Enerplus (NYSE:ERF) has a large acreage leasehold in the Williston Basin and plans to exploit this position to generate oil and liquids production and reserves growth for the company over the next few years.

Investopedia Broker Guides: Enhance your trading with the tools from today's top online brokers.

Oil and Liquids Development
The company estimates that oil and liquids production will grow to 50% of the total company production in 2012. This goal will be accomplished through oil production growth of 22% as it exploits tight oil plays across its portfolio in the United States and Canada. Natural gas production growth is expected to be flat during the year.

Williston Basin
One area the company is focused on is the Williston Basin, where it has 74,000 net acres under lease. It has approximately 78 drilling locations into the Bakken and Three Forks plays in the Fort Berthold area in North Dakota.

The development program will lead to rapid production growth for Enerplus from the basin. It expects to exit 2012 with a production of 15,600 barrels of oil equivalent (BOE) per day, up from 9,000 BOE per day at the end of 2011.

In 2012, the company is planning to drill 30 wells in the Williston Basin and allocate $300 million in capital here, or 50% of its total drilling and completion budget.

SEE: A Guide To Investing In Oil Markets

The company estimates that its Bakken wells will cost approximately $11 million to drill and complete. The average well will have an estimated ultimate recovery (EUR) of 940,000 BOE, with 95% composed of oil and natural gas liquids. The wells will generate an internal rate of return (IRR) of 90%.

The Three Forks wells will have the same cost and liquids content as the Bakken wells, but will yield an EUR of 650,000 BOE. The company expects to earn an IRR of 40% on these wells.

These returns are comparable to other operators that are active in the Williston Basin. Linn Energy (Nasdaq:LINE) has 17,000 net acres under lease and estimates that it will generate returns of approximately 50% on wells drilled and completed here. Marathon Oil (NYSE:MRO) has a large position here and estimates that IRR's on Bakken wells will range from 22 to 27%.

SEE: Oil And Gas Industry Primer

Long-Term Potential
Enerplus estimates that production in the Bakken and Three Forks has the potential to reach 25,000 BOE per day by 2015. This estimate is dependent on the future price of oil and adequate access to capital.

One company that is planning for future production growth from the Williston Basin is MDU Resources Group (NYSE:MDU), which recently purchased a 50% interest in midstream infrastructure from Whiting Petroleum (NYSE:WLL). The company paid $66 million for the assets, which include a natural gas processing plant and an oil storage terminal.

SEE: What Determines Oil Prices?

The Bottom Line
Enerplus is trying to grow its oil and liquids production and has chosen the Williston Basin as one of its core areas to help achieve this goal. Many other operators have chosen this basin as a means to accomplish similar goals and have attained success.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

At the time of writing, Eric Fox did not own shares in any of the companies mentioned in this article.

Related Articles
  1. Economics

    The 9 Industries Driving Texas' Economy

    Find out which industries are driving the Texas economy. Learn about the largest and fastest growing employers and producers in Texas.
  2. Stock Analysis

    Will WYNN Continue to Rally?

    Wynn Resorts has experienced a rally recently. Will it remain a good bet?
  3. Stock Analysis

    Don't Be Fooled by the Market's Recent Rally

    The bulls won for a bit in early October, but will bears have the last laugh?
  4. Stock Analysis

    Will Twitter's Stock Find its Wings Soon?

    Twitter is an enigma to many investors, but its story is pretty straightforward.
  5. Stock Analysis

    The 4 Best Buy-and-Hold Dividend Stocks

    Discover four of the best dividend stocks for investors to buy and hold, along with the reasons for each stocks' suitability for long-term success.
  6. Investing Basics

    How to Think About Seasonality Trends

    Investors benefit when company research incorporates seasonality trends that predict relative strength and weakness throughout the calendar year.
  7. Investing

    Why Coal Won't Go Away Anytime Soon

    Despite government regulation, more competition and higher production costs, coal remains a relatively cheap source of fuel for electricity.
  8. Chart Advisor

    These 3 Charts Say Now Is Not The Time To Buy Commodities

    Traders are turning their attention to the charts of commodity stocks to get a better idea of the future trend. We'll take a look at three stocks from different segments of the basic materials ...
  9. Stock Analysis

    8 Solid Utility Stocks for a Bear Market

    If you're seeking modest appreciation, generous dividend payments and resiliency, consider these eight utility stocks.
  10. Stock Analysis

    Why Phillips 66 (PSX) is a Solid Long-Term Bet

    Here's why Phillips 66 will likely remain one of the world’s largest and most profitable companies for a long time to come.
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!