Delivering energy,
fuelling the transition
EnQuest PLC
Annual Report and
Accounts 2024
01
See our transition in action stories
Inside this report
Strategic Report
04
Highlights
05
Key performance indicators
06
At a glance
08
Chairman’s statement
10
Market overview
12
Chief Executive’s report
16
Our strengths
18
Our strategy
20
Operational review
32
Oil and gas reserves and resources
33
Hydrocarbon assets
34
Financial review
39
Group non-financial and sustainability
information statement
40
Environmental, Social and Governance
44
Environmental
48
Social
54
Governance: Risks and uncertainties
72
Governance: Business conduct
74
Governance: Task Force on
Climate-related Financial Disclosures
84
Governance: Stakeholder engagement
Corporate Governance
88
Executive Committee
90
Board of Directors
92
Chairman’s letter
94
Corporate governance statement
98
Governance and Nomination Committee report
101
Audit Committee report
107
Directors’ Remuneration Report
118
Sustainability and Risk Committee report
120
Directors’ report
Financial Statements
125
Statement of Directors’ responsibilities for the
Group financial statements
126
Independent auditor’s report to the members
of EnQuest PLC
138
Group Income Statement
139
Group Balance Sheet
140
Group Statement of Changes in Equity
141
Group Statement of Cash Flows
142
Notes to the Group Financial Statements
181
Statement of Directors’ Responsibilities for
the Parent Company Financial Statements
182
Company Balance Sheet
183
Company Statement of Changes in Equity
184
Notes to the Financial Statements
189
Glossary – Non-GAAP Measures
193
Company information
EnQuest is an oil and gas
company with the energy
transition at the heart of
everything we do.
We are a leader in late-life
energy asset management –
optimising oil and gas fields,
delivering sector-leading
decommissioning, repurposing
existing infrastructure and
fuelling the energy transition
through decarbonisation and
renewable energy projects.
This is transition in action.
Transition in action
Midstream and Veri Energy
Right-sizing existing infrastructure
and progressing scalable new energy
and decarbonisation projects.
Page 28
Transition in action
Upstream
Late-life asset management
expertise, extending asset lives.
Page 22
Transition in action
Decommissioning
Delivering sector-leading
decommissioning performance
– a key transition capability
Page 26
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
01
We responsibly extract existing oil
and gas resources through established
infrastructure while minimising emissions.
Upstream
Decommissioning
We are focused on safe and reliable
operations while repurposing infrastructure
to progress renewable energy and
decarbonisation opportunities at scale.
Midstream and Veri Energy
CARBON STORAGE
CO
2
storage potential (mtpa)
10
TOP QUARTILE PRODUCTION UPTIME
Group operated production efficiency (%)
90
2023: 87
Who we are and what we do
Our strategic
vision
To be the partner
of choice for the
responsible
management of
existing energy
assets, applying our
core capabilities to
create value through
the transition.
Our
purpose
Our purpose is to
provide creative
solutions through the
energy transition.
Our
Values
SAFE Results
Working
Collaboratively
Respect & Openness
Growth & Learning
Driving a Focused
Business
An independent energy
company, demonstrating
expertise across the
transition lifecycle
WELL PLUG AND ABANDONMENT
Thistle and Heather wells completed
22
2023: 25
We are committed to delivering
decommissioning programmes responsibly,
minimising emissions and maximising the
reuse of recovered materials.
Our strategic
focus
1
Managing assets
to optimise and
grow production
while exercising
cost control and
capital discipline
2
Repurposing existing
infrastructure to
deliver new energy
and decarbonisation
opportunities at scale
3
Safely and
efficiently executing
decommissioning
activities
4
Managing our
Balance Sheet while
pursuing selective,
capability-led and
value-accretive
acquisitions
See more on
Page 18
See more on
Pages 16-19
See more on
Page 22
See more on
Page 26
See more on
Page 28
What we do
EnQuest PLC Annual Report and Accounts 2024
Strategic Report
Corporate Governance
Financial Statements
02—03
Highlights
Balance sheet
strength provides
foundation for
growth.
Strong operational performance
and focused cost control and capital
discipline underpinned further
deleveraging during 2024. EnQuest
net debt was reduced in the year
from $480.9 million to $385.8 million,
following another year of positive
free cash flow generation and the
repayment of a vendor loan provided
to RockRose as part of the 2023 Bressay
transaction. The Group also fully repaid
its reserve based lending (‘RBL’) facility
during the first quarter. In order to
maximise available financial capacity
to pursue value-accretive growth, the
Group completed a successful tap of
its existing high yield bond, with the
proceeds used to repay and refinance
the $150.0 million term loan facility.
Production in the year decreased by
7.0% versus 2023, reflecting natural
declines across the portfolio partially
offset by top quartile production uptime
and the efficient execution of well work
activities at Magnus and PM8/Seligi.
The Group’s adjusted EBITDA decreased
18.4% to $672.6 million, reflecting the
lower revenue associated with reduced
production and lower commodity
prices, as well as higher tariffs at
SVT. Profit after tax was $93.8 million,
reflecting a lower tax charge in the
period. The Group reported basic
earnings per share of 5.0 cents (2023:
loss per share of 1.6 cents), primarily
reflecting a lower effective tax rate
of 43.7% (2023: 113.3%) in the year.
The Group’s robust balance sheet and
transaction-ready liquidity position
means EnQuest is well placed to
pursue growth opportunities and return
capital to shareholders, with a final
2024 dividend of 0.616 pence per share
proposed (equivalent to c.$15 million).
Average Brent oil price
$/bbl
80.5
-2.4%
2023: 82.5
Average day-ahead gas price
GBp/therm
83.6
-15.5%
2023: 98.9
Commodity prices
Operating costs
$ million
382.8
+10.3%
2023: 347.2
Adjusted free cash flow
$ million
53.2
-82.3%
2023: 300.0
Read more in the
Financial review
see Page 34
Adjusted EBITDA
$ million
672.6
-18.4%
2023: 824.7
Alternative performance measures
1
Revenue and other operating income
$ million
1,180.7
-20.6%
2023: 1,487.4
Read more in the
Financial review
see Page 34
Net assets/(liabilities)
$ million
542.5
+18.8%
2023: 456.7
Basic earnings/(loss) per share
cents
5.0
n/a
2023: (1.6)
Net cash flows from operating activities
$ million
508.8
-32.5%
2023: 754.2
Profit/(loss) before tax
$ million
166.6
-28.1%
2023: 231.8
Statutory performance measures
1
3
A
HSEA
Group Lost Time Incident
frequency rate
1
+198.1%
2024 performance with respect to Lost
Time Incident (‘LTI’) performance was
disappointing and out of line with the
Group’s recent safety record. EnQuest
aims to be in the upper quartile for
safety performance and is working
closely with contractors to ensure that
everyone working at our sites is aligned
with EnQuest’s commitment to safety.
1
4
D
Cash generated from operations
$ million
-19.7%
Cash generated from operations
reflected lower production and lower
commodity prices.
1
G
Net 2P reserves
MMboe
-3.6%
During 2024, the Group produced
c.14 MMboe of its year-end 2023 2P
reserves base, partially offset by the
recognition of additional gas volumes
in South East Asia.
1
3
B
Net production
Boepd
-7.0%
The decrease in production was
primarily driven by natural declines
across the portfolio partially offset by
strong production efficiencies and
the efficient execution of well work
activities at Magnus and PM8/Seligi.
1
E
Cash capital and decommissioning
expense
2
$ million
+48.5%
Increased cash capital and
decommissioning expense reflected
SVT major project costs and Magnus
Flare Gas Recovery, the Magnus five-
yearly rig recertification, and well plug
and abandonment decommissioning
activities at Heather and Thistle.
1
3
H
Scope 1 and 2 emissions
tCO
2
e
+2.5%
EnQuest has reduced its operated Scope
1 and Scope 2 emissions by 22% against a
2020 baseline. 2024 saw a slight increase
in year-on-year emissions, driven by
increased flaring at SVT. Work is ongoing
to decarbonise the terminal site by 90%.
For more information,
see Page 28
.
1
C
Unit opex
2
$/Boe
+15.5%
Average unit operating costs were
primarily impacted by SVT tariff costs
and lower 2024 production volumes.
4
F
EnQuest net debt
2
$ million
-19.8%
Adjusted free cash flow generation in
2024 and the repayment of a vendor
loan provided to RockRose as part of
the 2023 Bressay transaction, enabled
the Group to pay down a further
$95.1 million of EnQuest net debt.
Key performance indicators
Notes above
1
See reconciliation of alternative
performance measures within the
‘Glossary – Non-GAAP measures’ starting
on page 189
Notes opposite
1
Lost Time Incident frequency represents
the number of incidents per million
exposure hours worked (based on 12 hours
for offshore and eight hours for onshore).
2
See reconciliation of alternative
performance measures within the
‘Glossary – Non-GAAP measures’ starting
on page 189
2024
2023
2022
0.52
0.57
1.55
2024
2023
2022
685.9
854.7
1,026.1
2024
2023
2022
385.8
480.9
717.1
2024
2023
2022
169
175
190
2024
2023
2022
40,736
43,812
47,259
2024
2023
2022
313.4
211.1
174.8
2024
2023
2022
21.9
22.7
25.3
2024
2023
2022
1,068.4
1,041.9
1,051.9
Our strategic focus
1
Managing assets to optimise
and grow production while
exercising cost control and
capital discipline
2
Repurposing existing
infrastructure to deliver new
energy and decarbonisation
opportunities at scale
3
Safely and efficiently executing
decommissioning activities
4
Managing our Balance Sheet
while pursuing selective,
capability-led and value-
accretive acquisitions
EnQuest PLC Annual Report and Accounts 2024
Strategic Report
Corporate Governance
Financial Statements
04—05
Group operations
Carbon storage
- 10 million tonnes
per annum
4 Deep water jetties
- 24 metre draught
Renewable
energy hub
Alma/Galia
Scolty/Crathes
Kraken
Magnus
Golden Eagle
Aberdeen
E-Fuel production
Upstream
Decommissioning
Midstream
Heather/Broom
Sullom Voe
Terminal
Thistle/
Deveron
Dons
Alba
Greater Kittiwake Area
Sullom Voe Terminal,
Shetland Islands
Global
employees
2P Reserves
(MMboe)
UK production
hubs
2C Reserves
(MMboe)
UK North Sea
PM8/Seligi
DEWA
Kuala
Lumpur
Malaysia
Onshore
processing
terminal
Operated
2P
Decommissioning
assets
Group
production
(Boepd)
RRR
1
since IPO
667
169
4
354
1
96%
4
40,736
1.4x
At a glance
We focus on mature assets,
responsibly optimising
production to provide energy
security. Where we can, we
repurpose infrastructure to
deliver renewable energy
and decarbonisation projects
before executing world-class
decommissioning.
mtpa CO
2
storage potential
carbon storage licences
10
2
The Sullom Voe Terminal provides the Group
with the infrastructure from which to progress its
renewable energy and decarbonisation ambitions,
including carbon capture and storage, generation
of renewable power and the production of e-fuels.
Renewable energy and
Decarbonisation opportunities
1
Reserves Replacement Ratio
calculated as Reserves Additions/
Cumulative Production – effective
31 December 2024
EnQuest PLC Annual Report and Accounts 2024
Strategic Report
Corporate Governance
Financial Statements
06—07
A responsible energy future
requires balance, delivering
reliable oil and gas today
while driving towards the
solutions of tomorrow.
Chairman
Gareth Penny
Delivering
diversified
growth
Chairman’s statement
Overview
The Group continues to demonstrate
its differentiated operating capability
across the portfolio, leveraging core
capabilities to create value through the
upstream asset life cycle. This operational
excellence provides a strong foundation
for the Group’s growth ambitions in the UK
and is fundamental as we look to deploy
our expertise on several new projects
in South East Asia. Having celebrated
ten years of successful operations in
Malaysia, EnQuest was proud to be named
Malaysia Upstream Operator of the Year by
PETRONAS, and our commitment to growth
in the region has been reinforced by the
award of the DEWA Production Sharing
Contract and the expansion of the Seligi
gas agreement. Our entry into Vietnam
through the Block 12W acquisition provides
further geographic and commodity
diversification and demonstrates our
commitment to deploy capital where
we see the most favourable returns.
As the UK fiscal regime has continued
to provide challenges for all North Sea
operators, our long-standing commitment
to cost management and a prudent
approach to capital allocation have
ensured that our financial performance
has remained robust. Following continued
fast payback capital allocation and
our well-supported high yield bond tap
process during 2024, we have delivered
shareholder returns, further reduced debt
levels and enhanced financial flexibility,
with significant transaction-ready
liquidity available to grow the business.
We are very clear that we are targeting
transformational growth through
acquisition in the UK. The UK Energy Profits
Levy has impacted cash generation and
investment across the UK energy sector,
with the Group’s significant tax asset
creating a relative advantage versus full
tax-paying peers. With the combination
of our late-life asset management
expertise and this differentiated tax
position, value can be created from the
transfer of assets into our ownership,
and I believe that EnQuest represents
a credible North Sea consolidator. As
such, I am confident there will be further
opportunities for EnQuest to add significant
value-accretive production and cash
flow to the portfolio as other operators
continue to shift their focus from the UK.
Fuelling the Just Energy Transition
As a responsible transition operator,
EnQuest is very clear that the value
generated by our Upstream business is
of primary focus, both in terms of cash
generation and retention of the key skills,
knowledge and technical expertise which
are vital to a successful transition. This focus
extends to decommissioning, in which
EnQuest continues to demonstrate sector-
leading capability and has an established
position as the most prolific well plug and
abandonment exponent in the North
Sea. Decommissioning is a key transition
activity that is becoming an ever more
significant component of the competency
mix for a North Sea operator, including
as a key enabler in M&A discussions.
With significant decarbonisation projects
underway across our production asset
portfolio and at the Sullom Voe Terminal
(‘SVT’), the Group continues to demonstrate
its commitment to internal and external
emission reduction targets and to fulfilling
the Board commitment to reach net zero
Scope 1 and Scope 2 emissions by 2040.
Under the management of Veri Energy,
the Group’s wholly owned subsidiary,
considerable progress has been made
in delivering credible and potentially
material new energy and decarbonisation
opportunities, primarily through
repurposing existing infrastructure at SVT,
a microcosm of the UK energy transition.
EnQuest is a truly just transition
company, supporting net zero
ambitions while continuing to
meet society’s energy needs. The
reality is that oil and gas will remain
essential for the foreseeable future,
even as we implement low-carbon
solutions. Our focus is on delivering
that energy safely, efficiently, and
with a reduced environmental
footprint. A just transition is not just
about technology; it is about people.
The oil and gas sector supports
around 200,000 jobs across the UK,
and we are committed to ensuring
that our workers have the skills and
opportunities to thrive in the evolving
energy landscape. Through targeted
investment in training, reskilling,
and our decarbonisation and new
energy projects, we are preparing our
workforce for the future while creating
new opportunities in clean energy.
Furthermore, we continue to work
closely with local communities,
industry partners and government
bodies to ensure that the transition
delivers economic growth and
equitable, long-term prosperity,
particularly in regions historically
reliant on oil and gas. The expertise
that resides today within traditional
oil and gas companies will deliver
the energy transition, and we
recognise that our skilled and
dedicated workforce is our strength.
As we navigate the energy transition, we
are committed to strategies that prioritise
employee and community wellbeing,
professional growth, and economic
security. We have set ambitious, time-
bound targets to reduce our emissions,
consistently updating internal and external
stakeholders on progress, and I was
delighted to see our efforts recognised
through a ‘B’ rating in the 2024 CDP Climate
Change Survey, which places EnQuest
among the sector leaders.
Leadership
Corporate governance is an essential
part of EnQuest’s operational and
business framework, supporting both risk
management and the Group’s Core Values.
We remain focused on Board and executive
succession planning, with the evolution of
the Group’s strategy necessitating changes
to align competencies more closely with
its delivery. As part of the Board refresh and
following shareholder approval at the 2024
Annual General Meeting (‘AGM’), Jonathan
Copus joined the EnQuest Board as an
Executive Director, with Rosalind Kainyah
MBE and Marianne Daryabegui joining
the Board as Non-Executive Directors. As
previously announced, Salman Malik, Rani
Koya and Liv Monica Stubholt stepped
down as Directors at the AGM.
With the additions of Jonathan as Chief
Financial Officer and Steve Bowyer as North
Sea General Manager, as well as Radzif
Ahmed’s expanded role in managing our
growing South East Asian business, I am
pleased to report Amjad is leading a strong
and experienced management team,
supported by a diverse and knowledgeable
Board. Across the whole Group, I am
impressed by the depth and breadth of
our talent pool and collective focus on
delivering on EnQuest’s strategic aims.
Looking ahead
As we look to deliver material value-
accretive growth in the UK and continued
diversified growth across South East Asia,
we remain confident in the resilience and
repeatability of our business model, the
expertise of our people, and a commitment
across the organisation to deliver long-term
value for our shareholders. We recognise
the imperative to adapt to changing market
and socio-economic dynamics and
embrace the opportunities created by our
operational and financial advantages.
We continue to advocate on behalf of
our sector and the workers, families and
communities dependent on oil and gas
for their quality of life today and as part
of a low-carbon future. Particularly in the
UK, policymakers have the opportunity
to embrace the reality that transitions
take time and that, if managed in a just
and orderly way, can yield significant
opportunities to deliver economic growth,
energy security and an effective and
sustainable approach to innovation across
our energy mix. EnQuest will remain at
the forefront of efforts to enhance the
investment climate and pursue sustainable
growth, guided by our strategic vision to
apply our core capabilities to create value
through the transition.
Gareth Penny
Chairman
“At EnQuest, we are
committed to a Just
Energy Transition that
supports energy security,
sustainability, and
economic growth.”
EnQuest PLC Annual Report and Accounts 2024
Strategic Report
Corporate Governance
Financial Statements
08—09
EnQuest PLC Annual Report
and Accounts 2024
In shaping our strategy
we consider a wide range
of issues, assessing the
potential opportunities
and threats they pose
to our business.
Global trends
impacting our business
What does it mean for
our industry?
Fiscal regime volatility undermines
confidence and negatively impacts
the investment environment. The
increase in UK Energy Profits Levy
(‘EPL’) rate from 35% to 38% and its
extension to 2030, announced in
the Autumn Budget, represented
the fifth amendment to UK sector
taxation in the last three years. The
EPL has resulted in a number of
industry participants accelerating
their shift in focus away from the
UK North Sea, with some reducing
investment and others looking
to depart the UK entirely.
What does it mean for
our industry?
Commodity prices remained within
a lower but stable range during 2024,
with the year largely defined by the
wars in Ukraine and Gaza. 2024 also
marked a significant milestone for
global policy, with over 70 countries,
representing more than half of the
world’s population, holding national
elections. Energy policy emerged
as one of the critical issues, with
global voters assessing the success
of their national energy strategies.
How are we responding?
EnQuest remains committed
to growing its UK business,
underpinned by a differentiated
operating capability and the
Group’s historic tax asset. These
relative advantages provide the
Group with a strong foundation
from which to pursue value-
accretive growth through
acquisition, as demonstrated by
recent growth in South East Asia.
How are we responding?
EnQuest hedges a significant
amount of its production in order to
protect against downside risk, while
retaining the upside during periods
of increased commodity prices.
Further changes to the EPL have
driven some operators to shift
focus away from the UK North
Sea, and towards more
supportive geographies.
Global markets impacted
by volatility of the geopolitical
environment. Global conflicts
and government policies
affecting supply/demand
dynamics.
UK oil and gas
fiscal regime
Macroeconomic
uncertainty
Market overview
Read more in the
Financial review
see Page 34
What does it mean for
our industry?
Within the oil and gas sector, a
credible transition plan is effectively
the licence to operate. Companies
will increasingly be asked to
explain how targets will be met and
emphasis will be applied to reporting
against interim milestone targets.
Scope 1 and 2 emissions
tCO
2
e
-22%
What does it mean for
our industry?
The transition to just energy
introduces both challenges
and opportunities for the sector.
Companies that adapt to
changing market dynamics,
diversify their portfolios, and
embrace sustainable practices
will be better positioned to thrive
in a low-carbon future. Investors
are increasingly considering ESG
factors in their investment decisions
and companies will face issues in
attracting investment if they are
perceived as being incompatible
with sustainability goals.
What does it mean for
our industry?
The Environmental, Social and
Governance (‘ESG’) landscape
is evolving and oil and gas
companies are expected to
adopt principles of environmental
stewardship, resource efficiency,
social responsibility and
community engagement, and
safety and risk management.
Above all, transparency and
accountability are vital.
How are we responding?
EnQuest has a Board-approved
target to reach net zero in terms of
Scope 1 and Scope 2 emissions by
2040. The Group is progressing its
transition plans and continued to
progress a credible transition plan
during 2024. The decarbonisation
and renewable energy opportunities
at the Sullom Voe Terminal add
significant credibility to the
Group’s net zero ambitions.
How are we responding?
The Group recognises the evolving
energy landscape and is committed
to leading a Just Energy Transition,
ensuring that our workers, the
communities we serve, and our
stakeholders benefit in the process.
How are we responding?
EnQuest maintains collaborative
relationships with major
shareholders, lenders and other
key stakeholders, regularly seeking
feedback on the Group’s operational
plans and ESG performance.
Demonstrating its commitment
to responsible and sustainable
operations, the Group was
awarded a ‘B’ rating in the 2024
CDP Climate Change Survey.
Governments, regulators and
consumers are calling for the
reduction of carbon-related
emissions and net zero targets
are coming under scrutiny.
The JET has risen to prominence,
underscoring the shift from fossil
fuels to renewables, prioritising
equity and support for impacted
people and communities.
Key stakeholders are
increasingly demanding
responsible and ethical
working practices that drive
positive impacts for society
and manage risk.
Climate change
and carbon
targets
The just energy
transition (‘JET’)
Responsible
and sustainable
operation
2024
2020
1,068.4
1,361.9
EnQuest PLC Annual Report and Accounts 2024
Strategic Report
Corporate Governance
Financial Statements
10—11
Our growth strategy is
underpinned by the belief
that we can deploy our
expertise to create value
across the asset life cycle.
Chief Executive
Amjad Bseisu
Delivering
operational
excellence
Chief Executive’s report
Overview
EnQuest is an expert in managing
assets in mature basins. We do this
by improving operational uptime,
lowering costs and extending asset
life. At the end of an asset’s economic
life, we either safely decommission it or
repurpose it for a low carbon future.
Across the UK North Sea and South
East Asia, we operate c.96% of our 2P
reserves. This means we have strong
control over how we deploy our people
and capital. Our focus is to invest in
maintenance and low-cost, fast-payback
opportunities that diversify production,
help manage natural field declines, lower
costs and reduce emissions. We have
been careful to enter these assets with
financial agreements that minimise our
exposure to decommissioning costs.
Delivering diversified growth is central
to our strategy. In the UK North Sea, we
remain focused on utilising our core
operational skills and advantaged tax
position to deliver a deal that propels
us into the top tier of producers. This will
expand the Group’s cash flow, enabling
us to boost shareholder distributions and
accelerate our growth in South East Asia.
Since ending 2024, we have grown our
cash and available facilities to $549.0
million as at 28 February 2025. This
provides a strong foundation from which
to transact, and we are focused on 2025
as a year of transformational delivery.
Market conditions
In 2024, wars in Ukraine and Gaza
intensified and over 70 countries,
representing more than half of the world’s
population, held national elections.
Despite this complex geopolitical mix, oil
prices were lower but relatively stable,
with Brent averaging $80.5/bbl.
Production
Boepd
40,736
Group liquidity
1
at 31 December 2024
$ million
474.5
In the UK, the Labour Party entered
power following the General Election
with a strong majority and a manifesto
pledge to tighten fiscal conditions in the
UK North Sea, despite the UK being the
only country in the world to maintain a
windfall tax on oil and gas producers
in 2024. The new government used its
first Budget Statement to increase the
Energy Profits Levy (‘EPL’) rate to 38% and
extended its duration to 31 March 2030.
This was the fifth material amendment
to UK sector taxation in the last two and
a half years. Such volatility undermines
North Sea investment and impacts jobs
and equipment that are essential to
delivering the UK’s transition ambitions.
As more industry participants
accelerate their shift in focus away
from the UK North Sea, we retain the
view that a significant proportion of
UK production is transactable, and we
are clear in our desire to be a sector
consolidator. Our significant tax loss
position and the impact of the EPL on
marginal tax rates means that the
transfer of assets to EnQuest ownership
would increase their relative value to a
multiple of that in the hands of existing
owners. The combination of this relative
tax advantage and our differentiated
operating capability, including
demonstrable decommissioning
expertise, make EnQuest the right
operator to maximise the value of
mature assets in the North Sea.
EnQuest has a track record of
demonstrating resilience, creativity,
and adaptability, and can generate
opportunities in such circumstances.
Having consistently delivered against
production, operational and cost
targets, we have generated material-
free cash flows across recent years,
even during periods of significantly
reduced commodity prices.
This commitment to delivery, against
the backdrop of a challenging UK fiscal
environment, has seen us reduce
EnQuest net debt by more than $1.6
billion since its peak. With no outstanding
debt maturities until 2027, now is the
time for EnQuest to build on that strong
foundation as we look to deliver material
growth in the UK and accelerate the
value of our significant UK tax asset.
All figures quoted are in US Dollars unless otherwise stated.
1
Cash and available facilities.
See Glossary – Non-GAAP
Measures on
Page 189
“We are value-led and
committed to playing
our part in a just and
sustainable transition,
with our people and our
communities at its heart.”
Exceptional operating performance
In 2024, EnQuest delivered production
efficiency of c.90% across its operated
portfolio, production averaging 40,736
Boepd (2023: 43,812 Boepd). 80% of this
production originated from the UK North
Sea and 88% of Group output was oil.
With 88% production efficiency, our North
Sea assets again significantly exceeded
the industry’s average basin performance
(c.77%). Given EnQuest’s focus on late-life
assets, this is a standout achievement.
The Kraken field continued to perform at
the very top of the production efficiency
for floating hubs, the FPSO’s 95.5%
production efficiency exceeding North
Sea average efficiency by c.25%.
High levels of uptime at Magnus were
offset by minor delays to the five-yearly
rig recertification, which in turn delayed
the start-up of several new wells.
The field also suffered an outage on
third-party infrastructure in the fourth
quarter of 2024. To mitigate this, the
Group designed and executed a well
optimisation campaign that added over
1,000 Boepd of incremental production.
Production efficiency in Malaysia
averaged 94% and production totalled
8,149 Boepd (10% up on 2023). This was
underpinned by three new infill wells
and strong domestic demand for
associated Seligi 1a gas, for which EnQuest
receives a handling and delivery fee.
EnQuest is successfully delivering
against a key component of its strategy
by delivering diversified growth, with
successive South East Asian transactions,
that provide geographic and commodity
diversification within the portfolio. Our
entry into Vietnam through the Block 12W
acquisition and extending our Malaysian
footprint with the expansion of our Seligi
gas agreement and the DEWA PSC
award are all underpinned by EnQuest’s
differentiated operating capability and
our ability to deploy our expertise to
create asset value. As EnQuest continues
to work towards a transaction in the UK
North Sea and further potential new
country entries in South East Asia, these
agreements underline our commitment
to growth, a disciplined approach to M&A,
and a strategy to deploy capital where
we see the most favourable returns.
Strategic Report
Corporate Governance
Financial Statements
12—13
EnQuest PLC Annual Report and
Accounts 2024
At the other end of the lifecycle of our
asset portfolio, EnQuest plugged and
abandoned (‘P&A’) another 22 wells, and
the Group remains on track to complete
well P&A work on both Heather and Thistle
in 2025. Although we have delivered more
than 35% of the total well P&A work in the
North Sea over the last three years, our
exposure to the cost of this work remains
one of the lowest in the basin, as these
costs have mostly been left behind with
the original owners of the assets. We
continue to deliver P&A activities at a per
well cost that is significantly below the
North Sea Transition Authority (‘NSTA’)
industry benchmark, and in recognition
of our decommissioning expertise,
in 2024 Shell transferred to EnQuest
its decommissioning management
role of the Greater Kittiwake Area.
Having produced c.14 MMboe of
hydrocarbons in 2024, we almost
fully replaced these volumes through
2P reserve additions in South East
Asia, with Group 2P reserves totalling
168.6 MMboe at 31 December 2024
(2023: 174.9 MMboe). 2C resources also
remained robust, totalling c.354 MMboe,
Bressay and Bentley each holding more
than 100 MMboe of net resource.
Post the period end, EnQuest
added a further 7.5 MMboe of 2P
and reserves and 4.9 MMboe of 2C
resource through the acquisition of
Harbour’s Vietnam operations.
Financial performance
The Group’s continued solid financial
and operating performance in the
period drove further strengthening of
EnQuest’s balance sheet and enabled
the focus of the business to pivot to
shareholder distributions and growth.
We reduced our EnQuest net debt by
a further $95.1 million, to $385.8 million
(31 December 2023: $480.9 million)
and we were delighted to execute our
first shareholder return programme,
repurchasing $9.0 million of capital via
a share buyback.
Lower commodity prices, production and
the Magnus crossover gas component
reduced Group revenue to $1,180.7 million
(2023: $1,487.4 million). The Magnus
crossover gas also drove a reduction in
cost of sales, with production costs flat
year-on-year. Adjusted EBITDA fell by 18.5%,
to $672.6 million (2023: $824.7 million) but
EnQuest’s effective tax rate fell to 43.7%
(2023: 113.3%) due to the recognition of
additional carried forward tax losses. As a
result, the Group reported a post-tax profit
of $93.8 million (2023: $30.8 million loss).
Chief Executive’s report
continued
“Our top quartile
operating capability
and differentiated tax
position make EnQuest
the right operator to
maximise the value of
mature assets in the
North Sea and beyond.”
Capital expenditure in the period rose to
$252.9 million, primarily relating to the
Magnus five-yearly rig recertification,
Golden Eagle drilling, decarbonisation
projects at SVT, and the emission-reducing
Magnus Flare Gas Recovery project
(2023: $152.2 million). Decommissioning
expenditure totalled $60.5 million
(2023: $58.9 million). In the period, we
also received repayment of a vendor
loan that was provided to RockRose as
part of the 2023 Bressay farm-down.
We used our financial strength to
make $130.6 million of net repayments
on our loans and borrowings (2023:
$237.1 million), repaying our RBL facility
in full ($140.0 million) in Q1 2024 and,
in Q4 2024, repaying the entire $150.0
million term loan facility through a
$160.0 million tap of EnQuest’s high
yield bond, which has simplified
transaction-ready access to our RBL.
Following the RBL redetermination process
at the end of 2024 and with no further
drawdowns in the first quarter of 2025,
$237.1 million of the RBL facility remains
available to EnQuest for future drawdown.
We understand the importance of
distributions to our shareholders and,
having ended 2024 with a strong financial
position, EnQuest is pleased to propose
its maiden dividend, which for 2025 will
be 0.616 pence per share, equivalent to
c.$15 million.
Environmental, Social
and Governance
Against the 2018 baseline established
by the NSTA’s North Sea Transition Deal,
we have reduced our absolute UK Scope
1 and Scope 2 emissions by over 40%,
providing a strong foundation for our
commitment to reach net zero in Scope
1 and Scope 2 emissions by 2040.
Work continues to decarbonise existing
portfolio infrastructure. Examples of these
initiatives include the Magnus Flare Gas
Recovery project, which was sanctioned
in 2024, and development of the Bressay
gas cap, for which we target regulatory
approval later this year. At the Sullom
Voe Terminal (‘SVT’) on Shetland, we are
progressing two significant projects: the
New Stabilisation Facility (‘NSF’) and the
long-term power solution, which together
will reduce SVT’s carbon footprint by c.90%.
Under the management of Veri Energy,
a wholly owned subsidiary of EnQuest,
we are also supporting the UK’s
transition ambitions by progressing
several scalable renewable energy
and decarbonisation projects.
The health, safety and wellbeing of our
employees remains our top priority.
In 2024, our Lost Time Incident (‘LTI’)
performance fell short of our expectations
and was out of line with the Group’s
recent safety record. EnQuest aims
to be in the upper quartile for safety
performance and is working closely with
all contractors to ensure that everyone
working at our sites is aligned with
EnQuest’s commitment to SAFE Results.
2024 saw a number of changes to the
EnQuest Board, with Jonathan Copus,
our Chief Financial Officer, formalising his
Board position and Rosalind Kainyah MBE
and Marianne Daryabegui joining the
Board as Non-Executive Directors. With
Salman Malik, Rani Koya and Liv Monica
Stubholt stepping down as Directors
at the Annual General Meeting (‘AGM’),
I would like to thank them for their diligent
contributions to EnQuest over the years. I
look forward to working with the refreshed
Board as we execute our growth strategy.
2025 performance and outlook
In 2025, our focus is to maximise the
value of our existing assets, while using
our operating expertise and advantaged
UK tax position to grow our business
through acquisition. Success in these
goals is expected to deliver a step-
change in our operations, which will
expand cash flow and enable us to
boost shareholder distributions and
accelerate our growth in South East Asia.
Group production to the end of February
from the current portfolio, excluding
Vietnam, was 43,037 Boepd. At the same
date, following the Group’s year-end RBL
redetermination, cash and available
facilities had risen to $549.0 million.
Our full-year 2025 net production
guidance of between 40,000 and 45,000
Boepd includes pro forma volumes from
our Vietnam acquisition (due to complete
during the second quarter of 2025) and
the expected impact of drilling and
well work at Magnus and PM8/Seligi.
Pro forma operating costs are expected
to be c.$450.0 million, while capital
expenditures are expected to be c.$190.0
million. Decommissioning expenditures
are expected to total c.$60.0 million.
In 2025, we are working to advance
several important projects toward
Final Investment Decisions (‘FID’).
Development of Bressay’s gas cap will
lower Kraken costs and emissions, whilst
de-risking the pathway to development
of significant oil volumes on the Bressay
and Bentley fields (together c.250 MMboe
of the Group’s 2C Resources).
EnQuest operates the Sullom Voe Terminal
on Shetland, which is the focus of the
Group’s decarbonisation and renewable
energy projects.
1
See Glossary – Non-GAAP Measures on Page 189
2
This includes pro forma Vietnam volumes
EnQuest’s Kraken FPSO
EnQuest net debt
1
at
31 December 2024
$ million
385.8
2025 pro forma production
guidance
2
Boepd
40,000
45,000
Following encouraging testing, we also
aim to progress the Kraken Enhanced Oil
Recovery (‘EOR’) project to a FID within the
next 12 months. Initial estimates suggest
that this has potential to unlock 30 to 60
MMbbls gross of additional recoverable oil.
Our position as a top quartile operator,
alongside our advantaged UK tax
position, enhances our M&A credentials
as a responsible owner and operator
of existing assets and infrastructure
as we transition to a lower-carbon
energy system, offering our people
long-term opportunities. We also
believe that our core capabilities and
top quartile operating performance
can be replicated and deployed across
other geographies as we continue to
grow and diversify internationally.
Reflecting on 2024, I am proud of the
resilience, adaptability, and commitment
that have defined our performance.
Despite a dynamic and volatile global
energy landscape, EnQuest has delivered
diversified growth, demonstrated
operational excellence, and returned
capital to our shareholders. Our
employees remain the cornerstone
of our success and, together, we
recognise the responsibility we share
in shaping the future of energy.
As we look to execute a transformative
transaction in the UK, and further
diversification of our portfolio, we will
continue to be guided by a commitment
to generating value for our shareholders.
Amjad Bseisu
Chief Executive
EnQuest PLC Annual Report and Accounts 2024
Strategic Report
Corporate Governance
Financial Statements
14—15
Distinct skills
and capabilities
Industry-leading
sustainability
credentials, with
focus on safety
EnQuest is a top quartile
operator through the
life cycle of maturing
hydrocarbon assets,
and its compelling
decarbonisation and
renewable energy
strategy is anchored in
its unique infrastructure
position and strong
engineering and
subsurface capability.
Our strengths
How we are differentiated
Top quartile performance
across developments, wells,
operations, decommissioning
and technical support functions
Transferable capabilities that can
be deployed across all aspects of
the portfolio, different geographies
and decarbonisation and
renewable energy opportunities
Highly skilled, dedicated teams
with strong technical credentials
Board-supported commitment
to reach net zero with regard to
Scope 1 and Scope 2 emissions
by 2040; ten years ahead of UK
national target
UK Scope 1 and Scope 2 emissions
reduction of 40% versus 2018
baseline. EnQuest performance
tracking significantly ahead of
North Sea Transition Deal targets
Lost time incident frequency of 1.55
in 2024. UK average is 1.63
Average asset production
uptime during 2024
90%
Reduction in UK Scope 1
and Scope 2 emissions
versus 2018 baseline
40%
Read more in the Operating
Review on
Page 20
and the
Financial review on
Page 34
Our strengths
Uniquely
positioned to
capitalise on
transition projects
Differentiated
UK tax positioning
Track record
of delivering
accretive
acquisitions
EnQuest is a top quartile operator,
primed for growth
EnQuest has an exclusive right
to develop renewable energy and
decarbonisation projects at Sullom
Voe Terminal
Veri Energy, a wholly owned EnQuest
subsidiary, provides dedicated
management of projects
EnQuest will provide support
in a capital-light manner,
while enabling Veri Energy to
leverage support from financial
and strategic partnerships
EnQuest holds significant
recognised UK tax loss position of
c.$2.1 billion as at 31 December 2024
The UK Energy Profits
Levy enhances
EnQuest’s relative tax advantage
versus full tax-paying peers
EnQuest plans to accelerate tax
loss benefit through acquisition
of value-accretive assets, with
immediate M&A focus in the UK
Since inception, EnQuest has
extended the economic lives
of all nine operated assets
Asset acquisitions have
typically achieved payback
within 12-18 months
Entrepreneurial, innovative
approach taken to structure
past deals with limited upfront
consideration and focus on value
Total anticipated annual
carbon storage potential
from CCS project
10mtpa
Comparative cash flow
due to tax advantage
1
2.8x
Life extension achieved
at Magnus, PM8/Seligi and
Dons following acquisition
10+yrs
1
Based on a full UK taxpayer retaining 22%
post-tax income vs EnQuest retaining 62%
post-tax income given CT/SCT tax loss position
EnQuest PLC Annual Report and Accounts 2024
Strategic Report
Corporate Governance
Financial Statements
16—17
Key updates for 2024
Our strategy
Upstream
Managing assets to
optimise and grow
production while
exercising cost control
and capital discipline
Progress in 2024
• Production of 40,736 Boepd
•
Top quartile production efficiency delivered across
operated portfolio
•
Delivery of diversified growth through expansion of Seligi
gas agreement and award of DEWA Production Sharing
Contract award in Malaysia
Objectives for 2025
•
Production guidance of 40,000 to 45,000 Boepd, including
pro forma Vietnam volumes
•
Multi-well drilling and wellwork programmes at Magnus
and at PM8/Seligi
•
Progress Kraken Enhanced Oil Recovery project to final
investment decision within 12 months
Read more in the
Operational review see
Page 20
1
Progress in 2024
•
Plug and abandonment (‘P&A’) of 22 wells completed
across Heather and Thistle projects
•
Per North Sea Transition Authority review data, EnQuest
probabilistic average cost per well P&A is £2.8 million –
significantly lowering sector average
•
Validation of decommissioning credentials with Shell
transferring its Greater Kittiwake Area decommissioning
management role to EnQuest
Objectives for 2025
•
Complete well P&A campaigns at both Heather
and Thistle
•
Continue planning work ahead of heavy lifts during 2026
and 2027
Decommissioning
Safely and
efficiently executing
decommissioning
activities
Read more in the
Operational review see
Page 20
3
2
Progress in 2024
•
Midstream team progressing two major infrastructure
projects at SVT. Together, these projects are expected to
reduce terminal emissions by 90%
•
Veri Energy supporting the UK Government’s Clean Power
2030 Action Plan and delivering against the Scottish
Government’s Energy Strategy and Just Transition Plan
•
Received grant funding from UK Government’s Net Zero
Hydrogen Fund to support e-fuels study work
Objectives for 2025
•
Complete New Stabilisation Facility right-sizing project
•
Progress onshore wind project to Final Investment Decision
Midstream and Veri Energy
Repurposing existing
infrastructure to
deliver new energy
and decarbonisation
opportunities at scale
Read more in the
Operational review see
Page 20
Progress in 2024
•
Full repayment of reserve based lending facility (‘RBL’)
•
Executed successful $160.0 million tap of high yield bond;
process over-subscribed and priced above par at 101.0%
•
Repaid $150.0 million term loan facility, simplifying access
to transaction-ready liquidity
•
Group liquidity at 28 February 2025 of c.$550 million
Objectives for 2025
•
Focus on executing transformative UK transaction,
following delivery of diversified growth in South East Asia
•
Continue to de-leverage the Group’s balance sheet
through disciplined capital allocation
• Execute shareholder return programme
Financial
Continuing to reduce debt
while pursuing selective,
capability-led and value-
accretive acquisitions
4
Read more in the
Financial review see
Page 34
EnQuest PLC Annual Report and Accounts 2024
Strategic Report
Corporate Governance
Financial Statements
18—19
00—00
In delivering production uptime of
90% across its operated portfolio
during 2024, EnQuest achieved a level
of performance which sits at the very
top end of the UK North Sea sector.
The latest available benchmarked
data from the North Sea Transition
Authority (‘NSTA’) shows that
production efficiency across the
UKCS is 77%. EnQuest’s UK operated
asset uptime was 88%.
Further, the NSTA UKCS production
efficiency for floating hubs is 71%.
At 95.5% production efficiency,
EnQuest’s Kraken FPSO beats that
by almost 25%.
This exemplary uptime performance
extends to the Group’s South East
Asia business, with 94% uptime at
PM8/Seligi.
We continue to demonstrate
differentiated, top quartile
operating capability across
the transition asset life cycle.
General Manager, North Sea
Steve Bowyer
Operational review
Group operated production efficiency
90%
Transition in action
Late-life asset
management expertise
See more on
Page 22
2024 saw the Group deliver 90%
production efficiency across its
operated portfolio. EnQuest is proud
of its differentiated operating
capability, with its foundation in late-life
asset management expertise and
expansion to include sector-leading
decommissioning performance.
The Group is committed to optimising all of
the assets we operate and has a strong track
record in extending the life of mature oil and
gas fields. We do this by applying focus to
maintenance, key production equipment
and through the high-quality execution
of drilling and well intervention work.
We are also focused on the decarbonisation
of our portfolio and have several projects
in flight at Magnus, Kraken and the Sullom
Voe Terminal (‘SVT’), aimed at significantly
reducing the Group’s carbon footprint and
delivering an improved long-term operating
cost base. These components are key to
ensuring our operations continue to thrive
in an evolving regulatory environment.
All the skills outlined above are transferable
across our business and can be deployed as
we grow, in both the UK and in South East Asia,
and as we right-size and repurpose existing
infrastructure to create a decarbonisation
and renewable energy hub at SVT.
2024 Group Production
Boepd
40,736
-7%
2023: 43,812
Magnus production efficiency
2017
59%
2024
83%
2023 UKCS average: 77%
Kraken production efficiency
2017
63%
2024
96%
2023 UKCS floating hub average: 77%
Update on operations
EnQuest PLC Annual Report and Accounts 2024
Strategic Report
Financial Statements
Corporate Governance
20—21
EnQuest PLC Annual Report and Accounts 2024
Operational review
continued
UK Upstream
2024 UK operations
performance summary
Production of 32,587 Boepd across
EnQuest’s UK upstream assets was
underpinned by strong production
efficiencies across the portfolio and the
Group’s investment in low-cost, quick-
payback well work and production
optimisation, partially offsetting the
impact of natural field declines.
Kraken
2024 performance summary
The Kraken Floating, Production, Storage
and Offloading (‘FPSO’) facility delivered
an exceptional production efficiency
of 96% (2023: 86%) and water injection
efficiency of 95.5% (2023: 85%) for the year,
resulting in average 2024 net production of
12,759 Boepd (2023: 13,580 Boepd). This is a
testament to the focus and collaboration
between the EnQuest and Bumi Armada
operational teams, delivering production
efficiency performance that is 24.5%
above the industry average benchmark
for floating hubs (as measured against the
latest North Sea Transition Authority data).
The Kraken maintenance shutdown
was completed in ten days (six days full
shutdown and four days on single train
operations). This work included the five-
yearly FPSO swivel inspection.
The Group continues to optimise Kraken
cargo sales through the shipping fuel
market. Kraken oil is a key component of
International Maritime Organization (‘IMO’)
2020 compliant low-sulphur fuel oil and,
avoiding refining-related emissions.
2025 outlook
The asset team is focused on maintaining
best-in-class FPSO production
efficiency through focused investment
in maintenance and reliability activities.
Work is ongoing to mature the Kraken
Enhanced Oil Recovery (‘EOR’) project to a
Final Investment Decision (‘FID’) within the
next 12 months. EOR represents a material
upside to Kraken’s value, with base case
incremental recoverable oil estimates of
30 to 60 MMbbls gross.
The EnQuest team is advancing a gas
import project that involves the subsea
tie-back of a Bressay gas well to the Kraken
FPSO. By establishing an alternative fuel
supply to the diesel currently used to power
Kraken operations, this project has the
potential to drive a step change reduction
in FPSO emissions and operating costs.
It is anticipated that the Bressay gas well
can be drilled as part of an expanded well
programme, alongside the resumption
of drilling at Kraken and a subsea well
plugging and abandonment programme.
UK upstream operations
continue to deliver
top-quartile production
efficiency performance
across the portfolio.
Director, Upstream Assets
Fergus Kulasinghe
With c.33 MMboe of 2C resources, the
Group remains well positioned to pursue
infill drilling opportunities in the main Kraken
field reservoir. Plans for these activities
will be advanced in parallel with the EOR
project. In 2025, Kraken production will be
subject to natural field decline and the
impact of a 15-day maintenance shutdown
planned in the third quarter of the year.
Magnus
2024 performance summary
In 2024, Magnus celebrated 40 years of
operations. Asset production efficiency
was 83% (2023: 88%) and the annual
maintenance shutdown was completed
in 18 days (versus the original 21-day
plan) with all major scopes executed.
The shutdown involved 10,000 man-hours
of work being completed with zero lost-
time incidents.
Production of 14,173 Boepd was 11%
lower than 2023 (15,933 Boepd), due to
a break in the infill drilling programme
to accommodate the five-yearly
rig recertification scope which was
undertaken in the first half of the year,
and incurred minor delays. Some of the
planned well intervention also required
rig remediation, which resulted in wells
being offline for longer than originally
planned. The Magnus team partially offset
these losses through a successful gas lift
optimisation campaign (which added
incremental production of 1,000 Boepd)
and through improving water injection
sweep (which delivered a 2% reduction in
overall Magnus field water cut through the
year). In the fourth quarter, an unplanned
outage of the Magnus subsea isolation
valve within third-party-operated export
infrastructure shut in all system users,
including Magnus production. Production
was reinstated within seven days following
a collaborative response by all users with
EnQuest operating the repair activities.
EnQuest remains focused on the efficient
management of key Magnus topside
infrastructure and targeted investment
to optimise equipment reliability, reduce
obsolescence and continue to deliver top
quartile operational uptimes.
2025 outlook
The Group plans to execute an infill
drilling programme and production-
enhancing well intervention campaign at
Magnus. The asset team is also focused
on enhancing water injection and
reservoir sweep, including progressing
the conversion of a high water cut
production well to water injection. This is
expected to increase reservoir pressure
and boost production. Looking beyond this
programme of work, Magnus 2C resources
of c.28 MMboe offer additional significant
low-cost, quick-payback drilling and well
intervention opportunities.
UK Upstream operations
1
Daily average net production
Boepd
32,587
-10%
2023: 36,375
1
Includes Magnus, Kraken, Golden Eagle, the Greater
Kittiwake Area including Scolty/Crathes and Alba
UK operated production efficiency
88%
2023: 86%
Kraken EOR
The Kraken asset has established
a track record of exemplary
production efficiency performance
over several years, and EnQuest
is focused on optimising the
next phase of Kraken production
operations. In doing so, the
EnQuest team is progressing a
proof-of-concept workstream for
an Enhanced Oil Recovery (‘EOR’)
project, consisting of a polymer
flooding programme with the aim
of proving the technology and
increasing oil production rates.
EOR has the potential to deliver
a material upside to the
existing Kraken base reservoir
performance, with initial estimates
of 30 to 60 MMbbls gross of
additional recoverable oil.
A critical component of the project
is the selection of the polymer
for injection into the reservoir;
the compound selected must
be compatible with the entire
production system, from reservoir to
topsides. A focused in-house project
team is progressing a rigorous
testing and analysis programme to
ensure that the correct polymer and
target injection location are selected
for Phase 1 of the EOR project.
The project team is undertaking
a holistic process review of
Kraken topside separation, water
treatment, injection and production
systems to identify and mitigate
process risks. This review will
inform the design, engineering
and assurance of a suitable
deployment programme. Injection
modelling has also been completed
to optimise the initial execution
phase, comparing deployment
into a single well or full drill centre.
It is anticipated that the polymer
specification and deployment
strategy for the initial phase will
be determined during 2025. This
will enable the project team to
focus on the engineering and
planning activities ahead of a
final investment decision and
initial polymer deployment
in late 2025 or early 2026.
The Group plans a two-day production
outage in the third quarter of 2025, aligned
to a planned maintenance shutdown in
third-party operated export infrastructure.
The asset team is also progressing the
Ninian bypass project towards FID in 2025.
This involves the subsea bypass of the
Ninian Central Platform which is planned
for cessation of production in 2027.
Alongside ongoing work at the Sullom Voe
Terminal on the New Stabilisation Facility,
this project will secure a long-term export
pathway for Magnus oil.
Following the initiation of the Magnus
Flare Gas Recovery project in Q4 2024,
engineering work will continue in 2025.
This project demonstrates EnQuest’s
commitment to the decarbonisation
of its portfolio.
Greater Kittiwake Area
2024 performance summary
At the Greater Kittiwake Area (‘GKA’),
2024 production averaged 2,009
Boepd (2023: 2,412 Boepd), largely in
line with expectations. Solid operational
performance in the year was underpinned
by production efficiency of 77% (2023: 83%)
and included the efficient completion of
the planned maintenance shutdown.
2025 outlook
EnQuest and its partners are focused
on extending field life and executing an
efficient glide path to decommissioning,
including plans for early plugging and
abandonment of platform wells prior to
cessation of production. This process will
be managed in full by EnQuest, with Shell
transferring its decommissioning operator
role to EnQuest during 2024. A 14-day
maintenance shutdown is planned at
GKA during Q3 2025.
Non-operated
North Sea assets
2024 performance summary
2024 production across the Group’s
non-operated UK interests averaged
3,646 Boepd (2023: 4,450 Boepd). The
2023/24 platform drilling programme at
Golden Eagle concluded in August 2024.
Two of the three planned producers were
successfully brought online alongside the
planned water injector, although overall
production rates were below expectations.
At Alba, performance continued in line with
the Group’s expectations.
2025 outlook
At Golden Eagle, a 15-day shutdown is
planned during the third quarter. The
operator also plans to execute well
intervention work in the form of mud
acid stimulations in June.
At Alba, a more extensive shutdown of
28 days is planned.
Strategic Report
Corporate Governance
Financial Statements
22—23
EnQuest PLC Annual Report and Accounts 2024
EnQuest PLC Annual Report and Accounts 2024
00—00
Strategic Report
Operational review
continued
South East Asia
EnQuest celebrated
ten years of successful
operations in Malaysia with
another strong production
operations performance.
General Manager, South East Asia
Radzif Ahmed
PM8/Seligi, Malaysia
2024 performance summary
In 2024, EnQuest was awarded two
accolades at the Malaysia Upstream
Awards, including Operator of the Year and
Excellence in HSE. To be recognised in this
way by PETRONAS was extremely gratifying
and is testament to the work undertaken
across the EnQuest Malaysia team.
Malaysian production averaged 8,149
Boepd, 10% higher than 2023. This increase
was driven by continued operational
excellence and production efficiency
of 94% (2023: 90%), benefitting from
the availability of all compression units
throughout the year. 2024 volumes include
1,978 Boepd associated with Seligi 1a gas,
to which Petronas holds the entitlement,
and EnQuest receives a gas handling and
delivery fee.
The team successfully executed a three-
well infill drilling programme during 2024,
with realised production rates in line with
expectations. Three well workovers were
also completed, and the Group continued
work on the PM8/Seligi idle well restoration
programme. Six wells were plugged
and abandoned in accordance with the
planned decommissioning programme.
The 2024 shutdown was completed
during the third quarter of 2024, with all
critical integrity and maintenance works,
including a turbine control panel upgrade,
delivered on schedule.
EnQuest continued its excellent HSE
performance in Malaysia during 2024,
reaching the milestones of two years and
4.9 million man-hours worked without a
lost time incident.
2025 outlook
The Group plans to drill four infill wells
during 2025, targeting undrained oil in
step-out areas of the main reservoir and
undeveloped minor reservoirs. The asset
team is also targeting delivery of a well
workover, with eight wells to be plugged
and abandoned. The drilling rig and
workover unit will mobilise during the first
quarter of the year.
A two-week shutdown at PM8/Seligi
to undertake asset integrity and
maintenance activities is planned for
the summer, which will help to improve
reliability and efficiency at the field.
EnQuest has significant 2P reserves and
2C resources of c.36 MMboe and c.28
MMboe, respectively, with future multi-well
annual drilling programmes planned. The
Group continues to work with the regulator
to assess the opportunity to develop the
additional gas resource at PM8/Seligi to
meet forecast Peninsular Malaysia demand.
Malaysia growth
Delivering portfolio diversification
Building on a decade of successful
operations in Malaysia, EnQuest was
awarded the DEWA Production Sharing
Contract (‘PSC’) and will be the operator
of the block with the largest participating
interest of 42.0%.
The DEWA PSC consists of 12 discovered
fields in an area c.50 kilometres off
the coast of Sarawak, in water depths
of 40 to 50 metres. The block is in a
proven hydrocarbon area containing
undeveloped discoveries, providing low-
cost development options to provide gas
supply into the Sarawak gas system.
Within the initial two-year pre-development
term of the PSC, EnQuest and its partners
will complete a resource assessment
and submit a Field Development and
Abandonment Plan for the cluster of
fields, which could hold up to 500 Bscf of
gas in place, with the potential to deliver
production of c.100 mmscf per day
(c.18 Kboed).
In addition, the Group was awarded an
expansion to its Seligi gas agreement, with
the award to develop an additional 155
Bscf (c.27 million barrels of oil equivalent) of
non-associated Seligi field gas resources.
The agreement enables EnQuest and its
partners to develop and commercialise
the non-associated gas resources in
the PM8E PSC contract area and, in line
with expected demand, supply around
70 mmscf per day of sales gas. With a 50%
equity share, this represents c.35 mmscf
per day net to EnQuest, which equates to
c.6,000 Boepd.
EnQuest will produce the additional gas by
modifying its existing infrastructure, with
low levels of development capex required
to deliver new volumes into the Peninsular
Malaysia gas system, helping the nation
meet its increasing energy needs. With
first gas from the project expected in
2026, these volumes will increase the
gas component of EnQuest’s production,
which aligns to the Group’s strategic aim
to reduce its overall carbon intensity.
Malaysia operations
1
Daily average net production
Boepd
8,149
+10%
2023: 7,437
1
Includes 1,978 Boepd of associated Seligi
gas production
Malaysia production efficiency
94%
2023: 90%
In January 2025, EnQuest signed a
Sale and Purchase Agreement to
acquire Harbour Energy’s business
in Vietnam, which includes the
53.125% equity interest in the Chim
Sáo and Dua production fields. This
transaction aligns with the Group’s
strategic aim to grow its international
operating footprint by investing in
fast-payback assets, with low capex
and reduced carbon intensity.
The transaction has an effective date
of 1 January 2024 and is scheduled
to complete during the second
quarter of 2025. The headline value
of the transaction is $84 million and,
net of interim period cash flows, the
consideration to be paid by EnQuest
on completion is expected to equal
c.$35 million. This fully staffed new
country entry expands the Group’s South
East Asian footprint beyond Malaysia,
where EnQuest recently celebrated
ten years of successful operations.
EnQuest will operate the Chim Sáo and
Dua fields (‘Block 12W’) from completion,
deploying its proven late-life and
FPSO asset management expertise
to maximise value and progress
discovered resources into reserves.
Block 12W is made up of three producing oil
and gas fields; Chim Sáo, Chim Sáo North
West and Dua, located in the Nam Con
Son Basin, approximately 400km south
west of Vung Tau, Vietnam. As at 1 January
2025, net 2P reserves and 2C resources
across the fields total 7.5 million Boe and
4.9 million Boe, respectively. Block 12W
production has responded positively to the
drilling of three infill wells during 2023 and
a series of well interventions undertaken
in 2023-2024, with the combined impact
of these scopes contributing c.3.0 MMboe
to 2P reserves at 1 January 2025.
Net production in 2025 is forecast to
average c.5.3 kboepd, with further
significant upside potential relating to
well intervention performance. Oil (c.
73% of output) is high quality and has
historically realised a c.10% premium
to Brent. Gas is commercialised via an
Associated Gas Gathering Agreement.
Field volumes are produced at a life
of field asset breakeven of c.$40 per
Boe, with minimal capital requirements
and a decommissioning liability that
is covered via a PSC fund. The resulting
free cash flow underpins Chim Sáo and
Dua’s value, making them strong anchor
assets for EnQuest’s entry into Vietnam.
The Block 12W Production Sharing
Contract runs to November 2030,
with an opportunity to extend the
contract. Additional Block 12W
prospectivity is spread across gas
discoveries and several additional
targets; potential upside that
EnQuest intends to investigate.
As a country, Vietnam has significant
potential for oil and gas development
beyond its established 4.4 billion
Boe reserves, with an increase in
exploration in the hydrocarbon-rich
South China Sea driving projects which
seek to replace the production from
mature offshore fields. In addition,
there is significant opportunity
for late-life asset managers, such
as EnQuest, to acquire producing
assets as established operators
have PSCs nearing their end dates.
Delivering diversified growth –
Vietnam new country entry
Strategic Report
Corporate Governance
Financial Statements
24—25
EnQuest PLC Annual Report and
Accounts 2024
Operational review
continued
Decommissioning
Heather: successfully abandoned
11
wells; while Thistle executed
11
wells, with partial completion of a
further well by year end
2024 saw EnQuest further
cement its capability as
a leading North Sea
decommissioning
operator; applying
our learning to deliver
performance well ahead
of industry benchmarks.
Decommissioning Director
John Allan
Asset removals
With significant Engineering, Preparation,
Removal and Disposal (‘EPRD’) contracts
in place for both Heather and Thistle,
planning, engineering and preparatory
works have been executed at pace
during 2024.
2025 will see the culmination of significant
work through the removal of the Heather
topsides from field by Allseas and their
Pioneering Spirit heavy lift vessel. The
Heather jacket is scheduled for removal
in 2027, which aligns with our agreed
contractual execution windows.
Underdeck scaffold removal and key
topside modifications were all completed
efficiently and on schedule.
2025 marks the final full year on the
platform, with disembarkation planned
for early 2026. Key milestones for the
year focus on completion of the main rig
and conductor pulling units campaigns,
completion of topside steam cleaning
and pipeline flushing activities, and
commencing and completing the removal
preparations prior to disembarkation.
Excellence in decommissioning
Thistle Well A33 – A unique
abandonment challenge
Thistle well A33 abandonment
presented significant challenges for the
Thistle decommissioning team in 2024.
The well was previously suspended in
2012, due to the poor condition of the
production tubing, utilising a product
called ‘Sandaband’ which is an
unconsolidated plugging material
that, when pumped into the wellbore
becomes a gas tight deformable
solid. The well’s structural integrity
was additionally compromised by
a severely corroded 30” conductor,
placing an urgency on the team to
complete the well abandonment prior
to the upcoming winter storms.
The main challenge was the removal of
the significant volume of Sandaband
and recovery of the production tubing
so the well could be permanently
abandoned. The solution involved
using a range of tools and techniques
normally reserved for coil tubing
workover operations but in this case
deployed from the Thistle drilling
package and utilising the rig’s own
well control equipment. This approach,
which was the first such Sandaband
cleanout in the UKCS, required diligent
engineering, planning and fabrication
of new equipment to ensure a safe
and efficient operation that was
commended internally within EnQuest
but also externally by our JV Partners.
Despite taking longer than the original
estimated duration, 59 days of
operations leading to a successful
Phase II abandonment, this was
considered a major success given
the significant issues encountered by
the Team. Subsequent operations to
recover the 20” surface casing and
the compromised 30” conductor were
completed by the Thistle Conductor
Pulling Unit and A33 was fully
decommissioned in June 2024.
Both the Thistle and Heather project
teams are targeting completion of their
well P&A campaigns during 2025.
The Heather team aims to permanently
disembark the platform in the second
quarter of 2025, while Thistle is
scheduled for disembarkation early
in 2026. Both projects remain in line
with the respective removals contract
dates, with Heather topside removals
commencing during 2025 and Thistle
topside removals scheduled in 2026.
Throughout 2024, EnQuest has also
progressed planning and engineering
work on the subsea wells at Alma Galia,
Dons and Broom, while continuing to
discuss the future work programmes
with the North Sea Transition Authority.
Preparation for removal
Alongside the completion of Phase 1
and Phase 2 abandonment work, the
Heather project team successfully
completed the flushing of the gas import
and oil export pipelines, the cutting and
laydown of the five Broom flexible risers
and, through close collaboration with
Allseas, ensured the safe execution of all
platform preparatory works on Heather.
This primarily involved the welding of
necessary lifting points underdeck and
separation of topsides pipework from the
jacket to support future topsides removal.
The Heather team is fully focused on safe
disembarkation of the asset, with the key
scope being the completion of the topsides
cleaning and utility rundown. This will be
followed by the necessary leg-cutting
works before the arrival of the Pioneering
Spirit heavy lift vessel during the summer
of 2025 to lift and remove the topsides and
transport to Denmark for safe disposal.
At Thistle, the project team continued
to demonstrate its capability to deliver
multiple key scopes simultaneously.
EnQuest and Saipem teams have worked
closely together, progressing engineering
and planning for the nine-month pre-
disembarkation preparation phase in 2025
and the future topside and jacket heavy
lift campaigns. An extensive module void
inspection campaign was successfully
completed which involved accessing,
inspecting and clearing 43 void spaces.
Subsea campaigns were also completed
covering essential inspection, repair and
maintenance activities and preparatory
work for future conductor removal
activities using bespoke tooling developed
with the subsea contractor.
Performance summary
For EnQuest’s dedicated decommissioning
team, 2024 represented another year
of sector-leading delivery; further
enhancing the Group’s strong track record
of executing multi-asset abandonment
campaigns. With the majority of well
plug and abandonment (‘P&A’) activity
completed significantly faster and
cheaper than sector averages, the Thistle
and Heather project teams are focused on
the culmination of the respective projects.
Work is underway ahead of the 2025
preparation and removals programmes
at these two major North Sea platforms.
Recognising EnQuest’s ability to deliver
SAFE Results, exemplary decommissioning
performance and cost and schedule
efficiencies, the Greater Kittiwake Area
(‘GKA’) joint venture has appointed
EnQuest as operator for the full GKA
decommissioning scope, with Shell
transferring its decommissioning
management role to EnQuest. The GKA
infrastructure is expected to continue
production into the late 2020s, with
EnQuest proactively planning for well
P&A activity to be completed alongside
asset production. This approach will
result in a managed glidepath for the
asset and will help EnQuest to optimise
the post-cessation of production
decommissioning programme.
Well decommissioning
At both the Heather and Thistle fields,
the extensive programme of well P&A
continued at pace throughout the
year. The Thistle team successfully
abandoned 11 wells during 2024, with
a further well nearing completion
at year end. At Heather, 11 wells were
completed by year end, resulting in the
completion of all abandonment work
to Phase 2 and the commencement
of the final well decommissioning
scope, Phase 3 conductor recovery.
In addition to the completion of 22 well
abandonments across the two platform
rigs, the Thistle project team continued
to implement a third activity string, in the
form of a conductor pulling unit (‘CPU’)
to execute the recovery of conductors on
available wells. This resulted in a further 17
wells being abandoned to the final stage
of the well P&A process, taking Thistle
to a total of 24 wells fully abandoned.
Strategic Report
Corporate Governance
Financial Statements
26—27
EnQuest PLC Annual Report and Accounts 2024
Midstream
EnQuest is committed to
the decarbonisation of the
Sullom Voe Terminal as
part of a just transition.
