Enerplus (ERF) 7 May 212021 Q1 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to the Enerplus First Quarter 2021 Results Conference Call. [Operator Instructions]. This call is being recorded on Friday, May 7, 2021. I would now like to turn the conference over to Mr. 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

the amounts details half increase in in each free quarters, remaining speaks. with it current he of in prices, material expect quarter morning, outlook. was Thank flow which, BOE about towards on then the generate quarter. And than our due second I'll acquisitions in volumes and you, with to in quarter some the expected commenced our Bakken $XX the provide operations about when Marcellus a recent begin XX,XXX to move first was year. the free over three combination of on to our first comments cash drive second end more from our Production Good Bakken quarter, Wade all. just X-year increased per the Drew. Based during previous and X% acquisitions, commodity flow under on the higher production results. acquired We to completions the more more quarter, substantial talk during will with through in of X-week Bruin cash million acquisition. quarter contribution production. the the generated we We day the a which the our will

acquisitions, North which increased closed. to The profile free Bakken business. in of has runway our to these extended change a drive are and the helping both in Dakota, development combination on the Moving of footprint meaningfully cash flow deals our operational step now our is

what Here number acres, net we XXX economic efforts. our through drilling net exploitation XXX,XXX between summary X transactions. of by the new land announced high-level the of costs operations. is added our scale increasing levels. acquisition these assets itself increase able locations an potential the Xx. this capital When of low April, to to a we're position drilling focused identified for XX,XXX into BOE by to of per and Dunn maintaining broader more incorporate cyclicality also including and and underpinned sector and Integration consistent total our is lent we relatively day operational we net across the provided financial the asset following to in allocation increased We believe further efficiencies. also decline County leverage. benefits enhance the completion not execution outlook, We on ability low high-debt a an and administrative and the high-margin production, a were as does our general X-year principles, add flexibility operational scale, base this we on increased track, flat. our safe keeping and while ensuring our of with positions

that be this the We end or below deleveraging. on hold, of levels X.Xx estimate. We incremental WTI than in with we less to If flow, path continue price. We with we be a clear higher a ratio by ahead that estimate will to Xx. prices oil target a but of acquisitions, debt flow will based net year $XX at today's to the funds cash the adjusted long-term see of quickly connection debt we increased

cash we flow. commitment our Second was free generating to highlighted principle

investing projects in by We are in cash portfolio. our focused on the sustainably free highest-return flow growing our

is base. operating shareholder flow we've principles our record increasing of returns, Third returning years our as by are cash these supported focus for shareholders. on many believe an grow how This to None been is to track we capital aim new demonstrates. We our to Enerplus.

$XX our Assuming price West flow $XX growing $X.X generating delivering we focus to X%. announced through see dividend capabilities. growth flow free supported in we billion cumulative with XX% billion to on approximately XXXX, X% a for a returns, to shareholder our expanding Texas, Consistent while cash annual increase liquids an by cash our of $X.X rate

for to Given including year context the will of allocation to our business, meaningfully debt there over this pause we the this of return and outlook potential turn increasing of our expectations capital to the the capital robust framework. evaluate continue for reducing shareholders call year, will Wade. I our this in

and you, morning, Thank Ian, good everyone.

with April. As in a started quarter. of our in pad we Ian Dakota the brought completions wells of X-well the program the noted, wells X production X remaining quarter, of towards North online We right at end end the the on

completed in We pad to the quarter. have since second date a X-well

second The our to will active operated XX XX we over year and gross, bring quarters wells expect most third net online and be this this period.

