EnQuest has announced results for the year ended 31 December 2023 and 2024 outlook. EnQuest achieved its 2023 targets, delivering strong operational performance across the operated portfolio and continuing to de-lever its balance sheet, with year-end EnQuest net debt reduced to $481 million. Statutory revenue and other income totalled $1,487.4 million (2022: $1,853.6 million) and adjusted EBITDA totalled $824.7 million (2022: $979.1 million).
EnQuest Chief Executive, Amjad Bseisu, said:
'EnQuest achieved its 2023 targets, delivering strong operational performance across the operated portfolio and continuing to de-lever its balance sheet, with year-end EnQuest net debt reduced to $481 million. Against the backdrop of a challenging UK fiscal environment, EnQuest has reduced net debt by c.$1.5 billion since its peak and with significant tax assets remaining, the business has a strong base, and successful track record of executing quick payback, life-extending acquisitions, from which to pursue value-accretion and production growth through M&A.
'Our top quartile operating capability, demonstrated through high production uptimes across our operated asset portfolio, underpinned 2023 production of 43.8 Kboed, which was in line with the mid-point of guidance. This operational excellence extends to our decommissioning activities, with 2023 seeing the Group complete the plug and abandonment (‘P&A’) of 25 wells, delivering top quartile well P&A performance across its Heather and Thistle projects and executing another record-breaking year of northern North Sea multi-asset well abandonments at sector-leading cost.
'We also realised value within the existing portfolio by selling a 15.0% share of both the Bressay licence and the EnQuest Producer FPSO to RockRose Energy; a transaction which represents an important step in moving the Bressay project forward.
'As we further enhance our position as a key player in the energy transition, we continue to progress our new energy and decarbonisation ambitions at the Sullom Voe Terminal under the management of our newly established subsidiary, Veri Energy. The award of four carbon storage licences during 2023 represented a key milestone for our future ambitions. Work is underway to right-size the terminal site and transform its carbon footprint, with delivery of the new stabilisation facility and power generation projects expected to reduce future CO2 emissions at SVT by c.90%. We have already reduced our total UK emissions by more than 40% from the 2018 benchmark, significantly ahead of the UK's North Sea Transition Deal targets, while our credible net zero transition plan was a key factor in EnQuest securing a B rating in the 2023 CDP Climate Change Survey.
'We have set the foundations for a pivot to growth during 2024 and continue to perform well against our full year targets, with production to 29 February 2024 averaging around 44,500 Boepd. The Group also fully paid down its RBL facility post year-end and has further reduced net debt to $409.6 million at the end of February 2024.
'Reflecting the strength of our core business, confidence in the opportunities ahead and the Group’s commitment to delivering shareholder returns during 2024, we have committed to deploy $15.0 million of capital in a share buyback programme during 2024.'
2023 performance
- Statutory revenue and other income totalled $1,487.4 million (2022: $1,853.6 million) and adjusted EBITDA totalled $824.7 million (2022: $979.1 million).
- Against a backdrop of continued geopolitical tension, inflation and Sterling volatility, Brent prices averaged $82.5/bbl (18.2% below 2022: $100.8/bbl) and day ahead gas prices decreased to 98.9p/Therm (51.4% below 2022: 203.5p/Therm).
- Group production (delivered at the mid-point of guidance) averaged 43,812 Boepd (2022: 47,259 Boepd), with high levels of asset uptime across the portfolio and efficient execution of maintenance activities partially offsetting natural field declines.
- Reflecting the above drivers and cash tax timing, net operating cash flow totalled $754.2 million, 19.0% below 2022 ($931.6 million).
- Operating expenditure of $347.2 million was 12.4% below 2022 ($396.5 million). Unit opex declined to $21.9/boe (2022: $22.7/boe).
- Capital investment of $152.2 million (2022: $115.8 million) was focused on low cost, quick payback projects that enhanced production and lowered emissions. Decommissioning expenditure totalled $58.9 million (2022: $59.0 million) and focused on well P&A.
- Free cash flow generation1 remained strong, totalling $300.0 million (2022: $518.9 million).
- Statutory reported loss after tax $30.8 million (2022: $41.2 million loss), reflecting the impact of the UK Energy Profits Levy.
- Group liquidity (cash and available facilities) rose to $498.8 million (31 December 2022: $348.9 million). EnQuest net debt totalled $480.9 million at 31 December 2023, a 32.9% reduction versus 2022 ($717.1 million).
- Having delivered on the Group’s strategic aims to deliver and de-lever, EnQuest is pleased to announce its first shareholder distribution, a $15.0 million buyback that will be completed in 2024.
2024 performance and guidance
- Net Group production expected to average between 41,000 and 45,000 Boepd (c.44,500 Boepd YTD to end-February).
- Capital investment expected to total c.$200 million; Operating expenditure expected to total c.$415 million; and Decommissioning expenditure expected to total c.$70 million.
- Investment is scaled to maintain production, maximise cash flow, drive capital efficiency and reduce future emissions and costs.
- At 29 February 2024, EnQuest net debt totalled $409.6 million and the Group fully repaid the outstanding $140.0 million of its drawn reserve based lending facility (‘RBL’).
Outlook – 2025 and beyond
- Capital-efficient investment programme; targeting organic production growth in 2025.
- Kraken FPSO lease rate reduces by c.70% from 1 April 2025 and major projects at SVT are expected to crystallise significant emissions and operating cost reductions in 2026 and beyond.
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Source: EnQuest
