As discussed in Note 2(d) to the consolidated financial statements, the Company depletes its oil and gas properties each quarter using the unit-of-production method on a country-by-country basis. Under such method, capitalized costs for the US oil and gas properties are depleted over the estimated proved oil and gas reserves (“country proved reserves”). For the year ended December 31, 2021, the Company recorded depletion, depreciation and accretion expense of $271 million, a portion of which related to depletion expense on the US oil and gas properties. Additionally, as discussed in Note 2(d) to the consolidated financial statements, the Company is required to perform a quarterly ceiling test calculation on a country-by-country basis. For the year ended December 31, 2021, the Company recorded no ceiling test impairments related to the US oil and gas properties. The Company limits the capitalized costs of proved and unproved oil and natural gas properties, net of accumulated depletion and the related deferred income tax effects, by country, to the estimated future net cash flows from country proved reserves discounted at 10 percent, net of related tax effects, plus the lower of cost or fair value of unproved oil and gas properties. The estimation of country proved reserves, which are used in the calculations of depletion and the ceiling test, requires the expertise of independent reservoir engineering specialists, who take into consideration assumptions related to forecasted production and forecasted operating and capital costs. The estimated future net cash flows are calculated using the simple average of the preceding twelve months’ first-day-of-the-month commodity prices. The Company engages independent reservoir engineering specialists to estimate country proved reserves.

We identified the impact of estimated country proved reserves on the calculations of depletion expense and the ceiling test related to US oil and gas properties as a critical audit matter. Changes in reserve assumptions related to forecasted production and forecasted operating and capital costs could have had a significant impact on the calculations of depletion expense and the ceiling tests. A high degree of auditor judgment was required in evaluating the country proved reserves, and assumptions related to forecasted production and forecasted operating and capital costs, which were an input to the calculations of depletion expense and the ceiling test.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to:

●

the calculations of depletion expense and the ceiling test, and

●

the estimation of the country proved reserves and the assumptions related to forecasted production and forecasted operating and capital costs.

We assessed the calculations of depletion expense and the ceiling test for compliance with regulatory standards. We evaluated the competence, capabilities and objectivity of the independent reservoir engineering specialists engaged by the Company, who estimated the country proved reserves. We evaluated the methodology used by the independent reservoir engineering specialists to estimate country proved reserves for compliance with regulatory standards. We compared the Company’s 2021 actual production and operating and capital costs by country to those estimates used in the prior year estimate of country proved reserves to assess the Company’s ability to accurately forecast. We assessed the estimates of forecasted production and forecasted operating and capital cost assumptions used in the country proved reserves by comparing them to historical results.

Fair value measurement of property, plant and equipment in business combination

As discussed in Note 3(a) to the consolidated financial statements, the Company acquired Bruin E&P Holdco, LLC (“Bruin”) in a business combination that was completed on March 10, 2021 (“acquisition date”). As a result of the transaction, the Company acquired property, plant and equipment (“PP&E”) with an acquisition-date fair value $542 million. The determination of the acquisition-date fair value of PP&E involves significant estimates, including the cash flows associated with the proved and probable oil and gas reserves acquired (the “Bruin reserves”) and the discount rate. The estimation of Bruin reserves, which are used in the calculation of the acquisition-date fair value of PP&E, requires the expertise of independent reservoir engineering specialists, who take into consideration assumptions related to forecasted production, forecasted operating and capital costs and forecasted oil and gas prices (“reserve assumptions”). The Company engages independent reservoir engineering specialists to estimate the Bruin reserves.

We identified the determination of the acquisition-date fair value of PP&E acquired in the Bruin transaction as a critical audit matter. Changes in reserve assumptions and the discount rate could have had a significant impact on the determination of the acquisition-date fair value of PP&E. A high degree of auditor judgment was required in evaluating the reserve assumptions associated with the Bruin reserves and the discount rates. Additionally, the evaluation of this estimate required specialized skills and knowledge.

ENERPLUS 2021 FINANCIAL SUMMARY 5

STATEMENTS

Consolidated Balance Sheets


(US$ thousands)	Note	December 31, 2021		December 31, 2020
Assets
Current assets
Cash and cash equivalents		$	61,348	$	89,945
Accounts receivable	4		227,988		83,596
Other current assets			10,956		5,609
Derivative financial assets	17		5,668		2,790
			305,960		181,940
Property, plant and equipment:
Crude oil and natural gas properties (full cost method)	5, 6		1,253,505		452,302
Other capital assets	5		13,887		11,499
Property, plant and equipment			1,267,392		463,801
Other long-term assets	7		9,756		3,845
Right-of-use assets	11		26,118		25,818
Deferred income tax asset	15		380,858		477,014
Total Assets		$	1,990,084	$	1,152,418

Liabilities
Current liabilities
Accounts payable	8	$	367,008	$	197,895
Dividends payable			—		1,749
Current portion of long-term debt	9		100,600		81,600
Derivative financial liabilities	17		143,200		15,136
Current portion of lease liabilities	11		10,618		10,523
			621,426		306,903
Long-term debt	9		601,171		303,800
Asset retirement obligation	10		132,814		102,325
Derivative financial liabilities	17		7,098		—
Lease liabilities	11		18,265		18,425
			759,348		424,550
Total Liabilities			1,380,774		731,453

Shareholders’ Equity
Share capital – authorized unlimited common shares, no par value
Issued and outstanding: December 31, 2021 – 244 million shares
December 31, 2020 – 223 million shares	16		3,094,061		3,113,829
Paid-in capital			50,881		49,382
Accumulated deficit			(2,238,325)		(2,447,735)
Accumulated other comprehensive loss			(297,307)		(294,511)
			609,310		420,965
Total Liabilities & Shareholders' Equity		$	1,990,084	$	1,152,418

Commitments and Contingencies	18
Subsequent Events	9, 16, 21

The accompanying notes to the Consolidated Financial Statements are an integral part of these statements.

Approved on behalf of the Board of Directors:


/s/ Hilary Foulkes	/s/ Jeffrey Sheets
Director	Director

ENERPLUS 2021 FINANCIAL SUMMARY 7

Consolidated Statements of Income/(Loss) and Comprehensive Income/(Loss)


For the year ended December 31 (US$ thousands)	Note	2021		2020		2019
Revenues
Crude oil and natural gas sales	12	$	1,482,575	$	553,739	$	945,894
Commodity derivative instruments gain/(loss)	17		(274,432)		75,742		(47,930)
			1,208,143		629,481		897,964
Expenses
Operating			292,433		197,097		219,343
Transportation			128,309		98,681		109,241
Production taxes			101,953		37,417		62,662
General and administrative	13		56,807		43,097		54,920
Depletion, depreciation and accretion			271,336		218,118		269,046
Asset impairment	6		3,420		751,723		—
Goodwill impairment	6		—		149,217		347,283
Interest			27,395		20,737		25,580
Foreign exchange (gain)/loss	14		(6,908)		1,232		(16,420)
Transaction costs and other expense/(income)			(2,487)		4,489		(5,695)
			872,258		1,521,808		1,065,960
Income/(Loss) Before Taxes			335,885		(892,327)		(167,996)
Current income tax expense/(recovery)	15		2,689		(10,716)		(25,246)
Deferred income tax expense/(recovery)	15		98,755		(188,260)		61,650
Net Income/(Loss)		$	234,441	$	(693,351)	$	(204,400)

Other Comprehensive Income/(Loss)
Unrealized gain/(loss) on foreign currency translation			(6,893)		(2,169)		11,995
Foreign exchange gain/(loss) on net investment hedge, net of tax	17		4,097		1,780		—
Total Comprehensive Income/(Loss)		$	231,645	$	(693,740)	$	(192,405)

Net Income/(Loss) per Share
Basic	16	$	0.93	$	(3.12)	$	(0.88)
Diluted	16	$	0.90	$	(3.12)	$	(0.88)

The accompanying notes to the Consolidated Financial Statements are an integral part of these statements.

8 ENERPLUS 2021 FINANCIAL SUMMARY

Consolidated Statements of Changes in Shareholders’ Equity


For the year ended December 31 (US$ thousands)	2021		2020		2019
Share Capital
Balance, beginning of year	$	3,113,829	$	3,106,875	$	3,294,496
Issue of shares (net of tax effected issue costs)		99,516		—		—
Purchase of common shares under Normal Course Issuer Bid		(128,686)		(3,582)		(190,917)
Share-based compensation – treasury settled		9,402		10,694		3,296
Cancellation of predecessor shares		—		(158)		—
Balance, end of year	$	3,094,061	$	3,113,829	$	3,106,875

Paid-in Capital
Balance, beginning of year	$	49,382	$	56,439	$	46,626
Share-based compensation – tax withholdings settled in cash		(3,551)		(5,567)		(3,705)
Share-based compensation – treasury settled		(9,402)		(10,694)		(3,296)
Share-based compensation – non-cash		14,452		9,204		16,814
Balance, end of year	$	50,881	$	49,382	$	56,439

Accumulated Deficit
Balance, beginning of year	$	(2,447,735)	$	(1,736,355)	$	(1,567,680)
Purchase of common shares under Normal Course Issuer Bid		5,504		1,775		56,632
Cancellation of predecessor shares		—		158		—
Net income/(loss)		234,441		(693,351)		(204,400)
Dividends declared⁽¹⁾		(30,535)		(19,962)		(20,907)
Balance, end of year	$	(2,238,325)	$	(2,447,735)	$	(1,736,355)

Accumulated Other Comprehensive Income/(Loss)
Balance, beginning of year	$	(294,511)	$	(294,122)	$	(306,117)
Unrealized gain/(loss) on foreign currency translation		(6,893)		(2,169)		11,995
Foreign exchange gain/(loss) on net investment hedge, net of tax		4,097		1,780		—
Balance, end of year	$	(297,307)	$	(294,511)	$	(294,122)
Total Shareholders’ Equity	$	609,310	$	420,965	$	1,132,837

(1) For the year ended December 31, 2021, dividends declared were CDN$0.15 ($0.12) per share (2020 – CDN$0.12 ($0.09) per share; 2019 – CDN$0.12 ($0.09) per share).

