Denbury Resources Inc. (NYSE:DNR) (“Denbury” or the “Company”)
today announced an adjusted net loss(1) (a non-GAAP measure) of $3
million for the fourth quarter of 2015, or $0.01(1)(2) per diluted
share. On a GAAP basis, the Company recorded a quarterly net
loss of $885 million, or $2.56 per diluted share. The
adjusted net loss(1) for the fourth quarter of 2015 differs from
the GAAP net loss primarily due to the exclusion of a $1.3 billion
($832 million after tax) write-down of oil and natural gas
properties.
Sequential comparisons of selected quarterly
financial items are shown in the following table:
|
|
Quarter Ended |
(in
millions, except per share and unit data) |
|
Dec. 31, 2015 |
|
Sept. 30, 2015 |
|
Dec. 31, 2014 |
Net income (loss) |
|
$ |
(885 |
) |
|
$ |
(2,244 |
) |
|
$ |
364 |
|
Adjusted net income
(loss)(1) (non-GAAP measure) |
|
|
(3 |
) |
|
|
63 |
|
|
|
93 |
|
Net income (loss) per
diluted share |
|
|
(2.56 |
) |
|
|
(6.41 |
) |
|
|
1.04 |
|
Adjusted net income
(loss) per diluted share(1)(2) (non-GAAP measure) |
|
|
(0.01 |
) |
|
|
0.18 |
|
|
|
0.27 |
|
Cash flows from
operations |
|
|
165 |
|
|
|
273 |
|
|
|
338 |
|
Adjusted cash flows
from operations(1)(3) (non-GAAP measure) |
|
|
129 |
|
|
|
243 |
|
|
|
350 |
|
|
|
|
|
|
|
|
Revenues |
|
$ |
266 |
|
|
$ |
300 |
|
|
$ |
480 |
|
Receipt on settlements
of commodity derivatives |
|
|
78 |
|
|
|
161 |
|
|
|
104 |
|
Revenues and commodity
derivative settlements combined |
|
$ |
344 |
|
|
$ |
461 |
|
|
$ |
584 |
|
|
|
|
|
|
|
|
Average realized oil
price per barrel (excluding derivative settlements) |
|
$ |
40.41 |
|
|
$ |
45.74 |
|
|
$ |
70.80 |
|
Average realized oil
price per barrel (including derivative settlements) |
|
$ |
52.67 |
|
|
$ |
71.32 |
|
|
$ |
86.67 |
|
|
|
|
|
|
|
|
Total production
(BOE/d) |
|
|
72,002 |
|
|
|
71,410 |
|
|
|
74,875 |
|
|
(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
350.9 million for the three months ended September 30, 2015, and
350.0 million for the year ended December 31, 2015. |
(3)
Adjusted cash flows from operations reflects cash flows from
operations before working capital changes. |
Adjusted net income (loss)(1) for the fourth
quarter of 2015 decreased by $66 million on a sequential-quarter
basis and $96 million when compared to the prior-year fourth
quarter. The changes during both comparative periods were
primarily due to lower oil revenues in the fourth quarter of 2015
as a result of the decline in realized oil prices and a reduction
in receipt on settlements from the Company’s derivative
contracts. These decreases were partially offset by
reductions in depletion, depreciation and amortization, general and
administrative expenses, and taxes other than income in both
periods, with the change versus the prior year fourth quarter also
benefiting from a reduction in lease operating expenses.
Adjusted cash flows from operations(1)(3) (a non-GAAP measure) for
the fourth quarter of 2015 decreased $114 million on a
sequential-quarter basis and $221 million from the prior-year
fourth quarter, primarily as a result of lower revenues and hedging
receipts, offset in part by a decrease in many of the Company’s
operating expenses.
ANNUAL RESULTS
Denbury’s full-year 2015 adjusted net income(1)
was $131 million, or $0.37 per diluted share. On a GAAP
basis, the Company recorded a full-year 2015 net loss of $4.4
billion, or $12.57 per diluted share, on annual revenues of $1.2
billion. Adjusted net income(1) for the full-year 2015
differs from GAAP net income for the year primarily due to the
exclusion of (1) a $4.9 billion ($3.1 billion after tax) write-down
of oil and natural gas properties, (2) a $1.3 billion ($1.2 billion
after tax) impairment of goodwill, and (3) a $364 million ($225
million after tax) loss on noncash fair value adjustments on
commodity derivatives(1).
Year-over-year comparisons of selected annual
financial items are shown in the following table:
|
|
Year Ended |
(in
millions, except per share and unit data) |
|
Dec. 31, 2015 |
|
Dec. 31, 2014 |
Net income (loss) |
|
$ |
(4,385 |
) |
|
$ |
635 |
|
Adjusted net income(1)
(non-GAAP measure) |
|
|
131 |
|
|
|
365 |
|
Net income (loss) per
diluted share |
|
|
(12.57 |
) |
|
|
1.81 |
|
Adjusted net income per
diluted share(1)(2) (non-GAAP measure) |
|
|
0.37 |
|
|
|
1.04 |
|
Cash flows from
operations |
|
|
864 |
|
|
|
1,223 |
|
Adjusted cash flows
from operations(1)(3) (non-GAAP measure) |
|
|
819 |
|
|
|
1,269 |
|
|
|
|
|
|
Revenues |
|
$ |
1,244 |
|
|
$ |
2,417 |
|
Receipt on settlements
of commodity derivatives |
|
|
512 |
|
|
|
1 |
|
Revenues and commodity
derivative settlements combined |
|
$ |
1,756 |
|
|
$ |
2,418 |
|
|
|
|
|
|
Average realized oil
price per barrel (excluding derivative settlements) |
|
$ |
47.30 |
|
|
$ |
90.74 |
|
Average realized oil
price per barrel (including derivative settlements) |
|
$ |
67.41 |
|
|
$ |
90.82 |
|
|
|
|
|
|
Total production
(BOE/d) |
|
|
72,861 |
|
|
|
74,432 |
|
Adjusted net income(1) for full-year 2015
decreased by $234 million compared to 2014, primarily due to a
decrease in oil revenues as a result of lower realized prices,
partially offset by an increase in receipt on settlements from the
Company’s derivative contracts and reductions in all expense
categories during 2015. Adjusted cash flows from
operations(1)(3) during 2015 decreased $450 million from 2014,
primarily as a result of lower revenues and hedging receipts,
offset in part by a decrease in many of our cash expenses.
