REG - EnQuest PLC - EnQuest November Operations Update

EnquestAnnouncement

28/11/2023 07:00

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RNS Number : 8278U  EnQuest PLC  28 November 2023

EnQuest PLC, 28 November 2023

Operations update

EnQuest Chief Executive, Amjad Bseisu, said:

"The Group has continued to deliver good production performance from its
operated assets and we expect full year production around the mid-point of our
guidance range. This is under-pinned by the strong production uptime across
the portfolio, including at Kraken following transformer upgrades, where we
have seen 100% production efficiency since the reinstatement of full
production during August.

"Our 2023 drilling programme continues to progress well and remains on track
to bring additional wells online at Magnus and at Golden Eagle before the end
of the year. In addition, we have entered into a rig contract to return to
drilling at Kraken in 2025, with EnQuest holding the option to extend the
contract to accommodate additional work scopes. Further, we continue to
execute safe and efficient decommissioning projects at Thistle and Heather and
expect to deliver another record year for northern North Sea multi-asset well
abandonments by completing 25 wells this year, while we remain on schedule for
platform removals.

"Building on this excellent operational performance and by remaining
disciplined in our investment decisions, we are on track to deliver on our
2023 targets. We are encouraged by government announcements relating to the
fiscal regime governing the UK's oil and gas sector as we remain engaged in
efforts to encourage legislation which supports investment in the UK's
delivery of energy security, decarbonisation and energy transition.

"Looking ahead towards 2024, we remain focused on utilisation of our
differentiated tax advantage as we look to unlock organic and inorganic
opportunities to grow the business and create a pathway to deliver returns to
shareholders."

 

Operating performance

§ Average net Group production in the ten months to end October 2023 was
43,872 Boepd, in line with guidance

§ Following reinstatement of full production during August, Kraken delivered
100% production efficiency in September and October

§ The extensive planned maintenance shutdowns at Magnus and GKA were
completed ahead of schedule, with all key scopes executed

§ Magnus and PM8/Seligi are ahead of 2023 production targets with strong
production uptime

Liquidity and net debt

§ As at 31 October 2023, the Group's net debt position was $585.8 million,
down from $615.2 million at 31 August 2023

§ At the end of October, $190.0 million remained outstanding on the Group's
senior secured debt facility ('RBL') following the Group's decision to make an
additional accelerated payment of $50.0 million during October

§ The Group drew $150.0 million against its term loan facility at the end of
September

§ In October, the Group fully repaid its £111.3 million ($138.1 million)
2023 7% Sterling bond

Hedging

§ For the last two months of 2023, the Group has hedged a total of c.1.5
MMbbls. Of this total, c.0.7 MMbbls relates to put options with an average
floor price of $60/bbl, while the Group have also entered into c.0.8 MMbbls of
swaps at an average price of $88/bbl

§ The Group has hedged a total of c.3.5 MMbbls for 2024 and c.0.2 MMbbls for
2025, predominantly using put options at an average floor price of c.$60/bbl

Guidance

§ 2023 average net Group production is expected to be around the mid-point of
the existing guidance range of 42,000 Boepd to 46,000 Boepd

§ Operating expenditure for the year is expected to be c.$400 million, which
is $25 million lower than original guidance of $425 million, due primarily to
lower than budgeted diesel and chemical costs

§ Cash capital and decommissioning expenditures are both expected to be in
line with original guidance at c.$160 million and c.$60 million, respectively

 

 Production details

 

 Average daily production on a net working interest basis (Boepd)      1 Jan' 2023 to  1 Jan' 2022 to

31 Oct' 2023
31 Oct' 2022
                                                                       (Boepd)         (Boepd)
 UK Upstream

 - Magnus                                                              15,645          11,493
 - Kraken                                                              13,471          18,591
 - Golden Eagle                                                        4,302           6,542
 - Other Upstream(1)                                                   2,661           3,542
 Total UK                                                              36,079          40,168
 Total Malaysia(2)                                                     7,793           6,425
 Total EnQuest                                                         43,872          46,593

 

(1) Other Upstream: Scolty/Crathes, Greater Kittiwake Area and Alba

(2) Malaysia production figure for the YTD October 2023 includes 750 Boepd
associated with Seligi gas

 

Magnus

Production at Magnus has averaged 15,645 Boepd for the ten months to end
October 2023, an increase of 36.1% versus the equivalent period in 2022. The
planned annual maintenance shutdown was completed in 20 days, versus the
original planned duration of 24 days, with all major scopes executed. The
shutdown involved 10,000 manhours of work being completed with zero loss time
incidents. YTD production efficiency at the asset following the shutdown
remains high at 86.3%.

Following the successful completion of the North West Magnus injector in May
and the B6 infill well in early August, drilling activity continues at Magnus
with a sidetrack well expected to be completed in early December, followed by
a well perforation scope. The Group will then complete the five-yearly rig
recertification of the Magnus platform rig during the first quarter of 2024.

Kraken

During the ten months to end October 2023, average gross production was 19,108
Boepd (net 13,471 Boepd), which is reflective of high uptime before and after
the anomalous failure of hydraulic submersible pump ('HSP') transformer units
during the first half of the year. Since the efficient return to service of
the floating production, storage and offloading vessel ('FPSO') restored full
production in early August, the Group has overseen a return to top quartile
performance, with the FPSO delivering production efficiency and water
injection efficiency of 100% for the months of September and October. In
addition, delivery and deployment of new HSP transformer units has provided
increased resilience to production capacity.