Midstream Director
Dave Marshall
Operational review
continued
SVT right-sizing
Planned reduction in SVT
carbon footprint
c.90%
People and community
EnQuest continues to build its
community investment on Shetland
with contributions to local charities
and sports groups, and through its
workforce development programmes.
The Group has a well-established
apprentice programme at SVT, with three
apprentices successfully graduating
in 2024. The Group also continued with
its graduate programme in 2024, with
one graduate recruited into SVT.
SVT supported a range of cultural and
sporting events on Shetland in 2024,
including Shetland Rugby’s mid-summer
event for children, women and men’s
matches, the Shetland Junior Golf
Open and sponsorship of local table
tennis events.
EnQuest also sponsored a Sail Training
Shetland event for 70 young people
from Shetland to Bergen and provided
support to the Shetland Folk Festival.
Seven educational awards for the
academic year 2023-2024 were made
by the Trustees of the Sullom Voe
Terminal Participants’ Tenth Anniversary
Fund. Now in its 36th year, the Trust was
established to promote and encourage
the education of Shetland residents
who will be studying a discipline likely
to contribute to the social or economic
development of Shetland. This year,
students are engaged in disciplines
as wide-ranging as medicine, primary
education, folk and traditional music,
geography and sustainable development.
As terminal operator, EnQuest also offers
a scholarship to a student studying in
a technical or commercial discipline
that is relevant to SVT, where they
take part in a work placement at the
terminal during the summer break.
Safe, stable operations
Throughout 2024, the Group continued
to deliver safe, stable and effective
operations for both East of Shetland and
West of Shetland oil and gas, delivering
100% uptime for both oil streams, and
100% uptime for West of Shetland gas. In
addition, the SVT power station achieved
100% power delivery throughout the period.
The terminal continued to deliver strong
HSE performance, effectively managing
the increase in project personnel on-site
throughout the year. During 2024, the
milestones of five years, and five million
work hours Lost Time Incident (‘LTI’) free
were reached, underlining EnQuest’s
commitment to safety. A subsequent
LTI at the terminal enabled the team to
review the circumstance and to ensure
that mitigations and lessons learned
were incorporated into reinforcing
the HSE Management System.
Decarbonisation
The Group is focused on right-sizing SVT
for future operations. During 2024, EnQuest
successfully commenced Engineering,
Procurement and Construction on
two strategic projects: to connect the
terminal to the UK’s electricity grid and the
construction of New Stabilisation Facilities
(‘NSF’). Completion of the NSF is expected
to enable the Group to meet the North
Sea Transition Authority (‘NSTA’) target of
zero routine flaring obligations by 2030,
while the aggregated impact of these
two projects is expected to transform the
carbon footprint and overall emissions
from SVT and the EQUANS-operated Sullom
Voe power station. The delivery of these
scopes will reduce the Terminal’s operating
costs and provide resilience for long-term
operations through the replacement
of obsolete equipment. Together, these
projects provide the opportunity to extend
production at both East of Shetland and
West of Shetland assets.
In 2024, EnQuest commenced the phased,
partial decommissioning of redundant
processing and storage facilities at SVT.
This scope has reduced the risk potential
at the site, along with reducing ongoing
operating costs. Furthermore, the removal
of the facilities creates the opportunity to
repurpose areas of SVT for third-party use,
including renewable energy projects.
2024 emissions at SVT were elevated due
to issues encountered with the site’s gas
compression system, which resulted in
flaring above the routine baseline levels.
In September, an engineering solution
was deployed effectively, restoring the
compression system to full operations.
This has resulted in a return to lower
process flaring and emissions.
Decarbonising SVT
EnQuest’s suite of projects underway
at Sullom Voe perfectly encapsulates
the transition of old energy to new as it
embarks on a journey to decarbonise
the Sullom Voe Terminal (‘SVT’). This
asset will continue to be a critical
component in protecting the UK’s
security of energy supply, whilst playing
a major role in delivering the net zero
goals agreed as part of the North Sea
Transition Deal.
SVT will continue to service oil and gas
operators from the East and West of
Shetland for years to come through a
terminal that is being right-sized for
current rates of production, which have
declined from their peak in 1984. In 2024,
EnQuest progressed the construction of
a New Stabilisation Facility (‘NSF’), which
will provide a low-emission and cost-
effective solution, maximising energy
efficiency and minimising greenhouse
gas emissions, whilst supporting
continuing oil and gas production
from fields around Shetland. The
modernisation of the processing system
in turn enables an 80% reduction of the
terminal’s power demand.
With the development of the Shetland
Interconnector and the Viking Wind
Farm, combined with the terminal’s
reduced power demand, EnQuest
has taken the opportunity to further
decarbonise SVT by receiving power
directly from the electricity grid. The Grid
Power Connection Project will permit
the gas-fired power station on site to
be retired from service, removing a
significant source of greenhouse gas
emissions from the terminal.
Taken together, the NSF and the Grid
Power Connection projects will deliver
a 90% reduction in CO
2
emissions
from the terminal, removing 190kTe of
CO
2
per year, the equivalent of taking
80,000 cars off the road. This will have
a material impact on the Shetland
environment which, at 14.4 tonnes of CO
2
emitted per person, is three-times the
average Scottish rate of 4.8 tonnes.
Furthermore, EnQuest will deploy flare
gas recovery technology as part of the
NSF project to eliminate CO2 emissions
associated with routine flaring. This
important step ensures that SVT will be
compliant with the World Bank’s Zero
Routine Flaring by 2030 initiative, whilst
maximising the value of the produced
hydrocarbon gas.
Delivering these projects on time and
on budget requires collaborative work
with multiple stakeholders including
co-owners and contractors at SVT.
The challenges and complexities in
executing these projects safely and
efficiently should not be underestimated
and EnQuest is bringing its experience
of successful site management, gained
over the past six years, to bear on these
projects. EnQuest has also worked with
established contractors and fostered
new relationships with specialists to
achieve our goals.
EnQuest is progressing at pace with
the engineering and construction
phases of these transformative projects
and is looking forward to realising the
decarbonisation benefits of the new
facilities when they are brought into
service across 2025 and 2026.
Strategic Report
Corporate Governance
Financial Statements
28—29
EnQuest PLC Annual Report and Accounts 2024
Electrification/Onshore wind
During 2024, Veri Energy identified an
opportunity to develop an onshore wind
power project to assist in decarbonising
and reducing costs at the Sullom
Voe Terminal, harnessing Shetland’s
natural advantage of one of the world’s
highest wind capacity factors and
existing terminal infrastructure. The
project underwent technical analysis,
environmental impact assessment, and
feasibility studies during 2024, and is
expected to enter front-end engineering
and design during 2025.
E-Fuels
Veri Energy continues to evaluate a multi-
stage green hydrogen and derivatives
project at Sullom Voe. During 2024, Veri
received an award of £1.74 million in grant
funding from the UK government’s Net
Zero Hydrogen Fund (‘NZHF’) to support a
front-end engineering and design study
for the project. The company continues to
evaluate scenarios for end products, scale,
partnerships and technology integration
for the project.
The favourable conditions for
development of net-zero e-fuels at SVT,
via the combination of green hydrogen
and biogenic CO
2
, place Veri Energy at
the forefront of plans to produce e-diesel
that can displace demand for fossil fuels
from the local marine and power industry.
Powered by a skilled local workforce and
supported by the advantaged conditions
at the terminal site, there is the potential to
scale this business for e-fuel export.
Operational review
continued
Veri Energy
We recognise the evolving
energy landscape and are
committed to leading a
Just Energy Transition,
ensuring that our workers,
the communities we serve,
and our stakeholders
benefit in the process.
CCS project storage
Up to (mtpa)
10
Total storage potential
In excess of (mt)
200
CEO, Veri Energy
Gavin Templeton
Veri Energy is a wholly owned
subsidiary of EnQuest, focused
on transforming skills and
infrastructure to deliver economic
decarbonisation solutions, initially
at the Sullom Voe Terminal (‘SVT’)
on Shetland. Veri Energy is
supporting the UK Government’s
Clean Power 2030 Action Plan and
delivering against the Scottish
Government’s Energy Strategy
and Just Transition Plan.
Transition in
action
Veri Energy is fuelling the UK’s
energy transition
Using the SVT site as a base, Veri Energy
is looking to support further industrial
decarbonisation and future growth in the
energy transition through the execution of
phased renewable energy developments.
Carbon capture and storage (‘CCS’)
Veri Energy continues to develop a flexible,
merchant-market carbon storage solution
that can transport and permanently store
up to 10mtpa of CO
2
from isolated emitters
in the UK and Europe. CO
2
captured by
emitters will be transported via ship to
SVT from where it will be transported, via
repurposed pipeline infrastructure, for
permanent geological storage in depleted
oil and gas reservoirs.
In August 2023, EnQuest successfully
secured four carbon storage licences
as part of the first round of UK carbon
sequestration licences issued by the North
Sea Transition Authority (‘NSTA’). Following
work to assess the licences, EnQuest took
the decision to relinquish the Tern and
Eider licences, effective 1 March 2025. The
remaining licence areas, CS013 and CS014,
are some 99 miles northeast of Shetland
and incorporate fields currently operated
by EnQuest, the Magnus and Thistle fields.
These sites are large, well-characterised
deep storage formations connected by
significant existing infrastructure to the
Sullom Voe Terminal on Shetland.
During 2024, work included significant
engagement with the NSTA to progress the
licences through the early risk assessment
phase, engaging with strategic partners
and refining the project development plan.
Veri Energy continues to be encouraged
by the project’s potential to be a low-
cost merchant-market solution for CO
2
emitters to permanently sequester carbon
beginning in the late 2020s/early 2030s.
EnQuest PLC Annual Report and Accounts 2024
30—31
EnQuest PLC Annual Report and Accounts 2024
Financial Statements
Corporate Governance
Strategic Report
30—31
North Sea
South East Asia
Total
Oil and
NGLs
MMbbls
Gas
Bcf
Total
MMboe
Oil and
NGLs
MMbbls
Gas
Bcf
Total
MMboe
Oil and
NGLs
MMbbls
Gas
Bcf
Total
MMboe
2P reserves (working interest)
1,2,3,5,6
1 January 2024
135.2
65.5
146.5
25.4
16.9
28.4
160.7
82.3
174.9
Revisions
4
(1.0)
(7.1)
(2.2)
(3.4)
77.5
10.0
(4.3)
70.4
7.8
Production
(11.0)
(5.2)
(11.9)
(2.0)
(0.6)
(2.1)
(13.0)
(5.8)
(14.0)
31 December 2024
123.3
53.1
132.4
20.1
93.8
36.3
143.3
146.9
168.6
2C resources (working interest)
1,2,7,8
1 January 2024
305.1
18.1
308.2
31.1
287
80.6
336.2
305.1
388.8
Revisions, additions and relinquishments
0.0
0.0
0.0
(13.3)
(126.8)
(35.2)
(13.3)
(126.8)
(35.2)
31 December 2024
305.1
18.1
308.2
17.8
160.2
45.4
322.9
178.3
353.6
Notes:
1
Reserves and resources are quoted on a working interest basis
2
2P reserves and 2C resources have been assessed by the Group’s internal reservoir engineers, utilising geological, geophysical, engineering and financial data
3
The Group’s 2P reserves have been audited by a recognised Competent Person in accordance with the definitions set out under the 2018 Petroleum Resources Management
System and supporting guidelines issued by the Society of Petroleum Engineers
4
Includes expansion of Seligi gas agreement in Malaysia
5
The above proven and probable reserves include volumes that will be consumed as fuel gas, including c.6.4 MMboe at Magnus, c.0.7 MMboe at Kraken, c.0.2 MMboe at Golden
Eagle and c.0.1 MMboe at Scolty Crathes
6
The above 2P reserves at 31 December 2024 on an entitlement basis is 157 MMboe (North Sea 132 MMboe and South East Asia 25 MMboe)
7
Contingent resources are quoted on a working interest basis and relate to technically recoverable hydrocarbons for which commerciality has not yet been determined and are
stated on a best technical case or 2C basis
8
2C contingent resources at 31 December 2024 include the volumes associated with the Group’s PSC award at DEWA in Malaysia, as well as the relinquishment of the PM409
exploration licence
9
Rounding may apply
Oil and gas reserves
and resources
Oil and gas reserves and resources
Licence
Block(s)
Working interest (%)
Name
Decommissioning obligation (%)
UK North Sea Upstream production and development
P193
211/7a, 211/12a
100.0
1
Magnus
30.0
2
P1077
9/2b
70.5
Kraken & Kraken North
As per working interests
P1107/P1617
21/8a, 21/12c, 21/13a
50.0
Scolty/Crathes
As per working interests
P238
21/18a, 21/19a, 21/19b
50.0
Kittiwake
25.0
50.0
Mallard
30.9
50.0
Grouse & Gadwall
As per working interests
P073
21/12a
50.0
Goosander
As per working interests
P213
3
16/26a
8.0
Alba
As per working interests
P234/P493/P920/P977
3/28a, 3/28b, 3/27b, 9/2a, 9/3a
85.0
Bressay
P1078
9/3b
100.0
Bentley
P300/P928
3
14/26a, 20/1a
26.69
Golden Eagle
P26327
5
9/1, 9/2c
100.0
West of Kraken
UK North Sea Decommissioning
P242
2/5a
n/a
Heather
37.5
P242/P902
2/5a, 2/4a
n/a
Broom
63.0
P475
211/19s
n/a
Thistle
6.1
4
P236
211/18a
n/a
Thistle/Deveron
6.1
4
P236
211/18c
n/a
Don SW & Conrie
60.0
P236/P1200
211/18b, 211/13b
n/a
West Don
78.6
P2137
211/18e, 211/19c
n/a
Ythan
60.0
P1765/P1825
30/24c, 30/25c, 30/24b
n/a
Alma/Galia
65.0
Other UK North Sea licences
P90
3
9/15a
33.3
n/a
Malaysia production and development6
PM8/Seligi
7
PM8 Extension
50.0
Seligi, North & South
Raya, Lawang, Langat,
Yong & Serudon
50.0
DEWA Complex
Cluster SFA PSC
7
DEWA PSC
42.0
D30, D30W, Danau,
Daya, Daya North, D41,
D41W, Dafnah West,
Dana, Darma, West
Acis, and Spaoh
42.0
Notes:
1
bp has a security over the Magnus asset (and related infrastructure assets) and is entitled to 37.5% of free cash flow from the assets subject to the terms of the transaction
documents between bp and EnQuest
2
bp has retained the decommissioning liability in respect of the existing Magnus wells and infrastructure. EnQuest will pay bp additional deferred consideration by reference
to 30% of bp’s actual decommissioning costs on an after-tax basis, which EnQuest estimates will result in a payment equivalent to approximately 9% of the gross estimated
decommissioning costs. The additional consideration payable is capped at the amount of cumulative positive cash flows received by EnQuest from Magnus, SVT and the
associated infrastructure assets
3 Non-operated
4
EnQuest is liable for the decommissioning costs associated with investment since it assumed operatorship, with the balance remaining with the former owners. Following the
exercise of the Thistle decommissioning options in January and October 2018, EnQuest will undertake the management of the physical decommissioning of Thistle and Deveron
and is liable to make payments to bp by reference to 7.5% of bp’s decommissioning costs of Thistle and Deveron, which equates to 6.1% of the gross decommissioning costs
5
UK 33rd licence round award
6
EnQuest relinquished the PM409 PSC licence on 2 June 2024
7
Official reference PM-8 Extension PSC, commonly referred to elsewhere as PM8/Seligi
8
DEWA Complex Cluster SFA PSC was officially awarded on 21 October 2024
EnQuest asset base as at 31 December 2024
EnQuest oil and gas reserves and resources
Hydrocarbon
assets
Hydrocarbon assets
EnQuest PLC Annual Report and Accounts 2024
Strategic Report
Corporate Governance
Financial Statements
32—33
Financial review
Primed for growth.
Introduction
EnQuest delivered significant progress
against each of its financial priorities in
2024, and this momentum has continued
into 2025. The Group has optimised its
capital structure and maximised available
financial capacity for value-accretive
growth, by successfully tapping its high
yield bond and the repayment in full of
both the reserve based lending (‘RBL’)
and term loan facilities.
EnQuest net debt was reduced by
$95.1 million, to $385.8 million. This reflects
robust free cash flow generation, cash
received from the farm-down of Bressay
and returns to shareholders through the
share buy-back programme.
EnQuest maintained a strong focus
on disciplined and efficient capital
expenditure and cost control. The
investment in the future decarbonisation
of Magnus through the installation of a
flare gas recovery system reflects our
focus on fast payback projects, while the
re-certification of the Magnus platform
drilling rig underpins ongoing low-cost
drilling and well intervention work. As
anticipated, EnQuest’s increased share
of throughput at the Sullom Voe Terminal
(‘SVT’) led to higher tariff costs in the
period, noting future cost and emission
reductions are expected on completion
of the ongoing decarbonisation projects
at the terminal.
In line with the Group’s growth strategy,
EnQuest signed several agreements in
South East Asia: entering Vietnam through
the acquisition of Block 12W; extending
the Group’s Malaysian footprint with the
expansion of the Seligi gas agreement;
and award of the DEWA PSC. These
transactions provide geographic and
commodity diversification, adding
production and reserves.
The Group reported an IFRS post-tax
profit of $93.8 million for the year to
31 December 2024 (2023: IFRS post-tax
loss of $30.8 million). This was primarily
driven by a lower tax charge in the period
(reflecting fast payback investment and
the recognition of an additional deferred
tax asset associated with ring-fence
expenditure supplement in the UK) offset
by lower profit before tax (production was
lower year-on-year and tariffs were higher).
EnQuest’s year-end RBL redetermination
expanded the leverageable capacity of
the Group’s assets, and at 28 February
2025 total cash and available facilities
totalled $549.0 million (31 December
2023: $498.8 million). With the UK Autumn
Budget Statement (30 October 2024)
bringing clarity on the fiscal landscape
of the UK North Sea, EnQuest’s strategic
UK tax advantage and financial capacity
mean the Group remains well placed to
pursue further growth opportunities in the
North Sea and internationally. EnQuest’s
Board is also proposing a final dividend
of 0.616 pence per share, equivalent to
c.$15 million.
Income statement
Revenue
Group production averaged 40,736 Boepd (7.0% lower than in 2023,
43,812 Boepd), with strong uptime performance of c.90% across
the operated portfolio and investment in low-cost, quick-payback
well work and production optimisation partially offsetting the
impact of natural field declines. Oil accounted for 87.2% of this
output (2023: 90.0%).
Brent crude oil prices declined 2.4% year-on-year to average
$80.5/bbl (2023: $82.5/bbl) while the average day-ahead UK gas
price decreased by 15.5% to 83.6 GBp/therm (2023: 98.9 GBp/
therm). Excluding the impact of hedging, EnQuest realised an
average oil price of $81.3/bbl (2023: $82.2/bbl). Post-hedging, the
realised oil price was $80.2/bbl (1.5% lower than in 2023, $81.4/bbl).
Reflecting the above price and volume drivers, Group revenue in
the period totalled $1,180.7 million, a 20.6% reduction year-on-year
(2023: $1,487.4 million). Oil contributed $1,020.3 million (9.5% lower
year-on-year, 2023: $1,127.4 million) and condensate and gas
revenue contributed $164.6 million (51.4% lower year-on-year,
2023: $339.0 million). Gas revenue mainly relates to the onward
sale of gas purchases from third-party West of Shetland fields
under the terms of the Magnus acquisition. The contribution of
these volumes to revenue is therefore offset through an equal
and opposite charge to cost of sales.
Tariffs and other income generated $2.6 million (2023: $1.3 million),
which includes income associated with the transportation
of Seligi gas. Realised losses on commodity hedges totalled
$12.9 million, primarily reflecting the cost of historic put options
(2023: $11.3 million). Unrealised gains on open commodity
contracts (from mark-to-market movements) totalled $3.1 million
(2023: $28.5 million).
Note: For the reconciliation of realised oil prices see ‘Glossary – Non-GAAP measures’
starting on page 189
Cost of sales
Cost of sales was $787.4 million, which was 16.8% lower than in 2023
($946.8 million).
Production costs were broadly flat, totalling $307.6 million
($20.6/Boe) but operating costs increased by $35.6 million to
$382.8 million. This rise was as expected and reflected an increase
to EnQuest’s share of throughput at SVT. Costs and emissions
at the terminal are forecast to reduce on completion of the
current decarbonisation projects on site. With the combination
of higher tariffs and lower production volumes, unit operating
costs (excluding hedging losses) increased by 15.5% to
$25.3/Boe (2023: $21.9/Boe).
2024
$ million
2023
$ million
Production costs
307.6
308.3
Tariff and transportation expenses
70.5
41.7
Realised loss/(gain) on derivatives
related to operating costs
4.7
(2.8)
Operating costs
1
382.8
347.2
Charge/(credit) relating to the Group’s
lifting position and inventory
2.2
(4.2)
Other cost of operations
136.3
305.9
Depletion of oil and gas assets
263.3
292.2
Other cost of sales
2.8
5.7
Cost of sales
787.4
946.8
Unit operating cost
2,3
$/Boe
$/Boe
– Production costs
20.6
19.3
– Tariff and transportation expenses
4.7
2.6
Average unit operating cost
25.3
21.9
Notes:
1
See reconciliation of alternative performance measures within the ‘Glossary –
Non-GAAP measures’ starting on page 189
2
Calculated using production on a working interest basis including Seligi
Associated Gas
3
Excludes realised loss/(gain) on derivatives related to operating costs
The charge relating to the Group’s lifting position and hydrocarbon
inventory for the year ended 31 December 2024 was $2.2 million
(2023: credit of $4.2 million), with the Group in a net neutral
lifting position across its asset base at 31 December 2024
(2023: net underlift position $3.5 million).
The cost of Magnus third-party gas purchases that are sold
on is reported within ‘other cost of operations’. These costs fell
significantly to $125.7 million (2023: $294.0 million), due to reduced
third-party volumes and lower gas prices.
Depletion expense ($263.3 million) was 9.9% lower than 2023
($292.2 million), mainly reflecting lower production.
Impairment
In the year, the Group recognised a non-cash net impairment
charge of $71.4 million (2023: $117.4 million). This charge reflected
changes to the UK Energy Profits Levy confirmed by the UK
Government in its Autumn Budget (including the planned two-year
extension to 31 March 2030), lower short-term oil price assumptions
and changes to the production profile of the non-operated Golden
Eagle field, partially offset by production profile changes at the GKA
hub and a lower discount rate of 10.0% (2023: 11.0%).
Other income and expenses
The Group has recognised net other expense in the period of
$4.7 million (2023: net other expense of $19.6 million). The impact
of both the unwind of discount and other changes in fair value of
Magnus contingent consideration have been combined in other
income and expenses following a review of market practice. This
required a $58.9 million charge for 2023 being reclassed from
finance costs. As such, 2024 incurred a net $15.9 million non-cash
charge driven by: the unwinding of discounting offset by changes
in the near-term oil price assumptions and production and cost
profiles (2023: $10.8 million non-cash income, driven by an increase
in the discount rate applied offset by the unwinding of discounting).
Other items of other income and expense include: $14.6 million
charge relating to the termination of a drilling rig contract following
the Kraken joint venture’s decision to defer near-term infill drilling;
a non-cash charge of $7.1 million due to a net increase in the
decommissioning provision of fully impaired non-producing assets
(2023: non-cash charge of $32.8 million); a foreign exchange gain
of $10.0 million, reflecting a favourable movement in the Sterling to
US Dollar exchange rate (2023: $11.8 million foreign exchange losses);
and lease income of $16.5 million (2023: $12.1 million).
Other expenses also include costs associated with Veri Energy,
which totalled $1.7 million in the year (2023: $1.6 million).
Adjusted EBITDA
Adjusted EBITDA for the year totalled $672.6 million, down 18.4%
compared to the same period in 2023 ($824.7 million). This
reduction reflects the lower revenue associated with reduced
production, as well as higher tariffs at SVT (see detail above).
EnQuest’s net debt to last 12-month adjusted EBITDA ratio at
31 December 2024 equalled 0.6x. This was in line with the prior
year (31 December 2023: 0.6x).
Adjusted EBITDA
2024
$ million
2023
$ million
Profit/(loss) from operations before
tax and finance income/(costs)
311.5
397.4
Unrealised commodity hedge gain
(3.1)
(28.5)
Depletion and depreciation
269.3
298.3
Impairment charge
71.4
117.4
Net other expenses
36.2
25.1
Foreign exchange and UKA forward
purchase losses
2.8
3.8
Change in well inventories
(5.5)
(0.6)
Net foreign exchange (gain)/loss
(10.0)
11.8
Adjusted EBITDA
1
672.6
824.7
Note:
1
See reconciliation of Adjusted EBITDA within the ‘Glossary – Non-GAAP measures’
starting on page 189
Chief Financial Officer
Jonathan Copus
EnQuest PLC Annual Report and Accounts 2024
Reduction in EnQuest net debt
$ million
95
Post-tax profit
$ million
94
Strategic Report
Corporate Governance
Financial Statements
34—35
EnQuest PLC Annual Report and Accounts 2024
Financial review
continued
Finance costs
EnQuest’s overall net finance costs fell by 12.5%, to $144.9 million
(2023: $165.6 million). This reflected a significantly lower level of
outstanding loans and borrowings, resulting in a lower overall
interest charge of $73.5 million (2023: $89.7 million). Partially
offsetting this were higher refinancing fees (2024: $19.3 million),
including the accelerated amortisation of remaining initial
term loan fees of $2.9 million and the early redemption fee of
$4.7 million paid following the repayment in full of the term loan
in October 2024 (2023: $7.9 million).
Finance charges included the unwinding of discounting on
decommissioning and other provisions (2024: $31.2 million;
2023: $25.4 million). Lease liability interest costs totalled
$27.7 million (2023: $43.8 million), and there were other interest
and financial expenses of $7.8 million (2023: $5.3 million), which
primarily are the cost for surety bonds that provide security for
decommissioning liabilities.
Finance income increased to $14.5 million reflecting additional
cash on deposit and accrued interest on the RockRose vendor
loan (2023: $6.5 million).
Profit/loss before tax
Reflecting the movements above, the Group’s profit before tax was
$166.6 million (2023: profit of $231.8 million).
Taxation
The 2024 tax charge of $72.8 million includes a current tax charge
of $12.1 million (2023: $262.6 million, inclusive of a current tax charge
of $185.6 million).
In the Autumn Statement on 30 October 2024, the UK government
confirmed that from 1 November 2024 the rate of the Energy
Profits Levy (‘EPL’) would be increased from 35% to 38%. It was
also announced that EPL Investment Allowances would be
abolished from 1 November 2024 and that decarbonisation
relief would be retained, but the rate of relief would be reduced
from 80% to 66%. These changes increase the current year
tax charge and deferred tax for EPL by $42.2 million. The
announcement to extend the EPL period to 31 March 2030 was
however not substantively enacted until March 2025, which
resulted in there being no impact on the 31 December 2024
balance sheet. Had the extension been enacted, the Group
estimates an additional deferred tax liability of $115.9 million
would have been recognised (see note 6 for further information).
The Group’s effective tax rate for the period was a charge of
43.7% (2023: 113.3%).
EnQuest’s strategic UK North Sea tax asset was estimated at
$2,066.4 (gross) million at 31 December 2024 (31 December 2023:
$2,007.9 million (gross)). The increase reflects the recognition of
additional carried forward losses associated with the ring-fenced
expenditure supplement, partially offset by utilisation against the
Group’s profits before tax.
Due to this tax position, no significant corporation tax or
supplementary charge is expected to be paid on UK operational
activities for the foreseeable future. The Group expects to continue
to make EPL payments for the duration of the levy, and EnQuest
also pays cash corporate income tax on its Malaysian assets.
Profit/loss for the period
EnQuest’s total profit after tax was $93.8 million, which compares
to a 2023 loss of $30.8 million.
Earnings per share
The Group’s reported basic earnings per share was 5.0 cents (2023
loss per share: 1.6 cents) and reported diluted earnings per share
was 4.9 cents (2023 loss per share: 1.6 cents).
Cash flow, EnQuest net debt and liquidity
Driven by continued adjusted free cash flow generation in 2024
and the repayment of a vendor loan provided to RockRose related
to the 2023 Bressay transaction, EnQuest net debt at 31 December
2024 totalled $385.8 million. This was $95.1 million lower than the
position reported at 31 December 2023 ($480.9 million).
The movement in EnQuest net debt was as follows:
$ million
EnQuest net debt 1 January 2024
(480.9)
Net cash flows from operating activities
508.8
Cash capital expenditure
(252.9)
Magnus profit share payments
(48.5)
Net interest and finance costs paid
(73.1)
Finance lease payments
(130.1)
Repayment of vendor loan provided to RockRose
107.5
Share buyback
(9.0)
Term loan early termination fee
(4.7)
Other movements, primarily net foreign exchange
on cash and debt
(2.9)
EnQuest net debt 31 December 2024
1
(385.8)
Note:
1
See reconciliation of alternative performance measures within the ‘Glossary – Non-
GAAP measures’ starting on page 189
Reported net cash flows from operating activities for the year
were $508.8 million. This was 32.5% below the comparative period
of 2023 ($754.2 million). This reduction reflects: higher cash tax
payments totalling $97.3 million (2023: $41.0 million, including
a tax refund of $37.4 million); $17.7 million unwind of the joint
venture advance cash call received in 2023 ($39.5 million); one-
off payments relating to the rig cancellation ($14.6 million) and
$8.5 million of funds released from escrow pending resolution of
the final arbitration decision in relation to a dispute with a third
party supplier in Malaysia; and lower gross profit, reflecting lower
revenues and higher operating costs. Clean of one-off impacts
of the tax refund, joint venture advance cash call movements,
rig cancellation and contractor dispute payments, year-on-year
cash flow from operating activities was 18.9% lower.
Reported net cash flows used in investing activities decreased
year-on-year by $79.1 million, to $183.6 million (2023: $262.7 million).
This principally reflects: higher capital expenditures ($252.9 million
– primarily related to the Magnus five-yearly rig recertification
work scope, Golden Eagle well campaign, decarbonisation
projects at SVT, and the emissions reducing flare gas recovery
project on Magnus (2023: $152.2 million)); offset by repayment of a
vendor loan provided to RockRose ($107.5 million; 2023: net nil cash
flow impact reflecting farm-down proceeds being offset by the
vendor financing facilities from EnQuest to RockRose (see note 18));
the final Golden Eagle acquisition costs paid in 2023 ($50.0 million);
and lower Magnus profit share payments (2024: $48.5 million;
2023: $65.5 million).
Cash outflow on capital expenditure is set out in the table below:
Capital expenditure
2024
$ million
2023
$ million
North Sea
230.4
124.2
Malaysia
19.0
21.0
Exploration and evaluation
3.5
7.0
252.9
152.2
The Group utilised $352.9 million of cash in financing activities
(2023: $478.6 million). This included further net repayments
of the Group’s loans and borrowings totalling $130.6 million
(2023: $237.1 million), with EnQuest repaying its RBL facility in full
($140.0 million) in the first quarter and, in the fourth quarter, the
entire $150.0 million term loan facility following the successful
conclusion of a $160.0 million tap of its high yield bond in October.
Following the RBL redetermination process at the end of 2024 and
no further drawdowns in the first quarter of 2025, $237.1 million of
the RBL facility remains available to EnQuest for future drawdown.
Interest costs on the Group’s borrowings totalled $83.2 million
(2023: $105.9 million) and an additional $130.1 million was paid in
relation to finance leases (2023: $135.7 million).
EnQuest also repurchased $9.0 million of shares as part of its share
buyback programme.
In aggregate, the Group’s cash and cash equivalents decreased
by $33.4 million in 2024. This decrease was primarily driven by the
repayment in full of the Group’s RBL facility and share repurchases
made under EnQuest’s share buyback programme offset by the
net cash inflow from the farm-down of Bressay and adjusted free
cash flow generation. Adjusted free cash flow generation in 2024
was lower than in 2023, reflecting lower revenues, higher capital
expenditure, partial unwind of the joint venture advance cash call
received in 2023 and one-off costs associated with the drilling
rig cancellation and the dispute with a third party supplier in
Malaysia, partially offset by lower finance charges.
EnQuest net debt
31 December
2024
$ million
31 December
2023
$ million
Bonds
632.1
474.7
Senior secured debt facility (‘RBL’)
–
140.0
Term loan
–
150.0
SVT Working Capital Facility
33.9
29.8
Cash and cash equivalents
(280.2)
(313.6)
EnQuest net debt
1
385.8
480.9
Note:
1
See reconciliation of EnQuest net debt within the ‘Glossary – Non-GAAP measures’
starting on page 189
The Group ended the year with $280.2 million of cash and cash
equivalents (31 December 2023: $313.6 million) and cash and
available undrawn facilities of $474.5 million (31 December 2023:
$498.8 million). Subsequently, following the most recent RBL
redetermination process, EnQuest’s cash and available facilities
have increased to $549.0 million at 28 February 2025.
Balance sheet
EnQuest’s robust liquidity position enables the Group to continue
delivering its capital-efficient programmes of capital investment
and pursue transformational North Sea and International
production acquisitions.
Assets
Total assets reduced by 5.4% to $3,562.6 million (31 December 2023:
$3,765.8 million). Driving this were: repayment of a vendor loan
provided to RockRose ($107.5 million); a reduction of $33.6 million
in the Group’s deferred tax asset; and lower cash and cash
equivalents of $33.3 million.
Liabilities
Total liabilities reduced by 8.7% to $3,020.1 million (31 December
2023: $3,309.0 million) reflecting continuing material debt
repayments and optimisation of the capital structure (the
full outstanding principals of $140.0 million on the RBL and
$150.0 million for the term loan facility were repaid in the year,
offset by an additional $160.0 million tap of the high yield bond);
lower tax liabilities, reflecting fiscally efficient investments and
cash tax payments in the period, and a reduction in lease liabilities
of $86.9 million. Deferred tax liabilities increased by $27.1 million.
Contingent consideration payments in the period (related to the
acquisition of Magnus) totalled $48.5 million (2023: Magnus and
Golden Eagle: $115.5 million). When combined with the net change
in the fair value estimate, this payment drove a lower outstanding
contingent consideration estimate of $473.3 million (31 December
2023: $507.8 million).
Financial risk management
The Group’s activities expose it to various financial risks,
particularly those associated with fluctuations in oil price, foreign
currency risk, liquidity risk and credit risk. The disclosures in relation
to financial risk management objectives and policies, including
the policy for hedging, and the disclosures in relation to exposure
to oil price, foreign currency and credit and liquidity risk, are
included in note 27 of the Group’s 2024 Annual Report.
Going concern disclosure
In recent years, EnQuest has focused on deleveraging and
optimising its capital structure, to simplify its balance sheet and
maximise available financial transactional capacity.
In 2024, the Group deleveraged further, reducing net debt by
$95.1 million, to $385.8 million at 31 December 2024. This was driven
by robust adjusted free cash flow generation and repayment of
the first of two vendor loans that was provided to RockRose as part
of the 2023 Bressay farm-down. In the period EnQuest fully repaid
its Reserve Based Lending (‘RBL’) facility (from $140.0 million) and
completed a $160.0 million tap of its high yield bonds. By using
this tap to repay a $150.0 million term loan facility, additional RBL
capacity was opened. At 31 December 2024, EnQuest’s net debt
to adjusted EBITDA ratio was 0.6x. The Group ended 2024 with a
positive RBL redetermination, which expanded RBL capacity by
34%. Cash and available facilities at 28 February 2025 totalled
$549.0 million.
Against this robust backdrop, EnQuest continues to closely monitor
and manage its funding position and liquidity requirements
throughout the year, including monitoring forecast covenant results.
Cash forecasts are regularly produced and sensitivities considered
for, but not limited to, changes in crude oil prices (adjusted for
hedging undertaken by the Group), production rates and costs.
These forecasts and sensitivity analyses allow management to
mitigate liquidity or covenant compliance risks in a timely manner.
The Group’s latest approved business plan underpins
management’s base case (‘Base Case’). It is in line with EnQuest’s
production guidance (including the acquisition and contribution
of the Block 12W in Vietnam – completion expected in the second
quarter of 2025) and an oil price assumption of $75.0/bbl is used
for 2025 and 2026.
A reverse stress test has been performed on the Base Case. This
indicates that an oil price of c.$40.0/bbl is required to maintain
covenant compliance over the going concern period. The low level
of this required price reflects the Group’s strong liquidity position.
The Base Case has also been subjected to further testing through
a scenario that explores the impact of the following plausible
downside risks (the ‘Downside Case’):
•
10.0% discount to Base Case prices resulting in Downside Case
prices of $67.50/bbl for 2025 and 2026;
•
Production risking of 5.0%; and
•
2.5% increase in operating costs.
The Base Case and Downside Case indicate that the Group is able
to operate as a going concern and remain covenant compliant for
12 months from the date of publication of its full-year results.
After making appropriate enquiries and assessing the
progress against the forecast, the Directors have a reasonable
expectation that the Group will continue in operation and meet
its commitments as they fall due over the going concern period.
Accordingly, the Directors continue to adopt the going concern
basis in preparing these financial statements.
Strategic Report
Corporate Governance
Financial Statements
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EnQuest PLC Annual Report and Accounts 2024
Financial review
continued
Viability statement
The Directors have assessed the viability of the Group over a
three-year period to March 2028. The viability assumptions are
consistent with the going concern assessment, with the extension
of an oil price of $75.0/bbl for 2027 and 2028 in the Base Case.
Consistent plausible downside risks have also been applied
in a Downside Case. This assessment has taken into account
the Group’s financial position as at 26 March 2025, its future
projections – including the impacts of the Block 12W acquisition in
Vietnam; the Seligi 1b gas agreement; the Group’s debt maturities,
which occur towards the end of the viability period; and the
Group’s principal risks and uncertainties. The Directors’ approach
to risk management, their assessment of the Group’s principal
risks and uncertainties, and the actions management are taking
to mitigate these risks, are outlined on pages 54 to 71. These risks
and uncertainties include potential impacts from climate change
concerns and related regulatory developments. The period of
three years is deemed appropriate as it is the time horizon across
which management constructs a detailed plan against which
business performance is measured, and, given the Group’s focus
on short-cycle, quick payback capital expenditures on its existing
portfolio, is a time horizon over which the Group can undertake any
necessary mitigation activities.
Under the Group’s Base Case projections, the Directors have a
reasonable expectation that the Group can continue in operation
and meet its liabilities as they fall due over the period to March 2028.
For the current assessment, the Directors also draw attention to the
specific principal risks and uncertainties (and mitigants) identified
below, which, individually or collectively, could have a material
impact on the Group’s viability during the period of review. In
forming this view, it is recognised that such future assessments
are subject to a level of uncertainty that increases with time and,
therefore, future outcomes cannot be guaranteed or predicted
with certainty. The impact of these risks and uncertainties has
been reviewed on both an individual and combined basis by the
Directors, while considering the effectiveness and achievability of
potential mitigating actions.
Oil price volatility
A decline in oil prices would adversely affect the Group’s
operations and financial condition. To mitigate oil price volatility,
the Directors have hedged a total of 3.1 MMbbls from 1st April 2025
for the next 12 months with an average floor price of $69.6/bbl
and a further 1.3 MMbbls in the subsequent 12-month period with
an average floor price of $68.3/bbl, in each case predominantly
utilising swaps. The Directors, in line with Group policy and the
terms of its RBL facility, will continue to pursue hedging at the
appropriate time and price.
The following information is prepared in accordance with Section
414CB(1) of the Companies Act 2006. Further information on each
of the areas set out below, including the Group’s policies where
relevant, can be found in the following pages of this section of
the report. The Group’s business model can be found on page 2,
while its key performance indicators can be found on page 5. The
Group’s principal risks can be found on page 54 and include HSE,
Human Resources and Reputation.
Environmental (see Pages 40 to 47, and 72 to 86)
•
At the core of EnQuest’s Values is SAFE Results with no harm to
people and respect for the environment
•
EnQuest’s Environmental Management System (‘EMS’) ensures
the Group’s activities are undertaken in such a way that it
manages and mitigates its impact on the environment. The EMS
meets both the requirements of OSPAR and the International
Organization for Standardization’s environmental management
system standard – ISO 14001. Environmental performance is
regularly reviewed by senior management and the Board, with
no Health and Safety Executive (‘HSE’) Improvement Notices
received in 2024
•
Having progressed three significant renewable energy
and decarbonisation opportunities at Sullom Voe Terminal,
the Group launched Veri, with responsibility for delivering
the Group’s short- and medium-term emission reduction
objectives and advancing longer-term renewable energy and
decarbonisation opportunities
•
During 2023, EnQuest’s Board approved a commitment to reach
net zero in respect of Scope 1 and Scope 2 emissions by 2040
•
The Group continues to make good progress in reducing its
absolute Scope 1 and 2 emissions. Since 2018, UK emissions
have reduced by 40%, which is significantly ahead of the UK
Government’s North Sea Transition Deal target of achieving a
10% reduction in Scope 1 and 2 CO
2
equivalent emissions by 2025
•
In 2024, the Group expanded its Scope 3 emissions reporting
to include Category 6 ‘Business travel’, category 7 ‘Employee
commuting’ and, most materially, Category 11 ‘Use of sold
products’. These reporting categories are in addition to
Category 5 ‘Waste generated in operations’, which formed
part of the Group’s SECR in the UK in 2023
•
EnQuest has reported on all the emission sources within its
operational control required under the Companies Act 2006
(Strategic Report and Directors’ Reports) Regulations 2013
•
The Group continues to evolve its disclosures in accordance
with the recommendations of the Task Force on Climate-related
Financial Disclosures
•
EnQuest maintained a ‘B’ rating for its 2024 CDP Climate Change
submission (2023: B)
Our people (see Pages 51 to 53)
•
EnQuest is committed to providing an inclusive culture that
recognises and celebrates difference and sees a diverse culture
as an enabler of creativity and performance improvement
•
The Group-wide diversity and inclusion strategy was updated
in 2024 to a Diversity, Equity and Inclusion strategy, with an
associated policy and plan published on the Group’s website
•
DE&I statistics are monitored and reported to senior
management on a monthly basis
•
The mental and physical welfare of all employees continues to
be a major focus across the business
•
A broad programme of job-specific training was undertaken
to ensure high levels of skill, competence and safety are
maintained across our operations
•
The UK’s EnQlusion workforce group promoted a number of
initiatives during 2024 and EnQuest became a member of the
OEUK (D&I) Special Interest Group
Community (see Pages 50 to 51)
•
Management consider that no formal policy is required
given the key impacts on the community of environmental
performance and our people. However, EnQuest is fully
committed to active community engagement programmes,
encouraging and supporting charitable donations in the
areas of improving health, education and welfare within the
communities in which it works
•
In Aberdeen, EnQuest was able to donate to a range of charities
including its two core charities in the North Sea, CLAN Cancer
Support and the Archie Foundation
•
There was continued support for a range of cultural events,
charitable donations and educational awards in Shetland
throughout the year
•
In Malaysia, EnQuest maintained its support of the Sungai Pergam
Orang Asli Primary School in Terengganu, by contributing to
student bursaries students through the MyKasih ‘Love My School’
programme, alongside a university scholarship programme
Business conduct (see Page 72)
•
The Group’s Code of Conduct sets out the behaviour which the
organisation expects of its Directors, managers and employees,
and of our suppliers, contractors, agents and partners
•
This code addresses several areas, including the importance of
health and safety and environmental protection, compliance
with applicable law, anti-corruption, anti-facilitation of tax
evasion, anti-slavery, addressing conflicts of interest, ensuring
equal opportunities, combatting bullying and harassment and
the protection of privacy
•
All employees in the Group undertake Anti-Bribery and
Corruption and anti-facilitation of tax evasion training annually,
with participation statistics reported to the Board
•
The Group is committed to ensuring that it respects
(and never participates in the violation of) international
human rights. It does this through strict adherence to the
Code of Conduct, its Modern Slavery Statement and the
EnQuest Values (see page 72)
•
The highest potential risk of modern slavery would be in the
supply chain, and is covered by the supply chain policy. As such,
risk-based due diligence may be conducted on suppliers before
allowing them to become a preferred/pre-qualified supplier,
with on-site audits undertaken where appropriate. EnQuest
also conducts training for its procurement teams so that they
understand the signs of modern slavery and how to raise any
concerns they may have
•
EnQuest is not aware of any slavery or human trafficking within
its business or supply chains and no issue in relation to modern
slavery has been raised
Group non-financial and sustainability
information statement
Fiscal risk and government take
Unanticipated changes in the regulatory or fiscal environment,
such as the UK EPL in recent years, can affect the Group’s ability
to access funding and liquidity. The Group will continue to
communicate to Government and Treasury the importance of
fiscal stability, whilst also monitoring developments and any
potential related impacts.
Access to funding
Prolonged low oil prices, cost increases, production delays or
outages and changes to the fiscal environment could threaten
the Group’s liquidity and access to funding.
The Directors recognise the importance of ensuring medium-term
liquidity. The Group has evidenced its continued management
of funding, prioritisation of debt reduction and optimisation of its
capital structure by fully repaying its RBL and Term Loan along with
obtaining additional unsecured funds through a successful high
yield bond tap in 2024. The increase in available funds under the RBL
following the recent redetermination and the long-dated maturity
profile of the Group’s debt provide a material level of funding for the
majority of the viability period. Refinancing of the Group’s current
debt structure (see note 17) is assumed towards the end of the
viability period but would likely occur well ahead of the 2027 bond
maturities, providing funding beyond the viability period.
In assessing viability, the Directors recognise that in a Downside
Case additional liquidity would be required towards the end of
the viability period, which may necessitate limited mitigations,
such as working capital management, amendments to capital
work programmes, asset farm-downs or other financing
options, including vendor financing or prepayments. Given the
extended duration of the viability period, the Directors believe
such measures can be executed successfully in the necessary
timeframe to maintain liquidity.
Notwithstanding the principal risks and uncertainties described
above, after making enquiries and assessing the progress
against the forecast, projections and the status of the mitigating
actions referred to above, the Directors have a reasonable
expectation that the Group can continue in operation and meet
its commitments as they fall due over the viability period ending
March 2028. Accordingly, the Directors therefore support this
viability statement.
EnQuest’s Kraken FPSO
Strategic Report
Corporate Governance
Financial Statements
38—39
EnQuest PLC Annual Report and Accounts 2024
Environmental, Social and Governance
Reduction in Group Scope 1 and
Scope 2 emissions vs 2020 baseline
22%
Reduction in UK Scope 1 and 2
emissions vs 2018 NSTD baseline
40%
LTIF
1
performance
1.55
Female representation
at Board level
43%
Our sustainability highlights
for 2024
Our quest for
better continues
Social
Our culture defines how
we approach safety and
ensures that our people,
EnQuest’s most important
asset, return home from
work safe and well.
Committed to operating with a strong
culture and Values, in line with the
Group’s purpose
Delivering SAFE Results with no harm to
our people
Committed to improving workforce
diversity, equity and inclusion
Committed to positively impact the
communities in which we operate
Environmental
Managing emissions
from existing operations
and advancing new
energy opportunities.
Committed to contributing positively to the
drive towards net zero
Focused on absolute Scope 1 and Scope 2
emission reductions with rolling Group
targets linked to reward
Implementation of Scope 3 disclosure
Growth and diversification ambition
centred on reduced carbon intensity
Governance
We are committed to
operating within a robust
Risk Management
Framework.
Committed to operating with the highest
standards of integrity, in line with the
Group’s Code of Conduct
Apply the Group’s established Risk
Management Framework and operate
within the Board-approved statement
of risk appetite
Reward is linked to ESG performance
See more on
Page 44
See more on
Page 48
See more on
Page 54
1
Lost Time Incident Frequency represents the number
of incidents per million hours worked (based on 12
hours for offshore and eight hours for onshore)
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
40—41
See more in Social
on
Page 48
See more in Governance
on
Page 54
Environmental, Social and Governance
Target 12.2 – By 2030, achieve the
sustainable management and
efficient use of natural resources
•
Committed to operating with high
ethical standards, overseen by a
diverse and knowledgeable Board
2024 performance
2025 ambitions
Long-term goals
•
22% reduction in Scope 1 and
Scope 2 Group emissions
versus 2020 baseline
• Exceeded 5% target and
reduced upstream flare
emissions by 18%
• Expanded Group Scope 3
disclosures to incorporate
material value chain emissions
• Completed a Group-wide
Double Materiality Assessment
• Achieved sector-leading B
rating for the 2024 CDP Climate
Change survey (2023: B)
•
Our skilled and dedicated workforce
is our strength. As we navigate the
energy transition, we are committed
to strategies that prioritise their
wellbeing, professional growth and
economic security
• Group lost time incident
frequency was 1.55 (2023: 0.52).
UK average was 1.63
• Celebrated ten years of
Malaysian operations with
HSE Excellence award
• Group Diversity, Equity and
Inclusion policy published in 2024
• Board composition compliant
with FTSE Women Leaders Review
and Listing Rule 6.6.6R(9) which
targets at least 40% of Board
members to be women
• Rosalind Kainyah and Marianne
Daryabegui appointed as
Non-Executive Directors
• Board remains ahead
of the Parker Review
requirement with respect to
ethnic minority representation
Three-year emission reduction
target vs 2022 baseline
10%
Deliver net zero Scope 1 and
Scope 2 emissions by
2040
Deliver LTIF performance ahead
of industry benchmarks
<1.00
Female Board-level representation
>40%
Objectives
• Contribute positively towards the
drive to net zero
•
Reduce absolute Group Scope 1
and Scope 2 emission reductions
by 10% across three-year period
• Consolidate sector leadership
within CDP Climate Change
survey rating
• Committed to operating with
a strong culture and Values, in
line with the Group’s purpose,
alongside delivering SAFE Results
with no harm to our people
• Committed to improving workforce
diversity, equity and inclusion
•
Aim to impact positively the
communities in which we
operate, prioritising respect
for the environment
•
Committed to operating with high
standards of integrity in line with the
Group’s Code of Conduct
•
Apply the Group’s established Risk
Management Framework and
operate within the Board-approved
statement of risk appetite
•
Reward is linked to ESG performance
Our ESG journey
keeps evolving
Environmental
Social
Governance
See more in Environmental
on
Page 44
EnQuest PLC Annual Report and Accounts 2024
Strategic Report
Corporate Governance
Financial Statements
42—43
Environmental, Social and Governance
continued
Decarbonisation progress in 2024 –
Upstream
At Magnus, the Group is investing in the
asset’s future by sanctioning a flare gas
recovery project, which will help meet the
NSTA’s emission reduction requirements,
and the World Bank’s target of zero routine
flaring by 2030.
Decarbonisation efforts at Kraken include
boiler control upgrades to maximise the
use of produced gas as fuel for the boilers
or main power generators rather than be
diverted to flare. The upgrades have been
implemented across three boilers at
Kraken, with the full emission reduction
benefit expected in 2025.
Decarbonisation initiatives at the Greater
Kittiwake Area include a study on the
feasibility to revert a diesel turbine back
into gas, with the potential to displace
diesel consumption by utilising fuel gas
at a much lower carbon intensity.
In Malaysia, the Group has delivered a
35% emission reduction at PM8/Seligi,
against a 2020 baseline. This reduction has
been achieved through upgrades to the
compression system, resulting in improved
compression uptime and reduced flaring.
Midstream
At the Sullom Voe Terminal (‘SVT’), two
major infrastructure projects are ongoing
which, when taken together, are expected
to reduce terminal emissions by over 90%.
The New Stabilisation Facility (‘NSF’) will
right-size terminal operations to align to
current throughput, while the Grid Power
Connection project will see the on-site
gas-fired power station to be retired from
service. These projects will transform the
carbon footprint and operating cost at SVT
and serve as a high-profile exemplar of
the UK’s transition in action.
Looking ahead – decarbonisation
and diversification
In line with internal Group targets
and those set within the regulatory
environment, EnQuest is committed
to a transition plan which has asset
decarbonisation at its heart. Accordingly,
the Group continues to identify and assess
opportunities to lower the carbon footprint
of existing infrastructure, as well as that of
prospective acquisition targets.
Reduction in Group
Scope 1 and 2 emissions
22%
vs 2020 baseline
Reduction in UK
Scope 1 and 2 emissions
40%
vs 2018 NSTD
1
baseline
Reducing Scope 1 and 2 CO
2
e
Within EnQuest’s core Upstream and
Decommissioning businesses, the Board
is focused on a strategy that recognises
hydrocarbons will remain a key element
of the global energy mix for decades to
come, and through which the Group can
pursue a business model that helps fulfil
energy demand, while reducing Scope 1
and Scope 2 emissions from its own
business operations.
EnQuest has committed to reducing its
absolute Scope 1 and Scope 2 CO
2
e to
net zero by 2040. At the end of 2024, the
Group’s CO
2
e emissions have reduced by
22% versus the 2020 baseline, reflecting
operational and facilities improvements
and lower flaring and diesel usage.
Since 2018, EnQuest’s UK emissions have
reduced by 40%, including the impact of
the decisions to cease production at
several of the Group’s assets. EnQuest’s
emission reduction performance is
tracking significantly ahead of the UK
Government’s North Sea Transition Deal
target of achieving a 10% reduction in
Scope 1 and Scope 2 CO
2
equivalent
emissions by 2025.
In addition to reducing upstream
emissions, the Group has continued to
optimise sales of Kraken cargoes directly
to the shipping fuel market, thereby
avoiding the significant emissions
related to refining – estimated to be
c.32–36 kgCO
2
e/bbl
2,3
for typical North
Sea crude, and helping to reduce
sulphur emissions in accordance
with the International Maritime
Organization (‘IMO’) 2020 regulations.
Decarbonising operations
whilst developing
opportunities within the
wider energy transition
Environmental
A responsible oil and gas operator
with a credible transition roadmap
EnQuest recognises that industry,
alongside other key stakeholders such as
governments, regulators, and consumers,
must contribute to reducing atmospheric
emissions to mitigate and slow climate
change. EnQuest is committed to
delivering against national emission
reduction targets, and has in place a
Board-approved commitment to reduce
Group operated Scope 1 and Scope 2
emissions to net zero by 2040.
At the core of EnQuest’s Values is SAFE
Results with no harm to people and
respect for the environment. As an oil
and gas company operating across
the energy transition life cycle, safely
improving the operating, financial and
environmental performance of mature
and late-life assets remains a key business
focus. Alongside the decarbonisation
of existing Group operations, EnQuest’s
wholly owned subsidiary, Veri Energy,
is developing and delivering scalable
decarbonisation and renewable energy
opportunities within the Group’s transition
roadmap, including opportunities
such as carbon storage, electrification
and the production of e-fuels.
Notes above:
1
North Sea Transition Deal
2 kgCO
2
e/bbl = kilograms of CO
2
equivalent per
produced barrel
3
Based on the University of Calgary Petroleum
Refinery Life Cycle Model (‘PRELIM’) recognised by
California Air Resources Board, US Energy
Technologies Laboratory, US DOE Office of Energy
Efficiency and Renewable Energy, Carnegie
Endowment for International Peace and the US
Environmental Protection Agency
“We have a credible plan
to progress our business
towards net zero,
transforming the carbon
footprint of our existing
portfolio and developing
scalable decarbonisation
projects at SVT.”
Amjad Bseisu
Chief Executive Officer
In South East Asia, EnQuest continues
to voluntarily limit emissions in support
of Malaysia’s Nationally Determined
Contributions (‘NDC’) as per the
Paris Agreement.
Upstream
The Group maintains and assesses a
hopper of emission reduction opportunities,
focused on delivering an increasingly
efficient product across the portfolio.
The EnQuest team continues to advance
the Bressay gas import project as a
subsea tie-back to Kraken with a Bressay
Field Development Plan and Kraken
FDPA in draft form and a final investment
decision planned in 2025. This activity is
expected to displace the majority of the
diesel currently used to power Kraken
operations; driving a material reduction
in FPSO emissions and significantly
reducing asset operating costs.
At Magnus, a significant proportion of
emissions are associated with fuel gas
usage. For 2024, fuel gas emissions
represented 79% of Magnus’s emissions.
EnQuest has identified a decarbonisation
and efficiency solution by replacing
Magnus’ three 5-Frame gas turbines with
a refurbished LM2500+G4 gas turbine. The
pre-existing turbines are oversized for
current and forecasted energy demand
and therefore right sizing turbines will
significantly reduce fuel consumption and
emissions associated with production.
Decommissioning
EnQuest’s UK Decommissioning
directorate oversees the safe and efficient
execution of decommissioning work
programmes and is committed to
delivering them in a responsible manner.
This includes minimising emissions and
maximising the recycle and reuse of
recovered materials. In 2024, EnQuest has
continued to demonstrate sector-leading
performance within decommissioning,
executing the plug and abandonment
(‘P&A’) of 22 wells and doing so at a cost
which is lower than the sector benchmark.
Well P&A work is progressing well at both
Heather and Thistle, with anticipated
disembarkation dates in Q2 2025 and early
2026, respectively. Decommissioning
planning work is ongoing at the Greater
Kittiwake asset, where the Group is
proactively planning to complete well P&A
activity alongside continued production.
Strategic Report
Corporate Governance
Financial Statements
44—45
EnQuest PLC Annual Report and Accounts 2024
1
2
3
4
5
6
7
8
9
10
11
12
13
14
Med
15
16
17
Low
18
19
High
Negligible
Minor
Serious
Impact on EnQuest
Effectiveness of EnQuest’s response
(according to stakeholders)
Severe
Major
8.0
8.5
7.5
7.0
6.5
Process safety and asset integrity
Occupational health and safety
Employment practices
Diversity, equity and inclusion
Forced labour and modern slavery
Freedom of association and
collective bargaining
Supporting local communities
8
9
10
11
12
13
14
Managing a Just Transition
Anti-corruption and bribery
Payments to governments
Public Policy
Data and cyber security
15
16
17
18
19
GHG Emission Stewardship
Climate adaptation, Resilience
and Transition
Air Quality
Conservation
Waste and effluents
Water management
Decommissioning
1
2
3
4
5
6
7
Material Issues
Environment
Safety
Social
Governance
Key
Environmental management
EnQuest’s Environment Management
System (‘EMS’) represents a group
of reporting procedures that outline
the process to manage and mitigate
environmental impact, and how
the Group will assess and select
emission reduction opportunities.
The EMS meets the requirements
of the OSPAR recommendations
2003/2005 and is aligned with
the requirements of International
Organization for Standardization’s
environmental management system
standard – ISO 14001 and ISO 50001.
Materiality assessment
In 2024, EnQuest undertook a materiality
assessment with reference to Global
Reporting Initiative (‘GRI’) and International
Association of Oil & Gas Producers
(‘IOGP’) material sustainability topics
for the oil and gas industry. This process
was supported by Wood Mackenzie.
The assessment enabled EnQuest to
identify and understand the relative
importance of specific sustainability-
related subjects to EnQuest’s operations,
and to ensure they were appropriately
addressed within the Group’s Risk
Management Framework (‘RMF’).
EnQuest will continue to review the
outputs of this assessment as regulatory
requirements continue to evolve.
Materiality Assessment
third-party travel booking agent, and the
development of an in-house commuting
emissions app. Scope 3 development
was undertaken as part of EnQuest’s
Continuous Improvement Plan (‘CIP’) and
has enabled the progression of EnQuest’s
Scope 3 reporting category to include
Category 5 ‘Waste’, Category 6 ‘Business
Travel’, Category 7 ‘Commuting Emissions’
and Category 11 ‘Sold Product’. For more
information on the Group’s Scope 3
reporting, please see page 123 of the
Directors’ Report.
SECR
In 2022, the North Sea Transition Authority
requested companies operating in the UK
North Sea to consider disclosing certain
quantitative metrics in their annual reports.
The following disclosure has been made
for 2024 in accordance with this request:
North Sea Transition Authority – UK
short-term quantitative metrics
Scope 1 and 2 Emissions
(MTCO
2
e)
784,051
Fugitive Emissions as
% of Marketed Gas
0.025%
Carbon Intensity Total UK
(MTCO
2
e/Boe)
0.046
Water Pollution Risks (million m
3
)
10.77
Waste Management &
Disposal (MT)
21,336
Flaring & Venting
(MTCO
2
e/Boe)
0.018
Regulatory Fines
0
Lost Time Injury
Frequency Rate
2.3
Recordable Injury
Frequency Rate
5.63
Restricted Workday Case
5
Medical Treatment Case
8
Lost Work Day Case
9
Emission reduction incentivisation
Emission reduction goals are included
within EnQuest’s annual KPIs, and
also within EnQuest’s medium-term
Performance Share Plan (‘PSP’). The
scheme runs across a three-year period
with a minimum reduction threshold
of 10% against a rolling baseline.
In 2024, EnQuest delivered an 8.2%
reduction against 2021 baseline emissions.
For 2025, the PSP three-year incentive
scheme will be reviewed against a 2022
emission baseline.
“EnQuest is committed to
a Just Energy Transition,
working to meet the UK’s
oil and gas demand while
delivering the cleanest
energy available.”
Steve Bowyer
General Manager, North Sea
Veri Energy
EnQuest continues to mature renewable
energy opportunities at SVT, including
electrification, e-fuel production and
carbon capture and storage (‘CCS’).
Veri Energy’s electrification plans offer
an opportunity for low carbon offshore
production in the West of Shetland into the
2050s. The production of green hydrogen
and synthetic diesel through harnessing
the advantaged natural wind resource
around Shetland could provide a low-
carbon alternative fuel, supporting
decarbonisation of several industries.
In 2023, EnQuest was awarded four CCS
licences by the North Sea Transition
Authority (‘NSTA’). Following work to
evaluate the licences, EnQuest took
the decision to relinquish the Tern and
Eider licences, effective 1 March 2025.
The remaining licence areas, CS013 and
CS014, incorporate the EnQuest-operated
Magnus and Thistle fields, which together
establish an estimated capacity of
200 million tonnes of CO
2
storage. Veri
Energy’s CCS initiatives could see the
Group’s operational carbon footprint
become net negative by 2030. Due to
exceptional reservoir sequestration
potential, EnQuest estimates that c.10
million tonnes of carbon per annum
could be processed through existing SVT
infrastructure supporting individual and
wider industry emission sequestration.
Sustainability disclosures
EnQuest recognises that sustainability is
more than just regulatory requirements,
and is poised to align with the increasingly
stringent ESG reporting requirements in the
UK, with the view that structured reporting
disclosures provide an opportunity to
transparently report EnQuest’s robust
and credible net zero strategy, strong
governance pathways, and ambition to
continuously strive for improvements.
EnQuest’s approach to sustainability
has been recognised within CDP’s
new 2024 scoring methodology and
has been awarded an A to A- within
10/16 scoring categories, achieving
an overall score of B for 2024.
Scope 3
EnQuest recognises the complexity
and scope of its value chain and has
carefully considered how to approach the
disclosure of Scope 3 emissions. In 2024,
resources were focused on expanding
EnQuest’s Scope 3 reporting capacity,
with activities including an EnQuest-led
emissions workshop with the Group’s
Sullom Voe Terminal, Shetland Islands
Reduction in PM8/Seligi Scope 1
and Scope 2 emissions
35%
vs 2020
baseline
Sustainability matrix
The chart above shows the impact of key
sustainability issues on EnQuest’s business
on the x-axis and the stakeholder’s view of
the effectiveness of EnQuest’s response to
these issues on the y-axis. The size of the
bubble represents the importance to
stakeholders. The scores on the y-axis
were gathered through an online survey
and face-to-face interviews with external
stakeholders. The y-axis scores were
averaged for online respondents and
interviewees separately. The final score
represents a weighted average of the two
groups surveyed.
Interpretation of the materiality
assessment results
Scores gathered through one-on-one
interviews were weighted at 70%, given
their more in-depth, higher-quality input.
The stakeholders scored the
effectiveness of EnQuest’s response
for each sustainability issue in the
range between 6.5-8.5, given a scale
of 1-10, with 1 representing an ineffective
response and 10 representing an
exceptionally effective response.
•
Most of the issues identified as
‘Negligible’ or ‘Minor’ by EnQuest were
also low in importance for stakeholders;
•
Ten issues shown in the table above (1, 2, 7,
8, 9, 10, 14, 17, 18 and 19) were assessed by
EnQuest as having a potentially ‘Severe’
or ‘Major’ impact on the Company;
• Stakeholder responses demonstrated
strong alignment with the ten issues
marked as ‘High’ importance;
•
In general, the effectiveness of EnQuest’s
response was scored highly. Issue 7
(Decommissioning) was scored highly
across all stakeholder groups.