MANAGEMENT COMMENT
Phil Rykhoek, Denbury’s President and CEO,
commented, “I am very pleased with our response to the continued
commodity price downturn, driving significant year-over-year
reductions in capital and lease operating expenditures, while
taking important steps to improve our operational efficiency and
positioning us well for the future. Maintaining our liquidity
and financial flexibility is paramount in this oil price
environment, and we continue to adjust our business to preserve our
financial security and flexibility. During 2015, we generated
over $390 million of excess cash flow after incurred development
capital expenditures and dividends, part of which was due to our
cost reduction efforts. We used $220 million of this cash
flow to reduce our bank debt to $175 million at year-end, leaving
us with well over a billion dollars of current liquidity. We
also recently modified our bank loan agreement to enable us to
comply with our bank debt financial maintenance covenants through
the end of 2017, assuming current strip pricing. Lastly, we
have recently entered into additional hedges for the second half of
2016 and first quarter of 2017 to further protect our
liquidity. We now have hedges covering an average of 27,000
barrels of oil per day (“Bbls/d”) in the third and fourth quarters
at an average price of $40.66 per barrel. While we believe
oil prices will ultimately improve, we are taking steps to ensure
we have liquidity and resources to weather this storm.
“For 2016, we anticipate capital expenditures of
approximately $200 million in 2016, a fifty-one percent reduction
from 2015 capital expenditures of $407 million. Despite this
significant reduction in capital spending for the second year in a
row, our production declines should be minimized due to the
long-lived low-decline profile of our asset base. We expect
2016 annual production will be approximately seven to twelve
percent below 2015 levels, about sixty percent due to natural
declines, with the other forty percent due to production shut-in
for economic reasons. We continue to focus on reducing costs,
increasing efficiency, and maximizing our cash flow in this
environment, which means we will continue to evaluate shutting-in
production that becomes uneconomic to produce at current
prices.
“Denbury has many competitive advantages in this
low-priced environment, including reduced bank debt, substantial
liquidity, and low-decline assets. We continue to improve our
operational efficiency, which will permanently enhance our future
profitability, and to evaluate ways to strengthen our financial
position. We are optimistic about the daily improvements
occurring in our business, and look forward to promising days
ahead.”
PRODUCTION
Denbury’s total production for the fourth
quarter of 2015 averaged 72,002 barrels of oil equivalent per day
(“BOE/d”), including 41,177 Bbls/d from tertiary properties and
30,825 BOE/d from non-tertiary properties. Denbury’s average
production for the full-year 2015 was 72,861 BOE/d, down 2% from
the prior year’s level, including annual tertiary production of
41,602 Bbls/d and non-tertiary production of 31,259 BOE/d.
Fourth quarter 2015 production was 95% oil, unchanged from the same
prior-year period.
Total fourth quarter 2015 production increased
1% on a sequential-quarter basis and decreased 4% compared to
production during the fourth quarter of 2014, and reflects the
impact of just under 1,700 BOE/d attributable to wells shut-in at
year-end as uneconomic to either produce or repair due to commodity
prices. In addition to the production shut-in during 2015, in
early 2016 the Company decided to shut-in incremental production
for economic reasons which totaled approximately 900 BOE/d.
Production during the fourth quarter of 2015 compared to the
prior-year quarter reflects the impact of a contractual
reversionary assignment in Delhi Field occurring on November 1,
2014, which decreased the Company’s ownership interest in the field
by approximately 25%. Fourth quarter 2015 tertiary oil
production increased 1% on a sequential-quarter basis and decreased
2% compared to the fourth quarter of 2014. Non-tertiary
oil-equivalent production during the fourth quarter of 2015 was up
1% on a sequential-quarter basis and down 7% from comparable
production in the fourth quarter of 2014.
REVIEW OF FINANCIAL RESULTS
Oil and natural gas revenues, excluding the
impact of derivative contracts, decreased 45% when comparing the
fourth quarters of 2015 and 2014, due to a 41% decline in realized
commodity prices and a 4% decline in production. Denbury’s
average realized oil price, excluding derivative contracts, was
$40.41 per Bbl in the fourth quarter of 2015, compared to $45.74
per Bbl in the third quarter of 2015 and $70.80 per Bbl in the
prior-year fourth quarter. Including derivative settlements,
Denbury’s average realized oil price was $52.67 per Bbl in the
fourth quarter of 2015, compared to $71.32 per Bbl in the third
quarter of 2015 and $86.67 per Bbl in the prior-year fourth
quarter. The oil price realized relative to NYMEX oil prices
(the Company’s NYMEX oil price differential) in the fourth quarter
of 2015 was $1.74 per Bbl below NYMEX prices, compared to a
differential of $0.96 per Bbl below NYMEX in the third quarter of
2015 and $2.24 per Bbl below NYMEX in the prior-year fourth
quarter.
The Company’s total lease operating expenses in
the fourth quarter of 2015 averaged $19.31 per BOE. Lease
operating expenses during the third quarter of 2015 included
insurance and other expense reimbursements recognized during the
quarter totaling $14 million, or $2.09 per BOE. Excluding
these special items, lease operating expenses per BOE during the
fourth quarter of 2015 decreased 1% from the $19.43 per-BOE average
in the third quarter of 2015, and decreased 15% from the $22.64
per-BOE average in the fourth quarter of 2014. These
decreases were primarily due to the Company’s cost reduction
efforts throughout 2014 and 2015, as well as general market
decreases in the prices of many of the components of these
costs.
Taxes other than income, which includes ad
valorem, production and franchise taxes, decreased $1 million
sequentially and $9 million from the prior-year fourth quarter
level. The levels of taxes other than income during most
periods are generally aligned with fluctuations in oil and natural
gas revenues.
General and administrative expenses were $27
million in the fourth quarter of 2015, decreasing $5 million, or
17%, sequentially and $8 million, or 22%, from levels of the same
expenses in the prior-year fourth quarter. On an annual
basis, general and administrative expenses decreased $14 million,
or 9%, from 2014 to 2015. The decreases during both periods
were due largely to an approximate 11% reduction in headcount
between year-end 2014 and 2015, which resulted in lower employee
compensation and related costs, as well as other cost reduction
efforts.
