Enerplus (ERF) 6 Nov 202020 Q3 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to the Enerplus Corporation Q3 2020 Results Conference Call. At this time, all lines are in a listen-only mode.

Following the presentation, we will conduct a question-and-answer session. [Operator Instructions] This call is being recorded on Friday, November 6, 2020. I'd now like to turn the conference over to Drew Mair. ahead. go Please

and the operator, everyone. you Thank Thank good joining call. for you, morning,

get note Before located please started, we take end today's at of of news release. the advisories the

U.S. been Financial Senior unless Officer; I'm in volumes have and otherwise are gross President all specified. Hutchings, basis a this here morning working VP, VP Executive on Jodi Chief discussion in financial and financials Our Jenson figures today accordance Dundas, with are Marketing. of Chief Morihira, and GAAP. prepared and with VP production Chief interest Labrie, Shaina VP, and company Wade Officer; All Canadian Senior our Officer; Garth Ian Operating Finance; dollars, Doll,

With will Ian. Following over to that, it our we for I open discussion, turn will up the questions. call

thanks its all our our for just all. ourselves Thank for the few of dedication covering and thank responsible manner. to all a some staff and partners, plan find then XXXX. time you, continues begin very you complicated like well for a business our this execute field Thank in we as for I environment I during to take in we both spend third in, their the the at and that results, level But preliminary moment of would of corporate of I'll today. safe as and the and strategic all support thoughts joining Despite begin, prepare to quarter outlook and environmentally time. Enerplus as some to the about Drew, rest us the by year, highlights before our from you talking

continuing our to costs and a terms quarter in to enhancing efficiencies, environment maximizing driving of was through unit capital teams activity, it margins. per operational our quiet respond down relatively the While are

with key Bakken, This execution highlights year current performance translated helped free cash million above the with guidance. per several capital previous Additionally, into million $X.XX drive cash strong third in day, to in generating quarter, of midpoint production our and $XXX our in by $XXX including our solid cash margins. cost continuing our from has reducing by our supporting quarter, $XX our visibility in flow, well fourth the the outperformance this forecast guidance spending the our per BOE, flow annual outlook million X,XXX previously, guidance production to BOE reducing increasing further free combined

average declined the year to capital limited per activity upcoming third to the quarter, the response between we to price barrels liquids due at Looking in this to in expect oil day, fourth XX,XXX our production the XX,XXX quarter weakness.

XXXX, to guided sheet commodity focus of on sight principles to remain preliminary flow. price stabilizing next our strategy the capital balance us strength, shareholder upon production, free with Turning same based maintaining our generating foundational allocation have and returns historically for view, year today. outlook Based Namely cash sees current a that returns. our line

day, midpoint including quarter per expect per execute keep fourth of would would liquids. XX,XXX production maintenance which of plan, barrels our largely capital we Specifically, expected XX,XXX approximately volumes flat the to XXXX a to of our day BOE

The see further currently. will WTI grow a to the see prioritize we in at believe growth flow, just in meaningful the mind. to dividend we bear signal outlook in WTI. at in enhance timing. market before do cash including a to is increase strengthen supply, are which We our this is we important with the Today $XXs Texas drilling oil demand base XXXX. cash balance. expected $XXs spending capital environment, shareholders high million that and a is a plan by on plan pursue for of we incremental into it would is significant sheet In to price to plans will $XXX would prices, And see have prices. shareholders. constructive funded, generation. and further back return of fully That We need to balance current driving capital maintenance environment the price uncertainty, prices. returns capital investments, includes the sheet, production set balance similar growth. sustain level to for at is capital the production the opportunities. our our free we $XX The be cash higher This somewhere question West but and for said, a supported We would would Importantly, additional consider cash returns anticipate economic some prices associated optionality implications obviously up our around we us And to of higher approximately free given robust to lack are come $XX not capital estimate to

being that across this a unsustainable business moderate are more As water financial is sustainable at uneconomic change more of even supported. that generation this an grow our sustainability. better commodity the where is hold, growth This full prioritizing treading pursuing prices, taken shrinking. is cash and question we rates, with new of a outcome strategies and to to you and managed at to returns, that paradigm one cycle has There's will But sector flow, look growing we thoughtfully a that business longer support free is higher means dynamic. are production resilience. growth be the landscape, needs It endure new expect excessive no economic dealing or belief longer-term that no of truly and than

early to we later well the and we We navigate this volatility returns to potential quality low in or risk will positioned remain year. offer believe we current high that we summary, next exposure and But recovery, - may provide reasonable guidance more market. formalized XXXX price for in year

over some Now on Jodi? update highlights. Jodi, to will who the I'll call turn financial you

cash with Starting Ian. Thanks, generation.

million flow fully flow. of third $XX spending the generated Our capital for cash funds free million, and was which quarter our adjusted $XX funded requirements

prices plant were impacted the months earnings impairments our plant for Our the The and equipment average $XXX totaling and in million. property, by oil the property, under driven impairment to defined gas, facility was in natural trailing quarter equipment million US$XXX non-cash the and credit principles. by and XX consisting hand accounting of have to Enerplus continues million on on significant liquidity undrawn of decline of our of September. U.S. accepted bank cash end $XX at as capacity generally

