EnQuest H1 Earnings Call Highlights

Key Points

• First-half performance improved: Cash revenue rose 18% to $609 million, adjusted EBITDA increased 13% to $273 million, and operating cash flow climbed 31% to $281 million. EnQuest generated $71 million in free cash flow despite a deferred Magnus cargo and third-party production disruptions.
• Malaysian acquisition is on track to close Dec. 31: The deal is expected to more than double production to over 100,000 Boepd, lift 2P reserves to roughly 300 million barrels, and reduce group operating costs by about 35%. EnQuest expects to assume operatorship on Jan. 1, 2027.
• Production guidance narrowed amid North Sea disruption: Full-year guidance is now 41,000–43,000 Boepd, versus 41,000–45,000 previously, following a loss of more than 4,000 Boepd at Magnus. The company continues to advance the Magnus bypass project and Kraken enhanced oil recovery plans while maintaining 2026 cost guidance of $670 million.

EnQuest LON: ENQ reported higher first-half production and cash flow for 2026 while advancing a planned acquisition of offshore Malaysian assets that management said would more than double the company’s production scale.

Chief Executive Officer Amjad Bseisu said the company’s production rose 9% from the first half of 2025, supported by contributions from Vietnam and higher gas output at the PM8 Seligi field in Malaysia. Those gains more than offset disruption to production at the Magnus field in the North Sea caused by third-party infrastructure downtime.

EnQuest narrowed its full-year production guidance to 41,000 to 43,000 barrels of oil equivalent per day (Boepd), from its prior range of 41,000 to 45,000 Boepd. Bseisu attributed the change primarily to the impact of the Ninian Central Platform on Magnus, which reduced production by more than 4,000 Boepd during the first half.

First-Half Financial Performance

Chief Financial Officer Jonathan Copus said reported revenue for the first half totaled $530 million, including a $79 million non-cash unrealized hedging adjustment. Cash revenue, excluding that adjustment, rose 18% year-over-year to $609 million.

The company said a deferred Magnus cargo reduced first-half cash flow by approximately $60 million. Cost of sales were $480 million, with about $40 million of the year-over-year increase related to hedge mark-to-market adjustments. EnQuest also cited the addition of Vietnam production and a 40% increase in diesel costs as notable factors affecting expenses.

Adjusted EBITDA increased 13% year-over-year to $273 million, while operating cash flow rose 31% to $281 million. EnQuest invested $78 million in capital expenditures and spent $28 million on decommissioning during the period. After interest costs, lease payments and taxes, it generated $71 million in free cash flow.

At June 30, net debt stood at $517 million and cash totaled $206 million. The company said it paid $60 million during the first half to settle the Magnus contingent consideration, incurred $43 million of costs related to refinancing activity, and paid a $28 million deposit for the Malaysian acquisition.

Balance Sheet Changes and Malaysia Acquisition

EnQuest refinanced its U.S. dollar bonds during the period, extending their maturity to 2031 and reducing borrowing costs by 175 basis points, Copus said. The company also redeemed its sterling-denominated bonds and now has a capital structure consisting of its reserve-based lending facility and U.S. dollar bonds.

The reserve-based lending facility was expanded through a partial exercise of its accordion option. At June 30, EnQuest’s $400 million RBL was undrawn, while the company said it had expanded the facility’s loan tranche to $700 million. Transaction-ready liquidity was $759 million, up $80 million from Dec. 31, 2025.

The company’s Malaysian acquisition, announced in June, has received shareholder approval and approvals from PETRONAS, according to Copus. All conditions precedent have been met, with completion expected on Dec. 31. EnQuest expects to assume operatorship from Jan. 1, 2027, and said production from the acquired assets would be included from that date.

Management said the transaction is expected to lift EnQuest’s net working-interest production by 134% to more than 100,000 Boepd and increase its 2P reserves to roughly 300 million barrels. Based on trailing 2025 figures, Bseisu said the enlarged group would have approximately $1.8 billion in revenue and more than $900 million in EBITDA.

The acquired Malaysian production is expected to carry operating costs of about $10 per barrel, while forward capital expenditure to develop the associated 2P volumes is expected to be about $170 million, or less than $2 per barrel. EnQuest expects the transaction to reduce group operating costs by about 35% to approximately $16 per barrel.

Copus said the company expects pro forma net debt-to-EBITDA to be 1.1 times following the transaction, compared with 0.9 times reported at the end of 2025.

Operational Projects and Growth Priorities

In Southeast Asia, EnQuest said its Vietnam acquisition, completed in July 2025, added around 5,000 Boepd and achieved payback within one year. At PM8 Seligi, the accelerated Seligi 1b gas project was delivered nine months ahead of schedule and added more than 6,200 Boepd of gas production. The company said it had at times supplied 150 million standard cubic feet per day of gas, above its committed rate of 70 million standard cubic feet per day.

In the North Sea, EnQuest and partner NEO Energy have sanctioned an Ninian Central Platform bypass project intended to create direct export routes from Magnus to the Sullom Voe Terminal. Offshore execution is expected to begin in the fourth quarter of 2026, with first oil from the export solution targeted during the following half-year period.

The company also highlighted its enhanced oil recovery project at Kraken, which would use polymer flooding to improve recovery. A first-phase pilot involving a single drill center is expected to add approximately 5 million barrels of recoverable reserves, subject to a further investment decision. A potential full-field second phase is estimated to add 30 million to 40 million barrels gross.

• Production efficiency was 89% excluding third-party impacts and 83% including the unplanned Ninian Central disruption.
• EnQuest reported first-half realized prices of $87 per barrel before hedging and $84 per barrel after hedging.
• The company said its 2026 cost guidance remains $670 million.
• EnQuest paid a $20 million dividend in June, an increase from its previous distribution.

Bseisu said Southeast Asia and the U.K. would remain parallel areas of focus, with capital allocated to projects offering the highest returns. He added that the company would continue seeking fast-payback, low-cost production opportunities while maintaining a preference to limit additional decommissioning liabilities in potential acquisitions.

About EnQuest (LON:ENQ)

EnQuest is providing creative solutions through the energy transition. EnQuest is an independent energy company. We focus on mature late-life assets, responsibly optimising production to provide energy security. Where we can, we repurpose our infrastructure to deliver renewable energy and decarbonisation projects before executing world-class decommissioning. Shares in the Company trade on the London Stock Exchange (ENQ.L).

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