EnQuest (LON:ENQ) has reported a ‘good start to the year,’ as it focuses on maintaining production and reducing debt, and intends to review its capex plans in the wake of new windfall tax investment incentives.
In a 2 August operations update the London-listed firm reported half-year production of 49,726 barrels of oil equivalent per day (boepd) to the end of June – an 8% increase on the same period last year, which it said was driven by strong production efficiency across its portfolio.
It reported free cash flow generation of £264 million, and a £280m reduction in net debt to around £721m.
UK upstream production amounted to just over 41,000 boepd – a marginal uptick on the same period last year, thanks largely to greater than expected output from its Kraken field.
EnQuest said it was on track to meet its net production guidance of between 44,000 and 51,000 Boepd.
Magnus, located 99 miles northeast of the Shetland Islands, averaged 12,754 boepd over the period, impacted by a pump and well integrity failure in June.
Earlier this year EnQuest said it would focus on further improving output at the field through the continuation of the well intervention programme. The current well work campaign is underway, and the company expects the North West Magnus well to be brought online in the coming weeks, while further well work is planned in the second half of the year.
Preparations are also underway for a three-week shutdown planned in the third quarter, with the key work scope being a compressor overhaul.
Kraken will also undergo a shutdown period during the third quarter.
On decommissioning, it said its Heather and Thistle plug and abandonment (P&A) campaigns are “progressing well” with six wells completed at Heather and nine wells completed at Thistle. It aims to complete 16 wells at each installation this year.
Contracts for the heavy-lift removal of the Heather and Thistle topsides and jacket removals are also in progress, with delivery scheduled for 2024 and 2025 respectively, and awards to be announced in the second half of the year.
Full year expectations for operating, cash capital and abandonment expenditures remain unchanged, the group said, remaining at approximately £352.6 million, £131.2 million and £61.5 million, respectively.
However, EnQuest expects some impact to cash flows in the second half of the year due to planned maintenance shutdowns, and the impact of the Energy Profits Levy.
On the latter, EnQuest said remains “committed to investing in the North Sea” and would be reviewing future capital expenditure programmes in light of the additional investment allowances available under the levy.
Chief executive Amjad Bseisu commented: “We remain on track to deliver our operational targets and, in the prevailing price environment, are focused on driving an accelerated debt reduction programme.
“EnQuest has a long track record of investment in the North Sea. We remain focused on continuing to improve performance and extend the lives of assets within our portfolio, delivering value to all of our stakeholders as we increase production, reduce emissions and support energy security.”
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