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What: Oil and gas producer Denbury Resources, Inc. (NYSE:DNR) reported earnings today, and a $1.1 billion net loss -- in the midst of a lingering oil price malaise -- knocked almost 14% off the stock price. At one point this spring Denbury's stock was up 15% for the year, but it's given back those gains and then some since:

DNR Chart

DNR data by YCharts.

So what: Today's big loss deserves some context, as it's essentially all non-cash. Due to the huge drop in oil and gas prices since last year, Denbury was forced to take a $1.7 billion writedown of its oil and gas assets, since they're now worth far less than they were when oil prices were higher. 

In other words, today's big loss isn't a product of operations, but just market value for oil and gas. Adjusted for those non-cash valuation adjustments, the company actually produced a profit from its operations. 

Now what: Just because the loss was non-cash doesn't mean it's not material. After all, the company essentially stated that the current market means it will produce nearly $2 billion less in value from its current oil and gas assets. But with that said, the company has cut costs substantially, and managed to keep relatively high production levels, even as it reduces capital spending. 

Nonetheless, I'm not completely convinced that makes the company's stock is a buy today. There remains a lot of uncertainty around demand for oil, and a weakening China -- one of the world's largest oil consumers -- could send further shockwaves through an already weak demand environment with too much oil being produced. 

Jason Hall has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.