Source: Sharecast
Via its Malaysian subsidiary, EnQuest has agreed to buy three asset packages from Petronas Carigali and E&P Malaysia Venture.
It said the acquisitions will deliver "a step change" in the company’s production, reserves and cash flow, as well as providing significant organic opportunities for future growth.
The deal will deliver enlarged group production of more than 100,000 barrels of oil equivalent per day, up 134% on 2025’s production, with potential to deliver a 100 kboepd rate through the end of the decade. The new participating interests together add around 57.4 kboepd of production.
Broker Shore Capital, which reiterated its ‘buy’ rating on the shares, said: "We expect the transaction to be immediately free cash flow accretive on completion (scheduled for end-FY26F), with EnQuest becoming a more than 100kboe/d producer.
"Although, this tips the balance of the business away from the UK North Sea and towards SE Asia, we are confident EnQuest retains the financial capacity and appetite to continue pursuing transformational acquisitions in the UK."
Danni Hewson, head of financial analysis at AJ Bell, said: "Traditionally EnQuest has been focused on the UK North Sea where it has been hit by increasing regulation and significant levels of taxation. This has led to a shift from EnQuest, with the company picking up previous assets in Southeast Asia in some piecemeal deals.
"These were baby steps compared with the giant leap the business announced today. If it goes through as planned, the deal should deliver a substantial increase in the company’s production of oil and gas. However, the size of the transaction means it constitutes a reverse takeover and will therefore need shareholder approval.
"Given EnQuest’s balance sheet issues in recent years, investors may be forgiven for being nervous about the scope of the acquisition, but the cash flow provided by the assets should mean its debt position remains under control."
The shares ended up 27% at 24.25p.
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