Denbury Reports Third Quarter 2022 Financial and Operational Results
Denbury Inc. reported its third quarter 2022 financial results, achieving $156 million in net cash flows from operations and $250 million in net income. The company generated $47 million of free cash flow, with an average daily production of 47,109 BOE/d. Denbury signed multiple CO2 transportation and sequestration agreements, expanding its carbon capture and storage capabilities. Despite challenges like inflation, the company anticipates capital expenditures of $135 million in Q4 2022, with a production forecast of 47,500 to 49,000 BOE/d.
- Net income of $250 million for Q3 2022.
- Generated $156 million in cash flow from operations.
- Achieved $47 million in free cash flow during Q3.
- Average daily sales volumes up to 47,109 BOE/d, indicating strong production.
- Signed multiple agreements for CO2 transportation and sequestration, expanding market opportunities.
- Total revenues declined due to lower oil prices, down approximately 16% from Q2 2022.
- Lease operating expenses increased to $134 million, driven by service cost inflation and higher natural gas prices.
- Projected sales volumes for Q4 2022 are slightly lower than original expectations due to equipment delays.
Cumulative CO2 transport & storage agreements now total 20 MMTPA
FINANCIAL AND OPERATIONAL HIGHLIGHTS
-
Third quarter 2022 net cash flows provided by operating activities totaled
, and adjusted cash flows from operations(1), excluding working capital changes, totaled$156 million .$156 million -
Generated
of free cash flow(1) during the third quarter and$47 million year-to-date.$153 million -
Repurchased
of the Company’s outstanding shares in the third quarter (total of$71 million of shares repurchased in 2022).$100 million - Delivered sales volumes of 47,109 barrels of oil equivalent per day (“BOE/d”), slightly above second quarter 2022 levels.
-
Industrial-sourced CO2 represented
41% of CO2 utilized in Denbury’s Enhanced Oil Recovery (“EOR”) operations, equivalent to an average utilization of over 4 million metric tons per year (“mmtpa”) of industrial CO2. -
Progressed the development of the Company’s Cedar Creek Anticline (“CCA”) EOR project in
Montana andNorth Dakota , with production response anticipated in the second half of 2023.
RECENT CCUS HIGHLIGHTS
-
Signed a definitive agreement for the transportation and sequestration of CO2 captured from Clean Hydrogen Works’ planned “blue” ammonia facilities. Captured CO2 volumes are expected to total up to 12 mmtpa for the two-phase development. The project is planned to be built in close proximity to the Company’s existing CO2 pipeline infrastructure near
Donaldsonville, Louisiana , with Block 1 startup anticipated by the end of 2027. -
Executed a definitive agreement with Lake Charles Methanol to provide CO2 transportation and sequestration in association with their planned “blue” methanol project near
Lake Charles, Louisiana . Captured CO2 volumes are projected to total approximately 1 mmtpa, and first operations are anticipated by the end of 2027.
(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. |
EXECUTIVE COMMENT
“I continue to believe
THIRD QUARTER RESULTS
|
|
3Q 2022 |
|
YTD 2022 |
||||
(in thousands, except per-share and volume data) |
|
Total |
|
Per Diluted Share |
|
Total |
|
Per Diluted Share |
Net Income |
|
|
|
|
|
|
|
|
Adjusted net income(1)(2) (non-GAAP) |
|
102,219 |
|
1.90 |
|
288,342 |
|
5.29 |
Adjusted EBITDAX(1) (non-GAAP) |
|
161,136 |
|
|
|
446,387 |
|
|
|
|
|
|
|
|
|
|
|
Net cash flows from operations |
|
156,301 |
|
|
|
396,409 |
|
|
Adjusted cash flows from operations(1) (non-GAAP) |
|
155,824 |
|
|
|
431,594 |
|
|
|
|
|
|
|
|
|
|
|
Oil & gas development capital expenditures |
|
99,331 |
|
|
|
243,227 |
|
|
CCUS capital expenditures - storage sites and related |
|
8,200 |
|
|
|
32,100 |
|
|
|
|
|
|
|
|
|
|
|
Average daily sales volumes (BOE/d) |
|
47,109 |
|
|
|
46,866 |
|
|
Blue Oil (% oil volumes using industrial-sourced CO2) |
|
|
|
|
|
|
|
|
Industrial-sourced CO2 injected (thousand metric tons) |
|
1,078 |
|
|
|
3,202 |
|
|
Industrial-sourced CO2 injected (% of total CO2 used in EOR operations) |
|
|
|
|
|
|
|
|
(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 53.7 million and 54.5 million for the three and nine months ended |
Total revenues and other income in the third quarter of 2022 were
Denbury’s sales volumes averaged 47,109 BOE/d during the third quarter of 2022, slightly better than expectations and 548 BOE/d higher than second quarter 2022 levels. Oil represented
CO2 sales and transportation revenue in the third quarter of 2022 was higher than in previous periods and better than expected primarily due to a short-term CO2 sales agreement that is expected to continue through a portion of the fourth quarter of 2022.
