Denbury Resources’ production costs and margins
Excluding hedges, in 2Q16, Denbury Resources (DNR) reported a positive cash margin but a negative total margin (Chart 1).
Gains from crude oil (USO) hedges helped Denbury Resources increase its cash margin further and turned its negative total margin positive (Chart 2).
- production cash cost = LOE (lease operating expenses) + production and ad valorem taxes + transportation expenses + G&A (general and administration) cash expenses + interest expenses
- total production cost = Cash cost + DD&A (depletion, depreciation and amortization)