- EnQuest is in discussions with Serica Energy over a possible reverse takeover
North Sea-focused oil producer EnQuest will pay a maiden dividend after swinging to a profit last year despite recording lower production and turnover.
The oil exploration group, which is in discussions with Serica Energy over a possible merger, has proposed handing investors a 0.62 pence per share dividend for 2025, equivalent to around $15million.
After two consecutive annual losses, EnQuest rebounded to a $93.8million profit in 2024 even though its revenue slumped by approximately a fifth to $1.2billion.
Sales were dampened by falling commodity prices, with average Brent Crude prices dipping by $2 to $80.5 per barrel and natural gas prices sliding by 15.5 per cent to 83.6 pence per thermal unit.
They were further hit by production levels shrinking by 7 per cent to about 40,700 barrels of oil equivalent per day due to what EnQuest called ‘natural field declines’ across its portfolio.
Consequently, EnQuest’s adjusted earnings before nasties were 18.4 per cent lower at $672.6million.
Reward: EnQuest intends to pay a maiden dividend after swinging to a profit last year
Yet the company’s net debt fell by a further 20 per cent to $385.2billion, more than $1.6billion below its peak of just over $2billion.
‘The group delivered another outstanding year of operational performance in 2024,’ remarked Amjad Bseisu, chief executive of EnQuest.
He added: ‘Having consistently delivered against production, operational and cost targets, we have generated material free cash flows across recent years, even during periods of reduced commodity prices.’
EnQuest shares jumped by 11.2 per cent to 14.8p by late Thursday afternoon, making them the FTSE All-Share Index’s biggest riser.
About three weeks ago, EnQuest revealed that it was in talks over a possible reverse takeover of Serica.
The two companies said a likely deal would see Serica’s shareholders enjoy a return of capital and hold a majority stake in the enlarged business.
Serica’s bosses believe a tie-up would provide ‘substantial potential benefits,’ such as greater scale and diversification, synergies and a ‘stronger platform for further growth.’
Under City takeover rules, EnQuest must declare a firm intention to put forward an offer for Serica by 5pm on 4 April or walk away.
A potential merger comes as many energy producers scale back production in the North Sea due to the Energy Profits Levy.
Introduced by then-Chancellor Rishi Sunak in 2022, the EPL is a windfall tax on profits from oil and gas production in the North Sea.
The UK Government raised the tax by three percentage points to 38 per cent in its last Budget and withdrew the 29 per cent investment allowance for new oil and gas extraction.
These tax changes mean UK oil and gas producers pay a headline tax rate of 78 per cent, among the highest in the world.
Texas-based Apache revealed plans last November to shut its North Sea operations by the end of 2029 because of the EPL’s ‘onerous financial impact.’
Just before that, Reuters reported that Harbour Energy was considering selling its stakes in five North Sea fields – Armada, Everest, Lomond, Catcher and Tolmount.
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This article was originally published by a www.dailymail.co.uk . Read the Original article here. .