British North Sea oil and gas producer EnQuest cut its operating costs by a further $40 million to $335 million from previous guidance and senior management will take a voluntary 20% pay cut to weather an oil price slump, it said on Thursday.
EnQuest now expects it will reach its cash flow breakeven point at an oil price LCOc1 of $33 a barrel of oil equivalent this year and $27 per boe next year, lower than previous guidance of $38 a barrel for 2020.
“The Group’s 2021 capital expenditure programme is expected to reduce further, which will also impact production,” EnQuest, which became the first North Sea producer to shut fields as oil price slumped, said.
“While no further repayments of the Group’s senior credit facility are due in 2020, debt repayment remains the financial priority for the Group.”
EnQuest, whose market capitalisation stood at around $212 million on Wednesday, said it had liquidity in the form of cash and available debt facilities of around $289 million. It has said its net debt was $1.367 billion at the end of February.
Reporting results on Thursday, EnQuest said it made $995 million in cash from operations last year, compared with $789 million in the previous year, mainly driven by higher production after it bought up the Magnus field.
EnQuest booked a $562 impairment charge, mainly to reflect lower oil prices, which slumped 65% in the first quarter.
EnQuest hedged a fifth of its 2020 output, or 2.9 million barrels, at an average floor price of $65 a barrel and 1.1 million barrels at an average floor of $52 a barrel.
Oil and gas producers with operations around the world have cut their 2020 capital spending by about 25%, or $55 billion, data compiled by Reuters showed, following a slump in crude prices.
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