CALGARY, March 9, 2017 /CNW/ - Enerplus Corporation
(TSX & NYSE: ERF) announces that it has entered into definitive
agreements to sell various Canadian properties located in
Alberta and southwest Saskatchewan for aggregate proceeds of
$67.3 million, before customary
closing adjustments. Enerplus is making corresponding adjustments
to its 2017 guidance to reflect the impact of these
divestments.
The properties to be divested include the majority of Enerplus'
shallow gas assets, as well as its Brooks waterflood property.
These divestments are a part of Enerplus' portfolio optimization
strategy as the Company continues to focus on its larger-scale,
higher-margin assets in Canada and
the United States that are
expected to drive long-term profitable growth.
With these divestments, Enerplus expects to realize a
$0.60 per BOE reduction in overall
corporate operating expense, driving further margin improvement,
and a 60% reduction in its overall well count as Enerplus continues
to actively manage its abandonment and reclamation liabilities.
Key information regarding the divestments:
|
|
Current
production:
|
7,300 BOE per day
(66% Natural Gas)
|
Operating cost:
|
$18.00 per
BOE
|
Net wells
divested:
|
3,200
|
These transactions are expected to close by mid-April 2017.
Scotia Waterous and RBC Capital Markets are acting as financial
advisers to Enerplus.
2017 Adjusted Guidance
Enerplus is adjusting its 2017 guidance to reflect the
divestments announced today. With minimal capital allocated to the
divested assets, the Company's 2017 capital budget is unchanged.
Production has been adjusted to reflect the approximate nine-month
impact of the divested volumes on annual average production, as
well as the full impact on fourth quarter production. As a result
of the higher proportion of U.S. production following the
divestments, the Company's average royalty and production tax rate
is forecast to increase by 1% to 24%. As mentioned above, annual
operating expense guidance has been reduced by $0.60 per BOE. Transportation expense is expected
to increase by $0.10 per BOE due to
the higher proportion of U.S. production, and G&A expense per
BOE is expected to modestly increase due to the lower overall
production volumes.
The table below provides the Company's updated guidance.
|
|
|
|
Revised
Guidance
|
Original
Guidance
|
Capital
spending
|
$450
million
|
$450
million
|
Average annual
production
|
81,000 – 85,000
BOE/d
|
86,000 – 90,000
BOE/d
|
Q4 average
production
|
86,000 – 91,000
BOE/d
|
92,000 – 97,000
BOE/d
|
Average annual crude
oil and natural gas liquids production
|
38,500 – 41,500
bbls/d
|
40,000 – 43,000
bbls/d
|
Q4 average crude oil
and natural gas liquids production
|
43,000 – 48,000
bbls/d
|
45,000 – 50,000
bbls/d
|
Average royalty and
production tax rate
|
24%
|
23%
|
Operating
expense
|
$7.25 per
BOE
|
$7.85 per
BOE
|
Transportation
expense
|
$4.00 per
BOE
|
$3.90 per
BOE
|
Cash G&A
expense
|
$1.85 per
BOE
|
$1.80 per
BOE
|
About Enerplus
Enerplus Corporation is a responsible
developer of high quality crude oil and natural gas assets in
Canada and the United States committed to creating value
for its shareholders through a disciplined capital investment
strategy.
Follow @EnerplusCorp on Twitter at
https://twitter.com/EnerplusCorp.
Ian C. Dundas
President & Chief Executive Officer
Enerplus Corporation
CURRENCY
All amounts in this news release are stated in Canadian
dollars unless otherwise specified.
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
U.S. industry protocol is to present production volumes net
of royalties. Under Canadian industry protocol, 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 information contained within this news release
presents our production and BOE measures on a "company interest"
basis (before deduction of Crown and other royalties, plus
Enerplus' royalty interest), unless otherwise specified.
FORWARD-LOOKING INFORMATION AND STATEMENTS
This news release contains certain forward-looking
information and forward-looking statements within the meaning of
applicable securities laws ("forward-looking information"). The use
of any of the words "expect", "continue", "estimate", "guidance",
"will", "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: expectations regarding
proposed asset divestments, including expected timing of completion
thereof and impact on Enerplus' operations and financial results;
and adjusted 2017 guidance, including expected capital spending
levels, average annual production (including production mix),
average royalty and production tax rate, and operating and
transportation expenses.
The forward-looking information contained in this news
release reflects several material factors, expectations and
assumptions including, without limitation: that we will complete
the proposed asset divestments, substantially on the terms and
within the timeframe disclosed in this press release; that we
will conduct our operations and achieve results of operations as
anticipated; that our development plans will achieve the expected
results; that lack of adequate infrastructure will not result in
curtailment of production and/or reduced realized prices; current
commodity price, differentials and cost assumptions; the general
continuance of current or, where applicable, assumed industry
conditions; the continuation of assumed tax, royalty and regulatory
regimes; the continued availability of adequate debt and/or equity
financing and adjusted funds flow to fund our capital, operating
and working capital requirements, and dividend payments as needed;
the continued availability and sufficiency of our adjusted funds
flow and availability under our bank credit facility to fund our
working capital deficiency; our ability to negotiate debt covenant
relief under our bank credit facility and outstanding senior notes
if required; the availability of third party services; and the
extent of our liabilities. In addition, our adjusted 2017 guidance
contained in this news release is based on the following: a WTI
price of US$55.00/bbl, a NYMEX price
of US$3.00/Mcf, an AECO price of
$2.75/GJ and a USD/CDN exchange rate
of 1.35. We believe 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: failure
to complete the proposed asset divestments on the terms or within
the timeframe discussed in this press release or at all; continued
low commodity prices environment or further decline of commodity
prices; changes in realized prices of Enerplus' products; changes
in the demand for or supply of our products; unanticipated
operating results, results from our capital spending activities or
production declines; curtailment of our 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 our capital plans or by third party operators of our
properties; increased debt levels or debt service requirements;
inability to comply with debt covenants under our bank credit
facility and outstanding senior notes; inaccurate estimation of our
oil and gas reserve and contingent resource 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 third party service
providers; and certain other risks detailed from time to time in
our public disclosure documents (including, without limitation,
those risks and contingencies described under "Risk Factors and
Risk Management" in Enerplus' MD&A for the year ended,
and annual information form dated, December
31, 2016 and in our other public filings).
SOURCE Enerplus Corporation