Enerplus cuts additional $25 million from 2020 capital budget
Enerplus Corp., Calgary, has cut an additional $25 million from its 2020 capital budget in response to the market conditions resulting from the COVID-19 pandemic and decreased commodity prices. In total, the $300 million capital budget is a 45% reduction from the company’s original plan.
The company has now suspended all further operated drilling and completions activity in North Dakota and has begun to temporarily shut-in select wells across its Williston basin and Canadian operations. The company said it is preserving the productive capacity of its recently completed seven-well pad in North Dakota. The high-working interest pad delivered encouraging rates during initial clean-out operations and the company plans to bring the pad onstream when oil prices improve.
Previously, as noted in January, the company had expected to allocate 82% of its original $520-570 million budget to its North Dakota development to drill 41-46 net wells and bring about 45 net wells on production.
Capital plans and expected production from the company's Marcellus natural gas position remain unchanged. In January, the company noted plans to spend 5% of its 2020 capital budget in the Marcellus to drill 3 net wells and bring 2 net wells on production.
April production is expected to be modestly impacted by shut-in activity with monthly production projected to average 88,000 boe/d, including 47,000 b/d of crude oil and natural gas liquids. The company currently expects to shut-in more production in May and plans to provide an update with its first quarter 2020 results on May 8.
Enerplus' first quarter 2020 production averaged 98,200 boe/d, including 54,400 b/d of crude oil and natural gas liquids.
As a result of the significant ongoing uncertainty in market conditions, the company is withdrawing its 2020 corporate guidance.
At Mar. 31, Enerplus had $100 million of cash on its balance sheet and access to an undrawn $600 million senior unsecured bank credit facility. The company's only near-term debt maturity is $82 million in senior notes due in May and June, with remaining maturities extending to 2026.
Enerplus has reduced cash compensation for its board of directors, executives, and employees. While specific details were not provided, the company said it anticipates its cash general and administrative expenses for 2020 will be $5 million lower than its original budget.
The company has suspended its share repurchase program.