ERF - Earnings call transcript Q2 2022

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Operator

Good morning, ladies and gentlemen and welcome to Enerplus Q2 2022 Results Conference Call. [Operator Instructions] This call is being recorded on August 5, 2022. I would now like to turn the call over to Drew Mair, Manager of Investor Relations. Please go ahead.

Drew Mair

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

started, Before advisories release. note the take at we the news get located quarter end of second please of our

financials GAAP. with in been Our U.S. have prepared accordance

net Our are our Officer; and financial this specified. are production figures morning VP Operating Officer; Morihira, Financial otherwise and Senior of U.S. unless am reported Chief Jenson a our dollars Hutchings, volumes in and I royalty after Executive Finance; on Doll, Shaina with Senior basis deduction here Dundas, Wade Marketing. Officer; Chief and Labrie, Garth Senior President and VP Jodi Ian Chief VP, VP,

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

Ian Dundas

Thank you, morning Drew. Good everyone.

reflects allocation. disciplined momentum Our second strong quarter operating results capital outlook and and XXXX updated

cash second impacts in severe in efficient believe execution. due the are year annual have guidance we since increasing Canada. For our quarter, set quarter X,XXX of last particularly events our our We the yet increased we per Combined, recently the growth. we annual to we production where and announced significant and our assets weather evident production to for sale a performance February. flow up the and per the us volume consecutive Bakken half considering almost spoke well to is guide production the have expect these BOE this second impacted X,XXX day outperformance guidance released XXXX of from our day, has initial BOE in by by This production robust very a

focus upon cost are million free of expect to over million rest our which of capital approach control based an months within back the cash and in the half the generated mitigate range increase we We $X.XX $XXX to many first X to TI NYMEX of helping experiencing. to prices the the to $XXX to flow $XX $XXX our we of execution, year million continue of inflationary are and through of also of by operate We strong million as on pressures year procurement, $XXX guidance year, incremental gas.

flow XX% to outlook cash we cash free XXXX position, financial in flow our least of shareholders at XXXX. returns second commencing cash and continuing our free of to have and half this Given solid through increased the

absolute up free We cash previously. competitive from million, increased At have return minimum XXXX corporate this also approximately $XXX our – yield valuation, commitment return flow $XXX sorry, XX%. minimum million yield to represents today’s commitment in a cash of

of divestments. announced portion of to of sale Last assets a for our we week, a the CADXXX Canadian Moving consideration on million. total

to in We Saskatchewan. assets invest to Canadian and our Alberta continue in remaining advance opportunities

Lastly, Canadian X-year process. due price outlook divestment on TI we commodity base prices $XX as and have our inflationary Previously, to our well asset higher better as ongoing reflect NYMEX. environment exclude and to our outlook the to X-year updated the based $X was

cash XXXX to at our our We updated flow is to forecast million are The between free our and our these valuation. price increasing X-year at commodity XXXX approximately annual $XX and forecast Under is estimated flow $XXX and from $X capital spending approximately $X. free is current cumulative XXXX XXXX cash equal billion. assumptions market through assumptions,

turn will Wade it operational it I update. an leave and So there over to for

Wade Hutchings

second equivalent of Total day, to of over I year. the start oil the rest our moving quarter XX,XXX liquids. will review you, for operating everyone. per with quarter Ian production outlook morning a on about results XX,XXX per barrels good barrels including and our was day Thank before second of just of

following with completion weather, performance. activity we strong quarter active the the exited some experienced volumes strong well and we due of Although in an severe quarter downtime period early to

Dakota. North operated wells gross pads in During XX quarter, we the production X brought on across

peak optimization seeing development Our from wells, terms are X,XXX and wells. landing our the outperformance completion wells our back. to XXXX each artificial design, contributing annual per to BOE per midpoint. XX-day zones, production existing X,XXX up This per we These approximately continued This consecutive have to XX,XXX locations to far per team with lift day in day, have XXX,XXX increases producing so be averaged at flow customize We of the spacing, guidance continues the supporting combined offsets day of now high-quality pad are to year. the basis. is to well expect on a we make BOE to outperformance our this BOE total production

anticipate online terms in quarter we bringing completions North quarter. activity the X of of online in the remaining the wells fourth our operated Dakota, in third In cadence X and

of Additionally, some half we have second the the the forecast in for year. non-operated completions

program Our strong up half set second volumes. expected is to

and primarily our is highlighted sequential release, The have impacts deliver in tightness. Touching our continued to As in to third production program. expect capital in news experience approximately we impact supply cost growth being XX% chain inflation on liquids quarter. we inflation, due the pressure to of felt the upward