Interest expense, before capitalized interest,
was $47 million in the fourth quarter of 2015, compared to $50
million in the fourth quarter of 2014, due primarily to a $234
million decrease in average debt outstanding. Capitalized
interest was $7 million during the fourth quarter of 2015,
consistent with fourth quarter of 2014 levels, resulting in net
interest expense of $40 million in the fourth quarter of 2015,
compared to $43 million in the prior-year fourth quarter.
Excess cash flow from operations was used to pay down borrowings on
the Company’s bank credit facility, which ended the fourth quarter
of 2015 at $175 million, down from $395 million as of December 31,
2014.
As a result of the significant decrease in
commodity pricing from fourth quarter of 2014 levels, the Company
recognized pre-tax full cost pool ceiling test write-downs of $1.3
billion and $4.9 billion during the quarter and year ended December
31, 2015, respectively. In determining these write-downs, the
Company is required to use the average of rolling
first-day-of-the-month oil and natural gas prices for the preceding
12 months, after adjustments for market differentials by
field. The preceding 12-month price averaged $48.11 per Bbl
for crude oil and $2.45 per thousand cubic feet (“Mcf”) for natural
gas for the year ended December 31, 2015. Based on current
oil prices, another full cost ceiling test write-down is likely in
the first quarter of 2016.
Denbury’s overall depletion, depreciation, and
amortization (“DD&A”) rate was $16.96 per BOE in the fourth
quarter of 2015, compared to $22.81 per BOE in the prior-year
fourth quarter. The decrease was primarily driven by a
reduction in depletable costs associated with the Company’s
reserves base resulting from the full cost pool ceiling test
write-downs recognized during the first nine months of 2015,
partially offset by a reduction in proved oil and natural gas
reserve volumes (discussed further below). Based on full cost
pool ceiling test write-downs recognized during 2015, the DD&A
rate for the first quarter of 2016 is expected to decrease further
from the fourth quarter of 2015 rate.
Receipts on settlements of oil and natural gas
derivative contracts were $78 million in the fourth quarter of
2015, compared to receipts of $161 million in the third quarter of
2015 and $104 million in the fourth quarter of 2014. On an
annual basis, receipts on settlements of oil and natural gas
derivative contracts totaled $512 million during 2015, resulting in
an increase in average net realized prices of $19.24 per BOE.
Denbury’s effective tax rate for the fourth
quarter of 2015 was 36.5%, relatively consistent with the effective
tax rate of 37.4% in the prior-year fourth quarter. The
Company’s estimated statutory rate remained at 38%, consistent with
the prior-year fourth quarter. Denbury’s effective tax rate
for full-year 2015 was 30.7%, less than the Company’s statutory
rate, primarily as a result of the impairment of goodwill during
the third quarter of 2015, whereby a significant portion of the
$1.3 billion balance that was written off for financial reporting
purposes did not have a related tax basis, and therefore no
corresponding tax benefit was realized related to the
impairment.
YEAR-END 2015 PROVED
RESERVES
Denbury’s total estimated proved oil and natural
gas reserves at December 31, 2015 were 289 million barrels of
oil equivalent (“MMBOE”), consisting of 282 million barrels of
crude oil, condensate and natural gas liquids (together,
“liquids”), and 38 billion cubic feet (or 7 MMBOE) of natural
gas. Reserves were 98% liquids and 79% proved developed, and
57% of those reserves were attributable to Denbury’s CO2 tertiary
operations. The net reduction in total proved reserves of 149
MMBOE during 2015 was the result of 126 MMBOE of revisions due to
price changes, which is discussed further below, as well as 27
MMBOE of 2015 production, slightly offset by 4 MMBOE of other net
upward revisions or additions.
|
|
Oil(MMBbl) |
|
Gas (MMcf) |
|
MMBOE |
Balance at December 31,
2014 |
|
362 |
|
|
452 |
|
|
438 |
|
Revisions due to price changes |
|
(61 |
) |
|
(389 |
) |
|
(126 |
) |
2015 production |
|
(25 |
) |
|
(8 |
) |
|
(27 |
) |
Other revisions |
|
6 |
|
|
(17 |
) |
|
4 |
|
Balance at
December 31, 2015 |
|
282 |
|
|
38 |
|
|
289 |
|
The estimated discounted net present value of
Denbury’s proved reserves at December 31, 2015, before
projected income taxes, using a 10% per annum discount rate (“PV-10
Value”)(1) (a non-GAAP measure), was $2.3 billion, compared to $8.7
billion at December 31, 2014. PV-10 Value(1) and
estimated proved reserves for 2015 were computed using
first-day-of-the-month 12-month average prices of $50.28 per Bbl
for oil (based on NYMEX prices) and $2.63 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 2014 were $94.99 per Bbl of
oil and $4.30 per MMBtu for natural gas, adjusted for prices
received at the field.
Proved oil and natural gas reserve quantities
and PV-10 Values(1) presented above reflect the significant decline
in commodity prices between year-end 2015 and 2014, and include 368
Bcf (61 MMBOE) of natural gas reserves at Riley Ridge that were
reclassified and are no longer considered proved reserves primarily
due to lower natural gas prices and increased forecasted operating
costs.
Denbury’s estimated proved CO2 reserves at
year-end 2015, on a gross or 8/8th’s basis for operated fields,
together with its overriding royalty interest in LaBarge Field in
Wyoming, totaled 6.7 trillion cubic feet (“Tcf”), reduced from
December 31, 2014 CO2 reserves of 8.7 Tcf. Of these
total CO2 reserves, 5.5 Tcf are located in the Gulf Coast
region and 1.2 Tcf in the Rocky Mountain region. During 2015,
1.8 Tcf of Riley Ridge CO2 reserves were reclassified and are no
longer considered proved reserves primarily as a result of lower
natural gas prices. In addition to these proved
CO2 reserves, Denbury is currently purchasing CO2 from
two industrial facilities in the Gulf Coast region and a gas
processing facility in the Rocky Mountain region, all under
long-term contractual agreements. Although there are no
proved CO2 reserves associated with these long-term
agreements, they currently supply approximately 15% of the
CO2 Denbury is using for its tertiary operations.
