Open Book Test: Denbury Wins Big With Biden's "Green" Agenda -- January 29, 2023

Link here.

Like Intel, it doesn't matter whether you excel at what you do; it matters how you play the game -- the political game.  

Denbury really didn't have to pivot. It was already "doing CO2." 

But then Greta showed up. LOL

"Doing CO2" was the right business to be in and Denbury was "in CO2." LOL.

Middling oil producer Denbury Inc. emerged from bankruptcy in September 2020 with a collection of aging wells, pipelines to move around carbon dioxide and uncertain prospects.

Today, the Dallas-based company is one of the big winners of the Biden administration’s signature climate bill.

Denbury took on significant amounts of debt over the past decade acquiring oil properties and building out the pipelines, which ferry CO2 to depleted oil fields and coax out more crude. By 2019, debt equivalent to around 11 times its earnings was weighing on the producer’s finances, before Covid-19 lockdowns and falling oil prices pushed it into bankruptcy.

The company has since expanded into waste management, with plans to carry emitters’ CO2 through hundreds of miles of pipelines and bury it in rocky reservoirs—for a fee.

Its stock is trading around $88—more than four times its price when Denbury relisted in late 2020. And analysts say that the company’s foothold in the carbon business makes it an attractive acquisition target for large oil companies.

“I would certainly say it’s moved faster than I expected,” Denbury Chief Executive Chris Kendall said of the company’s recovery.

Behind Denbury’s renaissance: billions of dollars of public money juicing carbon capture. Tax credits in the Inflation Reduction Act, which President Biden signed into law last year, reward companies that store CO2 underground. Denbury won’t receive public funding directly in most cases—it will go to customers who capture the carbon—but the company will charge customers for handling their emissions.

My day, if he were still around, would find this humorous, to say the least. 

Another example of the importance of investors to pay attention to President Biden and his "green agenda."

As for me, I'm loving it. 

DEN: a P/E of nine; pays no dividend.

By the way, another great example of the strength -- if that's the right word -- the American system -- the opportunity of companies to reorganize with protection from creditors granted by the courts in an expeditious matter. 

On every level, I find this a wonderful -- if that's the right word -- story. Good for Denbury, its CEO, its board or directors, its roughnecks, and its shareholders. 

By the way, same with Intel -- getting a huge "bailout" from the Biden administration. 

For the record: I don't invest directly in either Intel or Denbury. 

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