Enerplus Corp (ERF)

[eFinanceMarkets]

$ERF Dakota Access pipeline has made big difference for Enerplus, CEO says

The completion of the Dakota Access pipeline has dramatically reduced shipping costs for companies operating in the Bakken shale, bringing overall costs in line with other U.S. shale producers, which should prove to be a "powerful advantage that we haven’t had for the past six or seven years,” Enerplus (NYSE:ERF) CEO CEO Ian Dundas tells Financial Post.

Before Dakota Access, ~25% of oil shipped out of North Dakota traveled by rail, but the figure is now 7%, and the increased availability of pipeline capacity has translated into much lower shipping costs for producers.

ERF was receiving a US$13/bbl discount for its oil in early 2014 vs. the WTI benchmark, mostly tied to higher shipping costs, but the total discount had shrunk to US$7 by last year and is expected to fall as low as US$3.50 in H2 2017, Dundas says.

“These are pretty dramatic moves when you talk about the lower margins that everyone is struggling with in a $50 oil world,” Dundas says.