Denbury Resources Inc. (NYSE:DNR) (“Denbury” or the “Company”)
today announced that its 2017 capital budget, excluding
acquisitions and capitalized interest, is currently estimated at
approximately $300 million, 44% over 2016 capital spending
levels. The budget provides for:
- $175 million allocated for tertiary oil field
expenditures;
- $60 million allocated for other areas, primarily non-tertiary
oil field expenditures;
- $10 million to be spent on CO2 sources and pipelines; and
- $55 million for other capital items such as capitalized
internal acquisition, exploration and development costs and
pre-production tertiary startup costs.
In addition, capitalized interest for 2017 is
currently estimated at approximately $20 million. At this
spending level, the Company anticipates 2017 production of between
58,000 and 62,000 barrels of oil equivalent per day (“BOE/d”), with
the mid-point of such range roughly flat with the Company’s 2016
exit rate of just under 60,000 BOE/d.
MANAGEMENT COMMENT
Phil Rykhoek, Denbury’s CEO commented, “We are
pleased with our progress over the past year, especially the
improvements we made in reducing costs and enhancing the efficiency
of our operations. We also completed a robust review of all
of our fields and identified multiple areas that we can exploit in
the coming years, including both tertiary expansions and other
opportunities. We continue to be vigilant with our balance
sheet and are limiting our capital spending to an amount near our
expected cash flow. Our capital spending in the current price
environment continues to be primarily focused on expanding our
existing CO2 floods and other infill opportunities and,
importantly, our planned 2017 capital projects have strong
economics at $50 oil. With our improved efficiencies, this
$300 million capital budget should hold full-year 2017 production
essentially flat with our 2016 exit rate and should put us on a
trajectory to resume slight production growth in 2018, based on
current assumptions and expectations. We are encouraged by
our future opportunities and are looking forward to 2017 as we
continue to pursue ways to enhance our operating efficiency and
de-lever our balance sheet.”
PRELIMINARY 2016 FOURTH QUARTER AND ANNUAL
PRODUCTION
Denbury’s continuing production averaged 60,685
BOE/d during the fourth quarter of 2016, in line with our
expectations, and was 96% oil, with CO2 tertiary properties
accounting for 62% of overall production. On a
sequential-quarter basis, continuing production in the fourth
quarter of 2016 was essentially flat with continuing production in
the third quarter of 2016, with production from our CO2 tertiary
properties increasing slightly.
Excluding sold properties, Denbury’s continuing
production for full-year 2016 averaged 62,998 BOE/d, down 11% from
the prior-year’s level. Approximately one-third of the
production decline was attributable to production shut-in due to
economics and weather-related shut-in production at Thompson and
Conroe fields, with the remainder largely due to natural production
declines. Further production information is provided on page
7 of this press release.
PRELIMINARY 2016 CAPITAL EXPENDITURES
Denbury’s 2016 development capital expenditures
totaled $209 million, consisting of $206 million spent on oil and
natural gas development, including $56 million related to
capitalized internal acquisition, exploration and development costs
and pre-production tertiary startup costs, with the remainder spent
primarily on CO2 source wells and CO2 infrastructure and
pipelines. These estimated capital expenditures exclude
property acquisition costs of $11 million and capitalized interest
of $26 million.
A breakdown of preliminary estimated 2016
capital expenditures is shown in the following table:
In millions |
|
2016 Preliminary Capital Expenditures (1) |
Capital expenditures by project |
|
|
Tertiary
oil fields |
|
$ |
119 |
|
Non-tertiary fields |
|
31 |
|
Capitalized internal costs (2) |
|
56 |
|
Oil and
natural gas capital expenditures |
|
206 |
|
CO2
pipelines, sources and other |
|
3 |
|
Capital expenditures, before acquisitions and capitalized
interest |
|
209 |
|
Acquisitions of oil and
natural gas properties |
|
11 |
|
Capital expenditures, before capitalized
interest |
|
220 |
|
Capitalized
interest |
|
26 |
|
Capital expenditures, total |
|
$ |
246 |
|
(1) Capital expenditure amounts include accrued capital.(2)
Includes capitalized internal acquisition, exploration and
development costs and pre-production tertiary startup costs.
