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How Denbury Resources performed during the energy rout

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Stock market performance

Now that we’ve familiarized ourselves with Denbury Resources (DNR) as a unique American upstream company, let’s find out how the company has been doing on the stock markets.

This is particularly interesting given that Denbury is an oil-heavy producer, and oil prices have more than halved since June 2014. We’ll be looking at Denbury’s stock market performance during this energy rout over the last seven months.

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Crude prices

First, let’s explore the context of how crude prices did over the last seven months. Looking at an investable instrument for retail investors—the United States Oil Fund (USO), which tracks the daily movements in WTI crude oil—we can see the deep cut that oil prices have taken. Between mid-June 2014 and mid-February 2015, USO lost ~50%.

Denbury’s seven-month performance

Not surprisingly, Denbury Resources fell by about the same amount in the same period. The company mainly produces oil, and so its fortunes are tightly linked to that of oil’s.

Indeed, while Denbury lost ~52% over the last seven months, fellow oil-heavy producers Whiting Petroleum (WLL) and Murphy Oil (MUR) also lost ~52% and ~20%, respectively, over the same period.

ETFs

Looking at broader comparables, the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) lost ~35% between mid-June 2014 and mid-February 2014. Denbury Resources (DNR) comprises 1.37% of XOP, and Whiting Petroleum (WLL) comprises 1.42% of the fund.

That should show you the power of diversification. If diversification within a sector did that well, the broader and most diversified SPDR S&P 500 ETF (SPY) did even better, gaining ~8.5% during this period.

However, the fact that Denbury did so badly on the markets may belie some of its hidden strengths as an energy company. We’ll discover some of these strengths over the course of this series, as well as a follow-up series analyzing its financial strength.

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