For EnQuest (ENQ) to single out its 3.3 times net debt to cash profits ratio as a highlight of its 2015 financial results tells you management's worst fears may have receded. The market clearly agreed, sending shares in the heavily geared oil producer up by a third on news of the debt covenant headroom and a 31 per cent uptick in production.
There were additional positives. Strong hedging strategies contributed $261.2m (£180m) to the top line and ensured an average realised oil price of $72 last year. A 29 per cent reduction in operating costs to $29.70 a barrel provided some insulation from the drop in crude prices, which resulted in a separate non-cash asset impairment of $626m.
By the end of 2015, EnQuest had $235m of headroom on its borrowing facilities, and expects to have access to funding for the next 12 months. That's predicated on an average oil price of $30 a barrel for the rest of this year, and $40 in the first quarter of 2017, against an expected fall in operating costs to the low $20s per barrel once the Kraken development is fully on stream. That should firm up average daily production to between 44,000 and 48,000 barrels in 2016.
ENQUEST (ENQ) | ||||
|---|---|---|---|---|
| ORD PRICE: | 18p | MARKET VALUE: | £144m | |
| TOUCH: | 17.8-18.3p | 12-MONTH HIGH: | 61p | LOW: 11p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 83¢ | NET DEBT: | $1.55bn | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2011 | 0.94 | 0.36 | 7.6 | nil |
| 2012 | 0.89 | 0.40 | 46.2 | nil |
| 2013 | 0.96 | 0.33 | 24.0 | nil |
| 2014 | 1.03 | -0.58 | -22.8 | nil |
| 2015 | 0.91 | -1.34 | -98.0 | nil |
| % change | -12 | - | - | - |
Ex-div: na Payment: na £1=$1.45 | ||||
