Enerplus Agrees to Acquire Williston Basin Operator

Source: www.gulfoilandgas.com 1/26/2021, Location: North America

Enerplus Corporation ("Enerplus") (ERF) announced that it has entered into a definitive agreement to acquire all of the shares of Bruin E&P HoldCo, LLC ("Bruin"), a pure play Williston Basin private company, for total cash consideration of US$465 million (the "Acquisition").

Core area acquisition improving scale – Acquiring 151,000 net acres in the Williston Basin, including 30,000 net acres contiguous with Enerplus' tier 1 acreage position. The acquisition includes approximately 24,000 BOE per day of existing production (working interest(1)), 84 MMBOE of proved plus probable reserves (working interest(1)), and an inventory of 149 (111 net) drilling locations (including drilled uncompleted wells). After the Acquisition, Enerplus estimates it will hold more than a decade of drilling inventory capable of sustaining production at 2021 levels, with additional drilling inventory upside on Bruin's acreage if commodity prices strengthen.

Immediately accretive to per share metrics – Expected to be materially accretive to per share metrics in the first year, including adjusted funds flow and free cash flow. Accretion to adjusted funds flow per share and free cash flow per share is expected to be approximately 30% and 80%, respectively, in the 12-month period following closing of the Acquisition, inclusive of the bought deal equity financing described below.

Enhanced value capture and free cash flow acceleration – The purchase price represents less than 3.0 times Bruin's 2021 forecast EBITDA using a US$50 per barrel WTI oil price – a discount to Enerplus' current trading metrics. Bruin's lower decline production base is expected to support strong free cash flow generation. Pro forma and based on a ten-month contribution from Bruin's assets in 2021, Enerplus expects to generate over $200 million of free cash flow in 2021 based on US$50 per barrel WTI crude oil and US$2.75 per Mcf NYMEX natural gas prices.

Maintains strong balance sheet – The pro forma business retains a solid financial position with an estimated year-end 2021 net debt to adjusted funds flow ratio at or below 1.3x on a trailing 12-month basis (inclusive of the bought deal equity financing described below), with a target of less than 1.0x over the longer term. The business will continue to have excellent liquidity and expects to be undrawn on its US$600 million bank credit facility upon the Acquisition closing.

Drives cost synergies – The enhanced operating scale and asset synergies resulting from the Acquisition are expected to drive continued efficiency gains and cost reductions supporting further cash flow improvements beyond Enerplus' current forecast. Additionally, there are no incremental general and administrative costs associated with the Acquisition.

Commitment to strong ESG performance – Enerplus will continue to pursue ESG excellence while integrating Bruin's assets and operations into its ESG initiatives. The Company will continue to work towards its longer-term goals, including a 50% reduction in GHG emissions intensity by 2030 and a 50% reduction in freshwater use per well completion by 2025.

"This acquisition demonstrates our disciplined returns-oriented focus and commitment to value creation for our shareholders," said Ian C. Dundas, President and CEO of Enerplus. "With immediately adjacent acreage offering strong operational synergies, Bruin's assets are highly complementary to our existing tier 1 position in the Bakken and will enable us to accelerate free cash flow growth and further support our focus on providing long term sustainable shareholder returns."


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