Moody's Lifts Denbury Outlook to Stable on Carbon Dioxide Projects 07/25 03:01 PM
Moody's Investors Service raised its outlook on Denbury Resources Inc. (DNR:$15.21,00$0.58,003.96%) to stable from negative, pointing to the independent oil and gas company's progress in implementing its carbon dioxide projects, a key driver of future growth.
Moody's affirmed Denbury's rating at Ba3, three notches into junk territory.
The ratings firm noted Denbury is heavily engaged in carbon dioxide-driven enhanced oil recovery projects across several mature basins in the U.S., and these projects are expected to be the company's primary source of growth over the long run.
Moody's said its stable outlook also reflects the company's high cash margins and good return expectations relative to peers as a result of its heavy exposure to oil production, which made up 93% of production in the first-quarter oil- weighted production. Moody's expects Denbury's leverage to modestly decline over the near term as production and reserves grow.
Denbury has seen its revenue strengthen for more than two years, aided by higher oil prices and its 2010 takeover of Encore Acquisition Co., which made the company one of the country's largest independent oil producers.
In May, Denbury beat analysts' expectations and swung to a profit, as its revenue and production increased, while its derivative expenses fell.
Shares rose 1.7% to $14.66 in recent trading. The stock has fallen 21% over the past three months.
Write to Nathalie Tadena at nathalie.tadena@dowjones.com