Denbury Inc. (NYSE: DEN) (“Denbury” or the “Company”) today
provided results for the second quarter of 2021.
FINANCIAL AND OPERATING
HIGHLIGHTS
2Q 2021
YTD 2021
(in thousands, except per-share and volume
data)
Total
Per Diluted Share
Total
Per Diluted Share
Net loss
$(77,695)
$(1.52)
$(147,337)
$(2.91)
Adjusted net income(1)(2) (non-GAAP)
33,266
0.61
55,616
1.05
Adjusted EBITDAX(1) (non-GAAP)
72,453
154,369
Cash flows from operations
90,882
143,538
Adjusted cash flows from operations(1)
(non-GAAP)
71,225
151,741
Development capital expenditures
54,102
74,181
Average daily sales volumes (BOE/d)
49,133
48,250
Blue Oil (% oil volumes using
industrial-sourced CO2)
26%
23%
Industrial-sourced CO2 injected (thousand
metric tons)
833
1,568
- Commenced installation of the 105-mile Greencore CO2 Pipeline
extension to the Cedar Creek Anticline (“CCA”) enhanced oil
recovery (“EOR”) project.
- Progressed negotiations with multiple parties for long-term
transport and/or storage of CO2, representing the potential for
more than 50 million metric tons per year.
- Advanced discussions to acquire rights to store CO2 in multiple
potential sequestration sites, both onshore and offshore,
representing storage capacity of over 1 billion metric tons of
CO2.
- Received $18 million from the divestiture of undeveloped,
unconventional deep mineral rights covering approximately 13,000
net acres at the Company’s Hartzog Draw Field in Wyoming.
- Reduced debt by $57 million, resulting in $69 million in total
debt and $531 million in liquidity at the end of the second
quarter.
(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 54.3 million and 52.7 million for the three
and six months ended June 30, 2021, respectively.
EXECUTIVE COMMENT
Chris Kendall, the Company’s President and CEO, commented, “Our
strong operational execution, along with improved oil prices,
delivered another solid quarter for Denbury. In addition, we
initiated field development of our low-carbon, blue oil CCA EOR
project during the quarter. Construction crews are progressing the
Greencore CO2 Pipeline extension, which remains on budget and on
schedule for completion by the end of the year. The CCA EOR
development is expected to provide many years of strong cash flow
to Denbury while also contributing to our goal of being Scope 3
carbon-negative by the end of this decade.
"We also meaningfully progressed multiple CCUS value
opportunities during the second quarter. Our Denbury Carbon
Solutions team is in the midst of a number of negotiations for
future CO2 transport and storage services, and I am highly
confident we will have several deals to announce by the end of
2021. The potential CO2 volumes covered by our negotiations are
well in excess of our existing capacity, supporting our plans for
future pipeline takeaway expansion and the acquisition and
development of a portfolio of sequestration sites. Combined with
the Company’s ideally positioned infrastructure, our multi-decade
expertise in managing CO2 provides a significant advantage in the
developing CCUS industry. We see broad and expanding support for
CCUS development as a practical, economic, and massively scalable
means of reducing CO2 emissions, and we are highly confident in
this significant growth opportunity for our Company.”
FINANCIAL AND OPERATING RESULTS
Total revenues and other income in the second quarter of 2021
were $301 million, a 20% increase from the first quarter of 2021,
supported by strong oil price realizations and sales volumes.
Denbury’s second quarter 2021 average pre-hedge realized oil price
was $64.70 per barrel (“Bbl”), representing a differential of $1.32
per Bbl below NYMEX WTI oil prices, which was driven by better than
expected realizations in the Company’s Rocky Mountain and Gulf
Coast regions.
Denbury’s oil and natural gas sales volumes averaged 49,133
barrels of oil equivalent per day (“BOE/d”) during the second
quarter of 2021, an increase of nearly 4% from the first quarter
2021 average. Higher second quarter production was primarily due to
a full quarter’s contribution from the Wind River Basin assets
acquired in March 2021, as well as the impact of winter storms on
the first quarter of 2021. Oil represented 97% of the Company’s
second quarter 2021 volumes, with approximately 26% of the
Company’s oil produced through the injection of industrial-sourced
CO2 in its EOR operations, resulting in carbon-negative or blue
oil.
