What happened

Shares of Denbury Resources Inc. (NYSE:DNR) rose another 24.9% in August, pushing its year-to-date return to more than 150%. Fueling those gains has been the continued turn around in the oil stock's financials, which was evident in the company's second-quarter report last month.

So what

Denbury Resources announced better-than-expected second-quarter results in early August, showing continued progress on every metric that matters. One area where the company improved was production, which averaged 61,994 barrels of oil equivalent per day (BOE/D) during the quarter, up 4% year over year and 3% from just the first quarter. The strong performance of the company's recently drilled Mission Canyon wells helped fuel that growth.  

Several oil pumps in a row at dusk.

Image source: Getty Images.

Adjusted earnings, meanwhile, came in at $61 million, or $0.13 per share, which beat the consensus estimate by $0.02 per share. Aside from higher oil prices, the company also benefited from its ability to continue driving down lease operating costs, which fell about 2% on a per-BOE basis compared to the first quarter.

In addition, the company continued to reduce debt, paying off another $189 million during the quarter, pushing its total reduction to more than $1 billion since the end of 2014. That helped drive further improvement in its leverage ratio, which has fallen from 4.5 times to 3.0 times after adjusting for the impact of the company's current oil hedges. Meanwhile, later on in the month, the company refinanced more than $400 million in debt, which pushed back its nearest-term maturity from next year to 2021. As a result, Denbury now has the financial flexibility and liquidity needed to support its expansion plan.

Now what

Denbury Resources has made tremendous strides to improve its financial position and growth prospects. While the company still has some work to do, it's on a much stronger footing and has a clear path forward that it anticipates can create substantial shareholder value in the coming years. Because of that, Denbury looks like a high upside oil stock that's worth considering as long as investors are comfortable with the company's still elevated risk profile.

Matthew DiLallo owns shares of Denbury Resources. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.