LONDON – EnQuest has launched a proposed financial restructuring to sustain its UK North Sea business.
Its main current prerogative is to ensure that the Kraken heavy-oil field development in the East Shetland basin comes onstream as scheduled during 1H 2017.
In response to lower oil prices and cash flow constraints, the company has focused on divesting non-core assets; reducing operating costs; cutting capex for Kraken; and improving future cash flows through the development of Kraken and Scolty/Crathes in the UK central North Sea.
However, it needs a longer-term solution to strengthen its liquidity position and to reduce its cash debt service obligations.
Currently the company is cutting its full cycle capex estimate for Kraken by around a further $100 million to $2.5 billion, helped by improved performance on drilling and subsea production systems.
The Kraken FPSO is close to mechanical completion, with the focus on pre-commissioning and commissioning. All four engines and boilers are mechanically complete.
Scolty/Crathes is ahead of schedule, with first oil expected around the end of 2016.
EnQuest anticipates average production for 2016 in the range of 42-44,000 boe/d, and opex at $25-$27/bbl.
The company continues to pursue cost reductions across the supply chain.
At the producing Alma/Galia development in the central sector, the K1 (AP4) well required a chemical treatment which has been successful. A workover of the K3z (AP1) well has further increased production.
Drilling of well K7, the replacement for the uncompleted K6, is in the completion operations phase. It should be online around year-end.