EnQuest Projects Consistent 2026 Production Following Robust 2025 Performance

EnQuest Surpasses 2025 Targets and Lowers Costs, Offers Outlook for 2026

EnQuest outperformed its 2025 production expectations and managed to keep expenses below projected levels. Looking ahead, the company anticipates production in 2026 to remain steady or dip slightly, largely due to weather-related setbacks in the UK North Sea.

The independent oil and gas producer announced an average daily output of 45,606 barrels of oil equivalent in 2025, exceeding its guidance range of 40,000–45,000 boepd. Asset uptime reached 89%, placing EnQuest among the industry’s top performers.

Despite a roughly 10% decline in the U.S. dollar, EnQuest’s 2025 spending came in about 4% under budget. Operating expenses are estimated at $435 million, below the $450 million forecast, while capital investments totaled around $180 million, under the $190 million target. Decommissioning costs were also lower than anticipated at $55 million.

UK operations maintained production within 4% of 2024 levels. Output from the Magnus field increased by 8% year-over-year to 15,300 boepd, even with a five-week outage caused by third-party infrastructure issues. If not for this disruption, North Sea production efficiency would have reached 92%.

EnQuest expanded its presence in Southeast Asia during the year. After finalizing the acquisition of Harbour Energy Vietnam in July, the company drilled three wells in Block 12W, boosting fourth-quarter net production to about 5,500 boepd. In Malaysia, the Seligi 1b project delivered first gas nine months ahead of schedule in December, and by January 2026, full production reached approximately 70 million cubic feet per day (about 6,000 boepd net).

By the end of 2025, EnQuest’s net debt stood at around $435 million, aligning with forecasts. The company held $269 million in cash, and its refinanced reserve-based lending facility remained untouched, raising total available liquidity to roughly $675 million—an increase from $475 million the previous year.

Throughout the year, EnQuest paid $104 million in UK Energy Profits Levy taxes, $22.7 million for the Vietnam acquisition, and $20 million in refinancing fees for its lending facility.

The company also finalized a $60 million settlement related to the Magnus contingent consideration, securing all future cash flows from Magnus, settling outstanding contingent payments, and streamlining its balance sheet. Existing decommissioning agreements remain unchanged.

As EnQuest is currently behind on tax payments, it expects its cash tax obligations to be much lower in 2026.

For 2026, EnQuest projects production between 41,000 and 45,000 boepd, compared to 45,606 boepd in 2025. So far in January, average output has been about 33,800 boepd, reflecting the impact of harsh weather in the UK North Sea.

Operational Updates and Future Plans

In mid-January, storm damage to the third-party-operated Ninian Central Platform caused an unexpected shutdown, affecting users such as the Magnus field. Production resumed on February 22 after repairs were completed.

To mitigate risks associated with third-party infrastructure, EnQuest is working on plans to bypass the Ninian Central Platform by 2027. Additionally, a six-well infill drilling program at Magnus is scheduled for 2026–2027.

For 2026, the company expects to spend approximately $160 million on capital projects, $450 million on operating costs, and around $60 million on decommissioning.

EnQuest has hedged about 4 million barrels of its 2026 oil output at an average price of $68 per barrel through swaps, with further protection via zero-cost collars. Additional hedges are in place for 2027 and 2028 at around $64 per barrel.

Regional Developments in Asia

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

In Vietnam, the Block 12W license has been extended by four years to July 2034, providing more time to turn discovered resources into reserves. In Brunei, EnQuest is forming a 50/50 joint venture to operate Block C, aiming for about 15,000 boepd of net gas production starting in 2029.

EnQuest remains committed to maintaining strong operational performance in the UK North Sea, while leveraging its tax position, financial stability, and growing presence in Southeast Asia to drive future growth.

By Charles Kennedy for Oilprice.com