Denbury Stock Forecast: “Clean” Oil Driller Is a Real Future Growth Opportunity

Viktoria VoronchukThis Denbury Stock Forecast article was written by Viktoriya Voronchuk – Financial Analyst intern I Know First.


  • The oil and gas sector’s revenue growth decreased by 32.7% due to COVID-19
  • Since April 2020, the company’s share has risen by 41%
  • DEN stock forecast for the next year provides for $26 according to the average growth rate for the last 8 years.



Denbury Inc. operates as an independent oil and natural gas company in the United States. It holds interests in various oil and natural gas properties located in Mississippi, Texas, and Louisiana in the Gulf Coast region; and in Montana, North Dakota, and Wyoming in the Rocky Mountain region. As of December 31, 2019, the company had 230.2 million barrels of oil equivalent of estimated proved oil and natural gas reserves. Denbury Resources Inc. was incorporated in 2003 and is headquartered in Plano, Texas.

DEN Stock Forecast: Oil and Gas Industry Outlook After COVID-19

Of course, 2020 was a difficult year for the oil and gas industry. The circumstances caused a real storm of falling prices and demand. What does this mean for oil investors or potential investors? Is oil still a good investment in 2021?

Oil price collapse is weighing on both Russia-Saudi supply competition and COVID-19’s impact on demand, which we can see in the figure below. Futures contracts prices fell from $63.27 for a barrel (WTI) in early January 2020 to about $30 below zero for a barrel in April 2020. Travel restrictions and personnel quarantines due to tight containment measures due to the COVID-19 outbreak continue to restrict the use of jet fuel and slow industrial activity in 2021.

(Figure 1- Source:

Looking ahead, oil demand is expected to rebound significantly in 2021 but remains about 4% below pre-COVID-19 levels. The industry may even benefit from a small temporary jump in prices, as today’s large investment cut will lead to tomorrow’s spot deficit.

On the contrary, according to Mckinsey, price levels may not recover until 2024 and may not return to past levels. Moving beyond the current crisis and approaching the end of the 2030s, the macro environment will become even more complex. Discussions about climate and the environment, innovations that have reduced wind and solar energy costs, and decarbonization will remain a pressing issue for the industry. The oil and gas companies will have to prove that they can master this space. Discipline in finance, capital allocation, risk management, and corporate governance will be critical. Otherwise, the demand for the oil and gas industry will slow down.

From the figure below, uncertainty in the short-term opens a range of expected prices from the low $20 to high $40 for a barrel over the next 12-18 months. In the long-term, the forecast price will stabilize closer to $50 a barrel by 2022 given the growth in global demand.

(Figure 2- Source:

Altogether I can say that the oil and gas companies were weakened by low prices and volatility after the pandemic. Denbury should strive to implement green projects, actively participate in the energy transition, and switch to products that are more sustainable than fossil fuels. The company announced the environmental benefits of pumping carbon dioxide into the ground. For example, in 2018, the company emitted the equivalent of 690,000 cars of carbon dioxide into the ground. Denbury is trying to position itself as a “clean” driller. This could open up more opportunities in a world that still needs oil, but also contributes to reducing greenhouse gas emissions. However, the transformation of the industry will be slow, so I think that stocks in this sector should be held for now.

Denbury & Competitors: Revenue Growth Decreased By 32.7%

The industry has been hit hard by the drop in the global oil demand fueled by the COVID-19 pandemic, resulting in record low oil prices and rapid changes in the energy market. Therefore, in the figure below, we see that the oil and gas sector’s revenue growth last year decreased by 32.7%, while Denbury has a significant revenue decline of 483.6%.

(Figure 3 – Past 5 Years Annual Earnings Growth and Analyst Future Growth Forecasts of DEN and Competitors 2020: Source:

It is useful to remain vigilant with DEN’s competitors, Concho and Diamondback Energy. We should know the competitive landscape and potentially capitalize on industry trends that competitors have not even noticed. Sure, it’s interesting to know how well assets are put to work for investors in a company, what percentage of sales has turned into profits, how well the ability to generate profitability for its shareholders, investors, and owners. Let’s review it. 

As shown in Figure 4 below, ROE, ROA, Net Margins are quite low across all companies. Denbury has the lowest rates. ROE is less by an average of 54% than for its competitors, while ROA is less by 15 % on average. Of course, this can prick up investor’s ears.

(Figure 4 – Profitability of DEN and Competitors 2020, %: Source:

What about net income and gross profit? Net income will tell how much profit the company made after paying all of its expenses. Denbury has a lower revenue than its competitors do, by 360% on average, but higher net income than Concho, on average by 1000%. It can be concluded that the indicators are not the most promising for investing in Denbury.

