What Does Denbury’s Balance Sheet Tell Us about the Company?



Denbury’s balance sheet

Let’s take a look at how Denbury Resources’ (DNR) balance sheet has evolved over the last six years.

A balance sheet gives a snapshot of a company’s assets, liabilities, and net assets (or equity) on a particular date, usually at the end of a quarter or year.

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Denbury Resources’ (DNR) balance sheet shows that the company’s assets have grown about 3.5x, from ~$3.6 billion at the end of 2008 to ~$12.7 billion at the end of 2014. This was driven mainly by more than tripling its net property plant and equipment.

In comparison, close peers Newfield Exploration Company (NFX), Ultra Petroleum (UPL), and Whiting Petroleum (WLL) had balance sheet sizes of ~$9.6 billion, ~$4.2 billion, and ~$14 billion, respectively, at the end of 2014.

These companies, along with Denbury, account for ~5.6% of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) and ~1% of the iShares U.S. Energy ETF (IYE).

Liabilities and Equity

Denbury’s liabilities have grown fourfold in the six years to 2014. This was driven by a combination of ballooning debt and deferred tax liabilities, both long-term items.

Denbury’s asset growth was also funded by a far slower 3x increase in equity. This would imply that Denbury’s growth was more debt-fueled than fed by savings from prior earnings.

The sudden expansion in the company’s equity in 2010 is related to its $4.5 billion acquisition of Encore Acquisition Company that year. Also noteworthy here are the numbers that reflect how Denbury has been steadily adding to its net worth (retained earnings) and that it has been rewarding shareholders via stock repurchases since 2011 (treasury stock).


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