Denbury Inc. (NYSE: DEN) (“Denbury” or the “Company”) today provided results for the third quarter of 2021.

FINANCIAL AND OPERATING HIGHLIGHTS

 

 

3Q 2021

 

 

YTD 2021

(in thousands, except per-share and volume data)

 

Total

 

Per Diluted Share

 

 

Total

 

Per Diluted Share

Net Income (Loss)

 

$82,708

 

$1.51

 

 

$(64,629)

 

$(1.27)

Adjusted net income(1)(2) (non-GAAP)

 

40,360

 

0.74

 

 

95,976

 

1.80

Adjusted EBITDAX(1) (non-GAAP)

 

80,587

 

 

 

 

234,956

 

 

Cash flows from operations

 

104,019

 

 

 

 

247,557

 

 

Adjusted cash flows from operations(1) (non-GAAP)

 

77,550

 

 

 

 

229,291

 

 

Development capital expenditures

 

99,640

 

 

 

 

173,821

 

 

 

 

 

 

 

 

 

 

 

 

Average daily sales volumes (BOE/d)

 

49,682

 

 

 

 

48,732

 

 

Blue Oil (% oil volumes using industrial-sourced CO2)

 

25%

 

 

 

 

24%

 

 

Industrial-sourced CO2 injected (thousand metric tons)

 

862

 

 

 

 

2,430

 

 

  • Progressed installation of the 105-mile extension of the Greencore CO2 Pipeline to the Cedar Creek Anticline (“CCA”) EOR project ahead of plan, with completion expected before the end of November 2021.
  • Completed the Oyster Bayou A1 CO2 development expansion with initial production commencing late in the third quarter.
  • Reduced total debt by $52 million during the third quarter, exiting the quarter with no outstanding long-term debt and liquidity of $565 million.
  • Issued Denbury’s 2021 Corporate Responsibility Report, highlighting the Company’s net negative combined Scope 1 and 2 CO2 emissions for 2019 and 2020 and its target to be fully negative through Scope 3 within this decade.

(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.

(2)

Calculated using weighted average diluted shares outstanding of 54.7 million and 53.4 million for the three and nine months ended September 30, 2021, respectively.

RECENT CCUS HIGHLIGHTS

  • Executed a term sheet with Mitsubishi Corporation for the transport and storage of CO2 captured from Mitsubishi’s proposed ammonia project along the U.S. Gulf Coast. The agreement covers a 20-year period, and Mitsubishi’s project is targeted to produce associated CO2 emissions of approximately 1.8 million metric tons per year (“MMTPA”), beginning in the latter half of the decade.
  • Commenced a joint evaluation with Mitsui E&P USA LLC of potential opportunities across the U.S. Gulf Coast to develop carbon-negative oil assets utilizing anthropogenic CO2. As part of the evaluation, the parties seek to jointly pursue CO2 offtake opportunities from Mitsui’s potential projects along the U.S. Gulf Coast.
  • Announced joint development of a Texas Gulf Coast sequestration site with Gulf Coast Midstream Partners. Located in close proximity to Denbury’s existing CO2 Green Pipeline, the location has the potential to store up to 400 million metric tons of CO2 at a rate of up to 9 MMTPA. The EPA Class VI permitting process has been initiated and sequestration is estimated to be available by early 2025.

EXECUTIVE COMMENT

Chris Kendall, the Company’s President and CEO, commented, “Denbury’s strong operational execution and continued safety focus, combined with support from higher oil prices, delivered exceptional results for the third quarter. We advanced both near and long-term resource development projects, and I am particularly proud that the CCA CO2 development, the largest tertiary project in Denbury’s history, is ahead of schedule with zero recordable safety incidents incurred to date.”

“The third quarter was also a significant period for our CCUS business, as the initial term sheets we executed represent the first steps towards solidifying this substantial growth opportunity for our Company. We have advanced negotiations for additional CO2 transport and storage arrangements, and I remain confident in further announcements by the end of 2021. Our successes in 2021 have set the stage for a very exciting future, as we execute on our strategy to grow the CCUS opportunity while maintaining a strong EOR-focused production business.”

FINANCIAL AND OPERATING RESULTS

Total revenues and other income in the third quarter of 2021 were $344 million, a 14% increase over second quarter 2021 levels, supported predominantly by higher oil price realizations and also slightly higher oil volumes. Denbury’s third quarter 2021 average pre-hedge realized oil price was $68.88 per barrel (“Bbl”), which was $1.75 per Bbl below NYMEX WTI oil prices, consistent with the Company’s guidance. As compared to the second quarter of 2021, the Company’s average oil differential widened from the $1.32 per Bbl below NYMEX WTI last quarter, primarily as a result of Gulf Coast crudes in comparison to WTI.

Denbury’s oil and natural gas sales volumes averaged 49,682 barrels of oil equivalent per day (“BOE/d”) during the third quarter of 2021. In comparison to the second quarter 2021, third quarter sales volumes were up 1% primarily attributable to the Wind River Basin properties, Oyster Bayou performance, and non-tertiary sales at Conroe Field. Oil represented 97% of the Company’s third quarter 2021 volumes, and approximately 25% of the Company’s oil was attributable to the injection of industrial-sourced CO2 in its EOR operations, resulting in carbon-negative or blue oil.

Lease operating expenses (“LOE”) in the third quarter of 2021 totaled $117 million, or $25.50 per BOE, in line with expectations. On a per BOE basis, LOE expense increased approximately 3% from the second quarter of 2021 due in part to higher power and fuel, contract labor, and workover costs.

Transportation and marketing expenses for the quarter totaled $6 million, an improvement of $3 million from the second quarter of 2021, primarily as a result of a change in transportation and marketing arrangements for certain of the Company’s Rocky Mountain region oil volumes.

General and administrative expenses were $15 million in the third quarter of 2021, in line with expectations and consistent with the second quarter of 2021. Depletion, depreciation, and amortization (“DD&A”) was also in line with expectations at $38 million, or $8.25 per BOE for the quarter.

Commodity derivatives expense totaled $42 million in the third quarter of 2021. Cash payments on hedges that settled in the third quarter of 2021 totaled $78 million, offset by a $36 million noncash gain representing mark-to-market changes in the value of the Company’s hedging portfolio. No new hedges were added by the Company during the third quarter of 2021.

