Enerplus presents at EnerCom’s The Oil & Gas Conference®
During Enerplus’ breakout session, management was asked the following questions:
- You said that you currently have 20 years of inventory to drill. What would your drilling plan be at $70 oil?
- What are you thoughts on the dividend?
- Why did you keep the dividend at such a high level and then cut it?
- What are the takeaway situations in the Bakken and Marcellus? How does that affect the marginal cost and basis differentials?
- Can you describe the economic argument to extend the Waterfloods project and what the possibilities are for it going forward?
- Do you get positive cash flow from processing gas in the Bakken? Will that continue given the costs to process the liquids?
- Are you as optimistic about waterflood technology as potentially the next great technology for the industry?
- Do you see polymer injection waterflood technology as being problematic in areas such as the Cardium that have seen a lot of injection done in the past?
You can listen to Enerplus’ presentation by clicking here.
For the company’s second quarter results, click here.
Enerplus remains focused on low decline assets in Canada and the U.S.
Enerplus Corporation (ticker: ERF) is a developer of high quality crude oil and natural gas assets in Canada and the United States, focused on providing growth and income to its shareholders. The company’s core growth assets are located in the Bakken/North Forks and Northeastern Marcellus.
Enerplus’ low decline, high margin assets with EOR upside in the Canadian Deep Basin provide support through stable cash flows. In 2016, the company’s plans to focus capital spending on U.S and Canadian crude oil plays.
Enerplus realized production at an average of 93,659 Boe/d in the second quarter 2016, of which 47% was crude oil and natural gas liquids. Annual average 2016 production is tracking the higher-end of Enerplus’ guidance range of 90,000 – 94,000 BOE per day, despite the divestment of approximately 2,300 BOE per day at the end of the second quarter, largely due to strong Marcellus production. As a result, Enerplus is updating its 2016 average production guidance to 92,000 – 94,000 BOE per day.
In North Dakota, production averaged 28,800 Boe/d from Fort Berthold and Elm Coulee acreage, up 6% year over year. Year-to-date 2016, 4.6 net wells were brought online, with three delivering IP30 rates exceeding 1,990 Boe/d. Well costs continue to trend down as a result of improvements in drilling time and ongoing completions optimization. Enerplus’ average cost for a two-mile lateral well in the second quarter was US$7.8 million including drilling, completion, tie-in and facilities costs, 26% lower than the Company’s 2015 average.
Canadian production averaged 16,560 Boe/d, with most of the activity in the waterflood properties. Lower second quarter production was due to limited capital activity levels and the divestment of certain non-core assets located in northwest Alberta in June 2016.
Well cost components continued to decline due to shorter drilling times, completions optimization, and facility design changes. Operating expenses have been reduced 10% year over year, despite lower volumes. Cost savings, the strengthening CAD-USD exchange rate, and divestment of higher cost assets have reduced operating expense guidance to $8.50/Boe.
Proved and probable reserves at year-end 2015 were 406 MMBoe, split evenly between liquids and natural gas. Roughly 75% of reserves are located in the U.S. and 108% of year-end production was replaced in 2015.
Non-core asset divestment year to date has yielded net proceeds of $283 million. These were used along with the company’s $800 million bank credit facility to repurchase $172 million of senior notes. Use of the credit facility in lieu of senior notes will provide flexibility to reduce leverage with cash flows going forward.