Lease operating expenses (“LOE”) in the third quarter of 2022 totaled
On a pre-hedge basis, per barrel operating margins (oil & natural gas revenues less LOE, production and ad valorem taxes, transportation and marketing expenses, and general & administrative and interest costs) were
Commodity derivatives income in the third quarter of 2022 was
The Company’s third quarter 2022 effective income tax rate was approximately
CAPITAL EXPENDITURES
Third quarter 2022 capital expenditures, excluding capitalized interest, totaled
Third quarter 2022 CCUS capital expenditures were
During the third quarter, the Company invested
FINANCIAL POSITION AND SHARE REPURCHASES
The Company repurchased
OUTLOOK
Capital expenditures for the fourth quarter 2022 are anticipated to be higher than in the third quarter driven by oil development activities, particularly at the CCA EOR project. The Company anticipates approximately
Fourth quarter 2022 sales volumes are expected in a range of 47,500 to 49,000 BOE/d, with the midpoint up nearly two and a half percent from the third quarter as a result of incremental production from multiple projects in the Company’s 2022 capital program. These predicted fourth quarter 2022 sales volumes are slightly lower than original expectations due to timing associated with equipment and materials delays, which should benefit production in early 2023.
Additional guidance details are available in supplemental materials provided on the Company’s website.
CONFERENCE CALL AND WEBCAST
ABOUT
This press release and updated supporting materials, other than historical information, contains forward-looking statements that involve risks and uncertainties including: expectations as to future oil prices, operating costs, production levels and cash flows; anticipated levels of 2022 capital expenditures and production, along with other financial forecasts; the expected timing of first tertiary production at CCA; statements or predictions related to the ultimate economics of proposed carbon capture, use and storage arrangements and the CO2 volumes covered by such arrangements; and other risks and uncertainties detailed in the Company’s filings with the
FINANCIAL AND STATISTICAL DATA TABLES AND RECONCILIATION SCHEDULES
The following tables include selected unaudited financial and operational information for the comparative three and nine-month periods ended
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) |
||||||||||||||
The following information is based on GAAP reporting earnings (along with additional required disclosures) included or to be included in the Company’s periodic reports: |
||||||||||||||
|
|
Quarter Ended |
|
Nine Months Ended |
||||||||||
|
|
|
|
|
||||||||||
In thousands, except per-share data |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||
Revenues and other income |
|
|
|
|
|
|
|
|
||||||
Oil sales |
|
$ |
389,543 |
|
|
$ |
305,093 |
|
$ |
1,217,377 |
|
$ |
818,714 |
|
Natural gas sales |
|
|
5,680 |
|
|
|
3,361 |
|
|
14,727 |
|
|
7,893 |
|
CO2 sales and transportation fees |
|
|
18,586 |
|
|
|
12,237 |
|
|
44,618 |
|
|
31,599 |
|
Oil marketing revenues |
|
|
17,663 |
|
|
|
12,593 |
|
|
47,725 |
|
|
26,538 |
|
Other income |
|
|
8,015 |
|
|
|
10,451 |
|
|
9,055 |
|
|
11,518 |
|
Total revenues and other income |
|
|
439,487 |
|
|
|
343,735 |
|
|
1,333,502 |
|
|
896,262 |
|
Expenses |
|
|
|
|
|
|
|
|
||||||
Lease operating expenses |
|
|
134,464 |