Other income for the third quarter of 2021 included a $7 million gain related to the sale of non-producing Houston-area surface acreage outside of the Company’s planned development area.

The Company’s effective tax rate for the third quarter of 2021 was negligible, as virtually all of the tax expense/benefit generated is currently fully offset by a change in valuation allowance on its federal and state deferred tax assets.

CAPITAL EXPENDITURES

Third quarter 2021 development capital expenditures totaled nearly $100 million, bringing year to-date capital expenditures to a total of $174 million. Approximately 60% of the third quarter total was dedicated to the CCA tertiary project, including the Greencore CO2 Pipeline extension, the infield CCA distribution system installation, and field work to begin converting water injection wells to CO2 injection. The Greencore CO2 Pipeline extension project is running ahead of schedule, and completion is now anticipated before the end of November 2021. Initial CO2 injection into CCA is expected in the first quarter of 2022, with production response estimated to commence in the second half of 2023.

Also during the quarter, the Company completed drilling and injection work at the Oyster Bayou A1 CO2 development expansion in the Gulf Coast. In addition, the Company drilled a horizontal infield development well at Coral Creek in the Cedar Creek Anticline area of the Rocky Mountain region. Production response from these projects commenced late in the third quarter of 2021.

GUIDANCE

Development capital expenditures for the fourth quarter of the year are expected between $75 million and $95 million, with the full year unchanged at a range of $250 million to $270 million. Planned fourth quarter capital expenditures include the completion of the Greencore CO2 Pipeline extension and CCA CO2 infield distribution system, as well as additional field development activities. For the fourth quarter of 2021, LOE per BOE is anticipated to be consistent with the unit rate in the third quarter and sales volumes are anticipated to average nearly 50,000 BOE/d.

Additional fourth quarter guidance details are available in the Company’s supplemental third quarter 2021 earnings presentation, which is available in the Investor Relations section of the Company’s website, www.denbury.com.

CONFERENCE CALL AND WEBCAST INFORMATION

Denbury will host a conference call and webcast to review and discuss its results and outlook today, Thursday, November 4, at 11:00 a.m. Central Time. Additionally, Denbury will post presentation materials on its website before market open today. The presentation webcast will be available, both live and for replay, on the Investor Relations page of the Company’s website at www.denbury.com. Individuals who would like to participate in the conference call should dial the following numbers shortly before the scheduled start time: 877.705.6003 or 201.493.6725 with conference number 13696090.

Denbury is an independent energy company with operations and assets focused on Carbon Capture, Use and Storage (CCUS) and Enhanced Oil Recovery (EOR) in the Gulf Coast and Rocky Mountain regions. For over two decades, the Company has maintained a unique strategic focus on utilizing CO2 in its EOR operations and since 2012 has also been active in CCUS through the injection of captured industrial-sourced CO2. The Company currently injects over three million tons of captured industrial-sourced CO2 annually, and its objective is to fully offset its Scope 1, 2, and 3 CO2 emissions within this decade, primarily through increasing the amount of captured industrial-sourced CO2 used in its operations. For more information about Denbury, visit www.denbury.com.

This press release, other than historical information, contains forward-looking statements that involve risks and uncertainties including estimated 2021 production, capital expenditures, and costs, the timing of completion of the Greencore pipeline extension to CCA, and results of ongoing negotiations of CCUS transport and storage arrangements, 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 financial and market, engineering, geological 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 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.

FINANCIAL AND STATISTICAL DATA TABLES AND RECONCILIATION SCHEDULES

References below to “Successor” refer to the new Denbury reporting entity after the Company’s emergence from bankruptcy on September 18, 2020, and references to “Predecessor” refer to the Denbury entity prior to emergence from bankruptcy. The following tables include selected unaudited financial and operational information for the Successor three and nine-month periods ended September 30, 2021, Successor period from September 19, 2020 through September 30, 2020, Predecessor periods from July 1, 2020 through September 18, 2020 and January 1, 2020 through September 18, 2020, and certain Combined information for the three and nine months ended September 30, 2020, in order to assist investors in understanding the comparability of the Company’s financial and operational results for the applicable periods. All sales volumes and dollars are expressed on a net revenue interest basis with gas volumes converted to equivalent barrels at 6:1.

DENBURY INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

The following information is based on GAAP reporting earnings (along with additional required disclosures) included or to be included in the Company’s periodic reports:

 

 

Quarter Ended Sept. 30, 2021

 

Quarter Ended Sept. 30, 2020

 

Period from Sept. 19, 2020 through Sept. 30, 2020

 

Period from July 1, 2020 through Sept. 18, 2020

In thousands, except per-share data

 

Successor

 

Combined (Non-GAAP)(1)

 

Successor

 

Predecessor

Revenues and other income

 

 

 

 

 

 

 

 

Oil sales

 

$

305,093

 

$

174,447

 

 

$

22,311

 

 

$

152,136

 

Natural gas sales

 

3,361

 

964

 

 

10

 

 

954

 

CO2 sales and transportation fees

 

12,237

 

7,484

 

 

967

 

 

6,517

 

Oil marketing revenues

 

12,593

 

3,483

 

 

151

 

 

3,332

 

Other income

 

10,451

 

7,191

 

 

94

 

 

7,097

 

Total revenues and other income

 

343,735

 

193,569

 

 

23,533

 

 

170,036

 

Expenses

 

 

 

 

 

 

 

 

Lease operating expenses

 

116,536

 

71,192

 

 

11,484

 

 

59,708

 

Transportation and marketing expenses

 

5,985

 

9,499

 

 

1,344

 

 

8,155

 

CO2 operating and discovery expenses

 

1,963

 

1,197

 

 

242

 

 

955

 

Taxes other than income

 

24,154

 

15,546

 

 

2,073

 

 

13,473

 

Oil marketing purchases

 

11,940

 

3,427

 

 

139

 

 

3,288

 

General and administrative expenses

 

15,388

 

16,748

 

 

1,735

 

 

15,013

 

Interest, net of amounts capitalized of $1,249, $4,887, $183 and $4,704, respectively

 

669

 

8,038

 

 

334

 

 

7,704

 

Depletion, depreciation, and amortization

 

37,691

 

41,600

 

 

5,283

 

 

36,317

 

Commodity derivatives expense (income)

 

41,745

 

574

 

 

(4,035

)

 

4,609

 

Write-down of oil and natural gas properties

 

 

261,677

 

 

 

 

