May 8, 2009 / 1:38 PM / in 8 years

UPDATE 2-Enerplus Resources Q1 profit drops 57 percent

* Q1 EPS C$0.31 vs C$0.82 year ago

* Q1 oil and gas rev down 40 pct

* Says could shift spending to oil from gas for 2009 (Adds details, analyst comment, updates share movement)

By Ashutosh Joshi

BANGALORE, May 8 (Reuters) - Canada's Enerplus Resources Fund ERF_u.TO posted quarterly profit that fell nearly 57 percent on weak commodity prices and said it could shift some capital spending to oil-related projects from natural gas if gas prices remain at low levels.

The company said its C$300 million 2009 capital budget remains sensitive to the current pricing environment, and if weak natural gas prices continue it might shift more of its capital program into oil projects throughout the remainder of the year.

"They (oil prices) are up substantially from their bottom where as gas prices are sort of near their low and they could stay weak for next several months through the summer. People are more worried about the gas prices than the oil prices," said BMO Capital Markets analyst Gordon Tait.

The analyst has an "outperform" rating on the stock.

During the quarter, the company's average selling price of natural gas went down by 32 percent, while selling price of crude oil was down by 51 percent.

Enerplus said the continued deterioration of the North American economy and reduced access to credit has resulted in an increase in assets for sale and it was looking at such opportunities, even though some disparity remains between buyers and sellers expectations.

It expects production to decline through 2009 due to reduced capital spending and maintained its annual average production outlook of 91,000 barrels of oil equivalent per day (BOE).

For the first quarter, net income was C$51.8 million, or 31 Canadian cents a share, down from C$121.4 million, or 82 Canadian cents a share, a year ago.

Revenue from oil and gas sales was down 40 percent to C$307.5 million. Cash flow from operations was C$169.4 million, down 34 percent from a year earlier.

Units of the Calgary-based company were up 91 Canadian cents or 3.5 percent at C$26.65 Friday afternoon on the Toronto Stock Exchange. (Editing by Mike Miller, Dinesh Nair)

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