Production Summary

EnQuest had another good operational performance during 2012, with average daily production of 22,802 Boepd, which compares with the guidance range of average production of 20,000 to 24,000 Boepd and reflected good year end production performances from all of EnQuest’s fields.

Alma/Galia and Thistle Field Approvals

EnQuest’s Board has approved an increase in the scope and specification of the Alma/Galia project with the objective of extending the field life, optimising operating costs and enabling a potential second phase development. These changes, which are subject to the normal partner approval process, are expected to extend the FPSO vessel life materially (up to 15 years), and to add additional wells in any second development phase. With the extended field life, the gross field 2P reserves are increased from 29 MMBoe to 34 MMBoe as audited by Gaffney Cline for the existing first phase of development which excludes possible incremental 2C resources for a second phase. Results of all wells drilled to date have been at or better than prognosis. EnQuest will review effects of the well results on reserves, after all wells are completed and analysed.

These improvements in adding swivel capacity and extending vessel and project life are expected to increase the gross capital expenditure for the project by approximately $200m. This includes $100m of costs relating to compliance with recent UKCS marine code changes which require upgrades to the mooring system and strengthening of the swivel and vessel hull. In addition, ongoing operations have been impacted by weather related and other cost factors which have resulted in an increase of approximately $100m to the previous capital expenditure estimates. The gross capital expenditure for the Alma/Galia project, in which EnQuest has a 65% working interest, is now expected to total $1.2bn, plus $0.1bn in contingency and growth allowances.

In spite of the capital cost increases, the benefits of the extended life related reserves increase and operational improvements to the project will have a positive net present value impact on EnQuest in the first phase of the development. The improvements also create increased potential for additional reserves and value in a potential second phase.

EnQuest’s Board has also approved the sanctioning of the next phase of the Thistle late life extension project, facilitated as it has been by its qualification for the Brown Field Allowances programme announced by the Government late in 2012.

Amjad Bseisu, Chief Executive, said

“It is good to be able to report average production of 22,802 Boepd for 2012, above the middle of the range of our guidance, which is a testament to the success of our drilling programme and good reservoir management.

First oil for the Alma/Galia project is still anticipated for Q4 2013. The first phase of the project is now expected to generate significantly greater returns than those foreseen at the time of sanction. The further increase to 34 MMboe in gross 2P reserves for Alma/Galia represents a more attractive first phase development and, with the newly sanctioned improvements, more potential reserves with a second phase.”