ENQUEST PLC, 27 March 2013
Results for the 12 months to 31 December 2012
Sustained strong cash flow generation
Major project execution on track
Unless otherwise stated, all figures are before exceptional items and depletion
of fair value uplift and are in US dollars.
Highlights
· EnQuest performed well in 2012, delivering production of 22,802 Boepd, above
the mid-point of guidance due to a successful drilling programme
· EnQuest’s net 2P reserves at the start of 2013 were 128.5 MMboe, an 11.5%
increase on the start of 2012; reflecting a reserves replacement ratio of 262.2%
and a reserve life of 15.6 years
· Revenue of $889.5 million, EBITDA* of $626.2 million and cash generated from
operations of $593.9 million, reflecting strong underlying operational
performance and cost control
· Profit after tax was $259.7 million, up 90.8% on the prior year
· 2012 capital investment on property, plant and equipment oil and gas assets
amounted to $802.9 million
· The Alma/Galia development project is on track for first oil in Q4 2013 and
the new Kraken development is on schedule for the submission of the Field
Development Plan (‘FDP’) in Q2 2013
· Average production guidance for the full year 2013 is between 22,000 Boepd
and 27,000 Boepd, as approximately 1,000 Boepd has been lost, primarily due to
third party shutdowns of the Brent pipeline in Q1 2013
2012 2011 Change%
Production (Boepd) 22,802 23,698 (3.8)
Revenue ($m) 889.5 936.0 (5.0)
Realised oil price $/bbl 111.6 107.6 3.7
Gross profit ($m) 441.3 444.2 (0.1)
Profit before tax & net finance costs ($m) 405.1 390.1 3.8
Profit after tax ($m) 259.7 136.1 90.8
EBITDA * ($m) 626.2 629.1 (0.5)
Cash generated from operations ($m) 593.9 656.3 (9.5)
Reported basic earnings per share (cents) 46.2 7.6 507.9
Net cash ** ($m) 89.9 378.9 (76.3)
* EBITDA is calculated by taking profit/loss from operations before tax and
finance income/(costs) and adding back depletion (adjusted for depletion of fair
value uplift), depreciation, impairment and write-off of intangible oil and gas
assets. ** Net cash represents cash and cash equivalents less borrowings as at
the reported cash flow statement date of 31 December.
EnQuest CEO Amjad Bseisu said:
“In 2012, our successful drilling programme and strong operational performance
produced 22,802 Boepd, above the mid-point of our guidance. This was driven by
five production wells being brought onstream and by strong operations execution
at Thistle and the Dons. In 2012, EnQuest generated $593.9 million in cash flow
from operations. In the three years since our inception, we have built a strong
technically focused organisation that has generated total cash from operations
of over $1.5 billion.
The execution of our major new development projects is on track; Alma/Galia is
set to produce first oil in Q4 of this year and we are planning to submit our
Field Development Plan (‘FDP’) for the new Kraken development in Q2 2013. With
the Kraken and Alba acquisitions and through the 27th UK Licensing Round, we
have further expanded our asset base. In 2012, EnQuest doubled the number of
UKCS blocks in which it has an interest and established a presence in oil basins
outside the UK North Sea. At the end of 2012, EnQuest had increased 2P reserves
to 128.5 MMboe, representing a reserve replacement ratio of 262.2% and a reserve
life of over 15 years.”
