All financial information contained within this news release
has been prepared in accordance with U.S. GAAP, except as noted
under "Non-GAAP Measures". 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" at the conclusion of
this news release. A full copy of Enerplus' Second Quarter 2020
Financial Statements and MD&A are available on the Company's
website at www.enerplus.com, under its SEDAR profile at
www.sedar.com and on the EDGAR website at www.sec.gov.
CALGARY, AB, Aug. 7, 2020 /CNW/ - Enerplus Corporation
("Enerplus" or the "Company") (TSX: ERF) (NYSE: ERF) today
reported its second quarter 2020 operating and financial
results. Cash flow from operating activities for the second quarter
was $90.6 million and adjusted funds
flow was $70.0 million. Enerplus
reported a second quarter net loss of $609.3
million, or $2.74 per share.
The Company recognized a $426.8
million non-cash impairment on property, plant and equipment
("PP&E") and a $202.8 million
non-cash impairment on goodwill as a result of the continued market
volatility and low commodity price environment. Excluding these
impairments and certain other non-cash or non-recurring items,
Enerplus' second quarter 2020 adjusted net loss was $41.2 million, or $0.19 per share.
HIGHLIGHTS
- Second quarter production was 87,360 BOE per day, including
liquids of 48,097 barrels per day
- Adjusted funds flow of $70
million exceeded capital spending in the second quarter,
generating free cash flow of $30
million, with additional free cash flow forecast during the
second half of 2020
- Reinstated 2020 production guidance: 88,000 to 90,000 BOE per
day, including 49,000 to 50,000 barrels per day of liquids
- 2020 capital spending unchanged at $300
million
- Maintained low financial leverage; net debt to adjusted funds
flow ratio was 1.0 times at quarter-end
- Advantaged position for rapid future capital deployment with
drilled uncompleted well inventory
"We have seen extraordinary volatility in the first 6-months of
2020 as the COVID-19 pandemic and OPEC supply issues meaningfully
impacted the industry," commented Ian C.
Dundas, President and Chief Executive Officer of Enerplus.
"Enerplus took decisive action to respond to this instability,
enabling the company to navigate this period and maintain financial
resilience. Despite the challenging conditions, we delivered strong
operational execution and cost performance in the second quarter,
which has helped position the business to deliver free cash flow in
2020 and maintain our top-quartile balance sheet strength."
SECOND QUARTER SUMMARY
Production
Production in the second quarter of 2020
was 87,360 BOE per day, a decrease of 13% compared to the same
period a year ago, and 11% lower than the prior quarter. Crude oil
and natural gas liquids production in the second quarter of 2020
was 48,097 barrels per day, a decrease of 9% compared to the same
period a year ago, and 12% lower than the prior quarter.
The lower production was due to the temporary curtailment of
production during the second quarter and the suspension of all
operated drilling and completion activity in response to the
significant decline in crude oil prices. Enerplus curtailed
approximately 25% of its liquids volumes in May to protect against
selling oil at negative margins. The Company began restoring
curtailed volumes in June as oil prices improved, with curtailed
volumes largely restored in July.
Financial Highlights
Enerplus reported adjusted funds
flow for the second quarter of 2020 of $70.0
million compared to $186.0
million in the second quarter of 2019. The decrease from the
prior year period was due to lower commodity prices and production
levels in the second quarter of 2020.
The Company reported a net loss of $609.3
million in the second quarter of 2020 compared to net income
of $85.1 million in the same period
in 2019. The decrease from the prior year period was primarily the
result of non-cash impairments and lower commodity prices and
production in the second quarter of 2020. In the second quarter of
2020, Enerplus recorded a $426.8
million non-cash impairment on PP&E and a $202.8 million non-cash impairment on goodwill as
a result of the continued market volatility and low commodity price
environment. Excluding these impairments and certain other non-cash
or non-recurring items, Enerplus' second quarter 2020 adjusted net
loss was $41.2 million, or
$0.19 per share, compared to adjusted
net income of $74.4 million, or
$0.32 per share in the second quarter
of 2019. Enerplus recorded a current tax recovery of $14.4 million in the second quarter of 2020
related to the recognition of the Company's final U.S. Alternative
Minimum Tax refund.
