Denbury Resources Inc. has a market cap of $8.54 billion; its shares were traded at around $21.3 with a P/E ratio of 27 and P/S ratio of 4.4. Denbury Resources Inc. had an annual average earning growth of 10.9% over the past 10 years.
Highlight of Business Operations:We recognized a net loss of $14.2 million, or $0.04 per basic common share, during the first quarter of 2011 as compared to net income of $96.9 million, or $0.33 per basic common share, during the first quarter of 2010. This decrease between the two periods is primarily attributable to (1) non-cash fair value losses for our commodity derivatives of $172.3 million in the first quarter of 2011 compared to gains of $100.8 million in 2010, resulting in a $273.1 million negative change between the comparable quarters ($169.3 million after tax), (2) a $101.6 million gain on the sale of Genesis in the first quarter of 2010 ($63.0 million after tax), and (3) a $15.8 million loss in the first quarter of 2011 associated with repurchases of senior subordinated notes ($9.8 million after tax). Partially offsetting these decreases was an increase in oil and gas revenues of $175.3 million due to increased volumes attributable to a full quarter of production from the properties retained from the Encore Merger (versus 22 days of production in the first quarter of 2010), increased tertiary production, and higher oil prices. In-line with higher production volumes, our operating expenses increased across the board. Interest expense also increased significantly due to our additional debt incurred in conjunction with the Encore Merger.
Oil prices during the first quarter of 2011 were considerably higher than prices during the first quarter of 2010. Our average oil and natural gas price received per BOE, excluding the impact of commodity derivative contracts, was $88.42 per BOE during the first quarter of 2011, compared to $69.21 per BOE during the first quarter of 2010, a 28% increase between the two periods. Including the impact of cash settlements on our commodity derivative contracts, our average oil and natural gas price per BOE was $88.70 per BOE during the first quarter of 2011 compared to $56.70 per BOE during the first quarter of 2010.
Debt Refinancing. In February 2011, we issued, at par, $400 million of 63/8% Senior Subordinated Notes due 2021. The net proceeds, together with cash on hand, were used to repurchase $525 million in principal amount of our outstanding 2013 Notes and 2015 Notes. Also, in February, we commenced cash tender offers to purchase $225 million principal amount of our 2013 Notes and $300 million principal amount of our 2015 Notes. Upon expiration of the tender offers in March 2011, we accepted for purchase $169.6 million in principal of the 2013 Notes at 100.625% of par and $220.9 million in principal of the 2015 Notes at 104.125% of par. We called the remaining 2013 and 2015 Notes, repurchased all of the remaining outstanding 2015 Notes at 103.75% of par on March 21, 2011 and repurchased all of the remaining outstanding 2013 Notes at par on April 1, 2011. During the first quarter of 2011, we recognized a $15.8 million loss associated with the debt repurchases, included in our income statement under the caption Loss on early extinguishment of debt.
Based on oil and natural gas commodity futures prices in early May 2011 and our current production forecasts, excluding acquisition costs, our 2011 capital budget, including capitalized interest and tertiary start-up costs, is $100 million to $200 million greater than our anticipated cash flow from operations. These expenditures will be funded with our excess cash on hand or, if necessary, borrowings under our $1.6 billion Bank Credit Agreement which currently has no outstanding borrowings.
In April 2011, we entered into three long-term drilling contracts. Our total commitment under these contracts is approximately $55.8 million, with $5.2 million expected to be paid in 2011, $18.6 million in both 2012 and 2013, and $13.4 million in 2014.
During the first quarter of 2011, operating costs for our tertiary properties averaged $25.40 per Bbl, compared to our first quarter of 2010 average cost of $22.67 per Bbl and a fourth quarter of 2010 average of $22.26 per Bbl. The per Bbl increase quarter to quarter was primarily due to increases in utilities, CO2 costs (which are variable and partially tied to oil prices), and workover expenses. On a per Bbl basis, our cost of CO2 increased by $0.69 per Bbl, from $4.89 per Bbl during the first quarter of 2010 to $5.58 per Bbl during the first quarter of 2011 and increased $0.03 from $5.55 per Bbl during the fourth quarter of 2010 due to slightly lower CO2 injection levels at our tertiary producing fields. First quarter of 2011 workover expenses increased $1.32 per Bbl over the first quarter of 2010 levels and $1.39 per Bbl over fourth quarter of 2010 levels as we accelerated planned mechanical integrity test repairs at Brookhaven Field rather than performing the work throughout the year as originally planned. For any specific field, we expect our tertiary lease operating expense per Bbl to be high initially and then decrease as production increases, ultimately leveling off until production begins to decline in the latter life of the field, when lease operating expense per Bbl will again increase.
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