Denbury (DNRWW) 5 May 222022 Q1 Earnings call transcript

Good day, ladies and gentlemen. And welcome to the Denbury's First Quarter 2022 Results Conference Call. My name is Juan, and I will be coordinating your call today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session [Operator Instructions]. to call, conference Investor Brad like host to Relations. now today's for Whitmarsh, would turn over the your I Head of Please proceed, sir.

transport significant I but our to this to strong morning CCUS today's an that and what is I include to and joining the very numerous supporting new best well chance share authorized today's everyone are excited you are and that also on as at review hope available discussed statements first There denbury.com. that our today. certainly factors storage on agreement, to results remind releases differ as could morning, and materially repurchase program. only a site information. actual call. you've most quarter announce news are Good our a not forward-looking call from materials results, want had based on Web that reasonable thank everyone us will cause for We're

full the SVP are to in from earnings that, Business and release Sheppard, as Nik of certain statements Chris. President recent SEC provided You in release. today's Q&A. and in and we to course Development most all Operations; our read Kendall, Chris of come with CEO; during over and Dahan, presentation, turn here participate are prepared morning, that and relative the and measures Reconciliation Allen, Matt reference our slides will today's well. of Carbon on today's business those note David I'll of associated With Factors our may Also, filings This Wood, comments SVP news our Mark can non-GAAP the Risk call measures. accompanying CFO; the disclosures please Technology the brief disclosure Solutions; call, forward-looking to today's SVP

have Russia's would year in Good oil an the been and combined natural call. demand and taken dynamic. to everyone joining energy the energy to with Further, chains this what start on backdrop, of increased gas turbulence you to to demand. continue has are and in proud say created challenged understatement start I'm for markets be Considering inflation, accomplished thank Thanks levels activities It with us to be have not experienced Brad. especially morning, high prices that that our growth teams adding many today's levels to and rising supply and already years. services costs XXXX. have of

or objectives have are We safely our with and progress to record near we at continued all making great importantly, our operate on of levels. either metrics most key

all and daily for maturity that bank with covenants. and updates restrictive from $XX operating million, and before free line credit with track and amendment exited facility all keeping to in quarter as on flow four are various million totaled chain volumes, in program highlights this of topics; working cash our repurchase progress financial business. the robust solutions primary operating as the delivered well increased well results, capital carbon While momentum concluded our impacts expectations morning; with as base careful relaxing only far in by our our our debt. projects. as announced we first mitigated while thus on guidance, by significant prices. morning, XX% $XX oil in we extending annual were borrowing development $XXX the Denbury’s $XXX our key we Also, $XXX Denbury the to and to Operating in million, I'll to on flow guidance; an the first experiencing of results we quarter facility's breakdowns high capital team, developments, our share our in focus increasing any This our us cash firmly costs, leverage planning continued quarter, million to the million changes quarter, business, enhanced sales the differentials resulting supply diligence, effects lives, and our have on

we sales capital expenses. maintaining across guidance volumes, forward, full ranges year and are Looking our

increased we our taxes anticipate current price expense pressures, to a our commodity those higher for the upper rate reflects for some which prices tax have will we tax in and half outlook items XXXX. oil toward recent with anticipated and cost end upper some Also, cash environment, However, ranges. inflationary of income the outlook of trend that the updated

we the quarter and quarter. occurred second maintenance late quarter second Production the fourth year. that capital quarter lower volumes first that early the year volumes results than anticipate storms in higher of highest will the being be winter from initial downtime to production, unplanned Regarding see due for we slightly ramp as XXXX in program the with the should second of half our recent

higher, repurchase have strengthen, for around As provide oil while significantly higher exposure positions providing hedge with our an share cash our authorized program. XXXX, that oil enhanced added to $XXX prices. prices board or a flow floor protection continued to also With we've collars million outlook, to $XX primarily recently

CCUS sufficient shareholders in view we on in while capital and anticipate growth fund business, and first, expanding second, cash return are; our when do to strong production capital As our sustaining to investments; past, a future. to toward priorities the Based our the level; maintaining our we've free CCUS at moderate business to our allocation emphasized our to fund third, balance date a sheet, success capital expected meaningful to to so. generating needs