261,677

 

Restructuring items, net

 

 

849,980

 

 

 

 

849,980

 

Other expenses

 

4,553

 

24,248

 

 

2,164

 

 

22,084

 

Total expenses

 

260,624

 

1,303,726

 

 

20,763

 

 

1,282,963

 

Income (loss) before income taxes

 

83,111

 

(1,110,157

)

 

2,770

 

 

(1,112,927

)

Income tax provision (benefit)

 

 

 

 

 

 

 

 

Current income taxes

 

350

 

(1,445

)

 

6

 

 

(1,451

)

Deferred income taxes

 

53

 

(302,350

)

 

6

 

 

(302,356

)

Net income (loss)

 

$

82,708

 

$

(806,362

)

 

$

2,758

 

 

$

(809,120

)

 

 

 

 

 

 

 

 

 

Net income (loss) per common share

 

 

 

 

 

 

 

 

Basic

 

$

1.62

 

 

 

$

0.06

 

 

$

(1.63

)

Diluted

 

$

1.51

 

 

 

$

0.06

 

 

$

(1.63

)

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

 

Basic

 

51,094

 

 

 

50,000

 

 

497,398

 

Diluted

 

54,714

 

 

 

50,000

 

 

497,398

 

(1)

Combined results for the quarter ended September 30, 2020 are provided for illustrative purposes and are derived from the financial statement line items from the Successor and Predecessor periods. Because of the impact of various adjustments to the financial statements in connection with the application of fresh start accounting, including asset valuation adjustments and liability adjustments, certain results of operations for the Successor are not comparable to those of the Predecessor. Management believes that the combined results provide meaningful information to assist investors in understanding the Company’s financial results for the applicable period, but should be not be considered in isolation, as a substitute for, or more meaningful than, independent results of the Predecessor and Successor periods for the quarter reported in accordance with GAAP.

 

 

Nine Months Ended Sept. 30, 2021

 

Nine Months Ended Sept. 30, 2020

 

Period from Sept. 19, 2020 through Sept. 30, 2020

 

Period from Jan. 1, 2020 through Sept. 18, 2020

In thousands, except per-share data

 

Successor

 

Combined (Non-GAAP)(1)

 

Successor

 

Predecessor

Revenues and other income

 

 

 

 

 

 

 

 

Oil sales

 

$

818,714

 

 

$

511,562

 

 

$

22,311

 

 

$

489,251

 

Natural gas sales

 

7,893

 

 

2,860

 

 

10

 

 

2,850

 

CO2 sales and transportation fees

 

31,599

 

 

22,016

 

 

967

 

 

21,049

 

Oil marketing revenues

 

26,538

 

 

8,694

 

 

151

 

 

8,543

 

Other income

 

11,518

 

 

8,513

 

 

94

 

 

8,419

 

Total revenues and other income

 

896,262

 

 

553,645

 

 

23,533

 

 

530,112

 

Expenses

 

 

 

 

 

 

 

 

Lease operating expenses

 

308,731

 

 

261,755

 

 

11,484

 

 

250,271

 

Transportation and marketing expenses

 

22,304

 

 

28,508

 

 

1,344

 

 

27,164

 

CO2 operating and discovery expenses

 

4,487

 

 

2,834

 

 

242

 

 

2,592

 

Taxes other than income

 

65,499

 

 

45,604

 

 

2,073

 

 

43,531

 

Oil marketing purchases

 

25,763

 

 

8,538

 

 

139

 

 

8,399

 

General and administrative expenses

 

62,821

 

 

50,257

 

 

1,735

 

 

48,522

 

Interest, net of amounts capitalized of $3,500, $23,068, $183 and $22,885, respectively

 

3,457

 

 

48,601

 

 

334

 

 

48,267

 

Depletion, depreciation, and amortization

 

113,522

 

 

193,876

 

 

5,283

 

 

188,593

 

Commodity derivatives expense (income)

 

330,152

 

 

(106,067

)

 

(4,035

)

 

(102,032

)

Gain on debt extinguishment

 

 

 

(18,994

)

 

 

 

(18,994

)

Write-down of oil and natural gas properties

 

14,377

 

 

996,658

 

 

 

 

996,658

 

Restructuring items, net

 

 

 

849,980

 

 

 

 

849,980

 

Other expenses

 

9,913

 

 

38,032

 

 

2,164

 

 

35,868

 

Total expenses

 

961,026

 

 

2,399,582

 

 

20,763

 

 

2,378,819

 

Income (loss) before income taxes

 

(64,764

)

 

(1,845,937

)

 

2,770

 

 

(1,848,707

)

Income tax provision (benefit)

 

 

 

 

 

 

 

 

Current income taxes

 

(101

)

 

(7,254

)

 

6

 

 

(7,260

)

Deferred income taxes

 

(34

)

 

(408,863

)

 

6

 

 

(408,869

)

Net income (loss)

 

$

(64,629

)

 

$

(1,429,820

)

 

$

2,758

 

 

$

(1,432,578

)

 

 

 

 

 

 

 

 

 

Net income (loss) per common share

 

 

 

 

 

 

 

 

Basic

 

$

(1.27

)

 

 

 

$

0.06

 

 

$

(2.89

)

Diluted

 

$

(1.27

)

 

 

 

$

0.06

 

 

$

(2.89

)

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

 

Basic

 

50,807

 

 

 

 

50,000

 

 

495,560

 

Diluted

 

50,807

 

 

 

 

50,000

 

 

495,560

 

(1)

Combined results for the nine months ended September 30, 2020 are provided for illustrative purposes and are derived from the financial statement line items from the Successor and Predecessor periods. Because of the impact of various adjustments to the financial statements in connection with the application of fresh start accounting, including asset valuation adjustments and liability adjustments, certain results of operations for the Successor are not comparable to those of the Predecessor. Management believes that the combined results provide meaningful information to assist investors in understanding the Company’s financial results for the applicable period, but should be not be considered in isolation, as a substitute for, or more meaningful than, independent results of the Predecessor and Successor periods for the nine months ended September 30, 2020 reported in accordance with GAAP.