Enerplus' second quarter 2020 realized Bakken oil price
differential was US$4.36 per barrel
below WTI, compared to US$3.00 per
barrel below WTI in the second quarter of 2019. Bakken oil
differentials materially weakened during April as refineries
reduced purchases given the significant reduction in demand for
refined products due to the COVID-19 pandemic. Despite this
weakness, Enerplus outperformed the benchmark index (Bakken DAPL –
WTI) by temporarily curtailing production during the weakest period
and through the diversification of sales into higher priced
markets.
The Company's realized Marcellus natural gas price differential
was US$0.49 per Mcf below NYMEX
during the second quarter of 2020 compared to US$0.57 per Mcf below NYMEX in the second quarter
of 2019. The second quarter differentials reflect lower seasonal
natural gas demand in the local market.
In the second quarter of 2020, Enerplus' operating expenses were
$6.84 per BOE, compared to
$7.84 per BOE during the same period
in 2019. The lower unit operating expenses were primarily driven by
the proactive price related shut-in of the Company's highest unit
expense oil wells, and from reduced well servicing activity and
lower service costs.
Second quarter transportation costs were $4.28 per BOE and cash general and administrative
expenses were $1.14 per BOE.
Exploration and development capital spending in the second
quarter was $40.1 million, reflecting
strong operational execution which drove continued improvement in
total well costs. Capital activity in the quarter was associated
with drilling 2.5 net wells and bringing 8.9 net wells on
production, including operated and non-operated activity across the
Company.
Enerplus ended the second quarter of 2020 with a strong balance
sheet and significant liquidity. The Company had total debt of
$524.3 million, cash of $6.2 million and US$599
million available on its US$600
million bank credit facility. The Company's net debt to
adjusted funds flow ratio was 1.0 times at quarter-end. During the
second quarter, Enerplus made scheduled principal repayments of
US$81.6 million on its 2009 and 2012
senior notes.
Asset Activity
Williston Basin production averaged
44,081 BOE per day (81% oil) during the second quarter of 2020, a
decrease of 6% compared to the same period a year ago, and 11%
lower than the prior quarter, reflecting the curtailed production
during the second quarter of 2020. During the second quarter, and
prior to the suspension of the Company's drilling and completion
program in mid-April, the Company drilled one gross operated well
and completed a seven-well pad (97% average working interest). The
seven-well pad was brought on production during June concurrent
with improving oil prices. Enerplus currently has 33 gross
(27 net) operated drilled uncompleted wells in inventory in
North Dakota.
Marcellus production averaged 197 MMcf per day during the second
quarter of 2020, a decrease of 17% compared to the same period in
2019, and 9% lower than the prior quarter. The Company participated
in drilling 15 gross non-operated wells (4% average working
interest) and brought 10 gross non-operated wells (2% average
working interest) on production during the quarter.
Canadian waterflood production averaged 6,338 BOE per day (94%
oil) during the second quarter of 2020, a decrease of 31% compared
to the same period in 2019, and 23% lower than the prior quarter,
reflecting the curtailed production during the second quarter of
2020.
In the DJ Basin, the Company participated in drilling 15 gross
non-operated wells (6% average working interest) in the second
quarter and brought two gross operated wells (90% average working
interest) on production. Enerplus currently has three gross (2.6
net) operated drilled uncompleted wells in inventory in the DJ
Basin.
2020 GUIDANCE AND 2021 MAINTENANCE CAPITAL
Although there remains significant uncertainty regarding the
timing and path forward for a global economic recovery from the
impacts of COVID-19, given the relative stability in oil prices
since late in the second quarter, Enerplus is reinstating 2020
guidance.
Enerplus expects its 2020 production to average 88,000 to 90,000
BOE per day, including 49,000 to 50,000 barrels per day of crude
oil and natural gas liquids. Enerplus is maintaining its
$300 million capital budget in 2020.
Remaining activity is primarily focused on non-operated drilling
and completions in the Marcellus and North Dakota, along with four operated
completions in North Dakota
planned for the fourth quarter. In total, the Company expects to
complete approximately six net wells (operated and non-operated) in
North Dakota and two net wells in
the Marcellus in the second half of 2020. Enerplus expects this
plan to generate free cash flow in 2020 based on current market
conditions.
With this outlook, Enerplus estimates it could maintain its
second half 2020 liquids production flat in 2021 for approximately
$300 million. This maintenance
capital estimate includes an allocation for drilling in 2021 to
provide an inventory of wells to complete in 2022, and an
allocation for the Company's Marcellus natural gas asset.
