Production falls while earnings rise for EnQuest

The London-listed firm said revenue and other operating income rose to $1.32bn (£1bn) for the 12 months ended 31 December, from $855.1m in 2020.

Its adjusted EBITDA improved to $742.9m from $550.6m, which the board put down to “materially higher” oil prices, partially offset by lower production.

Cash generated from operations came in at $756.9m for the year, up from the $567.2m it reported a year earlier.

Cash expenditures totalled $117.6m, down from $173m, with cash capital expenditure falling to $51.8m from $131.4m and cash abandonment expenditure rising to $65.8m from $41.6m.

EnQuest described free cash flow generation as “strong”, as it grew to $396.8m from $210.5m.

Cash and available facilities amounted to $318.7m at year-end on 31 December, up from $284.1m at the end of 2020, with net debt narrowing to $1.22bn from $1.28bn.

Statutory reported profit after tax was $377m, swinging from a restated loss after tax of $469.9m for 2020.

Looking at 2022, EnQuest said year-to-date February production averaged 50,408 barrels of oil equivalent per day, in line with its full-year guidance, while net debt totalled $1.09bn on 28 February.

Hedges were in place for around 8.6 million barrels of oil, the board reported, with an average floor price of $63 per barrel and an average ceiling price of $78 per barrel.

Full-year average net group production was pencilled in to fall between 44,000 and 51,000 barrels of oil equivalent per day.

Operating costs for 2022 were set to be $430m, while cash capital expenditure was expected to be $165m, with cash abandonment expenditure of $75m.

“We made good progress against our strategic objectives in 2021, concluding three acquisitions, refinancing our senior secured debt facility, generating significant free cash flow of $396.8m and reducing our year end net debt to $1.22bn, its lowest level since 2014,” said chief executive officer Amjad Bseisu.

“We have made strong progress on emissions reduction, which continues to be a focus for the group.

“We have also started 2022 well, with production to the end of February averaging 50,408 barrels of oil equivalent per day, towards the top end of our full year guidance range.”

Bseisu said the company also continued to reduce its net debt, in line with the company’s strategic priorities.

“With a supportive oil price environment and an active programme of nine wells and seven workovers in 2022, our largest sanctioned programme since 2014 and our first new wells in over two years, we remain confident on delivering a good performance this year.

“The acquisition of Golden Eagle has strengthened our portfolio, building on our track record of value creation through innovative, disciplined mergers and acquisitions.

“The acquisitions of Bressay and Bentley have added almost 250 million barrels equivalent of 2C resources, adding to those already in place at Magnus, Kraken, PM8/Seligi and PM409, providing EnQuest with longer-term potential development opportunities.”

Amjad Bseisu said the product remained focussed on continuing to reduce its net debt, while selectively investing in its low-cost, quick payback well portfolio in order to sustain its production base.

“EnQuest's business is strongly positioned to play an important role in the energy transition. We will do so by responsibly optimising production, leveraging existing infrastructure, delivering decommissioning and exploring new energy and decarbonisation opportunities.”

At 0950 GMT, shares in EnQuest were up 7.53% at 31.4p.