Strong growth shown in Enquest’s operations update
Enquest has released an operations update that shows production is up c.25% year on year, driven by Magnus.
Group production averaged 69,973 Boepd in the four months to end April 2019 with full year 2019 guidance of 63,000 Boepd to 70,000 Boepd remains unchanged.
Magnus has continued to perform above expectations, reflecting high production efficiency, reservoir management, well interventions and plant debottlenecking.
Significant improvements in performance have been seen at Kraken with higher production efficiency delivering gross average production above 33,000 Bopd in March and April, up materially on the single train operation to end February. All DC4 wells are onstream and performing better than expected. Full year guidance of 30,000 Bopd to 35,000 Bopd (gross) remains unchanged. PM8/Seligi’s performance remains strong, largely reflecting high levels of production efficiency and the ongoing successful idle well restoration programme.
At 30th April 2019, net debt was reduced to $1,724 million (end 2018: $1,774 million) with cash and available bank facilities amounting to $231 million (end 2018: $309 million)and strong operational performance and supportive oil price more than offset the anticipated unwind of the c.$50 million favourable working capital position at the end of 2018.
EnQuest is on track for a net debt: EBITDA ratio of less than 2x if the recent price environment continues with the Group’s credit facility being reduced to $680 million following the scheduled amortisation in April.
For 2019, the Group has continued to enter hedges with the total for the year now c.12.5 MMbbls. Around 5.4 MMbbls with a floor price of c.$66/bbl had settled by the end of April. For the remaining eight months of 2019, approximately 6.2 MMbbls are hedged at an average floor price of c.$66/bbl, with a further 0.9 MMbbls hedged with an average floor price of c.$56/bbl in accordance with the Oz Management facility agreement
EnQuest Chief Executive, Amjad Bseisu, said: “The Group has made a good start to 2019. Production is towards the top end of our full year guidance range our capital programme is on track and we have continued to generate strong cash flows and reduce our debt.
“FPSO performance at Kraken has improved significantly with two trains online and we continue to drive further improvements with the FPSO operator. Production from DC4 at Kraken has been better than expected and both Magnus and PM8/Seligi have performed strongly.
“Good progress is being made on our pipeline projects and preparations for drilling at Magnus and PM8/Seligi, along with our annual maintenance programmes, are underway. As such, we remain confident of achieving our Group’s 2019 production guidance of 63,000 to 70,000 Boepd.
“If the favourable oil price environment continues, we expect our net debt to EBITDA ratio to be below 2x by year end.”
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