Enquest says Kraken running on schedule and under budget

Enquest said the development of the Kraken field was continuing to run on schedule and under budget, while reiterating previous guidance for full-year 2017 production of between 45,000 and 51,000 barrels per day.

However, the latter depended on Kraken delivering first oil in the second quarter of 2017, as expected by management.

"Successful startup/ramp-up at Kraken will be key to the deleveraging process, which is in turn key for the investment thesis," analysts at Numis said.

In 2016 the company's production grew 8.7% to 39,751 b/d.

At the end of last year, the oil explorer's level of net debt stood at $1.796.5bn, up from $1,548bn in the year before, as expected by analysts.

The Aberdeen-based outfit also reiterated its guidance for 2017 unit operating expenses, including Kraken, to reduce to between $21 and $25 a barrel, down again from $24.6 in 2016 and $29.7 in 2015.

Likewise, cash capital expenditures were still seen at between $375m and $425m, with the majority of that to be funelled into Kraken, versus $609.2m for 2015.

For 2016, the company said cash generated from operations rose from $221.7m in 2015 to $408.3m. Revenue and other operating income on the other hand slipped 6.3% to $849.6m.

In parallel, the realised oil price dropped 11.4% from $72 per barrel in 2015 to $63.8 for 2016.

The acquisition of the Magnus oil field and Sullom Voe terminal had begun and were ongoing, the company said.

Numis also took heart from the Magnus transaction, saying it was "encouraging" to see such deals inked even when the firm's funding position is rather tight.

"The Magnus deal is essentially an option on EnQuest's ability to optimise a mature asset, a core skill for the company."