TIDMENQ
RNS Number : 7220O
EnQuest PLC
23 August 2017
ENQUEST PLC Operations update and revised full year 2017
production guidance
23 August 2017
EnQuest's production outlook guidance
Production for the first half of 2017 was 37,015 Boepd. With
prolonged commissioning leading to lower than expected operational
efficiency from the Kraken FPSO vessel to date, production volumes
have been lower than forecast and EnQuest's overall average daily
production for the full year 2017 is now anticipated to be as per
the first half 2017 production rate, plus or minus 10%. This
reduction in EnQuest's short term 2017 production guidance, is
consistent with EnQuest's objective of bringing Kraken onstream in
a phased manner in line with good reservoir management practices
aimed at maximising long term productivity and value. We do not
expect the current operational issues in the Kraken ramp-up to
continue beyond 2017.
Net debt at the end of June 2017, was $1,922 million, compared
to $1,912 million as reported as at the end of April 2017.
Available cash and bank facilities amounted to $213 million as at
30 June 2017.
EnQuest CEO, Amjad Bseisu said:
"EnQuest was pleased to bring the Kraken field onstream in Q2
2017 at a substantially reduced capex spend, having delivered
excellent drilling and subsea programmes. The FPSO however is a
complex vessel, designed and built to manage the heavy oil from the
Kraken development, and it is taking longer than expected to
commission during this initial period. Nonetheless, we have been
very pleased with reservoir performance and the flow rates achieved
on individual wells and, we expect the field to increase production
in Q4 and to achieve plateau production of approximately 50,000
Bopd gross in H1 2018.
While we have seen natural declines in EnQuest's existing
production base in H1 2017, Kraken is on course to drive a material
increase in EnQuest's production in 2018 and beyond."
Production statistics. H1 2017 production and development
performance and outlook by asset:
Production Net daily Net daily
on a working average average
interest basis H1 2017 H1 2016
(Boepd) (Boepd)
----------------- ---------- ----------
Northern North
Sea
Thistle/Deveron 7,417 8,966
Dons/Ythan 5,122 6,600
Heather/Broom 4,560 6,114
Central North
Sea
Kittiwake 2,916 3,738
Scolty/Crathes 3,362 -
Alma/Galia 3,259 6,433
Kraken 97(1) -
Alba 1,311 1,236
------------------- ---------- ----------
Total UKCS 28,045 33,087
------------------- ---------- ----------
PM8/Seligi 7,966 8,152
Tanjong Baram 1,003 1,281
------------------- ---------- ----------
Total Malaysia 8,969 9,433
------------------- ---------- ----------
Total EnQuest 37,015 42,520
------------------- ---------- ----------
(1) Net production since first oil on 23 June, averaged over the
six months to end June 2017
Kraken development update highlights
First oil from Kraken was delivered on 23 June 2017. To date,
the four wells from drill centre 1 ('DC1') and two wells out of the
three wells from drill centre two ('DC2'), have produced at initial
gross rates above expectations and with stabilised flow rates which
confirm the Field Development Plan. DC1 maximum individually tested
well rates have been approximately 24,000 Bopd, with stabilised
combined well rates at approximately 15,000 Bopd. One DC2 well has
been tested at a rate above 10,000 Bopd, demonstrating excellent
reservoir properties and completion efficiency. Injection wells
have also surpassed expectations. The hydraulic submersible pumps,
subsea production system and turret have all performed as
expected.
Commissioning of the FPSO vessel topsides equipment continues
and, despite good well deliverability, has been constraining
production so far. Whilst in Q3 2017, volumes are behind forecast
as equipment is commissioned, we expect operational uptime to
improve accordingly and to deliver plateau production of
approximately 50,000 Bopd gross in H1 2018.
DC3 wells are now due to complete in Q4 2017, ahead of schedule,
further facilitating the achievement of plateau performance in H1
2018.
We expect to achieve a further c.$100 million of capex savings
on the project as a result of the drilling of DC3 being completed 3
to 4 months earlier than planned and lower market rates for the
subsea costs of DC4. Full cycle gross project capex is now
estimated to be c.$2.4 billion, 25% down on the original sanctioned
cost of $3.2 billion.
Northern North Sea production
The ongoing Thistle/Deveron programme to improve the reliability
of water injection continues to have a positive impact, plant
uptime is also improving. At the Don fields, well performance was
particularly good at Don Southwest, with high levels of production
efficiency across the Don fields. Production improving chemical
treatments are planned at both West Don and Don Southwest. 2017
water injection issues at Heather/Broom have impacted production
year on year, offset by high levels of production efficiency.
