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Understanding Denbury Resources: A Crude-Weighted Upstream Company

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Denbury Resources’ production mix

As you can see in the chart below, in 2Q16, Denbury Resources’ production mix was ~96% crude oil and ~4% natural gas. This mix means that Denbury Resources (DNR) is primarily a crude oil producer. In fact, Denbury Resources has one of the highest crude oil percentages in its production mix. Typically, upstream companies with more crude oil production have better operating margins.

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Denbury Resources’ production mix trend

DNR’s quarterly crude oil percentage in its production mix has risen from ~92% in 1Q11 to ~96% in 2Q16, with an average rate of increase of ~0.21% QoQ. In 2Q16, the crude oil percentage in its production mix rose by one percentage point to ~96% from ~95% in 1Q16.

Other upstream companies

Other upstream companies with higher liquids percentages in their production mix are Diamondback Energy (FANG), Occidental Petroleum (OXY), Devon Energy (DVN), and Murphy Oil (MUR). These companies contained ~87%, ~73%, ~60%, and ~64% liquids in their 2Q16 production mix, respectively. The volatility in oil prices also impacts ETFs and ETNs like the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), the Vanguard Energy ETF (VDE), and the VelocityShares 3x Long Crude Oil ETN (UWTI).

Next, let’s take a look at Denbury Resources’ oil and gas revenue mix for 2Q16.

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