DENBURY INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

 

 

Quarter Ended Sept. 30, 2021

 

Quarter Ended Sept. 30, 2020

 

Period from Sept. 19, 2020 through Sept. 30, 2020

 

Period from July 1, 2020 through Sept. 18, 2020

In thousands

 

Successor

 

Combined (Non-GAAP)(1)

 

Successor

 

Predecessor

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net income (loss)

 

$

82,708

 

 

$

(806,362

)

 

$

2,758

 

 

$

(809,120

)

Adjustments to reconcile net income (loss) to cash flows from operating activities

 

 

 

 

 

 

 

 

Noncash reorganization items, net

 

 

 

810,909

 

 

 

 

810,909

 

Depletion, depreciation, and amortization

 

37,691

 

 

41,600

 

 

5,283

 

 

36,317

 

Write-down of oil and natural gas properties

 

 

 

261,677

 

 

 

 

261,677

 

Deferred income taxes

 

53

 

 

(302,350

)

 

6

 

 

(302,356

)

Stock-based compensation

 

2,556

 

 

571

 

 

 

 

571

 

Commodity derivatives expense (income)

 

41,745

 

 

574

 

 

(4,035

)

 

4,609

 

Receipt (payment) on settlements of commodity derivatives

 

(77,670

)

 

17,789

 

 

6,660

 

 

11,129

 

Debt issuance costs and discounts

 

685

 

 

1,764

 

 

114

 

 

1,650

 

Gain from asset sales and other

 

(7,055

)

 

(6,404

)

 

 

 

(6,404

)

Other, net

 

(3,163

)

 

9,074

 

 

589

 

 

8,485

 

Changes in assets and liabilities, net of effects from acquisitions

 

 

 

 

 

 

 

 

Accrued production receivable

 

(4,067

)

 

3,049

 

 

38,537

 

 

(35,488

)

Trade and other receivables

 

3,769

 

 

(4,815

)

 

1,366

 

 

(6,181

)

Other current and long-term assets

 

6,043

 

 

6,000

 

 

705

 

 

5,295

 

Accounts payable and accrued liabilities

 

20,192

 

 

36,213

 

 

(7,980

)

 

44,193

 

Oil and natural gas production payable

 

2,944

 

 

4,361

 

 

(11,064

)

 

15,425

 

Other liabilities

 

(2,412

)

 

(143

)

 

(29

)

 

(114

)

Net cash provided by operating activities

 

104,019

 

 

73,507

 

 

32,910

 

 

40,597

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Oil and natural gas capital expenditures

 

(59,630

)

 

(21,810

)

 

(2,125

)

 

(19,685

)

Acquisitions of oil and natural gas properties

 

(116

)

 

(1

)

 

(1

)

 

 

Pipelines and plants capital expenditures

 

(14,272

)

 

(645

)

 

(6

)

 

(639

)

Net proceeds from sales of oil and natural gas properties and equipment

 

597

 

 

1,231

 

 

880

 

 

351

 

Other

 

9,956

 

 

12,544

 

 

(308

)

 

12,852

 

Net cash used in investing activities

 

(63,465

)

 

(8,681

)

 

(1,560

)

 

(7,121

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

Bank repayments

 

(212,000

)

 

(380,000

)

 

(55,000

)

 

(325,000

)

Bank borrowings

 

177,000

 

 

200,000

 

 

 

 

200,000

 

Interest payments treated as a reduction of debt

 

 

 

(3,911

)

 

 

 

(3,911

)

Cash paid in conjunction with debt repurchases

 

 

 

 

 

 

 

 

Costs of debt financing

 

 

 

(12,183

)

 

 

 

(12,183

)

Pipeline financing repayments

 

(17,166

)

 

(44,831

)

 

(54

)

 

(44,777

)

Other

 

309

 

 

(133

)

 

 

 

(133

)

Net cash provided by (used in) financing activities

 

(51,857

)

 

(241,058

)

 

(55,054

)

 

(186,004

)

Net increase (decrease) in cash, cash equivalents, and restricted cash

 

(11,303

)

 

(176,232

)

 

(23,704

)

 

(152,528

)

Cash, cash equivalents, and restricted cash at beginning of period

 

59,765

 

 

247,642

 

 

95,114

 

 

247,642

 

Cash, cash equivalents, and restricted cash at end of period

 

$

48,462

 

 

$

71,410

 

 

$

71,410

 

 

$

95,114

 

(1)

Combined results for the quarter ended September 30, 2020 are provided for illustrative purposes and are derived from the financial statement line items from the Successor and Predecessor periods. Because of the impact of various adjustments to the financial statements in connection with the application of fresh start accounting, including asset valuation adjustments and liability adjustments, certain results of operations for the Successor are not comparable to those of the Predecessor. Management believes that the combined results provide meaningful information to assist investors in understanding the Company’s financial results for the applicable period, but should be not be considered in isolation, as a substitute for, or more meaningful than, independent results of the Predecessor and Successor periods for the quarter reported in accordance with GAAP.

 

 

Nine Months Ended Sept. 30, 2021

 

Nine Months Ended Sept. 30, 2020

 

Period from Sept. 19, 2020 through Sept. 30, 2020

 

Period from Jan. 1, 2020 through Sept. 18, 2020

In thousands

 

Successor

 

Combined (Non-GAAP)(1)

 

Successor

 

Predecessor

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(64,629

)

 

$

(1,429,820

)

 

$

2,758

 

 

$

(1,432,578

)

Adjustments to reconcile net income (loss) to cash flows from operating activities

 

 

 

 

 

 

 

 

Noncash reorganization items, net

 

 

 

810,909

 

 

 

 

810,909

 

Depletion, depreciation, and amortization

 

113,522

 

 

193,876

 

 

5,283

 

 

188,593

 

Write-down of oil and natural gas properties

 

14,377

 

 

996,658

 

 

 

 

996,658

 

Deferred income taxes

 

(34

)

 

(408,863

)

 

6

 

 

(408,869

)

Stock-based compensation

 

22,788

 

 

4,111

 

 

 

 

4,111

 

Commodity derivatives expense (income)

 

330,152

 

 

(106,067

)

 

(4,035

)

 

(102,032

)

Receipt (payment) on settlements of commodity derivatives

 

(179,466

)

 

88,056

 

 

6,660

 

 

81,396

 

Gain on debt extinguishment

 

 

 

(18,994

)

 

 

 

(18,994

)

Debt issuance costs and discounts

 

2,055

 

 

11,685

 

 

114

 

 

11,571

 

Gain from asset sales and other

 

(7,026

)

 

(6,723

)

 

 

 

(6,723

)

Other, net

 