in average has completions one reasons approximately the to going that Dunn production XXXX our pads having This both been wells on on guidance our requiring with XX solid, stages we of acceleration closed efforts quickly Bruin, an XX% April. per announced inactive Production County workovers. supported by is to acquisition our well. representing we resilient, averaged when very been compared of integration increased has Our which is The performance over the performance. improvement restore XX, of March XXXX day, we also execution

to track culture. happy return of operators us part also that to report on that have joined by are I'm acquisition our commitment an to as to May. these demonstrating of the safety wells the of end new are this excellent production have We most

acquired. to like a we've I'd few that new the on acreage Now share perspectives

about County. in both XX,XXX acres With the existing acquired another FBIR net we've acres locations. to Williams Bruin Across identified our acquisition, we XX,XXX on drilling net and operations, areas, net adjacent XXX

focused look at locations portion testing Williams the near only the Over of position be eastern medium-term Williams of will are we the acreage. previously, on our FBIR about Williams and noted plans the identified or Western and total time, acreage Eastern Williams. on acreage, but focused will the X/X we've I've As

With south the this our are which we vintage activity by and southwest acquisition, Dunn net highlighted to acquisition, from XX,XXX and acres Tier position. of supported net X, County industry locations results. the We've FBIR robust recent acquired XXX drilling clearly

on We believe have also offer economic returns the XXX for today net we completions noted acreage. we as more locations, additional which modern potential are test the more but compelling an

There in the area drilling only Three offer productive wells are new Lastly, are the we've additional in Forks offset identified Bakken the recent on that our locations upside Middle formation. acres.

starting acquisitions. from We tangible to see these are synergies

leases D&C As We've we our per the our press XX% this advantaged We're operating contract in while pass keeping now Ian rig rates. scale G&A cost also USD noted, release. flat now Jodi. extension at and to compared million our the X.X total targeting This to cost larger hundreds XXXX. on effectively of day I'll BOE run we've is of a our absolute support a call year, to leveraged drive unit to efficiencies rate cost to reduction highlighted continued helping the basis. and historic added XX,XXX a lower well

and in pre-pandemic crude. our price to realizations demand pricing the X.XX than our the is was Thanks, quarter. strong production which USD combination Wade. be averaged basin Refining Bakken, for in below with first per lower of supporting the Starting Bakken continues oil WTI strong levels, differential barrel

gas assuming hubs NGL continued We by per and below X.XX the cold pricing first both liquids continue key in the WTI, to that pricing We and Bakken natural barrel the driven expect operation centered be in differential is Texas. February, Dakota was full pipeline. the to weather year our event access the approximately which quarter, strong during USD over realized of Midwest

pricing from exacerbated during Marcellus NYMEX the in per has Marcellus differential due Transco with seasonality, of realized strength maintenance was line expected to May. quarter been weather. be colder Our by Mcf X.XX pricing Leidy on is USD in the second which onset benefiting in normal weaker the quarter, the to the regional below

production quarters in XXXX unit Marcellus for differential release. our USD of per expense G&A than acquisitions. quarter XXXX, Cash This with expect in fourth press operating full $X.XX BOE, included increased which XXXX, which quarter. to we This driven and guidance pricing X.XX in the is liquids to third primarily volumes XXXX, of in X% expected weaker weighting, prices XXXX. through provided expect continue guidance per the assumes XXXX the our lower increase first with second to below BOE Mcf our per We from $X.XX XX% higher a by cost NYMEX. than in We due XXXX, year X% strengthening in to following XX% expenses higher to be are

the to on balance sheet. Moving

no package. senior our million, extended existing separately in USD last to changes maturing week, credit XXXX, October and increased we facility As bank grid price with to or covenant XXX announced our unsecured

cost facility linked our integrating transitioned as markets pricing in capital this believe our We it our and initiatives to future. view sustainably of incentive progress our which incorporates and targets. the this terms toward on ESG our enhance continued X to credit performance our also ESG relative support based across ESG-linked business, will credit access a We facility to

free expect on We prices, approximately capacity. acquisition in flow cash of After substantial result continue our facility. XXXX, to to year. will USD April had levels closing million credit the significant upsized XXX XX, Based County quickly our liquidity in of we have through generate throughout commodity Dunn on available which we undrawn deleveraging current

XXXX. target track debt to flow by to leverage ratio Xx adjusted We than less our funds are net achieve on of

the quarter. With a for it an this dividend and and elected to paid are the to Concurrently, will transitioning dividend. million June Given we of in paid the dividend open dividends our a and up to the turn monthly call we business, to dividend the leave operator increase over quarterly commencing with scale from outlook April June will and quarterly in questions. increase, result in or May in effective the $X.X increased the incremental our payment. I'll payments second already it change declared, with dividends the there,

