PLANO, Texas, Nov. 07, 2019 (GLOBE NEWSWIRE) -- Denbury Resources Inc. (NYSE: DNR) (“Denbury” or the “Company”) today announced net income of $73 million, or $0.14 per diluted share, for the third quarter of 2019. Adjusted net income(1) (a non-GAAP measure) was $41 million, or $0.08(1)(2) per diluted share, with the difference from GAAP net income primarily due to a $35 million gain from noncash fair value adjustments ($26 million after tax) on the Company’s commodity derivative positions (see reconciliation of GAAP and non-GAAP measures in tables beginning on page 9 of this press release).
THIRD QUARTER AND RECENT HIGHLIGHTS
- Generated cash flow from operations of $131 million and free cash flow(1) (a non-GAAP measure) of $44 million after considering development capital expenditures, capitalized interest and interest treated as debt reduction, with 2019 year-to-date free cash flow(1) of $109 million
- Continued debt reduction through debt repurchases and exchanges which reduced debt by $87 million since June 30, 2019 (including October transactions) and by $139 million since January 1, 2019
- Reaffirmed borrowing base of $615 million on senior secured bank credit facility
- Production of 56,441 barrels of oil equivalent (“BOE”) per day (“BOE/d”), in-line with expectations and on track for the midpoint of previously raised full-year guidance
- Two successful Mission Canyon exploitation wells recently drilled and completed with a projected combined IP-30 rate of 1,000 barrels of oil per day
- Completed $9 million of surface acreage sales during the third quarter of 2019 and an additional $5 million in October 2019
| ____________ | |
| (1) | A non-GAAP measure. See accompanying schedules that reconcile GAAP to non-GAAP measures along with a statement indicating why the Company believes the non-GAAP measures provide useful information for investors. |
| (2) | Calculated using weighted average diluted shares outstanding of 547.2 million, 467.4 million, and 458.5 million for the three months ended September 30, 2019, June 30, 2019, and September 30, 2018, respectively. |
SELECTED QUARTERLY COMPARATIVE DATA
| Quarter Ended | ||||||||||||
| (in millions, except per-share and per-unit data) | September 30, 2019 | June 30, 2019 | September 30, 2018 | |||||||||
| Net income | $ | 73 | $ | 147 | $ | 78 | ||||||
| Adjusted net income(1) (non-GAAP measure) | 41 | 59 | 59 | |||||||||
| Adjusted EBITDAX(1) (non-GAAP measure) | 145 | 169 | 148 | |||||||||
| Net income per diluted share | 0.14 | 0.32 | 0.17 | |||||||||
| Adjusted net income per diluted share(1)(2) (non-GAAP measure) | 0.08 | 0.13 | 0.13 | |||||||||
| Cash flows from operations | 131 | 149 | 148 | |||||||||
| Adjusted cash flows from operations(1) (non-GAAP measure) | 126 | 145 | 135 | |||||||||
| Development capital expenditures | 51 | 77 | 86 | |||||||||
| Oil, natural gas, and related product sales | $ | 293 | $ | 330 | $ | 380 | ||||||
| CO2, purchased oil sales and other | 22 | 13 | 15 | |||||||||
| Total revenues and other income | $ | 315 | $ | 343 | $ | 395 | ||||||
| Receipt (payment) on settlements of commodity derivatives | $ | 8 | $ | (2 | ) | $ | (62 | ) | ||||
| Average realized oil price per barrel (excluding derivative settlements) | $ | 57.64 | $ | 62.22 | $ | 71.44 | ||||||
| Average realized oil price per barrel (including derivative settlements) | 59.23 | 61.92 | 59.78 | |||||||||
| Total production (BOE/d) | 56,441 | 59,719 | 59,181 | |||||||||
| Total continuing production (BOE/d)(3) | 56,441 | 59,313 | 58,412 | |||||||||
| ____________ | |
| (1) | A non-GAAP measure. See accompanying schedules that reconcile GAAP to non-GAAP measures along with a statement indicating why the Company believes the non-GAAP measures provide useful information for investors. |
| (2) | Calculated using weighted average diluted shares outstanding of 547.2 million, 467.4 million, and 458.5 million for the three months ended September 30, 2019, June 30, 2019 and September 30, 2018, respectively. |
| (3) | Continuing production excludes production from Citronelle Field sold on July 1, 2019 and production from Lockhart Crossing Field sold in the third quarter of 2018. |
MANAGEMENT COMMENT
Chris Kendall, Denbury’s President and CEO, commented, “Denbury’s third quarter results once again demonstrate our commitment to exceptional execution, cost efficiency, and capital discipline. We generated $44 million of free cash flow in the third quarter, keeping us on course to generate $140 – $150 million in free cash flow for the full year.
“We continue to execute on our key priorities for 2019 and we remain on track to reach the midpoint of our previously raised 2019 production guidance, despite third quarter production curtailments relating mainly to a planned maintenance shut-down of the Rockies CO2 source plant impacting our Bell Creek production and Tropical Storm Imelda impacting our Gulf Coast production. Our spending discipline is evident across the board, with capital spend, lease operating expense, and G&A spend each on target to be at or below full-year guidance.
“Our unique portfolio of assets and high quality, low decline, oil-weighted production are the driving forces behind our ability to generate sustainable free cash flow, enabling us to actively allocate capital to manage our debt maturities and reduce leverage. We continued to make meaningful progress on improving our balance sheet by repurchasing or exchanging $54 million of 2022 and 2023 senior subordinated notes at a significant discount, and we further reduced our borrowings under our senior secured bank credit facility by $30 million. Importantly, our flagship Cedar Creek Anticline EOR development continues to progress on schedule with first CO2 injection projected in early 2021.
“None of these results would have been possible without the dedication to success and commitment to safety of Denbury’s team members across the business. As we move into the final quarter of 2019, I am excited about where the Company is headed. We continue to perform, to consistently deliver on our promises, and to make steady progress toward securing our long-term success. Additionally, the low carbon footprint of our CO2 EOR focused strategy will continue to differentiate us from the industry, providing an ideal solution that significantly reduces the CO2 emissions associated with the production of oil, a vital energy source today and for the foreseeable future.”
REVIEW OF OPERATING AND FINANCIAL RESULTS
Denbury’s oil and natural gas production averaged 56,441 BOE/d during third quarter 2019, a decrease of 5% from continuing production on a sequential-quarter basis and a decrease of 3% compared to continuing production in the prior-year third quarter. The sequential-quarter decrease was primarily due to an expected reduction in production at Bell Creek Field associated with planned maintenance at the Company’s primary CO2 source in the Rocky Mountain region. Third quarter production was also impacted by approximately 400 BOE/d due to unplanned downtime from power outages and flooding caused by Tropical Storm Imelda. Further production information is provided on page 15 of this press release.
