Enerplus Corp (ERF)

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Enerplus Delivers Strong 2014 Operating-Results and Low-Cost Reserves Additions; Updates 2015 Strategy to Enhance Value and Balance Sheet Strength

Last update: 20/02/2015 6:00:07 am


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" at the conclusion of this news release. Readers are also referred to "Information Regarding Reserves, Resources and Operational Information", "Notice to U.S. Readers" and "Non-GAAP Measures" at the end of this news release for information regarding the presentation of the financial, reserves, contingent resources and operational information in this news release. A full copy of our 2014 Financial Statements and MD&A are 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.

CALGARY, Feb. 20, 2015 /CNW/ - Enerplus Corporation ("Enerplus") (TSX: ERF) (NYSE: ERF) is pleased to announce our results for the fourth quarter of 2014 as well as full year 2014 operating, financial and reserves results. We are also updating our outlook for 2015 with regard to our spending plans and our strategy to preserve our financial strength and enhance the value of our portfolio in the current commodity price environment.

2014 KEY TAKEAWAYS:
-- Production growth of 15% year-over-year (13% per share) to 103,130 BOE
per day

-- Strong funds flow growth of 14% year-over-year (12% per share)

-- Conservative debt-to-trailing-twelve-month funds flow ratio at year-end
of 1.3

-- Proved plus probable reserves growth of 7% year-over-year (6% per share),
replacing 175% of 2014 production, net of acquisitions and divestments,
at a low FD&A cost of $8.62 per BOE

-- Significant proved plus probable reserves additions of 75 MMBOE from
development capital spending at an F&D cost of $9.80 per BOE representing
a recycle ratio of 2.7

-- Continued portfolio rationalization with non-core divestments
representing 3,500 BOE per day of production and proceeds of $204 million
at $19.65 per BOE

2015 KEY TAKEAWAYS:
-- Further reduction in capital spending to $480 million (a 40% reduction
from 2014 levels and a 24% reduction from previous 2015 guidance)

-- A reduction in the monthly dividend from $0.09 per share to $0.05 per
share (a 44% reduction) effective with the April 2015 dividend

-- Non-core asset sales representing 1,900 BOE per day of production raising
proceeds of $182 million

-- Marcellus curtailment strategy to maximize value by restricting
production until natural gas prices improve

-- Reductions in capital spending and dividend, along with non-core asset
sales, results in adjusted payout ratio of less than 100%

-- Financial strength maintained with an expected debt-to-trailing-12 month
funds flow ratio of approximately 2.2 at the end of 2015

"In light of current market conditions, we believe it is prudent to defer activity, selectively restrict production and reduce our dividend to a more appropriate level until we gain more visibility to an improvement in costs and/or commodity prices" says Ian Dundas, President and Chief Executive Officer. "While these measures have modest implications to near-term funds flow, our primary focus is on balance sheet preservation and maximizing returns for our shareholders. This strategy positions us to re-establish profitable growth in the future and also consider acquisitions to complement our organic development inventory."

RESERVES/RESOURCES:

We delivered strong reserves/resources results in 2014:
-- Proved plus probable ("2P") reserves grew by 7% to 429 MMBOE (50% oil and
liquids). On a per share basis, 2P reserves increased by 6%
year-over-year.

-- Proved ("1P") reserves grew by 9% to 285 MMBOE, representing 66% of 2P
reserves. Proved producing reserves represent 74% of total 1P reserves.

-- 75 MMBOE of 2P reserves were added through our capital spending program
replacing over 200% of 2014 annual production. Well performance in both
North Dakota and the Marcellus continued to exceed the previous forecasts
of our independent reserves engineers and resulted in significant
positive technical revisions. Approximately 30% of additions were from
crude oil and 70% from natural gas.

-- 2P finding and development ("F&D") costs including future development
capital ("FDC") continued to improve, decreasing by 13% to $9.80 per BOE.
This represents a recycle ratio of 2.7 based on our operating netback of
$26.46 per BOE, before hedging, in 2014.

-- We sold various interests in non-core properties representing 11 MMBOE of
2P reserves at a value of $19.65 per BOE. Total 2P reserves additions,
net of our divestment activities, were approximately 66 MMBOE, replacing
175% of 2014 annual production.

