Attachment: FORM 8-K


den-20210805.pdf
Attachment: PDF OF FORM 8-K


Document
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News Release
Denbury Reports Second Quarter 2021 Results

PLANO, Texas – August 5, 2021 – Denbury Inc. (NYSE: DEN) (“Denbury” or the “Company”) today provided results for the second quarter of 2021.

FINANCIAL AND OPERATING HIGHLIGHTS
2Q 2021YTD 2021
(in thousands, except per-share and volume data)TotalPer Diluted ShareTotalPer Diluted Share
Net loss$(77,695)$(1.52)$(147,337)$(2.91)
Adjusted net income(1)(2) (non-GAAP)
33,2660.6155,6161.05
Adjusted EBITDAX(1) (non-GAAP)
72,453154,369
Cash flows from operations90,882143,538
Adjusted cash flows from operations(1) (non-GAAP)
71,225151,741
Development capital expenditures54,10274,181
Average daily sales volumes (BOE/d)49,13348,250
Blue Oil (% oil volumes using industrial-sourced CO2)
26%23%
Industrial-sourced CO2 injected (thousand metric tons)
8331,568

Commenced installation of the 105-mile Greencore CO2 Pipeline extension to the Cedar Creek Anticline (“CCA”) enhanced oil recovery (“EOR”) project.
Progressed negotiations with multiple parties for long-term transport and/or storage of CO2, representing the potential for more than 50 million metric tons per year.
Advanced discussions to acquire rights to store CO2 in multiple potential sequestration sites, both onshore and offshore, representing storage capacity of over 1 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.
(1)    A non-GAAP measure. See accompanying schedules that reconcile GAAP to non-GAAP measures along with a statement indicating why the Company believes the non-GAAP measures provide useful information for investors.
(2)    Calculated using weighted average diluted shares outstanding of 54.3 million and 52.7 million for the three and six months ended June 30, 2021, respectively.

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EXECUTIVE COMMENT

Chris Kendall, the Company’s President and CEO, commented, “Our strong operational execution, along with improved oil prices, delivered another solid quarter for Denbury. In addition, we initiated field development of our low-carbon, blue oil CCA EOR project during the quarter. Construction crews are progressing the Greencore CO2 Pipeline extension, which 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.

“We also meaningfully progressed multiple CCUS value opportunities during the second quarter. Our Denbury Carbon Solutions team is in the midst of a number of negotiations for future CO2 transport and storage services, and I am highly confident we will have several deals to announce by the end of 2021. The potential CO2 volumes covered by our negotiations are well in excess of our existing capacity, supporting our plans for future pipeline takeaway expansion and the acquisition and development of a portfolio of sequestration sites. Combined with the Company’s ideally positioned infrastructure, our multi-decade expertise in managing CO2 provides a significant advantage in the developing CCUS industry. We see broad and expanding support for CCUS development as a practical, economic, and massively scalable means of reducing CO2 emissions, and we are highly confident in this significant growth opportunity for our Company.”


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FINANCIAL AND OPERATING RESULTS

Total revenues and other income in the second quarter of 2021 were $301 million, a 20% increase from the first quarter of 2021, supported by strong oil price realizations and sales volumes. Denbury’s second quarter 2021 average pre-hedge realized oil price was $64.70 per barrel (“Bbl”), representing a differential of $1.32 per Bbl below NYMEX WTI oil prices, which was driven by better than expected realizations in the Company’s Rocky Mountain and Gulf Coast regions.

Denbury’s oil and natural gas sales volumes averaged 49,133 barrels of oil equivalent per day (“BOE/d”) during the second quarter of 2021, an increase of nearly 4% from the first quarter 2021 average. Higher second quarter production was primarily due to a full quarter’s contribution from the Wind River Basin assets acquired in March 2021, as well as the impact of winter storms on the first quarter of 2021. Oil represented 97% of the Company’s second quarter 2021 volumes, with approximately 26% of the Company’s oil produced through the injection of industrial-sourced CO2 in its EOR operations, resulting in carbon-negative or blue oil.

Lease operating expenses (“LOE”) in the second quarter of 2021 totaled $110 million, or $24.65 per BOE, in line with expectations. Second quarter expense includes a full quarter of LOE from the Wind River Basin assets, as well as higher seasonal workover and maintenance activities as compared to the first quarter of 2021. Certain of the Company’s LOE costs, including the cost of legacy CO2 contracts, power and fuel, are linked to commodity prices, which increased during the second quarter. First quarter 2021 LOE included a $15 million non-recurring benefit resulting from the power disruption during Winter Storm Uri.

