Kraken Output in View for EnQuest
Tuesday 21 March 2017
EnQuest is on target to start production from its Kraken development off the UK within the next three months, ushering in a period of cash generation and debt reduction at the UK independent.
Kraken, the large heavy-oil development east of the Shetlands that is crucial to EnQuest’s future, is expected to boost the company’s production to between 45,000 and 51,000 barrels of oil equivalent per day this year.
EnQuest said production in 2016 was 39,751 boepd, its highest ever.
Full-year earnings increased to $477 million in 2016 from $474 million in 2015.
The Kraken floating production, storage and offloading vessel, which is designed to handle 460,000 barrels per day of fluids, including 275,000 bpd of water-injection, and with storage capacity of 600,000 barrels, set sail from Singapore at the end of last year and was moored on station in February.
Commissioning work on the unit and the subsea infrastructure in continuing.
Once on stream, Kraken is expected to help reduce EnQuest’s average operating costs to between $21 and to $25 per barrel.
Chief executive Amjad 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.”
Towards the end of last year EnQuest carried out a financial restructuring worth $400 million, strengthening its liquidity position and reducing the levels of cash needed to service its debt obligations.
Net debt at 31 December 2016 has increased to just under $1.8 billion compared with $1.55 billion at the end of 2015, the company said.
EnQuest, in common with UK North Sea producers, has been battered by the fall in the oil price that began in 2014 as it was in the midst of Kraken and another major development, the now producing Alma-Galia field.
EnQuest said capital spending in 2017 is set to be between $375 million and 425 million, the majority of which is being invested in Kraken.