Lease operating expenses (“LOE”) in the second quarter of 2021
totaled $110 million, or $24.65 per BOE, in line with expectations.
Second quarter expense includes a full quarter of LOE from the Wind
River Basin assets, as well as higher seasonal workover and
maintenance activities as compared to the first quarter of 2021.
Certain of the Company’s LOE costs, including the cost of legacy
CO2 contracts, power and fuel, are linked to commodity prices,
which increased during the second quarter. First quarter 2021 LOE
included a $15 million non-recurring benefit resulting from the
power disruption during Winter Storm Uri.
Commodity derivatives expense was $173 million in the second
quarter of 2021, a result of strengthened oil prices during the
period. Cash payments on hedges that settled in the second quarter
of 2021 totaled $63 million, with the remaining expense
representing the noncash mark-to-market change in the value of the
Company’s hedging portfolio.
General and administrative expenses were $15 million in the
second quarter of 2021, in line with expectations, and depletion,
depreciation, and amortization (“DD&A”) was $36 million, or
$8.14 per BOE. DD&A was better than expected due to an uplift
in proved reserves, primarily resulting from an increase in the
trailing 12-month average oil price used to quantify proved
reserves.
The Company’s effective tax rate for the second quarter of 2021
was negligible, as the tax expense/benefit generated is currently
fully offset by a change in valuation allowance on its federal and
state deferred tax assets.
CAPITAL EXPENDITURES
Second quarter 2021 development capital expenditures totaled $54
million. Year to-date development capital expenditures totaled $74
million, or about 29% of the Company’s annual capital budget.
Second quarter expenditures included $19 million spent on the
Greencore CO2 Pipeline extension and infield distribution system
installation at CCA. In addition, the Company’s development
projects at the Oyster Bayou and Tinsley fields progressed
substantially towards completion, which is anticipated early in the
third quarter of 2021.
GUIDANCE
The Company has reiterated its 2021 sales volume range for the
year of between 47,500 BOE/d and 51,500 BOE/d. Denbury anticipates
third quarter sales volumes will increase from the second quarter
of 2021, driven primarily by the Company’s Rocky Mountain region,
including the impact from workover projects and continued response
from the previous development of Bell Creek Phase 6. Fourth quarter
2021 sales volumes are anticipated to be slightly higher than the
third quarter, driven primarily by the Company’s Gulf Coast Region,
where the developments at the Oyster Bayou and Tinsley fields are
anticipated to contribute to increased volumes.
Development capital expenditures for 2021 are still expected to
range from $250 million to $270 million. Third quarter capital
expenditures should increase from the second quarter of 2021,
primarily due to continued activity supporting the extension of the
Greencore CO2 Pipeline and CCA EOR field development. Fourth
quarter capital expenditures are anticipated to be relatively
consistent with the third quarter of 2021.
Additional guidance details are available in the Company’s
supplemental second quarter 2021 earnings presentation, which is
available in the Investor Relations section of the Company’s
website, www.denbury.com.
CONFERENCE CALL AND WEBCAST INFORMATION
Denbury will host a conference call and webcast to review and
discuss its results and outlook today, Thursday, August 5, at 11:00
a.m. Central Time. Additionally, Denbury will post presentation
materials on its website before market open today. The presentation
webcast will be available, both live and for replay, on the
Investor Relations page of the Company’s website at
www.denbury.com. Individuals who would like to participate in the
conference call should dial the following numbers shortly before
the scheduled start time: 877.705.6003 or 201.493.6725 with
conference number 13696088.
