DEN - Earnings call transcript Q2 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, ladies and gentlemen. And welcome to the Denbury’s Second Quarter 2022 Results Conference Call. My name is [Technical Difficulty] your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. now for turn Head today's Relations. would to conference of I host your call, Instructions] like the to over Investor [Operator Brad Whitmarsh, proceed, Please sir.

Brad Whitmarsh

hope are for today's is Good most to news our I materially on morning materials are us thank that our everyone everyone supplemental There this factors based reasonable a call and you the are our morning, today. best to and releases from I want today's that forward-looking cause that you've and remind could will review statements website on differ information. had chance actual discussed denbury.com. joining available numerous that to call. include results on what at

Reconciliation Risk accompanying our in the call, today's that You reference disclosures our certain from course Chris presentation, can those today's well. news read note Mark prepared today's Carbon full Nik come SEC will and associated the Wood, release. the business earnings COO; measures comments Sheppard, This President Factors filings morning, SVP slides on during non-GAAP and as David today's of in most and our recent disclosure Solutions. Allen, statements Kendall, CEO; please release measures. and and may provided our are Also, with we forward-looking to CFO; of relative

I'll Our prepared that, to follow-up the turn comments With should go Q&A. call around XX we’ll minutes and with then Chris.

Chris Kendall

the us The Last Despite an specifically job those experienced prices, macro dynamics morning, tight multiyear on in physical the quarter. both control. mitigating navigate. Thanks I executing Denbury. call. chain matters well terms been out meaningful both have you any done the our how joining pronounced challenges, our even as oil plans at more challenges levels as supply impact today's beginning for of in Brad. Good continued environment, in of and the dynamic had amazing gas through and became company These not of year disruptions, second to of of our and oil for thank teams all combination the highs Denbury also XX-years at highlighted and past quarter, for in presents the business inflation markets, in of the

of are the on a the As goals efforts, every to established start their one result achieve a path we we solid to year. of

the project debt second year confidence more extremely are I'm level With execution project. and replenishing execution projects high our flow in to year year existing deliver continued and more Considering seeing prices company's sourced production strong program, industrial our pay In fields business our and see inject the on increase we and Our proud business technical I'm this of to of certainly EOR this million buyback quarter impact on to development, more business. production, the our our results in ever a investments we our enough track oil of is remaining from cash program. strong CCUS This valuable David to outlook, will on strategy, with our are the the fourth the next excited than COX EOR in operations, and the our our to CCA. history. in share success CCA $XXX solid anticipated fund we highlight operational to growth initiate opportunities quarter Board results Greenfield multiple with flow cash and our availability buyback and strength than to authorized generated share in in our off recently commodity our $XXX million.

equivalent world milestone of million missions business, the producing potential In year, our incredible of hours, fact, inject rate the our at per remarkable underscores X this over a of energy we will X decarbonizing current while million that tons of dearly the needs.

great We're operating on scale, we make fired are Multiple building progress long pipeline Denbury’s remains enhanced either kind system substantially country to CCUS proposal further a drive their Denbury closely watching to company. the the XX% currently is power Solutions more Carbon a emissions, to our carbon unique incredible startup continue proposed broad lived superior of on CCUS credits. and will optimistic to one flexibility leveraging to which valuable would generators, levels and manufacturers system, focused also capture States, will future on the with current while available even to vision and this XX-Q call. or cement gas the a congressional history our will flood The business path a making industries otherwise and highly under of difference network, later be continued CCA. opportunity in carbon increase increase the attractive in provide proposal by a meaningful at policy largest its that own change in including COX capture in be reliability. that the step a sequestration this asset, tax emissions. steel XX-Q the is put of oil EOR business focus the Executing sequestration under the Nik some new result would an in Our and in the levels, upon color team significant in a credit EOR our incentives will United incentivized The increase U.S. in largest new

near a CCUS, support to to Looking which sets are to development the and of perfect rapid policy public necessary incentivize projects. skill lead future, the collective in capture assets fit has now Denbury’s

call over I'll We Mark. are extremely excited turn future. now about to the the And