In early July, a U.S. district court ordered the Dakota Access
Pipeline ("DAPL") to cease operations after it found that, due to
deficiencies in the original environmental review, the U.S. Army
Corps of Engineers are required to complete a more thorough
Environmental Impact Statement. On August
5, an appeals court granted the pipeline owners' request for
a stay over the lower court order requiring the pipeline to cease
operations. As a result, there is no outstanding court order in
place requiring DAPL to shut down at this time and the legal
process is ongoing.
As a result of the above and assuming DAPL continues to operate,
the Company expects the market price for Bakken oil to remain
constructive and estimates its realized 2020 Bakken oil price
differential will average approximately US$5.00 per barrel below WTI. For the second half
of 2020, Enerplus has fixed differential sales agreements in
North Dakota for approximately
16,000 barrels per day at an estimated price of US$6.00 per barrel below WTI, based on current
market prices.
2020 Guidance Summary
The Company's reinstated guidance for 2020 is in the table
below.
2020
Guidance
|
Capital
spending
|
$300 million
|
Average annual
production
|
88,000 – 90,000
BOE/day
|
Average annual crude
oil and natural gas liquids production
|
49,000 – 50,000
bbls/day
|
Average royalty and
production tax rate
|
26%
|
Operating
expense
|
$8.25/BOE
|
Transportation
expense
|
$4.15/BOE
|
Cash G&A
expense
|
$1.40/BOE
|
|
2020 Full-Year
Differential/Basis Outlook (1)
|
U.S. Bakken crude oil
differential (compared to WTI crude oil)(2)
|
US$(5.00)/bbl
|
Marcellus natural gas
sales price differential (compared to NYMEX natural gas)
|
US$(0.45)/Mcf
|
(1)
|
Excluding
transportation costs.
|
(2)
|
Based on the
continued operation of the Dakota Access Pipeline.
|
Risk Management
As of August 6, 2020, Enerplus has
an average of 24,500 barrels per day of crude
oil hedged through financial derivative contracts for the
remainder of 2020 and 6,000 barrels per day for the first half of
2021.
|
WTI Crude Oil (US$/bbl)(1)(2)
|
|
Jul 1, 2020
– Sep
30, 2020
|
Oct 1, 2020 – Dec
31, 2020
|
Jan 1, 2021
– Jun 30,
2021
|
|
Swaps
|
|
|
|
Volume
(bbls/d)
|
7,000
|
—
|
—
|
Sold Swaps
|
$ 36.02
|
—
|
—
|
|
|
|
|
Put
Spreads
|
|
|
|
Volume
(bbls/d)
|
16,000
|
16,000
|
—
|
Sold Puts
|
$ 46.88
|
$ 46.88
|
—
|
Purchased
Puts
|
$ 57.50
|
$ 57.50
|
—
|
|
|
|
|
Three Way
Collars
|
|
|
|
Volume
(bbls/d)
|
5,000
|
5,000
|
6,000
|
Sold Puts
|
$ 48.00
|
$ 48.00
|
$ 32.00
|
Purchased
Puts
|
$ 56.25
|
$ 56.25
|
$ 40.00
|
Sold Calls
|
$ 65.00
|
$ 65.00
|
$ 50.00
|
(1)
|
All of the sold puts
on the put spreads are settled annually at the end of 2020 rather
than monthly.
|
(2)
|
The total average
deferred premium spent on these hedges is US$1.75/bbl from July 1,
2020 to December 31, 2020 and US$0.03/bbl from January 1, 2021 to
June 30, 2021.
|
DIRECTOR RETIREMENT
Enerplus announced the retirement of Mr. Michael Culbert from the Company's board of
directors. Mr. Culbert has been a valued member of the board of
directors since his appointment in March
2014 and has provided the board with insightful guidance
gained through his long career in the oil and gas industry.
Enerplus wishes to acknowledge and thank him for his many
contributions and dedicated service.