Denbury is an independent energy company with operations and
assets focused on Carbon Capture, Use and Storage (CCUS) and
Enhanced Oil Recovery (EOR) in the Gulf Coast and Rocky Mountain
regions. For over two decades, the Company has maintained a unique
strategic focus on utilizing CO2 in its EOR operations and since
2012 has also been active in CCUS through the injection of captured
industrial-sourced CO2. The Company currently injects over three
million tons of captured industrial-sourced CO2 annually, and its
objective is to fully offset its Scope 1, 2, and 3 CO2 emissions
within this decade, primarily through increasing the amount of
captured industrial-sourced CO2 used in its operations. For more
information about Denbury, visit www.denbury.com.
This press release, other than historical information, contains
forward-looking statements that involve risks and uncertainties
including estimated 2021 production and capital expenditures,
timing of completion of the Greencore pipeline extension, and
results of ongoing negotiations of CCUS arrangements, and other
risks and uncertainties detailed in the Company’s filings with the
Securities and Exchange Commission, including Denbury’s most recent
report on Form 10-K. These risks and uncertainties are incorporated
by this reference as though fully set forth herein. These
statements are based on financial and market, engineering,
geological and operating assumptions that management believes are
reasonable based on currently available information; however,
management’s assumptions and the Company’s future performance are
both subject to a wide range of risks, and there is no assurance
that these goals and projections can or will be met. Actual results
may vary materially. In addition, any forward-looking statements
represent the Company’s estimates only as of today and should not
be relied upon as representing its estimates as of any future date.
Denbury assumes no obligation to update its forward-looking
statements.
FINANCIAL AND STATISTICAL DATA TABLES AND RECONCILIATION
SCHEDULES
The following tables include selected unaudited financial and
operational information for the comparative three and six-month
periods ended June 30, 2021 and 2020. References to “Successor”
refer to the new Denbury reporting entity after the Company’s
emergence from bankruptcy on September 18, 2020, and references to
“Predecessor” refer to the Denbury entity prior to emergence from
bankruptcy. All sales volumes and dollars are expressed on a net
revenue interest basis with gas volumes converted to equivalent
barrels at 6:1.
DENBURY INC. 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
Quarter Ended
Six Months Ended
Six Months Ended
June 30, 2021
June 30, 2020
June 30, 2021
June 30, 2020
In thousands, except per-share data
Successor
Predecessor
Successor
Predecessor
Revenues and other income
Oil sales
$
280,577
$
108,538
$
513,621
$
337,115
Natural gas sales
2,131
849
4,532
1,896
CO2 sales and transportation fees
10,134
6,504
19,362
14,532
Oil marketing revenues
7,819
1,490
13,945
5,211
Other income
707
494
1,067
1,322
Total revenues and other income
301,368
117,875
552,527
360,076
Expenses
Lease operating expenses
110,225
81,293
192,195
190,563
Transportation and marketing expenses
8,522
9,388
16,319
19,009
CO2 operating and discovery expenses
1,531
885
2,524
1,637
Taxes other than income
22,382
10,372
41,345
30,058
Oil marketing expenses
7,738
1,450
13,823
5,111
General and administrative expenses
15,450
23,776
47,433
33,509
Interest, net of amounts capitalized of
$1,168, $8,729, $2,251 and $18,181, respectively
1,252
20,617
2,788
40,563
Depletion, depreciation, and
amortization
36,381
55,414
75,831
152,276
Commodity derivatives expense (income)
172,664
40,130
288,407
(106,641)
Gain on debt extinguishment
—
—
—
(18,994)
Write-down of oil and natural gas
properties
—
662,440
14,377
734,981
Other expenses
3,214
11,290
5,360
13,784
Total expenses
379,359
917,055
700,402
1,095,856
Loss before income taxes
(77,991)
(799,180)
(147,875)
(735,780)
Income tax provision (benefit)
Current income taxes
(260)
598
(451)
(5,809)
Deferred income taxes
(36)
(102,304)
(87)
(106,513)
Net loss
$
(77,695)
$
(697,474)
$
(147,337)
$
(623,458)
Net loss per common share
Basic
$
(1.52)
$
(1.41)
$
(2.91)
$
(1.26)
Diluted
$
(1.52)
$
(1.41)
$
(2.91)
$
(1.26)
Weighted average common shares
outstanding
Basic
50,999
495,245
50,661
494,752
Diluted
50,999
495,245
50,661
494,752
DENBURY INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Quarter Ended
Quarter Ended
Six Months Ended
Six Months Ended
June 30, 2021
June 30, 2020
June 30, 2021
June 30, 2020
In thousands
Successor
Predecessor
Successor
Predecessor
Cash flows from operating
activities
Net loss
$
(77,695)
$
(697,474)
$
(147,337)
$
(623,458)
Adjustments to reconcile net loss to cash
flows from operating activities
Depletion, depreciation, and
amortization
36,381
55,414
75,831
152,276
Write-down of oil and natural gas
properties
—
662,440
14,377
734,981
Deferred income taxes
(36)
(102,304)
(87)
(106,513)
Stock-based compensation
2,552
1,087
20,232
3,540
Commodity derivatives expense (income)
172,664
40,130
288,407
(106,641)
Receipt (payment) on settlements of
commodity derivatives
(63,343)
45,629
(101,796)
70,267
Gain on debt extinguishment
—
—
—
(18,994)
Debt issuance costs and discounts
685
4,995
1,370
9,921
Other, net
17
(969)
744
(1,642)
Changes in assets and liabilities, net of
effects from acquisitions
Accrued production receivable
(12,131)
(4,874)
(48,881)
62,063
Trade and other receivables
(6,443)
6,752
(5,578)
(16,162)
Other current and long-term assets
3,836
(7,091)
1,294
(4,552)
Accounts payable and accrued
liabilities
28,694
12,312
27,292
(60,295)
Oil and natural gas production payable
7,429
(6,269)
20,224
(22,217)
Other liabilities
(1,728)
1,191
(2,554)
237
Net cash provided by operating
activities
90,882
10,969
143,538
72,811
Cash flows from investing
activities
Oil and natural gas capital
expenditures
(33,784)
(33,881)
(53,411)
(79,897)
Acquisitions of oil and natural gas
properties
(146)
—
(10,811)
—
Pipelines and plants capital
expenditures
(4,393)
(4,668)
(4,851)
(10,962)
Net proceeds from sales of oil and natural
gas properties and equipment
18,453
428
18,456
40,971
Other
(1,243)
4,416
(4,159)
(105)
Net cash used in investing
activities
(21,113)
(33,705)
(54,776)
(49,993)
Cash flows from financing
activities
Bank repayments
(283,000)
(65,000)
(485,000)
(226,000)
Bank borrowings
243,000
330,000
450,000
491,000
Interest payments treated as a reduction
of debt
—
(24,295)
—
(42,506)
Cash paid in conjunction with debt
repurchases
—
—
—
(14,171)
Pipeline financing and capital lease debt
repayments
(17,001)
(3,325)
(33,510)
(7,015)
Other
278
(6,576)
(2,735)
(9,529)
Net cash provided by (used in)
financing activities
(56,723)
230,804
(71,245)
191,779
Net increase in cash, cash equivalents,
and restricted cash
13,046
208,068
17,517
214,597
Cash, cash equivalents, and restricted
