Extractive Industries

EnQuest revenues fall but recovery seen in Golden Eagle

EnQuest plc reported revenues and EBITDA* nearly halved by the end of last year, reflecting lower oil prices and the cessation of production at Heather, Thistle and Alma/Galia following the reorganisation in 2020.

Focus: EnQuest aims to extend the useful lives of existing assets through operational improvements and reducing emissions (Pixabay – generic)

But the group, with operations in the UK North Sea and Malaysia, remains optimistic that its proposed acquisition of the Golden Eagle area will strengthen business.

In its results for the year ended 31 December 2020, the offshore group reported revenue of US$856.9 million compared with $1,711.8m for the same period in 2019, and EBITDA of $550.6m (2019: $1,006.5m).

The company said the 49% decrease was also due to realised oil prices of $41.3/bbl, partially offset by lower operating costs, and the move from a net overlift to a net underlift position.

Revenue is mainly derived from crude oil sales which totalled $779.9m, 49.6% lower than in 2019 ($1,548.2m).

Sales of condensate and gas were $60.5m (2019: $120.2m), reflecting significantly lower market prices for gas in relation to the onward sale of third-party gas purchases not required for injection activities at Magnus.

The group’s operating expenditure of $328.6m was 36.6% lower than in 2019 ($518.1m), as a result of cost control including the decision to cease production at Heather, Thistle and Alma Galia.

The group’s production averaged 59,116 boepd in 2020, in line with guidance (2019: 68,606 boepd).

Unit operating costs decreased by 26.2% to $15.2/boe (2019: $20.6/boe).

Cash generated from operations fell to $567.8m (2019: $994.6m) and cash capital expenditure was $131.4m (2019: $237.5m).

EnQuest recorded free cash flow generation of $211.1m at the end of the period (2019: $368.5m).

Cash and available bank facilities amounted to $284.1m (2019: $288.6m), with net debt reduced to $1,279.7m (2019: $1,413.0m)

Statutory reported basic loss after tax of $625.8m reflecting non-cash impairments, including tax, of $630.3m, (2019: loss after tax of $449.3m).

OUTLOOK

Chief executive Amjad Bseisu said that the proposed acquisition of the Golden Eagle area would strengthen business, providing additional production and strong cash flows which would partially utilise the group’s UK tax assets.

“We successfully managed the unique set of challenges presented in 2020, taking decisive action to protect and enhance our business.

“Our focus on extending the useful lives of existing assets through operational improvements and reducing emissions is well suited to operating through the energy transition and I am confident that EnQuest is well placed to succeed in a changing world.”

*Earnings before interest, taxes, depreciation, and amortization.

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