CALGARY, Aug. 8, 2014 /CNW/ - Enerplus Corporation ("Enerplus") (TSX: ERF) (NYSE: ERF) is pleased to announce strong operational and financial results for the second quarter of 2014.
|SELECTED FINANCIAL RESULTS|
|Three months ended June 30,||Six months ended June 30,|
|Cash and Stock Dividends||55,214||54,009||110,149||107,794|
|Debt Outstanding - net of cash||1,067,590||1,133,048||1,067,590||1,133,048|
|Property and Land Acquisitions||3,231||51,692||13,200||55,659|
|Debt to Trailing 12-Month Funds Flow||1.3x||1.6x||1.3x||1.6x|
|Financial per Weighted Average Shares Outstanding|
|Net Income (Basic)||0.20||0.19||0.39||0.11|
|Weighted Average Number of Shares Outstanding (000's)||204,158||199,825||203,671||199,430|
|Selected Financial Results per BOE(1)(2)|
|Oil & Natural Gas Sales(3)||$||51.93||$||48.65||$||53.03||$||47.68|
|Royalties and Production Taxes||(11.58)||(9.93)||(11.81)||(9.73)|
|Commodity Derivative Instruments||(2.60)||1.11||(2.17)||1.29|
|General and Administrative||(1.97)||(2.29)||(2.14)||(2.71)|
|Interest, Foreign Exchange and Other Expenses||(1.61)||(1.38)||(1.63)||(1.78)|
|SELECTED OPERATING RESULTS|
|Three months ended June 30,||Six months ended June 30,|
|Average Daily Production|
|Crude oil (bbls/day)||39,863||38,066||38,817||38,193|
|Natural gas (Mcf/day)||362,929||290,841||354,906||281,275|
|% Natural Gas||58%||54%||58%||53%|
|Average Selling Price(2)|
|Crude oil (per bbl)||$||94.90||$||82.95||$||93.25||$||80.74|
|NGLs (per bbl)||49.98||45.64||57.66||52.16|
|Natural gas (per Mcf)||4.02||3.70||4.46||3.41|
|Net Wells drilled||14||10||44||35|
|(1) Non-cash amounts have been excluded.|
|(2) Based on Company interest production volumes. See "Basis of Presentation" section in our second quarter MD&A.|
|(3) Net of oil and gas transportation costs, but before royalties and the effects of commodity derivative instruments.|
|Three months ended June 30,||Six months ended June 30,|
|Average Benchmark Pricing|
|WTI crude oil (US$/bbl)||$||102.99||$||94.22||$||100.84||$||94.30|
|AECO- monthly index (CDN$/Mcf)||4.68||3.59||4.72||3.34|
|AECO- daily index (CDN$/Mcf)||4.69||3.53||5.20||3.37|
|NYMEX- last day (US$/Mcf)||4.67||4.09||4.80||3.71|
|USD/CDN exchange rate||1.09||1.02||1.10||1.02|
|Share Trading Summary||CDN* - ERF||U.S.** - ERF|
|For the three months ended June 30, 2014||(CDN$)||(US$)|
|* TSX and other Canadian trading data combined.|
**NYSE and other U.S. trading data combined.
|2014 Dividends per Share|
|First Quarter Total||$||0.27||$||0.24|
|Second Quarter Total||$||0.27||$||0.24|
|(1)||US$ dividends represent CDN$ dividends converted at the relevant foreign exchange rate on the payment date.|
|Production and Capital Spending|
Three months ended
June 30, 2014
Six months ended
June 30, 2014
|Crude Oil & NGLs (BOE/day)||
|Total Crude Oil & NGLs (BOE/day)||43,499||$127||42,267||$249|
|Natural Gas (Mcf/day)|
|Total Natural Gas (Mcf/day)||362,929||$77||354,906||$173|
|Company Total (BOE/day)||103,987||$204||101,418||$422|
|Net Drilling Activity - for the three months ended June 30, 2014|
|Crude Oil||Horizontal Wells||
Dry & Abandoned
|Total Crude Oil||8.4||8.0||12.0||-|
|Total Natural Gas||5.9||4.6||7.3||-|
|*Wells drilled during the quarter that are pending potential completion/tie-in or abandonment as at June 30, 2014.|
|** Total wells brought on-stream during the quarter regardless of when they were drilled.|
Our second quarter capital spending totaled $204 million, down slightly from the first quarter. This investment saw us drill 14.3 net horizontal wells and place 19.3 net wells on-stream, the majority of which were in our Bakken/Three Forks and Marcellus plays.
At Fort Berthold, we invested $98.6 million in the quarter with 6.9 net wells drilled targeting a mix of Bakken and Three Forks horizons. We also completed and brought on-stream 5.1 net wells, including our two top performing wells, one Bakken and one second bench Three Forks, which produced an average of approximately 2,400 barrels per day per well in their first 30 days (cumulative production of over 70,000 barrels of oil each). Daily production increased by 14% at Fort Berthold over the first quarter of 2014, averaging 20,800 BOE per day, a new high for this project.