The accompanying notes to the Consolidated Financial Statements are an integral part of these statements.

ENERPLUS 2021 FINANCIAL SUMMARY 9

Consolidated Statements of Cash Flows


For the year ended December 31 (US$ thousands)	Note	2021		2020		2019
Operating Activities
Net income/(loss)		$	234,441	$	(693,351)	$	(204,400)
Non-cash items add/(deduct):
Depletion, depreciation and accretion			271,336		218,118		269,046
Asset impairment	6		3,420		751,723		—
Goodwill impairment	6		—		149,217		347,283
Changes in fair value of derivative instruments	17		109,536		18,074		59,750
Deferred income tax expense/(recovery)	15		98,755		(188,260)		61,650
Foreign exchange (gain)/loss on debt and working capital	14		(8,055)		1,363		(21,899)
Share-based compensation and general and administrative	13, 16		13,424		9,508		17,356
Other expense/(income)	10		(4,594)		—		—
Amortization of debt issuance costs	9		1,093		—		—
Translation of U.S. dollar cash held in parent company	14		(2,330)		(902)		6,825
Other income reclassified to Investing Activities	20		(4,593)		—		—
Asset retirement obligation settlements	10		(12,951)		(13,275)		(12,646)
Changes in non-cash operating working capital	20		(94,643)		83,669		(3,197)
Cash flow from/(used in) operating activities			604,839		335,884		519,768

Financing Activities
Proceeds from bank term loan/bank credit facility	9		400,000		—		—
Debt issuance costs	9		(4,621)		—		—
Repayment of senior notes	9		(81,600)		(81,600)		(44,444)
Proceeds from the issuance of shares	16		98,339		—		—
Purchase of common shares under Normal Course Issuer Bid	16		(123,182)		(1,807)		(134,285)
Share-based compensation – tax withholdings settled in cash	16		(3,551)		(5,567)		(3,705)
Dividends	16, 20		(32,284)		(19,897)		(21,003)
Cash flow from/(used in) financing activities			253,101		(108,871)		(203,437)

Investing Activities
Capital and office expenditures	20		(271,131)		(248,990)		(454,521)
Bruin acquisition	3		(420,249)		—		—
Dunn County acquisition	3		(305,076)		—		—
Property and land acquisitions	5		(9,846)		(7,491)		(18,409)
Property divestments	3, 5, 7		108,193		4,456		7,210
Other expense/(income)	20		4,593		—		—
Cash flow from/(used in) investing activities			(893,516)		(252,025)		(465,720)
Effect of exchange rate changes on cash and cash equivalents			6,979		(1,786)		(295)
Change in cash and cash equivalents			(28,597)		(26,798)		(149,684)
Cash and cash equivalents, beginning of year			89,945		116,743		266,427
Cash and cash equivalents, end of year		$	61,348	$	89,945	$	116,743

The accompanying notes to the Consolidated Financial Statements are an integral part of these statements.

10 ENERPLUS 2021 FINANCIAL SUMMARY

NOTES

Notes to Consolidated Financial Statements

1) REPORTING ENTITY

These annual audited Consolidated Financial Statements (“Consolidated Financial Statements”) and notes present the financial position and results of Enerplus Corporation (the “Company” or “Enerplus”) including its Canadian and United States (“U.S.”) subsidiaries. Enerplus is a North American crude oil and natural gas exploration and development company. Enerplus is publicly traded on the Toronto and New York stock exchanges under the ticker symbol ERF. Enerplus’ corporate offices are located in Calgary, Alberta, Canada and Denver, Colorado, United States.

2) SIGNIFICANT ACCOUNTING POLICIES

The following significant accounting policies are presented to assist the reader in evaluating these Consolidated Financial Statements and, together with the following notes, are an integral part of the Consolidated Financial Statements.

a) Basis of Preparation

Enerplus’ Consolidated Financial Statements have been prepared by management in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Certain prior period amounts have been restated to conform with current period presentation.

i. Reporting and Functional Currency

In the fourth quarter of 2021, the Company elected to change its reporting currency from Canadian dollars to U.S. dollars since the majority of its crude oil and natural gas properties are located in the U.S., and to facilitate a more direct comparison to other U.S. exploration and development companies. The change in reporting currency is a voluntary change which is accounted for retrospectively. All prior periods have been restated to U.S. dollars using the procedures outlined below:

●	Consolidated Statements of Income/(Loss) and Consolidated Statements of Cash Flows have been translated into U.S. dollars using average foreign exchange rates for the relevant period.

●	Assets and liabilities in the Consolidated Balance Sheets have been translated into U.S. dollars at the closing foreign exchange rates on the respective balance sheet dates.

●	The shareholders’ equity section of the Consolidated Balance Sheets has been translated into U.S. dollars using historical foreign exchange rates.

●	Earnings per share disclosures have also been restated to U.S. dollars to reflect the change in reporting currency. Dividends are disclosed in Canadian dollars with the U.S. dollar equivalent disclosed in parentheses as dividends were declared in Canadian dollars.

The functional currency of the parent entity has been and continues to be Canadian dollars and the functional currency of the U.S. subsidiaries continues to be U.S. dollars. All references to $ or US$ are to U.S. dollars and references to CDN$ are to Canadian dollars. All financial information presented in U.S. and Canadian dollars has been rounded to the nearest thousand unless otherwise indicated.

ii. Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect both the amount and timing of recording assets, liabilities, revenues and expenses since the determination of these items may be dependent on future events. Actual results could differ from these estimates, and changes in estimates are recorded when known. Significant estimates made by management include those that relate to: crude oil and natural gas reserves and related present value of future cash flows, depreciation, depletion and accretion (“DD&A”), impairment of property, plant and equipment, asset retirement obligations, income taxes, ability to realize deferred income tax assets, impairment assessments of goodwill and the fair value of derivative instruments. The estimation of crude oil and natural gas reserves and the related present value of future cash flows involves the use of independent reservoir engineering specialists and numerous estimates and assumptions including forecasted production volumes, forecasted operating, royalty and capital cost assumptions and assumptions around commodity pricing. Inflation and discount rates impacting various items within the Company’s financial statements are also subject to management estimation. When estimating the present value of future cash flows, the discount rate implicitly considers the potential impacts, if any, due to climate change factors. Enerplus uses the most current information available and exercises judgment in making estimates and assumptions. In the opinion of management, these Consolidated Financial Statements have been properly prepared within reasonable limits of materiality and within the framework of the Company’s significant accounting policies.

ENERPLUS 2021 FINANCIAL SUMMARY 11

iii. Basis of Consolidation

These Consolidated Financial Statements include the accounts of Enerplus and its subsidiaries. Intercompany balances and transactions are eliminated on consolidation. Interests in jointly controlled crude oil and natural gas assets are accounted for following the concept of undivided interest, whereby Enerplus’ proportionate share of revenues, expenses, assets and liabilities are included in the accounts.

iv. Business Combinations

The acquisition method of accounting is used to account for acquisitions that meet the definition of a business under U.S. GAAP. The cost of an acquisition is measured as the fair value of the assets transferred, equity instruments issued and liabilities incurred or assumed at the acquisition date. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values, with limited exceptions, at the acquisition date.

b) Revenue

Enerplus sells the majority of its production pursuant to variable-price contracts. The transaction price for variable priced contracts is based on the commodity price, adjusted for quality, location or other factors, whereby each component of the pricing formula can be either fixed or variable, depending on the contract terms. Under the contracts, the Company is required to deliver a fixed or variable volume of crude oil, natural gas liquids or natural gas to the contract counterparty. Crude oil, natural gas and natural gas liquids are sold under contracts of varying terms, including multi-year contracts. Revenues are typically collected in the month following production.

Revenue from the sale of crude oil, natural gas and natural gas liquids is measured based on the consideration specified in contracts with customers, net of sales taxes. Enerplus recognizes revenue when it satisfies a performance obligation by transferring control of the product to a customer. This is generally at the time the customer obtains legal title to the product and when it is physically transferred to the contractual delivery points.

Enerplus evaluates its arrangements with third parties and partners to determine if the Company acts as the principal or as an agent. In making this evaluation, management considers if Enerplus retains control of the product being delivered to the end customer. As part of this assessment, management considers whether the Company retains the economic benefits associated with the good being delivered. Management also considers whether the Company has the primary responsibility for the delivery of the product, the ability to establish prices or the inventory risk, in which case the Company would be the principal and the revenue is recognized on a gross basis. Any associated fees are recorded as an expense. If Enerplus acts in the capacity of an agent rather than as a principal in a transaction, then the revenue is recognized on a net basis, only reflecting the fee, if any, realized by the Company from the transaction.

All references to crude oil and natural gas revenue or production in the Consolidated Financial Statements are net of royalties.

c) Transportation

Enerplus generally sells crude oil and natural gas under two types of agreements which are common in industry. Both types of agreements include a transportation charge. One is a net-back arrangement, under which the Company sells crude oil or natural gas at the wellhead and collects a price, net of the transportation incurred by the purchaser. In this case, sales are recorded at the price received from the purchaser, net of transportation costs.

Under the other arrangement, Enerplus sells crude oil or natural gas at a specific delivery point, pays transportation to a third party and receives proceeds from the purchaser with no transportation deduction. In this case, transportation costs are recorded as transportation expense on the Consolidated Statements of Income/(Loss).

d) Crude Oil and Natural Gas Properties

Enerplus uses the full cost method of accounting for its crude oil and natural gas properties. Under this method, all acquisition, exploration and development costs incurred in finding crude oil and natural gas reserves are capitalized, including general and administrative costs attributable to these activities. These costs are recorded on a country-by-country cost centre basis as crude oil and natural gas properties subject to depletion (“full cost pool”). Costs associated with production and general corporate activities are expensed as incurred.

The net carrying value of both proved and unproved crude oil and natural gas properties is depleted using the unit of production method using proved reserves, as determined using a constant price assumption of the simple average of the preceding twelve months’ first-day-of-the-month commodity prices (“SEC prices”). The depletion calculation takes into account estimated future development costs necessary to bring those reserves into production.

