The share price of EnQuest (ENQ) has more than halved over the past three months as sentiment towards North Sea drillers soured on the back of the plunge in crude oil prices.
There was some respite last week, however, after the company, which heads the development of one of the largest pending UK offshore projects, successfully negotiated an agreement with lenders to ease debt covenant conditions. The company's balance sheet has been stretched as it moved ahead with the $3.2bn (£2.1bn) development of the Kraken field in the North Sea. EnQuest has also had some hefty capital commitments in relation to the Alma/Galia oilfield. The company intends to bring the complex back into production midway through this year, which should help to drive 2015 production towards a midpoint guidance of 34,500 barrels of oil per day, on a working interest basis.
EnQuest's share price rose by 22 per cent on news of the credit facility covenants, which represent a vote of confidence on the part of the banks. The covenants have been relaxed until mid-2017, by which time production from Kraken is expected to kick in.