Highlighting operational at to fund repurchase ability the needs, However, our accomplishments. those commodity all program. as meet share recent to have expect we well of of current to some prices, the as

of to space. the should cash opportunities be X a for of development CCUS some day progress injection million strong of of management, as industrial on sourced of potential pipeline, of all EOR an skill EOR Xst, $XXX business The fund focus extraordinary highest continues investments only that industrial forward our execution fundamental on our exact be same on sourced current our we of or annual margin developed XX have injection on wells, Based it XXXX. industrial and capture customers have twice are rate allow remains project per and vision. Phase This tons cubic X in negative our the Wells for projects. have of development new scale Financially, XXX our COX to half barrels commenced side Technically, asset transportation in The the of and second total today, is sets to undertaken recoverable energy available transition EOR COX the of over at more subsurface largest a blue highly over EOR in extremely well. than with needed today, COX, And for on offtake plus million our COX with to total our carbon CCA production. years basis. EOR CCUS sets sequestration. production operations drives is million Our XX use fee will is and the the in US us CCUS February over investment the organically flows project plan form tertiary reserves. and we exclusive still oil move the first of certainty with operationally, skill produced that proved reliable barrels, we providing

As CCUS call, be in XXXX our outlook I this will year transformational mentioned business. for Denbury

and an planned tons we in This as the capacity industry-leading great both Multiple new for of through industrial partners of agreements year well close transportation make year. to emissions. a to to the cumulative are of tons we XX year chemicals per transportation storage on, to in this today, proximity day. intended in and existing execution now storage constructed COX continues what With sequestration morning, a new on-track team year. out COX I agreements, X our our tons is million captured and based virtually solutions million their are working progress, continuing substantially for us we see metric building as are per And Coast, have COX announced Gulf exceed four sheet agreement, incremental of new opportunities pipeline space with of reaching believe for annual the carbon agreements services. facility, Our per agreement target new transportation we to COX an every advance in on to X This our infrastructure. are this of getting another representing significant coming what storage to terms be term million and I reached

and completed these and more While CCUS a growing the and customers reached transportation of been I'm looking have in implant COX we the the business suite Each full a ranging includes only, of the capture providing package customers. industrial from our needs tailored industrial weeks have as more unique to being full evident. you to agreements as options, even and to-date of storage months scale updating for transportation process agreements are offering to service becomes forward storage, transportation these of and that are of coming is well. Danbury's solutions the we

Our infrastructure. our regions pipeline various contracted development Denbury's support engaging of the process. network provide The is Coast buildout of and sequestration located to our sequestration and sites, is plan efficient team CCUS the focused a across VI of for highly-reliable Class key highly system in at on with EPA points Gulf is sites our permitting

we this that planning multiple effort, to test stratographic As part are year. later wells of drill

more agreements we are will in coming expect build site continuing to that out storage the further, addition, we capacity months. In and several I complete sequestration

Denbury. have momentum We at great

for plan go to strong generating is year. our EOR flow the XXXX cash that which of are beginning of production is becoming volume progress, important incredible in XXXX, our business resource as late CCUS future and details business we growth will further an the our Concurrently, we through foundation production with into drive the Our project layout CCA developing and decades. making we

we you about I report focus close, the on report to wanted learn read intend to Denbury's I near that to our more issue responsibility I future. in encourage sustainability. As corporate to through note XXXX the

and way. future redefine what but teams energy As time am has to us, I the extremely the we'll incredible now not of today energizing in Denbury a needs, our turn opportunity are while world reducing the and our for outset, I doing. to questions. mentioned your over provide company in for just call an proud of also the emissions of carbon our your front at meaningful Thanks

the line [Operator Leggate the Bank from comes first question Doug of America. Instructions]. from of And

comment, but door is understand. XX Green X a it And questions, is to there opens indicates question the I'm times because a This think Number that My are to trying in footnote and Pipeline. just just apologize this tiered, Slide is concerns considering expansion several this you and first X I to there on and the Clay. I

FIDs, take two, the underwrite lead expansion? COX to four So gotten the And read critical permits the of granted? in offtake construction, kind would time number already you of are considering you have already Number just the the the ways one, place? are of -- Six Class mass

