All financial information contained within this news release has been prepared in accordance with U.S. GAAP and is presented in U.S. dollars. This news release includes forward-looking statements and information within the meaning of applicable securities laws. Production information, unless otherwise stated, is presented on a net basis (after deduction of royalty obligations). 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’ 2023 Financial Statements and MD&A is 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. All amounts in this news release are stated in United States dollars unless otherwise specified.
CALGARY, AB, Feb. 21, 2024 /CNW/ – Enerplus Corporation (“Enerplus” or the “Company”) (TSX:ERF) (NYSE:ERF) today reported fourth quarter 2023 cash flow from operating activities and adjusted funds flow(1) of $297.9 million and $240.5 million, respectively, compared to $316.6 million and $315.4 million, respectively, in the fourth quarter of 2022. Full year 2023 cash flow from operating activities and adjusted funds flow(1) was $938.2 million and $961.2 million, respectively, compared to $1,173.4 million and $1,230.3 million, in 2022.
On February 21, 2024, Enerplus entered into an arrangement agreement with Chord Energy Corporation (“Chord”), pursuant to which, upon completion of the transaction, Enerplus shareholders will receive 0.10125 shares of Chord common stock and $1.84 in cash for each share of Enerplus (90% stock and 10% cash consideration). The transaction is subject to various approvals and conditions to close and is expected to be completed mid-2024. For more information refer to the joint press release of Enerplus and Chord regarding this transaction.
HIGHLIGHTS – FULL YEAR 2023
Exceeded 2023 total and liquids production guidance:
Total production averaged 100,015 BOE per day (guidance of 98,000 to 99,000 BOE per day).
Liquids production averaged 62,208 barrels per day (guidance of 60,500 to 61,500 barrels per day).
Generated adjusted funds flow(1) of $961.2 million in 2023, which exceeded capital spending of $532.5 million, generating free cash flow(1) of $428.7 million.
Returned $306.9 million to shareholders through dividends and share repurchases, representing 72% of 2023 free cash flow(1).
Reduced shares outstanding by 7% since year-end 2022 and 17% since year-end 2021.
Reduced net debt(1) by 46% from year-end 2022, ending 2023 with net debt(1) of $119.3 million.
Reduced 2023 methane emissions intensity by 45% and Scope 1 and Scope 2 greenhouse gas (“GHG”) emissions intensity by 40%, compared to 2021, based on preliminary estimates.
“2023 marked another year of solid operational and financial performance, further demonstrating the quality of our team and North Dakota Bakken position,” said Ian C. Dundas, President and CEO. “We exceeded production targets within a disciplined capital allocation framework, helping to drive free cash flow of over $400 million. Consistent with our track record, we returned significant cash to shareholders — over 70% of free cash flow in 2023 — through dividends and share repurchases, while also reducing net debt by 46%.”
(1)
This is a non-GAAP financial measure. Refer to “Non-GAAP and Other Financial Measures” section for more information.
FOURTH QUARTER 2023 SUMMARY
Total production for the fourth quarter of 2023 was 103,543 BOE per day, a decrease of 3% compared to the same period in 2022. Liquids production in the fourth quarter was 67,097 barrels per day, an increase of 3% compared to the same period in 2022. Strong well performance in North Dakota supported fourth quarter 2023 liquids production, while lower activity levels in the Marcellus throughout 2023 and the impact from the sale of Canadian assets during the fourth quarter of 2022 led to the decrease in total production year-over-year. The Company’s fourth quarter production exceeded the top end of the total and liquids production guidance ranges of 95,000 to 99,000 BOE per day and 60,500 to 64,500 barrels per day, respectively.
In North Dakota, Enerplus drilled 19 operated wells (79% average working interest) during the quarter, with no operated wells brought on production. North Dakota production averaged 78,222 BOE per day in the quarter. Marcellus production averaged 143 MMcf per day in the quarter.
Enerplus reported fourth quarter 2023 net income of $116.7 million, or $0.57 per share (basic), compared to net income of $330.7 million, or $1.49 per share (basic), in the fourth quarter of 2022. Excluding certain non-cash or non-recurring items, fourth quarter 2023 adjusted net income(1) was $115.3 million, or $0.56 per share (basic), compared to $181.1 million, or $0.81 per share (basic), during the same period in 2022. The reduction in net income was due to the gain on the sale of the Canadian assets recorded during the fourth quarter of 2022, as well as lower production and commodity prices, which also decreased adjusted net income, relative to the prior year period.
Enerplus’ realized fourth quarter 2023 Bakken crude oil price differential was $1.26 per barrel below WTI, compared to $1.05 per barrel above WTI for the same period in 2022. Bakken crude oil prices were weaker than the prior year period due to elevated local production growth driven predominantly by an acceleration in well completion activity resulting in less spare pipeline capacity in 2023, while refinery demand deteriorated in the fourth quarter of 2023 due to a decline in global refinery margins. Enerplus’ fourth quarter 2023 Marcellus natural gas price differential was $1.20 per Mcf below NYMEX, compared to $1.18 per Mcf below NYMEX for the same period in 2022.
