This news release includes forward-looking statements and
information within the meaning of applicable securities laws.
Readers are advised to review the "Cautionary Note Regarding
Forward-Looking Information and Statements" at the conclusion of
this news release. Readers are also referred to "Information
Regarding Operational Information" and "Non-GAAP Measures" at the
end of this news release for information regarding the presentation
of the financial and operational information contained in this news
release. A full copy of our 2012 Financial Statements and MD&A
have been filed on our website at www.enerplus.com, under our
profile on SEDAR at www.sedar.com and on the EDGAR website at
www.sec.gov.
CALGARY, May 10, 2013 /CNW/ - Enerplus Corporation
("Enerplus") (TSX: ERF) (NYSE: ERF) is pleased to announce that
strong results for the first quarter have positioned us to achieve
all of our operational targets for the coming year. Our portfolio
of core assets in Canada and the
U.S. continued to deliver profitable, organic growth.
Highlights
- We achieved average production of 87,183 BOE per day during the
quarter. This growth was in part driven by record production
levels from the Marcellus and our Fort Berthold assets in
North Dakota.
- Most notably, our Marcellus production increased by
approximately 40%, averaging 79 MMcf per day, up from 57 MMcf per
day during the fourth quarter of 2012 as a result of a combination
of strong well performance and increased tie-in activity at the end
of the year.
- We closely managed our capital spending program during the
first quarter as part of our strategy to improve the sustainability
and profitability of our business. We invested $173 million during the quarter, approximately
25% of our capital spending budget for the year. The majority of
our spending was once again directed to our crude oil projects in
Canada and the U.S.
Approximately 45% of our program was directed to our Bakken
development at Fort Berthold, North
Dakota where we realized a reduction in well costs during
the first quarter. A total of 25 net wells were drilled with
17 net wells brought on-stream.
- With the steady recovery of natural gas prices and support from
our hedging program, we generated $173
million ($0.87 per share) in
funds flow during the quarter. Approximately 40% of our total
production is now attributable to our U.S. assets, helping to
mitigate the impact of wider Canadian heavy crude oil
differentials.
- Our operating costs of $10.37/BOE
were in line with our guidance, and while our general and
administrative costs were higher than expected due to one-time
charges associated with the departure of personnel, we continue to
maintain our annual guidance for both these items.
- Our adjusted payout ratio was approximately 126%, a significant
improvement from 254% a year ago due to the increase in funds flow,
and reductions in our capital spending and monthly dividend.
- We have continued to keep our balance sheet strong with a debt
to trailing 12 month funds flow ratio of 1.7 times at the end of
the quarter. Approximately 70% of our $1
billion credit facility remains unutilized.
- We are also well positioned with hedges on approximately 65% of
our net crude oil production and 35% of our net natural gas
production for 2013 that we expect will provide us with significant
funds flow protection in 2013. This will help ensure we have
the financial capacity to support our capital spending plans and
our dividend. We've also started to layer in additional
hedges for 2014.
- We reported a net loss of $5.2
million for the quarter. Non-cash mark-to-market losses on
our commodity derivatives as a result of higher forecast commodity
prices at quarter end negatively impacted earnings. This
non-cash loss had no impact on funds flow.
- Subsequent to the quarter, we sold approximately 600 BOE per
day of low working interest crude oil production in southeast
Saskatchewan and Alberta for $58
million. These assets were not considered part of our core
portfolio and their sale not only increases our financial
flexibility but also improves the concentration of our asset
base.
- We are also currently marketing a package of small non-core
properties representing approximately 1,300 BOE per day of
primarily oil production in order to further focus our portfolio
and provide additional funding for our capital program.
- We are maintaining our annual average production guidance of
82,000 to 85,000 BOE per day with an exit rate of 84,000 to 88,000
BOE per day, despite the sale of 600 BOE/day. Our guidance
does not reflect the potential divestment activities mentioned
above as we cannot predict the outcome of these efforts.
