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Enerplus Announces Third Quarter 2012 Results


CALGARY, Nov. 9, 2012 /CNW/ - Enerplus Corporation ("Enerplus") (TSX: ERF) (NYSE: ERF) is pleased to announce our operating and financial results for the third quarter of 2012.


    --  Our efforts throughout 2012 have been focused on delivering
        organic growth through an oil-focused capital spending program
        and providing a dividend to our shareholders. We continued to
        deliver on this strategy during the third quarter while
        maintaining a strong financial position.
    --  Our investment in our Bakken crude oil assets in Fort Berthold,
        North Dakota continues to deliver as we again increased
        production from this region during the third quarter, growing
        by 10% to approximately 12,800 BOE/day. With the weakness in
        natural gas prices and an absence of meaningful capital
        spending on our Canadian operated natural gas assets, we saw
        our natural gas production decline.
    --  Daily production during the third quarter averaged 81,573
        BOE/day, up 11% from the same period a year ago and down
        slightly from the second quarter. Oil and liquids volumes have
        grown by 24% year-over-year and were up by 1% versus the
        previous quarter and now represent just under 50% of our total
        production.
    --  Our natural gas volumes have declined throughout the year
        primarily due to a lack of capital investment in our Canadian
        gas assets. We continued to drill wells in the Marcellus with
        our partners in order to retain leases in the northeast region
        of Pennsylvania which we believe is one of the best areas
        within the play. Based upon the drilling activity to date, we
        expect to have approximately 65% of our core non-operated
        leases held by production by year-end. We also satisfied the
        remainder of our carry commitment associated with the original
        purchase of interests in the Marcellus. With the weak natural
        gas price environment in 2012 and on-going infrastructure
        challenges, drilling and tie-in activity has been slower than
        expected.  As a result, the growth in production volumes has
        been delayed however this has had little impact on our funds
        flow due to weak natural gas prices. We continue to expect a
        slower pace of wells on-stream through the remainder of the
        year and anticipate exit production to be approximately 10
        MMcf/day to 20 MMcf/day lower than originally planned.  Exit
        volumes in the Marcellus are now expected to range between 50
        MMcf/day - 60 MMcf/day.
    --  We generated funds flow of $135 million ($0.68 per share)
        during the quarter. While both crude oil and natural gas prices
        improved slightly quarter over quarter, higher operating costs
        caused by a number of one-time charges along with fluctuations
        in the foreign exchange related to our U.S. operations impacted
        our funds flow.
    --  Capital expenditures totaled $167 million during the quarter,
        down 20% from the second quarter of 2012.  We drilled 16.6 net
        wells with 18.2 net wells brought on-stream with the bulk of
        this activity again focused on our oil plays.
    --  With the reduction in our monthly dividend to $0.09 per share
        per month and lower capital spending this quarter, our adjusted
        payout ratio improved to 159%.
    --  Net income for the quarter was impacted by impairments in our
        exploration and evaluation ("E&E") assets.  We recorded E&E
        impairments of approximately $114 million, the majority of
        which related to leases in West Virginia and Maryland which
        will expire over the next 12 months where we do not anticipate
        allocating capital.
    --  We improved our financial flexibility with the sale of our
        equity investment in Laricina Energy in August for net proceeds
        of $141 million. We used these proceeds to reduce our debt and
        ended the quarter with a debt to trailing twelve month funds
        flow ratio of 1.9 times versus 2.0 times last quarter.
    --  We had a total of $307 million drawn on our $1.0 billion credit
        facility at September 30(th), 2012. We also recently extended
        our $1.0 billion credit facility for an additional year with
        the same terms and pricing.
    --  We entered into additional hedges on both crude oil and natural
        gas during the quarter and currently have approximately 58% of
        our expected 2013 crude oil production, net of royalties,
        hedged at approximately US$100/bbl.  We also have approximately
        17% of our expected net natural gas production protected next
        year at an average floor price of $3.31/Mcf. As we move into
        the winter months, we may enter into additional natural gas
        hedges. For the remainder of 2012, we have approximately 63% of
        our expected crude oil production volumes, net of royalties,
        hedged at US$96.22/bbl.
    --  Subsequent to the quarter, we announced an agreement to sell
        all of our assets in Manitoba for gross proceeds of
        approximately $220 million.  These assets are currently
        producing approximately 1,600 bbls/day of crude oil under
        waterflood with an estimated 8.4 million barrels of estimated
        proved plus probable reserves.  With limited near-term growth
        potential under our current capital allocation plans, these
        assets are considered non-core to our long-term business
        strategy.  The proceeds from this sale will be used to reduce
        our debt levels and will strengthen our balance sheet as we
        head into 2013. Our September 30, 2012 debt-to-funds flow ratio
        pro forma this transaction is 1.5 times.
    --  We expect to continue selling non-core assets in the future in
        order to focus our asset base and improve our operational
        efficiencies. We are also pursuing a joint venture or sale of
        our early stage gas assets including our Montney and Duvernay
        lands.

