Close
Search TSX NYSE
Close ERF
CAD
Last
Change
Change %
Volume
52 Wk High
52 Wk Low
More
Close ERF
USD
Last
Change
Change %
Volume
52 Wk High
52 Wk Low
More

Returns & Value Focused

At Enerplus, we're focused on creating long-term value for our shareholders through a disciplined, returns-based capital allocation strategy and a commitment to safe, responsible operations.

Learn More

News Releases


Enerplus announces January 2009 cash distribution and 2009 guidance - preserving balance sheet strength

December 18, 2008
    TSX - ERF.UN
    NYSE - ERF

    CALGARY, Dec. 18 /CNW/ - Enerplus Resources Fund ("Enerplus") is planning
a conservative approach to 2009 in light of falling commodity prices with
reductions in capital spending and distributions. We intend to preserve our
financial strength and maintain flexibility in order to position us to take
advantage of future opportunities to add quality assets in an increasingly
attractive acquisition market.
    Enerplus currently has one of the strongest balance sheets in the oil and
gas sector which is a strategic advantage in the current economic environment.
Our prudent approach to reducing both our capital spending and distributions
to unitholders is intended to preserve this advantage. Decreased commodity
prices will continue to reduce costs. We expect to benefit from these
reductions through an improvement in our capital efficiencies. We intend to
also defer many of our internal development projects and effectively retain
these in our inventory for future development beyond 2009. Our capital
spending and distribution levels for 2009 are based on the current forward
commodity prices of US$52.83 per barrel WTI crude oil (CDN$63.19 per barrel)
and CDN$6.74 per Mcf AECO natural gas. These prices are currently above the
spot price. Over the course of 2009, we intend to manage our capital spending
and distributions to unitholders at a level which will minimize increases in
our debt levels outside of any acquisition activity.

    Capital Program

    Our capital development spending is targeted at $300 million and is
comprised of approximately $240 million on Canadian conventional, $35 million
on our U.S. operations and $25 million on oil sands spending. A majority of
this capital spending is targeted for our operated properties. This level of
capital spending represents a decrease of approximately 45% over our 2008
forecast development spending. Our spending will be directed toward high value
development projects, maintaining the integrity of our existing infrastructure
and new development areas given our desire to add opportunities in emerging
resource plays.
    Approximately 70% of our conventional spending will be directed at
natural gas resource plays with the remainder on oil. Our natural gas program
will be concentrated on shallow gas and tight gas projects which provide an
attractive return with gas prices at or better than $5.00/Mcf. Our oil program
is directed primarily at our U.S. Bakken assets and optimization projects with
attractive returns with oil prices at or better than US$40.00/bbl.
    Included in our plans is approximately $50 million of spending on
growth-oriented projects in new resource areas and includes land, seismic and
exploration drilling.
    The Kirby SAGD oil sands project investment spending for 2009 is
currently expected to be approximately $25 million and will be directed at
positioning us for a sanctioning decision in late 2009 should commodity
markets improve. Our plans also include a seismic program that we expect will
add additional contingent resources attributable to this property however we
do not plan to drill any additional core holes this winter.
    This capital spending forecast also includes an estimate of cost savings
that we are expecting in the industry as a result of a slowdown in activity
and does not reflect any acquisition or divestment activity that may occur as
a normal part of our business. We will review our 2009 capital program on a
regular basis throughout the year in the context of prevailing economic
conditions and make adjustments as deemed necessary. We expect that
approximately one quarter of our capital spending will occur in the first
quarter of 2009 as a result of winter access areas and the continuation of our
on-going program from 2008.

                                                           Spending
    Capital Activity                                     ($millions)
                                                        -------------

    Drilling, recompletions, optimization                       190
    Maintenance                                                  35
    Land, seismic, exploration                                   50
    Oil Sands                                                    25
                                                        -------------

    Total Capital                                               300
                                                        -------------
                                                        -------------
    Production Guidance

    As a result of our reduced spending, we anticipate our production volumes
will average approximately 91,000 BOE/day in 2009, a decline of approximately
5% over forecast 2008 average volumes. We expect to exit 2009 at approximately
88,000 BOE/day.

