TIDMENQ
RNS Number : 8036S
EnQuest PLC
18 November 2021
EnQuest PLC, 18 November 2021
Operations update
EnQuest Chief Executive, Amjad Bseisu, said :
"We are delighted to have completed the acquisition of the
Golden Eagle area. As a highly cash generative, low-cost asset,
delivering material incremental production, reserves and resources,
Golden Eagle is a great addition to our portfolio, further
strengthening the Company .
"Revenue and cash flow continues to be positively impacted by
the prevailing strong price environment and we expect this to
continue through the end of the year.
"Group production has been challenging, largely driven by
performance at Magnus and a recent unplanned shutdown at Kraken,
combined with a supplier driven delay in the pipeline replacement
in Malaysia. We now expect production for the year to be around
45,000 Boepd, including the contribution from Golden Eagle since
completion."
Golden Eagle completion
-- Successfully completed the Golden Eagle transaction on 22
October. In the ten months to the end of October, the asset
produced 10,556 Boepd (on a net working interest basis)
-- Initial consideration of c.$325 million was financed by a
$125 million drawdown from the Reserve Based Lending facility,
c.$125 million from EnQuest's available cash and c.$75 million of
interim period post-tax cash flows from Golden Eagle
-- Two cargo liftings are anticipated prior to year-end
Good revenue generation
-- Revenue in the ten months to end October 2021 of c.$950
million, including c.$110 million related to Magnus crossover gas,
reflecting the strong price environment and the realised impact of
the Group's hedging programme
-- The Group's average realised oil price including the impact
of hedging was $66.0/bbl in the period, c.63% higher than during
the ten months to October 2020 ($40.6/bbl)
-- Higher revenues enabled the Group to finance a larger portion
of the Golden Eagle acquisition from cash flow, resulting in a
lower than expected drawdown on the Group's RBL facility. At the
end of October, the RBL facility was drawn to $485 million with an
early voluntary repayment of around $50 million expected to be made
before the year-end
-- 2021 year-end net debt is expected to be around the closing
net debt position in 2020, after the Golden Eagle acquisition and
the c.$60 million early settlement of the Magnus BP vendor payment
(subject to year-end working capital movements)
Operating performance
-- Average net Group production in the ten months to end October
2021 was 44,306 Boepd
-- Production at Magnus impacted by recent compressor system
outages
-- Kraken performance has been impacted by a short unplanned
shutdown and single train operation
-- Pipeline replacement at PM8/Seligi has been delayed due to
support vessel availability
Hedging
-- c.2 MMbbls have been hedged with an average ceiling price of
c.$74/bbl for the last two months of 2021
-- For 2022, EnQuest has hedged a total of c.7 MMbbls
predominantly with costless collars, with an average floor price of
c.$61/bbl and an average ceiling price of c.$76/bbl. For 2023, the
Group has hedged a total of c.2 MMbbls with an average floor price
of c.$56/bbl and an average ceiling price of c.$74/bbl. Golden
Eagle production is currently benefitting from the current strong
oil price
Guidance
-- 2021 average net Group production, including Golden Eagle(1)
, is expected to be around 45,000 Boepd
-- Kraken gross production is expected to be unchanged between
30,000 Boepd and 35,000 Boepd (21,150 Boepd to 24,675 Boepd
net)
-- Operating expenditure is expected to be approximately $300
million, including costs related to Golden Eagle
-- Combined cash capital and abandonment expenditure is expected
to be unchanged at approximately $120 million(2)
(1) Golden Eagle contribution for the period 22 October to 31
December, averaged over the 12 months to the end of December
2021
(2) Excludes costs associated with the PM8/Seligi riser
repair
Production details
Average daily production 1 Jan' 2021 1 Jan' 2020
on a net working to to
interest basis 31 Oct' 31 Oct'
(Boepd) 2021 2020
-------------------------- ------------ ------------
(Boepd) (Boepd)
UK Upstream
- Magnus 12,640 17,570
- Kraken 22,544 26,637
- Golden Eagle 328 n/a
(1)
- Other Upstream
(2) 3,516 6,849
UK Upstream 39,028 51,056
UK Decommissioning
(3) 200 2,606
------------ ------------
Total UK 39,228 53,662
------------ ------------
Total Malaysia 5,078 7,115
------------ ------------
Total EnQuest 44,306 60,777
------------ ------------
Golden Eagle pro 10,556 n/a
forma (4)
------------ ------------
Total EnQuest pro 54,534 n/a
forma
------------ ------------
(1) Golden Eagle contribution for the period 22 to 31 October,
averaged over the ten months to the end of October 2021
(2) Other Upstream: Scolty/Crathes, Greater Kittiwake Area and
Alba
(3) UK Decommissioning: The Dons, Alma/Galia
(4) Net working interest production for the period 1 January to
31 October 2021
Magnus
Production remains below expectations, averaging 12,640 Boepd
for the ten months to end October 2021. The Group has concluded the
production enhancement programme along with the coiled tubing
campaign, which has returned three wells to service. Following the
planned annual shutdown to address maintenance activities, a
compressor gear box failure occurred which required repairs. This
has resulted in single compressor operations. The Group remains
focused on optimising existing facilities performance and
anticipates resuming dual compressor operations during November.