Operating expenses in the fourth quarter of 2023 were $11.67 per BOE, compared to $9.68 per BOE in the same period in 2022. The increase in per unit operating expenses was primarily due to inflation adjusted contract pricing and higher gas facility and fluid handling charges due to the increase in North Dakota production. Cash general and administrative (“G&A”) expenses were $1.41 per BOE in the fourth quarter of 2023, compared to $1.15 per BOE in the prior year period due to inflationary pressures on labour and services.
Capital spending totaled $91.5 million in the fourth quarter. The Company paid $12.2 million in dividends during the quarter and repurchased 5.8 million shares at an average price of $16.09 per share for a total cost of $93.8 million.
Current tax expense was $0.2 million in the fourth quarter.
Enerplus ended the fourth quarter with net debt(1) of $119.3 million and had a net debt to adjusted funds flow ratio(1) of 0.1 times.
(1)
This is a non-GAAP financial measure. Refer to “Non-GAAP and Other Financial Measures” section for more information.
FULL YEAR 2023 SUMMARY
Total production for 2023 was 100,015 BOE per day, broadly flat compared to 2022. Liquids production in 2023 was 62,208, an increase of 1% compared to 2022. Liquids production increased by 9% year-over-year when adjusted for the Canadian asset divestments completed in 2022. The Company’s 2023 production exceeded the top end of the total and liquids production guidance ranges of 98,000 to 99,000 BOE per day and 60,500 to 61,500 barrels per day, respectively.
Enerplus reported full year 2023 net income of $456.1 million, or $2.16 per share (basic), compared to net income of $914.3 million, or $3.91 per share (basic), in 2022. Excluding certain non-cash or non-recurring items, 2023 adjusted net income(1) was $477.6 million, or $2.26 per share (basic), compared to $707.1 million, or $3.02 per share (basic), in 2022. The lower net income in 2023 was due to the gain on the sale of the Canadian assets recorded during 2022, as well as lower production and commodity prices, which also decreased adjusted net income, relative to the prior year period.
Enerplus’ 2023 realized Bakken crude oil price differential was $0.45 per barrel below WTI, compared to $1.09 per barrel above WTI in 2022. Bakken differentials weakened through the second half of 2023 due to local production growth driven by an acceleration in well completion activity resulting in less spare pipeline capacity in 2023, while refinery demand deteriorated in the fourth quarter of 2023 due to a decline in global refinery margins. Enerplus’ 2023 Marcellus natural gas price differential was $0.92 per Mcf below NYMEX, compared to $0.72 per Mcf below NYMEX in 2022.
Operating expenses in 2023 were $10.67 per BOE, compared to $9.99 per BOE in 2022. The increase in per BOE operating expenses was primarily due to inflation adjusted contract pricing and higher gas facility and fluid handling charges as a result of increased production in North Dakota. Cash G&A expenses in 2023 were $1.33 per BOE, compared to $1.17 per BOE in 2022 due to inflationary pressures on labour and services.
Current tax expense was $27.2 million in 2023.
Capital spending totaled $532.5 million in 2023, approximately the midpoint of the Company’s guidance range of $520 to $540 million. The Company paid $48.6 million in dividends in 2023 and repurchased 16.4 million shares at an average price of $15.71 per share for a total of $258.3 million. In total, Enerplus returned $306.9 million to shareholders in 2023.
(1)
This is a non-GAAP financial measure. Refer to “Non-GAAP and Other Financial Measures” section for more information.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) UPDATE
Enerplus continues to make progress on its ESG initiatives in 2023. Based on preliminary estimates and relative to its 2021 baseline, the Company reduced 2023 methane emissions intensity by 45% and Scope 1 and Scope 2 GHG emissions intensity by 40%.
The Company continues to work towards its longer-term emissions reduction targets, including a methane emissions intensity of 0.02 kg CH4/BOE by 2030, and a Scope 1 and Scope 2 GHG emissions intensity of 13 kg CO2e/BOE by 2030, which equates to an approximate intensity reduction of 45% and 30%, respectively, from Enerplus’ preliminary 2023 estimates.
As previously disclosed, as part of its emissions reduction strategy Enerplus is endorsing the World Bank Zero Routine Flaring by 2030 initiative and has established a flare intensity target of less than 2% per thousand cubic feet of natural gas produced by 2026.
2024 OUTLOOK
As previously announced, Enerplus expects 2024 capital spending of approximately $550 million and annual average liquids production of approximately 64,000 barrels per day. The Company expects 2024 annual average total production of approximately 99,000 BOE per day(1). The Company’s 2024 outlook is subject to changes as a result of completion of the transaction with Chord, which is currently expected to close mid-2024.
