21st Mar 2019 08:22
LONDON (Alliance News) - EnQuest PLC on Thursday reported significant growth in both annual profit and revenue, boosted by both increased production and prices.
EnQuest's output in 2018 increased 48% on 2017, reaching 55,447 barrels of oil equivalent per day on average, with the realised oil price up 17% to USD61.2 per barrel.
Most of EnQuest's production comes from the North Sea, but some is also from Malaysia. The rise in annual production came from extra output from the Kraken and Magnus fields, offsetting a slight fall in Malaysia due to natural field decline.
Looking to 2019, EnQuest sees 20% growth in production to between 63,000 barrels and 67,000 barrels of oil equivalent per day.
The company's revenue climbed to USD1.20 billion on the back of the production increase, from USD635.2 million in 2017, while pretax profit before tax and finance costs surged to USD290.0 million from USD47.3 million.
A focus in 2018 was on debt reduction, EnQuest said. At the end of 2018, net debt was USD1.77 billion, 10% lower than a year before.
Looking ahead, EnQuest expects its net debt to earnings before interest, tax, depreciation and amortisation ratio to be "approaching" 2 times, with a target of between 1 times and 2 times.
Once debt has reduced to sustainable levels, EnQuest said, there is the possibility of shareholder returns as well as acquisitions.
In other guidance for 2019, operating expenditure is seen around USD600 million and cash capital expenditure around USD275 million.
Chief Executive Amjad Bseisu said: "In 2018, the group met its financial and operational targets. Production increased by 48%, just above the midpoint of our guidance, which, along with strong cost control, drove a significant improvement in cash generation allowing the group to reduce net debt."
"In the near term, we remain focused on investing in short-cycle projects which maximise cash flow and allow us to deliver on our plans to reduce our debt," he added.
"We have opportunities for low-cost material growth in near-field, short-cycle infill and tie-back investments, particularly at Magnus, PM8/Seligi and Kraken."
Shares were 6.8% higher early on Thursday morning in London at 18.84 pence each.
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