Denbury Resources Suspends Dividend

Driller Denbury Resources said Monday that it would suspend its cash dividend effective in the fourth quarter, the latest company to do so as the industry grapples with the low price of oil.

While oil commodity hedges and reductions in capital spending "have buffered us to a large degree from this oil price downturn," Chief Executive Phil Rykhoek said the benefit from those hedges will begin to diminish in the fourth quarter.

Denbury said it will pay its previously-announced third-quarter dividend on Sept. 29.

Suspending the dividend will free up about $22 million of cash each quarter, the company said. The newly available cash will be directed toward debt reduction, increases in capital spending or repurchases of shares.

The company said Monday that its board approved a reinstatement of the company's share-buyback program, which had been suspended in November 2014. Under the program, about $222 million is authorized for repurchases with no expiration date and no requirement that any buybacks are completed.

"We expect to reinstate a dividend in the future, but the timeline for doing so is uncertain and will likely be highly dependent on oil prices," said Mr. Rykhoek.

In suspending its dividend, Denbury joins a host of energy companies making a similar move. Linn Energy LLC, Baytex Energy Corp. and Penn West Petroleum Ltd. are among others to have recently suspend dividend payments.

Shares in Denbury have dropped 81% over the past 12 months.

Write to Lisa Beilfuss at [e-mail]

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(END) Dow Jones Newswires

September 21, 2015 08:05 ET (12:05 GMT)

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