19th May 2016 11:58
LONDON (Alliance News) - EnQuest PLC Thursday said it still expects to deliver its full year production guidance this year but said the level of production has declined since the start of the year as the company continues to progress its numerous activities within the UK North Sea.
The company said production in the first four months of 2016 averaged 42,752 barrels of oil equivalent per day, and although that is 39% higher than a year ago it is lower than production rates in late 2015.
Production in November and December last year averaged over 50,000 barrels of oil equivalent per day, meaning that production has declined since the start of the year. However, production in 2016 so far is well ahead of the average rate over the whole of 2015 of only 36,567 barrels of oil per day.
Notably, EnQuest said production in April was higher at 45,933 barrels of oil equivalent per day, suggesting production is climbing again. That rise was driven by an improved performance from the wells on the Alma/Galia field in the North Sea, which was not producing this time last year.
The company said Alma/Galia has six wells that are currently producing around 9,017 barrels of oil equivalent per day during April as the project continues to be optimised and ramped up.
"Good uptimes are being delivered and average production volumes are expected to increase with performance enhancements such as acidisation being undertaken," said EnQuest.
Breaking the production down, the company said its North Sea fields reported a 19% year-on-year rise in production in the first four months of the year to 32,403 barrels per day from 22,601 barrels whilst its operations in Malaysia reported a 27% lift to 10,349 barrels a day from 8,167 barrels.
EnQuest's largest UK field, Thistle/Deveron, reported a 19% lift in production but its second biggest field reported a small 0.3% fall. The Heather/Broom field posted a huge 45% lift in production and Kittiwake experienced a 33% lift. The smallest field, Alba, saw production fall by 7.6%.
In Malaysia, the bulk of production comes from the PM8/Seligi field which saw production rise by over 10% whilst the much smaller Tanjong Baram field contributed its first lot of production during the year, making it the main driver of growth in the region.
Overall, the company is confident it can deliver its full year guidance range of 44,000 to 48,000 barrels of oil equivalent per day, which would be up by 20% to 30% year-on-year if delivered.
The company said it is also expecting to meet its cost reduction targets this year, forecasting average unit operating costs of between USD25 to USD27 per barrel produced over the whole year. To put that into perspective, Brent was trading at USD48 per barrel on Thursday.
EnQuest is also progressing its major development projects in the North Sea, with the Kraken development and the Scolty/Crathes tie-back development both running on schedule whilst drilling remains under budget.
EnQuest said the Scolty well was in line with expectations whilst the results from the Crathes reservoir was ahead of expectations. As drilling is ahead of schedule, EnQuest said it will bring forward the drilling of the Eagle prospect to the second or third quarter of this year.
Importantly, once Kraken comes online then those operating costs per barrel produced will fall further to below USD20 per barrel.
EnQuest reported net debt of USD1.63 billion at the end of April.
"EnQuest continues to focus on its strategic priorities in this low oil price environment: strengthening the balance sheet, delivering on production and execution targets and streamlining operations. The targeted reductions in capex and opex announced in March are being realised, in conjunction with continuing excellent operational performance," said Chief Executive Amjad Bseisu.
EnQuest shares were trading down 0.7% to 36.25 pence per share on Thursday.
By Joshua Warner; [email protected]; @JoshAlliance
Copyright 2016 Alliance News Limited. All Rights Reserved.
Related Shares:
Enquest