Last Monday, six insiders of independent oil and natural gas
company, Denbury Resources (
DNR
) reported purchasing a combined amount of about 7,000 shares,
soon after the company announced its second phase completion to
sell its Bakken assets in North Dakota and Montana to Exxon Mobil
Corp. (
XOM
).
The slew of purchases, perhaps driven by a new wave of company
confidence, were made three years after the company's last
reported insider purchase, which was by Director Michael B.
Decker on June 2009, a 1,000-share addition to his then
23,555-share holding. After Decker's transaction, the rest of
Denbury's insider activity comprised of sells up until the six
that were reported on the last day of 2012.
The breakdown of the recent purchases is as follows:
- CEO Phil Rykhoek bought
1,694
shares, which places his total holding at 672,568 shares.
- Sr. Vice President and CFO Mark C. Allen bought
1,149
shares, placing his total holding at 520,091 shares.
- Sr. Vice President of CO
2
Operations, Robert L. Cornelius bought
1,149
shares, placing his holding at 268,341 shares.
- Newly promoted Senior Vice President of Planning,
Technology and Business Development, Charlie Gibson bought
815
shares, placing his total holding at 145,671 shares.
- Newly promoted Senior Vice President and COO Craig
McPherson bought
1,222
shares, which places his total holding at 103,468 shares.
- Vice President and Chief Accounting Officer, Alan Rhoades
purchased
726
shares, which places his total holding at 87,491 shares.
(Data from
Denbury Resources Insider Activity
on GuruFocus.com)
All transactions were made at an average price of $16.12.
Announced last September, Plano, Texas-based Denbury originally
anticipated $1.6 billion in cash from its Bakken sales, which
Denbury intended to use to pursue additional oil fields in the
Gulf Coast or Rocky Mountain regions, as well as to fund capital
expenditures and/or to repay outstanding debt.
As part of the deal, Denbury agreed "in principle" to either
purchase an interest or incremental CO
2
in ExxonMobil's CO
2
reserves from its southwestern Wyoming LaBarge field, which would
reduce the amount of cash that Denbury would receive.
The turnout, months later, was ExxonMobil paying $1.3 billion in
cash (including closing adjustments) in December for all of
Denbury's Bakken area assets. In turn, Denbury acquired operating
interests in ExxonMobil's Webster Field in Texas and Hartzog Draw
Field in Wyoming for the purpose of CO
2
-enhanced oil recovery.
CEO Rykhoek commented on the transaction in Denbury's third
quarter financial report:
"The Bakken transaction will sharpen our focus on our highly
profitable
CO
2
EOR strategy and provides us with two additional oil fields in
close proximity to our existing infrastructure that are well
suited for CO2 EOR. Our large inventory of CO2 EOR projects
provides us with excellent visibility on relatively lower risk,
long-term production growth, while our strong balance sheet and
expected cash proceeds from the Bakken transaction give us a very
high degree of financial flexibility."
Market capitalized at $6.49 billion, Denbury remains the largest
combined oil and natural gas operator in Mississippi and Montana,
and owns the largest reserves of CO
2
used for tertiary oil recovery east of the Mississippi River. It
also holds significant acreage in the Rocky Mountain and the Gulf
Coast regions.
Gurus
George Soros
and
RS Investment Management
hold 1.1 percent and 4.72 percent of Denbury's outstanding
shares, respectively.
The company's
10-Year Financials
suggest that Denbury's revenue has been booming for at least 10
years, with an annual growth rate of 16.4 percent for the
timeframe. In five years, it grew at a rate of 10.3 percent, and
in the past 12 months, its revenue grew by 14.3 percent.
In the last three years, the company has increased in market
value by 7.29 percent.
Its stock is currently trading at $16.65. It has three stars in
Business Predictability, 5 in Financial Strength and 7 in
Profitability and Growth.
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