Denbury Resources Inc. (NYSE: DNR) (“Denbury” or the “Company”) today announced that its Board of Directors has approved a common stock repurchase program for up to $500 million of Denbury shares. The Company currently has approximately 402 million common shares outstanding and its total market capitalization is approximately $4.6 billion based on the closing price of the Company’s stock on September 30, 2011. The Company recently amended its bank credit facility to provide for up to $500 million of combined stock repurchases or dividend payments made in compliance with other credit facility covenants. The Company plans to fund its share repurchase program with a combination of cash flow from operations and borrowings on the Company’s $1.6 billion bank credit facility, under which $110 million was outstanding on September 30, 2011.
Under this program, the Company may repurchase its common stock from time to time in open market transactions, including through 10b5-1 programs, or through privately negotiated transactions. The timing and amount of any repurchases will depend upon market conditions, estimates of the Company’s intrinsic value and other factors. The Board approved program has no pre-established ending date, and may be suspended or discontinued at any time. The Company is not obligated to repurchase any dollar amount or specific number of shares of its common stock under the program.
Phil Rykhoek, Chief Executive Officer, said, "We believe this is a prime opportunity for the Company to initiate a stock repurchase program. In our opinion the Company is undervalued, as it is trading at a significant discount to the net asset value of its proved oil and natural gas reserves, and we believe there is significant incremental value in the Company’s future reserve potential that is not being appropriately valued in the current market. To the extent that we repurchase stock, we plan to reduce our 2012 capital expenditures by a commensurate amount in order to maintain our strong balance sheet. We intend for any stock repurchases to be accretive to our production per share, even after consideration of any adjustment to 2012 production that would result from reduced 2012 capital expenditures.”