(2,448

)

 

7,751

 

 

589

 

 

7,162

 

Changes in assets and liabilities, net of effects from acquisitions

 

 

 

 

 

 

 

 

Accrued production receivable

 

(52,948

)

 

65,112

 

 

38,537

 

 

26,575

 

Trade and other receivables

 

(1,809

)

 

(20,977

)

 

1,366

 

 

(22,343

)

Other current and long-term assets

 

7,337

 

 

1,448

 

 

705

 

 

743

 

Accounts payable and accrued liabilities

 

47,484

 

 

(24,082

)

 

(7,980

)

 

(16,102

)

Oil and natural gas production payable

 

23,168

 

 

(17,856

)

 

(11,064

)

 

(6,792

)

Other liabilities

 

(4,966

)

 

94

 

 

(29

)

 

123

 

Net cash provided by operating activities

 

247,557

 

 

146,318

 

 

32,910

 

 

113,408

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Oil and natural gas capital expenditures

 

(113,041

)

 

(101,707

)

 

(2,125

)

 

(99,582

)

Acquisitions of oil and natural gas properties

 

(10,927

)

 

(1

)

 

(1

)

 

 

Pipelines and plants capital expenditures

 

(19,123

)

 

(11,607

)

 

(6

)

 

(11,601

)

Net proceeds from sales of oil and natural gas properties and equipment

 

19,053

 

 

42,202

 

 

880

 

 

41,322

 

Other

 

5,797

 

 

12,439

 

 

(308

)

 

12,747

 

Net cash used in investing activities

 

(118,241

)

 

(58,674

)

 

(1,560

)

 

(57,114

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

Bank repayments

 

(697,000

)

 

(606,000

)

 

(55,000

)

 

(551,000

)

Bank borrowings

 

627,000

 

 

691,000

 

 

 

 

691,000

 

Interest payments treated as a reduction of debt

 

 

 

(46,417

)

 

 

 

(46,417

)

Cash paid in conjunction with debt repurchases

 

 

 

(14,171

)

 

 

 

(14,171

)

Costs of debt financing

 

 

 

(12,482

)

 

 

 

(12,482

)

Pipeline financing repayments

 

(50,676

)

 

(51,846

)

 

(54

)

 

(51,792

)

Other

 

(2,426

)

 

(9,363

)

 

 

 

(9,363

)

Net cash provided by (used in) financing activities

 

(123,102

)

 

(49,279

)

 

(55,054

)

 

5,775

 

Net increase (decrease) in cash, cash equivalents, and restricted cash

 

6,214

 

 

38,365

 

 

(23,704

)

 

62,069

 

Cash, cash equivalents, and restricted cash at beginning of period

 

42,248

 

 

33,045

 

 

95,114

 

 

33,045

 

Cash, cash equivalents, and restricted cash at end of period

 

$

48,462

 

 

$

71,410

 

 

$

71,410

 

 

$

95,114

 

(1)

Combined results for the nine months ended September 30, 2020 are provided for illustrative purposes and are derived from the financial statement line items from the Successor and Predecessor periods. Because of the impact of various adjustments to the financial statements in connection with the application of fresh start accounting, including asset valuation adjustments and liability adjustments, certain results of operations for the Successor are not comparable to those of the Predecessor. Management believes that the combined results provide meaningful information to assist investors in understanding the Company’s financial results for the applicable period, but should be not be considered in isolation, as a substitute for, or more meaningful than, independent results of the Predecessor and Successor periods for the nine months ended September 30, 2020 reported in accordance with GAAP.

DENBURY INC.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 

In thousands, except par value and share data

 

Sept. 30, 2021

 

Dec. 31, 2020

Assets

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

 

$

1,783

 

 

$

518

 

Restricted cash

 

 

 

1,000

 

Accrued production receivable

 

144,370

 

 

91,421

 

Trade and other receivables, net

 

20,867

 

 

19,682

 

Derivative assets

 

 

 

187

 

Prepaids

 

10,872

 

 

14,038

 

Total current assets

 

177,892

 

 

126,846

 

Property and equipment

 

 

 

 

Oil and natural gas properties (using full cost accounting)

 

 

 

 

Proved properties

 

1,011,545

 

 

851,208

 

Unevaluated properties

 

108,258

 

 

85,304

 

CO2 properties

 

188,752

 

 

188,288

 

Pipelines

 

193,669

 

 

133,485

 

Other property and equipment

 

94,763

 

 

86,610

 

Less accumulated depletion, depreciation, amortization and impairment

 

(151,844

)

 

(41,095

)

Net property and equipment

 

1,445,143

 

 

1,303,800

 

Operating lease right-of-use assets

 

18,253

 

 

20,342

 

Intangible assets, net

 

90,533

 

 

97,362

 

Other assets

 

80,444

 

 

86,408

 

Total assets

 

$

1,812,265

 

 

$

1,634,758

 

Liabilities and Stockholders’ Equity

 

 

 

 

Current liabilities

 

 

 

 

Accounts payable and accrued liabilities

 

$

211,894

 

 

$

112,671

 

Oil and gas production payable

 

69,717

 

 

49,165

 

Derivative liabilities

 

193,015

 

 

53,865

 

Current maturities of long-term debt

 

17,332

 

 

68,008

 

Operating lease liabilities

 

3,338

 

 

1,350

 

Total current liabilities

 

495,296

 

 

285,059

 

Long-term liabilities

 

 

 

 

Long-term debt, net of current portion

 

 

 

70,000

 

Asset retirement obligations

 

243,184

 

 

179,338

 

Derivative liabilities

 

16,435

 

 

5,087

 

Deferred tax liabilities, net

 

1,241

 

 

1,274

 

Operating lease liabilities

 

17,362

 

 

19,460

 

Other liabilities

 

25,954

 

 

20,872

 

Total long-term liabilities

 

304,176

 

 

296,031

 

Commitments and contingencies

 

 

 

 

Stockholders’ equity

 

 

 

 

Preferred stock, $.001 par value, 50,000,000 shares authorized, none issued and outstanding

 

 

 

 

Common stock, $.001 par value, 250,000,000 shares authorized; 50,120,895 and 49,999,999 shares issued, respectively

 

50

 

 

50

 

Paid-in capital in excess of par

 

1,128,030

 

 

1,104,276

 

Accumulated deficit

 

(115,287

)

 

(50,658

)

Total stockholders equity

 

1,012,793

 

 

1,053,668

 

Total liabilities and stockholders’ equity

 

$

1,812,265

 

 

$

1,634,758

 

DENBURY INC. OPERATING HIGHLIGHTS (UNAUDITED)

All sales volumes and dollars are expressed on a net revenue interest basis with gas volumes converted to equivalent barrels at 6:1.

