Falling oil price drills a hole in EnQuest's profits

A fall in the price of crude oil has knocked 13.2 per cent off interim profits at the North Sea oil explorer EnQuest.

The shares fell 2.8p to 123.9p as the company, which specialises in squeezing life out of old fields, reported a pre-tax profit of $167.2m (£108m), down from $192.6m a year earlier.

EnQuest said its "realised" oil price in the first half was $109 per barrel, against $112 a year earlier. A $6m one-off cost relating to the running of a turbine on diesel at its Thistle field also hit profits.

The company also warned that oil production from a new field, Alma/Galia, would now come on stream in the first quarter of next year instead of the final three months of this year. This will push its production in 2013 to the lower end of the guidance that it had given previously.

The company said in March that it expected to produce between 22,000 and 27,000 barrels of oil equivalent per day (boepd).

The Alma/Galia development, a revitalisation of Britain's first oil-producing field, is taking longer than expected because the company had decided to conduct a more thorough refurbishment of the floating production, storage and offloading vessel.

EnQuest's chief executive, Amjad Bseisu, said: "We continue to look at opportunities to acquire assets in the UK and other regions, where our expertise and capabilities can be applied to maturing assets and development opportunities."

Mr Bseisu said EnQuest's production will jump by around 60 per cent when Alma/Galia comes onstream and sought to play down concerns about the delay. "We're only talking about a few months here... Nothing to worry investors. We'll have four of the wells ready rather than two, so I think the production will start off at a higher rate," he said.

EnQuest also announced yesterday that it has bought a 50 per cent stake in the Avalon prospect in the North Sea. Enquest will pay part of the drilling costs up to a limit of £12.5m.