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EnQuest PLC (LSE:ENQ) delivered stable financial results for the first half of 2024, with cash generated from operations reaching $368.9 million, nearly unchanged from the $370.4 million reported for the same period in 2023. The company’s capital expenditure increased to $95.0 million (2023: $80.0 million), while cash abandonment costs were also slightly higher at $31.5 million compared to $29.3 million in the previous year.
A key achievement for EnQuest in H1 2024 was its significant reduction in net debt, which fell by $159.9 million, bringing total net debt to $321.0 million by June 30, 2024. This reduction allowed the Group to fully repay its reserves-based lending (RBL) facility, maintaining robust liquidity with cash and available facilities totaling $566.0 million (compared to $498.8 million at the end of 2023). EnQuest's net debt to EBITDA ratio stood at 0.4x, surpassing its leverage target of 0.5x, positioning the company well for future growth.
In April 2024, EnQuest initiated a $15 million share buyback program, with $2.5 million worth of shares repurchased by the end of June. The Group completed its planned treasury repurchases in August, and all future share purchases will be cancelled to benefit shareholders.
Production and Revenue Performance
EnQuest’s net production averaged 42,771 barrels of oil equivalent per day (Boepd) during the first half of 2024, down from 45,480 Boepd in H1 2023. Despite solid uptime across its portfolio, production was impacted by minor delays in the Magnus five-yearly rig recertification program and the failure of an infill well at the non-operated Golden Eagle asset.
Revenue and other operating income fell to $586.0 million in H1 2024, down from $770.4 million in the previous year, primarily due to lower gas prices and reduced third-party volumes transported over Magnus. Oil revenue remained relatively stable at $523.1 million (2023: $540.1 million). However, the decline in gas revenue was mitigated by a corresponding reduction in the cost of sales.
The company reported a profit after tax of $30.3 million for the period, a sharp turnaround from the $21.2 million loss posted in H1 2023.
Outlook and Guidance for 2024
EnQuest remains on course to meet its full-year production guidance, with expectations ranging between 41,000 and 45,000 Boepd. However, due to delays in the Magnus rig recertification and the issues at the Golden Eagle field, production is now projected to be at the lower end of this range.
The Group’s full-year guidance for operating expenditures, cash capital expenditure, and abandonment costs remains consistent with earlier forecasts of $415 million, $200 million, and $70 million, respectively. EnQuest has also hedged approximately 5.4 million barrels of oil for the second half of 2024, including 4.6 million barrels under put options with a floor price of $60 per barrel and 0.8 million barrels through swaps at approximately $87 per barrel.
Looking ahead, EnQuest's business development team is focused on delivering transformational growth opportunities, with the company continuing to pursue disciplined strategies aimed at enhancing shareholder value.
