The Courier & Advertiser (Angus and Dundee)
Kraken delay weighs on EnQuest
Oil and gas explorer EnQuest saw its shares take a double-digit hit yesterday after it warned over short-term production levels.
In an operational update, the firm said delays in achieving peak output from the newly commissioned Kraken field’s floating production, storage and offloading vessel (FPSO) had led to “lower than expected operational efficiency.”
It said it now expected its full-year production to be broadly in line with the circa 37,000-barrels-per-day output achieved in the first half of the year.
EnQuest stock fell on the update but the company insisted it was a temporary operational problem that it expected to be resolved before the end of this year.
“This reduction in EnQuest’s shortterm 2017 production guidance, is consistent with EnQuest’s objective of bringing Kraken onstream in a phased manner in line with good reservoir management practices aimed at maximising long-term productivity and value,” the firm said.
Despite the immediate issues, EnQuest reported it now expected to save an extra $100m at Kraken due to the drilling schedule for the third well being ahead of schedule and a lowering of market costs in relation to subsea works for the fourth well site.
Chief executive Amjad Bseisu said: “EnQuest was pleased to bring the Kraken field on stream in Q2 2017 at a substantially reduced capex spend, having delivered excellent drilling and subsea programmes.
“The FPSO however is a complex vessel, designed and built to manage the heavy oil from the Kraken development, and it is taking longer than expected to commission during this initial period.
“Nonetheless, we have been very pleased with reservoir performance and the flow rates achieved on individual wells and, we expect the field to increase production in Q4 and to achieve plateau production of approximately 50,000 barrels of oil per day gross in H1 2018.”
Shares closed down 2.49 at 29.50.