12 ENERPLUS 2021 FINANCIAL SUMMARY

Under full cost accounting, a ceiling test is performed on a cost centre basis each quarter. Enerplus limits capitalized costs of proved and unproved crude oil and natural gas properties, net of accumulated depletion and the related deferred income tax effects, to the estimated future net cash flows from proved crude oil and natural gas reserves discounted at 10%, net of related tax effects, plus the lower of cost or fair value of unproved properties (“the ceiling”). This discount rate is not adjusted for current market trends, changes in the cost of capital and the potential impacts, if any, on the discount rate due to climate change or any other factors, as it is prescribed under U.S. GAAP. The ultimate period in which global energy markets can fully transition from carbon-based sources to alternative energy is highly uncertain, and as such, it is difficult to determine the impact on estimated future net cash flows of such a transition.

The estimated future net cash flows are calculated using the simple average of the preceding twelve months’ first-day-of-the-month commodity prices. If such capitalized costs exceed the ceiling, a write-down equal to that excess is recorded as a non-cash charge to net income. A write-down is not reversed in future periods even if higher crude oil and natural gas prices subsequently increase the ceiling.

Under certain circumstances, where the carrying value of the full cost centre exceeds the ceiling test limitation, the Company may seek a temporary waiver from the SEC to exclude certain amounts from the full cost ceiling limitation. The Company must demonstrate that the fair value of the excluded properties clearly exceeds the carrying value.

Under full cost accounting rules, divestments of crude oil and natural gas properties are generally accounted for as adjustments to capitalized costs, with no recognition of a gain or loss. However, if not recognizing a gain or loss on the transaction would have otherwise significantly altered the relationship between a cost centre’s capitalized costs and proved reserves, then a gain or loss is recognized.

e) Other Capital Assets

Other capital assets are recorded at historical cost, net of depreciation, and include furniture, fixtures, leasehold improvements, and computer equipment. Depreciation is calculated on a straight-line basis over the estimated useful life of the respective asset. The cost of repairs and maintenance is expensed as incurred.

f) Other Long-term Assets

Other Long-term Assets include Company-owned line fill in third party pipelines and long-term receivables. Line fill is recorded at lower of cost and net realizable value.

g) Cash and Cash Equivalents

Cash and cash equivalents include cash and highly liquid investments with maturities of less than 90 days.

h) Goodwill

Enerplus recognizes goodwill relating to business acquisitions when the total purchase price exceeds the fair value of the net identifiable assets and liabilities acquired. Goodwill is stated at cost less impairment and is not amortized. Goodwill is not deductible for income tax purposes.

Goodwill is assessed for impairment annually or more frequently if events or changes in circumstances indicate that goodwill may be impaired. Enerplus first performs a qualitative assessment to determine whether events or changes in circumstances indicate that goodwill may be impaired. If it is more likely than not that the fair value of the reporting unit is less than its carrying value, quantitative impairment tests are performed. If the carrying value of the reporting unit exceeds its fair value, goodwill is written down to the reporting unit’s fair value, with an offsetting charge to earnings in the Consolidated Statements of Income/(Loss). The loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The estimated fair value of the reporting unit involves numerous estimates including the estimated cash flows from proved reserves (and in certain periods probable reserves) associated with the reporting unit and the appropriate discount rate to apply to the estimated cash flows. The discount rate is based on the estimated cost of capital.

i) Asset Retirement Obligations

Enerplus’ crude oil and natural gas operating activities give rise to dismantling, decommissioning, reclamation, and site remediation activities. Enerplus recognizes a liability for the estimated present value of the future asset retirement obligation liability at each balance sheet date. Upon recognition, the liability is recorded at its estimated fair value. The associated asset retirement cost is capitalized and amortized over the same period as the underlying asset. Changes in the estimated liability and related asset retirement cost can arise as a result of revisions in the estimated amount or timing of cash flows.

Depletion of asset retirement costs and increases in asset retirement obligations resulting from the passage of time are recorded to depreciation, depletion and accretion and charged against net income in the Consolidated Statements of Income/(Loss).

ENERPLUS 2021 FINANCIAL SUMMARY 13

j) Leases

Enerplus determines if an arrangement is an operating or finance lease, as defined under U.S. GAAP, at inception. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. These leases are included in right-of-use (“ROU”) assets and lease liabilities in the Consolidated Balance Sheet.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from such leases. Lease liabilities are recognized at the lease commencement date based on the present value of remaining lease payments over the lease term, taking into consideration conditions such as incentives and termination penalties, as appropriate. A corresponding ROU asset is recognized at the amount of the lease liability, adjusted for payments made prior to lease commencement or initial direct costs, if any.

When calculating the present value, Enerplus uses the rate implicit in the lease, or uses its incremental borrowing rate for a similar term and risk profile based on the information available at the commencement date. Enerplus’ lease terms may have options to extend or terminate the lease which are included in the calculation of lease liabilities when it is reasonably certain that it will exercise those options. Lease expense for operating leases is recognized on a straight-line basis over the lease term.

Lease agreements can contain both lease and non-lease components, which are accounted for separately. For certain equipment leases, a portfolio approach is applied to account for the ROU assets and liabilities.

k) Income Tax

Enerplus uses the liability method of accounting for income taxes. Deferred income tax assets and liabilities are recorded on the temporary differences between the accounting and income tax basis of assets and liabilities, using the enacted tax rates expected to apply when the temporary differences are expected to reverse. Deferred tax assets are reviewed each period and a valuation allowance is provided if, after considering available evidence, it is more likely than not that a deferred tax asset will not be realized. Enerplus considers both positive and negative evidence including historic and expected future taxable income, reversing existing temporary differences and tax basis carry forward periods in making this assessment.

The expected future taxable income considered in the analysis of the valuation allowance is based on cash flows from the proven and probable reserves. The estimated cash flows from proven and probable reserves is subject to numerous estimates and judgments and involves the use of independent reserve evaluators. A valuation allowance is removed in any period where available evidence indicates all or a portion of the valuation allowance is no longer required. The financial statement effect of an uncertain tax position is recognized when it is more likely than not, based on technical merits, that the position will be sustained upon examination by a taxation authority. Penalties and interest expense related to income tax are recognized in income tax expense.

l) Financial Instruments

i. Fair Value Measurements

Financial instruments are initially recorded at fair value, defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. For financial instruments carried at fair value, and when disclosing the fair value of financial instruments on certain non-financial items, inputs used in determining the fair value are characterized according to the following fair value hierarchy:

● Level 1 – Inputs represent quoted market prices in active markets for identical assets or liabilities.

● Level 2 – Inputs other than quoted market prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted market prices for similar assets or liabilities in active markets or other market corroborated inputs.

● Level 3 – Inputs that are not observable from objective sources, such as forward prices supported by little or no market activity or internally developed estimates of future cash flows used in a present value model.

Subsequent measurement is based on classification of the financial instrument into one of the following five categories: held-for-trading, held-to-maturity, available-for-sale, loans and receivables or other financial liabilities.

ii. Non-derivative financial instruments

The carrying amount of cash and cash equivalents, accounts receivable, accounts payable, bank credit facilities, and term loan reported on the Consolidated Balance Sheets approximates their fair value. The fair value of the senior notes are considered a level 2 fair value measurement and details are disclosed in Note 17.

14 ENERPLUS 2021 FINANCIAL SUMMARY

The Company uses the current expected credit loss model in valuing accounts receivable, which requires the use of a lifetime expected loss provision. In making an assessment as to whether financial assets are credit-impaired, the Company considers: (i) historically realized bad debts; (ii) a counterparty’s present financial condition and whether a counterparty has breached certain contracts; (iii) the probability that a counterparty will enter bankruptcy or other financial reorganization; (iv) changes in economic conditions that correlate to increased levels of default; and (v) the term to maturity of the specified receivable. The carrying amounts of receivables are reduced by the amount of the expected credit loss through an allowance account and losses are recognized within general and administrative expense in the Consolidated Statement of Income/(Loss). If the Company subsequently determines an account is uncollectible the account is written off with a corresponding charge to the allowance account.

Enerplus has designated certain U.S. dollar denominated debt that is held in the parent entity as a hedge of its net investment in operations for which the U.S. dollar is the functional currency. As a non-derivative financial instrument, it will be accounted for under hedge accounting.

To be accounted for as a hedge, the U.S. dollar denominated debt must be designated as an effective hedge, both at inception and on an ongoing basis. The required hedge documentation defines the relationship between the U.S. dollar denominated debt and the net investment in the U.S. subsidiary, as well as the Company’s risk management objective and strategy for undertaking the hedging transaction. The Company formally assesses, both at inception and on an ongoing basis, whether the changes in fair value of the U.S. dollar denominated debt are highly effective in offsetting changes in the fair value of the net investment in the U.S. subsidiary. If effective, the unrealized foreign exchange gains and losses arising from the translation of the U.S. denominated debt are recorded in Other Comprehensive Income/(Loss) (“OCI”), net of tax, to the extent the net investment in the U.S. subsidiary supports the U.S. denominated debt. Prior to January 1, 2020, the Company did not apply hedge accounting to the net investment in operations with a U.S. dollar functional currency, and unrealized gains and losses were recognized in net income/loss at the end of each respective reporting period.

A reduction in the fair value of the net investment in the U.S. subsidiary or increase in the U.S. dollar denominated debt may result in a portion of the hedge becoming ineffective. If the hedging relationship ceases to be effective or is terminated, hedge accounting is not applied and subsequent gains or losses are recorded through net income/(loss).

iii. Derivative financial instruments

Enerplus enters into financial derivative contracts in order to manage its exposure to market risks from fluctuations in commodity prices, foreign exchange rates and interest rates in the normal course of operations.

Enerplus has not designated its financial derivative contracts as effective accounting hedges and thus has not applied hedge accounting, even though it considers most of these contracts to be economic hedges. As a result, financial derivative contracts are classified as held-for-trading and are recorded at fair value based on a Level 2 designation, with changes in fair value recorded in net income. The fair values of these derivative instruments are generally based on an estimate of the amounts that would be paid or received to settle these instruments at the balance sheet date. Enerplus’ accounting policy is to not offset the fair values of its financial derivative assets and liabilities.

