The company has made its regular report to shareholders and conducted the usual post-release call. But as CEO Phil Rykhoek noted, "With our analyst day less than a week away, we will not be discussing on this call the outcome of our corporate review process for 2014. ... We'll also try to keep today's operations comments down to a minimum."
We do know that the company's adjusted earnings for the quarter were $0.45 per share, up 36% from the $0.33 for the comparable quarter a year ago. The consensus forecast had been for an adjusted per-share number of $0.42. Revenue was $684.8 million, up year over year from $600.4 million.
Production for the quarter averaged 71,531 barrels per day on an oil-equivalent basis, compared with 56,024 daily equivalent barrels for the third quarter of 2012. Of the most recent figure, 37,513 barrels per day were from tertiary operations, while 34,018 daily barrels resulted from non-tertiary activities. The tertiary output occurred largely through carbon dioxide (CO2) floods at such Gulf Coast fields as Oyster Bayou, Hastings, Delhi, and Heidelberg.
Denbury's average realized oil price for the quarter -- excluding derivative contracts -- was $105.91 per barrel. That compares with $93.09 a year earlier. Almost certainly, with crude prices having slipped of late, a figure closer to the 2012 price will prevail in the current quarter.
A different approach
Should the terms "tertiary" and "carbon dioxide floods" be unfamiliar to you, let me simply note that Plano, Texas-based Denbury produces oil through a process involving the capture of CO2 and its subsequent injection at high pressure into tired old wells that otherwise would be on the verge of ceasing their output. The result -- in addition to the containment of a major greenhouse gas -- is the production of substantially more oil from a well than would otherwise be possible.
The CO2 employed in the process comes from a variety of locations, including the largest deposits east of the Mississippi River and significant amounts in the Rocky Mountains. In addition, earlier this year, Denbury began receiving "anthropogenic" carbon dioxide from Air Products & Chemicals (NYSE:APD). The latter company now produces what is essentially manmade CO2 at a plant in Port Arthur, Texas.
In addition to its extensive tertiary -- also called enhanced oil recovery (or CO2 EOR) -- activities on the Gulf Coast, as Rykhoek noted in release his company's quarterly metrics, "Our Rocky Mountain operations reached a significant milestone in the third quarter with our first Rocky Mountain tertiary oil production sales. We anticipate the planned expansion of our carbon dioxide flood at the Bell Creek Field (Montana) to drive tertiary oil production growth from that field for many years to come."
In mid-June of this year, Denbury experienced a release of well fluids at its Delhi field, east of Monroe, La. The company remains involved in a remediation of an area of the well. Indeed, during the third quarter, management increased from $70 million to $98 million the estimated cost of completing the remediation project at Delhi. An estimated that one-third to two-thirds of the current costs estimates may be covered by insurance.
The company continues to actively repurchase its shares, having bought back a total of 11.7 million shares during the first three quarters of 2013. Since its buyback program commenced two years ago, Denbury has reacquired 42.8 million shares, or approximately 11% of the shares outstanding at the outset of the program.
Foolish bottom line
We'll know more about Denbury's detailed operating status and plans following the company's annual analyst conference, which will be conducted in Houston on Monday. In the meantime, I continue to believe that the company's unique approach to its business renders it worthy of careful analysis by Fools with a bent for energy.