|
|
|
116,536 |
|
|
376,643 |
|
|
308,731 |
|
Transportation and marketing expenses |
|
|
5,191 |
|
|
|
5,985 |
|
|
14,638 |
|
|
22,304 |
|
CO2 operating and discovery expenses |
|
|
2,066 |
|
|
|
1,963 |
|
|
6,564 |
|
|
4,487 |
|
Taxes other than income |
|
|
33,789 |
|
|
|
24,154 |
|
|
101,487 |
|
|
65,499 |
|
Oil marketing purchases |
|
|
19,095 |
|
|
|
11,940 |
|
|
47,162 |
|
|
25,763 |
|
General and administrative expenses |
|
|
21,071 |
|
|
|
15,388 |
|
|
58,998 |
|
|
62,821 |
|
Interest, net of amounts capitalized of |
|
|
909 |
|
|
|
669 |
|
|
3,092 |
|
|
3,457 |
|
Depletion, depreciation, and amortization |
|
|
37,680 |
|
|
|
37,691 |
|
|
108,425 |
|
|
113,522 |
|
Commodity derivatives expense (income) |
|
|
(109,248 |
) |
|
|
41,745 |
|
|
140,325 |
|
|
330,152 |
|
Write-down of oil and natural gas properties |
|
|
— |
|
|
|
— |
|
|
— |
|
|
14,377 |
|
Other expenses |
|
|
2,726 |
|
|
|
4,553 |
|
|
11,459 |
|
|
9,913 |
|
Total expenses |
|
|
147,743 |
|
|
|
260,624 |
|
|
868,793 |
|
|
961,026 |
|
Income (loss) before income taxes |
|
|
291,744 |
|
|
|
83,111 |
|
|
464,709 |
|
|
(64,764 |
) |
Income tax provision (benefit) |
|
|
|
|
|
|
|
|
||||||
Current income taxes |
|
|
4,012 |
|
|
|
350 |
|
|
6,363 |
|
|
(101 |
) |
Deferred income taxes |
|
|
37,309 |
|
|
|
53 |
|
|
53,301 |
|
|
(34 |
) |
Net income (loss) |
|
$ |
250,423 |
|
|
$ |
82,708 |
|
$ |
405,045 |
|
$ |
(64,629 |
) |
|
|
|
|
|
|
|
|
|
||||||
Net income (loss) per common share |
|
|
|
|
|
|
|
|
||||||
Basic |
|
$ |
4.89 |
|
|
$ |
1.62 |
|
$ |
7.86 |
|
$ |
(1.27 |
) |
Diluted |
|
$ |
4.66 |
|
|
$ |
1.51 |
|
$ |
7.43 |
|
$ |
(1.27 |
) |
|
|
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding |
|
|
|
|
|
|
|
|
||||||
Basic |
|
|
51,182 |
|
|
|
51,094 |
|
|
51,512 |
|
|
50,807 |
|
Diluted |
|
|
53,715 |
|
|
|
54,714 |
|
|
54,524 |
|
|
50,807 |
|
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) |
||||||||||||||||
|
|
Quarter Ended |
|
Nine Months Ended |
||||||||||||
|
|
|
|
|
||||||||||||
In thousands |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
Cash flows from operating activities |
|
|
|
|
|
|
|
|
||||||||
Net income (loss) |
|
$ |
250,423 |
|
|
$ |
82,708 |
|
|
$ |
405,045 |
|
|
$ |
(64,629 |
) |
Adjustments to reconcile net income (loss) to cash flows from operating activities |
|
|
|
|
|
|
|
|
||||||||
Depletion, depreciation, and amortization |
|
|
37,680 |
|
|
|
37,691 |
|
|
|
108,425 |
|
|
|
113,522 |
|
Write-down of oil and natural gas properties |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
14,377 |
|
Deferred income taxes |
|
|
37,309 |
|
|
|
53 |
|
|
|
53,301 |
|
|
|
(34 |
) |
Stock-based compensation |
|
|
4,416 |
|
|
|
2,556 |
|
|
|
11,491 |
|
|
|
22,788 |
|
Commodity derivatives expense |
|
|
(109,248 |
) |
|
|
41,745 |
|
|
|
140,325 |
|
|
|
330,152 |
|
Payment on settlements of commodity derivatives |
|
|
(55,780 |
) |
|
|
(77,670 |
) |
|
|
(276,796 |
) |
|
|
(179,466 |
) |
Debt issuance costs |
|
|
531 |
|
|
|
685 |
|
|
|
2,465 |
|
|
|
2,055 |
|
Gain on asset sales and other |
|
|
(950 |
) |
|
|
(7,055 |
) |
|
|
(1,119 |
) |
|
|
(7,026 |
) |
Other, net |
|
|
(8,557 |
) |
|
|
(3,163 |
) |
|
|
(11,543 |
) |
|
|
(2,448 |
) |
Changes in assets and liabilities, net of effects from acquisitions |
|
|
|
|
|
|
|
|
||||||||
Accrued production receivable |
|
|
52,902 |
|
|
|
(4,067 |
) |
|
|
(32,884 |
) |
|
|
(52,948 |
) |
Trade and other receivables |
|
|
