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Denbury Resources (DNR) Posts Q4 Loss as Expected, Sales Top

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Denbury Resources Inc. reported a loss of 2 cents per share in fourth-quarter 2016 (excluding one-time items), in line with the Zacks Consensus Estimate. The company had incurred loss of 1 cent per share a year ago. A significant rise in total expense, lower production as well as weaker oil and gas price realizations contributed to the deterioration.

For full-year 2016, adjusted profit was 4 cents per share compared with 37 cents in the prior year. The reported figure surpassed our expectation of 3 cents per share.

Fourth-quarter total revenue of $271.6 million increased from $269.6 million a year ago. The top line also beat the Zacks Consensus Estimate of $235 million.

Total revenue for the full year decreased 28.9% year over year to $975.6.0 million. This also came in below the Zacks Consensus Estimate of $1,014.0 million

Operational Performance

During the reported quarter, production averaged 60,685 barrels of oil equivalent per day (Boe/d) compared with 72,002Boe/d in the prior-year quarter.  

Oil production averaged 58,429 barrels per day (96.3% of the total volume), down 14.6% from the year-ago level. Natural gas production inched up 1% and averaged 13,538 thousand cubic feet/Mcf, on a daily basis.

The company’s production from tertiary operations averaged 37,346 barrels of oil equivalent per day, down 9.3% year over year.

Oil price realization (including the impact of hedges) averaged $41.93 per barrel in the quarter, down 20.4% year over year. Gas prices jumped 27.5% year over year to $2.55 per Mcf. On an oil equivalent basis, overall price realization plunged 19.5% from the year-earlier level of $50.83 to $40.94 per barrel.   

Total Expense

During the quarter, the company witnessed 47.8% year-over-year decrease in total expense to $868.9 million.

Financials

Cash flow from operations for the fourth quarter was $60 million as against $165 million in the comparable period a year ago. Oil and natural gas capital investments for the reported period were approximately $61.4 million compared with the year-earlier level of $109 million. As of Dec 31, 2016, cash balance was $1.6 million and total debt was $2.8 billion.

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Guidance

Denbury – a predominantly oil exploration and production company – expects full-year 2017 production in the range of 58,000–62,000 barrels of oil equivalent per day (BOE/d). The mid-point of this range is likely to be almost flat with the company’s 2016 exit rate of just below 60,000 BOE/d. Full-year capital expenditure is expected at $300 million, up 44% from the 2016 capital spending level.

Zacks Rank and Key Stock Picks

Denbury carries a Zacks Rank #3 (Hold). A couple of better-ranked players in the same space include Delek Logistics Partners, LP (DKL - Free Report) and Sunrun Inc. (RUN - Free Report) . Both these stocks sport a Zacks Rank #1 (Strong Buy). Another stock from the same space is W&T Offshore Inc. (WTI - Free Report) , which holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Delek Logistics Partners posted a negative earnings surprise of 25.45% in the preceding quarter. It had an average negative earnings surprise of 11.32% in the four trailing quarters.

Sunrun posted a positive earnings surprise of 137.21% in the preceding quarter. It beat estimates in all the four trailing quarters with an average positive earnings surprise of 134.71%.

W&T Offshore posted a positive earnings surprise of 44.19% in the preceding quarter. It beat estimates in all the four trailing quarters with an average positive earnings surprise of 31.49%.

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