Realized gains and losses from commodity price risk management activities are recognized in income when the contract is settled. Unrealized gains and losses on commodity price risk management activities are recognized in income based on the changes in fair value of the contracts at the end of the respective reporting period.

Enerplus’ crude oil, natural gas and natural gas liquids physical delivery purchase and sales contracts qualify as normal purchases and sales as they are entered into and held for the purpose of receipt or delivery of products in accordance with the Company’s expected purchase, sale or usage requirements. As such, these contracts are not considered derivative financial instruments. Settlements on these physical contracts are recognized in net income over the term of the contracts as they occur.

m) Foreign Currency

i. Foreign currency transactions

Transactions denominated in foreign currencies are translated to the functional currency of the entity (Canadian dollars in Canada and U.S. dollars in the U.S) using the exchange rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated to the functional currency of the entity using the rate of exchange in effect at the balance sheet date whereas non-monetary assets and liabilities are translated at the historical rate of exchange in effect on the date of the transaction. Foreign currency differences arising on translation are recognized in net income in the period in which they arise.

ENERPLUS 2021 FINANCIAL SUMMARY 15

ii. Foreign currency translation

For financial statement presentation, assets and liabilities of Enerplus’ Canadian operations, which have a Canadian dollar functional currency, are translated into U.S. dollars at period end exchange rates while revenues and expenses are translated using average rates for the period. Gains and losses from the translation are deferred and included in the cumulative translation adjustment which is recorded in accumulated other comprehensive income.

n) Share-Based Compensation

Enerplus’ share-based compensation plans include equity-settled Restricted Share Unit (“RSU”) and Performance Share Unit (“PSU”) awards made pursuant to its Share Award Incentive Plan (“SAIP”). The Company is authorized to issue up to 4.5% of outstanding common shares from treasury under the SAIP. Enerplus also has a cash-settled Deferred Share Unit (“DSU”) Plan for Directors (“Director DSU Plan”) and a cash-settled RSU Plan for Directors (“Director RSU Plan”).

i. Long-term Incentive (“LTI”) Plans

For RSU awards granted under the SAIP, employees receive compensation in relation to the value of a specified number of underlying notional shares. The number of notional shares awarded varies by individual and vests one-third each year for three years. The value upon vesting is based on the value of the underlying notional shares plus notional accrued dividends over the vesting period.

For PSU awards granted under the SAIP, executives and management receive compensation in relation to the value of a specified number of underlying notional shares. The number of notional shares awarded varies by individual and they vest at the end of three years. The value upon vesting is based on the value of the underlying shares plus notional accrued dividends along with a multiplier that ranges from 0 to 2 depending on Enerplus’ performance compared to a peer group of both Canadian and U.S. crude oil and natural gas producers over the vesting period.

Under Enerplus’ Director DSU Plan and Director RSU Plan, directors receive compensation in relation to the value of a specified number of underlying notional shares. The number of notional shares awarded is based on the annual equity retainer value. Directors may elect to receive all or a portion of their notional shares under either plan. Under the Director DSU Plan, units vest and are paid at a specified date following the director leaving the Board. Under the Director RSU Plan, units vest one-third each year for three years. The value upon vesting is based on the value of the underlying notional shares plus notional accrued dividends over the vesting period. All Director DSU and RSU grants are settled in cash.

Enerplus recognizes non-cash share-based compensation expense over the vesting period of the equity-settled long-term incentive plans, net of realized forfeitures, based on the estimated grant date share price fair value of the respective awards. The fair value for the PSUs is adjusted for the outcome of the performance condition. Share-based compensation charges are recorded on the Consolidated Statements of Income/(Loss) with an offset to paid-in capital. Each period, management performs an estimate of the PSU plan multiplier. Any differences that arise between the actual multiplier on plan settlement and management’s estimate is recorded to share-based compensation. On settlement of these plans, amounts previously recorded to paid-in capital are reclassified to share capital.

Enerplus recognizes a liability with respect to its cash-settled long-term incentive plans based on their estimated fair value. The liability is re-measured at each reporting date and at settlement date with any changes in the fair value recorded as share-based compensation, included in general and administrative expense.

o) Net Income/(Loss) Per Share

Basic net income/(loss) per common share is computed by dividing net income/(loss) by the weighted average number of common shares outstanding during the period.

For the diluted net income per common share calculation, the weighted average number of shares outstanding is adjusted for the potential number of shares which may have a dilutive effect on net income. The weighted average number of diluted shares is calculated in accordance with the treasury stock method which assumes that the proceeds received from outstanding RSU’s and PSU’s would be used to repurchase common shares at the average market price.

p) Contingencies

Liabilities for loss contingencies arising from claims, assessments, litigation, environmental and other sources are recognized when it is probable that a liability has been incurred and the amount can be reasonably estimated. Contingencies are adjusted as additional information becomes available or circumstances change.

16 ENERPLUS 2021 FINANCIAL SUMMARY

Purchase Price Equation

The transaction was accounted for as an acquisition of a business. The purchase price is measured as the fair value of the assets transferred, equity instruments issued, and liabilities incurred or assumed at the acquisition date. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The purchase price equation was determined following the closing date, during which time the value of the net assets and liabilities acquired was revised as indicated in the agreement and is reflected in the purchase price equation as follows:


($ thousands)	At March 10, 2021
Consideration
Purchase Price	$	465,000
Purchase price adjustments		(44,751)
Total consideration	$	420,249

Fair value of identifiable assets and liabilities of Bruin
Other current assets		1,667
Property, plant and equipment		542,190
Right of use assets		1,892
Accounts payable		(25,257)
Asset retirement obligation		(21,964)
Commodity contract liabilities		(76,387)
Lease liabilities		(1,892)
Total identifiable net assets	$	420,249

The estimated fair value of the acquired property, plant and equipment was based on the after-tax cash-flows and associated proved and probable reserves discounted using an estimated weighted average cost of capital. The determination of proved and probable reserves involves numerous estimates and assumptions (see Note 2).

b)	Dunn County Acquisition

On April 8, 2021, the Company announced it had entered into a purchase agreement to acquire assets in Dunn County, North Dakota from Hess Bakken Investments II, LLC for total cash consideration of $312.0 million, subject to customary purchase price adjustments. The acquisition was funded using the Company’s existing cash balance with the remaining portion funded through borrowing on its bank credit facility. The effective date of the acquisition was March 1, 2021 and the acquisition closed on April 30, 2021.

The acquisition was recorded as an asset acquisition as of the close date of April 30, 2021 with the results of operations from these assets reflected in the Consolidated Financial Statements thereafter. After purchase price adjustments, the purchase consideration including capitalized transaction costs was $306.8 million.

c)	Sleeping Giant and Russian Creek Divestment

On August 30, 2021, the Company announced it had entered into a definitive agreement to sell its interests in the Sleeping Giant field in Montana and the Russian Creek area in North Dakota in the Williston Basin, for total cash consideration of $115.0 million, subject to customary purchase price adjustments. After purchase price adjustments and transaction costs, adjusted proceeds were $107.8 million. In addition, Enerplus may receive up to $5.0 million in contingent payments if the WTI oil price averages over $65 per barrel in 2022 and over $60 per barrel in 2023, with amounts payable on January 31, 2023 and January 31, 2024, respectively. The disposition closed on November 2, 2021. The fair value of the contingent payments have been recorded as part of Other Long-Term assets.

4) ACCOUNTS RECEIVABLE


($ thousands)	December 31, 2021		December 31, 2020
Accrued revenue	$	208,160	$	73,201
Accounts receivable – trade		23,697		13,208
Allowance for doubtful accounts		(3,869)		(2,813)
Total accounts receivable, net of allowance for doubtful accounts	$	227,988	$	83,596

18 ENERPLUS 2021 FINANCIAL SUMMARY

5) PROPERTY, PLANT AND EQUIPMENT (“PP&E”)


			Accumulated Depletion,
At December 31, 2021			Depreciation,
($ thousands)	Cost		and Impairment		Net Book Value
Crude oil and natural gas properties⁽¹⁾	$	13,075,987	$	(11,822,482)	$	1,253,505
Other capital assets		103,355		(89,468)		13,887
Total PP&E	$	13,179,342	$	(11,911,950)	$	1,267,392


			Accumulated Depletion,
At December 31, 2020			Depreciation,
($ thousands)	Cost		and Impairment		Net Book Value
Crude oil and natural gas properties⁽¹⁾	$	11,966,258	$	(11,513,956)	$	452,302
Other capital assets		96,373		(84,874)		11,499
Total PP&E	$	12,062,631	$	(11,598,830)	$	463,801

(1)	All of the Company’s unproved properties are included in the full cost pool.

Acquisitions:

For the years ended December 31, 2021 and 2020, Enerplus acquired property and land totaling $857.1 million and $7.5 million, respectively. Refer to Note 3 for details regarding the Bruin and Dunn County acquisitions during 2021.

Divestments:

For the years ended December 31, 2021 and 2020, Enerplus disposed of properties for proceeds of $112.7 million and $4.5 million, respectively. Refer to Note 3 for details regarding the divestment of the Sleeping Giant and Russian Creek assets during 2021.

6) IMPAIRMENT

a) Impairment of PP&E


($ thousands)	2021		2020		2019
Crude oil and natural gas properties:
U.S. cost centre	$	—	$	650,780	$	—
Canada cost centre		3,420		100,943		—
Total impairment expense	$	3,420	$	751,723	$	—

For the year ended December 31, 2021, Enerplus recorded asset impairment of $3.4 million (2020 – $751.7 million; 2019 – nil). The primary factors that affect ceiling values include first-day-of-the-month commodity prices, reserves, capital expenditure levels and timing, acquisition and divestment activity, and production levels. At March 31, 2021, Enerplus’ crude oil and natural gas properties in the U.S. cost centre exceeded the ceiling test limitation by approximately $265 million, primarily due to the difference in the ceiling value using SEC prices for the assets acquired in the Bruin acquisition compared to the carrying value, which more closely represented fair market value, based on forward prices. Given the short duration between closing the acquisition and the ceiling test calculation at March 31, 2021, Enerplus requested and received a temporary exemption from the SEC to exclude the properties acquired from Bruin in the full cost ceiling test for the duration of 2021.

