North Sea oil independent EnQuest is expecting its 2015 production to be at least 10% above previous expectations, and announced a 40% cut in capital spending, easing concerns the firm could breach debt covenants.
EnQuest said 2014 production was up 17% compared to 2013, at 28,267 boe/d, at the high-end of what it had predicted. The firm said the rates reflected strong reservoir performance, production efficiency measure and initial production from PM8/Seligi in Malaysia - the firm's first production outside the North Sea. 2015 production is expected to be around 33,000-36,000 boe/d, with the Alma/Galia development due on stream mid-2015.
EnQuest says it will make capital spending cuts on new projects and existing developments in 2015, with spending now totalling US$600 million. Earlier in 2014, the firm had said 2015 spending would be around $700-800 million. The firm said it would also make further operations cost reductions of about 10%.
Amjad Bseisu, EnQuest's CEO, said: “The rapid change in the macro environment with respect to the oil price has affected all in the industry, not least EnQuest. However, with our strong production growth, the new developments coming on stream in the next two years and our available $1.1 billion in funding under our facilities, we continue to demonstrate the strength and sustainability of EnQuest’s production growth model.
"I am very pleased that our production efficiency for 2014 has been approximately 90%, which is an exceptional performance and ranks EnQuest as one of the best operators in the North Sea. The business continues to perform very well operationally and is on course for another year of strong production growth.”
First production from Alma/Galia, due to be developed using the EnQuest Producer floating production, storage and offloading vessel, had been expected in H2 2014.
Alma/Galia comprises seven production wells and two water injection wells, tied back to the EnQuest Producer, which is capable of processing 57,000 Boepd and storing 625,000 barrels of crude oil. The vessel has been under going modifications work at the Hadrian Yard in Newcastle, northern England.
In February 2013, EnQuest announced that it was extending the field life of the project and that gross 2P reserves would be increased from 29-34 MMboe.
The project will see the UK North Sea’s first producing field – Argyll – brought back to life.
Argyll was first discovered in 1971 and produced oil four years later, before being decommissioned twice over the subsequent decades. EnQuest submitted a license application soon after IPO in 2010, in the 26th UK License Round.
EnQuest is operator of Alma/Galia, with partner Kuwait Foreign Petroleum Exploration Company (KUFPEC) holding 35% equity.