SECOND QUARTER PRODUCTION AND Operational summary
tables
Average Daily Production(1)
|
Three months
ended June 30, 2020
|
|
Six months
ended June 30, 2020
|
|
Crude Oil
(Mbbl/d)
|
Natural
Gas
Liquids
(Mbbl/d)
|
Natural
gas
(MMcf/d)
|
Total
Production
(Mboe/d)
|
|
Crude Oil
(Mbbl/d)
|
Natural
Gas
Liquids
(Mbbl/d)
|
Natural
gas
(MMcf/d)
|
Total
Production
(Mboe/d)
|
Williston
Basin
|
35.6
|
4.2
|
25.2
|
44.1
|
|
37.7
|
4.4
|
28.0
|
46.8
|
Marcellus
|
-
|
-
|
196.7
|
32.8
|
|
-
|
-
|
206.3
|
34.4
|
Canadian
Waterfloods
|
6.0
|
0.1
|
1.8
|
6.3
|
|
6.8
|
0.1
|
2.2
|
7.3
|
Other(2)
|
1.6
|
0.6
|
11.8
|
4.2
|
|
1.5
|
0.7
|
12.7
|
4.3
|
Total
|
43.2
|
4.9
|
235.6
|
87.4
|
|
46.1
|
5.1
|
249.2
|
92.8
|
(1)
|
Table may not add due
to rounding.
|
(2)
|
Comprises DJ Basin
and non-core properties in Canada.
|
Summary of Wells Drilled(1)
|
Three months
ended June 30, 2020
|
|
Six months
ended June 30, 2020
|
|
Operated
|
|
Non-Operated
|
|
Operated
|
|
Non-Operated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
|
Net
|
|
Gross
|
Net
|
|
Gross
|
Net
|
|
Gross
|
Net
|
|
|
|
|
|
|
|
|
|
|
|
|
Williston
Basin
|
1
|
1.0
|
|
-
|
-
|
|
19
|
18.8
|
|
3
|
1.1
|
Marcellus
|
-
|
-
|
|
15
|
0.6
|
|
-
|
-
|
|
30
|
1.7
|
Canadian
Waterfloods
|
-
|
-
|
|
-
|
-
|
|
10
|
10.0
|
|
-
|
-
|
Other(2)
|
-
|
-
|
|
15
|
0.9
|
|
5
|
4.4
|
|
16
|
0.9
|
Total
|
1
|
1.0
|
|
30
|
1.5
|
|
34
|
33.2
|
|
49
|
3.7
|
(1)
|
Table may not add due
to rounding.
|
(2)
|
Comprises DJ Basin
and non-core properties in Canada.
|
Summary of Wells Brought On-Stream(1)
|
Three months
ended June 30, 2020
|
|
Six months
ended June 30, 2020
|
|
Operated
|
|
Non-Operated
|
|
Operated
|
|
Non-Operated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
|
Net
|
|
Gross
|
Net
|
|
Gross
|
Net
|
|
Gross
|
Net
|
|
|
|
|
|
|
|
|
|
|
|
|
Williston
Basin
|
7
|
6.8
|
|
-
|
-
|
|
18
|
15.8
|
|
7
|
1.9
|
Marcellus
|
-
|
-
|
|
10
|
0.2
|
|
-
|
-
|
|
20
|
0.6
|
Canadian
Waterfloods
|
-
|
-
|
|
-
|
-
|
|
-
|
-
|
|
-
|
-
|
Other(2)
|
2
|
1.8
|
|
-
|
-
|
|
2
|
1.8
|
|
1
|
0.0
|
Total
|
9
|
8.6
|
|
10
|
0.2
|
|
20
|
17.6
|
|
28
|
2.5
|
(1)
|
Table may not add due
to rounding.
|
(2)
|
Comprises DJ Basin
and non-core properties in Canada.
|
Q2 2020 Conference Call Details
A conference call hosted by Ian C.
