Denbury Resources (DNR) Tops Q1 EPS by 4c

Denbury Resources (NYSE: DNR) reported Q1 EPS of ($0.03), $0.04 better than the analyst estimate of ($0.07). Revenue for the quarter came in at $194.8 million versus the consensus estimate of $274.69 million.

MANAGEMENT COMMENT

Phil Rykhoek, Denbury’s President and CEO, commented, “I am very pleased with our first quarter results as we maintained our focus on our core objectives for 2016, which include lowering costs, preserving cash and liquidity, and reducing leverage. Although the oil commodities market has improved slightly, we are continuing to operate under the assumption that prices could stay low for an extended period of time.

“Most significantly this quarter, our normalized per-barrel operating expenses came down for the ninth consecutive quarter, to $16.23 per barrel of oil equivalent (“BOE”). This substantial decrease of 16% from the prior quarter is largely due to cost reductions across all of our lease operating expense categories, coupled with the impact of shutting in uneconomic wells during the last part of 2015 and early 2016. We continue to focus on every aspect of our operations to reduce lease operating expenses, which we expect to average between $17.00 and $18.50 per BOE for 2016, as we anticipate higher workover levels and gradual production declines for the remainder of the year. In addition, we continued to work on reducing our general and administrative expenses during the first quarter, and expect to see the full magnitude of those savings in the second quarter. Our costs are definitely moving in the right direction.

“As we stated on our fourth quarter call, we have been actively looking for opportunities to monetize the discount the market has placed on our subordinated debt to improve our balance sheet without sacrificing liquidity. During the first quarter, we spent approximately $56 million drawn under our bank credit facility to repurchase over $152 million of our outstanding senior subordinated notes on the open market, resulting in a net debt reduction of $97 million. These repurchases allowed us to extinguish this debt at an average price of 36 cents on the dollar. This week, we entered into private transactions with a small group of our debt holders, swapping a new second lien note plus equity for their subordinated debt, which will result in additional net debt reduction of $391 million. This is a significant positive series of transactions, and under our bank credit agreement we still have $469 million of junior lien capacity available for potential future use, depending on market conditions.”

For earnings history and earnings-related data on Denbury Resources (DNR) click here.

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