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
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CO: Enerplus Corporation
ST: Alberta
NI: OIL ERN CONF EST ERN
-0- Nov/09/2012 11:00 GMT
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