Strategic Report
Corporate Governance
46—47
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
Environmental, Social and Governance
continued
Environmental
Environmental, Social and Governance
continued
Social
•
Maturation of the process safety
barrier model improving the visibility
of integrity status to prioritise allocation
of resources based upon risk; and
•
Updates to key processes; Control of
Work, Safe Isolation and Reinstatement
of Plant and Investigation Management
were made to improve ease of use
and understanding and to incorporate
learnings from previous events.
EnQuest Malaysia’s continuous focus on
a safe working environment delivered
zero lost time injuries in 2024 and saw
the Group recognised for HSE Excellence
at the Malaysia Upstream Awards.
The Group’s health and safety
performance has continued to be strong
from a leading indicator perspective,
while lagging indicators of Lost Time
Incidents (‘LTIs’) and hydrocarbon releases
were more challenged. There has been
further development of the continuous
improvement culture with several
activities undertaken in 2024 including:
•
Independent audit of the Investigation
Management Process with
improvement plans identified;
•
Exceeding the target for site safety-
leadership visits, a leading safety
indicator of engagement;
•
Continuing to reduce high-risk safety
and environmental critical element
repair orders, which has lowered the
risk profile across the Group; and
•
Contributing positively to the industry
organisations Offshore Energies UK
and Step Change in Safety initiatives
and campaigns.
No Health and Safety Executive (‘HSE’)
Improvement Notices were issued in 2024.
Our culture defines how we
approach safety and ensures that
our people, our most important
asset, go home safe and well.
Social
Health and safety
Underpinning the Group’s licence
to operate is its health and safety
performance. The Group focuses on the
delivery of SAFE Results while realising its
business objectives. To achieve this, the
business is managed in accordance with
the Board-approved Group-wide Health,
Safety, Environment and Assurance
(‘HSEA’) Policy, which can be found on the
Group’s website, www.enquest.com, under
Environmental, Social and Governance.
Culture
Safety is at the heart of EnQuest’s Values.
The Group undertakes continuous
improvement activities to ensure that its
health and safety culture continues to
develop. These have a focus on the
prevention of personal injuries, dangerous
occurrences and hydrocarbon releases
and, in support of the delivery of SAFE
Behaviours, are aligned to four key pillars of:
•
Standards
– following rules and
procedures;
•
Awareness
– understanding the hazards
and controls;
•
Fairness
– adopting the correct
behaviours; and
•
Engagement
– communicating
effectively.
Several improvements were made in
people, plant and process safety, including:
• Shutdowns undertaken across the
Group’s operated asset base continued
to focus on driving improved asset
integrity and reliability;
• Risk-based approach applied to
global audit and assurance plans
and activities, to focus efforts on key
areas of the business;
Health
EnQuest recognises the benefits of
promoting positive health and wellbeing
within the workplace. As such, the Group
operates a Mental Health Policy to
underpin a commitment to protecting
and maintaining the health, safety and
wellbeing of its workforce. The employee-
led Wellbeing Committee implemented
a number of activities such as Step
Challenges, Menopause Awareness events
and participation in the Corporate Games.
Personal safety
Management of late-life assets through
production operations, drilling and
decommissioning activities requires
constant vigilance and attention to detail.
During the year, nine LTIs were reported
across the Group, resulting in a Group LTI
frequency
1
of 1.55 (2023: 0.52) against a
backdrop of 5,815,350 man hours worked.
The LTIs in 2024 were all related to
contractor personnel and primarily
occurred during routine activities. In
response, management emphasised
the need for increased leadership and
accountability, continued focus on
hazards and controls and dynamic
risk assessment for all personnel at
EnQuest sites.
Various notable milestones were achieved
across the Group’s asset base:
•
The asset team at Kittiwake recorded 19
years LTI free;
•
SVT achieved two significant milestones
in 2024: reaching five years and five
million manhours LTI free; and
• The PM8E/Seligi team achieved
the milestone of two years LTI free
in August with over four million
manhours performed on production
operations, drilling, well operations
and shutdown activities.
Process safety
Process safety continued to be a focus in
2024. In conjunction with the 2023 asset
integrity review, there has been progress
achieved in risk review processes, such
as the maturation of the major accident
hazard barrier model which enables the
extraction of real-time inspection and
maintenance data.
This has enabled the monthly asset
Process Safety Review and Improvement
Boards to generate open and transparent
discussions about key threats and control
arrangements:
•
For those assets in a decommissioning
phase and not processing hydrocarbons,
asset integrity is being assured to deliver
safe decommissioning activities, while
the management of safety-critical
maintenance is tailored to reflect the
specific circumstances of each asset;
•
HSEA systems have continued to
be reviewed and the use of data
visualisation tools is better informing
HSEA performance and ensuring that
any response to changing HSEA
processes is supported by reliable data
sources from automated systems;
•
In both Malaysia and the UK, regulator
interaction continues in an open and
transparent manner, allowing for
collaboration on key issues; and
• 2024 included one reportable
hydrocarbon release across UK-
operated assets (2023: two; 2022: three;
2021: one), while Malaysia incurred a
single hydrocarbon release (2023: one;
2022: zero; 2021: one). Hydrocarbon
release prevention also remained
a focus area in 2024 and further
programmes are planned for 2025 in
the areas of operational procedures
and integrity management.
“We are committed to
achieving SAFE Results
through comprehensive HSE
processes and resources,
personal responsibility, and
the right to stop the job.”
Ian McKimmie
Director of HSE and Wells
1
Lost Time Incident frequency represents the
number of incidents per million exposure hours
worked (based on 12 hours for offshore and eight
hours for onshore)
2
Tier 1 Hydrocarbon release, 10kg gas or 100kg oil
“Our culture defines how
we approach safety and
ensures that our people, our
most important asset, go
home safe and well.”
Ian McKimmie
Director of HSE and Wells
LTI frequency
1
performance
1.55
Tier 1 hydrocarbon
releases across the Group
2
2
Strategic Report
Corporate Governance
Financial Statements
48—49
EnQuest PLC Annual Report and Accounts 2024
Community
EnQuest has an established culture of
supporting the communities in which
we operate.
Charitable donations in 2024
($000)
c.181
UK
EnQuest made a series of charitable
donations throughout the year:
•
Offshore and at SVT, our charitable
donation scheme is directly linked to
positive health and safety performance
on our assets. Through these schemes
EnQuest was able to donate to a wide
range of charities including Scottish
hospices, local cancer support groups
as well as Men United, which aims to
promote and protect the mental
health and wellbeing of men, and
AberNecessities which provides
disadvantaged families with essential
and basic necessities that no child
should go without;
•
SVT also supported a range of cultural
and sporting events in Shetland in 2024,
including Sail Training Shetland and
event which supports 70 young people
travelling from Shetland to Bergen. In
addition, EnQuest also sponsored
Shetland Rugby’s mid-summer event for
children, women’s and men’s matches
and the Shetland Junior Golf Open;
•
Seven educational awards for the
academic year 2023-2024 were made
by the Trustees of the Sullom Voe
Terminal Participants’ Tenth Anniversary
Fund. Now in its 36th year, the Trust was
established to promote and encourage
the education of Shetland residents who
will be studying a discipline likely to
contribute to the social or economic
development of Shetland. This year,
students are engaged in disciplines
as wide ranging as medicine, primary
education, marine and fresh water
biology and electrical and mechanical
engineering. As operator, EnQuest also
offers a scholarship opportunity to a
student studying in a technical or
commercial discipline that is relevant
to SVT, where they take part in a work
placement at the terminal during the
summer break;
•
In Aberdeen, EnQuest was able to
donate to a range of charities including
our two core charities in the North Sea,
CLAN Cancer Support and the Archie
Foundation. EnQuest also donated to
Befriend a Child, a charity that supports
disadvantaged children in Aberdeen
City and Shire, the Camphill School
which cares for children and young
people with learning disabilities and
complex additional support needs in
Aberdeen, as well as matching
employee funding for a range of
charities from the First Scottish Women’s
Junior Cycle team to Duchenne UK, a
muscular dystrophy disease that targets
young boys aged between three and six
years; and
Malaysia
In Malaysia, EnQuest continued to
support a very active programme of
local community initiatives, charitable
donations, and educational sponsorship,
including:
•
EnQuest Malaysia continued to support
the Orang Asli primary school, Sekolah
Kebangsaan Sungai Pergam, in
Terengganu by contributing RM43,200 to
student bursaries for 45 students
through MyKasih ‘Love My School’
cashless programme. The bursaries
enabled students to make cashless
purchases of daily canteen meals and
classroom necessities at school;
•
EnQuest Malaysia has supported the
school since June 2019, with the school
being one of only two Orang Asli primary
schools in the state. Having funded the
refurbishment of the school canteen in
2019, EnQuest committed to paying
RM60,550 for upgrades to classrooms
and the school’s roof. This included
refurbishing a classroom for after-
school sessions to ensure no child is left
behind in their studies;
•
In 2024, 14 local university students were
selected for internship placements in a
variety of disciplines;
•
EnQuest Malaysia has a total of six
graduates of our scholarship awards, a
joint sponsorship between EnQuest and
The Amjad and Suha Bseisu Foundation.
Disciplines include geology as well as
chemical, mechanical, and petroleum
engineering at courses offered at the
Universiti Malaya, Universiti Teknologi
Malaysia and Universiti Teknologi
Petronas. Currently, we have four active
scholarship recipients under the joint
programme; and
•
EnQuest Malaysia collaborated with the
Global Peace Foundation Malaysia to
enhance living circumstances for two
indigenous communities in Pahang,
helping more than 50 families.
Our people
At EnQuest, we recognise people are
critical to our success and we are
committed to ensuring EnQuest remains
a great place to work. We have a strong
set of Values that underpin our way of
working and provide a rewarding work
environment, with opportunities for
growth and learning while contributing
to the delivery of our strategy.
An inclusive workforce
We remain committed to providing an
inclusive culture that recognises and
celebrates difference and sees a diverse
culture as an enabler of creativity and
performance improvement. Established
in 2021, the Group-wide diversity and
inclusion (‘D&I’) strategy, was updated
in 2024 to become a Diversity, Equity
and Inclusion (‘DE&I’) strategy. EnQuest
continues to focus on embedding the
DE&I values into Company culture and
making continuous efforts to fostering
an environment that supports employee
engagement and demonstrates our
values across the Company. The DE&I
policy and plan can be found on the
Group’s website (www.enquest.com),
outlining our eight key commitments to:
•
Understand the diversity of our
workforce;
• Challenge personal bias,
microaggressions and discrimination;
•
Engage and educate our workforce
on DE&I;
•
Recruit on merit and consider
diverse talent;
•
Ensure that diverse talent is
well represented;
• Reinforce meritocracy in performance
evaluation and career advancement;
•
Be influential and make real impact on
society; and
• Learn and continuously improve.
The UK’s EnQlusion workforce group
promoted a number of initiatives during
2024, including continued support for the
Association for Black and Minority Ethnic
Engineers and International Women’s Day,
as well as engaging in a variety of cultural
celebration events through the year.
EnQuest also worked with SPE International
to deliver DE&I training to all of the onshore
and offshore workforce. In 2024 EnQuest
has also become a member of the OEUK
D&I Special Interest Group.
EnQuest celebrated ten years of successful
operations in Malaysia during 2024
EnQuest’s Board of Directors visited
Aberdeen for a series of employee events
“At EnQuest, our people will
always be our most
important asset.”
Amjad Bseisu
Chief Executive Officer
•
EnQuest also offered 11 internship
placements in the summer to a
diverse group of postgraduates and
undergraduates working across the
business divisions from Upstream to
Decommissioning, HR, as well as its
Wells and Veri Energy business. Since
September 2023, EnQuest has
committed to sponsor a Mechanical
Engineering student from Aberdeen
University for the duration of their
five-year degree course. This funding
goes towards educational materials
and subsistence for the student. This
student will be invited to participate in
our intern programme during their
studies. Throughout 2024 EnQuest has
also been supporting a Foundation
Apprenticeship student. A Foundation
Apprenticeship is a qualification for
school pupils which combines college-
based learning and work-based
learning. EnQuest will continue to
expand its commitment to develop new
talent in the industry and has already
committed to a further graduate and
intern programme for 2025.
Strategic Report
Corporate Governance
50—51
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
Environmental, Social and Governance
continued
Social
Recruitment
Our people and organisational strategy is
to ensure that we have the right people, in
the right roles, driving performance and
delivering efficiencies as we pursue our
strategy. We ensure that our processes are
open and transparent, providing equal
opportunities for all. We will continue with
this approach, recruiting individuals based
on merit and their suitability for the role.
We remain committed to fair treatment
of people with disabilities in relation to job
applications. Full and fair consideration
is given to applications from disabled
persons where the candidate’s particular
aptitudes and abilities are consistent with
adequately meeting the requirements
of the job. In 2024 EnQuest became a
Disability Confident Committed employer,
formally recognising our commitment to
increase our understanding of disabilities
in the workplace and supporting
disabled people to fulfil their potential.
During January 2025, EnQuest was
an exhibitor at a SmartSTEM event
at the University of Aberdeen. The
event welcomed over 280 pupils from
schools across Aberdeen City and Shire
from socio-economically challenged
areas, with the aim to inspire young
students to study and pursue careers in
science, technology, engineering and
mathematics (‘STEM’) disciplines.
In addition, EnQuest employees exhibited
at a careers fair in Lerwick, on Shetland,
which was open to all secondary school
students on the island. The event was
attended by over 1,500 visitors and
provided an opportunity for EnQuest
to share information on operations at
SVT and across the energy industry.
Ways of working and engagement
We have a strong set of Values and high
standards of business conduct which we
expect our employees and everyone we
work with to demonstrate and adhere to.
Throughout 2024, we continued to
celebrate and recognise those who had
demonstrably lived our Values through
Values awards presented at our Global
Town Hall events.
EnQuest’s Chairman, Gareth Penny, was
the Company’s formally designated
Non-Executive Director for workforce
engagement for most of 2024. Rosalind
Kainyah, Non-Executive Director, took
over the role in October 2024. The Forum
functions as a useful interface between
employees and management for
constructive two-way dialogue. Areas
discussed and reviewed during the
year included:
•
Board Member changes in 2024;
•
HSE Focus / LTIs;
•
Veri Energy inception and strategy;
• Fiscal challenges and political
landscape; and
• Acquisitions and opportunities for
EnQuest growth.
In addition, during 2024, EnQuest Non-
Executive Directors maintained a broad
approach for employee engagement,
such as through face-to-face meetings
in specifically arranged, small group
sessions. Further details of how the
Company engages with its workforce can
be found in the Corporate governance
statement on page 95.
Our commitment to wellbeing
The mental and physical welfare of all
employees continues to be a major focus
across the business. During 2023, a Mental
Health and Wellbeing policy was developed
and launched with the aim of protecting
and maintaining the health, safety and
welfare of employees by promoting positive
health and wellbeing in the workplace. In
2024 we have continued this focus a
provided online and face to face mental
health training for managers. Managers are
often the first line of defence when spotting
an employee who may be suffering with
poor mental health. Equipping managers
with the knowledge and understanding of
how best to support their teams has been
recognised as the best start to improving
workplace wellbeing.
We have a well-established Wellbeing
Committee, consisting of an active
membership from across the business.
The Committee is pivotal in developing
initiatives covering all aspects of individual
wellbeing such as Mental Health
Awareness week and introducing dignity
baskets in female bathrooms, as well as
social events such as our annual children’s
Christmas party. In 2024, EnQuest
participated in the Aberdeen Corporate
Games and saw excellent involvement
from colleagues across the organisation
in a variety of sporting events. We also
use our internal social media channel to
promote these initiatives and others, such
as those targeted at physical health,
including pilates, nutrition, along with
the annual ‘rig-run’ and ‘step count’
challenges throughout the year
Continued growth and learning
In line with UK legislation, EnQuest continues
to contribute to the UK Apprenticeship
Levy each year. Contributions to the levy
can be reclaimed for specific training
initiatives and EnQuest has partnered
with SDC-Learn since 2023 to provide
a Vocational Leadership Programme.
For 2024-25, EnQuest has specifically
targeted employees who aspire to and
demonstrate a high potential to grow into
a leadership or more senior leadership
role in the future. With three cohorts
commencing at different levels during
this period, the programme will deliver a
Vocational Qualification in Management
and a Modern Apprenticeship Certificate
upon completion. In Malaysia, the
development of offshore competencies
has remained a key focus during 2024
with a multi-phase training programme
implemented with partner Institut Teknologi
Petroleum PETRONAS (INSTEP). Office-
based employees are provided with the
opportunity to undertake an assignment
at EnQuest’s London and Aberdeen offices.
In doing so they gain an understanding
of global business expectations and
enhance their technical and professional
skills. There are currently two individuals
from Malaysia on secondment in the
UK. E-Learning remains a key tool in
delivering training to employees in
Malaysia with greater flexibility to meet
their individual training needs.
Identifying succession plans for our
business-critical roles continued in 2024
to ensure we retain and develop high-
potential employees. We conduct regular
reviews to ensure the direction, focus and
development of employees identified
remain relevant and on track. In 2024 a
new development process was designed
and launched to managers to support the
new framework. This included the
introduction of a new digital Talent Profile
for employees to build and maintain within
our HR Information System (‘HRIS’). As part
of our management training on this, we
also provided guidance on how to engage
and discuss career development with their
direct reports more effectively.
We communicated the new offering to
employees via an HR roadshow at the
end of June 2024. Simultaneously, we
also launched LinkedIn Learning to all
employees to better support and
enable self-driven bite-size learning
that employees can access on
demand and in line with their own
individual learning needs.
To reinforce the above action, we revisited
our Mid-Year Review approach in order to
utilise this process to further encourage
employees to complete their talent profiles
and drive career talks with line managers.
As we have digitalised these through our
HRIS, we can now access a detailed
overview of the training needs that exist
across the organisation, which in turn is
helping to drive more data-driven
decision-making around training.
In addition to this key focus on learning
needs and training, we are continuing to
work on our new career progression
framework. Our aim now is to enhance the
visibility of career paths that employees
can have at EnQuest.
Gender pay gap
When EnQuest published its first report on
the gender pay gap in 2017, it highlighted a
noticeable gap between what our male
and female employees were being paid.
Since then, the Company has worked hard
on addressing and reducing the gap from
a mean difference of men being paid
38.7% more in 2017 down to 22.8% in 2024.
The Group’s mean gender pay gap has
unfortunately increased from 21% in 2023
to 22.8% in 2024. Analysis suggests that
this increase in gender pay gap has been
driven by fewer female workers in the
upper quartile pay segment compared
to 2023. Also, the number of women in the
lower quartile pay segment increased
while the number of men decreased.
Looking forward, we are committed to
improving our gender pay gap in 2025 and
beyond. We will do this through continued
focus on diversity and inclusion in all
aspects of our business, fair and balanced
recruitment and promotion processes and
regular assessment of skills and capability
to ensure we have the right people in the
right roles regardless of gender, ethnicity
or socio-economic background. For a
breakdown of our Director and workforce
gender, please see page 99.
Breakfast with the Board enabled
employees to discuss EnQuest culture
with Directors
EnQuest was an exhibitor at a SmartSTEM
event at the University of Aberdeen
Strategic Report
Corporate Governance
52—53
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
Environmental, Social and Governance
continued
Social
Environmental, Social and Governance
continued
Governance
•
The Group makes investments and
manages the asset portfolio against
agreed key performance indicators
consistent with the strategic objectives
of enhancing net cash flow, reducing
leverage, reducing emissions,
managing costs, diversifying its asset
base and pursuing new energy and
decarbonisation opportunities;
•
The Group seeks to embed a culture
of risk management within the
organisation corresponding to the risk
appetite which is articulated for each
of its principal risks;
•
The Group seeks to avoid reputational
risk by ensuring that its operational and
HSEA processes, policies and practices
reduce the potential for error and harm
to the greatest extent practicable by
means of a variety of controls to prevent
or mitigate occurrence; and
•
The Group sets clear tolerances for all
material operational risks to minimise
overall operational losses, with zero
tolerance for criminal conduct.
The Board reviews the Group’s risk
appetite annually in light of changing
market conditions and the Group’s
performance and strategic focus. Senior
management periodically reviews and
updates the Group Risk Register based on
the individual risk registers of the business.
The Board also periodically reviews
(with senior management) the Group
Risk Register, an assurance map and
controls review, a Risk Report (focused on
identifying and mitigating the most critical
The Board confirms that
the Group complies with
the Financial Reporting
Council’s Guidance on
Risk Management, Internal
Control and Related Financial
and Business Reporting.
Governance
Robust Risk Management Framework
Risks and uncertainties
Management of risks and
uncertainties
Consistent with the Group’s purpose,
the Board has articulated EnQuest’s
strategic vision to be the partner of
choice for responsible management of
existing energy assets, applying our core
capabilities to create value through
the transition.
EnQuest seeks to balance its risk position
between investing in activities that can
achieve its near-term targets, including
those associated with reducing emissions,
and those which can drive future growth
with appropriate returns, including
capitalising on any opportunities that may
present themselves, and the continuing
need to remain financially disciplined.
This combination drives cost efficiency
and cash flow generation, facilitating
continued reduction in the Group’s debt.
In pursuit of its strategy, EnQuest has to
manage a variety of risks. Accordingly, the
Board has established a Risk Management
Framework (‘RMF’) to enhance effective
risk management within the following
Board-approved overarching statements
of risk appetite:
and emerging risks through a systematic
analysis of the Group’s business, its
industry and the global risk environment),
and a Continuous Improvement Plan
(‘CIP’) to ensure that key issues are
being adequately identified and actively
managed. In addition, the Group’s Audit
Committee oversees the effectiveness of
the RMF while the Sustainability and Risk
Committee provides a forum for the Board
to review selected individual risk areas
in greater depth (for further information,
please see the Audit Committee report on
pages 101 to 106 and the Sustainability and
Risk Committee report on pages 118 to 119).
As part of its strategic, business planning
and risk processes, the Group considers
how a number of macroeconomic themes
may influence its principal risks. These
are factors which the Group should be
cognisant of when developing its strategy.
They include, for example, long-term
supply and demand trends for oil and
gas and renewable energy, the evolution
of the fiscal regime, developments in
technology, demographics, the financial,
physical and transition risks associated
with climate change and other ESG trends,
and how markets and the regulatory
environment may respond, and the
decommissioning of infrastructure in the
UK North Sea and other mature basins.
These themes are relevant to the Group’s
assessments across a number of its
principal risks. The Group will continue
to monitor these themes and the
relevant developing policy environment
at an international and national level,
adapting its strategy accordingly.
For example, the Group has made
further progress in the development
and execution of its energy transition
and decarbonisation strategy through
the sanction of major decarbonisation
projects across its existing infrastructure,
as well as a suite of scalable renewable
energy and decarbonisation projects
under the management of Veri Energy,
a wholly owned subsidiary of the Group.
The Group is also conscious that, as an
operator of mature producing assets
with limited appetite for exploration, it
has only slight exposure to investments
that do not deliver near-term returns and
is therefore in a position to adapt and
calibrate its exposure to new investments
according to developments in relevant
markets. This flexibility also ensures
the Group can mitigate against the
potential impact of ‘stranded assets’
(being those assets that are no longer
able to earn an economic return as a
result of changes associated with the
transition to a low-carbon economy).
Within the Group’s RMF, the Sustainability
and Risk Committee has categorised
all risk areas faced by the Group into a
‘Risk Library’ of 19 overarching risks. For
each risk area, ‘Risk Bowties’ are used to
identify risk causes and impacts, with
these mapped against preventative
and containment controls used to
manage the risks to acceptable levels
(see diagram on following page). These
Risk Bowties are periodically reviewed
to ensure they remain fit for purpose.
The Board, cognisant of the changes to the
UK Corporate Governance Code during
2024 (and Provision 29 for future financial
years), supported by the Audit Committee
and the Sustainability and Risk Committee,
has reviewed the Group’s system of risk
management and internal control for the
period from 1 January 2024 to the date
of this report and carried out a robust
assessment of the Group’s emerging
and principal risks and the procedures in
place to identify and mitigate these risks.
A RMF Performance report is produced
and reviewed at each Sustainability
and Risk Committee meeting in support
of this review. The Group will report on
the updated UK Corporate Governance
Code 2024 changes as appropriate.
Our strategic focus
1
Managing assets to optimise and
grow production while exercising
cost control and capital discipline
2
Repurposing existing infrastructure
to deliver new energy and
decarbonisation opportunities
at scale
3
Safely and efficiently executing
decommissioning activities
4
Managing our Balance Sheet while
pursuing selective, capability-led
and value-accretive acquisitions
See more in Our strategy
Page 18
Key Performance Indicators (‘KPIs’):
A
HSEA (LTI)
B
Production (Boepd)
C
Unit opex ($/Boe)
D
Cash generated by operations
($ million)
E
Cash capital and abandonment
expense ($ million)
F
EnQuest net debt ($ million)
G
Net 2P reserves (MMboe)
H
Emissions (tCO
2
e)
See more in Our strategy
Page 18
Strategic Report
Corporate Governance
Financial Statements
54—55
EnQuest PLC Annual Report and Accounts 2024
Environmental, Social and Governance
continued
Governance
ENQUEST RISK MANAGEMENT FRAMEWORK
WHAT WE MONITOR
Enterprise risk register
A summary of the Group’s key risks; prepared by combining
key risks identified from the asset and functional risk registers
with Group-level risks.
Asset and functional risk registers
A compilation of risks (including threats and opportunities)
and mitigating controls being managed at an operational/
functional level on a day-to-day basis.
Quarterly RMF performance report
Reviewed by leadership teams before being presented to
the Sustainability and Risk Committee and uploaded to the
Board portal.
Continuous Improvement Plan
A summary of the key actions planned for continual
improvement of the RMF.
Risk landscape inputs/considerations
Comprises:
(a)
long-term macro factors such as political risk; supply
and demand trends; climate change-related financial,
physical and transition risks; and the decommissioning
of infrastructure; and
(b)
near-term, emerging and principal risks. These are
considered holistically on a backward and forward-
looking basis, alongside outputs from relevant strategic
reviews, and summarised in an annual Risk Report
presented to the Sustainability and Risk Committee.
Assessment
Risk causes; likelihood and impact; gross impact; mitigating
controls (preventative and containment); net impact; risk
appetite; improvement actions; and risk owner.
Identified risks
14 principal risks mapped from a ‘Risk Library’ of 19
overarching risks.
HOW WE MONITOR
Board of Directors (pages 90 to 91)
Responsible for providing oversight of the Group’s control and risk management systems, reviewing key risks and mitigating controls
periodically. Approves the Group’s risk appetite annually and approves the Group’s going concern and viability statements.
Audit Committee (pages 101 to 106)
•
Reviews the effectiveness of the Group’s internal financial
and IT-related controls;
•
Reviews the internal audit assurance programme; and
•
Reviews and recommends for approval by the Board the
Group’s going concern and viability statements.
Supported by the Group’s Internal Audit function.
Sustainability and Risk Committee (pages 118 to 119)
•
Supports the implementation and progression of the
Group’s RMF;
•
Monitors the adequacy of containment and mitigating
controls, and progression of mitigation of risks;
•
Undertakes in-depth analysis of specific risks and considers
existing and potential new controls;
•
Conducts detailed reviews of key non-financial risks not
reviewed within the Audit Committee; and
•
Reviews HSE, technical and reserves matters.
Business leadership teams
• Regularly reviews operating
performance against stretching
targets and agreed KPIs; and
•
Regularly reviews asset risk registers
and considers the results of assurance
audits over operational controls.
Executive Committee
• Frequently reviews Group
performance, including financial,
operating and HSE performance; and
•
Periodically reviews the Enterprise Risk
Register and RMF performance report.
HSEA Directorate
•
Regularly reviews the Group’s HSE
performance against stretching
targets, agreed KPIs and industry
benchmarks; and
•
Regularly reviews the HSE risk register
and considers the results of assurance
audits over HSE controls.
Near-term and emerging risks
As outlined previously, the Group’s RMF is embedded at all levels of
the organisation with asset risk registers, regional and functional
risk registers and ultimately an enterprise-level ‘Risk Library’.
This integration enables the Group to identify quickly, escalate
and appropriately manage emerging risks, and how these
ultimately impact on the enterprise-level risk and their associated
‘Risk Bowties’. In turn, this ensures that the preventative and
containment controls in place for a given risk are reviewed and
remain robust based upon the identified risk profile. It also drives
the required prioritisation of in-depth reviews to be undertaken by
the Sustainability and Risk Committee, which are now integrated
into the Group’s internal audit programme for review. During the
year, six Risk Bowties were reviewed, ensuring that all 19 of the
Group’s identified risks have been reviewed within the targeted
three-year cycle.
ONGOING GEOPOLITICAL SITUATION
The Group has continued to assess its commercial and IT security
arrangements and does not consider it has a material adverse
exposure to the geopolitical situation with respect to the conflicts
in Western Europe or the Middle East, although recognises that
the situations have caused oil price volatility. The Group continues
to monitor its position to ensure it remains compliant with any
sanctions in place.
Climate change risks
While not considered an emerging risk, given the focus on
climate-related risks for energy companies, EnQuest has provided
further detail below on its assessment of this risk within the Group’s
Risk Library. Additional information can be found in the Group’s
Task Force on Climate-related Financial Disclosures, starting
on page 74.
CLIMATE CHANGE
RISK
The Group recognises that climate change concerns and related
regulatory developments could impact a number of the Group’s
principal risks, such as oil and gas price, financial, reputational
and fiscal risk and government take, which are disclosed later
in this report.
APPETITE
EnQuest recognises that the oil and gas industry, alongside
other key stakeholders such as governments, regulators and
consumers, must all play a part in reducing the impact of
carbon-related emissions on climate change, and is committed
to contributing positively towards the drive to net zero through the
energy transition through reducing Scope 1 and Scope 2 emissions
from existing operations. A decarbonisation strategy is being
pursued through EnQuest’s wholly owned subsidiary, Veri Energy,
which was established to drive decarbonisation and renewable
energy business opportunities.
The Group’s risk appetite for climate change risk is reported
against the Group’s impacted principal risks, while a discrete
disclosure against the Task Force on Climate-related Financial
Disclosures can be found on pages 74 to 83.
MITIGATION
Mitigations against the Group’s principal risks potentially
impacted by climate change are reported later in this report.
The Group has an emissions management strategy and is
committed to a 10% reduction in Scope 1 and 2 emissions over
three years against a rolling year-end baseline. These targets are
directly linked to organisation-wide remuneration via the Group
Performance Share Plan. The first three-year period of emission
reduction targets covered the 2023 out-turn versus a 2020
baseline, and in this period the Group achieved a reduction of 23%
through improvements in operational performance, minimising
flaring and venting where possible, and the application of
appropriate and economic improvement initiatives.
For 2024, the rolling emission reduction strategy shifted to a new
baseline of verified 2021 emissions and, when measured against
this, the Group’s year-end 2024 emissions achieved an 8.2%
reduction against a year-end 2021 baseline, falling short of the 10%
emission reduction target. Exceptional decarbonisation efforts
in 2021 reduced baseline emissions by 16% compared to 2020, far
surpassing the targeted 3% year-on-year reduction.
Looking ahead, EnQuest has initiated significant decarbonisation
workstreams across its existing portfolio, including a Flare Gas
Recovery Project at Magnus, the New Stabilisation Facility and
long-term power solution at the Sullom Voe Terminal (‘SVT’), and
the potential for a Bressay gas line to power Kraken operations.
Following the establishment of Veri Energy during 2023, the
Group’s business model incorporates a focus on repurposing
existing infrastructure to support its renewable energy and
decarbonisation ambitions, centred around SVT.
EnQuest has reported on all of the greenhouse gas emission
sources within its operational control required under the
Companies Act 2006 (Strategic Report and Directors’ Reports)
Regulations 2013 and The Companies (Directors’ Report) and
Limited Liability Partnerships (Energy and Carbon Report)
Regulations 2018 (see pages 122 to 124 for more information).
The Group’s focus on short-cycle investments drives an inherent
mitigation against the potential impact of ‘stranded assets’.
Key business risks
The Group’s principal risks (identified from the ‘Risk Library’) are
those which could prevent the business from executing its strategy
and creating value for shareholders or lead to a significant loss
of reputation. The Board has carried out a robust assessment of
the principal and emerging risks facing the Group at its February
meeting, including those that would threaten its business
model, future performance, solvency or liquidity. Further to this
assessment, the Board has committed to reviewing its principal
risks and uncertainties during 2025 as part of its preparation for
reporting against the 2024 changes to provision 29 of the Code.
Cognisant of the Group’s purpose and strategy, the Board
is satisfied that the Group’s risk management system works
effectively in assessing and managing the Group’s risk appetite
and has supported a robust assessment by the Directors of the
principal risks facing the Group.
Set out on the following pages are:
•
The principal risks and mitigations;
•
An estimate of the potential impact and likelihood of occurrence
after the mitigation actions, along with how these have
changed in the past year and which of the Group’s KPIs could be
impacted by this risk (see page 5 for an explanation of the KPI
symbols); and
•
An articulation of the Group’s risk appetite for each of these
principal risks.
Among these, the key risks the Group currently faces are materially
lower oil prices for an extended period (see ‘Oil and gas prices’ risk
on page 59), and/or a materially lower than expected production
performance for a prolonged period (see ‘Production’ risk on page
60 and ‘Reserves estimation and replacement’ on page 65), which
could reduce the Group’s cash generation, which may in turn
impact the Company’s ability to comply with the requirements
of its debt facilities and/or execute growth opportunities.
Strategic Report
Corporate Governance
Financial Statements
56—57
EnQuest PLC Annual Report and Accounts 2024
Environmental, Social and Governance
continued
Governance
Potential impact
Medium (2023: Medium)
Likelihood
Medium (2023: Medium)
Change from last year
EnQuest respects the hazards associated with oil and gas
development and production in harsh environments and
has applied continued focus to the safety and wellbeing
of its people and assets. As a result, the potential impact
and likelihood remains in line with 2023. Through our HSE
processes, there is continuous focus on the management
of the barriers that prevent hazards occurring. The Group
has a strong, open and transparent reporting culture and
monitors both leading and lagging indicators and incurs
substantial costs in complying with HSE requirements.
The Group’s overall record on HSE has been good
and is achieved by working closely and openly with
contractors, verifiers and regulators to identify potential
improvements through an active assurance process and
implement plans to close any gaps in a timely manner.
Risk appetite
Low (2023: Low)
Link to strategy
1
2
3
4
Read more in Our Strategy
see Page 18
Related KPIs
A
B
C
D
E
F
G
H
Read more in Highlights
see Page 4
Health, Safety and
Environment (‘HSE’)
RISK
Oil and gas development, production and exploration activities
are by their very nature complex, with HSE risks covering many
areas, including major accident hazards, personal health and
safety, compliance with regulatory requirements, asset integrity
issues and potential environmental impacts, including those
associated with climate change.
APPETITE
The Group’s principal aim is SAFE Results with no harm to people
and respect for the environment. Should operational results and
safety ever come into conflict, employees have a responsibility
to choose safety over operational results. Every employee is
empowered to stop operations for safety-related reasons.
The Group’s desire is to maintain upper quartile HSE performance
measured against suitable industry metrics.
In 2024, EnQuest’s Lost Time Incident frequency rate
1
(‘LTIF’) of 1.55
and two hydrocarbon releases, reported on page 49, challenged
this objective. The lost time injuries were all associated with routine
repetitive tasks. The root causes have been assessed and the
Group is working closely with the contractors involved to ensure
that everyone is aligned with EnQuest’s safety culture, trained
on equipment and procedures and empowered to stop a task
should a safer method be identified. The hydrocarbon releases
did not have common root causes and occurred at two different
locations. All events were subject to thorough investigation and no
systemic failure was identified within EnQuest systems.
All of the injurious events in 2024 were associated with
external contractors, reflecting the high level of project and
decommissioning activities that rely on these services. Regardless,
the Group takes its responsibility seriously and has provided
additional resources to support contractors to ensure that
EnQuest’s fundamental aim of ensuring no harm to people
and respect for the environment is given the highest priority.
MITIGATION
The Group’s HSE Policy is fully integrated across its operated sites
and this enables a consistent focus on HSE. There is a strong
assurance programme in place to ensure that the Group complies
with its policy and principles and regulatory commitments.
The Group maintains, in conjunction with its core contractors,
a comprehensive programme of assurance activities and has
undertaken a series of in-depth reviews into the Risk Bowties
that have demonstrated the robustness of the management
process and identified opportunities for improvement which
are implemented on a prioritised risk basis. The Group-aligned
HSE Continuous Improvement Plan promotes a culture of
accountability and performance in relation to HSE matters. The
purpose of this plan is to ensure that everyone understands what
is expected of them by having realistic standards, governance,
and capabilities to add value and support the business. HSE
performance is discussed at each Board meeting and the
mitigation of HSE risk continues to be a core responsibility of
the Sustainability and Risk Committee. During 2024, the Group
continued to focus on the control of major accident hazards
and SAFE Behaviours.
In addition, the Group has positive and transparent relationships
with the UK Health and Safety Executive and Department for
Energy Security and Net Zero, and the Malaysian regulator,
PETRONAS Malaysia Petroleum Management.
Potential impact
High (2023: High)
Likelihood
High (2023: High)
Change from last year
The potential impact and likelihood remain high, reflecting
the uncertain economic outlook, including possible
impacts from a global recession, geopolitical tensions
and associated sanctions, and the potential acceleration
of ‘peak oil’ demand.
The Group recognises that climate change concerns
and related regulatory developments are likely to reduce
demand for hydrocarbons over time. This may be mitigated
by correlated constraints on the development of new supply.
Further, oil and gas will remain an important part of the
energy mix, especially in developing regions.
Risk appetite
Medium (2023: Medium)
Link to strategy
1
2
3
4
Read more in Our Strategy
see Page 18
Related KPIs
B
D
E
F
G
Read more in Highlights
see Page 4
Oil and Gas Prices
RISK
A material decline in oil and gas prices adversely affects the
Group’s operations and financial condition as the Group’s revenue
depends substantially on oil prices.
APPETITE
The Group recognises that considerable exposure to this risk is
inherent to its business but is committed to protecting cash flows
in line with the terms of its reserve based lending (‘RBL’) facility.
MITIGATION
This risk is being mitigated by a number of measures.
As an operator of mature producing assets with limited appetite
for exploration, the Group has limited exposure to investments
which do not deliver near-term returns and is therefore in a
position to adapt and calibrate its exposure to new investments
according to developments in relevant markets.
The Group monitors oil price sensitivity relative to its capital
commitments and its assessment of the funds required to
support investment in the development of its resources. The
Group will therefore regularly review and implement suitable
programmes to hedge against the possible negative impact
of changes in oil prices within the terms of its established policy
(see page 174) and the terms of the Group’s RBL facility, which
requires hedging of EnQuest’s entitlement sales volumes (see
page 174). To mitigate oil price volatility, the Directors have hedged
a total of 3.1 MMbbls from 1st April 2025 for the next 12 months
with an average floor price of $69.6/bbl and a further 1.3 MMbbls
in the subsequent 12 month period with an average floor price
of $68.3/bbl, in each case predominantly utilising swaps. The
Directors, in line with Group policy and the terms of its RBL facility,
will continue to pursue hedging at the appropriate time and price.
The Group has an established in-house trading and marketing
function to enable it to enhance its ability to mitigate the exposure
to volatility in oil prices.
Further, the Group’s focus on production efficiency supports
mitigation against a low oil price environment.
1
Lost Time Incident frequency represents the number of incidents per
million exposure hours worked (based on 12 hours for offshore and
eight hours for onshore)
Strategic Report
Corporate Governance
Financial Statements
58—59
EnQuest PLC Annual Report and Accounts 2024
Environmental, Social and Governance
continued
Governance
Potential impact
High (2023: High)
Likelihood
Medium (2023: Medium)
Change from last year
There has been no material change in the potential impact
or likelihood. The Group revised its 2024 production guidance
to slightly below its original guidance for the year and
continues to focus on key maintenance activities during
planned shutdowns and procuring a stock of critical spares
to support facility uptime.
Risk appetite
Low (2023: Low)
Link to strategy
1
2
3
4
Read more in Our Strategy
see Page 18
Related KPIs
B
C
D
E
F
G
H
Read more in Highlights
see Page 4
Production
RISK
The Group’s production is critical to its success and is subject
to a variety of risks, including subsurface uncertainties,
operating in a mature field environment, potential for significant
unexpected shutdowns, and unplanned expenditure (particularly
where remediation may be dependent on suitable weather
conditions offshore).
Lower than expected reservoir performance or insufficient addition
of new resources may have a material impact on the Group’s
future growth.
Longer-term production is threatened if low oil prices or prolonged
field shutdowns and/or underperformance requiring high-cost
remediation bring forward decommissioning timelines.
APPETITE
Since production efficiency and meeting production targets are
core to EnQuest’s business, the Group seeks to maintain a high
degree of operational control over producing assets in its portfolio.
EnQuest has a very low tolerance for operational risks to its
production (or the support systems that underpin production).
MITIGATION
The Group’s programme of asset integrity and assurance
activities provide leading indicators of significant potential issues,
which may result in unplanned shutdowns, or which may in
other respects have the potential to undermine asset availability
and uptime. The Group continually assesses the condition of
its assets and operates extensive maintenance and inspection
programmes designed to minimise the risk of unplanned
shutdowns and expenditure.
The Group monitors both leading and lagging KPIs in relation to
its maintenance activities and liaises closely with its downstream
operators to minimise pipeline and terminal production impacts.
Production efficiency is continually monitored, with losses
being identified and remedial and improvement opportunities
undertaken as required. A continual, rigorous cost focus is
also maintained.
Life of asset production profiles are audited by independent
reserves auditors. The Group also undertakes regular internal
reviews. The Group’s forecasts of production are risked to reflect
appropriate production uncertainties.
The Sullom Voe Terminal has a good safety record, and its safety
and operational performance levels are regularly monitored and
challenged by the Group and other terminal owners and users to
ensure that operational integrity is maintained. Further, EnQuest
is committed to transforming the Sullom Voe Terminal to ensure
it remains competitive and well placed to maximise its useful
economic life and support the future of the North Sea.
The Group actively continues to explore the potential of alternative
transport options and developing hubs that may provide both risk
mitigation and cost savings.
The Group also continues to consider new opportunities for
expanding production and has recently added diversified growth
to its production base through an expansion of the Seligi gas
agreement and the Group’s agreement to acquire the Block 12W
production assets in Vietnam.
Potential impact
High (2023: High)
Likelihood
Medium (2023: High)
Change from last year
There is no change to the potential impact but the
likelihood has reduced. Against a backdrop of improved
fiscal certainty and relatively stable oil price environment,
the Group has significantly reduced its debt and
successfully refinanced certain of its debt facilities in
2024 . This maximises available financial capacity, with
funds available under the Group’s RBL further increased
in January 2025 following the annual redetermination
process (see the going concern disclosure on page 37).
However, factors such as climate change, other ESG
concerns, oil price volatility and geopolitical risks continue
to impact investors’ and insurers’ acceptable levels of oil
and gas sector exposure. In addition, the cost of emissions
trading allowances may trend upward along with the
potential for insurers to be reluctant to provide surety bonds
for decommissioning, thereby requiring the Group to fund
decommissioning security through its balance sheet.
Risk appetite
Medium (2023: Medium)
Link to strategy
1
2
3
4
Read more in Our Strategy
see Page 18
Related KPIs
B
C
D
E
F
G
H
Read more in Highlights
see Page 4
Financial
RISK
Inability to fund financial commitments or maintain adequate
cash flow and liquidity and/or reduce costs.
Significant reductions in the oil price, production and/or the
funds available under the Group’s RBL facility would likely have
a material impact on the Group’s ability to repay or refinance
its existing credit facilities and invest in its asset base. Prolonged
low oil prices, cost increases, including those related to an
environmental incident, and production delays or outages, could
threaten the Group’s liquidity and/or ability to comply with relevant
covenants. Further information is contained in the Financial review,
particularly within the going concern and viability disclosures on
pages 34 to 38.
APPETITE
The Group remains focused on further reducing its leverage
levels, targeting 0.5x EnQuest net debt to EBITDA ratio on a mid-
cycle oil price basis, maintaining liquidity, controlling costs and
complying with its obligations to finance providers while delivering
shareholder value.
MITIGATION
Balance sheet management remains a strategic priority. During
2024, the Group’s free cash flow generation and the repayment of
a vendor loan provided to RockRose as part of the 2023 Bressay
transaction drove a $95.1 million reduction in EnQuest net debt to
$385.8 million at 31 December 2024, with the EnQuest net debt to
adjusted EBITDA ratio maintained at 0.6x. During the year, EnQuest
also further optimised its capital structure through the successful
high yield bond tap and repayment in full of both the RBL and Term
Loan facilities. Repayment of the term loan, which had second lien
security, added additional access to the RBL while the year-end
2024 redetermination resulted in an increase to the available
funds under the RBL. At 26 March 2025, the Group’s RBL facility
was undrawn following repayments totalling $140.0 million in the
first quarter of 2024, ensuring the Group remains ahead of the
amended facility amortisation schedule and within its borrowing
base limits.
Ongoing compliance with the financial covenants under the
Group’s reserve based lending facility is actively monitored
and reviewed. EnQuest generates operating cash inflow
from the Group’s producing assets and reviews its cash flow
requirements on an ongoing basis to ensure it has adequate
resources for its needs.
Where costs are incurred by external service providers, the Group
actively challenges operating costs. The Group also maintains a
framework of internal controls.
These steps, together with other mitigating actions available to
management, are expected to provide the Group with sufficient
liquidity to meet its obligations as they fall due.
Strategic Report
Corporate Governance
Financial Statements
60—61
EnQuest PLC Annual Report and Accounts 2024
Environmental, Social and Governance
continued
Governance
Potential impact
High (2023: High)
Likelihood
High (2023: High)
Change from last year
The potential impact and likelihood remain unchanged,
with the confirmed changes of the UK EPL and removal of
investment allowances likely to impact industry participants’
investment views of the UK North Sea, a number of
competitors assessing the acquisition of available oil
and gas assets and the rising potential for consolidation.
Operating in a competitive industry may result in higher than
anticipated prices for the acquisition of assets and licences.
Risk appetite
Medium (2023: Medium)
Link to strategy
1
2
3
4
Read more in Our Strategy
see Page 18
Related KPIs
B
C
D
E
F
G
H
Read more in Highlights
see Page 4
Competition
RISK
The Group operates in a competitive environment across
many areas, including the acquisition of oil and gas assets, the
marketing of oil and gas, the procurement of oil and gas services,
including drilling rigs for development and decommissioning
projects, and access to experienced and capable personnel.
APPETITE
The Group operates in a mature industry with well-established
competitors and aims to be the leading operator in the sector.
MITIGATION
The Group has strong technical, commercial and
business development capabilities to ensure that it is well
positioned to identify and execute potential acquisition
opportunities, utilising innovative structures, which may
include the Group’s competitive advantage of approximately
$2.1 billion of UK tax losses, as may be appropriate.
The Group maintains good relations with oil and gas service
providers and constantly keeps the market under review.
EnQuest has a dedicated marketing and trading group
of experienced professionals responsible for maintaining
relationships across relevant energy markets, thereby ensuring
the Group achieves the highest possible value for its production.
Human Resources risk is covered specifically on page 71.
Potential impact
Medium (2023: Medium)
Likelihood
High (2023: High)
Change from last year
There is no change to the impact or likelihood of this risk.
Risk appetite
Low (2023: Low)
Link to strategy
1
2
3
4
Read more in Our Strategy
see Page 18
Related KPIs
A
B
Read more in Highlights
see Page 4
IT Security and
Resilience
RISK
The Group is exposed to risks arising from interruption to, or failure
of, IT infrastructure. The risks of disruption to normal operations
range from loss in functionality of generic systems (such as email
and internet access) to the compromising of more sophisticated
systems that support the Group’s operational activities. These risks
could result from malicious interventions such as cyber-attacks or
phishing exercises.
APPETITE
The Group endeavours to provide a secure IT environment that is
able to resist and withstand any attacks or unintentional disruption
that may compromise sensitive data, impact operations, or
destabilise financial systems; it has a very low appetite for this risk.
MITIGATION
The Group has established IT capabilities and endeavours to be in
a position to defend its systems against disruption or attack.
A number of tools to strengthen employee awareness continue to
be utilised, including videos, presentations, Viva Engage posts and
poster campaigns.
The Audit Committee has reviewed the Group’s cyber-security
measures and its IT resourcing model, noting the Group has
a dedicated cyber-security manager. Work on assessing the
cyber-security environment (including internal audit reviews) and
implementing improvements as necessary has continued during
2024. A number of actions were undertaken to further strengthen
our controls including the following:
•
Implementation of IT Governance, Risk and Compliance
framework to address UK Corporate Governance Code 2024
•
Security strengthened through actions to improve privileged
access and password changes to finance system
•
Insider threat penetration testing carried out, alongside a
ransomware threat and attack desktop exercise facilitated by
a third party cyber security company
•
Air gapped (segregated) back-ups, meaning they are
separately available with minimal operational impact should
the main data be hit by ransomware. An added feature of this
initiative is continuous scanning of all EnQuest’s back-ups for
the presence of ransomware
•
Established a Security Operations Centre for 24/7 live monitoring
of Group’s cyber environment, improving cyber threat detection
and intervention capability
•
Upgraded the Group’s existing brand protection service to
include ‘Identity Protection’ module. This is utilised to identify
EnQuest IT users’ leaked credentials
•
Initiated a review of the Group’s supply chain/vendor cyber
security risk management environment, with 31 vendors
assessed to date
•
Established a Group-wide vulnerability management process,
enabling the continuous review and identification of high risk
vulnerabilities and planned remediation
Strategic Report
Corporate Governance
Financial Statements
62—63
EnQuest PLC Annual Report and Accounts 2024
Environmental, Social and Governance
continued
Governance
Potential impact
High (2023: High)
Likelihood
High (2023: High)
Change from last year
There has been no material change in the potential impact
or likelihood although the Group is expected to increase its
exposure to gas, other geographies and other sources of
income over time.
Risk appetite
Medium (2023: Medium)
Link to strategy
1
2
3
4
Read more in Our Strategy
see Page 18
Related KPIs
B
C
D
Read more in Highlights
see Page 4
Portfolio
Concentration
RISK
The Group’s existing assets are primarily concentrated in the
UK North Sea around a limited number of infrastructure hubs
and existing production (principally oil) is from mature fields.
This amplifies exposure to key infrastructure (including ageing
pipelines and terminals), political/fiscal changes and oil
price movements.
APPETITE
The Group is pursuing an international growth and diversification
strategy that includes an increased gas component with the
extent of portfolio concentration moderated by existing production
generated in Malaysia and further business development
activities in South East Asia, including the expansion of the
Seligi Gas Agreement in Malaysia and agreement to acquire
hydrocarbon assets in Vietnam.
MITIGATION
This risk is mitigated in part through acquisitions. For all
acquisitions, the Group uses a number of business development
resources, both in the UK and internationally, to liaise with vendors/
governments and evaluate and transact. This includes performing
extensive due diligence (using in-house and external personnel)
and actively involving executive management and the Board in
reviewing commercial, technical and other business risks together
with mitigation measures.
The Group also constantly keeps its portfolio under rigorous review
and, accordingly, actively considers the potential for making
disposals, executing development projects, expanding hubs and
investing in gas assets, export capability or renewable energy and
decarbonisation projects where such opportunities are consistent
with the Group’s focus on enhancing net revenues, generating
cash flow and strengthening the balance sheet.
The Group has made good progress with its decarbonisation
strategy, identifying the three key focus areas of carbon storage,
electrification/renewable power and production of e-fuels
through its subsidiary company, Veri Energy, which could provide
diversified revenue opportunities in the long term.
Potential impact
High (2023: High)
Likelihood
Medium (2023: Medium)
Change from last year
There is no change to the potential impact or likelihood
of this risk. There have been two new secured projects
in Malaysia, Seligi Phase 1b and the DEWA block. It is also
expected that the Group will complete the acquisition of
Harbour Energy’s asset in Vietnam in 2025 which will further
improve the Reserves Replacement Ratio.
Other aspects still remain, such as possible low oil prices
and higher development cost and declining asset
performance which accelerate cessation of production
and can potentially affect development of contingent and
prospective resources and/or reserves certifications.
Given EnQuest’s limited appetite for exploration, the Labour
Government’s manifesto promise not to issue new oil and
gas exploration licences in the UK is not expected to have a
material impact on the Group.
Risk appetite
Medium (2023: Medium)
Link to strategy
1
2
3
4
Read more in Our Strategy
see Page 18
Related KPIs
A
B
D
E
F
G
H
Read more in Highlights
see Page 4
Reserves Estimation
and Replacement
RISK
Failure to develop contingent and prospective resources or secure
new licences and/or asset acquisitions and realise their expected
value.
APPETITE
Reserves replacement is an element of the sustainability of the
Group and its ability to grow. The Group has some tolerance for
the assumption of risk in relation to the key activities required to
deliver reserves growth, such as drilling and acquisitions.
MITIGATION
The Group puts a strong emphasis on subsurface analysis and
employs industry-leading professionals. The Group continues
to recruit in a variety of technical positions which enables it to
manage existing assets and evaluate the acquisition of new
assets and licences.
All analysis is subject to internal peer-review process and, where
appropriate, external review and relevant stage gate processes. All
reserves are currently externally reviewed by a Competent Person.
The Group has material reserves and resources at Magnus,
Kraken and PM8/Seligi. Some of the resources volumes can be
accessed through low-cost workovers, drilling and tie-backs
to existing infrastructure.
The Group continues actively to consider potential opportunities
to acquire new production resources and development projects
that meet its investment criteria. In 2024, the Group successfully
secured the Seligi Phase 1b project (13.7 MMboe net WI reserves)
with anticipated first gas in 2026. Additionally, the Group was
awarded a Production Sharing Contract for a new discovered
resource opportunity block (DEWA) in Malaysia, which has the
potential to be developed in the next few years with estimated
resources of 17.7 MMboe net WI.
The Group’s acquisition in Vietnam is expected to complete in the
second quarter of 2025, adding 7.5 MMboe of net 2P reserves.
Strategic Report
Corporate Governance
Financial Statements
64—65
EnQuest PLC Annual Report and Accounts 2024
Environmental, Social and Governance
continued
Governance
Potential impact
Medium (2023: Medium)
Likelihood
Medium (2023: Low)
Change from last year
The potential impact remains unchanged. As the Group
focuses on managing its balance sheet, its current
appetite is to pursue short-cycle development projects
and to manage its decommissioning and Infrastructure
and New Energy projects over an extended period
of time. However, the volume of projects across the
portfolio in the execution phase, including the material
right-sizing projects ongoing at SVT, increase the
likelihood of this risk impacting Group operations.
Risk appetite
Medium (2023: Medium)
Link to strategy
1
2
3
4
Read more in Our Strategy
see Page 18
Related KPIs
A
B
D
E
F
G
H
Read more in Highlights
see Page 4
Project Execution
and Delivery
RISK
The Group’s success will be partially dependent upon the
successful execution and delivery of potential future projects that
are undertaken, including infill development, tie-back and facility
modifications, decommissioning, decarbonisation and new
energy opportunities in the UK.
APPETITE
The efficient delivery of projects has been a key feature of the
Group’s long-term strategy. The Group’s appetite is to identify and
implement short-cycle development projects such as infill drilling,
near-field tie-backs and facility modifications to enable emission
reduction initiatives in its Upstream business, industrialise
decommissioning projects to ensure cost efficiency and unlock
new energy and decarbonisation opportunities through innovative
commercial structures and redevelopment of SVT. While the
Group necessarily assumes significant risk when it sanctions a
new project (for example, by incurring costs against oil price or
cost of emission allowances assumptions), or a decommissioning
programme, it requires that risks to efficient project delivery
are minimised.
MITIGATION
The Group has teams which are responsible for the planning
and execution of new projects with a dedicated team for each
project. The Group has detailed controls, systems and monitoring
processes in place, notably the Capital Projects Delivery
Process and the Decommissioning Projects Delivery Process,
to ensure that deadlines are met, costs are controlled and that
design concepts and Field Development/Decommissioning
Plans are adhered to and implemented. These are modified
when circumstances require and only through a controlled
management of change process and with the necessary internal
and external authorisation and communication. The Group’s UK
decommissioning programmes are managed by a dedicated
directorate with an experienced team who are driven to
deliver projects safely at the lowest possible cost and
associated emissions.
Within Veri Energy, the Group is working with experienced
third-party organisations and aims to utilise innovative
commercial structures to develop new energy and
decarbonisation opportunities.
The Group also engages third-party assurance experts to review,
challenge and, where appropriate, make recommendations to
improve the processes for project management, cost control and
governance of major projects. EnQuest ensures that responsibility
for delivering time-critical supplier obligations and lead times are
fully understood, acknowledged and proactively managed by the
most senior levels within supplier organisations.
Potential impact
High (2023: High)
Likelihood
Medium (2023: Medium)
Change from last year
There has been no material change in the potential
impact or likelihood given the enactment of the Labour
Government’s expected changes to the EPL.
Risk appetite
Medium (2023: Medium)
Link to strategy
1
2
3
4
Read more in Our Strategy
see Page 18
Related KPIs
D
E
F
Read more in Highlights
see Page 4
Fiscal Risk and
Government Take
RISK
Unanticipated changes in the regulatory or fiscal environment can
affect the Group’s ability to deliver its strategy/business plan and
potentially impact revenue and future developments.
APPETITE
Given the Group’s strategy to grow in the UK and internationally,
including in its nascent new energy business, it must be tolerant
of certain inherent exposure.
MITIGATION
It is difficult for the Group to predict the timing or severity of
such changes. However, through Offshore Energies UK and other
industry associations, the Group engages with government
and other appropriate organisations in order to keep abreast
of expected and potential changes. The Group also takes an
active role in making appropriate representations as it has done
throughout the implementation period of the EPL.
All business development or investment activities recognise
potential tax implications and the Group maintains relevant
internal tax expertise.
At an operational level, the Group has procedures to identify
impending changes in relevant regulations to ensure
legislative compliance.
Strategic Report
Corporate Governance
Financial Statements
66—67
EnQuest PLC Annual Report and Accounts 2024
Environmental, Social and Governance
continued
Governance
Potential impact
Medium (2023: Medium)
Likelihood
Medium (2023: Medium)
Change from last year
There has been no material change in the impact or
likelihood. The Group’s new country entry into Vietnam is
fully staffed, thus ensuring a continuation of experienced,
capable asset support.
Risk appetite
Medium (2023: Medium)
Link to strategy
1
2
3
4
Read more in Our Strategy
see Page 18
Related KPIs
A
B
D
E
F
G
H
Read more in Highlights
see Page 4
International
Business
RISK
While the majority of the Group’s activities and assets are in the
UK, the international business is still material and, with recent
acquisitions, is growing. The Group’s international business is
subject to the same risks as the UK business (for example, HSEA,
production and project execution). However, there are additional
risks that the Group faces, including security of staff and assets,
political, foreign exchange and currency control, taxation, legal
and regulatory, cultural and language barriers and corruption.
APPETITE
In light of its long-term growth strategy, the Group seeks to
expand and diversify its production (geographically and in
terms of quantum and product mix); as such, it is tolerant of
assuming certain commercial risks which may accompany
the opportunities it pursues.
However, such tolerance does not impair the Group’s commitment
to comply with legislative and regulatory requirements in the
jurisdictions in which it operates. Opportunities should enhance
net revenues and facilitate strengthening of the balance sheet.
MITIGATION
Prior to entering a new country, EnQuest evaluates the host country
to assess whether there is an adequate and established legal
and political framework in place to protect and safeguard first its
expatriate and local staff and, second, any investment within the
country in question.
When evaluating international business risks, executive
management conducts a review of commercial, technical, ethical
and other business risks, together with mitigation and considers
how risks can be managed by the business on an ongoing basis.
EnQuest looks to employ suitably qualified host country staff and
work with good quality local advisers to ensure it complies with
national legislation, business practices and cultural norms, while
at all times ensuring that staff, contractors and advisers comply
with EnQuest’s business principles, including those on financial
control, cost management, fraud and corruption.
Where appropriate, the risks may be mitigated by entering into a
joint venture with partners with local knowledge and experience.
After country entry, EnQuest maintains a dialogue with local
and regional government, particularly with those responsible
for oil, energy and fiscal matters, and may obtain support from
appropriate risk consultancies. When there is a significant change
in the risk to people or assets within a country, the Group takes
appropriate action to safeguard people and assets.
Potential impact
Medium (2023: Medium)
Likelihood
Medium (2023: Low)
Change from last year
There has been no material change in the potential impact
but the challenging UK fiscal environment increases the
likelihood of default for EnQuest’s joint venture partners.
Risk appetite
Medium (2023: Medium)
Link to strategy
1
2
3
4
Read more in Our Strategy
see Page 18
Related KPIs
B
C
E
F
G
Read more in Highlights
see Page 4
Joint Venture
Partners
RISK
Failure by joint venture parties to fund their obligations.
Dependence on other parties where the Group is non-operator.
APPETITE
The Group requires partners of high integrity. It recognises that
it must accept a degree of exposure to the creditworthiness of
partners and evaluates this aspect carefully as part of every
investment decision.
MITIGATION
The Group operates regular cash call and billing arrangements
with its co-venturers to mitigate the Group’s credit exposure at
any one point in time and keeps in regular dialogue with each of
these parties to ensure payment. Risk of default is mitigated by
joint operating agreements allowing the Group to take over any
defaulting party’s share in an operated asset and rigorous and
continual assessment of the financial situation of partners.
The Group generally prefers to be the operator and maintains
regular dialogue with its partners to ensure alignment of interests
and to maximise the value of joint venture assets, taking account
of the impact of any wider developments.
Strategic Report
Corporate Governance
Financial Statements
68—69
EnQuest PLC Annual Report and Accounts 2024
Environmental, Social and Governance
continued
Governance
Potential impact
High (2023: High)
Likelihood
Low (2023: Low)
Change from last year
There has been no material change in the potential impact
or likelihood.
Risk appetite
Low (2023: Low)
Link to strategy
1
2
3
4
Read more in Our Strategy
see Page 18
Related KPIs
A
B
D
E
F
G
H
Read more in Highlights
see Page 4
Reputation
RISK
The reputational and commercial exposures to a major offshore
incident, including those related to an environmental incident,
or non-compliance with applicable law and regulation and/
or related climate change disclosures, are significant. Similarly,
it is increasingly important that EnQuest clearly articulates its
approach to and benchmarks its performance against relevant
and material ESG factors.
APPETITE
The Group has no tolerance for conduct which may compromise
its reputation for integrity and competence.
MITIGATION
All activities are conducted in accordance with
approved policies, standards and procedures. Interface
agreements are agreed with all core contractors, ensuring
that they comply with equivalent standards.
The Group requires adherence to its Code of Conduct and runs
ethics and compliance programmes to provide assurance on
conformity with relevant legal and ethical requirements. In 2024,
the Group launched a Handrails website – a standalone website
with various ethics and compliance policies, complemented by
external training within the website.
The Group undertakes regular audit activities to provide
assurance on compliance with established policies, standards
and procedures.
All EnQuest personnel and contractors are required to undertake
an annual anti-bribery and corruption course, an anti-facilitation
of tax evasion course and a data privacy course.
All personnel are authorised to shut down operations for safety-
related reasons.
The Group has a clear ESG strategy, with a focus on health and
safety (including asset integrity), emission reductions, looking
after its employees, positively impacting the communities in
which the Group operates, upholding a robust Risk Management
Framework and acting with high standards of integrity. The Group
is successfully implementing this strategy.
Potential impact
Medium (2023: Medium)
Likelihood
Medium (2023: Medium)
Change from last year
There has been no material change in the potential impact
or likelihood.
Risk appetite
Medium (2023: Medium)
Link to strategy
1
2
3
4
Read more in Our Strategy
see Page 18
Related KPIs
A
B
C
D
E
F
G
H
Read more in Highlights
see Page 4
Human Resources
RISK
The Group’s success continues to be dependent upon its ability
to attract and retain key personnel and develop organisational
capability to deliver strategic growth. Industrial action across the
sector, or the availability of competent people, could also impact
the operations of the Group.
APPETITE
As a lean organisation, the Group relies on motivated and high-
quality employees to achieve its targets and manage its risks.
The Group recognises that the benefits of a flexible and diverse
organisation require creativity and agility to protect against the
risk of skills shortages.
MITIGATION
The Group has established an able and competent employee
base to execute its principal activities. In addition, the Group seeks
to maintain good relationships with its employees and contractor
companies and regularly monitors the employment market to
provide remuneration packages, bonus plans and long-term
share-based incentive plans that incentivise performance and
long-term commitment from employees to the Group.
