STRONG PRODUCTION GROWTH,
27,567 BOEPD TO END OF OCTOBER, UP 19%
Highlights
Production summary
· Production from 1 January to 31 October 2014 averaged 27,567 Boepd, up
c.19.2% on the same period last year. This reflects strong production from
EnQuest's existing hubs and from the newly acquired assets in Malaysia and
Tunisia, which produced 2,688 Boepd. EnQuest reiterates production guidance for
2014 of between 25,000 Boepd and 30,000 Boepd for the full year.
Development projects
· Alma/Galia. On course for first oil in mid-2015, following sailaway in
spring 2015; construction work on the FPSO* is now substantially complete, with
commissioning well underway. Five production wells are fully complete and are
awaiting FPSO tie-in.
· Kraken. Progressing well and continues on budget and on schedule for first
oil in 2017. EnQuest's drilling rig contract for the Transocean Leader has been
executed, at a rate materially below the level this rig was previously
contracted for.
*Floating Production, Storage and Offloading vessel
Financing
· As part of its regular programme to underpin planned capital investment in
the year ahead, EnQuest has hedged c.22k Boepd in 2015.
· Whilst budgets are still being finalised, the indicative level of the UK
capex programme in 2015 is in the approximate range of $700 million to $800
million, weighted towards the second half of the year. Additional limited
amounts of international investment will be subject to approval and are expected
to be cash flow neutral in 2015.
· EnQuest's investment programme is funded by its long term financing
arrangements, with significant facilities in place, comprising the high yield
bond, the retail bond and the $1.2 billion committed revolving credit facility,
which is expandable to $1.7 billion.
Amjad Bseisu, Chief Executive, said
"The 19% growth in production to the end of October reflects continuing strong
reservoir performance and top quartile production efficiency from our existing
producing assets. It also reflects a substantial initial contribution from
PM8/Seligi and Didon, our first producing oil fields outside the North Sea. The
new interests EnQuest has acquired this year will add approximately 20MMboe to
net 2P reserves.
The oil and gas industry has been adjusting its plans for the impact of recent
decreases in oil prices and in associated service costs. We are currently
planning our capex programme for 2015 and will set out the detail of our 2015
investment programme with our full year results.
With Alma due onstream in mid-2015 and Kraken on schedule for first oil in 2017,
EnQuest is set for substantial production growth from its UK hubs. Growth is
also enhanced by production from our new businesses in South East Asia and North
Africa, increasing the diversity of EnQuest's portfolio."
Net Production (working interest basis)
Daily average Daily average
1 Jan' 2014 to 1 Jan' 2013 to
31 Oct' 2014 31 Oct' 2013
(Boepd) (Boepd)
Thistle/Deveron 9,175 6,941
Dons 9,327 11,031
Heather/Broom 4,029 4,315
Kittiwake 1,130(1) -
Alba 1,239 842(2)
Total UKCS 24,899 23,129
PM8/Seligi (Malaysia) 2,361(3) -
Didon (Tunisia) 307(3) -
Total EnQuest 27,567 23,129
1 Net production since the completion of the acquisition at the start of Mar'
2014, averaged over the ten months to the end of Oct' 2014.
2 Net production since the completion of the acquisition at the end of Mar'
2013, averaged over the ten months to the end of Oct' 2013.
3 Net production since the completion of the acquisitions at the end of June
2014, averaged over the ten months to the end of Oct' 2014.
Producing fields
UK
· Thistle/Deveron. Delivered 32% production growth year on year. Investment
has been made in the life extension programme, which has been delivering
improvements. Two new cranes were fully installed and made operational in Q3
2014, improving safety and reducing opex. The B turbine was recommissioned and
brought back into service.
· Dons. The 'TJ' well in Area 22 of Don Southwest was tied-in in August, with
initial rates in line with expectations. The scale dissolver programme at Don
Southwest was also successful. An upgrade of the water injection system is
underway. These improvements have helped to mitigate the expected natural
decline in rates. The Ythan Field Development Plan has been approved by DECC;
Ythan, which lies adjacent to Don Southwest, is located within the southern area
of the Don North East licence that was awarded in March 2014. A phased
development of the field is planned, with drilling operations expected to
commence in the fourth quarter of this year and first production from the field
by mid-2015.
· Heather/Broom. Heather producer well H56 was successfully worked over in Q1
2014 with an 80% production uplift. The new injection well H64 came online in
July. High levels of operational 'uptimes' have been achieved; in H2 2014,
Heather/Broom delivered over 100 consecutive days without any production
interruptions. A Broom water injection flowline failed at the end of August;
replacement options are being evaluated for implementation in H1 2015.
