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Enquest swings to profit in H1; eyes rights issue to acquire Magnus stake

By BFN News | 09:31 AM | Friday 07 September, 2018

Enquest proposed Friday to undertake a $138m rights issue to support its acquisition of the remaining 75% stake in the Magnus field, after swinging to a first-half profit and reaffirming full-year production guidance. 'The opportunity to add around $500 million of additional net present value to the Group and an additional 60 MMboe of 2P reserves through the exercise of the Magnus option, is compelling,' the company said. For the six months through 30 June, the company reported a profit of $19.13m, compared with a loss of $21.33m a year earlier, revenue increased to $548.3m from $294.8m and earnings (EBITDA) doubled to $311.9m from $151.0m a year earlier. The increased revenues were driven by 'material' growth in the group's production, led by contributions from Kraken and Magnus, and higher market prices, which were partially offset by the impact of the Group's hedging programme. Group net production up 45.9%, averaging 53,990 barrels a day in the half year. The company maintained full year 2018 guidance of 50,000 barrels a day to 58,000 barrels a day reaffirmed. The 3 for 7 rights issue at a price of 21 pence per a share would not only help fund the acquisition of Magnus field, but also provide funds to drill two infill wells in 2019, the company said. The company would have fork out $300m to exercise the option to acquire the 75% stake in Magnus. $100m of the initial consideration would be funded by the rights issue, payable in cash and the remainder funded as a non-recourse loan from BP and repaid from net cash flow generated by the 75% interests in Magnus. EnQuest and BP would equally split the net cash flow generated by Magnus. But BP's share of cash flow would be capped at $1bn, the company said. The Magnus transaction is expected to be completed in the fourth quarter of 2018. '(The) recent performance at Kraken has been improving with production in July and August averaging around 33,000 Bopd. The successful drilling and workover campaigns we have undertaken this year at Magnus, PM8/Seligi Heather and Alma/Galia, combined with robust underlying production performance across the portfolio underpins our confidence in delivering within our full year guidance range of 50,000 to 58,000 Boepd,' said EnQuest Chief Executive, Amjad Bseisu. At 9:31am: (LON:ENQ) EnQuest Plc share price was -3.87p at 34.73p Story provided by

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