- Alberta-based Enerplus (TSX:ERF) is implementing further cost-cutting measures as global oil prices continue to disappoint
- The company is also withdrawing its 2020 corporate guidance, which was released on March 16 this year
- In the first quarter of this year, production averaged roughly 98,200 barrels of oil equivalents per day
- However, some of the company’s operations will be shut down until oil prices improve
- Enerplus (ERF) is currently up 5.34 per cent to C$2.76 per share, with a market cap of $614.27 million
Alberta-based Enerplus (TSX:ERF) is implementing further cost-cutting measures as global oil prices continue to disappoint.
Production for the first quarter of this year averaged a respectable 98,200 barrels of equivalent oil per day, including 54,400 barrels per day of crude oil and natural gas liquids.
However, given the sustained and disappointing performance of global oil prices, the company will suspend its operations in North Dakota and temporarily shut-in wells across its Williston basin and Canadian operations.
Given these decisions, Enerplus is expecting April production to be modestly impacted, with projected results to be in the region of 88,000 barrels of oil equivalents per day, including 47,000 barrels per day of crude oil and natural gas liquids.
On top of this, the company is anticipating production shut-in to spill over into May unless oil prices dramatically improve before then.
As a result, Enerplus has implemented further cutbacks to its previously announced capital budget. An additional C$25 million will be knocked off, bringing the total plan to $300 million.
The company says that the reductions are a combination of efficiency improvements and the deferral of non-operated oil activity and internal projects. In total, Enerplus has cut its original capital budget by 45 per cent.
To this end, the company is also withdrawing its corporate guidance for 2020. Like the significant majority of companies in the oil and gas sector, prevailing market uncertainty has rendered filing an accurate outlook almost impossible.
Ian Dundas, President and CEO of Enerplus, noted that the unprecedented impacts of COVID-19, in conjunction with excess global oil supply, has posed significant challenges for the industry.
“Further to our previously announced capital budget reduction, we are taking additional steps to preserve shareholder value and maintain our financial strength by reducing capital spending by a further $25 million due to operational outperformance and project deferrals, while also lowering our cost structure.
“In addition, we have significant operational flexibility to reduce production levels in the second quarter to protect against selling oil at negative margins and to preserve value,” he said.
Enerplus (ERF) is currently up 5.34 per cent to $2.76 per share at 11:54am EST.