Enerplus (TSX: ERF)(NYSE: ERF) seems to be flying under the radar these days. The high-yielding stock is producing some compelling numbers that investors are simply missing. Two of those numbers are being fueled by the big opportunity found at the company’s Bakken Shale operations.
Drilling down into the Bakken
Last quarter, Enerplus drilled its best two wells to date in the Williston Basin. The first well, Hognose, was drilled into the second bench of the Three Forks formation, which is an area not currently counted among Enerplus’ future drilling opportunities. This well, however, produced 60,000 barrels of oil in just 26 days, which is about 2,300 barrels of oil per day. It was the company’s best well drilled to date in this shale, which suggests that it has a lot of potential to deliver future value to investors as Enerplus taps the shale underneath the more well-known Bakken Shale.
In addition to that, Enerplus drilled its best Bakken Shale well to date. The Ribbon well produced 64,000 barrels of oil in its first 26 days, which works out to about 2,500 barrels of oil per day. What’s unique about this one is that was a downspacing test, meaning it was drilled in close proximity to an earlier well to test how closely Enerplus could drill wells on its acreage. The fact that this well performed strongly suggests that Enerplus could potentially drill a lot more than previously thought on its acreage.
Add these two opportunities up and we come up with a pretty compelling picture. Under the current Bakken Shale spacing scheme, Enerplus has about 145 wells left to drill, which gives it about a seven-year drilling inventory. However, by spacing its wells closer together Enerplus could add another 150 future well locations, which could more than double its drilling inventory. Furthermore, adding in the second and third benches of the Three Forks could double Enerplus’s future drilling inventory yet again.
Well we blew thru $19, $20, and $21 in about 6 weeks time soon after the Street and Klaimer ran that "sell ERF" article (what a joke that was a few months back) ~ Personally I though we'd be in the high $23's to low $24 range right now BUT slow and steady as she goes might be better to build a stronger support base ~ I'm starting to seriously believe with all of the worldwide movement towards LNG and the shipping of such (especially with Comrade Putin sabre rattling with the EU) will move this stock easily back into the $30's over time ~ According to a recent Bloomberg article (which I posted here) the US will see a major shortfall in winter 2015 reserves despite full blown production schedules working round the clock; no way to catch up due to the rundown of supply/reserves because of last winters major extended cold snap ~ I'd be disappointed and have to re-jigger my numbers and thinking if we aren't in the mid $25 range (or at least $25) by summers end ~ Then the fun will really starts for ERF (and shareholders) imho providing the IDIOTS in the WH or on WS don't pull any Shenanigans ~ I'd go out on a limb and say $30+ by this time next year ~ GLTA!
Enerplus has plenty of running room to grow thanks to its decision to focus its attention on the U.S. shale boom as its core growth engine. Enerplus will still see 10% production growth from its Canadian oil assets alone.
Enerplus’ prospects are strong
Right now, Enerplus has powerful growth prospects thanks to its oil-rich position in the Bakken, which just keeps getting better over time. The bottom line is if you want to own a high-yielding Canadian energy company, Enerplus offers the most long-term upside, as its position in the Williston Basin just keeps growing,