The Group recognises that its people are critical to its success and
is therefore continually evolving EnQuest’s end-to-end people
management processes, including recruitment and selection,
career development and performance management. This
ensures that EnQuest has the right person for each job and that
appropriate training, support and development opportunities are
provided, with feedback collated to drive continuous improvement
while delivering SAFE Results.
The culture of the Group is an area of ongoing focus and employee
feedback is frequently sought to understand employees’ views
on areas, including diversity and inclusion and wellbeing in order
to develop appropriate action plans. Although it was anticipated
that fewer young people may join the industry due to climate
change-related factors, 2024 saw a further rise in the number of
young professionals joining EnQuest, and we saw a 33% increase
in employees under the age of 24. EnQuest aims to attract and
sustain the best talent, recognising the value and importance
of diversity. The emphasis around improved diversity in the
Group’s management and leadership is a main focal point for the
Board; further details on these are set out on page 99. The Group
recognises that there is a gender pay gap within the organisation
but that there is no issue with equal pay for the same tasks.
The Group has reviewed the appropriate balance for its onshore
teams between site, office, and home working to promote strong
productivity and business performance facilitated by an engaged
workforce, adopting a hybrid approach. EnQuest has now moved
to a 4:1 office to work from home ratio in the UK to enhance
productivity and motivate staff. The Group will continue to monitor
such practices, adapting as necessary. The Group also maintains
market-competitive contracts with key suppliers to support the
execution of work where the necessary skills do not exist within
the Group’s employee base.
Executive and senior management retention, succession planning
and development remain important priorities for the Board. It is
a Board-level priority that executive and senior management
possess the appropriate mix of skills and experience to realise
the Group’s strategy.
Strategic Report
Corporate Governance
Financial Statements
70—71
EnQuest PLC Annual Report and Accounts 2024
72—73
Business conduct
EnQuest has a Code of Conduct which it requires all personnel
to be familiar with. The EnQuest Code of Conduct sets out
the behaviour which the organisation expects of its Directors,
managers and employees and of its suppliers, contractors,
agents and partners. We are committed to conducting ourselves
ethically, with integrity and to complying with all applicable legal
requirements; we routinely remind those who work with or for us
of our obligations in this respect.
Our employees and everyone we work with help to create and
support our reputation, which in turn underpins our ability to
succeed. This Code of Conduct addresses our requirements in a
number of areas, including the importance of health and safety,
compliance with applicable law, anti-corruption, anti-facilitation
of tax evasion, anti-slavery, anti-competition, sanctions, export
and import controls, addressing conflicts of interest, ensuring
equal opportunities, combatting bullying and harassment and
the protection of privacy.
The Group’s induction procedures cover the Code of Conduct,
and the Group runs both ad hoc and scheduled periodic training
for personnel to refresh their familiarity with relevant aspects of
the Code of Conduct and specific policies and procedures which
support it such as the Group’s anti-corruption programme. As part
of its continual improvement planning in the space of business
conduct, in 2024 we launched a ‘Handrails’ website which enhances
accessibility to materials and training on a broad range of ethics
and compliance topics relevant to personnel including on fraud,
money laundering, competition law and sanctions. The website is
also complemented by external training on the subject matter.
As part of the Group’s Risk Management Framework, the Board
is supplied annually with an ‘assurance map’ that provides
an insight into the status of the main sources of controls and
assurance in respect of the Group’s key risk areas (see pages 54
to 71 for further information on how the Group manages its key risk
areas). While this provides some formal assurance as to how the
Group reinforces its requirements in respect of business conduct,
the Board also recognises the importance of promoting the right
culture within the Group and this remains an area of focus for
the Group.
The Code of Conduct also includes details of the independent
reporting line through which any concerns related to the Group’s
practices, or any suspected breaches of the Group’s policies
and procedures, can be raised anonymously and encourages
personnel to report any concerns to the legal department.
Where concerns are raised (whether through the reporting line or
otherwise), the legal representative, reporting for this purpose to the
Chair of the Audit Committee, is required to look into the relevant
concern, investigate and take appropriate action. Concerns raised
in relation to potential conflicts of interest and safety practices, as
well as more routine interfaces with regulatory authorities, are also
reported to the Board and addressed appropriately.
The Code of Conduct includes a confirmation of EnQuest’s
commitments to adhere to applicable laws. The Group has zero
tolerance for practices that breach applicable laws and expects
the same of all with whom it has business dealings; for example,
in relation to procurement, by requiring suppliers to confirm their
commitment to various laws (including anti-slavery, tax and
employment) before being qualified to supply the Group.
The Group has also supplemented its procedures to provide
further assurance that it is able to identify and manage human
rights risks in its supply chain. EnQuest publishes its modern
slavery statement on its website at www.enquest.com, under
the Environmental, Social and Governance section, where further
detail on EnQuest’s corporate responsibility policies and activities,
including the area of business conduct, is also available.
We remain committed to
our Values, a non-negotiable
standard of ethics, acting with
integrity in all endeavours, and
compliance with the laws and
regulations in every jurisdiction
we operate.
Strategic Report
EnQuest PLC Annual Report and Accounts 2024
Financial Statements
Corporate Governance
Environmental, Social and Governance
continued
Governance
(b) Describe management’s role in assessing and managing climate-related risks and opportunities.
EnQuest’s Chief Executive Officer has ultimate responsibility for assessing and managing climate-related risks and opportunities and
is supported in this endeavour by the CEO of Veri Energy (a wholly owned subsidiary of EnQuest), the Group’s Chief Risk Officer and the
HSEA Director.
Management, through a combination of the Executive Committee, Operations Committee and the HSEA Directorate, regularly reviews
Company performance and the Group’s risk registers. The Chief Financial Officer (‘CFO’) is responsible for ensuring the Group also
recognises the impacts of climate-related risks and opportunities appropriately in its financial statements, including judgements and
estimates, such as future oil and emission trading certificate prices and the costs and benefits associated with emission reduction
projects, and other relevant disclosures. EnQuest’s Chief Risk Officer directly oversees climate-related risks as a component part of the
Group RMF, with support and input from the Director of HSE and Wells. The RMF is reviewed on an annual basis by the Board and Audit
Committee, alongside reviews of associated controls and actions. This annual review offers management and Directors an opportunity
to challenge the principal climate-related risks and opportunities, ensuring they are credible, fit-for-purpose and aligned to regulation,
with effective mitigations in place.
Emission reduction is a standing component of EnQuest’s departmental and corporate KPIs, therefore all employees benefit from
initiatives that deliver a reduction in the Group’s carbon footprint. Climate-related risk mitigation is embedded into EnQuest’s culture,
with climate impact a key strategic consideration across the business. As an example, screening of business development opportunities
is underpinned by resilience testing to ensure compatibility of all potential investments with the Group’s strategy to mitigate the cost of
carbon and reduce portfolio carbon intensity.
The Group also has an energy management system governance document setting out how it approaches the measurement and
reporting of emissions and how the Group will assess and select emission reduction opportunities, with a working group dedicated to
the identification and implementation of economically viable emission-saving opportunities across the Group’s portfolio of assets. This
working group reports to the Executive Committee regularly and the Sustainability and Risk Committee at each scheduled meeting.
The Group’s legal, commercial, company secretariat, investor relations and communications teams monitor the regulatory, legal,
capital markets and competitive/commercial environments, providing reports to management (and the Board) as required. The Group’s
sustainability function is responsible for preparing TCFD reporting, including scenario modelling to assess the impact of climate-related
risks on EnQuest’s portfolio. EnQuest’s operating, technical and environment teams support the development and implementation of
decarbonisation initiatives at an asset level. Such initiatives implemented during 2024 are detailed within the Group’s Emission Reduction
Action Plans (‘ERAPs’), with short-term decarbonisation opportunities included in an opportunity hopper.
The Group also has a documented energy management system governance process, which sets out the measurement and reporting of
emissions and how the Group will assess and select emission reduction opportunities, with a working group dedicated to the identification
and implementation of economically viable projects. This working group reports to the Executive Committee regularly, and at each
meeting of the Sustainability and Risk Committee.
EnQuest disclosure
Additional/related
information
Strategy
Disclose the actual and
potential impacts of
climate-related risks
and opportunities on
the organisation’s
businesses, strategy,
and financial planning
where such information
is material
EnQuest’s strategic vision is to be the partner of choice for responsible
management of existing energy assets, applying its core capabilities to create
value through the transition. Its business model covers the full energy transition
landscape: Upstream aims to responsibly optimise production to support today’s
energy needs; Midstream is right-sizing and decarbonising existing infrastructure
as a pathway for Veri Energy to leverage the repurposed site to deliver renewable
energy and decarbonisation opportunities; while Decommissioning aims to
manage end of field life and post-cessation of production operations to deliver
safe and efficient execution of decommissioning work programmes in a
responsible manner.
This integrated business model, which incorporates the Group’s plans for
transitioning to a lower-carbon economy, provides mitigation against each of the
potential climate-related transition risks noted below, which have the potential to
have substantive financial or strategic impact unless stated to be ‘not material’.
The Group has an investment committee that reviews investment decisions, with
additional support and review provided by the Sustainability and Risk Committee
if required.
The financial or strategic impact of a risk or opportunity is assessed and measured
based on the potential net present value (‘NPV’) impact of the particular risk. These
assessments are made through the Group’s annual planning and budgeting
process, as well as on an ad hoc basis when assessing specific risks or
opportunities that may arise. While all of the climate-related risks outlined in the
section below have been assessed, the Group is definitive in its view that, as an oil
and gas company, the fundamental risk to the business is that of oil and gas
commodity pricing.
See pages 5 to 15
(KPIs, Chairman and
CEO statements), 30
to 31 (Veri Energy
review), 34 to 38
(Financial review), 44
to 47 (Environmental),
54 to 71 (Risks) and
138 (Financial
statements)
The Group supports good governance and transparency in general, and specifically in relation to climate change. The Board recognises
the societal and investor focus on climate change, and the desire to understand potential impacts on the oil and gas industry through
meaningful disclosure, such as those recommended by the Task Force on Climate-related Financial Disclosures (‘TCFD’) and those
required by the Companies Act via Climate-related Financial Disclosures (‘CFD’). Listing Rule 6.6.6R (8) requires companies to include
climate-related financial disclosures consistent with the TCFD recommendations. EnQuest has complied fully with these requirements.
For 2024, EnQuest has enhanced its TCFD disclosure through reporting of material Scope 3 value chain emissions, undertaking a
materiality assessment to support the identification of risks and opportunities within Strategy (b), and disclosing quantified outcomes
when using the IEA’s transition scenario analysis to assess corporate resilience.
The Group continues to demonstrate good practices and standards for transparency consistent with TCFD recommendations. EnQuest
has completed the TCFD recommended disclosures in line with sector guidance, as well as the supplemental guidance for non-financial
groups, including the energy sector.
EnQuest acknowledges the developing regulatory and ESG reporting landscapes and expects to refer to IFRS S1 and IFRS S2 reporting
requirements for the 2025 reporting period.
EnQuest disclosure
Additional/related
information
Governance
Disclose the
organisation’s
governance around
climate-related risks
and opportunities
EnQuest’s purpose is to provide creative solutions through the energy transition.
As such, climate-related risks and opportunities are a core part of the
organisation’s considerations, from Board level to its operational and functional
teams, with emission reductions an important part of both management’s and
the wider organisation’s variable remuneration. During 2022, the Board and
Executive Committee approved the enhancement of the Group business model
to include a focus on repurposing existing infrastructure to support its renewable
energy and decarbonisation ambitions, including targeting carbon capture and
storage, electrification and green hydrogen production. This model has been
further enhanced during 2023 by the launch of Veri Energy, a wholly owned
subsidiary of EnQuest, to provide dedicated management of the Group’s
renewable energy and decarbonisation projects.
An organogram outlining the Group’s Risk Management Framework can be found
on page 56.
See pages
44 to 47
(Environmental), 54
to 71 (Risks), 84 to 87
(s172), 101 to 106
(Audit Committee
report), 107 to 117
(Directors’
Remuneration
Report), 118 to 119
(Sustainability
Committee report)
and 120 to 124
(Directors’ report)
(a) Describe the Board’s oversight of climate-related risks and opportunities.
The Board takes full responsibility for the governance of climate-related risks and opportunities, building such considerations into several
of its processes, including reviewing and guiding strategy and major plans of action alongside setting budgets, plans and objectives and
monitoring performance accordingly.
The Sustainability and Risk Committee (previously named the Sustainability Committee), a dedicated sub-Committee of the Board, has
specific climate-related responsibilities incorporated into its terms of reference, with these responsibilities including: assessment of the
Group’s exposure to managing risks from ‘climate change’ and reviewing actions to mitigate these risks in line with its assessment of other
risks; reviewing and monitoring the Group’s decarbonisation activities, including reviewing the adequacy of the associated framework;
and reviewing targets and milestones for the achievement of decarbonisation objectives. In addition, a designated member of the
Committee has responsibility for the Company’s decarbonisation activities. The Committee generally meets four times per year and, at
each meeting, reviews a report sponsored by a Board member of the Committee which includes a summary of performance against
short- and long-term emission reduction targets and outlines future opportunities and updates. The Committee also reviews the Group’s
Risk Management Framework (‘RMF’) performance report.
The Board receives a separate summarised version of the above update on climate-related issues as part of the health, safety, environment
and assurance (‘HSEA’) report that is delivered during each of the five scheduled Board meetings by the Director of HSE and Wells.
The Board also receives reports covering the Group’s financial and operational performance, which include the progress being made
in developing the Group’s renewable energy and decarbonisation opportunities, and monitors performance against Group emission
reduction targets. Progress in developing these growth opportunities is linked to reward as a component of the Company Performance
Contract (see page 112 of the Directors’ Remuneration Report), with rolling emission reduction targets also included in the Group’s
Performance Share Plan (‘PSP’).
Collectively, the Board and management also keep appraised of the evolving risk and opportunity landscape and its potential impacts on
the Company’s business by consulting as appropriate with the Group’s advisers and appropriate third-party institutions, including fund
managers, investors and industry associations such as Brindex and Offshore Energies UK.
In 2024, EnQuest undertook a materiality assessment with the third-party support of Wood Mackenzie and aligned with GRI and IOGP
material sustainability topics. This assessment enabled EnQuest to streamline its sustainability strategy by assessing what is deemed
material in terms of risk, opportunity and impact on EnQuest’s operations, both from an internal perspective and from the standpoint
of a broad group of the Group’s key stakeholders. The outcomes of the materiality assessment have reinforced EnQuest’s approach to
sustainability disclosure and risk mitigation. For more on EnQuest’s materiality assessment, please see page 47.
Strategic Report
Corporate Governance
Financial Statements
74—75
EnQuest PLC Annual Report and Accounts 2024
Environmental, Social and Governance
continued
Task Force on Climate-related Financial Disclosures
(a) Describe the climate-related risks and opportunities the organisation has identified over the short-, medium-, and
long-term.
EnQuest has offshore oil and gas assets in the UK and South East Asia and has assessed climate-related risks and opportunities jointly for
this one sector and both geographies. Exceptions are detailed in the table on the next page.
EnQuest considers within one year to be short term (which aligns with the Group’s budgeting process and assessment of going concern),
one to three years to be medium term (which is in line with the Group’s assessment of viability and the period over which the Group prepares
detailed plans) and the longer term to be beyond three years (for which EnQuest tests its life of field estimates against its internal price
assumptions and the International Energy Agency’s Announced Pledges (‘APS’), and Net Zero Emissions by 2050 (‘NZE’) Scenarios).
Using a mix of quantitative and qualitative measures, the Group has made an assessment of the potential impact and likelihood of the
climate-related risks or opportunities set out in the table on the following page. This is in line with common enterprise risk management
system practice.
Risk
type Climate-related risk
EnQuest risk management
Transition
Market (all geographies and timeframes unless
otherwise stated)
•
Demand for oil and gas and associated pricing materially
affects the Group’s operations and financial condition as
the Group’s revenue depends substantially on oil prices
(long term). The impact of climate change on oil demand
and the commensurate impact on commodity price is
considered by EnQuest to be the material climate-related
business risk
•
Emissions trading allowances impact costs (UK only, as
Malaysia does not have the same regulatory requirement)
•
Access to capital (see Financial risk on page 61): The Group
has substantial existing credit facilities, needs to invest in
its asset base and aims to pursue value-accretive M&A.
Wider market forces, including interest rates, investor
sentiment and ESG requirements, impact the Group’s
ability to raise capital
•
Supply-side constraints due to competing demand for
equipment and/or services as supply chain migrates to
support alternative sectors could increase costs and/or
result in delayed work programmes, ultimately impacting
revenue generation (long term)
•
Planning and investment decision process caters for low oil
price scenarios and includes a carbon cost associated with
forecast emissions (see metrics and targets (a) – Transition
risks and carbon prices)
•
The Group actively monitors current and future oil prices (see
Oil and gas prices risk on page 59) through its Marketing and
Trading organisation, which is also responsible for purchases
of emissions trading allowances (see metrics and targets (a)
– Transition risks and carbon prices)
•
The Group closely monitors and manages its funding position
and liquidity risk throughout the year (see Financial risk on
page 61). EnQuest’s renewable energy and decarbonisation
opportunities were a significant factor in attracting new
investors in the Group’s recent refinancing activities
•
The Group maintains relationships with key stakeholders,
including governments, regulators, financial institutions,
advisers, industry participants and supply chain
counter-parties
Policy and legal (all geographies)
• Regulatory or legislative changes (including emissions
trading schemes and flaring allowances, for example):
Facility modifications, regulatory sanctions/fines and
litigation risk (medium and long term)
•
Country policies (including net zero targets): Facility
modification investment, regulatory sanctions/fines
and litigation risk (long term)
•
Increased direct and/or indirect taxes (long term)
•
Each of the above could require additional capital
investment, potentially at a lower return than traditional
projects, or increase costs
• Targeted emission reductions and assessing opportunities
to reduce flaring, for example (see page 123) (see metrics
and targets (a) – Scope 1, 2 and 3 absolute emissions and
emissions intensity)
•
The UK Energy Profits Levy includes incentives for
decarbonisation investments, which the Group aims to utilise
(see metrics and targets (a) – Climate-related opportunities)
• Maintaining relationships with government and
regulatory bodies
•
Engaging with a variety of external advisers and appropriate
third-party institutions to ensure awareness, advance
planning and integration to ensure ongoing compliance
Risk
type Climate-related risk
EnQuest risk management
Transition
(continued)
Reputation (all geographies and timeframes, unless
otherwise noted)
•
Negative perception of the oil and gas industry
• Lack of credible transition plan
•
Failure to adhere to regulatory or legislative requirements
(medium and long term)
•
The perception of the oil industry has already impacted
access to and the cost of capital. In the longer term, the
above risks could impact the willingness of counterparties
to transact with EnQuest, increasing costs and the
availability of a skilled workforce, leading to higher costs
and/or lower revenues, or regulatory or legal action
•
Development of Veri Energy linked to reward (see metrics
and targets (a) – Scope 1, 2 and 3 absolute emissions and
emissions intensity, Climate-related opportunities, Capital
deployment and Remuneration)
•
Clear and credible emission reduction targets linked to reward
(see metrics and targets (a) – Scope 1, 2 and 3 absolute
emissions and emissions intensity, and Remuneration)
• Continued engagement with all stakeholders, including
participation in credible climate initiatives, such as the CDP
survey and submission of Emission Reduction Action Plans
(‘ERAP’) to the North Sea Transition Authority
•
Emissions Management Team that develops and drives
continual improvement on Scope 1 and 2 emission reduction
opportunities in line with the Group’s overall targets (see
metrics and targets (a) – Scope 1, 2 and 3 absolute emissions
and emissions intensity)
•
Sustainability team is responsible for development of Group
reporting on Scope 3, including verified reporting on Categories
5, 6, 7 and 11 during 2024 (see metrics and targets (a) – Scope 1, 2
and 3 absolute emissions and emissions intensity)
• Regular asset-level emissions measurement, monitoring and
reporting with timely corrective action taken if necessary (see
metrics and targets (a) – Scope 1, 2 and 3 absolute emissions
and emissions intensity, Transition risks and carbon prices
and Capital deployment)
•
High standards of business conduct (see page 72)
Technology (all geographies, medium to long term)
• Alternative, lower-emission products and services could
accelerate the transition away from oil and gas, impacting
demand
•
Costs of new technologies could limit the timing
and economics of existing oil and gas and
decarbonisation projects
•
Carbon capture and storage studies have identified the
potential to store up to 10mtpa of CO
2
from stranded emitters in
depleted North Sea reservoirs, while EnQuest’s electrification
and hydrogen ambitions could harness renewable energy to
help decarbonise offshore developments and a number of
other industries, respectively (see metrics and targets (a) –
Climate-related opportunities and Capital deployment)
•
Continued engagement with relevant new energy and
decarbonisation stakeholders, including potential strategic
and financial partners (see metrics and targets (a) –
Climate-related opportunities and Capital deployment)
• Continued engagement with suppliers, requiring provision
of services with a lower emissions footprint (see metrics and
targets (a) – Climate-related opportunities and
Capital deployment)
Physical
Acute (all geographies, short and medium term)
•
Adverse and/or severe weather (storms, cyclones, extreme
heat or cold) resulting in asset downtime and impacting
revenue, or increasing health and safety risk to staff
•
Action and response plans, including effective supply change
management, to manage risks and extent of downtime to as
low as reasonably possible (see metrics and targets (a) –
Physical risks)
Chronic (all geographies long term)
•
Rising sea levels, tidal impacts and other extreme weather
causes extensive/irreparable damage to assets impacting
capital and/or operating costs or early decommissioning
of assets
•
EnQuest considers these risks to be not material given
the Group’s focus on asset integrity and the expected
remaining life of its assets see metrics and targets (a) –
Physical risks)
Strategic Report
Corporate Governance
Financial Statements
76—77
EnQuest PLC Annual Report and Accounts 2024
Environmental, Social and Governance
continued
Task Force on Climate-related Financial Disclosures
With EnQuest’s business model spanning the entire energy transition spectrum, the Group is well positioned to assess and pursue a
number of climate-related opportunities.
Opportunity type
Climate-related opportunities
EnQuest action
Energy source
(long term and
UK-only at
present)
• Use of lower emission sources
of energy
• Shift towards decentralised energy
generation
• Use of supportive policy incentives
• Use of new technologies
•
Progressing the potential to facilitate the electrification of nearby
offshore oil and gas assets and planned developments
• Assessing onshore wind potential on Shetland
•
Commencement of project to deliver new grid-connected power
solution for Sullom Voe Terminal (‘SVT’)
•
Assessing initial 50MW green hydrogen project at SVT supported by
government-backed fund matching worth £1.74 million
•
Progressing gas tie-back from Bressay to Kraken to displace diesel
as Kraken FPSO primary fuel
•
Completion of modifications to the Heather asset power generation
equipment to minimise emissions during decommissioning
Resilience (all
geographies
and timeframes,
unless otherwise
stated)
•
Resource substitutes/diversification
(UK-only at present)
• Participation in renewable energy
programmes and adoption of energy
efficiency measures
• Access to M&A opportunities: Noting
other industry participants need to
dispose of assets to meet their own
ESG targets
•
Strengthened climate change oversight through the introduction of an
Energy (Emission) Management System – Structure & Governance
procedure. The procedure itself is structured to align with the
internationally recognised structure for an energy management
system in relation to ISO 50001
•
Pursuing carbon capture and storage, electrification and green
hydrogen production opportunities at scale at SVT (long term)
•
New development opportunities to be assessed in terms of low
emission power generation (medium term)
•
The Group maintains relationships with key stakeholders, including
regulators, financial institutions, advisers and industry participants
Products and
services (all
geographies
and timeframes,
unless otherwise
stated)
• Development and/or expansion of
low emission goods and services
(long term, with the exception of
supplier engagement which is all
timeframes)
• Ability to diversify business activities
(long term)
•
Pursuing carbon capture and storage which will store up to 10mtpa
of CO
2
from stranded emitters in depleted North Sea reservoirs
•
Assessing the potential to facilitate the electrification of nearby
offshore oil and gas assets and planned developments
•
Exploring the potential for harnessing the advantaged natural
wind resource around Shetland for the production of green
hydrogen and derivatives at export scale in order to provide a
low-carbon alternative fuel which could help to decarbonise
a number of industries
•
Continued engagement with suppliers, requiring provision of
services with a lower emissions footprint to ultimately improve
efficiencies and reduce costs
Market
(long term
and UK-only)
• Access to new markets
• Use of supportive policy incentives
•
Pursuing carbon capture and storage, electrification and green
hydrogen production opportunities at scale at SVT
Resource
efficiency
(all geographies
and timeframes)
•
Use of more efficient production
and distribution processes
• Use of recycling
•
Focused on absolute emission reductions in all operations see
metrics and targets section)
•
Measurement of waste generated in operations, with 2024
reporting in line with Category 5 Scope 3 emissions (see metrics
and targets section)
•
Assessment of options to repurpose existing infrastructure prior to
any decision to cease production and begin asset decommissioning
• Decommissioning business seeks to maximise reuse
and/or recycling
(b) Describe the impact of climate-related risks and opportunities on the organisation’s businesses, strategy, and
financial planning.
The Group considers as part of its strategic, business planning and risk processes how a number of macroeconomic themes may
influence its principal risks. Following this assessment, EnQuest considers the impact of climate change on oil price to be the only material
risk factor to the Group’s business model, with climate change representing one of many potential influencing factors on commodity
price. Accordingly, for the purposes of quantification of risk, the Group has assessed its resilience against oil price assumptions within the
International Energy Agency’s Announced Pledges (‘APS’) and Net Zero Emissions (‘NZE’) scenarios. In the short to medium term, EnQuest
reviews the impact of different oil prices in its going concern and viability assessments. The Group’s Marketing and Trading team is
responsible for optimising sales of the Group’s production, including developing and implementing the Group’s hedging programme.
The potential impact of a change in oil price on the Group’s carrying amount of oil and gas assets is outlined in note 2 of the Financial
Statements. The Group’s Marketing and Trading team is also responsible for purchasing emissions trading allowances in the UK, with the
costs of these allowances forecast to make up c.5% of the Group’s operating costs in 2025.
The Group monitors its cash position, cash forecasts and liquidity on a regular basis and takes a conservative approach to cash
management, with variance analysis run to reflect different scenarios. This is done to identify risks to liquidity and covenant compliance
and enable management to formulate appropriate and timely mitigation strategies as necessary. Specific financial risks of climate
change considered include access to, and cost of, capital, insurance and decommissioning surety bonds as investors’ and insurers’
appetite for exposure to the oil and gas sector reduces across all timeframes. It is difficult to quantify the precise impact on access to and
cost of capital given the number of other constituent factors in such transactions, including the state of global financial markets at the
time such a transaction takes place. The potential impact of a change in the Group’s discount rate, which considers the Group’s cost of
capital, is outlined in note 2 of the Financial Statements.
The Group has a proven track record of executing value-accretive acquisitions, although the timing of such events is uncertain. As
majors and other operators continue to shift their focus from mature basins such as the North Sea and Malaysia, there will be further
opportunities for EnQuest to access additional oil and gas resources, with gas resources offering diversification of the portfolio commodity
mix into a necessary transition fuel. Where new assets are acquired, there will be a clear emission reductions plan for any such asset for
which EnQuest assumes operatorship, relative to the carbon footprint in the hands of the seller, and the Group factors in an associated
carbon price into the acquisition economics, even in markets where no carbon trading or pricing mechanism exists.
Building on a platform of strong emission reduction performance in recent years, EnQuest sanctioned the Magnus Flare Gas Recovery
project in the fourth quarter of 2024 and is working towards regulatory approval during 2025 for plans to materially reduce Kraken FPSO
emissions via a gas well tieback from Bressay. Beyond these asset-specific initiatives, the Group’s renewable energy and decarbonisation
strategy is focused on a suite of projects at the Sullom Voe Terminal (‘SVT’). As SVT operator, EnQuest is leading the terminal ownership
group in decarbonising the site, with a New Stabilisation Facility project and a grid connection project in-flight. Together, these projects
are expected to reduce SVT emissions by more than 90%. This right-sizing of the terminal clears the way for Veri Energy to progress
three significant projects: Carbon Sequestration and Storage (‘CCS’), Electrification (via onshore wind) and the production of e-fuels. It
is expected that the opportunities at SVT will play a major role in delivering the Group’s short- and medium-term emission reduction
objectives and advancing longer-term renewable energy and decarbonisation opportunities. These opportunities are centred around
repurposing the strategically advantaged terminal site, positioning EnQuest as a credible energy transition company.
EnQuest has a Board-approved commitment to reach net zero in respect of Scope 1 and Scope 2 emissions by 2040. The Group sets
interim targets, linked to reward and on a rolling three-year basis, to reduce Group-wide Scope 1 and Scope 2 emissions by 10%. Against
the 2021 baseline, 2024 emissions were reduced by 8.2%. A further 10% reduction target has been set over the next three-year period, 2022-
2025. EnQuest is also monitoring progress against the UK North Sea Transition Deal (‘NSTD’) goals which contribute to the UK Government’s
target of net zero by 2050 and require reductions against a 2018 baseline of 10% by 2025, 25% by 2027 and 50% by 2030. At the end of 2024,
EnQuest had reduced UK Scope 1 and Scope 2 emissions by 40%. All milestones occur in the medium to long term.
(c) Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios,
including a 2°C or lower scenario.
The Group has measured the resilience of its existing portfolio and future development plans again as part of its 2024 full-year results
process, having previously updated scenario analysis 12 months ago. In its scenario modelling, the Group incorporates the estimated
oil price and cost of emissions, with the oil price deemed to be the most influential risk to its business, that would prevail under the
International Energy Agency’s APS, and NZE scenarios. The APS assumes that all RAS climate commitments made by governments and
industries around the world by the end of August 2024, for both 2030 targets and longer-term net zero or carbon neutrality pledges will
be met in full and on time and shows how close current pledges get the world to the target of limiting global warming to 1.5°c, while the
NZE shows an accelerated pathway for the global energy sector to achieve net zero CO
2
emissions by 2050 and is consistent with limiting
the global temperature rise to 1.5°c. The Group continues to generate positive free cash flow when using assumptions based on the
APS, although cash flow becomes negative when using assumptions based on the NZE. As outlined in the Group’s viability statement on
page 38, should oil prices be lower than assumed in its Plausible Downside Case projections, the Group may be required to undertake
mitigating actions to meet its various obligations. EnQuest’s business model enables the Group to adapt to a changing external
environment, with short-cycle investments reducing the risk of ‘stranded assets’ in its upstream business, while the Group is pivoting
towards renewable energy and decarbonisation with the activities being pursued by Veri Energy.
In summary, EnQuest’s business model remains resilient under APS scenarios. Given the likelihood of each scenario assessed, the Board is
comfortable that the Group’s business model is resilient.
Asset Value relative to EnQuest Base Case NAV
Base Case
100%
IEA Announced Pledges
IEA Net Zero
136%
-77%
-5%
IEA Stated Pledges
226%
2%
Net asset value (NPV10)
Voluntary Carbon Costs
0
-50%
50%
100%
150%
200%
250%
-100%
3%
Strategic Report
Corporate Governance
Financial Statements
78—79
EnQuest PLC Annual Report and Accounts 2024
Environmental, Social and Governance
continued
Task Force on Climate-related Financial Disclosures
EnQuest disclosure
Additional/related
information
Risk management
Disclose how the
organisation identifies,
assesses, and
manages climate-
related risks
The Group has robust risk management and business planning processes that are
overseen by the Board, the Sustainability and Risk Committee and the Executive
Committee in order to identify, assess and manage climate-related risks, while the
Audit Committee oversees the effectiveness of the Risk Management Framework. The
risk landscape inputs and considerations are outlined on page 56 and cover
long-term macro factors and near-term and emerging risks.
See pages 54 to 71
(Risks) and 118 to 119
(Sustainability and
Risk Committee
report)
(a) Describe the organisation’s processes for identifying and assessing climate-related risks.
The Group’s RMF is embedded in all levels of the organisation with asset, regional and functional risk registers aggregating to an enterprise
risk register, as outlined below, identifying relevant threats and how they are mitigated, while the adequacy and efficacy of controls
in place are themselves also monitored. This integration enables the Group to quickly identify, escalate and appropriately manage
emerging risks, with a quarterly RMF report reviewed by leadership teams and presented to the Sustainability and Risk Committee. All
risks are assessed based on their estimated potential impact and likelihood with respect to people, environment, asset/business and
reputation (‘PEAR’) on a pre- and post- mitigation basis, with judgements reviewed by peers and/or management as appropriate.
The Group is targeting net zero in respect of Scope 1 and Scope 2 emissions by 2040 and seeks to ensure that suitable and sufficient
controls are in place to deliver against its environmental, social, governance (‘ESG’) strategy. In 2024, EnQuest undertook a double
materiality assessment with reference to GRI and IOGP material sustainability topics for the oil and gas industry. The materiality
assessment has enabled EnQuest to refresh its ability to articulate and disclose climate-related risks and opportunities, in keeping
with the evolving sustainability disclosure landscape.
EnQuest uses Hurdle Risk as the risk management tool for identification, measurement and mitigation of risks and requires an assessment
of value associated with a given risk. The Risk Management Process takes place across four key areas: Group, Region, Asset and Functional:
•
Group level – An Enterprise Risk Register and Risk Report provides the Board and executive management with a single view of risk
across the Group to aid strategic decision making. This reflects the overall Risk Management Strategy and responses to individual
risks, including climate-related risks, with a focus on reporting risks that are critical from a decision-making perspective. Critical risks
are those that are assessed as having the greatest potential impact and likelihood with respect to PEAR on a pre- and post-mitigation
basis;
•
Region level – Risk registers are available for the North Sea and Malaysia. These registers include details of all relevant operational,
execution, HSE, organisational, financial, legal and contractual risks facing each of the business units;
•
Asset level – Risk registers are developed for all operated assets. These registers include details of all relevant operational, executional,
HSEA, organisational, financial, legal and contractual risks facing each asset; and
•
Functional level – A risk register is developed for any improvement opportunities and deficiencies in the risk controls for the legal,
commercial, HSEA, organisational, financial and business services risk categories. The functional assessments review the effectiveness
of policy and management systems in place and identify critical gaps and/or areas of non-compliance within the Group.
Climate-related risks are classified in alignment with TCFD’s description of transition and physical risks:
Transition risks
– risks related to the transition to a lower-carbon economy, including policy and legal, technology, markets and reputation.
Physical risks
– risks related to the physical impacts of climate change, including event-driven risks such changing severity and/or
frequency of extreme weather events.
Through EnQuest’s Environmental Management System, all environmental aspects and risks are identified using EnQuest’s Environmental
Aspects and Impacts Identification Procedure and are recorded in an Environmental Aspects and Impacts Register. Similarly, the
process of developing an asset or project-specific aspects and impacts register entails a systematic review of operational activities,
identifying effective control measures, mitigations and/or improvement plans at all stages in the project life cycle from inception, through
to abandonment and decommissioning. The people undertaking this process shall be competent with the requisite experience and
technical knowledge, so that a high-quality review of an activity, project, process, design or an operation is carried out. Aspects may be
identified through workshops, meetings, reviews and audits and separated into two groups; planned and unplanned. EnQuest has also
established an Identification and Evaluation of Compliance Obligations Procedure in order to ensure that the organisation is aware of
and understands how its activities are (or will be) affected by current and new legislative requirements. This procedure is aligned with the
requirements of ISO 14001:2015. Furthermore, the Group strengthened its climate change oversight through the introduction of an Energy
(Emission) Management System – Structure & Governance procedure (as noted in the Strategy (a) disclosure). The HSEA team keeps up to
date with the identification and maintenance of awareness of compliance obligations through professional subscriptions, by consulting
relevant websites, including regulatory and government departments, as well as through training, attendance of seminars, conferences,
network forums and meetings. Consultations with government, other regulatory agencies and any other stakeholders may also be
required. Other compliance requirements are identified and recorded from the Group’s HSEA Policy, licences, permits and authorisations
and industry standards and codes of practice. The result of the evaluation of compliance is detailed in the monthly KPI report, while on a
routine basis, the HSEA teams review and discuss open non-conformances and any new legal requirements.
(b) Describe the organisation’s processes for managing climate-related risks.
The Sustainability and Risk Committee also provides a forum for the Board to review selected individual risk areas in greater depth.
Climate-related risks and opportunities, and associated mitigation measures and action plans, are maintained in a series of risk registers
at Enterprise (Group), region, function and asset levels.
Climate change is categorised as a standalone risk area within the Group’s ‘Risk Library’, allowing the application of EnQuest’s RMF to
underpin its approach in this important area. For each risk area, the Sustainability and Risk Committee reviews ‘Risk Bowties’ that identify
risk causes and impacts and maps these to preventative and containment controls used to manage the risks to acceptable levels.
EnQuest’s Climate Change ‘Risk Bowtie’ covers both physical and transition risks in accordance with the TCFD framework (as outlined
in the Strategy section (a)). They are also considered within the context and review of several other risk areas, such as oil price, (see the
Strategy and Risk management sections for the Group’s assessment of financial materiality and potential impact and likelihood with
respect to PEAR, respectively).
The outcomes from the Group’s double materiality assessment have been incorporated within the Climate Change ‘Risk Bowtie’,
identifying and mapping risk causes and impacts against preventative and containment controls used to manage the risks to an
acceptable level.
A Continuous Improvement Plan (‘CIP’) describes EnQuest’s improvement initiatives, what the Company will do to achieve them and how it
will measure success. Specific objectives, targets and actions are developed and cascaded to all levels within the organisation, including
a number related to the management of climate-related risks. In addition to the CIP, EnQuest has defined Key Performance Indicators
(‘KPIs’), which are used to monitor performance. They take into account the significant environmental aspects and the Company’s
compliance obligations.
(c) Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the
organisation’s overall risk management.
See the Risk management disclosure (a) for a description of how climate-related risks are integrated into EnQuest’s overall RMF. Risks are
uploaded to the Group’s risk software tools which assign ownership for the risks with associated systemised monitoring of mitigations
being closed out. These systems require the risk owner to assess the materiality of each given risk before and after mitigations in
accordance with the Group’s materiality thresholds (outlined in the metrics and targets section below).
EnQuest disclosure
Additional/related
information
Metrics and targets
Disclose the metrics and
targets used to assess
and manage relevant
climate-related risks
and opportunities
where such information
is material
Absolute emissions and their reduction are a key area of focus for EnQuest given
the Group’s net zero commitment in respect of Scope 1 and Scope 2 emissions by
2040 and its desire to play its part in the UK’s drive towards net zero by 2050 (2045
in Scotland).
EnQuest currently operates offshore in the UK and Malaysia, which are highly
regulated mature hydrocarbon provinces. The Group has a well-established HSEA
Policy outlining its commitment to integrating environmental management into its
operations, with its Environmental Management System ensuring the Group
manages and mitigates its impact on the environment and complies with the
regulatory requirements in the areas in which it operates. Through this process,
the Group has not identified any material risks associated with water, energy, land
use, and waste management.
EnQuest has considered the climate-related metric categories in Table A2.1 within
the TCFD implementation guidance but has not set any other metrics or targets
beyond those listed below.
See pages 5 (KPIs),
28 to 31 (Midstream
and Veri Energy
review), 44
(Environmental), 84
(s172), 112 and 113
(CPC and PSP
disclosures within
the Directors’
Remuneration
Report) and 123
(GHG emissions
disclosures in the
Directors’ report)
EnQuest disclosures
(a) Disclose the
metrics used by the
organisation to assess
climate-related risks
and opportunities in
line with its strategy
and risk management
process.
Metrics – consistent with prior year
unless otherwise stated
Description
Scope 1, 2 and 3 absolute
emissions and emissions
intensity.
Scope 1, Scope 2 and
Scope 3 Category 5
metrics are consistent
with prior years. Scope 3
Category 6, 7 and 11
metrics are new additions
in 2024.
EnQuest operates in an industry and geography in the UK that has agreed
medium- and long-term absolute Scope 1 and 2 emission reduction targets,
expressed as percentage reductions in tonnes of CO
2
equivalent emissions.
As such, the Group monitors progress against these and its own associated
targets (see metrics and targets (c)).
The Group has also enhanced its reporting of Scope 3 emissions, with verified
data on Category 5 ‘waste generated in operations’, Category 6 ‘business
travel’, Category 7 ‘employee commuting, and, most materially, Category 11
‘use of sold products’ included within the 2024 Annual Report and Accounts.
The Group has defined criteria for screening and ranking emission reduction
opportunities within its existing operations, including: the potential
contribution to the Group’s targets; economic indicators; the chance of
success; time to implement; and any risks to the Group’s production.
The Group also monitors its emissions intensity ratio (as set out in the
Directors’ report on page 123), recognising the impact this metric has on
certain risks and opportunities, such as reputation, access to capital and
M&A opportunities.
Strategic Report
Corporate Governance
Financial Statements
80—81
EnQuest PLC Annual Report and Accounts 2024
Environmental, Social and Governance
continued
Task Force on Climate-related Financial Disclosures
EnQuest disclosure
(a) Disclose the
metrics used by the
organisation to
assess climate-
related risks and
opportunities in line
with its strategy and
risk management
process.
(continued)
Metrics – consistent with prior year
unless otherwise stated
Description
Transition risks and
carbon prices
The Group primarily produces oil from its offshore installations and so deems
the oil price to be the most material risk to its business, particularly as
commodity prices are impacted by other of the identified transition risks and
opportunities outlined in Strategy (a). As such, the Group actively monitors
the price of oil, hedging a proportion of its exposure to oil prices to ensure a
minimum price is received for its production.
EnQuest uses oil prices in its internal planning and investment (including
M&A) decision-making processes. The Group’s forward-looking oil prices
are disclosed in note 2 of the financial statements.
Physical risks
All of the Group’s assets are in offshore environments and so are subject to
physical risks, as outlined in Strategy (a).
Climate-related
opportunities
As a responsible transition operator, EnQuest is actively decarbonising its
existing portfolio, with significant decarbonisation projects underway at the
Sullom Voe Terminal and at Magnus. The Group also aims to achieve a final
investment decision during 2025 on a gas well tie-back from Bressay to
Kraken; a project which would materially reduce Kraken emissions. Within Veri
Energy, EnQuest is assessing opportunities that could deliver decarbonisation
and renewable energy at scale in the long term. For example, the Group’s
carbon capture and storage opportunity has identified the potential to store
up to 10mtpa of CO
2
from stranded emitters in depleted North Sea reservoirs,
potentially taking EnQuest beyond net zero, in comparison to the Group’s
reported Scope 1 and 2 emissions footprint. The Group is also progressing
an onshore wind project to provide electrification options at SVT, while the
opportunity to produce e-fuels at the terminal site is being assessed.
Capital deployment
The Group has several major decarbonisation projects in-flight, including the
Magnus Flare Gas Recovery project, which was sanctioned in 2024 and the
New Stabilisation Facility at the Sullom Voe Terminal. Accordingly, c.52% of the
Group’s 2024 capital expenditure was classified as decarbonisation cost. Such
expenditures are reset on an annual basis, in line with the Group’s business
plan process.
Remuneration
The Group’s emission reduction targets and progress of its energy transition
and decarbonisation strategy development and execution are linked to
short-term and long-term remuneration, as set out in the Directors’
Remuneration Report (see pages 112 to 113).
(b) Disclose Scope 1,
Scope 2, and, if
appropriate, Scope 3
greenhouse gas
(‘GHG’) emissions,
and the related risks.
As outlined in the Directors’ Report, EnQuest discloses Scope 1 and 2 emissions and associated intensity
outcomes on an operational control basis. The Group has also enhanced its Scope 3 emission disclosure,
with data reported on Category 5 ‘waste generated in operations’, Category 6 ‘business travel’, Category 7
‘employee commuting’ and, most materially, Category 11 ‘use of sold product’. The Group’s GHG emissions
data disclosed in the Directors’ report and throughout the ARA is verified by Lucideon. The Group is
cognisant of the risks of access to capital and people, rising emission costs and reputational and
regulatory risks associated with failure to adhere to policies and guidelines or missing targets.
EnQuest disclosure
(c) Describe the
targets used by the
organisation to
manage climate-
related risks and
opportunities, and
performance
against targets.
The Board’s goal is to be as ambitious as it can in setting decarbonisation targets, while balancing
the economic realities of operating late-life assets. As such, in 2021 the Board approved a targeted 10%
reduction in EnQuest’s absolute Scope 1 and 2 emissions from its existing portfolio on a rolling three-year
basis, from a year-end 2020 baseline. As at 31 December 2024, Group emissions had been reduced by
c.22% against the 2020 baseline and c.8% in the three-year period from 1 January 2022. Further emission
reduction targets over a three-year period have been set as part of the Group’s Performance Share Plan
measures (see page 113 of the Directors’ Remuneration Report).
Discrete targets for emission reductions compared to 2021 associated with diesel use and flaring were
also set, for which performance was assessed as being between target and stretch (see the Directors’
Remuneration Report in the Group’s 2022 ARA).
As at 31 December 2024, UK emissions had been reduced by c.40% against the 2018 baseline,
significantly ahead of the North Sea Transition Deal targets of achieving a 10% reduction by 2025 and
close to the 50% reduction targeted by 2030.
During 2023, the EnQuest Board committed to reach net zero in terms of Scope 1 and Scope 2 emissions
by 2040.
In 2024, the Group continued to make progress in each of its renewable energy and decarbonisation
opportunities. In carbon capture and storage, the Group has assessed the four carbon storage licences
awarded by the NSTA during 2023, and took the decision to relinquish two of the licences in the first
quarter of 2025. The Group’s remaining licences are based at the Magnus and Thistle reservoirs. These
are intended for use in delivering the potential to store up to 10mtpa of CO
2
from stranded emitters in
depleted North Sea reservoirs. Further, EnQuest’s electrification ambitions, as well as plans to produce
e-fuels could harness renewable energy to help decarbonise offshore developments and a number of
other industries, respectively. These opportunities remain at an early stage and require further
regulatory and fiscal development before appropriate financial targets can be considered.
Strategic Report
Corporate Governance
Financial Statements
82—83
EnQuest PLC Annual Report and Accounts 2024
Environmental, Social and Governance
continued
Task Force on Climate-related Financial Disclosures
Section 172
statement
Section 172 matters (a) – (c) are covered
in the accompanying stakeholder
engagement disclosures on the following
pages. The Board’s consideration with
respect to section 172 matter (d) can be
found on pages 40 to 55, matter (e) on
pages 39, 70, 72, 95 to 97 and 110, and
matter (f) within the principal decisions
outlined on page 86.
The Board has acted in a way that it
considers to be most likely to promote the
success of the Company for the benefit
of its members as a whole and, in so
doing, has regard for the potential impact
of the Group’s activities on its various
stakeholders. In the majority of cases,
information and feedback are provided
throughout the year to the Directors by
the Group’s Executive Directors, senior
and functional management and
external advisers through a variety of
Board reports, presentations and ad hoc
correspondence. These reports cover
the Group’s financial, operational and
environmental performance, while
EnQuest’s advisers provide the Board
with relevant insight from their interactions
with their respective stakeholders.
When appropriate, the Directors seek
further understanding of the concerns
of relevant stakeholders, which could
include direct engagement by the
relevant Director and/or requesting
additional information to ensure they have
a full appreciation of a given matter prior
to making any decisions. As such, the
Directors are able to assess the impact of
business decisions on stakeholders and
fulfil their duty to promote the long-term
success of the Group.
The Directors consider principal decisions
(outlined on page 86) on the basis of
materiality of the incremental impact they
are anticipated to have on the Company’s
stakeholders and/or the Company itself.
Throughout the year, the Board and
management team considered various
M&A opportunities. For several of these,
it was decided that their pursuit would
not be in the interests of the Group’s
stakeholders, reflecting EnQuest’s in-depth
review processes (including those by the
Technical and Reserves Committee) and
focus on capital discipline.
Stakeholder groups
Direct Board-level engagement in 2024
Other engagement activities in 2024
A
People
Our employee and contractor workforce is critical to
the delivery of SAFE Results and EnQuest’s success. As
such, we are committed to ensuring EnQuest remains a
great place to work. We have a strong set of Values that
underpin our way of working and provide a rewarding work
environment, with opportunities for growth and learning
while contributing to the delivery of our strategy.
Three Global Employee Forum meetings per year with designated
Non-Executive Directors were organised; video messages; subject
matter expert virtual and physical attendance at scheduled
Board and Board Committee meetings; physical and virtual
safety leadership engagement visits; three interactive virtual
Town Hall Meetings.
See the accompanying principal decisions on page 86
and pages 51 to 53 of the ESG section which detail the various
people-related initiatives implemented during the year, including
the employee surveys and those related to our people’s safety
and wellbeing.
B
Investors
Our investors support management in the execution of
EnQuest’s business strategy, including the provision of
capital for management to develop the business in order
to deliver returns in a responsible manner.
Virtual and physical meetings (including the Annual General
Meeting, post-results roadshows and multiple investor conferences
and ad hoc meetings), calls and direct correspondence with a
wide range of equity and debt investors in relation to the Group’s
refinancing plans and delivery against its strategic objectives.
See the accompanying principal decisions on page 86 and the
Strategic report on pages 02 to 86, which explains the Group’s
performance and investment decisions during the year.
Page 95 of the Corporate governance statement outlines in more
detail how the Group engages with its investors. Financing is
identified as one of the Group’s Principal risks and uncertainties
on page 61.
C
Partners
We collaborate with our existing joint venture partners,
securing their support to deliver our asset plans. We
value their contribution to the effective operational
and financial management of our assets as we deliver
on our business strategy
In pursuit of the Group’s new energy and decarbonisation
ambitions, we also engage with potential strategic and
financial partners
Virtual and physical meetings and calls.
The Group has regular engagement with its joint venture partners
on day-to-day asset management and the execution of the
longer-term asset strategy. This occurs through a combination of
formal interactions, governed by joint operating agreements, and
via informal engagement.
See pages 20 to 31 of the Strategic report for further details on
operational and financial activities and decisions undertaken
across our assets.
Joint venture partners are recognised as one of the Group’s
Principal risks and uncertainties on page 69.
D
Host
governments
and regulators
We work closely with the host governments and regulators
in the jurisdictions in which we operate. The Group
complies with the necessary regulatory requirements,
including those related to environmental matters such
as reducing emissions, to ensure it maintains a positive
reputation and licence to operate, enabling the effective
delivery of the Group’s strategy.
Virtual and physical meetings and calls with the North Sea
Transition Authority (‘NSTA’) in the UK and Malaysian Petroleum
Management (‘MPM’) in Malaysia. A number of meetings have
been held with the Shetland Islands Council (‘SIC’) in relation to
the Group’s Infrastructure and New Energy business, while several
meetings and other correspondence have been undertaken with
UK Treasury officials on the UK’s Energy Profits Levy (‘EPL’).
See the Strategic report on pages 02 to 86 and the Group’s
Principal risks and uncertainties on pages 54 to 71, which outline
EnQuest’s strong relationships with governments and regulators.
Pages 44 to 49 of the ESG section and pages 120 to 124 of the
Directors’ report outline further details on the Group’s regulatory
compliance activities.
E
Suppliers
EnQuest relies on its suppliers to provide specialist
equipment and services, including skilled personnel,
to assist in the delivery of SAFE Results.
None
The Group has continued its active and positive engagement
with its suppliers through various supplier forums, performance
reviews, ad hoc virtual meetings and industry events. The
Group continues to monitor and report its supplier payment
performance.
Please also see the Group’s Principal risks and uncertainties on
pages 54 to 71, a number of which are impacted by the Group’s
supplier relationships.
F
Communities
Making a positive contribution, and appropriately
managing our environmental impact in the communities
in which we live and work around the world, remains a key
part of our activities. Our communities provide a potential
source of employees, contractors and support services,
and are important in supporting EnQuest’s social licence to
operate and maintaining a positive reputation.
None
See pages 50 to 51 of the ESG section which outline the Group’s
community engagement activities and environmental
considerations, with the importance of maintaining a positive
reputation outlined in the Group’s Principal risks and uncertainties
on page 70.
G
Customers
Our customers help facilitate the provision of hydrocarbon-
related products to meet a variety of consumer demands
and, as such, require a reliable supply of hydrocarbons to
meet their needs.
We have also begun engaging with potential customers
in relation to our carbon capture and storage and
electrification opportunities as part of our Infrastructure
and New Energy business.
None
We have maintained strong relationships with existing customers,
including fuel oil blenders to whom the Group supplies Kraken oil
as an unrefined constituent of IMO 2020 compliant low-sulphur
bunker fuel.
Strategic Report
Corporate Governance
Financial Statements
84—85
EnQuest PLC Annual Report and Accounts 2024
Environmental, Social and Governance
continued
Stakeholder engagement
Environmental, Social and Governance
Principal decision and
impacted stakeholders
Stakeholder considerations and impact on the
long-term sustainable success of the Company
Shareholder
distributions
Impacted stakeholders:
A
B
Following significant and disciplined deleveraging of the Group’s balance sheet, EnQuest reached a net debt
to EBITDA ratio of 0.6x, close to its stated target of 0.5x, as at 31 December 2023.
Upon reaching this milestone, the decision was taken to return capital to shareholders in the form of an up to
$15.0 million share buy-back programme. Given the discount in equity trading value versus net asset value, it
was decided that such a programme would be more value-accretive to shareholders than a dividend.
The 2024 share buy-back programme commenced on 29 April 2024 and was carried out through an
agreement whereby Merrill Lynch International purchased shares as principal for the subsequent sale on to,
and purchase by, EnQuest. The programme concluded on the contracted date of 31 December 2024.
c.56 million shares were purchased for a total consideration of c.£7 million (c.$9 million) over the period, with
the first 25 million share purchases held in Treasury for subsequent issue to the EnQuest Employee Benefit
Trust. In total, nearly 31 million shares were cancelled through this programme.
For further information, see note 8 to the financial statements.
Diversity, Equity and
Inclusion Policy update
Impacted stakeholders:
A
B
C
D
E
F
In early 2024, the Board reviewed EnQuest’s established ‘Diversity and Inclusion Policy’ alongside analysis of
progress against stated targets. The outcome of the review was a request from the Board to enhance the
tenets of the existing policy, which were developed in 2021, to reinforce EnQuest’s commitment towards
supporting an inclusive culture amongst our workforce.
Working alongside industry bodies to assess best practice in this area, the Group has developed a Diversity,
Equity and Inclusion (‘DE&I’) Policy and an accompanying plan to deliver against updated targets.
Accordingly, the Group’s vision is to fully embrace DE&I and embed it into all business functions across all
locations. EnQuest aims to stand out as an employer that values and practices DE&I and leads by example.
For further information on our DE&I Policy and progress in this area, see page 51 of the Strategic report.
High Yield bond tap and
subsequent repayment
of term loan facility
Impacted stakeholders:
A
B
C
D
The Group’s improved balance sheet, enhanced liquidity position and significantly advantaged UK tax
position means EnQuest is well placed to pursue growth opportunities.
In order to maximise available financial capacity to pursue value-accretive growth, the Board considered
several options relating to simplification of the Group’s debt structure. This process was centred on repaying
and refinancing a $150.0 million term loan facility which, due to its second lien ranking within the structure,
restricted the Group’s ability to draw on its full reserve based lending facility.
During September 2024, the Board sanctioned a Dollar for Dollar refinancing of the term loan facility, plus
associated fees, via a tap on the Group’s existing high yield US Dollar bond. This bond issuance was
significantly over-subscribed and was priced above par at 101.0%, forming a fungible addition to the existing
$305 million high yield notes, due for repayment in 2027. The Board concluded that this positioned the Group
to be transaction-ready for future opportunities.
For further information, see pages 34 to 38 of this Strategic report and note 17 to the financial statements.
Malaysian expansion
and Vietnam new
country entry
Impacted stakeholders:
A
B
C
D
E
F
G
During 2024, EnQuest celebrated ten years of successful operations in Malaysia and was named Upstream
Operator of the Year at the Malaysia Upstream Awards.
Building on this strong operating footprint in Malaysia, the Board and Executive team have been clear that
South East Asia is a region in which EnQuest is targeting enhanced geographic and commodity
diversification for the Group.
Accordingly, the Board has made two significant decisions relating to Malaysian operations during 2024; the
DEWA asset Production Sharing Contract award, and the expansion of the Seligi gas agreement.
At DEWA, EnQuest has taken operatorship and a 42.0% equity share of a cluster of assets consisting of 12
discovered fields, focused on a first phase development which could hold up to 500 Bscf of gas in place.
The expanded Seligi gas agreement builds on the existing transport and handling agreement currently in
place by awarding EnQuest the opportunity to develop approximately 155 Bscf (c.27 million barrels of oil
equivalent) of additional Seligi field gas resources, with a 50% equity share. EnQuest will produce the
additional Seligi Field gas by modifying its existing infrastructure, providing a cost-efficient way to deliver
new volumes into the Peninsular Malaysia gas system and help the nation meet its increasing energy needs.
Together, these volumes will significantly increase the gas component of EnQuest’s production, which aligns
to the Group’s strategic aim to reduce its overall carbon intensity.
EnQuest’s growth in South East Asia was further enhanced by an agreement to acquire Harbour Energy PLC’s
business in Vietnam, which includes the 53.125% equity interest in the Chim Sáo and Dua production fields.
This fully staffed new country entry expands the Group’s South East Asian footprint beyond Malaysia.
In assessing this acquisition, the Board took the view that it aligns with the Group’s strategic aim to grow its
international operating footprint by investing in fast-payback assets, with low capex and reduced carbon intensity.
For more information on these transactions, please see pages 24 to 25.
Stakeholder groups
A
People
B
Investors
C
Partners
D
Host governments and regulators
E
Suppliers
F
Communities
G
Customers
The Strategic report was approved by the Board and signed on its behalf by the Company Secretary on 26 March 2025.
Kate Christ
Company Secretary
EnQuest PLC Annual Report and Accounts 2024
Environmental, Social and Governance
continued
Stakeholder engagement
PB—87
Corporate Governance
Financial Statements
Strategic Report
86—87
Executive Committee
Key strengths and experience
• Extensive legal and
commercial expertise
• Wealth of experience in
structuring and delivering
business development
projects and acquisitions
• Joint venture management
Paul joined EnQuest in 2011 from
law firm Dundas & Wilson, where
he worked in the energy and
infrastructure team, advising
a variety of public and private
sector clients, utilities and lenders
on complex major commercial
projects. In his time at EnQuest,
Paul has undertaken several key
roles, including North Sea Legal
Manager, Director of Corporate
Development and New Energy
and, most recently, playing an
integral role in establishing the
Group’s new energy subsidiary, Veri
Energy. Paul has played a key role
in a number of EnQuest’s business
development projects and was
instrumental in structuring the
Group’s acquisition of the Magnus
asset from bp. Paul has overall
responsibility for the commercial
and legal affairs of the Company.
Paul is a member of the law
society of Scotland and has an LLB
(First Class) in Law (with options
in accountancy) degree from
the University of Aberdeen.
Paul Massie
Legal and Commercial Director
Key strengths and experience
•
MA in International Business
and Languages
•
Member of the Chartered Institute
of Personnel Development
Claire began her career in the retail
industry and, after progressing
through various managerial
positions, she joined Michael Page
Recruitment in 2008 as a Managing
Consultant, supporting the set-up
of a newly created Aberdeen
office focusing on oil and gas
recruitment. Claire joined EnQuest
as a Senior Recruitment Advisor in
2012 before becoming HR Business
Partner in 2013. She has a track
record of consistent performance,
delivering results and effective
leadership for the company.
Claire took on the role of
Human Resources Director
for North Sea in June 2024.
Claire Scrimgeour
Human Resources Director
Key strengths and experience
• Senior operational leadership
positions held onshore and
offshore during 30-year career
• 16 years in executive roles
(MD, CEO and Chair)
•
Involved in over $5 billion
of E&P transactions
• Founded Decipher Energy,
which was successfully
sold within five years
• Steve is a director on the board
of Offshore Energies UK
Steve joined EnQuest PLC in October
2023. Prior to joining the Group
he was a technical adviser to
global financial institutions and
investors. Steve commenced his
career in subsea engineering/
installation before moving to
Talisman as a reservoir engineer,
offshore team leader and asset
manager. Steve then set up Taqa’s
UK operation before moving
to First Oil as MD, acquiring an
interest in the Kraken field prior to
the successful appraisal well.
Steve was the founding director
of Decipher Energy, a full life
cycle operating company, safely
drilling and completing an 18,500
ft well, delivering Orlando first
oil within two years of founding
the company and overseeing its
sale to Tailwind Energy in 2021.
Steve Bowyer
General Manager, North Sea
Key strengths and experience
• Over 30 years of experience in
the oil and gas industry, having
had organisational lead roles, as
well as those overseeing projects,
field development, commercial
and business development
• Degree in Civil Engineering
from Liverpool University and
a Post-graduate Diploma in
Business Administration from
Strathclyde Business School
Radzif joined EnQuest at the
early stages of the Company’s
entry into Malaysia and has
played a key role in ten years
of successful operations.
Radzif started his career as a
marine civil engineer, working on
marine and shore protection.
He later worked for ExxonMobil
and Nippon Oil in various project
roles, before joining Bechtel
to work on the development
of petrochemical plants.
Radzif moved back to upstream
with Murphy Oil, working to bring
their first oilfield onstream in 2003,
and then in support of a new billion-
dollar gas development. Radzif
has built extensive experience
in commercial and business
development, both in Malaysia and
across the South East Asia region.
Radzif Ahmed
General Manager, South East Asia
Key strengths and experience
• MBA in Finance
• Extensive international experience
Ali joined EnQuest in July 2012
from Schlumberger where
he held the role of Regional
Procurement and Sourcing
Manager for the North Sea.
He has over 22 years of
procurement and shared
services function experience
for both E&P operators and
oilfield service providers. Ali
has an MBA in Finance and has
diverse experience of working in
different industries in large, well-
established organisations as well
as medium-sized start-ups in the
Middle East, South Asia, Europe
and the Caspian region.
Ali has also held leadership
positions at various industry
groups, including Chair of Oil and
Gas UK’s Supply Chain Forum,
member of the Oil and Gas
Authority’s Supply Chain & Exports
Board and currently Chair of
World Economic Forum’s Resource
Sharing Hub in the North Sea.
Ali Talpur
Director of Global
Corporate Services
Key strengths and experience
• MSc in Corporate Governance
• Chartered Secretary
Kate joined EnQuest PLC in
2016 and became Company
Secretary in 2024.
She is a Fellow of the Chartered
Governance Institute and
over the past 17 years has
worked in governance roles
in a variety of industries
She started her career in the
charitable sector, has worked
within government departments
and, prior to joining EnQuest,
worked for FTSE 100 and FTSE 250
financial service companies.
Kate Christ
Company Secretary
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
88—89
Marianne Daryabegui
Independent Non-Executive
Director
Appointed 30 May 2024
Board of Directors
Key strengths and experience
Significant capital
markets and mergers and
acquisitions experience
Marianne is a seasoned capital
markets adviser with a focus on oil
and gas, first at Total, then as Head
of Natural Resources at BNP Paribas
and as co-head of the Energy and
Natural Resources M&A practice at
Natixis. With a strong experience
in corporate transactions, capital
markets and structured finance,
Marianne has advised multiple
oil and gas companies. She was
appointed CFO of Lithium de France
in 2021. She led the €44M Series B
for the company, then the listing
of Arverne Group on Euronext
through its merger with Transition
SPAC. Marianne is currently Head
of Financing, Capital Markets and
M&A for Arverne Group and a
non-executive director of
Gulf Keystone Petroleum.
Principal external appointments
Marianne is currently the Head of
Financing, Capital Markets and
M&A of the Arverne Group and is
a Non-Executive Director of Gulf
Keystone Petroleum Limited.
Rosalind Kainyah
Independent Non-Executive
Director
Appointed 30 May 2024
Key strengths and experience
Substantial international,
multi-sector experience
Rosalind has over 30 years of
international, legal, operational,
executive and board experience
in a variety of sectors,
including energy, oil and gas,
mining, infrastructure, private
equity, financial services and
manufacturing. She has worked
across Africa, Europe, the Americas,
Asia and the South Pacific for
companies and organisations,
including Linklaters, Anglo
American, De Beers, Tullow Oil plc,
the United Nations Environment
Programme, University of Oxford’s
Environmental Change Unit
and ERM.
Principal external appointments
Rosalind is the founder and director
of Kina Advisory Limited, and also a
non-executive director of discoverIE
plc, Gem Diamonds Limited and
WE Soda, a private company.