Central North Sea Production
The work programme in the Greater Kittiwake Area ('GKA') &
Scolty/Crathes for 2017 continues to be focused on optimising
production across the assets. Good production has been delivered
from the GKA fields, with high levels of plant uptime and
production efficiency. Production rates on Scolty/Crathes have been
constrained due to wax build up in the pipeline. Chemical
treatments have been carried out which have allowed production to
continue at reduced rates. Further work is ongoing to identify
longer term solutions. Evaluation of the potential from the Eagle
discovery is ongoing; Dana Petroleum has confirmed its intention to
withdraw from this discovery.
At Alma/Galia, the final phase of the power and also the
produced and sea water injection optimisation projects have been
completed on the EnQuest Producer. As expected at the time of
EnQuest's full year 2016 results announcement in March 2017,
production from Alma/Galia has been lower than in 2016, given shut
in wells, production outages in Q1 due to storm damage and natural
declines. Discussions continue with the ESP supplier on
rectification plans to address the ongoing pump reliability
issues.
Malaysian production
PM8/Seligi
EnQuest continues to invest in low cost well work and facility
projects to improve production efficiency, including gas
compression train and power generation control system upgrades. In
addition, robust inspection and refurbishment campaigns on platform
topsides and structures support ongoing safe operations.
Longer term, EnQuest will extend field life through further
investment in idle well restoration, facility improvements and
upgrades, well workovers, new drilling and secondary recovery
projects to increase ultimate recovery. Significant progress is
being made in 2017 on technical studies to better define the next
phase of these projects.
Tanjong Baram
The Tanjong Baram field has produced with excellent operational
uptime in 2017 and the focus remains on steady, safe and low cost
operations.
A futher update and additional analysis will be provided with
EnQuest's 2017 half year results on 7 September 2017.
Ends
Conference call for analysts and investors
A conference call for analysts and investors will be held at
09:00 today - London time.
Dial in number(s) UK Toll: +44 (0)2031394830 UK Toll-Free: 08082370030
URL for international http://events.arkadin.com/ev/docs/NE_FEL_NTF_Events_International_Access_List.pdf
dial in numbers
Participant PIN code 98505309#
For further information please contact:
EnQuest PLC Tel: +44 (0)20 7925 4900
Amjad Bseisu (Chief Executive)
Jonathan Swinney (Chief Financial Officer)
Michael Waring (Head of Communications & Investor
Relations)
Tulchan Communications
Tel: +44 (0)20 7353 4200
Martin Robinson
Martin Pengelley
Notes to editors
This announcement has been determined to contain inside
information.
ENQUEST
EnQuest is one of the largest UK independent producers in the UK
North Sea. EnQuest PLC trades on both the London Stock Exchange and
the NASDAQ OMX Stockholm. Its operated assets include
Thistle/Deveron, Heather/ Broom, the Dons area, the Greater
Kittiwake Area, Scolty/Crathes and Alma/Galia, also the Kraken
development; EnQuest also has an interest in the non-operated Alba
producing oil field. At the end of December 2016, EnQuest had
interests in 25 UK production licences, covering 35 blocks or part
blocks and was the operator of 23 of these licences.
EnQuest believes that the UKCS represents a significant
hydrocarbon basin, which continues to benefit from an extensive
installed infrastructure base and skilled labour. EnQuest believes
that its assets offer material organic growth opportunities, driven
by exploitation of current infrastructure on the UKCS and the
development of low risk near field opportunities.
EnQuest is replicating its model in the UKCS by targeting
previously underdeveloped assets in a small number of other
maturing regions; complementing its operations and utilising its
deep skills in the UK North Sea. In which context, EnQuest has
interests in Malaysia where its operated assets include the
PM8/Seligi Production Sharing Contract and the Tanjong Baram Risk
Services Contract.
Forward looking statements: This announcement may contain
certain forward-looking statements with respect to EnQuest's
expectation and plans, strategy, management's objectives, future
performance, production, reserves, costs, revenues and other trend
information. These statements and forecasts involve risk and
uncertainty because they relate to events and depend upon
circumstances that may occur in the future. There are a number of
factors which could cause actual results or developments to differ
materially from those expressed or implied by these forward looking
statements and forecasts. The statements have been made with
reference to forecast price changes, economic conditions and the
current regulatory environment. Nothing in this presentation should
be construed as a profit forecast. Past share performance cannot be
relied on as a guide to future performance.
Glossary
DC Drill centre
FDP Field development plan
FPSO Floating production, storage and offloading vessel
This information is provided by RNS
The company news service from the London Stock Exchange
END
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