The share price of Enquest (LSE: ENQ) — the largest UK independent oil producer in the UK North Sea, which specialises in extending the life of old oil fields — is currently down close to 2% following the release of its results for the six months to 30 June 2013.
The company reported first-half production of 21,455 barrels of oil equivalent per day (boepd), up 5.9% on the first half of 2012.
Revenue grew 3.6%, to 456m, but gross profit declined 14.3%, to $175m, owing to the lower price of oil ($109 per barrel, versus $112 per barrel in H1 2012), some one-off operating costs, and a higher depletion charge resulting from a change in the production mix.
Looking ahead, the company anticipates a substantial addition to its proven-plus-probable (2P) reserves, with an increase of more than 70 MMboe to net 2P reserves, 60 MMboe of which will come from the Kraken field, if Enquest’s field development plan is sanctioned, as is hoped, in the second half of this year.
The company also confirmed a separate second field — ‘Kraken North’ — and anticipates an additional £800m heavy oil tax allowance. Overall, Enquest does not expect to pay cash tax before 2018.
Commenting on the results, CEO Amjad Bseisu said:
“EnQuest is delivering sustainable growth through increasing production and increasing reserves, and our assets are performing well.
“We continue to look at opportunities to acquire assets in the UK and other regions, where our expertise and capabilities can be applied to maturing assets and development opportunities.“
At the time of writing Enquest ‘s share price is 124.5p. That’s up just 3.3% so far this year, compared with a near-12% rise in the FTSE 100. But over the last five years, Enquest’s share price has outperformed the FTSE 100, rising close to 17%, versus 14.4% for the index.
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> Jon doesn’t own shares in Enquest.