2016 CAPITAL BUDGET AND ESTIMATED
PRODUCTION
The Company’s 2016 capital budget, excluding
acquisitions and capitalized interest, will be approximately $200
million, which has been budgeted at less than half of 2015 levels
to more closely match the Company’s estimated cash flow from
operations. At this spending level, the Company anticipates
2016 production of between 64,000 and 68,000 BOE/d, a decrease of
approximately seven to twelve percent from 2015 levels, with
approximately sixty percent of the decrease due to natural declines
and the remainder due to production shut-in for economic
reasons.
CONFERENCE CALL INFORMATION
Denbury management will host a conference call
to review and discuss fourth quarter and full-year 2015 financial
and operating results, as well as first quarter and full-year 2016
financial and operating guidance, today, Thursday, February 18, at
10:00 A.M. (Central). Additionally, Denbury has published
presentation materials which will be referenced during the
conference call. Individuals who would like to participate
should dial 800.230.1096 or 612.332.0725 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 one month after the
call by dialing 800.475.6701 or 320.365.3844 and entering
confirmation number 324020.
ANNUAL MEETING INFORMATION
Denbury’s 2016 Annual Meeting of Stockholders
will be held on Tuesday, May 24, 2016, at 8:00 A.M. (Central), at
Denbury’s corporate offices located at 5320 Legacy Drive, Plano,
Texas. The record date for determination of shareholders
entitled to vote at the annual meeting is the close of business on
Tuesday, March 29, 2016.
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.
This press release, other than historical
financial information, contains forward-looking statements that
involve risks and uncertainties including estimated 2016 production
and capital expenditures, estimated cash generated from operations
in 2016, 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.
FINANCIAL AND STATISTICAL DATA TABLES
AND RECONCILIATION SCHEDULES
Following are unaudited financial highlights for
the comparative three and twelve month periods ended
December 31, 2015 and 2014 and the three month period ended
September 30, 2015. All production volumes and dollars are
expressed on a net revenue interest basis with gas volumes
converted to equivalent barrels at 6:1.
DENBURY RESOURCES INC. |
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED) |
|
The
following information is based on GAAP reported earnings, with
additional required disclosures included in the Company’s Form
10-K: |
|
|
|
Quarter Ended |
|
Year Ended |
|
|
December 31, |
|
Sept. 30, |
|
December 31, |
In
thousands, except per-share data |
|
2015 |
|
2014 |
|
2015 |
|
2015 |
|
2014 |
Revenues and
other income |
|
|
|
|
|
|
|
|
|
|
Oil sales |
|
$ |
254,294 |
|
|
$ |
461,843 |
|
|
$ |
285,742 |
|
|
$ |
1,194,038 |
|
|
$ |
2,338,367 |
|
Natural gas sales |
|
3,983 |
|
|
7,750 |
|
|
4,646 |
|
|
18,988 |
|
|
34,106 |
|
CO2 and helium sales and
transportation fees |
|
7,358 |
|
|
10,682 |
|
|
9,144 |
|
|
30,626 |
|
|
44,643 |
|
Interest income and other
income |
|
3,982 |
|
|
3,409 |
|
|
4,068 |
|
|
13,908 |
|
|
18,089 |
|
Total revenues and other
income |
|
269,617 |
|
|
483,684 |
|
|
303,600 |
|
|
1,257,560 |
|
|
2,435,205 |
|
Expenses |
|
|
|
|
|
|
|
|
|
|
Lease operating expenses |
|
127,887 |
|
|
158,732 |
|
|
113,902 |
|
|
515,043 |
|
|
647,559 |
|
Marketing and plant operating
expenses |
|
15,388 |
|
|
14,116 |
|
|
14,458 |
|
|
55,746 |
|
|
64,379 |
|
CO2 and helium discovery and
operating expenses |
|
1,648 |
|
|
2,993 |
|
|
1,017 |
|
|
4,557 |
|
|
25,222 |
|
Taxes other than income |
|
24,151 |
|
|
32,940 |
|
|
25,607 |
|
|
109,992 |
|
|
169,701 |
|
General and administrative
expenses |
|
27,430 |
|
|
35,332 |
|
|
32,907 |
|
|
144,564 |
|
|
158,343 |
|
Interest, net of amounts
capitalized of $6,918, $6,789, $8,081, $32,146 and $24,202,
respectively |
|
40,081 |
|
|
42,867 |
|
|
39,225 |
|
|
159,268 |
|
|
183,003 |
|
Depletion, depreciation, and
amortization |
|
112,356 |
|
|
157,118 |
|
|
121,406 |
|
|
531,660 |
|
|
592,972 |
|
Commodity derivatives expense
(income) |
|
(21,821 |
) |
|
(554,430 |
) |
|
(92,028 |
) |
|
(147,999 |
) |
|
(555,255 |
) |
Loss on early extinguishment of
debt |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
113,908 |
|
Write-down of oil and natural gas
properties |
|
1,327,000 |
|
|
— |
|
|
1,760,600 |
|
|
4,939,600 |
|
|
— |
|
Impairment of goodwill |
|
— |
|
|
— |
|
|
1,261,512 |
|
|
1,261,512 |
|
|
— |
|
Other expenses |
|
9,599 |
|
|
12,816 |
|
|
— |
|
|
9,599 |
