LONDON: EnQuest, the largest UK independent oil producer in the North Sea, suffered a heavy half-year loss due to falling oil prices.
The London-listed company with offices in Aberdeen, Malaysia and Dubai reported a pre-tax loss of $34.6 million (£22.09m) for the six months to June 30 due to impairments and other exceptional items.
During the same period in 2014 it made a profit of $78.6m (£50.18m). Revenue fell 12% to $444m (£283.45m) due to the falling price of oil which in the last year is down more than 50% to less than $50 (£31.90) a barrel.
EnQuest said a hedging programme – a risk-management transfer strategy to deal with commodity price fluctuations – offset some of the losses. It also reduced its capital expenditure plans and renegotiated banking covenants.
Chief executive Amjad Bseisu said: “EnQuest has responded well to the lower oil price environment, delivering a strong performance driven by production gains and cost reductions and by a well-executed hedging programme.”
The company is expecting to reduce its costs per barrel by around 10% this year to $38, with a further reduction to the low $30s next year.
EnQuest suffered a $579m pre-tax loss in the year to 2014, after a $330m profit in 2013, due to asset impairment and other exceptional items based on the view the oil prices would stay low.
The company is expecting to produce 24% more oil this year at between 33,000 and 36,000 barrels.
One of its main projects is the $3.2 billion Kraken field off Shetland which is expected to produce its first oil in 2017. EnQuest holds a 60% stake in Kraken, one of the largest development projects in the North Sea.
The company hailed its strong North Sea performance despite the difficult marketplace and also achieved good production performance in Malaysia.
EnQuest is also set to benefit from an increase in production from the Alma/Galia field in the central North Sea.
Mr Bseisu added: “Despite the uncertain markets, we are well placed for the future.”
EnQuest’s share price was down 2p yesterday at 31.25p.
