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terminal on Shetland and has operations in Malaysia.
A trading update yesterday showed that the group’s production was running about 25 per cent ahead, year-on-year. Production equivalent to 69,973 barrels of oil per day was achieved in the first four months of the year and the company maintained its guidance of between 63,000 and 70,000 barrels for the full year. In addition to a strong performance from the Magnus field there was “significantly improved” performance from Kraken, although previous guidance of producing between 30,000 and 35,000 barrels from it was not upgraded. Simon Thomson, 54, Cairn Energy’s chief executive, told shareholders at its recent annual meeting that Kraken had been producing more than 45,000 barrels on some days this month.
Enquest’s net debt was trimmed by $50 million in the first four months of the year to $1.7 billion and Amjad Bseisu, 55, the chief executive, confirmed that strengthening the balance sheet and reducing debt was a focus for this year.
At current oil prices, Mr Bseisu hopes that the ratio of net debt to earnings before interest, tax, depreciation and amortisation can be below two times. That would be the first time since 2014 that the measure had fallen to that level.
He also confirmed that Enquest was looking at adding to its UK assets through new licences as well as drilling at its existing operation. He said: “We are sorting our Kraken issues and I think we have [other] assets which are outperforming. Hence we are feeling quite good about the asset base we have.”
Analysts at Jefferies suggested that the production performance was “encouraging” while Canaccord Genuity predicted that net debt could end the year at between $1.5 billion and $1.6 billion depending on the oil price.
Mr Bseisu’s generally upbeat tone and the trading update appeared to do little to reassure investors concerned about commodity fluctuations, however. Brent crude futures, the international benchmark for oil prices, was set to have its worst week this year, with the price falling below $69 per barrel yesterday. Rising oil inventories in the United States and the tense trade stand-off between China and America were among the factors that analysts cited for the fall.
Even though Enquest has more than 11 million barrels of production for this year hedged at an average floor price of $66, its shares were down 12.2 per cent at just over 20p. The stock had been changing hands for about 44p as recently as last August.
ADVICE Hold
WHY There is little upside in jettisoning the shares now. Operational and fiscal improvements are coming through steadily
In Scandinavian folklore the Kraken is a giant squid-like creature that can sink ships. For Enquest, the oil and gas group, its Kraken is a North Sea oilfield that cost about $2.3 billion and has not quite performed as expected since it went into operation in the summer of 2017.
What was supposed to have been a big beast producing 50,000 barrels a day has been dogged by delays, equipment problems and service outages. Average production has hovered at about 30,000 barrels per day, resulting in Cairn Energy, which holds a minority stake in the field, writing down the value of its interest this year.
Enquest was founded in 2010 through the merger of the UK North Sea businesses of Petrofac and Lundin Petroleum. It is one of the largest independent producers in the North Sea, operates the Sullom Voe
https://www.thetimes.co.uk/edition/business/north-sea-monster-rides-the-storm-bdxpx8prz
Marmaris, I think one of two things. Either, they don’t want to interfere with the small amount of profit being generated at VOB #1 and others so think ‘best to leave for now and concentrate on Alaska. Or... it is working out to be a lot more problematic to be able to sort the problems for whatever reason. The more I look at the former, seems unlikely..what is not appreciated is the ‘blank’
https://finance.yahoo.com/news/oil-prices-edge-u-china-012127138.html
Thought something must have spiked it
‘Production running ahead of schedule’ can’t get full article but looking good
https://www.upstreamonline.com/hardcopy/1766355/enquest-pleased-with-progress-at-magnus