Commodity derivatives expense was $173 million in the second quarter of 2021, a result of strengthened oil prices during the period. Cash payments on hedges that settled in the second quarter of 2021 totaled $63 million, with the remaining expense representing the noncash mark-to-market change in the value of the Company’s hedging portfolio.

General and administrative expenses were $15 million in the second quarter of 2021, in line with expectations, and depletion, depreciation, and amortization (“DD&A”) was $36 million, or $8.14 per BOE. DD&A was better than expected due to an uplift in proved reserves, primarily resulting from an increase in the trailing 12-month average oil price used to quantify proved reserves.

The Company’s effective tax rate for the second quarter of 2021 was negligible, as the tax expense/benefit generated is currently fully offset by a change in valuation allowance on its federal and state deferred tax assets.

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CAPITAL EXPENDITURES

Second quarter 2021 development capital expenditures totaled $54 million. Year to-date development capital expenditures totaled $74 million, or about 29% of the Company’s annual capital budget. Second quarter expenditures included $19 million spent on the Greencore CO2 Pipeline extension and infield distribution system installation at CCA. In addition, the Company’s development projects at the Oyster Bayou and Tinsley fields progressed substantially towards completion, which is anticipated early in the third quarter of 2021.

GUIDANCE

The Company has reiterated its 2021 sales volume range for the year of between 47,500 BOE/d and 51,500 BOE/d. Denbury anticipates third quarter sales volumes will increase from the second quarter of 2021, driven primarily by the Company’s Rocky Mountain region, including the impact from workover projects and continued response from the previous development of Bell Creek Phase 6. Fourth quarter 2021 sales volumes are anticipated to be slightly higher than the third quarter, driven primarily by the Company’s Gulf Coast Region, where the developments at the Oyster Bayou and Tinsley fields are anticipated to contribute to increased volumes.

Development capital expenditures for 2021 are still expected to range from $250 million to $270 million. Third quarter capital expenditures should increase from the second quarter of 2021, primarily due to continued activity supporting the extension of the Greencore CO2 Pipeline and CCA EOR field development. Fourth quarter capital expenditures are anticipated to be relatively consistent with the third quarter of 2021.

Additional guidance details are available in the Company’s supplemental second quarter 2021 earnings presentation, which is available in the Investor Relations section of the Company’s website, www.denbury.com.

CONFERENCE CALL AND WEBCAST INFORMATION

Denbury will host a conference call and webcast to review and discuss its results and outlook today, Thursday, August 5, at 11:00 a.m. Central Time. Additionally, Denbury will post presentation materials on its website before market open today. The presentation webcast will be available, both live and for replay, on the Investor Relations page of the Company’s website at www.denbury.com. Individuals who would like to participate in the conference call should dial the following numbers shortly before the scheduled start time: 877.705.6003 or 201.493.6725 with conference number 13696088.

Denbury is an independent energy company with operations and assets focused on Carbon Capture, Use and Storage (CCUS) and Enhanced Oil Recovery (EOR) in the Gulf Coast and Rocky Mountain regions. For over two decades, the Company has maintained a unique strategic focus on
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utilizing CO2 in its EOR operations and since 2012 has also been active in CCUS through the injection of captured industrial-sourced CO2. The Company currently injects over three million tons of captured industrial-sourced CO2 annually, and its objective is to fully offset its Scope 1, 2, and 3 CO2 emissions within this decade, primarily through increasing the amount of captured industrial-sourced CO2 used in its operations. For more information about Denbury, visit www.denbury.com.

# # #

This press release, other than historical information, contains forward-looking statements that involve risks and uncertainties including estimated 2021 production and capital expenditures, timing of completion of the Greencore pipeline extension, and results of ongoing negotiations of CCUS arrangements, and other risks and uncertainties detailed in the Company’s filings with the Securities and Exchange Commission, including Denbury’s most recent report on Form 10-K. These risks and uncertainties are incorporated by this reference as though fully set forth herein. These statements are based on financial and market, engineering, geological and operating assumptions that management believes are reasonable based on currently available information; however, management’s assumptions and the Company’s future performance are both subject to a wide range of risks, and there is no assurance that these goals and projections can or will be met. Actual results may vary materially. In addition, any forward-looking statements represent the Company’s estimates only as of today and should not be relied upon as representing its estimates as of any future date. Denbury assumes no obligation to update its forward-looking statements.