2016 PROVED RESERVES
The Company’s total estimated proved oil and
natural gas reserves at December 31, 2016 were 254 million
barrels of oil equivalent (“MMBOE”), consisting of 247 million
barrels of crude oil, condensate and natural gas liquids (together,
“liquids”), and 44 billion cubic feet (or 7 MMBOE) of natural
gas. Reserves were 97% liquids and 82% proved developed, with
58% of those reserves attributable to Denbury’s CO2 tertiary
operations. Total proved reserves declined by a net 35 MMBOE
during 2016 primarily due to 23 MMBOE of production, with 7 MMBOE
of downward revisions of previous estimates associated with changes
in commodity prices, operating costs and performance, and 5 MMBOE
due to properties sold during the year.
|
|
Oil(MMBbl) |
|
Gas (Bcf) |
|
MMBOE |
Balance at December 31,
2015 |
|
282 |
|
|
38 |
|
|
289 |
|
Revisions
of previous estimates |
|
(9 |
) |
|
16 |
|
|
(7 |
) |
2016
production |
|
(22 |
) |
|
(6 |
) |
|
(23 |
) |
Sales of
minerals or other revisions |
|
(4 |
) |
|
(4 |
) |
|
(5 |
) |
Balance at
December 31, 2016 |
|
247 |
|
|
44 |
|
|
254 |
|
Year-end 2016 estimated proved reserves and the
discounted net present value of Denbury’s proved reserves, using a
10% per annum discount rate (“PV-10 Value”)(1) (a non-GAAP
measure), were computed using first-day-of-the-month 12-month
average prices of $42.75 per Bbl for oil (based on NYMEX prices)
and $2.55 per million British thermal unit (“MMBtu”) for natural
gas (based on Henry Hub cash prices), adjusted for prices received
at the field. Comparative prices for year-end 2015 were
$50.28 per Bbl of oil and $2.63 per MMBtu for natural gas, adjusted
for prices received at the field. The preliminary
standardized measure of discounted estimated future net cash flows
after income taxes of Denbury’s proved reserves at December 31,
2016 (“Standardized Measure”) was $1.4 billion compared to $1.9
billion at December 31, 2015. PV-10 Value(1) was $1.5
billion at December 31, 2016, compared to $2.3 billion at
December 31, 2015. See the accompanying schedules for an
explanation of the difference between PV-10 Value(1) and the
preliminary Standardized Measure and the uses of this
information.
Denbury’s estimated proved CO2 reserves at
year-end 2016, on a gross or 8/8th’s basis for operated fields,
together with its overriding royalty interest in LaBarge Field in
Wyoming, totaled 6.5 trillion cubic feet (“Tcf”), slightly lower
than CO2 reserves of 6.7 Tcf as of December 31,
2015. Of these total CO2 reserves, 5.3 Tcf are located in the
Gulf Coast region and 1.2 Tcf in the Rocky Mountain region.
In addition to these proved CO2 reserves, in the Gulf Coast
region Denbury is currently purchasing CO2 from two industrial
facilities and expects purchases to begin in the near future from
Mississippi Power’s Kemper County plant; and in the Rocky Mountain
region Denbury has the ability to purchase CO2 from a gas
processing facility, all under long-term contractual
agreements. Although there are no proved CO2 reserves
associated with these long-term agreements, they currently supply
approximately 65 million cubic feet per day (“MMcf/d”) of the
CO2 Denbury is using for its tertiary operations and could
increase up to approximately 225 MMcf/d in a few years once the
Kemper County plant is fully operational.
(1) A non-GAAP measure. See accompanying
schedules that reconcile GAAP to non-GAAP measures along with a
statement indicating why the Company believes the non-GAAP measures
provide useful information for investors.
CONFERENCE PRESENTATION
Phil Rykhoek, CEO, Chris Kendall, President and
COO, and Mark Allen, Sr. VP and CFO, will be attending the 22nd
Annual Credit Suisse Energy Summit and delivering a Company
presentation on Thursday, February 16, 2017 at 10:20 A.M. Mountain
Time. A link to the live webcast of the presentation and the
presentation slides will be available the morning of Tuesday,
February 14th in the investor relations section of the Company’s
website at www.denbury.com.
FOURTH QUARTER AND FULL-YEAR 2016
RESULTS CONFERENCE CALL
Denbury management will host a conference call
to review and discuss fourth quarter and full-year 2016 financial
and operating results, together with its financial and operating
outlook for 2017, on Thursday, February 23, 2017 at 10:00 A.M.
