TIDMENQ
RNS Number : 2039F
EnQuest PLC
19 February 2018
ENQUEST PLC, 19 February 2018.
OPERATIONS UPDATE.
2017 PRODUCTION IN LINE WITH GUIDANCE; MATERIAL PRODUCTION
GROWTH EXPECTED IN 2018
EnQuest today provides an unaudited update on the Group's
performance in 2017, together with an outlook for 2018 ahead of its
2017 Full Year Results, which will be announced on 20 March
2018.
2017 performance
-- Group production averaged 37,405 Boepd in 2017, in line with guidance.
-- Kraken first oil in Q2 2017, on schedule and under budget;
achieved gross production rates of over 40,000 Bopd.
-- Operating expenditure expected to be approximately $350
million, with unit opex of c.$25.5/boe.
-- Cash capital expenditure expected to be approximately $370 million, below guidance range.
-- Available bank facilities and cash* amounted to $248 million
at 31 December 2017, with net debt of $1,989 million. Excluding
Payment in Kind interest, net debt was $1,898 million.
-- Successful completion of the acquisition of interests in
Magnus and the Sullom Voe Oil Terminal in December.
* Excluding cash from the ring fenced working capital facility
associated with SVT.
2018 outlook
-- Average Group production expected to grow by between 33% and
55% at c.50,000 to 58,000 Boepd.
-- Kraken gross production averaged 35,000 Bopd in January and
has already delivered the targeted 50,000 Bopd (gross) as
planned.
-- Unit opex expected to be c.$24/boe, including costs associated with planned workovers.
-- Cash capital expenditure expected to be materially lower than
2017 at c.$250 million; includes drilling programmes at Kraken
(DC4), PM8/Seligi and Heather. Net cash payments for capital
expenditure in 2019 reduced by c.$60 million having agreed a
reduction in rig rates.
-- The Group has hedged c.4.4 MMbbls of oil at an average price of c.$60/bbl.
EnQuest CEO Amjad Bseisu said:
"2017 was a transformational year for EnQuest. Delivering the
Kraken project on schedule and below budget was a huge achievement.
As one of the largest developments in the North Sea in recent
years, it demonstrated EnQuest's ability to deliver complex
projects, while the acquisition of the Magnus oil field and Sullom
Voe Oil Terminal provides further opportunities for us to apply our
cost focused life extension capabilities and for growth.
Performance at Kraken continues to improve, and along with the
full year impact of Magnus underpins our expectations for material
production growth in 2018. The resulting increase in operating cash
flow combined with lower capital expenditure will enable us to
begin reducing our debt."
Production statistics
Production on a Net daily Net daily
working interest average average
basis 01.01.17 01.01.16
to to
31.12.17 31.12.16
(Boepd) (Boepd)
-------------------- ---------- ----------
Northern North
Sea 15,627(1) 18,885
Central North Sea 8,131 11,718(2)
Kraken 4,709(3) -
Total UKCS 28,467 30,603
-------------------- ---------- ----------
Total Malaysia 8,938 9,148
------------------------- ---------- ----------
Total EnQuest 37,405 39,751
------------------------- ---------- ----------
(1) Includes net production since acquisition of Magnus from 1 December 2017, averaged over the 12 months to the end of December 2017. Net Magnus production was 3,928 Boepd in December 2017. (2) Includes net production since Scolty/Crathes first oil on 21 November 2016, averaged over the 12 months to the end of December 2016. Net Scolty/Crathes production was 6,422 Boepd over the period from 21 November 2016 to 31 December 2016. (3) Net production since first oil on 23 June, averaged over the 12 months to the end of December 2017.
UK North Sea
Northern North Sea production (Thistle/Deveron, Heather/Broom,
Dons/Ythan, Magnus)
Northern North Sea production in 2017 was 3,258 Boepd lower than
2016. This reduction was primarily driven by lower water injection
at Heather/Broom and Thistle/Deveron, combined with underlying
declines at the Dons fields. Following successful delivery of
identified work programmes, the water injection performance at
Heather/Broom and Thistle/Deveron were improved by year end.