(Figure 5 – Earnings of DEN and Competitors 2020, $ million: Source:

Altogether, I can conclude, that oil and gas companies are on the mend after a dreadful 2020. The global coronavirus pandemic has disrupted supply chains, sapped demand, and resulted in extreme volatility for oil and gas prices. The oil and gas sector’s revenue growth last year decreased by 32.7%. Denbury has quite low ROE, ROA, Net Margins, and earnings indicators. This is a significant consideration for investors because the amount of money the company has available to pay dividends, repurchase shares, reinvest in the business, or simply add to its cash is quite low. All things above allow me to stay in a hold position.

DEN Financial Overview: Since April 2020,  Shares Have Risen By 41%

Denbury Inc. completed its financial restructuring and began trading in common shares on the New York Stock Exchange in September 2020. Denbury restructured its balance sheet and liquidated $2.1 billion in bond liabilities. This process should help reduce debt, strengthen balance sheets and ensure a more secure future for Denbury. Since April 2020, the company’s share has risen by 41%.

(Figure 6 – Source: )

DEN’s short-term assets do not cover its short-term and long-term liabilities by $111.3 million and $108.2 million. An asset deficit is a sign of financial distress and indicates that the company may not meet its obligations to creditors and maybe on the verge of bankruptcy. The key point to watch out for is negative cash flows. Denbury’s 2019 annual negative net cash flow is $22 million, which could sign that managers are inefficiently using the company’s assets to generate income. Weak sales growth and their decline over a while may indicate insufficient demand for a company’s products or services.

(Figure 7– Source:

The Green Light To Exit Bankruptcy For Denbury: Cutting $2.1 Billion In Bond Debt

DEN recently announced an agreement to acquire 100% interest in two oil fields in Fremont County, Wyoming. The cash value of the transaction is estimated at $12 million.  Total revenues and other revenues in the third quarter of 2020 were $194 million, 64% higher than in the previous quarter and 39% less than in the third quarter of last year. The consistent quarterly increase was mainly due to higher realized oil prices, while the decline compared to the third quarter of the previous year was mainly due to lower oil prices and, to a lesser extent, lower oil production.

It can be concluded that the company has negative financial indicators, problems with liquidity. Denbury is handed over to creditors, and the debt on bonds is reduced by $2.1 billion. If a company can successfully go through the restructuring process and show sufficient flexibility, it can expand its operations and become a larger player among its competitors. However, this will take some time, and therefore I support holding up the company’s shares.

What is DEN Stock Forecast for 2021?

The figure below provides a picture of the DEN’s SWOT analysis. Denbury has strengths that help it succeed in the marketplace, mainly in its highly skilled workforce. Denbury invests enormous resources in the training and development of its employees. Denbury refunds up to 80% of tuition fees, registration fees, and required books. It has also successfully brought together many technology companies over the past few years to streamline their operations and build a robust supply chain. 

The company should beware of threats to the EV market and new competitors. Electric vehicles could cut oil demand by 6.4 million barrels per day by 2040, according to Bloomberg, and improved fuel efficiency would cut another 7.5 million barrels per day. This is why the new environmental policy is a great opportunity to implement new technologies and increase market share in a new product category.

(Figure 8 – SWOT analysis of Denbury) 

To predict the future value of the company’s shares, I calculated the average growth rate for the last 8 years. If the growth rate remains at the middle level, and the number of shares of the company does not change, then the company will have a decrease potential of about 1%. Consequently, the share price is expected to be around $26. There are practically no positive signals at the moment. Denbury stock contains sell signals from both short-term and long-term moving averages, giving a more negative outlook for the stock.

Key financial highlights of the company include: the company has reduced debt on bonds by $2.1 billion, resulting in annual interest savings of $165 million. A new $575 million secured bank credit facility was created, available as of September 30, 2020, following receipt of $85 million in loans and outstanding letters of credit. Revenue and other revenues of $194 million in Q3 2020. $25 million in sales proceeds received two lots of market square in Houston. In my opinion, DEN’s shares should be viewed as a candidate for retention or accumulation in this position pending further development. 


I consider at these current levels to hold stock and according to the average growth rate for the last 8 years, DEN’s stock target price should be $1 lower and will be around $26. The industry has been hit hard by the drop in global oil demand fueled by the COVID-19 pandemic, resulting in record low oil prices and rapid changes in the energy market.

It is worth paying attention that the stock-picking AI of I Know First has a high signal on the one-year market trend forecasts for the DEN stock forecast. The light green for the short-term forecasts is mildly bullish, while the darker green is a strong bullish signal for the one-year forecast. Nevertheless, I take the hold-side on DEN’s stock because stock holds several negative signals and this should be a sell candidate, but due to the general chance for a turnaround situation it should be considered as a hold candidate.

Past Success With DEN Stock Forecast

I Know First has been bullish on DEN stock forecast in the past. On December 15, 2020, the I Know First algorithm predicted a bullish forecast for DEN stock price. The forecast on 2-weeks time horizon provided investors with returns of 11.11%. See the chart below. (Please note the name of Denbury’s share has changed from DNR to DEN)

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Please note-for trading decisions use the most recent forecast.