This news release includes forward-looking statements and
information within the meaning of applicable securities laws.
Readers are advised to review the "Forward-Looking Information and
Statements" at the conclusion of this news release.
CALGARY, June 10, 2015 /CNW/ - Enerplus Corporation
("Enerplus") (TSX: ERF) (NYSE: ERF) is announcing an increase to
its production guidance and capital spending in 2015.
Year to date, we have been producing at the high end of our
guidance range while maintaining cost discipline.
Additionally, we have decided to accelerate the completion of eight
North Dakota oil wells at a cost
of $60 million. This activity
is underpinned by strong economics and is expected to provide
increased funds flow and reduced leverage ratios in 2015 and
2016.
As a result of the combination of operational success and the
additional completions, we are increasing our 2015 annual average
production guidance range to 97,000 – 103,000 BOE per day, and our
crude oil and natural gas liquids to 43 – 45% of the production
mix.
HIGHLIGHTS:
- We are revising our 2015 annual average production guidance
upwards from 93,000 – 100,000 BOE per day to 97,000 – 103,000 BOE
per day.
- We are increasing our 2015 capital budget by $60 million from $480
million to $540 million.
- The additional completions are underpinned by robust economics.
The average expected rate of return for the completions (excluding
the drilling capital already spent), using a flat West Texas
Intermediate oil price of US$60 per
barrel, is approximately 60%. The average expected payout period
for the completions is less than two years under a flat WTI oil
price of US$60 per barrel.
- We expect to utilize our $1
billion bank facility, which was approximately 4% drawn at
May 31st 2015, to fund the
additional $60 million in capital
spending. The well completions are expected to improve our 2015 and
2016 debt to funds flow ratios as a result of accelerating funds
flow.
- We have added additional crude oil hedge positions in the
fourth quarter of 2015 and for the full year in 2016 to help
support the economics of the accelerated well completions. Our
total crude oil hedge position in the fourth quarter of 2015,
through a combination of fixed price swaps and option structures,
is now 44% of forecasted net production after royalties, at a
weighted average floor price of US$80.09 per barrel. Our total crude oil hedge
position in 2016, through a combination of fixed price swaps and
option structures, now covers 31% of forecasted net production
after royalties, at a weighted average floor price of US$64.48 per barrel. With respect to natural gas
hedges for the second half of 2015, we have NYMEX swaps in place
for 49% of our forecasted net production after royalties at a
weighted average price of US$3.82 per
Mcf.
Electronic copies of our quarterly and annual results, news
releases and other public information including investor
presentations, are available on our website at
www.enerplus.com. For further information, please contact
Investor Relations at 1-800-319-6462 or email
investorrelations@enerplus.com.
Follow @EnerplusCorp on Twitter at
https://twitter.com/EnerplusCorp.
Currency and Accounting Principles
All amounts in this news release are stated in Canadian
dollars unless otherwise specified. All financial information in
this news release has been prepared and presented in accordance
with U.S. GAAP, except as noted below under "Non-GAAP
Measures".
Barrels of Oil 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.
Presentation of Production Information
Under U.S. GAAP oil and gas sales are generally presented net
of royalties and U.S. industry protocol is to present production
volumes net of royalties. Under Canadian industry protocol
oil and gas sales and production volumes are presented on a gross
basis before deduction of royalties. All production volumes
presented herein are reported on a "company interest" basis, before
deduction of Crown and other royalties, plus Enerplus' royalty
interest.
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",
"ongoing", "may", "will", "project", "should", "believe", "plans",
"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: expected 2015 average
production volumes and the anticipated production mix; the
proportion of our anticipated oil and gas production that is hedged
and the effectiveness of such hedges in protecting our funds flow;
the results from our drilling program and the timing of related
production; oil and natural gas prices and our commodity risk
management programs in 2015 and in the future; capital spending
levels in 2015 and its impact on our production level; funds flow
and leverage ratios; future debt and working capital levels and
debt to funds flow ratio.
The forward-looking information contained in this news
release reflects several material factors and expectations and
assumptions of Enerplus including, without limitation: that
Enerplus will conduct its operations and achieve results of
operations as anticipated; that Enerplus' development plans will
achieve the expected results; current commodity price and cost
assumptions; the general continuance of current or, where
applicable, assumed industry conditions; the continuation of
assumed tax, royalty and regulatory regimes; the accuracy of the
estimates of Enerplus' reserves and resources volumes; the
continued availability of adequate debt and/or equity financing,
cash flow and other sources to fund Enerplus' capital and operating
requirements, and dividend payments as needed; availability of
third party services; and the extent of its liabilities. 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 realized prices for Enerplus'
products; changes in the demand for or supply of Enerplus'
products; unanticipated operating results, results from Enerplus'
capital spending activities or production declines; curtailment of
Enerplus' production due to low realized prices or lack of adequate
infrastructure; 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;
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
our AIF and Form 40-F as at December 31,
2014).
NON-GAAP MEASURES
In this news release, we use the terms "funds flow" and "debt
to funds flow ratio" as measures to analyze operating performance,
leverage and liquidity. "Funds flow" is calculated as net cash
generated from operating activities but before changes in non-cash
operating working capital and asset retirement obligation
expenditures. "Debt to funds flow ratio" is calculated as
total debt net of cash, divided by a trailing 12 months of funds
flow.
Enerplus believes that, in addition to net earnings and other
measures prescribed by U.S. GAAP, the terms "funds flow" and "debt
to funds flow" are useful supplemental measures as they provide an
indication of the results generated by Enerplus' principal business
activities. However, these measures are not measures recognized by
U.S. GAAP and do not have a standardized meaning prescribed by U.S.
GAAP. Therefore, these measures, as defined by Enerplus, may not be
comparable to similar measures presented by other issuers. For
reconciliation of these measures to the most directly comparable
measure calculated in accordance with U.S. GAAP, and further
information about these measures, see disclosure under "Non-GAAP
Measures" in our First Quarter 2015 MD&A.
SOURCE Enerplus Corporation