11,849 |
|
|
|
3,769 |
|
|
|
66 |
|
|
|
(1,809 |
) |
Other current and long-term assets |
|
|
(9,554 |
) |
|
|
6,043 |
|
|
|
(21,729 |
) |
|
|
7,337 |
|
Accounts payable and accrued liabilities |
|
|
(23,651 |
) |
|
|
20,192 |
|
|
|
28,359 |
|
|
|
47,484 |
|
Oil and natural gas production payable |
|
|
(19,917 |
) |
|
|
2,944 |
|
|
|
13,412 |
|
|
|
23,168 |
|
Asset retirement obligations and other liabilities |
|
|
(11,152 |
) |
|
|
(2,412 |
) |
|
|
(22,409 |
) |
|
|
(4,966 |
) |
Net cash provided by operating activities |
|
|
156,301 |
|
|
|
104,019 |
|
|
|
396,409 |
|
|
|
247,557 |
|
|
|
|
|
|
|
|
|
|
||||||||
Cash flows from investing activities |
|
|
|
|
|
|
|
|
||||||||
Oil and natural gas capital expenditures |
|
|
(78,312 |
) |
|
|
(59,630 |
) |
|
|
(217,834 |
) |
|
|
(113,041 |
) |
CCUS storage sites and related capital expenditures |
|
|
(9,760 |
) |
|
|
— |
|
|
|
(27,518 |
) |
|
|
— |
|
Acquisitions of oil and natural gas properties |
|
|
(500 |
) |
|
|
(116 |
) |
|
|
(874 |
) |
|
|
(10,927 |
) |
Pipelines and plants capital expenditures |
|
|
(1,995 |
) |
|
|
(14,272 |
) |
|
|
(22,259 |
) |
|
|
(19,123 |
) |
Net proceeds from sales of oil and natural gas properties and equipment |
|
|
— |
|
|
|
597 |
|
|
|
237 |
|
|
|
19,053 |
|
Investment in third-party CCUS projects |
|
|
(10,000 |
) |
|
|
— |
|
|
|
(10,000 |
) |
|
|
— |
|
Other |
|
|
(4,123 |
) |
|
|
9,956 |
|
|
|
(9,746 |
) |
|
|
5,797 |
|
Net cash used in investing activities |
|
|
(104,690 |
) |
|
|
(63,465 |
) |
|
|
(287,994 |
) |
|
|
(118,241 |
) |
|
|
|
|
|
|
|
|
|
||||||||
Cash flows from financing activities |
|
|
|
|
|
|
|
|
||||||||
Bank repayments |
|
|
(284,000 |
) |
|
|
(212,000 |
) |
|
|
(808,000 |
) |
|
|
(697,000 |
) |
Bank borrowings |
|
|
299,000 |
|
|
|
177,000 |
|
|
|
788,000 |
|
|
|
627,000 |
|
Pipeline financing repayments |
|
|
— |
|
|
|
(17,166 |
) |
|
|
— |
|
|
|
(50,676 |
) |
Common stock repurchase program |
|
|
(76,654 |
) |
|
|
— |
|
|
|
(100,028 |
) |
|
|
— |
|
Other |
|
|
10,809 |
|
|
|
309 |
|
|
|
9,421 |
|
|
|
(2,426 |
) |
Net cash used in financing activities |
|
|
(50,845 |
) |
|
|
(51,857 |
) |
|
|
(110,607 |
) |
|
|
(123,102 |
) |
Net increase (decrease) in cash, cash equivalents, and restricted cash |
|
|
766 |
|
|
|
(11,303 |
) |
|
|
(2,192 |
) |
|
|
6,214 |
|
Cash, cash equivalents, and restricted cash at beginning of period |
|
|
47,386 |
|
|
|
59,765 |
|
|
|
50,344 |
|
|
|
42,248 |
|
Cash, cash equivalents, and restricted cash at end of period |
|
$ |
48,152 |
|
|
$ |
48,462 |
|
|
$ |
48,152 |
|
|
$ |
48,462 |
|
CONSOLIDATED BALANCE SHEETS (UNAUDITED) |
||||||||
In thousands, except par value and share data |
|
|
|
|
||||
Assets |
|
|
|
|
||||
Current assets |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
519 |
|
|
$ |
3,671 |
|
Accrued production receivable |
|
|
176,249 |
|
|
|
143,365 |
|
Trade and other receivables, net |
|
|
19,035 |
|
|
|
19,270 |
|
Derivative assets |
|
|
26,782 |
|
|
|
— |
|
Prepaids |
|
|
27,060 |
|
|
|
9,099 |
|
Total current assets |
|
|
249,645 |
|
|
|
175,405 |
|
Property and equipment |
|
|
|
|
||||
Oil and natural gas properties (using full cost accounting) |
|
|
|
|
||||
Proved properties |
|
|
1,325,866 |
|
|
|
1,109,011 |
|
Unevaluated properties |
|
|
192,784 |
|
|
|
112,169 |
|
CO2 properties |
|
|
187,690 |
|
|
|
183,369 |
|
Pipelines |
|
|
219,090 |
|
|
|
224,394 |
|
CCUS storage sites and related assets |
|
|
32,348 |
|
|
|
— |
|
Other property and equipment |
|
|
102,627 |
|
|
|
93,950 |
|
Less accumulated depletion, depreciation, amortization and impairment |
|
|
(270,593 |
) |
|
|
(181,393 |
) |
Net property and equipment |
|
|
1,789,812 |
|
|
|
1,541,500 |
|
Operating lease right-of-use assets |
|
|
17,065 |
|
|
|
19,502 |
|
Derivative assets |
|
|
9,048 |
|
|
|
— |
|
Intangible assets, net |
|
|
81,410 |
|
|
|
88,248 |
|
Restricted cash for future asset retirement obligations |
|
|
47,633 |
|
|
|
46,673 |
|
Other assets |
|
|
48,718 |
|
|
|
31,625 |
|
Total assets |
|
$ |
2,243,331 |
|
|
$ |
1,902,953 |
|
Liabilities and Stockholders’ Equity |
|
|
|
|
||||
Current liabilities |
|
|
|
|
||||
Accounts payable and accrued liabilities |
|
$ |
259,015 |
|
|
$ |
191,598 |
|
Oil and gas production payable |
|
|
89,311 |
|
|
|
75,899 |
|
Derivative liabilities |
|
|
33,868 |
|
|
|
134,509 |
|
Operating lease liabilities |
|
|
4,392 |
|
|
|
4,677 |
|
Total current liabilities |
|
|
386,586 |
|
|
|
406,683 |
|
Long-term liabilities |
|
|
|
|
||||
Long-term debt, net of current portion |
|
|
15,000 |
|
|
|
35,000 |
|
Asset retirement obligations |
|
|
301,764 |
|
|
|
284,238 |
|
Derivative liabilities |
|
|
— |
|
|
|
— |
|
Deferred tax liabilities, net |
|
|
54,940 |
|
|
|
1,638 |
|
Operating lease liabilities |
|
|
14,726 |
|
|
|
17,094 |
|
Other liabilities |
|
|
17,438 |
|
|
|
22,910 |
|
Total long-term liabilities |
|
|
403,868 |
|
|
|
360,880 |
|
Commitments and contingencies |
|
|
|
|
||||
Stockholders’ equity |
|
|
|
|
||||
Preferred stock, |
|
|
— |
|
|
|
— |
|
Common stock, |
|
|
50 |
|
|
|
50 |
|
Paid-in capital in excess of par |
|
|
1,042,438 |
|
|
|
1,129,996 |
|
Retained earnings |
|
|
410,389 |
|
|
|
5,344 |
|
|
|
|
— |
|
|
|
— |
|
Total stockholders’ equity |
|
|
1,452,877 |
|
|
|
1,135,390 |
|
Total liabilities and stockholders’ equity |
|
$ |
2,243,331 |
|
|
$ |
1,902,953 |
|
OPERATING HIGHLIGHTS (UNAUDITED) |
||||||||||||
All sales volumes and dollars are expressed on a net revenue interest basis with gas volumes converted to equivalent barrels at 6:1. |
||||||||||||
|
|
Quarter Ended |
|
Nine Months Ended |
||||||||
|
|
|
|
|
||||||||
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||
Average daily sales (BOE/d) |
|
|
|
|
|
|
|
|
||||
Tertiary |
|
|
|
|
|
|
|
|
||||
|
|
|
22,503 |
|
|
24,336 |
|
|
22,573 |
|
|
24,432 |
|
|
|
9,855 |
|
|
9,033 |
|
|
9,423 |
|
|
8,337 |
Total tertiary sales |
|
|
32,358 |
|
|
33,369 |
|
|
31,996 |
|
|
32,769 |
|
|
|
|
|
|
|
|
|
||||
Non-tertiary |
|
|
|
|
|
|
|
|
||||
|
|
|
3,727 |
|
|
3,763 |
|
|
3,641 |
|
|
3,600 |
|
|
|
11,024 |
|
|
12,550 |
|
|
11,229 |
|
|
12,363 |
Total non-tertiary sales |
|
|
14,751 |
|
|
16,313 |
|
|
14,870 |
|
|
15,963 |
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||
Oil (Bbls/d) |
|
|
45,639 |
|
|
48,145 |
|
|
45,404 |
|
|
47,276 |
Natural gas (Mcf/d) |
|
|
8,815 |
|
|
9,222 |
|
|
8,770 |
|
|
8,739 |
BOE/d (6:1) |
|
|
47,109 |
|
|
49,682 |
|
|
46,866 |
|
|
48,732 |
|
|
|
|
|
|
|
|
|
||||
Unit sales price (excluding derivative settlements) |
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||
Oil (per Bbl) |
|
$ |
92.62 |
|
$ |
68.86 |
|
$ |
98.13 |
|
$ |
63.47 |
Natural gas (per mcf) |
|
|
8.28 |
|
|
4.45 |
|
|
6.76 |
|
|
3.59 |
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||
Oil (per Bbl) |
|
$ |
92.98 |
|
$ |
68.91 |
|
$ |
98.32 |
|
$ |
63.39 |
Natural gas (per mcf) |
|
|
