Quarterly / Earnings Reports | First Quarter (1Q) Update | Production Rates

Enerplus Reports Q1 2019 Results

Share Print Bookmark    |    Friday,May 10,2019

Enerplus Corp. reported its first quarter 2019 operating and financial results.

Highlights:

• Strong pricing in the Bakken and Marcellus helped drive first quarter adjusted funds flow of $168.8 million
• 2019 production guidance increased to 97,000 to 101,000 BOE per day with 53,500 to 56,000 barrels per day of liquids production
• Mid-point implies 10% year-over-year liquids production growth (13% per share)
• Oil growth underway with second quarter liquids production expected to be approximately 15% higher than the first quarter
• Visibility to meaningful free cash flow in the second half of 2019 based on current forward commodity prices
• Repurchased approximately $35 million of the Company's stock year-to-date with plans to accelerate share repurchases, based on current market conditions
• 2019 capital spending guidance range narrowed to $590 to $630 million (from $565 to $635 million) following the continued optimization of operational plans
• Significant financial flexibility; total debt net of cash was $363.8 million leading to a net debt to adjusted funds flow ratio of 0.5 times

"Our 2019 plans remain on track," stated Ian C. Dundas, President and Chief Executive Officer. "As anticipated, we saw production decline in the first quarter as a result of our 2018 investment profile which was front-half weighted. However, the growth we had projected as we moved past the first quarter is now well underway. With solid operational momentum established, we anticipate robust growth going forward."

Dundas continued, "With our operational plan delivering sustainable, double-digit oil production growth, we will continue to maintain capital spending discipline and prioritize free cash flow generation and return of capital to shareholders. With this in mind, and given our strong liquidity position and the compelling value we currently see in our shares, we plan to accelerate share repurchases under our normal course issuer bid. Additionally, we plan to allocate a meaningful percentage of our expected free cash flow in the second half of the year towards share repurchases, based on current market conditions."

Q1 Summary

Production
Production in the first quarter averaged 88,583 BOE per day, including oil and natural gas liquids production of 45,488 barrels per day (90% oil). First quarter production declined 9% from the prior quarter as a result of the Company's 2018 investment profile which included only modest capital activity in the fourth quarter.

With strong well performance in North Dakota and the Marcellus driving growth and momentum into the second quarter, Enerplus remains well positioned relative to its 2019 production targets. The Company is increasing its annual production guidance to 97,000 to 101,000 BOE per day (from 94,000 to 100,000 BOE per day) including liquids production of 53,500 to 56,000 barrels per day (from 52,500 to 56,000 barrels per day).

Second quarter production is expected to average 97,500 to 100,000 BOE per day, with liquids production of 51,500 to 53,000 barrels per day.

Capital Expenditures and Balance Sheet Position
Exploration and development capital spending in the first quarter was $160.8 million and was associated with drilling 17.1 net wells and bringing 6.8 net wells on production across the Company's operations. Capital spending is expected to increase in the second quarter primarily due to a higher number of well completions in North Dakota compared to the first quarter.

Enerplus has narrowed its 2019 capital budget range to $590 to $630 million (from $565 to $635 million previously) following the continued optimization of its operational plans in North Dakota. The Company expects to complete and bring approximately 35 net operated wells on production in 2019 at Fort Berthold.

Total debt net of cash at March 31, 2019 was $363.8 million. Total debt was comprised of $682.8 million of senior notes outstanding. The Company was undrawn on its $800 million bank credit facility and had a cash balance of $319.0 million. Enerplus' net debt to adjusted funds flow ratio was 0.5 times at the quarter-end.

Share Repurchase
During the first quarter, the Company repurchased 1.7 million shares at an average share price of $11.43 for a cost of $19.8 million under its normal course issuer bid ("NCIB"). In total, including repurchases made subsequent to the end of the first quarter and up to May 8, 2019, the Company has repurchased 3.0 million shares in 2019 at an average share price of $11.61 for total consideration of $34.8 million.

Enerplus renewed its NCIB commencing on March 26, 2019 for a period of twelve months. The NCIB renewal allows the Company to repurchase up to 16.7 million shares, representing approximately $190 million based on its most recent closing share price.

Asset Activity

Average Daily Production⁽¹⁾

Summary of Wells Brought On-Stream⁽¹⁾

Williston Basin
Williston Basin production averaged 38,916 BOE per day (80% oil) during the first quarter of 2019, down from 47,420 BOE in the prior quarter. The sequential quarterly decline was due to modest capital activity in the fourth quarter of 2018 during which Enerplus brought one well on production. First quarter Williston Basin production was comprised of 35,889 BOE per day in North Dakota and 3,027 BOE per day in Montana. 

In the first quarter, Enerplus brought a three-well (100% working interest) pad on production at Fort Berthold. The average peak 30-day production rate per well was 1,900 BOE per day (74% oil, on a three-stream basis) with an average completed lateral length of 9,600 feet per well.

The Company drilled 15 gross operated wells (95% average working interest) in the first quarter.

Marcellus
Marcellus production averaged 209 MMcf per day during the first quarter, approximately flat from the previous quarter.

Thirteen gross non-operated wells (14% average working interest) were brought on-stream during the quarter. The average peak 30-day production rate per well was 22 MMcf per day with an average completed lateral length per well of 7,700 feet.

The Company participated in drilling nine gross non-operated wells (2% average working interest) during the first quarter.

2019 Guidance Updates

The Company has revised its 2019 production and capital spending guidance ranges, with changes noted in the table below. In addition, production guidance for the second quarter of 2019 has been provided.

2019 Guidance