Denbury Resources: A different kind of oil company (Part 11 of 12)
(Continued from Part 10)
So far, we’ve discussed Denbury Resources (DNR) in isolation. Here, let’s quickly put it into perspective by comparing its high-level metrics with those of its independent upstream peers.
Comparing Denbury Resources to its peers
To put Denbury in the right context, we selected a group of peers that are close to it in size—companies in a similar market capitalization and EV (enterprise value) range.
Among our selected peers, Murphy Oil (MUR) is the largest company by market capitalization and EV at ~$9 billion and ~$12 billion, respectively. In comparison, Denbury Resources has a market capitalization of ~$3 billion and an EV of ~$7 billion.
While in terms of market or EV size, Denbury may be much smaller than Whiting Petroleum (WLL) and Newfield Exploration (NFX), the size of the company’s assets is second only to that of MUR’s. However, WLL does sport a larger revenue.
In terms of net debt (debt less cash and equivalents), Denbury stands out with a higher net debt level compared to MUR and WLL. However, net debt levels for its smaller peers—Sandridge Energy (SD) and Ultra Petroleum (UPL)—are higher when seen in the context of their sizes.
In terms of operating cash flows, Denbury seems a little undervalued compared to its larger peers. The company also trades at the highest dividend yield compared to its peers here.
In terms of EV/EBITDA (or enterprise value to earnings before interest, tax, depreciation, and amortization) multiples too, MUR, SD, and UPL seem to be trading at elevated levels. On the other hand, WLL and Denbury are trading at relatively cheaper multiples. We’ll delve deeper into Denbury’s financial health in a future series, to see if it’s indeed undervalued.
In the meanwhile, for diversified access to these and other American energy companies, investors may consider the Vanguard Energy Fund (VDE).
Continue to Part 12
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