And it's time. Pipeline, the based we have of at for that been that the something And that demand volume just of coming. honestly primarily so on we what incredible is looking expansion Green and see some that's planning

time. can from goals that so the at you that as And not our to we today, the about line is we enormous. agreements yet But capacity. have is potential about of right at come, have Ultimately, the enhance it's loops lot we as capacity towards that. is as the per expansion to your can just we look tons now, do certainly here over can we're primarily, an existing being look contracted now. to the the locations progress various stations And what we way as negotiating, an we see right at line right and quarter only of just in place adding we start with which at with line million itself a pump the expect XX for of can do what of we used expansion question, take within and awful capacity Remember

have ways to that expansion. us and take have. coming what and will projects capacity go are does of that capacity execute we we that the ultimately is that So the to a that in it line require with room gives the we all we that with think have plan quite And expansion

to versus options. storage you seems closer to various development New tier be see way Just ultimately, of get where will of it? first, the this like see you do the Orleans kind that then of a the it about And do looking are the that developed pipeline pipeline Is agreements you by storage later. the at those context, spending, in concluding Alabama does set the and if how distance sites could the have and It when be begin, cadence right XXXX, XXXX? it when think that

think quite don't really it -- don't I And Clay. of as I tiered development,

steadily the think you'd if look for an the mean, Nik's one see of of to that site specific team region is every it is is that every now, kind a into that best that region have on are you sites the emissions that idea in have. were they're that for I to single right captured. occur suited And of we of going I that as process all the above. permitting churning are

comes. coming being now or is projects the towards have time, together. mentioned these view sites all we just years. our sites aware time the in that certainly, sites over just right can over to that be are like going to work of so we when more And ago, I plans either that with But expect of are a matching this as And those that we minute we're adding go building available executed are we

asked that quite we ramp we want cadence certainly, up, about the of question next would bit year. of as You do to capital. And the this think work I a

system, the That's So about, And Clay, beauty in not the that efficiency one the that increase for do site that the that the and want locations as way as as connect is have that's to build to just the the can we bring about thinking of pipeline of any system redundancy sure make to along well emitters. sites ideal particular back we that to capital but the sites way, along going only emissions emitter, the I we it. of expect to to laterals we're with the XXXX thing meaningfully out, in we that we this various one think system have system. across part we these

to understand of value that's just The in the front opportunity follow-up trying creation question you.

And to significant, incremental ultimately you And you're the is about think project? contracts As noted you skill, I'll continue operator it leave project ultimately, value how are of adding? as develop, do the this the the right this that there. of you you

have you know, XX at look mean, recovery XX, carbon just for honestly primarily on dioxide. back focused been when we Denbury now, I I does, oil what enhanced using years

have XX a you company, you'd professionals to if Clay, years. the inside look who handled and of operational for things were technical suite So plus all see COX

a EOR. further so aspect, about And in I have the from transporting injecting place. take imagine Then to and I we that that anybody outside and better be can't qualified think I even it of COX step just infrastructure

as COX network pipeline split the Rockies the We as between region States, in in that have region. operated the Coast longest United Gulf well you mentioned our earlier,

day, start think And to emissions head access great underground as infrastructure the sites place into that to really a emissions a emitters end as us economic industrial for that well put creates So well. solution and them to the the of storage close sites, allows allows that us at sets their on to be bring really capture, I system in most the permanently. backbone

Meade Charles Johnson the from of Rice. Our come line next from question

buyback. I want to ask about the

$XXX have that good doesn't when going authorization, great at so arrow that But from it mean committing doing it option, the an a have different quiver. look option okay, it's And to to I is you're and think to it. million but -- to so, it's I having necessarily

seems deep tertiary already opportunity in been like versus frankly So your on cash, the side call attractiveness point of is, really to you, not management and thinking what free even about buying and on a this front you, the set spending but you've CCUS how making shares ask I want the relative of -- on really are just the side. rich back the board, the to

allocation are you are board guidelines, thinking the So the that and decision? so about how what how --

