FT - EnQuest Kraken improvements21 Mar 2019 08:40
"FT - EnQuest expects Kraken ‘improvement’ despite Cairn warning".
UK oil group forecasts increased production at key asset after maintenance concludes.
Nathalie Thomas in London. UK oil producer EnQuest has insisted production at Kraken, one of its key North Sea assets, will “significantly improve”, despite its partner in the project last week lowering its expectations of how much crude can be recovered from the field.
Shares in EnQuest took a hit last week after Cairn Energy reduced its forecast of recoverable reserves at Kraken by 19 per cent, or 6.8m barrels. EnQuest, which operates the project and has the larger stake of 70.5 per cent, immediately disputed Cairn’s revision, citing “different technical approaches” to forecasting production.
In its full-year results on Thursday, EnQuest said production at Kraken is expected to improve as maintenance activities on the extraction vessel at the field — which has been at the heart of problems since the first oil was produced in 2017 — are completed.
The field is expected to produce between 30,000 and 35,000 barrels per day, the company said, although this is considerably lower than the 50,000 barrels/day it had originally been expected to yield at peak.
Overall, EnQuest’s full year production this year is expected to grow by 20 per cent to 63,000-70,000 barrels of oil equivalent per day, primarily driven by the Magnus field, north-east of the Shetland Islands.
EnQuest last year raised $128.9m through a rights issue to buy the remainder of the Magnus oilfield from BP after acquiring an initial stake a year earlier.
Overall production at the company averaged 55,447 per day in 2018, a 48 per cent increase on a year earlier, which helped drive revenues at the group up 89 per cent to $1.2bn as it also benefited from higher oil prices, although this was offset to a certain extent by the negative impact of commodity hedges. Pre-tax profit improved to $290m from $47m a year earlier.
EnQuest had net debt of $1.77bn at the end of 2018, down from $1.99bn a year earlier. It said debt reduction would continue to remain a priority, although the group’s chief executive, Amjad Bseisu, said the company would look at “suitable” acquisition opportunities longer-term once debt has been returned to “sustainable levels”.
EnQuest, like several other UK listed independent oil producers, racked up high debts after the oil price crash of 2014 as they had already committed to capital intensive development projects as income was dropping".
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