ENQUEST PLC, 19 MAY 2016. OPERATIONAL UPDATE.
Production up 39% on 2015
Kraken and Scolty/Crathes are continuing on schedule
Delivering targeted capex and opex reductions
- Production averaged 42,752 Boepd for the four months to the end of April 2016, up 39% on 2015; average production in April was 45,933 Boepd, benefitting from improving well performance at Alma/Galia. 2016 production from the rest of EnQuest's North Sea fields was up 19% year on year, with Malaysia up 27%. This reflected continuing high levels of production efficiency.
- Full year production guidance is reiterated at between 44,000 Boepd and 48,000 Boepd.
- The Kraken development project continues on schedule. The Scolty/Crathes tie-back development is also on schedule. Drilling is ahead of programme and under budget. The Scolty well was as expected and the Crathes reservoir was ahead of expectations.
- Alma/Galia production now has six production wells available. Average net production of 9,017 Boepd was realised in April. Good uptimes are being delivered and average production volumes are expected to increase with performance enhancements such as acidisation being undertaken.
- EnQuest is well on track to meet its cost reduction targets of delivering unit opex in the range $25 - 27/bbl overall for 2016, and into the low $20s after the Kraken development is fully onstream.
- The time saved from the excellent drilling performance on Scolty/Crathes, has created the opportunity to accelerate drilling of the Eagle prospect into Q2/Q3 2016.
- As at 30 April 2016, EnQuest's net debt was approximately $1.63 billion.
EnQuest CEO Amjad Bseisu said
"EnQuest continues to focus on its strategic priorities in this low oil price environment: strengthening the balance sheet, delivering on production and execution targets and streamlining operations. The targeted reductions in capex and opex announced in March are being realised, in conjunction with continuing excellent operational performance.
Production to the end of April, averaged 42,752 Boepd, up 39% year on year, with 45,933 Boepd in April, benefiting from the production rise of Alma/Galia. The production statistics show the breadth and depth of the operated asset base, with good performances across the board; Thistle and Heather/Broom delivered growth of 19% and 45% respectively. We reconfirm our production guidance for 2016 at between 44,000 Boepd and 48,000 Boepd.
EnQuest's high operating efficiency and execution capability enable us to realise the optimal performance potential in maturing oil fields, with our low cost delivery vital in current market conditions."
2016 net production statistics
|Production on a working
|Net daily average
1 Jan’ 2016 to
30 April 2016
|Net daily average
1 Jan’ 2015 to
30 April 2015
Performance by individual production and development asset
UK North Sea
- The 2015 drilling programme achieved industry leading execution performance and was completed ahead of budget. The programme consisted of three electrical submersible pump workovers, which exceeded performance expectations, also three sidetracks; these are performing well and are on track to recover expected reserves. Overall, the programme has delivered better cashflow than forecast.
- Reservoir performance for the Dons wells is above expectation and production is ahead of forecast. The first phase of the planned scale treatment programme was successfully completed on Don Southwest and preparations are underway for the second phase and a similar programme on West Don. Modifications to an export pump have increased plant efficiency and reduced platform fuel costs.
- Production rates from Heather and Broom are increasing as a result of 2015 drilling and ongoing water injection optimisation. Production efficiency continues to be very strong.
Greater Kittiwake Area, including the Scolty/Crathes tie-back development
- The Greater Kittiwake Area achieved good levels of production efficiency at the start of the year. Production optimisation trials are progressing. Sand clean-up operations, lifeboat upgrades and gas turbine controls upgrades have been successfully completed.
- On Scolty/Crathes, there has been excellent drilling performance on both wells, completed ahead of schedule and under budget. The Crathes reservoir has exceeded expectations and Scolty is on prognosis. Offshore construction is progressing as per schedule on the Kittiwake platform and subsea construction is planned for summer 2016.
- Good uptimes are being achieved on the EnQuest Producer. All six production wells are now available and production is being optimised. Production volumes are expected to increase with performance enhancements such as acidisation being undertaken. The fourth cargo off-take was successfully completed in May.
Overall the project remains on schedule and on budget, with first oil anticipated in H1 2017.