SELECTED FINANCIAL RESULTS
                       Three months ended Nine months ended September
                            September 30,                         30,
                           2012      2011      2012              2011

Financial (000's)                                                    
    Funds Flow         $134,980 $ 123,262  $444,233         $ 416,927
    Cash and Stock       53,394    97,416   247,988           291,179
    Dividends
    Net Income         (63,466)   111,321     2,977           408,852
    Debt Outstanding  1,118,569   734,300 1,118,569           734,300
    - net of cash
    Capital Spending    166,988   201,266   692,641           520,875
    Property and Land     7,277    67,313    63,946           209,946
    Acquisitions
    Divestments           3,112     7,320    55,636           638,108
                                                                     
    Debt to Trailing       1.9x      1.3x      1.9x              1.3x
    12 Month Funds
    Flow
                                                                     

Financial per                                                        
Weighted Average
Shares Outstanding
    Funds Flow( )         $0.68     $0.68     $2.28             $2.32
    Net Income           (0.32)      0.62      0.02              2.28
    Weighted Average    197,618   180,266   194,753           179,566
    Number of Shares
    Outstanding
                                                                     

Selected Financial                                                   
Results per BOE((1))
    Oil & Gas Sales(
    (2))                 $43.30   $ 46.44    $44.10            $48.34
    Royalties            (8.61)    (8.33)    (8.74)            (8.67)
    Commodity              1.06    (0.66)      0.11            (1.09)
    Derivative
    Instruments
    Operating Costs     (12.32)   (10.90)   (11.00)            (9.87)
    G&A and Equity       (3.17)    (2.45)    (2.94)            (2.96)
    Based
    Compensation
    Interest and         (2.56)    (1.01)    (1.40)            (1.55)
    Other Expenses
    Taxes                  0.29    (4.80)    (0.10)            (3.75)
    Funds Flow           $17.99   $ 18.29    $20.03           $ 20.45
                                                     
                                           

SELECTED OPERATING RESULTS                           
                       Three months ended Nine months ended September
                            September 30,                         30,
                           2012      2011      2012              2011

Average Daily                                                        
Production
    Crude oil            36,810    29,337    35,807            29,665
    (bbls/day)
    NGLs (bbls/day)       3,538     3,295     3,644             3,323
    Natural gas         247,347   243,675   249,046           250,244
    (Mcf/day)
    Total (BOE/day)      81,573    73,245    80,959            74,695
                                                                     
    % Crude Oil &           49%       45%       49%               44%
    Natural Gas
    Liquids
                                                                     

Average Selling Price                                                
((2))
    Crude oil (per      $ 76.41   $ 77.57   $ 78.72           $ 82.01
    bbl)
    NGLs (per bbl)        47.81     64.98     54.88             63.89
    Natural gas (per       2.20      3.73      2.18              3.83
    Mcf)
    USD/CDN exchange       1.00      1.02      1.00              1.02
    rate
                                                                     
    Net Wells drilled        17        35        70                75

((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 September 30, 2012     (CDN$)        (US$)

High                                              $16.94       $17.48

Low                                               $12.41       $12.13

Close                                             $16.30       $16.61

* TSX and other Canadian trading data combined.
**NYSE and other U.S. trading data combined.
                        

2012 Dividends Per Share               

Payment Month             CDN$ US$((1))

First Quarter Total      $0.54    $0.54

Second Quarter Total     $0.54    $0.53

July                     $0.09    $0.09

August                    0.09     0.09

September                 0.09     0.09

Third Quarter Total      $0.27    $0.27

Total Year-to-Date       $1.35    $1.34

(1)  US$ dividends represent CDN$ dividends converted at the relevant
     foreign exchange rate on the payment date.
      

