Enerplus Is A Cheap Growth Stock

| About: Enerplus Corporation (ERF)
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Summary

Enerplus reduced debt while increasing production.

Enerplus combines balance sheet strength with great assets.

Enerplus's exceptional capital efficiency allows it to grow at low oil prices.

Enerplus (NYSE:ERF) has raised $1.2 billion (Cdn) through divestitures over the past six years while maintaining production of about 90,000 barrels of oil equivalent per day (BOE/day). The divestitures represented 11,000 BOE/day of production.

Source: Enerplus corporate presentation

If 11,000 BOE/day was worth $1.2 billion, it follows that the company's remaining approximately 90,000 BOE/day must have a value somewhere around $7 or $8 billion U.S. Enerplus's enterprise value today is about $2.5 billion. This stock is cheap by any measure.

Unlike many of its peers, Enerplus has a strong balance sheet with net debt at about $500 million ($674 million Cdn funds) and an undrawn $600 million ($800 million Cdn funds) line of credit. That puts ERF in an enviable position to not only expand its drilling program but also to acquire production at depressed prices.

Source: Enerplus corporate presentation

Enerplus has one of the best capital efficiency measures in the industry. The combination of an impressive capital efficiency of $20,000 Cdn per barrel of oil per day ($15,000 U.S.) and a clean balance sheet gives Enerplus plenty of firepower if there is any improvement in commodity prices and the stock is undervalued even at today's prices.

I am long the stock and will add more.

Disclosure: I am/we are long ERF.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.