DENBURY CONTACTS:
Brad Whitmarsh, Executive Director, Investor Relations, 972.673.2020, brad.whitmarsh@denbury.com
Susan James, Manager, Investor Relations, 972.673.2593, susan.james@denbury.com
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FINANCIAL AND STATISTICAL DATA TABLES AND RECONCILIATION SCHEDULES

The following tables include selected unaudited financial and operational information for the comparative three and six-month periods ended June 30, 2021 and 2020. References to “Successor” refer to the new Denbury reporting entity after the Company’s emergence from bankruptcy on September 18, 2020, and references to “Predecessor” refer to the Denbury entity prior to emergence from bankruptcy. All sales volumes and dollars are expressed on a net revenue interest basis with gas volumes converted to equivalent barrels at 6:1.

DENBURY INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

The following information is based on GAAP reporting earnings (along with additional required disclosures) included or to be included in the Company’s periodic reports:
Quarter EndedQuarter EndedSix Months EndedSix Months Ended
June 30, 2021June 30, 2020June 30, 2021June 30, 2020
In thousands, except per-share dataSuccessorPredecessorSuccessorPredecessor
Revenues and other income
Oil sales$280,577 $108,538 $513,621 $337,115 
Natural gas sales2,131 849 4,532 1,896 
CO2 sales and transportation fees
10,134 6,504 19,362 14,532 
Oil marketing revenues7,819 1,490 13,945 5,211 
Other income707 494 1,067 1,322 
Total revenues and other income301,368 117,875 552,527 360,076 
Expenses
Lease operating expenses110,225 81,293 192,195 190,563 
Transportation and marketing expenses8,522 9,388 16,319 19,009 
CO2 operating and discovery expenses
1,531 885 2,524 1,637 
Taxes other than income22,382 10,372 41,345 30,058 
Oil marketing expenses7,738 1,450 13,823 5,111 
General and administrative expenses15,450 23,776 47,433 33,509 
Interest, net of amounts capitalized of $1,168, $8,729, $2,251 and $18,181, respectively1,252 20,617 2,788 40,563 
Depletion, depreciation, and amortization36,381 55,414 75,831 152,276 
Commodity derivatives expense (income)172,664 40,130 288,407 (106,641)
Gain on debt extinguishment— — — (18,994)
Write-down of oil and natural gas properties— 662,440 14,377 734,981 
Other expenses3,214 11,290 5,360 13,784 
Total expenses379,359 917,055 700,402 1,095,856 
Loss before income taxes(77,991)(799,180)(147,875)(735,780)
Income tax provision (benefit)
Current income taxes(260)598 (451)(5,809)
Deferred income taxes(36)(102,304)(87)(106,513)
Net loss$(77,695)$(697,474)$(147,337)$(623,458)
Net loss per common share
Basic$(1.52)$(1.41)$(2.91)$(1.26)
Diluted$(1.52)$(1.41)$(2.91)$(1.26)
Weighted average common shares outstanding
Basic50,999 495,245 50,661 494,752 
Diluted50,999 495,245 50,661 494,752 

