Please ensure Javascript is enabled for purposes of website accessibility

Why Denbury Resources Inc.'s Stock Is Rallying Today

By Matthew DiLallo - Feb 22, 2018 at 3:16PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The oil producer reported strong fourth-quarter results.

What happened

Shares of Denbury Resources Inc. (DNR) rose sharply on Thursday and were up 13% at 2:45 p.m. EST. Driving the move: the oil producer's solid fourth-quarter results, which continued its rally from last week's positive production report.

So what

Denbury Resources finished 2017 on a good note, reporting $48 million, or $0.12 per share, of adjusted earnings. That was more than triple what it pulled in during the third quarter and an even sharper improvement from its year-ago loss. Furthermore, Denbury beat analysts' expectations by $0.05 per share. The oil producer benefited from a 1% rise in production versus the previous quarter, a nearly $10-per-barrel improvement in realized oil prices, and the continued impact of its cost-reduction efforts.

An oil pumping unit at sunset

Image source: Getty Images.

Cash flow was also much higher during the quarter, rocketing 89% from the third quarter to $124 million. That pushed its full-year total to $267 million, which was 22% higher than 2016's level. That cash flow more than covered the company's $241 million in capital spending, $59 million below its original guidance. That gave Denbury some extra cash to pay down debt, which when combined with some exchanges, has fallen $184 million over the past few months.

Now what

"We are entering 2018 as a much stronger company," according to CEO Chris Kendall. That said, strengthening the balance sheet remains the top priority. This oil stock will likely continue to be volatile until the company gets its finances back on solid ground.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Denbury Resources Inc. Stock Quote
Denbury Resources Inc.
DNR

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
316%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/02/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.