A sigh of investor relief – and a 6 per cent surge in the group’s shares – greeted EnQuest's (ENQ) publication of full-year numbers this week. After a shaky start to life for the Kraken field, no news – in the shape of unchanged production guidance – was clearly good news. In 2018, total daily oil and gas output should average between 50,000 and 58,000 barrels of oil-equivalent per day (boepd), as the field replaces declining production from reservoirs elsewhere; the faster Kraken can hit its 50,000 barrels of oil per day (bopd) plateau, the greater the chance EnQuest will hit the top end of the range.
Early signs here are promising. In a previous trading update, we learned that Kraken produced 35,000 bopd in January, an average that has crept up to 38,000 bopd for the first two months of the year. Ongoing efforts to optimise performance have resulted in successful tests of the 50,000 bopd capacity.
So with Brent crude at $67 (£48) a barrel – and between 35 and 41 per cent of this year’s sales hedged at $62 – investors should have plenty to celebrate. Certainly, the $250m cash needed to fund the 2018 drilling programme at Kraken and the PM8/Seligi and Heather fields looks a lot more feasible. Consensus forecasts are for adjusted pre-tax profits of $150m and EPS of 6.7¢ this year, rising to $174m and 11.3¢ in 2019.
| ENQUEST (ENQ) | ||||
| ORD PRICE: | 33.2p | MARKET VALUE: | £394m | |
| TOUCH: | 33-33.3p | 12-MONTH HIGH: | 47p | LOW: 23p |
| DIVIDEND YIELD: | NIL | PE RATIO: | N/A | |
| NET ASSET VALUE: | 64¢* | NET DEBT: | 262% | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (¢) |
| 2013 | 0.96 | 0.33 | 22.4 | nil |
| 2014 | 1.03 | -0.58 | -21.3 | nil |
| 2015 | 0.91 | -1.34 | -98.8 | nil |
| 2016 | 0.80 | 0.22 | 22.7 | nil |
| 2017 | 0.63 | -0.24 | -5.4 | nil |
| % change | -21 | - | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| £1=$1.40. *Includes intangible assets of $241m, or 20¢ a share | ||||
