CALGARY - Enerplus Corp. (TSX:ERF) plans to expand its light oil interests in Montana in a deal valued at US$121 million.
Calgary-based Enerplus said Monday that it will acquire an additional 20 per cent working interest in the company's operated leases in the Sleeping Giant area in the Elm Coulee field.
The acquisition is complementary to existing operations in Sleeping Giant where the company currently owns an operated 70 per cent working interest.
The price is US$131 million, but drops to $121 million after an estimated US$10 million in adjustments.
Enerplus described the asset as "a mature light oil property with an average decline rate of 14 per cent."
"We believe there is additional upside potential in this field through production optimization, refracs and limited infill drilling," it added.
Closing is expected by the middle of December, giving Enerplus a 90 per cent working interest in the operated leases with production of some 7,300 barrels of oil equivalent per day.
Meanwhile, the company said it is targeting a capital program of $685 million in 2013, 20 per cent lower than estimated spending in 2012.
It said the move would more closely balance capital spending and dividends with funds flow.
It also said it expected production to average between 82,000 and 85,000 BOE/day which, at the mid-point of the range, would represent a two per cent increase over estimated 2012 average daily production after adjusting for recent acquisition and divestment activities.
"Based upon current cost structures and the commodity price outlook for both crude oil and natural gas in 2013, we believe this is an appropriate level of production growth," it said, adding that the company would continue to pursue acquisition opportunities in core areas and rationalize non-core assets to enhance profitability.