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EnQuest looking forward to cash generation and deleveraging as Kraken start-up nears

Published: 09:00 21 Mar 2017 GMT

Enquest oil worker
Kraken is slated for 'first oil' in the second quarter.

EnQuest Plc (LON:ENQ) boss Amjad Bseisu is looking forward to focussing on cash generation and deleveraging after what he describes as a period of heavy capital investment.

The growing independent oil firm’s transition will be marked by the start-up of the Kraken field, which is said to be under budget and on schedule for first oil in the second quarter.

Assuming the Kraken field comes online and ramps up without fuss or delay the company forecasts 2017 production between 45,000 and 51,000 barrels oil equivalent per day.

That will be a meaningful uplift from the 39,751 boepd produced through 2016, which in itself represented 8.7% growth from the preceding year.

Rather than another major capital outlay after Kraken, the next leg up for EnQuest comes from the ‘innovatively’ acquired Magnus field – a mature field is being picked up from BP without upfront consideration (instead EnQuest will take on decommissioning obligations and hand over a share of future production revenues).

“Our journey to optimise and increase production and reduce costs continues, with average 2017 production anticipated to be between 45,000 Boepd and 51,000 Boepd,” Bseisu said.

“Following delivery of Kraken, EnQuest will begin moving from a period of heavy capital investment into one focused on cash generation and deleveraging the balance sheet."

Financial results for 2016 reveal US$849.6mln of revenue, down 6.3% on the prior year, as the average realised oil price was 11% lower than 2015 at US$63.8 per barrel.

Gross profit was up 13% at US$196mln, and EnQuest highlighted that profit before tax and net finance costs rose 36% to US$237mln while earnings (EBITDA) were reported at US$477.1mln, up just slightly from US$474mln the year before.

Cash generated from operations was meanwhile measured at US$408mln, up from US$221mln.

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