- Company has reduced capital spending `significantly,' CEO says
- Shares surge 31 percent, biggest one-day gain on record
EnQuest Plc, an oil producer focused on the North Sea, jumped by the most on record after boosting output and cutting costs.
Oil and gas production averaged 36,567 barrels of oil equivalent in 2015, an increase of 31 percent from the previous year, the company said in a statement Thursday. EnQuest posted profit after tax and net finance costs of $127.8 million, compared with $137.4 million in 2014. Its shares rose 31 percent to 19 pence in London trading, the biggest increase since the company was listed in April 2010.
“EnQuest has delivered a robust set of results, in our view demonstrating its ability to squeeze value out of its producing asset base,” David Round, an analyst at BMO Capital Markets Ltd., said in a note to clients. Round warned it’s unlikely EnQuest will continue to outperform unless there’s a recovery in oil prices.
After the 60 percent slump in Brent crude prices since mid-2014, some parts of the U.K. North Sea have been rendered uneconomic as costs escalate at aging fields. EnQuest has cut capital expenditure “significantly” and will continue working on its supply chain to reduce costs, Chief Executive Officer Amjad Bseisu said in an interview with Bloomberg Television. Tax cuts announced Wednesday by the U.K. government to support the oil and gas industry are “very positive,” he said.
The company brought its Alma/Galia complex onstream in October. On Thursday it said its Kraken field is on schedule and total project savings of about $300 million were achieved compared with the original budget.