LONDON Oil producer EnQuest lowered its full-year production guidance by 7 percent on Thursday after the slow start-up of a new field, sending its shares lower despite posting a 51 pct jump in first-half pretax profit.
Enquest, in common with oil companies worldwide, continues to keep a tight rein on costs to contend with depressed crude prices.
The North Sea-focused company lowered its 2016 production forecast to between 42,000 and 44,000 barrels of oil equivalent per day (bpd), down from the 44,000 to 48,000 bpd previously expected, citing a slower than expected ramp-up in output from its Alma/Galia field after technical teething troubles.
Shares in the company were down 2.6 percent at 0831 GMT.
Despite the Alma/Galia problems EnQuest reported total first-half production up 43 percent year on year, adding that more efficient drilling practices enabled it to save a further $150 million (112.38 million pounds) on its flagship Kraken oil field in the North Sea.
With the total cost now pegged at $2.6 billion, the company has saved $575 million compared with initial estimates for the project. Kraken remains on track to produce first oil in the first half of next year, EnQuest said.
"EnQuest has performed well in a low oil price environment ... With Kraken on track, there is the prospect of volume growth over the next couple of years," Liberum analysts said.
EnQuest announced in July that it was in talks to sell a 20 percent stake in Kraken to Israel's Delek Group in a deal valued at about $162 million.
However, EnQuest chief executive Amjad Bseisu said on Thursday that the announcement had been a mistake and that talks with other partners are also continuing.
"We're not exclusively talking to Delek," he told Reuters.
EnQuest is mainly relying on cashflow from asset disposals to beef up its balance sheet, Bseisu added.
The company is in discussions to sell the FPSO vessel tied to its Alma/Galia field, which it would then lease in return, he said.
EnQuest made a similar deal on its Aberdeen office which it sold in June last year and subsequently rented for 20 years, freeing up cash on non-core assets.
The weakening of the pound in the aftermath of Britain's vote to leave the European Union has created a favourable exchange rate for EnQuest, which makes money in dollars and invests heavily with sterling.
EnQuest said that operating expenditure could fall by $30 million to $40 million a year in 2017 and 2018 if exchange rates remain at current levels.
(Editing by David Goodman)