However, well mitigate through we positioned of last gains to experience. continue early to partnerships XXXX the approach our technology-driven on year, program impacts efficiency we contracting remain strategic to inflation and the

the an continues X%. on result, a will $XXX Marcellus position, per rates during brought call were I pass in average and feet capital there of activity participated quarter XX in per range. the day million cubic be are within to which spending with As now to performance production to XX-day Touching we our continuing we our million solid with peak XX operate production it $XXX leave approximately well. Well to Jodi. interest on wells, million briefly non-operated working of consecutive

Jodi Jenson Labrie

of our quarter. and oil a in per sales the continuing Bakken an Bakken with realized trade to a second oil realized premium balance, by $X.XX the and price oil expect to WTI, Wade. This delivered the start WTI. will significant Bakken, prices prices I continued WTI In we prices during per to driven prices strength annual barrel improving barrel. being demand above premium region Coast. at our realized average U.S. XXXX supply excess to is Thanks Bakken oil in prices capacity Gulf to pipeline strong crude $X for we now the With

the our side, was Marcellus realized per in NYMEX On quarter. the price below gas $X.XX Mcf natural

to gas continue year on Marcellus the differentials seasonal in impact guidance of the the in costs service with weighting. liquids region per XXXX prices due replacement full quarter. in an quarter, in below per were costs natural along of activity anticipate lift to We largely widen expect second BOE higher $X.XX have to system third due anticipated trend our will increased for remainder well to increases Mcf operating artificial the Operating and XXXX We and $X.XX NYMEX unchanged. left the

lower $XX.XX tax. third tax BOE. of as a on basis, our expect $XX we This we $XX the on close at expense X% operating to a quarter. And second of the from our flow tightened of expected the the announced impact to in However, before of asset we includes cash of result, per in per adjusted current to expenses We million expect of X% year based end BOE to our funds recorded range full continue taxes commodity environment, the Canadian divestment, overall XXXX is current the fourth have guidance quarter. price operating quarter. previous previously $X.XX to which And our cost

to on bottom Moving line. the

WTI $XXX to half have capital year-end. the the free quarter second on committed updated flow $XXX our shareholders We million $XXX and July, funds year, to to return capital greater. $XXX million capital flow shareholders, of we generated reinforcing of have the With This $XXX the million our was spending dividends returning in remaining for $XXX we second of higher. this quarter, share million. return with leaving and remaining second million be our Our with the this could of would cash to continue net adjusted a framework, is Through prioritize at adjusted now beginning $XXX whichever we amount of million. $XXX year in of along income half the If to the approximately million plan was through XX% and to free increase minimum cash year, of of minimum XXXX and repurchases, returning flow return least $XXX rest free in sheet balance flow. between returned averaged cash Under a million.

have commitment returning XX% least XXXX our into flow at extended cash We free as to also well. of our

normal Over our to upon bid expiry the and repurchasing float August. at the last XX bid an spending $XX.XX months, the XX% renew of million in $XXX our public its course we float plan bought under issuer back average of of we for per XX% million announced XX our shares public share. And another price by approximately

and our we both a And would is next view remains discounted compared XX a return to course issuer issuer of normal to to that bid strip share capital fulfill current over our under bid shareholders. price using commitment months anticipate pricing, the our substantial intrinsic value. Our

questions. share have remaining not dividend this of we cash from In also our buyback dividend our year. the payment. addition year program, second the increased the XX% free represents over with XX% start is and by increase effective raise This September of an by net returns allocated the to The quarterly flow over to will flow the there it the turn leave will the reinforcing call funds to balance end this sheet, to and in approximately resulting operator it for of shareholder I prioritized year. and open debt X.Xx up be for the strategically