|
|
12,816 |
|
Total expenses |
|
1,663,719 |
|
|
(97,516 |
) |
|
3,278,606 |
|
|
7,583,542 |
|
|
1,412,648 |
|
Income (loss)
before income taxes |
|
(1,394,102 |
) |
|
581,200 |
|
|
(2,975,006 |
) |
|
(6,325,982 |
) |
|
1,022,557 |
|
Income tax provision
(benefit) |
|
|
|
|
|
|
|
|
|
|
Current income taxes |
|
(9,418 |
) |
|
(43,439 |
) |
|
1,184 |
|
|
(8,355 |
) |
|
(42,907 |
) |
Deferred income taxes |
|
(499,607 |
) |
|
261,006 |
|
|
(732,064 |
) |
|
(1,932,179 |
) |
|
429,973 |
|
Net income
(loss) |
|
$ |
(885,077 |
) |
|
$ |
363,633 |
|
|
$ |
(2,244,126 |
) |
|
$ |
(4,385,448 |
) |
|
$ |
635,491 |
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) per common share |
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(2.56 |
) |
|
$ |
1.04 |
|
|
$ |
(6.41 |
) |
|
$ |
(12.57 |
) |
|
$ |
1.82 |
|
Diluted |
|
$ |
(2.56 |
) |
|
$ |
1.04 |
|
|
$ |
(6.41 |
) |
|
$ |
(12.57 |
) |
|
$ |
1.81 |
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
declared per common share |
|
$ |
— |
|
|
$ |
0.0625 |
|
|
$ |
0.0625 |
|
|
$ |
0.1875 |
|
|
$ |
0.2500 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
Basic |
|
345,876 |
|
|
348,869 |
|
|
350,052 |
|
|
348,802 |
|
|
348,962 |
|
Diluted |
|
345,876 |
|
|
350,627 |
|
|
350,052 |
|
|
348,802 |
|
|
351,167 |
|
DENBURY RESOURCES INC. |
SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES
(UNAUDITED) |
|
Reconciliation of net income (loss) (GAAP measure) to adjusted net
income (loss) (non-GAAP measure)(1): |
|
|
|
Quarter Ended |
|
Year Ended |
|
|
December 31, |
|
Sept. 30, |
|
December 31, |
In
thousands |
|
2015 |
|
2014 |
|
2015 |
|
2015 |
|
2014 |
Net income (loss) (GAAP
measure) |
|
$ |
(885,077 |
) |
|
$ |
363,633 |
|
|
$ |
(2,244,126 |
) |
|
$ |
(4,385,448 |
) |
|
$ |
635,491 |
|
Noncash fair value adjustments on
commodity derivatives |
|
56,585 |
|
|
(450,754 |
) |
|
68,649 |
|
|
363,700 |
|
|
(553,834 |
) |
Interest income and other income –
noncash fair value adjustment – contingent liability |
|
(1,250 |
) |
|
(1,250 |
) |
|
— |
|
|
(1,250 |
) |
|
(1,250 |
) |
Lease operating expenses – special
items |
|
— |
|
|
2,772 |
|
|
(13,715 |
) |
|
(13,715 |
) |
|
(7,134 |
) |
Loss on early extinguishment of
debt |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
113,908 |
|
Write-down of oil and natural gas
properties |
|
1,327,000 |
|
|
— |
|
|
1,760,600 |
|
|
4,939,600 |
|
|
— |
|
Impairment of goodwill |
|
— |
|
|
— |
|
|
1,261,512 |
|
|
1,261,512 |
|
|
— |
|
Other expenses – impairment of
assets |
|
8,705 |
|
|
12,816 |
|
|
— |
|
|
8,705 |
|
|
12,816 |
|
Estimated income taxes on above
adjustments to net income (loss) and other discrete tax items |
|
(508,542 |
) |
|
165,838 |
|
|
(769,497 |
) |
|
(2,041,916 |
) |
|
165,488 |
|
Adjusted net income
(loss) (non-GAAP measure) |
|
$ |
(2,579 |
) |
|
$ |
93,055 |
|
|
$ |
63,423 |
|
|
$ |
131,188 |
|
|
$ |
365,485 |
|
|
(1)
See “Non-GAAP Measures” at the end of this report. |
Reconciliation of cash flows from operations (GAAP measure) to
adjusted cash flows from operations (non-GAAP measure)(1): |
|
|
|
Quarter Ended |
|
Year Ended |
In thousands |
|
December 31, |
|
Sept. 30, |
|
December 31, |
|
2015 |
|
2014 |
|
2015 |
|
2015 |
|
2014 |
Net income (loss) (GAAP
measure) |
|
$ |
(885,077 |
) |
|
$ |
363,633 |
|
|
$ |
(2,244,126 |
) |
|
$ |
(4,385,448 |
) |
|
$ |
635,491 |
|
Adjustments to
reconcile to adjusted cash flows from operations |
|
|
|
|
|
|
|
|
|
|
Depletion, depreciation, and
amortization |
|
112,356 |
|
|
157,118 |
|
|
121,406 |
|
|
531,660 |
|
|
592,972 |
|
Deferred income taxes |
|
(499,607 |
) |
|
261,006 |
|
|
(732,064 |
) |
|
(1,932,179 |
) |
|
429,973 |
|
Stock-based compensation |
|
7,967 |
|
|
4,409 |
|
|
7,670 |
|
|
30,604 |
|
|
30,513 |
|
Noncash fair value adjustments on
commodity derivatives |
|
56,585 |
|
|
(450,754 |
) |
|
68,649 |
|
|
363,700 |
|
|
(553,834 |
) |
Loss on early extinguishment of
debt |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
113,908 |
|
Write-down of oil and natural gas
properties |
|
1,327,000 |
|
|
— |
|
|
1,760,600 |
|
|
4,939,600 |
|
|
— |
|
Impairment of goodwill |
|
— |
|
|
— |
|
|
1,261,512 |
|
|
1,261,512 |
|
|
— |
|
Other |
|
10,111 |
|
|
14,391 |
|
|
(1,129 |
) |
|
9,464 |
|
|
19,787 |
|
Adjusted cash flows
from operations (non-GAAP measure) |
|
129,335 |
|
|
349,803 |
|
|
242,518 |
|
|
818,913 |
|
|
1,268,810 |
|
Net change in assets and
liabilities relating to operations |
|
35,572 |
|
|
(12,075 |
) |
|
30,158 |
|
|
45,391 |
|
|
(45,985 |
) |
Cash flows from
operations (GAAP measure) |
|
$ |
164,907 |
|
|
$ |
337,728 |
|
|
$ |
272,676 |
|
