Saturday, November 8, 2014

Enerplus Earnings Release

 Enerplus was established in 1986. This company is an energy producer in North American that currently has a portfolio of high quality oil and natural gas assets. The company tries to develop their properties which they hope, in turn, create values the their many investors.
      Enerplus is headquartered in Calgary, Alberta and trades on both the Toronto stock Exchange and the New York Stock Exchange.  The company used to be a Canadian Royal Land Trust, but changed their corporate structure to a corporation.  In 2006 on Halloween, Canadian Finance minister Jim Flaherty changed the tax rules for the income  trust model. The rules would change in 5 years where income trusts would be taxed more after 2011. The income trust did not have to pay taxes by paying out 90% of their earnings to shareholders, who paid the taxes at the individual level. So Enerplus, along with most income trusts, switched to a corporation setup.
       When I started my investment in Enerplus, it was paying $2.16 annual dividend. The yield on this high. The price of Natural Gas has fallen a lot shortly after I owned the stock. As Enerplus is a producer, this greatly affected their bottom line.  The company was losing as Natural Gas fell in value. On April 19, 2012 the price of Natural Gas closed at $1.93 on the NYMEX, which is the New York Mercantile  Exchange. As the company was not as profitable, Enerplus felt it was in there best interest to cut the dividend by 50% to $1.08 per year.

Now to the Earnings Release

Some Operational Highlights
  • Daily production averaged near 104000 BOE, which was on par with their previous quarter.
  •  Averaged increase of 700 barrels per day over the second quarter
  • Natural gas production was roughly the same despite low natural gas prices and maintenance on pipeline in the Marcellus region
  • Looking for full year production to come in around 103000 BOE per day.

Financial Highlights
  •   Funds flow quarter over quarter at $213 million or $1.04
  • Dividends paid out represented 26% of funds flow during the quarter.
  • Average realized price on crude oil sales was $86.49 per barrel in Canadian dollars, which is down 9% from the second quarter.
  • Average selling price for natural gas was $3.22 per Mfg in Canadian dollars, which represent a 20% reduction quarter over quarter.
      Enerplus has various hedges in place to protect themselves in the near future against possible declines in the price of natural gas or crude oil. These hedges and the positive earnings report, pushed the stock higher on Friday by 10.13 %, or $1.54 a share to close at $16.74 per share. 
       At the current price, I will not be averaging down my shares.  I would consider averaging down my shares if the price of Enerplus falls near or below $15.00 a share. I currently have the DRIP turned on, but missed it last month. So this month I will start to averaging down via DRIP when Enerplus pays their monthly dividend.

Note: BOE stands for Barrel of Oil Equivalent

Disclosure: Long ERF (Toronto Stock Exchange)

     I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.  Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk


  1. I like to keep an eye on ERF every now and then as I was invested in them but lost quite a bit in 2012. I didn't like how management acting. I see they have done well but are now impacted with lower energy prices though thats hardly their fault. Everyone is hurting these days.

  2. Pulling Myself Up,

    Management seems to have gotten a lot better recently. Recently, Enerplus stopped their stock dividend plan as it was diluting shares. The stock dividend plan meant is when shares are directly purchased though the transfer agent. The company would have to have extra shares on hand for this.
    They are definitely impacted with the low energy prices right now.