Last checked at 
* Bids from Polish entity, private group abandoned - sources
* EnQuest $2 bln net debt more than 3 times market value
* Opted for loan against ringfenced stake instead of sale
By Ron Bousso and Shadia Nasralla
LONDON, Sept 12 (Reuters) - EnQuest switched fromplans to sell a stake in its flagship North Sea oilfield toborrowing money against it after two sets of sale talks had tobe abandoned as a deadline for a debt repayment approached,industry and banking sources said.
EnQuest, with almost $2 billion in debt, launched earlierthis year the sale of a 20 percent stake in the heavy oil Krakenfield, one of the largest North Sea developments which startedproduction in June last year.
The sale of the stake would have pumped welcome cash intothe coffers of the company which has to pay back just under $200million in debt in October.
The sale process, initially expected to raise up to $400million, was run by investment bank Jefferies.
London-based EnQuest received an offer for a stake in Krakenfrom Lotos, a Polish state-backed oil and gas company,several months ago, according to the sources.
The talks reached advanced stages, but dragged on and couldnot be concluded in time, according to one source.
Lotos declined to comment.
A second offer from a private company was rejected byEnQuest after the bidder revised its terms at the last minute,the sources said.
After the two failed approaches, EnQuest decided to borrow$175 million against 15 percent of Kraken's cashflow from Oz(Och-Ziff) Management to be paid back within five years.
The move added to its net debt which stood at $1.97 billionat the end of June. Its market value is around $564 million.
"There was very significant interest in the farm-out processfor Kraken and we received a number of offers from both industryparticipants and financial institutions," EnQuest said in astatement to Reuters.
"The financing agreement with Oz Management was selected asthe preferred economic option for EnQuest at this time, allowingus to retain significant exposure to the upside potential onKraken."
EnQuest, which specialises in squeezing more barrels out ofageing fields, holds 70.5 percent of the Kraken field whileCairn Energy owns the rest.
Oil production from Kraken averaged 31,000 barrels per day(bpd) in the first six months of 2018, slightly belowexpectations due to issues with water injection to increase oilrecovery and bad weather.
It has since picked up to as much as 36,000 bpd. Earlierthis year, it had reached as much as 50,000 bpd.
EnQuest shares tumbled around 13 percent on Friday after thecompany announced a discounted share issue to buy the remaining75 percent in the Magnus oilfield from BP to shore upfuture output.
Its next debt repayments are $175 million due in April and$100 million in October 2019, it said on Friday.
"The concern with Enquest's equity value remains itssensitivity to $1.97 billion of net debt ... we cannot rule outfuture approaches to the market," Jefferies said in a note onMonday.(Editing by Mark Potter)