|
$ |
864,304 |
|
|
$ |
1,222,825 |
|
|
(1)
See “Non-GAAP Measures” at the end of this report. |
DENBURY RESOURCES INC. |
SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES
(UNAUDITED) |
|
Reconciliation of commodity derivatives income (expense) (GAAP
measure) to noncash fair value adjustments on commodity derivatives
(non-GAAP measure)(1): |
|
|
|
Quarter Ended |
|
Year Ended |
|
|
December 31, |
|
Sept. 30, |
|
December 31, |
In
thousands |
|
2015 |
|
2014 |
|
2015 |
|
2015 |
|
2014 |
Receipt on settlements
of commodity derivatives |
|
$ |
78,406 |
|
|
$ |
103,676 |
|
|
$ |
160,677 |
|
|
$ |
511,699 |
|
|
$ |
1,421 |
|
Noncash fair value
adjustments on commodity derivatives (non-GAAP measure) |
|
(56,585 |
) |
|
450,754 |
|
|
(68,649 |
) |
|
(363,700 |
) |
|
553,834 |
|
Commodity derivatives income
(expense) (GAAP measure) |
|
$ |
21,821 |
|
|
$ |
554,430 |
|
|
$ |
92,028 |
|
|
$ |
147,999 |
|
|
$ |
555,255 |
|
|
(1)
See “Non-GAAP Measures” at the end of this report. |
OPERATING HIGHLIGHTS (UNAUDITED) |
|
|
|
Quarter Ended |
|
Year Ended |
|
|
December 31, |
|
Sept. 30, |
|
December 31, |
|
|
2015 |
|
2014 |
|
2015 |
|
2015 |
|
2014 |
Production
(daily – net of royalties) |
|
|
|
|
|
|
|
|
|
|
Oil (barrels) |
|
68,398 |
|
|
70,909 |
|
|
67,900 |
|
|
69,165 |
|
|
70,606 |
|
Gas (mcf) |
|
21,623 |
|
|
23,796 |
|
|
21,066 |
|
|
22,172 |
|
|
22,955 |
|
BOE (6:1) |
|
72,002 |
|
|
74,875 |
|
|
71,410 |
|
|
72,861 |
|
|
74,432 |
|
Unit sales
price (excluding derivative settlements) |
|
|
|
|
|
|
|
|
|
|
Oil (per barrel) |
|
$ |
40.41 |
|
|
$ |
70.80 |
|
|
$ |
45.74 |
|
|
$ |
47.30 |
|
|
$ |
90.74 |
|
Gas (per mcf) |
|
2.00 |
|
|
3.54 |
|
|
2.40 |
|
|
2.35 |
|
|
4.07 |
|
BOE (6:1) |
|
38.99 |
|
|
68.17 |
|
|
44.20 |
|
|
45.61 |
|
|
87.33 |
|
Unit sales
price (including derivative settlements) |
|
|
|
|
|
|
|
|
|
|
Oil (per barrel) |
|
$ |
52.67 |
|
|
$ |
86.67 |
|
|
$ |
71.32 |
|
|
$ |
67.41 |
|
|
$ |
90.82 |
|
Gas (per mcf) |
|
2.64 |
|
|
3.60 |
|
|
2.87 |
|
|
2.83 |
|
|
3.99 |
|
BOE (6:1) |
|
50.83 |
|
|
83.22 |
|
|
68.66 |
|
|
64.85 |
|
|
87.38 |
|
NYMEX
differentials |
|
|
|
|
|
|
|
|
|
|
Gulf Coast region |
|
|
|
|
|
|
|
|
|
|
Oil (per barrel) |
|
$ |
(0.87 |
) |
|
$ |
1.20 |
|
|
$ |
0.92 |
|
|
$ |
0.49 |
|
|
$ |
1.73 |
|
Gas (per mcf) |
|
(0.07 |
) |
|
(0.01 |
) |
|
(0.22 |
) |
|
(0.15 |
) |
|
0.05 |
|
Rocky Mountain region |
|
|
|
|
|
|
|
|
|
|
Oil (per barrel) |
|
$ |
(3.41 |
) |
|
$ |
(9.28 |
) |
|
$ |
(4.73 |
) |
|
$ |
(5.60 |
) |
|
$ |
(10.19 |
) |
Gas (per mcf) |
|
(0.52 |
) |
|
(0.73 |
) |
|
(0.55 |
) |
|
(0.52 |
) |
|
(0.53 |
) |
Total company |
|
|
|
|
|
|
|
|
|
|
Oil (per barrel) |
|
$ |
(1.74 |
) |
|
$ |
(2.24 |
) |
|
$ |
(0.96 |
) |
|
$ |
(1.55 |
) |
|
$ |
(2.21 |
) |
Gas (per mcf) |
|
(0.23 |
) |
|
(0.29 |
) |
|
(0.34 |
) |
|
(0.28 |
) |
|
(0.20 |
) |
DENBURY RESOURCES INC. |
OPERATING HIGHLIGHTS (UNAUDITED) |
|
|
|
Quarter Ended |
|
Year Ended |
|
|
December 31, |
|
Sept. 30, |
|
December 31, |
Average Daily Volumes (BOE/d) (6:1) |
|
2015 |
|
2014 |
|
2015 |
|
2015 |
|
2014 |
Tertiary oil
production |
|
|
|
|
|
|
|
|
|
|
Gulf Coast
region |
|
|
|
|
|
|
|
|
|
|
Mature properties |
|
|
|
|
|
|
|
|
|
|
Brookhaven |
|
1,671 |
|
|
1,579 |
|
|
1,712 |
|
|
1,672 |
|
|
1,759 |
|
Eucutta |
|
1,825 |
|
|
1,995 |
|
|
1,922 |
|
|
1,926 |
|
|
2,137 |
|
Mallalieu |
|
1,268 |
|
|
1,653 |
|
|
1,427 |
|
|
1,451 |
|
|
1,799 |
|
Other mature properties (1) |
|
5,639 |
|
|
5,864 |
|
|
5,885 |
|
|
5,781 |
|
|
6,122 |
|
Total mature properties |
|
10,403 |
|
|
11,091 |
|
|
10,946 |
|
|
10,830 |
|
|
11,817 |
|
Delhi |
|
3,898 |
|
|
3,743 |
|
|
3,676 |
|
|
3,688 |
|
|
4,340 |
|
Hastings |
|
5,082 |
|
|
4,811 |
|
|
5,114 |
|
|
5,061 |
|
|
4,777 |
|
Heidelberg |
|
5,635 |
|
|
6,164 |
|
|
5,600 |
|
|
5,785 |
|
|
5,707 |
|
Oyster Bayou |
|
5,831 |
|
|
5,638 |
|
|
5,962 |
|
|
5,898 |
|
|
4,683 |
|
Tinsley |
|
7,522 |
|
|
8,767 |
|
|
7,311 |
|
|
8,119 |
|
|
8,507 |
|
Total Gulf Coast region |
|
38,371 |
|
|
40,214 |
|
|
38,609 |
|
|
39,381 |
|
|
39,831 |
|
Rocky Mountain
region |
|
|
|
|
|
|
|
|
|
|
Bell Creek |
|
2,806 |
|
|
1,659 |
|
|
2,225 |
|
|
2,221 |
|
|
1,248 |
|
Total Rocky Mountain region |
|
2,806 |
|
|
1,659 |
|
|
2,225 |
|
|
2,221 |
|
|
1,248 |
|
Total tertiary oil
production |
|
41,177 |
|
|
41,873 |
|
|
40,834 |
|
|
41,602 |
|
|
41,079 |
|
Non-tertiary
oil and gas production |
|
|
|
|
|
|
|
|
|
|
Gulf Coast
region |
|
|
|
|
|
|
|
|
|
|
Mississippi |
|
1,800 |
|
|
2,099 |
|
|
1,592 |
|
|
1,638 |
|
|
2,318 |
|
Texas |
|
6,470 |
|
|
6,677 |
|
|
6,508 |
|
|
6,443 |
|
|
6,290 |
|
Other |
|
800 |
|
|
1,082 |
|
|
846 |
