EnQuest on a high as it raises production forecasts for the year

Published on Monday 16 August 2010 22:05

SHARES in EnQuest, the North Sea-focused oil and gas group, rose strongly yesterday after the company raised its full-year production guidance after completing two wells ahead of schedule.

First-half output of 18,708 barrels of oil equivalent per day (boepd) was ahead of market forecasts of 16,333 barrels thanks to a stronger-than-expected performance at the Thistle oil field and the completion of two wells at the Don fields.

The progress has led the company to up its output guidance for the full year to 20,000 boepd from 18,000.

Shares in the company, which was created by the combination of the North Sea assets of oil services company Petrofac and Swedish explorer Lundin, rose by 7.3p or 6.5 per cent to 119.3p yesterday.

Chief executive Amjad Bseisu said: "We've had excellent execution so the wells are coming on stream earlier than expected and also the wells are performing better than expected.

"With our technical core competence and financial strength, we are well set to create a substantial exploitation company in the UK North Sea."

EnQuest, which is targeting acquisitions to help meet its aim of raising its production by 10 per cent a year in the medium term, made its first acquisition earlier this month buying smaller North Sea player Stratic Energy for $45.7 million (28.7m).

Bseisu said the company was in a strong position to make further acquisitions with a cash balance of $76.4m plus around $200m in loan facilities.

"We're seeing both independents as well as major companies looking at rationalising their portfolio and putting assets on the market. We still see significant opportunities ahead to utilise our cash."

JP Morgan analyst Jessica Saadat said the results were better than forecast and maintained her "overweight" recommendation on the shares given the production upgrade.