Operator

Markets. Your Please Instructions] [Operator ahead. comes from first today ATB go you. O’Rourke with Patrick Thank question

Patrick O’Rourke

Hey, guys. at Capital. It’s good morning, Patrick ATB O’Rourke

just quick Just clearly Joe, return buybacks. you formula? an the a current terms SIB. dividends question, I Obviously, of in your on gravitated buybacks potential towards here capital between and for you’ve know the mentioned dichotomy

when the and there and I in done But of think SIB special especially positive at the light an issued, XXXX, exhaust that’s buyback some use we’ve the these this exhausted As potential seen is been from potentially of look in are. have asked what your to any they parameters dividends that you of maybe you’ll peers you’ve in the and in so? XXXX, see performance past

Ian Dundas

over it in that. Jodi address a turn to I’ll few to things

Jodi Jenson Labrie

potentially shareholders us. value best the being options the through dividend the which that to the or considered between the of available with to capital levels, the dividend, those it just want below we trading buyback. to when very prices our or intrinsic and context Good where We we we And ability at base best special be the our dividend. a bulk morning, maybe components it both we Obviously, really sustainable. But parameters. of of see to stepping buybacks, in Sure. total the base that continuing part biggest be it growing our share as we’ve buybacks. have of return we mentioned return capital, capital be being do be would And is or dividends Patrick, of of the return we of think significantly low to the want about shares, a back, these see to think value or we

look As as we to do Obviously, have a August. are in valued future, have for issuer to special another and bid makes substantial the NTAP would change, increase dividend well and mentioned, as believe in here we continue we if where we price share towards a variable we parameters to the or potential option the do if a sense. the XX% at renewing value it

Patrick O’Rourke

operational the Okay, the The especially here, light to and it’s staying thank considerations driven it looks you. the And impressive in here, pretty the guidance length I previously. back outage maybe albeit by think came sale that capital just mainly inflationary and bump is flat on and shifting like slightly gears asset of front.

of some we planning geology of you better little more you the really the is or expectations? if terms acquired bit get you’ve process on runway could in Are or augmenting here? Is a or and conservative sweet it gave sort assets the on wondering hitting a completion driving still your a well the here? general, of of spot your the get design Just prior color versus it into understanding outperformance just, of nature what’s that in

Ian Dundas

Thanks, Pat.

versus We a what’s quarter this right? on effectively pretty function this talked but second is were So we’ve And – the pretty it transparent that, quarter, a no can pretty year. it. of turning quarter, downtime sandbagging how performance a a on stop was going maybe or with good that our we but it hitting QX into the so not the what’s We’ve largely little storm. light been earlier and see we it’s for been performance. on through bit and early we didn’t I’ll so in a ask deck numbers this the and actual every a But at performing about updated this we What far, well The We escape We’ve it because onstream there little turn average year. sort morning, going wells of – are is to him this what it’s managed sure. is raised me vintages, over pretty managed results. related raise through well time, level XXXX and as the bit have and collectively twice storm. influenced every quarter you capital managing I’ll performance, to do to get

Wade Hutchings

I quick on make going into the a will appreciate and I’m and or acquired assets, actually to Ian, Thanks, I Sure. and two question, the base dive comment performance the then well performance. Patrick.

just year that wells from one pads noted, brought last our simply existing that our across both And year. has from uptime. on year been we assets I’ll that the of note part purchased acquired year. this the And this capital came we So that’s last on four outperformance as Ian of of legacy even set good program, been the plus wells

well of think look importantly, most well had been turning out basin And and full a the development other it’s made lots contrast strong in maybe whole where to changes been performance. well in some to reflect very over mode. history. Bakken think there zoom helpful moment step periods performance as into And the for So its I I just performance, to basins moved has on is actually at – operators have and

development been in I would hasn’t our many mode. play results learnings kind seeing But have in this think as that been in that of there of And adjustments. course, Of you’re even reservoir and if there you year. perform how seeing missteps, will, through terms big

almost that wells unit been the we new near assets So has producing we have conditions what into the developing everything about that the speaking a everything of every some of today in specifically wells, are take layout know account the etcetera. the we offsetting producing to approach for the doing, geology, given existing the pad reservoir every and already We our in or design taking subsurface, we unit. the know about customized to very unit, the all aspect

