Downcast Realizations Overshadow Denbury - Analyst Blog

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Texas-based Denbury Resources Inc. 's ( DNR ) presented estimated reserves and preliminary production numbers for 2013 on Feb 11. However, a down trend in price realizations cast a dark shadow on investors' sentiment. As a result, the share price opened at $16.41 or up 0.7% on Feb 12 from the previous day's closing to finally settle at $16.35.

Denbury's average realized oil price was $93.00 per Bbl in the fourth quarter of 2013, compared to $105.91 per Bbl in the third quarter. This was partially offset by average realized natural gas price of $3.50 per Mcf in the fourth quarter, compared to $3.38 per Mcf in the third quarter.

Denbury Resources' total estimated proved oil and natural gas reserves at Dec 31, 2013 were 468 million barrels of oil equivalent (MMBOE), consisting of 387 million barrels of crude oil, condensate and natural gas liquids, and 81 MMBOE (or 490 billion cubic feet) of natural gas.

Denbury's aggregate proved reserves additions during 2013 were 85 MMBOE, representing a 330% reserves replacement-to-production ratio. The proved reserve additions consisted primarily of 34 MMBOE of reserves from tertiary development of Bell Creek Field and 42 MMBOE of reserves acquired in the Cedar Creek Anticline of Montana and North Dakota during 2013. These additions were offset by 26 MMBOE of production during the year.

Denbury expects 2013 capital expenditures to be $981 million for capital projects and $163 million for other capital costs. The company as of Feb 7 has acquired a total of approximately 58 million common shares under the program, or about 14% of its shares outstanding, at an average cost of $15.67 per share.

Denbury is the leading carbon dioxide Enhanced Oil Recovery company in the U.S. with a unique profile. Recently, the company closed the second and final phase of its previously announced divestiture program to ExxonMobil Corporation ( XOM ) and its wholly owned subsidiary, XTO Energy. The company plans to use most of the proceeds raised from its asset sale to work out a purchase deal with ConocoPhillips ( COP ).

Last month, Denbury inked an agreement with a wholly owned subsidiary of ConocoPhillips to purchase the producing property interests in Cedar Creek Anticline (CCA) for $1.05 billion in cash. The CAA acreage matches Denbury's existing portfolio. Also, recovery from these fields requires supply of carbon dioxide - a process in which Denbury excels in the Gulf of Mexico.

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 Zacks Rank #1 (Strong Buy) stocks in the oil and gas sector like Clayton Williams Energy, Inc. ( CWEI ) which are expected to outperform the market.



CONOCOPHILLIPS (COP): Free Stock Analysis Report

WILLIAMS(C)ENGY (CWEI): Free Stock Analysis Report

DENBURY RES INC (DNR): Free Stock Analysis Report

EXXON MOBIL CRP (XOM): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: CCA , COP , C , CWEI , DNR

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