In the Marcellus, our operations continued to be focused in Wyoming, Susquehanna, Bradford and Sullivan counties. During the quarter we invested $45.1 million, drilling and bringing on-stream 5.9 net wells. Production averaged a record 189 MMcf per day, up 5% compared to the first quarter of the year, and more than double from the production rate in the second quarter of 2013.
We also invested $28.1 million into our low-decline Canadian oil waterflood portfolio for both near and long-term growth, increasing production slightly quarter over quarter. At Brooks, we continued to advance our 60-well drilling program targeting the Lower Mannville sands and we are moving forward with the second phase of development in our polymer project at Medicine Hat.
Consistent with our on-going portfolio management strategy, we expect to sell non-core gas weighted properties with production of 2,500 BOE to 3,500 BOE per day with closing early in the fourth quarter.
2014 Guidance Update
A summary of our revised 2014 guidance is outlined below.
|Average annual production||100,000 - 104,000 BOE/day (from 96,000 - 100,000 BOE/day)|
|Production mix (volume)||
44,000 bbls/day crude oil and natural gas liquids
56,000 - 60,000 BOE/day natural gas
|Capital spending||$800 million|
Average royalty rate
(% of gross sales, net of transportation)
|23% (from 23.5%)|
|Operating costs||$10.10/BOE (from $10.25/BOE)|
|Cash G&A expenses||$2.30/BOE (from $2.45/BOE)|
|Cash share-based compensation expenses||
$0.60/BOE (from $0.45/BOE)
|U.S. Cash taxes (% of U.S. funds flow)||3% - 5%|
Conference Call Details
A conference call hosted by Ian C. Dundas, President and CEO will be held at 8:30AM MT (10:30AM ET) today to discuss these results. Details of the conference call are as follows:
Live Conference Call
|Date:||Friday, August 8, 2014|
|Time:||8:30AM MT / 10:30AM ET|
|888-231-8191 (toll free)|
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 be available on our website for downloading. A telephone replay will be available for 30 days following the conference call. The telephone replay can be accessed at the following numbers:
|1-855-859-2056 (toll free)|
Electronic copies of our Second Quarter 2014 MD&A and Financial Statements, along with 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 firstname.lastname@example.org.
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. In order to continue to be comparable with our Canadian peer companies, the summary results contained within this news release presents our production and BOE measures on a before royalty company interest basis. All production volumes and revenues presented herein are reported on a company interest basis, before deduction of Crown and other royalties, plus Enerplus' royalty interest.
See "Non-GAAP Measures" below.
Contingent Resource Estimates
This news release contains estimates of contingent resources. Contingent resources are not, and should not be confused with, oil and gas reserves. Contingent resources are defined in the Canadian Oil and Gas Evaluation Handbook (the "COGE Handbook") as "those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies may include factors such as economics, legal, environmental, political and regulatory matters or a lack of markets. It is also appropriate to classify as contingent resources the estimated discovered recoverable quantities associated with a project in the early evaluation stage. All of our contingent resource estimates are economic using established technologies and under current commodity price assumptions used by our independent reserve evaluators. Enerplus expects to develop these contingent resources in the coming years however it is too early in their development for these resources to be classified as reserves at this time. There is no certainty that it will be commercially viable or that we will produce any portion of the volumes currently classified as contingent resources. The contingent resource estimates contained herein are presented as the best estimate of the quantity that will actually be recovered, effective as of June 1, 2014. A best estimate of contingent resources means that it is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate, and if probabilistic methods are used, there should be at least a 50% probability that the quantities actually recovered will equal or exceed the best estimate.
For additional information regarding the primary contingencies which currently prevent the classification of our disclosed contingent resources associated with our Fort Berthold properties as reserves and the positive and negative factors relevant to the contingent resource estimates, see page 19 of our Annual Information Form dated February 21, 2014, a copy of which is available under our SEDAR profile at www.sedar.com, and our Form 40-F, a copy of which is available under our EDGAR profile at www.sec.gov.
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: Enerplus' asset portfolio; future capital and development expenditures and the allocation thereof among our assets; future development and drilling locations, plans and costs; the performance of and future results from Enerplus' assets and operations, including anticipated production levels, expected ultimate recoveries and decline rates; future growth prospects, acquisitions and dispositions; the volumes and estimated value of Enerplus' oil and gas reserves and contingent resource volumes and future commodity price, differentials and foreign exchange rate assumptions related thereto; the life of Enerplus' reserves; potential asset dispositions and timing thereof; rates of return on Enerplus' capital program; Enerplus' tax position; sources of funding of Enerplus' capital program; the amount and timing of future debt issuances and expected use of proceeds therefrom; and future costs, expenses and royalty rates.
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; 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' reserve and resource volumes; 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; 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 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; 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 described above).
The purpose of certain financial outlook information included in this news release, including with respect to our 2014 guidance for funds flow, is to communicate our current expectations as to our performance in 2014. Readers are cautioned that it may not be appropriate for other purposes. 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.
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 used to analyze leverage and liquidity and 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 ratio" 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.
SOURCE Enerplus Corporation
For further information:
Ian C. Dundas
President & Chief Executive Officer