TIDMENQ
RNS Number : 8278U
EnQuest PLC
28 November 2023
EnQuest PLC, 28 November 2023
Operations update
EnQuest Chief Executive, Amjad Bseisu, said :
"The Group has continued to deliver good production performance
from its operated assets and we expect full year production around
the mid-point of our guidance range. This is under-pinned by the
strong production uptime across the portfolio, including at Kraken
following transformer upgrades, where we have seen 100% production
efficiency since the reinstatement of full production during
August.
"Our 2023 drilling programme continues to progress well and
remains on track to bring additional wells online at Magnus and at
Golden Eagle before the end of the year. In addition, we have
entered into a rig contract to return to drilling at Kraken in
2025, with EnQuest holding the option to extend the contract to
accommodate additional work scopes. Further, we continue to execute
safe and efficient decommissioning projects at Thistle and Heather
and expect to deliver another record year for northern North Sea
multi-asset well abandonments by completing 25 wells this year,
while we remain on schedule for platform removals.
"Building on this excellent operational performance and by
remaining disciplined in our investment decisions, we are on track
to deliver on our 2023 targets. We are encouraged by government
announcements relating to the fiscal regime governing the UK's oil
and gas sector as we remain engaged in efforts to encourage
legislation which supports investment in the UK's delivery of
energy security, decarbonisation and energy transition.
"Looking ahead towards 2024, we remain focused on utilisation of
our differentiated tax advantage as we look to unlock organic and
inorganic opportunities to grow the business and create a pathway
to deliver returns to shareholders."
Operating performance
-- Average net Group production in the ten months to end October
2023 was 43,872 Boepd, in line with guidance
-- Following reinstatement of full production during August,
Kraken delivered 100% production efficiency in September and
October
-- The extensive planned maintenance shutdowns at Magnus and GKA
were completed ahead of schedule, with all key scopes executed
-- Magnus and PM8/Seligi are ahead of 2023 production targets
with strong production uptime
Liquidity and net debt
-- As at 31 October 2023, the Group's net debt position was
$585.8 million, down from $615.2 million at 31 August 2023
-- At the end of October, $190.0 million remained outstanding on
the Group's senior secured debt facility ('RBL') following the
Group's decision to make an additional accelerated payment of $50.0
million during October
-- The Group drew $150.0 million against its term loan facility
at the end of September
-- In October, the Group fully repaid its GBP111.3 million
($138.1 million) 2023 7% Sterling bond
Hedging
-- For the last two months of 2023, the Group has hedged a total
of c.1.5 MMbbls. Of this total, c.0.7 MMbbls relates to put options
with an average floor price of $60/bbl, while the Group have also
entered into c.0.8 MMbbls of swaps at an average price of
$88/bbl
-- The Group has hedged a total of c.3.5 MMbbls for 2024 and
c.0.2 MMbbls for 2025, predominantly using put options at an
average floor price of c.$60/bbl
Guidance
-- 2023 average net Group production is expected to be around
the mid-point of the existing guidance range of 42,000 Boepd to
46,000 Boepd
-- Operating expenditure for the year is expected to be c.$400
million, which is $25 million lower than original guidance of $425
million, due primarily to lower than budgeted diesel and chemical
costs
-- Cash capital and decommissioning expenditures are both
expected to be in line with original guidance at c.$160 million and
c.$60 million, respectively
Production details
Average daily 1 Jan' 2023 1 Jan' 2022
production on a to to
net working interest 31 Oct' 31 Oct'
basis (Boepd) 2023 2022
----------------------- ------------ ------------
(Boepd) (Boepd)
UK Upstream
- Magnus 15,645 11,493
- Kraken 13,471 18,591
- Golden Eagle 4,302 6,542
- Other Upstream
(1) 2,661 3,542
------------ ------------
Total UK 36,079 40,168
------------ ------------
Total Malaysia
(2) 7,793 6,425
------------ ------------
Total EnQuest 43,872 46,593
------------ ------------
(1) Other Upstream: Scolty/Crathes, Greater Kittiwake Area and
Alba
(2) Malaysia production figure for the YTD October 2023 includes
750 Boepd associated with Seligi gas
Magnus
Production at Magnus has averaged 15,645 Boepd for the ten
months to end October 2023, an increase of 36.1% versus the
equivalent period in 2022. The planned annual maintenance shutdown
was completed in 20 days, versus the original planned duration of
24 days, with all major scopes executed. The shutdown involved
10,000 manhours of work being completed with zero loss time
incidents. YTD production efficiency at the asset following the
shutdown remains high at 86.3%.
Following the successful completion of the North West Magnus
injector in May and the B6 infill well in early August, drilling
activity continues at Magnus with a sidetrack well expected to be
completed in early December, followed by a well perforation scope.
The Group will then complete the five-yearly rig recertification of
the Magnus platform rig during the first quarter of 2024.
