Oil & Gas Producer Denbury Etching Cup-With-Handle Base
Denbury (NYSE: DEN), which went public for the second time a year ago, following a restructuring, has been etching a base since late June. It's now fo...
which went public for the second time a year ago, following a restructuring, has been etching a base since late June. It's now forming a handle below a potential buy point of $75.20.
Denbury is an independent oil and gas company with operations mainly in the Rocky Mountain and Gulf Coast regions.
The Plano, Texas company reported its second-quarter on August 5. Denbury earned $0.61 per share, up from a loss of $0.07 per share a year ago. Revenue was $301.4 million, up 156% from the year-earlier quarter.
Denbury's second quarter compares to consensus analyst estimates for EPS of $0.49 per share and revenue of $245.3 million.
Denbury's stock climbed 1.80% on the news, although trading volume was below average.
The company announced several operational accomplishments during the quarter, including:
- Began installation of the 105-mile Greencore CO2 Pipeline extension to the Cedar Creek Anticline enhanced oil recovery project in the Rocky Mountain region.
- Progressed negotiations with multiple parties for long-term transport and/or storage of CO2, with the potential for more than 50 million metric tons per year.
- Advanced discussions to acquire rights to store CO2 at multiple potential sites, both onshore and offshore, representing storage capacity of over a billion metric tons of CO2.
- Received $18 million from the divestiture of undeveloped, unconventional deep mineral rights covering approximately 13,000 net acres at the company’s Hartzog Draw Field in Wyoming.
- Reduced debt by $57 million, resulting in $69 million in total debt and $531 million in liquidity at the end of the second quarter.
According to CEO Chris Kendall the Greencore CO2 Pipeline extension "remains on budget and on schedule for completion by the end of the year. The CCA EOR development is expected to provide many years of strong cash flow to Denbury while also contributing to our goal of being Scope 3 carbon-negative by the end of this decade."
That's important for today's energy companies. According to Denbury, part of its obligation is to report greenhouse gas emissions and develop procedures and methods to collect data critical for calculating these emissions.
In addition, the company is committed to using emerging technologies, where feasible, to capture or reduce emissions and to improve its carbon efficiency.
Not only do companies face greater environmental regulation, but greenhouse gas emission reductions are a central tenet of ESG funds These funds are increasingly in demand as investors want to hold companies accountable for improvement on various social issues.
Denbury is one of several small- and mid-cap oil & gas exploration and production companies with strong chart action right now. Fellow outperformers include Antero Resources (NYSE: AR), SandRidge Energy (NYSE: SD), SM Energy (NYSE: SM), SilverBow Resources (NYSE: SBOW) and Callon Petroleum (NYSE: CPE).
As a whole, the oil and gas exploration and production industry is doing well, although it's slumped in the past two months. Several stocks in the group are currently forming corrections, including the largest stock, by market cap, EOG Resources (NYSE: EOG).
Denbury closed Friday at $71.40, down $0.44, or 0.61%, in volume 8% below average.
The current cup formation began on June 25, as the stock fell below its intraday high of $81.37. It etched its current cup pattern in an orderly fashion, and started forming a handle on September 2.
The current handle fits the ideal description: It formed in the upper half of the base, and so far has lasted five days, the minimum number of days you'd like to see in a handle.
The current handle buy point would be $75.20. You want to see it clear that point in heavier-than-normal trade.
MKM Partners initiated coverage of Denbury on September 9 with a "buy" rating and a price target of $96, representing a 37.03% upside.
The stock advanced 5.08% over the past month as it etched the right side of the cup base. Year-to-date, Denbury is up 177.93%. Since it went public last September, it's up 294%.
This is a stock with plenty of potential in the near term, as evidenced by analysts' expectations. Wall Street is eyeing earnings growth of 173% this year, to $2.40 per share, with another 102% growth in 2022, to $4.85 per share.