EnQuest reports sharp drop in annual profit

(Sharecast News) - EnQuest reported a sharp drop in annual profit on Wednesday, as lower oil prices weighed on earnings, although production exceeded guidance and the group increased its dividend while reiterating its 2026 outlook. The London-listed, North Sea-focused producer posted profit after tax of $1.6m for 2025, down from $93.8m a year earlier, reflecting weaker oil prices and the impact of the UK's Energy Profits Levy extension.

Excluding the non-cash impact of the levy, profit would have been $125.5m.

Revenue and other income fell 5.3% to $1.12bn, while adjusted EBITDA declined 25.2% to $503.8m, as Brent crude prices dropped 15.3% year-on-year to $68.2 per barrel.

Production rose 5.4% to 42,945 barrels of oil equivalent per day, above the top end of guidance, supported by contributions from Vietnam following the acquisition of Harbour Vietnam in July.

Pro forma production, including Vietnam volumes for the full year, reached 45,606 barrels of oil equivalent per day.

Asset uptime averaged around 90%, while unit operating costs fell 2.0% to $25.1 per barrel of oil equivalent.

Operationally, EnQuest delivered growth across both its UK and South East Asia portfolios.

Magnus output increased 8% to 15.3 Kboed despite a five-week third-party outage, while South East Asia production rose 13% year-on-year.

In Malaysia, the Seligi 1b gas project was brought onstream nine months ahead of schedule, with full production beginning in January.

The group said it strengthened its balance sheet during the year, refinancing its reserve-based lending facility and ending 2025 with $678.6m of cash and available facilities, up from $474.5m a year earlier.

Net debt increased to $433.9m following tax payments, acquisition costs and refinancing fees.

A $60m settlement of the Magnus contingent consideration, completed in early 2026, removed a $432.9m liability and unlocked approximately $777m in future cash flows.

For 2026, EnQuest said it expected production to average between 41,000 and 45,000 equivalent daily barrels.

Output had strengthened into the first quarter, with production exceeding 50,000 barrels of oil equivalent per day during March after resolving earlier disruption at Magnus.

The company said it expected operating expenditure of around $450m, capital investment of approximately $160m and decommissioning costs of about $60m.

It said it had hedged 5.1 million barrels of oil over the next 12 months at an average floor price of $71.3 per barrel, alongside a further 3.5 million barrels in the following year at $64.4 per barrel.

EnQuest proposed a final 2025 dividend of 0.8p per share, equivalent to around $20m, subject to shareholder approval, following its maiden $15m payout in 2025.

"In a volatile world, EnQuest stands out for its consistent operational delivery, highly tangible reserves base, disciplined investment, and a strategy anchored in diversified growth," said chief executive Amjad Bseisu.

"Our position as a top quartile operator, combined with a strengthened financial base and an increasingly diversified portfolio, sets the stage for a pivotal period of growth across the UK North Sea and South East Asia.

"These actions ensured that we began 2026 with confidence and momentum.

"Reflecting strong peninsular Malaysia gas demand and robust well performance, Seligi 1b is regularly delivering up to 40% above the field's contracted volumes, and, having resolved third-party disruption to Magnus - due to extreme North Sea weather - group production has consistently exceeded 50 Kboed during March."

At 0930 GMT, shares in EnQuest were down 5.06% at 17.62p.

Reporting by Josh White for Sharecast.com.

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