Enerplus Corp ERF

Primary Symbol: T.ERF

Energy Oil & Gas E&P

Enerplus Corporation is a Canada-based independent oil and gas exploration and production company. The Company is focused on the development of North American oil and natural gas assets. Its portfolio includes light oil assets in the Bakken, North Dakota, and a position in the Marcellus natural gas shale region in northeast Pennsylvania. The Company's operations are concentrated in the core of the Bakken/Three Forks light oil shale play where it holds approximately 235,600 net acres in North Dakota. The acreage is primarily located across the Fort Berthold Indian Reservation, as well as in Williams and Dunn Counties. It holds an interest in approximately 32,500 net acres in the dry gas window of the Marcellus shale in northeast Pennsylvania. This non-operated position is located in Susquehanna, Bradford, Wyoming, Sullivan and Lycoming counties.

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Post by retiredcfon May 10, 2021 9:47am

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Post# 33164113

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Their upside scenario target is now $13.00. GLTA

Enerplus Corporation Integration Moves into Focus

Our view: With its Bruin and Hess acquisitions in the Bakken now closed, Enerplus is poised to deliver substantial free cash flow over the course of 2021 while preserving its strong balance sheet. We are confident in Enerplus’ ability to integrate these acquisitions and boost efficiency. We are affirming an Outperform rating on Enerplus, and boosting our one-year target price by $0.50 (6%) to $9.00 per share. Enerplus remains our favorite intermediate producer.

Key points:

Impressive 1Q. Enerplus Corporation delivered impressive first-quarter
results amid 4% higher oil & liquids realizations and 7% lower operating
costs of $7.82/boe. The company generated free cash flow of $63 million (before dividends and working capital changes) in the first quarter with $66 million of capital investment.

Dividend Increase. Enerplus also announced a 10% increase in its annualized common share dividend to $0.132 per share (1.9% yield), and will transition to a quarterly payment schedule in June.

2021 Guidance Intact. The company reaffirmed its 2021 guidance (shaped
by its Bruin and Hess acquisitions in North Dakota) which points toward
mid-point production of 113,000 boe/d supported by $360-$400 million
of capital investment. Approximately 80% of the company’s 2021 capital
budget will be allocated to North Dakota, where Enerplus expects to drill 21 gross operated wells and bring 42 gross operated wells on stream during the year.

Strong FCF Outlook. We peg Enerplus’ free cash flow (before dividends) at $523 million in 2021 under our base outlook (US$64 WTI, US$2.92 Henry Hub). This would equate to a free cash flow yield of 29% (vs. our North American intermediate E&P peer group avg. of 13%). The company’s average net debt-to-trailing cash flow ratio of 0.8x in 2021E remains well below our peer group average of 1.8x.

Operations wise, Enerplus’ Williston Basin first-quarter production was up 3% sequentially to 47,300 boe/d (73% oil), with 3 gross operated wells brought on stream (100% wi). The company reinitiated its drilling program in North Dakota in April, and plans to continue running one drilling rig for the rest of the year. Enerplus’ average cost for a two-mile lateral is expected to decline to US$6.1 million in 2021 (down 20% vs. 2019).

Relative Valuation—Discount. At current levels, Enerplus is trading at a discount 2021E debt-adjusted cash flow multiple of 2.9x (vs. our peer group avg. of 4.1x). We believe the company should trade at an average/above average multiple given its consistent operating performance, capable management team and strong balance sheet, partly offset by portfolio concentration