Enerplus: The Dividend Is On Borrowed Time

To put it mildly, Enerplus (NYSE: ERF) likely had one of its worst ever 3-month periods. Since mid-September, shares of the company have declined nearly 50%. The main catalysts towards this trouncing is the sharp decline in oil prices, as shown below.ERF data by YChartsUpdated 2015 guidanceOn December 17, Enerplus announced some major changes to its 2015 capital budget and guidance.First, Enerplus has announced a 23% reduction its capex for 2015, down to $635M. This move will save the company around $195M. Of this, around $530M will be towards development drilling & completion "growth capex," $75M towards Plants and facilities, and $30M towards maintenance capex.Of the $530M growth capex, $405M is slated for crude oil spending, mostly in the Bakken and a smaller sum in the Canadian assets, while around $125M is slated for natural gas spending, mostly in the Marcellus shale and a much smaller sum for the legacy Canadian gas fields. This is around a 76/24 split for oil/natural gas and a 78/22 split for US/Canada capex spending.Enerplus plans to drill around 75 net wells and bring 80 net wells on-stream in 2015. Furthermore, around 60% of the capex spending will be done during the first half of the year. 2015 production is expected to range from 103,000 BOE/D to 108,000 BOE/D, implying flat to around 5% growth compared to 2014. The 2015 capex budget is expected to have capital efficiencies of about $25,000 per flowing BOE.Also note that Enerplus has some hedges in place,... Read more