Denbury’s third quarter 2019 average realized oil price, including derivative settlements, was $59.23 per barrel (“Bbl”), a decrease of 4% from the prior quarter and 1% from the prior-year third quarter. Denbury’s NYMEX differential for the third quarter 2019 was $1.30 per Bbl above NYMEX WTI oil prices, compared to $2.35 per Bbl above NYMEX WTI in the prior quarter and $1.84 per Bbl above NYMEX WTI in third quarter 2018. The sequential decrease was primarily attributable to a lower Gulf Coast premium in the third quarter of 2019, which represents approximately 60% of the Company’s crude oil production.
Total lease operating expenses in third quarter 2019 were $118 million, or $22.70 per BOE, relatively unchanged on an absolute-dollar basis compared to the prior quarter. When compared to third quarter 2018, lease operating expenses decreased $5 million, or 4%, on an absolute-dollar basis, primarily due to lower workover and power costs.
General and administrative expenses were $18 million in third quarter 2019, up slightly from the prior quarter, and a $3 million decrease compared to third quarter 2018, primarily due to lower performance-based compensation expense in the current-year period.
Interest expense, net of capitalized interest, totaled $23 million in third quarter 2019, a $2 million increase from the prior quarter and an increase of $4 million compared to third quarter 2018. The sequential-quarter and prior-year increases were primarily due to noncash expense for amortization of debt discounts associated with the Company’s recently issued 7¾% Senior Secured Second Lien Notes due 2024 and 6⅜% Convertible Senior Notes due 2024. The discount on these notes was initially recorded during the second quarter of 2019 and will continue to be amortized as interest expense over the terms of these notes. A schedule detailing the components of interest expense is included on page 17 of this press release.
Depletion, depreciation, and amortization (“DD&A”) was $55 million during third quarter 2019, compared to $58 million in second quarter 2019 and $51 million in third quarter 2018. The sequential-quarter decrease was primarily due to lower depletion on CO2 assets resulting from lower CO2 production in the Rocky Mountain region, and the increase compared to prior year was due primarily to an increase in depletable costs.
Denbury’s effective tax rate for third quarter 2019 was approximately 34%, higher than the Company’s estimated statutory rate of 25% due primarily to a valuation allowance applied against a portion of the Company’s business interest expense deduction that it estimates will be disallowed in the current year as a result of limitations enacted under the Tax Cuts and Jobs Act. The Company currently forecasts that its effective tax rate for the fourth quarter and full-year 2019 will be approximately 32%, depending in part on taxable income.
RECENT DEBT TRANSACTIONS AND BANK CREDIT FACILITY
During the third quarter, Denbury repurchased $11 million in aggregate principal amount of its then outstanding 5½% Senior Subordinated Notes due 2022 (“5½% Senior Subordinated Notes”) in open market transactions for a total purchase price of $5 million, excluding accrued interest. In connection with these transactions, the Company recognized a $6 million gain on debt extinguishment, net of unamortized debt issuance costs written off, during the three and nine months ended September 30, 2019.
During October 2019, the Company repurchased (principally through exchanges) an additional $13 million in aggregate principal amount of its then outstanding 5½% Senior Subordinated Notes and $29 million in aggregate principal amount of its then outstanding 4⅝% Senior Subordinated Notes due 2023 for $6 million in cash and issuance of 14 million shares of Denbury Common Stock. The Company currently expects to record a noncash gain on debt extinguishment of approximately $22 million, net of unamortized debt issuance costs written off, in fourth quarter 2019 related to these transactions.
Pursuant to the fall 2019 semiannual borrowing base redetermination completed in late October 2019, the Company’s borrowing base and commitment levels of the banks were reaffirmed at $615 million. As of September 30, 2019, the Company had $50 million of outstanding borrowings on its $615 million senior secured bank credit facility, compared to $80 million of outstanding borrowings as of June 30, 2019 and no outstanding borrowings as of December 31, 2018, leaving $510 million of liquidity available after consideration of $55 million of currently outstanding letters of credit. Based on current 2019 projections using recent oil price futures, the Company currently expects to have the capacity to repay all of its outstanding borrowings on the senior secured bank credit facility by the end of the year.
2019 CAPITAL BUDGET AND ESTIMATED PRODUCTION
The Company’s 2019 estimated development capital, excluding acquisitions and capitalized interest, remains unchanged from the previously estimated range of $240 million to $260 million. The capital budget consists of approximately $200 million for tertiary and non-tertiary field investments and CO2 supply, plus approximately $50 million of estimated capitalized costs (including capitalized internal acquisition, exploration and development costs and pre-production tertiary startup costs). Of this combined capital expenditure amount, $189 million (76%) has been incurred through the third quarter 2019, which is significantly less than cash flow from operations during that period. Denbury’s estimated 2019 production remains unchanged from the previously disclosed updated guidance range of 57,000 – 59,500 BOE/d.
THIRD QUARTER CONFERENCE CALL INFORMATION
Denbury management will host a conference call to review and discuss third quarter 2019 financial and operating results, as well as financial and operating guidance for 2019, today, Thursday, November 7, at 10:00 A.M. (Central). Additionally, Denbury will post presentation materials on its website which will be referenced during the conference call. Individuals who would like to participate should dial 877.705.6003 or 201.493.6725 ten minutes before the scheduled start time. To access a live webcast of the conference call and accompanying slide presentation, please visit the investor relations section of the Company’s website at www.denbury.com. The webcast will be archived on the website, and a telephonic replay will be accessible for approximately one month after the call by dialing 844.512.2921 or 412.317.6671 and entering confirmation number 13695520.
Denbury is an independent oil and natural gas company with operations focused in two key operating areas: the Gulf Coast and Rocky Mountain regions. The Company’s goal is to increase the value of its properties through a combination of exploitation, drilling and proven engineering extraction practices, with the most significant emphasis relating to CO2 enhanced oil recovery operations. For more information about Denbury, please visit www.denbury.com.
FINANCIAL AND STATISTICAL DATA TABLES AND RECONCILIATION SCHEDULES
Following are unaudited financial highlights for the comparative three and nine-month periods ended September 30, 2019 and 2018 and the three-month period ended June 30, 2019. All production volumes and dollars are expressed on a net revenue interest basis with gas volumes converted to equivalent barrels at 6:1.