(Central). Additionally, Denbury will publish presentation
materials on its website which will be referenced during the
conference call. Individuals who would like to participate
should dial 800.230.1074 or 612.332.0226 ten minutes before the
scheduled start time. To access a live audio webcast of the
conference call and accompanying slide presentation, please visit
the investor relations section of the Company’s website at
www.denbury.com. The webcast will be archived on the website,
and a telephonic replay will be accessible for at least one month
after the call by dialing 800.475.6701 or 320.365.3844 and entering
confirmation number 361971.
Denbury is an independent oil and natural gas
company with operations focused in two key operating areas: the
Gulf Coast and Rocky Mountain regions. The Company’s goal is
to increase the value of its properties through a combination of
exploitation, drilling and proven engineering extraction practices,
with the most significant emphasis relating to CO2 enhanced oil
recovery operations. For more information about Denbury,
please visit www.denbury.com.
In this press release, Denbury provides
estimated year-end 2016 proved reserves information and preliminary
production and capital expenditures information for its fiscal year
2016. Denbury has prepared the summary preliminary data in
this release based on the most current information available to
management. Denbury’s normal closing and financial reporting
processes with respect to the preliminary data herein have not been
fully completed and, as a result, its actual results could be
different from this summary preliminary information presented
herein, and any such differences could be material.
This press release, other than historical
financial information, contains forward-looking statements that
involve risks and uncertainties including the preliminary
information referenced above, estimated 2017 production and capital
expenditures, estimated cash generated from operations in 2017, and
other risks and uncertainties detailed in the Company’s filings
with the Securities and Exchange Commission, including Denbury’s
most recent report on Form 10-K. These risks and
uncertainties are incorporated by this reference as though fully
set forth herein. These statements are based on engineering,
geological, financial and operating assumptions that management
believes are reasonable based on currently available information;
however, management’s assumptions and the Company’s future
performance are both subject to a wide range of business risks, and
there is no assurance that these goals and projections can or will
be met. Actual results may vary materially. In
addition, any forward-looking statements represent the Company’s
estimates only as of today and should not be relied upon as
representing its estimates as of any future date. Denbury
assumes no obligation to update its forward-looking statements.
DENBURY RESOURCES INC.
SUPPLEMENTAL NON-GAAP FINANCIAL MEASURE
(UNAUDITED)
Reconciliation of the preliminary standardized
measure of discounted estimated future net cash flows after income
taxes (GAAP measure) to PV-10 Value (non-GAAP measure)
PV-10 Value is a non-GAAP measure and is
different from the preliminary Standardized Measure in that PV-10
Value is a pre-tax number and the Standardized Measure is an
after-tax number. Denbury’s 2016 and 2015 year-end
estimated proved oil and natural gas reserves and proved
CO2 reserves quantities were prepared by the independent
reservoir engineering firm of DeGolyer and MacNaughton. The
information used to calculate PV-10 Value is derived directly from
data determined in accordance with FASC Topic
932. Management believes PV-10 Value is a useful
supplemental disclosure to the Standardized Measure because the
Standardized Measure can be impacted by a company’s unique tax
situation, and it is not practical to calculate the Standardized
Measure on a property-by-property basis. Because of
this, PV-10 Value is a widely used measure within the industry and
is commonly used by securities analysts, banks and credit rating
agencies to evaluate the estimated future net cash flows from
proved reserves on a comparative basis across companies or specific
properties. PV-10 Value is commonly used by management
and others in the industry to evaluate properties that are bought
and sold, to assess the potential return on investment in the
Company’s oil and natural gas properties, and to perform impairment
testing of oil and natural gas properties. PV-10 Value is not
a measure of financial or operating performance under GAAP, nor
should it be considered in isolation or as a substitute for the
Standardized Measure. PV-10 Value and the preliminary
Standardized Measure do not purport to represent the fair value of
the Company’s oil and natural gas reserves.
