All amounts in this news release are presented in United States dollars unless otherwise specified. All financial information contained within this news release has been prepared in accordance with U.S. GAAP. Production information, unless otherwise stated, is presented on a net basis (after deduction of royalty obligations). 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 "Notice Regarding Information Contained in this News Release" and "Non-GAAP and Other Financial 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' first quarter 2024 and annual 2023 Financial Statements and associated MD&A are or will be available on our website at www.enerplus.com, under our profile on SEDAR+ at www.sedarplus.ca and on the EDGAR website at www.sec.gov.
CALGARY, AB, May 8, 2024 /CNW/ - Enerplus Corporation ("Enerplus" or the "Company") (TSX:ERF) (NYSE:ERF) today announced financial and operating results for the first quarter of 2024. Due to the pending combination with Chord Energy Corporation ("Chord"), Enerplus will not host a conference call or webcast to discuss its first quarter results.
The Company reported first quarter 2024 cash flow from operating activities and adjusted funds flow of $128.7 million and $173.1 million, respectively, compared to $241.4 million and $260.4 million in the first quarter of 2023. Cash flow from operating activities decreased from the prior year period primarily due to lower natural gas production and weaker commodity prices.
FIRST QUARTER HIGHLIGHTS
Adjusted funds flow(1) was $173.1 million (inclusive of $7.8 million of transaction costs associated with the pending combination with Chord) Capital spending was $126.7 million Generated free cash flow(1) of $46.4 million First quarter total production was 87,151 BOE per day, including liquids production of 56,513 barrels per day Strong operational momentum expected to drive approximately 15% sequential liquids production growth in the second quarter of 2024(1) This is a non-GAAP financial measure. Refer to "Non-GAAP and Other Financial Measures" section for more information.
"Our positive operating performance is continuing in 2024," said Ian C. Dundas, President and CEO. "We are delivering strong results across our North Dakota position including improving cycle times and excellent well productivity. With this operating momentum and our liquids volumes building into the second quarter, we remain well positioned relative to our 2024 outlook. Our pending combination with Chord will further enhance the value proposition for our shareholders by bringing together our premier asset bases, operational abilities and technical acumen."
FIRST QUARTER SUMMARY
Production in the first quarter of 2024 was 87,151 BOE per day, a decrease of 11% compared to the same period in 2023, and 16% lower than the prior quarter. Crude oil and natural gas liquids production in the first quarter of 2024 was 56,513 barrels per day, in line with the same period a year ago, and 16% lower than the prior quarter. The lower production compared to the prior quarter was driven by the planned sequencing of Enerplus' completions program in North Dakota, with no operated wells brought online during the fourth quarter of 2023, and lower natural gas production due to price-related curtailments in the Marcellus. First quarter liquids production was also impacted by severe winter weather in North Dakota during January 2024.
Enerplus reported first quarter 2024 net income of $66.1 million, or $0.32 per share (basic), compared to net income of $137.5 million, or $0.63 per share (basic), in the same period in 2023. Excluding certain non-cash or non-recurring items, adjusted net income(1) for the first quarter of 2024 was $73.1 million, or $0.36 per share (basic), compared to $140.7 million, or $0.65 per share (basic), during the same period in 2023. First quarter 2024 net income and adjusted net income were lower than the prior year period primarily due to lower natural gas production and a decrease in realized commodity prices, offset by lower tax expense. Transaction costs of $7.8 million related to the proposed combination with Chord were also recorded during the quarter, which contributed to the lower adjusted net income relative to the prior year period.
Enerplus' first quarter 2024 realized Bakken oil price differential was $2.64 per barrel below WTI, compared to $0.06 per barrel above WTI in the first quarter of 2023 due to weaker refinery utilizations and higher basin production levels in the first quarter of 2024.
The Company's realized Marcellus natural gas price differential was $0.06 per Mcf above NYMEX during the first quarter of 2024, compared to $0.64 per Mcf below NYMEX in the first quarter of 2023 due to basis tightening resulting from lower benchmark prices and strong cash prices during cold weather events in the first quarter of 2024.
Operating expenses were $12.86 per BOE in the first quarter of 2024, compared to $10.56 per BOE during the first quarter of 2023. The increase in per unit operating expenses compared to the prior year period was primarily due to higher planned well service activity and a greater proportion of production from North Dakota due to limited capital investment and price-related production curtailments in the Marcellus.
Cash general and administrative expenses for the first quarter of 2024 were $1.20 per BOE compared to $1.48 per BOE during the same period in 2023.
