9th Apr 2020 10:58
(Alliance News) - EnQuest PLC on Thursday reported sinking to a loss in 2019 but is confident in its ability to generate cash amid the low oil price environment.
Shares in the crude producer were 19% higher in London on Thursday morning at 13.30 pence each.
For 2019, EnQuest reported a USD449.3 million pretax loss, compared to a USD127.3 million profit in 2018.
Revenue rose 43% year on year to USD1.71 billion from USD1.20 billion, but EnQuest took an USD812.5 million impairment loss in 2019 on its oil and gas assets, compared to a USD126.0 million such loss the year before.
Earnings before interest, tax, depreciation and amortization increased 41% in 2019 to USD1.01 billion from USD716.3 million in 2018.
EnQuest's production in 2019 averaged 68,606 barrels of oil equivalent per day, up 24% year on year. In the UK Continental Shelf, production grew to 59,953 boepd from 47,015.
Chief Executive Amjad Bseisu said: "During 2019, EnQuest again delivered on its targets. The combination of improved Kraken performance, a full year contribution at Magnus and strong performances at Scolty/Crathes and PM8/Seligi, drove significant production growth and free cash flow generation, which facilitated a material reduction in the group's net debt."
EnQuest's cash generation in 2019 topped USD994.6 million, up 26% on 2018, driving debt down 20% to USD1.41 billion.
Bseisu continued: "Given the prevailing low oil price environment, we have taken decisive action to lower our cost base, targeting USD190 million of operating cost savings in 2020, equating to unit operating expenses of about USD15 [per barrels of oil equivalent].
"With these significant cost reductions, cash flow breakeven is estimated at about USD33 [per barrel] in 2020. With realisations in the first quarter of 2020, the cash flow breakeven falls to about USD25 [per barrel] for the remainder of the year."
As a result, 2021 cash flow breakeven is guided at about USD27 per barrel, with unit operating expenses of about USD12 per barrel.
"With these significant reductions, we are well positioned to manage through a sustained low oil price environment," CEO Bseisu said.
He added: "Our three largest assets continue to generate meaningful operating cash flows, even at low oil prices, and, in the medium to long-term, offer low-cost resource maturation opportunities which are aligned with our proven differential capabilities."
By Paul McGowan; [email protected]
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