 

 

Quarter Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2021

 

2020

 

2021

 

2020

Average daily sales (BOE/d)

 

 

 

 

 

 

 

 

Tertiary

 

 

 

 

 

 

 

 

Gulf Coast region

 

24,336

 

25,776

 

24,432

 

26,971

Rocky Mountain region

 

9,033

 

7,718

 

8,337

 

7,586

Total tertiary sales

 

33,369

 

33,494

 

32,769

 

34,557

 

 

 

 

 

 

 

 

 

Non-tertiary

 

 

 

 

 

 

 

 

Gulf Coast region

 

3,763

 

3,728

 

3,600

 

4,161

Rocky Mountain region

 

12,550

 

12,464

 

12,363

 

13,221

Total non-tertiary sales

 

16,313

 

16,192

 

15,963

 

17,382

 

 

 

 

 

 

 

 

 

Total Company

 

 

 

 

 

 

 

 

Oil (Bbls/d)

 

48,145

 

48,334

 

47,276

 

50,619

Natural gas (Mcf/d)

 

9,222

 

8,110

 

8,739

 

7,916

BOE/d (6:1)

 

49,682

 

49,686

 

48,732

 

51,939

 

 

 

 

 

 

 

 

 

Unit sales price (excluding derivative settlements)

 

 

 

 

 

 

 

 

Gulf Coast region

 

 

 

 

 

 

 

 

Oil (per Bbl)

 

$

68.86

 

$

39.49

 

$

63.47

 

$

37.70

Natural gas (per mcf)

 

4.45

 

2.07

 

3.59

 

1.85

 

 

 

 

 

 

 

 

 

Rocky Mountain region

 

 

 

 

 

 

 

 

Oil (per Bbl)

 

$

68.91

 

$

38.85

 

$

63.39

 

$

35.66

Natural gas (per mcf)

 

3.64

 

0.38

 

3.11

 

0.67

 

 

 

 

 

 

 

 

 

Total Company

 

 

 

 

 

 

 

 

Oil (per Bbl)(1)

 

$

68.88

 

$

39.23

 

$

63.44

 

$

36.88

Natural gas (per mcf)

 

3.96

 

1.29

 

3.31

 

1.32

BOE (6:1)

 

67.48

 

38.37

 

62.13

 

36.15

(1)

Total company realized oil prices including derivative settlements were $51.35 per Bbl and $43.23 per Bbl during the three months ended September 30, 2021 and 2020, respectively, and $49.53 per Bbl and $43.23 per Bbl during the nine months ended September 30, 2021 and 2020, respectively.

DENBURY INC. SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES (UNAUDITED)

Reconciliation of net income (loss) (GAAP measure) to adjusted net income (non-GAAP measure)

Adjusted net income is a non-GAAP measure provided as a supplement to present an alternative net income (loss) measure which excludes expense and income items (and their related tax effects) not directly related to the Company’s ongoing operations. Management believes that adjusted net income may be helpful to investors by eliminating the impact of noncash and/or special or unusual items not indicative of the Company’s performance from period to period, and is widely used by the investment community, while also being used by management, in evaluating the comparability of the Company’s ongoing operational results and trends. Adjusted net income should not be considered in isolation, as a substitute for, or more meaningful than, net income (loss) or any other measure reported in accordance with GAAP, but rather to provide additional information useful in evaluating the Company’s operational trends and performance.

 

 

Quarter Ended

 

Quarter Ended

 

 

September 30, 2021

 

September 30, 2020

 

 

Successor

 

Combined (Non-GAAP)(1)

In thousands, except per-share data

 

Amount

 

Per Diluted Share

 

Amount

Net income (loss) (GAAP measure)(2)

 

$

82,708

 

 

$

1.51

 

 

$

(806,362

)

Adjustments to reconcile to adjusted net income (non-GAAP measure)

 

 

 

 

 

 

Noncash fair value losses (gains) on commodity derivatives(3)

 

(35,925

)

 

(0.66

)

 

18,363

 

Reorganization items, net(4)

 

 

 

 

 

849,980

 

Write-down of oil and natural gas properties(5)

 

 

 

 

 

261,677

 

Accelerated depreciation charge(6)

 

 

 

 

 

1,791

 

Expense associated with restructuring(9)

 

 

 

 

 

16,232

 

Delhi Field insurance reimbursements(10)

 

 

 

 

 

(15,402

)

Noncash fair value adjustment - contingent consideration(11)

 

436

 

 

0.01

 

 

 

Other(12)

 

(6,859

)

 

(0.12

)

 

1,013

 

Estimated income taxes on above adjustments to net loss and other discrete tax items(14)

 

 

 

 

 

(307,344

)

Adjusted net income (non-GAAP measure)

 

$

40,360

 

 

$

0.74

 

 

$

19,948

 

 

 

 

Nine Months Ended

 

Nine Months Ended

 

 

September 30, 2021

 

September 30, 2020

 

 

Successor

 

Combined (Non-GAAP)(1)

In thousands, except per-share data

 

Amount

 

Per Diluted Share

 

Amount

Net loss (GAAP measure)(2)

 

$

(64,629

)

 

$

(1.27

)

 

$

(1,429,820

)

Adjustments to reconcile to adjusted net income (non-GAAP measure)

 

 

 

 

 

 

Noncash fair value losses (gains) on commodity derivatives(3)

 

150,686

 

 

2.82

 

 

(18,011

)

Reorganization items, net(4)

 

 

 

 

 

849,980

 

Write-down of oil and natural gas properties(5)

 

14,377

 

 

0.27

 

 

996,658

 

Accelerated depreciation charge(6)

 

 

 

 

 

39,159

 

Gain on debt extinguishment(7)

 

 

 

 

 

(18,994

)

Severance-related expense included in general and administrative expenses(8)

 

 

 

 

 

2,361

 

Expense associated with restructuring(9)

 

 

 

 

 

24,107

 

Delhi Field insurance reimbursements(10)

 

 

 

 

 

(15,402

)

