Denbury says it will repay bank debt, grow cash by end of first quarter

By Jennifer Lanning Drey

Portland, Ore., Feb. 21 - Denbury Resources Inc. expects to pay off its bank debt and have $100 million to $125 million of cash by the end of the first quarter, Phil Rykhoek, the company's chief financial officer, said during Denbury's fourth-quarter earnings conference call held Thursday.

Denbury plans to use $48.9 million of expected proceeds from the second portion of the sale of its Louisiana natural gas assets and a $250 million dropdown with Genesis Energy, LP to eliminate the bank debt and grow cash, he said.

At Dec. 31, Denbury had $675 million of total debt outstanding, which included $150 million of bank debt, according to the CFO.

During the fourth quarter, the company borrowed funds for acquisitions and capital spending in excess of cash flows until late in the period when the company used proceeds from the closing of the first portion of the Louisiana asset sale to repay a portion of its debt, Rykhoek said.

Cash flow from operations for 2007 was $570.2 million, a record annual amount, as compared to $461.8 million for 2006.

Net cash flow provided by operations totaled $205.4 million during the fourth quarter, compared with $117.5 million in the prior-year's fourth quarter, according to the company's earnings release.

During 2007, Denbury increased production, which drove improved financial results over the previous year. Denbury posted record annual earnings for the full-year 2007 of $253.1 million, which was 25% higher than 2006 net income of $202.5 million.

Denbury is a Plano, Texas-based independent oil and gas company.

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