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EnQuest PLC ENQ Interim Management Statement



  EnQuest PLC (ENQ) - Interim Management Statement

RNS Number : 7155Q
EnQuest PLC
09 November 2012
 



                                       

                                       

                       EnQuest PLC, 09 November 2012. 

                         Interim Management Statement

                                       

                  PRODUCTION AND PROJECT EXECUTION ON TRACK

                                       

INTERIM MANAGEMENT STATEMENT HIGHLIGHTS

 

Production summary

·      Production from 1 January to 31 October 2012 averaged 21,569 Boepd, in
line with EnQuest's expectations and reflecting the second half weighted
phasing of the 2012 drilling programme

·      EnQuest anticipates delivering 2012 average production around the
middle of previous full year guidance of between 20,000 Boepd and 24,000 Boepd

 

Major projects are on track

·      The Alma/Galia development remains on schedule for first oil in Q4 2013
and the farm out to KUFPEC has been completed

·      The proposed development of the Kraken discovery is on schedule for
field development plan ('FDP') submission in H1 2013

·      The Heather rig reactivation is progressing according to plan, ahead of
new drilling in early 2013

·      The next stage of the Thistle field life extension project is moving
ahead and an application for the new Brown Field Allowance (as recently
announced by HM Treasury) will be made shortly

 

UK licensing round

·      DECC has offered EnQuest eleven licences in the 27^th UK licensing
round

 

EnQuest has started to establish a presence in two new oil basins outside the
UK North Sea, as part of executing its long term growth strategy

·      Norway: EnQuest has applied to pre-qualify as an operator in the
Norwegian North Sea

·      Malaysia: EnQuest has acquired Nio Petroleum (Sabah) Limited ('Nio') -
including an appraisal opportunity at the Bambazon oil discovery and other
exploration targets - for initial cash payments of approximately $3m, plus a
further contingent consideration up to $20m

 

Amjad Bseisu, Chief Executive, said

EnQuest continues to deliver on our targets with a successful 14 well
programme for 2012. Our execution in all of our major programmes at Thistle,
the Dons and Alma is on track, which is a testament to the skills and
technical strength of our people.  Our financial performance, production and
cash generation are on track for another strong year.  The execution of our
major development projects Alma and Kraken will secure our medium term
production and reserves growth.  

We have also announced today our first steps outside of the UK North Sea,
preparatory moves to replicate our existing model by targeting previously
underdeveloped assets in a small number of other maturing regions;
complementing our operations and utilising our deep skills in the UK North
Sea.

 

BOARD NEWS

 

EnQuest PLC co-founder and COO Nigel Hares 

 

Nigel Hares has decided that after the assembly of a world class operations
team in Aberdeenand the successful implementation of EnQuest's strategy in its
critical first years, he is now planning to reduce the amount of time
dedicated to EnQuest - to be balanced by more time spent on personal affairs.

 

Therefore with effect from today, Nigel is standing down from the Board and
will be working four days a week for EnQuest, advising on future strategy and
development. Operations will continue to be managed by David Heslop, General
Manager UKCS and his team.

 

EnQuest Chief Executive, Amjad Bseisu said  

"The Board and I are very grateful to Nigel for the excellent contribution he
has already made to EnQuest.  I look forward to continuing to work closely
with Nigel in shaping and implementing our strategy for future growth in his
new role."

 

FURTHER INTERIM MANAGEMENT STATEMENT DETAILS

NET PRODUCTION

 

                   Daily average  Daily average

                  1 Jan' 2012 to 1 Jan' 2011 to
                    31 Oct' 2012   31 Oct' 2011
                         (Boepd)        (Boepd)
Thistle/Deveron            7,845          5,246
Dons/Conrie               10,203         13,145
Heather/Broom              3,521          5,553
Total                     21,569         23,944

 

·      Thistle: Reliable power and enhanced water injection rates have
delivered better than expected base oil production, supplemented with oil
production from two installed electric submersible pumps (ESP's) and the new
A59/45 ESP, which was brought online in October

·      Dons: The sidetrack of Don Southwest Well S1 to the Horst target (now
designated Well S11) came on line in July with a good initial rate on
prognosis at 15,000 Boepd.  S10 is anticipated to come on stream soon

·      Heather/Broom: Performance improved with the return to two compressor
operation in late July.   Improvements in plant management resulted in a
period of high production efficiency.  There was a month long planned shutdown
of Heather/Broom during September/October

·      The Northern Producer was shutdown mid-August for a planned 19 day
shutdown for maintenance work which was executed on time

 

DEVELOPMENT PROJECTS

 

Alma / Galia

 

·      EnQuest's development of its new Alma/Galia hub remains on track for
first oil in Q4 2013

