REG - EnQuest PLC - February Operations Update

EnquestAnnouncement

12/02/2025 07:00

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RNS Number : 7590W  EnQuest PLC  12 February 2025

EnQuest PLC, 12 February 2025

Full year 2024 operations update and 2025 guidance

International transactions deliver diversification; UK growth a priority

Unless otherwise stated, all figures are unaudited and are in US Dollars

EnQuest Chief Executive, Amjad Bseisu, commented:

"EnQuest is successfully delivering its strategy to grow its international
footprint, with successive transactions in South East Asia providing
geographic and commodity diversification within the portfolio. Our entry into
Vietnam through the Block 12W acquisition and extending our Malaysian
footprint with the expansion of our Seligi gas agreement and the DEWA PSC
award are all underpinned by EnQuest's differentiated operating and project
capability. As EnQuest continues to work towards a transaction in the UK North
Sea and another potential new country entry in South East Asia, these
agreements underline our commitment to growth, a disciplined approach to
M&A, and a strategy to deploy capital where we see the most favourable
returns.

"The Group delivered another solid year of operational performance in 2024,
with asset up time averaging c. 90% and production averaging 40.7 Kboed.
Despite the impact of the Ninian outage in November, strong production towards
the end of the year brought us within 0.6% of our stated range. 2025
production from our existing portfolio to the end of January was 44.2 Kboed,
which is tracking ahead of our 2025 guidance range of 40 - 45 Kboed (which
includes pro forma volumes for Vietnam). We continue to deliver top-quartile
production uptime across the portfolio and remain committed to maintaining
discipline in our cost management and investment decisions.

"EnQuest's foundation for growth remains robust and we are progressing several
UK transaction processes, each focused on monetising the Group's UK tax asset.
Building shareholder value remains at the heart of our capital allocation
decisions and we will provide an update on the Group's shareholder return
plans when we announce our final audited results in March."

2024 performance - Top quartile operating performance

·      2024 Group operated production uptime of 90% is at the top end of
sector performance, resulting in 2024 average production of 40,736 Boepd.

·      EnQuest named Operator of the Year at the Malaysia Upstream
Awards, confirming EnQuest's status as a high-performing operator and
differentiated partner in South East Asia.

·      Expected cash expenditure: Operating costs c. $400 million
(guidance $415 million); Capital costs c. $250 million (November guidance $250
million); Decommissioning costs c. $60 million (guidance $70 million).

2024 Financial highlights - Group remains transaction-ready

·      Net debt c. $386 million at 31 December 2024; a c. $95 million
reduction versus 31 December 2023.

·      As a taxpayer in arrears, EnQuest paid $80 million against the UK
Energy Profits Levy during Q4 2024. In line with the Group's focus on fiscal
efficiency and following the approval of the Magnus Flare Gas Recovery
project, EnQuest expects to pay UK cash tax totalling c. $100 million during
2025.

·      Gross debt c. $665 million at 31 December 2024; a c. $1.5 billion
reduction since end-2017. The Group has no debt maturities before 2027.

·      c. $475 million liquidity at 31 December 2024 ($535 million
following 1 January 2025 RBL redetermination), providing a platform for
transformational transactional growth, enhanced by EnQuest's advantaged UK tax
position.

UK acquisition landscape - Focus on transformative growth

·      The Autumn Budget statement clarified the UK fiscal regime,
including retention of 100% first year capital allowances and the EPL
decarbonisation allowance.

·      EnQuest remains focused on delivering significant value-accretive
growth in the UK and is actively progressing several UK transaction processes.

International growth and diversification

·      Signed agreement to acquire Harbour Energy's business in Vietnam,
with the transaction adding 7.5 million boe of net 2P reserves and c. 5.3
Kboed of pro forma 2025 production. Expected to complete during Q2 2025.

·      In Malaysia, agreement reached on contract to supply Seligi gas,
adding c.13 million boe to net 2P reserves, with net production of c. 35 mmscf
per day (c. 6.0 Kboed) from mid-2026.

·      Award of DEWA Production Sharing Contract in October 2024. The
low-cost first phase development holds up to 500 Bscf of gas in place, with
the potential to deliver production of c. 100 mmscf per day (c. 18 Kboed).

