What: To put it mildly, September was an abysmal month for Denbury Resources (NYSE:DNR) investors. The stock dropped another 33.2% last month after a trifecta of catalysts converged. Here's what went down last month.

So what: For Denbury Resources, it really all starts with oil prices. Crude was down another 8.5% last month, which took the whole energy sector down with it. Unfortunately, oil was just the one culprit behind Denbury's poor performance in September.

Because oil remains weak, analysts really piled on the negativity last month as Denbury Resources received a number of downgrades. Here are the highlights (or lowlights) of those downgrades:

  • Credit Suisse downgraded it from neutral to underperform and slashed its price target to just $1 per share. It cited the fact that Denbury's hedges are rolling off, which will cut its hedge gains from $540 million this year to just $100 million next year.
  • Denbury was cut to sell from neutral at UBS.
  • It was also reduced to underperform from market perform at Cowen.

In addition to the downgrades, Denbury also suspended its dividend. It plans to use the cash it will save to pay down debt, increase capital spending, or buy back stock. Speaking of stock buybacks, the company reinstated its share repurchase program, which was suspended last November and still has $222 million remaining on its authorization.

Now what: With oil prices continuing to stay weak, it will lead to materially lower cash flow for Denbury Resources in the future because its oil hedges don't cover as much of its production. That's forcing the company to reduce cash outflows like its dividend so it can keep its debt in check as it waits for conditions to improve. The problem is that no one sees those improvements on the horizon, which is why analysts rallied and investors bailed on the stock.