Enerplus Corp. $4.34 - Toronto symbol ERF

ENERPLUS CORP. $4.34 (Toronto symbol ERF; Shares outstanding: 206.5 million; Market cap: $813.8 million; TSINetwork Rating: Extra Risk; Dividend yield: 8.3%) produces oil and gas from properties mainly in Alberta, Saskatchewan, B.C., North Dakota and Montana, as well as in the Marcellus Shale, which passes through Pennsylvania, New York, Ohio and West Virginia. Enerplus increased its output by 6.5% in the three months ended September 30, 2015, to an average of 110,794 barrels of oil equivalent per day (55% gas and 45% oil), from 104,035 a year earlier. However, that wasn’t enough to offset sharply lower oil and gas prices; cash flow per share fell 44.2%, to $0.58 from $1.04. Like Bonavista, Enerplus will cut exploration spending this year. Its outlays will now total $350.0 million, down 31.4% from $510.0 million in 2015. It spent $811.0 million in 2014. The lower spending—along with Enerplus’s plan to produce less gas in the Marcellus Shale until prices rebound—will cut its forecast 2016 production to around 102,500 barrels of oil equivalent a day. The company expects to generate cash flow of $1.72 a share in 2016, based on today’s low oil prices, down from $2.67 in 2015 and $4.20 in 2014. The stock trades at 2.5 times this year’s estimate. It yields a high 8.3%, but the current dividend may not be sustainable if energy prices remain low. Enerplus Corp. is a hold.

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