Texas-based Denbury Resources (NYSE: DNR) has joined the long list of oil companies that have reported losses this quarter on account of derivatives contracts. Based on this, it is clearly evident that companies never expected crude oil prices to shoot past $120 per barrel. And they will pay the price for that. Yet, Foolish investors should absolutely realize that there are more to these stocks than what the bottom lines are suggesting.

The results
Denbury posted net losses of $14.2 million in the first quarter, compared with the year-ago net income of $96.9 million. What primarily dented the company's results were noncash losses on the change of derivatives to the tune $172.3 million. These losses, of course, should not matter much since they do not represent actual cash outflow from the company.

What really matters
In fact, after discounting these unusual expenses, adjusted net income stood at $103.9 million -- a huge jump from the year-ago adjusted net income of $17.4 million. This does not look surprising given that production and sales have gone up substantially. Production this quarter averaged 63,603 barrels of oil equivalent per day (Boe/d), versus 53,125 Boe/d a year back. This translates to a healthy 20% growth.

Rival Continental Resources (NYSE: CLR) ramped up its average daily production by as much as 34%. Fundamental growth in business is what Foolish investors should be looking for, and I think that's what we're looking at here -- with both companies.

Regional growth
For me, what really stands out is Denbury's expansion into the Bakken reserves. Having primary operations in Mississippi and Montana, an expansion into Bakken, like LINN Energy (Nasdaq: LINE), shows that the company is willing to diversify its reach in terms of resources. Production at Bakken increased by 10% from the last quarter of 2010.

Future growth in Denbury's core business will depend on how well the company exploits this shale play as Continental and Kodiak Oil & Gas (AMEX: KOG) have demonstrated on their own.

Foolish takeaway
With five rigs currently operating in the Bakken, the company intends to add two more by the end of this year. Fools should take note of the increased activity going on in this region. Denbury seems to be doing well, and I'll closely watch how well the company manages to increase production.