DENBURY RESOURCES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
The following information is based on GAAP reported earnings (along with additional required disclosures) included or to be included in the Company’s periodic reports:
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||||||||||
| September 30, | June 30, | September 30, | ||||||||||||||||||||||||||||||||||||||||
| In thousands, except per-share data | 2019 | 2018 | 2019 | 2019 | 2018 | |||||||||||||||||||||||||||||||||||||
| Revenues and other income | ||||||||||||||||||||||||||||||||||||||||||
| Oil sales | $ | 292,100 | $ | 377,329 | $ | 328,571 | $ | 912,636 | $ | 1,088,021 | ||||||||||||||||||||||||||||||||
| Natural gas sales | 1,092 | 2,299 | 1,850 | 5,554 | 7,193 | |||||||||||||||||||||||||||||||||||||
| CO2 sales and transportation fees | 8,976 | 8,149 | 7,986 | 25,532 | 22,416 | |||||||||||||||||||||||||||||||||||||
| Purchased oil sales | 5,468 | 265 | 2,591 | 8,274 | 1,668 | |||||||||||||||||||||||||||||||||||||
| Other income | 7,817 | 6,931 | 2,367 | 12,274 | 15,972 | |||||||||||||||||||||||||||||||||||||
| Total revenues and other income | 315,453 | 394,973 | 343,365 | 964,270 | 1,135,270 | |||||||||||||||||||||||||||||||||||||
| Expenses | ||||||||||||||||||||||||||||||||||||||||||
| Lease operating expenses | 117,850 | 122,527 | 117,932 | 361,205 | 361,267 | |||||||||||||||||||||||||||||||||||||
| Transportation and marketing expenses | 10,067 | 11,116 | 11,236 | 32,076 | 31,671 | |||||||||||||||||||||||||||||||||||||
| CO2 discovery and operating expenses | 879 | 708 | 581 | 2,016 | 1,670 | |||||||||||||||||||||||||||||||||||||
| Taxes other than income | 22,010 | 27,344 | 25,517 | 71,312 | 81,897 | |||||||||||||||||||||||||||||||||||||
| Purchased oil expenses | 5,436 | 264 | 2,564 | 8,213 | 1,426 | |||||||||||||||||||||||||||||||||||||
| General and administrative expenses | 18,266 | 21,579 | 17,506 | 54,697 | 61,223 | |||||||||||||||||||||||||||||||||||||
| Interest, net of amounts capitalized of $8,773, $9,514, $8,238, $27,545 and $26,817, respectively | 22,858 | 18,527 | 20,416 | 60,672 | 51,974 | |||||||||||||||||||||||||||||||||||||
| Depletion, depreciation, and amortization | 55,064 | 51,316 | 58,264 | 170,625 | 156,711 | |||||||||||||||||||||||||||||||||||||
| Commodity derivatives expense (income) | (43,155 | ) | 44,577 | (24,760 | ) | 15,462 | 189,601 | |||||||||||||||||||||||||||||||||||
| Gain on debt extinguishment | (5,874 | ) | — | (100,346 | ) | (106,220 | ) | — | ||||||||||||||||||||||||||||||||||
| Other expenses | 2,140 | 2,980 | 2,386 | 8,664 | 10,544 | |||||||||||||||||||||||||||||||||||||
| Total expenses | 205,541 | 300,938 | 131,296 | 678,722 | 947,984 | |||||||||||||||||||||||||||||||||||||
| Income before income taxes | 109,912 | 94,035 | 212,069 | 285,548 | 187,286 | |||||||||||||||||||||||||||||||||||||
| Income tax provision (benefit) | ||||||||||||||||||||||||||||||||||||||||||
| Current income taxes | (859 | ) | (1,888 | ) | 3,354 | 1,214 | (3,674 | ) | ||||||||||||||||||||||||||||||||||
| Deferred income taxes | 37,909 | 17,504 | 62,023 | 90,454 | 42,741 | |||||||||||||||||||||||||||||||||||||
| Net income | $ | 72,862 | $ | 78,419 | $ | 146,692 | $ | 193,880 | $ | 148,219 | ||||||||||||||||||||||||||||||||
| Net income per common share | ||||||||||||||||||||||||||||||||||||||||||
| Basic | $ | 0.16 | $ | 0.17 | $ | 0.32 | $ | 0.43 | $ | 0.35 | ||||||||||||||||||||||||||||||||
| Diluted | $ | 0.14 | $ | 0.17 | $ | 0.32 | $ | 0.41 | $ | 0.33 | ||||||||||||||||||||||||||||||||
| Weighted average common shares outstanding | ||||||||||||||||||||||||||||||||||||||||||
| Basic | 455,487 | 451,256 | 452,612 | 453,287 | 426,036 | |||||||||||||||||||||||||||||||||||||
| Diluted | 547,205 | 458,450 | 467,427 | 490,054 | 455,934 | |||||||||||||||||||||||||||||||||||||
DENBURY RESOURCES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
| Nine Months Ended | ||||||||||||||||
| September 30, | ||||||||||||||||
| In thousands | 2019 | 2018 | ||||||||||||||
| Cash flows from operating activities | ||||||||||||||||
| Net income | $ | 193,880 | $ | 148,219 | ||||||||||||
| Adjustments to reconcile net income to cash flows from operating activities | ||||||||||||||||
| Depletion, depreciation, and amortization | 170,625 | 156,711 | ||||||||||||||
| Deferred income taxes | 90,454 | 42,741 | ||||||||||||||
| Stock-based compensation | 9,866 | 8,711 | ||||||||||||||
| Commodity derivatives expense | 15,462 | 189,601 | ||||||||||||||
| Receipt (payment) on settlements of commodity derivatives | 14,714 | (149,738 | ) | |||||||||||||
| Gain on debt extinguishment | (106,220 | ) | — | |||||||||||||
| Debt issuance costs and discounts | 7,607 | 4,980 | ||||||||||||||
| Other, net | (6,862 | ) | (7,066 | ) | ||||||||||||
| Changes in assets and liabilities, net of effects from acquisitions | ||||||||||||||||
| Accrued production receivable | (1,428 | ) | (17,140 | ) | ||||||||||||
| Trade and other receivables | (147 | ) | 139 | |||||||||||||
| Other current and long-term assets | 27 | (4,467 | ) | |||||||||||||
| Accounts payable and accrued liabilities | (33,167 | ) | 27,435 | |||||||||||||
| Oil and natural gas production payable | (1,819 | ) | (3,764 | ) | ||||||||||||
| Other liabilities | (9,414 | ) | (2,832 | ) | ||||||||||||
| Net cash provided by operating activities | 343,578 | 393,530 | ||||||||||||||
| Cash flows from investing activities | ||||||||||||||||
| Oil and natural gas capital expenditures | (204,904 | ) | (210,504 | ) | ||||||||||||
| Pipelines and plants capital expenditures | (25,965 | ) | (19,134 | ) | ||||||||||||
| Net proceeds from sales of oil and natural gas properties and equipment | 10,494 | 7,308 | ||||||||||||||
| Other | 5,797 | 5,598 | ||||||||||||||
| Net cash used in investing activities | (214,578 | ) | (216,732 | ) | ||||||||||||
| Cash flows from financing activities | ||||||||||||||||
| Bank repayments | (641,000 | ) | (1,943,653 | ) | ||||||||||||
| Bank borrowings | 691,000 | 1,468,653 | ||||||||||||||
| Proceeds from issuance of senior secured notes | — | 450,000 | ||||||||||||||
| Interest payments treated as a reduction of debt | (59,808 | ) | (37,233 | ) | ||||||||||||
| Cash paid in conjunction with debt exchange | (125,268 | ) | — | |||||||||||||
| Costs of debt financing | (11,017 | ) | (15,933 | ) | ||||||||||||
| Pipeline financing and capital lease debt repayments | (10,279 | ) | (18,353 | ) | ||||||||||||
| Other | 5,470 | (13,288 | ) | |||||||||||||
| Net cash used in financing activities | (150,902 | ) | (109,807 | ) | ||||||||||||
| Net increase (decrease) in cash, cash equivalents, and restricted cash | (21,902 | ) | 66,991 | |||||||||||||
| Cash, cash equivalents, and restricted cash at beginning of period | 54,949 | 15,992 | ||||||||||||||
| Cash, cash equivalents, and restricted cash at end of period | $ | 33,047 | $ | 82,983 | ||||||||||||
DENBURY RESOURCES INC.
SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES (UNAUDITED)
Reconciliation of net income (GAAP measure) to adjusted net income (non-GAAP measure)
Adjusted net income is a non-GAAP measure provided as a supplement to present an alternative net income measure which excludes expense and income items (and their related tax effects) not directly related to the Company’s ongoing operations. Management believes that adjusted net income may be helpful to investors by eliminating the impact of noncash and/or special or unusual items not indicative of the Company’s performance from period to period, and is widely used by the investment community, while also being used by management, in evaluating the comparability of the Company’s ongoing operational results and trends. Adjusted net income should not be considered in isolation, as a substitute for, or more meaningful than, net income or any other measure reported in accordance with GAAP, but rather to provide additional information useful in evaluating the Company’s operational trends and performance.
| Three Months Ended | ||||||||||||||||||||||||||||||||||||
| September 30, | June 30, | |||||||||||||||||||||||||||||||||||
| 2019 | 2018 | 2019 | ||||||||||||||||||||||||||||||||||
| In thousands, except per-share data | Amount | Per Diluted Share | Amount | Per Diluted Share | Amount | Per Diluted Share | ||||||||||||||||||||||||||||||
| Net income (GAAP measure)(1) | $ | 72,862 | $ | 0.14 | $ | 78,419 | $ | 0.17 | $ | 146,692 | $ | 0.32 | ||||||||||||||||||||||||
| Adjustments to reconcile to adjusted net income (non-GAAP measure) | ||||||||||||||||||||||||||||||||||||
| Noncash fair value gains on commodity derivatives(2) | (35,098 | ) | (0.06 | ) | (17,034 | ) | (0.04 | ) | (26,309 | ) | (0.06 | ) | ||||||||||||||||||||||||
| Gain on debt extinguishment(3) | (5,874 | ) | (0.01 | ) | — | — | (100,346 | ) | (0.21 | ) | ||||||||||||||||||||||||||
| Other adjustments(4) | (5,247 | ) | (0.01 | ) | 1,497 | 0.00 | 1,399 | 0.00 | ||||||||||||||||||||||||||||
| Estimated income taxes on above adjustments to net income and other discrete tax items(5) | 14,499 | 0.02 | (3,886 | ) | 0.00 | 37,692 | 0.08 | |||||||||||||||||||||||||||||
| Adjusted net income (non-GAAP measure) | $ | 41,142 | $ | 0.08 | $ | 58,996 | $ | 0.13 | $ | 59,128 | $ | 0.13 | ||||||||||||||||||||||||
| Nine Months Ended | ||||||||||||||||
| September 30, | ||||||||||||||||
| 2019 | 2018 | |||||||||||||||
| In thousands, except per-share data | Amount | Per Diluted Share | Amount | Per Diluted Share | ||||||||||||
| Net Income (GAAP measure)(1) | $ | 193,880 | $ | 0.41 | $ | 148,219 | $ | 0.33 | ||||||||
| Adjustments to reconcile to adjusted net income (non-GAAP measure) | ||||||||||||||||
| Noncash fair value losses on commodity derivatives(2) | 30,176 | 0.06 | 39,863 | 0.09 | ||||||||||||
| Gain on debt extinguishment(3) | (106,220 | ) | (0.22 | ) | — | — | ||||||||||
| Other adjustments(4) | (793 | ) | 0.00 | 3,546 | 0.01 | |||||||||||
| Estimated income taxes on above adjustments to net income and other discrete tax items(5) | 28,483 | 0.06 | (17,680 | ) | (0.05 | ) | ||||||||||
| Adjusted net income (non-GAAP measure) | $ | 145,526 | $ | 0.31 | $ | 173,948 | $ | 0.38 | ||||||||
- Diluted net income per common share includes the impact of potentially dilutive securities including nonvested restricted stock, nonvested performance-based equity awards, and shares into which the Company’s convertible senior notes are convertible. The basic and diluted earnings per share calculations are included on page 10.
- The net change between periods of the fair market values of open commodity derivative positions, excluding the impact of settlements on commodity derivatives during the period.
- Gain on extinguishment related to the Company’s 2019 debt exchanges and open market repurchases.
- Other adjustments include (a) $6 million gain on land sales, <$1 million of transaction costs related to the Company’s privately negotiated debt exchanges, and <$1 million of costs associated with the helium supply contract ruling during the three months ended September 30, 2019, (b) $2 million write-off of debt issuance costs associated with the Company’s 2018 reduction and extension of the senior secured bank credit facility and $1 million gain on land sales, partially offset by a $1 million accrual for litigation matters during the three months ended September 30, 2018, and (c) $1 million of transaction costs related to the Company’s privately negotiated debt exchanges and <$1 million of costs associated with the helium supply contract ruling during the three months ended June 30, 2019. The nine months ended September 30, 2019 was further impacted by $1 million of expense related to an impairment of assets and <$1 million of costs associated with a helium supply contract court ruling during the three months ended March 31, 2019, and the nine months ended September 30, 2018 was further impacted by $3 million gain on land sales, offset by a similar amount of other expense accrued for litigation matters, and $2 million of transaction costs related to the Company’s privately negotiated debt exchanges.
- The estimated income tax impacts on adjustments to net income are generally computed based upon a statutory rate of 25% with the exception of (a) the periodic tax impacts of a shortfall (benefit) on the stock-based compensation deduction which totaled $2 million, ($2) million, and <$1 million during the three months ended September 30, 2019, September 30, 2018 and June 30, 2019, respectively, and $2 million and $1 million for the nine months ended September 30, 2019 and 2018, respectively, (b) $22 million of tax expense associated with the gain on debt extinguishment and $9 million of valuation allowances established against a portion of the Company’s business interest expense deduction during the three months ended June 30, 2019, and (c) a tax benefit for enhanced oil recovery income tax credits of $5 million during the three and nine months ended September 30, 2018, respectively.