this all on thoughts to and we're of couple ask all where luxury And then business, do this to what well. want look and cash a everything price today then compared as are mark we share share the honestly where to right of have executing have that see just we that today like CCUS company top doesn't But business, the those. to some on our single the CCUS it's us it of you, flow we and just and EOR within to as with when opportunities honestly, like I'll of the day, this on gains of his do we being value in ahead see on with of place. within on are potential every just able share I'll particularly, focused look that, at at buyback. making prices the is that look of we abundance We the

other to the question so might And are your I there. to weigh of my those some just that thoughts. Mark elements -- on in ask all

obviously Charles, the this weakness. price as performance the not the year. think the We are Chris through share first we of is much part much, potential pleased greater. with We said, here recognize

generation. about we approach as be so obviously, be free will with we cash aligns aspects as it We execute thoughtful and will that's into so legal cash think aspects consideration it. and to generation a think that something today. are see, our the flow And And the look But all share about we this price and at we to want we we we that systematic thinking need free of consider it. about a flow about to how this. want will factor all a But take

on question And CCUS. then a the follow-up

there per more are to you going there. mean signed see So to is be same thinking that or of chance you and table guys, looking have bit you of at lines new new get Louisiana our ways up and to speculations a extent build you at XX a you are we Should of on kind guess you, the deals could this the something X I'm that, guide and far, South we I I the sorts with you want project, what is multiple tons along said have million annum to you you be guys for. brought have different? the so that to

we point emissions of accurate. see to continued to a that to So same on is continue continue of gain pathway more we have previously have the on we that out we services, provided type suite and progress to the

and servicing adding partners, of new which services one of capture additional our suite to We different emitters services. see to of is different continue ways industrial

past. a seen new And so you in that's relative what have to may approach the

that add provide. And to so we could the services would I

The way just is we and industrial to what and one make meets different may of customers preferences, I needs what has in think trying that. our others. be certain about and Charles it whole kit the may cases or can And just transportation is are that every provide sure just it do we be

Our from question the Richard Tullis comes Securities. from One Capital next line of

maybe the previously to with I with of you or -- Continuing at same you that expand of correctly discussion and Den suite the COX capture related services. the would to Bury potentially Charles, provide expanding Am looking at just the the equipment part hearing facility?

if And XXQ industry like. incentivized of looks spectrum Richard. think what that is whole that pre-combustion. under the about a today right, A you is of it, is That's there lot

experience in and And well. limited And many the of cases, year about dehydration. million dehydration much of great as XX just pretty depth handling so really in COX are compressing a compression in think compression, capture we is our all and EOR that tons a that, of of operations, you I COX have to course, talking

more to And plants the as make you So that's of solution they've of core are that a care see would the to we preferred And themselves, an just sense. further that then makes looking business case-by-case all that it's cases been integrated industrial become those But for allow is go can start decisions you customer on to you focus that and them in operating. the step. it on where continue just taken basis. easy and be the

of in for, and Denbury provide team scale? the it. you be comfortable details about on of on And the lower portfolio, with looking that be is volumes Chris, end thinking sort of could any part if investment how thinking this or the range service particular the What emitters, of these would you're of more would volumes level what from about you is this

It could at. range be we're that volumes of looking a

other I'd I primarily initial I'd And go we upstream, so work Richard. about a we But I one on upstream would investment. at question of if very do, level beyond dehydration, don't it's then that fashion really say. think or that some with end entities the in than What deal more likely of we as say compression the is, as your look day-to-day in it's far think for further as partnerships what example, other, and

there. end of it while our look good customer. is the industrial a on on at the also day, for case approach depends solution for driving that the really here what capital So we'd return we're sure in But our providing making any best investors,

discussions And me, hearing maybe just possibly convert we've or you, a some to for from maybe Pipeline to pipelines Chris. Nik, from last conversions, been plans participants’ transporters. for gas question COX industry natural

wanted effectiveness take cost transportation the on COX to there, the sort really Just there? if that your and of involved project, get get I pipelines for thoughts could to the converting expected your of to complete timelines

in about COX it moving a and nature of in talked the the pressure past, operating of phase. the just dense We bit

that with it's to or X,XXX typically which we've natural For maximum X,XXX XXX gas a transport anti seen phase. conversions which is PSI. service, that's And around pressure been in the an X,XXX us, above have PSI, has typically dense harder service

that is efficient, scale So at COX pressure distances. economical most move we higher the over believe the to way

can we've conversions of in converted. And minor that be done. think network some had our I even fact, portions

with how It it we've pressure just by inject the other for really basis underground -- is of and And about. we've end for a something can sure compression you a us. that prefer so system to of had on works presents in bit be better us some talked Richard, going at the view operational strongly that. can needing limitations you least, some at just our and it case network it's to it even presents It's within get that works, some, it that costs case we our a own