Dundas, President and CEO will be held at 9:00 AM MT (11:00 AM
ET) today to discuss these results. Details of the
conference call are as follows:
Date:
|
Friday, August 7,
2020
|
Time:
|
9:00 AM MT (11:00 AM
ET)
|
Dial-In:
|
587-880-2171
(Alberta)
|
|
1-888-390-0546 (Toll
Free)
|
Conference
ID:
|
65642132
|
Audiocast:
|
https://produceredition.webcasts.com/starthere.jsp?ei=1338878&tp_key=8226100b06
|
To ensure timely participation in the conference call, callers
are encouraged to dial in 15 minutes prior to the start time to
register for the event. A telephone replay will be available for 30
days following the conference call and can be accessed at the
following numbers:
Replay
Dial-In:
|
1-888-390-0541 (Toll
Free)
|
Replay
Passcode:
|
642132 #
|
SELECTED FINANCIAL
RESULTS
|
|
Three months
ended
June 30,
|
|
Six months
ended
June 30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Financial (CDN$,
thousands, except ratios)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income/(Loss)
|
|
$
|
(609,323)
|
|
$
|
85,084
|
|
$
|
(606,447)
|
|
$
|
104,242
|
Adjusted Net
Income/(Loss)(1)
|
|
|
(41,185)
|
|
|
74,366
|
|
|
(20,095)
|
|
|
146,824
|
Cash Flow from
Operating Activities
|
|
|
90,560
|
|
|
236,991
|
|
|
213,299
|
|
|
345,942
|
Adjusted Funds
Flow(1)
|
|
|
69,997
|
|
|
186,038
|
|
|
183,224
|
|
|
354,793
|
Dividends to
Shareholders - Declared
|
|
|
6,675
|
|
|
7,034
|
|
|
13,345
|
|
|
14,196
|
Total Debt Net of
Cash(1)
|
|
|
518,094
|
|
|
359,006
|
|
|
518,094
|
|
|
359,006
|
Capital
Spending
|
|
|
40,084
|
|
|
207,208
|
|
|
203,709
|
|
|
368,001
|
Property and Land
Acquisitions
|
|
|
3,416
|
|
|
1,911
|
|
|
5,672
|
|
|
4,936
|
Property
Divestments
|
|
|
(63)
|
|
|
9,601
|
|
|
5,515
|
|
|
10,067
|
Net Debt to Adjusted
Funds Flow Ratio(1)
|
|
|
1.0x
|
|
|
0.5x
|
|
|
1.0x
|
|
|
0.5x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial per
Weighted Average Shares Outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income /(Loss) -
Basic
|
|
$
|
(2.74)
|
|
$
|
0.36
|
|
$
|
(2.73)
|
|
$
|
0.44
|
Net Income/(Loss) -
Diluted
|
|
|
(2.74)
|
|
|
0.36
|
|
|
(2.73)
|
|
|
0.43
|
Weighted Average
Number of Shares Outstanding (000's) - Basic
|
|
|
222,557
|
|
|
235,490
|
|
|
222,457
|
|
|
237,197
|
Weighted Average
Number of Shares Outstanding (000's) - Diluted
|
|
|
222,557
|
|
|
238,189
|
|
|
222,457
|
|
|
239,947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Financial
Results per BOE(2)(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil & Natural Gas
Sales(4)
|
|
$
|
19.53
|
|
$
|
44.00
|
|
$
|
26.11
|
|
$
|
44.33
|
Royalties and
Production Taxes
|
|
|
(5.15)
|
|
|
(11.26)
|
|
|
(6.74)
|
|
|
(10.90)
|
Commodity Derivative
Instruments
|
|
|
6.73
|
|
|
(0.13)
|
|
|
5.12
|
|
|
0.55
|
Cash Operating
Expenses
|
|
|
(6.84)
|
|
|
(7.84)
|
|
|
(7.90)
|
|
|
(8.26)
|
Transportation
Costs
|
|
|
(4.28)
|
|
|
(4.02)
|
|
|
(4.11)
|
|
|
(3.97)
|
Cash General and
Administrative Expenses
|
|
|
(1.14)
|
|
|
(1.26)
|
|
|
(1.26)
|
|
|
(1.39)
|
Cash Share-Based
Compensation
|
|
|
(0.15)
|
|
|
0.07
|
|
|
0.09
|
|
|
(0.04)
|
Interest, Foreign
Exchange and Other Expenses
|
|
|
(1.69)
|
|
|
(0.79)
|
|
|
(1.29)
|
|
|
(0.75)
|
Current Income Tax
Recovery
|
|
|
1.81
|
|
|
1.52
|
|
|
0.85
|
|
|
1.14
|
Adjusted Funds
Flow(1)
|
|
$
|
8.82
|
|
$
|
20.29
|
|
$
|
10.87
|
|
$
|
20.71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SELECTED OPERATING
RESULTS
|
|
Three months
ended
June 30,
|
|
Six months
ended
June 30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Average Daily
Production(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude Oil
(bbls/day)
|
|
|
43,168
|
|
|
48,141
|
|
|
46,106
|
|
|
44,642
|
Natural Gas Liquids
(bbls/day)
|
|
|
4,929
|
|
|
4,720
|
|
|
5,137
|
|
|
4,552
|
Natural Gas
(Mcf/day)
|
|
|
235,579
|
|
|
287,000
|
|
|
249,246
|
|
|
272,863
|
Total
(BOE/day)
|
|
|
87,360
|
|
|
100,694
|
|
|
92,784
|
|
|
94,671
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Crude Oil and
Natural Gas Liquids
|
|
|
55%
|
|
|
52%
|
|
|
55%
|
|
|
52%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Selling
Price (3)(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude Oil (per
bbl)
|
|
$
|
30.55
|
|
$
|
74.42
|
|
$
|
41.59
|
|
$
|
70.82
|
Natural Gas Liquids
(per bbl)
|
|
|
(0.96)
|
|
|
17.96
|
|
|
6.16
|
|
|
18.53
|
Natural Gas (per
Mcf)
|
|
|
1.63
|
|
|
2.63
|
|
|
1.87
|
|
|
3.46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Wells
Drilled
|
|
|
3
|
|
|
13
|
|
|
37
|
|
|
30
|
(1)
|
These non-GAAP
measures may not be directly comparable to similar measures
presented by other entities. See "Non-GAAP Measures" section in
this news release.
