EnQuest Production Increases. Kraken FDP Submitted

EnQuest Production Increases. Kraken FDP Submitted

EnQuest, an independent oil and gas development and production company, releases its first half of 2013 results.

Production in H1 2013 was 21,455 Boepd, up 5.9% on H1 2012. Development drilling at the core hub assets delivered good results in H1 2013, this has continued into H2 2013 with a new well on the Thistle Western Fault Block and with a new producer/injector pair at Don Southwest. Reservoir performance of all producing assets has been good.

Revenue was $455.9 million, with EBITDA of $273.0 million and strong cash flow of $234.7 million generated from operations.

Gross profit was $175.0 million, down 14.3% on the prior period, reflecting a lower oil price, a number of one-off operating costs and a change in the production mix, resulting in a higher depletion charge.

Alma/Galia first oil is currently expected in Q1 2014, mainly due to the increase in scope of refurbishment of the existing FPSO marine and process systems.

With Alma/Galia first oil expected in Q1 2014 and stronger Thistle production in H2 2013, average 2013 EnQuest production should be in the lower half of the range indicated in March this year; 22,000 Boepd to 27,000 Boepd. With initial net production anticipated of approximately 13,000 Boepd, the Alma/Galia development will deliver a substantial increase in EnQuest’s production in 2014.

A field development plan (‘FDP’) for Kraken was submitted to the Department of Energy and Climate Change (‘DECC’) during H1 2013, gross reserves are 137 MMboe and sanction is expected in H2 2013. The Kraken appraisal well confirmed a separate second field, to be known as ‘Kraken North’; a second heavy oil tax allowance of £800 million is therefore anticipated. With the sanction of Kraken and the associated capital investment, EnQuest does not expect to pay cash tax before 2018.

EnQuest has acquired a 50% interest in the Avalon prospect, close to the Scolty and Crathes discoveries. KUFPEC UK Limited and Spike Exploration UK Limited have farmed into the Cairngorm discovery on a promoted basis, EnQuest retains a 45% interest and operatorship.

Business development and new development project activity in 2013 are expected to result in a substantial addition to 2P reserves, with an increase of more than 70 MMboe to net 2P reserves, largely driven by the sanction of Kraken.

EnQuest CEO Amjad Bseisu said:

“EnQuest is delivering sustainable growth through increasing production and increasing reserves, and our assets are performing well.

“In H1 2013, with good operational progress, EnQuest delivered a 6% increase in production, up to 21,455 Boepd; resulting in $235 million of cash flow from operations. Production was enhanced by the performance of the new West Don producer/injector pair and by operational efficiency and good well performance at Heather/Broom. Development drilling at our new Thistle Western Fault Block well and the new Dons Southwest producer/injector pair has been successful. The Thistle well came in better than expected and will lead to stronger Thistle production in H2.

“Most of the Alma/Galia subsea work is now complete. The scope of the refurbishment of the marine and process systems at the FPSO has been extensive and we now anticipate first oil being rescheduled to Q1 2014. Alma/Galia is set to deliver a significant increase in EnQuest’s production in 2014. The Kraken FDP has been submitted and Kraken remains on track for sanction in the second half of this year. Beyond that, EnQuest’s recent first move into North Africa is providing us with short term infill drilling opportunities at Didon and with further major development opportunities at Zarat.

“Through asset acquisitions and new development projects in 2013, we already expect to increase our net 2P reserves by more than 70MMboe, including over 60MMboe from Kraken. We continue to look at opportunities to acquire assets in the UK and other regions, where our expertise and capabilities can be applied to maturing assets and development opportunities.”

Average production for H1 2013 was 21,455 Boepd, up 5.9% on H1 2012.

Thistle/Deveron

Reservoir performance remains strong, however H1 2013 production was lower as a result of the shutdown of the third party Brent pipeline in Q1 2013 and water injection downtime due to an outage of the ‘B’ turbine generator while the new ‘D’ turbine was being commissioned.

The new Thistle production well in the Western Fault Block reached target depth in June. The well came in 80ft high to prognosis and has started production.

There was a non-recurring increase in operating costs at Thistle of approximately $6 million over the prior period, mainly as a result of an outage of the ‘old’ B turbine generator and of the costs of running the D turbine on diesel fuel during the commissioning period. The D turbine is anticipated to be on fuel gas later in H2 2013.

Dons

Although the Don fields were also impacted by the Brent pipeline shutdowns in Q1 2013, the West Don W6/W4 producer/injector pair performed well, following the tie-in of the new W6 injector well in Q1 2013. This contributed to the 28% H1 2013 year-on-year production growth from the Don fields. A successful new producer/injector pair has also been drilled in Don Southwest, Area 6.

Heather/Broom

Heather/Broom delivered 15% year-on-year production growth in H1 2013, reflecting good well performance at Broom and high operating efficiency at both Heather and Broom.

The Heather return to drilling rig reactivation project should be complete in H2 2013.

Alba

Alba’s H1 2013 reported production of an average 814 Boepd is based on the three months production since the acquisition completed. The underlying level of production is continuing at a similar rate.

Platform well A67 (previously designated as A38z) was successfully completed. Subsea well D13 successfully appraised an extension to the main field before reaching the main target. This well is expected to be online in the second half of the year. Two further platform wells are planned to be drilled in H2 2013.

Alma/Galia

The drilling and subsea elements of the project continue on plan. The scope of the work on the FPSO has expanded, including additional work on the existing marine and process systems. Depending on weather, first production is expected to be in Q1 2014. The new schedule and updated project scope will result in some additional costs. EnQuest is considering moving the FPSO to a yard closer to the field, for commissioning.

In February 2013, EnQuest announced that it was extending the field life of the project and that consequently gross 2P reserves would be increased from 29 MMboe to 34 MMboe.

Kraken

An Environmental Statement for the Kraken Area development was submitted to DECC during H1 2013, approval of the Environmental Statement is anticipated in H2 2013.

The appraisal well in H1 2013 confirmed a second accumulation of oil north of Kraken. The FDP for the Kraken area development contains the development plan for both the Kraken and the Kraken North fields. EnQuest anticipates separate heavy oil allowances for each field.

The FDP for the Kraken development has been submitted to DECC. Gross Kraken development reserves are 137 MMboe; EnQuest expects to book at least a further net 60 MMboe of 2P reserves in relation to Kraken.

Malaysia (Blocks SB307 & 308)

Seismic analysis is ongoing; an exploration well will be drilled at the end of 2013 or in early 2014.

[mappress]

Press Release, August 13, 2013

 

Related news

List of related news articles