Our changed be has net debt to flow XX. XX, September to from ratio continues times which adjusted funds X.X not at June

Bakken, on about in the to quarters, $X cease the appeals the Moving the averaged Pipeline pipeline court's stay to in early the our to per largely US$X.XX for wider early third granted August, barrel Dakota due WTI a Access barrel realizations prior over operations. quarter, for In oil the following compared our a differential district below to in order. uncertainty court's order court the district request July the owners' per

legal pipeline appeals As requiring this court court. the a result, there shutdown time in order no and the to is within is at as district both place outstanding the ongoing process court the well as

forecast Bakken for barrel US$X We below per continue to of XXXX. WTI differential realized a

shoulder storage of third the particularly and natural combined continuing to and turning result the of full demand Now regional especially early the Marcellus, nearly the a were into October regional This season. with low quarter, is during November. part gas weak September in prices during

widened realized result, quarter. per Marcellus a US$X.XX average differential NYMEX the sales price Mcf our As to during below

continuing curtailments related seen price some Marcellus due curtailments until of expect continue quarter and level price fourth strengthen. here to in the to in cash weakness have production prices We the

next heading Mcf US$X.XX and winter. and natural previously. Given We do, price prices per And third on underappreciated into outlook guidance a however, XXXX natural prices position basis for constructive weakness, US$X.XX remain differentials provides the Mcf gas our Marcellus to Marcellus the are wide our gas adjusting on strong option Marcellus year. valuable we quarter per from below for current ongoing year full NYMEX

XXXX. Assuming a we season, per in normal Mcf minus see to range expect to a the US$X.XX winter differential NYMEX for

seen continue further to across by our lowered costs, for to on expenses, down $X.XX cash we've as and BOE, and total resiliency costs of transportation guidance per trend our our in a G&A this environment. have low-price operating noted, Ian XXXX supporting board the Moving

by position commodity per and of for in the currently to XX,XXX our US$XX year. barrel first added have three-way of by per have WTI We approximately US$XX half XXXX day collars next at hedging barrels US$XX

million swapped summer feet cubic Mcf. which for to with that, And through also will April XXXX over October Wade. is per day XX the gas at of I US$X it per natural gas turn season, have We under just

Thanks, drilling activity Jodi, no and capital during in had good limited the morning, with We everyone. Dakota. or North completions quarter third operated

from excellent safely activities. our the volumes an were production up curtailed the our third integrity job restoring the restored teams work the quarter. over production our quarter, previously volumes in X% early through curtail did of second and liquids Having quarter However, protecting

Dakota. we perspective, operator quarter terms rest DUCs of from the North X an of in in fourth activity year completing In are

slight Dakota In both uptick in addition activity and a to this, in non-operated we the expect Marcellus. North

a previously seen this performance in highlighted, Dakota. year our North As we've step well we have change in cost

latest US$X.X Our well structural solid been US$X.X have to reduction our costs capital a this which cost year the average. averaged driven is XXXX million million, have planning reductions total view very The which improved meaningful with now cycle reduced $XXX drilling technology is by and These execution, capital support trend have costs year, continuing delivered times. on coupled application spending driven completion at million. improvements when helped well guidance a and our this of has our we've

where once largely we preliminary focused inventory. Turning to enter again with the XX the briefly operating to expect a net will gross, our on Bakken, year plan XXXX DUC well XX be

complete see and reinitiating provide an to wells the capital year in completing inventory Our outlook would of XXXX. maintenance to DUCs during us drilling

adjust have We needed. next year to and the will our mindful of remain prices commodity capital flexibility as plans

a Lastly, exceptional. wrap Safety been comments. with year-to-date performance ESG I few will has up

I months for thank as XXXX. safety to the would operate focus and performance partners In and uncertainty their efforts seen a company. fact, of best last the to XX ever like our safely our employees amidst have

completions published the And freshwater by in to also and produced of we lower to emissions per our has year using This reduce noted stimulation water a a ESG Dakota XX% flaring target. activity. XXXX in report, to our North planning efforts use The resulting our activities. both than intensity recent North project to report XX% XX% driven finish be we basins bit of highlights lower in improved our As corporate intensity, Dakota, operational been more year-over-year. our anticipate in ahead from step-change GHG stimulation

has operator our and to for of there up integrated and the continues call planning. deepen over element to and open strategy we'll Our operations it turn become questions. I'll ESG leave it an the

moment to questions for Thank you. question. One Instructions] time. seems There at your this [Operator first be no

thanks, well, And… operator. Okay,

like does few a have now. popped it in look Oh,

ahead. Jarod Your first go question Edelen comes Investment Dakota with Office. South from Please

talk And paradigm. and dynamic and on you - but call of to order trying would a - have briefly touch today strategic you what existing next that? very guys. would to declining a into wells to you flat to questions. commodity flat rationale focused in have with the for Hey, What's are today to Thanks production need to price in need mentioned production $XX year, a what when you a companies wide about the keep continuing on new i.e., the you differential? just the Could for of weak completing or and signal you change a price production, do

the Jarod. morning, for you question. It's Good great. Yeah. Thank

also for So, at highly market cash go-forward our drives I market, and news from see affordable. by inventory DUC up well. And it as we forward that the guess, a decision it's affordability. the economics dynamic from it's robust free really flow hedge perspective, good and partially a us book, our making. economics, sets supported And current

pretty in easy our that's opinion. think I So

mid Probably start low under those much wasn't there, flow at economics would free conditions how still the program. [indiscernible] the $XX, the perhaps. because matter so change? think does much much? you you're not as just into start you questioning wasteful the you're getting things that very Yeah, cash whether being I where So go, you have of would margins, If $XXs,

