Production jump sends EnQuest soaring

EnQuest (ENQ) is eyeing up a 20% jump in medium-term production after sanctioning the development of the Alma and Galia fields in the North Sea.

This $850 million (c£545 million) project will add a fourth hub to EnQuest's existing operating base and will increase both the company's net 2P oil reserves by 29 million barrels of oil equivalent and its output.

The UK North Sea oil producer said it will deliver an annual growth rate of over 20% per year between 2009 and 2014. It is forecasting average yearly production of between 20,000 and 24,000 barrels of oil equivalent per day (boepd) for 2012, between 25,000 and 30,000 boepd for 2013 and in excess of 40,000 boepd for 2014.

The development will consist of seven production wells and two water injection/disposal wells tied back to the modified Uisge Gorm Floating Production and Storage Offloading vessel.

Chief executive Amjad Bseisu told investors: "The Alma and Galia development shows the continuing growth of EnQuest and the breadth and depth of its capabilities from subsurface to production. The project reuses existing facilities and is designed to ensure that abandonments costs will be minimised.

"The Alma and Galia development underpins our medium term production growth profile. This is EnQuest's largest new project so far and our fourth hub."

The news sent its shares as much as 13% higher to 102.8p - the most in more than a month.

The company also said today that it will acquire a 40% interest in the Kildrummy discovery on 15/12b and 15/17 after agreeing a farm in with Talisman Energy.

EnQuest will earn the 40% working interest by carrying Talisman's share of the appraisal programme, which is estimated to be around $32 million.

Looking for expert opinion on oil production in UK waters? Watch what George Godber from Matterley Asset Management has to say in: The future of North Sea oil.