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Why Is Denbury Resources (DNR) Up 26.1% Since Last Earnings Report?

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A month has gone by since the last earnings report for Denbury Resources (DNR - Free Report) . Shares have added about 26.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Denbury Resources due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Second-Quarter 2018 Results

Denbury Resources Inc.’s second-quarter 2018 earnings per share of 13 cents (excluding one-time items) beat the Zacks Consensus Estimate of 10 cents and also improved from the year-ago quarter’s breakeven.

Total revenues of $387.1 million rose from $261.2 million a year ago. The top line also surpassed the Zacks Consensus Estimate of $329 million.

Increased production of oil along with higher realized crude price attributed to the strong quarterly results.

Operational Performance

During the reported quarter, production averaged 61,994 barrels of oil equivalent per day (Boe/d) compared with 59,774 Boe/d in the prior-year quarter.

Oil production averaged 60,109 barrels per day (bpd) (approximately 97% of the total volume), up from the year-ago quarter’s 57,867 bpd. However, natural gas production averaged 11,314 thousand cubic feet/Mcf (down 1.1%) on a daily basis.

The company’s production from tertiary operations averaged 38,514 barrels per day, up 5% year over year.

Oil price realization (including the impact of hedges) averaged $58.23 per barrel in the quarter, up 30% year over year. Gas prices fell 10% year over year to $2.21 per Mcf. On an oil equivalent basis, the overall price realization was $56.86 per barrel, up 29.4% from the year-earlier quarter’s level of $43.96 per barrel.   

Financials

Adjusted cash flow from operations was $134 million in the reported quarter compared with $65 million in the year-ago quarter. The company’s capital spending plunged to $90.4 million from the year-earlier quarter’s $152.6 million.

Guidance

Denbury continues to expect 2018 production in the range of 60,000-64,000 Boe/d.

 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 29.17% due to these changes.

VGM Scores

Currently, Denbury Resources has a strong Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Denbury Resources has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.




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