ENQUEST PLC, 17 November 2010
Interim Management Statement
EnQuest remains on track for 2010 production targets
HIGHLIGHTS
- Affirming full year production guidance of 20,000 boepd
- First well in Thistle in 20 years drilled and on production
- Completed acquisition of Stratic Energy Corporation
- Offered all five licences sought in 26th round with four as
operator
Amjad Bseisu, Chief Executive, said
“I am pleased to report that EnQuest is performing well. In the ten
months to the end of October 2010, we achieved production growth of 47
per cent over the same period in 2009 and can confirm that we remain on
track to deliver our overall 2010 production target of 20,000 boepd,
having increased that target from 18,000 boepd in August. We completed
our first acquisition, which provides us with a meaningful increase in
our 2P reserves and increases our equity in the West Don field. This
year we have completed five production wells in three different fields
and finished upgrading the drilling rig on the Thistle platform. We
are also pleased with our success in the 26th license round. The above
results give us further confidence in EnQuest's strategy of delivering
sustainable growth in shareholder value through the exploitation of
existing reserves, development opportunities and selective
acquisitions.”
Production & Development Summary
Pro-forma* Pro-forma*
Pro-forma*Cumulative Pro-forma*
Daily Average Daily Average
Cumulative
1 Jan 2010 to 1 Jan 2009 to 1 Jan
2010 to 1 Jan 2009 to
31 Oct 2010 31 Oct 2009 31 Oct
2010 31 Oct 2009
Net production (boepd) Net production (boepd) Net
production (bbls) Net production (bbls)
Thistle/Deveron 4,737 3,835
1,440,117 1,165,844
The Don Fields 10,612 3,172
3,225,916 964,371
Heather/Broom 4,527 6,522
1,376,188 1,982,709
Total 19,876 13,529
6,042,221 4,112,924
- Produced 19,876 boepd net pro-forma daily average to the end
of October 2010, up 46.9% on the same period in 2009
- Produced 6.0m bbls net pro-forma cumulative to the end of
October 2010, including 2.7m bbls in the first four months of the second
half of 2010
Within the second half of 2010, EnQuest's cumulative net production from
1 July 2010 to 31 October 2010 was 2,656,137bbls.
- Our first well in Thistle (and the first in the field for 20
years) is a success. To date we have only tested the poorer lower part
of the reservoir which started production at 800 boepd. Further
production zones will be added later.
- The West Don W4 production well was completed in September
and following a sub-sea hook-up is expected to start production within
the next few weeks
- Broom pipeline replacement and augmentation project was
completed on time.
* ‘Pro-forma' data reflects the results for first six calendar months of
2010 and 2009, as if the assets previously owned by Petrofac Limited and
Lundin Petroleum AB were owned by EnQuest throughout the period. The
results reported under IFRS reflect the related pooling of interests and
acquisition accounting - for further details see ‘Pro-forma note' in
EnQuest's 2010 Half Year Results.
Summary Report
On 27 October 2010, EnQuest was offered all five of the blocks it had
sought in the 26th licensing round, these included; a 100 per cent
interest 3/1b (split) (small exploration block adjacent to Heather), a
100 per cent interest in 21/27a (part) and 28/2 (part) (a heavy oil
discovery), a 100 per cent interest in 30/24, 30/25 part blocks
(potential redevelopment of the Ardmore field) and a 33.33 per cent
interest in 3/17 (exploration block operated by Apache).
On 5 November 2010, the acquisition of Stratic Energy Corporation was
completed, increasing EnQuest's North Sea 2P reserves and consolidating
EnQuest's previous 27.7 per cent West Don holding to 44.95 per cent.
The acquisition also provides a 19 per cent interest in the proposed
Crawford development. Following several months of preparation prior to
the completion of the acquisition, the integration of this business into
EnQuest is now well underway.
The drilling programme in the second half of 2010 has delivered the
start of production from our first well (A55) in the Thistle field,
drilled into the Southern Fault Block of the field. It is the first new
production well drilled and completed in 20 years from the Thistle
platform. This follows an extensive upgrade programme on the drilling
rig with approximately $70 million already invested in advance of the
new drilling activities. Current indications from the well are
encouraging with 800 boepd of initial production from the poorer lower
part of the well.
OUTLOOK
In the first half of 2010 pro-forma unit cost of sales for production
and transport costs were running at just over $28 per boe. The full
year pro-forma unit costs are expected to increase as a result of a
number of factors. These include the costs of maintaining and operating
the Sullom Voe Terminal where the operator of the facility has advised
that these costs will be greater than previously expected. Related to
this EnQuest's full year pro-forma cost of sales for production and
transport are expected to increase by approximately $0.5 per boe. A
‘one-off' workover on the W2 well in the West Don field, completed in
November 2010, will increase unit costs by approximately $1 per boe.
Other miscellaneous costs incurred are expected to result in a further
increase of approximately $1 to $2 per boe.
Pro-forma capital expenditure for 2010 is now expected to be
approximately $200 million rather than the $240 million previously
estimated. This decrease is partly a consequence of rephasing, with $40
million of expenditure now moving to 2011. As an example of the
rephasing, the Thistle rig has started a programme of two partial well
abandonments prior to returning to drilling the North West Fault Block,
now to be in early 2011. The 2011 drilling and capital programmes,
including exploration and appraisal expenditure, will be set out in more
detail at the time of EnQuest's preliminary full year results.
EnQuest remains confident of delivering the increased overall 2010 net
production target of 20,000 boepd, representing growth of 47 per cent
over 2009.
Ends
EnQuest PLC
Tel: +44 (0)20 7925 4943
Jonathan Swinney (Chief Financial Officer)
Michael Waring (Head of Communications & Investor
Relations)
Finsbury
Tel: +44 (0)20 7251 3801
Andrew Mitchell
Conor McClafferty
ENQUEST PLC, 17 November 2010 Interim Management Statement
| Source: EnQuest PLC