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Last paragraph;- The B3 rating also reflects the adequate liquidity profile of EnQuest. The company has access to $1.2 billion of credit facility, split into $1.125 billion of term loan facility and $75 million revolving credit facility (RCF), out of which $100 million remains undrawn as of December 2017. This coupled with cash balance of $173 million as of year-end 2017, and expectations of positive FCF generation should be sufficient to meet its liquidity needs for the next 12-18 months. The company has debt maturities of $224 million in 2018 and $330 million in 2019, which includes maturities under the credit facility which starts amortising semi-annually in October 2018. Moody's believes that the company should be able to repay these amounts through internal cash generation. A successful farm down of the company's 70.5% stake in Kraken could improve the company's liquidity position, the timing of which remains uncertain. Moody's continues to see EnQuest as an efficient and strong operator in the North Sea, as demonstrated by its ability to quickly bring down operating costs from $42/BOE in 2014 to around $26/BOE in 2017.
Hope Moodies don't mind:- Rating Action: Moody's upgrades EnQuest's rating to B3, stable outlook 14 Jun 2018 London, 14 June 2018 -- Moody's Investors Service, ("Moody's") has today upgraded EnQuest plc's (EnQuest or the company) corporate family rating (CFR) to B3 from Caa1 and probability of default rating (PDR) to B3-PD from Caa1-PD. Concurrently, Moody's has also upgraded the senior unsecured rating of the $677.5 million notes to Caa1 from Caa2. The outlook on all ratings remains stable. RATINGS RATIONALE The upgrade of the rating to B3 from Caa1 reflects the successful ongoing ramp-up of Kraken leading to an increased total production in 2018 of around 50,000-58,000 boepd from 37,405 boepd in 2017. Timely Kraken ramp-up has been a very important rating driver and the progress demonstrated by the company in 2018 reduces the ramp-up risk to a large extent. The production increase is also supported by higher oil prices averaging at around $70/bbl in the first 5 months of 2018. This should result in materially improved cash flow generation in 2018 and deleveraging with adjusted debt/EBITDA expected to around 4.0x-4.5x from its peak of 11.6x in 2017. The upgrade of the rating to B3 also reflects Moody's expectation that the company should be able to maintain an adequate liquidity profile. Kraken started producing first oil in June 2017. However, the company faced instrumentation and familiarisation issues with the Floating, Production, Storage and Offloading (FPSO) vessel which caused delays to the ramp up of Kraken in 2017. This coupled with the decline in production on the existing assets due to the maturing reserve life resulted in lower production at around 37,405 boepd in 2017 versus 39,751 boepd in 2016. Kraken's net production to EnQuest averaged at 4,709 boepd in 2017. However, the company has managed to resolve the FPSO issues and production is ramping-up as per expectations in H1 2018. Kraken has produced around 21,431 boepd in the first four months of 2018 net to EnQuest, which is a material step up from 2017 and de-risks the project to a large extent. Moody's expects the company to generate EBITDA of around $650-670 million in 2018-19, assuming an oil price of $59/bbl in 2018 and $55/bbl in 2019. Moody's also notes that 7.5 MMbbls of oil (around 40% of total production) are hedged at an average price of $62/bbl in 2018. Capex spending is expected to remain at around $250-300 million in 2018-19. This is expected to result in positive free cash flow (FCF) generation of around $300 million in 2018 and $150 million in 2019. As a result of strong EBITDA generation, material deleveraging is expected in 2018-19 to around 4.0x-4.5x. The B3 rating also reflects the adequate liquidity profile of EnQuest. The company has access to $1.2 billion of credit facility, split into $1.125 billion of term loan facility and $75 million revolving credit facility (RCF), out of which $100 million remains undrawn as of December 201