Mark Allen

board, expectations in and including barrel highs quarter our most operating revenues, with quarterly good performance items. Denbury’s and was volumes guidance. the and which by production, consensus, income, net and generally will results quarter second Chris, in oil robust prices Denbury's and recent on stable second results cash financial were morning, second touch flow briefly bolstered quarter drove Thanks, margins. line and Across sales I per Today, everyone. cost

will detail. more cover which increasing are costs certain inflationary Although due in to pressures, David

million second changes significantly expanded of working the flow of barrel. before for second pre-hedge a debt. per million basis million before margin $XXX was the or million cash quarter. $XXX cash to on quarter than for XX% quarter no more $XX Our capital we Year-to-date, for capital flow ending the quarter generated working than with $XXX $XX the higher capital free changes, our cash investments Operating

our the utilized a During I'm X.X% that outstanding. $XXX and through to announced to repurchase we $XXX July, share quarter, second report repurchase program, of million we pleased shares million

our In share price. we shares of currently authorized company's addition, an representing share $XXX of available at the the million recent X% so recently $XXX million another Board under incremental program, repurchases, have outstanding

balance oil to tier on capital resource to In allocation EOR previously. and a our sheet, significant we our providing to incremental production our top base reserves. stated what want priorities consistent at remain CCA maintain develop operations capital maintaining We and allocate with addition have near-term

which to our pipeline grow years CCUS of and needs COX expand storage expect build business, we fully fund the We capital over infrastructure. next several our sites the growth want also to as we out

As cash our flow our prices anticipated strong provide shareholders. to to oil near-term beyond additional plan needs, return we capital

XX% our in we on tax of the over On the course highlighted XXXX, assets approximately an quarter resulting tax deferred expected the allowance XX% of our one was last statutory rate. instead the rate guidance tax valuation reversal of of front, item

of guided total our We also previously around taxes. cash represent that XX% taxes could

we of will XX% capital However, in forecast and currently XX% items, to with taxes. total expect cash taxes be other our our changes

You our can and outlook our slide presentation find our guidance recent on additional information most in on website.

in business ability CCUS As position have strong next only over generating great our I a significant our gives us today, great to David, we financial is to growing David? to the business that optionality I years. several confidence it long-term free our Not we want flow but our turn funding over cash strategy. emphasize that execute have for do

David Sheppard

good our operating as is can at everyone. well. Thanks, exciting an morning, continued and very our perform Bembury time second Mark, to from quarter you see teams It and results,

with our into engage Before HSE of I operating results, our Annual topics culture to all quarter, teams. some we I commitment safety our we jump concluded by would where Xth to Roadshow and like field begin environmental, This various past in reaffirming safety. key

to a of holding commitment exceptionally track rate total believe recordable result tenant this I impressive low our continue as company culture. We of incident is strongly Denbury's to at safety fundamental an and due

begun COX year. has per Beaver quarter and located activities. Wyoming at is to flooding over from currently respond Also the The repair as Production Gulf the first was region the than well in compression Mountain day gross volumes of BOE first lower Second at primarily development producing slightly the to and in an activities quarter per anticipated. production volumes primarily workover Rocky BOE due beginning XXX day increase materially our Coast from to downtime were sales saw due CCA. up to X,XXX greenfield the Creek in quarter and

and Looking the to response remain forward, program. XXXX relatively company the expect from total production capital flat quarter see increase in to significantly quarter fourth in we our production as we third

on and affect a additional to environment. workover expense cost, Moving quarter return in COX as the crude our oil and up and of was rigs our was service result second as we gas fuel the power expenses. quarterly to price per natural which to in to Also inflation significant production decisions commodity the higher LOE increases cost wells and in higher prices, run in elected made the BOE directly quarter

being to raising guidance BOE our $XX reasons, $XX the LOE with quarter the For we the highest slightly for are these annual year. unit third per to

starting On well. project X project, to our large EOR progress continues side, extremely the capital with CCA Phase

To the XXXX Denbury excited planned our resource negative ever is when an February delivery ramped in areas the response projections, see first injection We With highest. been about As believe will have we've understatement. asset are Average XXXX on. X to our and begin It's previous will on production Phase that construction grow may facilities. production impact mentioned and and capital injection largest we calls, the be we into base of as EOR and move the This in of XXXX. It's will limited I'm quarter. realized ramps rates mitigate forecast XXXX than in rates higher base the range and in reserve second up still the of CCA planned multiple second acceleration of earlier second fully the rates occurred phenomenal our to is say injection commenced asset carbon of to been executing in our this our well to in projects response reserve company the will have we where yet development in supply valuation CCA quarter. injection so job teams half the Xst, full across on compression no concerns, bookings did XXXX. Furthermore, operational have anticipate the chain accelerate recycle to-date. value The the material capital in have a mind rate. working EOR components the worked of and the

