September 27, 2012
Enerplus made a drastic, yet necessary move in June, when the company chopped its dividend in half. Although shareholders never want to see high-paying dividends decreased, Enerplus needed to take a hardline to increase the company’s unappealing liquidity picture. However, even after reducing its dividend, the company still faces significant headwinds going forward, including operating in highly capital intensive plays, and a looming $400 million debt hurdle before 2015.
Although management still has to navigate through troubled waters, Enerplus has a few options at its disposal. The first is 12 mature waterflood assets, which provide solid and stable cash flows that have a 50% rate of return to go with its growth assets in the Bakken and Marcellus shale. In addition, Enerplus has valuable leaseholds in the Montney and Duvernay in Canada, which the company is currently shopping. Check out the video below for detailed information on Enerplus, and see if the company can maintain its 7% dividend, or if it will have to chisel it away, once again.
Another huge lift for Enerplus has been the steady increase in crude oil prices since the first quarter of this year. Oil E&Ps are closely aligned with the price of crude, but some companies are more levered than others. If you're on the lookout for some currently intriguing energy plays, check out The Motley Fool's 3 Stocks for $100 Oil. You can get free access to this special report by clicking here.