17th Mar 2016 07:48
LONDON (Alliance News) - EnQuest PLC Thursday reported a substantial pretax loss in 2015 as a large rise in production failed to offset the fall in oil prices and impairments impacted its results.
The company, which claims to be the largest UK independent oil producer in the UK North Sea, said its pretax loss amounted to a staggering USD1.34 billion in 2015, widening from the USD578.7 million loss reported in 2014.
That was thanks to a fall in revenue thanks to lower prices in the year, with impairments, exceptional items and remeasurements adversely hitting pretax profit by USD1.33 billion in the year.
On an underlying basis, which excludes exceptional items, EnQuest still reported a pretax loss of USD1.5 million compared to a USD243.3 million profit last year.
More than a 30% rise in production in the year failed to offset the collapse in oil prices, pushing revenue down to USD908.5 million from USD1.02 billion in 2014.
Production was up over 31% to 36,567 barrels of oil equivalent per day from 27,895 barrels a day in 2014, but the average price dropped to USD72 a barrel from USD103.9 per barrel - more than a 30% drop.
Production is set to soar this year to the range of 44,000 to 48,000 barrels of oil equivalent per day as new projects come online this year.
Capital expenditure was cut 29% year-on-year to USD751.1 million from USD1.05 billion, but the cuts failed to stop net debt rising to USD1.54 billion at the end of 2015 compared to USD1.31 billion at the end of the first half.
EnQuest said it has 10.0 million barrels hedged at USD68 per barrel in 2016, and believes it can get its operating costs down to USD25 to USD27 per barrel for the full year, which would be a 12% fall from 2015, before making further cuts down to USD20 per barrel once its Kraken project in the North Sea comes online.
Capital expenditure this year will now be at the lower end of its guidance range of USD700.0 to USD750.0 million, which is also lower than the original USD950.0 million budget.
By Joshua Warner; [email protected]; @JoshAlliance
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