Oil company EnQuest's shares plunge after output warning

By Aditi Sebastian

(Reuters) -Oil producer EnQuest on Thursday warned that annual output would be at the lower end of its previously forecast range, primarily owing to declines at its Magnus field in the UK's North Sea, sending its shares down more than 7%.

Production activity at its Magnus and Greater Kittiwake Area oilfields has been hit by natural declines, outages and topside-related issues that caused some wells to require repairs, the company said.

EnQuest expects annual production at the lower end of the range between 46,000 and 52,000 barrels of oil equivalent per day (boepd).

The company, which has operations in the North Sea and Malaysia, has embarked on programmes to fix the wells and expects further recovery in production over the remainder of the year, Chief Executive Amjad Bseisu told Reuters.

Though UK production has been hit by pandemic-related impacts, gas output from the North Sea was already in long-term decline, according to an OGUK report https://oguk.org.uk/the-uk-faces-a-stark-energy-choice-invest-in-its-offshore-industry-to-build-energy-security-jobs-and-a-managed-green-transition-or-rely-on-other-countries-for-its-energy-needs-a-report-h.

Long-time partner Cairn Energy this year sold its stake in EnQuest's flagship Kraken oilfield, describing it as part of a "portfolio in decline".

"We will continue to look for opportunities in Malaysia and South-East Asia and even further beyond," EnQuest boss Bseisu said on Thursday when asked if he was looking to diversify the North Sea-concentrated portfolio.

EnQuest said free cash flow rose 63% to $141.5 million in the first half of the year as oil prices rose, helping it to reduce debt that stood at about $1.18 billion at June 30, down from $1.28 billion at the end of last year.

The company completed a $750 million debt refinancing in June to support its purchase of the low-cost Golden Eagle field, which it bought this year to add about 10,000 boepd to its output.

($1 = 0.7260 pounds)

(Reporting by Aditi Sebastian in BengaluruEditing by Shounak Dasgupta and David Goodman)