Enerplus Corp (TSX: ERF, NYSE: ERF)
Enerplus Corp last year halved its dividend to shore up its balance sheet and end a borrowing binge that had almost exhausted its credit lines. In subsequent quarters, the exploration and production company has turned the ship around by divesting noncore assets and plowing money into developing its most promising acreage.
In the third quarter, Enerplus boosted its hydrocarbon production by 8 percent from year-ago levels, including a 19 percent increase in volumes from its oil-focused assets in North Dakota and an uptick in production from the Marcellus Shale that topped management’s forecast exit rate for the year.
Management allocated about 70 percent of the company’s CA$146 million in capital expenditures to water-flooding activity, a form of enhanced oil recovery that boosts production and softens the decline rate in mature fields.
Meanwhile, the firm’s funds from operations soared 45 percent from year-ago levels, and its all-in payout ratio (dividends plus capital expenditures) came in at 97 percent. The company has also reduced its debt by 13.8 percent year over year and its operating costs per barrel of oil equivalent by 14.8 percent.
Ongoing production growth and cost reductions will drive future upside for Enerplus. Although we don’t expect the company to boost its dividend until at least 2015, investor sentiment toward the stock has improved.
Your complete guide to energy investing, from growth stocks to high-yielders.
In October 2012, renowned energy expert Elliott Gue launched the Energy & Income Advisor, a twice-monthly investment advisory that's dedicated to unearthing the most profitable opportunities in the sector, from growth stocks to high-yielding utilities, royalty trusts and master limited partnerships.
Elliott and Roger on Feb. 26, 2019
Balanced portfolios of energy stocks for aggressive and conservative investors.
Our take on more than 50 energy-related equities, from upstream to downstream and everything in between.
Our assessment of every energy-related master limited partnership.
Roger Conrad’s coverage of more than 70 dividend-paying energy names.