Instructions]. [Operator

with question first BMO. Ray Your comes from Kwan

Yes. I have three questions.

around peers are be just terms ask XX% going about think is, in going is that that's or was players what guess well, was talk potential doing can be or increase I do special or of whatnot. U.S. one, go to to first about, how your you how to? increases guys to too? you tied nice think that dividends The I a There to the about as and But dividend. How obviously, in that's tied you the surprise. forward, going

focus context I the the our it to So in continuing When and I'd largest overarching priority evolve, this want of we've near-term about guess debt. say going the to to evolve dividend, framework this we but sustainable principle it we resilient. to be will on outlined is with think is

actually special was and to it a thought be question We call. the be change heroic year, balanced to a something dividend was decision I To quite it through or guess now, your the we about it think a evaluating didn't as sort will clearly. structured some of dividend, open-minded. we'll we So start move we're that

had recall, there we As at didn't was it part XX people we at that there necessarily years time some construct of Enerplus. out now. of that but thought We may capital, was companies maximizing trying the to ago, the are cost good find

and well. we'll function were well. evaluating They to a allocation is we And of have robust years want be be necessarily next -- And is now, the and back we are see framework. closed, Didn't next very it a to a deals obviously, XXXX. We adjusting pretty X But capital So dividend. integrated this of I'll robust be Obviously, pricing we strong. it sustainable going are one as better, a that. come that fundamentals. us think just is front in growing gone and highlighted, will but pretty the

balanced So probably a with start change the decision it's today. to

versus X-year you whether makes guess, of to like the Can X the cadence -- following drives to about of kind you've X% what you talk the the X% talk the years on about kind that around -- Yes, X% of like next Can over growth I stated here growth your per growth? X% kind sense. here. plan year.

of bit rounding little sometimes. A a year

it We come So of to the I careful not growing back -- see one more characteristics to of capital this is but a business. say that to again, much Ray, guess not I'll we attractive growing, level. outcome were targeting is financial we're framework, and growth be an the business an the really needs allocation absolute

all return of a see so world, capital sheet, And are principles, do to we to balance flow, do, the going all the we're cash XX Those to free those then grow an ability generate that long have And in business. we shareholders. done things to time. XX a things for and

there's number. I between if particular difference the X%, to So X% magic know that any to don't

about I think would top Enerplus maybe just opposed for and industry broad of it's our levels in theme put traditionally talking saying was XX we've on lower is, message been as company that again, really coffee sense. income. to trying to it a differences growth that see a we But obviously, growth now, the one get the we and to anticipate were growth can this of There balanced than years had. in -- want subtle to to is mid-single-digit right if growth think over here rates. maybe and And makes approach low happens you of we decline sort we granular a this sometime, but rate

happens than that say, to let's You way and start you level. past go decline see its inching and sub-X the start up, to less X,

kick -- the environments of cash to cap I I think about generation. outcome. that it. the an have you that potential But we that that price higher there's rock where we're trying more on would to free firm don't has around. cash flow grow than And think that, not if lot sort know in there's of So be absolute out. not a tell environments, in to ability helped like prioritizing people But I'm obviously, then these

of and operational XXX%. Yes, is of type question. does. last a this an It question, My saying more

drilling Wade So you like to of I the the kind on upside wondering upside it's to for I want year? about locations well guess, talk of probably just you, lands And more add are new I Ian. mean you expand -- this But locations going delineating to maybe or can -- be confirm, just as kind as on more inventory? the

Yes.

change not than just there's been company it a a moment Yes, talk economic the it's spend who it's cash long it's in and we and because two it's portfolio, great generation, for the those have that change Ray, followed is some portfolio, big to broader time, a it's is don't strategically context giving or free inventory, -- a and a Wade question. set lot for that the flow maybe think, significant why opportunity just the highlighted. I a about I'll wealth

some you of do maybe Wade, So want to through take that? us

Yes, for Thanks happy question, to. the Ray.

