Pictured is Enerplus’ Fort Berthold acreage in the Williston Basin where the company’s development plan features 10 wells per spacing unit in the Middle Bakken and First Three Forks, with upside in the Second Three Forks. (Source: Enerplus Corp.)
After a year of acquisitions doubling down in the Bakken Shale, Enerplus Corp. continues to make A&D waves with another multimillion-dollar deal.
According to a company release from the Calgary, Alberta-based independent E&P company on Aug. 30, Enerplus has agreed to sell its interests in Montana’s Sleeping Giant Field and North Dakota’s Russian Creek area in the Williston Basin to an undisclosed buyer for total consideration of $115 million. In addition, Enerplus said it will also receive up to $5 million in contingent payments tied to future oil prices as part of the sale agreement.
“The sale of our legacy position in Montana and the Russian Creek acreage in North Dakota, properties which were not attracting capital in our portfolio, brings significant value forward and accelerates our debt reduction plans,” commented Ian C. Dundas, president and CEO of Enerplus, in the company release on Aug. 30.
The divestiture follows two transformative back-to-back acquisitions made by Enerplus earlier this year in the Williston Basin. Combined, the acquisitions were worth almost $800 million and quadrupled the company’s acreage footprint in the Bakke Shale play.
The first acquisition, which added 151,000 net acres from Bruin E&P Partners LLC for $465 million, closed in March. Meanwhile, Enerplus completed its second acquisition, worth $312 million and comprised of 79,000 net operated and nonoperated acres carved out of Hess Corp.’s portfolio, in April.
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As a result of the divestiture announced Aug. 30, Dundas estimates that Enerplus will achieve the company’s $400 million debt reduction target by the end of first-quarter 2022, based on the current commodity price environment, with proceeds going directly back to its shareholders.
“While debt reduction remains our priority,” he said, “we believe our shares are trading in an attractive price range, and as a result, we plan to direct approximately 10% of the sale proceeds to incremental share repurchases.”
The sale does not include any future drilling locations in Enerplus’ identified Williston Basin drilling inventory, according to the company release.
Enerplus’ working interest production from the interests averaged roughly 3,000 boe/d (77% crude oil and NGL) in second-quarter 2021 and includes approximately 244 net wells. Estimated 2022 net operating income associated with the interests is approximately $22 million based on a $60 WTI oil price.
The sale is expected to close at the end of October, subject to customary closing conditions. The effective date of the transaction is July 1.
TD Securities (USA) LLC is the exclusive financial adviser to Enerplus on the divestiture.
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