Kraken
During the ten months to end October 2023, average gross
production was 19,108 Boepd (net 13,471 Boepd), which is reflective
of high uptime before and after the anomalous failure of hydraulic
submersible pump ('HSP') transformer units during the first half of
the year. Since the efficient return to service of the floating
production, storage and offloading vessel ('FPSO') restored full
production in early August, the Group has overseen a return to top
quartile performance, with the FPSO delivering production
efficiency and water injection efficiency of 100% for the months of
September and October. In addition, delivery and deployment of new
HSP transformer units has provided increased resilience to
production capacity.
Production in the second half of the year has benefited from the
removal of two planned periods of single train operations, with the
Group having executed maintenance work while production at the FPSO
was shut-in. As a result, no further planned maintenance outages
are anticipated during 2023.
Looking ahead, the Group has procured a mobile offshore drilling
unit for the proposed drilling of two wells at Kraken during
2025.
Golden Eagle
Year to date October net production was 4,302 Boepd, with asset
production efficiency remaining strong at around 90%.
Following the arrival of the drilling rig in August 2023,
drilling of the first well in the 2023 drilling programme commenced
in October and is expected to be brought online in late December.
This represents the first well of an anticipated four well
programme, which is due to be completed in mid-2024.
Other upstream assets
Production for the ten months to end October 2023 averaged 2,661
Boepd, in line with expectations. The Greater Kittiwake Area
maintenance shutdown was completed in 22 days having been
rescheduled to July, which represented an improvement of three days
versus the original plan.
Infrastructure and New Energy
The Sullom Voe Terminal ('SVT') and its related infrastructure
continues to maintain safe and reliable performance, with 100%
export service availability during the year to date.
EnQuest continues to develop cost-effective and efficient plans
to repurpose the terminal site and connected offshore
infrastructure and is well positioned to harness the significant
renewable energy potential in the area. The Group continues to
mature a number of global scale decarbonisation opportunities,
including carbon capture and storage, electrification and green
hydrogen. Having secured an exclusivity agreement with the Shetland
Islands Council to progress new energy opportunities at SVT,
EnQuest is well placed to deliver on these new energy ambitions in
conjunction with potential strategic and financial partners.
In August, EnQuest formally accepted the award of four carbon
storage licences in the North Sea Transition Authority's ("NSTA")
first carbon storage licensing round. Each of the licence areas are
accessible from EnQuest's existing owned and operated
infrastructure and development plans are progressing around
leveraging this infrastructure and significant infrastructure reuse
and repurposing to optimise capital cost and minimise environmental
impact, targeting development of a flexible storage hub capable of
accommodating up to ten million tonnes of CO(2) per annum from
emitters in UK, Europe and beyond.
UK Decommissioning
Heather and Thistle well plug and abandonment ('P&A')
campaigns are progressing well with 11 wells completed at Heather
and a further 12 wells completed at Thistle as at 31 October 2023.
For the full year, the Group remains on track to complete the
P&A of 12 wells at Heather. At Thistle, the Group expects to
complete P&A of 13 wells, an increase of two wells versus the
original plan. Delivery of the enhanced 2023 P&A plan of 25
wells would exceed the record for the most prolific multi-asset
P&A campaign in the northern North Sea, set by EnQuest at 24
wells in 2022.
EnQuest also continues to plan the P&A of 33 subsea wells at
the Alma/Galia, Dons and Broom fields.
Malaysian operations
For the ten months to end October 2023, average production in
Malaysia was 7,793 Boepd, representing a 21.3% increase over the
same period last year. This increase includes 750 Boepd associated
with Seligi gas, to which Petronas hold the entitlement, and which
is produced and handled by EnQuest in exchange for a gas handling
and delivery fee, as well as strong operational performance and
production uptime of 90%.
Following the drilling of the commitment well at Block PM409,
the Group can report that the well was plugged and abandoned dry.
Following confirmation from Petronas that all well requirements had
been met by EnQuest, no further drilling is planned for PM409.
For 2024, the Group plans to drill three infill wells alongside
three well workovers at PM8/Seligi, with rig mobilisation targeted
by the end of the first quarter.
Liquidity and net debt
Net debt of $585.8 million at 31 October 2023 represents an
improvement of $29.4 million versus net debt of $615.2 million as
at 31 August 2022, following the EPL payment of $60.2 million and
the settlement at maturity of the 2023 7% Sterling bond of GBP111.3
million ($138.1 million).
As of 31 October 2023, cash and available facilities were $386.3
million, including restricted cash and ring-fenced funds held in
joint venture operational accounts totalling $130.7 million.
Ends
For further information please contact:
EnQuest PLC Tel: +44 (0)20 7925
4900
Amjad Bseisu (Chief Executive Officer)
Salman Malik (Chief Financial Officer)
Craig Baxter (Head of Investor Relations)
Teneo Tel: +44 (0)20 7353
4200
Martin Robinson
Harry Cameron
Notes to editors
ENQUEST
EnQuest is providing creative solutions through the energy
transition. As an independent energy company with operations in the
UK North Sea and Malaysia, the Group's strategic vision is to be
the partner of choice for the responsible management of existing
energy assets, applying its core capabilities to create value
through the transition.
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
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