Farina Khan
Senior Independent Director
Appointed 1 November 2020
Key strengths and experience
Strong energy industry and
financial experience, as well as
deep insights into Malaysia
Farina is a Fellow of the Institute of
Chartered Accountants Australia
and New Zealand with 30 years’
working experience primarily
in the oil and gas industry. She
started her career with Coopers &
Lybrand, Australia, before returning
to Malaysia to join PETRONAS in
strategic planning and finance
roles. She held various senior
positions in PETRONAS including
as CFO of an upstream subsidiary,
PETRONAS Carigali Sdn. Bhd and
CFO at PETRONAS Exploration
and Production. From 2013-15,
Farina was the CFO of PETRONAS
Chemical Group Berhad, the
largest listed entity of PETRONAS.
Principal external appointments
Chair of Ambank Islamic Berhad
and member of the boards of
the following Malaysian listed
companies: PETRONAS Gas Berhad,
KLCC Property Holdings Berhad
and Icon Offshore Berhad. Farina
also currently sits on the board of
KLCC REIT Management Sdn. Bhd.
Key strengths and experience
A wealth of board-level and
extractive industry experience
Gareth, having chaired a number
of public and private boards, joined
EnQuest in December 2022. He is
currently the chairman of Ninety
One Plc and Ltd and was previously
chairman of Norilsk Nickel, Russia’s
largest diversified mining and
metals company. Gareth also
served on the board of Julius Baer
Group for 12 years. He has extensive
experience in extractive industries,
having spent 22 years with De
Beers and Anglo American, the
last five of which he was group
chief executive officer of De Beers.
Principal external appointments
Chairman of Ninety-One Plc
and Ltd.
Gareth Penny
Independent Non-Executive
Chairman
Appointed 6 December 2022
Key strengths and experience
Extensive energy industry and
leadership experience
Amjad worked for the Atlantic
Richfield Company (‘ARCO’) from
1984 to 1998, eventually becoming
president of ARCO Petroleum
Ventures. In 1998, he founded and
was the chief executive of Petrofac
Resources International Limited
which merged into Petrofac PLC
in 2003. In 2010, Amjad formed
EnQuest PLC, having previously
been a founding non-executive
chairman of Serica Energy PLC
and a founding partner of Stratic
Energy Corporation. Amjad was
chairman of Enviromena Power
Systems Ltd, the largest solar power
engineering company in the MENA
region, until its sale in 2017 and
was British Business Ambassador
for Energy from 2013 to 2015.
Principal external appointments
Chair of the independent
energy community for the World
Economic Forum since 2016.
Director of The Amjad and Suha
Bseisu Foundation since 2011.
Amjad Bseisu
Chief Executive
Appointed 22 February 2010
Key strengths and experience
Extensive energy, natural resource
and capital market experience
Jonathan joined EnQuest in
December 2023 as CFO Designate,
becoming EnQuest CFO on 1
February 2024. Jonathan has a
strong technical background
in geology and geoscience
alongside ten years’ capital
markets experience. In his time in
the City, Jonathan was the number
one ranked energy analyst and
co-authored a well-respected
industry handbook, ‘Oil and Gas
for Beginners’. Jonathan spent four
years as CFO of Salamander Energy
PLC, a production and development
business focused in South East
Asia. While there, Jonathan more
than doubled the post-tax margin
against a flat oil price. For the last
seven years, Jonathan was CEO
of Getech Group PLC, where he
repositioned and recapitalised the
business as a data and analytics
specialist, while also decarbonising
more than one-third of revenues.
Principal external appointments
None.
Jonathan Copus
Chief Financial Officer
Appointed 30 May 2024
Key strengths and experience
Significant global exploration
and production experience
Michael is an experienced operator
of large-scale exploration and
production assets, having worked
for over 35 years with TotalEnergies,
including managing the integration
of the Maersk Oil business.
His international career with
TotalEnergies has spanned Europe,
Asia, North and South America,
culminating in his appointment
as senior vice president North Sea
and Russia, and as Denmark
country chair in 2020. Michael
was a non-executive director
of Novatek OAO, which was listed
on the London Stock Exchange
and Moscow Stock Exchange,
between 2015 and 2021.
Principal external appointments
None.
Michael Borrell
Independent Non-Executive
Director
Appointed 5 September 2023
Committees key
Audit
Governance and Nomination
Remuneration and Social Responsibility
Sustainability and Risk
Denotes Committee Chair
A
G
R
S
G
G
R
G
A
S
R
A
A
S
R
S
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
90—91
Key corporate governance activities during the year
Activity
Purpose
Result
Succession
planning
and Board
composition
Creating a balanced
Board, continuous
refreshing of talent,
and development
of internal talent
•
Appointment of Rosalind Kainyah and Marianne Daryabegui as Non-Executive Directors
•
Appointment of Jonathan Copus as Chief Financial Officer and Executive Director
•
Confirmed Committee membership following new appointments
Committee
structure
Ensuring the appropriate
support is provided to
the Board
•
Sustainability Committee renamed Sustainability and Risk Committee to ensure
effective oversight of risk and sustainability matters
Refinancing
Strengthening the
balance sheet
•
Offering of $160.0 million aggregate principal notes
• Repayment of term loan
Business
development
Ensure funding of
opportunities to support
the strategy
•
Approval of the installation of the Magnus Flare Gas Recovery system
•
Acquisition of assets in Vietnam and other M&A activities
Governance
To align the culture with
strategy and enable
effective delivery
• Share repurchase programme
•
Establishing Handrails website – a one stop website for employees regarding
compliance materials and training
•
Audit Committee and Sustainability and Risk Committee terms of reference update
•
Shareholder engagement in relation to remuneration policy
Further details of the Board’s activities and how they support compliance with the Corporate Governance Code are shown in the table
on page 97.
1
During the year, the Sustainability Committee changed its name and became the Sustainability and Risk Committee
2 Committee Chair
EnQuest Structure
EnQuest PLC
Board of Directors
Chief Executive
Remuneration
and Social
Responsibility
Committee
Rosalind Kainyah
2
Farina Khan
Gareth Penny
Sustainability and
Risk Committee
1
Michael Borrell
2
Rosalind Kainyah
Marianne Daryabegui
Audit
Committee
Farina Khan
2
Michael Borrell
Marianne Daryabegui
Governance and
Nomination
Committee
Gareth Penny
2
Amjad Bseisu
Michael Borrell
North Sea
Leadership Team
Executive
Committee
Investment
Committee
HSEA
Directorate
EnQuest’s proactive
governance ensures
that the Company
is well prepared to
navigate the evolving
dynamics of the
energy industry.
Chairman
Gareth Penny
Dear shareholder,
On behalf of the Board of Directors (the ‘Board’) I am delighted to
introduce EnQuest’s Corporate Governance Report for 2024.
Throughout the year the Board has played its part in setting the
purpose, tone and culture of the organisation. Towards the end
of 2024, an external Board evaluation was conducted and it was
concluded that the Board was both highly effective and well run.
I am very encouraged by the results. To find out how the evaluation
was conducted, please see page 99.
The Company has recently widened its opportunity landscape
with an increased focus on South East Asia and we were pleased
to announce on 22 January 2025, a new country entry into
Vietnam. This transaction aligns with the Group’s strategic aim
to grow its international operating footprint by investing in fast-
payback assets, with low capex and reduced carbon intensity.
It has also been a significant year for the Company as we
celebrated its successful ten-year presence in Malaysia. I was
pleased to be able to join the celebrations held in Kuala Lumpur
which were attended by our Malaysian employees and Farina
Khan, our Senior Independent Director.
On 29 April 2024 we announced the commencement of the share
repurchase programme of our Ordinary shares of 5 pence each of
up to $15 million. Details of the share repurchase programme can
be found on pages 121 and 166. In addition, in September the Group
announced the pricing of its offering of $160.0 million aggregate
principal amount of 11 5/8% senior notes due 2027. The Group used
these proceeds to repay and cancel all amounts outstanding
under its US Dollar second lien term loan facility and for general
corporate purposes, including payment of costs and expenses
related to the transaction.
As highlighted in the 2023 Annual Report, we made a number
of Board appointments in 2024, seeking specific skills to
ensure alignment with our strategy. Marianne Daryabegui and
Rosalind Kainyah were appointed to the Board as Non-Executive
Directors. Marianne is a seasoned capital markets adviser and is
currently the Head of Financing, Capital Markets and M&A of the
Arverne Group. She currently sits on our Audit Committee and
Sustainability and Risk Committee. Marianne’s biography can be
found on page 91. Rosalind has over 30 years of international, legal,
operational, executive and board experience in a variety of sectors,
including energy, oil and gas, mining, infrastructure, private equity,
financial services and manufacturing. Rosalind’s biography can
be found on page 91. Jonathan Copus was also appointed to
the Board as an Executive Director. Jonathan joined us as CFO
Designate in December 2023, and after a formal transition process
became CFO on 1 February 2024. Details of Jonathan’s biography
can be found on page 90. All the appointments were made on
30 May 2024 following the conclusion of the 2024 Annual General
Meeting (‘AGM’).
The Board continues to take great interest in Veri Energy Limited
(‘Veri’), a wholly owned subsidiary of EnQuest PLC, and is pleased
that Gavin Templeton, who has previously held senior leadership
positions in the energy transition sector, was appointed as CEO
of Veri following Salman Malik’s departure. Gavin joined Veri in
October 2024 to lead the overall strategic direction and execution
of Veri Energy’s project portfolio and reports regularly to the
Board on the activities of the company. More detail regarding
Veri activities can be found on page 30.
This year at EnQuest has been challenging but also productive
and fulfilling, and I am pleased to be entering into 2025 with
a strong and supportive Board. I am confident that my fellow
Directors, senior management and the wider EnQuest team will
deliver our strategy and create a strong future for the Group.
Gareth Penny
Chairman
26 March 2025
Chairman’s letter
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
92—93
Conducting these activities ensures that the Board can
understand the priorities of employees, which in turn supports
the Company’s business model, purpose and Values.
EnQuest’s Code of Conduct underpins the governance and
culture of the Group. All personnel are required to be familiar
with the Code of Conduct, which sets out the behaviours that the
organisation expects of those who work at and with the Group.
The Code of Conduct is regularly reviewed and updated to ensure
it supports ethics and compliance best practice. The Group’s
Values complement the behaviours contained within the Code of
Conduct and are a key part of the Group’s identity. They guide the
workforce as they pursue EnQuest’s strategy and delivery of SAFE
Results. In 2024, the Group established its Handrails website – a
standalone website containing all internal policies and external
training programmes. All staff are required to enrol onto the course
programme on the website with courses such as anti-bribery and
corruption training and data protection training being mandatory
for all staff.
Workforce concerns
Through the Forum; regular briefings (which include an
opportunity for the workforce to ask questions to management);
the promotion of its Code of Conduct and Values; and various
communication media, the Group seeks to set positive,
appropriate standards of conduct for its people within an
open, dynamic and inclusive culture. The Group encourages
all employees to escalate any concerns and, as part of its
whistleblowing procedure, provides an external ‘speak-up’
reporting line which is available to all employees, allowing for
anonymous reporting through an independent third party. Where
concerns are raised, these are investigated and reported to the
Legal and Commercial Director and Chair of the Audit Committee,
with follow-up action taken as soon as practicable thereafter.
Stakeholder engagement
EnQuest continued to have an active and constructive dialogue
with its shareholders throughout the year to understand their
views on governance and performance against strategy.
The Company’s engagement activities were conducted through
a planned programme of investor relations activities, including
meetings with:
•
Credit and equity investors and research analysts with regard to
the Group’s performance against guidance and strategic aims;
•
A selection of the Group’s larger shareholders directly with
Board Chairman, Gareth Penny, to discuss Group strategy and
governance; and
•
Retail investors at the Company’s AGM.
The Group also delivered presentations alongside its half-year
and full-year results, including separate sessions designed to give
retail investors an opportunity to engage on the Group’s results,
copies of which are available on the Group’s website, under
‘Investors’ at www.enquest.com, as well as ad hoc presentations
at investor conferences. The Group’s results meetings are followed
by investor roadshows with existing and potential new investors.
These meetings, which take place throughout the year, other than
during closed periods, are organised directly by the Company, via
brokers and in response to direct investor requests.
EnQuest’s Investor Relations team and Company Secretarial
department respond to queries from shareholders, debt holders,
analysts and other stakeholders, all of whom can register on the
website to receive email alerts of relevant Group news. EnQuest’s
registrars, MUFG Corporate Markets (previously known as Link
Group) also has a team available to answer shareholder queries in
relation to technical and administrative aspects of their holdings.
The Board is routinely kept informed of investor feedback, broker
and analyst views and industry news in a paper submitted at each
Board meeting by the Group’s Head of Investor Relations and as
required on an ad hoc basis.
The Board is also kept informed of relevant developments relating
to other stakeholder groups such as suppliers, regulators, partners
and governments, as required by the Executive Directors and/or
the appropriate functional management and considers potential
impacts on these groups of principal decisions made during the
course of the year (see page 84 for more details).
Board agenda and key activities throughout 2024
During 2024, Board meetings have been held both virtually and in
person, taking advantage of technology to ensure that decision
making can be carried out efficiently and in a cost-effective
manner. However, being cognisant of the importance of personal
connections and the need to build relationships, three face-to-
face meetings were held during the year. These meetings were
aligned with Committee meetings to maximise the benefit of
travel. Along with the Board meetings, two Board dinners took
place, where Directors were able to explore issues and exchange
ideas informally. The Executive Committee attended all of the
dinners, and during the Board’s October 2024 Aberdeen visit, the
North Sea Leadership team was also invited.
Directors’ attendance at Board meetings in 2024
Meetings
attended
Scheduled meetings 2024
Executive Directors
Amjad Bseisu
Jonathan Copus
1
6/6
3/3
Non-Executive Directors
Gareth Penny
Michael Borrell
Marianne Daryabegui
1
Rosalind Kainyah
1
Farina Khan
6/6
6/6
3/3
3/3
6/6
1
Jonathan, Rosalind and Marianne have been in attendance for all meetings held
since their appointments on 30 May 2024
2
Rani Koya and Liv Monica Stubholt resigned as Directors on 30 May 2024. They
attended all meetings that they were eligible to attend (3/3)
Statement of compliance
The Board believes that the manner in which it conducts its business is important and it is committed to delivering the highest standards
of corporate governance for the benefit of all of its stakeholders. The Directors understand and respect their duties to stakeholders
under Section 172 of the Companies Act 2006 and considerations related to stakeholders are reflected throughout this Annual Report
and Accounts (‘2024 ARA’). The Section 172 Statement can be found on page 84. The Company applies the principles and complies with
the provisions of the Financial Reporting Council‘s UK Corporate Governance Code 2018 (the ‘Code’) which was effective for accounting
periods beginning on or after 1 January 2019 except in respect of Provision 41 and Provision 32, both page 97. The Code can be found on
the Financial Reporting Council’s website at www.frc.org.uk. Detailed below is EnQuest’s application of, and compliance with, the Code.
To avoid duplication, cross-references to appropriate sections within the 2024 ARA are provided. EnQuest notes that the new Corporate
Governance Code is due to take effect on 1 January 2025 and intends to report against the revised provisions (as applicable) in the 2025
Annual Report and Accounts.
The manner in which the Company has applied the principles of the Code can be found in the following sections:
Corporate governance statement
Board leadership and Company purpose
•
Corporate governance statement (page 94)
• Strategic report (page 03)
• Stakeholder Engagement (page 84)
•
Purpose, Values and Culture (pages 02, 86)
•
Workforce policies and practices (page 52)
•
Key activities of the Board in 2024 (page 97)
Division of responsibilities
•
Board biographies incl. external appointments (page 90)
•
Corporate governance statement (page 94)
Composition, succession and evaluation
•
Governance and Nomination Committee report (page 98)
•
Board and committee composition (page 93)
• Succession planning (page 99)
• Board diversity (page 99)
•
Board training and evaluation (page 99)
Audit, risk and internal control
• Strategic report (page 03)
•
Audit Committee report (page 101)
•
Sustainability and Risk Committee report (page 118)
• Financial Reporting (page 138)
•
Internal financial controls (page 105)
•
Internal and external audit (page 106)
• Risk management (page 118)
Remuneration
•
Directors’ Remuneration Report (page 106)
•
Alignment with strategy and performance (page 106)
• Shareholder engagement (page 108)
•
Executive Directors policy (page 109)
Board leadership and Company purpose
The Board takes seriously its roles in promoting the long-term
success of EnQuest, generating value for shareholders, having
regard to the interests of other stakeholders and contributing to
wider society. How the Company manages these areas can be
found in the Strategic report, in particular within the ‘Who we are
and what we do’ section on the inside front cover and page 02.
The Board is responsible for:
•
The Group’s overall purpose and strategy;
•
Health, safety and environmental performance;
•
Review of business plans and trading performance;
•
Approval of major capital investment projects;
• Acquisition and divestment opportunities;
•
Review of significant financial and operational issues;
•
Review and approval of the Group’s financial statements;
•
Oversight of control and risk management systems;
•
Succession planning and appointments; and
• Oversight of employee culture.
Culture
The Board ensures that the culture of the Group is aligned with
its purpose, Values and strategy. EnQuest’s Values (which are
detailed at www.enquest.com/about-us/our-values) embody
the ethos of the Group, and the Board carefully monitors and
promotes a positive, inclusive and SAFE culture. The Board believes
that engaged and committed employees are integral to the
delivery of the Group’s business plan and strategy and, to assist
this, on joining the Company, the Chairman of EnQuest took on the
role of designated Director for employee engagement. During his
tenure as the designated Director, he attended the meetings of the
Company’s Employee Forum (the ‘Forum’) and made regular visits
to the Company’s offices, including attending the Kuala Lumpur
office’s ten-year celebration of EnQuest activities in Malaysia.
He also went offshore and visited the Magnus platform. Rosalind
Kainyah became the Company’s designated Director in October
2024 and has continued to meet with the Forum on a regular basis.
These meetings are reported to the Board to ensure the Directors
are aware of staff concerns. More detail on the activities on the
Forum can be found on page 52. In addition to these activities,
in October 2024 the Board members travelled to the Aberdeen
office and met for breakfast seminars and conducted workshops
with employees, where matters such as risk and strategy were
discussed. Feedback from employees confirmed that the activities
had been welcomed and viewed as a positive addition to the
workforce engagement programme.
The table below sets out matters that the Board discuss at each meeting and the key activities that have taken place throughout
this period.
Key activities for the Board throughout 2024
Strategy
Operation
Governance
Stakeholders
•
Key projects, their status and
progress made
• Strategy update
• Key transactions
• Financial reports and
statements
•
Liquidity and financing
• HSEA
• Production
• Operational issues and
highlights
• HR matters
• Key legal updates
• Emission reductions
• Succession planning
• Assurance and risk
management
• Key governance developments
•
Investor relations and capital
market updates
• Employee engagement
• Government and regulator
engagement
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
94—95
Audit Committee
The Audit Committee responsibilities include reviewing
the effectiveness of the Group’s internal controls and risk
management systems, including the adequacy of the Company’s
arrangements for whistleblowing and procedures for detecting
fraud. The Committee is also in charge of approving statements to
be included in the Annual Report concerning risk management as
well as monitoring and reviewing the effectiveness of the Group’s
internal audit capability, and oversight of external auditors, in the
context of the Group’s overall risk management system. The work
of the Audit Committee is on pages 101 to 106.
Remuneration and Social Responsibility Committee
The Remuneration and Social Responsibility Committee is
responsible for assessing the Group’s performance and for
determining appropriate performance-related compensation
in alignment to the Group’s Remuneration Policy and the Code. It
reviews and takes note of institutional shareholder guidelines. At the
2024 AGM the Remuneration Policy was submitted to shareholders
for approval. As part of a process of regular review the Committee
considered the Policy again in autumn 2024 and consulted with
major shareholders to ensure it remained appropriate. It was agreed
that no changes were necessary and so the Policy, as approved
last year, remains in place. There was no engagement with the
workforce explaining how executive remuneration aligns with the
wider company pay policy due to no changes being made to the
Policy (being a departure from Code Provision 41). In addition to
remuneration, the Committee also monitors the social responsibility
activities of the Company, see page 50. The work of the Remuneration
and Social Responsibility Committee is set out on pages 107 to 117.
Gareth Penny, Chairman of EnQuest, acted as interim Chair of the
Committee in 2024 while there was a vacancy for the position
(being a departure from Code Provision 32). Rosalind Kainyah
became Chair of the Committee following her appointment as
a Director in May 2024 (see Code Provision 32). More information
can be found on page 99.
Sustainability and Risk Committee
To emphasise the Board’s view of the importance of risk
and risk monitoring, the Sustainability Committee was
renamed as the Sustainability and Risk Committee in 2024.
This Committee continues to progress its comprehensive
Risk Management Framework and has conducted a robust
assessment of the principal risks facing the Group, which are
outlined on pages 56 to 71 of the Strategic report. The work of
the Committee, which includes monitoring HSEA issues and
oversight of decarbonisation matters, is on pages 118 to 119.
This Committee is responsible for providing the Board with
additional technical insight when making Board decisions.
The Committee also reviews material controls and held a joint
discussion with the Audit Committee in 2024 to review the
oversight of risk to ensure it was appropriately managed.
Governance and Nomination Committee
The Governance and Nomination Committee leads the process
for appointments and regularly reviews the structure, size and
composition of the Board. It also considers succession planning for
the Executive Committee and has expanded its remit to cover all
aspects of the Code. The work of the Governance and Nomination
Committee, including information regarding the Board’s diversity
and the Company’s associated policy, recruitment and the Board
annual evaluation process, is on pages 98 to 100.
Conflicts of interest and compliance
The Group has procedures in place which identify and, where
appropriate, manage conflicts or potential conflicts of interest
with the Group’s interests. In accordance with the provisions
relating to Directors’ interests in the Companies Act 2006, all
Directors are required to submit details to the Company Secretary
of any situations which may give rise to a conflict or potential
conflict. The Board is satisfied that formal procedures are in place
to ensure that authorisation for potential and actual conflicts
of interest are dealt with efficiently. Directors are required to
obtain Board approval before accepting any further external
appointments. For example, when Farina Khan notified the Board
that she was considering a role of Chair at Ambank Islamic
Berhad she advised of her current time commitments and that
she would be stepping down from two committees to ensure
sufficient time for the new role and her current responsibilities
at EnQuest. The Board, having considered her appointment and
time commitments, was satisfied that she could meet the needs
of EnQuest alongside the new position and her other current roles
and so approved the appointment.
The Group is committed to behaving fairly and ethically in all
of its endeavours and has policies which cover anti-bribery,
anti-corruption, data protection and anti-facilitation of tax
evasion. The anti-bribery and corruption programme is
reviewed annually by the Board and a compulsory online
anti-corruption training course, alongside data protection
training, is required to be completed by all staff. Additional
information can be found on page 39 and in the Code of
Conduct which is available on the Group’s website. The
Group also launched its Handrails website to provide easy
access to the Group’s governance materials and training
on a broad range of ethics and compliance topics including
fraud, money laundering, competition law and sanctions.
Board education
All Directors receive an induction pack and meet with
management on joining the Company. They are also offered
Director training and memberships of organisations which deliver
knowledge and training to Non-Executive Directors. Education is
provided from time to time by the Company Secretary or external
advisers. For example, a session was held with external counsel
to discuss governance updates which included changes to the
listing regime, Economic Crime and Corporate Transparency
Act and other trends in audit, corporate governance and
sustainability reporting.
2024 Annual Report and Accounts (‘ARA’)
The Directors are responsible for preparing the 2024 ARA and
consider that, taken as a whole, the 2024 ARA is fair, balanced
and understandable, and provides the necessary information for
shareholders to assess the Company and Group’s position and
performance, business model and strategy.
Annual General Meeting (‘AGM’)
The Company’s AGM is ordinarily attended by the Directors
and executive and senior management and is open to all
EnQuest shareholders to attend. The 2025 AGM will be held
on 27 May 2025 at Sofitel St James, 6 Waterloo Place, London
SW1Y 4AN, United Kingdom.
Division of responsibilities
There is a clear division of responsibilities between the Board and
the executive leadership of EnQuest. The roles of the Chairman
and Chief Executive are not exercised by the same individual.
Chairman
The Chairman is responsible for the leadership of the Board,
setting the Board agenda and ensuring the overall effective
working of the Board. The Chairman holds regular one-to-one
and group meetings with the Non-Executive Directors without the
Executive Directors present.
Chief Executive
The Chief Executive is accountable and reports to the Board.
His role is to develop strategy in consultation with the Board, to
execute that strategy following presentation to, and consideration
and approval by, the Board and to oversee the operational
management of the business.
Senior Independent Director
The Senior Independent Director (‘SID’) is available to shareholders
if they have concerns where contact through the normal channels
of the Chairman or the Executive Directors has failed to resolve
an issue, or where such contact is inappropriate. The SID acts
as a sounding board for the Chairman and also conducts the
Chairman’s evaluation on an annual basis. Farina Khan is currently
the SID for EnQuest.
Non-Executive Directors
The Non-Executive Directors combine broad business and
commercial experience from oil and gas and other industry
sectors. They bring independence, external skills and objective
judgement, and constructively challenge the actions of executive
and senior management. This is critical for providing assurance
that the Executive Directors are exercising good judgement in
delivery of strategy, risk management and decision making. They
receive a monthly report on Group performance and updates
on major projects, irrespective of a meeting taking place, which
allows them to monitor performance regularly. In addition, they
hold to account the performance of management and individual
Directors against agreed objectives and assess and monitor
the culture of the Company. All Directors of EnQuest have been
determined to have sufficient time to meet their responsibilities
and this is monitored on a regular basis. At the date of this report
there are seven Directors, consisting of two Executive Directors
and five independent Non-Executive Directors (including
the Chairman).
Company Secretary
The Company Secretary is responsible for advising the Board,
through the Chairman, on all Board procedures and governance
matters. In addition, each Director has access to the advice and
services of the Company Secretary. The Company Secretary
assists with the ongoing training and development of the Board
and is instrumental in facilitating the induction of new Directors.
The appointment and removal of the Company Secretary is a
Board matter. The Company Secretary supports the Chairman in
the provision of accurate and timely information. Board agendas
are drawn up by the Company Secretary in conjunction with the
Chairman and with agreement from the Chief Executive. All Board
papers are published via an online Board portal system which
offers a fast, secure and reliable method of distribution.
Independence
The Chairman was independent on appointment. The Board
considers that all the Non-Executive Directors continue to remain
independent and free from any relationship that could affect, or
appear to affect, their independent judgement. Information on the
skills and experience of the Non-Executive Directors can be found
in the Board biographies on pages 90 and 91.
Committees
The Board has four Committees which meet on a regular basis and
report back to the Directors at each Board meeting. This allows for
the Board to be informed of important Committee business and,
if necessary, to discuss issues should they need to be escalated to
Board level. There are formal terms of reference for each Committee
which set out the scope of authority of the Committee, satisfy the
requirements of the Code and are reviewed and approved on an
ongoing basis by the Board. Copies of the terms of reference are
available on the Group’s website, www.enquest.com. Membership
and attendance of each Committee can be found on the
dedicated Committee pages, details of which are found below.
Corporate governance statement
continued
Board discussions and outcomes
Code requirements
Key Board discussions
Outcome
• Ensuring an effective and
entrepreneurial Board to promote
long-term sustainable success
• Macroeconomic environment
• Growth opportunities, including
new energy and decarbonisation
developments at the Sullom Voe Terminal
and potential acquisitions
• Board evaluation results
• Training and knowledge refresh
•
The Board discusses growth opportunities
at every Board meeting, including at the
opportunity costs of pursuing ventures
•
Training on corporate governance and
compliance; anti-corruption and bribery;
and on Directors’ responsibilities
•
Board member engagement with the
Employee Forum, which drives staff culture
• Establishing and aligning purpose,
Values and strategy with culture
•
Culture, Values and ESG are included in
Company Performance Indicators
•
Launch of 2024 Offering of notes
•
Regular in-depth reviews of risks and their
mitigants through its Committees
•
Ensuring necessary resourcing is in
place and establishing a framework of
controls to enable risk to be assessed
•
Rigorous assessment of the Group’s
liquidity requirements
• Reviewed Risk Management Framework
•
Reviewed principal risks and uncertainties
and emerging risks
•
UK and South East Asia regulatory
environment
•
Refinancing the Group’s debt facilities
•
Evolution of the Risk Management
Framework
•
Discussion and alignment on compliance
with regulatory requirements
• Effective engagement with
shareholders and stakeholders
•
Updates provided at each Board meeting
• Debt investor engagement
• Annual General Meeting
• Ensuring workforce policies and
practices are consistent with the
Company’s Values
• Ethics and compliance
•
Company Code of Conduct and
associated policies updated
• Established Handrails website
•
Appointments are subject to formal
rigorous and transparent procedure
with effective succession plan for
Board and senior management
• Appointment of NEDs
• Appointment of CFO
• Detailed discussions on succession
planning and review of roles and
accountabilities of Executive Committee
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
96—97
Good governance
is more than a
requirement,
it is the key to
business success.
Chair of the Governance and
Nomination Committee
Gareth Penny
Dear shareholder,
In 2024 the Committee focused on Board composition, in
particular further recruiting two new members as both Rani Koya
and Liv Monica Stubholt had advised the Company that they
would be both stepping down at the May 2024 Annual General
Meeting (‘AGM’). We also required a new Chair of the Remuneration
and Social Responsibility Committee as I was chairing the
Committee on an interim basis following Karina Litvack’s
departure towards the end of 2023.
I’m very pleased that after a thorough search process (which
was detailed in the Company’s 2023 Annual Report on page 89),
the Committee recommended Rosalind Kainyah and Marianne
Daryabegui to the Board for appointment. After due consideration
the Board agreed with our recommendation and proposed their
appointments to you, our shareholders, at the May 2024 AGM.
The Committee also recommended to the Board that Rosalind,
with her previous Remuneration Committee experience, become
Chair of the Remuneration and Social Responsibility Committee,
and also join the Sustainability and Risk Committee. Marianne,
with her strong financial background joined the Audit Committee
and also sits on the Sustainability and Risk Committee. Mike Borrell
took over as Chair of the Sustainability and Risk Committee from
Rani Koya.
At the end on 2024, the Board held an external performance
evaluation. I am encouraged by the findings which concluded
that the Board was well run and that its members’ skills reflected
the requirements of the Company. New Board members have
settled in quickly and are demonstrating that their appointments
were well made. More information on this can be found on the
following page.
Gareth Penny
Chair of the Governance and Nomination Committee
26 March 2025
Governance and Nomination Committee report
Governance and Nomination Committee membership
The composition of the Governance and Nomination Committee is
set out below, along with attendance at the scheduled meetings.
Appointment dates and attendance at the four scheduled
meetings are set out below:
Member attended
Date appointed as
Committee member
Meetings
attended
Gareth Penny
Amjad Bseisu
Michael Borrell
6 December 2022
22 February 2010
5 September 2023
4/4
4/4
4/4
Main responsibilities
The core work of the Governance and Nomination Committee is
to ensure that the Board and its Committees support the strategy
of the Group. The Board currently comprises seven members; five
Non-Executive Directors and two Executive Directors. The Board is
characterised by a collaborative approach which works to create
strong leadership with individual Directors who collectively bring
a diverse mix of talent and experience to the Company.
The main responsibilities of the Committee are to:
•
Review the size, structure and composition (including the skills,
experience, independence, knowledge and diversity) of the
Board and its Committees;
•
Ensure the orderly succession of Executive Directors, Non-
Executive Directors and executive and senior management;
•
Identify, evaluate and recommend candidates for appointment
or reappointment as Directors or Company Secretary, taking
into account diversity, including gender, social and ethnic
backgrounds, cognitive and personal strengths and the balance
of knowledge, skills and experience required to serve on the Board;
•
Review the outside directorships/commitments of
Non-Executive Directors; and
•
Exercise oversight of the compliance of the Company with
the Corporate Governance Code (the ‘Code’) and ensure the
relevant practices are applied as when the Code is updated.
The Committee’s full terms of reference can be found on the
Group’s website, www.enquest.com, under Corporate Governance.
changes, there was no concern regarding succession planning
at this time. It was concluded that the Directors worked well
together and contributed effectively to the Company. The Board’s
Committees were also reviewed and were found to be well run and
adhering to their Terms of Reference. There were no major findings
from the Board or Committees review, however, a suggestion
that, despite extensive review at the Audit Committee, additional
oversight be given to IT matters was accepted.
The Chairman’s review formed part of the external evaluation and
it was concluded that he was highly rated by his fellow Directors
and led the Board well, encouraging debate and ensuring all
views are aired. It was added that both the Chairman and CEO
were respectful of Board opinions and complemented each
other’s skills.
The key areas from the 2023 review were monitored and
progressed during the year. These included ensuring that the
Board understood stakeholder expectations, which was facilitated
by a presentation by the Head of Investor Relations; a review and
renewal of the Company’s diversity policy; employee engagement
activities, which included a Board visit to the Aberdeen office, see
page 94; the appointment of a Chair of the Remuneration and
Social Responsibility Committee (noting that the Company Chair
was not the right person to lead said Committee); and to ensure
risk matters remained adequately covered at Board level.
Re-election to the Board
Following a review of the effectiveness of the Board, the Governance
and Nomination Committee confirms that it is satisfied with both
the performance and the time commitment of each Director
throughout the year. The Committee also remains confident
that each of them is in a position to discharge their duties to the
Company in the coming year and that together they continue to
bring the necessary skills required to the Board. Board approval is
required should a Director wish to accept a further external role, see
page 96 for an example of the decision-making process. Detailed
biographies for each Director, including their skills and external
appointments, can be found on pages 90 to 91.
Priorities for the coming year
The main focus of the Committee in 2025 will be continued
oversight of Board and Committee composition.
Boardroom diversity
The Group’s Diversity, Equity and Inclusion Policy can be found
on the Group’s website at www.enquest.com/environmental-
social-and-governance/social/people. The Policy aligns with the
Company’s Values, which incorporate both respect and openness.
The Group seeks diversity in its employee base, recognising that
those from different backgrounds, experience and abilities can
bring fresh ideas, perspectives and innovation to improve the
business and working practices. In 2024, the Board considered the
diversity of the organisation, targets and the means to improve
diversity. As a result of this consideration, there was an updated
Diversity, Equity and Inclusion Policy published. The Board also
encouraged the Company in STEM engagement with specific
emphasis on Women in STEM, with a focus on STEM education
across the wider school and university community.
The Board Diversity Policy is aligned with the expectations of
Listing Rule 6.6.6 R(9). As at 31 December 2024 (being the reference
date chosen for the purposes of the Listing Rule) at least 40% of
the individuals on the Board were women (42.86%); one of the
CEO, CFO, Chair or SID is a woman (the SID is Farina Khan); and
at least one individual is from a minority ethnic background
(three members). Recent appointments have been made with
diversity of age, gender, ethnicity, sexual orientation, disability
or educational, professional and socio-economic backgrounds
in mind. There have been no changes to the Board since the
reference date.
Committee activities during the year
The Governance and Nomination Committee met four times in
2024. Its key activities included:
Board appointments
Rosalind Kainyah and Marianne Daryabegui were both appointed
as Non-Executive Directors on 30 May 2024, following shareholder
approval at the 2024 AGM. Jonathan Copus, the Company’s Chief
Financial Officer, was appointed as an Executive Director at the
2024 AGM. All appointments were subject to a formal, rigorous
and transparent procedure and as explained in the Company’s
2023 Annual Report, were conducted by an independent external
provider, Spencer Stuart. Their biographies are on page 90 to 91.
Committee appointments
As detailed in the Chairman’s letter, the Committee reviewed the
composition of the Board Committees at various stages during
the year and the new Board members were allocated committees
accordingly. Membership of which can be found on page 93. The
appointment process was fully detailed in the 2023 Annual Report.
In 2023, Gareth Penny, Chairman of EnQuest, stepped into the role
as interim Chair of the Remuneration and Social Responsibility
Committee. This was not recommended under Code Provision
32 which stipulates that the chair of a company may not chair
a remuneration committee. Hence, following her appointment
in May 2024, Rosalind Kainyah was appointed as Chair of the
Remuneration and Social Responsibility Committee.
Structured Board succession planning
Succession planning is an important part of the Committee
and the Board’s deliberations and is aimed at both senior
management and the wider organisation, such as identifying
and developing high potential individuals.
To ensure the Board remains adequately resourced, effective, and
aligned with the Company’s strategic priorities, the Governance
and Nomination Committee oversees a robust succession
planning process, spanning short, medium, and long-term
horizons. This process encompasses diversity, sector expertise,
and leadership capabilities. At the current time, given the short
tenure of the majority of the Directors and the current skillset, the
Board is considered to be well positioned for the future.
In considering a Board composition which best serves the
strategy, Values and Company Purpose into the future, the Board
has adopted diversity targets which align to the expectations
of Listing Rule 6.6.6 R(9). Its membership represents a spread
of backgrounds and experiences which cover the oil and gas
industry and other industries, including those supporting the
energy transition. See pages 90 to 91 for biographies.
The Board and the Governance and Nomination Committee
remain satisfied that the individuals currently fulfilling key
executive and senior management positions in the Group
have the requisite depth and breadth of skills, knowledge and
experience to ensure that orderly succession to the Board and
Executive Committee can take place. The Group continues to
work to identify capability, strengths and development gaps
and to develop the process for encouraging and supporting
high-potential employees.
Board performance review
The 2024 Board performance review was conducted externally
by CorpStat Governance Services. CorpStat Governance Services
has no other connection with the Company or individual Directors.
The next external performance review will take place in 2027. The
review was conducted via questionnaire and interview with each
Director. Interviews with the Company’s broker and external audit
partner were also conducted.
The results from the review, which were discussed in detail at
the February 2025 Board meeting, considered that the Board,
as a whole and individually, was very effective, especially given
the Board changes over recent years. Due to the recent Board
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
98—99
With regards to DTR 7.2.8AR, noting that the Board Diversity policy
applies equally to its Committees, while most of the Board
Committees are both gender and ethnically diverse, due to the
small size of the Board (there being five Non-Executive Directors,
including the Chairman of the Company) the Governance and
Nomination Committee remains 100% male; this will be reviewed
going forward. The target for the Executive Committee is for a 33%
diverse membership. At the reference date, excluding the CEO and
CFO, it was 20% ethnically diverse and 40% gender diverse. At the
date of publication of this report it is, excluding the CEO and CFO,
33.3% ethnically diverse and 33.3% gender diverse.
Although not a FTSE 350, the Board and Committee is cognisant
of the FTSE Women Leaders Review target of 40% female
representation on the Board and leadership teams and
remains ahead of the Parker Review target with respect to
minority ethnic representation.
The tables below set out information, as required by Listing Rule
6.6.6R(10), at 31 December 2024. Data was gathered by asking
each Director and member of the Executive Committee to
self-report via email their response to the information required
by the Listing Rule.
Note:
1
Breakdown of percentages: Directors (three female, four male); senior managers
(nine female, 49 male); employees (134 female, 533 male). Senior management and
total employee figures include EnQuest’s employees in Dubai, Malaysia and the UK
2
Per Code Provision 23 – this is the gender balance of those in the senior
management and their direct reports
Number of
Board members
Percentage of
the Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)
Number in
executive
management
Percentage of
executive
management
Men
4
57.15%
3
3
60%
Women
3
42.86%
1
2
40%
Not specified/prefer not to say
–
–
–
–
–
Number of
Board members
Percentage of
the Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)
Number in
executive
management
Percentage of
executive
management
White British or other White
(including minority-white groups)
4
57.14%
1
4
80%
Mixed/Multiple Ethnic Groups
–
–
–
–
–
Asian/Asian British
1
14.29%
1
1
20%
Black/African/Caribbean/Black British
1
14.29%
–
–
–
Other ethnic group
1
14.29%
1
–
–
Not specified/prefer not to say
–
–
–
–
–
Governance and Nomination Committee
continued
Directors
Senior
managers
Employees
Senior
managers and
Direct reports
2
88.14%
11.86%
57.15%
42.86%
80%
64%
20%
36%
Female
Male
0
20
40
60
80
100
The chart below illustrates gender breakdown of EnQuest’s
Directors and workforce as at 31 December 2024
1
.
EnQuest PLC Annual Report and Accounts 2024
Audit Committee report
The Committee has
continued to provide
robust review and
challenge of the
Group’s financial
reporting and system
of internal controls.
Chair of the Audit Committee
Farina Khan
Dear fellow shareholder
I am pleased to present the Audit Committee report for the year
ended 31 December 2024, covering our activities over the course
of the year.
The Audit Committee oversees and monitors the Group’s
financial reporting (including reporting on the financial aspects
related to climate change), external and internal audit and the
effectiveness of the system of internal financial and IT-related
controls. The Committee also works closely with the Sustainability
and Risk Committee in matters of mutual interest, including any
recommendations arising from internal audit assurance in the
matter of risk and risk management.
More information on the role and responsibilities of the Committee
and its terms of reference, which are reviewed annually, can be
found at www.enquest.com/investors/corporate-governance.
In addition to the standing agenda items for the year, the
Committee also considered a variety of other focus areas
including: the evolving cyber security landscape and the Group’s
response; updates to standards issued by the Institute of Internal
Auditors (‘IIA’); EnQuest PLC’s shareholder distribution capacity;
simplification of the Group’s legal entity structure; reviewing
Corporate Governance updates, including the Group’s approach
to compliance with the changes to Provision 29 with respect to
risk management and internal control (in conjunction with the
Sustainability and Risk Committee); and investor and regulator
focus areas. With the updates to the UK Corporate Governance
Code (the ‘Code’) issued in January 2024, most of which are
effective from 1 January 2025 with the exception of Provision
29, which is effective from 1 January 2026, the Committee and
management remain committed to reviewing the Group’s existing
risk management and control environment and associated
reporting to ensure it remains robust and appropriate.
There was continued review and challenge on progress against
control and process improvements, including IT controls,
identified in conjunction with the Group’s external auditor. It
was pleasing to see that significant progress during the year
was made in this regard by management, particularly around
privileged access controls and financial and ESG reporting
process improvements. Given the volatile global environment,
the Committee also continued to ensure that key judgements
and estimates made in the financial statements, such as the
recoverable value of the Group’s assets, were carefully assessed.
In May 2024, we welcomed Marianne Daryabegui to the Board
and Committee. Marianne brings significant experience in capital
markets and mergers and acquisitions and I have welcomed her
contributions through the second half of 2024 as we have covered
a broad range of focus areas, including the Group’s successful
debt refinancing activities in the fourth quarter.
In November 2024, EnQuest received a letter from the Financial
Reporting Council (‘FRC’) stating that the 2023 Annual Report
and Accounts had been reviewed by the FRC’s Corporate
Reporting Review (‘CRR’) team. Whilst acknowledging the
limitations inherent in the scope of their review, it was pleasing
to see that the review resulted in no queries or questions
for management and no formal responses were required.
Several areas were noted for management’s attention where
the FRC believes that users of the accounts would benefit
from improvements to EnQuest’s reporting. These areas
have been addressed by management in the 2024 Annual
Report and Accounts, where considered appropriate.
As discussed within the Corporate governance statement,
the Committee is pleased to confirm that the actions of
the Committee were, and continue to be, in compliance
with the Code and that it is satisfied with the formal
and transparent policies and procedures in place.
Farina Khan
Chair of the Audit Committee
26 March 2025
Strategic Report
Corporate Governance
Financial Statements
100—101
Audit Committee report
continued
Committee composition
As required by the Code published in January 2024, the
Committee exclusively comprises Non-Executive Directors,
biographies of whom are set out on pages 90 and 91. The Board is
satisfied that the Chair of the Committee, Farina Khan, previously
Chief Financial officer at PETRONAS Chemical Group Berhad, and
a Fellow of the Institute of Chartered Accountants in Australia
and New Zealand, meets the requirement for recent and relevant
financial experience, with the Committee as a whole meeting the
requirement to have competence relevant to the sector in which
they operate given Michael Borrell and Marianne Daryabegui’s
respective careers in the oil and gas sector.
Membership of the Committee, appointment dates and
attendance at the four meetings held during 2024 is provided in
the table below:
Member
Date appointed
Committee member
Attendance at
meetings during
the year
Farina Khan
Liv Monica Stubholt
1
Mike Borrell
Marianne Daryabegui
1
1 November 2020
15 February 2021
6 December 2023
30 May 2024
4/4
2/2
4/4
2/2
Notes:
1
Following EnQuest’s Annual General Meeting on 30 May 2024, Liv Monica Stubholt
stepped down from the Board of Directors and her position on the Audit Committee.
On that date, Marianne Daryabegui was appointed
Meetings are also normally attended by the Chief Executive Officer,
Chief Financial Officer, Company Secretary, the external auditor,
the internal auditor, key finance team members and other senior
business managers as required. The Chairman of the Board
also attends the meetings from time to time. The Chair of the
Committee regularly meets in between Committee meetings
with the external lead audit partner and internal audit to discuss
matters relevant to the Company.
The Committee continues to monitor its own effectiveness and
that of the functions it supports on a regular basis. Through
the review of the terms of reference of the Committee, regular
meetings with the internal and external auditors and key
management personnel, the Committee has concluded that
its core duties in relation to financial reporting, internal controls,
whistleblowing and fraud, internal audit, external audit and
reporting responsibilities are being performed well.
Fair, balanced and understandable
A key requirement of the Group’s Annual Report and Accounts
is for the report to be fair, balanced and understandable. In
addition, the Annual Report should contain sufficient information
to enable the position, performance, strategy and business
model of the Company to be clearly understood and details of
measurable key performance indicators and explanations of how
the Company has engaged with its stakeholders (as set out in
the Group’s Section 172 Statement on page 84). The Committee
and the Board are satisfied that the Annual Report and Accounts
meet these requirements, with appropriate weight being given
to both positive and negative developments in the year.
With regard to these requirements, the Committee has
considered the robust process which operates when
compiling the Annual Report and Accounts, including:
•
Clear guidance and instructions are provided to all contributors;
•
Revisions to regulatory requirements, including the Code, are
communicated and monitored;
•
A thorough process of review, evaluation and verification of the
content of the Annual Report and Accounts is undertaken to
ensure accuracy and consistency;
•
External advisers, including the external auditors, provide advice
to management and the Audit Committee on best practice with
regard to the creation of the Annual Report and Accounts; and
•
A meeting of the Committee was held in March 2025 to review
and approve the draft 2024 Annual Report and Accounts in
advance of the final sign-off by the Board.
Financial reporting and significant financial statement
reporting issues
The primary role of the Committee in relation to financial reporting
is to assess, amongst other things:
•
The appropriateness of the accounting policies selected
and disclosures made, including whether they comply with
International Financial Reporting Standards; and
•
Those judgements, estimates and key assumptions that
could have a significant impact on the Group’s financial
performance and position, or on the remuneration of
executive and senior management.
Audit Committee meetings
There were four Committee meetings in 2024. A summary of the main items discussed in each meeting is set out in the table below:
Measure
March
2024
May
2024
August
2024
December
2024
Audit Committee self-evaluation assessment of its effectiveness including review of
actions identified in previous effectiveness review
√
Audit Committee terms of reference
√
√
Significant matters arising from completed internal audits
√
√
√
√
Internal audit and assurance plan for 2024 and 2025
√
√
Internal audit progress against 2024 plan, including findings since last meeting
√
√
√
√
Updates on changes to IIA Global Internal Audit Standards
√
Independence and objectivity of Internal audit
√
Joint venture audit plan for 2024, including summary findings since last meeting
√
√
√
√
Cyber security update
√
√
√
√
Capital structure and business development
√
√
√
√
Annual external audit plan
√
External (Deloitte) audit fees subject to the audit plan
√
Level of non-audit service fees for Deloitte
√
Quality, independence and objectivity of Deloitte
√
√
√
Effectiveness of Deloitte as external auditors
√
Evaluate the viability assessment
√
Appropriateness of going concern assumption
√
√
Review of half-year or full-year regulatory press release and results statements
√
√
Briefings on regulatory developments including corporate governance, fraud risk
assessment, FRC thematic reviews and climate-related matters
√
√
Key risks, judgements and uncertainties, including the consideration of climate
change, impacting the half-year or year-end financial statements (reports from
both management and external auditor)
√
√
√
Presentation on the reserves audit and evaluation of the Competent Person’s
independence and objectivity
√
Tax strategy, policy and compliance
√
Impact of UK Energy Profits levy and other tax topics
√
√
√
Management’s response to audit findings, recommendations and control
weaknesses, including potential improvements and agreed actions
√
√
√
Review of process and controls relating to the development of the Group’s internal
control framework
√
√
√
√
IT controls progress against IT audit findings
√
√
√
√
These items are considered by the Committee, together with reports from both management and its external auditor at each relevant
Committee meeting. The significant accounting and reporting areas considered, including those related to EnQuest’s 2024 Consolidated
Financial Statements, are set out below:
Significant financial statement reporting issue
Consideration
Going concern and viability
The Group’s assessments of the going concern assumption
and viability are based on detailed cash flow, covenant and the
reserves-based lending borrowing base forecasts. These are, in
turn, underpinned by forecasts and assumptions in respect of:
•
Production and costs for the next three years, based on the
Group’s approved 2025 business plan and forecasts; and
•
The oil price assumption, based on a forward curve of
$75/bbl (2025).
The Committee reviewed and considered the Directors’ half-
year and full-year statements with respect to the going concern
basis of accounting. The Board also regularly reviews the liquidity
projections of the Group. The detailed going concern and longer-
term viability analysis, including sensitivity analysis and stress
testing, along with explanations and justifications for the key
assumptions made, were presented at the March 2025 meeting.
This analysis was considered and challenged by the Committee,
including, but not limited to, the appropriateness of the period
covered, planning scenarios, including production volume
expectations, capital projects, macroeconomic assumptions,
including those associated with oil prices and inflation, stress
tests and the achievability of any mitigations that may be
required in a downside case scenario to ensure that the
Group would have sufficient headroom to continue as a going
concern. The Committee supported the going concern basis of
accounting. The disclosures in the Annual Report concerning the
viability statement and going concern assumption (see pages 37
to 38) were reviewed and approved at the March 2025 meeting
for recommendation to the Board.
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
102—103
Audit Committee report
continued
Significant financial statement reporting issue
Consideration
Potential misstatement of oil and gas reserves
The Group has total proved and probable reserves as at
31 December 2024 of 168.6 MMboe. The estimation of these
reserves is essential to:
•
The valuation of the Company;
•
The assessment of going concern and viability;
•
Impairment testing;
• Decommissioning liability provisions; and
• The calculation of depreciation.
During the March 2025 meeting, management presented the
Group’s 2P reserves, together with the report from Gaffney,
Cline & Associates, the Group’s reserves auditor (which are also
presented to the Group’s Sustainability and Risk Committee for
technical assessment).
The Committee considered the scope and adequacy of the work
performed by Gaffney, Cline & Associates and their independence
and objectivity and concurred that the estimation of reserves
had been consistently applied to the financial statements.
Impairment of tangible and intangible assets
The recoverability of asset carrying values is a significant area
of judgement. These impairment tests are underpinned by
assumptions regarding:
• 2P reserves;
•
Oil price assumptions (based on an internal view of future prices
of $75/bbl (2025), $75/bbl (2026), $75/bbl (2027) and $75/bbl
real thereafter);
•
Life of field production profiles and opex, capex and
abandonment expenditure; and
•
A post-tax market discount rate derived using the weighted
average cost of capital methodology.
For more details, see also note 2 critical accounting judgements
and key sources of estimation uncertainty: recoverability of asset
carrying values, and notes 9 and 11.
Impairment testing has been performed resulting in a pre-tax
non-cash impairment charge of $71.4 million.
At the March 2025 meeting, management presented the key
assumptions made in respect of impairment testing and the
result thereof to the Committee. The Committee considered
and challenged these assumptions, including the oil price and
discount rate used, and potential impacts of climate change
and energy transition, in line with the challenges performed as
part of the going concern and viability review. Sensitivity analysis
and disclosures estimating the effect of oil price reductions were
reviewed. Consideration was also given to Deloitte’s view of the
work performed by management.
Contingent consideration
Any contingent consideration included in the consideration
payable for a business combination or asset acquisition is
recorded at fair value at the date of acquisition. These fair values
are generally based on risk-adjusted future cash flows discounted
using appropriate discount rates.
The Group calculates contingent consideration payable in respect
of its Magnus acquisition. See note 21 for further details.
At the March 2025 meeting, the key judgements and estimates
and result of the fair value calculations, explanation of
movements in the year and the associated disclosures, including
sensitivity analysis, were presented to and challenged by the
Committee. It was noted the key assumptions, other than the
discount rate which is specific to the liability, were aligned with
those used in the Group’s impairment testing and tax estimates.
Consideration was also given to Deloitte’s view of the work
performed by management.
The Committee concluded that the assumptions and inputs
for contingent consideration payable were reasonable and
consistent with other relevant judgements and estimates made
and the related liabilities recorded were appropriate.
Climate change in financial reporting
While the Group’s view of evolving climate risks continues to
develop, appropriate disclosure is an area of focus for the
Committee.
Climate change and the transition to a lower carbon economy
may have significant impacts on the currently reported amounts
of the Group’s assets and liabilities and on similar assets and
liabilities that may be recognised in the future.
See note 2 Use of judgements, estimates and assumptions:
Climate change and energy transition.
The Committee considered financial statement disclosures,
including TCFD and CFD reporting, and how the Group’s climate
change scenarios are reflected in the Group’s key judgements
and estimates used in the preparation of the Group’s 2024
financial statements. The Committee also reviewed the results
of testing the Group’s resilience under the International Energy
Agency’s Announced Pledges scenario and Net Zero Emissions
by 2050 scenario.
The Committee, recognising the evolving nature of climate
change risks and responses, concluded that climate change
has been appropriately considered by management in key
judgements and estimates and concurred with the disclosures
proposed by management.
Appropriateness of the decommissioning provision
The Group’s decommissioning provision of $741.6 million at
31 December 2024 is based upon a discounted estimate of the
future costs and timing of decommissioning of the Group’s oil and
gas assets. Judgement exists in respect of the estimation of the
costs involved, the discount rate and inflation rate assumed, and
the timing of decommissioning activities.
See note 2 Critical accounting judgements and key sources of
estimation uncertainty: Provisions.
The Committee reviewed the report by management
summarising the key inputs and their impact on the provision.
The Committee and the Group’s external auditor focused on
cost assumptions, as well as, the inflation and discount rates
used, alongside sensitivity analysis and disclosure estimating
the effect of a change in discount rates given the uncertain
macroeconomic environment. Regard was also given to the
observations made by Deloitte as to the appropriateness of
the estimates made.
Significant financial statement reporting issue
Consideration
Taxation
At 31 December 2024, the Group carried deferred tax balances
comprising $506.5 million of tax assets (primarily related to
previous years’ tax losses) and $104.7 million of tax liabilities
primarily related to deferred taxes associated with the UK Energy
Profits Levy.
The recoverability of the tax losses has been assessed by reference
to future profit estimates derived from the Group’s impairment
testing. Ring-fence corporation tax losses totalling $2,066.4 million
($717.9 million tax-effected) have been recognised.
Given the complexity of tax legislation, risk exists in respect of some
of the Group’s tax positions.
The Committee received a report from the Group’s Head
of Tax, outlining all uncertain tax positions, and discussed
management’s assumptions of future profit estimates and
evaluated the amount of deferred tax assets recognised. It was
noted that the assumptions are consistent with those used in
the impairment assessment (see above). The Committee also
took into account the views of Deloitte as to the adequacy of the
Group’s tax balances.
An evaluation of the transparency of the Group’s tax exposures
was undertaken, reviewing the adequacy and appropriateness
of tax disclosures, including those related to the EPL, presented by
management. Regard was also given to the observations made
by Deloitte as to the appropriateness of the disclosures made.
Risk management
The Code requires that the Board monitors the Company’s risk
management and, at least annually, carries out and reports
on the results of a review of their effectiveness. The Board has
oversight of risk management within EnQuest for the Company’s
emerging and principal risks. Pages 54 and 118 provide more detail
on how the Board, and its Sustainability and Risk Committee, have
discharged its responsibility in this regard.
Internal control
Responsibility in respect of financial internal control is delegated
by the Board to the Committee. The effectiveness of the Group’s
internal control framework is reviewed continually throughout the
year. Key features include:
•
Clear delegations of authority to the Board and its
sub-Committees, and to each level of management;
•
Setting of HSEA, operational and financial targets and
budgets which are subsequently monitored by management
and the Board;
•
A comprehensive risk management process with clear
definition of risk tolerance and appetite. This includes a review
by the Sustainability and Risk Committee of the effectiveness of
management controls and actions which address and mitigate
the most significant risks;
•
An annual risk-based internal audit programme developed in
conjunction with management. Findings are communicated
to the Audit Committee and follow-up reviews are conducted
where necessary;
•
Regular reporting to the Audit Committee of managements key
financial controls self-assessment; and
•
Further objective feedback provided by the external auditors
and other external specialists.
Obtaining assurance on the internal control environment
The Committee received reports from internal audit at each
scheduled Committee meeting in 2024 and meets privately with
the head internal auditor from time to time. In order to ensure
independence and objectivity, the primary reporting line of all
assurance providers, including the Group’s internal audit function,
is to the Chair of the Committee, administrative oversight being
provided by the Chief Executive.
The purpose, scope and authority of internal audit are defined
within its charter, which is approved annually by the Committee.
The internal audit function maintains an internal quality assurance
and improvement programme covering all aspects of internal
audit’s activities and evaluates the conformance of these activities
with the Chartered Institute of Internal Auditors’ Standards (‘IIA
Standards’). Following the launch of the new Global Internal Audit
Standards by the IIA (effective January 2025), it was agreed a
self-assessment against the new Global Internal Audit Standards
would be carried out and an action plan would be submitted to
the Committee.
The Group’s system of internal control, which is embedded in
all key operations, provides reasonable rather than absolute
assurance that the Group’s business objectives will be achieved
within the risk tolerance levels defined by the Board. Regular
management reporting, which provides a balanced assessment
of key risks and controls, is an important component of assurance.
In January 2024, the FRC issued the updated UK Corporate
Governance Code with the ultimate aim to strengthen board
accountability for the effectiveness of the risk and control
framework. This will require boards to make a specific declaration
within the ARA as to the effectiveness of a Company’s risk
management and internal control systems extended to include
those over reporting, such as narrative and ESG reporting. This
requirement comes into effect from 1 January 2026. As such, the
Committee will continue to support and monitor the development
of an Audit & Assurance Policy to focus attention on the level of
assurance relating to all material controls within the business with
specific attention being paid to cyber security given its impact on
the wider control environment. Management has also continued
its assessment of the potential for fraud risk across the business,
ensuring mitigating controls are in place and operating as
expected as well as identifying and implementing specific actions
to ensure the Group maintains a strong control environment.
In respect of the work performed by internal audit, an internal
audit plan is approved by the Committee each year. When setting
the plan, recommendations from management and internal
audit are considered, and take into account the particular risks
impacting the Company, which are reviewed by the Board and
the Sustainability and Risk Committee. During 2024, internal audit
activities were undertaken for various areas, including reviews of:
•
Human Resources – Management of change;
•
‘Purchase to pay’ (Maximo) upgrade project (post-
implementation review);
•
HSSE and asset integrity – maintenance processes;
•
Climate change risk management framework (‘RMF’) bowtie;
•
Compliance with Regulation, legislation and ethical conduct
RMF bowtie; and
• Payroll.
Detailed results from internal audit were presented to
management and a summary of the findings was presented to
the Committee, together with copies of all internal audit reports,
noting no material control issues were identified. Where potential
control enhancements were identified as being required, the
Committee agreed appropriate actions with management and
assessed management’s response to the findings. Throughout the
year, the Committee is kept apprised of management’s progress
against the agreed actions, with the majority of actions closed in
accordance with the agreed schedule.
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
104—105
Audit Committee report
continued
External audit
One of the Committee’s key responsibilities is to monitor the
performance, objectivity and independence of the external
auditor. Each year, the Committee ensures that the scope
of the auditor’s work is sufficient and that the auditor is
remunerated fairly.
The annual process for reviewing the performance of the
external audit process involves an interview or questionnaire
with key members of the Group who are involved in the audit
process to obtain feedback on the quality, efficiency and
effectiveness of the audit. Additionally, Committee members
take into account their own view of the external auditor’s
performance and independence, including the level of
professional scepticism displayed, when determining whether
or not to recommend reappointment. The Committee also held
private meetings with the external auditor during the year.
The Committee considered the external audit plan, in particular
to gain assurance that it was tailored to reflect changes in
circumstances from the prior year. The significant audit risks
addressed during the course of the 2024 audit were:
•
Impairment of oil & gas assets and goodwill;
• Contingent consideration;
• Decommissioning provision;
• Deferred tax; and
• Management override of controls.
Deloitte regularly updated the Committee on the status of their
procedures during the year, including how they had challenged
the Group’s assumptions. The Committee and Deloitte discussed
how risks to audit quality were addressed, key accounting and
audit judgements, material communications between Deloitte
and management and any issues arising from them.
Taking into account management’s review and its own
experiences with the external auditor, the Committee concluded
that the audit team was providing the required quality in relation
to the provision of audit services in its fifth year as auditor and has
maintained its independence and objectivity. As required under
UK auditing standards, Deloitte confirmed their independence to
the Committee.
As previously disclosed, a new lead partner has been in place for
2024. The Committee considers the reappointment of the external
auditor each year, including consideration of the advisability
and potential impact of conducting a tender process for the
appointment of a different independent public accounting firm.
The Committee is also responsible for making a recommendation
to the Board for it to put to the Company’s shareholders for
approval at the AGM, to appoint, reappoint or remove the external
auditor. At the AGM in May 2024, the shareholders approved
a resolution to reappoint Deloitte as external auditor with the
same resolution to be proposed for the 2025 AGM. The Company
has complied with the Code and FRC Guidance in respect of
audit tendering and rotation, under which the Company will be
required to tender for the audit no later than the 2030 financial
year. The Committee regularly reviews auditor performance and
may elect to carry out the tender earlier than the 2030 financial
year if determined it would be in the interests of the Company’s
shareholders to do so.
Use of external auditors for non-audit services
The Committee is responsible for EnQuest’s policy on non-audit
services and the approval of non-audit services. The Committee
and Board believe that the external auditor’s independence and
objectivity can potentially be affected by the level of non-audit
services to EnQuest. However, the Committee acknowledges
that certain work of a non-audit nature is best undertaken by the
external auditor given their working knowledge of the Group. To
ensure objectivity and independence, and to reflect best practice
in this area, the Company’s policy on non-audit services reflects
the UK Regulations.
As part of the Committee’s process in respect of the provision of
non-audit services, the external auditor provides the Committee
with information about its policies and processes for maintaining
independence and monitoring compliance with current
regulatory requirements.
The key features of the non-audit services policy, the full version
of which is available on the Group’s website (www.enquest.com;
under Corporate Governance within the Investors section), are
as follows:
•
A pre-defined list of prohibited services has been established;
•
A schedule of services where the Group may engage the
external auditor has been established and agreed by the
Committee;
•
Any non-audit project work which could impair the objectivity
or independence of the external auditor may not be awarded to
the external auditor; and
•
Fees for permissible non-audit services provided by the external
auditor are to be capped at no more than 70% of both the
average Group audit fee and the UK audit fee for the preceding
three years.
The Committee continues to review non-audit services and
reviews the scope of work to ensure its close link to audit services.
The Committee regularly reviews reports from management on
the audit and non-audit services reported in accordance with the
policy or for which specific prior approval from the Committee is
being sought.
Delegated authority by the Committee for the approval of
non-audit services by the external auditor is as follows:
Authoriser
Value of services per
non-audit project
Chief Financial Officer
Chair of the Audit Committee
Audit Committee
Up to £50,000
Up to £100,000
Above £100,000
In each case where the audit or non-audit service contract does
not exceed the relevant threshold, the matter is approved by
management by delegated authority from the Committee and
is subsequently presented for approval by the Committee at the
next meeting.
The scope of the non-audit services contracted with the external
auditor in 2024 consisted mainly of the interim review and the
provision of customary comfort letters in respect of the debt
refinancing and other assurance services (see note 4(f)).
EnQuest PLC Annual Report and Accounts 2024
The Committee’s
focus remains on
ensuring reward
programmes
incentivise
employees to deliver
EnQuest’s strategy.
Chair of the Remuneration and
Social Responsibility Committee
Rosalind Kainyah
Dear shareholder
On behalf of the Board and the Remuneration and Social
Responsibility Committee, I am pleased to present EnQuest’s
Directors’ Remuneration Report (‘DRR’) for the financial year
ended 31 December 2024.
