Sunday, May 8, 2016

Enerplus Corporation - ERF.t

Enerplus Corporation - ERF.t is a developer of high quality crude oil and natural gas assets in Canada and the United States.

The oil portfolio includes the Bakken/Three Forks resource play in North Dakota, as well as from a variety of crude oil properties across Western Canada. Primary natural gas assets include a concentrated land position in the Marcellus shale gas region in the U.S

On May 6, 2016 the company released Numbers

"Enerplus Corporation ("Enerplus" or the "Company") (TSX & NYSE: ERF) is pleased to announce its results from operations for the first quarter of 2016."We continue to position our company to deliver long-term profitability in a lower commodity price environment. Our focus on reducing costs and driving efficiencies across the organization has resulted in a meaningful reduction to our cost structure. As a result, we are reducing our combined operating, transportation and G&A cost guidance by $1.30 per BOE in 2016," stated Ian C. Dundas, President & CEO. "In addition, we have been delivering on our portfolio optimization objectives with non-core divestments generating net proceeds of $188 million in the first quarter, further strengthening our company's balance sheet. Operationally, our assets continue to deliver strong results and we remain on track to achieve our targets."
  • Production averaged 97,860 BOE per day during the quarter, including approximately 45,000 barrels per day of crude oil and natural gas liquids. Total production was down 8% from the previous quarter primarily as a result of non-core divestment activity during the fourth quarter of 2015 and first quarter of 2016, in which we divested properties with associated production of approximately 9,100 BOE per day. The divested production was approximately 90% natural gas weighted and, as a result, our crude oil and natural gas liquids weighting increased to 46% in the first quarter, from 43% in the previous quarter.
  • We continued to see outperformance from our North Dakota wells along with strong production results from our Canadian oil portfolio during the quarter. As a result, and despite the previously announced second quarter divestment of 2,300 BOE per day, we are maintaining our 2016 production guidance range of 90,000 to 94,000 BOE per day and 43,000 to 45,000 barrels per day of crude oil and natural gas liquids.
  • First quarter funds flow was $41.7 million ($0.20 per share), down approximately 60% from the fourth quarter of 2015 as a result of significantly lower crude oil and natural gas prices and lower realized gains on crude oil and natural gas hedging contracts.
  • We recorded a net loss of $173.7 million ($0.84 per share) in the first quarter. Our first quarter earnings benefited from a combined gain of $152.2 million on property divestments and the repurchase of a portion of our outstanding senior notes. These gains were offset by non-cash charges of $304.7 million related to asset impairment and a valuation allowance taken on our deferred tax asset as a result of the decline in 12-month trailing average commodity prices.
  • Our focus on maintaining our balance sheet strength and preserving the value of our high quality inventory during this period of low commodity prices resulted in a 50% reduction in capital spending from the fourth quarter of 2015, to $43.3 million. Capital spending was focused on our crude oil properties with $19.8 million directed to North Dakota and $19.1 million directed to our Canadian oil portfolio. We continue to budget 2016 capital spending of $200 million, with approximately 90% allocated to our crude oil plays (65% North Dakota, 25% Canada).
  • Our ongoing cost reduction efforts are delivering strong results. First quarter operating expenses of $8.15 per BOE were 6% lower than the fourth quarter of 2015 and 16% lower than the first quarter of 2015, despite lower volumes. Based on cost savings to date, the strengthening Canadian dollar relative to our U.S. dollar denominated operating costs, and the previously announced divestment of our higher cost northwest Alberta assets, we are reducing our 2016 guidance for operating expenses to $8.50 per BOE from $9.50 per BOE. We are also reducing our transportation cost guidance to $3.10 per BOE from $3.30 per BOE as a result of the strengthening Canadian dollar.
  • Cash G&A expenses during the first quarter were $2.07 per BOE, down 12% from the same period in 2015 and up 18% from the fourth quarter of 2015 largely due to severance payments incurred in the first quarter. As a result of the reduction of our workforce to better align with our more focused asset base and improved organizational efficiencies, we are reducing our 2016 guidance for cash G&A expenses to $2.00 per BOE from $2.10 per BOE.
  • Overall, taking into account our reduced operating, transportation and G&A expense guidance, we expect our 2016 cash costs to be approximately $1.30 per BOE lower than previously forecast.
  • As previously announced, effective with the April 2016 payment, we reduced the monthly dividend from $0.03 per share to $0.01 per share. This reduction reflected the need to rebalance the dividend level to better align with reduced funds flow in the context of the sustained low commodity price environment.
  • We further strengthened our balance sheet during the first quarter, ending the period with total debt, net of cash, of $992.8 million compared to $1,216.2 million at December 31, 2015. The $223 million reduction in total debt was a result of applying divestment proceeds against outstanding debt combined with the strengthening Canadian dollar relative to our U.S. dollar denominated senior notes. Total debt was comprised of $844.5 million of senior notes and $149.6 million of bank indebtedness (19% drawn on our $800 million facility) less $1.3 million in cash.  At March 31, 2016, our senior debt to EBITDA ratio was 1.6 times and our debt to funds flow ratio was 2.3 times.
  • We had continued success in divesting non-core assets during the quarter which provided net proceeds of approximately $188 million. These proceeds, along with our largely undrawn bank credit facility, were used to fund the repurchase of US$172 million of our senior notes during the quarter, and a total of US$267 million of senior notes to date. The repurchases were completed at prices ranging from 90% of par to par value, with no penalty or make-whole payments required, resulting in a total gain of $19 million. As a result of replacing fixed term, higher interest rate senior debt with lower interest rate bank debt and using divestment proceeds to repay outstanding debt, we expect to save approximately US$13 million in interest expense on an annualized basis. Utilizing a portion of our bank credit facility in place of the senior notes provides additional flexibility within our capital structure to reduce our leverage further as cash becomes available.
  • Subsequent to the quarter, we announced an additional non-core divestment of certain assets located in northwest Alberta for proceeds of $95.5 million, subject to closing adjustments. Expected annual average 2016 production associated with these assets is approximately 2,300 BOE per day (50% natural gas). This divestment is expected to close in the second quarter of 2016 and we expect to realize a gain of approximately $70 million as a result of the sale. Upon closing, this will bring total 2016 divestment proceeds to $283 million.
  • In connection with our non-core assets sales, we have materially reduced the Company's future abandonment liabilities. Since the start of 2015, we have reduced our asset retirement obligations by over 30%.