cash at beginning of period
46,719
39,574
42,248
33,045
Cash, cash equivalents, and restricted
cash at end of period
$
59,765
$
247,642
$
59,765
$
247,642
DENBURY INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
In thousands, except par value and share
data
June 30, 2021
Dec. 31, 2020
Assets
Current assets
Cash and cash equivalents
$
13,565
$
518
Restricted cash
—
1,000
Accrued production receivable
140,302
91,421
Trade and other receivables, net
24,740
19,682
Derivative assets
—
187
Prepaids
12,454
14,038
Total current assets
191,061
126,846
Property and equipment
Oil and natural gas properties (using full
cost accounting)
Proved properties
949,128
851,208
Unevaluated properties
103,088
85,304
CO2 properties
188,700
188,288
Pipelines
143,633
133,485
Other property and equipment
97,699
86,610
Less accumulated depletion, depreciation,
amortization and impairment
(120,073)
(41,095)
Net property and equipment
1,362,175
1,303,800
Operating lease right-of-use assets
19,000
20,342
Intangible assets, net
92,814
97,362
Other assets
85,044
86,408
Total assets
$
1,750,094
$
1,634,758
Liabilities and Stockholders’
Equity
Current liabilities
Accounts payable and accrued
liabilities
$
163,905
$
112,671
Oil and gas production payable
69,390
49,165
Derivative liabilities
223,212
53,865
Current maturities of long-term debt
34,498
68,008
Operating lease liabilities
2,596
1,350
Total current liabilities
493,601
285,059
Long-term liabilities
Long-term debt, net of current portion
35,000
70,000
Asset retirement obligations
226,615
179,338
Derivative liabilities
22,164
5,087
Deferred tax liabilities, net
1,187
1,274
Operating lease liabilities
18,157
19,460
Other liabilities
26,172
20,872
Total long-term liabilities
329,295
296,031
Commitments and contingencies
Stockholders’ equity
Preferred stock, $.001 par value,
50,000,000 shares authorized, none issued and outstanding
—
—
Common stock, $.001 par value, 250,000,000
shares authorized; 50,017,491 and 49,999,999 shares issued,
respectively
50
50
Paid-in capital in excess of par
1,125,143
1,104,276
Accumulated deficit
(197,995)
(50,658)
Total stockholders’ equity
927,198
1,053,668
Total liabilities and stockholders’
equity
$
1,750,094
$
1,634,758
DENBURY INC. 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
Six Months Ended
June 30,
June 30,
2021
2020
2021
2020
Average daily sales (BOE/d)
Tertiary
Gulf Coast region
24,680
26,220
24,481
27,576
Rocky Mountain region
8,772
7,108
7,984
7,518
Total tertiary sales
33,452
33,328
32,465
35,094
Non-tertiary
Gulf Coast region
3,415
3,805
3,518
4,379
Rocky Mountain region
12,266
13,057
12,267
13,604
Total non-tertiary sales
15,681
16,862
15,785
17,983
Total Company
Oil (Bbls/d)
47,653
48,900
46,834
51,774
Natural gas (Mcf/d)
8,882
7,737
8,494
7,818
BOE/d (6:1)
49,133
50,190
48,250
53,077
Unit sales price (excluding derivative
settlements)
Gulf Coast region
Oil (per Bbl)
$
64.90
$
24.83
$
60.72
$
36.86
Natural gas (per mcf)
2.86
1.66
3.15
1.74
Rocky Mountain region
Oil (per Bbl)
$
64.44
$
23.74
$
60.40
$
34.13
Natural gas (per mcf)
2.50
0.71
2.80
0.83
Total Company
Oil (per Bbl)(1)
$
64.70
$
24.39
$
60.59
$
35.78
Natural gas (per mcf)
2.64
1.21
2.95
1.33
BOE (6:1)
63.23
23.95
59.33
35.09
(1)
Total company realized oil prices
including derivative settlements were $50.10 per Bbl and $34.64 per
Bbl during the three months ended June 30, 2021 and 2020,
respectively, and $48.58 per Bbl and $43.23 per Bbl during the six
months ended June 30, 2021 and 2020, respectively.
