Enquest shares tumble as group defers drilling at Kraken field

Exploration and production Enquest shares headed south early on Friday as it revealed it will defer drilling at its Kraken field as a result of recent changes to the North Sea windfall tax.

Enquest stated that following changes to the energy profits levy, that saw Downing Street up the windfall tax a further 10% to a headline rate of 75%, it had "further optimised its capital programme", with planned drilling programmes at Kraken shelved for the time being.

However, three infill wells at Magnus and three new wells at Golden Eagle will go ahead as planned.

Chief executive Amjad Bseisu said: "Looking ahead, changes to the UK Energy Profits Levy will impact cash flow generation and have implications for our capital allocation strategy and our UK production growth ambitions.

"In the immediate future, we remain focused on deleveraging and intend to prioritise organic investments with quick pay backs and accretive M&A opportunities that allow us to leverage our operating capability and tax loss position."

Enquest also stated that free cash flow came to an all-time high of more than $500.0m in 2022 and said it had cut net borrowings to $700.0m.

The London-listed firm produced 47,259 barrels a day on average in 2022, up roughly 6% year-on-year, with production from Kraken coming in above expectations, while Magnus was affected by workovers and Golden Eagle produced less than targeted.

As of 0840 GMT, Enquest shares had slumped 11.01% at 19.0p.

Reporting by Iain Gilbert at Sharecast.com