Floating production, storage and offloading vessel ('FPSO')
- Key FPSO modules for fuel gas and separation were lifted on board the FPSO in early April. Final deliveries of outstanding materials were received for a water injection/hydraulic submersible pump module. Fuel gas compressors were mechanically completed and access platforms were fabricated and integrated. The two complete units will soon be lifted into the module infrastructure. Integration work on piping continues ahead of schedule and cable pulling is progressing where modules are now in place. Pre-commissioning work of sub-systems is ramping up. Work continues on marine systems, tank works are complete and work was concluded on helideck and aft deck areas. Good progress made on equipment installation, cabling and fit-out.
Subsea umbilical riser and flowline / subsea production systems
- Drill centre 2 (DC2) production and water injection manifolds have been installed successfully. A vessel is currently infield working at DC2, installing jumpers and relocating glass reinforced plastic covers which were previously wet stored. At the end of April, a pipe laying vessel started mobilising for the Kraken DC3 rigid pipeline installation campaign.
- The subsea trees for two injector and two producer wells were batch set onto the respective wellheads with all four trees being handled at the same time by the drilling rig. A further injector well was drilled through the reservoir, which encountered all geobodies as prognosed, and the well was completed successfully and tested. An injectivity test provided better results than prognosed.
- The PM8/Seligi assets averaged just over 9,000 Boepd, representing an increase of 10% compared to the same period last year. This strong performance was supported by very high production efficiency and the successful ongoing idle well restoration program.
- This year's infrastructure work programme continues focus on integrity and reliability, supporting safe and cost efficient operations. Longer term, EnQuest will extend field life by investing in idle well restoration, facility improvements and upgrades, and technical studies supporting development drilling and secondary recovery projects to increase ultimate recovery.
- Tanjong Baram production averaged c.1,350 net Boepd for the period, with intervention work scheduled in May, aiming to further increase field production.
- As at 30 April 2016, EnQuest's net debt was approximately $1.63 billion. EnQuest remains focused on its balance sheet strength and is pursuing a range of opportunities and mitigations in this respect, on which EnQuest continues to work closely with its facility providers. Potential measures include asset sales and further cost reductions.
For further information please contact:
EnQuest PLC Tel: +44 (0)20 7925 4900
Amjad Bseisu (Chief Executive)
Jonathan Swinney (Chief Financial Officer)
Michael Waring (Head of Communications & Investor Relations)
Tulchan Communications Tel: +44 (0)20 7353 4200
Notes to editors
EnQuest is the largest UK independent producer in the UK North Sea. EnQuest PLC trades on both the London Stock Exchange and the NASDAQ OMX Stockholm. Its operated assets include the Thistle/Deveron, Heather/ Broom, Dons area, the Greater Kittiwake Area and Alma/Galia, also the Kraken and the Scolty/Crathes developments; EnQuest also has an interest in the non-operated Alba producing oil field. At the start of 2016, EnQuest had interests in 30 UK production licences, covering 42 blocks or part blocks and was the operator of 25 of these licences.
EnQuest believes that the UKCS represents a significant hydrocarbon basin, which continues to benefit from an extensive installed infrastructure base and skilled labour. EnQuest believes that its assets offer material organic growth opportunities, driven by exploitation of current infrastructure on the UKCS and the development of low risk near field opportunities.
EnQuest is replicating its model in the UKCS by targeting previously underdeveloped assets in a small number of other maturing regions; complementing its operations and utilising its deep skills in the UK North Sea. In which context, EnQuest has interests in Malaysia where its operated assets include the PM8/Seligi Production Sharing Contract and the Tanjong Baram Risk Services Contract.
Forward looking statements: This announcement may contain certain forward-looking statements with respect to EnQuest's expectation and plans, strategy, management's objectives, future performance, production, reserves, costs, revenues and other trend information. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that may occur in the future. There are a number of factors which could cause actual results or developments to differ materially from those expressed or implied by these forward looking statements and forecasts. The statements have been made with reference to forecast price changes, economic conditions and the current regulatory environment. Nothing in this presentation should be construed as a profit forecast. Past share performance cannot be relied on as a guide to future performance.