EnQuest PLC, 30 May
2024
Annual General Meeting -
Operations update
Strong operational
performance year to date; full year guidance
unchanged
EnQuest Chief Executive, Amjad Bseisu,
commented:
"EnQuest has continued to deliver
strong operational performance across our operated portfolio during
the early part of the year, with production to the end of April
averaging 43.6 Kboed (above the mid-point of guidance).
"We continue to achieve top quartile
production efficiencies across the portfolio, while our high
performing decommissioning team continues to deliver sector leading
performance, having completed ten well plug and abandonments in
2024 across Heather and Thistle.
"We are also making good progress in
respect of the major right-sizing projects which are underway at
the Sullom Voe Terminal, with the new stabilisation facilities
expected to be online early next year.
"During this period of political and
fiscal uncertainty, we remain actively engaged in efforts to
advocate on behalf of the sector and the 200,000 jobs which it
supports to create an environment which supports investment in the
UK's delivery of energy security, decarbonisation and a just energy
transition.
"Following the commencement of
EnQuest's inaugural shareholder returns programme in April and with
the foundations set for a pivot to growth during 2024, we are
focused on delivering that growth through transformative
acquisitions; utilising our differentiated operating capability and
advantaged tax position to accrete value."
Operating performance
§ Group
production averaged 43,595 Boepd (guidance 41,000 Boepd to 45,000
Boepd) for the year to date 30 April.
§ Kraken
reached milestone of 70 million barrels of oil produced during
May.
§ Magnus
five yearly rig recertification nearing completion, with two infill
wells and a barrel-adding wellwork programme planned for the second
half of the year.
Liquidity and net debt
§ Net debt
c.$344 million at 30 April; represents a reduction of c.$137
million since 31 December 2023 and a reduction of c.$66 million
since 29 February 2024.
§ c.$534
million liquidity at 30 April, providing a platform for transformational transactional growth, enhanced
by EnQuest's advantaged UK tax position.
§ EnQuest's
$15 million share buy back programme commenced on 29 April
2024.
2024
guidance unchanged
§ Production
guidance: 41,000 Boepd to 45,000 Boepd.
§ Cash
capital expenditure to total c.$200 million; operating expenditure
to total c.$415 million; and decommissioning expenditure to total
c.$70 million.
§ Investment
is scaled to maintain production, maximise cash flow, drive capital
efficiency and reduce future emissions and operating
costs.
2024
Annual General Meeting
§ Subject to
shareholder approval at today's Annual General Meeting ('AGM'),
Jonathan Copus joins the EnQuest Board as an Executive Director,
with Rosalind Kainyah MBE and Marianne Daryabegui joining the Board
as Non-Executive Directors. As previously announced, Salman Malik,
Rani Koya and Liv Monica Stubholt will step down as Directors at
the AGM.
Further Detail:
Production:
Group production for the first four
months of 2024 averaged 43,595 Boepd, with continued top quartile
production uptimes across the operated portfolio maintaining full
year average 2023 production levels and partially offsetting the
impact of natural field declines.
Upstream:
Production at Magnus averaged 15,875 Boepd, with
production efficiency of 86% for the period. Following the
replacement of a seawater lift pump in the first quarter, which
required an unscheduled one-week shutdown, a rolling changeout
programme has been initiated to minimise downtime going
forward.
The Magnus five-yearly rig
recertification scope is expected to be completed in June, ahead of
a return to drilling activity in the second half of the year. Two
sidetrack wells and multiple scale squeeze activities are planned
before the end of 2024. Work to optimise the annual maintenance
shutdown is ongoing.
Kraken net production averaged
13,700 Boepd, reflecting 98% production uptime and water injection
efficiency of 95% as partial offsets to natural field decline. This
continued strong operational performance saw Kraken reach the
milestone of 70 million barrels of oil produced during
May.
Planning work is underway ahead of
the planned return to drilling at Kraken during 2025, with joint
venture approval granted to order select long lead equipment
required to facilitate the two-well sidetrack programme.
Golden Eagle net production for
the year to date 30 April was 3,778 Boepd, with asset production
efficiency of around 95%.
The 2023/24 platform drilling
programme on this non-operated asset is ongoing, with the first
well having been brought online in January 2024. The second well
did not encounter sufficient hydrocarbon bearing sands so was not
completed, while the third well is in the process of being
completed for production. The final planned well in the programme
is a water injector, which is due to be completed in
mid-2024.
Production from other UK upstream
assets averaged 2,528 Boepd, reflecting strong uptime of 86% at the Greater
Kittiwake Area.