Production efficiency at Heather/Broom and the Dons fields was
very good and various production enhancement activities were
undertaken across the Northern North Sea assets. The contribution
from Magnus also helped mitigate the year-on-year reduction.
Following an upgrade of the Magnus drilling rig, EnQuest expects
to drill three wells to come onstream later in 2018, as well as
undertake logging and well interventions to improve performance. In
addition to infill drilling on Heather, low cost well abandonment
campaigns are also planned at both Heather and Thistle.
Central North Sea production (Alma/Galia, Greater Kittiwake
Area, Scolty/Crathes, Alba)
Central North Sea production in 2017 was 3,587 Boepd lower than
2016. As outlined previously, this reduction is primarily driven by
lower volumes from Alma/Galia reflecting Electric Submersible Pump
(ESP) related well shut-ins, storm related production outages and
natural declines. Field performance improved in the second half of
the year following finalisation of the optimisation projects for
power, produced water and sea water injection. A workover programme
is scheduled to replace certain ESPs in 2018.
Good production has been delivered from the GKA fields, with
high levels of plant uptime and production efficiency. The
Mallard/Gadwall water injection flowline replacement was completed
and brought into service.
As expected, the full year contribution from Scolty/Crathes was
limited due to wax in the flowline. The reservoir has outperformed
expectations and production uptime has been very high. Chemical
treatments have been and continue to be successfully utilised to
keep the flowline in service whilst the partners are considering
rectification options.
The unscheduled shutdown in December of the third-party operated
Forties Pipeline resulted in the GKA and Scolty/Crathes fields
being shut down for approximately three weeks, during which time
opportunistic maintenance work was undertaken.
Kraken
Following first oil from Kraken on 23 June 2017, production
increased throughout the second half of the year as both production
and injection wells performed in line with expectations. The second
processing train, which was brought online during November,
resulted in gross production rates of over 40,000 Bopd being
achieved. Since late December, all DC3 wells have been brought
online and operational efficiency has significantly improved.
Average gross production in January was over 35,000 Bopd, and has
reached 50,000 Bopd with improving operational efficiency as we
continue to optimise performance.
Following the excellent delivery of the DC3 drilling programme
and lower market rates for the remaining subsea campaign, full
cycle gross Kraken project capital expenditure was further reduced
during 2017. In early 2018, EnQuest agreed renegotiated terms for
the drilling rig, reducing both the contract duration and day
rates, saving c.$60 million of net cash payments for capital
expenditure in 2019. Full cycle gross project capital expenditure
has been reduced by approximately $100 million and is now expected
to be c.$2.3 billion, more than 25% lower than originally
sanctioned. The DC4 well campaign, which was not anticipated to
impact 2018 production, is expected to commence in the second half
of 2018, with first production in 2019.
A scheduled shutdown of approximately two weeks is planned for
April, primarily to undertake performance improving work scopes and
minor commissioning activities. A further maintenance shutdown of
approximately one week is currently planned for September.
Malaysia
Production in 2017 was broadly in line with 2016, reflecting
good operational uptime across PM8/Seligi and Tanjong Baram
combined with completion of key work scopes such as compression
reliability improvement and well interventions at PM8/Seligi.
In 2018, we will commence our first drilling campaign with two
wells to be drilled in PM8/Seligi and brought into production in
the second half of the year.
Ends
For further information please contact:
EnQuest PLC Tel: +44 (0)20 7925 4900
Amjad Bseisu (Chief Executive)
Jonathan Swinney (Chief Financial Officer)
Ian Wood (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, Magnus, the Greater
Kittiwake Area, Scolty/Crathes Alma/Galia and Kraken; EnQuest also
has an interest in the non-operated Alba producing oil field. At
the end of December 2017, EnQuest had interests in 25 UK production
licences 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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