All financial information contained within this news release
has been prepared in accordance with U.S. GAAP. This news release
includes forward-looking statements and information within the
meaning of applicable securities laws. Readers are advised to
review the "Forward-Looking Information and Statements" and
"Non-GAAP Measures" at the end of this news release for information
regarding the presentation of the financial and operational
information in this news release as well as the use of certain
financial measures that do not have standard meaning under U.S.
GAAP. A copy of Enerplus' 2019 Financial Statements and MD&A is
available on our website at www.enerplus.com, under our profile on
SEDAR at www.sedar.com and on the EDGAR website at www.sec.gov. All
amounts in this news release are stated in Canadian dollars unless
otherwise specified.
CALGARY, April 22, 2020 /CNW/ - Enerplus Corporation
("Enerplus") (TSX & NYSE: ERF) today provided a corporate
update in response to the market conditions resulting from the
COVID-19 pandemic and decreased commodity prices.
Enerplus' priority remains the health and safety of its
employees, partners and the communities where it operates. The
Company has introduced measures to protect the well-being of these
stakeholders and is extremely proud of the dedication of its
workforce to maintain safe operations and business continuity
during these challenging conditions.
"The unprecedented impacts from the COVID-19 pandemic, as well
as the excess global oil supply, poses significant challenges for
our industry," said Ian C. Dundas,
President and Chief Executive Officer of Enerplus. "Enerplus'
strong balance sheet, robust commodity hedging position and
operational flexibility provide a significant advantage during this
difficult period."
"Further to our previously announced capital budget reduction,
we are taking additional steps to preserve shareholder value and
maintain our financial strength by reducing capital spending by a
further $25 million due to
operational outperformance and project deferrals, while also
lowering our cost structure. In addition, we have significant
operational flexibility to reduce production levels in the second
quarter to protect against selling oil at negative margins and to
preserve value," said Dundas.
Production update
Enerplus' first quarter 2020
production averaged approximately 98,200 BOE per day, including
54,400 barrels per day of crude oil and natural gas liquids. As
previously announced, Enerplus has now suspended all further
operated drilling and completions activity in North Dakota.
Enerplus has begun to temporarily shut-in select wells across
its Williston basin and Canadian
operations, and is also preserving the productive capacity of its
recently completed seven-well pad in North Dakota. This high-working interest pad
delivered encouraging rates during initial clean-out operations and
the Company plans to bring the pad onstream when oil prices
improve. The Company's April production is expected to be modestly
impacted by shut-in activity with monthly production projected to
average approximately 88,000 BOE per day, including 47,000 barrels
per day of crude oil and natural gas liquids. The Company currently
expects to shut-in more production in May in response to weaker oil
pricing and will provide a further update in connection with its
first quarter 2020 results on May 8,
2020.
Enerplus will be responsive to changes in the commodity price
environment, and with the majority of its oil production from
horizontal wells in North Dakota,
it has the ability to shut-in and quickly restore volumes to
pre-shut-in production levels. Based on historical field
turnarounds, Enerplus also expects that any curtailed production
from its Canadian oil fields can be restored without negatively
impacting the reservoirs.
Capital plans and expected production from the Company's
Marcellus natural gas position remain unchanged.
As a result of the significant ongoing uncertainty in market
conditions, Enerplus is withdrawing its 2020 corporate guidance, as
provided in the Company's news release on March 16, 2020 and in its management's discussion
and analysis for the year ended December 31,
2019 dated February 20, 2020.
Enerplus will continue to reassess its ability to reasonably
estimate and provide annual guidance and plans to provide frequent
operational updates to investors during this period of heightened
volatility.
Further capital spending reduction
Enerplus is further
reducing its 2020 capital budget by an additional $25 million to $300
million. The capital reduction is a combination of
efficiency improvements from the strong operational execution
realized year to date and the deferral of additional non-operated
oil activity and internal projects. In total, Enerplus has reduced
its 2020 capital budget by approximately 45% from its original
plan.
Financial strength and liquidity
Enerplus
benefits from maintaining a strong balance sheet and financial
flexibility. At March 31, 2020,
Enerplus had approximately US$100
million of cash on its balance sheet and access to an
undrawn US$600 million senior
unsecured bank credit facility. The Company's only near-term debt
maturity is US$82 million in senior
notes due in May and June 2020, with
remaining maturities extending to 2026. Based on current market
conditions, Enerplus expects to remain in compliance with its debt
covenants during 2020.
Enerplus' 2020 adjusted funds flow will be supported by its
robust commodity hedging position, which is expected to provide
full year gains of approximately $150
million, based on recent forward strip oil prices.
In addition to its financial commodity hedging contracts,
Enerplus has fixed physical differential sales agreements for
approximately 13,000 barrels of oil per day in North Dakota at an estimated price of WTI less
US$5.00 per barrel for the remainder
of 2020. These volumes are largely in line with Enerplus' leasehold
obligations.
Cost reductions
Enerplus is making progress reducing
its operating costs through improved workflow, further project
prioritization and service cost reductions. Currently, Enerplus
anticipates that its 2020 unit operating expenses will be
$0.25 lower compared to its prior
guidance and will average approximately $8.25 per BOE.
Enerplus has also reduced cash compensation for its Board of
Directors, executives and employees. The Company anticipates that
its cash general and administrative expenses for 2020 will be
approximately $5 million lower than
the Company's original budget, with the potential for further
reductions.
Share repurchase program
Given the deterioration in
market conditions, Enerplus has suspended its share repurchase
program as it continues to prioritize its financial strength and
liquidity. The Company chose not to renew its normal course issuer
bid ("NCIB"), which expired on March 25,
2020, however, Enerplus does plans to renew its NCIB in due
course and recommence its share repurchase program when market
conditions improve.
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", "anticipate", "continue", "estimate",
"guidance", "believes" and "plans" 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: expected
production volumes, timing thereof and the anticipated production
mix; the proportion of our anticipated oil and gas production that
is hedged and the effectiveness of such hedges in protecting our
adjusted funds flow; the proportion of its production that may be
curtailed and the effect of such curtailment on Enerplus'
properties, operations and financial position; oil and natural gas
prices and differentials, our commodity risk management programs in
2020, and expected hedging gains in 2020; expectations regarding
our realized oil and natural gas prices; capital spending levels in
2020, financial capacity and liquidity and capital resources to
fund capital spending and working capital requirements in 2020;
Enerplus' costs reduction initiatives and the expected cost savings
therefrom in 2020.
The forward-looking information contained in this news
release reflects several material factors, expectations and
assumptions including, without limitation: 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 beyond our current
expectations; current commodity price, differentials and cost
assumptions; the general continuance of current or, where
applicable, assumed global economic and 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 comply with our debt covenants
during 2020; and the availability of third party services. 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:
continued instability, or further deterioration, in the global
economic and market environment, including from COVID-19; continued
decline in commodity prices environment or further volatility in
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' 2019 MD&A and in our other public
filings).
The forward-looking information contained in this press
release speaks only as of the date of this press release, and we do
not assume any obligation to publicly update or revise such
forward-looking information to reflect new events or circumstances,
except as may be required pursuant to applicable laws.
For further information, including financial and operating
results and our most recent corporate presentation, please visit
our website at www.enerplus.com or phone 1-800-319-6462.
Shareholders may, upon request, obtain a hard copy of Enerplus'
complete audited financial statements free of charge.
SOURCE Enerplus Corporation