6.32 |
|
|
3.64 |
|
|
5.80 |
|
|
3.11 |
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||
Oil (per Bbl)(1) |
|
$ |
92.77 |
|
$ |
68.88 |
|
$ |
98.21 |
|
$ |
63.44 |
Natural gas (per mcf) |
|
|
7.00 |
|
|
3.96 |
|
|
6.15 |
|
|
3.31 |
BOE (6:1) |
|
|
91.19 |
|
|
67.48 |
|
|
96.30 |
|
|
62.13 |
(1) |
|
|
SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES (UNAUDITED) |
|
Reconciliation of net income (loss) (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 (loss) 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 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 (loss) 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. |
|
|
Quarter Ended |
|
Quarter Ended |
||||||||||||
|
|
|
|
|
||||||||||||
In thousands, except per-share data |
|
Amount |
|
Per Diluted Share(1) |
|
Amount |
|
Per Diluted Share(1) |
||||||||
Net income (loss) (GAAP measure) |
|
$ |
250,423 |
|
|
$ |
4.66 |
|
|
$ |
82,708 |
|
|
$ |
1.51 |
|
Adjustments to reconcile to adjusted net income (non-GAAP measure) |
|
|
|
|
|
|
|
|
||||||||
Noncash fair value gains on commodity derivatives(2) |
|
|
(165,028 |
) |
|
|
(3.07 |
) |
|
|
(35,925 |
) |
|
|
(0.66 |
) |
Contract contingency reversal(5) |
|
|
(7,763 |
) |
|
|
(0.14 |
) |
|
|
— |
|
|
|
— |
|
Noncash fair value adjustment - contingent consideration(8) |
|
|
59 |
|
|
|
0.00 |
|
|
|
436 |
|
|
|
0.01 |
|
Other(9) |
|
|
— |
|
|
|
— |
|
|
|
(6,859 |
) |
|
|
(0.12 |
) |
Estimated income taxes on above adjustments to net income (loss) and other discrete tax items(11) |
|
|
24,528 |
|
|
|
0.45 |
|
|
|
— |
|
|
|
— |
|
Adjusted net income (non-GAAP measure) |
|
$ |
102,219 |
|
|
$ |
1.90 |
|
|
$ |
40,360 |
|
|
$ |
0.74 |
|
|
|
Nine Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
|
|
|
||||||||||||
In thousands, except per-share data |
|
Amount |
|
Per Diluted Share(1) |
|
Amount |
|
Per Diluted Share(1) |
||||||||
Net income (loss) (GAAP measure) |
|
$ |
405,045 |
|
|
$ |
7.43 |
|
|
$ |
(64,629 |
) |
|
$ |
(1.27 |
) |
Adjustments to reconcile to adjusted net income (non-GAAP measure) |
|
|
|
|
|
|
|
|
||||||||
Noncash fair value losses (gains) on commodity derivatives(2) |
|
|
(136,471 |
) |
|
|
(2.50 |
) |
|
|
150,686 |
|
|
|
2.82 |
|
Delhi Field insurance reimbursements(3) |
|
|
(6,692 |
) |
|
|
(0.12 |
) |
|
|
— |
|
|
|
— |
|
Delta pipeline incident costs (included in other expenses)(4) |
|
|
3,867 |
|
|
|
0.07 |
|
|
|
— |
|
|
|
— |
|
Contract contingency reversal(5) |
|
|
(7,763 |
) |
|
|
(0.14 |
) |
|
|
— |
|
|
|
— |
|
Litigation expense(6) |
|
|
1,444 |
|
|
|
0.03 |
|
|
|
— |
|
|
|
— |
|
Write-down of oil and natural gas properties(7) |
|
|
— |
|
|
|
— |
|
|
|
14,377 |
|
|
|
0.27 |
|
Noncash fair value adjustment - contingent consideration(8) |
|
|
232 |
|
|
|
0.00 |
|
|
|
2,076 |
|
|
|
0.04 |
|
Other(9) |
|
|
— |
|
|
|
— |
|
|
|
(6,534 |
) |
|
|
(0.12 |
) |
Adjustments to reconcile effect of dilutive securities(10) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.06 |
|
Estimated income taxes on above adjustments to net income (loss) and other discrete tax items(11) |
|
|
28,680 |
|
|
|
0.52 |
|
|
|
— |
|
|
|
— |
|
Adjusted net income (non-GAAP measure) |
|
$ |
288,342 |
|
|
$ |
5.29 |
|
|
$ |
95,976 |
|
|
$ |
1.80 |
|
(1) |
Includes the impact of potentially dilutive securities including nonvested restricted stock, restricted stock units, performance stock units, shares to be issued under the employee stock purchase plan and warrants. |