BASIC AND DILUTED NET INCOME PER COMMON SHARE
| Three Months Ended | ||||||||||||||||||||||||||||||||||||
| September 30, | June 30, | |||||||||||||||||||||||||||||||||||
| 2019 | 2018 | 2019 | ||||||||||||||||||||||||||||||||||
| In thousands, except per-share data | Amount | Per Diluted Share | Amount | Per Diluted Share | Amount | Per Diluted Share | ||||||||||||||||||||||||||||||
| Numerator | ||||||||||||||||||||||||||||||||||||
| Net income – basic | $ | 72,862 | $ | 0.16 | $ | 78,419 | $ | 0.17 | $ | 146,692 | $ | 0.32 | ||||||||||||||||||||||||
| Effect of potentially dilutive securities | ||||||||||||||||||||||||||||||||||||
| Interest on convertible senior notes, net of tax | 5,101 | (0.02 | ) | — | — | 548 | 0.00 | |||||||||||||||||||||||||||||
| Net income – diluted | $ | 77,963 | $ | 0.14 | $ | 78,419 | $ | 0.17 | $ | 147,240 | $ | 0.32 | ||||||||||||||||||||||||
| Denominator | ||||||||||||||||||||||||||||||||||||
| Weighted average common shares outstanding – basic | 455,487 | 451,256 | 452,612 | |||||||||||||||||||||||||||||||||
| Effect of potentially dilutive securities | ||||||||||||||||||||||||||||||||||||
| Restricted stock and performance-based equity awards | 865 | 7,194 | 2,835 | |||||||||||||||||||||||||||||||||
| Convertible senior notes | 90,853 | — | 11,980 | |||||||||||||||||||||||||||||||||
| Weighted average common shares outstanding – diluted | 547,205 | 458,450 | 467,427 | |||||||||||||||||||||||||||||||||
| Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||
| September 30, | ||||||||||||||||||||||||||||||||||||||||
| 2019 | 2018 | |||||||||||||||||||||||||||||||||||||||
| In thousands, except per-share data | Amount | Per Diluted Share | Amount | Per Diluted Share | ||||||||||||||||||||||||||||||||||||
| Numerator | ||||||||||||||||||||||||||||||||||||||||
| Net income – basic | $ | 193,880 | $ | 0.43 | $ | 148,219 | $ | 0.35 | ||||||||||||||||||||||||||||||||
| Effect of potentially dilutive securities | ||||||||||||||||||||||||||||||||||||||||
| Interest on convertible senior notes, net of tax | 5,649 | (0.02 | ) | 538 | (0.02 | ) | ||||||||||||||||||||||||||||||||||
| Net income – diluted | $ | 199,529 | $ | 0.41 | $ | 148,757 | $ | 0.33 | ||||||||||||||||||||||||||||||||
| Denominator | ||||||||||||||||||||||||||||||||||||||||
| Weighted average common shares outstanding – basic | 453,287 | 426,036 | ||||||||||||||||||||||||||||||||||||||
| Effect of potentially dilutive securities | ||||||||||||||||||||||||||||||||||||||||
| Restricted stock and performance-based equity awards | 2,489 | 6,983 | ||||||||||||||||||||||||||||||||||||||
| Convertible senior notes | 34,278 | 22,915 | ||||||||||||||||||||||||||||||||||||||
| Weighted average common shares outstanding – diluted | 490,054 | 455,934 | ||||||||||||||||||||||||||||||||||||||
DENBURY RESOURCES INC.
SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES (UNAUDITED)
Reconciliation of cash flows from operations (GAAP measure) to adjusted cash flows from operations (non-GAAP measure) to adjusted cash flows from operations less interest treated as debt reduction (non-GAAP measure) and free cash flow (non-GAAP measure)
Adjusted cash flows from operations is a non-GAAP measure that represents cash flows provided by operations before changes in assets and liabilities, as summarized from the Company’s Unaudited Condensed Consolidated Statements of Cash Flows. Adjusted cash flows from operations measures the cash flows earned or incurred from operating activities without regard to the collection or payment of associated receivables or payables. Adjusted cash flows from operations less interest treated as debt reduction is an additional non-GAAP measure that removes interest associated with the Company’s senior secured second lien notes and convertible senior notes not reflected as interest expense for financial reporting purposes and other special items. Free cash flow is a non-GAAP measure that represents adjusted cash flows from operations less interest treated as debt reduction, development capital expenditures and capitalized interest, but before acquisitions. Management believes that it is important to consider these additional measures, along with cash flows from operations, as it believes the non-GAAP measures can often be a better way to discuss changes in operating trends in its business caused by changes in production, prices, operating costs and related factors, without regard to whether the earned or incurred item was collected or paid during that period.
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| September 30, | June 30, | September 30, | ||||||||||||||||||
| In thousands | 2019 | 2018 | 2019 | 2019 | 2018 | |||||||||||||||
| Net income (GAAP measure) | $ | 72,862 | $ | 78,419 | $ | 146,692 | $ | 193,880 | $ | 148,219 | ||||||||||
| Adjustments to reconcile to adjusted cash flows from operations | ||||||||||||||||||||
| Depletion, depreciation, and amortization | 55,064 | 51,316 | 58,264 | 170,625 | 156,711 | |||||||||||||||
| Deferred income taxes | 37,909 | 17,504 | 62,023 | 90,454 | 42,741 | |||||||||||||||
| Stock-based compensation | 3,001 | 3,559 | 3,602 | 9,866 | 8,711 | |||||||||||||||
| Noncash fair value losses (gains) on commodity derivatives | (35,098 | ) | (17,034 | ) | (26,309 | ) | 30,176 | 39,863 | ||||||||||||
| Gain on debt extinguishment | (5,874 | ) | — | (100,346 | ) | (106,220 | ) | — | ||||||||||||
| Other | (2,099 | ) | 753 | 673 | 745 | (2,086 | ) | |||||||||||||
| Adjusted cash flows from operations (non-GAAP measure) | 125,765 | 134,517 | 144,599 | 389,526 | 394,159 | |||||||||||||||
| Net change in assets and liabilities relating to operations | 4,813 | 13,387 | 4,035 | (45,948 | ) | (629 | ) | |||||||||||||
| Cash flows from operations (GAAP measure) | $ | 130,578 | $ | 147,904 | $ | 148,634 | $ | 343,578 | $ | 393,530 | ||||||||||
| Adjusted cash flows from operations (non-GAAP measure) | $ | 125,765 | $ | 134,517 | $ | 144,599 | $ | 389,526 | $ | 394,159 | ||||||||||
| Interest on notes treated as debt reduction | (21,372 | ) | (21,186 | ) | (21,355 | ) | (64,006 | ) | (64,849 | ) | ||||||||||
| Adjusted cash flows from operations less interest treated as debt reduction (non-GAAP measure) | 104,393 | 113,331 | 123,244 | 325,520 | 329,310 | |||||||||||||||
| Development capital expenditures | (51,420 | ) | (85,999 | ) | (76,856 | ) | (189,439 | ) | (215,219 | ) | ||||||||||
| Capitalized interest | (8,773 | ) | (9,514 | ) | (8,238 | ) | (27,545 | ) | (26,817 | ) | ||||||||||
| Free cash flow (non-GAAP measure) | $ | 44,200 | $ | 17,818 | $ | 38,150 | $ | 108,536 | $ | 87,274 | ||||||||||
DENBURY RESOURCES INC.
SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES (UNAUDITED)
Reconciliation of commodity derivatives income (expense) (GAAP measure) to noncash fair value gains (losses) on commodity derivatives (non-GAAP measure)
Noncash fair value adjustments on commodity derivatives is a non-GAAP measure and is different from “Commodity derivatives expense (income)” in the Unaudited Condensed Consolidated Statements of Operations in that the noncash fair value gains (losses) on commodity derivatives represents only the net change between periods of the fair market values of open commodity derivative positions, and excludes the impact of settlements on commodity derivatives during the period. Management believes that noncash fair value gains (losses) on commodity derivatives is a useful supplemental disclosure to “Commodity derivatives expense (income)” because the GAAP measure also includes settlements on commodity derivatives during the period; the non-GAAP measure is widely used within the industry and by securities analysts, banks and credit rating agencies in calculating EBITDA and in adjusting net income to present those measures on a comparative basis across companies, as well as to assess compliance with certain debt covenants.
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||||||||||
| September 30, | June 30, | September 30, | ||||||||||||||||||||||||||||||||||||||||
| In thousands | 2019 | 2018 | 2019 | 2019 | 2018 | |||||||||||||||||||||||||||||||||||||
| Receipt (payment) on settlements of commodity derivatives | $ | 8,057 | $ | (61,611 | ) | $ | (1,549 | ) | $ | 14,714 | $ | (149,738 | ) | |||||||||||||||||||||||||||||
| Noncash fair value gains (losses) on commodity derivatives (non-GAAP measure) | 35,098 | 17,034 | 26,309 | (30,176 | ) | (39,863 | ) | |||||||||||||||||||||||||||||||||||
| Commodity derivatives income (expense) (GAAP measure) | $ | 43,155 | $ | (44,577 | ) | $ | 24,760 | $ | (15,462 | ) | $ | (189,601 | ) | |||||||||||||||||||||||||||||
DENBURY RESOURCES INC.
SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES (UNAUDITED)
Reconciliation of net income (GAAP measure) to Adjusted EBITDAX (non-GAAP measure)
Adjusted EBITDAX is a non-GAAP financial measure which management uses and is calculated based upon (but not identical to) a financial covenant related to “Consolidated EBITDAX” in the Company’s senior secured bank credit facility, which excludes certain items that are included in net income, the most directly comparable GAAP financial measure. Items excluded include interest, income taxes, depletion, depreciation, and amortization, and items that the Company believes affect the comparability of operating results such as items whose timing and/or amount cannot be reasonably estimated or are non-recurring. Management believes Adjusted EBITDAX may be helpful to investors in order to assess the Company’s operating performance as compared to that of other companies in the industry, without regard to financing methods, capital structure or historical costs basis. It is also commonly used by third parties to assess leverage and the Company’s ability to incur and service debt and fund capital expenditures. Adjusted EBITDAX should not be considered in isolation, as a substitute for, or more meaningful than, net income, cash flow from operations, or any other measure reported in accordance with GAAP. The Company’s Adjusted EBITDAX may not be comparable to similarly titled measures of another company because all companies may not calculate Adjusted EBITDAX, EBITDAX or EBITDA in the same manner. The following table presents a reconciliation of the Company’s net income to Adjusted EBITDAX.
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| September 30, | June 30, | September 30, | ||||||||||||||||||
| In thousands | 2019 | 2018 | 2019 | 2019 | 2018 | |||||||||||||||
| Net income (GAAP measure) | $ | 72,862 | $ | 78,419 | $ | 146,692 | $ | 193,880 | $ | 148,219 | ||||||||||
| Adjustments to reconcile to Adjusted EBITDAX | ||||||||||||||||||||
| Interest expense | 22,858 | 18,527 | 20,416 | 60,672 | 51,974 | |||||||||||||||
| Income tax expense | 37,050 | 15,616 | 65,377 | 91,668 | 39,067 | |||||||||||||||
| Depletion, depreciation, and amortization | 55,064 | 51,316 | 58,264 | 170,625 | 156,711 | |||||||||||||||
| Noncash fair value losses (gains) on commodity derivatives | (35,098 | ) | (17,034 | ) | (26,309 | ) | 30,176 | 39,863 | ||||||||||||
| Stock-based compensation | 3,001 | 3,559 | 3,602 | 9,866 | 8,711 | |||||||||||||||
| Gain on debt extinguishment | (5,874 | ) | — | (100,346 | ) | (106,220 | ) | — | ||||||||||||
| Noncash, non-recurring and other | (4,744 | ) | (2,155 | ) | 1,417 | 1,459 | (1,139 | ) | ||||||||||||
| Adjusted EBITDAX (non-GAAP measure) | $ | 145,119 | $ | 148,248 | $ | 169,113 | $ | 452,126 | $ | 443,406 | ||||||||||
DENBURY RESOURCES INC.
OPERATING HIGHLIGHTS (UNAUDITED)
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||||||||||
| September 30, | June 30, | September 30, | ||||||||||||||||||||||||||||||||||||||||
| 2019 | 2018 | 2019 | 2019 | 2018 | ||||||||||||||||||||||||||||||||||||||
| Production (daily – net of royalties) | ||||||||||||||||||||||||||||||||||||||||||
| Oil (barrels) | 55,085 | 57,410 | 58,034 | 56,836 | 58,621 | |||||||||||||||||||||||||||||||||||||
| Gas (mcf) | 8,135 | 10,623 | 10,111 | 9,681 | 11,275 | |||||||||||||||||||||||||||||||||||||
| BOE (6:1) | 56,441 | 59,181 | 59,719 | 58,449 | 60,500 | |||||||||||||||||||||||||||||||||||||
| Unit sales price (excluding derivative settlements) | ||||||||||||||||||||||||||||||||||||||||||
| Oil (per barrel) | $ | 57.64 | $ | 71.44 | $ | 62.22 | $ | 58.82 | $ | 67.99 | ||||||||||||||||||||||||||||||||
| Gas (per mcf) | 1.46 | 2.35 | 2.01 | 2.10 | 2.34 | |||||||||||||||||||||||||||||||||||||
| BOE (6:1) | 56.46 | 69.73 | 60.80 | 57.54 | 66.31 | |||||||||||||||||||||||||||||||||||||
| Unit sales price (including derivative settlements) | ||||||||||||||||||||||||||||||||||||||||||
| Oil (per barrel) | $ | 59.23 | $ | 59.78 | $ | 61.92 | $ | 59.77 | $ | 58.63 | ||||||||||||||||||||||||||||||||
| Gas (per mcf) | 1.46 | 2.35 | 2.01 | 2.10 | 2.34 | |||||||||||||||||||||||||||||||||||||
| BOE (6:1) | 58.02 | 58.41 | 60.52 | 58.46 | 57.24 | |||||||||||||||||||||||||||||||||||||
| NYMEX differentials | ||||||||||||||||||||||||||||||||||||||||||
| Gulf Coast region | ||||||||||||||||||||||||||||||||||||||||||
| Oil (per barrel) | $ | 3.11 | $ | 3.21 | $ | 4.85 | $ | 4.08 | $ | 2.10 | ||||||||||||||||||||||||||||||||
| Gas (per mcf) | (0.24 | ) | 0.06 | 0.10 | (0.06 | ) | 0.07 | |||||||||||||||||||||||||||||||||||
| Rocky Mountain region | ||||||||||||||||||||||||||||||||||||||||||
| Oil (per barrel) | $ | (1.65 | ) | $ | (0.54 | ) | $ | (1.48 | ) | $ | (1.85 | ) | $ | (0.47 | ) | |||||||||||||||||||||||||||
| Gas (per mcf) | (1.61 | ) | (1.05 | ) | (1.13 | ) | (0.90 | ) | (1.07 | ) | ||||||||||||||||||||||||||||||||
| Total company | ||||||||||||||||||||||||||||||||||||||||||
| Oil (per barrel) | $ | 1.30 | $ | 1.84 | $ | 2.35 | $ | 1.79 | $ | 1.16 | ||||||||||||||||||||||||||||||||
| Gas (per mcf) | (0.87 | ) | (0.51 | ) | (0.50 | ) | (0.47 | ) | (0.51 | ) | ||||||||||||||||||||||||||||||||
DENBURY RESOURCES INC.
