North Sea-focused EnQuest booked a small rise in annual core earnings as cost cutting and hedging measures offset weak oil prices as it readies its huge Kraken oil field.
EnQuest ramped up output by 8.7 per cent for its highest annual production figure of 39,751 barrels of oil equivalent per day (boepd) on average in the year to the end of December.
The oil firm reported revenue fell 6.3 per cent to $849.6m (£681.97m) while core earnings edged up 0.6 per cent to $477.1m, reflecting strong operational performance and hedging activities, EnQuest said.
The company managed to cut operating costs to $24.60 per barrel from $29.70 per barrel in the previous year, and for 2017 it's targeting costs in the low $20s a barrel.
A successful hedging programme also helped cut costs, generating revenue of $255.8m as it locked in prices at an average of $63.80 a barrel.
Production guidance for 2017 was confirmed to be in the range of 45,000 boepd to 51,000 boepd, dependent on the timing of first oil at the Kraken oil field.
EnQuest's share price jumped more than five per cent at the open.
Why it's interesting
The Kraken oil field, which is one of the largest projects in the North Sea, is below budget and on track to come on stream in the second quarter.
EnQuest struggled during the commodity price crash, and chief executive Amjad Bseisu said Kraken's delivery will push the company away from capital spending into a period of cash generation.
The firm's strategy is to buy interests in cheaper, ageing fields and apply new technologies and stricter spending programmes.
Earlier this year, it bought a 25 per cent stake in BP's Magnus oil field and surrounding assets in what it called a "natural evolution of EnQuest's business".
What EnQuest said
EnQuest chief executive Amjad Bseisu said:
2016 saw the successful restructuring of our balance sheet, designed to strengthen EnQuest’s liquidity position, to reduce the level of its cash debt service obligations and to enable it to bring the Kraken development onstream.
Following delivery of Kraken, EnQuest will begin moving from a period of heavy capital investment into one focused on cash generation and deleveraging the balance sheet.