Denbury Resources Inc.
) announced an increase of $250 million to its authorized share
repurchase program, leaving $422 million of authorized
repurchases remaining as of Dec 31, 2013. The increase raises the
total amount authorized under the program since it commenced in
Oct 2011 to $1.162 billion.
Of the total, Denbury has spent $740 million as of Dec 31,
2013, to acquire a total of approximately 48 million common
shares, or about 12% of shares outstanding at Sep 30, 2011, at an
average cost of $15.55 per share. Of the total amount spent on
repurchases, $78 million was spent in the fourth quarter to
acquire approximately five million common shares at an average
cost of $16.22 per share.
Denbury has a relatively low-risk business model as it
produces oil by applying tertiary recovery techniques to mature
fields. Tertiary operations remain the company's principal focus.
The company's production from tertiary operations averaged 37,513
barrels per day in the third quarter, which represents a 7.8%
increase year over year. Contributions from continued field
development and expansion of facilities in Delhi, Hastings,
Heidelberg and Oyster Bayou fields led to the increase.
Denbury Resources remains on track to continue its growth
momentum. The company, driven by higher contribution from its
core tertiary operation, is steadily yielding more. As the
company's production is fairly oil weighted, we view strong
earnings and cash flow visibility in the future.
Denbury expects 2013 production in the range of 68,700-71,700
barrels of oil equivalent per day (Boe/d). Strong growth from the
company's high-growth projects at Delhi, Hastings and Oyster
Bayou should drive production toward the higher end of the guided
range. This will aid the company in effectively replacing all of
the sold Bakken production. The tertiary production growth was
set at 6-14%, reflecting normal year-to-year variability. Capital
expenditure was set at $1.06 billion for the year, of which
approximately 85% of the total capital outlay is for tertiary
projects. The balance will likely be for conventional projects,
primarily in the Cedar Creek Anticline (CCA).
Oil price realization (including the impact of hedges)
averaged $105.80 per barrel in the quarter, showing a rise of
13.8% year over year, while gas prices contracted 38.9% year over
year to $3.38 per Mcf. On an oil equivalent basis, the overall
price realization was $101.22 per barrel, up almost 14% from the
year-earlier level of $88.77 per barrel.
On the flip side, we remain cautious due to high cost levels
associated with the tertiary oil recovery method and harsh
weather conditions that might restrict the activity level.
Plano, Texas-based Denbury Resources is a growing exploration
and production company engaged in the acquisition, development,
operation and exploration of oil and natural gas properties in
the Gulf Coast and Rocky Mountain region of the U.S. It is the
largest oil producer in Mississippi, with further properties in
Louisiana, Alabama and Southeast Texas.
Denbury carries a Zacks #3 Rank (short-term Hold rating).
However, there are better-ranked stocks in the oil and gas sector
CVR Energy Inc.
Pacific Drilling S.A.
LRR Energy L.P.
) - which hold a Zacks Rank #1 (Strong Buy) and are expected to
outperform the market.
DENBURY RES INC (DNR): Free Stock Analysis
LRR ENERGY LP (LRE): Free Stock Analysis
PACIFIC DRILLNG (PACD): Free Stock Analysis
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