SELECTED OPERATING RESULTS |
Three months ended
March 31, |
|
2013 |
2012 |
Average Daily Production |
|
|
|
Crude oil (bbls/day) |
38,321 |
34,074 |
|
NGLs (bbls/day) |
3,595 |
4,002 |
|
Natural gas (Mcf/day) |
271,602 |
246,686 |
|
Total (BOE/day) |
87,183 |
79,190 |
|
|
|
|
% Crude Oil & NGLs |
48% |
48% |
|
|
|
Average Selling
Price(2) |
|
|
|
Crude oil (per bbl) |
$ 78.52 |
$ 85.91 |
|
NGLs (per bbl) |
58.58 |
56.77 |
|
Natural gas (per Mcf) |
3.10 |
2.27 |
|
|
|
Net Wells
Drilled |
25 |
34 |
|
|
|
|
Three months ended
March 31, |
|
2013 |
2012 |
Average Benchmark Pricing |
|
|
WTI crude oil (US$/bbl) |
$94.37 |
$102.93 |
AECO natural gas - monthly index
(CDN$/Mcf) |
3.08 |
2.52 |
AECO natural gas - daily index
(CDN$/Mcf) |
3.20 |
2.15 |
NYMEX natural gas -
monthly NX3 index (US$/Mcf) |
3.35 |
2.77 |
USD/CDN
exchange rate |
1.01 |
1.00 |
SELECTED FINANCIAL RESULTS |
Three months ended
March 31, |
|
2013 |
2012 |
Financial (000's) |
|
|
Funds Flow |
$172,596 |
$162,706 |
Cash and Stock Dividends |
53,785 |
105,995 |
Net Income/(Loss) |
(5,238) |
(33,821) |
Debt Outstanding - net of cash |
1,125,762 |
902,937 |
Capital Spending |
172,944 |
317,066 |
Property and Land Acquisitions |
3,967 |
33,020 |
Property Dispositions |
1,331 |
52,611 |
Asset Disposition gain/(loss) |
217 |
24,100 |
|
|
|
Debt to Trailing 12 Month Funds Flow |
1.7x |
1.6X |
|
|
|
Financial per Weighted Average Shares
Outstanding |
|
|
Funds Flow |
$0.87 |
$0.86 |
Net Income/(Loss) |
(0.03) |
(0.18) |
Weighted Average Number of Shares Outstanding
(000's) |
199,031 |
189,844 |
|
|
|
Selected Financial Results per
BOE(1) |
|
|
Oil & Gas Sales(2) |
$46.67 |
$47.04 |
Royalties |
(9.52) |
(9.26) |
Commodity Derivative Instruments |
1.47 |
(1.48) |
Operating Costs |
(10.42) |
(9.81) |
General and Administrative Expenses |
(3.15) |
(2.87) |
Equity Based Compensation |
(0.70) |
(0.22) |
Interest and Other Expenses |
(2.19) |
(0.72) |
Taxes |
(0.16) |
(0.10) |
Funds Flow |
$22.00 |
$22.58 |
(1) Non-cash amounts have been excluded.
(2) Net of oil and gas transportation costs, but before
the effects of commodity derivative instruments. |
Share Trading
Summary |
|
|
|
CDN* - ERF |
|
|
|
U.S.** - ERF |
For the three months ended March 31, 2013 |
|
|
|
(CDN$) |
|
|
|
(US$) |
High |
|
|
|
$15.50 |
|
|
|
$15.17 |
Low |
|
|
|
$12.26 |
|
|
|
$12.03 |
Close |
|
|
|
$14.84 |
|
|
|
$14.61 |
* TSX and other Canadian trading data
combined.