-- 2P finding, development and acquisition ("FD&A") costs per BOE were $8.62
including FDC, relatively unchanged from 2013. On a three-year basis, 2P
FD&A costs, including FDC, continued to improve, declining by 17% to
$12.13 per BOE.

-- 2P reserves in Fort Berthold, North Dakota increased 16%, including
positive technical revisions, to 123 MMBOE, replacing over 300% of 2014
production at an attractive F&D cost of $16.87 per BOE. Based upon an
average operating netback of $47.10 per BOE in 2014, this represents a
recycle ratio of 2.8.

-- 2P reserves attributable to our Marcellus shale gas assets increased 40%,
including positive technical revisions, to 840 Bcf, replacing
approximately 450% of 2014 production at a low F&D cost of approximately
$0.50 per Mcf. With an average operating netback of $1.78 per Mcf in
2014, this represents a recycle ratio of 3.6.

-- Canadian reserves were impacted by the sale of non-core properties. 2P
additions were offset by dispositions and deletions of undeveloped
locations resulting in an overall decrease of 15% year-over-year to 145
MMBOE.

-- Economic best estimate contingent resources, within a portion of our
portfolio, increased by 86 MMBOE from year-end 2013, to 449 MMBOE. This
represents approximately 13 years of organic reserves replacement
potential based on our 2015 forecast production volumes.

-- Our 2P reserve life index remains virtually unchanged from 2013 at 10.7
years.

2014 FINANCIAL AND OPERATING HIGHLIGHTS:

4th Quarter 2014:
-- Despite the fall in commodity prices, funds flow was essentially
unchanged quarter over quarter at $213 million due to higher production
volumes and the strength of our hedging program.

-- Production continued to grow during the fourth quarter averaging
approximately 105,600 BOE per day, up modestly from the previous quarter
despite the sale of non-core production completed on September 30, 2014.
Compared to the same period in 2013, fourth quarter production was up
12%. We continued to see strong performance from our Bakken/Three Forks
properties in North Dakota with average production increasing by 2,900
BOE per day from the previous quarter. Crude oil and natural gas liquids
accounted for 44% of fourth quarter volumes.

-- Natural gas production from the Marcellus increased 5% from the previous
quarter, despite an average of 6,000 -- 7,000 BOE per day of production
voluntarily curtailed to preserve value in this low natural gas price
environment. Overall, corporate natural gas production declined slightly
quarter over quarter primarily as a result of non-core Canadian natural
gas asset sales.

-- Cash operating costs increased marginally from the third quarter to
$10.75 per BOE due to continued production curtailments on our lower
operating cost Marcellus properties. General and administrative expenses
also increased quarter over quarter to $2.62 per BOE as a result of
severance costs incurred in the quarter.

-- We invested $181 million in capital projects during the quarter, down
from $208 million in the previous quarter, primarily as a result of a
slowdown in activity in the Marcellus. Over three quarters of the
spending was directed to oil projects with a total of 25 net wells
drilled and 18 net wells brought on-stream.

-- Our adjusted payout ratio decreased to 113% compared to 122% in the
previous quarter, driven by lower capital spending in the fourth quarter.

Full Year 2014 - Operations:
-- We delivered annual production growth of 15% in 2014 (13% per share).
Having increased our production guidance twice during 2014, we achieved
our target of 102,000 -- 104,000 BOE per day with daily production
averaging 103,130 BOE. This is despite the sale of 3,500 BOE per day of
non-core production and significant natural gas production curtailment in
the Marcellus.

-- Total average liquids production increased by 5% in 2014 to approximately
43,800 BOE per day representing 42% of our production mix in 2014. We
continued to see significant increases in crude oil production from our
properties in Fort Berthold, growing production by over 30% in 2014.

-- Natural gas production increased by 23% to average 356 MMcf per day for
the year, representing 58% of Enerplus' production mix. This growth was
due to the acquisition of additional working interests in the Marcellus
in the fourth quarter of 2013, and the success of our Marcellus
development program throughout the year which resulted in a doubling of
production, from 95 MMcf per day in 2013 to approximately 188 MMcf per
day in 2014.

-- Despite the growth in natural gas production, approximately 5,000 BOE per

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February 20, 2015 06:00 ET (11:00 GMT)