The following table outlines the 12-month average trailing benchmark prices and exchange rates used in Enerplus’ ceiling test at December 31, 2021, 2020 and 2019:



	WTI Crude Oil		Edm Light Crude		U.S. Henry Hub Gas		Exchange Rate
Period	$/bbl		CDN$/bbl		$/Mcf		CDN$/US$
2021	$	66.55	$	78.15	$	3.64		0.80
2020		39.54		45.56		2.00		0.75
2019		55.85		66.73		2.58		0.75

ENERPLUS 2021 FINANCIAL SUMMARY 19

b)	Impairment of Goodwill

At December 31, 2021 and 2020, there was no goodwill remaining on the Company’s Consolidated Balance Sheets. During the year ended December 31, 2020, Enerplus recorded goodwill impairment of $149.2 million relating to its U.S. reporting unit. This was due to lower commodity prices in 2020, which resulted in a reduction in the fair value of the U.S. reporting unit. For the year ended December 31, 2019, Enerplus recorded goodwill impairment of $347.3 million relating to the Canadian reporting unit as a result of the cumulative impact of Canadian asset divestments, the shut-in of uneconomic natural gas production in Canada and lower forecasted commodity prices.

7) OTHER LONG-TERM ASSETS

Included in Other Long-term Assets is Company-owned line fill in third party pipelines, amounting to $5.3 million (December 31, 2020 – $3.8 million) and a long-term receivable amounting to $4.5 million (December 31, 2020 – nil) relating to the fair value of contingent consideration associated with the Sleeping Giant and Russian Creek divestment. The fair value is adjusted at each reporting period. See Note 3 for further details.

8) ACCOUNTS PAYABLE


($ thousands)	December 31, 2021		December 31, 2020
Accrued payables	$	106,222	$	84,286
Accounts payable – trade		260,786		113,609
Total accounts payable	$	367,008	$	197,895

9) DEBT


($ thousands)	December 31, 2021		December 31, 2020
Current:
Senior notes	$	100,600	$	81,600
Long-term:
Term loan		397,971		—
Senior notes		203,200		303,800
Total debt	$	701,771	$	385,400

Term Loan

Upon closing the Bruin acquisition on March 10, 2021, Enerplus entered into a three-year senior unsecured $400 million term loan. The drawn fees align with those of Enerplus’ bank credit facility, which range between 125 and 315 basis points over bankers’ acceptance or LIBOR rates. The term loan includes financial and other covenants consistent with Enerplus’ bank credit facility and ranks equally with the bank credit facility and outstanding senior notes. Debt issuance costs of $2.8 million have been netted against the term loan and are being amortized over the three-year term. Subsequent to December 31, 2021, the Company converted its $400 million term loan into a revolving credit facility with no other amendments.

Bank Credit Facility

During 2021, Enerplus increased and extended its senior, unsecured, covenant-based bank credit facility to $900 million from $600 million with a maturity of October 31, 2025. Debt issuance costs of $1.8 million have been netted against the bank credit facility and are being amortized over the four and a half year term. As part of the extension, the Company transitioned the facility to a sustainability-linked credit facility incorporating environmental, social and governance (“ESG”)-linked incentive pricing terms which reduce or increase the borrowing costs by up to 5 basis points as Enerplus’ sustainability performance targets (“SPT”) are exceeded or missed. The SPTs are based on the following ESG goals of the Company:

●

GHG Emissions: continuous progress toward Enerplus’ stated goal of a 50% reduction in corporate Scope 1 and 2 greenhouse gas emissions intensity by 2030, using 2019 as a baseline and measurement based on Enerplus’ annual internal targets;

●

Water Management: achieve a 50% reduction in freshwater usage in corporate well completions by 2025 or earlier compared to 2019, with progress to be measured on an annual basis over the life of the credit facility; and

●

Health & Safety: achieve and maintain a 25% reduction in the Company’s Lost Time Injury Frequency, based on a trailing 3-year average, relative to a 2019 baseline.

For the year ended December 31, 2021, total amortization of debt issuance costs amounted to $1.1 million (December 31, 2020 – nil).

20 ENERPLUS 2021 FINANCIAL SUMMARY

Senior Notes

During 2021, Enerplus made its final $22.0 million principal repayment on its 2009 senior notes, and its second $59.6 million principal repayment on its 2012 senior notes. During 2020, Enerplus made its fourth $22.0 million principal repayment on its 2009 senior notes and its first $59.6 million principal repayment on its 2012 senior notes.

The terms and rates of the Company’s outstanding senior notes are detailed below:


				Original	Remaining
			Coupon	Principal	Principal
Issue Date	Interest Payment Dates	Principal Repayment	Rate	($ thousands)	($ thousands)
September 3, 2014	March 3 and Sept 3	5 equal annual installments beginning September 3, 2022	3.79%	$200,000	$105,000
May 15, 2012	May 15 and Nov 15	Bullet payment on May 15, 2022	4.40%	$20,000	$20,000
May 15, 2012	May 15 and Nov 15	3 equal annual installments beginning May 15, 2022	4.40%	$355,000	$178,800
		Total carrying value at December 31, 2021			$ 303,800

10) ASSET RETIREMENT OBLIGATION (“ARO”)


($ thousands)	December 31, 2021		December 31, 2020
Balance, beginning of year	$	102,325	$	106,274
Change in estimates		26,586		3,020
Property acquisition and development activity		1,304		1,615
Bruin acquisition (Note 3)		21,964		—
Dunn County acquisition (Note 3)		5,880		—
Divestments (Note 3)		(13,525)		(758)
Settlements		(12,951)		(13,275)
Government assistance		(4,594)		—
Accretion expense		5,825		5,449
Balance, end of year	$	132,814	$	102,325

Enerplus has estimated the present value of its asset retirement obligation to be $132.8 million at December 31, 2021 based on a total undiscounted, uninflated liability of $303.3 million (December 31, 2020 – $102.3 million and $273.8 million, respectively). Enerplus’ asset retirement obligation expenditures are mainly expected to be incurred between 2036 and 2051.

In 2021, Enerplus benefited from provincial government assistance to support the clean-up of inactive or abandoned crude oil and natural gas wells. These programs provide funding directly to oil field service contractors engaged by Enerplus to perform abandonment, remediation, and reclamation work. The funding received by the contractor is reflected as a reduction to ARO. For the year ended December 31, 2021, Enerplus benefited from $4.6 million (2020 – nil) in government assistance, which has been recorded as part of Other income in the Consolidated Statements of Income/(Loss).

11) LEASES

The Company has entered into various lease contracts related to office space, drilling rig commitments, vehicles and other equipment. Leases are entered into and exited in coordination with specific business requirements which include the assessment of the appropriate term for the related leased assets. Short-term leases with a lease term of 12 months or less are not recorded on the Consolidated Balance Sheets. Such items are charged to operating expenses or general and administrative expenses, as appropriate, in the Consolidated Statements of Income/(Loss), unless the costs are included in the carrying amount of another asset in accordance with U.S. GAAP.

ENERPLUS 2021 FINANCIAL SUMMARY 21


($ thousands)	December 31, 2021		December 31, 2020
Assets
Operating right-of-use assets	$	26,118	$	25,818

Liabilities
Current operating lease liabilities	$	10,618	$	10,523
Non-current operating lease liabilities		18,265		18,425
Total lease liabilities	$	28,883	$	28,948

Weighted average remaining lease term (years)
Operating leases		3.3		3.9

Weighted average discount rate
Operating leases		3.4%		4.2%

The Company’s lease contract expenditures/(income) for the years ended December 31, 2021 and 2020 are as follows:



($ thousands)	2021		2020
Operating lease cost	$	11,378	$	12,368
Variable lease cost		633		1,308
Short-term lease cost		3,469		7,093
Sublease income		(1,083)		(1,101)
Total	$	14,397	$	19,668

Variable lease payments are determined through analysis of day rate fees under applicable rig contracts. The amounts in the table above are recorded as part of general and administrative or operating expenses or property, plant, and equipment depending on the nature of the contract to which they relate. Although Enerplus has various leases containing extensions and/or termination options, none were determined to be reasonably certain to be exercised. As a result, none of these options are recognized as part of the ROU assets or lease liabilities at December 31, 2021 or 2020.

Maturities of lease liabilities, all of which are classified as operating leases at December 31, 2021, are as follows:


($ thousands)	Operating Leases
2022	$	11,419
2023		10,211
2024		5,870
2025		987
2026		966
After 2026		1,153
Total lease payments	$	30,606
Less imputed interest		(1,723)
Total discounted lease payments	$	28,883
Current portion of lease liabilities	$	10,618
Non-current portion of lease liabilities	$	18,265

Supplemental information related to leases is as follows:



($ thousands)	2021			2020
Cash amounts paid to settle lease liabilities:
Operating cash flow used for operating leases	$	11,571	$	12,038
Right-of-use assets obtained/(terminated):
Operating leases	$	10,030	$	(1,306)

22 ENERPLUS 2021 FINANCIAL SUMMARY

12) CRUDE OIL AND NATURAL GAS SALES

Crude oil and natural gas revenue by country and by product for the years ended December 31, 2021 and 2020 are as follows:


2021						Natural		Natural gas
($ thousands)		Total revenue		Crude oil⁽¹⁾		gas⁽¹⁾		liquids⁽¹⁾		Other⁽²⁾
United States	$	1,355,255	$	1,055,748	$	219,552	$	79,930	$	25
Canada		127,320		111,070		11,127		4,348		775
Total	$	1,482,575	$	1,166,818	$	230,679	$	84,278	$	800


2020						Natural		Natural gas
($ thousands)		Total revenue		Crude oil⁽¹⁾		gas⁽¹⁾		liquids⁽¹⁾		Other⁽²⁾
United States	$	480,822	$	380,074	$	92,453	$	8,182	$	113
Canada		72,917		59,642		9,239		2,591		1,445
Total	$	553,739	$	439,716	$	101,692	$	10,773	$	1,558

(1)	U.S. sales of crude oil and natural gas relate primarily to the Company’s North Dakota and Marcellus properties, respectively. Canadian crude oil sales relate primarily to the Company’s waterflood properties.