**NYSE and other U.S. trading data combined. |
|
2013 Dividends per Share
|
Payment Month |
|
|
|
|
|
CDN$ |
|
|
|
US$(1) |
January |
|
|
|
|
|
$0.09 |
|
|
|
$0.09 |
February |
|
|
|
|
|
$0.09 |
|
|
|
$0.09 |
March |
|
|
|
|
|
$0.09 |
|
|
|
$0.09 |
First Quarter
Total |
|
|
|
|
|
$0.27 |
|
|
|
$0.27 |
(1) US$ dividends
represent CDN$ dividends converted at the relevant foreign exchange
rate on the payment date. |
Production and Capital Spending |
|
|
|
|
|
Three
months ended March 31, 2013 |
Crude
Oil & NGLs (BOE/day) |
|
|
|
|
Average
Production Volumes |
|
|
|
|
Capital
Spending
($ millions) |
Canada |
|
|
|
|
22,284 |
|
|
|
|
$47 |
United States |
|
|
|
|
19,632 |
|
|
|
|
77 |
Total Crude Oil &
NGLs (BOE/day) |
|
|
|
|
41,916 |
|
|
|
|
$124 |
Natural Gas
(Mcf/day) |
|
|
|
|
|
|
|
|
|
|
Canada |
|
|
|
|
177,809 |
|
|
|
|
$36 |
United States |
|
|
|
|
93,793 |
|
|
|
|
13 |
Total Natural Gas
(Mcf/day) |
|
|
|
|
271,602 |
|
|
|
|
$49 |
Company Total
(BOE/day) |
|
|
|
|
87,183 |
|
|
|
|
$173 |
Net Drilling Activity
- for the three months ended March 31, 2013 |
Crude
Oil |
Horizontal
Wells |
Vertical
Wells |
Total
Wells |
Wells
Pending
Completion/
Tie-in * |
Wells
On-stream** |
Dry
&
Abandoned
Wells |
Canada |
14.4 |
0.4 |
14.8 |
10.9 |
4.2 |
- |
United States |
3.7 |
- |
3.7 |
2.8 |
7.7 |
- |
Total Crude
Oil |
18.1 |
0.4 |
18.5 |
13.7 |
11.9 |
- |
Natural Gas |
|
|
|
|
|
|
Canada |
5.4 |
- |
5.4 |
2.4 |
3.2 |
- |
United States |
0.8 |
- |
0.8 |
0.8 |
1.7 |
- |
Total Natural
Gas |
6.2 |
- |
6.2 |
3.2 |
4.9 |
- |
Company
Total |
24.3 |
0.4 |
24.7 |
16.9 |
16.8 |
- |
*Wells drilled during the quarter that are pending
potential completion/tie-in or abandonment as at March 31,
2013.
** Total wells brought on-stream during the quarter regardless of
when they were drilled. |
U.S. Crude Oil
Our U.S. crude oil production increased by approximately 7%
during the first quarter of 2013 compared to the fourth quarter of
2012 due to the additional working interests purchased in the
Sleeping Giant field in Montana in
December 2012 and continued drilling
at Fort Berthold in North
Dakota. We invested $77
million during the quarter in North Dakota targeting both the Bakken and
Three Forks formations. We drilled
three net operated long horizontal wells and participated in one
non-operated well. In addition, five operated long horizontal
wells, two short horizontal wells and one non-operated well were
brought on-stream.
The Fort Berthold region continues to be our most active
development area within our portfolio. Our focus in 2013 is
on improving our capital efficiencies and to continue to deliver
growth in production and reserves. We initially budgeted
$12.9 million for the drilling,
completion and tie-in of a long horizontal well in 2013. During the
quarter we realized savings in the order of 10% due primarily to
lower costs for completion services and supplies. We are
encouraged by these cost reductions and will work to extend them
throughout the remainder of the year. In total, we plan to drill,
complete and tie-in approximately 20 to 25 wells in 2013.
U.S. Natural Gas
Our U.S. natural gas production continued to grow during the
first quarter. Marcellus production increased from
approximately 57 MMcf per day during the fourth quarter of 2012 to
average 79 MMcf per day during the quarter, well ahead of our
expectations. While drilling activity slowed down as
expected, we continue to benefit from better than expected well
performance and increased tie-in activity late in 2012. Our
Marcellus capital program this year is almost exclusively focused
on the northeast region of Pennsylvania. With the recent
strengthening in NYMEX natural gas prices, the economics of our
capital program have improved significantly. Our Marcellus
production is currently delivering a netback of approximately
$2.50 per Mcf.
Canada Crude Oil
Capital spending activities to date in our Canadian crude oil
portfolio were focused primarily at our Medicine Hat Glauconitic
"C" property in Alberta and in
Saskatchewan where we continued to
drill into the Ratcliffe trend.
