EnQuest gross profit up 13% to $196m

North Sea exploration firm EnQuest, which recently went through a complex financial restructuring, said on Tuesday its 2016 gross profit rose 13.22% to $196.1 million despite revenue and other operating income falling 6.3% to $849.6 million.

EnQuest’s net debt at the year end was $1.79 billion, up from $1.54 billion at the end of 2015.

EnQuest announced a proposed acquisition of interests in the Magnus oil field and the Sullom Voe terminal on January 24 and on Tuesday said: “Transition activities have begun and are ongoing; the process is expected to take 6-12 months, with no cash outlay for EnQuest.”

EnQuest is a major stakeholder in the massive Kraken field east of Shetland, one of the North Sea’s largest new projects, and the firm said Kraken “continues under budget and on track for first oil in Q2 2017.”

EnQuest shares rose slightly to around 42p, giving it a stock market value of almost £500 million.

EnQuest CEO Amjad Bseisu said in a statement“EnQuest further streamlined its operations in 2016 and delivered cash capital expenditure at $609 million and unit opex at $24.6/bbl, both well down on the previous year. 

“Operationally EnQuest worked at high levels of production efficiency and safely delivered production averaging 39,751 Boepd, our highest annual production figure, supporting our financial objectives. 

“2016 saw the successful restructuring of our balance sheet, designed to strengthen EnQuest’s liquidity position, to reduce the level of its cash debt service obligations and to enable it to bring the Kraken development onstream.

“In early 2017, EnQuest securely moored the Kraken FPSO on station in the North Sea, where commissioning work continues on the vessel and the subsea infrastructure; preparations for the handover to operations are ongoing. 

“The project remains below budget and on track to deliver first oil in Q2 2017. 

“In early 2017, EnQuest and BP announced EnQuest’s proposed acquisition of interests in the Magnus oil field and the Sullom Voe oil terminal. 

“The innovative structure of the acquisition recognises EnQuest’s differential strength in managing maturing assets and infrastructure, whilst generating significant potential for future growth.   

“EnQuest’s combination of integrated technical capabilities and high levels of production efficiency and cost control ideally positions us to create value from assets such as Magnus and from the substantial potential in our existing asset portfolio, with 215 MMboe of net 2P reserves at the end of 2016.  

“Our journey to optimise and increase production and reduce costs continues, with average 2017 production anticipated to be between 45,000 Boepd and 51,000 Boepd. 

“Following delivery of Kraken, EnQuest will begin moving from a period of heavy capital investment into one focused on cash generation and deleveraging the balance sheet.”