Enerplus Announces First Quarter 2018 Results

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Canada NewsWire

CALGARY, May 3, 2018

All financial information contained within this news release has been prepared in accordance with U.S. GAAP, except as noted under "Non-GAAP Measures". This news release includes forward-looking statements and information within the meaning of applicable securities laws. Readers are advised to review the "Forward-Looking Information and Statements" at the conclusion of this news release. A full copy of Enerplus' First Quarter 2018 Financial Statements and MD&A are available on the Company's website at www.enerplus.com, under its SEDAR profile at www.sedar.com and on the EDGAR website at www.sec.gov.

CALGARY, May 3, 2018 /CNW/ - Enerplus Corporation ("Enerplus" or the "Company") (TSX & NYSE: ERF) is pleased to announce first quarter 2018 operating and financial results. The Company reported first quarter 2018 net income of $29.6 million or $0.12 per share.

HIGHLIGHTS

2018 adjusted funds flow expected to exceed capital expenditures and dividends by approximately $100 million based on current forward strip pricing
Strong growth underway with second quarter liquids production expected to average between 48,000 to 50,000 barrels per day
Well positioned relative to 2018 production guidance including over 30% production growth in North Dakota year-over-year
First quarter 2018 adjusted funds flow of $155.2 million
Ended the first quarter of 2018 with a net debt to adjusted funds flow ratio of 0.5 times

"Our plans are well on track to continue to drive competitive, profitable growth while generating robust returns on capital," stated Ian C. Dundas, President and Chief Executive Officer. "With our continued margin expansion resulting from improved pricing realizations and reductions to our cost structure over the last year, we expect to generate meaningful free cash flow in 2018 under current strip prices. Additionally, we expect to deliver over 30% production growth from our high-returning North Dakota asset. Despite the improving crude oil price outlook, we remain committed to our disciplined approach to capital allocation focused on generating full-cycle returns and creating long-term value for our shareholders."

FIRST QUARTER FINANCIAL AND OPERATIONAL SUMMARY

Production
Production in the first quarter of 2018 averaged 85,080 BOE per day, including 41,528 barrels per day of crude oil (90%) and natural gas liquids (10%). As forecast, liquids production was lower compared to the prior quarter primarily due to downtime related to completions activity on adjacent properties and on-stream activity in North Dakota weighted to the back half of the first quarter.

Natural gas production for the first quarter averaged 261 MMcf per day, a 4% increase from the prior quarter primarily due to higher Marcellus production supported by stronger natural gas pricing.

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The Company remains well positioned relative to its 2018 production guidance with strong growth underway in the second quarter. Four wells from a high-working interest six-well pad in North Dakota began flowing back at strong initial rates in late April, with the two remaining wells expected on-stream in early May. Based on field estimates, current liquids production is averaging approximately 49,000 barrels per day. Enerplus is expecting second quarter liquids production to average 48,000 to 50,000 barrels per day.

Net Income, Adjusted Funds Flow and Netback
Enerplus generated net income of $29.6 million in the first quarter of 2018, an increase from $15.3 million in the previous quarter as a result of lower non-cash income tax expense in the first quarter.

Adjusted funds flow was $155.2 million during the first quarter, compared to $199.6 million in the previous quarter which included $50.1 million related to the U.S. Alternative Minimum Tax refund. Adjusted funds flow remained strong in the first quarter supported by higher benchmark oil and natural gas prices and a hedging gain related to the unwinding of a portion of the Company's AECO - NYMEX basis contracts.

Enerplus' netback, before commodity hedging, was $21.97 per BOE in the first quarter of 2018. This represents a 2% increase from the prior quarter and a 22% increase from the same period in 2017.

Pricing Realizations and Cost Structure
Enerplus' realized Bakken crude oil price differential averaged US$3.27 per barrel below WTI in the first quarter, weaker than the previous quarter's differential of US$1.61 per barrel largely driven by the 13% increase in average benchmark WTI oil prices quarter-over-quarter. As a result of the recent strength in WTI oil prices and with the current 2018 forward strip at approximately US$65 per barrel, Enerplus is increasing its estimated 2018 average Bakken crude oil price differential to US$3.50 per barrel below WTI, from US$2.50 per barrel below WTI previously.