At Medicine Hat, we continued
with our waterflood optimization program drilling five injection
and two producing wells into the field during the quarter. We
also began work on a significant battery upgrade to support the
growing production from this field. In addition to our
waterflood program, we are encouraged by the response to our
polymer injection project which began in mid-2012. We expect
to make a decision on a second polymer project in this field by
year end.
In Saskatchewan, we drilled
three horizontal wells targeting the Ratcliffe at our Freda Lake and Neptune properties during the
quarter. We expect to complete and tie-in these wells during
the second quarter. We have been very pleased with our drilling
results in this area as we've grown production from approximately
700 BOE per day in 2010 to over 3,500 BOE/day during the quarter.
After spring break-up, we expect to run one rig over the balance of
the year and plan to continue to convert older vertical producing
wells into water injection wells to optimize the waterfloods in
this trend.
Canada Natural Gas
As planned, we have not invested significant capital in our
Canadian natural gas assets in 2013 and as a result, daily
production has continued to decline. We did however drill two
horizontal wells targeting the Wilrich zone based upon the success
of our 2012 drilling program in the Ansell area of Alberta. The first well is meeting our
type curve assumptions with a 30-day initial production rate of
approximately 6 MMcf per day of natural gas. The second well
had an initial peak test rate of approximately 35 MMcf per day
during the first 17 hours at 15.3 MPa in mid-March. The well has
been on production since mid-April and production has averaged 17
MMcf per day since that time, well ahead of our expectations.
Executive Changes
On March 21, 2013, the Board of
Directors of Enerplus announced that Gordon
J. Kerr will be retiring as President & Chief Executive
Officer effective June 30, 2013.
Ian C. Dundas, Executive Vice
President & Chief Operating Officer, will succeed Mr. Kerr as
President & Chief Executive Officer. Mr. Kerr will also be
retiring as a Director of Enerplus on June
30, 2013, and Mr. Dundas will be appointed as a director at
that time.
Q1 Results Live Conference Call
A conference call hosted by Mr. Gordon
J. Kerr and Mr. Ian C. Dundas
will be held today at 8:30 am MT
(10:30 am ET) to discuss these
results. Details of the conference call are as follows:
Date: |
|
|
Friday, May 10, 2013 |
Time: |
|
|
8:30 am MT (10:30 am ET) |
Dial-In: |
|
|
647-427-7450 |
|
|
|
1-888-231-8191 (toll free) |
Audiocast: |
|
|
http://www.newswire.ca/en/webcast/detail/1129683/1232193 |
To ensure timely participation in the conference call, callers
are encouraged to dial in 15 minutes prior to the start time to
register for the event. A telephone replay will be available for 30
days following the conference call and can be accessed at the
following numbers:
Dial-In: |
|
|
416-849-0833 |
|
|
|
1-855-859-2056 (toll free) |
Passcode: |
|
|
24407425 |
Minor Corrections to Year-End Filings
Enerplus has filed a Notice that corrects certain minor and
immaterial errors in the estimated net present value of future net
revenues of oil and gas reserves, on an after-tax basis, presented
in our 2012 year-end disclosure. A copy of the Notice is available
on our SEDAR profile at www.sedar.com and our EDGAR profile at
www.sec.gov.
INFORMATION REGARDING FINANCIAL AND OPERATIONAL
INFORMATION
Currency and Production Amounts
All amounts in this news release are stated in Canadian
dollars unless otherwise specified. All oil, NGL and gas production
volumes contained in this news release are presented on a "gross"
basis, before deduction of royalties, as in accordance with
Canadian practice.
Barrels of Oil Equivalent and Cubic Feet of Gas
Equivalent
This news release also contains references to "BOE" (barrels
of oil equivalent). Enerplus has adopted the standard of six
thousand cubic feet of gas to one barrel of oil (6 Mcf: 1 bbl) when
converting natural gas to BOEs. BOEs may be misleading,
particularly if used in isolation. The foregoing conversion
ratios are based on an energy equivalency conversion method
primarily applicable at the burner tip and do not represent a value
equivalency at the wellhead. Given that the value ratio based on
the current price of oil as compared to natural gas is
significantly different from the energy equivalent of 6:1,
utilizing a conversion on a 6:1 basis may be misleading.
