Production increased 27% year on year with higher cash generation;

debt reduction ongoing with net debt:EBITDA ratio* at 1.8x

Results for the six months ended 30 June 2019

 5 September 2019

Unless otherwise stated, all figures are on a Business performance basis and are in US Dollars.

Comparative figures for the income statement relate to the period ended 30 June 2018 and the Balance Sheet as at 31 December 2018.

Highlights and outlook

§  Group net production up 27.0%, averaging 68,548 Boepd in the six months to end June 2019; full year 2019 guidance of 63,000 Boepd to 70,000 Boepd unchanged

§  Improved production efficiency at Kraken in the second quarter resulted in average gross production of 32,776 Bopd in the first half of 2019. Full year guidance of 30,000 Bopd to 35,000 Bopd remains unchanged. Worcester two-well drilling programme planned for 2020 as the first Western Flank development

§  Magnus performance in line with expectations. Planned maintenance shutdown completed in the period. Two-well drilling programme to commence in the fourth quarter

§  PM8/Seligi performance above expectations reflecting the ongoing successful idle well restoration programme and high production efficiency. Two-well drilling programme commenced in July

§  Increased revenue of $858.2 million (2018: $548.3 million) and EBITDA of $525.9 million (2018: $311.9 million) driven by higher production volumes and realised prices, including the impact of the Group's hedge programme

§  Operating expenditure increased to $248.4 million (2018: $220.6 million) with unit operating costs reduced to $20.1/boe (2018: $22.6/boe), reflecting the acquisition of additional interest in Magnus

§  Material increase in cash generated from operations at $426.2 million (2018: $318.3 million); cash capital expenditure of $124.6 million (2018: $125.8 million), with guidance unchanged

§  Free cash flow** generation of $138.3 million (2018: $53.6 million) has enabled continuing debt reduction

End June net debt reduced by $136.6 million from year end; net debt:EBITDA ratio* of 1.8x

§  At 30 June 2019, net debt was reduced to $1,637.9 million (end 2018: $1,774.5 million) with cash and available bank facilities amounting to $248.5 million (end 2018: $309.0 million)

§  At the end of July, the Group's credit facility had reduced to $615.0 million following the early repayment of $65.0 million of the scheduled amortisation, with $55.0 million repaid in June and $10.0 million repaid in July. The remaining $35.0 million of the scheduled amortisation will be paid by 1 October

§  Net debt:EBITDA ratio* at the half year was 1.8x (end 2018: 2.5x), ahead of target to be below 2x by the end of 2019

* based on last twelve months EBITDA to end June 2019 and net debt at 30 June 2019

** Free cash flow: net change in cash and cash equivalents less net (repayments)/proceeds from loan facilities

2019 cash flow supported by oil price hedges

§  For full year 2019, the Group's hedge programme covers c.12.5 MMbbls. For the second half of 2019, the Group has c.4.6 MMbbls of oil hedges in place. Approximately 3.9 MMbbls are hedged at an average floor price of c.$66/bbl, with a further c.0.7 MMbbls hedged with an average floor price of c.$56/bbl in accordance with the Oz Management facility agreement 

Board change

§  EnQuest has appointed Martin Houston as Chairman of the Group with effect from 1 October 2019, replacing Jock Lennox who will step down from the Board on 30 September 2019 (See separate announcement)

EnQuest Chief Executive, Amjad Bseisu, said:

"The Group has delivered a strong performance in the first half of 2019. Production was towards the top end of our full year guidance range and we continue to control our operating expenditures, with unit opex of $20/boe in the period.

"We have generated strong cash flows in the period and significantly reduced our debt, with our net debt:EBITDA ratio at 1.8x, ahead of our target to be below 2x by the end of 2019.

"We remain confident in achieving our 2019 production guidance of 63,000 to 70,000 Boepd. Our two pipeline projects have been completed ahead of schedule and budget and our annual maintenance programme is expected to be concluded around the end of the third quarter. Drilling is underway in Malaysia with our two-well campaign and drilling at Magnus is due to start in the fourth quarter.

"The Worcester development at Kraken, planned for 2020, will utilise our existing infrastructure and is the first step in developing the material resource present in the Western Flank. We continue to assess options to develop the significant potential within our reserves and resources across our portfolio, particularly at Kraken, Magnus and PM8/Seligi."

Please refer the PDF document to view the full announcement.