·      EnQuest has completed the farm out of 35% of Alma/Galia to the Kuwait
Foreign Petroleum Exploration Company ('KUFPEC')

·      On completion EnQuest received a cash payment of $124.5m from KUFPEC,
being their share of costs incurred from 1 January to 30 September.  As
previously announced, from 1 October onwards, KUFPEC is paying its 35% share
and up to $182m in future contributions for past costs and development carry,
in relation to EnQuest's remaining interest in Alma/Galia and if KUFPEC does
not recover its costs by 1 January 2017, then it will receive 50% of revenue
less operating costs until those costs have been recovered

·      The Department of Energy and Climate Change ('DECC') has approved the
FDP for the Galia field.  The Galia Environmental Statement has also been
approved

·      As planned, the wells batch drilled in H1 2012 (K1, K2 and K3) are
currently suspended pending installation of completions.  The results from
these wells met or exceeded expectations

·      Also as planned, the wells batch drilled in H2 2012 (K4, K5 and K6) are
suspended pending further drilling and completion 

·      The key elements of the project execution required to deliver first oil
in Q4 2013 are proceeding within schedule

·      Modification of the FPSO in Hamburg continues with the first dry dock
related work nearing completion as planned 

·      Other key elements of the project are also proceeding as required to
meet the target timeline

·      Pipeline works authorisations approved for both Alma and Galia fields

·      Subsea trenching operations completed

·      Subsea flowlines laid between Alma and Galia and the FPSO location
along with umbilical between Alma and Galia 

·      Riser clump weights installed

·      Mooring installation contract awarded

·      Pile fabrication sub-contract awarded and progressing to plan

·      Equipment factory acceptance testing programs commencing as planned

 

Kraken

·      The proposed development of the Kraken discovery is on track for
submission of its FDP in H1 2013

·      Having formally taken over as operator in September 2012, EnQuest
remains supportive of the development concept proposed by Nautical Petroleum -
essentially a conventional rather than a heavy oil type of development

·      EnQuest anticipates that first oil should be deliverable in 2016

·      EnQuest is finalising new seismic interpretation; as part of this
process, EnQuest has decided not to exercise its option on the Ketos prospect

·      Following its acquisition of Nautical, Cairn Energy has now been fully
integrated into the partnership

 

INTERNATIONAL

 

EnQuest is now establishing early positions in two mature oil basins outside
the UK North Sea, with the intention of continuing to pursue its development
and production model in these regions.

Norway

·      EnQuest has applied to pre-qualify as an operator in the Norwegian
North Sea and in advance of becoming qualified has been permitted to and has
submitted an application as part of the current Norwegian APA field licence
round

Malaysia

·      EnQuest has acquired Nio Petroleum (Sabah) Limited ('Nio') from Nio
Petroleum Limited (the 'Seller') for initial cash payments of $3m, plus a
further contingent consideration up to $20m, which will be determined based on
2P reserves associated with an approved FDP on blocks SB307 and SB308 offshore
in Sabah, Malaysia (the 'Sabah Blocks').  Nio's principal asset is a 42.5%
interest in the Sabah Blocks, with one existing near field appraisal
opportunity at the oil discovery Bambazon and five prospects.  The partners on
the Sabah Blocks are Lundin Petroleum and PETRONAS Carigali.  The Nio
acquisition also provides EnQuest with an office base in Kuala Lumpur and a
management team with extensive experience in South East Asia, including the
Seller's CEO Richard Hall.  Richard is to join EnQuest as its new General
Manager, International

 

PRODUCING OIL FIELDS - additional information

Dons / Conrie

·      The up-dip sidetrack of West Don Well W2 (now designated Well W5) came
on line on 8 October at an initial rate of 2,000 Boepd

·      S10 is anticipated to come on stream soon at Don Southwest

 

Thistle / Deveron

·      Drilling on the new A59/45 well (a side track of well A46/45 to Area-6)
was completed in late September and the third Thistle platform electric
submersible pump (ESP) came on stream in mid October

·      The power project completed the safe and successful delivery of a new
generator to the platform. The turbine is due to commence full time operation
early 2013 

·      The offshore drilling team achieved a major industry safety milestone
during the period, five years operation without a lost time injury

Heather / Broom

·      The Heather rig reactivation is progressing well and is on track for
drilling in early 2013, following the start-up of drilling operations around
the 2012 year end

 

EXPLORATION AND APPRAISAL

 

Kildrummy

·      The Kildrummy well is drilling at the time of this announcement

·      EnQuest completed the acquisition for $3m in contingent consideration
for an additional 20% interest in the Kildrummy discovery, as announced in May
2012.  This takes the total interest to 60%

UK Licensing round

EnQuest has been offered eleven licences in the 27th Oil and Gas Licensing
Round of the UK's Department of Energy and Climate Change, providing a raft of
interesting new opportunities for growth.  EnQuest applied for fourteen
blocks, it has been offered eleven of those fourteen with the results of two
applications not as yet announced.