|
|
889 |
|
|
1,061 |
|
Total Gulf Coast region |
|
9,070 |
|
|
9,858 |
|
|
8,946 |
|
|
8,970 |
|
|
9,669 |
|
Rocky Mountain
region |
|
|
|
|
|
|
|
|
|
|
Cedar Creek Anticline |
|
17,875 |
|
|
18,553 |
|
|
17,515 |
|
|
17,997 |
|
|
18,834 |
|
Other |
|
3,880 |
|
|
4,591 |
|
|
4,115 |
|
|
4,292 |
|
|
4,850 |
|
Total Rocky Mountain region |
|
21,755 |
|
|
23,144 |
|
|
21,630 |
|
|
22,289 |
|
|
23,684 |
|
Total non-tertiary
production |
|
30,825 |
|
|
33,002 |
|
|
30,576 |
|
|
31,259 |
|
|
33,353 |
|
Total
production |
|
72,002 |
|
|
74,875 |
|
|
71,410 |
|
|
72,861 |
|
|
74,432 |
|
|
(1)
Other mature properties include Cranfield, Little Creek, Lockhart
Crossing, Martinville, McComb and Soso fields. |
DENBURY RESOURCES INC. |
PER-BOE DATA (UNAUDITED) |
|
|
|
Quarter Ended |
|
Year Ended |
|
|
December 31, |
|
Sept. 30, |
|
December 31, |
|
|
2015 |
|
2014 |
|
2015 |
|
2015 |
|
2014 |
Oil and natural gas
revenues |
|
$ |
38.99 |
|
|
$ |
68.17 |
|
|
$ |
44.20 |
|
|
$ |
45.61 |
|
|
$ |
87.33 |
|
Receipt on settlements
of commodity derivatives |
|
11.84 |
|
|
15.05 |
|
|
24.46 |
|
|
19.24 |
|
|
0.05 |
|
Lease operating
expenses – excluding special items |
|
(19.31 |
) |
|
(22.64 |
) |
|
(19.43 |
) |
|
(19.88 |
) |
|
(24.10 |
) |
Lease operating
expenses – special items |
|
— |
|
|
(0.40 |
) |
|
2.09 |
|
|
0.51 |
|
|
0.26 |
|
Production and ad
valorem taxes |
|
(3.33 |
) |
|
(4.25 |
) |
|
(3.19 |
) |
|
(3.60 |
) |
|
(5.72 |
) |
Marketing expenses, net
of third-party purchases, and plant operating expenses |
|
(2.02 |
) |
|
(1.61 |
) |
|
(1.91 |
) |
|
(1.82 |
) |
|
(1.76 |
) |
Production netback |
|
26.17 |
|
|
54.32 |
|
|
46.22 |
|
|
40.06 |
|
|
56.06 |
|
CO2 and helium sales,
net of operating and exploration expenses |
|
0.86 |
|
|
1.12 |
|
|
1.24 |
|
|
0.98 |
|
|
0.71 |
|
General and
administrative expenses |
|
(4.14 |
) |
|
(5.13 |
) |
|
(5.01 |
) |
|
(5.44 |
) |
|
(5.83 |
) |
Interest expense,
net |
|
(6.05 |
) |
|
(6.22 |
) |
|
(5.97 |
) |
|
(5.99 |
) |
|
(6.74 |
) |
Other |
|
2.68 |
|
|
6.69 |
|
|
0.43 |
|
|
1.18 |
|
|
2.50 |
|
Changes in assets and
liabilities relating to operations |
|
5.37 |
|
|
(1.75 |
) |
|
4.59 |
|
|
1.71 |
|
|
(1.69 |
) |
Cash flows from operations |
|
24.89 |
|
|
49.03 |
|
|
41.50 |
|
|
32.50 |
|
|
45.01 |
|
DD&A |
|
(16.96 |
) |
|
(22.81 |
) |
|
(18.48 |
) |
|
(19.99 |
) |
|
(21.83 |
) |
Write-down of oil and
natural gas properties |
|
(200.33 |
) |
|
— |
|
|
(267.99 |
) |
|
(185.74 |
) |
|
— |
|
Impairment of
goodwill |
|
— |
|
|
— |
|
|
(192.02 |
) |
|
(47.44 |
) |
|
— |
|
Deferred income
taxes |
|
75.42 |
|
|
(37.89 |
) |
|
111.43 |
|
|
72.65 |
|
|
(15.83 |
) |
Loss on early
extinguishment of debt |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(4.19 |
) |
Noncash fair value
adjustments on commodity derivatives |
|
(8.55 |
) |
|
65.44 |
|
|
(10.45 |
) |
|
(13.67 |
) |
|
20.39 |
|
Other noncash
items |
|
(8.08 |
) |
|
(0.98 |
) |
|
(5.57 |
) |
|
(3.21 |
) |
|
(0.16 |
) |
Net income (loss) |
|
$ |
(133.61 |
) |
|
$ |
52.79 |
|
|
$ |
(341.58 |
) |
|
$ |
(164.90 |
) |
|
$ |
23.39 |
|
CAPITAL EXPENDITURE SUMMARY (UNAUDITED) (1) |
|
|
|
Quarter Ended |
|
Year Ended |
|
|
December 31, |
|
Sept. 30, |
|
December 31, |
In
thousands |
|
2015 |
|
2014 |
|
2015 |
|
2015 |
|
2014 |
Capital expenditures by
project |
|
|
|
|
|
|
|
|
|
|
Tertiary oil fields |
|
$ |
66,484 |
|
|
$ |
186,980 |
|
|
$ |
36,845 |
|
|
$ |
199,923 |
|
|
$ |
629,790 |
|
Non-tertiary fields |
|
26,468 |
|
|
53,479 |
|
|
22,620 |
|
|
101,667 |
|
|
240,187 |
|
Capitalized internal costs (2) |
|
16,088 |
|
|
16,278 |
|
|
16,309 |
|
|
66,308 |
|
|
67,908 |
|
Oil and natural gas capital
expenditures |
|
109,040 |
|
|
256,737 |
|
|
75,774 |
|
|
367,898 |
|
|
937,885 |
|
CO2 pipelines |
|
4,309 |
|
|
21,060 |
|
|
3,839 |
|
|
14,444 |
|
|
45,672 |
|
CO2 sources (3) |
|
5,957 |
|
|
18,958 |
|
|
7,204 |
|
|
23,643 |
|
|
56,460 |
|
Other |
|
574 |
|
|
628 |
|
|
559 |
|
|
1,177 |
|
|
1,853 |
|
Capital expenditures,
before acquisitions and capitalized interest |
|
119,880 |
|
|
297,383 |
|
|
87,376 |
|
|
407,162 |
|
|
1,041,870 |
|
Acquisitions of oil and
natural gas properties |
|
3,010 |
|
|
7,090 |
|
|
796 |
|
|
25,765 |
|
|
8,773 |
|
Capital expenditures,
before capitalized interest |
|
122,890 |
|
|
304,473 |
|
|
88,172 |
|
|
432,927 |
|
|
1,050,643 |
|
Capitalized
interest |
|
6,918 |
|
|
6,789 |
|
|
8,081 |
|
|
32,146 |
|
|
24,202 |
|
Capital expenditures,
total |
|
$ |
129,808 |
|
|
$ |
311,262 |
|
|
$ |
96,253 |
|
|
$ |
465,073 |
|
|
$ |
1,074,845 |
|
|
(1) Capital
expenditure amounts include accrued capital. |
(2) Includes
