ENQUEST PLC, 5 April 2011 Full Year results, for the 12 months to 31 December 2010

HIGHLIGHTS
Unless otherwise stated all figures are in US dollars.

  • Pro-forma* net 21,074 Boepd export production, a 55% increase on 2009, average realised oil price was $81.26/Boe

  • Good operational performance across producing fields and the overall 2010 drilling programme was completed ahead of schedule and under budget

  • Increased year end net 2P reserves from 80.5 MMboe to 88.5 MMboe, equates to a reserve replacement ratio of 208% and an increase in year end reserves of 10%

  • Increased 2010 pro-forma* revenue by 93% to $614.4 million, with pro-forma EBITDA** pre-exceptionals and fair value adjustments, up from $124.8 million to $369.3 million

  • Reported cash flow from operations was $267.7 million, over four times 2009 levels

  • Completed acquisition of Stratic Energy Corporation in November 2010

  • Increased number of UK production licences from 16 to 26 during 2010, including five licences from the 26th licensing round

* ‘Pro-forma’ data reflects the results for 12 calendar months of 2010 and 2009 as if the assets previously owned by Petrofac Limited and Lundin Petroleum AB were owned by EnQuest throughout the period.  The results reported under IFRS reflect the related pooling of interests and acquisition accounting – see ‘Detailed pro-forma note’ below.

** EBITDA is calculated by taking profit/(loss) from operations before tax and finance income/(costs) and adding back depletion, depreciation and impairment and write off of tangible and intangible oil and gas assets

Amjad Bseisu, Chief Executive, said

“In our first year as a listed company, EnQuest has performed well against its key objectives; delivering strong results with significant increases in reserves and production.  This performance marks a great beginning for EnQuest.  It was made possible by the dedication and hard work of all of our employees.  In 2010, EnQuest grew its production and its capabilities, investing in both our facilities and our people, enabling us to maintain our focus on execution and creating a company with distinctive skills.

 EnQuest is setting its production target for 2011 at 26,500 Boepd, equating to a 26% increase over 2010; underpinned by our 2011 drilling programme of eight wells. Following the early success at Area E, the 2011 drilling programme will now include five production wells, two on Don Southwest and three on Thistle.  We also continue to examine other areas of potential within our portfolio, expanded as it has been by the acreage we acquired through the 26th licensing round; including a possible development opportunity at Ardmore.

EnQuest was very disappointed by the recent unexpected UK Budget decision to increase the supplementary charge levied on North Sea oil and gas production from 20% to 32%.  The increase in tax rate does not create a positive climate for additional investments in the UKCS and will render some small field investments uneconomic.  Nonetheless, there remains significant potential in our development and production programme and EnQuest is confident of its ability to deliver not only its 2011 targets, but also its medium and longer term growth objectives from its UKCS production and further afield.

With EnQuest’s technical core competence, financial strength and the opportunities available, we are creating a substantial exploitation company.  With the increased potential from our existing assets, the acquisition of Stratic and our success in the 26th licensing round, EnQuest remains firmly on track in implementing its strategy of delivering sustainable growth in shareholder value.”

OUTLOOK

  • EnQuest is targeting export production of 26,500 Boepd in 2011: a 26% increase on 2010.  Saleable production is anticipated to be at a similar ratio to export meter production as in 2010
  • An active eight well drilling programme in 2011, including:
    • Successful results already from the Area E well at Don Southwest (the Conrie field); scheduled to come onstream in the fourth quarter of 2011
    • The Don Southwest Area 26 appraisal well which was dry
    • Don Southwest producer-injector pair S8 and S9
    • Three infill wells at Thistle: NWFB-P1, EFB-P1 and Dev-P1
    • An exploration well at Ivy, south of Heather
  • Unit production and transportation costs anticipated to be $26-$28/Boe, using $85 oil and £1:$1.60
  • Full year capex guidance of approximately $300 million: $250 million on development drilling and facilities, $50 million on exploration and appraisal

Please see attached PDF for full announcement

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