Production in the second half of the year has benefited from the removal of
two planned periods of single train operations, with the Group having executed
maintenance work while production at the FPSO was shut-in. As a result, no
further planned maintenance outages are anticipated during 2023.

Looking ahead, the Group has procured a mobile offshore drilling unit for the
proposed drilling of two wells at Kraken during 2025.

Golden Eagle

Year to date October net production was 4,302 Boepd, with asset production
efficiency remaining strong at around 90%.

Following the arrival of the drilling rig in August 2023, drilling of the
first well in the 2023 drilling programme commenced in October and is expected
to be brought online in late December. This represents the first well of an
anticipated four well programme, which is due to be completed in mid-2024.

Other upstream assets

Production for the ten months to end October 2023 averaged 2,661 Boepd, in
line with expectations. The Greater Kittiwake Area maintenance shutdown was
completed in 22 days having been rescheduled to July, which represented an
improvement of three days versus the original plan.

Infrastructure and New Energy

The Sullom Voe Terminal ('SVT') and its related infrastructure continues to
maintain safe and reliable performance, with 100% export service availability
during the year to date.

EnQuest continues to develop cost-effective and efficient plans to repurpose
the terminal site and connected offshore infrastructure and is well positioned
to harness the significant renewable energy potential in the area. The Group
continues to mature a number of global scale decarbonisation opportunities,
including carbon capture and storage, electrification and green hydrogen.
Having secured an exclusivity agreement with the Shetland Islands Council to
progress new energy opportunities at SVT, EnQuest is well placed to deliver on
these new energy ambitions in conjunction with potential strategic and
financial partners.

In August, EnQuest formally accepted the award of four carbon storage licences
in the North Sea Transition Authority's ("NSTA") first carbon storage
licensing round. Each of the licence areas are accessible from EnQuest's
existing owned and operated infrastructure and development plans are
progressing around leveraging this infrastructure and significant
infrastructure reuse and repurposing to optimise capital cost and minimise
environmental impact, targeting development of a flexible storage hub capable
of accommodating up to ten million tonnes of CO(2) per annum from emitters in
UK, Europe and beyond.

UK Decommissioning

Heather and Thistle well plug and abandonment ('P&A') campaigns are
progressing well with 11 wells completed at Heather and a further 12 wells
completed at Thistle as at 31 October 2023. For the full year, the Group
remains on track to complete the P&A of 12 wells at Heather. At Thistle,
the Group expects to complete P&A of 13 wells, an increase of two wells
versus the original plan. Delivery of the enhanced 2023 P&A plan of 25
wells would exceed the record for the most prolific multi-asset P&A
campaign in the northern North Sea, set by EnQuest at 24 wells in 2022.

EnQuest also continues to plan the P&A of 33 subsea wells at the
Alma/Galia, Dons and Broom fields.

Malaysian operations

For the ten months to end October 2023, average production in Malaysia was
7,793 Boepd, representing a 21.3% increase over the same period last year.
This increase includes 750 Boepd associated with Seligi gas, to which Petronas
hold the entitlement, and which is produced and handled by EnQuest in exchange
for a gas handling and delivery fee, as well as strong operational performance
and production uptime of 90%.

Following the drilling of the commitment well at Block PM409, the Group can
report that the well was plugged and abandoned dry. Following confirmation
from Petronas that all well requirements had been met by EnQuest, no further
drilling is planned for PM409.

For 2024, the Group plans to drill three infill wells alongside three well
workovers at PM8/Seligi, with rig mobilisation targeted by the end of the
first quarter.

Liquidity and net debt

Net debt of $585.8 million at 31 October 2023 represents an improvement of
$29.4 million versus net debt of $615.2 million as at 31 August 2022,
following the EPL payment of $60.2 million and the settlement at maturity of
the 2023 7% Sterling bond of £111.3 million ($138.1 million).

As of 31 October 2023, cash and available facilities were $386.3 million,
including restricted cash and ring-fenced funds held in joint venture
operational accounts totalling $130.7 million.

Ends

 

For further information please contact:

 

 EnQuest PLC                                Tel: +44 (0)20 7925 4900
 Amjad Bseisu (Chief Executive Officer)
 Salman Malik (Chief Financial Officer)
 Craig Baxter (Head of Investor Relations)

 Teneo                                      Tel: +44 (0)20 7353 4200
 Martin Robinson
 Harry Cameron

 

Notes to editors

ENQUEST

EnQuest is providing creative solutions through the energy transition. As an
independent energy company with operations in the UK North Sea and Malaysia,
the Group's strategic vision is to be the partner of choice for the
responsible management of existing energy assets, applying its core
capabilities to create value through the transition.

EnQuest PLC trades on both the London Stock Exchange and the NASDAQ OMX
Stockholm.

Please visit our website www.enquest.com (http://www.enquest.com) for more
information on our global operations.

Forward-looking statements: This announcement may contain certain
forward-looking statements with respect to EnQuest's expectations 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
announcement should be construed as a profit forecast. Past share performance
cannot be relied upon as a guide to future performance.

 

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