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DENBURY INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Quarter EndedQuarter EndedSix Months EndedSix Months Ended
June 30, 2021June 30, 2020June 30, 2021June 30, 2020
In thousandsSuccessorPredecessorSuccessorPredecessor
Cash flows from operating activities 
Net loss$(77,695)$(697,474)$(147,337)$(623,458)
Adjustments to reconcile net loss to cash flows from operating activities 
Depletion, depreciation, and amortization36,381 55,414 75,831 152,276 
Write-down of oil and natural gas properties— 662,440 14,377 734,981 
Deferred income taxes(36)(102,304)(87)(106,513)
Stock-based compensation2,552 1,087 20,232 3,540 
Commodity derivatives expense (income)172,664 40,130 288,407 (106,641)
Receipt (payment) on settlements of commodity derivatives(63,343)45,629 (101,796)70,267 
Gain on debt extinguishment— — — (18,994)
Debt issuance costs and discounts685 4,995 1,370 9,921 
Other, net17 (969)744 (1,642)
Changes in assets and liabilities, net of effects from acquisitions 
Accrued production receivable(12,131)(4,874)(48,881)62,063 
Trade and other receivables(6,443)6,752 (5,578)(16,162)
Other current and long-term assets3,836 (7,091)1,294 (4,552)
Accounts payable and accrued liabilities28,694 12,312 27,292 (60,295)
Oil and natural gas production payable7,429 (6,269)20,224 (22,217)
Other liabilities(1,728)1,191 (2,554)237 
Net cash provided by operating activities90,882 10,969 143,538 72,811 
Cash flows from investing activities 
Oil and natural gas capital expenditures(33,784)(33,881)(53,411)(79,897)
Acquisitions of oil and natural gas properties(146)— (10,811)— 
Pipelines and plants capital expenditures(4,393)(4,668)(4,851)(10,962)
Net proceeds from sales of oil and natural gas properties and equipment18,453 428 18,456 40,971 
Other(1,243)4,416 (4,159)(105)
Net cash used in investing activities(21,113)(33,705)(54,776)(49,993)
Cash flows from financing activities 
Bank repayments(283,000)(65,000)(485,000)(226,000)
Bank borrowings243,000 330,000 450,000 491,000 
Interest payments treated as a reduction of debt— (24,295)— (42,506)
Cash paid in conjunction with debt repurchases— — — (14,171)
Pipeline financing and capital lease debt repayments(17,001)(3,325)(33,510)(7,015)
Other278 (6,576)(2,735)(9,529)
Net cash provided by (used in) financing activities(56,723)230,804 (71,245)191,779 
Net increase in cash, cash equivalents, and restricted cash13,046 208,068 17,517 214,597 
Cash, cash equivalents, and restricted cash at beginning of period46,719 39,574 42,248 33,045 
Cash, cash equivalents, and restricted cash at end of period$59,765 $247,642 $59,765 $247,642 


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DENBURY INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
In thousands, except par value and share dataJune 30, 2021Dec. 31, 2020
Assets
Current assets  
Cash and cash equivalents$13,565 $518 
Restricted cash— 1,000 
Accrued production receivable140,302 91,421 
Trade and other receivables, net24,740 19,682 
Derivative assets— 187 
Prepaids12,454 14,038 
Total current assets191,061 126,846 
Property and equipment  
Oil and natural gas properties (using full cost accounting)  
Proved properties949,128 851,208 
Unevaluated properties103,088 85,304 
CO2 properties
188,700 188,288 
Pipelines143,633 133,485 
Other property and equipment97,699 86,610 
Less accumulated depletion, depreciation, amortization and impairment(120,073)(41,095)
Net property and equipment1,362,175 1,303,800 
Operating lease right-of-use assets19,000 20,342 
Intangible assets, net92,814 97,362 
Other assets85,044 86,408 
Total assets$1,750,094 $1,634,758 
Liabilities and Stockholders’ Equity
Current liabilities  
Accounts payable and accrued liabilities$163,905 $112,671 
Oil and gas production payable69,390 49,165 
Derivative liabilities223,212 53,865 
Current maturities of long-term debt34,498 68,008 
Operating lease liabilities2,596 1,350 
Total current liabilities493,601 285,059 
Long-term liabilities  
Long-term debt, net of current portion35,000 70,000 
Asset retirement obligations226,615 179,338 
Derivative liabilities22,164 5,087 
Deferred tax liabilities, net1,187 1,274 
Operating lease liabilities18,157 19,460 
Other liabilities26,172 20,872 
Total long-term liabilities329,295 296,031 
Commitments and contingencies
Stockholders’ equity
Preferred stock, $.001 par value, 50,000,000 shares authorized, none issued and outstanding— — 
Common stock, $.001 par value, 250,000,000 shares authorized; 50,017,491 and 49,999,999 shares issued, respectively50 50 
Paid-in capital in excess of par1,125,143 1,104,276 
Accumulated deficit(197,995)(50,658)
Total stockholders equity
927,198 1,053,668 
Total liabilities and stockholders’ equity$1,750,094 $1,634,758 
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DENBURY INC.
OPERATING HIGHLIGHTS (UNAUDITED)

