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EnQuest announces operations update

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Oilfield Technology,

EnQuest has provided an unaudited update on the Group's performance in 2017, together with an outlook for 2018 ahead of its 2017 Full Year Results, which will be announced on 20 March 2018.

2017 performance

  • Group production averaged 37 405 boe/d in 2017, in line with guidance.
  • Kraken first oil in Q2 2017, on schedule and under budget; achieved gross production rates of over 40 000 bpd.
  • Operating expenditure expected to be approximately US$350 million, with unit Opex of c.US$25.5/boe.
  • Cash capital expenditure expected to be approximately US$370 million, below guidance range.
  • Available bank facilities and cash* amounted to US$248 million at 31 December 2017, with net debt of US$1989 million. Excluding Payment in Kind interest, net debt was US$1898 million.
  • Successful completion of the acquisition of interests in Magnus and the Sullom Voe Oil Terminal in December.

* Excluding cash from the ring fenced working capital facility associated with SVT.

2018 outlook

  • Average Group production expected to grow by between 33% and 55% at c.50 000 to 58 000 boe/d.
  • Kraken gross production averaged 35 000 bpd in January and has already delivered the targeted 50 000 bpd (gross) as planned.
  • Unit Opex expected to be c.US$24/boe, including costs associated with planned workovers.
  • Cash capital expenditure expected to be materially lower than 2017 at c.US$250 million; includes drilling programmes at Kraken (DC4), PM8/Seligi and Heather. Net cash payments for capital expenditure in 2019 reduced by c.US$60 million having agreed a reduction in rig rates.
  • The group has hedged c.4.4 million bbls of oil at an average price of c.US$60/bbl.

EnQuest CEO Amjad Bseisu said:

“2017 was a transformational year for EnQuest. Delivering the Kraken project on schedule and below budget was a huge achievement. As one of the largest developments in the North Sea in recent years, it demonstrated EnQuest’s ability to deliver complex projects, while the acquisition of the Magnus oil field and Sullom Voe Oil Terminal provides further opportunities for us to apply our cost focused life extension capabilities and for growth.

Performance at Kraken continues to improve, and along with the full year impact of Magnus underpins our expectations for material production growth in 2018. The resulting increase in operating cash flow combined with lower capital expenditure will enable us to begin reducing our debt.”

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