To view the full announcement, please refer to the PDF attached.
ENQUEST PLC, 8 September 2016. Results for the 6 months ended 30 June 2016*.
Strong production growth, 42,520 Boepd in H1 2016, up 43% on H1 2015
Unit opex down further to $23/bbl, ahead of target and now 50% down on H1 2014
Kraken on track for first oil in H1 2017, gross capex lowered by further c.$150m Continuing focus on strengthening the balance sheet
* Unless otherwise stated, all figures are on a business performance basis and are in US dollars.
- EnQuest is delivering against its strategic priorities in the continuing low oil price environment. Further action to reduce opex and capex has been accompanied by sustained strength in operations. High production efficiency has driven EnQuest’s highest H1 levels of production, with a well implemented drilling programme and with first oil from the Kraken development on schedule for H1 2017.
- Production averaged 42,520 Boepd in H1 2016, strong growth of 43% on H1 2015, with production increases in every operated asset:
- UK production grew by 22%, before inclusion of production from the new Alma/Galia development. Malaysian production was also up by over 20%.
- Alma/Galia delivered an average net production of 6,433 Boepd in H1 2016. Post first oil optimisation of production levels has continued in H2 2016, including two well interventions and acid treatments. Following which, between 5 and 31 August gross Alma/Galia production averaged 18,785 Boepd.
- With the extended period of production build up for Alma/Galia, full year 2016 production guidance is now anticipated to be in the range of between 42,000 and 44,000 Boepd, around the lower end of previous guidance, at the mid-point representing strong growth of c.18% over 2015.
- Revenue of $391.3 million and EBITDA*** of $242.9 million, reflecting the strong operational performance. The $182.6 million of cash generated from operations was $99.3 million or 119% up on H1 2015, reflecting the production growth.
- Continued further reductions in operating costs, H1 2016 unit opex was ahead of target at $23/bbl, benefiting from additional cost saving initiatives, including savings from EnQuest’s offshored procurement hub. Full year unit opex is now expected to be around the lower end of the $25-$27/bbl guidance; this reflects the impact of the Alma/Galia well interventions in H2.
- 2016 EnQuest cash capex outflow is being reduced by a net c.$30 million, predominantly as a result of the further phasing of milestone payments.
- The Kraken development is continuing on schedule. EnQuest today announces a further c.$150 million decrease in full cycle gross project capex, in addition to the c.$425 million of cost reductions announced since project sanction, giving a new gross full cycle project capex cost of c.$2.6 billion. Sail away of the Kraken FPSO is expected in H2 2016, as planned, ahead of first oil in H1 2017. In July 2016, EnQuest announced that it was conducting negotiations for the farm out of a 20% working interest in the exploration and production licences in the Kraken Field, to the Delek Group. EnQuest will provide further details in the event either of transaction documents being signed or of it becoming apparent that a binding agreement cannot be reached.
- Scolty/Crathes is both ahead of schedule and under budget, with first oil now expected around the 2016 year end.
- Net debt at the period end, was $1,681 million.
EnQuest CEO Amjad Bseisu : "Strong production of 42,520 Boepd has been delivered, representing broad based growth of 43% over H1 2015. Unit opex of $23/bbl is down 41% on the $39/bbl in H1 2015, and down 50% on the $46/bbl in H1 2014. 2016 cash capex, is reduced by a further c.$30 million, now set to be in the range between $670 million and $720 million.
EnQuest is progressing both of its development projects ahead of budget; the Kraken FPSO is on track for sail away in H2 2016, with its full cycle gross capex costs now reduced by a further c.$150 million to c.$2.6 billion. The Scolty/Crathes development is ahead of schedule. This year’s drilling programme has been executed very efficiently, delivering more wells within the original budget.
In H1 2016, EnQuest delivered EBITDA of $242.9 million and more than doubled cash generated from operations to $182.6 million, driven by the scale of the production growth, cost cutting and oil price hedging, more than countering the impact of lower oil prices.
With very substantial structural reductions in our cost base already delivered, the long term potential of EnQuest’s business model remains compelling. EnQuest’s overriding priority continues to be delivering a business which is robust in this challenging environment."