2013 Outlook
Summary
· Average production guidance for the full year 2013 is between 22,000 Boepd
and 27,000 Boepd, as approximately 1,000 Boepd has been lost, primarily due to
third party shutdowns of the Brent pipeline in Q1 2013
· In total, EnQuest plans to deliver 12 wells in 2013. This includes six
production wells, three injection wells and three exploration/appraisal wells
· Capital expenditure in 2013 is expected to be approximately $750 million
with around $350 million invested in the Alma/Galia development and about $75
million pre-development expenditure for the new Kraken development prior to
submission of the Field Development Plan (‘FDP’); this Kraken pre-development
expenditure includes an appraisal well to be drilled in Q2 2013
· Production and transportation costs for 2013 are expected to be in the range
$310 million to $340 million
· Exploration and appraisal. Appraisal wells will be drilled at Cairngorm and
Kraken. In H2 2013, an exploration/appraisal well is expected to be drilled in
the Sabah area, offshore Malaysia
· Development opportunities. Options for a proposed Crathes/Scolty development
are being analysed and a range of development options continues to be evaluated
at Kildrummy. Development studies at Crawford/Porter also continue
· EnQuest’s UK production licences increased from 22 at the start of 2012, to
39 at the start of 2013, including 11 licences from the UK’s 27th Licensing
Round
· EnQuest continues to look at additional opportunities both in the UK and
internationally
By Production and Development Asset
Thistle/Deveron
· In February 2013, EnQuest announced that it had sanctioned the next phase of
the Thistle life extension project, facilitated by its qualification for the UK
government brownfield allowance programme. The current Thistle drilling campaign
has been extended and the final well in the current phase, a new production well
in the West Fault Block, will be drilled in Q2 2013. Drilling will then stop on
Thistle for a year, to allow for the life extension programme to be continued
· Due to the third party closure of the Brent pipeline, production from
Thistle was shut down in Q1 2013 for an unscheduled 8 days
Dons
· The Don Southwest Area 6 DS producer is expected online in Q2 2013 and an
associated water injector will be drilled later in the year. The West Don W6
(NJ) water injector well was tied in and brought online in Q1 2013
· Due to the third party closure of the Brent pipeline, production from the
Dons was shut down in Q1 2013 for an unscheduled 8 days
Heather/Broom
· The drilling programme at Heather will start in Q3 2013, following the
completion of drilling on Thistle
Alma/Galia
· In February 2013, EnQuest announced it approved an increase in the scope and
specification of the Alma/Galia project with the objective of extending the
field life, optimising operating costs and enabling a potential second phase of
development
· First oil from Alma/Galia is scheduled for Q4 2013
Kraken
· The new development of Kraken remains on track for submission of FDP in Q2
2013 and is targeting first oil in 2016.
Review of 2012
Financial
· Strong levels of cash generation continued, with cash generated from
operations of $593.9 million resulting in net cash of $89.9 million at the end
of 2012, after cash outflow of $842.3 million on capital expenditure
· Tax losses increased to approximately $600 million at the end of 2012,
reflecting the investment programme
· 2012 revenue of $889.5 million was 5.0% lower than in 2011, due to the
expected decrease in production, partly offset by the increase in the realised
average price per barrel of oil sold. Revenue for 2012 was also lower than 2011
due to an underlift of $24.4 million in 2012, compared to an overlift of $14.6
million in 2011
· Profit from operations before tax and net finance costs was $405.1 million,
a 3.8% increase over 2011. This reflects the $44 million decrease in cost of
sales, partly reflecting a $39 million change in the lifting position and also a
reduction in the absolute level of operating costs. Underlying operational
performance and cost control were strong
· Profit after tax increased by 90.8% to $259.7 million, mainly due to a
reduction in income tax expense compared with 2011
· Exceptional items included a $175.9 million gain on disposal from the farm
out of a 35% interest in Alma/Galia. There was also a $143.9 million impairment
of the Heather and Broom hub following a delay in phasing of production,
particularly to allow the drilling of the West Fault Block well at Thistle in
2013; there was also an increase in estimated capital expenditure associated
with the field life extension programme. The Heather and Broom hub inherited a
high net book value of $423 million, reflecting the fair value uplift when
Lundin acquired the Heather and Broom assets prior to the formation of EnQuest
· 2012 capital investment on tangible oil assets amounted to $802.9 million.
