Shetland production issues weigh on oil company's shares

NORTH Sea-focused EnQuest has seen its shares fall 12 per cent after it said production from a big field off Shetland is set to remain well below initial expectations.

EnQuest generated excitement in the oil and gas industry when it started up the Kraken heavy oil field East of Shetland with Cairn Energy in 2017 only for the partners to face production challenges.

While Kraken was expected to produce 50,000 barrels per day at peak when it was brought onstream, output last year averaged 30,300 bopd.

EnQuest said yesterday that output has risen materially in recent months following an increase in production efficiency.

But the company left its guidance that full year production from Kraken would average 30,000 bopd to 35,000 bopd unchanged.

The update came weeks after Cairn cut its valuation of Kraken by $166 million.

Noting last week that Kraken had suffered production equipment issues, Cairn boss Simon Thomson said the experience had not put the firm off investing in North Sea projects.

EnQuest has maintained its valuation of Kraken signalling confidence in the field’s long term performance.

It has been pleased with the performance of other North Sea fields, after expanding amid the challenges posed by the plunge in oil prices from 2014.

Chief executive Amjad Bseisu said EnQuest remains confident of achieving its 2019 production guidance of 63,000 to 70,000 barrels oil equivalent per day.

Describing the oil price environment as favourable, he said EnQuest is on track to reduce debt as expected this year.

EnQuest shares closed down 2.8p at 20.1p.

Source: The Herald