Stifel. next comes from Michael The line Instructions] of from Scialla the [Operator question

on a had I question VI Slide permitting Class process the on XX.

on given areas. your four your estimates for project You've injection first

do Just Louisiana want timeline, in receiving primacy any maybe you to VI those projects for that the to process? Class when over expect submit gauge your update and permit on level applications of confidence and

we're I the continuous is when our includes interaction sites our process think the have permitting the sequestration process So information permitting VI at, a that permitting been with where has about That tool, to done all and of and for Class downloading EPA. timeline we geologic continuous data which the already.

We continued to progress sites. the interaction through on studies what I'll simulation, our containment modeling, factors. working of geologic call different includes and the the different seals desktop That

As where is the we construction. start process, VI month point a XX for construction injection permit still process. we drill construction the XX get this will are we get a a to point, Class VI At EPA from Class and at I will permitting well a to that believe we process.

We XX now. timeline are in or that right XX month

‘XX. look in mid And hopefully first getting to that we injection so forward

to Dakota have that's had question your following we Wyoming we on on I Louisiana than it be is North a What taken should longer one. primacy will tell you next. primacy, the Just and granting heard EPAs expected. that

expected. moving EPA I closed be say We to continue little to -- least and said, we're right Louisiana that wouldn't it's time it seems but do than primacy work have bit over at But going it that. granted that be other we moving slower to with should now, I states. a what think great confidence we'll see along to that Nick in just

in timeline control? there Louisiana, built it assumes that did Louisiana fair there get is granted would that to EPA is be there assuming it the say it if to and upside just more controls you've that the privacy or Is

VI built at you latter. everything Class and primacy the that based VI is process. on expect are Mike, folks process. I some the around more now the you do see plan EPA of there. that working and once least the have it's would have the through we acceleration state, EPA out you think the And still to But Class right We local

example, now. Denbury Infrastructure your something of the under legislative XXQ grants possibility get Jobs environment know could Investment plans and doing your your Any beyond to particular to peers on wanted you Anything And of benefit? the receive for use thoughts I that to similar. Act. in one

We the that. have few elements seen of bill a infrastructure do some that of

that And grants been are doing. we what have for certain aspects some of working to of with talking the folks DOE are the toward they

And the numbers along. not so, do that see game Generally, they they are but help, are of I some -- changers. coming

the us it just think interesting credit ultimately, will that that it's credits, we a I is, to It's it's is it tax that is For business. think great much that tax great we the overtime. better. XXQ just when legislation where that the credit think does, We just just see already inevitable the tax becomes today increase. business needs increase And

here. have I forces environment, how works to political push it current that is just will the considering there out know Just some at to work we see that forward,

projects just for at for that had deal Lookout EOR Slide done and is CCA? for or something you Cedar at that unique maybe East one all not X, your me. all. and it's Hills listed to But a I Cedar have last you Creek South Is certification noticed Butte one on And that big something Anticline. ISO

ISO bulk the Cedar to actually should Coast. going portfolio, it. in Hills just through any and two. that's or year, emissions certification in have them next of is on get completed in the Hastings We working new ahead we require Gulf in Bayou of get done certainly the that the continue process, Oyster a coming well back within should And here month

questions no the have on currently We line. you. Thank further

over any to I Whitmarsh So final for hand remarks. Brad

coming many in-person. hope for you Thanks the Mother's several again got up, of And and Thank to next joining Day you talking you all look see out moms days. us the over conferences all to to today. Beth and forward several we have there. so I we happy with

much This joining. concludes Thank today for so call. you conference

now disconnect your You may lines.