And will the in are the where we the and they Middle very Forks, so put they are number of how resulting wells customized they in what how that up landed, optimize a we spaced, is how Bakken program ends Three many, where actual then how subtle also integrating put are the in frac spaced to in relative terms about and and of back existing proppant design think producers, them wells loading we the those then lift. initial changes on with will how that artificial

approach. like And very that think exceeded customized actually is direct results some in And seeing have unit-by-unit places we so we are expectations. results feel result really good this a clearly, that the been pad-by-pad, strong our And development have we year quite from approach. this of really

Ian Dundas

add, it’s Maybe time, I right. just will early

on you giving So, these we are a some little we have rates wells. XX-day and longer got of

[ph] quality a many IPE Bakken well XX You something bad or XX-day the a of an rate into unlike examples that. turns that can’t find in like

are feeling we good. So,

take XXX we positive and of outperformance. but not curve, today against extrapolate these an decline pads are expect in type an a will, wells program. seen of we in sorts wells.” is These are We where than There areas few those safe “Hey, a would where it another don’t yet, average right. better average saying, this have it’s position are we We things, haven’t

we is explanation doesn’t maybe different have in But of because paying that of subsets that in XX think that it’s are weight, we got statistical We seen that part off. it. have this outperformance play disappoint, areas, curve. And a we generally

year. a will to time So, it’s been tell, start strong the but

Patrick O’Rourke

much. Okay. Thank very you

Ian Dundas

you. Thank Yes.

Operator

go Your with RBC coming ahead. Pardy question Markets. Capital Please from Greg will be today next

Greg Pardy

look of X% of into current morning. color. Good great year. are for operating we know, I I now Jodi, you as The kind taxes. I But Yes. ‘XX? Where does and the probably for more mentioned Thanks. from the or questions this tax AFFO around particularly rundown. company pricing X% position, sit got cash pretax a like mean then have stuff Thanks just

Jodi Jenson Labrie

to Yes. we and of are year. like operating this majority would the oil expecting in the use price expect gas, these losses mentioned, U.S. commodity during both we Thanks Yes, Greg. at our as levels,

number X% is these that year, XX% this to X% commodity next for prices still use hold, gas. I adjusted moving of for before and oil but towards to again, So, tax if both see good we year, think to funds would a XX% under current the flow prices

Greg Pardy

for Okay. obviously oil prices should of have Thanks those a it What so for favorable been that. in went And of and we going reasons. How because oil or really, then this seen anywhere production, Bakken is terms think prices of what variety still good about XX% in really I mean, detail. XX%, NGLs obviously, near you has about participated ahead? not your we have prices.

Jodi Jenson Labrie

weakness propane Yes. That and see the mix XX% About smaller has some In NGL QX, That’s XX% and Bakken is sure. portion driven did the prices in primarily is with butane. was we of pricing. our WTI. for of weaker in by propane become a butane

range, think to a So, going in as WTI. think forward I I of a good it think this way about percentage is

Greg Pardy

Okay.

– probably in we quarter range So of so NGLs? so not second on the unlike sort in not what the mid-XX% or the saw

Jodi Jenson Labrie

would a that Yes, number. I good think be

Greg Pardy

very Okay. Terrific. Thanks much.

Jodi Jenson Labrie

Thanks.

Ian Dundas

We operator. are the may have there more any Operator, lost questions?

please… question Next

Operator

Sorry through. about I I talking going wasn’t here. that. was

with So, CIBC. the Please from next question is go Kubik Jamie ahead.

Jamie Kubik

Yes. my and thanks Good for morning taking question.

framework. shareholder Just return around the

about powder XX% get preserve to You replenishment, zero, and dry you those M&A higher to levels Could can inventory items? think additional that about of your moving XX%. did debt you cash your shareholders plan increase potential from to return closer talk for do free to look as we or

Ian Dundas

that? CFO the this show. make let’s – make you to Why take going are We don’t

Jodi Jenson Labrie

Sure. Thanks Jamie.