Midstream:
Project activity at the Sullom Voe Terminal ('SVT') is underway, with
the commencement of construction of a right-sized oil stabilisation
facility. This will enable the continued production from the East
of Shetland basin, reduce the terminal power demand and associated
emissions, decrease operating costs and release the existing
stabilisation facility for decommissioning, reducing the risk
profile at site. This project is on schedule to be delivered in
early 2025.
The construction of the new
stabilisation facilities provides an opportunity to connect SVT to
the electrical power grid due to the lower power demand. This grid
connection will allow for the retiral of the Sullom Voe Power
Station, reducing terminal emissions by 90% and lowering operating
costs. This project is at an early stage but it is anticipated that
first power from the grid connection could be achieved during
2026.
In Malaysia,
EnQuest was awarded two accolades at the Malaysia
Upstream Awards, including Operator of the Year.
Average production at PM8/Seligi for the first four months of 2024 was
7,714 Boepd, with production uptime remaining high at 93% and
benefitting from availability of all compression units this year.
Seligi gas, which is produced and handled by EnQuest in exchange
for a gas handling and delivery fee, represented 1,486 Boepd of
year to date production. Discussions are ongoing between EnQuest
and Petronas, seeking to expand on the existing foundational
strategic agreement relating to Seligi gas.
The Group has drilled and completed
the first infill well of a three well programme utilising a tender
assisted rig. First oil was delivered on 9 May, with production
rates in line with expectations as optimisation work is ongoing.
The remaining two wells in the programme will be completed by July
2024. Three workover wells have been completed in May, with the
hydraulic workover unit now being mobilised for the six wells plug
and abandonment campaign. The 2024 shutdown is planned for the end
of the third quarter to complete critical integrity and maintenance
works, including a turbine control panel upgrade to further improve
compressor reliability.
Decommissioning:
EnQuest continues to demonstrate top
quartile decommissioning capability through performance across its
Heather and Thistle projects. As at 30 April, the Group has
completed the plug and abandonment of ten wells in total (six wells
at Thistle and four wells at Heather) against an annual target of
25 wells. This work is being executed at sector leading cost by
EnQuest's dedicated in-house team which, per North Sea Transition
Authority review data, has delivered a probabilistic average cost
per well for P&A of c.£2.5 million, 42% lower than the industry
benchmark of c.£4.3 million.
Liquidity and net debt
During the first quarter of 2024, the
Group fully repaid the $140 million outstanding balance on the RBL
facility. Cash flows in the year to date have benefitted from
strong production uptimes, supportive and stable commodity prices
and a year-to-date overlift position, which is expected to unwind
by the end of 2024.
Net debt as at 30 April 2024 was $344
million, with cash and available facilities of $534 million,
including restricted funds and ring-fenced funds held in joint
venture operational accounts totalling $145 million.
The Group commenced its $15 million
share buyback programme on 29 April. To date, 5.1 million shares
have been purchased at an average price of 15.7p. It is intended
that the first 25 million shares purchased under the buy back
programme will be held in Treasury for issue in due course to the
Company's Employee Benefit Trust. After the initial 25 million
shares are purchased, all additional shares purchased under the
programme will be cancelled.
2024
outlook unchanged
EnQuest remains focused on
maintaining its track record of upstream operational excellence and
utilising its skills, tax assets and significantly de-leveraged
balance sheet to drive growth through acquisition.
The Group remains on track to achieve
net production between 41,000 and 45,000 Boepd, with further well
activity planned in the second half of the year, most notably at
Magnus and at PM8/Seligi, partially offset by planned maintenance
shutdowns and natural declines.
Operating expenditures are expected
to be approximately $425 million, cash capital expenditure is
expected to be $200 million and decommissioning expenditure is
expected to be around $70 million.
The Group is due to make its first
full year payment under the 35% Energy Profits Levy in the second
half of 2024.
As at 30 April 2024, effective for
the period May to December 2024 inclusive, EnQuest has hedged c.3.5
MMbbls of oil, predominantly through the use of put options with an
average floor price of c.$60/bbl. The Group has hedged a total of
c.1.6 MMbbls for 2025 using put options at an average floor price
of c.$60/bbl.
EnQuest expects to announce its 2024 half year results in
September 2024.
Ends
For further information please
contact:
EnQuest PLC
|
Tel: +44 (0)20 7925 4900
|
Amjad Bseisu (Chief Executive
Officer)
|
|
Jonathan Copus (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 the London Stock
Exchange.
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 relied upon as a guide to future
performance.