(2)	Includes third party processing income.

13) GENERAL AND ADMINISTRATIVE EXPENSE


($ thousands)	2021		2020		2019
General and administrative expenseexcluding share-based compensation⁽¹⁾	$	38,013	$	33,347	$	37,360
Share-based compensation expense		18,794		9,750		17,560
General and administrative expense	$	56,807	$	43,097	$	54,920

(1)	Includes non-cash lease credit of $365 in 2021, $212 in 2020, and an expense of $542 in 2019.

14) FOREIGN EXCHANGE


($ thousands)	2021		2020		2019
Realized:
Foreign exchange (gain)/loss	$	3,477	$	771	$	(1,346)
Foreign exchange (gain)/loss on U.S. dollar cash held in parent company		(2,330)		(902)		6,825
Unrealized:
Foreign exchange (gain)/loss on U.S. dollar debt and working capital in parent company		(8,055)		1,363		(21,899)
Foreign exchange (gain)/loss	$	(6,908)	$	1,232	$	(16,420)

15) INCOME TAXES

Enerplus’ provision for income tax is as follows:


($ thousands)	2021		2020		2019
Current tax
United States	$	2,700	$	(10,716)	$	(14,774)
Canada		(11)		—		(10,472)
Current tax expense/(recovery)		2,689		(10,716)		(25,246)
Deferred tax
United States	$	148,920	$	(167,835)	$	53,020
Canada		(50,165)		(20,425)		8,630
Deferred tax expense/(recovery)		98,755		(188,260)		61,650
Income tax expense/(recovery)	$	101,444	$	(198,976)	$	36,404

ENERPLUS 2021 FINANCIAL SUMMARY 23

The following provides a reconciliation of income taxes calculated at the Canadian statutory rate to the actual income taxes:


($ thousands)	2021		2020		2019
Income/(loss) before taxes
United States	$	544,464	$	(877,406)	$	170,346
Canada		(208,579)		(14,921)		(338,342)
Total income/(loss) before taxes		335,885		(892,327)		(167,996)
Canadian statutory rate		24.00%		24.00%		26.50%
Expected income tax expense/(recovery)	$	80,612	$	(214,158)	$	(44,519)
Impact on taxes resulting from:
Foreign and statutory rate differences	$	19,297	$	(27,918)	$	21,329
Share-based compensation		1,878		1,671		(4,068)
Non-taxable capital (gains)/losses		(105)		14,341		3,007
Change in valuation allowance		(560)		(25,918)		(16,598)
Amounts in respect of prior periods		322		5,845		(14,669)
Non-deductible goodwill impairment and other expenses		—		47,161		91,922
Income tax expense/(recovery)	$	101,444	$	(198,976)	$	36,404

In 2020, the Alberta corporate income tax rate change resulted in a decrease to the Canadian statutory rate by 2.5%.

The deferred income tax asset consists of the following:


At December 31 ($ thousands)	2021		2020
Deferred income tax assets
Property, plant and equipment	$	125,312	$	139,724
Tax loss carry-forwards and other credits		225,463		303,288
Capital loss carry-forwards and other capital items		107,681		111,497
Asset retirement obligation		32,896		24,985
Derivative financial instruments		28,907		2,926
Other assets		19,270		6,668
Deferred income tax assets before valuation allowance		539,529		589,088
Valuation allowance		(112,847)		(112,074)
Deferred income tax assets, net		426,682		477,014
Deferred income tax liabilities
Property, plant and equipment	$	(45,824)	$	—
Total deferred income tax liabilities		(45,824)		—
Total deferred income tax asset	$	380,858	$	477,014

Loss carry-forwards available for tax reporting purposes:


At December 31 ($ thousands)	2021		Expiration Date
United States Federal
Net operating losses – prior to 2018	$	476,000	2032-2037
Net operating losses – 2018 and thereafter		256,000	Indefinite
Canada Federal
Capital losses	$	848,000	Indefinite
Non-capital losses		137,000	2031-2041

24 ENERPLUS 2021 FINANCIAL SUMMARY

Changes in the balance of Enerplus’ unrecognized tax benefits are as follows:


($ thousands)	2021		2020		2019
Balance, beginning of year	$	15,485	$	—	$	9,753
Increase – tax positions in prior periods		—		15,485		—
Settlements		—		—		(9,753)
Balance, end of year	$	15,485	$	15,485	$	—

If recognized, all of Enerplus’ unrecognized tax benefits at December 31, 2021 would affect Enerplus’ effective income tax rate. It is not anticipated that the amount of unrecognized tax benefits will significantly change during the next 12 months.

A summary of the taxation years, by jurisdiction, that remain subject to examination by the taxation authorities are as follows:


Jurisdiction		Taxation Years
United States – Federal		2018-2021
Canada – Federal		2017-2021

Enerplus and its subsidiaries file income tax returns primarily in Canada and the United States. Matters in dispute with the taxation authorities are ongoing and in various stages of completion.

16) SHAREHOLDERS’ EQUITY

a) Share Capital


	2021			2020			2019
(thousands)	Shares	Amount		Shares	Amount		Shares	Amount
Balance, beginning of year	222,548	$	3,113,829	221,744	$	3,106,875	239,411	$	3,294,496

Issued/(Purchased) for cash:
Issue of shares (net of tax effected issue costs)	33,062		99,516	—		—	—		—
Purchase of common shares under Normal Course Issuer Bid	(12,898)		(128,686)	(340)		(3,582)	(18,231)		(190,917)

Non-cash:
Share-based compensation – treasury settled⁽¹⁾	1,140		9,402	1,160		10,694	564		3,296
Cancellation of predecessor shares	—		—	(16)		(158)	—		—
Balance, end of year	243,852	$	3,094,061	222,548	$	3,113,829	221,744	$	3,106,875

(1)	The amount of shares issued on LTI settlement is net of employee withholding taxes.

The Company is authorized to issue an unlimited number of common shares without par value.

For the year ended December 31, 2021, Enerplus declared dividends of CDN$0.15 ($0.12) per weighted average common share totaling $30.5 million (2020 – CDN$0.12 ($0.09) per share and $20.0 million; December 31, 2019 – CDN$0.12 ($0.09) per share and $20.9 million). Subsequent to December 31, 2021, the Board of Directors approved a first quarter dividend payment of $0.033 per share to be paid in March 2022.

For the year ended December 31, 2021, Enerplus issued 33,062,500 common shares at a price of CDN$4.00 per common share for gross proceeds of $103.4 million (net $99.5 million, after $5.1 million in issue costs, net of $1.2 million in tax) pursuant to a bought deal prospectus offering under its base shelf prospectus.

On June 23, 2021, the Company filed a short form base shelf prospectus (the “Shelf Prospectus”) with securities regulatory authorities in each of the provinces and territories of Canada and a Registration Statement with the U.S. Securities Exchange Commission. The Shelf Prospectus allows Enerplus to offer and issue up to an aggregate amount of CDN$2.0 billion common shares, preferred shares, warrants, subscription receipts and units by way of one or more prospectus supplements during the 25-month period that the Shelf Prospectus remains valid.

ENERPLUS 2021 FINANCIAL SUMMARY 25

On August 12, 2021 Enerplus received approval from the Toronto Stock Exchange (“TSX”) to commence a Normal Course Issuer Bid (“NCIB”) to purchase up to 10% of the public float (within the meaning under TSX rules) during a 12-month period. As a result, 12,897,721 common shares were repurchased and cancelled under the NCIB at an average price of $9.55 (CDN$12.06) per share, for total consideration of $123.2 million. Of the amount paid, $128.7 million was charged to share capital and $5.5 million was credited to accumulated deficit. At December 31, 2021, 12,668,090 common shares are available for repurchase under the current NCIB.

For the year ended December 31, 2020, the Company repurchased 340,434 common shares under the former NCIB at an average price of $5.63 (CDN$7.44) per share, for total consideration of $1.9 million. Of the amount paid, $3.6 million was charged to share capital and $1.7 million was credited to accumulated deficit.

For the year ended December 31, 2019, the Company repurchased 18,231,401 common shares under the former NCIB at an average price of $7.36 (CDN$9.80) per share, for total consideration of $134.3 million. Of the amount paid, $190.9 million was charged to share capital and $56.6 million was credited to accumulated deficit.

Subsequent to December 31, 2021 and up to and including February 23, 2022, the Company repurchased 2,257,400 common shares under the current NCIB at an average price of $11.58 (CDN$14.67) per share, for total consideration of $26.1 million.

b) Share-based Compensation

The following table summarizes Enerplus' share-based compensation expense, which is included in General and Administrative expense on the Consolidated Statements of Income/(Loss):


($ thousands)	2021		2020		2019
Cash:
Long-term incentive plans (recovery)/expense	$	6,875	$	(934)	$	512
Non-Cash:
Long-term incentive plans expense		13,789		9,720		16,814
Equity swap (gain)/loss		(1,870)		964		234
Share-based compensation expense	$	18,794	$	9,750	$	17,560

LTI Plans

The following tables summarize the PSU, RSU and DSU activity for the year ended December 31, 2021:


For the year ended December 31, 2021	Cash-settled LTI Plans	Equity-settled LTI Plans		Total
(thousands of units)	DSU	PSU⁽¹⁾	RSU
Balance, beginning of year	555	2,552	1,825	4,932
Granted	269	2,158	2,207	4,634
Vested	(235)	(728)	(890)	(1,853)
Forfeited	—	—	(77)	(77)
Balance, end of year	589	3,982	3,065	7,636

(1)	Based on underlying awards before any effect of the performance multiplier.

Cash-settled LTI Plans

For the year ended December 31, 2021, the Company recorded a cash share-based compensation expense of $6.9 million (2020 – recovery of $0.9 million; 2019 – expense of $0.5 million).

