Enerplus Corp. continues to place its Fort Berthold, N.D., operations on its top shelf, devoting most of its capital investment to the play and nudging production over 15,000 barrels of oil equivalent per day in the second quarter.
It reported that C$78 million was invested in drilling 4.7 net long horizontal wells and bringing 6.1 wells onstream, most of them introduced to the production flow late in the quarter.
The Calgary-based company said the region generated “strong economic returns,” helped by operating costs and general and administrative costs remaining within guidance, with service and supply costs lower than original expectations by 10 percent for the year-to-date.
On the negative side, Enerplus said the reliance it and other producers place on moving a portion of their production by rail to the Gulf Coast has had a negative impact on overall netback.
“The amount of production that we ship by rail ... will vary over time due to transportation access constraints and changes in the price differential between Cushing and the Gulf Coast,” it said.
Enerplus said the price differential in North Dakota vs. West Texas Intermediate widened again in the second quarter as the narrowing of the price differential between Cushing WTI and the Gulf Coast resulted in lower rail netbacks.
The company posted second-quarter production of 90,037 barrels of oil equivalent per day (46 percent crude and natural gas liquids), up almost 8,000 boe per day from a year earlier, while output for the first six months climbed by a similar volume to 88,618 boe per day.
The crude and liquids count included 21,339 bpd in Canada and 20,224 bpd in the U.S., while natural gas production was 186.6 million cubic feet per day in Canada and 104.3 million cubic feet per day in the U.S.
Sale, JV plans suspended
For the time being, Enerplus said it has suspended plans to sell or seek joint ventures for its Duvernay and Montney assets, two of the hottest plays in Canada, plus the Marcellus in Pennsylvania.
It set the ball rolling last year in its search for deals, but company executives said improved performance since then has changed the outlook, removing any urgency to deal with the properties.
Chief Executive Officer Ian Dundas told analysts that Enerplus has “made such progress in changing the financial sustainability of the company that we’re now in a position (to postpone the process).”
“We believe our results over the last few quarters demonstrate consistent improvements in capital efficiency and execution ... and our dividend is sustainable at the current level,” he said.
Dundas said delineation work planned for Duvernay and Montney over the balance of 2013 will yield better knowledge of the assets and their potential, but he said no decision on developing the assets has been made.
“Some of the underlying conditions that caused us to (plan for a joint venture or sale) are still in place,” he said.
“That hasn’t changed. So we still see an opportunity to partner or potentially sell, but if you go back a year ago to the things that we were going to do to improve our sustainability, we’ve done all of those.
“Will we revisit this again? For sure,” Dundas said. The assets earmarked for transactions included 70,000 net acres in the Duvernay in the Willesden Green area of west-central Alberta, 33,000 net acres in the Montney in the Cameron area and 65,000 net acres in the Marcellus in the U.S., although Dundas’ comments were confined to Duvernay and Montney.
Net income for the second quarter was C$52.62 million, down from C$100.3 million a year earlier while cash flow rose to C$204.7 million from C$146.5 million.
—Gary Park