DENBURY INC. SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Reconciliation of net loss (GAAP measure) to adjusted net
income (loss) (non-GAAP measure)
Adjusted net income (loss) 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 (loss) 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 (loss) 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
June 30, 2021
June 30, 2020
Successor
Predecessor
In thousands, except per-share data
Amount
Per Diluted Share
Amount
Per Diluted Share
Net loss (GAAP measure)(1)
$
(77,695)
$
(1.52)
$
(697,474)
$
(1.41)
Adjustments to reconcile to adjusted net
income (loss) (non-GAAP measure)
Noncash fair value losses on commodity
derivatives(2)
109,321
2.01
85,759
0.17
Write-down of oil and natural gas
properties(3)
—
—
662,440
1.34
Severance-related expense included in
general and administrative expenses(6)
—
—
2,361
0.00
Expense associated with
restructuring(7)
—
—
7,875
0.02
Noncash fair value adjustment - contingent
consideration(8)
1,640
0.03
—
—
Other(9)
—
—
1,206
0.00
Adjustments to reconcile effect of
dilutive securities(10)
—
0.09
—
—
Estimated income taxes on above
adjustments to net loss and other discrete tax items(11)
—
—
(94,529)
(0.19)
Adjusted net income (loss) (non-GAAP
measure)
$
33,266
$
0.61
$
(32,362)
$
(0.07)
Six Months Ended
Six Months Ended
June 30, 2021
June 30, 2020
Successor
Predecessor
In thousands, except per-share data
Amount
Per Diluted Share
Amount
Per Diluted Share
Net loss (GAAP measure)(1)
$
(147,337)
$
(2.91)
$
(623,458)
$
(1.26)
Adjustments to reconcile to adjusted net
income (loss) (non-GAAP measure)
Noncash fair value losses (gains) on
commodity derivatives(2)
186,611
3.54
(36,374)
(0.07)
Write-down of oil and natural gas
properties(3)
14,377
0.27
734,981
1.49
Accelerated depreciation charge(4)
—
—
37,368
0.08
Gain on debt extinguishment(5)
—
—
(18,994)
(0.04)
Severance-related expense included in
general and administrative expenses(6)
—
—
2,361
0.00
Expense associated with
restructuring(7)
—
—
7,875
0.02
Noncash fair value adjustment - contingent
consideration(8)
1,640
0.03
—
—
Other(9)
325
0.01
2,610
0.01
Adjustments to reconcile effect of
dilutive securities(10)
—
0.11
—
—
Estimated income taxes on above
adjustments to net loss and other discrete tax items(11)
—
—
(111,311)
(0.24)
Adjusted net income (loss) (non-GAAP
measure)
$
55,616
$
1.05
$
(4,942)
$
(0.01)
(1)
Diluted net income (loss) per
common share includes the impact of potentially dilutive securities
including nonvested restricted stock units and warrants during the
Successor period and includes nonvested restricted stock, nonvested
performance-based equity awards, and shares into which the
Predecessor’s previous convertible senior notes were
convertible.
(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)
Full cost pool ceiling test
write-downs related to the Company’s oil and natural gas
properties.
(4)
Accelerated depreciation related
to impaired unevaluated properties that were transferred to the
full cost pool.
(5)
Gain on debt extinguishment
related to the Company’s 2020 open market repurchases.
(6)
Severance-related expense
associated with the Company’s May-2020 involuntary workforce
reduction.
(7)
Expenses related to advisor and
professional fees associated with review of strategic alternatives
and comprehensive restructuring of the Company’s indebtedness.
(8)
Expense related to the change in
fair value of the contingent consideration payments related to our
March 2021 Wind River Basin CO2 EOR field acquisition.
(9)
Other adjustments include $0.5
million of costs associated with the helium supply contract ruling
and $0.7 million of costs associated with the Delta-Tinsley CO2
pipeline incident during the three months ended June 30, 2020. The
six months ended June 30, 2021 were impacted by a $0.3 million
write-off of trade receivables during the three months ended March
31, 2021, and the six months ended June 30, 2020 were further
impacted by $0.5 million of costs associated with the helium supply
contract ruling and $0.9 million of costs associated with the
Delta-Tinsley CO2 pipeline incident during the three months ended
March 31, 2020.
(10)
Represents the impact to the
per-share calculation using weighted average dilutive shares of
54.3 million and 52.7 million during the three and six months ended
June 30, 2021, respectively, as a result of the adjustments to the
Company’s net loss (GAAP measure) to derive adjusted net income
(non-GAAP measure).
(11)
The estimated income tax impacts
on adjustments to net income for the three months ended June 30,
2020 are computed based upon the actual effective tax rate for the
six months ended June 30, 2020, with other discrete tax adjustments
totaling $84 million during the three months ended June 30, 2020
primarily comprised of the tax effect of the ceiling test and
accelerated depreciation, impacts of the CARES Act, and the
periodic tax impacts of a shortfall (benefit) on the stock-based
compensation deduction.
