Enerplus Announces Second Quarter 2016 Results Including Strengthened Balance Sheet and Further Cost Reductions

CALGARY, Aug. 5, 2016

CALGARY, Aug. 5, 2016 /CNW/ - Enerplus Corporation ("Enerplus" or the "Company") (TSX & NYSE: ERF) is pleased to announce its results from operations for the second quarter of 2016.

"We have significantly strengthened our balance sheet having reduced our debt, net of cash, by 45% since year-end 2015. In addition, we continue to drive costs lower as we position our company to deliver profitable growth in a lower commodity price environment," stated Ian C. Dundas, President & CEO. "Enerplus continues to perform at a high level operationally, and with our lower cost structure and improved financial strength we are modestly increasing our 2016 capital program in North Dakota as we position the company for growth in 2017."

KEY TAKEAWAYS:

• Production averaged 93,659 BOE per day during the quarter, including 43,908 barrels per day of crude oil and natural gas liquids. Annual average 2016 production is tracking the higher-end of Enerplus' guidance range of 90,000 – 94,000 BOE per day, despite the divestment of approximately 2,300 BOE per day at the end of the second quarter, largely due to strong Marcellus production. As a result, Enerplus is updating its 2016 average production guidance to 92,000 – 94,000 BOE per day. Crude oil and natural gas liquids production guidance remains unchanged at 43,000 – 45,000 barrels per day.
  
  
• Enerplus has significantly strengthened its balance sheet in 2016. The receipt of divestment proceeds of $280.5 million year to date and net equity financing proceeds of $220.4 million, have helped reduce the Company's total debt net of cash by 45% since December 31, 2015. At June 30, 2016, Enerplus had $723.3 million of senior notes outstanding and $49.2 million in cash, and the Company's $800 million bank credit facility was undrawn. At June 30, 2016, Enerplus' senior debt to adjusted EBITDA ratio was 1.2 times and debt to funds flow ratio was 2.0 times.
  
  
• Enerplus continued to deliver significant cost savings during the second quarter including a reduction in cash costs comprising operating, transportation, G&A and interest of $1.68 per BOE compared to the same period in 2015.
  
  
• Operating costs were $7.10 per BOE in the quarter, 10% lower than the same period in 2015 and below the Company's annual guidance of $8.50 per BOE as a result of continued cost reductions and the divestment of higher operating cost properties. Cash G&A expenses were $1.71 per BOE in the second quarter, 16% lower than the same period in 2015 and below the Company's annual guidance of $2.00 per BOE primarily due to a reduction in staffing levels. Based on this performance, Enerplus is reducing its 2016 guidance for operating expenses to $7.90 per BOE and cash G&A expenses to $1.95 per BOE.
  
  
• Enerplus recorded a net loss of $168.6 million or ($0.77) per share in the second quarter, which is attributable to non-cash items including an impairment charge and a deferred tax asset valuation allowance as a result of the continued decline in the twelve month trailing average commodity prices.
  
  
• Enerplus generated second quarter funds flow of $76.0 million, an increase of 82% from the previous quarter. The increased funds flow was driven by higher crude oil prices, improved commodity price differentials and lower cash costs.
  
  
• Enerplus' realized pricing differentials in the Bakken and Marcellus have meaningfully improved over the past year. Although in part this is due to lower benchmark prices, improvements in the supply-demand balance in each basin have also contributed to the tighter differentials. Compared to the same period in 2015, Enerplus' second quarter realized Bakken differential narrowed by US$1.07 per barrel to US$8.23 per barrel below WTI, and Enerplus' second quarter realized Marcellus differential narrowed by US$0.63 per Mcf averaging US$0.76 per Mcf below NYMEX.
  
  
• Capital spending in the second quarter was $48.1 million of which $30.4 million was directed to North Dakota. As a result of Enerplus' stronger financial position and lower cost structure, which is driving margin improvement, the Company is increasing its 2016 capital spending guidance to $215 million from $200 million to add three gross completions and pre-order facilities equipment in North Dakota during the latter part of the year for the 2017 program. The incremental expenditure will allow Enerplus to further test well downspacing in Fort Berthold, and is expected to add approximately 1,000 BOE per day to Enerplus' fourth quarter production volumes and better position the Company for growth in 2017. Enerplus continues to expect its 2016 capital and dividend commitments to be fully funded through internally generated cash flow at current forward strip commodity prices.

ASSET ACTIVITY

North Dakota production averaged 28,800 BOE per day during the second quarter, largely flat from the previous quarter and up 6% from the same period in 2015. Enerplus continues to operate one drilling rig at Fort Berthold with capital spending in the quarter totaling $30.4 million resulting in 4.6 net wells drilled and 7.2 net wells on-stream. Well costs continue to trend down as a result of improvements in drilling time and ongoing completions optimization. Enerplus' average cost for a two-mile lateral well in the second quarter was US$7.8 million including drilling, completion, tie-in and facilities costs, 26% lower than the Company's 2015 average. Initial 30-day production rates from operated wells brought on-stream in the second quarter averaged approximately 1,450 BOE per day. At the end of the quarter, Enerplus had approximately 8 net drilled uncompleted wells in Fort Berthold.

Marcellus production averaged 195 MMcf per day during the second quarter, a modest increase from the first quarter of 2016. Capital spending in the Marcellus was $9.3 million in the quarter delivering 0.3 net wells drilled and 1.8 net wells on-stream. The production increase over the previous quarter was due to strong well performance. Enerplus participated in 7 gross on-stream wells in the second quarter with initial 30-day production rates that averaged 15.8 MMcf per day and an average lateral length of 6,400 ft. Enerplus continues to plan for limited activity levels in the Marcellus for the remainder of 2016.