(2) |
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. |
(3) |
Insurance reimbursements associated with a 2013 insurance claim related to property damage at Delhi Field. |
(4) |
Represents an accrual for a preliminarily assessed civil penalty proposed in |
(5) |
Represents the reversal of a contract contingency primarily established in fresh start accounting which is no longer considered necessary. |
(6) |
Represents litigation expense, including |
(7) |
Full cost pool ceiling test write-downs related to the Company’s oil and natural gas properties. |
(8) |
Expense related to the change in fair value of the contingent consideration payments related to the Company’s |
(9) |
Other adjustments primarily include a |
(10) |
Represents the impact to the per-share calculation using weighted average dilutive shares of 53.4 million during the nine months ended |
(11) |
Represents the estimated income tax impacts on pre-tax adjustments to net income which incorporates discrete tax adjustments primarily related to the release of the valuation allowance on certain of the Company’s federal and state deferred tax assets. The valuation allowance release was |
|
SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES (UNAUDITED) |
|
Reconciliation of net income (loss) (GAAP measure) to Adjusted EBITDAX (non-GAAP measure) |
|
Adjusted EBITDAX is a non-GAAP measure which management uses and excludes certain items that are included in net income (loss), 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 nonrecurring. 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 (loss), 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 (loss) to Adjusted EBITDAX. |
In thousands |
|
Quarter Ended |
|
Nine Months Ended |
||||||||||||
|
|
|
|
|||||||||||||
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|||||||||
Net income (loss) (GAAP measure) |
|
$ |
250,423 |
|
|
$ |
82,708 |
|
|
$ |
405,045 |
|
|
$ |
(64,629 |
) |
Adjustments to reconcile to Adjusted EBITDAX |
|
|
|
|
|
|
|
|
||||||||
Interest expense |
|
|
909 |
|
|
|
669 |
|
|
|
3,092 |
|
|
|
3,457 |
|
Income tax expense (benefit) |
|
|
41,321 |
|
|
|
403 |
|
|
|
59,664 |
|
|
|
(135 |
) |
Depletion, depreciation, and amortization |
|
|
37,680 |
|
|
|
37,691 |
|
|
|
108,425 |
|
|
|
113,522 |
|
Noncash fair value losses (gains) on commodity derivatives |
|
|
(165,028 |
) |
|
|
(35,925 |
) |
|
|
(136,471 |
) |
|
|
150,686 |
|
Stock-based compensation |
|
|
4,416 |
|
|
|
2,556 |
|
|
|
11,491 |
|
|
|
22,788 |
|
Write-down of oil and natural gas properties |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
14,377 |
|
Severance-related expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
476 |
|
Noncash, non-recurring and other |
|
|
(8,585 |
) |
|
|
(7,515 |
) |
|
|
(4,859 |
) |
|
|
(5,586 |
) |
Adjusted EBITDAX (non-GAAP measure) |
|
$ |
161,136 |
|
|
$ |
80,587 |
|
|
$ |
446,387 |
|
|
$ |
234,956 |
|
|
SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES (UNAUDITED) |
|
Reconciliation of cash flows from operations (GAAP measure) to adjusted cash flows from operations (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. Free cash flow is a non-GAAP measure that represents adjusted cash flows from operations less oil and gas development expenditures, CCUS asset capital 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 sales volumes, prices, operating costs and related factors, without regard to whether the earned or incurred item was collected or paid during that period. Adjusted cash flows from operations and free cash flow are not measures of financial performance under GAAP and should not be considered as alternatives to cash flows from operations, investing, or financing activities, nor as a liquidity measure or indicator of cash flows. |