our at drill to additional our development are horizontal is Beaver additional reservoir Rocky continue program. in at drilling development oil in drilled and drill In the our quarter. we Activity intervals production. have the Canyon at field. strong and successful [Redessa] horizontal levels Soso the the planned several our Mountain primarily by quarter, activity region, showing wells and wells progress the expected we CCA. Charles targeting plus third Creek three seven holly We development In We new drilling Mission and EF Gulf completed Coast, workover increase to (ph) ongoing Cranfield wells Webster plan further driven to even than wells recompleting project Heidelberg reservoir

our In on our efforts addition, and asset program assets. Coast mature we most retirement focusing Gulf are

is wells of we year, Based oil $XXX acceleration increase year, have the is million XX raising half guidance this recordable of to full-year and mentioned the capital with remainder earlier. million, of this portion far that for and we our our due plugged for inflation. $XX on our zero compression an to abandoned remaining facilities I the The CCA outlook are So incidents. cost recycle approximately gas

we by of the a been great ramp on in we some we am efforts, assets, have our meaningful proactively by expect and want I with materials to to this of fourth equipment, these delays so, needed, impacts the pleased Our followed performance inflation with teams. business. the in I our seen teams now to job consistent need our up, and the finish services have when even activities XQ with for doing while ensure what we more the our modest timing XQ saying Accordingly, but execution year. be production quarter. we Despite where of securing have up how Wrapping managing

are I'll foundation to Solutions on hand the which now update on We for it Nick over strengthening Denbury the an business. stands. Carbon

Nik Wood

team's Solutions the Thanks, today be David. the It's great Carbon to call exciting to on progress. share

our for established a Solutions we've two goals As reminder, Carbon team significant this year.

billion agreements more is First capacity. per secure potential And X develop than transportation X.X year. industrial tons to of totaling million to with more and access to second is storage sequestration customers than COX tons

sites miles five estimated is than least of of XXX we tons provide of million area, we customers on both with our emissions, have We cost hub storage With sides recently have exceeded and less the the from agreements. goal Louisiana on potential storage pipeline, announced Gulf is capture and our capacity of across central Mississippi have to our is tons Coast, billion the of work which site Texas, and X.X our already and storage including storage new approximately million low total green at transportation In XX site is Louisiana, now sequestration River. potential. can additional continue capacity storage to a Donaldsonville This in many near sites Alabama. industrial tons Donaldsonville, and now

to sites continue to our will shorter infrastructure storage capacity more for This located distances. time. pipeline pipeline our our add potential and will providing plan system to our industrial provide and off We and pipeline move us the network, on sites flexible to Adding other economic, sites most sequestration maximize on system over customers of volumes across reliable the of system. anywhere pipeline solution our strategically the across allow evaluate the capability across

in preparations and storage stratigraphic For to exceed guide our this. we value continue wells support of reaching portfolio. CCUS storage important CCUS, are XXXX, to may opportunities VI of our and Also, process test in in our COX our classic upon building stages Depending we the additional of needed outside interesting guidance. transportation million early and to evaluate previous of Seismic capital injection out our permit progress months, the $XX invest elements EPA chain primarily we to coming storage. agreements for the our Class storage pace spend for for imaging

plan our We our in stratigraphic on reaching progress worldwide to sites two least that have already I purchased and acknowledged storage we and operated world at the in of Seismic will plastic storage XXXX. hopefully the as goals. decarbonization Based to later wells all of CCUS one for is we to-date, cornerstone drill ready one test confident am have year. solutions

to agreements. currently on various take close I Given skilled per year this than stages and projects. highly I technical for good feel is per remain million the off and staff, per exceeding back of agreements discussions Brad. active positioned goal about expenses and our storage tons negotiations dynamic. network, industrial the opportunities made and our it located on This Denbury XXXX year. very a optimally tune we store targets and more strategically greenfield to COX reaching sites pipeline our I lead year, brownfield to in way are stand CCUS. now believe negotiations hand of million will at and of partners To XX our continue transportation we our to with X with landscape, million we expand of and both XX tons tons signed COX Today, year in of

