Tuesday 12 March 2019 1:19 pm

Enquest firefights after Cairn revises figures for Kraken joint venture in North Sea

Enquest tried to reassure investors today as it was forced to counter the narrative from its North Sea partner Cairn, which reduced its forecasts for the companies’ joint venture.

Shares in Enquest fell by nearly 13 per cent to 16.08p, despite the company’s denials that it would take an impairment charge from the Kraken oil field in the North Sea.

Read more: Enquest pays down debt as production hits target

It said partner Cairn Energy, which announced an impairment of $166m (£127m) from the field in its results this morning, uses a different method to forecast the reserves at the field.

Cairn said it had re-evaluated the amount of oil and gas at Kraken, but is considering new drilling opportunities at the field.

The impairment ate into Cairn’s full-year results, pushing its operating loss to $182m, up from $105m in 2017, the oil and gas firm said this morning.

Revenues, meanwhile, rose more than 12 times to $410m from $33m the year before.

Oil and gas production averaged around 17,500 barrels of oil equivalent per day in 2018, Cairn said, while sales revenue reached $396m at an average price per barrel of $68, and production costs at $20.5.

The company estimates that production will reach between 19,000 and 22,000 barrels of oil per day in 2019, at an average production cost of $20 per barrel. This “should lead to high profits given the current price of oil”, said CMC Markets analyst David Madden.

During the year, Cairn will continue work on its Senegal field where it expects to get its first oil in 2022 and which will produce 100,000 barrels per day. It will also work on its Norwegian Nova field which is targeting first oil in 2021, and expected to produce 50,000 barrels a day.

Read more: EnQuest agreed to buy a stake in a BP oil field

The company is also drilling up to four exploration wells in the UK and Norway – having already started one earlier this month – and three in Mexico.

Cairn was trading down nearly four per cent to 168p by the early afternoon.