Denbury Resources Increases Production During Second Quarter 2002
The Company posted a 27% increase in production as compared to the second quarter of 2001, resulting in its best ever quarterly-average daily production of 35,526 barrels of oil equivalent per day (BOE/d). The Company posted earnings for the quarter of $13.5 million, or $0.25 per common share, despite a 7% drop in NYMEX oil prices and a 37% drop in NYMEX natural gas prices between the two respective quarters. This compares to earnings for the comparative prior year quarter of $20.1 million, or $0.44 per common share. Cash flow from operations for the quarter (excluding the changes in other assets and liabilities) was $43.4 million, or $0.82 per common share, as compared to cash flow during the second quarter of 2001 of $45.2 million, or $0.98 per common share.
Denbury's second quarter 2002 average daily production of 35,526 BOE/d was 27% higher than the 27,902 BOE/d average for the comparable period in 2001, making it the 12th quarterly increase in the last 13 quarters. Second quarter 2002 production was balanced, with 50% oil and 50% natural gas.
The increases in daily production are the result of strategic acquisitions and successful development and exploitation work on these acquisitions. Approximately 87% of the 7,624 BOE/d production increase between the respective second quarters came from the acquisition of Matrix Oil & Gas in July 2001, based on the production rates at the time of acquisition. Production from the Matrix properties averaged approximately 8,146 BOE/d (predominately natural gas) during the second quarter of 2002, the highest quarterly average to date from these properties, approximately 1,479 BOE/d (22%) higher than their production rates at the time of acquisition. The Matrix acquisition is performing better than expected, with production at or above projections. Proved reserves associated with the Matrix acquisition as of December 31, 2001 are up 35% since the acquisition, or up 46% based upon adding back production.
The majority of the remaining production increases relate to positive response from the Company's Mississippi CO2 properties. Production at Little Creek Field (including West Little Creek), during the second quarter of 2002 averaged a net 3,701 BOE/d, almost triple its 1,350 BOE/d production rate at the time of acquisition in August 1999. Production from Mallalieu Field, purchased in April 2001, began to respond to the injection of CO2 which commenced in November of 2001, increasing from approximately 75 Bbls/d at the time of acquisition to a second quarter average of 572 Bbls/d. The production increases from the Company's offshore properties and its CO2 properties were partially offset by general production declines as a result of normal depletion in its other two core areas, Eastern Mississippi and onshore Louisiana.