Production and Capital Spending
                           Three months ended      Nine months ended
                           September 30, 2012      September 30, 2012
                           Average      Capital    Average      Capital

Production Spending Production Spending Play Type Volumes ($ millions) Volumes ($ millions)

Tight Oil (BOE/day) 19,322 $90 17,760 $391

Crude Oil Waterflood 16,769 25 16,530 95 (BOE/day)

Conventional Oil 4,470 13 4,736 27 (BOE/day)

Total Crude Oil 40,561 $128 39,026 $513 (BOE/day)

Marcellus Shale Gas 40,188 $30 35,081 $120 (Mcf/day)

Other Natural Gas 205,881 9 216,519 60 (Mcfe/day)

Total Gas (Mcfe/day) 246,069 $39 251,600 $180

Company Total (BOE/day) 81,573 $167 80,959 $693


                                                            

Net Drilling Activity for the Three Months Ended September 30, 2012
                                                                  
             Horizontal Vertical              Wells                 Dry &
                                  Total     Pending              Abandoned

Wells Wells Wells Completion/ Wells Play Type Drilled Drilled Drilled Tie-in* On-stream** Wells

Tight Oil 7.9 - 7.9 3.6 8.9 -

Crude Oil 3.8 - 3.8 1.7 5.9 0.1 Waterflood

Conventional 2.5 - 2.5 0.9 1.7 - Oil

Total Crude 14.2 - 14.2 6.2 16.5 0.1 Oil

Marcellus 2.3 - 2.3 2.3 1.7 - Shale Gas

Other 0.1 - 0.1 0.1 - - Natural Gas

Total Gas 2.4 - 2.4 2.4 1.7 -

Company 16.6 - 16.6 8.6 18.2 0.1 Total

*Wells drilled during the quarter that were pending potential completion/tie-in or abandonment. **Total wells brought on-stream during the quarter regardless of when they were drilled.

Update on 2012 Guidance

The slower pace of activity in the Marcellus and the corresponding delay in bringing the associated natural gas production on stream is expected to impact both our annual and exit production rates.  As a result, we are revising our annual average production guidance from 83,500 BOE/day to 82,000 BOE/day and now expect our exit production could range between 85,000 BOE/day to 88,000 BOE/day. The sale of our Manitoba assets is not expected to have a material impact on our 2012 exit production forecast as the sale is expected to close late in December. Average production for October was approximately 84,000 BOE/day. Operating costs are now expected to average $10.70/BOE versus our original expectation of $10.40/BOE due to our revised production forecast. We are maintaining our capital spending guidance of $850 million with the majority of this spending focused on our crude oil properties.

Outlook

Looking forward to 2013, our focus will be on improving the profitability of our business while maintaining our financial strength.  We expect to reduce our capital spending program by approximately 20% next year from 2012 levels.  As a result, we would expect to see an improvement in our adjusted payout ratio while maintaining an attractive dividend.

Our growth expectations will be reduced for next year due to the lower capital program and the sale of our Manitoba assets (1,600 bbls/day) which we expect to close at the end of 2012.  Should profitability improve (for example through commodity price increases or improved operating efficiencies) we would have the ability to increase our capital program and production to capture additional value for our shareholders.

Conference Call Details

Further details on our operations will be provided during our conference call which is scheduled for 9:00 am MT (11:00 AM ET) today.  Details of the conference call are as follows:

Date: Friday, November 9, 2012

Time: 9:00 AM MT/11:00 AM ET

Dial-In: 1-647-427-7450

1-888-231-8191 (toll free)

Conference Call ID: 50540263

Audiocast: http://www.newswire.ca/en/webcast/detail/1054731/1146491

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 podcast of the conference call will also be available on our website for downloading following 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: 1-416-849-0833


           1-855-859-2056 (toll free)

Passcode:  50540263
            
            

Gordon J. Kerr
President & Chief Executive Officer
Enerplus Corporation

Except for the historical and present factual information contained herein, 
the matters set forth in this news release, including words such as "expects", 
"projects", "plans" and similar expressions, are forward-looking information 
that represents management of Enerplus' internal projections, expectations or 
beliefs concerning, among other things, future operating results and various 
components thereof or the economic performance of Enerplus. The projections, 
estimates and beliefs contained in such forward-looking statements necessarily 
involve known and unknown risks and uncertainties, which may cause Enerplus' 
actual performance and financial results in future periods to differ 
materially from any projections of future performance or results expressed or 
implied by such forward-looking statements. These risks and uncertainties 
include, among other things, those described in Enerplus' filings with the 
Canadian and U.S. securities authorities.  Accordingly, holders of Enerplus 
shares and potential investors are cautioned that events or circumstances 
could cause results to differ materially from those predicted.

 

 

 

 

 

 

 

 

 

 

For further information, please call 1-800-319-6462 or 
e-mail investorrelations@enerplus.com.  Electronic copies of our Q3 MD&A and 
financial statements are also  available on our website at www.enerplus.com.

SOURCE: Enerplus Corporation

To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/November2012/09/c6063.html

CO: Enerplus Corporation
ST: Alberta
NI: OIL ERN CONF EST ERN 

-0- Nov/09/2012 11:00 GMT

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