Enhanced oil recovery specialist Denbury Resources (DNR)
can generate significant cash margins over extended periods of high oil
prices, but it doesn't seem to be suiting the needs and tastes of the
market right now. Some investors seem disappointed that the company
elected not to convert to an MLP structure, while others worry about the
company's relatively modest production growth outlook and its
sensitivity to lower oil prices.
I don't find Denbury strikingly
cheap, at least not in comparison to some other alternatives in the
market, but it offers a different risk/reward profile than many other
oil stocks. With management now more focused on returning capital to
shareholders and with less drillbit risk here (relative at least to
companies in the Bakken, Eagle Ford, or Niobrara regions), Denbury
strikes me as an option for playing a high oil price outlook with less
operational risk.
Continue reading here:
Can Denbury Resources Recover Market Enthusiasm?
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