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Oil producer EnQuest secures £145m in bond issue

  • by PERRY GOURLEY
 

ENQUEST, the largest independent producer in the North Sea, has raised £145 million from investors after becoming the first oil and gas company to issue a retail bond.

Chief executive Amjad Bseisu said he was “delighted” by the level of interest shown in the bond, which offers investors a fixed gross interest rate of 5.5 per cent a year until 2022.

“The bond has received a strong response from investors and the issue allows us to extend the tenor of our borrowings and will complement our already strong balance sheet,” said Bseisu.

The net proceeds under the offer, after expenses of £1.55m, are £143.5m. The minimum initial subscription was £2,000.

The launch of a trading facility on the London Stock Exchange last year opened up the bond market to retail investors and a number of companies, including CLS, Modwen and Workspace, have issued offerings in recent months.

Although EnQuest has significant borrowing facilities at its disposal, the company said was attracted to the retail bond market due to the length of funding available as most bank lending tends to be for up to around four years.

Last week the company reported “another good operational performance” during 2012, with average daily production of 22,802 barrels of oil equivalent per day, which compared with the guidance range of average production of 20,000 to 24,000 barrels. It said the figures reflected good year end production from all of its fields.

In January EnQuest struck a deal with Cieco Energy to acquire two of its companies which together hold an 8 per cent non-operated interest in the Alba oil field.

EnQuest said the deal would add both reserves and production and further diversifies its asset base.

The company is paying £18.75m in cash upfront, plus a further deferred cash consideration of up to £500,000 dependent on certain project milestones being achieved.

EnQuest, which is listed on the FTSE250, is focused on mature assets and in undeveloped oil fields. It was established through combining the UK North Sea assets and operations of Lundin Petroleum and Petrofac.

Shares in EnQuest closed up 0.2p at 132.9p.

 

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