just at obviously, yes, our the around on QX. debt $XXX we remaining have million so balance sheet So,

or in returns of moving XX% we we least could sheet, debt would into that the So, a XXXX I we to be the as higher with continue XX% of think current be I timeframe. kind XXX%. moving debt makes to as We expect wouldn’t would that to down that number future it go expect on from at XX%. and sense. Obviously, XX% the think balance possible look lot pay this But

place. a We in really are strong

inventory We Bakken. have the deepest the some in of

want so a we long-term. the to – our we we on focus just have And ensuring sure sustainable over business remains make

Jamie Kubik

succeed out the be you should of with remaining maybe possibly shareholder before then And to catalyst from the how you production of Okay. that remaining sales impacting end move or higher, asset be that how if about disposing year, could that shareholder Canada, or sold returns? returns Canada, of the to the we about think think in

Ian Dundas

morning Jamie. Good

remaining will year think this framework we – we timing, going we it’s to this depending your similar year, I are this I this the but think upon and lens forecast happens, intense today, exit when the of for program. this your with debt to evolve have return with would repayments, look if

So, we see this that year.

returns to how plus debt So, enhancement thought is have we shareholder about it.

when pending later next ground that the we returns the XXXX proceeds do said transactions go there into how If or year. year, happens for occur, capital in practically, about have to will the ability then that. to the influences that could And a of We no program. portion think enhance real is

Jamie Kubik

for taking Thanks Okay. my questions.

Operator

is next The going Markets. O'Rourke Instructions] from a Patrick follow-up today go Please ahead. to ATB question with be [Operator

Patrick O’Rourke

I chunk, will see with would sale different that, here the on sort you was and in back see of potential an do that just strategy, transactions the accident. there. building have, the is you going asset one you just of Sorry, since anticipate the or balance guys, there curious of multiple to sort Canada, be do queue But did line am forward? question, any on I That trying in Jamie’s wasn’t be we

Ian Dundas

was could would this O’Rooke have the value that O’Rourke. been to we we Patrick want – is that announced have preferable from to the do long deals we one, we or the better said and even have day we – it from thought We made. transaction extract were an reason though was that single this out we execution obviously so we flexibility of perspective, and decision Is Patrick multiple ago maintain a

more next one could say those the like, look a be assets. when next what probably or the you of natural and the one could next does actually would what It’s like, look the I nature little So, one, it the assets multiple look at transactions.

different value focus This be – head when see could You tight it They value that that. margin, their a liquidity around is build on down. the lot would these quality hear these around good time about drivers And continuing want yes, are footprint pushback focus Southeast this. flow quite goal are profile. In from in the market, But we businesses high ensure This a to we perspective. cash free good just to things, It’s chasing to the done the cash is buyers have big single marketplace. getting They flow things. operating low these don’t pinned any decline, in in are volatility to easily days. like just business these for reasonable And execute. not by maximize we Sask, the this and and we ago. wouldn’t used assets our been remaining are – an attract are a free long

see likely now be a long may time be different. [indiscernible] would with I like met was more may a it’s you deal, single and the could but more if It it set Probably, we Canada So, have to best, ago. guess remaining, goes. be multiple deals I will how it you you do

Patrick O’Rourke

I people burden entire or with record, as of life. dealing just have Patio Patio have Lance basically been my and Okay. the given up to Great. And that Furniture. mispronunciation me for many of name, refer the And

Ian Dundas

leaving on it. have questions, where we if that Well, be don’t note, any more that’s we will

there is line? on So, any questions the operator, more

Operator

further this line at the no moment. on are questions There

You proceed. can please

Ian Dundas

And and I of Appreciate summary today we leave will it hope the your Well, there. last enjoy you Perfect. here. everyone’s bit attention interest.

fall. to Thank forward the in seeing everyone Looking you.

Drew Mair	Manager, Investor Relations
Ian Dundas	President and Chief Executive Officer
Wade Hutchings	Senior Vice President and Senior Chief Operating Officer
Jodi Jenson Labrie	Senior Vice President and Chief Financial Officer
Shaina Morihira	Vice President, Finance
Garth Doll	Vice President, Marketing
Patrick O’Rourke	ATB Markets
Greg Pardy	RBC Capital Markets
Jamie Kubik	CIBC

Enerplus (ERF) 5 Aug 222022 Q2 Earnings call transcript