So I thing what's first happening year. on the I'll this is touch think

we Roughly leading them County Williams XX of So DUCs as those in online later we indicated year. in will they Bruin, inventory be when those bringing from this XXXX. were we had announced the half DUCs, area, and

of So be that will Enerplus an important kind first test of Williams County.

of Berthold the for areas core of Fort acres got those near-term our and inventory and of area In County, terms Eastern new to kind that Knife FBIR all we compete those core are Dunn Little of in kind in County of legacy new capital that areas other itself, existing inventory. with Williams going

So of X-year a plan. expect areas. be kind spending the you of those move that XXXX out that will see between then integration, balance of optimization as you'll kind into And

question Bruin Hess factor your to we you'll that areas these answer X-year core from bought broad and our is, from of bought then in County that we both in prominently the plan. Dunn yes, So see pretty all

that X-year life we've in assets and even inventory XX-year on X% about X% X the new the relied Now kind beyond inventory built the those kind portfolio, inventory to beyond of core they clearly, really new clearly underpinning of the goes beyond expansion. purchase those really on justify that plan interesting upside, our to of that, kind have opportunities acres brought the to then the for we we've beyond we've go the that talked our clearly in And of resource goes inventory and outlook. several of terms XXX,XXX added that

just we on give bit me where little see upside. color a the of let you So

areas So there test. that quite keen we're are several to actually specific

additional The first the Bruin note XX,XXX that In one acres acquisition. core upside I on. the with Williams would model is we see County, the starting do X/X on inventory we of Bakken didn't

design say, in Williams a County. in we release, Bruin critical. more to, intense think we saw being area to Berthold County noted the more going at Fort completion little speaking, bit is effective Generally the we stimulation As be Williams relative

be inventory as in additional In quite of the the Little bit a southern County, it's be release, of further of our middle we the of going will that eastern also likely west. Dunn pretty to part, and to upside feature unlock So Williams we've as in to see the indicated Knife. both in area the third but Creek additional move you Williams, core a of do critical Bakken Murphy kind in portions

So if in Page as to see the But we counted. of today, core modern you at quite economic excited areas. we've actually will competitive actually do see Bakken look Bakken full the mid wells kind upside XXX clearly. the last to not design inventory those stimulation those there, a Middle you'll deck, They're denoted what of are as XX investor

very for active Fortunately, us, it's a actually area.

And activity so which acreage. our directly some industry of offsets bit we're watching quite County, in of a Dunn

so and is to and small noted of Dunn help upside. there's we that a was accelerate in own included even of our non-op Three And lastly, going in that a our Forks what number and assumptions. beyond -- core our upside learnings that then our lot industry that activity testing very we County, additional And

area, core than, basin Now complex say, the Three little a Berthold. in of for Forks in the more in the that Fort

subsurface careful going upside Forks characterization be a key geologic to And so really there. Three is to unlocking

already when would plans moment. specific mature in of firm to to upside 'XX quite have I Now you the move we of and parts are we the our balanced very very risk that to continue -- And I systematic we're and test a actually next to place question test that? what then see It's working test As as of upside going 'XX. quite approach you'll just the at forward I'm to more beyond of imagine, to is budget. begin more that, might we starting And confident kind beyond noted year.

brought diversity options as really Basin capital of even for Ian us. it's of inventory So a noted, certainly, allocation within the options, diversity Williston

to to and quite So some we're unlock actually test excited of that. begin

Kubik comes with Jamie from next CIBC. Your question

the I how start opportunities guess about a Enerplus Are seeing M&A guess? further as well. levels? And you couple acquisitive. of we've from can you I mean quite outline seen in thinking off further XXXX questions you're me maybe I current at Bakken,

Yes, QX, it for a busy was sure.

