Enquest reached a major production milestone, delivering its first individual day’s production total of more than 50,000 barrels.
The firm confirmed the output first as well as a raft of cost adjustments in its latest production update.
The operator, which achieved first oil for its Alma/Galia interest on October 27, revealed it had also decreased its Greater Kittiwake Areas costs from more than $100/bbl to $30/bbl.
The firm outlined a three-progoned approach to reducing its costs, including the introduction of incentivised contract structures.
The firm has rolled contracts which include KPI structures for service providers, which endure payment is linked to performance.
It’s also moved its procurement team to Dubai to “take advantage of lower global costs”.
Finally, the company achieved lower unit rates through a range of measures including a move to equal time rotas and reduced contractor rates.
Enquest’s overall production averaged 35,022 Boepd to the end of November, up 26% on the same period last year and with a 39% increase to 41,360 Boepd from July to November versus the first half of the year in 2015.
EnQuest chief executive Amjad Bseisu said:”EnQuest is addressing its priorities in this low oil price environment: delivering on production and execution targets, streamlining operations and strengthening the balance sheet.
“Production in H2 2015 has been very strong across the portfolio, averaging 41,360 Boepd from July to November, including spot rates of c.14,000 Boepd gross from the Alma/Galia development which was put onstream in late October. The Kraken development continues firmly on schedule. At the mid-point of our guidance ranges for 2015 and 2016, we are now forecasting a further 33% growth in production next year, before Kraken and Scolty/Crathes come onstream.
“We have continued to reduce operating costs which are now expected to be $31-32/bbl in 2015 and are currently expected to be in the $26-28/bbl range for 2016, ahead of our earlier expectations.
“EnQuest is improving its balance sheet with good operational performance. We have reduced Kraken capital expenditure by c.10% and average development cost/barrel around our established operated hubs is approximately $18/bbl in 2015. The 2015 drilling programme is below budget, with very high operating efficiencies across our operated rigs and significantly lowered spread rates.
“With 2016 capex focused on Kraken, net debt is planned to increase during 2016 ahead of Kraken first oil. Capex will be substantially reduced in 2017 and will further reduce in subsequent years. Debt repayments are anticipated to be made from H2 2017 onwards.”
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