|
(2)
|
Non-cash amounts have
been excluded.
|
(3)
|
Based on Company
interest production volumes. See "Presentation of Production
Information" below.
|
(4)
|
Before transportation
costs, royalties, and commodity derivative instruments.
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
Average Benchmark
Pricing
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
WTI crude oil
(US$/bbl)
|
|
$
|
27.85
|
|
$
|
59.81
|
|
$
|
37.01
|
|
$
|
57.36
|
Brent (ICE) crude oil
(US$/bbl)
|
|
|
33.27
|
|
|
68.32
|
|
|
42.12
|
|
|
66.11
|
NYMEX natural gas –
last day (US$/Mcf)
|
|
|
1.72
|
|
|
2.64
|
|
|
1.83
|
|
|
2.89
|
USD/CDN average
exchange rate
|
|
|
1.39
|
|
|
1.34
|
|
|
1.37
|
|
|
1.33
|
|
|
|
|
|
|
|
Share Trading
Summary
|
|
CDN(1) - ERF
|
|
U.S.(2) - ERF
|
For the three
months ended June 30, 2020
|
|
(CDN$)
|
|
(US$)
|
High
|
|
$
|
5.18
|
|
$
|
3.73
|
Low
|
|
$
|
1.95
|
|
$
|
1.38
|
Close
|
|
$
|
3.82
|
|
$
|
2.83
|
(1)
|
TSX and other
Canadian trading data combined.
|
(2)
|
NYSE and other
U.S. trading data combined.
|
|
|
|
|
|
|
|
2020 Dividends per Share
|
|
CDN$
|
|
US$(1)
|
First Quarter
Total
|
|
$
|
0.03
|
|
$
|
0.02
|
Second Quarter
Total
|
|
$
|
0.03
|
|
$
|
0.02
|
Total
|
|
$
|
0.06
|
|
$
|
0.04
|
(1)
|
CDN$ dividends
converted at the relevant foreign exchange rate on the
payment date.
|
Currency and Accounting Principles
All amounts in
this news release are stated in Canadian dollars unless otherwise
specified. All financial information in this news release has been
prepared and presented in accordance with U.S. GAAP, except as
noted below under "Non-GAAP Measures".
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 natural 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
Under U.S.
GAAP oil and gas sales are generally presented net of royalties and
U.S. industry protocol is to present production volumes net of
royalties. Under Canadian industry protocol oil and gas sales and
production volumes are presented on a gross basis before deduction
of royalties. To continue to be comparable with its Canadian peer
companies, the summary results contained within this news release
presents Enerplus' production and BOE measures on a before royalty
company interest basis. All production volumes and revenues
presented herein are reported on a "company interest" basis, before
deduction of Crown and other royalties, plus Enerplus' royalty
interest. All references to "liquids" in
this news release include light and medium crude oil, heavy oil and
tight oil (all together referred to as "crude oil") and natural gas
liquids on a combined basis.
