DNR did not disappoint with fourth quarter earnings
biz.yahoo.com
Friday February 23, 8:31 am Eastern Time
Denbury Resources Announces Record Quarterly and Annual Earnings
Daily Production Sets a Company Record, Growing at 28% Annual Rate
DALLAS--(BUSINESS WIRE)--Feb. 23, 2001--Denbury Resources Inc. (NYSE:DNR - news; TSE:DNR. - news; ``Denbury'' or the ``Company'') today announced record fourth quarter and 2000 financial and operating results.
The Company posted a 28% increase in production, year-over-year, and its highest quarterly earnings, revenues and cash flow in its ten-year history. The Company previously announced record quantities and valuation for its proved reserves.
Continued Production and Reserve Growth
Since 1996, Denbury has realized a 27% compound annual growth rate for its daily hydrocarbon output. Further, daily production increased for the seventh consecutive quarter, averaging 26,296 BOE/d in the fourth quarter of 2000, a 42% increase from the fourth quarter of 1999 and a 28% increase from the third quarter of 2000. The Company moved closer to its desired 50/50 balance of oil and natural gas production, with natural gas representing 38% of the Company's fourth quarter production on a BOE basis, as compared to approximately 25% in the prior quarter.
On an annual basis, production averaged 21,399 BOE/d for 2000, a 28% increase over the 1999 average of 16,748 BOE/d. The increases in daily production are the result of successful development and exploitation work on the Company's largest fields, combined with strategic acquisitions. Approximately 60% or 2,800 of the 4,651 BOE/d increase between 1999 and 2000 came from internal development, primarily at three of the Company's largest fields, Heidelberg, Lirette and Little Creek. The Company's acquisitions of Thornwell, Porte Barre and Iberia Fields in the fourth quarter of 2000 and the acquisition of Little Creek and King Bee Fields in 1999 contributed the balance of the increase, approximately 1,850 BOE/d.
Production from Heidelberg Field in Mississippi, the Company's largest field, increased for the twelfth consecutive quarter, averaging 7,978 BOE/d in the fourth quarter of 2000, a 23% increase from the fourth quarter of 1999 and a 4% increase from the third quarter of 2000. The daily production increase is attributable to the Company's active 2000 drilling program and expected response from ongoing production enhancement activities.
Production increases at Lirette Field primarily came from the Company's discovery well, the Leon Hebert Heirs No. 1 (formerly the Fina Fee No. 1). Production commenced in late September 2000. Denbury has a 67% working interest and a 50% net revenue interest in this well, which is currently producing approximately 7.0 MMcf/d and 125 Bbls/d, net to its account.
Along with the growth in production, the Company's proved reserves quantities increased 45% from 60.2 MMBOE as of December 31, 1999 to 87.4 MMBOE as of December 31, 2000, with an even larger increase in PV10 value of the Company's reserves due to the higher commodity prices. During 2000, the Company added 34.9 MMBOEs of estimated reserves from drilling, extensions, acquisitions and upward revisions and another 0.73 MMBOE due solely to year-to-year commodity prices increases. This equates to a finding cost for the year of $3.75 per BOE ($0.625 per Mcfe), the second year in a row that the Company has been below $4.00 per BOE. Excluding our accretive 2000 acquisitions, the Company's exploration and development activities added about 29.9 MMBOE of new reserves at $2.36 per BOE ($0.39 per Mcfe).
Record 2000 Financial Results
As a result of high commodity prices and strong production growth, Denbury posted a fourth quarter profit of $98.1 million, or $2.14 per common share, and an annual profit of $142.2 million, or $3.10 per common share. The annual per-share-figure is more than four times bigger than the Company's previous annual record of $0.74 per common share in 1997. Included in the fourth quarter and 2000 results is a $67.9 million deferred income tax benefit ($1.48 per share) resulting from the reversal of the valuation allowance on the Company's deferred tax asset balances that were fully impaired. Excluding this tax adjustment, the Company's net income was $30.2 million ($0.66 per share) for the fourth quarter of 2000 and $74.4 million ($1.62 per share) for the year, still more than double the Company's previous annual high.
