Analyst: Denbury Resources Inc. Share Price Could Decline To $8

Denbury Resources Inc.

extended its losses Monday on news that two top executives got the axe and the company will cut capital spending plans in half for 2015. http://www.denbury.com/investor-relations/press-releases/press-release-details/2014/Denbury-Exercises-Capital-Restraint-in-2015-Planning-Amid-Declining-Oil-Prices-and-Announces-Management-Changes/default.aspx The Plano, Tex.-based oil and gas developer traded recently down nearly 10 percent at $10.11 a share. The company is off nearly 40 percent in the year to date. The departure Friday of its both its chief operating officer K. Craig McPherson and its head of production Charlie Gibson "signals that a quick turnaround from recent sputters in operating performance is unlikely," according to Credit Suisse's Arum Jayarum. Jayarum downgraded Denbury to Neutral, from Outperform. McPherson had been viewed as a potential successor to Chief Executive Phil Rykhoek, and is the second COO to resign from Denbury in 37 months, according to Sterne Agee's Tim Rezvan. Both McPherson and Gibson contributed to disappointing 2014 production growth, according to Rezvan, who said design flaws at a recent key project may have sealed the executives' fate. Rezvan joined in downgrading Denbury to Neutral and called the company "not a compelling investment" given the cut to its dividend outlook Friday and what he called "execution issues." Denbury's share price could go as low as $8 a share before its expected annual dividend of $0.40 cents a share would offer support, Rezvan said. The company had previously forecast an annual dividend of $0.50 cents to $0.60 cents a share, but said lower oil prices required the lower amount. Jason A. Wangler maintained a Buy rating on Denbury pending the company's meeting with analysts Tuesday. But said the company's lack of share buyback plan will "likely cause concern in the market," Wangler said.