Enerplus Earnings: An Early Look

Earnings season is now starting to wind down, with most companies already having reported their quarterly results. But there are still some companies left to report, and Enerplus (NYSE: ERF  ) is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Enerplus is a former Canadian royalty trust that has extensive energy assets in some major shale plays across North America. But the slump in natural gas prices has hit the company hard. Let's take an early look at what's been happening with Enerplus over the past quarter and what we're likely to see in its quarterly report on Friday.

Stats on Enerplus

Analyst EPS Estimate

$0.10

Change From Year-Ago EPS

11%

Revenue Estimate

$375 million

Change From Year-Ago Revenue

27%

Earnings Beats in Past 4 Quarters

4

Source: Yahoo! Finance; S&P Capital IQ.

Can Enerplus build up some energy this quarter?
Over the past few months, analysts have gotten less optimistic about the earnings prospects Enerplus. They've reduced their earnings-per-share estimates for full-year 2013 by $0.15, and investors have been equally cautious, with the stock up less than 2% since mid-November amid a much more extensive rally for the overall market and for most energy stocks.

Like most energy companies, Enerplus has had to retrench in light of low energy prices. With promising exposure to the Bakken and the broader Williston Basin region, Enerplus has plenty of attractive core assets that have low production costs. But in order to shore up its balance sheet, Enerplus sold some of its Manitoba assets for $220 million, using the proceeds to pay down debt and build up its Williston Basin holdings.

The reason why the Bakken is so promising is that the entire industry is focusing on the area. For instance, Enerplus and fellow peer Kodiak Oil & Gas (NYSE: KOG  ) have been among producers having trouble getting production out of the area, with some producers resorting to rail transportation to ship out crude. But with new projects from Tesoro (NYSE: TSO  ) and EOG Resources (NYSE: EOG  ) targeting the area, small players like Enerplus and Kodiak can afford to make big bets on the Bakken because they know the ancillary resources will be there to support their efforts.

Still, investors are reeling from the company's dividend cut in mid-2012. As long as natural gas prices remain low, investors will have to wait for Enerplus to shift its production to higher-priced oil and gas liquids in order to reap more income from their investment.

In its quarterly report, watch for Enerplus to elaborate on whether its Williston-centered focus is paying off in terms of better production. With the company having reined in capital expenditure expectations for 2013, Enerplus will have to use more limited financial resources efficiently in order to hold its own in a tough environment for energy companies.

Will Enerplus beat out Kodiak?
Both Enerplus and Kodiak are betting big on the Bakken, so both Enerplus and Kodiak investors should learn more about their competition. Learn whether Kodiak rates a buy by reading our premium research report on the energy company, which goes through Kodiak's competitive pressures and the opportunities it has to overcome them. Click here now and get your report, which comes with a year of timely updates and analysis.

Click here to add Enerplus to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.


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  • Report this Comment On February 22, 2013, at 5:21 PM, Chipper39 wrote:

    " Enerplus and fellow peer Kodiak Oil & Gas (NYSE: KOG ) have been among producers having trouble getting production out of the area, with some producers resorting to rail transportation to ship out crude"

    Just curious how much you listen in to KOG's conference calls and presentations?

    They are having no trouble getting their oil out of the area and state that for the record regularly.

    FYI

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