Brad Whitmarsh

ready I for turning strategy. corporate we vital report, that and as it Before of is wanted business for over to you'll Operator, are XXXX I questions. Denbury's responsibility recently on take the to available hope we which questions, are responsibility sustainability overall published time website. elements read our through corporate it highlight our

Operator

call. Thank would now the of Q&A you, begin session sir. We today's

in with question your open. is Michael one comes first Our from line now of Michael, line Stifel. Scialla the

Michael Scialla

that want or to morning, is mentioned all if Yes. to new can expect you value guys. Chris, incremental I proposal, the to from (ph)? announcement of if higher you emitters since Good I any go potential congressional particularly that see Denbury customers? And any uptick customers, [app] that? cost you that approved, seen in the the guess on of capture interest have some

Chris Kendall

when now see from certainly, to of finally, this good in and something far. this steel not. that into we're Mike, start question. country you to rolled Act Hey just considered pretty about and level it's side And really closely the the been being package gets And it or that and into cement about in needed hearing morning. we think passes Yes, feel this right Catch get make From the is essentially watching path decarbonization, we'll that's that difference we've a to optimistic up have it's credit it so good others. was you wanting our And a big to into power whether just course, us the natural gas and can many get there. what among

and I've So we're one, a just new I question, is industry you Denbury? see the question, your is dollars secondarily, -- that and there with about is go? think that lot to this far we've win incentivize we've X that that a times additional much then bigger. that. The look for getting And But you -- us upside does to the what bigger better. number me, put excited contract market about we’re the capture. that does so And big so excited with what somewhere is to think then that to coming where seen will our the just your at just much total mean, looked There those go pie XXQ, that. together I where of the business I structures numbers in there there really that we've seen in current around makes

it and see and next overall, we're watch few see very here. I progress So the some days, bill think in this we'll how about we'll excited does

Michael Scialla

thinking by of budget $XX or some CCUS wondering more push budget? push tens millions? sense it you in more it Just would it this agreements Are it of the There's a a be is quantify testing that you exceed million you just couple I'm would Nick, said of better And What entails? Good. that, of year. higher? I sites? that higher? if to the budget, potential it for to the What's that? million not? what's your sequestration Or And Is trying get would guess could what

Nik Wood

Sure, Mike.

storage that current So look our store for our to sites. if the we're at containment the around in front-end you technology is to budget budget, mostly our our acquisition employ going verify

out we technical to great remainder of add we great accelerate our And the work. have a also have of we to opportunity portfolio. a to for year, that some As look the storage opportunity

pretty healthy to the in we a half see add out capital So an amount of the year. of opportunity second

Chris Kendall

I add the the I the come more of kind of could spend And just to me things success. will guess, to would we Yes. -- it that year that, we've do more, Mike, had be because in remainder if it's

infrastructure captured we will As short the COX a that's their possible this at that reliable have as as as make of possible, places trips all emitters and and build for broad storage win. out the right as

we And it's would so everything working we're that, up. if not move moving forward are bump in towards, million, above we it's something that I up successful $XXX with that could mean, us than in mentioned. couple working drill point hard the to these stratographic it towards as to more part wells And can we're we is sites. test a you other where getting a then

But the a just greater a budgeted of the I bit, with this start see can could of a way influence also so availability success that And out. in we than overall, goes rigs at costing if how year. environment in had even the sign that you it in million, is business that succeeding it's one imagine of those an each works few and up

Michael Scialla

the Appreciate guys. helpful answers. That's

Operator

your you Thank question. for

Our comes now next America. open. your Doug line is of one line with from question Doug, Bank of the Leggate

David Fernandez

ask understand we've will us the here. progress Fernandez can will portfolio be the for David actually consistent help that your like XXQ? emissions differently side, is -- any are light This how the what interested to equity on Doug seen you in for COX be Hello. And constructed, If of fund takers? changes about it off to so, are or Wanted tolling in the thinking you portion? all capture appetite to is it in you potential

Chris Kendall

around space the it thing, talking combination. about tolling a industrial customers the think to I way of David. we're and storage for And the of butter type certainly transportation and is for is Sure that most that us bread

the with industrial are emissions new several what your are we we and decarbonize potential problem where And -- there in we out combination plant we the that's reduction I that On depending think solve into them. and equipment the cases. are takes sense entire of approach this range just way, service provide the one in all point way is that technology and along emitters for whole partner everything in them the so be and that company one to bring we'll But best how this. and makes as business on we way the the that's tax negotiating site predominant. capture the helps and them I'd ranges their where that doing that's a of the a exposure look the end a provide but can emissions really then -- your seeing provide for of say that out point, that works can here and how to spectrum, of we along industrial a site so customer, the each of on looking at that that really help and care do And reduces this legislation to help credit their industry, may aspect at can we'll the grow to to