Enerplus' realized Marcellus natural gas price differential strengthened considerably to US$0.21 per Mcf below NYMEX in the first quarter, an improvement of US$0.60 per Mcf from the prior quarter. This pricing improvement was due to the continued build-out of regional pipeline takeaway capacity as well as the effect of a colder than normal winter, which resulted in price spikes in key consumption regions in the U.S. Enerplus expects its Marcellus differential to increase during the remainder of 2018 as a portion of its sales portfolio is linked to New York markets that are typically weaker during the summer months. Enerplus continues to project an average 2018 differential of US$0.40 per Mcf below NYMEX.

First quarter operating, transportation, and cash general and administrative ("G&A") expenses were all largely in-line with the Company's annual 2018 guidance. First quarter operating expenses averaged $7.02 per BOE, transportation costs averaged $3.52 per BOE, and cash G&A expenses averaged $1.72 per BOE. Enerplus' 2018 guidance for these items remains unchanged.

Capital Expenditures and Balance Sheet Position
Exploration and development capital spending in the first quarter was $151.5 million associated with drilling 13.9 net wells and completing and bringing on production 8.9 net wells across the Company. Enerplus' 2018 capital spending guidance of $535 million to $585 million is unchanged.

Enerplus remains in a strong financial position. Total debt net of cash at March 31, 2018 was $292 million. Total debt was comprised of $688.4 million of senior notes outstanding. The Company was undrawn on its $800 million bank credit facility, and had a cash balance of $396.4 million. At March 31, 2018, Enerplus' net debt to adjusted funds flow ratio was 0.5 times.

AVERAGE DAILY PRODUCTION⁽¹⁾

	Three months ended March 31, 2018
	Crude Oil (Mbbl/d)	Natural Gas Liquids (Mbbl/d)	Natural gas (MMcf/d)	Total Production (Mboe/d)
Williston Basin	27.7	2.8	19.8	33.8
Marcellus	0.0	0.0	208.4	34.7
Canadian Waterfloods	9.4	0.1	5.0	10.3
Other⁽²⁾	0.4	1.1	28.2	6.2
Total	37.4	4.1	261.3	85.1

(1)	Table may not add due to rounding.
(2)	Includes approximately 600 boe/d of production from Canadian natural gas properties sold in Q1 2018

SUMMARY OF WELLS BROUGHT ON-STREAM⁽¹⁾

	Three months ended March 31, 2018
	Operated		Non-Operated
	Gross	Net	Gross	Net
Williston Basin	8	5.2	0	0.0
Marcellus	0	0.0	11	1.5
Canadian Waterfloods	2	1.9	0	0.0
Other	0	0.0	1	0.3
Total	10	7.1	12	1.8

(1) Table may not add due to rounding.

ASSET ACTIVITY

Williston Basin
Williston Basin production averaged 33,836 BOE per day (82% oil) during the first quarter of 2018, down 14% from the fourth quarter of 2017. This decrease was expected due to downtime related to offset completions and on-stream activity in North Dakota weighted to the back half of the first quarter. First quarter Williston Basin production was comprised of 30,372 BOE per day in North Dakota and 3,464 BOE per day in Montana.

Enerplus brought on-stream eight gross operated wells (65% average working interest) across its acreage at Fort Berthold during the first quarter. The average completed lateral length was 9,000 feet per well and average peak 30-day production rates per well were 1,360 BOE per day (77% oil, on a three-stream basis).

The Company drilled nine gross operated wells (96% average working interest) in the first quarter.

In late April, the Company completed and brought on production four of six planned wells from its Cats pad (91% average working interest). The wells are currently flowing back at strong rates which are tracking the high end of the Company's expectations. The remaining two wells are expected to be on-stream in early May.

The Company continues to run two operated drilling rigs and one dedicated completions crew at its Fort Berthold operations.

Marcellus
Marcellus production averaged 208 MMcf per day during the first quarter, an increase from the previous quarter of 8% primarily due to stronger production driven by improved natural gas pricing.

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