OPERATING HIGHLIGHTS (UNAUDITED)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
| September 30, | June 30, | September 30, | |||||||||||||||||||||||||||
| Average Daily Volumes (BOE/d) (6:1) | 2019 | 2018 | 2019 | 2019 | 2018 | ||||||||||||||||||||||||
| Tertiary oil production | |||||||||||||||||||||||||||||
| Gulf Coast region | |||||||||||||||||||||||||||||
| Delhi | 4,256 | 4,383 | 4,486 | 4,405 | 4,315 | ||||||||||||||||||||||||
| Hastings | 5,513 | 5,486 | 5,466 | 5,506 | 5,634 | ||||||||||||||||||||||||
| Heidelberg | 4,297 | 4,376 | 4,082 | 4,123 | 4,384 | ||||||||||||||||||||||||
| Oyster Bayou | 3,995 | 4,578 | 4,394 | 4,373 | 4,863 | ||||||||||||||||||||||||
| Tinsley | 4,541 | 5,294 | 4,891 | 4,697 | 5,698 | ||||||||||||||||||||||||
| West Yellow Creek | 728 | 240 | 586 | 584 | 147 | ||||||||||||||||||||||||
| Mature properties(1) | 6,415 | 6,612 | 6,448 | 6,448 | 6,687 | ||||||||||||||||||||||||
| Total Gulf Coast region | 29,745 | 30,969 | 30,353 | 30,136 | 31,728 | ||||||||||||||||||||||||
| Rocky Mountain region | |||||||||||||||||||||||||||||
| Bell Creek | 4,686 | 3,970 | 5,951 | 5,096 | 4,010 | ||||||||||||||||||||||||
| Salt Creek | 2,213 | 2,274 | 2,078 | 2,116 | 2,109 | ||||||||||||||||||||||||
| Other | 58 | 6 | 41 | 50 | 2 | ||||||||||||||||||||||||
| Total Rocky Mountain region | 6,957 | 6,250 | 8,070 | 7,262 | 6,121 | ||||||||||||||||||||||||
| Total tertiary oil production | 36,702 | 37,219 | 38,423 | 37,398 | 37,849 | ||||||||||||||||||||||||
| Non-tertiary oil and gas production | |||||||||||||||||||||||||||||
| Gulf Coast region | |||||||||||||||||||||||||||||
| Mississippi | 873 | 1,038 | 1,025 | 977 | 938 | ||||||||||||||||||||||||
| Texas | 4,268 | 4,533 | 4,243 | 4,285 | 4,622 | ||||||||||||||||||||||||
| Other | 6 | 5 | 6 | 7 | 17 | ||||||||||||||||||||||||
| Total Gulf Coast region | 5,147 | 5,576 | 5,274 | 5,269 | 5,577 | ||||||||||||||||||||||||
| Rocky Mountain region | |||||||||||||||||||||||||||||
| Cedar Creek Anticline | 13,354 | 14,208 | 14,311 | 14,211 | 14,795 | ||||||||||||||||||||||||
| Other | 1,238 | 1,409 | 1,305 | 1,285 | 1,461 | ||||||||||||||||||||||||
| Total Rocky Mountain region | 14,592 | 15,617 | 15,616 | 15,496 | 16,256 | ||||||||||||||||||||||||
| Total non-tertiary production | 19,739 | 21,193 | 20,890 | 20,765 | 21,833 | ||||||||||||||||||||||||
| Total continuing production | 56,441 | 58,412 | 59,313 | 58,163 | 59,682 | ||||||||||||||||||||||||
| Property sales | |||||||||||||||||||||||||||||
| Citronelle(2) | — | 416 | 406 | 286 | 398 | ||||||||||||||||||||||||
| Lockhart Crossing(3) | — | 353 | — | — | 420 | ||||||||||||||||||||||||
| Total production | 56,441 | 59,181 | 59,719 | 58,449 | 60,500 | ||||||||||||||||||||||||
- Mature properties include Brookhaven, Cranfield, Eucutta, Little Creek, Mallalieu, Martinville, McComb and Soso fields.
- Includes production from Citronelle Field sold in July 2019.
- Includes production from Lockhart Crossing Field sold in the third quarter of 2018.
DENBURY RESOURCES INC.
