Enquest Prepares to Double Production Levels

LONDON -- Enquest (LSE: ENQ.L  ) , the largest independent producer of oil and gas from the North Sea, said its plans to increase its production levels remain on track, despite the fact that its latest interim profits have declined by 11% to $193 million.

Although Enquest received a slightly higher price for oil during the period, production from its three core areas declined by nearly 20% to an average of 20,253 barrels of oil equivalent per day. Part of this decline was expected, with an older well at its Don Fields development winding down, but a 20-day pipe shutdown affected another key unit.

This fall in production looks set to be temporary, however, as Enquest is confident it will hit its production range of 20,000 to 24,000 boepd for the full year, with a number of new wells due to come on line during the second half.

Looking further ahead, Enquest still believes it will hit its long-term expansion target of 20% annual growth from 2009 to 2014. In the presentation given alongside its previous set of results, initial guidance of 25,000 to 30,000 boepd was given for 2013, with more than 40,000 for 2014.

A new production area, Alma/Galia, is expected to come on stream from the end of next year, while Enquest is also pressing ahead with the Kraken heavy oil discovery, with a target production date of 2015.

All this expansion comes at a cost of course. Enquest's net cash declined from $266 million this time last year to just $93 million as of June 30, 2012. Capital expenditure for the first half of the year was a mammoth $500 million, but it is expected to be a mere $800 million for the full year, following the farm-out of a 35% stake in Alma/Galia to the Kuwait Foreign Petroleum Exploration Co. Enquest also has access to a $900 million credit facility, which was agreed just a few months ago.

Enquest shares were little changed today, falling 1% to 115 pence, which values the company at 920 million pounds. Despite all the recent activity at the company, the shares are just above the price at which they joined the market back in April 2010.

If you're looking for the inside track on identifying great oil and gas shares, then we have a special report that does just that.

In this report, we look at the factors (and risks) you need to consider before taking the plunge, plus we identify a key growth area to watch out for. The report is free to download and yours to keep.

Further Motley Fool investment opportunities:

Stuart does not own any of the shares listed above. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1983902, ~/Articles/ArticleHandler.aspx, 9/21/2014 4:18:58 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement