North Sea oil company EnQuest hindered by global oil price drop

EnQuest, the largest UK independent oil producer in the North Sea, suffered a heavy half-year loss due to falling oil prices. A write-down in the value of Enquest’s reserves, along with other impairments, reduced earnings by $46 million.

During the same period in 2014 it made a profit of $78.6m (£50.18m).

EnQuest (LON:ENQ), the North Sea operator with assets off the coast of Malaysia, reported a strong operational performance, but was hit by the sharp fall in the oil price.

EnQuest said a hedging programme – a risk-management transfer strategy to deal with commodity price fluctuations – offset some of the losses.

The firm’s 1H 2015 revenue decreased to $444 million from $503.8 million in 1H 2014, while 1H 2015 profit at the EBITDA level was $226.7 million – representing a 20.2-percent decrease on 1H 2014.

Full year guidance is maintained at an average of between 33,000 boepd and 36,000 boepd, including first production from Alma/Galia.

Kraken: The project continues to be on budget and on schedule for first oil in 2017. EnQuest achieved continuing high levels of operating efficiency in the North Sea and a good production performance in Malaysia, with PM8/Seligi’s first first-half contribution.

Production in UK North Sea fields was down from 25,300 barrels per day to 21,900, while Malaysian production added 7,800 barrels per day.

The chief executive, Amjad Bseisu, said: “EnQuest has responded well to the lower oil price environment, delivering a strong performance driven by production gains and cost reductions”.

Shares in the oil company were down by 5.26% to 31.50p at 0849 BST.