Presentation

EnQuest is one of the largest independent production and development companies in the UK North Sea and is listed in London and Stockholm. The company was formed in 2010 as a result of the combination of the UK North Sea assets of Petrofac and Lundin Petroleum. EnQuest’s asset portfolio has since remained highly levered to the UK North Sea but it also has operations in Malaysia. The company has a market capitalization of around USD 300m.

EnQuest recently presented an action plan to cope with the current depressed oil price which included not re-starting the two mature oil fields Thistle/Deveron which are shut down for maintenance, and cuts to 2020 opex and capex by 30% and 35% respectively. With these measures, the company targets FCF breakeven of USD 38/boe in 2020 and USD 35/boe in 2021. EnQuest had cash and available facilities of USD 289m at end-April, and there are no further repayments of the credit facility in 2020.

We expect a gradual oil price recovery and that EnQuest will be able to manage until then – provided the Kraken field continues to deliver steady production. If the oil price recovery materializes as we expect and the cash flow situation improves, the upside to the EnQuest share is meaningful, and its three main assets Kraken, Magnus and PM8/Seligi all offer further growth potential.