·      EnQuest continues to screen additional growth opportunities
across South East Asia, including further potential new country entries.

2025 guidance - pro forma basis, including Vietnam business

·      Production guidance: 40,000 Boepd to 45,000 Boepd (January YTD
production c. 44,200 excluding Vietnam).

·      Cash capital expenditure to total c. $190 million; operating
expenditure to total c. $450 million; and decommissioning expenditure to total
c. $60 million.

·      Kraken FPSO lease rate reduces by c. 70% from 1 April 2025,
representing a c. $60 million reduction in Group expenditure.

·      Investment is scaled to maintain production, maximise cash flow,
drive capital efficiency and reduce future emissions and operating costs.

 

Further Detail:

Production:

In 2024 Group production averaged 40,736 Boepd, with strong production uptimes
across the portfolio. The Group's investment in low-cost, quick-payback well
work and production optimisation partially offset the impact of natural field
declines (2023: 43,812 Boepd).

Upstream:

Kraken net production averaged 12,759 Boepd, reflecting another year of
exemplary uptime, delivering c. 96% production efficiency.

Production at Magnus averaged 14,173 Boepd, with production efficiency of 83%.
A well optimisation campaign added over 1,000 Boepd of incremental production
from the existing wells, offsetting minor delays to the five-yearly rig
recertification which in turn delayed the start-up of new wells from the
drilling and well intervention programme.

An unplanned outage of the Magnus SSIV within the third-party-operated Ninian
Central Platform's 500m zone shut in all system users, including Magnus
production. Production was reinstated within seven days following a
collaborative response by all users with EnQuest operating the execution of
the repair to the subsea hydraulic system.

Golden Eagle net production averaged 3,328 Boepd, with asset production
efficiency in excess of 92%. The 2023/24 platform drilling programme on this
non-operated asset concluded in August 2024. Two of the three planned
producers were successfully brought online alongside the planned water
injector, although overall production rates were below expectations.

Production from other UK upstream assets averaged 2,327 Boepd, largely in line
with expectations. At the Greater Kittiwake Area ('GKA'), EnQuest and its
partners are focused on extending field life and executing an efficient glide
path to cessation of production, including plans to plug and abandon wells
while asset production is ongoing.

Midstream activity at the Sullom Voe Terminal ('SVT') and its related
infrastructure continued to maintain safe and reliable performance, with 100%
export service availability achieved during 2024. The SVT New Stabilisation
Facility project is ongoing, with planned start-up in the fourth quarter of
2025. This project is a key component in the transformation of the terminal
and sets the fairway for future new energy projects to be undertaken by Veri
Energy

Malaysian production averaged 8,149 Boepd; 10% up on 2023, underpinned by
strong operational performance (94% production uptime) with three new infill
wells drilled in 2024, which delivered production in line with expected rates.
Associated Seligi 1a gas production totalled 1,978 Boepd, to which EnQuest
receives a gas handling and delivery fee.

Decommissioning:

In addition to the completion of 22 well abandonments across Heather and
Thistle, the Heather team reached a major milestone with all Phase 1 and Phase
2 well plug and abandonments ('P&A') fully completed in December. Parallel
rig campaigns on Heather and Thistle continue, with the Thistle team
continuing to deploy a third unit to execute the recovery of conductors. This
resulted in a further 17 wells being abandoned to the final Phase 3 stage of
the well P&A process, taking Thistle to a total of 24 wells fully
abandoned.

In August, Shell transferred its remaining GKA decommissioning operator role
to EnQuest. This comes with no additional financial liability and is a
validation of EnQuest's position as a leading decommissioning operator;
delivering safe results and market-leading cost and schedule performance.

Veri Energy:

Plans are progressing across three primary project work streams; Carbon
Storage, Electrification and E-Fuels, each based on transforming skills and
infrastructure at Sullom Voe Terminal. The Veri team is working towards a
final investment decision on an onshore wind development in late 2025, with
the first power from the project expected in early 2028. With regard to carbon
storage, Veri Energy is focused on delivering 2-3 million tonnes per year
injection capacity by 2030 via a merchant model, which results in lower costs
for the UK government and for stranded emitters.

