North Sea EnQuest plans Magnus drilling as Brent volumes slide, flags lower Golden Eagle output

UK independent EnQuest will prioritize drilling and near-term production improvement at the Magnus field, which feeds the Brent crude stream, in 2023, it said Feb. 17, going on to flag recent output slippage at the Golden Eagle Field operated by China’s CNOOC.

In a statement, EnQuest said the UK’s controversial Energy Profits Levy had caused it to defer drilling at its flagship Kraken heavy oil field, which produced 26,000 b/d in 2022. However, it flagged an increase in organic capital expenditure in 2023 — excluding any acquisitions — to $160 million, from $120 million in 2022.

Spending plans include a three-well drilling program at Magnus, following completion of an additional well in 2022 to facilitate gas production. It also returned three other wells to service. EnQuest said production had been affected by well integrity issues and natural decline. The field also underwent a shutdown in the third quarter focused on compressor maintenance, which served to limit full-year Magnus production to 12,600 b/d.

“The performance of Magnus has improved with the successful execution of the planned shutdown and delivery of our extensive well program, which also included the introduction of additional gas production at Magnus,” CEO Amjad Bseisu said.

Loadings of Brent blend crude in the Shetland Islands — a contributor to Platts Dated Brent North Sea benchmark — have dipped below 50,000 b/d in recent months as one of the UK’s oldest crude streams shows further decline. EnQuest has long specialized in reviving aging North Sea fields and took over Magnus from BP over the course of 2017-18.

“The impact of the Energy Profits Levy on cash available for investment has resulted in the group prioritising quick-payback opportunities at Magnus and deferring spend on Kraken drilling,” EnQuest said.

CNOOC field

Elsewhere, EnQuest flagged lower-than-expected production at the Golden Eagle field, which contributes to Flotta blend crude, loaded in the Orkney Islands. EnQuest bought a 26.7% stake in Golden Eagle in 2021.

With Golden Eagle production averaging some 24,000 b/d in 2022, “production efficiency remained strong at around 95% although production rates were lower than forecast,” EnQuest said.

It said a two-well drilling program at Golden Eagle in 2022 had run into problems, with the first well proving dry and the startup of the second delayed as a result of adverse weather until the second quarter of 2023. The partners, led by CNOOC, have plans to drill two further wells, but these have still to be signed off, EnQuest said.

“EnQuest continues to work with [CNOOC] and the joint venture partners to identify opportunities to maximise rates,” it said.

EnQuest increased its UK production by 4% in 2022 to 40,800 b/d of oil equivalent, mainly on the back of the Golden Eagle acquisition as well as a slight increase from Magnus, with an addiitonal portion from Malaysia taking its overall production to 47,300 boe/d. It forecast full-year 2023 production of 42,000-46,000 boe/d, noting its production in January had averaged above this at over 48,000 boe/d, including Malaysia.

It added that it was making good progress on plans for a low-carbon energy hub centered on the Sullom Voe terminal in the Shetland Islands, which it manages, and had submitted applications for two carbon capture and storage projects in the area.

“Looking ahead, changes to the UK Energy Profits Levy will impact cash flow generation and have implications for our capital allocation strategy and our UK production growth ambitions,” Bseisu said. “In the immediate future, we remain focused on deleveraging and intend to prioritise organic investments with quick pay backs and accretive M&A opportunities that allow us to leverage our operating capability and tax loss position.”

Platts, part of S&P Global Commodity Insights, assessed Dated Brent at $84.14/b on Feb. 16, up $0.65/b on the day.

CNOOC did not immediately respond to a request for comment.

Read the latest issue of the OGV Energy magazine HERE