British North Sea-focused oil producer EnQuest is "confident" it will secure a refinancing deal needed to buy an additional 10,000 barrels per day of output capacity, it said on Thursday, as it reported a 43% drop in free cash flow in 2020.
Last month, EnQuest agreed to buy Suncor's 27% stake in the Golden Eagle fields for $325 million on the back of a planned debt refinancing and equity raise.
EnQuest, which has a market capitalization of around $468 million based on its closing share price on Wednesday, said its net debt stood at just under $1.3 billion at the end of December, down from just over $1.4 billion a year earlier. It said it cut its operational expenses by 37% in 2020 to $329 million, while free cash flow fell to $211 million.
"Securing lenders' commitment to a new senior secured facility in conjunction with the Golden Eagle acquisition remains on track and the directors are confident of a successful outcome," EnQuest said in a statement.
The debt facility stands at $352 million and expires in October.
"In the unlikely event the Suncor acquisition does not complete, the directors are also confident they will be able to negotiate a new facility based on the group’s existing asset base or alternative financing arrangements such as a prepayment facility would be available to bridge any shortfall," EnQuest said.
In 2021, EnQuest forecasts output of 46,000-52,000 barrels of oil equivalent per day with its current portfolio.
It has hedged 5 million barrels of its production at an average floor price of $55 a barrel, it said.
(Reporting by Shadia Nasralla; editing by Jason Neely and Susan Fenton)