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Denbury Resources Inc.’s (DNR - Analyst Report) first-quarter 2013 adjusted earnings of 33 cents per share (excluding one-time items) beat the Zacks Consensus Estimate of 29 cents. However, the quarterly results were 19.5% below the year-earlier adjusted earnings of 41 cents.

First quarter total revenue of $583.1 million decreased 9.6% year over year but surpassed the Zacks Consensus Estimate of $521.0 million.
 
Operational Performance

During the reported quarter, continuing production averaged 63,823 barrels of oil equivalent per day (Boe/d) versus 54,485 Boe/d in the prior-year quarter.
 
Oil production averaged 59,577 barrels per day (down nearly 10.9% from the year-ago level), representing 93.3% of the total volume. Natural gas production averaged 25,477 thousand cubic feet (down 9.2%), on a daily basis.

The company’s production from tertiary operations averaged 39,057 barrels per day, which represents a 17% increase year over year. The upside came from contributions from new floods at Hastings and Oyster Bayou fields alongside production gains from expanding tertiary floods at Delhi and Tinsley fields.

Oil price realization (including the impact of hedges) averaged $105.59 per barrel in the quarter, showing a rise of 4.4% year over year, while gas prices contracted 50.2% to $3.28 per Mcf. On an oil equivalent basis, the overall price realization was $99.87 per barrel, up almost 2.8% from the year-earlier level of $99.14 per barrel.

Financials

Cash flow from operations was $269.2 million in the reported quarter versus $291.7 million in the year-ago quarter. Oil & natural gas capital investments were $270.9 million (before acquisitions and capitalized interest), down from the year-earlier level of $319.8 million.

Cash balance as of Mar 31, 2013 was $62.3 million and long-term debt was $3,295.1 million, representing a debt-to-capitalization ratio of 39.0%.

Guidance

Denbury expects 2013 production in the range of 68,700–71,700 Boe/d. The company’s tertiary production target is 36,500–39,500 Boe/d. Capital expenditure budget has been reiterated at $1.06 billion, of which about 85% is apportioned for tertiary projects. The remainder is for conventional projects, with special emphasis on Cedar Creek Anticline.

Zacks Rank

Denbury carries a Zacks #3 Rank (short-term Hold rating). However, there are other stocks in the oil and gas sector – InterOil Corporation (IOC - Snapshot Report), Tesco Corporation (TESO - Snapshot Report) and EPL Oil & Gas, Inc. – which hold a Zacks Rank #1 (Strong Buy) and are expected to perform better.

 

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