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Calgary's Enerplus announces US$465M takeover as court rules against N.D. pipeline


CALGARY — Enerplus Corp. is increasing its bets on the Bakken light oil region in North Dakota with the purchase of a private rival for US$465 million, despite a legal fight that could shut down a major oil pipeline there.

The Calgary-based company said Tuesday it has agreed to buy Bruin E&P HoldCo, LLC, which has current production of about 24,000 barrels of oil equivalent per day.

“With immediately adjacent acreage offering strong operational synergies, Bruin’s assets are highly complementary to our existing tier 1 position in the Bakken," said Enerplus CEO Ian Dundas in a statement.

The company did not immediately respond to a request for comment about a federal appeal court decision Tuesday to uphold the ruling of a district judge who last year ordered a full environmental impact review of the Dakota Access oil pipeline.

Following a complaint by the Standing Rock Sioux Tribe, the district judge ruled last spring that the review conducted by the U.S. Army Corps of Engineers on the 1,886-kilometre pipeline that straddles the North Dakota-South Dakota border was incomplete.

He ordered the pipeline shut down, but that order was reversed. The ruling Tuesday by the U.S. Court of Appeals for the D.C. Circuit is a setback for the pipeline but also does not require it to stop operating or be emptied of oil while the environmental review is done.

In its news release, Enerplus said it expects to achieve an average 2021 Bakken oil price that's discounted by about US$3.25 per barrel below benchmark West Texas Intermediate, an improvement credited to better pipeline access compared with 2020, when the discount was expected to be US$5 per barrel.

"In the event DAPL (Dakota Access) is required to cease operations, Enerplus expects Bakken oil price differentials to widen reflecting rail economics ... (to) US$6 per barrel below WTI, assuming 10 months of wider differentials if DAPL cannot operate," it said.

The Dakota Access pipeline was the subject of months of sometimes violent protests in 2016 and 2017 during its construction.

The tribe continued its legal challenges against the pipeline even after it began carrying oil from North Dakota across South Dakota and Iowa to a shipping point in Illinois in June 2017.

Enerplus reported fourth-quarter production of 86,200 boe/d on Tuesday and said that is expected to rise to an average of about 106,000 boe/d in 2021 on capital spending of between C$335 million and C$385 million if the Bruin deal goes through by early March as expected.

Enerplus says it will fund the purchase of Bruin with a new US$400-million term loan and a C$115-million equity financing. It says it will not assume any of Bruin's debt.

It says most of Bruin's production and development prospects are located in the Fort Berthold area near Enerplus's main property.

The company produces oil in Canada, but most of its output comes from the U.S., with oil and gas wells in North Dakota and Montana and natural gas production in the northeastern United States.

This report by The Canadian Press was first published Jan. 26, 2021.

Companies in this story: (TSX:ERF)

Dan Healing, The Canadian Press

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