DNR year end reserves
DNR year end reserves
6:14AM Denbury Resources announces that its total proved oil and natural gas reserves as of 12/31/2010, were 397.9 million barrels of oil equivalent (DNR) 20.66 : Co announces that its total proved oil and natural gas reserves as of December 31, 2010, were 397.9 million barrels of oil equivalent, consisting of 338.3 million barrels of crude oil, condensate and natural gas liquids and 357.9 billion cubic feet of natural gas. The Company's reserve quantities increased approximately 92% from year-end 2009 levels, primarily attributable to reserves added in connection with the acquisition of Encore Acquisition Company in March 2010, and reserves added from continued development and expansion of the Company's tertiary floods and from Bakken drilling. The Company also announced that its year-end 2010 proved carbon dioxide reserves were 7.1 trillion cubic feet at Jackson Dome in its Gulf Coast Region and 0.9 Tcf at Riley Ridge in its Rocky Mountain Region, a 27% increase over Denbury's year-end 2009 CO2 reserves of 6.3 Tcf. The independent reservoir engineering firm of DeGolyer and MacNaughton prepared Denbury's year-end reserve report, including its proved CO2 reserve quantities, for the tenth consecutive year. Denbury's year-end 2010 proved reserves are 85% oil, 60% are proved developed, and 41% of the year-end reserves are proved tertiary oil reserves.
Re: DNR year end reserves
For any of you that believe high oil prices are here to stay, DNR is for you.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: DNR year end reserves
The estimated discounted net present value of Denbury’s proved reserves, before projected income taxes, using a 10% per annum discount rate (“PV-10 Value”) was $7.3 billion at December 31, 2010, as compared to a PV-10 Value of $3.1 billion a year earlier. This increase is primarily due to the 2010 additions to reserves discussed above and a 27% increase between the average net oil prices in the 2009 reserve report and those in the 2010 reserve report.
A PV-10 value of the Company’s December 31, 2010, proved reserves calculated using alternative prices based on the futures market forward strips as of December 31, 2010, would be $9.4 billion. Denbury’s net average prices used in preparing this alternative PV-10 presentation were approximately $87.31 per Bbl of oil and $5.46 per Mcf of natural gas.
Based on preliminary data, the Company’s estimated average daily production rate for its tertiary oil production during the fourth quarter of 2010 is approximately 31,139 Bbls/d, a 5% sequential increase over its third quarter 2010 average tertiary production of 29,531 Bbls/d. Estimated average tertiary oil production for the full year 2010 is approximately 29,062 Bbls/d. Estimated Bakken production for the fourth quarter of 2010 is 5,193 BOE/d, a 12% increase over Bakken production in the third quarter of 2010. The Company’s preliminary fourth quarter total production is approximately 76,435 BOE/d. Excluding production of Encore Energy Partners and for the East Texas and Haynesville assets, all of which were sold in the fourth quarter of 2010, the Company’s continuing production in the fourth quarter was approximately 63,712 BOE/d.
My updated forecast model for DNR will be posted later today.
A PV-10 value of the Company’s December 31, 2010, proved reserves calculated using alternative prices based on the futures market forward strips as of December 31, 2010, would be $9.4 billion. Denbury’s net average prices used in preparing this alternative PV-10 presentation were approximately $87.31 per Bbl of oil and $5.46 per Mcf of natural gas.
Based on preliminary data, the Company’s estimated average daily production rate for its tertiary oil production during the fourth quarter of 2010 is approximately 31,139 Bbls/d, a 5% sequential increase over its third quarter 2010 average tertiary production of 29,531 Bbls/d. Estimated average tertiary oil production for the full year 2010 is approximately 29,062 Bbls/d. Estimated Bakken production for the fourth quarter of 2010 is 5,193 BOE/d, a 12% increase over Bakken production in the third quarter of 2010. The Company’s preliminary fourth quarter total production is approximately 76,435 BOE/d. Excluding production of Encore Energy Partners and for the East Texas and Haynesville assets, all of which were sold in the fourth quarter of 2010, the Company’s continuing production in the fourth quarter was approximately 63,712 BOE/d.
My updated forecast model for DNR will be posted later today.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: DNR year end reserves
Here is a note from the Morgan Stanley analyst that covers DNR.
We believe the share price will rise in absolute terms over the next 60 days.
This is because of raised forecasts/guidance. In the short-term, we expect that DNR will benefit from two key
developments: 1) Better than expected crude pricing differentials on tertiary oil volumes (~50% of crude production) as
pricing here more closely tracks LLS than WTI. WTI is currently (and expected to remain) at a wider discount to
waterborne benchmarks such as Brent and LLS. Our 2011 EPS estimate of $1.24 compares to Street estimates of $0.74,
largely due to pricing expectations. 2) Strong 2010 reserves report earlier this week is likely accretive to many Street NAV
models (added ~$2Bn to our PV10 model, or $5/shr, adjusted for the strip). The stock did not move materially on this
incremental data and we expect that over time this will be more accurately reflected in Street models, acting as a tailwind
for the stock.
We estimate that there is about an 80%+ or "highly likely" probability for the scenario.
Estimated probabilities are illustrative and assigned subjectively based on our assessment of the likelihood of the
scenario.
Stock Rating: Equal-weight
Industry View: In-Line
We believe the share price will rise in absolute terms over the next 60 days.
This is because of raised forecasts/guidance. In the short-term, we expect that DNR will benefit from two key
developments: 1) Better than expected crude pricing differentials on tertiary oil volumes (~50% of crude production) as
pricing here more closely tracks LLS than WTI. WTI is currently (and expected to remain) at a wider discount to
waterborne benchmarks such as Brent and LLS. Our 2011 EPS estimate of $1.24 compares to Street estimates of $0.74,
largely due to pricing expectations. 2) Strong 2010 reserves report earlier this week is likely accretive to many Street NAV
models (added ~$2Bn to our PV10 model, or $5/shr, adjusted for the strip). The stock did not move materially on this
incremental data and we expect that over time this will be more accurately reflected in Street models, acting as a tailwind
for the stock.
We estimate that there is about an 80%+ or "highly likely" probability for the scenario.
Estimated probabilities are illustrative and assigned subjectively based on our assessment of the likelihood of the
scenario.
Stock Rating: Equal-weight
Industry View: In-Line
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group