Higher production and realised prices meant EnQuest (ENQ) doubled pre-tax profits during the first-half, despite booking $120m (£108m) in exceptional items, including costs relating to last year's acquisition of the remaining 75 per cent of the Magnus oil field in the North Sea.
The oil and gas producer reported a 27 per cent year-on-year increase in production to 68,548 barrels of oil equivalent per day, driven by the first six months of full ownership of Magnus. Revenue was up more than that, helped by a $7.6m gain from EnQuest’s hedges, and cash profits were up more than two-thirds to $526m.
But while pre-tax profit held up, once finance charges and taxes came in profit was flat year-on-year at $44m. The biggest hit came from a $43m loss on mark-to-market movement on EnQuest’s commodity contracts in the period.
The company has had to do extensive work at Magnus since taking over, with a three-week shutdown in May to “undertake safety-critical maintenance”, knocking production efficiency from 95 per cent for the first four months of the year to 80 per cent over the entire six months. The Kraken project had a slow start to the year production-wise, before improvement in the March quarter and then problems in July and August with the floating production storage and offloading (FPSO) vessel.
Bloomberg consensus forecasts adjusted cash profits and EPS of $889m and 6.9¢, respectively, for 2019, and $858m and 9.5¢ in 2020.
| ENQUEST (ENQ) | ||||
| ORD PRICE: | 19.7p | MARKET VALUE: | £ 335m | |
| TOUCH: | 19.6-19.7p | 12-MONTH HIGH: | 38p | 15p |
| DIVIDEND YIELD: | na | PE RATIO: | 2 | |
| NET ASSET VALUE: | 62¢* | NET DEBT: | 156% | |
| Half-year to 30 June | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2018 | 551 | 19.1 | 3.3 | - |
| 2019 | 815 | 38.7 | 2.7 | - |
| % change | +48 | +103 | -18 | - |
| Ex-div: | na | |||
| Payment: | na | |||
| £1=$1.23 *Includes intangible assets of $337m, or 19.9¢ per share | ||||