The DRR is split into three sections: this Annual Statement; a
summary Remuneration Policy Report; and the Annual Report
on Remuneration. EnQuest’s Remuneration Policy was submitted
to shareholders at the 2024 Annual General Meeting (‘AGM’),
receiving 97.44% votes in favour. As explained below, no changes
are proposed to the Policy this year, and we have therefore chosen
to show an abridged version of the report which provides context
to the decisions taken by the Committee. The Annual Report on
Remuneration will be subject to an advisory shareholder vote at
the 2025 AGM.
Executive Director and Committee changes
As disclosed in last year’s report, Jonathan Copus began
employment with EnQuest on 7 December 2023 as Chief Financial
Officer (‘CFO’) Designate and became CFO on 1 February 2024.
He was formally appointed an Executive Director of the Group at
the 2024 AGM. Full details of Jonathan’s starting package were set
out in the 2023 report.
On 30 May 2024, Salman Malik stepped down from the EnQuest
Board. He remained employed in his role as Chief Executive Officer
of Veri Energy Limited (‘Veri Energy’), a wholly owned subsidiary
of EnQuest, until 30 June 2024. Details of the leaver treatment for
Salman Malik are set out on page 114.
Marianne Daryabegui and I both joined EnQuest as Non-Executive
Directors on 30 May 2024. I was appointed as Chair of the
Remuneration and Social Responsibility Committee, replacing
Gareth Penny who had served as Interim Chair of the Committee
since 18 December 2023.
Update on Directors’ Remuneration Policy
In last year’s report, the Committee set out its intention to revert
to shareholders with a revised Directors’ Remuneration Policy
(the ‘Policy’) over the next 12 months, reflecting ongoing work at
the time to establish a suitable management incentive for Veri
Energy. As noted above, with the role of Chief Executive Officer of
Veri Energy no longer being a Board Director, the need to amend
the Policy for Executive Directors fell away. The Committee is
satisfied that the current approved Policy remains appropriate
and continues to provide us with the right overall structure to
motivate Executive Directors to deliver against EnQuest’s short-
and longer-term strategy. Based on this, and given the very
strong shareholder support received at the 2024 AGM, we intend
to maintain the existing Policy for at least another 12 months (and
for up to 24 months, i.e. until the third anniversary of approval).
Performance and remuneration outcomes for 2024
Group production in 2024 averaged 40.7 Kboed, 0.6% below
the low-point of guidance. Significantly, the Company has
also continued to de-lever, with EnQuest net debt reduced
by $95 million in 2024 to $386 million by the end of the year,
providing a strong foundation from which the business can
pursue transformative growth. During 2024, the Group has
delivered diversified growth, including three notable transactions
in South East Asia.
2024 annual bonus – payable in 2025
The Executive Directors’ annual bonus awards are based on
a combination of financial and operational results and the
achievement of key accountability objectives. The bonus
attainment for Amjad Bseisu and Jonathan Copus was based
wholly on achievement against the Company Performance
Contract (‘CPC’). Salman Malik did not receive a bonus in respect
of the 2024 financial year.
In 2024, the target and maximum bonus potential for the
Executive Directors remained unchanged at 75% and 125% of salary,
respectively, with the final bonus award being equal to 63.1% of base
salary (50.5% of the maximum award). The Committee believes that
the payouts are appropriate and representative of the performance
of the Executive Directors and senior management when balanced
against the shareholder and employee experience, and that further
discretionary adjustment outside of the HSE&A performance
deductor was not required. Full details of how these awards were
determined are included on page 112 of this report.
Directors’ Remuneration Report
Strategic Report
Corporate Governance
Financial Statements
106—107
£2,511
Chief Executive
Below
Threshold
Target
Maximum
Maximum +
50% share
appreciation
47%
33%
20%
100%
£651
£1,379
26%
30%
21%
24%
44%
54%
£3,066
Long-term incentives
Annual bonus
Fixed pay
Remuneration (£’000s)
0
500
1,000
1,500
2,000
2,500
3,500
3,000
Chief Financial Officer
Below
Threshold
Target
Maximum
Maximum +
50% share
appreciation
48%
32%
20%
£925
£440
100%
30%
26%
18%
20%
44%
54%
24%
21%
61%
£1,680
£2,050
Directors’ Remuneration Report
continued
Performance Share Plan (‘PSP’)
The PSP is the primary long-term incentive awarded to Executive
Directors, senior management and other key talent in the
Company. The three-year performance period for the PSP
granted in 2022 ended on 31 December 2024, with vesting of these
awards based 80% on EnQuest’s total shareholder return (‘TSR’)
performance relative to a group of sector comparators and 20%
on reduction of emissions over the performance period. At the end
of the period, both EnQuest’s relative TSR ranking and emissions
reduction achievement was below the threshold performance
level. As a result, the 2022 PSP will lapse in full in April 2025. Further
details are included on page 113 of this report.
During the year, PSP awards were granted to Amjad Bseisu,
Salman Malik and Jonathan Copus. As set out in last year’s report,
in order to reflect the volatility of the Company’s share price and
ensure Executive Directors do not benefit from potential future
‘windfall gains’, the grant level was scaled back from 250% to 185%
of salary. Vesting of these awards is based 80% on relative TSR and
20% on the achievement of an emission reduction target, both
measured over a three-year period. Further details are included
on page 113 of this report.
Implementation of the Remuneration Policy in 2025
Base salaries
There will be no salary increase for Executive Directors with
effect from 1 January 2025, with salaries remaining at £600,000
for Amjad Bseisu and £400,000 for Jonathan Copus.
2025 annual performance bonus
For 2025, the annual bonus for Amjad Bseisu and Jonathan Copus
will continue to be based 100% on EnQuest’s CPC outcome. Both
have a target level of 75% of salary and a maximum of 125% of
salary. Details of the performance measures and weightings are
set out on page 117.
2025 PSP awards
Amjad Bseisu and Jonathan Copus will each receive a 2025
PSP award of up to 180% of salary, lower than the normal
award of 250% as was also the case in 2024, recognising
the current share price relative to historic levels.
In order to recognise the impact of the UK Energy Profits
Levy (‘EPL’) and the material relative disadvantage this
creates for operators with significant North Sea exposure,
the Committee consulted with shareholders on possible
revisions to the PSP scorecard for future cycles. Based on
the feedback received, it has been agreed that the 2025 PSP
will use a blend of relative TSR, absolute TSR and emissions
reduction targets weighted 40%, 40% and 20%, respectively.
In finalising this scorecard of measures, the Committee
concluded that relative TSR remains an objective measure of
performance for EnQuest which helps to isolate management’s
genuine outperformance from broader stock market and sector
volatility, but that balancing this with absolute TSR would help
to provide strong alignment with shareholders and somewhat
mitigate the asymmetric and uncertain impact of EPL for
participants over the performance period. It was also considered
that combining three measures would further help to diversify
the performance evaluation and reduce the likelihood of ‘all-
or-nothing’ outcomes for future PSP cycles. Further details,
including targets for each measure, are set out on page 117.
Summary Remuneration Policy Report
The current Directors’ Remuneration Policy was approved by shareholders at the AGM held on 30 May 2024 and can be found on pages 101
to 107 of the 2023 Annual Report and Accounts. A summary of the Policy is set out below for information purposes.
Component
Key terms
Base salary
•
Typically reviewed by the Committee in January each year
•
No prescribed maximum salary or increase. Salary increases for Executive Directors
will take into account the conditions and pay of all employees within the Company
Pension and other benefits
•
Maximum pension allowance of the lesser of 10% of salary and £50,000
•
Benefits reviewed periodically by the Committee and adjusted to meet typical market
conditions. Currently include private medical insurance, life assurance and personal
accident insurance
Annual bonus
•
Maximum bonus opportunity of 125% of salary; target 75% of salary
•
Measures, weightings and targets are set annually by the Committee
•
Any bonus earned over 100% of salary is deferred in shares for two years
•
Discretion to pay dividends on deferred shares at the time of vesting
• Malus and clawback provisions apply
Performance Share Plan (‘PSP’)
•
Normal maximum award of 250% of salary (350% in exceptional circumstances)
•
Threshold performance pays out no more than 25% of maximum
•
Vesting is subject to performance measured over three financial years
•
Vested awards are typically subject to a mandatory two-year holding period
•
Performance measures, weightings and targets are set by the Committee ahead of
each award to reinforce the Company’s strategy. Measures will include relative TSR
and ESG
•
Discretion to pay dividends on vested awards at the time of vesting
• Malus and clawback provisions apply
Shareholding guidelines
•
In-post: Executive Directors must build and maintain a minimum shareholding of 200%
of salary within five years of appointment
•
Post-employment: Executive Directors must continue to hold the lower of their in-post
guideline and their actual shareholding on cessation, for at least two years
Chairman and NED fees
•
The Chairman receives an all-inclusive fee which is reviewed annually by the Committee
•
NEDs are reviewed annually by the Chairman and Executive Directors
•
NEDs receive a base fee, with additional fees being paid to the Senior Independent Director
and Committee Chairs. Additional fees may also be paid if there is a material increase in
time commitment and the Board wishes to recognise this additional workload
•
Aggregate NED fees are limited by the Company’s Articles of Association
The charts below illustrate the proposed remuneration arrangements for 2025 and provide an indication of the proportion of total
remuneration made up of each component of the Policy and the value of each component.
Conclusion
We continue to appreciate the benefits of transparency and
proactive interaction with major shareholders. We welcome
your input and are always open and ready to listen and take on
board suggestions that help EnQuest to continue to develop and
improve. The Committee and I wish to thank all our shareholders
for their ongoing support over the years. I hope you will support
and vote for this DRR at the forthcoming AGM.
Rosalind Kainyah
Chair of the Remuneration and Social Responsibility Committee
26 March 2025
The Directors’ Remuneration Report has been prepared in accordance with the
requirements of the Companies Act 2006 and Schedule 8 of the Large and Medium-
sized Companies and Groups (Accounts and Reports) Regulations 2008 as amended
in August 2013. It also describes the Group’s compliance with the 2018 UK Corporate
Governance Code (the ‘Code’) in relation to remuneration. The Committee has taken
account of the new requirements for the disclosure of Directors’ remuneration and
guidelines issued by major shareholder bodies when setting the remuneration strategy
for the Group.
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
108—109
Directors’ Remuneration Report
continued
Annual Report on Remuneration for 2024
The following section provides details of how EnQuest’s Remuneration Policy was implemented during the financial year ended
31 December 2024 and how it will be implemented in 2025.
Remuneration Committee membership in 2024
The Committee’s terms of reference are available either on the Group website, www.enquest.com, or by written request from the
Company Secretariat team at the Group’s London headquarters. The remit of the Committee embraces the remuneration strategy
and policy for the Executive Directors, the Executive Committee, senior management and, in certain matters, for the whole Group.
As of 31 December 2024, the Remuneration Committee comprised three Non-Executive Directors:
Member
Date appointed Committee member
Attendance at scheduled meetings during the year
Rosalind Kainyah (Chair)
30 May 2024
2/2
Farina Khan
1 November 2020
4/4
Gareth Penny
15 February 2023
4/4
The Committee has four scheduled meetings per year. However, during 2024, it had three additional ad hoc meetings to review
and discuss the Policy, leaver arrangements for Salman Malik, base salary adjustments for 2025, the setting of Group performance
conditions and related annual bonus for 2024, PSP performance conditions, UK Corporate Governance Code provisions and the
approval of share awards.
The Committee invites individuals to attend meetings to provide advice to ensure that the Committee’s decisions are informed and take
account of pay and conditions in the Group as a whole. Those individuals, who are not members but may attend by invitation, include,
but are not limited to (a) the Chief Executive; (b) the Chief Financial Officer; (c) the Company Secretary; (d) a representative from the
Group’s Human Resources department; and (e) representatives from the Committee’s remuneration adviser. No Director takes part in
any decision directly affecting their own remuneration.
Advisers to the Committee
Ellason was appointed as the independent remuneration advisor to the Committee effective August 2022 and retained during the year.
The Committee undertakes due diligence periodically to ensure that Ellason is independent and that the advice provided is impartial and
objective. During 2024, Ellason provided independent advice including updates on the external remuneration environment, advice on PSP
performance measures and Directors’ Remuneration Report drafting support. Ellason reports directly to the Chair of the Remuneration
Committee and does not advise the Company on any other issues. Their total fees for the provision of remuneration services to the
Committee in 2024 were £64,574 (2023: £62,520) on the basis of time and materials.
Ellason is a member and signatory of the Code of Conduct for Remuneration Consultants, details of which can be found at
www.remunerationconsultantsgroup.com. Neither the Company or the individual Directors have a personal connection with Ellason.
Statement of voting at the Annual General Meeting
The table below summarises the voting at the AGM held on 30 May 2024 in respect of the Directors’ Remuneration Report and the
Remuneration Policy. The Group is committed to ongoing shareholder dialogue and takes an active interest in voting outcomes. Where
there are substantial votes against resolutions in relation to Directors’ remuneration, the reasons for any such vote will be sought, and any
actions in response will be detailed here.
Remuneration Report (2023)
Remuneration Policy (2023)
Number of votes cast for
831,425,573
951,492,134
Percentage of votes cast for
85.31%
97.44%
Number of votes cast against
143,211,212
25,026,131
Percentage of votes cast against
14.69%
2.56%
Total votes cast
974,636,785
976,518,265
Number of votes withheld
1,933,331
51,851
Information subject to audit
In this section of the report, payments made to the Executive and Non-Executive Directors of EnQuest for the year ended 31 December
2024, together with comparative figures for 2023 are set out.
Single total figure of remuneration – Executive Directors
Year
Salary
Taxable
benefits
Pension
3
Total
fixed
Annual
bonus
4
PSP
5,6
Total
variable
Total Single
Figure
Amjad Bseisu
2024
600
1
50
651
379
0
379
1,030
2023
513
1
50
565
428
228
656
1,221
Jonathan Copus
1
2024
233
0
23
257
147
0
147
404
2023
–
–
–
–
–
–
–
–
Salman Malik
2
2024
183
10
7
201
0
0
0
201
2023
440
77
44
561
367
36
403
964
Total
2024
1,017
12
81
1,019
526
0
526
1,635
2023
953
78
94
1,126
795
264
1059
2,184
Notes:
Rounding may apply on the numbers provided.
1
Jonathan Copus was appointed as CFO on 1 February 2024 and formally appointed an Executive Director of the Group at the May 2024 AGM. The figures shown in the table above
reflect the period between 30 May 2024 and 31 December 2024
2
Salman Malik stepped down from the Board on 30 May 2024. The figures shown in the table above reflect the period between 1 January 2024 and 30 May 2024. Taxable benefits for
Salman Malik in 2023 and 2024 include international private medical insurance grossed-up for income tax and National Insurance
3
Cash was provided in lieu of a company pension contribution
4
The amount stated is the full amount (including any portion deferred). Any amount that is above 100% of salary is paid in EnQuest PLC shares, deferred for two years, and subject to
continued employment
5
PSP awarded on 25 April 2022 that vests on 25 April 2025: the PSP will lapse in full
6
The PSP awarded on 27 April 2021 which vested on 25 April 2024: the PSP value shown in the 2023 single figure is calculated by taking the number of performance shares that vested
(20%) multiplied by the actual share price of 15.3 pence on the vesting date. The 2023 value of the vested shares in the remuneration table has been updated from last year’s value
to represent the actual value received on the date of vesting
Single total figure of remuneration – Non-Executive Directors
Year
Fees
Taxable
benefits
Total
Single Figure
Year
Fees
Taxable
benefits
Total Single
Figure
Gareth Penny
2024
200
0
200
2023
200
0
200
Farina Khan
2024
79
0
79
2023
66
0
66
Michael Borrell
7
2024
66
0
66
2023
19
0
19
Rosalind Kainyah
8
2024
41
0
41
2023
–
–
–
Marianne Daryabegui
9
2024
35
0
35
2023
–
–
–
Rani Koya
10
2024
29
0
29
2023
70
0
70
Liv Monica Stubholt
10
2024
25
0
25
2023
60
0
60
Total
2024
475
0
475
2023
415
0
415
Notes:
Rounding may apply on the numbers provided.
7
Michael Borrell was appointed to the Board on 5 September 2023 and as Chair of the Sustainability and Risk Committee on 31 May 2024
8
Rosalind Kainyah was appointed to the Board and as Chair of the Remuneration and Social Responsibility Committee on 30 May 2024
9
Marianna Daryabegui was appointed to the Board on 30 May 2024
10 Rani Koya and Liv Monica Stubholt stepped down from the Board on 30 May 2024
Incentive outcomes for the year ended 31 December 2024
Annual bonus 2024 – paid in 2025
The Committee’s belief is that any short-term annual bonus should be tied to the overall performance of the Group, measured through
a Company Performance Contract (‘CPC’). An Executive Director’s annual bonus may also be tied to additional objectives that cover
their own specific area of key accountabilities and responsibilities. For Amjad Bseisu and Jonathan Copus, the 2024 bonus was based
wholly on performance against the CPC. The maximum bonus entitlement for the year was 125% of salary for both Amjad Bseisu and
Jonathan Copus.
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
110—111
Directors’ Remuneration Report
continued
Company Performance Contract
Details of the CPC for both Amjad Bseisu and Jonathan Copus in 2024 are set out in the following table, showing the performance
conditions and respective weightings against which the bonus outcome was assessed. For 2024, payout against the CPC was subject
to a modifier based on the Committee’s assessment of the Group’s HSE&A performance during the year.
Measure
Weight
Threshold
Target
Maximum
Actual
Payout
(% max.)
Production
(Kboed)
20.0%
41.0
43.6
46.0
40.7
0.0%
Expenditure
Cash opex/capex/abex ($m)
10.0%
751
683
649
638.3
100.0%
Regulatory, ESG and culture
12.5%
Flaring reduction, decommissioning
performance and employee metrics
1
92.0%
Liquidity management
Reduce net debt year-on-year from 2023, whilst maintaining
adequate liquidity ($m)
10.0%
481
408
322
386
77.6%
Balance sheet management
10.0%
Projects to support liquidity and growth
1
100.0%
Growth
Deliver against growth projects
6.25%
Deliver 3
Deliver 4
Deliver 5
Deliver
4-5
80.0%
Growth
Deliver against business development projects
6.25%
Deliver 1
Deliver 2
Deliver 3+
Deliver 2
60.0%
Growth
Deliver against NSF project
5.0%
Mar-25
Feb-25
Dec-24
Project
Delayed
0.0%
Growth
Deliver against M&A project
15.0%
Deliver 1
Deliver 1
Deliver 1
Some
progress
made
36.0%
Growth
5.0%
Investor relations/
company secretariat objectives
1
54.0%
Total CPC outcome before HSE&A deductor (% of maximum)
56.1%
HSE&A performance deductor
90.0%
Total CPC outcome (% of maximum)
50.5%
Notes:
Rounding has been applied to percentages. In relation to the financial measures, threshold, target and stretch performance pays out at 0%, 60% and 100% of maximum respectively
and on a straight-line basis in between threshold and target performance and between target and stretch performance. For other measures, threshold performance pays out at 30%
of maximum.
1
Each of these measures was based on objective targets which were assessed by the Remuneration Committee following year-end. It is the Committee’s view that the specific
targets remain commercially sensitive and therefore we have chosen not to disclose these in full
2024 Annual bonus outcome
Director
Salary
Max. bonus
(% salary)
Overall
outcome (%
max.)
Overall
outcome (%
salary)
2024 bonus
(£)
Paid as cash
(£)
Deferred in
shares (£)
Amjad Bseisu
£600,000
125.0%
50.5%
63.1%
£378,600
£378,600
£0
Jonathan Copus
1
£400,000
125.0%
50.5%
63.1%
£147,234
£147,234
£0
Note:
1
The bonus figure shown for Jonathan Copus reflects the proportion of the financial year served as an Executive Director
2022 PSP awards that vest in 2025 (based on performance to 31 December 2024)
The PSP award made to Executive Directors on 25 April 2022 was based on performance to the year ended 31 December 2024 and will
vest on 25 April 2025. The performance targets for this award and actual performance against those targets over the three-year financial
period were as follows:
Measure
Weight
Threshold
(25% vesting)
Maximum
(100% vesting)
Actual
Vesting
outcome
(% max.)
Relative TSR
1
80%
50
th
percentile
75
th
percentile
10
th
percentile
0%
Emission reduction
20%
10%
reduction
12%
reduction
8%
reduction
0%
Total PSP vesting (% of maximum)
0%
Notes:
Straight-line vesting between Threshold and Maximum.
1
The TSR comparators for the 2022 PSP cycle were Africa Oil, Aker BP ASA, BW Energy, Capricorn Energy (formerly Cairn Energy), Diversified Energy, DNO, Energean, Genel Energy,
Harbour Energy (formerly Premier Oil), Hibiscus Petroleum, Hurricane Energy, Jadestone, Kosmos, Maurel & Prom, Okea, Orrön Energy (formerly Lundin Petroleum), Pharos Energy,
Santos, Serica and Tullow Oil. Orrön Energy and Hurricane Energy were tracked as comparators until June 2022 and June 2023, respectively, and thereafter the median of the
remaining comparator group was tracked instead
The table below shows the number of nil cost options awarded on 25 April 2022 that will vest on 25 April 2025 and their value as at
31 December 2024.
Measure
Number of
shares held
Vesting
outcome
(% max.)
Number of
shares
vesting
Valuation
share price
(£)
Value at
31 Dec 24
(£)
Amjad Bseisu
Salman Malik
3,343,689
1,619,078
0%
0%
0
0
£n/a
£n/a
£0
£0
Scheme interests awarded during the year ended 31 December 2024
April 2024 PSP award grant
After due consideration of Business performance in 2023, the Remuneration and Social Responsibility Committee awarded the Executive
Directors the following performance shares on 24 April 2024. As set out in last year’s report, in order to reflect the volatility of the Company’s
share price and ensure Executive Directors do not benefit from potential future ‘windfall gains’, the grant level was scaled back from the
normal 250% of salary to 185% of salary.
Director
Face value awarded
(% salary
1
)
Face value at grant
(£)
Number of
shares granted
2
Amjad Bseisu
185%
£947,783
6,054,872
Jonathan Copus
185%
£738,271
4,718,390
Salman Malik
185%
£812,098
5,190,229
3
Notes:
1
PSP awards are calculated with reference to the salary in effect at the end of the previous financial year, where available
2
Based on the average middle market quote for the three days preceding the date of grant on 24 April 2024 of 15.65 pence
3
Salman Malik’s award was subsequently pro-rated for time (see page 114)
Performance measures, weightings and targets applying to the 2024 PSP share awards are set out below. The performance period for the
award is 1 January 2024 to 31 December 2026, with any shares vesting thereafter subject to a mandatory two-year holding period.
Measure
Weight
Threshold
(25% vesting)
Maximum
(100% vesting)
Relative TSR
1
80%
50
th
percentile
75
th
percentile or higher
Emission reduction
20%
10% reduction
12% reduction or more
Notes:
Straight-line vesting between Threshold and Maximum.
1
The TSR comparators for the 2024 PSP cycle are Africa Oil, Aker BP, BW Energy, Capricorn Energy, DNO, Energean, Genel Energy, Gulf Keystone Petroleum, Harbour Energy, Hibiscus
Petroleum, Ithaca Energy, Jadestone, Jersey Oil & Gas, Kistos, Kosmos Energy, Maurel & Prom, Okea, Pharos Energy, Serica Energy and Tullow Oil
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
112—113
160
01 Jan 22
01 Jan 24
01 Jan 23
31 Dec 24
01 Jan 21
01 Jan 20
EnQuest
FTSE AIM – Oil & Gas
01 Jan 14
01 Jan 15
01 Jan 16
01 Jan 17
01 Jan 18
01 Jan 19
120
140
100
80
60
40
20
0
Directors’ Remuneration Report
continued
Statement of Directors’ shareholding and share interests
The interests of the Directors in the share capital of the Company as at 31 December 2024 are shown below. The table shows for unvested
awards the maximum number of shares that could be released if awards were to vest in full. These awards first vest on the third
anniversary of the award date, subject to the achievement of performance conditions (as described elsewhere in this or previous reports).
Awards granted to Executive Directors are subject to an additional two-year holding period which, unless the Committee determines
otherwise, will apply up to the fifth anniversary of the date of grant.
Director
31 Dec 2023
Granted
Lapsed
31 Dec 2024
Vesting period
Expiry date
Amjad Bseisu
3,343,689
8,102,723
–
–
–
6,054,872
–
–
–
3,343,689
8,102,723
6,054,872
25 Apr 2022 – 24 Apr 2025
25 Apr 2023 – 24 Apr 2026
24 Apr 2024 – 23 Apr 2027
24 Apr 2032
25 Apr 2033
24 Apr 2034
Jonathan Copus
–
4,718,390
–
4,718,390
24 Apr 2024 – 23 Apr 2027
24 Apr 2034
Salman Malik
1
1,619,078
7,224,166
–
–
–
5,190,229
–
1,970,227
3,171,807
1,619,078
5,253,939
2,018,422
25 Apr 2022 – 24 Apr 2025
25 Apr 2023 – 24 Apr 2026
24 Apr 2024 – 23 Apr 2027
24 Apr 2032
25 Apr 2033
24 Apr 2034
Notes:
1
Salman Malik’s 2023 and 2024 PSP awards were pro-rated for time
Statement of Directors’ shareholdings and share interests
Executive Directors are currently required to build up and hold shares in the Company worth 200% of salary and are expected to retain 50%
of shares from vested awards under the PSP (other than sales to settle any tax or social security withholdings due) until they hold at least
200% of salary in shares (this includes shares which are beneficially owned directly or indirectly by family members of an Executive Director).
Director
5
Legally owned shares
Value of
legally
owned
shares as a %
of salary
1,2
Unvested
and subject
to PSP perf.
conditions
Vested but
not exercised
under the PSP
Sharesave
Executive
deferrals
Total at 31 Dec
2024
Value of
legally
owned
shares as a %
of salary
1,2
Amjad Bseisu
3
234,732,857
4423%
17,501,284
5,303,351
0
72,475
257,609,967
4474%
Jonathan Copus
0
0%
4,718,390
0
0
0
4,718,390
0%
Gareth Penny
4
137,047
–
–
–
–
–
137,047
–
Farina Khan
211,235
–
–
–
–
–
211,235
–
Michael Borrell
0
–
–
–
–
–
0
–
Rosalind Kainyah
0
–
–
–
–
–
0
–
Marianne Daryabegui
0
–
–
–
–
–
0
–
Notes:
1
Shares are valued by taking the average closing share price on each trading day of the period 1 October 2024 to 31 December 2024
2
The value of shareholding as a percentage of salary is calculated by combining the number of legally owned shares with a forward projection that 50% of unvested share awards
will vest. The resultant projected number of shares is then valued by applying the share valuation process detailed in note 1 above
3
As at 31 December 2024, 201,881,058 shares were held by Double A Limited, a company beneficially owned by the extended family of Amjad Bseisu. 32,674,840 shares were also held
by The Amjad and Suha Bseisu Foundation and the remaining 176,959 shares were held by Amjad Bseisu directly
4
62,500 shares are held by Gareth Penny, 74,547 shares are held by Kate Penny, his wife
5
As at their dates of stepping down from the Board, Salman Malik held 1,651,676 shares, while Rani Koya and Liv Monica Stubholt did not have a shareholding
Leaver arrangements for Salman Malik
Salman Malik stepped down from the EnQuest Board on 30 May 2024, remaining employed in the role of Chief Executive Officer of Veri
Energy. Salman subsequently transitioned to be a Non-Executive Director of Veri Energy with effect from 30 June 2024. In accordance
with the Policy, Salman retained 1,619,078 shares in the 2022 PSP which will lapse in full on 25 April 2025. Salman’s interests in the 2023 and
2024 PSP cycles were pro-rated for time (to 5,253,939 shares and 2,018,422 shares, respectively) and remain subject to the performance
conditions as set out in previous reports. He did not receive an annual bonus in respect of the 2024 financial year.
Exit payments and payments to past Directors
There has been a payment of £444,636 made to Salman Malik who stepped down from the EnQuest Board on the 31st of May 2024.
Salman subsequently left the Company in June 2024. This payment was part of his PILON (Payment in Lieu of Notice) arrangements.
Information not subject to audit
Total Shareholder Return and Chief Executive total remuneration
The following graph shows the Company’s performance, measured by TSR, compared with the performance of the FTSE AIM All-Share
Oil & Gas, also measured by TSR. The FTSE AIM All-Share Oil & Gas index has been selected for this comparison as it is the index whose
constituents most closely reflect the size and activities of EnQuest.
Historical Chief Executive pay – ‘single figure’ history
The table below sets out details of the Chief Executive’s pay for 2024 and the previous nine years and the payout of incentive awards as a
proportion of the maximum opportunity for each period. The Chief Executive’s pay is calculated as per the ‘single figure’ of remuneration
shown elsewhere in this report. During this time, Amjad Bseisu’s total remuneration has been:
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
CEO ‘single
figure’ (£000)
884
941
998
1,306
1,275
1,244
1,658
1,728
1,221
1
1,030
2
Annual bonus
(% of max.)
27
33
57
79
81
60
65
74
67
50
PSP vesting
(% max.)
77
56
11
56
50
64
44
75
20
0
Notes:
1
Confirmed outcome updated after applying share price on PSP vesting date in 2024
2
Forecast outcome based on applying three-month average share price to expected PSP awards scheduled to vest in April 2025
CEO pay ratio
The CEO pay ratio has been calculated using the ‘Option A’ methodology which compares the single total figure of remuneration of the
CEO to UK employees for the 12 months ending 31 December 2024 on a full-time equivalent basis. This methodology has been chosen as
it offers the most accurate and preferred approach for companies to apply based on institutional investor guidelines.
Financial year
1
Methodology
P25 (lower quartile)
P50 (median)
P75 (upper quartile)
2024
2
A
11:1
9:1
8:1
2023
A
13:1
11:1
9:1
2022
A
25:1
20:1
17:1
2021
A
15:1
13:1
11:1
2020
A
14:1
12:1
10:1
2019
A
23:1
14:1
11:1
Notes:
1
For 2019-2023, the pay ratios shown are as disclosed in the relevant year’s report
2
For 2024, the single figure of total remuneration of the individuals at P25, P50 and P75 was £96,202, £117,375 and £ 131,913 respectively. The base salaries of the same individuals were
£83,646, £107,308 and £113,470, respectively
Total remuneration is as defined in the single total figure of remuneration for Executive Directors. EnQuest has determined the P25, P50 and
P75 individuals with reference to a ranking of total remuneration and by identifying those employees with the most typical pay structure
of a UK-based employee. All employees have been included as at 31 December 2024, with remuneration of part-time employees and
those employees on statutory leave included on a full-time equivalent basis. The reduction in the CEO pay ratio in 2024 can be attributed
primarily to the nil value of the PSP at vest.
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
114—115
Directors’ Remuneration Report
continued
In setting both the CEO remuneration and the remuneration structures for the wider UK workforce, EnQuest has adopted a remuneration
structure which includes the same elements for employees at all levels (base pay, benefits, pension, cash bonus and share awards). While
all employees receive a base salary that is market competitive for their role and commensurate with our business size, differences exist
in the quantum of variable pay that is achievable by the senior executive team and by individuals at senior management levels within
the Group. At these levels, where there is a greater opportunity to influence Group performance, there is a greater emphasis on aligning
executives with shareholders. Based on this distinction, the Group believes that the median pay ratio is consistent with the wider pay,
reward and progression policies impacting UK employees.
Relative spend on pay
The table below shows the actual expenditure of the Group on total employee pay, as well as profitability and distributions to shareholders,
and the change between the current and previous years:
2023 ($m)
2024 ($m)
Change
Adjusted EBITDA
1
825
673
-18.4 %
EnQuest net debt
481
386
-19.8 %
Distribution to shareholders
0
9
n/a %
Total employee pay
88
91
3.2 %
Note:
1
Adjusted EBITDA has been chosen as an appropriate measure of return to shareholders and net debt as a measure of EnQuest’s commitment to its lenders (see Glossary –
Non-GAAP measures on page 193 for how these are calculated)
Change in Directors’ pay relative to the workforce
These tables show the change in remuneration of EnQuest Directors and employees over time. Executive Director remuneration
includes base salary, benefits (including employer pension contribution and/or allowance) and annual bonus. Non-Executive Director
remuneration includes base fee and any additional fees paid, and any other benefits. Data is shown on a full-time equivalent basis. UK
employees have been chosen as the most appropriate comparator group as the majority of the EnQuest workforce is UK based and their
pay structure is comparable to the Directors’ pay based on annualised amounts paid in 2023 and 2024.
Base salary/fees
Benefits
Director
1
2023
to 2024
2022
to 2023
2021
to 2022
2020
to 2021
2019
to 2020
2023
to 2024
2022
to 2023
2021
to 2022
2020
to 2021
2019
to 2020
Amjad Bseisu
17%
4%
3%
5%
(3)%
0%
10%
0%
0%
0%
Jonathan Copus
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Salman Malik
0%
6%
n/a
n/a
n/a
0%
(27)%
n/a
n/a
n/a
Gareth Penny
0%
0%
n/a
n/a
n/a
n/a
n/m
n/a
n/a
n/a
Farina Khan
20%
(23)%
42%
0%
n/a
n/a
n/a
n/a
n/a
n/a
Michael Borrell
13%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Rosalind Kainyah
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Marianne Daryabegui
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Rani Koya
0%
(20)%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Liv Monica Stubholt
0%
(29)%
42%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
UK employees (avg.)
4%
4%
3%
0%
3%
0%
10%
0%
0%
3%
Bonus
2
2023 to 2024
2022 to 2023
2021 to 2022
2022 to 2021
2019 to 2020
Amjad Bseisu
(12)%
(7)%
17%
9%
(25)%
Jonathan Copus
n/a
n/a
n/a
n/a
n/a
Salman Malik
n/a
18%
n/a
n/a
n/a
UK employees (avg.)
2%
10%
(7)%
3%
(21)%
Notes:
n/a – not applicable; n/m – not meaningful
1
Changes in Directors and responsibilities during the 2023 and 2024 financial years which are relevant to the calculations above are as follows:
a. Salman Malik stepped down from the Board on 30 May 2024
b. Michael Borrell was appointed to the Board on 5 September 2023 and as Chair of the Sustainability and Risk Committee on 31 May 2024
c. Rosalind Kainyah was appointed to the Board and as Chair of the Remuneration and Social Responsibility Committee on 30 May 2024
d. Marianna Daryabegui was appointed to the Board on 30 May 2024
e. Rani Koya stepped down from the Board on 30 May 2024
f. Liv Monica Stubholt stepped down from the Board on 30 May 2024
2
The vast majority of UK-based employees directly support the North Sea business and have a proportion of their bonus based on the performance of the business unit reflected in
their annual bonus payment. The figures shown are reflective of any bonus earned during the respective financial year. Non-Executive Directors are not eligible to participate in the
annual bonus scheme and therefore no data is shown for them in the annual bonus table
Statement of implementation of the Remuneration Policy for the year ending 31 December 2025
Base salaries and 2025 pay review
As stated in the annual statement to this report, the remuneration for the Executive Directors is geared towards variable pay linked to
long-term performance targets, with base salaries currently set in relation to benchmarks for the energy industry and comparable sized
companies. In the view of the Committee, it is therefore important to ensure that the base salaries of the Executive Directors are reviewed
annually and that any increase reflects the change in scale and complexity of the role, as well as the performance of the Executive
Director. Following its latest review, the Committee determined that there would be no increase for Executive Directors with effect from
1 January 2025:
Salary for 2024
Salary for 2025
Increase
Amjad Bseisu
£600,000
£600,000
0%
Jonathan Copus
£400,000
£400,000
0%
The Committee also agreed that there would be no salary uplift for employees in 2025.
Pension and other benefits
The Group will continue to pay a cash benefit in lieu of pension of the lesser of 10% of salary or £50,000 (the CEO receives the pension
benefit at the capped level). The Group will also continue to pay private medical insurance, life assurance and personal accident
insurance, the costs of which are determined by third-party providers.
Annual bonus
For the year ended 31 December 2025, annual bonus opportunities for the Executive Directors will remain unchanged and in line with the
Policy of 75% of salary at target and 125% of salary at maximum. Any amount of bonus earned above 100% of salary will be deferred into
EnQuest shares for two years, subject to continued employment.
As in previous years, annual bonuses will be based on a combination of financial and operational results and the achievement of key
accountability objectives. The bonus for both Executive Directors will continue to be based wholly on achievement against the Company
Performance Contract (‘CPC’).
CPC metric categories and weightings are set out in the table below. Reflecting concerns around commercial sensitivity, precise targets
have not been disclosed in advance; to the extent that the targets are no longer commercially sensitive, they will be disclosed in next
year’s report. Each specific metric will have threshold, target and stretch performance levels defined.
Metric category
Weight
Production
20.0%
Expenditure
10.0%
Regulatory, ESG and culture
10.0%
Liquidity management
10.0%
Balance sheet management
10.0%
Growth
40.0%
Performance in HSEA is central to EnQuest’s overall results and so, as in previous years, this category may be used as an overlay on overall
Group performance.
Performance share awards
Amjad Bseisu and Jonathan Copus will each receive a 2025 PSP award of 185% of salary, lower than the normal award of 250%, recognising
the current share price relative to historic levels. As noted in the Chair’s statement on page 108, the 2025 PSP will be based on a blend of
relative TSR, absolute TSR and emissions reduction targets weighted 40%, 40% and 20%, respectively.
The relative TSR comparator group has been reduced to the ten most relevant companies, reflecting factors such as size, country of listing
and geography of operations. Targets for the absolute TSR measure have been set with reference to a range of relevant internal and
external reference points. Finally, targets for the emissions reduction measure are aligned with our long-term ambitions in this area while
taking into account the strong performance made by EnQuest to date.
Measure
Weighting
Threshold
(25% vesting)
Maximum
(100% vesting)
Relative TSR
1
40%
50th percentile
75th percentile
Absolute TSR
2
40%
17.0p
22.0p
Emissions reduction
3
20%
25% reduction
41.3% reduction
Notes:
Straight-line vesting between Threshold and Maximum.
1
The TSR comparators for the 2025 PSP cycle are: Capricorn Energy, Energean, Gulf Keystone Petroleum, Harbour Energy, Hibiscus Petroleum, Ithaca Energy, Jersey Oil & Gas, Kistos,
Serica Energy and Tullow Oil
2
Average share price over the period 1 October 2027 to 31 December 2027, plus any dividends paid FY25-FY27
3
Reduction at the end of 2027 relative to 2018 baseline
Non-Executive Director fees
The fees for the Non-Executive Directors with effect from 1 January 2025 are as follows:
Fee for 2024
Fee for 2025
Increase
Chairman
£200,000
£200,000
0%
Director
£60,000
£60,000
0%
Senior Independent Director additional fee
£10,000
£10,000
0%
Committee Chair additional fee
£10,000
£10,000
0%
Rosalind Kainyah
Chair of the Remuneration and Social Responsibility Committee
26 March 2025
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
116—117
The energy transition
remains a challenge
and an opportunity;
the Committee will
continue to support
the Board.
Chair of the Sustainability and Risk Committee
Michael Borrell
Dear shareholders
Oversight of risk and sustainability is a critical element of the
Sustainability and Risk Committee’s mandate. It ensures that
the Group operates within an appropriate controls framework
and sustainability initiatives are robust, forward-thinking, and
capable of withstanding challenges. To emphasise this dual
role, in 2024, the Board renamed the Sustainability Committee
as the Sustainability and Risk Committee. Addressing risk and
sustainability within the same forum allows the Group to identify
potential obstacles, mitigate negative outcomes, and capitalise
on opportunities for long-term growth and resilience. This
approach is designed to enhance the efficiency of oversight by
the Board whilst empowering relevant teams to conduct detailed
work in relation to all technical matters, asset integrity, review of
reserves as well as the key areas of risk, energy transition, health
and safety, environment and assurance.
On behalf of the Board and my fellow Committee members, I am
therefore pleased to present the report for the Sustainability and
Risk Committee.
Climate, new energy and decarbonisation
During 2024, the Committee continued to focus on climate
change, and EnQuest’s alignment with current and upcoming
sustainability disclosures. Reviewing our peer group and TCFD
compliance requirements, it was agreed that EnQuest should
expand Scope 3 disclosures to include Sold Product ‘Category 11’,
Business Travel ‘Category 6’, Operational Waste ‘Category 5’ and
Commuting Emissions ‘Category 7’.
In terms of emissions, the UK Government’s North Sea Transition
Deal (‘NSTD’) requires the industry to deliver material CO
2
equivalent reductions 10% by 2025, 25% by 2027 and 50% by 2030,
against a 2018 baseline. EnQuest’s emission reduction initiatives
have been exceptionally effective and have exceeded near term
reduction requirements. Based on the corporate 2025 operational
forecasts, it is anticipated that EnQuest’s emission reductions
will comfortably achieve both the 2025 and 2027 targets, and the
Group is on track to meet the required 50% reduction by 2030.
The Committee reviewed progress made over the last year in
terms of asset decarbonisation and the short- and medium-term
decarbonisation pipeline and is evaluating new decarbonisation
opportunities. In 2024, a strategic roadmap laid out the steps
required to achieve EnQuest’s Scope 1 and Scope 2 Net Zero
Commitment; it has been agreed that this roadmap will be
updated to align with the Transition Plan Taskforce (‘TPT’) Net Zero
Roadmap in the first quarter of 2025.
HSE & Asset integrity (‘HSEA’)
The health and safety of our personnel remains a key priority for the
Group. Throughout 2024, the Committee continued to undertake
detailed analysis of specific risk areas to ensure that asset
integrity and the safety of our personnel are not compromised.
The Committee believes that significant progress has
been made in relation to this risk focus area. Asset integrity
management within the Group is risk based, proportionate and
focused and relevant risks are considered as part of the budget
process. Engagement with the Health and Safety Executive
(‘HSE’) and Offshore Petroleum Regulator for Environment and
Decommissioning (‘OPRED’) remained positive throughout 2024 with
no enforcement action following an active inspection programme.
The business has continued to build on its Process Safety
Leadership foundations in terms of people, process and plant.
Personal safety performance was excellent in Malaysia with zero
lost time incidents in 2024. However, performance was challenged
in the North Sea, particularly in respect of lagging indicators
associated with routine tasks at site. The Committee and Board
spent considerable time reviewing the performance to understand
the underlying trends and improvement plans and the Committee
considers that the learning culture within the Group ensures
that the causes of incidents are established, shared and action
plans adequately implemented to prevent recurrence. Reflecting
the desire for improved performance, the Group’s integrated
HSEA Continuous Improvement Plan focuses on the key areas
to drive enhanced performance during 2025 and future years.
Risk Management Framework
The Group has a robust Risk Management Framework, which
the Committee reviews regularly to ensure that it adequately
recognises the full extent of risks and associated controls in
a complex and rapidly changing landscape for the sector.
In 2024, the Committee discussed the evolved treatment of
risk and other upcoming changes in the Financial Reporting
Council’s 2024 Corporate Governance Code. The Committee
also reviewed and approved risk management improvements
in specific risk areas. Notably, in December 2024, the Committee
held a joint meeting with the Audit Committee to consider
how risks were allocated between each Committee and
also how the Directors would make a declaration in the 2026
Annual Report on the effectiveness of material controls.
The joint Committees reviewed activities undertaken and
the necessary processes to allow the Board to provide the
required risk management and internal controls disclosures.
Technical and reserves
During the year, the Committee reviewed several business
development opportunities (including our acquisitions in Malaysia
and Vietnam), and the technical assumptions underpinning these
opportunities and was satisfied with the process and outcome of
the exercises.
With the renewed focus of the Sustainability and Risk Committee,
I am confident that this Committee will continue to make a very
positive impact with regard to the Group’s asset strategy, risk
management framework, investment opportunities and net
zero ambition.
Michael Borrell
Chair of the Sustainability and Risk Committee
26 March 2025
Sustainability and Risk Committee membership
The Committee having appointed new members, provides its
membership in the table below:
Member
Date appointed
Committee member
Attendance at
meetings during
the year
Michael Borrell
Rosalind Kainyah
1
Marianne Daryabegui
1
30 August 2023
30 May 2024
30 May 2024
3/3
2/2
2/2
Note:
1
Rosalind and Marianne have attended all Committee meetings since their
appointments in May 2024
Committee responsibilities
The main responsibilities of the Committee are to:
•
Undertake in-depth analysis of specific risks in relation to the
Company, as may be requested by the Board or determined by
the Committee from time to time;
•
Support the implementation and progression of the Group’s Risk
Management framework;
•
Conduct detailed reviews of key non-financial risks not reviewed
within the Audit Committee; and
•
Undertake such other specific actions as the Board may require
in relation to technical, reserves, business development, HSE, risk
and sustainability issues.
The Committee’s full terms of reference can be found on the Group’s
website, www.enquest.com/investors/corporate-governance.
Committee activities during the year
Over the year, the Sustainability and Risk Committee covered the
following matters:
•
Considered the impact of HSEA processes and culture and the
Group’s Risk Management Framework;
•
Continued to refine the Group’s Risk Management Framework
and continuous improvement planning;
•
Reviewed the Group Risk Register, assurance map and Risk
Report (focusing on the most critical risks and emerging and
changing risk profiles. This included obtaining assurance that
the risks associated with climate change are appropriately
assessed and incorporated within relevant risk areas);
•
Undertook in-depth reviews of ‘setting achievable business
targets’, ‘reserves estimation and replacement’, ‘HSSE
including asset integrity’, ’project execution and delivery’ and,
‘investment decisions’, in each case identifying improvements
to certain controls;
•
Received routine updates on HSEA (including reviewing
the Group’s performance along with ongoing and planned
HSEA activities), which continues to be a key focus area for
the Committee;
•
Received routine updates on the Group’s emission reduction
targets and strategy for further enhancing its contributions to
the United Nations SDG 12;
•
Received routine updates on the Group’s reserves, business
development efforts and business planning; and
•
Received routine updates on the market opportunities to
promote the Group’s strategy.
For further information on these risks, please see the Risks and
uncertainties section on pages 54 to 71.
Priorities for the coming year
In 2025, the Committee will continue to focus on detailed analysis
of key risk areas, including those relating to the Group’s activity on
technical and reserves matters, business development and safety,
sustainability and risk in support of the Group’s strategic purpose
to provide creative solutions through the energy transition. The
Committee will support the HSE continuous improvement priorities
to improve personal safety performance of contractors, deliver
a process safety competency roadmap and progress emission
reduction commitments.
Sustainability and Risk Committee report
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
118—119
Directors’ report
The Directors of
EnQuest present
their Annual Report
together with the
Group and Company
audited financial
statements.
Company Secretary
Kate Christ
Corporate governance statement
The Group’s corporate governance statement is set out on pages
94 to 97 and the Audit Committee report is set out on pages 101 to
106. Both are incorporated into the Directors’ report by reference.
Directors
The biographical details of all persons who served as Directors of
the Company during the financial year ended 31 December 2024
are set out on pages 90 to 91.
Directors’ indemnity provisions
Under the Company’s Articles, the Directors of the Company
may be indemnified out of the assets of the Company against
certain costs, charges, expenses, losses or liabilities which may
be sustained or incurred in or about the execution of their duties.
Such qualifying third-party indemnity provisions were in force
during the financial year ended 31 December 2024 and remain
in force as at the date of approving this Directors’ report. Former
Directors also received indemnities for the period for which they
were Directors of the Company. Such indemnities are in a form
consistent with the limitations imposed by law.
Substantial interests in shares
The table below shows the holdings in the Company’s issued
share capital at 31 December 2024, which had been notified to
the Company in accordance with Chapter 5 of the Disclosure
Guidance and Transparency Rules (‘DTR’). The Company has not
received any notifications between 31 December 2024 and the
date of this report:
Name
% of issued share
capital held at
31 December 2024
2
Bseisu consolidated interests
1
12.62
Aberforth Partners LLP
8.31
Cobas Asset Management
6.78
Hargreaves Lansdown Asset
5.20
Helikon Investments (UK)
5.02
Baillie Gifford & Co Ltd
3.41
Avanza Bank AB
3.23
Schroder Investment Management Ltd
3.07
Notes:
1
See Directors’ interests on page 121 for breakdown of holding
2 Rounding applies
Directors’ interests
The interests of the Directors and their connected persons in the
Ordinary shares of the Company, which are unchanged between
31 December 2024 and 26 March 2025, are shown below:
Name
Shares owned outright
26 March 2024
Amjad Bseisu
1
234,732,857
Jonathan Copus
–
Gareth Penny
2
137,047
Michael Borrell
–
Rosalind Kainyah
–
Marianne Daryabegui
–
Farina Khan
211,235
Notes:
1
201,881,058 shares are held by Double A Limited, a company beneficially owned by
the extended family of Amjad Bseisu. 32,674,840 shares are also held by The Amjad
and Suha Bseisu Foundation and 176,959 shares are held directly by Amjad Bseisu
2
62,500 shares are held by Gareth Penny, and 74,547 shares are held by his wife,
Kate Penny
Share capital
The Company’s share capital during the year consisted of
Ordinary shares of £0.05 each (‘Ordinary shares’). Each Ordinary
share carries one vote. At the start of 2024, there were 1,912,304,113
Ordinary shares in issue.
At the 2024 Annual General Meeting (‘AGM,’) an ordinary resolution
was passed authorising the Directors to allot new Ordinary shares
up to a nominal value of £31,928,879, equivalent to one-third
(33.33%) of the issued share capital of the Company. This resolution
also authorised the Directors to allot up to two-thirds (66.67%) of
the total issued share capital of the Company, although only in
the case of a rights issue. A further special resolution was passed
to effect a disapplication of pre-emption rights for a maximum of
20% of the issued share capital of the Company. These authorities
are valid until the 2025 AGM or 30 June 2025, whichever is sooner.
The Directors propose to renew each of these authorities at the
2025 AGM to be held on 27 May 2025.
The Company was also authorised by shareholders at the 2024
AGM to purchase its own Ordinary shares in the market of up to a
limit of 10% of its issued share capital, subject to certain conditions
laid out in the authorising resolution. The Company announced
on 29 April 2024 that it had commenced a share repurchase
programme of its Ordinary shares of 5 pence each of up to $15
million. Following completion of the share buyback programme
on 31 December 2024, the Company has c.7% of the authority
received from shareholders at the 2024 AGM remaining to
purchase its own shares. See note 19 on page 166 for further details.
At the 2025 AGM, shareholders will be asked to renew authorities
relating to the issue and purchase of Company shares. Details of
the resolutions are contained in the Notice of AGM, which can be
found on the Company’s website at https://www.enquest.com/
investors/shareholder-information/annual-general-meetings.
At 31 December 2024 there were 1,885,029,503 Ordinary
shares in issue, with 25,000,000 being held in Treasury. All of
the Company’s issued Ordinary shares have been fully paid
up. Further information regarding the rights attaching to the
Company’s Ordinary shares can be found in note 19 to the
financial statements on page 166. No person has any special
rights with respect to control of the Company.
The Company’s Ordinary shares are listed on the London
Stock Exchange.
Company share schemes
Shares are held in an employee benefit trust (‘EBT’) for the
purpose of satisfying awards made under the various employee
share plans. In 2024, the EBT was allotted 3,620,226 Ordinary
shares. At year end, the EBT held 0.6% of the issued share capital
of the Company (2023: 1.4%) for the benefit of employees and
their dependants. 25,000,000 Ordinary shares are being held in
Treasury, to be issued to the EBT as required. The voting rights
in relation to these shares are exercised by the Trustees, who
may vote the shares they hold at their discretion. In addition, as
required to be disclosed in accordance with Listing Rule 6.6.1 R,
the trustees of the EBT have waived its rights to receive dividends
on the shares it holds.
Employee engagement
Employees are informed about noteworthy business issues and
other matters of concern via country-level Town Hall meetings,
Global Town Hall meetings (whereby staff in all geographic
locations are invited to attend), email and other in-person and
electronic communications, particularly the Company’s intranet
and internal ‘Viva Engage’ channel.
Face-to-face briefing meetings are used along with virtual
communications to ensure all employees have the opportunity to
participate. Appropriate consultations take place with employees
when business change is undertaken.
Gareth Penny was the Designated Director for Employee
Engagement for most of the year. Rosalind Kainyah took over the
position in October 2024. During his time as Designated Director,
Gareth met with staff in Aberdeen, London, Shetland and Malaysia
and had discussions with Employee Forum representatives across
the organisation. Rosalind, during her tenure, has met staff in
both Aberdeen and London, held meetings with the Employee
Forum and hosted a breakout session for staff on a Board visit to
the Aberdeen office. As a Designated Director, Rosalind has the
responsibility to ensure the Board gets a clear understanding of
the views of employees in accordance with the requirement of the
Corporate Governance Code.
EnQuest offers employees the opportunity to participate directly
in the success of the Company through participation in share
schemes, such as the Save As You Earn (‘SAYE’) Share Scheme.
54.5% of eligible employees currently participate in the Company’s
SAYE schemes. Eligibility for participation in other share schemes
depends on a number of factors, such as seniority within
the Company.
Articles of Association
The Company’s Articles of Association may only be amended
by special resolution at a General Meeting of shareholders.
The Company’s Articles, found on the Company’s website at
https://www.enquest.com/investors/corporate-governance,
contain provisions on the appointment, retirement and removal
of Directors, along with their powers and duties.
Directors are submitted for re-election at every AGM and
appointments are made by a separate resolution. The Company
also reserves the right to remove a Director before expiration of
their term by special resolution.
The Company only has Ordinary shares in issue. In accordance
with the Company’s Articles, any share in the Company may be
issued with such rights (including preferred, deferred or other
special rights) or such restrictions whether in regard to dividend,
voting, return of capital or otherwise as the Company may from
time to time by ordinary resolution determine (or in the absence
of such determination, as the Directors may determine). There are
no specific rights or obligations attaching to the Ordinary shares
and there are no restrictions on the transfer of shares.
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
120—121
Annual General Meeting
The Company’s AGM will be held at Sofitel St James, 6 Waterloo
Place, London SW1Y 4AN United Kingdom on 27 May 2025. Formal
notice of the AGM, including details of special business, is set out
in the Notice of AGM which accompanies this Annual Report. It is
available on the Group’s website at https://www.enquest.com/
investors/shareholder-information/annual-general-meetings.
Registrars
The Company’s Ordinary shares are traded on the London Stock
Exchange. The Company’s share registrar is MUFG Corporate
Markets (previously known as Link Asset Services), details of which
can be found in the Company information section on the inside
back cover of the Annual Report.
Political donations
At the 2024 AGM, a resolution was passed giving the Company
authority to make political donations and/or incur political
expenditure as defined in Sections 362 to 379 of the Companies
Act 2006. Although the Company does not make and does not
intend to make political donations or to incur political expenditure,
the legislation is very broadly drafted and may catch such
activities as funding seminars or functions to which politicians are
invited, or may extend to bodies concerned with policy review, law
reform and representation of the business community that the
Company and its subsidiaries might wish to support.
No political donations were made in 2024 by the Company, or any
of its subsidiaries (2023: no donations).
Dividends
The Company has not declared or paid any dividends since
incorporation. However, during 2024 an up to $15.0 million share
buy-back, of which $9.0 million was realised, was executed. In 2025
the Board of Directors are proposing a final ordinary dividend of
0.616 pence per share (equivalent to c.$15 million), see note 8 on
page 154.
Any future shareholder distributions will be reviewed in the context
of the Company’s expected future cash flows and the Board’s aims
of preserving a balanced programme of value-led and growth-
focused organic and inorganic investment. Future distributions
remain subject to the earnings and financial condition of the
Company meeting the conditions for shareholder distributions
which the Company has agreed with its lenders and such other
factors as the Board of Directors of the Company consider
appropriate, including the requirements of the Companies Act.
Change of control agreements
The Company (or other members of the Group) are not party to
any significant agreements which take effect, alter or terminate
upon a change of control of the Company following a takeover bid,
except in respect of:
(a)
the senior facility agreement, which includes provisions
that, upon a change of control, permit each lender not to
provide certain funding under that facility and to cancel its
commitment to provide that facility and to require repayment
of the credit which may already have been advanced to the
Company and the other borrowers under the facility;
(b)
the deeds of indemnity, originally dated 10 June 2021 (as
amended and restated on 30 November 2024) and deeds
of indemnity dated 30 November 2024, pursuant to which the
sureties have agreed to consider requests to issue, procure
or participate in surety bonds, each include provisions that,
upon a change of control, permit each surety to require the
indemnitors to provide cash cover in respect of the liability
assumed by the sureties (and costs and fees of the sureties)
in relation to the Company and the other indemnitors under
the deeds;
(c)
the indenture governing the Company’s high yield notes
originally due 2027, which at the date of this report have an
aggregate nominal amount of approximately $465.0 million,
under which if the Company undergoes certain events
defined as constituting a change of control, each holder of the
high yield notes may require the Company to repurchase all
or a portion of its notes at 101% of their principal amount, plus
any accrued and unpaid interest.
Directors’ statement of disclosure of information to auditor
The Directors in office at the date of the approval of this Directors’
report have each confirmed that, so far as they are aware, there
is no relevant audit information (as defined by Section 418 of the
Companies Act 2006) of which the Company’s auditor is unaware,
and each of the Directors has taken all the steps he/she ought
to have taken as a Director to make himself/herself aware of any
relevant audit information and to establish that the Company’s
auditor is aware of that information. This confirmation is given and
should be interpreted in accordance with the provisions of Section
418 of the Companies Act 2006.
Responsibility statements under the DTR
The Directors who held office at the date of the approval of the
Directors’ report confirm that, to the best of their knowledge, the
financial statements, prepared in accordance with UK-adopted
IFRS, give a true and fair view of the assets, liabilities, financial
position and profit or loss of the Company and the undertakings
included in the consolidation taken as a whole; and the Directors’
report, Operating review and Financial review, which together
constitute the management report (for the purposes of DTR 4.1.8R),
include a fair review of the development and performance of the
business and the position of the Company and the undertakings
included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that they face.
Independent auditor
Having reviewed the independence and effectiveness of the
auditor, the Audit Committee has recommended to the Board
that the existing auditor, Deloitte, be reappointed. Deloitte has
expressed its willingness to continue as auditor. An ordinary
resolution to reappoint Deloitte as auditor of the Company and
authorising the Directors to set its remuneration will be proposed
at the forthcoming AGM. Information on the Company’s policy on
audit tendering and rotation is on page 106.
Going concern
The Group’s business activities, together with the factors likely
to affect its future development, performance and position, are
set out in the Strategic report on pages 03 to 86. The financial
position of the Group, its cash flow, liquidity position and borrowing
facilities are described in the financial review on pages 34 to 39.
The Board’s assessment of going concern and viability for the
Group is set out on pages 37 and 38. In addition, note 27 to the
financial statements on page 174 includes: the Group’s objectives,
policies and processes for managing its capital; its financial risk
management objectives; details of its financial instruments and
hedging activities; and its exposures to credit risk and liquidity risk.
Greenhouse gas (‘GHG’) emissions
EnQuest has reported on all of the emission sources within its
operational control required under the Companies Act 2006
(Strategic Report and Directors’ Report) Regulations 2013 and The
Companies (Directors’ Report) and Limited Liability Partnerships
(Energy and Carbon Report) Regulations 2018. These sources fall
within the EnQuest consolidated financial statements. EnQuest
has used the principles of the GHG Protocol Corporate Accounting
and Reporting Standard (revised edition), ISO 14064-1 and data
gathered to fulfil the requirements under the ‘Environmental
Reporting Guidelines: Including streamlined energy and carbon
reporting guidance March 2019’. The Streamlined Energy &
Carbon Reporting (‘SECR’) report includes assets which are in
the operational control of EnQuest.
Directors’ report
continued
Emissions
2024
5
SECR
2023
5
SECR
2018
6
baseline
Total emissions tCO
2
e
2
6,622,087
1,042,610
1,704,893
Scope 1
Total emissions tCO
2
e
996,749
967,073
1,617,366
Scope 2
Total emissions tCO
2
e
71,603
74,792
87,526
Scope 1
Extraction emissions tCO
2
e
2
890,175
894,844
1,562,507
Scope 2
Extraction emissions tCO
2
e
2
419
679
1,515
Extraction intensity ratio kgCO
2
e/Boe
2
46.28
44.70
47.54
Scope 1
Terminal (SVT) emissions tCO
2
e
2, 3
106,573
72,229
54,859
Scope 2
Terminal (SVT) emissions tCO
2
e
2, 3
71,184
74,113
86,011
Terminal (SVT) intensity ratio kgCO
2
e/Boe
3
throughput
2,3,8
5.03
3.42
4.65
Scope 3
Emissions tCO
2
e (All Operations)
5
5,553,735
744
N/A
Energy Consumption
1
2024
SECR
2023
SECR
Total kWh
4,442,944,699
4,353,231,637
Scope 1
Extraction kWh
3,651,965,090
3,678,072,239
Scope 2
Extraction kWh
925,516
1,855,745
Extraction intensity ratio kWh/Boe
2
189.84
183.67
Scope 1
Terminal (SVT) kWh
2, 3
401,045,291
270,349,367
Scope 2
Terminal (SVT) kWh
2, 3
389,008,803
402,954,286
Terminal (SVT) intensity ratio kgCO
2
e/Boe
3
throughput
2,3,8
22.38
15.72
UK and Overseas Breakdown
2024
SECR
(operational
control) scope
2023
SECR
(operational
control) scope
Scope 1
UK onshore tCO
2
e
2
UK offshore tCO
2
e
2
Non-UK tCO
2
e
106,578
606,184
283,987
72,242
618,587
276,243
Scope 2
UK onshore tCO
2
e
2
UK offshore tCO
2
e
2
Non-UK tCO
2
e
71,289
0
314
74,377
0
416
Scope 3
UK onshore tCO
2
e
2,5
UK offshore tCO
2
e
2,5
Non-UK tCO
2
e
2,5
14,170
4,412,646
1,126,920
187
453
105
Scope 1
UK onshore kWh
UK offshore kWh
Non-UK kWh
401,066,953
2,414,152,936
1,237,790,492
270,417,800
2,488,418,862
1,189,584,945
Scope 2
UK onshore kWh
UK offshore kWh
Non-UK kWh
389,515,744
0
418,575
404,226,950
0
583,081
Scope 3
UK onshore kWh
UK offshore kWh
Non-UK kWh
26,521,819,398
18,796,373,969
1,505,098,478
0
0
0
Notes:
1
When it is considered that the portfolio of assets under a company’s operational control has changed significantly, the baseline, which is based on verified scope data, is
recalculated to an appropriate comparative period for which good data is available. As such, the baseline is currently 2018
2 tCO
2
e = tonnes of CO
2
equivalent. kgCO
2
e = kilogrammes of CO
2
equivalent. Boe = barrel of oil equivalent. EnQuest is required to report the aggregate gross (100%) emissions for
those assets over which it has operational control. As such, the extraction intensity ratio is calculated by taking the aggregate gross (100%) reported Scope 1 and 2 kgCO
2
e from
those assets divided by the aggregate gross (100%) hydrocarbon production from the same assets. The throughput ratio is calculated by taking the aggregate gross (100%)
reported Scope 1 and 2 kgCO
2
e from SVT divided by the aggregate total throughput at the terminal
3
Note on uncertainty: The uncertainty for total emissions within the verified scope is calculated as 5%. SVT emissions in isolation are not within 5% due to the steam and electricity
meters for SVT not having supportable uncertainties
4
Kilo-watt hour (kWh) data is reported on a net calorific value basis throughout
5
Scope 3 emission Category 5 ‘waste generated in operations’ for 2024 was 481 tCO
2
e (2023: 567 tCO
2
e). In 2024, the Group reported the following Scope 3 categories for the first
time and, as such, there is no comparative data available: Category 6 ‘business travel’ 13,829 tCO
2
e, Category 7 ‘employee commuting’ 340 tCO
2
e and Category 11 ‘use of sold
products’ 5,539,085 tCO
2
e
6
2022 was the first year that the PM8/Seligi (Malaysian) asset was included within the verified scope due to availability of supportable metering uncertainty documentation. The
2018 baseline figures in the tables above are quoted for all assets in the operational control of EnQuest but it is declared for transparency that the PM8/Seligi asset contribution was
not verified for the 2018 baseline
7
Scope 3 emission Category 5 ‘waste generated in operations’ was reported for the first time in 2023. As this is a waste category, there is no associated kWh measure
8
Intensity ratios are calculated against Scope 1 and Scope 2 emissions only and, as such, exclude Scope 3 emissions
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
122—123
Energy efficiency strategy
EnQuest recognises that industry, alongside other key stakeholders
such as governments, regulators and consumers, must contribute
to reducing the impact on climate change of carbon-related
emissions. The Group is committed to playing its part in the
achievement of national emission reduction targets and the drive
to net zero. EnQuest aims to reduce emissions generated through
its operations by utilising a detailed project delivery process.
