EnQuest reports losses and reorganises North Sea operations

EnQuest’s revenue nearly halved for the first six months of 2020 compared with the same period last year but production losses were minimised.

Th group also decided not to restart production at the Heather/Broom and Thistle/Deveron fields, and to reorganise its UK North Sea business into three directorates of upstream, midstream and decommissioning leading to a 40% cut in employees.

The company’s total half year results, operating in the UKCS and Malaysia, showed revenue at $450.7m for H1 2020 compared with $858.2m for the same period in 2019 due to the drop in oil prices.

EnQuest’s total production fell to 66,055 barrels per day (2019: 68,548) due to higher production efficiency and two new wells coming onstream during March.

Crude oil sales were $375.5m compared with $761.9m in 2019, and revenue from the sale of gas and condensate was $27.6m (2019: $79.9m).

EnQuest’s costs fell with sales at $410.9m (H1 2020) compared with $588.3m (2019), which reflected the company’s focus on cost control, including the decision to cease production at Heather and Thistle.

EBITDA for the six months ended 30 June 2020 reduced to $274.9m (2019: $525.9m), and free cash flow was $87.5m for H1 2020 (2019: $138.3m).

The group’s upstream operations include Magnus, Kraken, the Greater Kittiwake Area and Scolty/Crathes, and Alba. Midstream includes the Sullom Voe Terminal and the group’s pipeline operations. Decommissioning comprises Heather/Broom, Thistle/Deveron, the Dons and Alma/Galia. 

The group’s other North Sea operations saw production in H1 at an average of 11,471 boepd, 39.8% lower than the same period in 2019.

The decrease was primarily driven by the decision not to restart production at the Heather/Broom and Thistle/Deveron fields, which contributed around 9,000 boepd in the same period of 2019, leading to the reorganisation of EnQuest’s UK business.

Average production in Malaysia in the six months to end June 2020 was 8,306 boepd, broadly in line with the same period in 2019.

EnQuest added it would build on its business development and growth opportunities following its signing in July of a sale and purchase agreement with Equinor for an equity interest in the Bressay licences.

Under the agreement, EnQuest will assume operatorship of the licenses with a participating interest of 40.81% for an initial consideration of £2.2m payable as a carry against 50% of Equinor’s net share of costs.

EnQuest reported three cases of Covid-19 offshore, across all producing assets but its operations continue without being materially affected by the virus.