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Denbury Reports 2012 Fourth Quarter And Annual Results

PLANO, Texas, Feb. 21, 2013 (GLOBE NEWSWIRE) -- Denbury Resources Inc. (NYSE:DNR) ("Denbury" or the "Company") today announced adjusted net income (a non-GAAP measure) (1) of $137 million for the fourth quarter of 2012, or $0.36 per diluted share. This compares to $127 million of adjusted net income, or $0.33 per diluted share for the third quarter of 2012 (2), and $175 million of adjusted net income, or $0.45 per diluted share, for the prior year fourth quarter. Fourth quarter of 2012 net income (the GAAP measure) was $115 million, or $0.30 per diluted share, on quarterly revenues of $603 million. This compares to net income of $85 million, or $0.22 per diluted share, on revenues of $595 million for the third quarter of 2012, and net income of $53 million, or $0.13 per diluted share, on revenues of $612 million for the prior year fourth quarter.

Adjusted cash flow from operations (a non-GAAP measure) (1) for the fourth quarter of 2012 was $316 million, but would have been $358 million if the increase in current income taxes related to the Bakken transaction (3) were excluded. This compares to adjusted cash flow from operations of $350 million for the third quarter of 2012 (2) and $387 million for the prior year fourth quarter. Net cash provided by operating activities (the GAAP measure) was $385 million for the fourth quarter of 2012, compared to $294 million for the third quarter of 2012 and $366 million for the prior year fourth quarter.

Key accomplishments in the fourth quarter of 2012 and early 2013 include:

  • Completed or entered into agreements on several tax efficient property transactions that, combined with the transactions completed in the first half of 2012: (i) further sharpened the Company's strategic focus on enhanced oil recovery with carbon dioxide ("CO 2 EOR" or "tertiary" operations); (ii) increased the Company's unproven CO 2 EOR potential reserves by 208 million barrels of oil equivalent (using the mid-point of the range of estimates) which resulted in a net increase in both the estimated volume and value of the Company's unproven potential reserves; (iii) nearly replaced the production of sold assets with that from the acquired or to-be-acquired assets; (iv) exchanged proved reserves with a high proved undeveloped component for reserves that are nearly all proved developed, which significantly increases free cash flow; and (v) increased Rocky Mountain region CO 2 reserves by 1.3 trillion cubic feet.  
  • Increased average quarterly oil production from tertiary operations to a new record level of 37,550 barrels per day ("Bbls/d"), 21% higher than 2011's fourth quarter level and 8% higher than the third quarter of 2012 level.
( 1) 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) The GAAP to non-GAAP reconciliations for the third quarter of 2012 are part of the Company's third quarter 2012 earnings release which is an exhibit to its November 6, 2012 Form 8-K.
(3) Full description of the Bakken transaction is provided in the Company's September 20, 2012 Form 8-K as amended December 26, 2012 and January 18, 2013 on Forms 8-K/A.
  • Completed the initial 232-mile segment of the 20-inch Greencore pipeline, Denbury's first CO 2 pipeline in the Rocky Mountain region, which is scheduled to begin delivering CO 2 for injection into the Denbury-operated Bell Creek Field in Montana in the first half of 2013.  
  • Continued the share repurchase program, acquiring a total of 20.5 million shares since recommencing share repurchases in September 2012 through yesterday to bring total purchases under such program since its commencement in October 2011 to 34.6 million shares, or about 9% of shares outstanding at September 30, 2011, at an average cost of just over $15 per share.  
  • Completed a $1.2 billion offering of 4 5/8% senior subordinated notes due 2023, with the planned use of proceeds to refinance approximately $651 million principal amount of existing senior subordinated notes with interest rates of 9 1/2% and 9 3/4% and to repay bank debt.

Denbury's full year 2012 adjusted net income (a non-GAAP measure) (1) was $563 million, or $1.45 per diluted share, compared to $574 million, or $1.43 per diluted share for the prior year. Net income (the GAAP measure) for the full year 2012 was $525 million, or $1.35 per diluted share, compared to $573 million, or $1.43 per diluted share for the prior year. Full year 2012 adjusted cash flow from operations (a non-GAAP measure) (1) was $1.38 billion, but would have been $1.42 billion if the increase in current income taxes related to the Bakken transaction were excluded. This compared to $1.36 billion of the same measure for the prior year. Full year 2012 net cash provided by operating activities (the GAAP measure) was $1.41 billion, compared to $1.20 billion of the same measure for the prior year.

Management Comment

Phil Rykhoek, Denbury's President and CEO, commented, "We finished 2012 with solid operational and financial performance as fourth quarter 2012 adjusted net income per diluted share increased by 9% from that in the third quarter of 2012 despite the expected decline in production caused by the sale of our Bakken area assets. The sequential improvement reflects continued strong execution in our core tertiary operations, the benefit of our high exposure to premium Gulf Coast region oil pricing, and a lower average diluted share count as a result of the stock repurchases made during the third and fourth quarter.

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