Denbury Resources Hits the Big Time (DNR, ROH, DOW)

Oil and gas E&P company Denbury Resources Inc. (NYSE:DNR) will be added to the S&P 500 after trading closes on April 1st. Denbury replaces Rohm and Haas Co. (NYSE:ROH), which Standard & Poor’s expects to be purchased by Dow Chemical Corp. (NYSE:DOW).

Like most E&P companies, Denbury had a big first half of 2008, but earnings sank in the second half on falling crude prices. EPS for the full 2008 fiscal year was $1.59; for the fourth quarter EPS totaled just $0.18, barely 11% of the total.

Denbury has operations in the Barnett Shale play in Texas, and tertiary recovery fields in Texas, Louisiana, and Mississippi. The company also owns a large carbon dioxide deposit in Mississippi. The CO2 is used in a technique called CO2 flooding to cover more barrels from existing fields. Denbury is also building a new CO2 pipeline, which the company hopes to use to pipe carbon dioxide from power plant emissions to fields for enhanced oil recovery.

Denbury shares are up nearly 8% this morning. The company’s 52-week range is $5.59-$40.32, and its market cap as of yesterday was $4.03 billion.

Paul Ausick
March 26, 2009