On Jun 18, 2014, we issued an updated research report on
Denbury Resources Inc.
). With its unique profile, compelling economics and unmatched
infrastructure, Denbury is nicely positioned to deliver long-term
This Zacks Rank #3 (Hold) company delivered positive earnings
surprise in three of the last four quarters, with an average beat
Denbury has a relatively low-risk business model as it produces
oil by applying tertiary recovery techniques to mature fields.
Tertiary operations - the company's principal focus - averaged
39,892 barrels per day in the first quarter, up 2.0 % 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 expects 2014 production in the range of 76,500-78,500
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. The capital expenditure
budget has been reiterated at $1 billion, of which about 78% is
apportioned for tertiary projects. The remainder is for
conventional projects, with special emphasis on Cedar Creek
Anticline and Hartzog Draw fields.
On the flip side, the Texas-based company reported sagging price
realizations during the first quarter of 2014. Oil price
realization (including the impact of hedges) averaged $93.46 per
barrel, reflecting a fall of 11.5% year over year, while gas prices
expanded 34.5% year over year to $4.41 per Mcf. On an oil
equivalent basis, the overall price realization was $89.93 per
barrel, down almost 10.0% from the year-earlier level of $99.87 per
Further, Denbury's project inventory is concentrated mostly
within a few tertiary recovery projects. Hence, total company
performance as well as profitability remain particularly exposed to
execution and operational risks of individual projects.
Stocks That Warrant a Look
Better-ranked stocks in the oil and gas industry include
WPX Energy, Inc.
Matrix Service Company
). All these stocks carry a Zacks Rank #1 (Strong Buy).
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DENBURY RES INC (DNR): Free Stock Analysis
MATRIX SERVICE (MTRX): Free Stock Analysis
ENCANA CORP (ECA): Free Stock Analysis Report
WPX ENERGY INC (WPX): Free Stock Analysis
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