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Texas-based Denbury Resources Inc. ( DNR - Analyst Report ) reported its preliminary first quarter 2012 production and realized oil prices. Production jumped 8% from fourth quarter 2011 to 71,532 barrels of oil equivalent per day (Boe/d), of which 93% was oil. The figures for both the periods are adjusted for the 2012 property sales.
Volumes of 1,759 Boe/d derived from non-core assets divested by Denbury so far in 2012 have been included in the preliminary production data. The first quarter 2012 production would fall 2% to 69,773 Boe/d if the contribution from these non-core assets were excluded. Taking into account the sale of non-core assets, Denbury has altered its 2012 production estimates by 2% to 68,625–73,625 Boe/d from 70,250-–75,250 Boe/d.
Included in the first quarter production estimates are 33,257 barrels per day of tertiary oil production and 15,114 Boe/d of Bakken production. These signify increases of 7% and 29% respectively, from the fourth quarter of 2011.
The sequential growth was attributed by the new tertiary floods at the Oyster Bayou and Hastings fields as well as an early production start-up at the Tinsley Field. Further, Denbury’s drilling program and encouraging winter operating conditions were responsible for the production growth in Bakken.
Denbury’s preliminary average realized oil price in the first quarter of 2012, excluding derivative settlements, was $102.52 per barrel, down 0.5% from the fourth quarter of 2011. While the realized oil price was 37 cents below the quarter's average NYMEX oil price, it was also lower than the $9.14 premium to NYMEX realized in fourth quarter 2011.
The current Zacks Consensus Estimates for Denbury are $1.58 and $1.68 per share for fiscal years 2012 and 2013, respectively. The estimates represent year-over-year growth of 18.8% for 2012 and 6.33% for 2013.
Denbury holds a Zacks Rank #3, which is equivalent to a Hold rating for a period of one to three months. Longer term, we maintain our Neutral recommendation on the stock. It faces tough competition from Pioneer Natural Resources ( PXD - Analyst Report ) and Newfield Exploration ( NFX - Analyst Report ) .
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