FORWARD-LOOKING INFORMATION AND STATEMENTS
This news release contains certain forward-looking
information and statements ("forward-looking information") within
the meaning of applicable securities laws. The use of any of the
words "expect", "anticipate", "continue", "estimate", "guidance",
"ongoing", "may", "will", "project", "plans", "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: expected capital spending levels in 2020 and
impact thereof on our production levels and land holdings, as well
as our free cash flow; expected production volumes; expected
operating strategy in 2020, including the proportion of Enerplus'
production that may be curtailed and the effect of such actions on
its properties, operations and financial position; the proportion
of our anticipated oil and gas production that is hedged and the
expected effectiveness of such hedges in protecting our adjusted
funds flow; the results from our drilling program and the timing of
related production; oil and natural gas prices and differentials,
and our commodity risk management program in 2020; expectations
regarding our realized oil and natural gas prices; expected
operating, transportation and cash G&A costs; expectations
regarding our 2021 production and capital spending levels required
to achieve that production; potential future non-cash PP&E
impairments, as well as relevant factors that may affect such
impairment; future debt and working capital levels and net debt to
adjusted funds flow ratio and adjusted payout ratio, financial
capacity, liquidity and capital resources to fund capital spending
and working capital requirements; expectations regarding our
ability to comply with debt covenants under our bank credit
facility and outstanding senior notes; Enerplus' costs reduction
initiatives; and the amount of future cash dividends that we may
pay to our shareholders.
The forward-looking information contained in this news
release reflects several material factors and expectations and
assumptions of Enerplus 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 and/or low commodity
price environment 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
industry conditions; the continuation of assumed tax, royalty and
regulatory regimes; the accuracy of the estimates of our reserve
and contingent resource volumes; 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; the availability of
third party services; and the extent of our liabilities. In
addition, our expected 2020 capital expenditures and operating
strategy described in this news release is based on the rest of the
year prices and exchange rate of: a WTI price of US$41.19/bbl, a NYMEX price of US$1.94/Mcf, and a USD/CDN exchange rate of 1.35.
Enerplus believes 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. Current
conditions, economic and otherwise, render assumptions, although
reasonable when made, subject to greater uncertainty.
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 global economic
and market environment, including from COVID-19; continued
low commodity prices environment or further decline and/or
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 identified in our MD&A, our
Annual Information Form, our Annual MD&A and Form 40-F as at
December 31, 2019).
The forward-looking information contained in this news
release speak only as of the date of this news release. Enerplus
does not undertake any obligation to publicly update or revise any
forward-looking information contained herein, except as required by
applicable laws
NON-GAAP MEASURES
In this news release, we use the terms "adjusted funds flow",
"adjusted net income", "free cash flow", "net debt to adjusted
funds flow ratio" and "total debt net of cash" as measures to
analyze financial and operating performance, leverage and
liquidity. "Adjusted funds flow" is calculated as cash flow
generated from operating activities but before changes in non-cash
operating working capital and asset retirement obligation
expenditures. "Adjusted net income" is calculated as net income
adjusted for unrealized derivative instrument gain/loss, asset
impairment, unrealized foreign exchange gain/loss, the tax effect
of these items, goodwill impairment, the impact of statutory
changes to the Company's corporate tax rate, and the valuation
allowance on our deferred income tax assets. "Free cash flow" is
calculated as adjusted funds flow minus capital spending. "Net debt
to adjusted funds flow ratio" is calculated as total debt net of
cash and cash equivalents, divided by a trailing 12 months of
adjusted funds flow. "Total debt net of cash" is calculated as
senior notes plus any outstanding bank credit facility balance,
minus cash and cash equivalents. Calculation of these terms is
described in Enerplus' MD&A under the "Non-GAAP Measures"
section.
Enerplus believes that, in addition to net earnings and other
measures prescribed by U.S. GAAP, the terms "adjusted funds flow",
"net debt to adjusted funds flow", and "total debt net of cash" are
useful supplemental measures as they provide an indication of the
results generated by Enerplus' principal business activities.
However, these measures are not measures recognized by U.S. GAAP
and do not have a standardized meaning prescribed by U.S. GAAP.
Therefore, these measures, as defined by Enerplus, may not be
comparable to similar measures presented by other issuers. For
reconciliation of these measures to the most directly comparable
measure calculated in accordance with U.S. GAAP, and further
information about these measures, see disclosure under "Non-GAAP
Measures" in Enerplus' Second Quarter 2020 MD&A.
Electronic copies of Enerplus Corporation's Second Quarter 2020
MD&A and Financial Statements, along with other public
information including investor presentations, are available on its
website at www.enerplus.com. Shareholders may, upon request,
receive a printed copy of the Company's audited financial
statements at any time.
Follow @EnerplusCorp on Twitter at
https://twitter.com/EnerplusCorp.
Ian C. Dundas
President & Chief Executive Officer
Enerplus Corporation
SOURCE Enerplus Corporation