TD They currently have a US$21.00 target. GLTA
Enerplus Corp.
(ERF-N) US$14.40
Q4/23 Update; Discloses Potential Impact of ND Freeze-offs
Event
Enerplus Announced a Brief Q4/23 Operations Update.
Impact: SLIGHTLY POSITIVE
Provides Q4/23 Update, Including Production Volumes Which Exceeded TD/
Consensus. The company announced Q4/23 volumes of 103.5 mBOE/d, which
exceeded our estimate (98.2 mBOE/d), consensus (98.5 mBOE/d) and previous
guidance (95-99 mBOE/d). Volumes included 67.1 mbbl/d of liquids, which was also
above our estimate (63.6 mbbl/d) and guidance (60.5-64.5 mbbl/d). Higher volumes
were attributed to outperformance of its recent drilling program and base production.
Q4/23 Spending Largely as Expected; Continues to Follow Through on Return
of Capital Commitments. Enerplus also disclosed Q4/23 capex of $91mm. This
was in line with TD ($87mm) and consensus ($90mm). The company bought back
5.8mm shares in Q4/23. Combined with the base dividend, this resulted in total RoC
of $106mm.
Our View: This update continues the trend that we have seen for several quarters,
whereby corporate volumes came in ahead of broad expectations. Although CFPS
was not disclosed, based on higher-than-expected volumes and strong return of
capital through the quarter, it is likely that Q4/23 CFPS will exceed our estimate.
Disclosed Impact of Cold-weather-related Downtime in ND. We have seen plenty
of headlines regarding freeze-offs in ND, and as we had expected, company volumes
were impacted. That said, production has now been largely restored, and average
liquids volumes are expected to have been curtailed only by 2-3 mbbl/d in Q1/24E
(3-4%). A formal budget is anticipated in February; however, we anticipate 2024
liquids volumes of ~64 mbbl/d on capex of $550mm.
Our View: Preliminary 2024E volumes are in line with our estimate (64 mbbl/d),
consensus (63.4 mbbl/d) and the company's previous five-year outlook, including
3-5% annual liquids growth on capex of $500mm-$550mm through 2027.
Enerplus expects to report complete Q4/23 results and 2023 reserves, and table a
formal 2024 budget on February 22, at which time we will update our estimates.