November 9, 2012
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of oil and gas producer Enerplus (NYSE: ERF ) sank 11% today after its quarterly results and guidance disappointed Wall Street.
So what: Enerplus' third-quarter loss of $63.6 million, coupled with downbeat production guidance for the full-year, naturally reinforces concerns over persistently weak natural gas prices. Management cited sluggish activity in the Marcellus Shale and the sale of some Manitoba assets for the expected slowdown in growth, forcing analysts to lower their valuation estimates yet again.
Now what: Management now sees annual average production of 82,000 BOE/day, down 2% from its prior view of 83,500 BOE/day. "We expect to reduce our capital spending program by approximately 20% next year from 2012 levels," the company said in a statement. "As a result, we would expect to see an improvement in our adjusted payout ratio while maintaining an attractive dividend." With the stock now off more than 50% from its 52-week highs and yielding a juicy 7%, now might even be a good time to take advantage of that dividend.
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