Denbury to cut debt; debt to EBITDA covenant removed from credit line

By Devika Patel

Knoxville, Tenn., June 26 – Denbury Resources Inc. plans to work on improving its balance sheet, as the current debt level is higher than management would like, and the company’s leadership is committed to reducing debt and debt metrics.

“We want to improve our balance sheet,” president and chief operating officer Chris Kendall said at the J.P. Morgan 2017 Energy Equity Conference in New York on Monday.

“We looked at our debt.

“Our debt is higher than we would like, obviously, and that’s something that we are continually focused on addressing.

“[There are] multiple ways to do that.

“We’re going to continue to opportunistically look at how we can reduce our debt or reduce our debt metrics, and that’s something that we were very successful with last year and we’ll continue to work [on] that this year,” he said.

Kendall noted that the company has a good relationship with its bank group and that the banks recently removed a total net debt to EBITDA covenant that could have been a problem for Denbury in upcoming quarters.

“Our relationship with the banks is very strong,” he said.

“We just finished our spring bank meeting.

“Our borrowing base and commitments were affirmed at $1.05 billion, which is the level that we’ve been at recently.

“Most importantly, the bank group eliminated the total net debt to EBITDA ex-covenant that was beginning to look like an issue in the coming quarters and that was completely eliminated for the life of the line,” he said.

At the end of the first quarter, the company had over $1 billion in liquidity, combined between its undrawn bank line and its $385 million of second lien that’s been unused.

The company had almost $3.6 billion of debt at the end of 2014, which was cut to $2.8 billion as of June 2017.

Denbury is a Plano, Texas-based oil and natural gas company emphasizing carbon dioxide-enhanced oil recovery.

© 2015 Prospect News.
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