TSX:ERF - Post Discussion
Post by
retiredcf on Jul 29, 2022 9:15am
RBC
July 28, 2022
Enerplus Corporation
Announces Sale of Certain Canadian Assets
NYSE: ERF | USD 13.72 | Outperform | Price Target USD 20.00
Sentiment: Neutral
Enerplus announced today that it has entered into a definitive agreement to sell certain Canadian assets located in Alberta to Journey Energy for a total consideration of C$140 million, prior to closing adjustments. The transaction is expected to close at the end of the third quarter of 2022.
Key Details
• The assets included in the transaction include Enerplus’ Ante Creek and Medicine Hat operations, along with broad interests in the West Five and West Six areas of Alberta.
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Production from the assets is approximately 3,400 boe/d (60% crude oil) on a net basis after the deduction of royalties (4,400 boe/d before royalty deduction). The assets include over 400 net wells.
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On a flowing gross (before royalties) barrel basis, the C$140 million disposition price and 4,400 boe/d of production would equate to roughly C$32,000/boe/d. Journey Energy indicated in its press release that the assets carry a total undiscounted and uninflated decommissioning liability of C$65 million.
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Under the terms of the agreement, the total consideration comprises $81 million cash, 3.0 million common shares in Journey Energy valued at $14 million (based on Journey’s last five trading days' volume weighted average share price), and a $45 million monthly amortizing, interest-bearing loan which Enerplus will provide to Journey that is secured by certain of the assets and which must be repaid in full by October 31, 2024.
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Enerplus is continuing to advance opportunities to divest its remaining Canadian assets with associated production of circa 3,000 boe/d net (99% crude oil).
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Following the transaction and in conjunction with its second-quarter results on August 4, Enerplus will provide updated guidance as well as an update on its return of capital plans.
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