All sales volumes and dollars are expressed on a net revenue interest basis with gas volumes converted to equivalent barrels at 6:1.
Quarter EndedSix Months Ended
June 30,June 30,
2021202020212020
Average daily sales (BOE/d)
Tertiary
Gulf Coast region24,680 26,220 24,481 27,576 
Rocky Mountain region8,772 7,108 7,984 7,518 
Total tertiary sales33,452 33,328 32,465 35,094 
Non-tertiary
Gulf Coast region3,415 3,805 3,518 4,379 
Rocky Mountain region12,266 13,057 12,267 13,604 
Total non-tertiary sales15,681 16,862 15,785 17,983 
Total Company
Oil (Bbls/d)47,653 48,900 46,834 51,774 
Natural gas (Mcf/d)8,882 7,737 8,494 7,818 
BOE/d (6:1)49,133 50,190 48,250 53,077 
Unit sales price (excluding derivative settlements)
Gulf Coast region
Oil (per Bbl)$64.90 $24.83 $60.72 $36.86 
Natural gas (per mcf)2.86 1.66 3.15 1.74 
Rocky Mountain region
Oil (per Bbl)$64.44 $23.74 $60.40 $34.13 
Natural gas (per mcf)2.50 0.71 2.80 0.83 
Total Company
Oil (per Bbl)(1)
$64.70 $24.39 $60.59 $35.78 
Natural gas (per mcf)2.64 1.21 2.95 1.33 
BOE (6:1)63.23 23.95 59.33 35.09 
(1)Total company realized oil prices including derivative settlements were $50.10 per Bbl and $34.64 per Bbl during the three months ended June 30, 2021 and 2020, respectively, and $48.58 per Bbl and $43.23 per Bbl during the six months ended June 30, 2021 and 2020, respectively.

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DENBURY INC.
SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES (UNAUDITED)

Reconciliation of net loss (GAAP measure) to adjusted net income (loss) (non-GAAP measure)

Adjusted net income (loss) is a non-GAAP measure provided as a supplement to present an alternative net income (loss) measure which excludes expense and income items (and their related tax effects) not directly related to the Company’s ongoing operations. Management believes that adjusted net income (loss) may be helpful to investors by eliminating the impact of noncash and/or special or unusual items not indicative of the Company’s performance from period to period, and is widely used by the investment community, while also being used by management, in evaluating the comparability of the Company’s ongoing operational results and trends. Adjusted net income (loss) should not be considered in isolation, as a substitute for, or more meaningful than, net income (loss) or any other measure reported in accordance with GAAP, but rather to provide additional information useful in evaluating the Company’s operational trends and performance.
Quarter EndedQuarter Ended
June 30, 2021June 30, 2020
SuccessorPredecessor
In thousands, except per-share dataAmountPer Diluted ShareAmountPer Diluted Share
Net loss (GAAP measure)(1)
$(77,695)$(1.52)$(697,474)$(1.41)
Adjustments to reconcile to adjusted net income (loss) (non-GAAP measure)
Noncash fair value losses on commodity derivatives(2)
109,321 2.01 85,759 0.17 
Write-down of oil and natural gas properties(3)
— — 662,440 1.34 
Severance-related expense included in general and administrative expenses(6)
— — 2,361 0.00 
Expense associated with restructuring(7)
— — 7,875 0.02 
Noncash fair value adjustment - contingent consideration(8)
1,640 0.03 — — 
Other(9)
— — 1,206 0.00 
Adjustments to reconcile effect of dilutive securities(10)
— 0.09 — — 
Estimated income taxes on above adjustments to net loss and other discrete tax items(11)
— — (94,529)(0.19)
Adjusted net income (loss) (non-GAAP measure)$33,266 $0.61 $(32,362)$(0.07)
Six Months EndedSix Months Ended
June 30, 2021June 30, 2020
SuccessorPredecessor
In thousands, except per-share dataAmountPer Diluted ShareAmountPer Diluted Share
Net loss (GAAP measure)(1)
$(147,337)$(2.91)$(623,458)$(1.26)
Adjustments to reconcile to adjusted net income (loss) (non-GAAP measure)
Noncash fair value losses (gains) on commodity derivatives(2)
186,611 3.54 (36,374)(0.07)
Write-down of oil and natural gas properties(3)
14,377 0.27 734,981 1.49 
Accelerated depreciation charge(4)
— — 37,368 0.08 
Gain on debt extinguishment(5)
— — (18,994)(0.04)
Severance-related expense included in general and administrative expenses(6)
— — 2,361 0.00 
Expense associated with restructuring(7)
— — 7,875 0.02 
Noncash fair value adjustment - contingent consideration(8)
1,640 0.03 — — 
Other(9)
325 0.01 2,610 0.01 
Adjustments to reconcile effect of dilutive securities(10)
— 0.11 — — 
Estimated income taxes on above adjustments to net loss and other discrete tax items(11)
— — (111,311)(0.24)
Adjusted net income (loss) (non-GAAP measure)$55,616 $1.05 $(4,942)$(0.01)

