Development and production company EnQuest has cut its average production guidance for 2016 to between 42,000 and 44,000 barrels of oil equivalent per day and expects its 2016 capital expenditure to be reduced by around $30 million.
The lower production guidance reflects a slow ramp-up from the UK Alma/Galia development and low production from the Dons/Ythan asset on the UK Continental Shelf, according to FirstEnergy Capital. EnQuest’s CAPEX is expected to be reduced as a result of the further phasing of milestone payments, said the company in its first half results for the year.
EnQuest produced an average of 42,520 boepd in 1H 2016 and recorded gross profit of $117.7 million. The company continued further reductions in operating costs during the first half of the year, with unit operating expenditure coming in at $23 per barrel, and revealed that it was still conducting negotiations for the farm out of a 20 percent working interest in the exploration and production licenses in the Kraken field to the Delek Group.
“With very substantial structural reductions in our cost base already delivered, the long term potential of EnQuest’s business model remains compelling,” said EnQuest CEO Amjad Bseisu in a company statement.
“EnQuest’s overriding priority continues to be delivering a business which is robust in this challenging environment,” he added.
FirstEnergy anticipated that the market will react slightly negatively to EnQuest’s latest announcement due to its “low production and the transaction with Delek appearing still uncertain”.
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