Enerplus restarts production in North Dakota despite pipeline threat

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Enerplus Corp. Said it has re-established North Dakota crude oil production interrupted during the pandemic-related oil price drop in May despite a court ruling last month that the Dakota access pipeline must be shut down.The Calgary-based company says it believes the state’s railroad shipment of crude oil can be sped up if the ruling, stayed by an appeals court earlier this week, is restored and the pipeline that carries out-of-state oil is withdrawn. longer term commission.

Last month, a United States District Court judge ruled that the three-year-old pipeline must be shut down and emptied while the US Army Corps of Engineers conduct a more extensive environmental review. The stay of the United States Court of Appeals this week is only a temporary stay.

Removing barrels from North Dakota’s Bakken Oil Basin will not be a problem as up to 800,000 barrels per day hauled by rail before the 570,000 bpd pipeline begins to operate, the CFO said. Enerplus Jodine Jenson Labrie on a conference call Friday. .

However, the higher cost of rail would likely lead to lower profit margins for oil producers, she said.

“There’s a lot of rail infrastructure left in the Bakken,” she said, noting that the reduced prices against benchmark US crude would likely drop from around US $ 5 a barrel to between $ 6 and US $ 8. with rail transport.

“In terms of the impact on Enerplus, if we assumed that the pipeline could not operate for the whole of 2021, we estimate that the larger Bakken differential would have an impact of around 80 cents per boe (barrel of oil equivalent ) on our net business income, ”she said. .

Protesters march towards the White House in Washington in March 2017 to rally against the construction of the Dakota Access pipeline. Last month, a U.S. judge ordered it shut down for an additional environmental review. (Manuel Balce Ceneta / Associated Press)

The company “curbed” activity at the oilfields in North Dakota in May as oil prices fell due to global overproduction of barrels from overproduction of OPEC-plus as demand was decreasing thanks to COVID-19 lockdowns, CEO Ian Dundas said.

“As we entered May, with the weakness of the oil market, our teams began to reduce volumes rather than risk negative margins,” he said.

“We ended up reducing our corporate liquids volumes by about 25 percent, and as the market continued to improve in June, we began to restore the reduced volumes. ”

Enerplus reported second quarter net loss in Canadian funds of $ 609 million or $ 2.74 per share due to non-cash impairments of $ 630 million on assets and goodwill due to volatility markets and low commodity prices.

This compares to a net profit of $ 85 million or 36 cents for the same period of 2019.

Excluding these impairments and other non-cash and non-recurring items, its adjusted net loss for the second quarter was $ 41.2 million, compared to adjusted net income of $ 74.4 million a year earlier.

Analysts said the company’s financial results beat consensus estimates, as did second-quarter production of 87,360 barrels of oil equivalent per day, down 11% from the first quarter.

Enerplus reinstated its canceled 2020 forecast earlier this year, calling for an unchanged capital budget of $ 300 million and average production of between 88,000 and 90,000 boe / d.

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