Liquidity and net debt

During 2024, EnQuest maintained its focus on de-leverage and, at 31 December
2024, net debt of $386 million was $95 million less than the position at 31
December 2023. Gross debt at 31 December totalled $666 million (31 December
2023: $794 million) and the Group's reserve based lending facility ('RBL')
remained fully undrawn ($140 million drawn at 31 December 2023).

As a taxpayer in arrears, EnQuest paid $80 million against the UK Energy
Profits Levy in Q4 2024. In line with the Group's focus on fiscal efficiency
and following approval of the Magnus Flare Gas Recovery project, EnQuest
expects to pay UK cash tax totalling c. $100 million during 2025.

To maximise available financial capacity for value-accretive growth and
simplify the Group's debt structure, EnQuest completed a tap of its existing
$305 million high yield US dollar bond. This was significantly over-subscribed
and priced at 101% of par. Proceeds were used to refinance the Group's $150.0
million term loan facility which, due to its second lien security, had
previously restricted EnQuest's ability to access the full capacity of its RBL
facility.

Total cash and available facilities at the end of 2024 were c. $475 million
(31 December 2023: $499 million). Subsequently, following the most recent RBL
redetermination process, EnQuest's cash and available facilities increased to
c. $535 million.

2025 guidance

EnQuest remains fully focused on maintaining its track record of upstream
operational excellence and utilising its skills, advantaged tax position and
balance sheet strength to drive growth through acquisition.

Group net production from the existing portfolio averaged c. 44,200 Boepd in
January. Following the completion of the Vietnam Block 12W acquisition, pro
forma 2025 net production is expected to be between 40,000 and 45,000 Boepd.

At current foreign exchange rates and oil prices, pro forma operating
expenditures are expected to be c. $450 million, and cash capital expenditure
is expected to be c. $190 million. The Group plans to execute an infill
drilling programme and production-enhancing well intervention campaign at
Magnus, while the asset team is also focused on continuing the good work
undertaken during 2024 to optimise production from the existing well stock.
The Magnus Flare Gas Recovery project was sanctioned in Q4 2024. This project
qualifies for the EPL decarbonisation allowance and, as such, helps to
minimise the Group's 2025 tax payment. Accordingly, EnQuest expects to pay c.
$100 million of cash tax during 2025.

In Malaysia, EnQuest intends to drill an additional four infill wells during
2025 and will continue its programme of compressor upgrades to improve the
reliability and performance of two further compression units.

The Group is focused on maturing the Kraken Enhanced Oil Recovery ('EOR')
project. Following encouraging testing, EnQuest aims to progress to a final
investment decision within the next 12 months. EOR represents a material
upside to the existing Kraken base reservoir performance, with initial
estimates suggesting 30 to 60 MMbbls of additional recoverable oil could be
unlocked.

The EnQuest team also continues to advance the Bressay gas import project as a
subsea tie-back to Kraken with a Bressay FDP and Kraken FDPA in draft form and
a final investment decision planned in 2025. This will displace the majority
of the diesel currently used to power Kraken operations; driving a material
reduction in FPSO emissions and significantly reducing operating costs.

Decommissioning expenditure is expected to total c. $60 million, with the
spend focused on the culmination of the well P&A programmes at the Heather
and Thistle fields. The Heather team aims to permanently disembark the
platform in Q2 2025, while Thistle is scheduled for disembarkation early in
2026. Heather topside removals are scheduled to commence in 2025, with Thistle
topside removals in 2026.

For 2025, EnQuest has hedged c. 3.7 MMbbls of oil with swaps at $72/bbl and a
further c. 1.0 MMbbls with put options at a floor price of $60/bbl. For 2026,
the Group has hedged c. 1.2 MMbbls of oil with swaps at $70/bbl and a further
0.1 MMbbls with zero cost collars with a floor price of $53/bbl and a ceiling
price of $81/bbl.

 

Ends

 

For further information please contact:

 

 EnQuest PLC                                                      Tel: +44 (0)20 7925 4900
 Amjad Bseisu (Chief Executive Officer)
 Jonathan Copus (Chief Financial Officer)
 Craig Baxter (Head of Investor Relations and Corporate Affairs)

 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 South East
Asia, 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 the London Stock Exchange.

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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