Page 15 - Euroil Week 21 2020

EurOil PROJECTS & COMPANIES EurOil
EnQuest “on track” with 2020 cost savings
NORTH SEA
EnQuest is targeting a 36% cut in spending this year.
UK-BASED EnQuest said on May 21 it was “on track” to meet its cost reduction targets this year, with its operations “materially unaffected” by the coronavirus (COVID-19) crisis.
EnQuest announced in April it was targeting a 36% cut in anticipated operating expenses this year to $335mn, and would almost halve capital expenditure to $120mn.
It later said it would make 530 North Sea workers redundant, in a “decisive” response to the “challenging” economic environment. The move was expected, given its decision earlier this year not to restart its Heather and Thistle platforms, which were shut down in Octo- ber because of a fire and equipment problems respectively.
EnQuest said it needed an average oil price of $25 per barrel for the rest of the year to achieve free cash flow (FCF) breakeven. The company produced 66,000 barrels of oil equivalent per day in the first four months of the year, which was above its full-year guidance of 57,000-63,000 boepd.
Before the pandemic, EnQuest had been fore- casting average output of 61,000-68,000 boepd in 2020. It produced 68,606 boepd last year, up 24% from the level in 2018.
Output at the Kraken field in the UK North Sea surged 36% year on year, thanks to improved performance at the floating production storage and offloading (FPSO) vessel stationed there.
EnQuest’s net debt stood at $1.364bn at the end of April, down $49mn from four months
earlier. Its total cash and available facilities amounted to $289mn, and no further amortisa- tion payments are due on its senior credit facility this year.
EnQuest also benefits from having 8.1mn barrels of oil hedged at around $45 per barrel this year.
Investors were apparently reassured by EnQuest’s trading update, with the company’s share price peaking at GBP0.1462 ($0.18) at 10:00 on May 21, almost 29% higher than the level at the previous session’s close.
“EnQuest has responded well to the chal- lenges of COVID-19 and the downturn in oil prices,” CEO Amjad Bseisu said. “Our continued focus on operational excellence has ensured our operations remain materially unaffected by the ongoing COVID-19 pandemic.”
Performance at the Kraken and Scolty/ Crathes assets has been “ahead of expectations,” he said, while production at Magnus and PM8/ Seligi has also been strong. Two new wells came on stream at Magnus in March.
“We also took decisive, early action to reduce costs and the implementation of our cost reduc- tion programme is progressing well,” he said. “With the strong performance in the year to date and continued focus on delivering our cost programme, we expect that for the remainder of the year we need to realise an average oil price of around $25 per barrel to achieve free cash flow breakeven, and remain confident in meeting our targets.” ™
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