$XX, again. So I to it meaningfully through I you think mid-$XXs, falling start think think a really about as start below you

Best of luck. you. much. great, so Great, thank Thanks

Yeah, Cheers. thank you.

Pardy question comes Markets. from go ahead. Please next RBC Greg Capital Your with

let couldn't We guys Yeah, that easily. thanks. morning. go you Good

for a - is the But mean, program baked a one of like I nothing much I point. just much this to year, lot can know I in the just - maybe fully So context there? how capital likely at talk you it. it's of a first And go But of might about on what that Marcellus? I couple spending need a mostly as bit to be $XXX questions. spend the guess, would next how the that's to I know non-op, million gas. curious get you

give you one with little we to dominating do that it, of give of Greg in to little a is Yeah, couple Wade, over to particular. a It non-operated bit I'll see on color all turn you what Wade, want partners bit of there? color. a

morning, Good Yeah, happy to. Greg.

But that materially be preliminary this up had capital of all course, we've pointed Of little In XXXX, is the XX% Marcellus. at wouldn't see the roughly at this the change. a moment. just It might bit. we year,

at typically roughly even part, it so, we year. net production drives activity your enough flat. when $XX-ish-million kind of to somewhere that this flat what kind typically a look sustain of takes kind activity - And of broader or look capital we've question, in of of the that if of similar at our seen at to order production a net look capital, pace our But to you on level, we at keep

million $XX that's And Canadian? Okay.

Correct.

Okay.

you Okay. for Thank Terrific. that.

with is a of around But question would be I acquisitions the broader Second just thoughts you what for not occurring, any the to question. the get just yet like, and know all I really there? guess, that everything for looks it's again, Bakken. focus, another And just landscape unusual

directly Bakken. the occurred in has some privately. restrictions the a Bakken, the There series the in been Yeah, change of lot has participants a have and in not quite that publicly there, of happened

can broadly. a see conversations, And, of to you certainly lot starting we're If a I M&A that's necessity. think back, step

more And sensible a governance, I and strong those you business scale shareholders. though be supported. scale, see though, the they're kinds the keep I a if from I bit think and maintaining going we think see Canada shareholder operating principles, me relevancy, that for I think forces. the U.S., Enerplus' well in in I of are to outcomes benefit for that all to scale for think think pretty well critical And, strong sustainable question been accretive with together, and and to executed resulting going perspective centric it's you to about - the continue successful with of that's perspective, powerful corporate maintaining continue for guess, up strategy, for and fight all transactions. right simple There's benefits going put I end I to guess sheet, balance focus, considered, things hasn't of scale. are synergies, throughout a and generally even of we kind in a been And the in do sake building it's logical real with

things in long So new dynamic going pace is of a what continue. bit Dakota, North been a to be up we're going come I things which going volatility to think makes would, around anticipate talk has of And there. for into I the profound, the opening thrown DAPL I activity pretty to it the harder it's uncertainty market has that I to fruition, trend just this about But out think a time. to for a

much. very Thanks

Greg. Thanks,

from O'Rourke ahead. Capital comes question go ATB next Your Patrick Markets. with Please

the for But upside around risk if timeframes exposed in process you I give what update maybe if an on could pipeline. what fully I know, that are? and kind DAPL. be us you can us not what in Hey, again XXXX of just you're stands, was with know, what morning. could the the Bakken? uncertainty - the the where there touched could guys, respect be to the good differentials to I you quantify wondering,

question. the appreciate I Patrick. Thanks,

you want do Jodi, think this? I to start

sure. Good morning. Yeah,

in DAPL as yeah, not you So involved the legal we're the mentioned, directly process. or process

and can supply really $X-ish if to We us sort of and is, in see operate, on can't declining. basin it DAPL the continues thing. differentials see steps we what means But range. So we that comment timelines in that for

clear use we up going to pipe be DAPL end If shutdown, basin. quantified the getting does And ability the to have to that. there's so

year $X.XX it So context about range and in to that us per on shutdown differentials of costs the that a BOE be would could production. Bakken a full the that equate $X in netback, to $X for would corporate

you. Thank Okay.

at questions this are There Please no proceed. Instructions] [Operator further time.

thank great your I great you have today. day to appreciate weekend. a call joined interest and a Okay, that Thanks. the well, and everyone

thank participating gentlemen, concludes please as for for call disconnect Have day. your such and a and We this lines. your today. great you conference Ladies you