) 141,966 116,124 + 22%
Net change in assets and liabilities
relating to operations 3,874 (13,141) NA
------- ------- ------
Cash flow from operations (GAAP measure) 145,840 102,983 + 42%
------- ------- ------
Oil & gas capital investments 119,586 129,336 - 8%
CO2 capital investments 16,008 11,393 + 41%
Proceeds from sales of oil and gas
properties 29,328 4,552 NA
BOE data (6:1)
Revenue 31.13 20.06 + 55%
Gain (loss) on settlements of
derivative contracts (5.60) 0.25 NA
Lease operating expense (7.15) (5.19) + 38%
Production taxes and marketing expense (1.17) (0.92) + 27%
------- ------- ------
Production netback 17.21 14.20 + 21%
CO2 operating margin 0.57 0.48 + 19%
General and administrative expense (1.12) (0.99) + 13%
Net cash interest expense (1.69) (1.75) - 3%
Current income taxes and other - 0.05 NA
Changes in assets and liabilities 0.40 (1.35) NA
------- ------- ------
Cash flow from operations 15.37 10.64 + 44%
======= ======= ======
(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 our 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 . Management believes that this is important to consider separately, as they believe it can often be a better way to discuss changes in operating trends in Denbury's 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. 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 the Company's latest Form 10-Q Form 10-Q See 10-Q. . 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 Louisiana (ləwē'zēăn`ə, l  ē'–), state in the S central United States. It is bounded by Mississippi, with the Mississippi R. 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 MexicoGolfo 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 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 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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