Denbury Resources Inc. has a market cap of $7.02 billion; its shares were traded at around $17.45 with a P/E ratio of 14.4 and P/S ratio of 3.6. Denbury Resources Inc. had an annual average earning growth of 10.9% over the past 10 years.
Highlight of Business Operations:Our capital expenditures, excluding the Riley Ridge acquisition, for the first nine months of 2011 were funded with $839.1 million of cash flow from operations, and cash on hand at the beginning of the period. Our capital expenditures for the first nine months of 2010, excluding the Encore Merger, were funded with $592.8 million of cash flow from operations together with proceeds from the sales of our interests in Genesis Energy, L.P. (“Genesis”) and non-strategic legacy Encore properties sold during May 2010 (the “Southern Assets”).
Continuing production during the three months ended September 30, 2011 increased 3,636 BOE/d over the comparable 2010 production levels, and continuing production when including Encore s pre-merger production increased from 62,169 BOE/d during the first nine months of 2010 to 65,129 BOE/d during the first nine months of 2011. These increases were primarily due to production increases from the Bakken and our tertiary oil fields (see a discussion of our tertiary operations in CO2 Operations above), offset by normal declines in most of our other non-tertiary properties. Total production decreased 14% between the third quarters of 2010 and 2011 due to the sale of the Haynesville natural gas assets, as well as the sale of our interests in ENP, in the fourth quarter of 2010. On a year-to-date basis, total production decreased 6,616 BOE/d between the first nine months of 2010 and 2011 due primarily to the sale of the non-strategic Encore assets, including the Haynesville and ENP interests, during 2010. Our production from the Cedar Creek Anticline generally declines in periods of increasing prices due to a net profits interest associated with this production; therefore, a portion of the decline in 2011 production at this field is related to the increase in oil prices during 2011.
Our production during the three and nine months ended September 30, 2011 was 93% and 92% oil, respectively, as compared to 83% and 81% oil during the three and nine months ended September 30, 2010, respectively. This increase is due to the sales of the non-strategic Encore properties and ENP properties in 2010, which had a higher percentage of natural gas production, and increases in our tertiary and Bakken production, which are primarily oil.
Generally, production taxes change in relation to oil and natural gas revenues, and marketing expenses change in relation to production volumes. The 23% increase in oil and natural gas revenues between the third quarters of 2010 and 2011 contributed to severance taxes increasing from $26.2 million in 2010 to $30.5 million in 2011. Likewise, the 30% increase in oil and natural gas revenues between the first nine months of 2010 and 2011 contributed to severance taxes increasing from $69.8 million in the first nine months of 2010 to $91.4 million in the first nine months of 2011. These severance tax increases in both comparative periods were partially offset by lower marketing expenses primarily attributable to lower production volumes in 2011.
The net effect of these changes resulted in a 22% decrease (a 9% decrease on a per BOE basis) in G&A expense between the comparable third quarters of 2011 and 2010, and a 3% increase (13% increase on a per BOE basis) between the comparable first nine months of 2011 and 2010. Lower production attributable to the 2010 property sales was the primary factor relating to the higher cost per BOE in the 2011 nine-month period as compared to the 2010 nine-month period, as any cost savings as a result of the property sales were offset by other expenses, including compensation increases effective at the beginning of 2011 and incremental expense attributable to the legacy Encore office leases and the new Denbury headquarters noted above.
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