The licences offered to EnQuest in October included

EnQuest Operated

·      2/4b - obligations to drill or drop

·      2/10a, 3/6 & 11c - (100%) - obligations to drill or drop

·      8/5 & 9/1b - West of Kraken - obligations to drill or drop

·      9/2d - (100%) - East of Kraken - obligations to drill or drop

·      15/17c - (100%) - Kilravock - obligations to drill or drop

·      21/7a -  West of Scolty - obligations to drill or drop

·      21/17b - (100%) - Winchat - obligations to drill or drop

·      21/26 & 27c, 28/2b & 3 - (100%) - Elke/Pilot area - obligations to
drill or drop

Not EnQuest Operated

·      22/11b - Contingent well

·      14/30c - Buffalo - obligations to drill or drop

·      20/14,19 & 20 - Cromwell - obligations to drill or drop

·      All of these licences are 'Traditional'

Discovery updates

·      Cairngorm: work is being undertaken to prepare for a proposed appraisal
well in 2013

·      Crawford and Porter: EnQuest and its partners have concluded that the
original development plan of a tie back to East Brea is not the best way to
proceed and are considering alternative development concepts.  A broad range
of development options is being evaluated

 

Additional information on the Nio transaction announced today

·      Under the proposed transaction, EnQuest has acquired

o  All of the shares in Nio and the assets of that entity, comprised of a
Malaysian branch and office, the Production Sharing Contract ('PSC'), and
related contractual commitments

o  Certain staff previously employed in other Seller entities

·      In May 2010, Nio together with Lundin Petroleum BV signed a new PSC
with PETRONAS over Blocks SB307 and SB308, offshore Sabah, Borneo, Blocks
SB307 and SB308 cover an area of over 6,230 square kilometres. This includes
the oil discovery Bambazon, which is currently being reviewed for appraisal. 
Prospects have also been identified in the blocks from previous 2D and 3D
seismic campaigns  

·      Nio was originally established as a development company, with principal
funding from Barclays Natural Resource Investments, a division of the
investment bank of Barclays Bank PLC

·      Nio holds a 42.5% participating interest in each of SB307 and SB308,
Lundin Petroleum (the PSC Operator) and PETRONAS Carigali hold a 42.5% and
15.0% interest respectively.

·      This initial PSC is for 4 years, expiring in Q2 2014, and is extendable
by negotiation

 

                                     ENDS

 

For further information please contact:

 

EnQuest PLC
                                                                                
Tel: +44 (0)20 7925 4900

Michael Waring (Head of Communications & Investor
Relations)                                              

 

RLM Finsbury                                               
                                 Tel: +44 (0)20 7251 3801

James Murgatroyd

Conor McClafferty

Dorothy Burwell

 

Notes to editors

EnQuest is the largest UK independent  producer in the UK North Sea.   EnQuest 
PLC trades on both the London Stock Exchange and the NASDAQ OMX Stockholm.  It
is a  constituent of  the FTSE  250 index.   Its assets  include the  Thistle, 
Deveron, Heather, Broom, West Don,  Don Southwest and Conrie producing  fields 
and the Alma  and Galia development.   At the  end of June  2012, EnQuest  had 
interests in 29 production licences covering  36 blocks or part blocks in  the 
UKCS, of which 22 licences are operated by EnQuest. 

 

EnQuest believes that the UKCS represents a significant hydrocarbon basin in a
low risk  region,  which continues  to  benefit from  an  extensive  installed 
infrastructure base  and skilled  labour.  EnQuest  believes that  its  assets 
offer material organic growth opportunities, driven by exploitation of current
infrastructure on  the  UKCS  and  the development  of  low  risk  near  field 
opportunities.

 

 

Forward looking statements: This announcement may contain certain
forward-looking statements with respect to EnQuest's expectation and plans,
strategy, management's objectives, future performance, production, costs,
revenues and other trend information.  These statements and forecasts involve
risk and uncertainty because they relate to events and depend upon
circumstances that may occur in the future.  There are a number of factors
which could cause actual results or developments to differ materially from
those expressed or implied by these forward looking statements and
forecasts.   The statements have been made with reference to forecast price
changes, economic conditions and the current regulatory environment.  Nothing
in this presentation should be construed as a profit forecast.  Past share
performance cannot be relied on as a guide to future performance.

                     This information is provided by RNS
           The company news service from the London Stock Exchange
 
END
 
 
IMSEAPFPEAKAFFF -0- Nov/09/2012 07:00 GMT
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