Enerplus Corporation (NYSE: ERF) today announced its 2020 exploration and development capital budget of $520 to $570 million and outlook through 2022.
Enerplus 2020 Guidance and Outlook through 2022 (CNW Group/Enerplus Corporation)
"We remain focused on creating value for shareholders through a combination of sustainable, high return production per share growth, free cash flow generation and low financial leverage," stated Ian C. Dundas, President and Chief Executive Officer. "As we further prioritize our ability to generate meaningful free cash flow throughout commodity price cycles, we are moderating our production growth outlook."
Dundas continued, "Our revised 2020 plan is expected to generate 12% liquids production per share growth under a reduced capital program that is approximately 13% lower than 2019's program of $625 million. This plan is also expected to generate free cash flow at oil prices above US$50 per barrel WTI, a portion of which we intend to continue returning to shareholders through our dividend and opportunistic share repurchases."
Highlights of the 2020 Budget
Improving capital efficiencies with well costs in North Dakota anticipated to be US$400,000 lower year-over-year
Annual crude oil and natural gas liquids production is expected to grow to between 57,000 to 60,000 barrels per day
7% annual crude oil and natural gas liquids production growth at the guidance midpoint (12% growth per share)
Free cash flow forecast at commodity prices above US$50 per barrel WTI and US$2.25 per Mcf NYMEX
Continuing focus on return of capital to shareholders through dividends and share repurchases
Price protection on 56% of forecast net oil production at a floor price of US$57 per barrel WTI, hedged largely through put spreads and collar structures, retaining meaningful exposure to higher crude oil prices
Maintaining low financial leverage
2020 Capital and Operating Plan
Enerplus' high quality position in North Dakota will continue to attract the majority of the Company's capital spending in 2020. Enerplus has allocated 82% of its 2020 capital budget to its North Dakota development to drill41 to 46 net wells and bring approximately 45 net wells on production. Sustained improvements in drilling cycle times, completion efficiencies and cost reductions are continuing to drive well costs lower. Enerplus expects its 2020 well costs to average US$7.2 million, approximately US$400,000 lower than its 2019 average.
Enerplus plans to spend 8% of its 2020 capital budget across its Canadian operations. Capital activity includes drilling approximately 9 net producer/injector wells, along with ongoing polymer injection for existing projects and facilities maintenance and optimization.
Capital spending in Enerplus' non-operated Marcellus position is expected to be meaningfully lower in 2020 compared to 2019, in response to lower anticipated natural gas prices. Enerplus plans to spend 5% of its 2020 capital budget in the Marcellus to drill 3 net wells and bring 2 net wells on production.
In 2019, Enerplus continued to advance its understanding of cost structures and well performance in the DJ Basin. The five wells brought on production in late 2019 were completed using various proppant and fluid intensities with encouraging results. On average, the wells have produced approximately 40,000 barrels of oil per well in 130 days on production. Currently the best performing of the five wells is St. Albert 8-67-21-22C, which also had the most competitive completion cost structure. The well has produced over 51,000 barrels of oil in 130 days on production. In 2020, Enerplus plans to drill 5 net wells and complete 3 net wells in the DJ Basin, which includes participating in non-operated wells. With line of sight to competitive development costs, this program is designed to make further progress enhancing economics and to retain acreage.