Enerplus increases N. Dakota acreage by 4 times and increases Dividend

  This was the first time that Workathon has covered the Enerplus story.And this coverage  was partly because Enerplus had a very active year in 2020.Enerplus is a rare entity as it gets a substantial amount of it's oil and gas production from American properties.Enerplus acquired two sizeable pieces of acreage in the Williston Basin in North Dakota.In fact, their acreage in North Dakota which is a core asset, is now 4 times bigger than in 2020.And the oil produced in the Bakken area in North Dakota earns W.T.I. prices not Western Canadian Select prices.Their timing appears to be excellent as oil prices have increased by almost 60% since the summer of 2020.Enerplus management has seen their stock price move from $2.50 a share in the summer of 2020 to $8.50 in 2021.  

First Quarter Highlights

 Production  showed a slight drop in output from Q1 2020. While funds from operations (FFO) increased from $1.51 in Q1 2020 to $2.08 in 2021.Most importantly e.p.s. went from $.01 to $.06 in Q1 2021 while adjusted net income went from $.09 to $.023 per share.And cash flow was robust enough to increase their dividend by 10% to $.033 per share which is considered a quite substantial dividend hike. 

 Williston Basin Properties

Enerplus produced only 6300 barrels from their first acquisition called the Bruin property in Q1 .It should probably get 35,000-40,000 barrels of production for the rest of the year.It also got 204 MMcf of natural gas from their Marcellus property.Since the acquisition, ERF has drilled 3 new producing wells in the Williston Basin.And Enerplus tells shareholders that it intends to spend 80% of their capital budget in the Williston Basin drilling 42 new well during 2021.

Annual Guidance

It is hard for ERF to accurately estimate what their production of oil,gas and liquids will be for the rest of the year.They offer an estimate of 111,000-115,000 of Barrels of Oil Equivalent (BOE) for total production in 2021.If true this would indicate a 20-30% increase.But this likely includes very little production from their new producing wells plus their wells just being drilled.And likely their revenues and earnings forecasted will be low as this blog sees further increases both in the price of oil and natural gas in 2021.The price of natural gas has doubled since the summer of 2020 as it moves with the price of crude oil.This blog sees that the adjusted net income reported for Q1 ($.23 per share) should be increasing every quarter of 2021.Consequently adjusted net income should be in a range of $1.10-$1.25 for 2021.And the P/E ratio could be as high as 8 to 10 times so this could put the price by yearend at $10-$12 per share.Investors need to watch the production and net income results in Q2 to see if this forecast will be accurate.

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