EnQuest has reaffirmed its commitment to the North Sea as increased production and surging wholesale prices allowed the oil and gas producer to slash its debts.
The London-headquartered independent paid off $342 million (£281m), during the first half of this year as it generated strong levels of cash flow. As of the end of June, net debt stood at approximately $880m.
“We remain on track to deliver our operational targets and, in the prevailing price environment, are focused on driving an accelerated debt reduction programme,” chief executive Amjad Bseisu said.
The trading update from EnQuest came as BP became the latest of the energy majors to report an upsurge in profits on the back of soaring wholesale prices. Looking ahead, EnQuest said it is considering new investments to make the most of tax reliefs built into the “windfall tax” on UK oil and gas firms.
The energy profits levy introduced earlier this year by former Chancellor Rishi Sunak sharply increased taxes on oil and gas profits but also boosted tax reliefs on new investments, allowing 91p per pound to be claimed back in the year the investment is made.
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“Following the enactment of the energy profits levy, EnQuest remains committed to investment in the North Sea and is reviewing future capital expenditure programmes in light of the additional investment allowances available under the levy,” the company said.
Mr Bseisu said the business made a “good start” to the year as it maintained its full-year net production guidance of between 44,000 and 51,000 barrels of oil equivalent per day (boepd). The company has stakes in the Magnus, Kraken and Golden Eagle fields in the North Sea, as well as interests in offshore Malaysia.
During the six months to the end of June group production averaged 49,726 boepd, an 8 per cent increase on the same period a year earlier. Kraken delivered average gross production of 27,698 boepd, above the top end of full-year guidance of 22,000 to 26,000 boepd.
EnQuest added that infill drilling campaigns have started at Magnus in the north-east of Shetland, and at PM8/Seligi in Malaysia, which will begin delivering production in the second half of this year.
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