September 8, 2017 / 11:26 AM / 10 months ago

UK's EnQuest gets waiver on quarterly credit test as profits drop

LONDON (Reuters) - Heavily indebted North Sea oil producer EnQuest (ENQ.L) has received a waiver on a quarterly credit review due in September after a slow ramp up of its flagship project led to a drop in earnings.

London-listed EnQuest last year underwent financial restructuring to cope with low oil prices and a large spending programme to get its $2.5 billion (£1.89 billion) Kraken field up and running.

A slower-than-expected ramp up of the field since it started production in June led to a drop in revenue and a risk that EnQuest would breach terms of its loan covenant. EnQuest’s debt rose to $1.92 billion in the first half of 2017.

“We’ve received the waiver for September. We went proactively to the banks to do that,” Chief Financial Officer Jonathan Swinney told analysts on Thursday.

Companies regularly undergo financial stress tests, also known as a loan test, to check their ability to repay debt.

The company said more quarterly waivers might be required in order to maintain its credit facility.

Reporting by Ron Bousso; Editing by Edmund Blair

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