Denbury Resources Suspends Dividend
21 September 2015 - 10:20PM
Dow Jones News
Driller Denbury Resources said Monday that it would suspend its
cash dividend effective in the fourth quarter, the latest company
to do so as the industry grapples with the low price of oil.
While oil commodity hedges and reductions in capital spending
"have buffered us to a large degree from this oil price downturn,"
Chief Executive Phil Rykhoek said the benefit from those hedges
will begin to diminish in the fourth quarter.
Denbury said it will pay its previously-announced third-quarter
dividend on Sept. 29.
Suspending the dividend will free up about $22 million of cash
each quarter, the company said. The newly available cash will be
directed toward debt reduction, increases in capital spending or
repurchases of shares.
The company said Monday that its board approved a reinstatement
of the company's share-buyback program, which had been suspended in
November 2014. Under the program, about $222 million is authorized
for repurchases with no expiration date and no requirement that any
buybacks are completed.
"We expect to reinstate a dividend in the future, but the
timeline for doing so is uncertain and will likely be highly
dependent on oil prices," said Mr. Rykhoek.
In suspending its dividend, Denbury joins a host of energy
companies making a similar move. Linn Energy LLC, Baytex Energy
Corp. and Penn West Petroleum Ltd. are among others to have
recently suspend dividend payments.
Shares in Denbury have dropped 81% over the past 12 months.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
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(END) Dow Jones Newswires
September 21, 2015 08:05 ET (12:05 GMT)
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