UPDATE 2-Enerplus posts loss, expects slower growth in 2013

Fri Nov 9, 2012 2:17pm EST

* Slashes capital spending for next year by 20 pct

* Cuts 2012 average production forecast by 2 pct to 82,000 boe/d

* Q3 loss/shr C$0.32 vs year ago EPS of C$0.62

* Shares fall as much as 15 pct

Nov 9 (Reuters) - Enerplus Corp reported a third-quarter loss as it wrote down the value of certain exploration assets, and the Canadian oil and gas producer warned of slower growth next year after it cut its 2013 capital spending by about 20 percent.

Shares of the company, which targets a 2012 capital spending of C$850 million, fell as much as 15 percent to C$12.76 on the Toronto Stock Exchange.

"We recorded impairments of approximately C$114 million, C$66 million of which relates to Marcellus operated leases in West Virginia and Maryland that are expected to expire over the next 12 months as we don't anticipate renewing them," Chief Executive Gordon Kerr said on a conference call with analysts.

The sale of its 1,600-barrels-per-day Manitoba assets in central Canada will also reduce growth expectations for 2013, said the company, which also owns assets in the Bakken in North Dakota and in the Marcellus shale in Pennsylvania.

"I am having a hard time seeing how they can cut capex by 20 percent and also have growth next year ... They have a tough job in front of them," said analyst Dirk Lever of Altacorp Capital.

"They are trying to do the right thing by selling off non-core assets but of the four core areas, one is holding flat, one is declining, one is having trouble because of commodity prices and their partners aren't putting up money. The only thing that is going for them is the Bakken right now," Lever said.

Shares of the company, which had a market value of C$3.02 billion as of Thursday close, were down 14 percent at C$12.95 in afternoon trading. The stock was one of the top percentage losers on the exchange.

LOWER OUTPUT

Enerplus also cut its average production forecast for 2012 by 2 percent to 82,000 barrels of oil equivalent per day.

With weak natural gas prices in 2012 and the ongoing infrastructure challenges, drilling and tie-in activity has been slower than expected, the company said.

Decade-low natural gas prices have forced companies such as Chesapeake Energy Corp and Encana Corp trim spending on dry-gas and focus on oil and natural gas liquids.

Natural gas prices fell 29 percent to average $2.85 per million British thermal unit in the July-September quarter from a year earlier.

"We continue to expect a slower pace of wells on-stream through the remainder of the year," the company said.

Operating costs for the current year are now expected to average C$10.70 per barrel of oil equivalent, up from its prior view of C$10.40.

Net loss in the third quarter was C$63.5 million ($63.6 million), or 32 Canadian cents per share, compared with a net income of C$111.3 million, or 62 Canadian cents per share, a year earlier.

Daily production in the quarter averaged 81,573 barrels of oil equivalent per day, up 11 percent from a year earlier.

The company said natural gas volumes declined due to a lack of capital investment in its Canadian gas assets.

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