Correspondingly, the Company's cash flow from operations increased 233% quarter over quarter, reaching $43.2 million or $0.94 per common share, for the fourth quarter of 2000, up from $13.0 million, or $0.28 per common share, for the fourth quarter of 1999. Full-year 2000 cash flow was $111.6 million, or $2.43 per common share, an increase of 253% compared to the $31.6 million, or $0.79 per common share, posted in 1999. Excluding the $25.3 million of losses that the Company incurred on its hedges in 2000, cash flow would have been almost $3.00 per share for 2000 and $1.16 per share for the fourth quarter, the highest in the Company's history. For 2001 and beyond, the Company does not have any hedges that could reduce the Company's price upside as its hedging program consists solely of ``floors'' (or ``puts'') which protect the downside, but do not limit the upside.
Product prices were significantly higher in 2000 than in 1999. Excluding the impact of realized hedging positions, Denbury's average net realized oil price of $25.89 per Bbl for 2000 was 72% higher than its 1999 average of $15.03 per Bbl. Denbury's average net realized unhedged natural gas price of $4.45 per Mcf for 2000 was 84% higher than the 1999 average of $2.42.
Balance Sheet Strengthens as Capital Program Creates Excess Cash Flow
Capital expenditures (``Capex'') for the fourth quarter of 2000 totaled $14.6 million and for the year totaled $73.7 million, which were funded out of $111.6 million of cash flow generated from operations. The excess cash flow from operations was used to partially fund acquisitions which totaled $60.3 million, resulting in a net increase to bank debt during the year of $46.5 million. Denbury's debt-to-cash-flow ratio for the fourth quarter of 2000 on an annualized basis was 1.15 to 1, a significant improvement when compared to the 2.9 to 1 ratio based on the annualized fourth quarter of 1999.
Operating expenses increased 57% (23% on a BOE basis) between 1999 and 2000 primarily due to an increase in production taxes related to higher product prices, the addition of Little Creek Field during the third quarter of 1999 (which has higher operating costs per barrel due to tertiary recovery operations), and overall increases in the number of wells and the cost of equipment and services. General and administrative expenses increased 15% on a gross basis between 1999 and 2000, but declined 10% on a BOE basis as a result of the increases in production. Depreciation and depletion increased 11% on a BOE basis as a result of the acquisitions made during 2000 at a higher than company-average cost per BOE.
2001 Outlook
Denbury's 2001 development and exploration budget is $150 million for 2001 and includes $10 million of uncompleted 2000 projects. Any acquisitions made by the Company will be in addition to these capital budget figures. Denbury's current total debt is $220 million and $55 million is available on its bank line. The Company anticipates that it will be able to reduce its debt during 2001 as it continues to generate more cash flow from operations than it is spending in its Capex program.
Management expects that the Company's organic production growth will continue during 2001, particularly for natural gas. The targeted average daily production for 2001 of 28,625 BOE/d (17.2 MBbls/d and 68.7 MMcf/d) is a 34% increase over 2000 rates. The Company anticipates a 24% increase in its base production with the balance coming from its fourth quarter 2000 acquisitions. The targeted average production for 2001 by quarter is 26,500; 28,000; 29,500; and 30,500 BOE/d; for the first through fourth quarters, respectively. Approximately 40% of 2001's projected production should be natural gas, as compared
to approximately 29% of 2000's production.
Gareth Roberts, Chief Executive Officer, said: ``We continue to adhere to the same time-tested business strategy that was put in place at our inception. By any measure, we experienced strong growth in 2000 and expect to continue this growth into 2001 with a production growth rate that is in the top tier of our peer group. Furthermore, we expect to achieve this growth at a reasonable cost. We plan to continue our fiscal discipline by limiting our development and exploration spending to our cash flow from operations, and we will continue to monitor our debt levels so that we do not overextend ourselves. We anticipate that any excess cash flow in 2001 will be used to reduce our bank debt. We expect an even better year for 2001.'' |
