Value Line has initiated coverage of Enerplus Corp. (ERF.TO) in its flagship product, The Value Line Investment Survey. The company, which is based in Canada, is engaged in the exploration and production of crude oil and natural gas. Its Canadian operations span Alberta, British Columbia, and Saskatchewan. Enerplus also has positions in the United States, with properties in Montana, North Dakota, Pennsylvania, West Virginia, and Wyoming. The energy producer boasts a rich portfolio focused on high-quality, low-decline oil and gas assets.
The company was established in 1986 as Enerplus Resources Fund. That same year, it completed a $9 million initial public offering and began operating as Canada's first oil and gas royalty trust. In 2011, Enerplus became a corporate entity with approval from 98.5% of unitholders and changed its name to Enerplus Corp. It currently trades on both the New York and Toronto stock exchanges under the ticker symbol ERF. The company is incorporated in California, with principal offices in Calgary, Alberta.
Since its inception, Enerplus has strived to maintain a balance between oil and natural gas production in an effort to mitigate the risk associated with each commodity. At the end of 2013, the company’s production volume consisted of 46% oil and liquids and 54% natural gas. For 2014, it is estimated that theses percentages will be 48% and 52%, respectively.
Four core areas make up about 85% of Enerplus’ total corporate production. The estimated break down for 2014 is: US Oil – Williston Basin (25%); US Natural Gas – Marcellus (25%); Canadian Oil – Waterfloods (20%); Canadian Gas – Deep Basin (15%). The bulk of production spending has been concentrated on the company’s oil projects in the United States and its Canadian oil properties of late.
Enerplus has performed well so far in 2014, logging a top-line gain of about 36% in the first quarter, with a solid profit. And, the near-term outlook appears favorable for the oil and gas producer, with top- and bottom-line gains likely for the full year. Indeed, following an unusually harsh winter in Canada and the United States, oil production has seemingly perked up and will likely remain healthy through the remainder of 2014. Long-term prospects for Enerplus appear solid, as well, with continued advances in sales and earnings probable.
From an investment perspective, the stock has done quite well of late. After taking a bit of a nosedive over the 2012-2013 period, ERF has climbed more than 25% since the start of this year. And, given Enerplus’ rosy outlook, it seems as though this issue still has room to run. What’s more, the company pays a nice dividend, which is likely to grow in the years ahead. Its yield is currently well above the Value Line median.
All told, Enerplus seems to have a solid grip on the oil and gas market, which should only strengthen in the coming years. This stock may well suit a number of investment strategies. For a more thorough review of this company, we recommend consulting our full-page report in the current issue of The Value Line Investment Survey, as well as future quarterly reviews. Interested subscribers are also encouraged to take note of any supplementary reports that may follow detailing newsworthy items regarding Enerplus.
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.