Current tax expense was $2.4 million in the first quarter of 2024.
Capital spending totaled $126.7 million in the first quarter of 2024.
Enerplus ended the first quarter of 2024 with total debt of $174.1 million and cash of $33.4 million. Enerplus was drawn $51.5 million on its $1.3 billion credit facilities.
(1) This is a non-GAAP financial measure. Refer to "Non-GAAP and Other Financial Measures" section for more information.
OPERATIONS
North Dakota production averaged 66,393 BOE per day during the first quarter of 2024, approximately flat compared with the same period a year ago, and 15% lower than the prior quarter due to the planned sequencing of the Company's completions program and severe winter weather during January 2024. During the first quarter, Enerplus drilled 21 gross operated wells (76% average working interest) and brought 12 gross operated wells (81% average working interest) on production in North Dakota.
Operational execution remains solid with improving drilling and completion cycle times, including a significant increase in completion stages per day driven by simul-frac operations, total well costs tracking 5% lower year-over-year, and strong well productivity. In the second quarter, Enerplus expects to bring 36 to 43 gross (27 to 33 net) operated wells on production in North Dakota which is anticipated to support approximately 15% liquids production growth compared to the first quarter.
Marcellus production averaged 116.5 MMcf per day during the first quarter of 2024, approximately 18% lower than the prior quarter and 35% lower than the same period in 2023 due to limited capital investment and price related production curtailments.
RETURN OF CAPITAL TO SHAREHOLDERS
Enerplus returned $29.5 million to shareholders through share repurchases and dividends during the first quarter. The Company paid $13.3 million in dividends in the quarter and repurchased and cancelled approximately 1.1 million common shares under its normal course issuer bid ("NCIB") at an average price of $14.37 per share, for total consideration of $16.2 million.
Enerplus announced a quarterly cash dividend of $0.065 per share payable on June 4, 2024 to shareholders of record on May 22, 2024.
2024 GUIDANCE
There are no changes to Enerplus' previously announced 2024 guidance of $550 million of capital spending and total production of approximately 99,000 BOE per day, including liquids production of approximately 64,000 barrels per day.
PRICE RISK MANAGEMENT
The following is a summary of Enerplus' financial commodity hedging contracts at May 7, 2024:
WTI Crude Oil ($/bbl)(1)
April 1, 2024 – June 30, 2024
3 Way Collars
Volume (bbls/day)
5,000
Sold Puts
$ 65.00
Purchased Puts
$ 77.00
Sold Calls
$ 95.00
(1)
The total average deferred premium spent on outstanding crude oil contracts is $1.25/bbl from April 1, 2024 - June 30, 2024.
FIRST QUARTER 2024 PRODUCTION AND OPERATIONAL SUMMARY TABLES
Summary of Average Daily Production(1)
Three months ended March 31, 2024
Williston Basin
Marcellus
Other(2)
Total
Tight oil (bbl/d)
45,238
-
1,028
46,266
Total crude oil (bbl/d)
45,238
-
1,028
46,266
Natural gas liquids (bbl/d)
10,120
-
127
10,247
Shale gas (Mcf/d)
66,207
116,521
1,098
183,826
Total natural gas (Mcf/d)
66,207
116,521
1,098
183,826
Total production (BOE/d)
66,393
19,420
1,338
87,151
(1)
Table may not add due to rounding.
(2)
Primarily DJ Basin.
Summary of Wells Drilled(1)
Three months ended March 31, 2024
Operated
Non-Operated
Gross
Net
Gross
Net
Williston Basin
21
16.0
21
2.9
Marcellus
-
-
22
0.9
DJ Basin
-
-
-
-
Total
21
16.0
43
3.8
(1)
Table may not add due to rounding.
Summary of Wells Brought On-Stream(1)
Three months ended March 31, 2024
Operated
Non-Operated
Gross
Net
Gross
Net
Williston Basin
12
9.7
1
0.3
Marcellus
-
-
6
0.1
DJ Basin
-
-
-
-
Total
12
9.7
7
0.3
(1)
Table may not add due to rounding.
Three months ended
SELECTED FINANCIAL RESULTS
March 31,
2024
2023
Financial (US$, thousands, except ratios)
Net Income/(Loss)
$
66,136
$
137,486
Adjusted Net Income(1)
73,091
140,729
Cash Flow from Operating Activities
128,657
241,401
Adjusted Funds Flow(1)
173,066
260,409
Dividends to Shareholders - Declared
13,276
11,993
Net Debt(1)
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