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EnQuest shares on the rise thanks to Kraken ramp-up
EnQuest saw its EBITDA fall 36.4% to $303.6m in its most recent trading year, principally due to a 25% drop in revenue to $635.2m amid lower realised prices within the company's hedging programme.
However, that was not enough to worry investors on Tuesday morning, as shares began to pick up on the positive news that production at EnQuest's flagship North Sea oil field, Kraken, continued to ramp up with output averaging 38,000 barrels of oil equivalent per day in the first two months of the year.
Operations at Kraken, which produces heavy oil, were put on hold as a result of the extremely cold weather witnessed throughout March, meaning that a planned maintenance shutdown in April will not go ahead.
Production across the entire company averaged just over 37,000 barrels of oil equivalent per day, down 5.9% year-on-year, but, EnQuest told investors on Tuesday that it expected to raise production to somewhere between 50,000 and 58,000 boepd in 2018.
EnQuest's net debt for the year rose to just under $2bn, with the firm highlighting the fact that its improving levels of production and a lower cash capital expenditure programme should help it generate positive net cash flow in the coming year, enabling it to reduce its leverage.
EnQuest's chief executive, Amjad Bseisu, said, "2017 was a transformational year for EnQuest. The group delivered the complex Kraken project on schedule and expects full cycle gross capital expenditure to be significantly below budget, while the acquisition of the Magnus oil field and Sullom Voe Oil Terminal is aligned with the group's asset life extension capabilities and provides further opportunities for synergies and growth."
"Production performance in January and February was strong and the group expects a material increase in production in 2018. This growth, combined with a focus on cost control and a substantially reduced cash capital expenditure programme, should see the group generate increased cash flow, enabling it to manage its liquidity and reduce debt," he added.
As of 1200 GMT, shares had picked up 6.26% to 33.10p.