This included $367.1 million invested in EnQuest’s existing producing fields and
$421.3 million in executing the Alma/Galia development project plan, of which
$86.7 million was the carry element
· The 2012 cash generated from operations of $593.9 million, is lower than the
equivalent $656.3 million 2011 figure, primarily due to the $67.5 million
increase in year end joint venture receivables, principally in relation to
Alma/Galia
Production, Development & Reserves
Net daily average2012 Net daily average2011
(Boepd) (Boepd)
Thistle/Deveron 8,058 5,436
The Don Fields 10,992 12,770
Heather/Broom 3,752 5,492
Total 22,802 23,698
Thistle/Deveron
· Base oil production increased significantly over 2011, partly due to more
reliable power and to enhanced water injection rates, supplemented with oil
production from three electrical submersible pumps (‘ESP’s’). The Deveron P1
ESP well started production in late Q1 2012, with productivity at the upper end
of pre-drill estimates. The A59/45 Area 6 well was completed in late September
and the ESP came onstream in October 2012. Following a successful wireline
intervention, the Thistle A27/17 well came back on line in December, helping to
increase year end production levels. The new gas turbine power generator was
lifted onto the Thistle platform in H2 2012, an important milestone in the
Thistle life extension project
Dons/Conrie
· The expected year on year decrease was due mainly to the decline in
production from the S5 well, which had been drilled and brought onstream in
2010. In July 2012 at Don Southwest, the S11 well came online at a good initial
rate. Well W2 on West Don was abandoned in September; following which well W5,
the sidetrack of well W2, was brought online in October. A new water injection
well, W6, was drilled in 2012 and tied in in Q1 2013. At Don Southwest, the
S10Y came onstream in Q4 2012, in line with expectations
Heather/Broom
· The year on year decline at Heather/Broom was as anticipated, reflecting the
natural decline in production from Broom BR2. Plant management at Heather was
good, resulting in high production efficiency
Alma/Galia
· EnQuest executed well on its development of its new Alma/Galia hub in 2012,
finishing the year on track for first oil in Q4 2013. Six wells were batch
drilled in 2012 (K1 to K6), the three which had been drilled through the
reservoir by the year end were all at or better than prognosis
Kraken
· Following EnQuest’s acquisition of 60% of Kraken in 2012 and its assumption
of operatorship of the proposed development project in September 2012, EnQuest
has been working closely with its partners in preparation for the submission of
the project FDP in Q2 2013 and for first oil targeted for 2016
Reserves
· 11.5% year on year growth in audited net 2P reserves to 128.5 MMboe, a
strong reserves replacement ratio of 262.2%, after production of 8.2 MMboe
during 2012. Reserves growth was driven by 20.4 MMboe which relates to EnQuest’s
20% direct interest in Kraken. Contingent resources in respect of the remaining
40% carried interest are anticipated to be recognised as 2P reserves after the
FDP has been submitted. Net contingent resources have been increased by 62.9
MMboe in relation to EnQuest’s interest in Kraken.
Ends
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)
Finsbury
Tel: +44 (0)20 7251 3801
James Murgatroyd
Conor McClafferty
Dorothy Burwell
Presentation to Analysts and Investors
A presentation to analysts and investors will be held at 09:30 today. The
presentation and Q&A will also be accessible via an audio webcast – available
from the investor relations section of the EnQuest website at www.enquest.com.
A conference call facility will also be available at 09:30 on the following
numbers:
UK: +44 (0) 20 7784 1036
USA: +1 646 254 3365
Notes to editors
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 assets include the Thistle, Deveron,
Heather, Broom, West Don, Don Southwest and Conrie producing fields and the Alma
and Galia development. At the end of 2012, including the licences EnQuest was
offered through the UK’s 27th Licensing Round, EnQuest had interests in 39
production licences covering 55 blocks or part blocks in the UKCS, of which 31
licences are operated by EnQuest. In addition, EnQuest also has an interest in
two blocks offshore in Sabah, Malaysia.
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.
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 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.
Click the associated PDF document to view the full announcement.
Final Results
| Source: EnQuest PLC
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