Operating performance

• Average net Group production in the six months to end June 2022 was 49,726 Boepd, an 8% increase over the same period last year, driven by strong production efficiency across the portfolio; full year guidance remains unchanged
• Kraken delivered average gross production of 27,698 Boepd, above the top end of full year guidance of 22,000 to 26,000 Boepd; planned shutdown on track for the third quarter
• Infill drilling campaigns have commenced at Magnus and PM8/Seligi
• Well work campaigns at Magnus and PM8/Seligi are progressing well, with two wells returned to service and three well workovers completed, respectively
• Excellent progress in reducing absolute Scope 1 and 2 emissions, with CO2 equivalent emissions reduced by 16.8% from the 2020 baseline; since 2018, UK Scope 1 and 2 emissions have reduced by 42.6%

EnQuest Chief Executive, Amjad Bseisu, said:
“We have made a good start to the year, delivering production of 49,726 Boepd and generating $332 million in free cash flows ($474 million pre-hedging) that have enabled us to significantly reduce net debt to c.$880 million at the end of June, resulting in a net debt to EBITDA ratio of around 1.0x, and representing a significant step towards our 0.5x target.

“Performance has been strong at Kraken and in Malaysia, where we have seen the positive impact of our well workover programme. Our drilling and workover programmes are underway at both Magnus and PM8/Seligi to deliver production in the second half, offset by our maintenance shutdowns at Magnus and Kraken.

“We remain on track to deliver our operational targets and, in the prevailing price environment, are focused on driving an accelerated debt reduction programme.

“EnQuest has a long track record of investment in the North Sea. We remain focused on continuing to improve performance and extend the lives of assets within our portfolio, delivering value to all of our stakeholders as we increase production, reduce emissions and support energy security.”

Liquidity and net debt    

• Net debt of c.$880 million at 30 June 2022 is down c.$342 million, inclusive of c.$10 million of foreign exchange movement, from 31 December 2021, driven by strong free cash flow generation
  • At the end of June, $115 million remained outstanding on the Group’s senior secured debt facility (‘RBL’) following accelerated repayments totalling $300 million in the six months to end June 2022
  • EnQuest’s net debt to EBITDA ratio as at 30 June 2022 is around 1.0x, down from 1.6x at the end of 2021.
• EnQuest has executed $14.4 million (1.7%) of buy backs of the 2023 7% high yield bonds
• For the period July to December 2022, the Group has hedged c.3.4 MMbbls of oil with an average floor price of c.$60/bbl and an average ceiling price of $79/bbl. For 2023, the Group has hedged a total of approximately c.3.5 MMbbls with an average floor price of c.$57/bbl and an average ceiling price of c.$77/bbl

Guidance unchanged

• 2022 net production guidance of between 44,000 and 51,000 Boepd
• Kraken gross production still expected to be between 22,000 Boepd and 26,000 Boepd (15,500 Boepd to 18,500 Boepd net)
• Operating expenditure is expected to be approximately $430 million
• Cash capital expenditure is expected to be around $165 million
• Abandonment expense is expected to total approximately $75 million

Board change

• As previously announced, on 24 March 2022 Jonathan Swinney notified the Board of his intention to step down from the Board as Chief Financial Officer (‘CFO’) and Executive Director. Following a successful period of transition, Jonathan will step down from the Board on 15 August 2022 and Salman Malik will join the Board as CFO on the same day.

KeyFacts Energy: EnQuest UK country profile   l   EnQuest Malsysia country profile