At December 31, 2021, a liability of $6.3 million (December 31, 2020 – $1.7 million) with respect to the Director DSU Plan was recorded as part of Accounts Payable on the Consolidated Balance Sheets.

26 ENERPLUS 2021 FINANCIAL SUMMARY

Equity-settled LTI Plans

The following table summarizes the cumulative share-based compensation expense recognized to date which is recorded to Paid-in Capital on the Consolidated Balance Sheets. Unrecognized amounts will be recorded to non-cash share-based compensation expense over the remaining vesting terms.


At December 31, 2021 ($ thousands, except for years)	PSU⁽¹⁾		RSU		Total
Cumulative recognized share-based compensation expense	$	12,791	$	10,554	$	23,345
Unrecognized share-based compensation expense		9,050		4,303		13,353
Fair value	$	21,841	$	14,857	$	36,698
Weighted-average remaining contractual term (years)		1.9		1.5

(1)	Includes estimated performance multipliers.

The Company directly withholds shares on PSU and RSU settlements for tax-withholding purposes. For the year ended December 31, 2021 cash withholding taxes of $3.6 million were paid (2020 – $5.6 million; 2019 – $3.7 million).

c) Basic and Diluted Net Income/(Loss) Per Share

Net income/(loss) per share has been determined as follows:


(thousands, except per share amounts)	2021		2020		2019
Net income/(loss)	$	234,441	$	(693,351)	$	(204,400)

Weighted average shares outstanding – Basic		251,909		222,503		231,334
Dilutive impact of share-based compensation⁽¹⁾		7,942		—		—
Weighted average shares outstanding – Diluted		259,851		222,503		231,334
Net income/(loss) per share
Basic	$	0.93	$	(3.12)	$	(0.88)
Diluted	$	0.90	$	(3.12)	$	(0.88)

(1)	For the years ended December 31, 2020 and 2019, the impact of share-based compensation was anti-dilutive as a conversion to shares would not increase the loss per share.

17) FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

a) Fair Value Measurements

At December 31, 2021, the carrying value of cash and cash equivalents, accounts receivable, and accounts payable approximated their fair value due to the short-term nature of these instruments. The fair values of the bank credit facility and term loan approximate their carrying values as they bear interest at floating rates and the credit spread approximates current market rates.

At December 31, 2021, the senior notes had a carrying value of $303.8 million and a fair value of $304.1 million (December 31, 2020 – $385.4 million and $388.2 million, respectively). The fair value of the senior notes is estimated based on the amount that Enerplus would have to pay a third party to assume the debt, including the credit spread for the difference between the issue rate and the period end market rate. The period end market rate is estimated by comparing the debt to new issuances (secured or unsecured) and secondary trades of similar size and credit statistics for both public and private debt.

The fair value of derivative contracts, senior notes, term loan, and credit facility are considered level 2 fair value measurements. There were no transfers between fair value hierarchy levels during the year.

b) Derivative Financial Instruments

The derivative financial assets and liabilities on the Consolidated Balance Sheets are recorded at amounts that represent the fair values of these instruments. At December 31, 2021, Enerplus has equity, commodity, and contingent consideration contracts. See Note 7 regarding the contingent consideration contract.

ENERPLUS 2021 FINANCIAL SUMMARY 27

The following tables summarize the change in fair value associated with equity and commodity contracts for the respective years:


							Income
Gain/(Loss) ($ thousands)	2021		2020		2019		Statement Presentation
Equity Swaps	$	1,870	$	(964)	$	(234)	G&A expense
Commodity Contracts:
Oil		(111,655)		(19,891)		(51,479)	Commodity derivative
Gas		249		2,781		(8,037)	instruments
Total Unrealized Gain/(Loss)	$	(109,536)	$	(18,074)	$	(59,750)

The following table summarizes the effect of Enerplus’ commodity contracts on the Consolidated Statements of Income/(Loss):


($ thousands)	2021		2020		2019
Unrealized change in fair value gain/(loss)	$	(111,406)	$	(17,110)	$	(59,516)
Net realized cash gain/(loss)		(163,026)		92,852		11,586
Commodity contracts gain/(loss)	$	(274,432)	$	75,742	$	(47,930)

The following table summarizes the presentation of fair values on the Consolidated Balance Sheets:


	December 31, 2021					December 31, 2020
	Assets		Liabilities				Assets	Liabilities
($ thousands)	Current		Current	Long-term			Current	Current
Equity Swaps	$	—	969	$	—	$	—	$	2,839
Commodity Contracts:
Oil		1,771	141,364		7,098		—		12,297
Gas		3,897	867		—		2,790		—
Total	$	5,668	143,200	$	7,098	$	2,790	$	15,136

The fair value of commodity contracts and the equity swaps is estimated based on commodity and option pricing models that incorporate various factors including forecasted commodity prices, volatility and the credit risk of the entities party to the contract. Changes and variability in commodity prices over the term of the contracts can result in material differences between the estimated fair value at a point in time and the actual settlement amounts.

On March 10, 2021, the outstanding crude oil commodity contracts acquired with the Bruin acquisition were recorded at fair value. Realized and unrealized gains and losses on the acquired contracts are recognized in the Consolidated Statement of Income/(Loss) and the Consolidated Balance Sheets to reflect changes in crude oil prices from the closing date of the Bruin acquisition.

At December 31, 2021, the fair value of Enerplus’ commodity contracts totaled a net liability of $143.7 million. Of this total net liability, $40.2 million related to Bruin contracts, with $22.8 million remaining from the original $76.4 million liability acquired from Bruin.

c) Risk Management

In the normal course of operations, Enerplus is exposed to various market risks, including commodity prices, foreign exchange, interest rates, equity prices, credit risk, liquidity risk, and the risks associated with environmental/climate change risk, social and governance regulation, and compliance.

i) Market Risk

Market risk is comprised of commodity price, foreign exchange, interest rate and equity price risk.

Commodity Price Risk:

Enerplus manages a portion of commodity price risk through a combination of financial derivative and physical delivery sales contracts. Enerplus’ policy is to enter into commodity contracts subject to a maximum of 80% of forecasted production volumes.

28 ENERPLUS 2021 FINANCIAL SUMMARY

The following tables summarize Enerplus’ price risk management positions at February 24, 2022:

Crude Oil Instruments:


Instrument Type⁽¹⁾⁽²⁾	bbls/day	US$/bbl

Jan 1, 2022 – Jun 30, 2022
WTI Purchased Put	12,500	75.00
WTI Sold Put	12,500	58.00
WTI Sold Call	12,500	87.63

Jan 1, 2022 – Dec 31, 2022
WTI Purchased Put	17,000	50.00
WTI Sold Put	17,000	40.00
WTI Sold Call	17,000	57.91
WTI Sold Swap⁽³⁾	3,828	42.35
WTI Purchased Swap	3,828	66.52

Jan 1, 2023 – Jun 30, 2023
WTI Purchased Put	10,000	76.50
WTI Sold Put	10,000	60.00
WTI Sold Call	10,000	107.38

Jan 1, 2023 – Oct 31, 2023
WTI Sold Swap⁽³⁾	250	42.10
WTI Purchased Swap	250	64.85
WTI Purchased Put⁽³⁾	2,000	5.00
WTI Sold Call⁽³⁾	2,000	75.00

Nov 1, 2023 – Dec 31, 2023
WTI Purchased Put⁽³⁾	2,000	5.00
WTI Sold Call⁽³⁾	2,000	75.00

(1)	The total average deferred premium spent on the Company’s outstanding crude oil contracts is $1.50/bbl from January 1, 2022 - December 31, 2022 and $1.25/bbl from January 1, 2023 – June 30, 2023.

(2)	Transactions with a common term have been aggregated and presented at weighted average prices and volumes.

(3)

Upon closing of the Bruin Acquisition, Bruin’s outstanding crude oil contracts were recorded at a fair value liability of $76.4 million. At December 31, 2021, the balance was a liability of $22.8 million on the Consolidated Balance Sheets. Realized and unrealized gains and losses on the acquired contracts are recognized in Consolidated Statement of Income/(Loss) and the Consolidated Balance Sheets to reflect changes in crude oil prices from the date of closing of the Bruin Acquisition.

Natural Gas Instruments:


Instrument Type⁽¹⁾	MMcf/day	$/Mcf

Jan 1, 2022 – Feb 28, 2022
NYMEX Purchased Put	40.00	3.43
NYMEX Sold Call	40.00	6.00

Mar 1, 2022 – Mar 31, 2022
NYMEX Swap	60.00	4.50
NYMEX Purchased Put	40.00	3.43
NYMEX Sold Call	40.00	6.00

Apr 1, 2022 – Oct 31, 2022
NYMEX Swap	40.00	3.40
NYMEX Purchased Put	60.00	3.77
NYMEX Sold Call	60.00	4.50

(1)	Transactions with a common term have been aggregated and presented at weighted average prices/Mcf.

Foreign Exchange Risk & Net Investment Hedge:

Enerplus is exposed to foreign exchange risk as it relates to certain activity transacted in Canadian or United States dollars. Enerplus has a U.S. dollar reporting currency, however Enerplus’ parent company has a Canadian functional currency. Activity in the Canadian parent company that is transacted in U.S. dollars will result in realized and unrealized foreign exchange gains and losses that will be recorded on the Consolidated Statements of Income/(Loss).

ENERPLUS 2021 FINANCIAL SUMMARY 29

Enerplus may designate certain U.S. dollar denominated debt held in the parent entity as a hedge of its net investment in its U.S. subsidiary, which has a U.S. dollar functional currency. The unrealized foreign exchange gains and losses arising from the translation of the debt are recorded in Other Comprehensive Income/(Loss), net of tax, and are limited by the cumulative translation gain or loss on the net investment in the foreign subsidiary. At December 31, 2021, $303.8 million of senior notes and the $400 million term loan were designated as net investment hedges (2020 – $385.4 million of senior notes). For the year ended December 31, 2021, Other Comprehensive Income/(Loss) included an unrealized gain of $4.1 million on Enerplus’ U.S denominated senior notes and term loan (2020 – $1.8 million gain and 2019 – nil).

