3 Takeaways From Enerplus Corp’s First-Quarter Results

Enerplus Corp (TSX:ERF)(NYSE:ERF) has had a rough start to the year.

| More on:
The Motley Fool

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Enerplus Corp (TSX:ERF)(NYSE:ERF) recently reported first-quarter results. The results showed that the company was deeply impacted by weak oil prices. Because of that, the report was pretty mixed as there was some good news and bad news. Here are three takeaways to make sense of Enerplus’ report.

No. 1: It’s actually not losing money

For the quarter Enerplus reported a loss of $293.2 million, or $1.42 per share. While that sounds bad, it doesn’t tell the whole story as Enerplus actually isn’t losing money producing oil and gas. Instead, the bulk of the loss was due to a $268 million non-cash impairment charge the company took as it wrote down some of the value of its oil and gas properties due to low oil prices. In addition to that, the company recorded one-time charges of $11 million and $8.6 million relating to its oil and gas hedge position and foreign exchange hedges.

Instead, the company was actually cash flow positive; it reported funds flow of $109 million for the quarter, or $0.53 per share. While that was about half of the $220.5 million, or $1.09 per share, it reported in the first-quarter of last year, it does show that Enerplus isn’t losing money on its oil and gas production.

No. 2: Debt is going the wrong way

While Enerplus isn’t losing money on oil and gas production, it is still burning through cash. This is due to the fact that it has spent $167 million on capital expenditures in the quarter as it drilled just over 17 net wells. Because of this overspend, as well as the drop in its funds flow, the company’s debt metrics are going in the wrong direction. This was evident as trailing 12-month debt-to-funds flow expanded from 1.3 times in the first quarter of last year to 1.7 times this past quarter. Obviously, this is a metric to watch as investors would prefer to see it improve and not worsen.

No. 3: Operations were strong

While Enerplus’ cash flow and debt metrics are weakening due to the drop in oil prices, its operations are running much stronger. During the first quarter Enerplus’ production was solid; it averaged 100,900 barrels of oil equivalent per day (BOE/d). While that was 4% below the previous quarter, that’s due to the fact that the company reduced its capital spending fairly significantly, and it deferred completing several wells in the Bakken shale. Despite this, its production was still above its projected full-year range of 93,000-100,000 BOE/d.

Even more impressive is the improvement Enerplus is seeing on the cost side of its business. During the quarter the company’s average well cost fell close to 15% below last year’s level, which is enabling it to drill more wells with less money. Meanwhile, its operating and general and administrative costs both came in under expectations. These lower costs are crucial to the company as it helps to partially mitigate the drop in oil prices.

Investor takeaway

While it wasn’t a great quarter by any means, it wasn’t awful either. Despite weak oil prices, the company is still making money on oil and gas production. Further, while some of its debt metrics are weakening, its operations are still strong and its costs are falling. So, while the company still has some work to do, its first quarter wasn’t as bad as the loss seemed to indicate at first glance.

Should you invest $1,000 in Enbridge right now?

Before you buy stock in Enbridge, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Enbridge wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Matt DiLallo has no position in any stocks mentioned.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Energy Stocks

golden sunset in crude oil refinery with pipeline system
Energy Stocks

Is Enbridge Stock (TSX:ENB) a Buy for its 5.9% Dividend Yield?

This solid dividend payer has the potential to help investors generate reliable passive income for decades.

Read more »

nugget gold
Dividend Stocks

Recession Stocks Are Back: Consider Buying the Dip This April

Recession stocks are back, and this one could be a solid winner.

Read more »

Person holds banknotes of Canadian dollars
Energy Stocks

Best Stock to Buy Right Now: Suncor vs Cenovus?

Suncor stock's 4.2% dividend yield vs Cenovus Energy's growth potential: Tariff-proof safety or growth gamble?

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

How to Earn $500/Month in Tax-Free Income With Your TFSA

Canadians can earn $500 or a desired tax-free income every month by saving and investing through the TFSA.

Read more »

how to save money
Energy Stocks

1 Canadian Stock Ready to Surge in 2025 and Beyond

This Canadian stock has seen significant growth, but more could come for 2025 and beyond.

Read more »

oil and natural gas
Energy Stocks

Here’s How Many Shares of Enbridge You Should Own to Get $2,000 in Yearly Dividends

Solid dividend stocks like Enbridge could help you generate reliable passive income for decades.

Read more »

Pumpjack in Alberta Canada
Energy Stocks

3 Canadian Oil and Gas Stocks to Watch for in 2025

Oil companies like Suncor Energy (TSX:SU) are doing well this year.

Read more »

Aerial view of a wind farm
Energy Stocks

The Best Renewable Energy Stocks to Buy Before They Take Off

Here are two of the best Canadian renewable energy stocks you can buy today and hold for the long term…

Read more »