On February 21, 2024, the Board approved a dividend increase of 8% to the quarterly dividend to $0.065 per share beginning with the March 15, 2024 dividend. It is anticipated that the quarterly dividend payments made by Enerplus until closing of the transaction will be equalized to those made by Chord, after giving effect to the exchange ratio, through an additional Enerplus dividend declared shortly prior to the closing.
(1)
See “Notice Regarding Information Contained in This News Release – Forward-Looking Information and Statements” in this news release.
PRICE RISK MANAGEMENT UPDATE
The following is a summary of Enerplus’ financial contracts in place at February 20, 2024:
WTI Crude Oil ($/bbl)(1)
Leidy Basis ($/Mcf)
Jan 1, 2024 – Jun 30, 2024
Feb 1, 2024 – Feb 29, 2024
Swaps
Volume (Mcf/day)
–
40,000
Swap Strike
–
($ 0.45)
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 our outstanding crude oil contracts is $1.25/bbl from January 1, 2024 – June 30, 2024.
FOURTH QUARTER AND FULL YEAR 2023 PRODUCTION AND OPERATIONAL SUMMARY TABLES
Summary of Average Daily Production(1)
Three months ended December 31, 2023
Twelve months ended December 31, 2023
Williston Basin
Marcellus
Other(2)
Total
Williston Basin
Marcellus
Other(2)
Total
Light & medium oil (bbl/d)
–
–
–
–
–
–
–
–
Heavy oil (bbl/d)
–
–
–
–
–
–
–
–
Tight oil (bbl/d)
52,831
–
1,181
54,011
49,827
–
951
50,779
Total crude oil (bbl/d)
52,831
–
1,181
54,011
49,827
–
951
50,779
Natural gas liquids (bbl/d)
12,952
–
134
13,086
11,323
–
106
11,429
Conventional natural gas (Mcf/d)
–
–
–
–
–
–
–
–
Shale gas (Mcf/d)
74,637
142,926
1,112
218,675
70,645
155,329
866
226,840
Total natural gas (Mcf/d)
74,637
142,926
1,112
218,675
70,645
155,329
866
226,840
Total production (BOE/d)
78,222
23,821
1,500
103,543
72,925
25,888
1,202
100,015
(1)
Table may not add due to rounding.
(2)
Largely comprises the DJ Basin.
Summary of Wells Drilled(1)
Three months ended
December 31, 2023
Twelve months ended
December 31, 2023
Operated
Non-Operated
Operated
Non-Operated
Gross
Net
Gross
Net
Gross
Net
Gross
Net
Williston Basin
19
15.1
7
0.3
65
54.7
73
7.1
Marcellus
–
–
16
0.4
–
–
56
1.2
DJ Basin
–
–
–
–
3
2.9
–
–
Total
19
15.1
23
0.7
68
57.6
129
8.3
(1)
Table may not add due to rounding.
Summary of Wells Brought On-Stream(1)
Three months ended
December 31, 2023
Twelve months ended
December 31, 2023
Operated
Non-Operated
Operated
Non-Operated
Gross
Net
Gross
Net
Gross
Net
Gross
Net
Williston Basin
–
–
36
3.0
46
40.0
77
9.4
Marcellus
–
–
30
0.6
–
–
52
0.9
DJ Basin
–
–
–
–
3
2.9
10
0.2
Total
–
–
66
3.6
49
43.0
139
10.5
(1)
Table may not add due to rounding.
SUMMARY FINANCIAL AND OPERATING RESULTS
Three months ended
Twelve months ended
SELECTED FINANCIAL RESULTS
December 31,
December 31,
2023
2022
2023
2022
Financial (US$, thousands, except ratios)
Net Income/(Loss)
$
116,702
$
330,708
$
456,076
$
914,302
Adjusted Net Income(1)
115,253
181,069
477,570
707,061
Cash Flow from Operating Activities
297,946
316,584
938,190
1,173,382
Adjusted Funds Flow(1)
240,526
315,379
961,243
1,230,289
Dividends to Shareholders – Declared
12,242
12,223
48,603
41,597
Net Debt(1)
119,298
221,516
119,298
221,516
Capital Spending
91,507
85,647
532,450
432,004
Property and Land Acquisitions
1,681
2,853
7,342
22,515
Property and Land Divestments
1,267
211,987
2,969
231,373
Net Debt to Adjusted Funds Flow Ratio(1)
0.1x
0.2x
0.1x
0.2x
Financial per Weighted Average Shares Outstanding
Net Income/(Loss) – Basic
$
0.57
$
1.49
$
2.16
$
3.91
Net Income/(Loss) – Diluted
0.55
1.43
2.09
3.77
Weighted Average Number of Shares Outstanding (000’s) – Basic
204,624
222,404
211,353
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