Denbury Resources (DNR)

Post Reply
dan_s
Posts: 34463
Joined: Fri Apr 23, 2010 8:22 am

Denbury Resources (DNR)

Post by dan_s »

Denbury deserves "Core Holding" status within the Sweet-16. It is always difficult to forecast results for a company while they are still within the transition period of a major merger but DNR looks solid. - Dan

2010 Outlook

Denbury’s 2010 development and exploration budget (excluding acquisitions) remains at $1.0 billion, with approximately 60% of the budget to be spent on tertiary related operations. The Company’s pending $900 million property sale is expected to close during May 2010, the proceeds of which will be used to repay most, if not all, of the Company’s outstanding bank debt. This divestiture is not expected to have a material impact on the Company’s 2010 capital budget.

Phil Rykhoek, Chief Executive Officer, said: “The first four months of 2010 have been extremely busy and positive for Denbury. We successfully financed and closed our Encore acquisition, and then within a few weeks entered into a $900 million sales transaction to repay most of our acquisition debt. This asset sale is expected to close within the next few weeks, and we will use the proceeds to repay most, if not all, of our bank credit line, leaving us with reasonable debt metrics and significant credit availability (up to $1.6 billion of unused credit assuming the banks do not reduce our borrowing base as a result of the property sale). While this quarter’s financials are a bit difficult to analyze with so many unusual items included therein, if you look at our core operations, we’re excited to report that our production is ahead of budget and we have accordingly increased our projected 2010 targets. Our employees are working extremely hard doing a great job at maintaining our operations while simultaneously working on the Encore integration. Things are going well, oil prices remain strong, and we are delighted to be one of the most oil-focused independents in the United States.”
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34463
Joined: Fri Apr 23, 2010 8:22 am

Re: Denbury Resources (DNR)

Post by dan_s »

I just completed the Denbury forecast. Kim will post it on the Home Page tomorrow.

Denbury will close on a $900 Million property sale by the end of May. The cash will pay off most of their bank debt.

DNR is HEAVILY WEIGHTED to oil (which I love) and they will have a strong Balance Sheet after the asset sale. The merger with Encore is now complete.

Back in the late 90's I was with Hess and we sold Denbury our "non-core" assets in Mississippi. DNR tripled the production in 18 months. Those assets are part of the legacy assets that got them started as the premier tertiary recovery experts they are today. My team at Hess helped then with the transition so I got to know Gareth Roberts and his team. Most of that first class team are still with Denbury and they are the senior officiers. Back then their daily production was under 5,000 boepd. Today they have close to 90,000 boepd and still growing. They are proof that hard work and focus pays off.

DNR remains a Core Holding for me.

Dan
Dan Steffens
Energy Prospectus Group
par_putt
Posts: 565
Joined: Tue Apr 27, 2010 11:51 am

Re: Denbury Resources (DNR)

Post by par_putt »

Dan
Can you give us an indication of which stocks you believe are in "your" core holding status?
regards
WEB
dan_s
Posts: 34463
Joined: Fri Apr 23, 2010 8:22 am

Re: Denbury Resources (DNR)

Post by dan_s »

"Core Holdings" for me are the large-caps with solid Balance Sheets and steady production and reserve growth locked in. They all have a high "Safety Rating". The Sweet-16 Portfolio companies that fit that bill are:

Arena Resources (ARD) > Soon to merge with Sandridge (SD)
Denbury Resources (DNR)
EOG Resources (EOG)
Newfield Exploration (NFX)
PetroBank (PBG.TO or PBEGF)
Precision Drilling Trust (PDS)

These may not offer investors the triple digit potential of a TGA but they are rock solid companies that let you sleep at night.

Dan
Dan Steffens
Energy Prospectus Group
Post Reply