Interest Rate Risk:

The Company’s senior notes bear interest at fixed rates while the term loan and bank credit facility bear interest at floating rates. At December 31, 2021, approximately 43% of Enerplus’ debt was based on fixed interest rates and 57% on floating interest rates (December 31, 2020 – 100% fixed), with weighted average interest rates of 4.2% and 1.9%, respectively (December 31, 2020 – 4.4%). At December 31, 2021 and 2020, Enerplus did not have any interest rate derivatives outstanding.

Equity Price Risk:

Enerplus is exposed to equity price risk in relation to its long-term incentive plans detailed in Note 16. Enerplus has entered into various equity swaps maturing in 2022 that effectively fix the future settlement cost on a portion of its cash settled LTI plans.

ii) Credit Risk

Credit risk represents the financial loss Enerplus would experience due to the potential non-performance of counterparties to its financial instruments. Enerplus is exposed to credit risk mainly through its joint venture, marketing and financial counterparty receivables. Enerplus has appropriate policies and procedures in place to manage its credit risk; however, given the volatility in commodity prices, Enerplus is subject to an increased risk of financial loss due to non-performance or insolvency of its counterparties.

Enerplus mitigates credit risk through credit management techniques, including conducting financial assessments to establish and monitor counterparties’ credit worthiness, setting exposure limits, monitoring exposures against these limits and obtaining financial assurances such as letters of credit, parental guarantees, or third party credit insurance where warranted. Enerplus monitors and manages its concentration of counterparty credit risk on an ongoing basis.

The Company’s maximum credit exposure consists of the carrying amount of its non-derivative financial assets and the fair value of its derivative financial assets. At December 31, 2021, approximately 83% of Enerplus’ marketing receivables were with companies considered investment grade (December 31, 2020 – 82%).

Enerplus actively monitors past due accounts and takes the necessary actions to expedite collection, which can include withholding production, netting amounts off future payments or seeking other remedies including legal action. Should Enerplus determine that the ultimate collection of a receivable is in doubt, it will provide the necessary provision in its allowance for doubtful accounts with a corresponding charge to earnings. If Enerplus subsequently determines an account is uncollectible the account is written off with a corresponding charge to the allowance account. Enerplus’ allowance for doubtful accounts balance at December 31, 2021 was $3.9 million (December 31, 2020 – $2.8 million).

iii) Liquidity Risk & Capital Management

Liquidity risk represents the risk that Enerplus will be unable to meet its financial obligations as they become due. Enerplus mitigates liquidity risk through actively managing its capital, which it defines as debt (net of cash and cash equivalents) and shareholders’ capital. Enerplus’ objective is to provide adequate short and longer term liquidity while maintaining a flexible capital structure to sustain the future development of its business. Enerplus strives to balance the portion of debt and equity in its capital structure given its current crude oil and natural gas assets and planned investment opportunities.

Management monitors a number of key variables with respect to its capital structure, including debt levels, capital spending plans, dividends, share repurchases, access to capital markets, as well as acquisition and divestment activity.

At December 31, 2021, Enerplus was in full compliance with all covenants under the bank credit facility, term loan and outstanding senior notes. If the Company breaches or anticipates breaching its covenants, the Company may be required to repay, refinance, or renegotiate the terms of the debt.

30 ENERPLUS 2021 FINANCIAL SUMMARY

iv) Climate Change Risk

The following provides certain considerations as to the impact of climate change on the amounts recorded in the financial statements for the year ended December 31, 2021. The below is not a comprehensive list or analysis of all climate change impacts and risks. In addition, the focus is with respect to the impact of climate change on amounts recognized in the Company’s financial statements as at and for the year ended December 31, 2021.

Changing regulation

Emissions, carbon and other regulations impacting climate and climate related matters are constantly evolving. The Canadian Securities Administrators have issued a proposed National Instrument 51-107 Disclosure of Climate-related Matters. The cost to comply with these standards, and others that may be developed or evolve over time, has not been quantified.

Impact of climate events and change on amounts recorded in the 2021 financial statements

Reserves:

The Company engages a third party external reserve engineer to review the reserve report. Enerplus considers the impact of the evolving worldwide demand for energy and global advancement of alternative sources of energy that are not sourced from fossil fuels in its assessment of economic recovery of crude oil and natural gas reserves. The reserve report includes anticipated impacts from emissions related taxes, most notably the reserve report includes estimated carbon tax related to the Company’s operations.

Ceiling test:

Given the prescriptive nature of the ceiling test and depletion calculations, climate change risk is only considered in the determination of reserves, which will impact the ceiling test and depletion calculations. At December 31, 2021, no impairment was recorded as a result of the ceiling test completed. See Note 6 for further detail.

Expenditures on property, plant and equipment:

The Company incurs capital expenditures related to emissions reduction initiatives. The extent of spending on projects directly linked to reducing the climate impact of the Company’s operations will vary, however, management anticipates funding future projects through cash flow from operations and bank credit facilities.

Current assets and current liabilities:

These amounts are short term in nature and management is not aware of any material impacts on these items related to climate change and climate events. The Company did not experience credit losses on its accounts receivable during 2021.

Access to Capital :

There is risk that access to capital may be restricted to the oil and gas industry. Management plans to continue to monitor and adjust the capital structure where necessary. During 2021, Enerplus transitioned its bank credit facility to a SLL facility with three sustainability performance targets. See Note 9 for further detail.

Physical effects of climate events (i.e. fire, flood, extreme weather) on the financial results

The Company’s financial results for 2021 were not impacted by a climate event.

18) COMMITMENTS AND CONTINGENCIES

a) Commitments

Enerplus has the following minimum annual commitments, excluding operating leases which are recorded in the lease liability (see Note 11):


				Minimum Annual Commitment Each Year
($ thousands)		Total		2022		2023		2024		2025		2026		Thereafter
Senior notes⁽¹⁾	$		303,800	$	100,600	$	80,600	$	80,600	$	21,000	$	21,000	$	—
Term Loan⁽¹⁾			400,000		—		—		400,000		—		—		—
Transportation commitments			545,636		72,241		72,802		73,201		74,014		74,464		178,914
Processing commitments			6,311		1,202		1,202		1,206		1,202		1,202		297
Service Workover Rigs Commitments			9,828		7,884		1,944		—		—		—		—
Total commitments⁽²⁾⁽³⁾	$		1,265,575	$	181,927	$	156,548	$	555,007	$	96,216	$	96,666	$	179,211

(1)	Interest payments have not been included.

(2)	Crown and surface royalties, production taxes, lease rentals and mineral taxes (hydrocarbon production rights) have not been included as amounts paid depend on future ownership, production, prices and the legislative environment.

(3)	CDN$ commitments have been converted to US$ using the December 31, 2021 foreign exchange rate of 0.79.

ENERPLUS 2021 FINANCIAL SUMMARY 31

b) Contingencies

Enerplus is subject to various legal claims and actions arising in the normal course of business. Although the outcome of such claims and actions cannot be predicted with certainty, the Company does not expect these matters to have a material impact on the Consolidated Financial Statements. In instances where the Company determines that a loss is probable and the amount can be reasonably estimated, an accrual is recorded.

19) GEOGRAPHICAL INFORMATION


As at and for the year ended December 31, 2021 ($ thousands)	U.S.		Canada		Total
Crude oil and natural gas sales	$	1,355,255	$	127,320	$	1,482,575
Depletion, depreciation and accretion		246,949		24,387		271,336
Property, plant and equipment		1,179,070		88,322		1,267,392
Deferred income tax asset		162,582		218,276		380,858


As at and for the year ended December 31, 2020 ($ thousands)	U.S.		Canada		Total
Crude oil and natural gas sales	$	480,822	$	72,917	$	553,739
Depletion, depreciation and accretion		183,226		34,892		218,118
Property, plant and equipment		375,634		88,167		463,801
Deferred income tax asset		311,502		165,512		477,014


As at and for the year ended December 31, 2019 ($ thousands)	U.S.		Canada		Total
Crude oil and natural gas sales	$	812,370	$	133,524	$	945,894
Depletion, depreciation and accretion		223,874		45,172		269,046
Property, plant and equipment		1,007,001		199,782		1,206,783
Deferred income tax asset		143,666		143,094		286,760
Goodwill		149,357		—		149,357
Long term income tax receivable		10,664		—		10,664

20) SUPPLEMENTAL CASH FLOW INFORMATION

a)	Changes in Non-Cash Operating Working Capital


($ thousands)	December 31, 2021		December 31, 2020		December 31, 2019
Accounts receivable	$	(144,413)	$	84,685	$	(255)
Other assets		(7,583)		(3,333)		3,177
Accounts payable - operating		57,353		2,317		(6,119)
Non-cash operating activities	$	(94,643)	$	83,669	$	(3,197)

b)	Changes in Non-Cash Financing Working Capital


($ thousands)	December 31, 2021		December 31, 2020		December 31, 2019
Dividends payable	$	(1,749)	$	65	$	(96)
Non-cash financing activities	$	(1,749)	$	65	$	(96)

c)	Changes in Non-Cash Investing Working Capital


($ thousands)	December 31, 2021		December 31, 2020		December 31, 2019
Accounts payable - investing⁽¹⁾	$	32,793	$	(28,390)	$	15,724
Non-cash investing activities⁽¹⁾	$	32,793	$	(28,390)	$	15,724

(1)	Relates to changes in accounts payable for capital and office expenditures and included in capital and office expenditures on the Consolidated Statements of Cash Flows, with the exclusion of the Bruin and Dunn County acquisitions. See Note 3.

During the year ended December 31, 2021, Enerplus, received a $4.6 million distribution associated with a privately held investment. This distribution is recorded within Transaction costs and other expense/(income) on the Consolidated Statements of Income/(Loss), and reflected as an investing activity on the Consolidated Statements of Cash Flows.

32 ENERPLUS 2021 FINANCIAL SUMMARY


($ thousands)	December 31, 2021		December 31, 2020		December 31, 2019
Income taxes paid/(received)	$	5,500	$	(42,716)	$	(53,674)
Interest paid	$	25,808	$	21,276	$	25,517