Shares of Denbury Resources have retreated to the tune of almost 20% in 2019 thanks to several factors such as the recent weakness in oil prices, the company\u2019s heavy debt load, and operational challenges.\r\n\r\nDenbury had closed 2018 on a strong note as its cash flow was on the positive side. The good news is that it delivered on that front once again in the first quarter of 2019, but there were a few red flags that knocked the wind out of the company\u2019s sales.\r\nThe Problem at Denbury\r\n\r\n\r\nDenbury\u2019s first-quarter 2019 results revealed that the company\u2019s production stood flat year over year. The company delivered 59,218 barrels of oil equivalent per day during the quarter, which led to a weak revenue performance thanks to a decline in oil prices.\r\n\r\nDenbury\u2019s first-quarter 2019 average realized oil price stood at $56.50 per barrel. This was substantially lower than the year-ago period\u2019s average realized oil price of $64.25 per barrel. As a result of the lower pricing, Denbury\u2019s first-quarter 2019 revenue dipped 13.5% year over year. What\u2019s more, the company\u2019s adjusted net income also fell to $45 million as compared to $54 million a year ago.\r\n\r\nHowever, Denbury did manage to generate adjusted operating cash flow of $119 million during the first quarter. That\u2019s because the company is currently focused on keeping a handle on its spending because of the high level of debt that it has, which has kept it from investing in its assets to increase production.\r\n\r\nMore specifically, Denbury has a debt load of $2.82 billion. By comparison, the company\u2019s cash position is extremely thin at just under $6 million. As a result, all the excess cash flow that Denbury generates goes towards paying off its debt and keeping its production at a steady level through investments in assets with low base decline rates.\r\n\r\nDenbury doesn\u2019t have the liberty of spending money on developing new assets that will boost its production. As a result, the company is completely reliant on a recovery in oil prices to drive financial growth.\r\nThis is Going to Be a Difficult Year\r\nDenbury\u2019s production levels will be nearly 4% lower in 2019 as compared to last year\u2019s levels. The company forecasts production between 56,000 and 60,000 barrels of oil equivalent per day in 2019, and this will be achieved at a capital expense of $240 million to $260 million.\r\n\r\nThe 2019 capex level represents a 20%-25% drop over the 2018 outlay, which clearly tells us that Denbury is cutting corners because of its debt-laden balance sheet. However, the company believes that it can generate more than $150 million in free cash flow this year, which will go towards reducing its debt.\r\n\r\nBecause of Denbury\u2019s focus on reducing debt, it is not surprising to see that analysts expect the company\u2019s revenue to drop to the tune of 5% in 2019, while earnings will go down from $0.48 last year to $0.47 this year.\r\n\r\nSo, until and unless there is an improvement in oil prices, it makes sense to stay away from Denbury Resources as the stock doesn\u2019t have much upside potential in the current scenario.