Noncash fair value adjustment - contingent consideration(11)

 

2,076

 

 

0.04

 

 

 

Other(12)

 

(6,534

)

 

(0.12

)

 

3,623

 

Adjustments to reconcile effect of dilutive securities(13)

 

 

 

0.06

 

 

 

Estimated income taxes on above adjustments to net loss and other discrete tax items(14)

 

 

 

 

 

(418,655

)

Adjusted net income (non-GAAP measure)

 

$

95,976

 

 

$

1.80

 

 

$

15,006

 

(1)

Combined results for the three and nine months ended September 30, 2020 are provided for illustrative purposes and are derived from the financial statement line items from the Successor and Predecessor periods. Because of the impact of various adjustments to the financial statements in connection with the application of fresh start accounting, including asset valuation adjustments and liability adjustments, certain results of operations of the Successor are not comparable to those of the Predecessor. Management believes that the combined results provide more meaningful information to assist investors in understanding the Company’s financial results for the applicable period, but should not be considered in isolation, as a substitute for, or meaningful than, independent results of the Predecessor and Successor periods for the quarter and nine months ended September 30, 2020 reported in accordance with GAAP.

(2)

Diluted net income (loss) per common share includes the impact of potentially dilutive securities including nonvested restricted stock units and warrants during the Successor period and includes nonvested restricted stock, nonvested performance-based equity awards, and shares into which the Predecessor’s previous convertible senior notes were convertible.

(3)

The net change between periods of the fair market values of open commodity derivative positions, excluding the impact of settlements on commodity derivatives during the period.

(4)

Reorganization items, net represent (a) expenses incurred subsequent to the filing petition for Chapter 11 as a direct result of the prepackaged joint plan of reorganization, (b) gains or losses from liabilities settled, and (c) fresh start accounting adjustments.

(5)

Full cost pool ceiling test write-downs related to the Company’s oil and natural gas properties.

(6)

Accelerated depreciation related to impaired unevaluated properties that were transferred to the full cost pool.

(7)

Gain on debt extinguishment related to the Company’s 2020 open market repurchases.

(8)

Severance-related expense associated with the Company’s May-2020 involuntary workforce reduction.

(9)

Expenses related to advisor and professional fees associated with review of strategic alternatives and comprehensive restructuring of the Company’s indebtedness.

(10)

Insurance reimbursements associated with a 2013 incident at Delhi Field.

(11)

Expense related to the change in fair value of the contingent consideration payments related to our March 2021 Wind River Basin CO2 EOR field acquisition.

(12)

Other adjustments primarily include: (a) for the three months ended September 30, 2021, $7.0 million gain on land sales, (b) for the three months ended September 30, 2020, $5.9 million gain on land sales, $4.2 million write-off of trade receivables, $2.2 million of expense associated with the Delta-Tinsley CO2 pipeline incident and $0.5 million of expense associated with the helium supply contract ruling. The nine months ended September 30, 2021 were impacted by a $0.3 million write-off of trade receivables during the three months ended March 31, 2021, and the nine months ended September 30, 2020 were further impacted by $1.6 million of expense associated with the Delta-Tinsley CO2 pipeline incident and $1.0 million of expense associated with the helium supply contract ruling.

(13)

Represents the impact to the per-share calculation using weighted average dilutive shares of 53.4 million during the nine months ended September 30, 2021 as a result of the adjustments to the Company’s net loss (GAAP measure) to derive adjusted net income (non-GAAP measure).

(14)

The estimated income tax impacts on adjustments to net income for the nine months ended September 30, 2020 are computed based upon a rate of 25% applied to income before tax, which incorporates discrete tax adjustments primarily comprised of the tax effect of the ceiling test and accelerated depreciation, impacts of the CARES Act, valuation allowances, and the periodic tax impacts of a shortfall (benefit) on the stock-based compensation deduction.

DENBURY INC. SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES (UNAUDITED)

Reconciliation of net income (loss) (GAAP measure) to Adjusted EBITDAX (non-GAAP measure)

Adjusted EBITDAX is a non-GAAP measure which management uses and is calculated based upon (but not identical to) a financial covenant related to “Consolidated EBITDAX” in the Company’s senior secured bank credit facility, which excludes certain items that are included in net income (loss), the most directly comparable GAAP financial measure. Items excluded include interest, income taxes, depletion, depreciation, and amortization, and items that the Company believes affect the comparability of operating results such as items whose timing and/or amount cannot be reasonably estimated or are nonrecurring. Management believes Adjusted EBITDAX may be helpful to investors in order to assess the Company’s operating performance as compared to that of other companies in the industry, without regard to financing methods, capital structure or historical costs basis. It is also commonly used by third parties to assess leverage and the Company’s ability to incur and service debt and fund capital expenditures. Adjusted EBITDAX should not be considered in isolation, as a substitute for, or more meaningful than, net income (loss), cash flow from operations, or any other measure reported in accordance with GAAP. The Company’s Adjusted EBITDAX may not be comparable to similarly titled measures of another company because all companies may not calculate Adjusted EBITDAX, EBITDAX or EBITDA in the same manner. The following table presents a reconciliation of the Company’s net income (loss) to Adjusted EBITDAX.

In thousands

 

Quarter Ended Sept. 30, 2021

 

Quarter Ended Sept. 30, 2020

 

Nine Months Ended Sept. 30, 2021

 

Nine Months Ended Sept. 30, 2020

 

Successor

 

Combined (Non-GAAP)(1)

 

Successor

 

Combined (Non-GAAP)(1)

Net income (loss) (GAAP measure)

 

$

82,708

 

 

$

(806,362

)

 

$

(64,629

)

 

$

(1,429,820

)

Adjustments to reconcile to Adjusted EBITDAX

 

 

 

 

 

 

 

 

Interest expense

 

669

 

 

8,038

 

 

3,457

 

 

48,601

 

Income tax expense (benefit)

 

403

 

 

(303,795

)

 

(135

)

 

(416,117

)

Depletion, depreciation, and amortization

 

37,691

 

 

41,600

 

 

113,522

 

 

193,876

 

Noncash fair value losses (gains) on commodity derivatives

 

(35,925

)

 

18,363

 

 

150,686

 

 

(18,011

)

Stock-based compensation

 

2,556

 

 

571

 

 

22,788

 

 

4,111

 

Gain on debt extinguishment

 

 

 

 

 

 

 

(18,994

)

