EnQuest cut its net debt to around $1.77 billion at the end of 2018 from $1.9 billion a year earlier, the British North Sea-focused oil company said on Feb. 5, adding it expected higher output this year to help it reduce debt further.
EnQuest reiterated that it expects output to rise to between 63,000 and 70,000 barrels of oil equivalent per day (boe/d) this year from 55,447 boe/d in 2018.
Production at its flagship Kraken oilfield was below expectations in 2018, but output is being boosted at the Magnus oilfield where EnQuest bought out partner BP last year.
"Our focus on cost control and capital discipline, combined with our improved cash generation capability enables further repayment of debt, which remains the priority for the Group," Chief Executive Amjad Bseisu said.
EnQuest plans to spend around $275 million including on drilling at Magnus and Kraken in the North Sea as well as in Malaysia. The company has a market capitalization of around $421 million.
"We should have been talking about shareholder returns by now; however, the oil price and a number of operational issues at key assets means EnQuest remains firmly focused on taking pressure from the balance sheet," BMO analysts said in a note.
"Today’s guidance is broadly in line although that in itself is a surprise for a company that has historically beaten expectations," they said.
EnQuest shares were up 3.3% at 0921 GMT.
Like many oil producers, EnQuest hedges some of its output. In the first quarter, it hedged 3.6 million barrels (MMbbl) at an average price of $68-$76 per bbl and a further 1.5 MMbbl through 2019 at $56-$68 per bbl.
The parties must now renegotiate a deal that would transfer Breitburn's Permian reserves to investors including Elliott and WL Ross through their participation in a $775 million rights offering.
Oil major Exxon Mobil said Jan. 31 it would create three new separate E&P companies, effective April 1, in an effort to double its profit by 2025.
EnQuest will be the first oil producer to get access to discoveries made by private-equity backed Seapulse as part of its 12-well exploration campaign.