Denbury Resources Lowers Workforce At Texas Headquarters

Denbury Resources Inc. (NYSE:DNR) revealed that it has reduced workforce by 15%, mostly at its Plano, TX headquarters.

The company announced job cut amid lower oil price environment. It is aiming to position itself for oil prices at $50 a barrel to gain profits in the long run. These efforts are in sync with Denbury Resources’ objectives.

Denbury Resources has estimated a one-time charge of $8 million during the third quarter relating to the job cuts. The job cuts were effective from August 10. As of year-end 2016, the company had a little over 1,000 employees.

As oil remains in a bearish territory, the top energy companies have cut spending (particularly on the costly drilling projects) on the back of lower profit margins. For 2017, Denbury Resources has also decreased capital spending to $250 million from the prior guidance of $300 million, in response to weak oil and gas prices during first half of the year.

Despite lower capital spending, the company expects to raise the full-year production guidance to 60,000-62,000 Boe/d from the previous range of 58,000-62,000 Boe/d. The development in this front reflects the fact that the upstream player has successfully executed some projects in the first half of 2017.

Denbury Resources has a relatively low-risk business model as it produces oil by applying tertiary recovery techniques to mature fields. Moreover, Denbury Resources’ in-house CO2 reserve base lends it a significant competitive advantage in acquiring and exploiting mature oil reservoirs.

In addition to industry-wide oilfield cost, the company’s growing outlays reflect its exposure to higher energy costs (electrical and fuel charges) due to continuing emphasis on CO2 flooding techniques.

Over the last three months, shares of Denbury Resources have lost 25.1% compared with the industry’s decline of 16.3%.

Denbury Resources currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space are Range Resources Corp. (NYSE:RRC) , Braskem S.A. (NYSE:BAK) and TransCanada Corp. (TO:TRP) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Range Resources delivered a positive earnings surprise of 250.00% in the preceding quarter. The company beat estimates in three of the trailing four quarters, with an average negative earnings surprise of 94.22%.

Braskem delivered a positive earnings surprise of 107.79% in the quarter ending September 2016.

TransCanada delivered a positive earnings surprise of 12.00% in the preceding quarter. It surpassed estimates in two of the trailing four quarters, with an average positive earnings surprise of 4.06%.

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