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Charts in Focus: Denbury Resources’ Production Costs and Margins

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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).

For 2Q16, other upstream companies like Diamondback Energy (FANG) and Pioneer Natural Resources (PXD) have reported positive cash margins, whereas Southwestern Energy (SWN) had negative cash margin.

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Definitions

  • 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)
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