capitalized internal acquisition, exploration and development costs
and pre-production tertiary startup costs. |
(3) Includes
capital expenditures related to the Riley Ridge gas processing
facility. |
DENBURY RESOURCES INC. |
SELECTED BALANCE SHEET AND CASH FLOW DATA
(UNAUDITED) |
|
|
|
December 31, |
In
thousands |
|
2015 |
|
2014 |
Cash and cash
equivalents |
|
$ |
2,812 |
|
|
$ |
23,153 |
|
Total assets |
|
5,919,824 |
|
|
12,727,802 |
|
|
|
|
|
|
Borrowings under bank
credit facility |
|
$ |
175,000 |
|
|
$ |
395,000 |
|
Borrowings under senior
subordinated notes (principal only) |
|
2,852,250 |
|
|
2,852,735 |
|
Financing and capital
leases |
|
283,090 |
|
|
323,624 |
|
Total debt (principal
only) |
|
$ |
3,310,340 |
|
|
$ |
3,571,359 |
|
|
|
|
|
|
Total stockholders’
equity |
|
$ |
1,248,912 |
|
|
$ |
5,703,856 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
|
December 31, |
|
In
thousands |
|
2015 |
|
2014 |
|
Cash provided by (used
in) |
|
|
|
|
|
Operating activities |
|
$ |
864,304 |
|
|
$ |
1,222,825 |
|
Investing activities |
|
|
(550,185 |
) |
|
|
(1,076,755 |
) |
Financing activities |
|
|
(334,460 |
) |
|
|
(135,104 |
) |
|
|
|
|
|
|
|
|
|
Cash dividends
paid |
|
$ |
65,426 |
|
|
$ |
87,044 |
|
NON-GAAP MEASURES
Adjusted net income (loss) is a non-GAAP measure
provided as a supplement to present an alternative net income
measure which excludes expense and income items (and their related
tax effects) not directly related to the Company’s ongoing
operations. The excluded items for the periods presented are
those which reflect the write-down of oil and natural gas
properties, impairment of goodwill, noncash fair value adjustments
on the Company’s commodity derivative contracts, special items
included in lease operating expenses, fair value adjustments
regarding a contingent liability, the cost of early debt
extinguishment, and impairment of assets. Management believes
that adjusted net income (loss) may be helpful to investors, 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
(loss) should not be considered in isolation or as a substitute for
net income reported in accordance with GAAP, but rather to provide
additional information useful in evaluating the Company’s
operational trends and performance.
Adjusted cash flow 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
Consolidated Statements of Cash Flows. Adjusted cash flow
from operations measures the cash flows earned or incurred from
operating activities without regard to the collection or payment of
associated receivables or payables. Management believes that
it is important to consider this additional measure, along with
cash flows from operations, as it believes the non-GAAP measure can
often be a better way to discuss changes in operating trends in its
business caused by changes in production, prices, operating costs
and so forth, without regard to whether the earned or incurred item
was collected or paid during that period.
Noncash fair value adjustments on commodity
derivatives is a non-GAAP measure and is different from “Commodity
derivatives expense (income)” in the Consolidated Statements of
Operations in that the noncash fair value adjustments on commodity
derivatives represents only the net change between periods of the
fair market values of open commodity derivative positions, and
excludes the impact of settlements on commodity derivatives during
the period. Management believes that noncash fair value
adjustments on commodity derivatives is a useful supplemental
disclosure to “Commodity derivatives expense (income)” because the
GAAP measure also includes settlements on commodity derivatives
during the period; the non-GAAP measure is widely used within the
industry and by securities analysts, banks and credit rating
agencies in calculating EBITDA and in adjusting net income to
present those measures on a comparative basis across companies, as
well as to assess compliance with certain debt covenants.
PV-10 Value is a non-GAAP measure and is
different than the Standardized Measure of Discounted Future Net
Cash Flows (“Standardized Measure”), which measure at year-end 2015
will be presented in Denbury’s upcoming Form 10-K, in that PV-10
Value is a pre-tax number, while the Standardized Measure includes
the effect of estimated future income taxes. Denbury’s 2015
and 2014 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.
DENBURY CONTACTS:
Mark C. Allen, Senior Vice President and Chief Financial Officer, 972.673.2000
Ross M. Campbell, Manager of Investor Relations, 972.673.2825
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