In thousands |
|
Quarter Ended |
|
Nine Months Ended |
||||||||||||
|
|
|
|
|||||||||||||
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|||||||||
Cash flows from operations (GAAP measure) |
|
$ |
156,301 |
|
|
$ |
104,019 |
|
|
$ |
396,409 |
|
|
$ |
247,557 |
|
Net change in assets and liabilities relating to operations |
|
|
(477 |
) |
|
|
(26,469 |
) |
|
|
35,185 |
|
|
|
(18,266 |
) |
Adjusted cash flows from operations (non-GAAP measure) |
|
|
155,824 |
|
|
|
77,550 |
|
|
|
431,594 |
|
|
|
229,291 |
|
Oil & gas development expenditures |
|
|
(99,331 |
) |
|
|
(99,640 |
) |
|
|
(243,227 |
) |
|
|
(173,821 |
) |
CCUS storage sites and related capital expenditures |
|
|
(8,200 |
) |
|
|
— |
|
|
|
(32,100 |
) |
|
|
— |
|
Capitalized interest |
|
|
(1,044 |
) |
|
|
(1,249 |
) |
|
|
(3,177 |
) |
|
|
(3,500 |
) |
Free cash flow (deficit) (non-GAAP measure) |
|
$ |
47,249 |
|
|
$ |
(23,339 |
) |
|
$ |
153,090 |
|
|
$ |
51,970 |
|
CAPITAL EXPENDITURE SUMMARY (UNAUDITED)(1) |
||||||||||||
|
|
Quarter Ended |
|
Nine Months Ended |
||||||||
|
|
|
|
|
||||||||
In thousands |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||
Capital expenditure summary(1) |
|
|
|
|
|
|
|
|
||||
CCA EOR field expenditures(2) |
|
$ |
34,620 |
|
$ |
9,991 |
|
$ |
73,825 |
|
$ |
19,091 |
CCA CO2 pipelines |
|
|
487 |
|
|
49,546 |
|
|
1,728 |
|
|
59,545 |
CCA tertiary development |
|
|
35,107 |
|
|
59,537 |
|
|
75,553 |
|
|
78,636 |
Non-CCA tertiary and non-tertiary fields |
|
|
52,473 |
|
|
31,861 |
|
|
138,910 |
|
|
71,507 |
CO2 sources and other CO2 pipelines |
|
|
4,014 |
|
|
388 |
|
|
6,124 |
|
|
1,039 |
Capitalized internal costs(3) |
|
|
7,737 |
|
|
7,854 |
|
|
22,640 |
|
|
22,639 |
Oil & gas development capital expenditures |
|
|
99,331 |
|
|
99,640 |
|
|
243,227 |
|
|
173,821 |
CCUS storage sites and related capital expenditures |
|
|
8,200 |
|
|
— |
|
|
32,100 |
|
|
— |
Oil and gas and CCUS development capital expenditures |
|
|
107,531 |
|
|
99,640 |
|
|
275,327 |
|
|
173,821 |
Capitalized interest |
|
|
1,044 |
|
|
1,249 |
|
|
3,177 |
|
|
3,500 |
Acquisitions of oil and natural gas properties(4) |
|
|
500 |
|
|
116 |
|
|
874 |
|
|
10,927 |
Investment in Clean Hydrogen Works |
|
|
10,000 |
|
|
— |
|
|
10,000 |
|
|
— |
Total capital expenditures |
|
$ |
119,075 |
|
$ |
101,005 |
|
$ |
289,378 |
|
$ |
188,248 |
(1) |
Capital expenditure amounts incurred during the period, including accrued capital costs. |
(2) |
Includes pre-production CO2 costs associated with the CCA EOR development project totaling |
(3) |
Includes capitalized internal acquisition, exploration and development costs and pre-production tertiary startup costs. |
(4) |
Primarily consists of working interest positions in the |
View source version on businesswire.com: https://www.businesswire.com/news/home/20221103005293/en/
DENBURY IR CONTACTS:
Source:
FAQ
What were Denbury's financial results for Q3 2022?
How much free cash flow did Denbury generate in Q3 2022?
What are Denbury's projected sales volumes for Q4 2022?
What challenges did Denbury face in Q3 2022?