· Kittiwake. The Mallard workover was successfully completed and was brought
online in September. Following inspection and routine testing the existing tree
was reinstalled, which reduced expenditure and allowed early production from
Mallard. Since acquiring GKA, EnQuest has been applying its proven business
model for managing mature fields; with upgraded facilities, improved operational
efficiency and the benefit of the workover, production has increased from just
over 2,500 Boepd gross in the first few months, to over 5,500 Boepd gross in
October.
The Mallard workover also facilitated the opportunity for an accelerated Gadwall
workover; production from Gadwall will be reinstated mid-2015, following the
sidetracking of the existing well in H2 2014. EnQuest is making substantial
improvements in operating efficiency, with opex per barrel significantly reduced
from pre-acquisition levels, with further reductions anticipated during 2015.
Front End Engineering Design ('FEED') studies are being completed on the
proposed development of Scolty/Crathes. Preparations are being made for the
drilling of the Eagle exploration well in early 2015.
· Alba: The second Alba production well came online in September in 2014.
Malaysia
· PM8/Selilgi: EnQuest assumed off-shore field operations in October while the
overall transition is due to complete in December this year. Production from
the fields has been strong, resulting in substantial recovery of our cash
consideration. Going forward, EnQuest has plans to enhance production through
well interventions, and facilities rectification and upgrade programme.
· Tanjong Baram: Work on development of the project is proceeding according to
plan.
Tunisia
· Status of transaction: EnQuest successfully completed the acquisition of a
70% interest in the producing Didon oil field in Tunisia in July 2014. The
consideration is currently being held in escrow, pending response of the
Tunisian authorities. The Zarat transaction is still pending, completion is
anticipated by the end of H1 2015.
· Operations: Didon has had steady production; an Electrical Submersible Pump
('ESP') was successfully installed during August and commissioned in September.
Plans are being developed for further ESP installations and the potential for
further infill production drilling is being examined.
Major development projects
· Alma continues on track from the half year results announcement. The pre
-first oil drilling programme for the production wells has been successfully
completed, with five wells now available to come onstream in mid-2015, followed
by a water injection well on Alma at the end of 2015. The subsea infrastructure
is in place, with risers and mooring systems awaiting the arrival of the FPSO.
· Kraken. The Kraken development remains on track for first oil in 2017 as
previously guided.
Following the award of the drilling rig contract, all major Kraken supplier
contracts are now in place; the drilling rig is expected on location at Kraken
by Q3 2015. The drilling rig contract is a four year contract, with the fourth
year at EnQuest's option. The programme of work continues on the conversion of
the FPSO for Kraken; the early focus being on the hull conversion and the marine
system refurbishment. Two integrated templates (major elements of subsea
infrastructure) have been installed at the first drill centre; eight wellheads
have been delivered. A survey vessel has successfully completed coring work at
the FPSO mooring anchor locations.
UK 28th Licensing Round
· EnQuest was recently offered 8 licences as part of the UK 28th North Sea
Licensing Round.
Financial
· In H2 2014, approximately two thirds of anticipated production is hedged at
c.$105.5/bbl.
· In 2015, EnQuest has hedged c.8 million barrels. This has been done through
purchasing puts averaging in the high $80s per barrel and selling calls in the
high $90s per barrel.
ENDS
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
About EnQuest www.enquest.com
EnQuest is the largest UK independent producer in the UK North Sea. EnQuest PLC
trades on both the London Stock Exchange and the NASDAQ OMX Stockholm. It is a
constituent of the FTSE 250 index. Its operated assets include the Thistle,
Deveron, Heather, Broom, West Don, Don Southwest, Conrie, Kittiwake, Mallard,
Gadwall, Goosander and Grouse producing fields and the Alma/Galia and Kraken
developments; EnQuest also has an interest in the non-operated Alba producing
oil field. At the end of H1 2014, EnQuest had interests in 35 production
licences covering 48 blocks or part blocks in the UKCS, of which 29 licences are
operated by EnQuest.
EnQuest believes that the UKCS represents a significant hydrocarbon basin in a
low risk region, 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 expanding geographically to a small number of other maturing regions,
complementing our operations and utilising our skills in the UK North Sea;
EnQuest has interests in Malaysia (including PM8/Seligi and Tanjong Baram) and
in Tunisia (Didon).
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, costs, revenues,
reserves 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.
EnQuest PLC, 12 November 2014. Interim Management Statement
| Source: EnQuest PLC
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