DENBURY INC. SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Reconciliation of net loss (GAAP measure) to Adjusted EBITDAX
(non-GAAP measure)
Adjusted EBITDAX is a non-GAAP 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 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 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 loss to Adjusted EBITDAX.
In thousands
Quarter Ended
Quarter Ended
Six Months Ended
Six Months Ended
June 30, 2021
June 30, 2020
June 30, 2021
June 30, 2020
Successor
Predecessor
Successor
Predecessor
Net loss (GAAP measure)
$
(77,695)
$
(697,474)
$
(147,337)
$
(623,458)
Adjustments to reconcile to Adjusted
EBITDAX
Interest expense
1,252
20,617
2,788
40,563
Income tax expense (benefit)
(296)
(101,706)
(538)
(112,322)
Depletion, depreciation, and
amortization
36,381
55,414
75,831
152,276
Noncash fair value losses (gains) on
commodity derivatives
109,321
85,759
186,611
(36,374)
Stock-based compensation
2,552
1,087
20,232
3,540
Gain on debt extinguishment
—
—
—
(18,994)
Write-down of oil and natural gas
properties
—
662,440
14,377
734,981
Severance-related expense
476
2,361
476
2,361
Noncash, non-recurring and other
462
10,231
1,929
12,595
Adjusted EBITDAX (non-GAAP
measure)(1)
$
72,453
$
38,729
$
154,369
$
155,168
(1)
Excludes pro forma adjustments
related to qualified acquisitions or dispositions under the
Company’s senior secured bank credit facility.
DENBURY INC. 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 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 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
Quarter Ended
Six Months Ended
Six Months Ended
June 30, 2021
June 30, 2020
June 30, 2021
June 30, 2020
Successor
Predecessor
Successor
Predecessor
Cash flows from operations (GAAP
measure)
$
90,882
$
10,969
$
143,538
$
72,811
Net change in assets and liabilities
relating to operations
(19,657)
(2,021)
8,203
40,926
Adjusted cash flows from operations
(non-GAAP measure)
71,225
8,948
151,741
113,737
Interest on notes treated as debt
reduction
—
(20,912)
—
(42,266)
Development capital expenditures
(54,102)
(21,259)
(74,181)
(60,044)
Capitalized interest
(1,168)
(8,729)
(2,251)
(18,181)
Free cash flow (deficit) (non-GAAP
measure)
$
15,955
$
(41,952)
$
75,309
$
(6,754)
CAPITAL EXPENDITURE SUMMARY
(UNAUDITED)(1)
Quarter Ended
Six Months Ended
June 30,
June 30,
In thousands
2021
2020
2021
2020
Capital expenditure summary
Cedar Creek Anticline tertiary
development
$
10,224
$
797
$
10,260
$
2,151
Other tertiary oil fields
16,694
4,397
20,774
17,769
Non-tertiary fields
11,181
2,294
19,523
13,248
Capitalized internal costs(2)
7,185
9,463
14,785
18,344
Oil and natural gas capital
expenditures
45,284
16,951
65,342
51,512
Cedar Creek Anticline CO2 pipeline
8,818
4,199
8,839
8,374
Other CO2 pipelines, sources and other
—
109
—
158
Development capital
expenditures
54,102
21,259
74,181
60,044
Acquisitions of oil and natural gas
properties(3)
146
38
10,811
80
Capital expenditures, before
capitalized interest
54,248
21,297
84,992
60,124
Capitalized interest
1,168
8,729
2,251
18,181
Capital expenditures, total
$
55,416
$
30,026
$
87,243
$
78,305
(1)
Capital expenditure amounts
include accrued capital.
(2)
Includes capitalized internal
acquisition, exploration and development costs and pre-production
tertiary startup costs.
(3)
Primarily consists of working
interest positions in the Wind River Basin enhanced oil recovery
fields acquired on March 3, 2021.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210805005174/en/
Brad Whitmarsh, Executive Director, Investor Relations,
972.673.2020, brad.whitmarsh@denbury.com Susan James, Manager,
Investor Relations, 972.673.2593, susan.james@denbury.com
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