The status of emission reduction opportunities and projects
is discussed at regular Emissions Reduction Workshops and
reviewed at Board level via the Sustainability and Risk Committee.
Emission reduction projects managed through this established
process include compressor re-mapping at the Greater Kittiwake
Area, the commissioning of waste heat recovery units on Kraken
and the delivery of both a flare purge reduction and a flare
passing valve replacement programme on Magnus. In the longer
term, Veri Energy, EnQuest’s wholly owned subsidiary, is developing
cost-effective and efficient plans to repurpose the terminal site
and connected offshore infrastructure to fulfil its ambition of
creating a new energy and decarbonisation hub at the Sullom
Voe Terminal (‘SVT’).
SECR (operational control) scope
EnQuest has a number of financial interests (for example, joint
ventures and joint investments), as covered in this Annual Report
for which it does not have operational control. In line with SECR
and ISO 14064-1 guidance, only those assets where EnQuest has
operational control greater than 50% are captured within the SECR
reporting boundary. Where EnQuest has less than 50% operational
control of an asset, it is not included within the SECR reporting
boundary. Hence, the SECR operational control boundary is
different to EnQuest’s financial boundary. In line with SECR
guidance, this is fully disclosed.
ISO-14064 verified scope
EnQuest has voluntarily opted to have emissions reported
within the SECR scope verified to the internationally recognised
ISO 14064-1 standard by a UKAS accredited verification body. This
increases the robustness of the reported emissions and provides
the reader with more confidence in the stated figures. This goes
beyond the minimum requirements of the SECR guidance.
Further disclosures
The Company has set out disclosures in the Strategic report in
accordance with Section 414C(11) of the Companies Act (2006) –
information required by Schedule 7 to the Accounting Regulations
to be contained in the Directors’ report. These disclosures and any
further disclosure requirements as required by the Companies Act
2006; Schedule 7 of the Large and Medium-sized Companies and
Groups (Accounts and Reports) Regulations 2008; The Companies
(Miscellaneous Reporting) Regulations 2018; the FCA’s Listing
Rules; and DTR are found on the following pages of the Company’s
Annual Report and are incorporated into the Directors’ report
by reference.
Disclosure number
Page
Future developments
Acquisitions and disposal
Fair treatment of disabled employees
Anti-slavery disclosure
Corporate governance statement
Gender diversity
Financial risk and financial instruments
Important events subsequent to year end
Branches outside of the UK
Stakeholder engagement
Research and development
Related party transactions
Dividend waiver
8-15
22-25
51
39
94
51, 99
174
n/a
178
84
n/a
174
121
The Directors’ report was approved by the Board and signed on its
behalf by the Company Secretary on 26 March 2025.
Kate Christ
Company Secretary
Directors’ report
continued
The Directors are responsible for preparing the Annual Report and
the Group financial statements in accordance with applicable
United Kingdom law and regulations. Company law requires
the Directors to prepare Group financial statements for each
financial year. Under that law, the Directors are required to prepare
Group financial statements under United Kingdom international
accounting standards (‘IFRS’).
Under Company law, the Directors must not approve the Group
financial statements unless they are satisfied that they give a true
and fair view of the state of affairs of the Group and of the profit or
loss of the Group for that period. In preparing the Group financial
statements, International Accounting Standard 1 (‘IAS’) requires
that the Directors:
•
Properly select and apply accounting policies;
•
Present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
•
Provide additional disclosures when compliance with the
specific requirements in IFRS is insufficient to enable users to
understand the impact of particular transactions, other events
and conditions on the Group’s financial position and financial
performance; and
•
Make an assessment of the Group’s ability to continue as a
going concern.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group’s
transactions and disclose with reasonable accuracy at any time
the financial position of the Group and enable them to ensure that
the Group financial statements comply with the Companies Act
2006 and Article 4 of the IAS Regulation. They are also responsible
for safeguarding the assets of the Group and hence for taking
reasonable steps for the prevention and detection of fraud and
other irregularities.
The Directors are also responsible for preparing the Strategic
Report, Directors’ report, the Directors’ Remuneration Report
and the Corporate governance statement in accordance with
the Companies Act 2006 and applicable regulations, including
the requirements of the Listing Rules and the Disclosure and
Transparency Rules.
Fair, balanced and understandable
In accordance with the principles of the UK Corporate Governance
Code, the Directors are responsible for establishing arrangements
to evaluate whether the information presented in the Annual
Report, taken as a whole, is fair, balanced and understandable
and provides the information necessary for shareholders to
assess the Group’s position and performance, business model
and strategy, and making a statement to that effect. This
statement is set out on page 102 of the Annual Report.
Strategic Report
Corporate Governance
Financial Statements
124—125
EnQuest PLC Annual Report and Accounts 2024
Statement of Directors’ Responsibilities
for the Group Financial Statements
Independent auditor’s report
Report on the audit of the financial statements
1. Opinion
In our opinion :
•
the financial statements of EnQuest PLC (the ‘parent company’) and its subsidiaries (the ‘group’) give a true and fair view of the state
of the group’s and of the parent company’s affairs as at 31 December 2024 and of the group’s profit for the year then ended;
•
the group financial statements have been properly prepared in accordance with United Kingdom adopted international accounting
standards;
•
the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted
Accounting Practice, including Financial Reporting Standard 101 “Reduced Disclosure Framework” and
•
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements which comprise:
•
the group Income Statement;
• the group Balance Sheet;
•
the group Statement of Changes in Equity;
•
the group Statement of Cash Flows;
•
the related notes 1 to 30 to the group Financial Statements;
•
the parent company Balance Sheet;
•
the parent company Statement of Changes in Equity; and
•
the related notes 1 to 13 to the parent company Financial Statements.
The financial reporting framework that has been applied in the preparation of the group financial statements is applicable law and United
Kingdom adopted international accounting standards. The financial reporting framework that has been applied in the preparation of the
parent company financial statements is applicable law and United Kingdom Accounting Standards, including FRS 101 “Reduced Disclosure
Framework” (United Kingdom Generally Accepted Accounting Practice).
2. Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of our report.
We are independent of the group and the parent company in accordance with the ethical requirements that are relevant to our audit
of the financial statements in the UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard as applied to listed public
interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. The non-audit services
provided to the group and parent company for the year are disclosed in note 4f to the group financial statements. We confirm that we
have not provided any non-audit services prohibited by the FRC’s Ethical Standard to the group or the parent company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
3. Summary of our audit approach
Key audit matters
The key audit matters that we identified in the current year were:
•
Valuation of oil and gas related assets and liabilities
• Valuation of decommissioning liability
Within this report, key audit matters are identified as follows:
Newly identified
Increased level of risk
Similar level of risk
Decreased level of risk
Materiality
The materiality that we used for the group financial statements was $20.3m which was determined on the
basis of 3.0% of adjusted EBITDA (management have presented a reconciliation of profit from operations
before tax and interest to adjusted EBITDA in the glossary to the financial statements on page 189).
Scoping
EnQuest PLC has two components, being the North Sea and Malaysia. They account for 100% of the group’s
revenue, 100% of its adjusted EBITDA and 100% of its net assets, therefore account balances of both
components were scoped in.
Significant changes in
our approach
There were no significant changes in our approach compared to the prior year.
4. Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the group’s and parent company’s ability to continue to adopt the going concern basis of
accounting included:
•
assessing the reasonableness of the assumptions used in the cash flow forecasts, in particular commodity prices, production
profiles and cash costs;
•
assessing the historical accuracy of forecasts prepared by management across production, operating expenditure and
capital expenditure;
•
assessing the financing facilities throughout the going concern period, including repayment terms and financial covenants;
•
considering the levels of cash and covenant headroom throughout the going concern period, including sensitivity analysis and
reverse stress testing;
•
assessing the mathematical accuracy of the forecasts and the going concern model, involving our modelling specialists; and
•
assessing the appropriateness of the group’s and parent company’s going concern related financial statement disclosures.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the group’s and parent company’s ability to continue as a going concern for a period of at
least twelve months from when the financial statements are authorised for issue.
In relation to the reporting on how the group has applied the UK Corporate Governance Code, we have nothing material to add or draw
attention to in relation to the directors’ statement in the financial statements about whether the directors considered it appropriate to
adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of
this report.
5. Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements
of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we
identified. These matters included those which had the greatest effect on: the overall audit strategy; the allocation of resources in the
audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters.
126—127
Strategic Report
Corporate Governance
Financial Statements
Independent auditor’s report
continued
5.1. Valuation of oil and gas related assets and liabilities
Key audit matter
description
Management is required to assess the carrying value of oil and gas related assets and liabilities, in line with the
relevant accounting standard, at each balance sheet date. In order to appropriately value these assets and
liabilities, management is required to forecast future cash flows. These forecast cash flows are used consistently
across the:
•
Impairment assessment of oil and gas assets;
•
Impairment assessment of goodwill;
•
Impairment assessment of the parent company investments;
•
Valuation of Magnus contingent consideration; and
•
Valuation of the deferred tax asset.
The forecast future cash flows contain a high level of management judgement and estimation, particularly
in relation to the following significant assumptions:
• Forecast commodity prices;
• Discount rate applied; and
•
Reserve estimates and production profiles.
Commodity prices, reserve estimates and production profiles are also impacted by climate-related risks, which
increases the level of estimation uncertainty.
Given the level of management judgement and estimation applied in determining the recoverable value of the
oil and gas related assets and liabilities, including estimation uncertainty within the significant assumptions
outlined above, we consider this to be a key audit matter related to the potential risk of fraud.
Impairment assessment of oil and gas assets, goodwill and parent company investments
Management performed an impairment assessment for oil and gas assets and goodwill carrying value,
by reference to IAS 36 Impairment of Assets. As at 31 December 2024, the net book value of property, plant
and equipment, which primarily relates to oil and gas assets was $2,298 million (2023: $2,297 million) and
management have recorded a pre-tax impairment of $71 million (2023: $117 million) against certain oil and
gas assets, including related right of use assets, as disclosed in note 9.
As at 31 December 2024, the net book value of goodwill was $134 million (2023: $134 million). No goodwill
impairment charge has been recorded in 2024 (2023: nil), as disclosed in note 10.
Management also performed an assessment of the carrying values of the parent company’s investment in
subsidiaries by reference to IAS36 Impairment of Assets and IFRS9 Financial Instruments. As at 31 December
2024, the net book value of investments recognised in the parent company balance sheet was $372 million
(2023: $300 million) and management have recorded an impairment reversal of $71 million (2023: $74 million
impairment charge), as disclosed in note 3 to the parent company financial statements.
Valuation of Magnus contingent consideration
The valuation of Magnus contingent consideration was $451 million (2023: $488 million) as at 31 December 2024,
based on the estimated future cash flows for the Magnus oil and gas asset, as disclosed in note 21.
Given the interrelationship with production and the profit-share agreement, considerations have been made to
the relationship of the key accounting estimates relating to commodity prices.
Valuation of the deferred tax asset
As at 31 December 2024, a deferred tax asset of $506m (2023: $540m) was recognised, based on the expected
utilisation of historical tax losses, underpinned by forecasts of future profitability. The forecast cash flows used to
value the deferred tax asset are consistent with the cash flows used for impairment purposes. Further details on
the deferred tax asset are disclosed in note 6(c).
Given the interrelated nature of the key areas noted above, management have applied consistent assumptions
across all of these valuations where appropriate.
Further details on this matter have been disclosed in the audit committee report on page 104 and 105 and in the
“critical accounting judgements and key sources of estimation uncertainty” section of note 2.
How the scope
of our audit responded
to the key audit matter
Our procedures comprised the following:
Procedures on internal controls and valuation models
•
obtaining an understanding of relevant controls over management’s process for identifying indicators of
impairment and for performing their impairment assessment and related valuations;
•
assessing management’s forecasting accuracy through a retrospective review of previous forecasts;
•
assessing whether forecast cash flows were consistent with board approved forecasts and budgets, and
forecasts used elsewhere, including for going concern and viability purposes;
•
challenging the reasonableness of the operating and capital cost assumptions within the models;
•
assessing, with input from our tax specialists, whether the models appropriately incorporate tax cash flows,
including the Energy Profits Levy;
•
working with our modelling specialists to evaluate the arithmetical accuracy of the models;
•
challenging management’s determination of oil and gas cash generating units for impairment purposes,
in comparison to the requirements of IAS36;
•
assessing the reasonableness of the various valuations on an aggregate basis, as part of our stand-back
procedures;
•
evaluating compliance with the relevant accounting standards, including IAS12 Income Taxes, IAS36
Impairment of Assets and IFRS13 Fair Value Measurements; and
•
evaluating the adequacy of management’s disclosures in relation to impairment and related valuations,
including related sensitivity analysis and climate-related disclosures.
Procedures related to the key assumptions used for valuation purposes
Our procedures related to the key assumptions in this key audit matter are:
Forecast commodity prices
•
assessing the appropriateness of management’s forecast commodity prices, through benchmarking against
forward curves, peer information, market data and climate aligned price scenarios;
•
performing sensitivity analysis on the pricing assumptions to determine the impact on the valuation
conclusions of reasonably possible changes;
•
evaluating whether management’s pricing assumptions have adequately considered the impact of the risk
of lower oil and gas demand due to climate change; and
•
assessed future commodity price differentials applied relative to observed differentials experienced from
liftings from 2024.
Discount rate
•
evaluating, with input from our valuations specialists, the group’s discount rates used in impairment tests
and valuations;
•
comparing discount rate of peer UKCS upstream companies; and
•
assessing whether country risks are appropriately reflected in the group’s discount rate.
Reserves estimates and production profiles
•
comparing management’s reserves estimates and production profiles to those of their independent
reserves expert;
•
assessing the technical competence, capabilities and objectivity of management’s internal and external experts;
•
evaluating, with involvement from our oil and gas reserves specialist, the reasonableness of reserves
estimates and production profiles; and
•
working with our oil and gas reserves specialist to challenge management on significant changes in the
reserves estimates and production profiles.
Key observations
We are satisfied with management’s conclusions in respect of the valuation of oil and gas related assets and
liabilities, including the related impairment charges.
In reaching this conclusion, we observed that:
•
Future commodity price assumptions are within our acceptable range for all years;
•
Impairment discount rates were within our acceptable range, calculated by our valuations specialist;
•
Reserves estimates and production profiles were concluded as reasonable, based on estimates from
management’s reserves expert;
•
The carrying value of the oil and gas assets and goodwill, including the related impairment charge, is reasonable;
•
The carrying value of the investment in subsidiaries, including the related impairment reversal, is reasonable;
•
The carrying value of the Magnus contingent consideration is reasonable; and
•
The deferred tax asset recognition is appropriate and the carrying value is a reasonable estimate.
5.1. Valuation of oil and gas related assets and liabilities
continued
128—129
Strategic Report
Corporate Governance
Financial Statements
Independent auditor’s report
continued
5.2. Valuation of decommissioning liability
Key audit matter
description
The group is required by law to decommission the oil and gas assets and associated infrastructure at the
end of their operating life. An estimate of the future cost of decommissioning is required to be provided for in
accordance with IAS37 Provisions, Contingent Liabilities and Contingent Assets.
The decommissioning provision at 31 December 2024 is $760 million (2023: $781 million). The provision represents
the present value of decommissioning costs which are expected to be incurred during the decommissioning
period, which is assumed to run to 2050, assuming no further development of the group’s assets. Further details
on the key sources of estimation uncertainty underpinning the valuation of decommissioning provisions can be
found in note 2. This key audit matter is considered to be a risk due to fraud.
Decommissioning liabilities are inherently judgemental areas, particularly in relation to cost estimates and
the related assumptions. The key management estimates containing the most estimation uncertainty, and
therefore the focus of our key audit matter, are:
•
internal well cost estimates included in the decommissioning model; and
•
discount rate applied, calculated as a risk-free rate using an average of year-end 5-, 10- and 20-year UK Gilts,
weighted to reflect expected timing profile of future decommissioning spend.
Further details on this matter have been disclosed in the audit committee report on page 104 and in note 22.
How the scope
of our audit responded
to the key audit matter
Our procedures comprised the following:
Procedures on internal controls and the decommissioning model
•
obtaining an understanding of the relevant controls relating to the decommissioning provision;
•
assessing the technical competence, capabilities and objectivity of management’s internal and external experts;
•
assessing the decommissioning provision for compliance with IAS 37 Provisions, Contingent Liabilities and
Contingent Assets;
•
working with our modelling specialists to evaluate the arithmetical accuracy of the decommissioning model;
•
assessing available benchmarking reports for indications of developments in industry practice and prevailing
cost trends;
•
challenging the cost reduction factors applied to the decommissioning model, through comparison with
available evidence for the factors applied including industry benchmarking reports;
•
testing a sample of actual decommissioning spend incurred during the period, by agreeing to invoices and
payments from bank statements;
•
assessing the historical forecasting accuracy of management for decommissioning expenditure, by
comparing actual spend with historical estimates;
•
re-calculating the closing decommissioning provision from the gross decommissioning cost estimate, and
agreeing this to the group’s financial records; and
•
evaluating the adequacy of management’s disclosures, including the key sources of estimation uncertainty
and associated sensitivity analysis of decommissioning assumptions.
Procedures on cost estimates and related assumptions
Internal well cost estimates
•
challenging the group’s assumptions within the cost estimate by referencing to available third-party data
and benchmarking to industry publications, peer and market rates; and
•
assessing the assumed durations for plug and abandonment of wells, by comparison to available
benchmarking data and potential contradictory evidence available from active decommissioning projects
or operator estimates.
Discount rate
•
evaluating the group’s discount rates used in valuing the decommissioning liability with reference to external
risk free market rates; and
•
recalculating the discount rate by agreeing key inputs, being the year-end 5-, 10- and 20- year UK Gilt rates
and expected timing profile of future decommissioning spend, to supporting evidence and confirming the
calculations are applied in accordance with the method and are mathematically accurate.
Key observations
•
The key assumptions within the well cost estimates are reasonable;
•
The decommissioning discount rate is reasonable; and
•
We are satisfied that the group’s decommissioning provision is reasonable and prepared in accordance with
the requirements of IAS 37 Provisions, Contingent Liabilities and Contingent Assets.
We are satisfied the disclosures in the financial statements are adequate.
6. Our application of materiality
6.1. Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions
of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our audit work
and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group financial statements
Parent company financial statements
Materiality
$20.3 million (2023: $23 million)
$16.8 million (2023: $11.4 million)
Basis for determining
materiality
3.0% of adjusted EBITDA, (2023: 2.8% of adjusted
EBITDA).
2.9% of net assets (2023: 3% of net assets)
Rationale for the
benchmark applied
Adjusted EBITDA was considered to be the most
relevant benchmark as it is a key performance
measure used by the group and by investors. It
represents a consistent profit measure used widely
by stakeholders.
The parent company acts principally as a holding
company and therefore net assets is a key measure
for this business.
Adjusted EBITDA
$673m
Group materiality
Component performance materiality range
$7.1m to $12.8m
Audit Committee reporting threshold $1.02m
Group materiality $20.3m
6.2. Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and undetected
misstatements exceed the materiality for the financial statements as a whole.
Group financial statements
Parent company financial statements
Performance
materiality
70% (2023: 70%) of group materiality
70% (2023: 70%) of parent company materiality
Basis and rationale
for determining
performance
materiality
In determining performance materiality, we considered the following factors:
•
our risk assessment, including our assessment of the group’s overall control environment;
•
our past experience of the audit, which has indicated a low number of corrected and uncorrected
misstatements identified in prior periods;
•
management’s willingness to correct errors identified in the prior year and current year; and
•
macro-economic factors such as commodity price volatility and geo-political instability.
6.3. Error reporting threshold
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of $1.02m (2023: $1.15m), as well
as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Audit Committee on
disclosure matters that we identified when assessing the overall presentation of the financial statements.
130—131
Strategic Report
Corporate Governance
Financial Statements
Independent auditor’s report
continued
7. An overview of the scope of our audit
7.1. Identification and scoping of components
Our audit was scoped by obtaining an understanding of the group and its environment, including group-wide controls, and assessing
the risks of material misstatement at the group level. In the current year we performed an audit of one or more account balances of the
North Sea and Malaysia components. Audit procedures were performed by the group audit team for the North Sea component and by the
Malaysia component team for the Malaysia component.
The performance materiality applied for the Malaysia component was $7.1 million (2023: $8.1 million). The performance materiality applied
for the North Sea component was $12.8 million (2023: $14.5 million).
The North Sea and Malaysia components, where we performed an audit of one or more account balances, accounted for 100% of the
group’s revenue, 100% of the group’s adjusted EBITDA and 100% of the group’s net assets, consistent with the prior year.
7.2. Our consideration of the control environment
We obtained an understanding of relevant controls in relation to a number of key business cycles, including impairment,
decommissioning, financial reporting and close and revenue, as well as IT systems that were relevant to the audit, being the financial
reporting system. Additionally, we tested relevant controls relating to revenue cut-off. Significant progress has been made in addressing
the control weaknesses that were identified in relation to the general IT control environment in the prior year but we did not place reliance
on these IT controls for the purposes of our audit testing. Overall, we did not plan to take a control reliance approach in the current year,
other than in respect of revenue as outlined above.
7.3. Our consideration of climate-related risks
We performed enquiries of management to understand the impact of climate-related risks and controls relevant to the group. We
performed a review of the climate change risk assessment and related documentation prepared by management and considered
the completeness and accuracy of the climate-related risks identified and summarised in the Task Force on Climate-related Financial
Disclosures report from page 74 to 83.
As disclosed in note 2, management identified key judgements and estimates with elevated climate-related risk, relating to property,
plant and equipment and goodwill, valuation of contingent consideration and deferred tax as well as the timing and valuation of the
decommissioning provision.
We considered whether the risks identified by management within their climate change risk assessment and related documentation
are complete and challenged assumptions impacting the financial statements. The key piece of climate-related regulation enacted to
date and impacting the group continues to relate to carbon costs and emission allowances. The key market-related matter which could
have a material impact on the valuation of the items noted above is in respect of future demand for, and pricing of, oil and gas as the
energy mix evolves in response to climate change risk and other matters. There continues to be a climate-related risk relating to the early
cessation of production of oil and gas assets, which would impact all of the judgements and estimates outlined above. This is disclosed in
the annual report on page 57.
We performed a review of the climate disclosures within the Annual Report, including the climate-related financial disclosures referred
to in note 2, with the involvement of our climate specialists. We considered whether these were materially consistent with the financial
disclosures and consistent with our understanding of the climate-related risks, assumptions and judgements during the year. Both of
our key audit matters are considered to contain climate-related risks, being the risks to commodity prices and cessation of production,
which could have a material impact on the valuation of oil and gas related assets and liabilities and valuation of the decommissioning
provision. The procedures performed for these key audit matters are discussed in detail in the key audit matters section above.
7.4. Working with other auditors
We engaged Deloitte Malaysia as our component auditor, directed and supervised by the group engagement team in the UK. Detailed
referral instructions were sent to the component audit team as part of planning procedures.
The group engagement team directed and supervised the component team throughout the year via attendance at planning meetings,
regular communication between the teams and attendance at closing meetings. The group engagement team reviewed and
challenged the reporting deliverables and audit file as part of concluding procedures.
We are satisfied that the level of involvement of the lead audit partner and team in the component audit has been appropriate and has
enabled us to conclude that sufficient appropriate audit evidence has been obtained in support of our opinion on the group financial
statements as a whole.
8. Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s
report thereon. The directors are responsible for the other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to
a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
9. Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary
to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent company’s ability to continue
as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.
10. Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of our auditor’s report.
132—133
Strategic Report
Corporate Governance
Financial Statements
Independent auditor’s report
continued
11. Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud is detailed below.
11.1. Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and
regulations, we considered the following:
•
the nature of the industry and sector, control environment and business performance including the design of the group’s remuneration
policies, key drivers for directors’ remuneration, bonus levels and performance targets;
•
the group’s own assessment of the risks that irregularities may occur either as a result of fraud or error that was approved by the board;
•
results of our enquiries of management, internal audit, the directors and the Audit Committee about their own identification and
assessment of the risks of irregularities, including those that are specific to the group’s sector;
•
any matters we identified having obtained and reviewed the group’s documentation of their policies and procedures relating to:
•
identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;
•
detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud; and
•
the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;
•
the matters discussed among the audit engagement team including the component audit teams and relevant internal specialists,
including tax, valuations, IT, modelling and oil and gas reserves specialists, regarding how and where fraud might occur in the financial
statements and any potential indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and
identified the greatest potential for fraud in the following areas:
•
valuation of oil and gas related assets and liabilities; and
• valuation of decommissioning provision.
In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory framework that the group operates in, focusing on provisions of those laws
and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key
laws and regulations we considered in this context included the UK Companies Act 2006 and the Listing Rules of the UK Listing Authority
and the relevant tax compliance regulations in the jurisdictions in which the group operates.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but
compliance with which may be fundamental to the group’s ability to operate or to avoid a material penalty. These included environmental
laws and regulations in the countries in which the group operates as well as licence terms for the group’s oil and gas assets.
11.2. Audit response to risks identified
As a result of performing the above, we identified the valuation of oil and gas related assets and liabilities and the valuation of the
decommissioning provision as key audit matters related to the potential risk of fraud. The key audit matters section of our report explains
the matters in more detail and also describes the specific procedures we performed in response to those key audit matters.
In addition to the above, our procedures to respond to risks identified included the following:
•
reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of
relevant laws and regulations described as having a direct effect on the financial statements;
•
enquiring of management, the Audit Committee and in-house legal counsel concerning actual and potential litigation and claims;
•
performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement
due to fraud;
•
reading minutes of meetings of those charged with governance, reviewing internal audit reports and reviewing correspondence with
relevant authorities; and
•
in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other
adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and
evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members including
internal specialists and component audit team, and remained alert to any indications of fraud or non-compliance with laws and
regulations throughout the audit.
134—135
Strategic Report
Corporate Governance
Financial Statements
Independent auditor’s report
continued
Report on other legal and regulatory requirements
12. Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the strategic report and the directors’ report for the financial year for which the financial statements are
prepared is consistent with the financial statements; and
•
the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course
of the audit, we have not identified any material misstatements in the strategic report or the directors’ report.
13. Corporate Governance Statement
The Listing Rules require us to review the directors’ statement in relation to going concern, longer-term viability and that part of the
Corporate Governance Statement relating to the group’s compliance with the provisions of the UK Corporate Governance Code specified
for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial statements and our knowledge obtained during the audit:
•
the directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material
uncertainties identified set out on page 37;
•
the directors’ explanation as to its assessment of the group’s prospects, the period this assessment covers and why the period is
appropriate set out on page 38;
•
the directors’ statement on fair, balanced and understandable set out on page 102;
•
the board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on pages 54 to 71;
•
the section of the annual report that describes the review of effectiveness of risk management and internal control systems set out
on page 105; and
•
the section describing the work of the audit committee set out on pages 101 to 106.
14. Matters on which we are required to report by exception
14.1. Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
•
we have not received all the information and explanations we require for our audit; or
•
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received
from branches not visited by us; or
•
the parent company financial statements are not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
14.2. Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of directors’ remuneration have not been
made or the part of the directors’ remuneration report to be audited is not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
15. Other matters which we are required to address
15.1. Auditor tenure
Following the recommendation of the audit committee, we were appointed by shareholders on 21 May 2020 to audit the financial statements
for the year ending 31 December 2020 and subsequent financial periods. The period of total uninterrupted engagement including previous
renewals and reappointments of the firm is five years, covering the years ending 31 December 2020 to 31 December 2024.
15.2. Consistency of the audit report with the additional report to the audit committee
Our audit opinion is consistent with the additional report to the audit committee we are required to provide in accordance with ISAs (UK).
16. Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our
audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an
auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other
than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rule (DTR) 4.1.15R – DTR 4.1.18R, these
financial statements will form part of the Electronic Format Annual Financial Report filed on the National Storage Mechanism of the FCA in
accordance with DTR 4.1.15R – DTR 4.1.18R. This auditor’s report provides no assurance over whether the Electronic Format Annual Financial
Report has been prepared in compliance with DTR 4.1.15R – DTR 4.1.18R.
David Paterson ACA (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
26 March 2025
136—137
Strategic Report
Corporate Governance
Financial Statements
Notes
2024
$’000
2023
$’000
Revenue and other operating income
4(a)
Cost of sales
4(b)
(787,383 )
(946,752 )
Gross profit/(loss)
Net impairment charge to oil and gas assets
9
(71,414 )
(117,396 )
General and administration expenses
4(c)
(5,702 )
(6,348 )
Other (expenses)/income
4(d)
(4,682 )
(19,550 )
Profit/(loss) from operations before tax and finance income/(costs)
Finance costs
5
(159,422 )
(172,087 )
Finance income
5
Profit/(loss) before tax
Income tax
6
(72,841 )
(262,612 )
Profit/(loss) for the year attributable to owners of the parent
(30,833 )
Total comprehensive profit/(loss) for the year, attributable to owners of the parent
(30,833 )
There is no comprehensive income attributable to the shareholders of the Group other than the profit/(loss) for the period. Revenue and
operating profit/(loss) are all derived from continuing operations.
$
$
Earnings per share
7
Basic
(0.016 )
Diluted
(0.016 )
The attached notes 1 to 30 form part of these Group financial statements.
Notes
2024
$’000
2023
$’000
ASSETS
Non-current assets
Property, plant and equipment
9
Goodwill
10
Intangible assets
11
Deferred tax assets
6(c)
Trade and other receivables
15
Other financial assets
18
Current assets
Intangible assets
11
Inventories
12
Trade and other receivables
15
Current tax receivable
Cash and cash equivalents
13
Other financial assets
18
TOTAL ASSETS
EQUITY AND LIABILITIES
Equity
Share capital and premium
19
Treasury shares
19
(4,425 )
Share-based payments reserve
Capital redemption reserve
19
Retained earnings
19
TOTAL EQUITY
Non-current liabilities
Loans and borrowings
17
Lease liabilities
23
Contingent consideration
21
Provisions
22
Deferred income
24
Trade and other payables
16
Deferred tax liabilities
6(c)
Current liabilities
Loans and borrowings
17
Lease liabilities
23
Contingent consideration
21
Provisions
22
Trade and other payables
16
Other financial liabilities
18
Current tax payable
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
The financial statements were approved by the Board of Directors and authorised for issue on 26 March 2025 and signed on its behalf by:
Jonathan Copus
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
138—139
Group Income Statement
For the year ended 31 December 2024
Group Balance Sheet
At 31 December 2024
Notes
Share
capital
$’000
Share
premium
$’000
Treasury
shares
$’000
Share–
based
payments
reserve
$’000
Capital
redemption
reserve
$’000
Retained
earnings
$’000
Total
$’000
Balance at 1 January 2023
Loss for the year
(30,833 )
(30,833 )
Total comprehensive expense for the year
(30,833 )
(30,833 )
Issue of shares to Employee Benefit Trust
(1,635 )
Share-based payment
Balance at 31 December 2023
Profit for the year
Total comprehensive income for the year
Issue of shares to Employee Benefit Trust
19
(229 )
Repurchase and cancellation of shares
19
(2,006 )
(4,425 )
(4,593 )
(9,018 )
Share-based payment
20
Balance at 31 December 2024
(4,425 )
The attached notes 1 to 30 form part of these Group financial statements.
Notes
2024
$’000
2023
$’000
CASH FLOW FROM OPERATING ACTIVITIES
Cash generated from operations
29
Cash received from insurance
Cash (paid)/received on purchase of financial instruments
(10,306 )
(5,795 )
Cash paid in relation to amounts previously provided for
(9,063 )
Decommissioning spend
(60,544 )
(58,911 )
Income taxes paid
(97,264 )
(40,986 )
Net cash flows from/(used in) operating activities
INVESTING ACTIVITIES
Purchase of property, plant and equipment
(249,165 )
(141,741 )
Proceeds from farm-down
11, 24
Vendor financing facility repaid/(loaned)
18(f), 24
(141,360 )
Purchase of intangible oil and gas assets
11
(3,686 )
(10,467 )
Purchase of other intangible assets
11
(1,138 )
(876 )
Payment of Magnus contingent consideration – Profit share
21
(48,465 )
(65,506 )
Payment of Golden Eagle contingent consideration – Acquisition
21
(50,000 )
Interest received
Net cash flows (used in)/from investing activities
(183,573 )
(262,695 )
FINANCING ACTIVITIES
Proceeds from loans and borrowings
Repayment of loans and borrowings
(162,304 )
(427,736 )
Payment for repurchase of shares
(9,018 )
Payment of obligations under financing leases
23
(130,065 )
(135,675 )
Interest paid
(83,162 )
(105,877 )
Net cash flows (used in)/from financing activities
(352,887 )
(478,631 )
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS
(27,691 )
Net foreign exchange on cash and cash equivalents
(5,642 )
(957 )
Cash and cash equivalents at 1 January
CASH AND CASH EQUIVALENTS AT 31 DECEMBER
Reconciliation of cash and cash equivalents
Total cash at bank and in hand
13
Restricted cash
13
Cash and cash equivalents per balance sheet
The attached notes 1 to 30 form part of these Group financial statements.
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
140—141
Group Statement of Changes in Equity
For the year ended 31 December 2024
Group Statement of Cash Flows
For the year ended 31 December 2024
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
142—143
Notes to the Group Financial Statements
For the year ended 31 December 2024
Companies Act and is registered in England and Wales and listed on the London Stock Exchange. The address of the Company’s
registered office is shown on the inside back cover of the Group Annual Report and Accounts.
The Group’s financial statements for the year ended 31 December 2024 were authorised for issue in accordance with a resolution of the
Board of Directors on 26 March 2025.
The consolidated financial statements have been prepared in accordance with United Kingdom international accounting standards
(‘IFRS’) in conformity with the requirements of the Companies Act 2006. The accounting policies which follow set out those policies which
apply in preparing the financial statements for the year ended 31 December 2024.
For the year ended 31 December 2024, the Group removed the separate disclosure of remeasurements and exceptional items from the
presentation of the Group income statement to simplify their presentation for users of accounts and bring them more in line with peers.
The Group continues to present various Alternative Performance Measures (‘APMs’) when assessing and discussing the Group’s financial
performance, balance sheet and cash flows that are not defined or specified under IFRS but consistent with the measurement basis applied
to the financial statements. The Group uses these APMs, which are not considered to be a substitute for, or superior to, IFRS measures, to
provide stakeholders with additional useful information to aid the understanding of the Group’s underlying financial performance, balance
sheet and cash flows by adjusting for certain items, such as those previously classified as remeasurements and exceptional items, which
impact upon IFRS measures or, by defining new measures. See the Glossary – Non-GAAP Measures on page 189 for more information.
The Group financial information has been prepared on a historical cost basis, except for the fair value remeasurement of certain financial
instruments, including derivatives and contingent consideration, as set out in the accounting policies. The presentation currency of the
Group financial information is US Dollars (‘$’) and all values in the Group financial information are rounded to the nearest thousand ($’000)
except where otherwise stated.
The financial statements have been prepared on the going concern basis.
In recent years, EnQuest has focused on deleveraging and optimising its capital structure, to simplify its balance sheet and maximise
available financial transactional capacity.
In 2024, the Group deleveraged further, reducing EnQuest net debt by $95.1 million, to $385.8 million at 31 December 2024. This was driven
by robust adjusted free cash flow generation and repayment of the first of two vendor loans that was provided to RockRose as part of the
2023 Bressay farm-down. In the period EnQuest fully repaid its Reserve Based Lending (‘RBL’) facility (from $140.0 million) and completed a
$160.0 million tap of its high yield bonds. By using this tap to repay a $150.0 million term loan facility, additional RBL capacity was opened. At
31 December 2024, EnQuest’s net debt to adjusted EBITDA ratio was 0.6x. The Group ended 2024 with a positive RBL redetermination, which
expanded RBL capacity by 34%. Cash and available facilities at 28 February 2025 totalled $549.0 million.
Against this robust backdrop, EnQuest continues to closely monitor and manage its funding position and liquidity requirements
throughout the year, including monitoring forecast covenant results. Cash forecasts are regularly produced and sensitivities considered
for, but not limited to, changes in crude oil prices (adjusted for hedging undertaken by the Group), production rates and costs. These
forecasts and sensitivity analyses allow management to mitigate liquidity or covenant compliance risks in a timely manner.
The Group’s latest approved business plan underpins management’s base case (‘Base Case’). It is in line with EnQuest’s production
guidance (including the acquisition and contribution of the Block 12W in Vietnam – completion expected in the second quarter of 2025)
and an oil price assumption of $75.0/bbl is used for 2025 and 2026.
A reverse stress test has been performed on the Base Case. This indicates that an oil price of c.$40.0/bbl is required to maintain covenant
compliance over the going concern period. The low level of this required price reflects the Group’s strong liquidity position.
The Base Case has also been subjected to further testing through a scenario that explores the impact of the following plausible downside
risks (the ‘Downside Case’):
•
10% discount to Base Case prices resulting in Downside Case prices of $67.50/bbl for 2025 and 2026;
•
Production risking of 5.0%; and
•
2.5% increase in operating costs.
The Base Case and Downside indicate that the Group is able to operate as a going concern and remain covenant compliant for 12 months
from the date of publication of its full-year results.
After making appropriate enquiries and assessing the progress against the forecast, the Directors have a reasonable expectation that
the Group will continue in operation and meet its commitments as they fall due over the going concern period. Accordingly, the Directors
New standards and interpretations
The following new standards became applicable for the current reporting period. No material impact was recognised upon application:
•
Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7)
•
Classification of Liabilities as Current or Non-current and Non-current Liabilities with Covenants (Amendments to IAS 1)
•
Lease Liability in a Sale and Leaseback (Amendment to IFRS 16)
Standards issued but not yet effective
At the date of authorisation of these financial statements, the Group has not applied the following new and revised IFRS Standards that
have been issued but are not yet effective:
IFRS 18 | Presentation of financial statements |
IFRS 9 and IFRS 7 | Amendments to the Classification and Measurement of Financial Instruments |
IFRS 19 | Subsidiaries without Public Accountability: Disclosures |
Amendments to IAS 21 | Lack of Exchangeability |
The Directors do not expect that the adoption of the Standards listed above will have a material impact on the financial statements of the
Group in future periods. The Directors noted IFRS 18 may change the presentation and disclosure information in the financial statements
when effective.
The consolidated financial statements incorporate the financial statements of EnQuest PLC and entities controlled by the Company
(its subsidiaries) made up to 31 December each year. Control is achieved when the Company:
•
has power over the investee;
•
is exposed, or has rights, to variable returns from its involvement with the investee; and
•
has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more
of the three elements of control listed above. Consolidation of a subsidiary begins when the Company obtains control over the subsidiary
and ceases when the Company loses control of the subsidiary. Specifically, the results of subsidiaries acquired or disposed of during the
year are included in profit or loss from the date the Company gains control until the date the Company ceases to control the subsidiary.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with
the Group’s accounting policies. All intra-Group assets and liabilities, equity, income, expenses and cash flows relating to transactions
Oil and gas operations are usually conducted by the Group as co-licensees in unincorporated joint operations with other companies.
Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant
activities require the consent of the relevant parties sharing control. The joint operating agreement is the underlying contractual
framework to the joint arrangement, which is historically referred to as the joint venture. The Annual Report and Accounts therefore refers
to ‘joint ventures’ as a standard term used in the oil and gas industry, which is used interchangeably with joint operations.
Most of the Group’s activities are conducted through joint operations, whereby the parties that have joint control of the arrangement have
the rights to the assets, and obligations for the liabilities relating to the arrangement. The Group recognises its share of assets, liabilities,
income and expenses of the joint operation in the consolidated financial statements on a line-by-line basis. During 2024, the Group did
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic
environment in which the entity operates (‘functional currency’). The Group’s financial statements are presented in US Dollars, the currency
which the Group has elected to use as its presentation currency.
In the financial statements of the Company and its individual subsidiaries, transactions in currencies other than a company’s functional
currency are recorded at the prevailing rate of exchange on the date of the transaction. At the year end, monetary assets and liabilities
denominated in foreign currencies are retranslated at the rates of exchange prevailing at the balance sheet date. Non-monetary assets
and liabilities that are measured at historical cost in a foreign currency are translated using the rate of exchange at the dates of the initial
transactions. Non-monetary assets and liabilities measured at fair value in a foreign currency are translated using the rate of exchange at
The Group operates in an energy intensive industry and is therefore required to partake in emission trading schemes (‘ETS’). The Group
recognises an emission liability in line with the production of emissions that give rise to the obligation. To the extent the liability is covered
by allowances held, the liability is recognised at the cost of these allowances held and if insufficient allowances are held, the remaining
uncovered portion is measured at the spot market price of allowances at the balance sheet date. The expense is presented within
‘production costs’ under ‘cost of sales’ and the accrual is presented in ‘trade and other payables’. Any allowance purchased to settle the
Group’s liability is recognised on the balance sheet as an intangible asset. Both the emission allowances and the emission liability are
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
144—145
Notes to the Group Financial Statements
continued
For the year ended 31 December 2024
2. Basis of preparation
continued
The preparation of the Group’s consolidated financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, at the
date of the consolidated financial statements. Estimates and assumptions are continuously evaluated and are based on management’s
experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount
of assets or liabilities affected in future periods.
The accounting judgements and estimates that have a significant impact on the results of the Group are set out below and should
be read in conjunction with the information provided in the Notes to the financial statements. The Group does not consider contingent
consideration and deferred taxation (including EPL) to represent a significant estimate or judgement as the estimates and assumptions
relating to projected earnings and cash flows used to assess contingent consideration and deferred taxation are the same as those
applied in the Group impairment process as described below in
Recoverability of asset carrying values
. Judgements and estimates,
not all of which are significant, made in assessing the impact of climate change and the transition to a lower carbon economy on the
consolidated financial statements are also set out below. Where an estimate has a significant risk of resulting in a material adjustment
Climate change and energy transition
As covered in the Group’s principal risks on oil and gas prices on page 59, the Group recognises that the energy transition is likely to
impact the demand, and hence the future prices, of commodities such as oil and natural gas. This in turn may affect the recoverable
amount of property, plant and equipment and goodwill, valuation of contingent consideration and deferred tax, as well as an acceleration
of cessation of production and subsequent decommissioning expenditure, in the oil and gas industry. The Group acknowledges that there
are a range of possible energy transition scenarios that may indicate different outcomes for oil prices. There are inherent limitations with
scenario analysis and it is difficult to predict which, if any, of the scenarios might eventuate.
The Group has assessed the potential impacts of climate change and the transition to a lower carbon economy in preparing the
consolidated financial statements, including the Group’s current assumptions relating to demand for oil and natural gas and their impact
on the Group’s long-term price assumptions. See
Recoverability of asset carrying values: Oil prices
.
While the pace of transition to a lower carbon economy is uncertain, oil and natural gas demand is expected to remain a key element of
the energy mix for many years based on stated policies, commitments and announced pledges to reduce emissions. Therefore, given
the useful lives of the Group’s current portfolio of oil and gas assets, a material adverse change is not expected to the carrying values of
EnQuest’s assets and liabilities within the next financial year as a result of climate change and the transition to a lower carbon economy.
Management will continue to review price assumptions as the energy transition progresses and this may result in impairment charges or
reversals in the future.
The Group has considered its critical accounting judgements and key sources of estimation uncertainty, and these are set out below.
Recoverability of asset carrying values
Judgements:
The Group assesses each asset or cash-generating unit (‘CGU’) (excluding goodwill, which is assessed annually regardless
of indicators) in each reporting period to determine whether any indication of impairment exists. Assessment of indicators of impairment
or impairment reversal and the determination of the appropriate grouping of assets into a CGU or the appropriate grouping of CGUs for
impairment purposes require significant management judgement. For example, individual oil and gas properties may form separate
CGUs, whilst certain oil and gas properties with shared infrastructure may be grouped together to form a single CGU. Alternative
groupings of assets or CGUs may result in a different outcome from impairment testing. See note 10 for details on how these groupings
have been determined in relation to the impairment testing of goodwill.
Estimates:
Where an indicator of impairment exists, a formal estimate of the recoverable amount is made, which is considered to be
the higher of the fair value less costs to dispose (‘FVLCD’) and value in use (‘VIU’). The assessments require the use of estimates and
assumptions, such as the effects of inflation and deflation on operating expenses, cost profile changes including those related to
emission reduction initiatives such as alternative fuel provision at Kraken, discount rates, capital expenditure, production profiles, reserves
and resources, and future commodity prices, including the outlook for global or regional market supply-and-demand conditions for
crude oil and natural gas. Such estimates reflect management’s best estimate of the related cash flows based on management’s plans
for the assets and their future development.
As described above, the recoverable amount of an asset is the higher of its VIU and its FVLCD. When the recoverable amount is measured by
reference to FVLCD, in the absence of quoted market prices or binding sale agreement, estimates are made regarding the present value of
future post-tax cash flows. These estimates are made from the perspective of a market participant and include prices, life of field production
profiles based on reserves and resources to which it is considered probable that a market participant would attribute value to them,
operating costs, capital expenditure, decommissioning costs, tax attributes, risking factors applied to cash flows, and discount rates.
Details of impairment charges and reversals recognised in the income statement and details on the carrying amounts of assets are
shown in note 9, note 10 and note 11.
The estimates for assumptions made in impairment tests in 2024 relating to discount rates and oil prices are discussed below. Changes
in the economic environment or other facts and circumstances may necessitate revisions to these assumptions and could result in a
material change to the carrying values of the Group’s assets within the next financial year.
Discount rates
For discounted cash flow calculations, future cash flows are adjusted for risks specific to the CGU. FVLCD discounted cash flow calculations
use the post-tax discount rate. The discount rate is derived using the weighted average cost of capital methodology. The discount
rates applied in impairment tests are reassessed each year and, in 2024, the post-tax discount rate was estimated at 10.0% (2023: 11.0%)
reflecting the impact from the Group’s reduced debt position and clarity over the UK fiscal system.
Oil prices
The price assumptions used for FVLCD impairment testing were based on latest internal forecasts as at 31 December 2024. These price
forecasts reflect EnQuest’s views of global supply and demand, including the potential financial impacts on the Group of climate change
and the transition to a low carbon economy as outlined in the Basis of Preparation, and are benchmarked with external sources of
information such as analyst forecasts. The Group’s price forecasts are reviewed and approved by management, the Audit Committee
and the Board of Directors.
EnQuest revised its oil price assumptions for FVLCD impairment testing compared to those used in 2023, with nearer-term prices
reflecting current market dynamics and external forecasts. A summary of the Group’s revised price assumptions is provided below. These
assumptions, which represent management’s best estimate of future prices, sit within the range of external forecasts. When compared
to the International Energy Agency’s (‘IEA’) forecast prices under its Announced Pledges Scenario (‘APS’), which assumes all climate
commitments made by governments and industries around the world by the end of August 2024 for both 2030 targets and longer-term
net zero or carbon neutrality pledges will be met in full and on time, EnQuest’s short- and medium-term assumptions are below those
assumed under the APS, while its longer-term prices are slightly higher. When compared with latest available Paris-consistent climate
scenario modelling data released by the World Business Council of Sustainable Development (‘WBCSD’), EnQuest’s assumption is broadly
aligned with the top end of a range of Paris-consistent scenarios. A 10% reduction in crude oil price assumptions, which management
believes to be a reasonably possible change as further considered later in this note, is comfortably within the range of WBCSD Paris-
consistent scenarios. Discounts or premiums are applied to price assumptions based on the characteristics of the oil produced and the
terms of the relevant sales contracts.
An inflation rate of 2% (2023: 2%) is applied from 2028 onwards to determine the price assumptions in nominal terms (see table below).
The price assumptions used in 2023 were $80.0/bbl (2024), $80.0/bbl (2025), $75.0/bbl (2026) and $77.0/bbl real thereafter, inflated at 2.0%
per annum from 2027.
2025 | 2026 | 2027 | 2028> (i) | |
Brent oil ($/bbl) | 75.0 | 75.0 | 75.0 | 77.0 |
(i)
Inflated at 2% from 2028
Oil and natural gas reserves
Hydrocarbon reserves are estimates of the amount of hydrocarbons that can be economically and legally extracted from the Group’s
oil and gas properties. The business of the Group is to responsibly optimise production, leverage existing infrastructure, deliver a
strong decommissioning performance and explore new energy and decarbonisation opportunities. Factors such as the availability of
geological and engineering data, reservoir performance data, acquisition and divestment activity, and drilling of new wells all impact
on the determination of the Group’s estimates of its oil and gas reserves and result in different future production profiles affecting
prospectively the discounted cash flows used in impairment testing and the calculation of contingent consideration, the anticipated
date of decommissioning and the depletion charges in accordance with the unit of production method, as well as the going concern
assessment. Economic assumptions used to estimate reserves change from period to period as additional technical and operational
data is generated. This process may require complex and difficult geological judgements to interpret the data.
The Group uses proven and probable (‘2P’) reserves (see page 32) and, for the Kraken CGU, 2C resources associated with the Bressay gas
well as an alternative fuel provision for the Kraken FPSO as the basis for calculations of expected future cash flows from underlying assets
because this represents the reserves and resources management intends to develop and it is probable that a market participant would
attribute value to them. Third-party audits of EnQuest’s reserves and resources are conducted annually.
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
146—147
Notes to the Group Financial Statements
continued
For the year ended 31 December 2024
Sensitivity analyses
Changes in price and its consequential impact on impairment, contingent consideration and deferred tax, along with the discount
rate impact on impairment and decommissioning are considered to be the only key sources of estimation uncertainty, although other
sensitivities that the Group believes are useful for users of these accounts but are not considered to have a significant risk of resulting in
material changes to carrying amounts in the next 12 months, may also be provided.
Management tested the impact of a change in cash flows in FVLCD impairment testing arising from a 10% reduction in crude price
assumptions, which it believes to be a reasonably possible change given the prevailing macroeconomic environment.
Price reductions of this magnitude in isolation could indicatively lead to a further reduction in the carrying amount of EnQuest’s oil and
gas properties by approximately $221.6 million, which is approximately 10% of the net book value of property, plant and equipment as at
31 December 2024.
The oil price sensitivity analysis above does not, however, represent management’s best estimate of any impairments that might be
recognised as it does not fully incorporate consequential changes that may arise, such as reductions in costs and changes to business
plans, phasing of development, levels of reserves and resources, and production volumes. As the extent of a price reduction increases,
the more likely it is that costs would decrease across the industry. The oil price sensitivity analysis therefore does not reflect a linear
relationship between price and value that can be extrapolated.
Management also tested the impact of a one percentage point change in the discount rate of 10.0% used for FVLCD impairment testing
of oil and gas properties, which is considered a reasonably possible change given the prevailing macroeconomic environment. If
the discount rate was one percentage point higher across all tests performed, the net impairment charge in 2024 would have been
approximately $51.2 million higher. If the discount rate was one percentage point lower, the net impairment charge would have been
approximately $55.9 million lower.
Goodwill
Irrespective of whether there is any indication of impairment, EnQuest is required to test annually for impairment of goodwill acquired in
business combinations. The Group carries goodwill of approximately $134.4 million on its balance sheet (2023: $134.4 million), principally
relating to the acquisition of Magnus oilfield. Sensitivities and additional information relating to impairment testing of goodwill are
provided in note 10.
The Group assesses the recoverability of its deferred tax assets at each period end. Sensitivities and additional information relating to
75% Magnus acquisition contingent consideration
Estimates:
The Group reassessed the fair value discount rate associated with the Magnus contingent consideration and estimated it to be
11.3% as at the end of 2024 (2023: 11.3%), as calculated in line with IFRS 13. Sensitivities and additional information relating to the 75% Magnus
acquisition contingent consideration are provided in note 21.
Provisions
Estimates:
Decommissioning costs will be incurred by the Group at the end of the operating life of some of the Group’s oil and
gas production facilities and pipelines. The Group assesses its decommissioning provision at each reporting date. The ultimate
decommissioning costs are uncertain and cost estimates can vary in response to many factors, including changes to relevant legal
requirements, estimates of the extent and costs of decommissioning activities, the emergence of new restoration techniques and
experience at other production sites. The expected timing, extent and amount of expenditure may also change, for example, in response
to changes in oil and gas reserves or changes in laws and regulations or their interpretation. Therefore, significant estimates and
assumptions are made in determining the provision for decommissioning. As a result, there could be significant adjustments to the
provisions established which would affect future financial results.
The timing and amount of future expenditures relating to decommissioning and environmental liabilities are reviewed annually. The rate
used in discounting the cash flows is reviewed half-yearly. The nominal discount rate used to determine the balance sheet obligations
at the end of 2024 was 4.5% (2023: 3.5%), reflecting the UK Gilt interest rate environment. The weighted average period over which
decommissioning costs are generally expected to be incurred is estimated to be approximately 13 years. Costs at future prices are
determined by applying inflation rates at 2.0% per annum thereafter (2023: 2.5% (2024) and a long-term inflation rate of 2% thereafter)
to decommissioning costs.
Further information about the Group’s provisions is provided in note 22. Changes in assumptions could result in a material change in
their carrying amounts within the next financial year. A one percentage point decrease in the nominal discount rate applied, which is
considered a reasonably possible change given the prevailing macroeconomic environment, could increase the Group’s provision
balances by approximately $59.4 million (2023: $68.0 million). The pre-tax impact on the Group income statement would be a charge
The Group’s organisational structure reflects the various activities in which EnQuest is engaged. Management has considered the
requirements of IFRS 8 Operating Segments in regard to the determination of operating segments and concluded that at 31 December
2024, the Group had two significant operating segments: the North Sea and Malaysia. Operations are managed by location and all
information is presented per geographical segment. The Group’s segmental reporting structure remained in place throughout 2024.
The North Sea’s activities include Upstream, Midstream, Decommissioning and Veri Energy. Veri Energy is not considered a separate
operating segment as it does not yet earn revenues and is not yet a material part of the Group from a capital and human resources
allocation perspective. Malaysia’s activities include Upstream and Decommissioning. The Group’s reportable segments may change in
the future depending on the way that resources may be allocated and performance assessed by the Chief Operating Decision Maker,
who for EnQuest is the Chief Executive. The information reported to the Chief Operating Decision Maker does not include an analysis of
assets and liabilities, and accordingly this information is not presented, in line with IFRS 8 paragraph 23.
Adjustments | ||||||
Year ended 31 December 2024 | All other | Total | and | |||
$’000 | North Sea | Malaysia | segments | segments | eliminations (i), (iii) | Consolidated |
Revenue and other operating income: | ||||||
Revenue from contracts with customers | 1,063,829 | 123,728 | – | 1,187,557 | – | 1,187,557 |
Other operating income/(expense) | 2,709 | – | 260 | 2,969 | (9,817) | (6,848) |
Total revenue and other operating income/(expense) | 1,066,538 | 123,728 | 260 | 1,190,526 | (9,817) | 1,180,709 |
Income/(expenses) line items: | ||||||
Depreciation and depletion | (252,208) | (17,042) | (41) | (269,291) | – | (269,291) |
Net impairment (charge)/reversal to oil and gas assets | (71,414) | – | – | (71,414) | – | (71,414) |
Exploration write-off and impairments | – | (183) | – | (183) | – | (183) |
Segment profit/(loss) (ii), (iii) | 274,354 | 45,536 | 9,013 | 328,903 | (17,375) | 311,528 |
Other disclosures: | ||||||
Capital expenditure (iv) | 313,557 | 32,774 | 15 | 346,346 | – | 346,346 |
Adjustments | ||||||
Year ended 31 December 2023 | All other | Total | and | |||
$’000 | North Sea | Malaysia | segments | segments | eliminations (i), (iii) | Consolidated |
Revenue and other operating income: | ||||||
Revenue from contracts with customers | 1,325,200 | 142,510 | – | 1,467,710 | – | 1,467,710 |
Other operating income/(expense) | 2,229 | – | 281 | 2,510 | 17,199 | 19,709 |
Total revenue and other operating income/(expense) | 1,327,429 | 142,510 | 281 | 1,470,220 | 17,199 | 1,487,419 |
Income/(expenses) line items: | ||||||
Depreciation and depletion | (278,280) | (19,923) | (105) | (298,308) | – | (298,308) |
Net impairment (charge)/reversal to oil and gas assets | (117,396) | – | – | (117,396) | – | (117,396) |
Exploration write-off and impairments | – | (5,640) | – | (5,640) | – | (5,640) |
Segment profit/(loss) (ii), (iii) | 330,501 | 46,192 | 4,474 | 381,167 | 16,206 | 397,373 |
Other disclosures: | ||||||
Capital expenditure (iv) | 149,093 | 11,817 | 12 | 160,922 | – | 160,922 |
(i)
Finance income and costs and gains and losses on derivatives are not allocated to individual segments as the underlying instruments are managed on a Group basis
(ii)
Tax is not included as this is not disclosed to the Chief Operating Decision Maker within the segment profit/(loss)
(iii)
Inter-segment revenues are eliminated on consolidation. All other adjustments are part of the reconciliations presented further below
(iv)
Capital expenditure consists of property, plant and equipment and intangible exploration and appraisal assets
Reconciliation of profit/(loss):
Year ended | Year ended | |
31 December | 31 December | |
2024 | 2023 | |
$’000 | $’000 | |
Segment profit/(loss) before tax and finance income/(costs) | 328,903 | 381,167 |
Finance costs | (159,422) | (172,087) |
Finance income | 14,508 | 6,493 |
(Loss)/gain on derivatives (i) | (17,375) | 16,206 |
Profit/(loss) before tax | 166,614 | 231,779 |
(i)
Includes $17.6 million realised losses on derivatives (2023: $8.4 million) and $0.3 million unrealised gains on derivatives (2023: $24.6 million). See note 18(b) for further detail
Revenue from three customers relating to the North Sea operating segment each exceeds 10% of the Group’s consolidated revenue arising
from sales of crude oil, with amounts of $394.8 million, $156.0 million and $115.7 million per each single customer (2023: two customers;
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
148—149
Notes to the Group Financial Statements
continued
For the year ended 31 December 2024
(a) Revenue and other operating income
The Group generates revenue through the sale of crude oil, gas and condensate to third parties, and through the provision of
infrastructure to its customers for tariff income. Revenue from contracts with customers is recognised when control of the goods or
services is transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange
for those goods or services. The Group has concluded that it is the principal in its revenue arrangements because it typically controls the
Sale of crude oil, gas and condensate
The Group sells crude oil, gas and condensate directly to customers. The sale represents a single performance obligation, being the sale
of barrels equivalent to the customer on taking physical possession or on delivery of the commodity into an infrastructure. At this point
the title passes to the customer and revenue is recognised. The Group principally satisfies its performance obligations at a point in time;
the amounts of revenue recognised relating to performance obligations satisfied over time are not significant. Transaction prices are
referenced to quoted prices, plus or minus an agreed fixed premium or discount rate to an appropriate benchmark, if applicable.
Tariff revenue for the use of Group infrastructure
Tariffs are charged to customers for the use of infrastructure owned by the Group. The revenue represents the performance of an
obligation for the use of Group assets over the life of the contract. The use of the assets is not separable as they are interdependent
in order to fulfil the contract and no one item of infrastructure can be individually isolated. Revenue is recognised as the performance
obligations are satisfied over the period of the contract, generally a period of 12 months or less, on a monthly basis based on throughput
at the agreed contracted rates.
Other operating income
Other operating revenue is recognised to the extent that it is probable economic benefits will flow to the Group and the revenue can be
The Group enters into commodity derivative trading transactions which can be settled net in cash. Accordingly, any gains or losses are not
considered to constitute revenue from contracts with customers in accordance with the requirements of IFRS 15, rather are accounted for
in line with IFRS 9 and included within other operating income (see note 18).
Year ended | Year ended | |
31 December | 31 December | |
2024 | 2023 | |
$’000 | $’000 | |
Revenue from contracts with customers: | ||
Revenue from crude oil sales | 1,020,266 | 1,127,419 |
Revenue from gas and condensate sales (i) | 164,647 | 338,973 |
Tariff revenue | 2,644 | 1,318 |
Total revenue from contracts with customers | 1,187,557 | 1,467,710 |
Realised (losses)/gains on commodity derivative contracts (see note 18) | (12,907) | (11,264) |
Unrealised gains/(losses) on commodity derivative contracts (see note 18) | 3,090 | 28,463 |
Other | 2,969 | 2,510 |
Total revenue and other operating income | 1,180,709 | 1,487,419 |
(i)
Includes onward sale of third-party gas purchases not required for injection activities at Magnus (see note 4(b))
Disaggregation of revenue from contracts with customers
Year ended | Year ended | |||||
31 December 2024 | 31 December 2023 | |||||
$’000 | $’000 | |||||
North Sea | Malaysia | Total | North Sea | Malaysia | Total | |
Revenue from contracts with customers: | ||||||
Revenue from crude oil sales | 900,310 | 119,956 | 1,020,266 | 987,610 | 139,809 | 1,127,419 |
Revenue from gas and condensate sales (i) | 162,951 | 1,696 | 164,647 | 336,902 | 2,071 | 338,973 |
Tariff revenue | 568 | 2,076 | 2,644 | 689 | 629 | 1,318 |
Total revenue from contracts with customers | 1,063,829 | 123,728 | 1,187,557 | 1,325,201 | 142,509 | 1,467,710 |
(i)
Includes onward sale of third-party gas purchases not required for injection activities at Magnus (see note 4(b))
Production imbalances, movements in under/over-lift and movements in inventory are included in cost of sales. The over-lift liability is
recorded at the cost of the production imbalance to represent a provision for production costs attributable to the volumes sold in excess
of entitlement. The under-lift asset is recorded at the lower of cost and net realisable value (‘NRV’), consistent with IAS 2, to represent a right
to additional physical inventory. An under-lift of production from a field is included in current receivables and an over-lift of production
Year ended | Year ended | |
31 December | 31 December | |
2024 | 2023 | |
$’000 | $’000 | |
Production costs | 307,634 | 308,331 |
Tariff and transportation expenses | 70,449 | 41,736 |
Realised loss/(gain) on derivative contracts related to operating costs (see note 18) | 4,735 | (2,839) |
Unrealised losses/(gains) on derivative contracts related to operating costs (see note 18) | 2,823 | 3,832 |
Change in lifting position | 3,528 | (2,669) |
Crude oil inventory movement | (1,356) | (1,575) |
Depletion of oil and gas assets (i) | 263,251 | 292,199 |
Movement in contractor dispute provision | – | 1,818 |
Other cost of operations (ii) | 136,319 | 305,919 |
Total cost of sales | 787,383 | 946,752 |
(i)
Includes $27.9 million (2023: $28.6 million) Kraken FPSO right-of-use asset depreciation charge and $23.5 million (2023: $24.0 million) of other right-of-use assets depreciation charge
(ii)
Year ended | Year ended | |
31 December | 31 December | |
2024 | 2023 | |
$’000 | $’000 | |
Staff costs (see note 4(e)) | 75,833 | 77,517 |
Depreciation (i) | 6,040 | 6,109 |
Other general and administration costs | 26,748 | 25,490 |
Recharge of costs to operations and joint venture partners | (102,919) | (102,768) |
Total general and administration expenses | 5,702 | 6,348 |
(i)
Year ended | Year ended | |
31 December | 31 December | |
2024 | 2023 | |
$’000 | $’000 | |
Net foreign exchange gains/(losses) | 9,975 | (11,659) |
Rental income from office sublease | 2,201 | 2,286 |
Fair value changes in contingent consideration (see note 21) (i) | (15,904) | 10,811 |
Change in decommissioning provisions (see note 22) | (6,666) | (31,159) |
Change in Thistle decommissioning provision (see note 22) | (412) | (1,605) |
Drilling rig contract cancellation costs (ii) | (14,629) | – |
Unsuccessful exploration expenditure (see note 11) | (183) | (5,640) |
Insurance income | 1,663 | 4,127 |
Reversal of provisions | – | 101 |
Other | 19,273 | 13,188 |
Total other (expenses)/income | (4,682) | (19,550) |
(i)
In previous periods, the element of the movement in the fair value of the Magnus contingent consideration due to the passage of time (“unwinding of discount”) has been
recorded within finance costs, with remaining fair value movements recorded within other income or expense. Following a review of this presentation and comparing this to
market practice, it has been concluded that it would be more appropriate for the impact from both the unwind of discount and other changes in fair value to be combined within
other income/expense, with comparative information restated. This restatement results in a $58.9 million charge for 2023 being reclassified from finance costs to other income/
expense, with no impact on net income or closing retained earnings for that year
(ii)
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
150—151
Notes to the Group Financial Statements
continued
For the year ended 31 December 2024
The Group’s pension obligations consist of defined contribution plans. The Group pays fixed contributions with no further payment
obligations once the contributions have been paid. The amount charged to the Group income statement in respect of pension costs
reflects the contributions payable in the year. Differences between contributions payable during the year and contributions actually
paid are shown as either accrued liabilities or prepaid assets in the balance sheet.