See "Non-GAAP Measures" below.
FORWARD-LOOKING INFORMATION AND STATEMENTS
This news release contains certain forward-looking
information and statements ("forward-looking information")
within the meaning of applicable securities laws. The use of any of
the words "expect", "anticipate", "continue", "estimate",
"guidance", "objective", "ongoing", "may", "will", "project",
"should", "believe", "plans", "intends", "budget", "strategy" and
similar expressions are intended to identify forward-looking
information. In particular, but without limiting the foregoing,
this news release contains forward-looking information pertaining
to the following: achievement of operational targets for
2013; Enerplus' expected operating and general and administrative
costs and oil and gas production volumes for 2013; the proportion
of our anticipated oil and natural gas production that is hedged;
Enerplus' financial capacity to support capital spending plans and
its dividend; potential asset divestments; future efficiencies and
reserves and production growth from capital spending; future
capital and development expenditures and the allocation thereof
among our assets; future development and drilling locations, plans
and costs; and the performance of and future results from Enerplus'
assets and operations, including anticipated production levels,
decline rates and future growth prospects.
The forward-looking information contained in this news
release reflects several material factors and expectations and
assumptions of Enerplus including, without limitation: that
Enerplus' operations and development plans will achieve the
expected results; the general continuance of current or, where
applicable, assumed industry conditions, including third party
costs; the continuation of assumed tax, royalty and regulatory
regimes; commodity price and cost assumptions; the continued
availability of adequate debt and/or equity financing, cash flow
and other sources to fund Enerplus' capital and operating
requirements as needed; the extent of its liabilities; and that
Enerplus will be able to complete planned asset sales. Enerplus
believes the material factors, expectations and assumptions
reflected in the forward-looking information are reasonable but no
assurance can be given that these factors, expectations and
assumptions will prove to be correct.
The forward-looking information included in this news release
is not a guarantee of future performance and should not be unduly
relied upon. Such information involves known and unknown risks,
uncertainties and other factors that may cause actual results or
events to differ materially from those anticipated in such
forward-looking information including, without limitation: changes
in commodity prices; changes in the demand for or supply of
Enerplus' products; unanticipated operating results, results from
development plans or production declines; changes in tax or
environmental laws, royalty rates or other regulatory matters;
changes in development plans by Enerplus or by third party
operators of Enerplus' properties; increased debt levels or debt
service requirements; inaccurate estimation of Enerplus' oil and
gas reserves and resources volumes; limited, unfavourable or a lack
of access to capital markets; an inability to complete planned
asset sales; increased costs; a lack of adequate insurance
coverage; the impact of competitors; reliance on industry partners;
and certain other risks detailed from time to time in Enerplus'
public disclosure documents (including, without limitation, those
risks identified in Enerplus' Annual Information Form and Form 40-F
for the year ended December 31, 2012,
filed on SEDAR and EDGAR, respectively, on February 22, 2013).
The forward-looking information contained in this news
release speaks only as of the date of this news release, and none
of Enerplus or its subsidiaries assume any obligation to publicly
update or revise them to reflect new events or circumstances,
except as may be required pursuant to applicable laws.
NON-GAAP MEASURES
In this news release, we use the terms
"adjusted payout ratio" to analyze operating performance, leverage
and liquidity, and "netback" as measures of operating
performance. We calculate "adjusted payout ratio" as cash
dividends to shareholders, net of our stock dividends (and for 2012
comparative purposes, our DRIP proceeds), plus capital spending
(including office capital) divided by funds flow. "Netback" is
calculated as oil and gas sales revenues after deducting royalties,
operating costs and transportation.
Enerplus believes that, in addition to net earnings and other
measures prescribed by IFRS, the term "adjusted payout ratio" and
"netback" are useful supplemental measures as they provides an
indication of the results generated by Enerplus' principal business
activities. However, these measures are not recognized by GAAP and
do not have a standardized meaning prescribed by IFRS. Therefore,
these measures, as defined by Enerplus, may not be comparable to
similar measures presented by other issuers.
Gordon J. Kerr
President & Chief Executive Officer
Enerplus Corporation
SOURCE Enerplus Corporation