EnQuest Guides Stable 2026 Output After Strong 2025 Delivery

EnQuest exceeded its 2025 production guidance and reduced costs below forecast, while guiding broadly stable to slightly lower output in 2026 following weather-related disruptions in the UK North Sea.

The independent upstream producer reported average 2025 production of 45,606 barrels of oil equivalent per day (boepd), above its 40,000–45,000 boepd guidance range. Asset uptime reached 89%, placing performance at the upper end of sector benchmarks.

Pro forma 2025 expenditures were approximately 4% below guidance despite a roughly 10% weakening of the U.S. dollar. Operating costs are expected to total around $435 million, below the $450 million forecast, while capital expenditure came in at approximately $180 million versus guidance of $190 million. Decommissioning costs were about $55 million, also below expectations.

In the UK, production remained within 4% of 2024 levels. Magnus output rose 8% year-on-year to 15,300 boepd despite a five-week third-party infrastructure outage. Excluding that disruption, North Sea production efficiency was 92%.

EnQuest expanded in Southeast Asia during the year. Following completion of the Harbour Energy Vietnam acquisition in July, the company invested in three wells at Block 12W, lifting fourth-quarter net production to roughly 5,500 boepd. In Malaysia, first gas from the Seligi 1b project was delivered nine months ahead of schedule in December, with full production of about 70 million cubic feet per day (around 6,000 boepd net) achieved in January 2026.

Net debt at year-end 2025 stood at approximately $435 million, broadly in line with expectations. Cash totaled $269 million, and the company’s refinanced reserve-based lending (RBL) facility remained undrawn, bringing total available liquidity to around $675 million, up from $475 million a year earlier.

During the year, EnQuest paid $104 million in UK Energy Profits Levy tax, $22.7 million for the Vietnam acquisition, and $20 million in RBL refinancing fees.

The company also executed a $60 million settlement of the Magnus contingent consideration mechanism. The agreement secures 100% of future Magnus cash flows for EnQuest, crystallizes remaining contingent payments, and simplifies the balance sheet. Existing decommissioning arrangements remain unchanged.

As a taxpayer in arrears, EnQuest expects significantly lower cash tax payments in 2026.

The company guided 2026 production at 41,000–45,000 boepd, compared with 45,606 boepd in 2025. January year-to-date production averaged approximately 33,800 boepd, reflecting the impact of severe weather in the UK North Sea.

Storm damage to the third-party-operated Ninian Central Platform in mid-January caused an unplanned outage affecting system users, including the Magnus field. Production was reinstated on February 22 following remedial work.

To reduce exposure to third-party infrastructure risk, EnQuest is advancing plans to bypass the Ninian Central Platform during 2027. The company is also preparing a six-well infill drilling campaign at Magnus across 2026–2027.

For 2026, cash capital expenditure is expected to total approximately $160 million, operating costs about $450 million, and decommissioning costs around $60 million.

EnQuest has hedged approximately 4.0 million barrels of 2026 oil production at about $68 per barrel using swaps, with additional volumes protected through zero-cost collars. Further hedges are in place for 2027 and 2028 at around $64 per barrel.

In Malaysia, January production averaged 10,400 boepd, supported by Seligi 1b. The DEWA production sharing contract offshore Sarawak is advancing toward a phased development, with Phase 1 targeting around 9,000 boepd net and a final investment decision expected in the second half of 2026.

In Vietnam, Block 12W has been extended by four years to July 2034, providing additional time to convert discovered resources into reserves. In Brunei, EnQuest is forming a 50/50 joint venture to operate Block C, targeting around 15,000 boepd of net gas production from 2029.

EnQuest said it remains focused on maintaining operational performance in the UK North Sea while leveraging its tax position, balance sheet strength, and regional expansion in Southeast Asia to support growth.

By Charles Kennedy for Oilprice.com

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