EnQuest reports good 2018 performance, expects 20% growth in 2019

2/6/2019

LONDON -- EnQuest has reported a good 2018 production performance, cost control and cash generation, and expects a 20% production growth between 63,000 boed and 70,000 Boed in 2019 with a continued focus on debt reduction.
 
2018 performance

  • Average Group production up 48% at 55,447 boed compared to 2017; above the mid-point of revised guidance
  • Strong performance at Magnus, with 100% interest delivering 21,528 boed in December, above expectations; high uptime, additional gas export and successful well interventions
  • Kraken average gross production of 30,310 bopd was below expectations; reservoir performance remains on track with production limited by a combination of FPSO and weather related outages
  • Strong performance across other assets
  • Operating expenditure expected to be approximately $470 million, with unit opex of c.$23/boe; SVT operating costs reduced by around 25% to approximately £150 million
  • Cash capital expenditure was approximately $220 million; below guidance of c.$250 million primarily due to phasing from 2018 in to 2019
  • At Dec. 31, 2018, net debt including PIK was approximately $1,774 million with cash and available bank facilities of around $309 million
  • Credit facility net debt/EBITDA ratio expected to be around 0.9x compared to future covenant threshold of 1.5x

2019 outlook

  • 2019 average group production expected to grow by around 20% to between 63,000 Boed and 70,000 Boed
  • Operating expenditure expected to be approximately $600 million, including additional interest in Magnus
  • Cash capital expenditures expected to be approximately $275 million; includes a combined total of approximately $100 million related to deferred payments from prior periods and phasing of spend from 2018
  • For the first quarter of 2019, EnQuest has collar options for c.3.6 MMbbls of oil in place at an average floor price of c.$68/bbl. In accordance with the Oz Management Facility agreement, the Group has a further c.1.5 MMbbls hedged across 2019 with an average floor price of c$56/bbl

EnQuest Chief Executive, Amjad Bseisu, said:
"The Group delivered on its operational targets for 2018, growing production by 48%. This performance and higher realized prices has facilitated accelerated repayments of the Group's credit facility. Completing the acquisition of additional interests in assets from BP has delivered a set of assets with a strong strategic fit into our portfolio, with the Magnus asset in particular bringing a significant step change in the Group's ability to generate positive cash flow.

"We expect material production growth of around 20% in 2019. Our capital program includes new wells at Magnus, Kraken and PM8/Seligi as well our pipeline projects at Thistle/Deveron and the Dons and Scolty/Crathes. The successful delivery of this program will underpin production during 2019 and beyond. Our focus on cost control and capital discipline, combined with our improved cash generation capability enables further repayment of debt, which remains the priority for the group."

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