The Group anticipates being entitled to 100% of Magnus cash flows
through to the end of the first quarter of 2022 as it has settled
the BP vendor payment.
Kraken
During the ten months to end October 2021, average gross
production was 31,977 Boepd, in line with expectations. An oil
heater failure resulted in a short facility shutdown. The Group
optimised production through single train operations until the
heater repairs were completed.
Golden Eagle
Performance from Golden Eagle has been strong at 10,556 Boepd on
a pro forma basis for the ten months to end October, reflecting
high uptime and continued good well performance following the
infill drilling campaign.
Other upstream assets
Production for the ten months to end October 2021 averaged 3,516
Boepd, in line with expectations. At the Greater Kittiwake Area,
the umbilical replacement and reinstatement of power to the Mallard
and Gadwall wells was concluded, with performance at Scolty/Crathes
remaining as expected.
Alba continues to perform broadly in line with Group
expectations.
Infrastructure and New Energy business(1)
Stable operations and plant availability continue to drive a
good performance at the Sullom Voe Terminal and its related
infrastructure, with 100% export service availability.
As an active member of Project Orion, the Group is collaborating
closely with the Shetland Islands Council and terminal partners to
develop a sustainable energy hub for Shetland.
The Group has begun assessing potential new energy opportunities
at the Sullom Voe Terminal to strengthen and extend the life of
this asset and has held constructive initial engagement with a
variety of stakeholders, including potential technical and
financial partners.
(1) Includes the Sullom Voe Terminal and Pipelines
UK Decommissioning
Average production of 200 Boepd reflects the cessation of
production at the Dons in March 2021.
At Thistle, good progress continues to be made with the subsea
campaign concluded in September and platform reactivation and
hydrocarbon removal being completed in October. The drilling rig
reactivation programme is underway ahead of the planned well plug
and abandonment campaign beginning in 2022.
At Heather, the well plug and abandonment campaign continues on
schedule, while the topside decommissioning programme has been
approved by the Secretary of State and initial engagement with
potential topside removal contractors has commenced.
Malaysian operations
For the ten months to end October 2021, average production in
Malaysia was 5,078 Boepd. The pipeline has been laid on the seabed.
Final completions of the riser sections have been delayed by the
late arrival and subsequent ongoing availability of the third-party
dive support vessel. It is now anticipated that full production
will return during the second quarter of 2022.
Hedging
EnQuest has hedged a total of c.11 MMbbls for full year 2021
predominantly using costless collars, with an average floor price
of c.$59/bbl and an average ceiling price of c.$69/bbl, with c.2
MMbbls hedged with an average floor of c.$60/bbl and ceiling price
of c.$74/bbl for the remainder of 2021. For 2022, EnQuest has
hedged a total of c.7 MMbbls using similar structures, with an
average floor price of c.$61/bbl and an average ceiling price of
c.$76/bbl. For 2023, the Group has hedged a total of c.2 MMbbls
with an average floor price of c.$56/bbl and an average ceiling
price of c.$74/bbl.
COVID-19 Update
The Group remains compliant with UK, Malaysia and Dubai
government and industry policy and continues to work with a variety
of stakeholders to ensure its operational response and advice to
its workforce is appropriate and commensurate with the prevailing
expert advice and level of risk. The Group's day-to-day operations
continue without being materially affected by COVID-19.
Ends
For further information please contact:
EnQuest PLC Tel: +44 (0)20 7925
4900
Amjad Bseisu (Chief Executive)
Jonathan Swinney (Chief Financial Officer)
Ian Wood (Head of Investor Relations, Communications
& Reporting)
Jonathan Edwards (Senior Investor Relations
& Communications Manager)
Tulchan Communications Tel: +44 (0)20 7353
4200
Martin Robinson
Martin Pengelley
Harry Cameron
Notes to editors
ENQUEST
EnQuest is providing creative solutions through the energy
transition. As an independent production and development company
with operations in the UK North Sea and Malaysia, the Group's
strategic vision is to be the operator of choice for maturing and
underdeveloped hydrocarbon assets by focusing on operational
excellence, differential capability, value enhancement and
financial discipline.
EnQuest PLC trades on both the London Stock Exchange and the
NASDAQ OMX Stockholm.
Please visit our website www.enquest.com for more information on
our global operations.
Forward-looking statements: This announcement may contain
certain forward-looking statements with respect to EnQuest's
expectations 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 announcement should
be construed as a profit forecast. Past share performance cannot be
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