DEN - Denbury started at Neutral at J.P. Morgan as promising CCUs business in 'early days'

2023-06-15 15:28:31 ET

Denbury ( NYSE: DEN ) +1% in Thursday's trading as J.P. Morgan initiates coverage with a Neutral rating and $96 price target, balancing an attractive long-term business mix and a strong balance sheet with growth that is dependent on "an unproven business that is several years from making a positive contribution."

JPM's John Royall said he expects about half of Denbury's ( DEN ) free cash flow will come from the carbon capture, utilization and storage business by 2030, which will provide a steady stream of cash flows under long-term contracts without significant commodity price exposure.

But Royall also believes the market may be hesitant to ascribe significant value to CCUS until the cash flows are demonstrated, while the regulatory upside catalyst may be mostly played out following the passage of the Inflation Reduction Act.

More on Denbury:

• Financial and valuation comparison to sector peers
• Analysis: Denbury: About To Start Production From CCA EOR Project
• Stock price return: Up 7.5% YTD, up 23% in the past 12 months

For further details see: