EnQuest reaffirms production targets

The UK's largest independent oil producer in the North Sea, EnQuest, saw pro-forma production rise by one-eighth in 2011 from the year before as it raced to cash in on soaring oil prices.

The group produced 23,698 barrels of oil equivalent per day (boepd) in 2011, up from 21,074 boepd the year before. All 2010 figures are quoted on a pro-forma basis unless otherwise stated, and assume that all the current parts of the business were part of EnQuest throughout 2010.

"Each of our hubs increased production, with Thistle's gross production being over 2 MMboe [millions of barrels of oil equivalent] for the first time in a decade," revealed Amjad Bseisu, EnQuest's Chief Executive Officer (CEO).

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The average realised oil price, including the group's hedging arrangement, was $107.60 a barrel, up 32.3% on the $81.30 achieved in 2010.

Revenue surged 52.3% to $936.0m from $614.4m the year before. The market had been expecting revenue of £632.3m, equivalent to just over $1bn.

Profit before tax and net finance costs rocketed 130.3% to $390.1m in 2011 from $169.4m. Market expectations, converted into dollars, were for pre-tax profit of $403m.

Earnings before interest, tax, depreciation and amortisation (EBITDA) climbed 70.3% to $629.1m from $369.3m the year before. Earnings per share were up 90% to 7.6 cents from a reported 4.0 cents the year before.

Cash flow from operations improved to $656.3m from the $267.7m reported the year before, while the group's net cash position improved to $387.9m from $41.4m at the end of 2010.

Despite particularly difficult weather conditions in the Northern North Sea in the first quarter of this year, average net export production in 2012 remains on track to meet the full year target of an average of between 20,000 boepd and 24,000 boepd, reflecting natural declines compared to 2011. Next year, as previously announced, the group expects to produce between 25,000 boepd and 30,000 boepd while in 2014 it expects to churn out more than 40,000 boepd .

"There is additional future production potential in the discoveries at Kraken, Kildrummy, Crawford and in the Crathes area. EnQuest has the operational capability and the financial capacity to ensure sustainable delivery of long term growth," Bseisu claimed.

The CEO welcomed the changes announced in the recent UK Budget speech that were aimed at encouraging the development of small oil and gas fields, saying they will "clearly make the UK oil and gas sector more competitive."

Following EnQuest's nine well programme and $361m of capital expenditure in 2011, EnQuest anticipates investing around $1,000m in 2012. EnQuest's 2012 capital programme includes 11 new wells and puts the Alma and Galia development on track for first oil by the end of 2013.

The company remains on the look-out for acquisition opportunities and will not be distributing any of the funds in its war chest in the form of dividends.

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