Unplanned outage to push EnQuest output below guidance

UK oil and gas company EnQuest expects its production for the year to be below its guidance range due to an incident and a resulting unplanned outage in Malaysia.

According to an update on Tuesday, EnQuest’s production averaged 60,777 Boepd in the ten months to end October 2020.

EnQuest added that its full-year production is expected to be slightly below the mid-point of the 57,000 to 63,000 Boepd guidance range.

Group production is lower in the second half compared to the first half of the year, reflecting the maintenance shutdown schedule as well as an unplanned outage at PM8/Seligi.

EnQuest Chief Executive, Amjad Bseisu, said: “The Group has delivered production in line with guidance year to date, with Kraken continuing to perform well. We expect production to be slightly below the mid-point of the 57,000 to 63,000 Boepd guidance range for the full year 2020, reflecting the impact of the unplanned outage at PM8/Seligi.

“We have continued to generate positive free cash flows in the period and have again made a voluntary early payment of $40 million against the April 2021 scheduled amortisation of our senior credit facility. We remain focused on cost control and capital discipline to maintain free cash flow breakeven at around $33/Boe in 2020”.

Average production in Malaysia in the ten months to end October 2020 was 7,115 Boepd, 15 per cent lower than the same period in 2019.

This decrease was primarily driven by a detached riser at the Seligi Alpha platform which provides gas lift and injection to the Seligi Bravo platform, EnQuest explained.

This resulted in a release of gas and a subsequent fire which initiated an automatic emergency shutdown of the PM8/Seligi field. The company’s safety systems and emergency response procedures were successfully implemented, with the fire extinguished quickly and all personnel onboard mustered safely.

Following an initial investigation and safety assessment, partial operations were able to be restarted within two days, with wells flowing under natural pressures.

Production is currently at c.40 per cent of normal levels with a single compressor train operational. Remediation activities to allow production to be returned to normal levels are currently being assessed, although production is expected to remain constrained through the first half of next year.

Performance at Kraken and Scolty/Crathes is expected to partially offset lower production at PM8/Seligi, Magnus and the Dons.

EnQuest continues to expect to achieve its 2020 targets with free cash flow breakeven for the full year of c.$33/Boe.