Write-down of oil and natural gas properties

 

 

 

261,677

 

 

14,377

 

 

996,658

 

Reorganization items, net

 

 

 

849,980

 

 

 

 

849,980

 

Severance-related expense

 

 

 

954

 

 

476

 

 

3,315

 

Noncash, non-recurring and other

 

(7,515

)

 

22,419

 

 

(5,586

)

 

35,014

 

Adjusted EBITDAX (non-GAAP measure)(2)

 

$

80,587

 

 

$

93,445

 

 

$

234,956

 

 

$

248,613

 

(1)

Combined results for the three and nine months ended September 30, 2020 are provided for illustrative purposes and are derived from the financial statement line items from the Successor and Predecessor periods. Because of the impact of various adjustments to the financial statements in connection with the application of fresh start accounting, including asset valuation adjustments and liability adjustments, certain results of operations of the Successor are not comparable to those of the Predecessor. Management believes that the combined results provide more meaningful information to assist investors in understanding the Company’s financial results for the applicable period, but should not be considered in isolation, as a substitute for, or meaningful than, independent results of the Predecessor and Successor periods for the quarter and nine months ended September 30, 2020 reported in accordance with GAAP.

(2)

Excludes pro forma adjustments related to qualified acquisitions or dispositions under the Company’s senior secured bank credit facility.

DENBURY INC. SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES (UNAUDITED)

Reconciliation of cash flows from operations (GAAP measure) to adjusted cash flows from operations (non-GAAP measure) and free cash flow (non-GAAP measure)

Adjusted cash flows from operations is a non-GAAP measure that represents cash flows provided by operations before changes in assets and liabilities, as summarized from the Company’s Unaudited Condensed Consolidated Statements of Cash Flows. Adjusted cash flows from operations measures the cash flows earned or incurred from operating activities without regard to the collection or payment of associated receivables or payables. Free cash flow is a non-GAAP measure that represents adjusted cash flows from operations less reorganization items settled in cash, interest treated as debt reduction, development capital expenditures and capitalized interest, but before acquisitions. Management believes that it is important to consider these additional measures, along with cash flows from operations, as it believes the non-GAAP measures can often be a better way to discuss changes in operating trends in its business caused by changes in sales volumes, prices, operating costs and related factors, without regard to whether the earned or incurred item was collected or paid during that period. Adjusted cash flows from operations and free cash flow are not measures of financial performance under GAAP and should not be considered as alternatives to cash flows from operations, investing, or financing activities, nor as a liquidity measure or indicator of cash flows.

In thousands

 

Quarter Ended Sept. 30, 2021

 

Quarter Ended Sept. 30, 2020

 

Nine Months Ended Sept. 30, 2021

 

Nine Months Ended Sept. 30, 2020

 

Successor

 

Combined (Non-GAAP)(1)

 

Successor

 

Combined (Non-GAAP)(1)

Cash flows from operations (GAAP measure)

 

$

104,019

 

 

$

73,507

 

 

$

247,557

 

 

$

146,318

 

Net change in assets and liabilities relating to operations

 

(26,469

)

 

(44,665

)

 

(18,266

)

 

(3,739

)

Adjusted cash flows from operations (non-GAAP measure)(2)

 

77,550

 

 

28,842

 

 

229,291

 

 

142,579

 

Reorganization items settled in cash

 

 

 

39,071

 

 

 

 

39,071

 

Interest on notes treated as debt reduction

 

 

 

(3,911

)

 

 

 

(46,417

)

Development capital expenditures

 

(99,640

)

 

(17,522

)

 

(173,821

)

 

(77,566

)

Capitalized interest

 

(1,249

)

 

(4,887

)

 

(3,500

)

 

(23,068

)

Free cash flow (deficit) (non-GAAP measure)

 

$

(23,339

)

 

$

41,593

 

 

$

51,970

 

 

$

34,599

 

(1)

Combined results for the three and nine months ended September 30, 2020 are provided for illustrative purposes and are derived from the financial statement line items from the Successor and Predecessor periods. Because of the impact of various adjustments to the financial statements in connection with the application of fresh start accounting, including asset valuation adjustments and liability adjustments, certain results of operations of the Successor are not comparable to those of the Predecessor. Management believes that the combined results provide more meaningful information to assist investors in understanding the Company’s financial results for the applicable period, but should not be considered in isolation, as a substitute for, or meaningful than, independent results of the Predecessor and Successor periods for the quarter and nine months ended September 30, 2020 reported in accordance with GAAP.

(2)

Adjusted cash flow from operations for the three and nine months ended September 30, 2021 includes $2.5 million of nonrecurring accrued litigation. If these amounts were removed, adjusted cash flow from operations would have been $80.1 million and $231.8 million for the three and nine months ended September 30, 2021, respectively.

DENBURY INC.

CAPITAL EXPENDITURE SUMMARY (UNAUDITED)(1)

 

 

 

Quarter Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

In thousands

 

2021

 

2020

 

2021

 

2020

Capital expenditure summary

 

 

 

 

 

 

 

 

Tertiary and non-tertiary fields

 

$

52,083

 

$

8,511

 

$

102,640

 

$

41,679

Capitalized internal costs(2)

 

7,854

 

8,351

 

22,639

 

26,695

Oil and natural gas capital expenditures

 

59,937

 

16,862

 

125,279

 

68,374

CCA CO2 pipeline

 

39,703

 

660

 

48,542

 

9,192

Development capital expenditures

 

99,640

 

17,522

 

173,821

 

77,566

Acquisitions of oil and natural gas properties(3)

 

116

 

15

 

10,927

 

95

Capital expenditures, before capitalized interest

 

99,756

 

17,537

 

184,748

 

77,661

Capitalized interest

 

1,249

 

4,887

 

3,500

 

23,068

Capital expenditures, total

 

$

101,005

 

$

22,424

 

$

188,248

 

$

100,729

(1)

Capital expenditure amounts include accrued capital.

(2)

Includes capitalized internal acquisition, exploration and development costs and pre-production tertiary startup costs.

(3)

Primarily consists of working interest positions in the Wind River Basin enhanced oil recovery fields acquired on March 3, 2021.

 

Brad Whitmarsh, Executive Director, Investor Relations, 972.673.2020, brad.whitmarsh@denbury.com Susan James, Manager, Investor Relations, 972.673.2593, susan.james@denbury.com

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