Denbury Resources (DNR) Tops Q1 EPS by 1c, Revenues Miss

Denbury Resources (NYSE: DNR) reported Q1 EPS of $0.10, $0.01 better than the analyst estimate of $0.09. Revenue for the quarter came in at $305.45 million versus the consensus estimate of $315.84 million.

• Production of 59,218 barrels of oil equivalent (“BOE”) per day (“BOE/d”), essentially flat with both 4Q 2018 and 1Q 2018 continuing production
• Strong production response from Bell Creek Phase Five CO2 flood expansion; Bell Creek production up 5% from 4Q 2018 and up 15% from 1Q 2018
• Generated operating cash flow of $119 million before giving effect to $55 million of cash outflows for working capital changes, resulting in GAAP cash flow from operations of $64 million
• Generated free cash flow(1) (a non-GAAP measure) of $27 million after considering development capital expenditures, capitalized interest and interest treated as debt reduction (see reconciliation on page 8 of this press release)
• Expect to generate free cash flow for full-year 2019 well in excess of $150 million based on current projections and oil futures prices
• Reaffirmed bank credit facility at $615 million; no amounts were outstanding as of March 31, 2019

Chris Kendall, Denbury’s President and CEO, commented, “The first quarter highlighted the compelling advantages of Denbury’s low-decline, high margin business. Our operating teams delivered another solid quarter, holding production flat with both the prior quarter and the first quarter of 2018 with limited capital spend. Our investments in Bell Creek continued to deliver great results, with net production reaching a record 4,650 barrels per day in the first quarter, up over 50% in the past two years. Our exploitation program continued to highlight even greater potential across our assets, with positive initial results in both our Conroe 2A sand horizontal test as well as our Tinsley Cotton Valley test.

“We maintained strong spending discipline, with G&A remaining at decade-low levels, unit LOE flat with the prior quarter, and capital within our guided range. Our peer-leading 97% oil weighting delivered yet another quarter of strong operating margins, well above $25 per BOE, supported by our overall differential to NYMEX WTI pricing, which remained positive for a sixth consecutive quarter.

“Combining this performance with a strengthening oil market, our outlook for the year has improved nicely. While we originally set our budget for the year based on generating $50 – $100 million in free cash at $50 WTI, our current performance and price expectations have significantly increased that anticipated free cash number, which we now believe could be well above $150 million for the full year. This additional cash would provide great flexibility, giving us more capacity to reduce leverage and to continue to build on the great success we have had in improving our balance sheet over the past several years.

“As I consider the rest of 2019, I am looking forward to sharing more of what this great Company can deliver. We will maintain our priority of strengthening our balance sheet; the results of our high-return capital investments will continue to shine; we will continue to drive our highly impactful Cedar Creek Anticline enhanced oil recovery project toward first oil; and we will have results from exciting new exploitation tests. I see all of this combining to pave the way to a strong and sustainable future for Denbury.”

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

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