Sweet 16 Growth Portfolio: An updated Net Income & Cash Flow model for Denbury Resources (DNR) has been posted under the Sweet 16 Tab. The forecast includes the impact of the sale of their Bakken assets to XTO, which is expected to close in late November.
DNR is probably in limbo until after the sale of their Bakken assets to XTO closes this month. The sale will definitely shore up the balance sheet. It also increases the percentage of oil being sold into the Gulf Coast market at a nice premium to WTI. IMO Denbury should be trading at over 8X CFPS since it has very long-lived oil reserves.
Q3 production was lower than my forecast due to hurricane Isaac related shut-ins. The production has been restored and Denbury should continue to grow its tertiary oil production at 13% to 15% per year.
First Call's price target is $22.67, which still looks well below Fair Value to me.
Denbury will go into 2013 in very good shape with a much stronger balance sheet.