(1)Diluted net income (loss) per common share includes the impact of potentially dilutive securities including nonvested restricted stock units and warrants during the Successor period and includes nonvested restricted stock, nonvested performance-based equity awards, and shares into which the Predecessor’s previous convertible senior notes were convertible.
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(2)The net change between periods of the fair market values of open commodity derivative positions, excluding the impact of settlements on commodity derivatives during the period.
(3)Full cost pool ceiling test write-downs related to the Company’s oil and natural gas properties.
(4)Accelerated depreciation related to impaired unevaluated properties that were transferred to the full cost pool.
(5)Gain on debt extinguishment related to the Company’s 2020 open market repurchases.
(6)Severance-related expense associated with the Company’s May-2020 involuntary workforce reduction.
(7)Expenses related to advisor and professional fees associated with review of strategic alternatives and comprehensive restructuring of the Company’s indebtedness.
(8)Expense related to the change in fair value of the contingent consideration payments related to our March 2021 Wind River Basin CO2 EOR field acquisition.
(9)Other adjustments include $0.5 million of costs associated with the helium supply contract ruling and $0.7 million of costs associated with the Delta-Tinsley CO2 pipeline incident during the three months ended June 30, 2020. The six months ended June 30, 2021 were impacted by a $0.3 million write-off of trade receivables during the three months ended March 31, 2021, and the six months ended June 30, 2020 were further impacted by $0.5 million of costs associated with the helium supply contract ruling and $0.9 million of costs associated with the Delta-Tinsley CO2 pipeline incident during the three months ended March 31, 2020.
(10)Represents the impact to the per-share calculation using weighted average dilutive shares of 54.3 million and 52.7 million during the three and six months ended June 30, 2021, respectively, as a result of the adjustments to the Company’s net loss (GAAP measure) to derive adjusted net income (non-GAAP measure).
(11)The estimated income tax impacts on adjustments to net income for the three months ended June 30, 2020 are computed based upon the actual effective tax rate for the six months ended June 30, 2020, with other discrete tax adjustments totaling $84 million during the three months ended June 30, 2020 primarily comprised of the tax effect of the ceiling test and accelerated depreciation, impacts of the CARES Act, and the periodic tax impacts of a shortfall (benefit) on the stock-based compensation deduction.
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DENBURY INC.
SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES (UNAUDITED)

Reconciliation of net loss (GAAP measure) to Adjusted EBITDAX (non-GAAP measure)

Adjusted EBITDAX is a non-GAAP measure which management uses and is calculated based upon (but not identical to) a financial covenant related to “Consolidated EBITDAX” in the Company’s senior secured bank credit facility, which excludes certain items that are included in net loss, the most directly comparable GAAP financial measure. Items excluded include interest, income taxes, depletion, depreciation, and amortization, and items that the Company believes affect the comparability of operating results such as items whose timing and/or amount cannot be reasonably estimated or are nonrecurring. Management believes Adjusted EBITDAX may be helpful to investors in order to assess the Company’s operating performance as compared to that of other companies in the industry, without regard to financing methods, capital structure or historical costs basis. It is also commonly used by third parties to assess leverage and the Company’s ability to incur and service debt and fund capital expenditures. Adjusted EBITDAX should not be considered in isolation, as a substitute for, or more meaningful than, net loss, cash flow from operations, or any other measure reported in accordance with GAAP. The Company’s Adjusted EBITDAX may not be comparable to similarly titled measures of another company because all companies may not calculate Adjusted EBITDAX, EBITDAX or EBITDA in the same manner.  The following table presents a reconciliation of the Company’s net loss to Adjusted EBITDAX.
In thousandsQuarter EndedQuarter EndedSix Months EndedSix Months Ended
June 30, 2021June 30, 2020June 30, 2021June 30, 2020
SuccessorPredecessorSuccessorPredecessor
Net loss (GAAP measure)$(77,695)$(697,474)$(147,337)$(623,458)
Adjustments to reconcile to Adjusted EBITDAX
Interest expense1,252 20,617 2,788 40,563 
Income tax expense (benefit)(296)(101,706)(538)(112,322)
Depletion, depreciation, and amortization36,381 55,414 75,831 152,276 
Noncash fair value losses (gains) on commodity derivatives109,321 85,759 186,611 (36,374)
Stock-based compensation2,552 1,087 20,232 3,540 
Gain on debt extinguishment— — — (18,994)
Write-down of oil and natural gas properties— 662,440 14,377 734,981 
Severance-related expense476 2,361 476 2,361 
Noncash, non-recurring and other462 10,231 1,929 12,595 
Adjusted EBITDAX (non-GAAP measure)(1)
$72,453 $38,729 $154,369 $155,168 

