Enerplus (ticker: ERF) is an independent exploration and production company with a concentrated portfolio of oil and natural gas assets both in Canada and the United States. The company’s operations include high growth opportunities in the Bakken/Three Forks, as well as stable, low decline crude oil production from a variety of crude oil waterflood properties across Western Canada. The company’s natural gas assets include a large land position in the Marcellus shale. In addition to the Marcellus and the Bakken, ERF also has a growing undeveloped natural gas land position in the liquids rich Deep Basin area of British Columbia and Alberta in addition to other conventional natural gas and oil production throughout the Western Canadian Sedimentary Basin.
On June 27, 2013, ERF announced it has entered into agreements to sell non-core assets located in Canada for $80 million. The assets include non-operated properties that produce 1,000 BOEPD. They will be sold to multiple parties and closings are anticipated during Q3’13.
Despite the sale of production, ERF maintained its production guidance for 2013 given the strong operational performance to date (obtaining a nine percent production increase in 2012). The company expects annual average production volumes will average approximately 85,000 BOEPD, at the high end of its previous guidance range. ERF’s 2012 average production rate was 82,098 BOEPD.
“We now expect annual average production volumes will average approximately 85,000 BOE/day, at the high end of our previous guidance range.” Ian Dundas, incoming President and Chief Executive Officer said. “Our financial flexibility has improved and our debt-to-funds flow ratio is now expected to be 1.6 times at year end.”
During 2013, Enerplus has sold, or has agreements to sell approximately 1,400 BOEPD of net production from non-core assets for $82,143 per flowing BOEPD. In comparison, the company sold $423 million worth of non-cores assets in 2012. In addition to today’s sale announcement, ERF was also able to pick up the remaining 50% working interest in the Pouce Coupe South Boundary B Unit #1 for approximately $30 million. These acquired interests produce approximately 375 BOEPD representing a transaction value of $80,000 per flowing BOEPD.
To put it simply, ERF has been able to sell non-core assets at a higher value point than they are able to buy assets with strong future upside. As of June 21, 2013, ERF was trading at an enterprise value to trailing twelve months production of $60,894 per flowing BOEPD, well below the average $93,450 per flowing BOEPD for the 25 companies in EnerCom’s Canadian E&P database.
Analyst and Investor Day
Enerplus held an investor day on June 27, 2013. You can listen to the webcast here.
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