PER-BOE DATA (UNAUDITED)
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| September 30, | June 30, | September 30, | ||||||||||||||||||
| 2019 | 2018 | 2019 | 2019 | 2018 | ||||||||||||||||
| Oil and natural gas revenues | $ | 56.46 | $ | 69.73 | $ | 60.80 | $ | 57.54 | $ | 66.31 | ||||||||||
| Receipt (payment) on settlements of commodity derivatives | 1.56 | (11.32 | ) | (0.28 | ) | 0.92 | (9.07 | ) | ||||||||||||
| Lease operating expenses | (22.70 | ) | (22.50 | ) | (21.70 | ) | (22.64 | ) | (21.87 | ) | ||||||||||
| Production and ad valorem taxes | (3.89 | ) | (4.66 | ) | (4.33 | ) | (4.12 | ) | (4.59 | ) | ||||||||||
| Transportation and marketing expenses | (1.94 | ) | (2.04 | ) | (2.07 | ) | (2.01 | ) | (1.92 | ) | ||||||||||
| Production netback | 29.49 | 29.21 | 32.42 | 29.69 | 28.86 | |||||||||||||||
| CO2 sales, net of operating and exploration expenses | 1.56 | 1.37 | 1.36 | 1.47 | 1.26 | |||||||||||||||
| General and administrative expenses | (3.52 | ) | (3.96 | ) | (3.22 | ) | (3.43 | ) | (3.71 | ) | ||||||||||
| Interest expense, net | (4.40 | ) | (3.40 | ) | (3.76 | ) | (3.80 | ) | (3.15 | ) | ||||||||||
| Other | 1.09 | 1.49 | (0.19 | ) | 0.48 | 0.61 | ||||||||||||||
| Changes in assets and liabilities relating to operations | 0.93 | 2.46 | 0.74 | (2.88 | ) | (0.04 | ) | |||||||||||||
| Cash flows from operations | 25.15 | 27.17 | 27.35 | 21.53 | 23.83 | |||||||||||||||
| DD&A | (10.60 | ) | (9.43 | ) | (10.72 | ) | (10.69 | ) | (9.49 | ) | ||||||||||
| Deferred income taxes | (7.30 | ) | (3.21 | ) | (11.41 | ) | (5.67 | ) | (2.59 | ) | ||||||||||
| Gain on debt extinguishment | 1.13 | — | 18.46 | 6.66 | — | |||||||||||||||
| Noncash fair value gains (losses) on commodity derivatives | 6.75 | 3.13 | 4.84 | (1.89 | ) | (2.41 | ) | |||||||||||||
| Other noncash items | (1.10 | ) | (3.26 | ) | (1.53 | ) | 2.21 | (0.37 | ) | |||||||||||
| Net income | $ | 14.03 | $ | 14.40 | $ | 26.99 | $ | 12.15 | $ | 8.97 | ||||||||||
CAPITAL EXPENDITURE SUMMARY (UNAUDITED)(1)
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||||||||||
| September 30, | June 30, | September 30, | ||||||||||||||||||||||||||||||||||||||||
| In thousands | 2019 | 2018 | 2019 | 2019 | 2018 | |||||||||||||||||||||||||||||||||||||
| Capital expenditure summary | ||||||||||||||||||||||||||||||||||||||||||
| Tertiary oil fields | $ | 17,547 | $ | 43,047 | $ | 28,758 | $ | 72,333 | $ | 107,133 | ||||||||||||||||||||||||||||||||
| Non-tertiary fields | 19,385 | 18,975 | 14,880 | 55,939 | 51,714 | |||||||||||||||||||||||||||||||||||||
| Capitalized internal costs(2) | 11,175 | 11,280 | 12,324 | 35,389 | 34,027 | |||||||||||||||||||||||||||||||||||||
| Oil and natural gas capital expenditures | 48,107 | 73,302 | 55,962 | 163,661 | 192,874 | |||||||||||||||||||||||||||||||||||||
| CO2 pipelines, sources and other | 3,313 | 12,697 | 20,894 | 25,778 | 22,345 | |||||||||||||||||||||||||||||||||||||
| Capital expenditures, before acquisitions and capitalized interest | 51,420 | 85,999 | 76,856 | 189,439 | 215,219 | |||||||||||||||||||||||||||||||||||||
| Acquisitions of oil and natural gas properties | 25 | 129 | 68 | 122 | 150 | |||||||||||||||||||||||||||||||||||||
| Capital expenditures, before capitalized interest | 51,445 | 86,128 | 76,924 | 189,561 | 215,369 | |||||||||||||||||||||||||||||||||||||
| Capitalized interest | 8,773 | 9,514 | 8,238 | 27,545 | 26,817 | |||||||||||||||||||||||||||||||||||||
| Capital expenditures, total | $ | 60,218 | $ | 95,642 | $ | 85,162 | $ | 217,106 | $ | 242,186 | ||||||||||||||||||||||||||||||||
- Capital expenditure amounts include accrued capital.
- Includes capitalized internal acquisition, exploration and development costs and pre-production tertiary startup costs.
DENBURY RESOURCES INC.
INTEREST AND FINANCING EXPENSES (UNAUDITED)
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| September 30, | June 30, | September 30, | ||||||||||||||||||
| In thousands | 2019 | 2018 | 2019 | 2019 | 2018 | |||||||||||||||
| Cash interest(1) | $ | 48,297 | $ | 46,515 | $ | 48,371 | $ | 144,616 | $ | 138,660 | ||||||||||
| Interest not reflected as expense for financial reporting purposes(1) | (21,372 | ) | (21,186 | ) | (21,355 | ) | (64,006 | ) | (64,849 | ) | ||||||||||
| Noncash interest expense | 1,060 | 2,712 | 1,194 | 3,517 | 4,980 | |||||||||||||||
| Amortization of debt discount(2) | 3,646 | — | 444 | 4,090 | — | |||||||||||||||
| Less: capitalized interest | (8,773 | ) | (9,514 | ) | (8,238 | ) | (27,545 | ) | (26,817 | ) | ||||||||||
| Interest expense, net | $ | 22,858 | $ | 18,527 | $ | 20,416 | $ | 60,672 | $ | 51,974 | ||||||||||
- Cash interest includes interest which is paid semiannually on the Company’s 9% Senior Secured Second Lien Notes due 2021, 9¼% Senior Secured Second Lien Notes due 2022, and the Company’s previously outstanding 5% Convertible Senior Notes due 2023 and 3½% Convertible Senior Notes due 2024. As a result of the accounting for certain exchange transactions in previous years, most of the future interest related to these notes was recorded as debt as of the debt issuance dates, which is reduced as semiannual interest payments are made, and therefore not reflected as interest for financial reporting purposes.
- Represents the amortization of debt discounts related to the Company’s 7¾% Senior Secured Second Lien Notes due 2024 (“7¾% Senior Secured Notes”) and 6⅜% Convertible Senior Notes due 2024 (“6⅜% Convertible Senior Notes”) issued in June 2019. In accordance with FASC 470-50, Modifications and Extinguishments, the 7¾% Senior Secured Notes and 6⅜% Convertible Senior Notes were recorded on the Company’s balance sheet at a discount of $30 million and $80 million, respectively, which will be amortized as interest expense over the term of the notes.
SELECTED BALANCE SHEET DATA (UNAUDITED)
| September 30, | June 30, | December 31, | ||||||||||||||||
| In thousands | 2019 | 2019 | 2018 | |||||||||||||||
| Cash and cash equivalents | $ | 514 | $ | 341 | $ | 38,560 | ||||||||||||
| Total assets | 4,753,710 | 4,732,034 | 4,723,222 | |||||||||||||||
| Borrowings under senior secured bank credit facility | $ | 50,000 | $ | 80,000 | $ | — | ||||||||||||
| Borrowings under senior secured second lien notes (principal only)(1) | 1,623,049 | 1,623,251 | 1,520,587 | |||||||||||||||
| Borrowings under senior convertible notes (principal only)(2) | 245,548 | 245,548 | — | |||||||||||||||
| Borrowings under senior subordinated notes (principal only) | 346,735 | 357,783 | 826,185 | |||||||||||||||
| Financing and capital leases | 171,067 | 174,310 | 185,435 | |||||||||||||||
| Total debt (principal only) | $ | 2,436,399 | $ | 2,480,892 | $ | 2,532,207 | ||||||||||||
| Total stockholders’ equity | $ | 1,346,120 | $ | 1,270,676 | $ | 1,141,777 | ||||||||||||
- Excludes $190 million, $208 million, and $250 million of future interest payable on the notes as of September 30, 2019, June 30, 2019, and December 31, 2018, respectively, accounted for as debt for financial reporting purposes and also excludes a $28 million and $29 million discount to par on the 7¾% Senior Secured Notes as of September 30, 2019 and June 30, 2019, respectively.
- Excludes a $77 million and $80 million discount to par on the 6⅜% Convertible Senior Notes as of September 30, 2019 and June 30, 2019, respectively.