Sept 21 (Reuters) – Oil and natural gas producer Denbury Resources Inc said it would suspend dividend payments from the fourth quarter, hurt by a slump in crude oil prices.
The company said it expected to save about $88 million annually, which it intended to use for cutting debt, increasing capital spending or buying back shares.
“Although our oil commodity hedges and proactive reduction in capital spending have buffered us to a large degree from this oil price downturn, the benefit from our hedges will begin to diminish in the fourth quarter of 2015,” Chief Executive Phil Rykhoek said in a statement on Monday.
Denbury shares rose nearly 5 percent to $3.04 in early morning trading on the New York Stock Exchange.
The company also reinstated a previously authorized share repurchase program, which was suspended in November last year and has $222 million in authorized buybacks.
Denbury, which operates in the U.S. Gulf Coast and Rocky Mountain region, said it will pay a cash dividend of 6.25 cents per share for the third quarter.
The company said the timeline for reinstating a dividend is uncertain and is expected to be highly dependent on oil prices.
(Reporting by Amrutha Gayathri in Bengaluru; Editing by Anil D’Silva)
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