    Forecast Production Breakdown                           BOE/day
                                                        -------------

    Natural Gas                                              53,000
    Crude Oil                                                34,000
    Natural Gas Liquids                                       4,000
                                                        -------------

    Total Average Annual Production                          91,000
                                                        -------------
                                                        -------------
    Operating Costs

    As a result of lower production volumes and increased regulatory costs,
we are currently projecting operating costs will increase by approximately 12%
on a per BOE basis to average $10.65 per BOE compared to our 2008 forecast of
$9.50 per BOE. While we have included some modest deflation of costs, we
expect that continued reductions in activity levels throughout the oil and gas
industry may result in further cost reductions and we will be working
diligently to capture savings in all areas of our business.

    General & Administrative Costs

    G&A costs (cash and non-cash) are expected to average $2.45 per BOE in
2009 compared to forecast 2008 G&A costs of approximately $2.00/BOE. This
increase is primarily due to the reduction in expected production volumes and
the full year impact of 2008 staff additions. Our 2008 costs were impacted by
lower long-term incentive plan payments.

    Hedging

    Based upon the current forward market, Enerplus has floor protection on
approximately 27% of our anticipated 2009 crude oil production net of
royalties at an effective price of US$92.70 per barrel. With regard to natural
gas, we currently have approximately 20% of our natural gas production volumes
net of royalties hedged at an effective price of $8.27 per Mcf through October
of 2009. Should crude oil and natural gas prices change significantly from the
current forward market, the prices we will receive will vary because of the
nature of the instruments used.

    Financial Strength

    Enerplus is in a very strong financial position currently with a trailing
debt to cash flow ratio of 0.4x, one of the lowest in our sector. As at
November 30, 2008, we had approximately $579 million of long-term debt
comprised of $286 million of senior unsecured notes and $293 million of bank
indebtedness. Currently we have over $1.1 billion of unused credit capacity.

    Reduction in Monthly Distribution

    In light of continued weak crude oil and natural gas prices and our
desire to protect our balance sheet strength, we are reducing the monthly cash
distribution to unitholders from $0.38 per unit to $0.25 per unit effective
with the January 2009 payment. This distribution will be payable on January
20, 2009 to all Enerplus unitholders of record on December 31, 2008. The
ex-distribution date for this payment is December 29, 2008.
    The CDN$0.25 per unit is equivalent to approximately US$0.21 per unit if
converted using a Canadian/US dollar exchange ratio of 1.21. The US dollar
equivalent distribution will be based upon the actual Canadian/US exchange
rate applied on the payment date and will be net of any Canadian withholding
taxes that may apply.
    Holders of Enerplus Exchangeable Limited Partnership Class B units
(formerly Focus Limited Partnership Class B units) of record on December 31,
2008 will be eligible to receive a distribution of CDN$0.10625 per unit on
January 20, 2009 based on the exchange ratio of 0.425 of an Enerplus trust
unit for each Enerplus Exchangeable Limited Partnership Class B unit.
    We currently have 165.5 million trust units and equivalent partnership
units outstanding. Therefore the new distribution level equates to
approximately $41 million per month in payments to our unitholders.
    Based upon the current forward commodity price outlook for 2009, we
believe that a capital spending level of approximately $300 million and
monthly distributions to unitholders of $0.25 per unit will preserve our
financial strength and position us for future acquisitions in an increasingly
attractive market. However, given our desire to preserve our financial
flexibility, we will revisit our cash distribution levels and capital spending
as economic conditions continue to evolve and will be prepared to adjust both
as deemed necessary. We believe that there will be opportunities to add
quality assets that support our vision of being a top quartile, resource
focused, distributing oil and gas entity. We expect to emerge as a stronger
company as commodity prices recover. We intend to continue to maintain our
disciplined and flexible approach to capital spending, distributions and
acquisitions throughout 2009.

    Currency and BOE Information
    ----------------------------

    All dollar amounts or references to "$" in this news release are in
Canadian dollars unless specified otherwise.
    Enerplus has adopted the standard of 6 Mcf:1 BOE when converting natural
gas to BOEs. BOEs may be misleading, particularly if used in isolation. A BOE
conversion ratio of 6 Mcf:1 BOE is based on an energy equivalency conversion
method primarily applicable at the burner tip and does not represent a value
equivalency at the wellhead.

    Cautionary Note Regarding Forward-Looking Information and Statements
    --------------------------------------------------------------------

    This news release contains certain forward-looking information and
statements within the meaning of applicable securities laws. The use of any of
the words "expect", "anticipate", "continue", "estimate", "budget",
"guidance", "objective", "ongoing", "may", "will", "project", "should",
"believe", "plans", "intends" and similar expressions are intended to identify
forward-looking information or statements. In particular, but without limiting
the foregoing, this news releases contains forward-looking information and
statements pertaining to the following; future capital spending amounts and
the types of projects on which such capital will be spent; improvement in our
capital efficiencies; future oil and natural gas prices and foreign exchange
rates; the development of our oil sands project and the contingent resources
attributable thereto; the volume and product mix of our 2009 oil, natural gas
liquids and natural gas production; future operating and general and
administrative costs and other expense estimates; our commodity risk
management programs; future liquidity and financial capacity and resources;
future cash distributions to our unitholders; and future growth opportunities
including development, exploration, and acquisition activities and related
expenditures, including with respect to both our conventional and oil sands
activities.
    The forward-looking information and statements contained in this news
release reflect several material factors and expectations and assumptions of
the Fund including, without limitation: that the Fund will conduct its
operations as anticipated; the general continuance of current or, where
applicable, assumed industry conditions; availability of cash flow, debt
and/or equity sources to fund the Fund's capital and operating requirements as
needed; the continuance of existing and, in certain circumstances, proposed
tax and royalty regimes; and certain commodity price, foreign exchange rate
and other cost assumptions. The Fund believes the material factors,
expectations and assumptions reflected in the forward-looking information and
statements are reasonable at this time but no assurance can be given that
these factors, expectations and assumptions will prove to be correct.
    The forward-looking information and statements included in this news
release are not guarantees of future performance and should not be unduly
relied upon. Such information and statements involve 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
or statements including, without limitation: changes in commodity prices;
unanticipated operating results or production declines; changes in tax or
environmental laws or royalty rates; increased debt levels or debt service
requirements; inaccurate estimation of the Fund's oil and gas reserves
volumes; limited, unfavourable or no access to debt or equity capital markets;
increased costs and expenses; the impact of competitors; reliance on industry
partners; and certain other risks detailed from time to time in the Fund's
public disclosure documents including, without limitation, those risks
identified in our MD&A for the year ended December 31, 2007 and in the Fund's
Annual Information Form for the year ended December 31, 2007, copies of which
are available on the Fund's SEDAR profile at www.sedar.com and which also form
part of the Fund's Form 40-F for the year ended December 31, 2007 filed with
the SEC, a copy of which is available at www.sec.gov.
    The forward-looking information and statements contained in this news
release speak only as of the date of this news release, and none of the Fund
or its subsidiaries assumes any obligation to publicly update or revise them
to reflect new events or circumstances, except as may be required pursuant to
applicable laws.

    Gordon J. Kerr
    President & Chief Executive Officer
    Enerplus Resources Fund

    %CIK: 0001126874

Return to News Release Listing

Contact Us
Enerplus™ - We Add Energy™
Emergency Number Emergency Number 1-877-576-5636
Follow Us Twitter Emergency Number