DNR
Re: DNR
All I can tell you is that DNR's 2nd quarter is going to be very strong. The company has confirmed that they sold 40% of 2nd quarter oil into the Gulf Coast market at more than a $12/bbl premium to WTI. They get the premium even on their hedged oil and I do not think the market realizes this fact. During the quarter, about 85% of their oil was hedged with collars that have $100/bbl ceilings.
DNR has 90% of 2011 natural gas production hedged at $6.20.
"Reported Earnings" will include a very large mark-to-market gain on their hedges. As you know by now, these gains and losses on derivatives mean nothing to me since they are non-cash accounting BS but companies that soundly beat the First Call EPS estimates do draw some attention.
Actual EPS will be around 33 cents, which is the current First Call estimate. CFPS will be around 72 cents.
IMO DNR is a "Screaming Buy" under $20 with a Fair Value of $31/share. First Call has a target price of $29/share, so my estimate is not some wild dream. I believe Denbury Resources is a great takeover target for some large-cap. Their production will be up near 73,000 boepd, heavily weighted to oil, by year-end. They are the world's expert in tertiary recovery using CO2 floods and they have trillions of cubic feet of CO2 reserves.
I will make some minor adjustments to my DNR forecast model and send it to Kim for posting under the Sweet 16 tab.
DNR has 90% of 2011 natural gas production hedged at $6.20.
"Reported Earnings" will include a very large mark-to-market gain on their hedges. As you know by now, these gains and losses on derivatives mean nothing to me since they are non-cash accounting BS but companies that soundly beat the First Call EPS estimates do draw some attention.
Actual EPS will be around 33 cents, which is the current First Call estimate. CFPS will be around 72 cents.
IMO DNR is a "Screaming Buy" under $20 with a Fair Value of $31/share. First Call has a target price of $29/share, so my estimate is not some wild dream. I believe Denbury Resources is a great takeover target for some large-cap. Their production will be up near 73,000 boepd, heavily weighted to oil, by year-end. They are the world's expert in tertiary recovery using CO2 floods and they have trillions of cubic feet of CO2 reserves.
I will make some minor adjustments to my DNR forecast model and send it to Kim for posting under the Sweet 16 tab.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: DNR
If you want the Excel version of my forecast model send me an e-mail.
dmsteffens@comcast.net
All of my forecast models have macros built in so all you need to do is change the oil or gas prices at the bottom of the spreadsheet to see how it effects earnings and cash flow.
Again, for anyone that believes oil prices are going higher, and I certainly do, Denbury is a Screaming Buy. It has a rock solid reserve base and production growth locked in for at least five years. DNR is a "Core Holding" stock trading at a deep discount to its break-up value. I also believe the market has yet to understand the upside DNR has in the Bakken.
dmsteffens@comcast.net
All of my forecast models have macros built in so all you need to do is change the oil or gas prices at the bottom of the spreadsheet to see how it effects earnings and cash flow.
Again, for anyone that believes oil prices are going higher, and I certainly do, Denbury is a Screaming Buy. It has a rock solid reserve base and production growth locked in for at least five years. DNR is a "Core Holding" stock trading at a deep discount to its break-up value. I also believe the market has yet to understand the upside DNR has in the Bakken.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group