11:34 AM EDT, 07/29/2022 (MT Newswires) -- Tudor, Pickering, Holt on Friday maintained its buy rating on the shares of Enerplus (ERF.TO) with a US$19.00 price target after the oil and gas producer agreed to sell some of its Alberta assets for C$140 million as it continues with plans to concentrate its production in the United States.
"Press release yesterday evening announced that ERF entered into an agreement to sell certain Canadian assets located in Alberta, including the company's Ante Creek and Medicine Hat operations along with its broad interests in the West Five and West Six areas of the region," analyst Jeoffrey Lambujon wrote. "With production from the assets at ~3.4mboepd (60% oil), $109MM (C$140MM) transaction value implies ~$32k/boepd at a high level. Total consideration from buyer, Journey Energy, includes C$81MM in cash, C$14MM in Journey common shares (3MM shares, based on L5D VWAP), and a C$45MM monthly amortizing, interest-bearing loan due Oct 2024 and secured by some of the transaction's assets. Overall, news is a positive in our view as the transaction puts bird in hand for part of what ERF has been marketing the past few months while the remaining irons in the fire (assets in Alberta and Saskatchewan) likely garner a more robust valuation given the oil mix (~3mboped of associated production, 99% oil) to push total transaction value for Canada monetizations into the $200-250MM bogey range. Deal expected to close by the end of Q3, and the stated uses of proceeds include debt reduction and enhancing ERF's return of capital program, which along with updated guidance and Q2 results will be updated with Q2 earnings next Thursday afternoon."