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2020-09-03

EnQuest PLC Half Year Results 2020

                                   Results for the six months ended 30 June 2020

Strong production performance and targeted free cash flow breakeven on track

3 September 2020

Unless otherwise stated, all figures are on a Business performance basis and are in US Dollars.

Comparative figures for the income statement relate to the period ended 30 June 2019 and the Balance Sheet as at 31 December 2019.

Alternative performance measures are reconciled within the 'Glossary - Non-GAAP measures' at the end of the Financial Statements.

Good performance in a challenging environment

- Group net production averaged 66,055 Boepd in the six months to end June 2020; full year production guidance range of 57,000 Boepd to 63,000 Boepd maintained, although currently expect to be towards the upper part of this range

- Operations materially unaffected by COVID-19

- Strong performance on Kraken with gross production of 38,967 Bopd (net 27,472 Bopd), c.19% higher than the same period in the prior year. Full year production is expected to be towards the upper part of the 30,000 Bopd to 35,000 Bopd (gross) guidance range

- Revenue of $450.7 million (2019: $858.2 million) and EBITDA of $274.9 million (2019: $525.9 million), reflecting  strong production volumes and the benefit of the Group's hedging programme, partially offset by lower market prices

- Operating expenditure decreased to $174.3 million (2019: $248.4 million) with unit operating costs reduced to $14.4/Boe (2019: $20.1/Boe), reflecting strong production and cost control

- Robust cash generated from operations at $283.2 million (2019: $426.2 million); cash capital expenditure of $101.4 million (2019: $124.6 million), with full year guidance of c.$120 million unchanged

- Free cash flow generation of $87.5 million (2019: $138.3 million) has enabled further debt reduction

- Lower oil price assumptions resulted in non-cash post-tax impairments of $251.6 million, and non-cash de-recognition of undiscounted deferred tax assets of $432.6 million. EnQuest retains access to its tax losses and allowances

End June net debt reduced by $61.9 million from year end

- At 30 June 2020, net debt was reduced to $1,351.1 million (end 2019: $1,413.0 million) with cash and available bank facilities amounting to $269.5 million (end 2019: $288.6 million)

- Tanjong Baram Project Finance Facility of $31.7 million fully repaid in June; Sculptor Capital Facility reduced by $31.8 million in the period to end June

- For full year 2020, the Group's hedge programme covers c.11.4 MMbbls. Approximately 10.3 MMbbls are hedged at an average floor price of $43/bbl, with a further 1.1 MMbbls hedged with an average floor price of c.$52/bbl in accordance with the Sculptor Capital facility agreement

Significant, low-cost 2C resource addition in the UK North Sea

- Signed sale and purchase agreement for 40.81% equity interest in and operatorship of Bressay licences in July

- Low-cost addition of up to 115 MMbbls (net) 2C resources; opportunity for long-term, low-risk, phased sub-sea tie-back project

EnQuest Chief Executive, Amjad Bseisu, said:

"The Group continues to perform well in challenging conditions, including COVID-19 and the early shutdown of a number of our assets. The safety of our people and our assets remains our priority. With our ongoing focus on operational excellence, we have continued to exceed our operational targets, including production of around 66,000 Boepd in the first half of 2020.

"Our difficult and early decisions to shut down our higher cost assets have resulted in a substantial cost reduction programme, which is on track. We remain confident that we will achieve our 2020 targets, with free cash flow breakeven for the full year at c.$33/Boe. We continue to target free cash flow breakeven of c.$27/Boe in 2021.

"Even with the most challenging macro and oil price environment since our genesis as a company, we have been able to generate around $87 million of free cash flow in the period and reduced our net debt. We remain focused on continuing to reduce our debt and strengthening our balance sheet.

"Looking further ahead, I am delighted we have agreed the acquisition of a material operating interest in the Bressay field. The addition of up to 115 MMbbls of net 2C resources materially increases our 2C resource base and provides EnQuest an opportunity to demonstrate further its proven capabilities in low-cost drilling and heavy oil."

 

Please click on the associated PDF document to view the full announcement.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com orvisit www.rns.com.

Författare EnQuest PLC

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