David Fernandez

much it. changes, I the mean, a makes terms I my follow-up Got that guess, that. is to the shouldn't actual a -- those low of it. or hurdle fairly to related you upside? is pose it you and of hurdle on total risk that a lot in enacted rate, that credits getting of that benefit credits getting that say for there's just wage multiplier Got assess you it's the bar? that of and of It's for of labor a sense. No, rate a Like would is X something -- proposed how requirements. lot industry? do can getting terms And Thank times the in

Chris Kendall

Business David. who leads Dahan, also that bet, for team Technology, weeks now. to ask Matt several this been going answer question. of our relations our And government SVP deep I'm He's neck You in Development to

Matthew Dahan

Real David. U.S. on apprenticeship some to content, Yes, Xx in particularly and the stuff steel. as multipliers then to that's facility the capture being quick, for COX, rates the credits, wage well prevailing there on include some built the get the requirements ultimately hurdle

those do hurdles any supply Probably costs? steel. additional and add sure really prevailing steel they other not the on bit So little a paying above upfront I'm any increment U.S. in wage that's

big So the the in aggregate that They guidelines. an projects. impact of Treasury to for not of do have set to basically the Secretary wait to

I XX-days to have bill that. the do they think after passes

Chris Kendall

I'd as And up use completed is that we we the project just David, what add to in example, wage that just in prevailing pipeline provision an that Montana. actually

David Fernandez

Okay. That's time. helpful. thank appreciate Well, Awesome. the much. super guys very you I really Got you.

Chris Kendall

David. Thanks,

Operator

for Thank sir. your question, you

Our Michael Scialla follow-up line is next of Stifel. a line Michael, is with once question your the from open. again

Michael Scialla

Yes.

think or oil plan? at those there things have all or well, I ’XX if you the and I'm activity some to part the prices resulting Creek of for that -- some mentioned Mission I as well CCA wells. the XX several half at David, wondering plan slide at waterflood Looking deck and Webster. is non-tertiary I And think of think you that from you higher always just wells Kevin that planned second highlighted incremental were is is the Canyon incremental

David Sheppard

excited all off coming about mix. is this I'm into Mike, those Sheppard. Yes, though question. opportunities David Yes, thanks Hey, super the the for no,

just go tangible here. all have to of they've a of that execute drilling projects all the not the the Here, the budget in that there. rig I plus year at referenced in secured been plan we're incremental, beginning those will say are you they definitely

I'm going to into the make rate planned see quarter is entry a that which part ramp and they're So and of exit to up, for XXXX. for great fourth really excited year rate

Chris Kendall

success. between had Yes. Charles and as just Texas. These them wells in are is add seen, up to then and plays, multiple all Webster, thing Canyon, I'd one you've And north already down in drilled good we've the Mission Mike, that

needle some that been a but So we're threading of the the drill, at team wells with exceptionally we that. good has

to said, in what for seeing does us here the David So like I'm forward looking fourth quarter. this

Michael Scialla

ramp of any the are or you what can you production day BOE then about? fourth I get you ramp chance quarter? thinking of north And in talking that a meaningful Good. XX,XXX kind quantify guys Are

Chris Kendall

Yes. I that a still guidance here but Mike, a for don't earlier in quantify year this about it the as quarter. we very to out we that think point good at we've where feel that that we're and is left put specific the yet is level have

Michael Scialla

Thank Yes, got it. you, guys.

Chris Kendall

Thanks, Mike.

Operator

are Thank you questions, no this your sir. other at queued questions up time. for There

I to over Brad now conference back our to Mr. the like would Whitmarsh. pass So host,

Brad Whitmarsh

weeks. and of and again joining the road looking a Thanks days you Yes. talking next to the great the Hope for great we'll hopefully of to day with are everybody have Beth and forward rest see us a coming you I you on summer. your call several over today. many on the here in

Operator

XXXX second Thank time. the call. conference your you quarter concludes That for Denbury results

You may now disconnect your lines.

Denbury (DNRWW) 5 Aug 222022 Q2 Earnings call transcript