Denbury Resources will cut capital spending by 50 percent in 2015 while keeping dividend rates steady as the company reacts to lower crude oil prices.
The Plano-based company has taken "prudent and proactive measures," such as hedging oil prices, that will help the company weather the storm, CEO Phil Rykhoek said in an earnings statement.
"The significant decrease in global oil prices during the second half of 2014 and early 2015 have impacted the entire industry," Rykhoek said. "The magnitude of this price drop in such a short period of time obviously presents many challenges in planning for both our near-term and long-term development projects."
Net income for the fourth quarter was $93 million, down from $100 million in the same period in 2013.
Despite the challenges, Denbury highlighted several positives that occurred in 2014. The company uses enhanced oil recovery (EOR), which involves injecting carbon dioxide to pressurize mature oil fields. Denbury's EOR production increased 7 percent to 41,079 barrels per day, a new record.
Total oil production averaged 74,875 barrels of oil equivalent per day, up 5 percent from the same period in 2013.
The cost per barrel has been reduced significantly, down to $22.64 per barrel of oil equivalent, 14 percent lower than a year ago. That's important because the cost to produce oil using EOR, as Denbury does, costs more, possibly as much as $20 to $30 a barrel just for the carbon dioxide alone.
Denbury created an innovation team that's tasked with reviewing the company's assets from the bottom up to find new efficiencies.
"During these times of lower prices, we must continue to innovate and find new ways to make our business more efficient for the long term," Rykhoek said. "Our findings to date give us confidence that there are ways to do more with less."
Denbury cut two senior vice presidents loose in November and announced that it wasn't satisfied with its drilling results.