Denbury Resources Earnings: Gross Margins Expanded for a Fifth Straight Quarter

S&P 500 (NYSE:SPY) component Denbury Resources Inc. (NYSE:DNR) reported a swing to a loss in the first quarter driven by higher costs. Denbury Resources, Inc. is an independent oil and gas company that acquires and develops oil and natural gas properties in the U.S. Gulf Coast region.

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Denbury Resources Earnings Cheat Sheet for the First Quarter

Results: Swung to a loss of $14.2 million (4 cents/diluted share) in the quarter. The independent oil and gas company had net income of $96.9 million or 32 cents per share in the year earlier quarter.

Revenue: Rose 53.3% to $514.2 million YoY.

Actual vs. Wall Street Expectations: The company reported adjusted net income of 26 cents per share. By this measure, the company fell short of the mean estimate of 27 cents per share.

Quoting Management: Phil Rykhoek, Chief Executive Officer, said, “We were pleased with our strong adjusted net income of $103.9 million and adjusted cash flow from operations of $271.2 million. This demonstrates that our strategy is working, and although we would have preferred to report strong production growth as well, the first quarter came in much as expected and as we suggested in our fourth quarter conference call.”

Key Stats:

The company has enjoyed double-digit year-over-year revenue growth for the past five quarters. Over that span, the company has averaged growth of 95.7%, with the biggest boost coming in the second quarter of the last fiscal year when revenue rose more than twofold from the year earlier quarter.

Last quarter marked the fifth consecutive quarter of gross margins expanding as the company’s gross margin expanded 3.3 percentage points to 68.5% from the year earlier quarter. Over that span, margins have grown on average 8.1 percentage points per quarter on a year-over-year basis.

DNR’s loss in the latest quarter follows profits in the previous three quarters. The company reported a profit of $10.4 million in the fourth quarter of the last fiscal year, a profit of $29.1 million in the third quarter of the last fiscal year and $135.4 million in the second of the last fiscal year.

Competitors to Watch: QR Energy LP (NYSE:QRE), Swift Energy Company (NYSE:SFY), Carrizo Oil & Gas, Inc. (NASDAQ:CRZO), Crimson Exploration Inc. (NASDAQ:CXPO), South Texas Oil Company (STXXQ), GeoMet, Inc. (NASDAQ:GMET), Penn Virginia Corporation (NYSE:PVA), Evolution Petroleum Corp. (AMEX:EPM), Constellation Energy Partners LLC (NYSE:CEP), and Lucas Energy, Inc. (AMEX:LEI)

Stock Performance: Shares of DNR are trading down 2.3% from the previous closing price of $20.89.

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