|
|
December 31, |
In
thousands |
|
2016 |
|
2015 |
Preliminary
Standardized Measure (GAAP measure) |
|
$ |
1,399,217 |
|
|
$ |
1,890,124 |
|
Discounted estimated future income tax |
|
142,467 |
|
|
428,431 |
|
PV-10 Value (non-GAAP
measure) |
|
$ |
1,541,684 |
|
|
$ |
2,318,555 |
|
DENBURY RESOURCES
INC.PRODUCTION HIGHLIGHTS (UNAUDITED)
|
|
Quarter Ended |
|
Year Ended |
|
|
December 31, |
|
Sept. 30, |
|
December 31, |
Average Daily Volumes (BOE/d) (6:1) |
|
2016 |
|
2015 |
|
2016 |
|
2016 |
|
2015 |
Tertiary oil
production |
|
|
|
|
|
|
|
|
|
|
Gulf Coast
region |
|
|
|
|
|
|
|
|
|
|
Mature
properties (1) |
|
8,440 |
|
|
10,403 |
|
|
8,653 |
|
|
9,040 |
|
|
10,830 |
|
Delhi |
|
4,387 |
|
|
3,898 |
|
|
4,262 |
|
|
4,155 |
|
|
3,688 |
|
Hastings |
|
4,552 |
|
|
5,082 |
|
|
4,729 |
|
|
4,829 |
|
|
5,061 |
|
Heidelberg |
|
4,924 |
|
|
5,635 |
|
|
5,000 |
|
|
5,128 |
|
|
5,785 |
|
Oyster
Bayou |
|
4,988 |
|
|
5,831 |
|
|
4,767 |
|
|
5,083 |
|
|
5,898 |
|
Tinsley |
|
6,786 |
|
|
7,522 |
|
|
6,756 |
|
|
7,192 |
|
|
8,119 |
|
Total
Gulf Coast region |
|
34,077 |
|
|
38,371 |
|
|
34,167 |
|
|
35,427 |
|
|
39,381 |
|
Rocky Mountain
region |
|
|
|
|
|
|
|
|
|
|
Bell
Creek |
|
3,269 |
|
|
2,806 |
|
|
3,032 |
|
|
3,121 |
|
|
2,221 |
|
Total
Rocky Mountain region |
|
3,269 |
|
|
2,806 |
|
|
3,032 |
|
|
3,121 |
|
|
2,221 |
|
Total tertiary oil
production |
|
37,346 |
|
|
41,177 |
|
|
37,199 |
|
|
38,548 |
|
|
41,602 |
|
Non-tertiary
oil and gas production |
|
|
|
|
|
|
|
|
|
|
Gulf Coast
region |
|
|
|
|
|
|
|
|
|
|
Mississippi |
|
745 |
|
|
1,377 |
|
|
963 |
|
|
850 |
|
|
1,194 |
|
Texas |
|
5,143 |
|
|
6,470 |
|
|
4,234 |
|
|
4,906 |
|
|
6,443 |
|
Other |
|
569 |
|
|
800 |
|
|
538 |
|
|
528 |
|
|
889 |
|
Total
Gulf Coast region |
|
6,457 |
|
|
8,647 |
|
|
5,735 |
|
|
6,284 |
|
|
8,526 |
|
Rocky Mountain
region |
|
|
|
|
|
|
|
|
|
|
Cedar
Creek Anticline |
|
15,186 |
|
|
17,875 |
|
|
16,017 |
|
|
16,322 |
|
|
17,997 |
|
Other |
|
1,696 |
|
|
2,407 |
|
|
1,763 |
|
|
1,844 |
|
|
2,743 |
|
Total
Rocky Mountain region |
|
16,882 |
|
|
20,282 |
|
|
17,780 |
|
|
18,166 |
|
|
20,740 |
|
Total non-tertiary
production |
|
23,339 |
|
|
28,929 |
|
|
23,515 |
|
|
24,450 |
|
|
29,266 |
|
Total
continuing production |
|
60,685 |
|
|
70,106 |
|
|
60,714 |
|
|
62,998 |
|
|
70,868 |
|
Property
sales |
|
|
|
|
|
|
|
|
|
|
Williston
Assets (2) |
|
— |
|
|
1,473 |
|
|
819 |
|
|
864 |
|
|
1,549 |
|
Other
property divestitures |
|
— |
|
|
423 |
|
|
— |
|
|
141 |
|
|
444 |
|
Total
production |
|
60,685 |
|
|
72,002 |
|
|
61,533 |
|
|
64,003 |
|
|
72,861 |
|
(1) Mature properties include Brookhaven, Cranfield, Eucutta,
Little Creek, Lockhart Crossing, Mallalieu, Martinville, McComb and
Soso fields.(2) Includes non-tertiary production in the Rocky
Mountain region related to the sale of remaining non-core assets in
the Williston Basin of North Dakota and Montana, which closed in
the third quarter of 2016.
DENBURY CONTACTS:
Mark C. Allen, Senior Vice President and Chief Financial Officer, 972.673.2000
John Mayer, Investor Relations, 972.673.2383
Denbury Resources (NYSE:DNR)
Historical Stock Chart
From Aug 2024 to Sep 2024
Denbury Resources (NYSE:DNR)
Historical Stock Chart
From Sep 2023 to Sep 2024