Friday 20 March 2020

Strong 2019 production performance and cash generation with reduced net debt;

Expect 2020 production between 61,000 Boepd and 68,000 Boepd; 2020 senior credit facility amortisation repaid ahead of schedule; further debt reduction remains a key focus

2019 performance

Production up c.24% year on year, driven by Magnus acquisition and improved Kraken uptime

Average Group production was 68,606 Boepd; towards the higher end of guidance of 63,000 to 70,000 Boepd

Continued strong performance at Magnus, with production efficiency of more than 80% combined with enhanced reservoir management, well interventions and plant debottlenecking

Kraken average gross production of 35,704 Bopd was above the top end of guidance reflecting improved FPSO performance

Production on Thistle and Heather impacted by shutdowns in the final quarter

Unit opex c.10% lower at c.$21/Boe

Operating expenditure is expected to be approximately $525 million, with unit opex of c.$21/Boe

Cash capital expenditure is expected to be approximately $240 million; below guidance of c.$275 million primarily due to phasing from 2019 in to 2020

Net debt reduced by c.$361 million to $1,413 million

At 31 December 2019, net debt including PIK was $1,413 million, with cash and available facilities of $289 million

The Group has now repaid the entire senior credit facility amortisation due in 2020 following voluntary early payments of $75 million in December 2019 and $35 million in January 2020

2020 outlook

2020 average net Group production is expected to be between 61,000 Boepd and 68,000 Boepd; Kraken gross production expected to be between 30,000 Bopd and 35,000 Bopd

Operating expenditure is expected to be approximately $525 million

Cash capital expenditure is expected to be approximately $230 million

EnQuest has hedged c.2.9 MMbbls of oil in the first quarter with an average floor price of c.$65/bbl. Also, in accordance with the Oz Management Facility agreement, the Group has a further c.1.1 MMbbls hedged across 2020 with an average floor price of c.$52/bbl

EnQuest Chief Executive, Amjad Bseisu, said:

“The Group has again delivered on its operational targets, growing production by 24%. Kraken performance in particular has been excellent, with production efficiency above 90% for much of the second half of the year.

“This performance has facilitated accelerated material repayments of the Group’s credit facility, with the Group’s year end net debt to EBITDA ratio expected to be below 1.5x. Following another early payment in January, we have now repaid the entire 2020 senior credit facility amortisation.

“Group production for 2020 is expected to be between 61,000 and 68,000 Boepd, primarily reflecting natural decline rates and the impact of the ongoing shutdowns at Thistle and Heather, which are expected to be partially offset by the new wells being drilled at Magnus and Kraken.

“I am delighted with the progress we have made at Kraken and in strengthening our balance sheet. We have now set a platform to use our capabilities for continuous improvement and to be able to enhance value for shareholders.”