(1)Excludes pro forma adjustments related to qualified acquisitions or dispositions under the Company’s senior secured bank credit facility.
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DENBURY INC.
SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES (UNAUDITED)

Reconciliation of cash flows from operations (GAAP measure) to adjusted cash flows from operations (non-GAAP measure) and free cash flow (non-GAAP measure)

Adjusted cash flows from operations is a non-GAAP measure that represents cash flows provided by operations before changes in assets and liabilities, as summarized from the Company’s Unaudited Condensed Consolidated Statements of Cash Flows. Adjusted cash flows from operations measures the cash flows earned or incurred from operating activities without regard to the collection or payment of associated receivables or payables. Free cash flow is a non-GAAP measure that represents adjusted cash flows from operations less interest treated as debt reduction, development capital expenditures and capitalized interest, but before acquisitions. Management believes that it is important to consider these additional measures, along with cash flows from operations, as it believes the non-GAAP measures can often be a better way to discuss changes in operating trends in its business caused by changes in sales volumes, prices, operating costs and related factors, without regard to whether the earned or incurred item was collected or paid during that period. Adjusted cash flows from operations and free cash flow are not measures of financial performance under GAAP and should not be considered as alternatives to cash flows from operations, investing, or financing activities, nor as a liquidity measure or indicator of cash flows.
In thousandsQuarter EndedQuarter EndedSix Months EndedSix Months Ended
June 30, 2021June 30, 2020June 30, 2021June 30, 2020
SuccessorPredecessorSuccessorPredecessor
Cash flows from operations (GAAP measure)$90,882 $10,969 $143,538 $72,811 
Net change in assets and liabilities relating to operations(19,657)(2,021)8,203 40,926 
Adjusted cash flows from operations (non-GAAP measure)71,225 8,948 151,741 113,737 
Interest on notes treated as debt reduction— (20,912)— (42,266)
Development capital expenditures(54,102)(21,259)(74,181)(60,044)
Capitalized interest(1,168)(8,729)(2,251)(18,181)
Free cash flow (deficit) (non-GAAP measure)$15,955 $(41,952)$75,309 $(6,754)

CAPITAL EXPENDITURE SUMMARY (UNAUDITED)(1)
Quarter EndedSix Months Ended
June 30,June 30,
In thousands2021202020212020
Capital expenditure summary  
Cedar Creek Anticline tertiary development$10,224 $797 $10,260 $2,151 
Other tertiary oil fields16,694 4,397 20,774 17,769 
Non-tertiary fields11,181 2,294 19,523 13,248 
Capitalized internal costs(2)
7,185 9,463 14,785 18,344 
Oil and natural gas capital expenditures45,284 16,951 65,342 51,512 
Cedar Creek Anticline CO2 pipeline
8,818 4,199 8,839 8,374 
Other CO2 pipelines, sources and other
— 109 — 158 
Development capital expenditures54,102 21,259 74,181 60,044 
Acquisitions of oil and natural gas properties(3)
146 38 10,811 80 
Capital expenditures, before capitalized interest54,248 21,297 84,992 60,124 
Capitalized interest1,168 8,729 2,251 18,181 
Capital expenditures, total$55,416 $30,026 $87,243 $78,305 

(1)Capital expenditure amounts include accrued capital.
(2)Includes capitalized internal acquisition, exploration and development costs and pre-production tertiary startup costs.
(3)Primarily consists of working interest positions in the Wind River Basin enhanced oil recovery fields acquired on March 3, 2021.
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Attachment: XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE DOCUMENT