mean excited nothing I it just was the done then things lot And and a really got then seeing it and then deal done. we concept, that and like are -- market this there we was a was high-centered happened we So happened. another about one got another

there's So a sellers to deals been in potential product causing question no is think and activity market. there's about putting bit of that or the

there. or at both like... mean I current do of So are How we pricing guess, think they're levels? or happen. deals out I of happening will that do them sort There you levels like think

I And of I on coming mean, of opportunities thinking to Yes. I your part, guess. acreage additional you couple Yes. proceeds? like help would use guess, anything, perhaps with about look a you of to Two dispose around the fronts, are there?

on And the part we've the assets we're fit meaningful profile focused about year. money. credit really money saw basis we've a And making So that a making sight really in was done pretty this this changing on a important where for line X been the our without cycle way. shareholders things and of of full operational plan, we excited

some to into that's us but goals the pretty leaned we we've and delever, sheet a on rapidly. bit, balance got So little

I a you all balancing those could in fit and something position do integration of And things. and operational becomes and So value it then else. think where we're

quarter fair in effectively is two deals a So a amount.

forward. a continue can really tomorrow, put ourselves move there's position But announcement we you. I So to tell good to in no

continuing thing. out a I to think is scale scale, positive build

way, You got the to right it do though.

look guess I Bakken, Relative and value. Anything like. maximize see the the out what we've I to value to of we'll so over divestments, I shakes for outside think opportunities pretty And we guess clear where looks that would been years.

lot buyers. sense weren't the of And why and so it was anything, of be we're we make we challenge a and seller a all to had that's didn't

you're going the to So see think it which I strengthens, as metrics. I market will, think

back at It think the is look I on will an price. in attractive Bruin people quite a moment market. was

I think that's promoted well. County as Dunn actually how they have

for you're to noncore of maybe think and to here value to So does move continue probably I valuations unlock an that the see would to bit a and provide assets. going opportunity little forward there

we'll our feet balls So the nimble on and on stay be that. of

were actually. Maybe thereabouts. I XXXX with Okay. you that shut over effectively assets that Bruin on mentioned that, asset know the came previously XXX in wells or

you're I at a the those rate that some production wells. just you Bruin like can earlier purchased, is XX,XXX day you the where all production of Can on restoring -- mentioned was shut You versus actively comment that BOEs on of the assets in guess?

Yes.

if above to I math, quarter, the a of run level. a it implies think contribution which highlighted bit you little was bit that little we the

were that we we're just did I we're of you done wells those for. but she on little pretty release. by tell time, getting a think in would bit done I to get game, bit job Part little our planning hope of that maybe think manager, in that. operations are everything we shut It down. a We of ahead was that in front the this good getting And Wade's the range within So it script. the a and what was, of actually that wasn't

part bit of a and we where to according of would been. So little It's really been it. that's well plan. going have also ahead Again,

Got it.

for then question And Okay. last here. me maybe

contingency from any is we if here? You've your X% off-line go XXXX about that plans growth changing XXXX you guess, off-line were to -- think But on the set you X% I if the just to for DAPL highlighted type duration? us remind to and liquids plan Ray that forth. And should touched of can on previous it, target in how

suppose. highlighted X% a will a follow XX the outcome we I of as world. in we're an X% today, XX And to to we XX, that So plan in

no whatsoever, So DAPL no goes XX off tomorrow, we're change and change whatsoever. in world, a

there that capacity. is of One to our the rail is just ample view that keys

be happen consequence, we be and we strange still cash it'd economic resilient. flow think very is have, there than otherwise would a we less will to have our really and would but negative business thing So

price do a plan that I little bit, still the that environment. see in and it's world in but suppose it's you're of maybe, I if not So margin kind a is that XX pretty impacting resilient. that wider

-- the X So of next to lion's that our rates months, X the these DUCs in next calculate, share onstreams and large actually -- year so returns in just are hard completing of are to at levels. the with

there It at Instructions]. further time. this no questions [Operator appears are

may You proceed.

you, and Thanks, everyone, weekend. Well, thank have operator. for joining. a Appreciate your you. today safe time Thank

gentlemen, conference disconnect today. Ladies please your call you concludes and for ask participating for and lines. We thank this you that your