CreditRiskMonitor®'s subscribers have shown increased concern about Denbury Resources Inc., illustrated by a spike in crowdsourced aggregate research activity. This multi-billion dollar exploration and production energy concern has held the worst possible FRISK® score of "1" for more than 10 months – suggesting heightened credit risk despite improving oil markets. Denbury's weak financial state was highlighted by its recent distressed debt exchange.
This High Risk Report explores important factors that have contributed to Denbury's poor financial condition. For example, the company has shown a steeply negative working capital position as well as a free cash flow deficit over the trailing 12-month period. As such, financial counterparties should be particularly careful when working with this oil company.
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Our FRISK® score model incorporates four powerful risk inputs:
- “Merton”-type model of stock market capitalization and volatility
- Financial ratios, including those used in the Altman Z”-Score Model
- Bond agency ratings from Fitch, Moody's, and DBRS Morningstar
- Website click pattern data from CreditRiskMonitor® subscribers, representing key credit decision-makers at more than 35% of current Fortune 1000 companies plus thousands of other large companies worldwide
Since the start of 2017, the FRISK® score’s rate of success in capturing public company bankruptcy is 96%: 235 identified out of 243 bankruptcies. In any given year, you can count on one hand the times we miss – and in those outlier cases, the circumstances deal with unusual, unforeseen events such as natural disasters and CEO fraud.
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About High Risk Reports
Our High Risk Reports feature companies that are exhibiting a significantly high level of financial distress, as indicated by our proprietary FRISK® score.
The reports highlight the factors that have pushed a company's score lower on the "1" (worst) to "10" (best) FRISK® score, which is 96% accurate in predicting bankruptcy over a 12-month period. The High Risk Reports also includes analysis on financial indicators such as the company’s DBT index, stock performance, financial ratios and how it is performing relative to its industry peers.
The ultimate goal of the High Risk Report series is two-part: provide an early warning for those doing business with an increasingly distressed company and inform of the many signals that should be examined when assessing financial risks.