Year ended | Year ended | |
31 December | 31 December | |
2024 | 2023 | |
$’000 | $’000 | |
Wages and salaries | 66,700 | 63,458 |
Social security costs | 5,899 | 5,457 |
Defined contribution pension costs | 5,265 | 5,038 |
Expense of share-based payments (see note 20) | 983 | 3,320 |
Other staff costs | 12,300 | 11,079 |
Total employee costs | 91,147 | 88,352 |
Contractor costs | 37,493 | 38,304 |
Total staff costs | 128,640 | 126,656 |
General and administration staff costs (see note 4(c)) | 75,833 | 77,517 |
Non-general and administration costs | 52,807 | 49,139 |
Total staff costs | 128,640 | 126,656 |
The monthly average number of persons, excluding contractors, employed by the Group during the year was 673, with 336 in the general
and administration staff costs and 337 directly attributable to assets (2023: 697 of which 343 in general and administration and 354
directly attributable to assets). Compensation of key management personnel is disclosed in note 26 and in the Directors’ Remuneration
The following amounts for the year ended 31 December 2024 and for the comparative year ended 31 December 2023 were payable by the
Group to Deloitte:
Year ended | Year ended | |
31 December | 31 December | |
2024 | 2023 | |
$’000 | $’000 | |
Fees payable to the Company’s auditor for the audit of the parent company and Group financial statements | 1,367 | 1,239 |
The audit of the Company’s subsidiaries | 173 | 149 |
Total audit | 1,540 | 1,388 |
Audit-related assurance services (i) | 589 | 314 |
Total audit and audit-related assurance services | 2,129 | 1,702 |
Total auditor’s remuneration | 2,129 | 1,702 |
(i)
Audit-related assurance services in both years include the review of the Group’s interim results, G&A assurance review and the provision of customary comfort letters in respect
Year ended | Year ended | |
31 December | 31 December | |
2024 | 2023 | |
$’000 | $’000 | |
Finance costs: | ||
Loan interest payable | 18,524 | 30,708 |
Bond interest payable | 54,971 | 58,999 |
Unwinding of discount on decommissioning provisions (see note 22) | 30,290 | 24,236 |
Unwinding of discount on other provisions (see note 22) | 911 | 1,145 |
Debt refinancing fees (see note 17) | 4,809 | – |
Finance charges payable under leases (see note 23) | 27,673 | 43,801 |
Finance fees on loans and bonds including amortisation of capitalised fees | 14,473 | 7,899 |
Other financial expenses (i) | 7,771 | 5,299 |
Total finance costs | 159,422 | 172,087 |
Finance income: | ||
Bank interest receivable | 11,110 | 6,493 |
RockRose loan interest (see note 18(f)) | 3,263 | – |
Other financial income | 135 | – |
Total finance income | 14,508 | 6,493 |
(i)
(a) Income tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on
tax rates and laws that are enacted or substantively enacted by the balance sheet date.
The Group’s operations are subject to a number of specific tax rules which apply to exploration, development and production. In addition,
the tax provision is prepared before the relevant companies have filed their tax returns with the relevant tax authorities and, significantly,
before these have been agreed. As a result of these factors, the tax provision process necessarily involves the use of a number of
estimates and judgements, including those required in calculating the effective tax rate.
in the Group financial statements. However, deferred tax is not accounted for if a temporary difference arises from initial recognition of
other assets or liabilities in a transaction other than a business combination that at the time of the transaction affects neither accounting
nor taxable profit or loss. Deferred tax is measured on an undiscounted basis using tax rates (and laws) that have been enacted or
substantively enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred
tax liability is settled. Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against
which the temporary differences can be utilised.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the
Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the
foreseeable future.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date. Deferred income tax assets and liabilities
are offset only if a legal right exists to offset current tax assets against current tax liabilities, the deferred income taxes relate to the same
Production taxes
In addition to corporate income taxes, the Group’s financial statements also include and disclose production taxes on net income
determined from oil and gas production.
Production tax relates to Petroleum Revenue Tax (‘PRT’) within the UK and is accounted for under IAS 12 Income Taxes since it has the
characteristics of an income tax as it is imposed under government authority and the amount payable is based on taxable profits of
the relevant fields. Current and deferred PRT is provided on the same basis as described above for income taxes.
Investment allowance
The UK taxation regime provides for a reduction in ring-fence supplementary charge tax where investment in new or existing UK assets
qualify for a relief known as investment allowance. Investment allowance must be activated by commercial production from the
same field before it can be claimed. The Group has both unactivated and activated investment allowances which could reduce future
supplementary charge taxation. The Group’s policy is that investment allowance is recognised as a reduction in the charge to taxation
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
152—153
Notes to the Group Financial Statements
continued
For the year ended 31 December 2024
Energy Profits Levy
The Energy (Oil & Gas) Profits Levy Act 2022 (‘EPL’) applies an additional tax on the profits earned by oil and gas companies from the
production of oil and gas on the United Kingdom Continental Shelf until 31 March 2028. This is accounted for under IAS 12 Income Taxes
since it has the characteristics of an income tax as it is imposed under government authority and the amount payable is based on
taxable profits of the relevant UK companies. Current and deferred tax is provided on the same basis as described above for income
The major components of income tax expense/(credit) are as follows:
Year ended | Year ended | |
31 December | 31 December | |
2024 | 2023 | |
$’000 | $’000 | |
Current UK income tax | ||
Current income tax charge | – | – |
Adjustments in respect of current income tax of previous years | – | (14) |
Current overseas income tax | ||
Current income tax charge | 11,432 | 24,685 |
Adjustments in respect of current income tax of previous years | (746) | (2,567) |
UK Energy Profits Levy | ||
Current year charge | 10,262 | 175,118 |
Adjustments in respect of current charge of previous years | (8,803) | (11,605) |
Total current income tax | 12,145 | 185,617 |
Deferred UK income tax | ||
Relating to origination and reversal of temporary differences | 42,745 | 160,712 |
Adjustments in respect of deferred income tax of previous years | (9,103) | 4,974 |
Deferred overseas income tax | ||
Relating to origination and reversal of temporary differences | 7,071 | (3,761) |
Adjustments in respect of deferred income tax of previous years | 31 | 1,430 |
Deferred UK Energy Profits Levy | ||
Relating to origination and reversal of temporary differences | 11,156 | (58,661) |
Adjustments in respect of changes in tax rates | 6,889 | – |
Adjustments in respect of deferred charge of previous years | 1,907 | (27,699) |
Total deferred income tax | 60,696 | 76,995 |
Income tax expense reported in profit or loss | 72,841 | 262,612 |
(b) Reconciliation of total income tax charge
A reconciliation between the income tax charge and the product of accounting profit multiplied by the UK statutory tax rate is as follows:
Year ended | Year ended | |
31 December | 31 December | |
2024 | 2023 | |
$’000 | $’000 | |
Profit/(loss) before tax | 166,614 | 231,779 |
UK statutory tax rate applying to North Sea oil and gas activities of 40% (2023: 40%) | 66,646 | 92,712 |
Supplementary corporation tax non-deductible expenditure | 5,809 | 10,580 |
Non-deductible expenditure (i) | 26,114 | 69,494 |
Non-taxable gain on sale of assets | 505 | – |
Petroleum revenue tax (net of income tax benefit) | (8,938) | (8,200) |
Tax in respect of non-ring-fence trade | 7,298 | 7,418 |
Deferred tax asset not recognised in respect of non-ring-fence trade | 12,243 | 11,696 |
Deferred tax asset recognised on previously unrecognised losses | (48,115) | – |
UK Energy Profits Levy (ii) | (13,921) | 116,457 |
UK Energy Profits Levy – changes in tax rates (ii) | 6,889 | – |
UK Energy Profits Levy – abolishment of Investment Allowance (ii) | 35,339 | – |
Adjustments in respect of prior years | (16,713) | (35,481) |
Overseas tax rate differences | 2,045 | (1,114) |
Share-based payments | (1,407) | (90) |
Other differences | (953) | (860) |
At the effective income tax rate of 44% (2023: 113%) | 72,841 | 262,612 |
(i)
Predominantly in relation to non-qualifying expenditure relating to the initial recognition exemption utilised under IAS 12 upon acquisition of Golden Eagle given that at the time of
the transaction, it affected neither accounting profit nor taxable profit
(ii)
Total current year EPL charge only. This consists of an EPL current tax charge of $10.3 million (2023: $175.1 million charge) and deferred EPL charge of $18.0 million (2023: $58.7 million
credit). The impact of the substantially enacted Autumn Statement changes referred to in part (e) below are included within these amounts and have been disclosed separately
above
Deferred income tax relates to the following:
Charge/(credit) for the year | ||||
Group balance sheet | recognised in profit or loss | |||
2024 | 2023 | 2024 | 2023 | |
$’000 | $’000 | $’000 | $’000 | |
Deferred tax liability | ||||
Accelerated capital allowances | 911,501 | 877,800 | 33,701 | (86,015) |
911,501 | 877,800 | |||
Deferred tax asset | ||||
Losses | (717,900) | (695,888) | (22,012) | 206,213 |
Decommissioning liability | (263,705) | (265,800) | 2,095 | (27,176) |
Other temporary differences (i) | (331,679) | (378,591) | 46,912 | (16,027) |
(1,313,284) | (1,340,279) | 60,696 | 76,995 | |
Net deferred tax (assets) (ii) | (401,783) | (462,479) | ||
Reflected in the balance sheet as follows: | ||||
Deferred tax assets | (506,481) | (540,122) | ||
Deferred tax liabilities | 104,698 | 77,643 | ||
Net deferred tax (assets) | (401,783) | (462,479) | ||
(i)
Predominantly includes $199.2 million related to Magnus acquisition contingent consideration in note 21 and $107.7 million on deferred income in note 24
(ii)
The total amounts for EPL included in net deferred assets are $160.7 million for accelerated capital allowances and $73.4 million for other items, which predominantly includes
$18.7 million Magnus acquisition contingent consideration (note 21) and $52.5 million deferred income (note 24)
Reconciliation of net deferred tax assets/(liabilities)
2024 | 2023 | |
$’000 | $’000 | |
At 1 January | 462,479 | 539,474 |
Tax expense during the period recognised in profit or loss | (60,696) | (76,995) |
At 31 December | 401,783 | 462,479 |
(d) Tax losses
The Group’s deferred tax assets at 31 December 2024 are recognised to the extent that taxable profits are expected to arise in the future
against which tax losses and allowances in the UK can be utilised. In accordance with IAS 12 Income Taxes, the Group assesses the
recoverability of its deferred tax assets at each period end. Sensitivities have been run on the oil price assumption, with a 10% change
being considered a reasonable possible change for the purposes of sensitivity analysis (see note 2). A 10% reduction in oil price would
result in a deferred tax asset derecognition of $62.1 million while a 10% increase in oil price would not result in any change as the Group is
currently recognising all UK tax losses (with the exception of those noted below).
The Group has unused UK mainstream corporation tax losses of $496.1 million (2023: $442.1 million) and ring-fence tax losses of
$1,117.5 million (2023: $1,163.0 million) associated with the Bentley acquisition, for which no deferred tax asset has been recognised at the
balance sheet date as recovery of these losses is to be established. In addition, the Group has not recognised a deferred tax asset for
the adjustment to bond valuations on the adoption of IFRS 9. The benefit of this deduction is taken over ten years, with a deduction of
$2.2 million being taken in the current period and the remaining benefit of $6.3 million (2023: $8.5 million) remaining unrecognised.
The Group has unused Malaysian income tax losses of $14.7 million (2023: $14.3 million) arising in respect of the Tanjong Baram RSC for
which no deferred tax asset has been recognised at the balance sheet date due to uncertainty of recovery of these losses.
No deferred tax has been provided on unremitted earnings of overseas subsidiaries. The Finance Act 2009 exempted foreign dividends
from the scope of UK corporation tax where certain conditions are satisfied.
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
154—155
Notes to the Group Financial Statements
continued
For the year ended 31 December 2024
(e) Changes in legislation
In June 2023, the UK introduced legislation implementing the Organisation for Economic Co-operation and Development’s (‘OECD’)
proposals for a global minimum corporation tax rate (Pillar Two) which is effective for periods beginning on or after 31 December 2023.
This legislation will ensure that profits earned internationally are subject to a minimum tax rate of 15%. The Group has performed an
assessment of the exposure to Pillar Two income taxes from 1 January 2024 and it does not have an exposure to Pillar Two income taxes in
any jurisdictions. The Group has applied the mandatory exception to recognising and disclosing information about the deferred tax assets
and liabilities related to Pillar Two income taxes in accordance with the amendments to IAS 12 published by the International Accounting
Standards Board (‘IASB’) on 23 May 2023.
In the Autumn Statement on 22 November 2023, the UK Government confirmed that it will bring in legislation for the Energy Security
Investment Mechanism (‘ESIM’) which would remove the EPL if both average oil and gas prices fall to, or below, $71.40 per barrel for oil and
£0.54 per therm for gas, for two consecutive quarters, and agreed to index link the trigger floor price to the CPI from April 2024. From April
2024, the ESIM threshold prices were revised to $74.21 per barrel for oil and £0.57 per therm for gas. EnQuest does not currently forecast that
the floor price will be met for both oil and gas prices and therefore there is currently no impact from this on tax carrying values.
In the Autumn Statement on 30 October 2024, the UK Government confirmed that from 1 November 2024 the rate of Energy Profits Levy
(‘EPL’) would be increased from 35% to 38%. They also announced that the EPL Investment Allowance would be abolished from 1 November
2024 (although First Year Allowances would be retained) and decarbonisation relief would be reduced from 80% to 66%. The impact
of these changes on the current year financial statements is an increase in the tax charge and deferred tax for EPL of $42.2 million. The
announcement to extend the EPL period to 31 March 2030 was not substantively enacted at 31 December 2024 and therefore is not
included in the tax balances included in these financial statements. It is expected that this extension, which was substantively enacted
The calculation of basic earnings per share is based on the profit after tax and on the weighted average number of Ordinary shares in
issue during the period. Diluted earnings per share is adjusted for the effects of Ordinary shares granted under the share-based payment
plans, which are held in the Employee Benefit Trust, unless it has the effect of increasing the profit or decreasing the loss attributable to
each share.
During the year to 31 December 2024, the Group repurchased 55,894,836 Ordinary shares, of which 25,000,000 Ordinary shares have been
classified in the balance sheet as Treasury shares with the balance cancelled (see note 8). The Treasury shares have been excluded for
the purposes of calculating the basic and diluted earnings per share at 31 December 2024.
Basic and diluted earnings per share are calculated as follows:
Profit/(loss) | Weighted average number | Earnings | ||||
after tax | of Ordinary shares | per share | ||||
Year ended 31 December | Year ended 31 December | Year ended 31 December | ||||
2024 | 2023 | 2024 | 2023 | 2024 | 2023 | |
$’000 | $’000 | million | million | $ | $ | |
Basic | 93,773 | (30,833) | 1,891.9 | 1,871.9 | 0.050 | (0.016) |
Dilutive potential of Ordinary shares granted under | ||||||
share-based incentive schemes | – | – | 24.3 | 32.4 | (0.001) | – |
Diluted (i) | 93,773 | (30,833) | 1,916.2 | 1,904.3 | 0.049 | (0.016) |
(i)
Potential Ordinary shares are not treated as dilutive when they would decrease a loss per share and as a result the weighted average number of Ordinary shares used as the
The Company paid no dividends during the year ended 31 December 2024 (2023: none). At 31 December 2024, there were no proposed
dividends (2023: none). During 2024, a share buy-back programme was executed with a total of 55,894,836 shares ($9.0 million)
repurchased as at 31 December 2024.
Having continued to reduce EnQuest net debt and optimise the debt structure, EnQuest is now positioned to balance deploying capital
for growth and returns to shareholders. As such, the Board is pleased to propose a final ordinary dividend of 0.616 pence per share
(equivalent to c.$15 million). This final dividend is subject to approval by shareholders at the Annual General Meeting on 27 May 2025
and so not recognised as a liability as at 31 December 2024. If approved, the dividend will be paid on 6 June 2025 to shareholders on the
Property, plant and equipment is stated at cost less accumulated depreciation and accumulated impairment charges.
Cost
Cost comprises the purchase price or cost relating to development, including the construction, installation and completion of
infrastructure facilities such as platforms, pipelines and development wells and any other costs directly attributable to making that asset
capable of operating as intended by management. The purchase price or construction cost is the aggregate amount paid and the fair
value of any other consideration given to acquire the asset.
The carrying amount of an item of property, plant and equipment is derecognised on disposal or when no future economic benefits are
expected from its use. The gain or loss arising from the derecognition of an item of property, plant and equipment is included in the other
operating income or expense line item in the Group income statement when the asset is derecognised.
Development assets
Expenditure relating to development of assets, including the construction, installation and completion of infrastructure facilities such as
platforms, pipelines and development wells, is capitalised within property, plant and equipment.
Carry arrangements
Where amounts are paid on behalf of a carried party, these are capitalised. Where there is an obligation to make payments on behalf of
a carried party and the timing and amount are uncertain, a provision is recognised. Where the payment is a fixed monetary amount, a
financial liability is recognised.
Borrowing costs directly attributable to the construction of qualifying assets, which are assets that necessarily take a substantial period
of time to prepare for their intended use, are capitalised during the development phase of the project until such time as the assets are
Oil and gas assets are depleted, on a field-by-field basis, using the unit of production method based on entitlement to proven and
probable reserves, taking account of estimated future development expenditure relating to those reserves. Changes in factors which
affect unit of production calculations are dealt with prospectively. Depletion of oil and gas assets is taken through cost of sales.
Depreciation on other elements of property, plant and equipment is provided on a straight-line basis, and taken through general and
administration expenses, at the following rates:
Office furniture and equipment | Five years |
Fixtures and fittings | Ten years |
Right-of-use assets (i) | Lease term |
(i)
Excludes Kraken FPSO which is depleted using the unit of production method in accordance with the related oil and gas assets
Each asset’s estimated useful life, residual value and method of depreciation is reviewed and adjusted if appropriate at each financial
At each balance sheet date, discounted cash flow models comprising asset-by-asset life-of-field projections and risks specific to assets,
using Level 3 inputs (based on IFRS 13 fair value hierarchy), have been used to determine the recoverable amounts for each CGU. The life of
a field depends on the interaction of a number of variables; see note 2 for further details. Estimated production volumes and cash flows up
to the date of cessation of production on a field-by-field basis, including operating and capital expenditure, are derived from the Group’s
business plan. Oil price assumptions and discount rate assumptions used were as disclosed in note 2. If the recoverable amount of an
asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable
amount. An impairment loss is recognised immediately in the Group income statement.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or CGU) is increased to the revised estimate of
its recoverable amount, but only so that the increased carrying amount does not exceed the carrying amount that would have been
determined had no impairment loss been recognised for the asset (or CGU) in prior years. A reversal of an impairment loss is recognised
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
156—157
Notes to the Group Financial Statements
continued
For the year ended 31 December 2024
Office | ||||
furniture, | Right-of- | |||
Oil and gas | fixtures and | use assets | ||
assets | fittings | (note 23) | Total | |
$’000 | $’000 | $’000 | $’000 | |
Cost: | ||||
At 1 January 2023 | 9,037,851 | 67,321 | 876,859 | 9,982,031 |
Additions | 120,820 | 1,257 | 28,378 | 150,455 |
Change in decommissioning provision | 53,333 | – | – | 53,333 |
Disposal | – | – | (243) | (243) |
Reclassification from intangible assets (note 11) | 31,803 | – | – | 31,803 |
At 1 January 2024 | 9,243,807 | 68,578 | 904,994 | 10,217,379 |
Additions | 325,813 | 394 | 16,453 | 342,660 |
Change in decommissioning provision (note 22) | (741) | – | – | (741) |
At 31 December 2024 | 9,568,879 | 68,972 | 921,447 | 10,559,298 |
Accumulated depreciation, depletion and impairment: | ||||
At 1 January 2023 | 7,000,950 | 56,625 | 447,481 | 7,505,056 |
Charge for the year | 239,640 | 2,689 | 55,979 | 298,308 |
Net impairment charge/(reversal) for the year | 123,473 | – | (6,077) | 117,396 |
Disposal | – | – | (121) | (121) |
At 1 January 2024 | 7,364,063 | 59,314 | 497,262 | 7,920,639 |
Charge for the year | 211,873 | 2,683 | 54,735 | 269,291 |
Net impairment charge/(reversal) for the year | 75,428 | – | (4,014) | 71,414 |
At 31 December 2024 | 7,651,364 | 61,997 | 547,983 | 8,261,344 |
Net carrying amount: | ||||
At 31 December 2024 | 1,917,515 | 6,975 | 373,464 | 2,297,954 |
At 31 December 2023 | 1,879,744 | 9,264 | 407,732 | 2,296,740 |
At 1 January 2023 | 2,036,901 | 10,696 | 429,378 2,476,975 | |
The amount of borrowing costs capitalised during the year ended 31 December 2024 was nil (2023: nil), reflecting the short-term nature of
the Group’s capital expenditure programmes.
Impairments to the Group’s producing assets and reversals of impairments are set out in the table below:
Impairment | Recoverable | |||
(charge)/reversal | amount (i) | |||
Year ended | Year ended | |||
31 December | 31 December | 31 December | 31 December | |
2024 | 2023 | 2024 | 2023 | |
$’000 | $’000 | $’000 | $’000 | |
North Sea | (71,414) | (117,396) | 1,172,487 | 1,323,009 |
Net pre-tax impairment (charge)/reversal | (71,414) | (117,396) | ||
(i)
Recoverable amount has been determined on a fair value less costs of disposal basis (see note 2 for further details of judgements, estimates and assumptions made in relation
to impairments). The amounts disclosed above are in respect of assets where an impairment (or reversal) has been recorded. Assets which did not have any impairment or
reversal are excluded from the amounts disclosed
For information on judgements, estimates and assumptions made in relation to impairments, along with sensitivity analysis, see Use of
judgements, estimates and assumptions: recoverability of asset carrying values within note 2.
The 2024 net impairment charge of $71.4 million relates to producing assets in the UK North Sea (charges of $2.0 million for GKA and
Scolty/Crathes CGU, $62.5 million for Golden Eagle and $20.1 million for Alba offset by an impairment reversal of $13.2 million at Kraken).
Impairment charges/reversals were primarily driven by EPL revisions, lower near-term oil price assumptions and changes in production
profiles, partially offset by a lower discount rate.
The 2023 net impairment charge of $117.4 million related to producing assets in the UK North Sea (charges of $17.2 million for GKA and
Scolty/Crathes CGU, $122.5 million for Golden Eagle and $9.1 million for Alba offset by an impairment reversal of $31.4 million at Kraken).
Impairment charges/reversals were primarily driven by changes in production and cost profile updates, partially offset by higher forecast
Cost
Goodwill arising on a business combination is initially measured at cost, being the excess of the cost of the business combination over
the net fair value of the identifiable assets, liabilities and contingent liabilities of the entity at the date of acquisition. If the fair value of the
net assets acquired is in excess of the aggregate consideration transferred, the Group reassesses whether it has correctly identified all
of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at
the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration
transferred, the gain is recognised in profit or loss.
Impairment of goodwill
Following initial recognition, goodwill is stated at cost less any accumulated impairment losses. In accordance with IAS 36 Impairment of
Assets, goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate the recoverable
For the purposes of impairment testing, goodwill acquired is allocated to the CGU (or group of CGUs) that is expected to benefit from the
synergies of the combination. Each unit or units to which goodwill is allocated represents the lowest level within the Group at which the
goodwill is monitored for internal management purposes. Impairment is determined by assessing the recoverable amount of the CGU
(or groups of CGUs) to which the goodwill relates. Where the recoverable amount of the CGU (or groups of CGUs) is less than the carrying
amount of the CGU (or group of CGUs) containing goodwill, an impairment loss is recognised. Impairment losses relating to goodwill
cannot be reversed in future periods. For information on significant estimates and judgements made in relation to impairments, see Use
of judgements, estimates and assumptions: recoverability of asset carrying values within note 2.
A summary of goodwill is presented below:
2024 | 2023 | |
$’000 | $’000 | |
Cost and net carrying amount | ||
At 1 January | 134,400 | 134,400 |
At 31 December | 134,400 | 134,400 |
The majority of the goodwill, relates to the 75% acquisition of the Magnus oil field and associated interests. The remaining balance relates
to the acquisition of the GKA and Scolty Crathes fields.
Impairment testing of goodwill
Goodwill, which has been acquired through business combinations, has been allocated to the UK North Sea segment grouping of CGUs,
and this is therefore the lowest level at which goodwill is reviewed. The UK North Sea is a combination of oil and gas assets, as detailed
within property, plant and equipment (note 9).
The recoverable amounts of the segment and fields have been determined on a fair value less costs of disposal basis. See notes 2 and
9 for further details. An impairment charge of nil was taken in 2024 (2023: nil) based on a fair value less costs to dispose valuation of the
Sensitivity to changes in assumptions
The Group’s recoverable value of assets is highly sensitive,
inter alia
, to oil price achieved and production volumes. A sensitivity has been
run on the oil price assumptions, with a 10% change being considered to be a reasonable possible change for the purposes of sensitivity
analysis (see note 2). A 10% reduction in oil price would result in an impairment charge of $66.7 million (2023: 10% reduction would not result
in an impairment charge). A 17% reduction in oil price would fully impair goodwill (2023: 20%) however Management do not consider this to
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
158—159
Notes to the Group Financial Statements
continued
For the year ended 31 December 2024
Exploration and appraisal assets
Exploration and appraisal assets have indefinite useful lives and are accounted for using the successful efforts method of accounting.
Pre-licence costs are expensed in the period in which they are incurred. Expenditure directly associated with exploration, evaluation or
appraisal activities is initially capitalised as an intangible asset. Such costs include the costs of acquiring an interest, appraisal well drilling
costs, payments to contractors and an appropriate share of directly attributable overheads incurred during the evaluation phase. For
such appraisal activity, which may require drilling of further wells, costs continue to be carried as an asset, whilst related hydrocarbons
are considered capable of commercial development. Such costs are subject to technical, commercial and management review to
confirm the continued intent to develop, or otherwise extract value. When this is no longer the case, the costs are written off as exploration
and evaluation expenses in the Group income statement. When exploration licences are relinquished without further development,
any previous impairment loss is reversed and the carrying costs are written off through the Group income statement. When assets are
declared part of a commercial development, related costs are transferred to property, plant and equipment. All intangible oil and gas
During the year ended 31 December 2024, there was no impairment of historical exploration and appraisal expenditures (2023: nil).
During 2023, $31.8 million of intangible assets associated with the Kraken field were transferred to property, plant and equipment, reflecting
updated drilling plans following assessment of previous seismic survey information. Also during 2023, Malaysia drilled an exploration well
on the PM409 licence. The results indicated that there were no commercial prospects and as a result costs of $5.6 million were written off
through the income statement during 2023 with an additional $0.2 million written off during 2024.
Other intangibles
UK emissions allowances (‘UKAs’) purchased to settle the Group’s liability related to emissions are recognised on the balance sheet as an
Exploration | |||
and | |||
appraisal | UK emissions | ||
assets | allowances | Total | |
$’000 | $’000 | $’000 | |
Cost: | |||
At 1 January 2023 | 154,937 | 1,199 | 156,136 |
Additions | 10,467 | 876 | 11,343 |
Write-off of relinquished licences previously impaired | (485) | – | (485) |
Write-off of unsuccessful exploration expenditure | (5,640) | – | (5,640) |
Transfer to property, plant and equipment (note 9) | (31,803) | – | (31,803) |
Disposal | – | (1,199) | (1,199) |
At 1 January 2024 | 127,476 | 876 | 128,352 |
Additions | 3,686 | 1,138 | 4,824 |
Write-off of unsuccessful exploration expenditure | (183) | – | (183) |
Disposal | (1,263) | (876) | (2,139) |
At 31 December 2024 | 129,716 | 1,138 | 130,854 |
Accumulated impairment: | |||
At 1 January 2023 | (109,638) | – | (109,638) |
Write-off of relinquished licences previously impaired | 485 | – | 485 |
At 1 January 2024 and 31 December 2024 | (109,153) | – | (109,153) |
Net carrying amount: | |||
At 31 December 2024 | 20,563 | 1,138 | 21,701 |
At 31 December 2023 | 18,323 | 876 | 19,199 |
At 1 January 2023 | 45,299 | 1,199 | 46,498 |
Inventories of consumable well supplies and inventories of hydrocarbons are stated at the lower of cost and NRV, cost being determined
2024 | 2023 | |
$’000 | $’000 | |
Hydrocarbon inventories | 22,544 | 21,189 |
Well supplies | 26,432 | 63,608 |
48,976 | 84,797 |
During 2024, a net gain of $6.9 million was recognised within cost of sales in the Group income statement relating to inventory (2023: net
gain of $2.2 million). During the current year, following a review of the balance of well supplies held within inventory, it was concluded that
some items met the definition of property, plant & equipment, and were reclassified during the current year end and presented as PP&E
additions within PP&E (note 9).
The inventory valuation at 31 December 2024 is stated net of a provision of $28.5 million (2023: $36.3 million) to write-down well supplies to
Cash and cash equivalents includes cash at bank, cash in hand, cash deposited in relation to decommissioning security arrangements
2024 | 2023 | |
$’000 | $’000 | |
Available cash | 226,317 | 313,028 |
Restricted cash | 53,922 | 544 |
Cash and cash equivalents | 280,239 | 313,572 |
The carrying value of the Group’s cash and cash equivalents is considered to be a reasonable approximation to their fair value due to
their short-term maturities.
During 2024, additional security was required to be provided in accordance with the Group’s decommissioning security arrangements.
EnQuest renewed its surety bond facilities and added three new providers with $53.4 million of cash required to be placed on deposit
(31 December 2023: nil). The remaining $0.5 million of restricted cash relates to bank guarantees for the Group’s Malaysian assets
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another
entity. Financial instruments are recognised when the Group becomes a party to the contractual provisions of the financial instrument.
Financial assets and financial liabilities are offset and the net amount is reported in the Group balance sheet if there is a currently
enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis.
Financial assets are classified, at initial recognition, as amortised cost, fair value through other comprehensive income (‘FVOCI’), or fair
value through profit or loss (‘FVPL’). The classification of financial assets at initial recognition depends on the financial assets’ contractual
cash flow characteristics and the Group’s business model for managing them. The Group does not currently hold any financial assets at
FVOCI, i.e. debt financial assets.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial
Financial assets at amortised cost
Trade receivables, other receivables and joint operation receivables are measured initially at fair value and subsequently recorded at
amortised cost, using the effective interest rate (‘EIR’) method, and are subject to impairment. Gains and losses are recognised in profit or
loss when the asset is derecognised, modified or impaired and EIR amortisation is included within finance costs.
The Group measures financial assets at amortised cost if both of the following conditions are met:
•
The financial asset is held in a business model with the objective to hold financial assets in order to collect contractual cash flows; and
•
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest
on the principal amount outstanding.
Prepayments, which are not financial assets, are measured at historical cost.
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
160—161
Notes to the Group Financial Statements
continued
For the year ended 31 December 2024
The Group recognises a loss allowance for expected credit loss (‘ECL’), where material, for all financial assets held at the balance sheet
date. ECLs are based on the difference between the contractual cash flows due to the Group, and the discounted actual cash flows that
are expected to be received. Where there has been no significant increase in credit risk since initial recognition, the loss allowance is equal
to 12-month expected credit losses. Where the increase in credit risk is considered significant, lifetime credit losses are provided. For trade
receivables, a lifetime credit loss is recognised on initial recognition where material.
The provision rates are based on days past due for groupings of customer segments with similar loss patterns (i.e. by geographical
region, product type, customer type and rating) and are based on historical credit loss experience, adjusted for forward-looking factors
specific to the debtors and the economic environment. The Group evaluates the concentration of risk with respect to trade receivables
and contract assets as low, as its customers are joint venture partners and there are no indications of change in risk. Generally, trade
Financial liabilities are classified, at initial recognition, as amortised cost or at FVPL.
Financial liabilities are derecognised when they are extinguished, discharged, cancelled or they expire. When an existing financial
liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially
modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability.
Financial liabilities at amortised cost
Loans and borrowings, trade payables and other creditors are measured initially at fair value net of directly attributable transaction costs
and subsequently recorded at amortised cost, using the EIR method. Loans and borrowings are interest bearing. Gains and losses are
recognised in profit or loss when the liability is derecognised and EIR amortisation is included within finance costs.
The Group holds derivative financial instruments classified as held for trading, not designated as effective hedging instruments. The
derivative financial instruments include forward currency contracts and commodity contracts, to address the respective risks; see
note 27. The Group also enters into forward contracts for the purchase of UKAs to manage its exposure to carbon emission credit prices.
Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Financial instruments at FVPL are carried in the Group balance sheet at fair value, with net changes in fair value recognised in the Group
income statement.
Financial assets with cash flows that are not solely payments of principal and interest are classified and measured at FVPL, irrespective of
the business model. All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVPL.
Financial instruments with embedded derivatives are considered in their entirety when determining whether their cash flows are solely
payment of principal and interest.
The Group also holds contingent consideration (see note 21) and a listed equity investment (see note 18). The movements of both are
The following table provides the fair values and fair value measurement hierarchy of the Group’s other financial assets and liabilities:
Quoted | ||||||
prices in | Significant | Significant | ||||
active | observable | unobservable | ||||
Carrying | markets | inputs | inputs | |||
Value | Total | (Level 1) | (Level 2) | (Level 3) | ||
31 December 2024 | Notes | $’000 | $’000 | $’000 | $’000 | $’000 |
Financial assets measured at fair value: | ||||||
Derivative financial assets measured at FVPL | ||||||
Gas commodity contracts | 18(a) | 69 | 69 | – | 69 | – |
Other financial assets measured at FVPL | – | |||||
Quoted equity shares | 6 | 6 | 6 | – | – | |
Total financial assets measured at fair value | 75 | 75 | 6 | 69 | – | |
Financial assets measured at amortised cost: | ||||||
Vendor financing facility | 18(f) | 38,453 | 38,453 | – | 38,453 | – |
Total financial assets measured at amortised cost (i) | 38,453 | 38,453 | – | 38,453 | – | |
Liabilities measured at fair value: | ||||||
Derivative financial liabilities measured at FVPL | ||||||
Commodity derivative contracts | 18(a) | 10,497 | 10,497 | – | 10,497 | – |
Forward foreign currency contracts | 18(a) | 2,354 | 2,354 | – | 2,354 | – |
Forward UKA contracts | 18(a) | 8,729 | 8,729 | – | 8,729 | – |
Other financial liabilities measured at FVPL | ||||||
Contingent consideration | 21 | 473,294 | 473,294 | – | – | 473,294 |
Total liabilities measured at fair value | 494,874 | 494,874 | – | 21,580 | 473,294 | |
Liabilities measured at amortised cost | ||||||
Interest-bearing loans and borrowings (i) | 17 | 33,972 | 33,972 | – | 33,972 | – |
Retail bond 9.00% (ii) | 17 | 169,371 | 161,461 | 161,461 | – | – |
High yield bond 11.625% (ii) | 17 | 461,514 | 466,102 | 466,102 | – | – |
Total liabilities measured at amortised cost (iii) | 664,857 | 661,535 | 627,563 | 33,972 | – |
(i)
Amortised cost is a reasonable approximation of the fair value
(ii)
Carrying value includes accrued interest
(iii)
Excludes related fees
Quoted | ||||||
prices in | Significant | Significant | ||||
active | observable | unobservable | ||||
Carrying | markets | inputs | inputs | |||
Value | Total | (Level 1) | (Level 2) | (Level 3) | ||
31 December 2023 | Notes | $’000 | $’000 | $’000 | $’000 | $’000 |
Financial assets measured at fair value: | ||||||
Derivative financial assets measured at FVPL | ||||||
Gas commodity contracts | 18(a) | 4,499 | 4,499 | – | 4,499 | – |
Other financial assets measured at FVPL | ||||||
Quoted equity shares | 6 | 6 | 6 | – | – | |
Total financial assets measured at fair value | 4,505 | 4,405 | 6 | 4,499 | – | |
Financial assets measured at amortised cost: | ||||||
Vendor financing facility | 18(f) | 145,103 | 145,103 | – | 145,103 | – |
Total financial assets measured at amortised cost (i) | 145,103 | 145,103 | – | 145,103 | – | |
Liabilities measured at fair value: | ||||||
Derivative financial liabilities measured at FVPL | ||||||
Oil commodity derivative contracts | 18(a) | 18,418 | 18,418 | – | 18,418 | – |
Forward UKA contracts | 18(a) | 8,261 | 8,261 | – | 8,261 | – |
Other financial liabilities measured at FVPL | ||||||
Contingent consideration | 21 | 507,796 | 507,796 | – | – | 507,796 |
Total liabilities measured at fair value | 534,475 | 534,475 | – | 26,679 | 507,796 | |
Liabilities measured at amortised cost | ||||||
Interest-bearing loans and borrowings (i) | 17 | 319,784 | 319,784 | – | 319,784 | – |
Retail bond 9.00% | 17 | 169,669 | 158,683 | 158,683 | – | – |
High yield bond 11.625% | 17 | 294,276 | 292,419 | 292,419 | – | – |
Total liabilities measured at amortised cost (ii) | 783,729 | 770,886 | 451,102 | 319,784 | – |
(i)
Amortised cost is a reasonable approximation of the fair value
(ii)
Excludes related fees
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
162—163
Notes to the Group Financial Statements
continued
For the year ended 31 December 2024
Fair value hierarchy
All financial instruments for which fair value is recognised or disclosed are categorised within the fair value hierarchy, based on the lowest
level input that is significant to the fair value measurement as a whole, as follows:
Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities;
Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly (i.e. prices) or
indirectly (i.e. derived from prices) observable; and
Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
Derivative financial instruments are valued by counterparties, with the valuations reviewed internally and corroborated with readily
available market data (Level 2). Contingent consideration is measured at FVPL using the Level 3 valuation processes, details of which
and a reconciliation of movements are disclosed in note 21. There have been no transfers between Level 1 and Level 2 during the period
(2023: no transfers).
For the financial assets and liabilities measured at amortised cost but for which fair value disclosures are required, the fair value of the
bonds classified as Level 1 was derived from quoted prices for that financial instrument, while interest-bearing loans and borrowings and
the vendor financing facility were calculated at amortised cost using the effective interest method to capture the present value (Level 3).
2024 | 2023 | |
$’000 | $’000 | |
Current | ||
Trade receivables | 20,151 | 31,905 |
Joint venture receivables | 106,963 | 79,036 |
Under-lift position | 16,806 | 22,309 |
VAT receivable | 7,574 | 3,314 |
Other receivables | 4,729 | 3,715 |
Prepayments | 7,822 | 2,781 |
Accrued income | 66,926 | 82,426 |
Total current | 230,971 | 225,486 |
Non-current | ||
Other receivables | 2,102 | – |
Total non-current | 2,102 | – |
The carrying values of the Group’s trade, joint venture and other receivables as stated above are considered to be a reasonable
approximation to their fair value largely due to their short-term maturities. Under-lift is valued at the lower of cost or NRV at the prevailing
balance sheet date (note 4(b)).
Trade receivables are non-interest-bearing and are generally on 15 to 30-day terms. Joint venture receivables relate to amounts billable
to, or recoverable from, joint venture partners. Receivables are reported net of any ECL with no losses recognised as at 31 December 2024
or 2023.
Non-current trade and other receivables represents capitalised fees associated with the Group’s Reserve Based Lending Facility that
were reclassed to trade and other receivables to better reflect the variable nature of the facility following the repayment in full of the
2024 | 2023 | |
$’000 | $’000 | |
Current | ||
Trade payables | 138,822 | 75,981 |
Accrued expenses | 209,225 | 228,664 |
Over-lift position | 16,849 | 18,824 |
Joint venture creditors | 46,187 | 20,262 |
Other payables | 3,307 | 3,678 |
Total current | 414,390 | 347,409 |
Non-current | ||
Joint venture creditors | – | 32,917 |
Total non-current | – | 32,917 |
The carrying value of the Group’s current trade and other payables as stated above is considered to be a reasonable approximation
to their fair value largely due to the short-term maturities. Certain trade and other payables will be settled in currencies other than the
reporting currency of the Group, mainly in Sterling. Trade payables are normally non-interest-bearing and settled on terms of between
ten and 30 days.
Accrued expenses include accruals for capital and operating expenditure in relation to the oil and gas assets and interest accruals.
The carrying value of the Group’s 2023 non-current trade and other payables as stated above was considered to be a reasonable
approximation to their fair value as this represented a specific bi-lateral agreement between counterparties with the liability extinguished
in full over time in accordance with the agreed schedule. The outstanding amount at 31 December 2024 is now presented within current
2024 | 2023 | |
$’000 | $’000 | |
Loans | 33,972 | 311,231 |
Bonds | 630,885 | 463,945 |
664,857 | 775,176 |
The Group’s borrowings are carried at amortised cost as follows:
2024 | 2023 | |||||
Principal | Fees | Total | Principal | Fees | Total | |
$’000 | $’000 | $’000 | $’000 | $’000 | $’000 | |
RBL facility (i) | – | – | – | 140,000 | (4,920) | 135,080 |
Term loan facility | – | – | – | 150,000 | (3,633) | 146,367 |
SVT working capital facility | 33,972 | – | 33,972 | 29,784 | – | 29,784 |
High yield bond 11.625% | 465,000 | (10,661) | 454,339 | 305,000 | (10,724) | 294,276 |
Retail bond 9.00% | 167,101 | – | 167,101 | 169,669 | – | 169,669 |
Accrued interest (ii) | 9,445 | – | 9,445 | – | – | – |
Total borrowings | 675,518 | (10,661) | 664,857 | 794,453 | (19,277) | 775,176 |
Due within one year | 43,417 | 27,364 | ||||
Due after more than one year | 621,440 | 747,812 | ||||
Total borrowings | 664,857 | 775,176 | ||||
(i)
Capitalised fees were reclassed in the current period to trade and other receivables to better reflect the variable nature of the facility
(ii)
Accrued interest on borrowings has been reclassed in the current period to better reflect the total borrowings balance (comparative information has not been restated as it is
not material). Accrued interest includes bond interest accruals of $9.4 million
See liquidity risk – note 27 for the timing of cash outflows relating to loans and borrowings.
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
164—165
Notes to the Group Financial Statements
continued
For the year ended 31 December 2024
Reserve Based Lending facility (‘RBL’)
In October 2022, the Group agreed an amended and restated RBL facility with commitments of $500.0 million, reducing in accordance with an
amortisation schedule, a sub-limit for drawings in the form of Letters of Credit of $75.0 million and a standard accordion facility which allowed
the Group to increase commitments by an amount of up to $300.0 million on no more than three occasions. The maturity of the facility is April
2027. Funds can only be drawn under the RBL to a maximum amount of the lesser of (i) the total commitments and (ii) the borrowing base
amount. Interest accrues at 4.00% until July 2025 when it increases to 4.50%, plus a combination of an agreed credit adjustment spread and
the Secured Overnight Financing Rate (‘SOFR’). The Group fully repaid the $140.0 million of its drawn Reserve Based Lending Facility in February
2024. At 31 December 2024, $176.4 million remained available for drawdown under the RBL (2023: $166.2 million). Effective from 1 January 2025,
the amount available to drawdown increased to $237.1 million as a result of the annual redetermination process.
At 31 December 2024, the Letter of Credit utilisation was $54.1 million (2023: $43.5 million).
Term loan facility
In August 2023, the Group agreed a second lien US Dollar term loan facility of $150.0 million which was drawn down in full in September
2023 and incurred interest at SOFR +7.90%. In October 2024, the term loan, plus the early redemption fee of $4.7 million, was fully repaid
utilising the proceeds from the high yield bond tap. The early redemption fee and the remaining unamortised costs of $2.9 million were
expensed within finance costs.
SVT working capital facility
EnQuest has extended the £42.0 million revolving loan facility with a joint operations partner to fund the short-term working capital cash
requirements of SVT and associated interests until April 2027. The facility is guaranteed by BP EOC Limited (joint operations partner) until
the earlier of: a) the date on which production from Magnus permanently ceases; or b) if the operating agreements for both SVT and
associated infrastructure are amended to allow for cash calling. The facility is able to be drawn down against, in instalments, and accrues
interest at 2.05% per annum plus GBP Sterling Over Night Index Average (‘SONIA’).
Vendor Loan facility
In August 2024, the Group entered into a deferred payment facility agreement with a third-party vendor providing capacity for refinancing
the payment of existing invoices up to an amount of £23.7 million, with interest payable monthly at a rate of 9.50% per annum. At
31 December 2024, nil was drawn down on the facility, with $20.7 million drawn by the end of February 2025.
High yield bond 11.625%
In October 2022, the Group concluded an offer of $305.0 million for a US Dollar high yield bond. In October 2024, the Group concluded a tap
of an additional $160.0 million of the US Dollar high yield bond on the same terms and conditions as the existing bond. The notes accrue
a fixed coupon of 11.625% payable semi-annually in arrears with a maturity date of November 2027. Associated fees of $3.4 million were
capitalised and are being amortised over the period of the bond.
The above carrying value of the bond as at 31 December 2024 is $454.3 million (2023: $294.3 million). This includes bond principal of
$465.0 million (2023: $305.0 million) and unamortised issue premium on the tap of $1.4 million less the unamortised original issue discount
of $2.4 million (2023: $3.3 million) and unamortised fees of $9.7 million (2023: $7.4 million). The fair value of the high yield bond is disclosed
in note 14.
Retail bond 9.00%
On 27 April 2022, the Group issued a new 9.00% retail bond following a successful partial exchange and cash offer. The principal of the
retail bond 9.00% raised by the partial exchange and cash offer totalled £133.3 million. The notes accrue a fixed coupon of 9.00% payable
semi-annually in arrears and are due to mature in October 2027.
The above carrying value of the bond as at 31 December 2024 is $167.1 million (2023: $169.7 million). All fees associated with this offer were
(a) Summary as at year end
2024 | 2023 | |||
Assets | Liabilities | Assets | Liabilities | |
$’000 | $’000 | $’000 | $’000 | |
Fair value through profit or loss: | ||||
Derivative commodity contracts | 69 | 10,497 | 4,499 | 18,418 |
Forward foreign currency contracts | – | 2,354 | – | – |
Derivative UKA contracts | – | 8,729 | – | 8,261 |
Amortised cost: | ||||
Other receivables (Vendor financing facility) (notes 18(f), 24) | – | – | 108,827 | – |
Total current | 69 | 21,580 | 113,326 | 26,679 |
Fair value through profit or loss: | ||||
Quoted equity shares | 6 | – | 6 | – |
Amortised cost: | ||||
Other receivables (Vendor financing facility) (notes 18(f), 24) | 38,453 | – | 36,276 | – |
Total non-current | 38,459 | – | 36,282 | – |
Total other financial assets and liabilities | 38,528 | 21,580 | 149,608 | 26,679 |
(b) Income statement impact
The income/(expense) recognised for derivatives are as follows:
Revenue and other | Cost of | |||
operating income | sales | |||
Realised | Unrealised | Realised | Unrealised | |
Year ended 31 December 2024 | $’000 | $’000 | $’000 | $’000 |
Commodity options | (19,899) | 10,617 | – | – |
Commodity swaps | 7,467 | (7,340) | – | – |
Commodity futures | (475) | (187) | – | – |
Foreign exchange contracts | – | – | 2,859 | (2,354) |
UKA contracts | – | – | (7,594) | (469) |
(12,907) | 3,090 | (4,735) | (2,823) | |
Revenue and other | Cost of | |||
operating income- | sales | |||
Realised | Unrealised | Realised | Unrealised | |
Year ended 31 December 2023 | $’000 | $’000 | $’000 | $’000 |
Commodity options | (21,463) | 19,148 | – | – |
Commodity swaps | 12,474 | 9,315 | – | – |
Commodity futures | (2,275) | – | – | – |
Foreign exchange contracts | – | – | 5,695 | – |
UKA contracts | – | – | (2,856) | (3,832) |
(11,264) | 28,463 | 2,839 | (3,832) | |
(c) Commodity contracts
The Group uses derivative financial instruments to manage its exposure to the oil price, including put and call options, swap contracts
and futures.
For the year ended 31 December 2024, losses totalling $9.8 million (2023: gains of $17.2 million) were recognised in respect of commodity
contracts measured as FVPL. This included losses totalling $12.9 million (2023: losses of $11.3 million) realised on contracts that matured
during the year, and mark-to-market unrealised gains totalling $3.1 million (2023: gains of $28.5 million).
The mark-to-market value of the Group’s open commodity contracts as at 31 December 2024 was a net liability of $10.4 million
(2023: net liability of $13.9 million).
(d) Foreign currency contracts
The Group enters into a variety of foreign currency contracts, primarily in relation to Sterling. During the year ended 31 December 2024,
gains totalling $0.5 million (2023: gains of $5.7 million) were recognised in the Group income statement. This included realised gains
totalling $2.9 million (2023: gains of $5.7 million) on contracts that matured in the year.
The mark-to-market value of the Group’s open contracts as at 31 December 2024 was a net liability of $2.4 million (2023: nil).
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
166—167
Notes to the Group Financial Statements
continued
For the year ended 31 December 2024
(e) UK emissions allowance forward contracts
The Group enters into forward contracts for the purchase of UKAs to manage its exposure to carbon emission credit prices. During the year
ended 31 December 2024, losses totalling $8.1 million (2023: losses of $6.7 million) were recognised in the Group income statement. This
included realised losses totalling $7.6 million (2023: losses of $2.9 million) on contracts that matured in the year.
The mark-to-market value of the Group’s open contracts as at 31 December 2024 was a net liability of $8.7 million (2023: $8.3 million).
(f) Other receivables
Other | |||
receivables | Equity shares | Total | |
$’000 | $’000 | $’000 | |
At 1 January 2023 | – | 6 | 6 |
Additions (i) | 145,103 | – | 145,103 |
At 31 December 2023 | 145,103 | 6 | 145,109 |
Interest | 3,263 | – | 3,263 |
Repayments | (107,518) | – | (107,518) |
Foreign exchange | (2,395) | – | (2,395) |
At 31 December 2024 | 38,453 | 6 | 38,459 |
Current | – | ||
Non-current | 38,459 | ||
38,459 |
(i)
Additions in 2023 relate to a vendor financing facility entered into with RockRose Energy Limited on 29 December 2023 following the farm-down of a 15.0% share in the EnQuest
Producer FPSO and capital items associated with the Bressay development. $107.5 million was repaid in the first quarter of 2024 with the remainder repayable through future net
The balance classified as equity share capital includes the total net proceeds (both nominal value and share premium) on issue of
registered share capital of the parent company. Share issue costs associated with the issuance of new equity are treated as a direct
reduction of proceeds. The share capital comprises only one class of Ordinary share. Each Ordinary share carries an equal voting right
Represents amounts transferred following purchase of the Company’s own shares out of distributable profits, with those shares available
for resale into the market, transfer to the Group’s Employee Benefit Trust (‘EBT’) where they can be used to satisfy awards made under the
Capital redemption reserve
Represents the par value of shares cancelled following the purchase of the Company’s own shares out of distributable profits.
Retained earnings
Retained earnings contain the accumulated profits/(losses) of the Group.
Share-based payments reserve
Equity-settled share-based payment transactions are measured at the fair value of the services received, and the corresponding
increase in equity is recorded. EnQuest PLC shares held by the Group in the EBT are recognised at cost and are deducted from the
share-based payments reserve, as they are held to satisfy awards made under equity-settled share-based payment transactions.
Consideration received for the sale of such shares is also recognised in equity, with any difference between the proceeds from the sale
and the original cost being taken to reserves. No gain or loss is recognised in the Group income statement on the purchase, sale, issue or
Capital | ||||||
Ordinary shares of | Share | Share | Treasury | redemption | ||
£0.05 each | capital | premium | shares | reserve | Total | |
Authorised, issued and fully paid | Number | $’000 | $’000 | $’000 | $’000 | $’000 |
At 1 January 2024 | 1,912,304,113 | 133,285 | 260,546 | – | – | 393,831 |
Issue of new shares to EBT | 3,620,226 | 229 | – | – | – | 229 |
Repurchase and cancellation of shares | (30,894,836) | (2,006) | – | (4,425) | 2,006 | (4,425) |
At 31 December 2024 | 1,885,029,503 | 131,508 | 260,546 | (4,425) | 2,006 | 389,635 |
During 2024, a share buy-back programme was executed with a total of 55,894,836 Ordinary shares repurchased as at 31 December 2024.
The first 25,000,000 Ordinary shares purchased under the Programme are held in Treasury for issue in due course to the Company’s EBT
to satisfy the anticipated future exercise of options and awards made to employees and Executive Directors of EnQuest PLC pursuant to
certain of the Company’s existing share plans. The remaining 30,894,836 Ordinary shares were cancelled.
At 31 December 2024, there were 972,269 shares held by the EBT (2023: 8,449,793) which are included within the share-based payment
reserve. The movement in the year was 11,097,750 shares used to satisfy awards made under the Company’s share-based incentive
schemes offset by a subscription for 3,620,226 additional Ordinary shares.
At 1 January 2023, the number of Ordinary shares was 1,885,924,339. In December 2023, 26,379,774 shares were issued and subsequently
Eligible employees (including Executive Directors) of the Group receive remuneration in the form of share-based payment transactions,
whereby employees render services in exchange for shares or rights over shares of EnQuest PLC.
Information on these plans for Executive Directors is shown in the Directors’ Remuneration Report on page 111.
The cost of these equity-settled transactions is measured by reference to the fair value at the date on which they are granted. The fair
value of awards is calculated in reference to the scheme rules at the market value, being the average middle market quotation of a share
for the three immediately preceding dealing days as derived from the Daily Official List of the London Stock Exchange, provided such
The cost of equity-settled transactions is recognised over the vesting period in which the relevant employees become fully entitled to the
award. The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent
to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The
Group income statement charge or credit for a period represents the movement in cumulative expense recognised as at the beginning
and end of that period.
In valuing the transactions, no account is taken of any service or performance conditions, other than conditions linked to the price of
the shares of EnQuest PLC (market conditions) or ‘non-vesting’ conditions, if applicable. No expense is recognised for awards that do
not ultimately vest, except for awards where vesting is conditional upon a market or non-vesting condition, which are treated as vesting
irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance conditions are satisfied.
Equity awards cancelled are treated as vesting immediately on the date of cancellation, and any expense not previously recognised for
the award at that date is recognised in the Group income statement.
The Group operates a number of equity-settled employee share plans under which share units are granted to the Group’s senior leaders
and certain other employees. These plans typically have a three-year performance or restricted period. Leaving employment will
The share-based payment expense recognised for each scheme was as follows:
2024 | 2023 | |
$’000 | $’000 | |
Performance Share Plan | 511 | 2,120 |
Other performance share plans | 64 | 231 |
Sharesave Plan | 408 | 969 |
983 | 3,320 |
The following table shows the number of shares potentially issuable under the Group’s various equity-settled employee share plans,
including the number of options outstanding and the number of options exercisable at the end of each year.
2024 | 2023 | |
Share plans | Number | Number |
Outstanding at 1 January | 87,367,455 | 102,271,264 |
Granted during the year | 35,353,664 | 33,940,859 |
Exercised during the year | (7,291,023) | (19,459,260) |
Forfeited during the year | (26,812,413) | (29,385,408) |
Outstanding at 31 December | 88,617,683 | 87,367,455 |
Exercisable at 31 December | 9,138,271 | 17,944,371 |
Within the Group’s equity-settled employee share plans detailed above, the Group operates an approved savings-related share option
scheme (the ‘Sharesave Plan’). The plan is based on eligible employees being granted options and their agreement to opening a
Sharesave account with a nominated savings carrier and to save over a specified period, either three or five years. The right to exercise
the option is at the employee’s discretion at the end of the period previously chosen, for a period of six months.
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
168—169
Notes to the Group Financial Statements
continued
For the year ended 31 December 2024
The following table shows the number of shares potentially issuable under equity-settled employee share option plans, including the
number of options outstanding, the number of options exercisable at the end of each year and the corresponding weighted average
exercise prices.
2024 | 2023 | |||
Weighted | Weighted | |||
average | average | |||
exercise price | exercise price | |||
Sharesave options | Number | $ | Number | $ |
Outstanding at 1 January | 18,658,144 | 0.16 | 33,308,249 | 0.14 |
Granted during the year | – | – | 10,268,853 | 0.14 |
Exercised during the year | (5,478,693) | 0.13 | (19,977,354) | 0.13 |
Forfeited during the year | (3,223,434) | 0.15 | (4,941,604) | 0.17 |
Outstanding at 31 December | 9,956,017 | 0.15 | 18,658,144 | 0.16 |
Exercisable at 31 December | 323,886 | 0.24 | 6,553,159 | 0.13 |
When the consideration transferred by the Group in a business combination includes a contingent consideration arrangement, the
contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business
combination. Changes in fair value of the contingent consideration that qualify as measurement period adjustments are adjusted
retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from
additional information obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition date) about facts
and circumstances that existed at the acquisition date.
The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period
adjustments depends on how the contingent consideration is classified. Contingent consideration depicted below is remeasured to fair
value at subsequent reporting dates with changes in fair value recognised in profit or loss. Contingent consideration that is classified as
equity if any, is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity.
Contingent consideration is discounted at a risk-free rate combined with a risk premium, calculated in alignment with IFRS 13 and the
unwinding of the discount is presented as part of the overall fair value change within other (expenses)/income.
Any contingent consideration included in the consideration payable for an asset acquisition is recorded at fair value at the date of
acquisition and included in the initial measurement of cost.
Settlement of contingent consideration recorded at fair value through profit or loss is recorded as investing outflows in the cash flow
statement to the extent cumulative amounts paid do not exceed the amount recognised at the date of acquisition, with any excess
recorded as an operating cash outflow. Settlement of contingent consideration relating to an asset acquisition is recorded as an investing
Magnus | |||
decommissioning- | |||
Magnus 75% | linked liability | Total | |
$’000 | $’000 | $’000 | |
At 31 December 2023 | 488,007 | 19,789 | 507,796 |
Unwinding of discount (see note 4(d)) | 55,144 | 2,301 | 57,445 |
Other changes in fair value (see note 4(d)) | (43,353) | 1,812 | (41,541) |
Utilisation | (48,465) | (1,941) | (50,406) |
At 31 December 2024 | 451,333 | 21,961 | 473,294 |
Classified as: | |||
Current | 18,905 | 1,498 | 20,403 |
Non-current | 432,428 | 20,463 | 452,891 |
451,333 | 21,961 | 473,294 |
75% Magnus acquisition contingent consideration
On 1 December 2018, EnQuest completed the acquisition of the additional 75% interest in the Magnus oilfield (‘Magnus’) and associated
interests (collectively the ‘Transaction assets’) which was part funded through a profit share arrangement with bp whereby EnQuest and
bp share the net cash flow generated by the 75% interest on a 50:50 basis, subject to a cap of $1.0 billion received by bp. This contingent
consideration is a financial liability classified as measured at FVPL. The fair value of contingent consideration has been determined by
calculating the present value of the future expected cash flows expected to be paid and is considered a Level 3 valuation under the fair
value hierarchy. Future cash flows are estimated based on inputs including future oil prices, production volumes and operating costs.
Oil price assumptions and discount rate assumptions used were as disclosed in Use of judgements, estimates and assumptions within
note 2. The contingent consideration was fair valued at 31 December 2024, which resulted in a decrease in fair value (excluding the impact
of unwind of discount) of $43.4 million (2023: decrease of $69.8 million). This decrease in 2024 reflects a reduction in the Group’s near-
term oil price assumptions and changes in the assets cost and production profile. The decrease in 2023 reflected a 1.3% increase in the
discount rate to 11.3% (2022: 10.0%) and changes in the asset cost profile, partially offset by the Group’s increased oil price assumptions.
The overall fair value accounting effect including the unwinding of discount, totalling a charge of $11.8 million (2023: credit of $13.2 million)
on the contingent consideration were recognised in the Group income statement. At 31 December 2024, the contingent profit-sharing
arrangement cap of $1.0 billion was forecast to be met in the present value calculations (31 December 2023: cap was forecast to be
met). Within the statement of cash flows, the profit share element of the repayment, $48.5 million (2023: $65.5 million), is disclosed
separately under investing activities. At 31 December 2024, the contingent consideration for Magnus was $451.3 million (31 December 2023:
$488.0 million).
Management has considered alternative scenarios to assess the valuation of the contingent consideration including, but not limited
to, the key accounting estimates relating to the oil price, discount rate and their interrelationship with production and the profit-share
arrangement. As described within note 2, oil price has been assessed by Management as the only key source of estimation uncertainty
due to its material impact on revenue, which in turn results in changes in the contingent consideration present value calculations due to
the timing of future cash flows and production profiles. As the profit-sharing cap of $1.0 billion is forecast to be met in the present value
calculations, sensitivity analysis has only been undertaken on a reduction in the oil price assumptions of 10%, which is considered to be
a reasonably possible change. This results in a reduction of $51.1 million to the contingent consideration (2023: reduction of $83.3 million).
A 1.0% reduction in the discount rate applied, which is considered a reasonably possible change given the prevailing macroeconomic
conditions, would increase reported contingent consideration by $19.8 million. A 1.0% increase would decrease reported contingent
consideration by $18.6 million.
The payment of contingent consideration is limited to cash flows generated from Magnus. Therefore, no contingent consideration is
payable if insufficient cash flows are generated over and above the requirements to operate the asset. By reference to the conditions
existing at 31 December 2024, the maturity analysis of the contingent consideration is disclosed in Risk management and financial
instruments: liquidity risk (note 27).
Magnus decommissioning-linked contingent consideration
As part of the Magnus and associated interests acquisition, bp retained the decommissioning liability in respect of the existing wells and
infrastructure and EnQuest agreed to pay additional consideration in relation to the management of the physical decommissioning costs
of Magnus. At 31 December 2024, the amount due to bp calculated on an after-tax basis by reference to 30% of bp’s decommissioning
costs on Magnus was $22.0 million (2023: $19.8 million). Any reasonably possible change in assumptions would not have a material impact
on the provision.
Golden Eagle contingent consideration
Part of the Golden Eagle acquisition consideration included an amount that was contingent on the average oil price between July 2021
and June 2023. Over the period July 2021 to June 2023, the average oil price was $89.6/bbl. As such, at 30 June 2023, the contingent
consideration was valued at $50.0 million with settlement of this liability completing in July 2023. The balance at 31 December 2024
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
170—171
Notes to the Group Financial Statements
continued
For the year ended 31 December 2024
Provision for future decommissioning costs is made in full when the Group has an obligation: to dismantle and remove a facility or an
item of plant; to restore the site on which it is located; and when a reasonable estimate of that liability can be made. The Group’s provision
primarily relates to the future decommissioning of production facilities and pipelines.
A decommissioning asset and liability are recognised, within property, plant and equipment and provisions, respectively, at the present
value of the estimated future decommissioning costs. The decommissioning asset is amortised over the life of the underlying asset on
a unit of production basis over proven and probable reserves, included within depletion in the Group income statement. Any change in
the present value of estimated future decommissioning costs is reflected as an adjustment to the provision and the oil and gas asset for
producing assets. For assets that have ceased production, the change in estimate is reflected as an adjustment to the provision and the
Group income statement, via other income or expense. The unwinding of the decommissioning liability is included under finance costs in
the Group income statement.
These provisions have been created based on internal and third-party estimates. Assumptions based on the current economic
environment have been made which management believes are a reasonable basis upon which to estimate the future liability. These
estimates are reviewed regularly to take into account any material changes to the assumptions. However, actual decommissioning costs
will ultimately depend upon future market prices for the necessary decommissioning works required, which will reflect market conditions
at the relevant time. Furthermore, the timing of decommissioning liabilities is likely to depend on the dates when the fields cease to be
economically viable. This in turn depends on future oil prices, which are inherently uncertain. See Use of judgements, estimates and
Other
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events; it is probable that an
outflow of resources will be required to settle the obligation; and a reliable estimate can be made of the amount of the obligation.
Thistle | ||||
Decommissioning | decommissioning | Other | ||
provision | provision | provisions | Total | |
$’000 | $’000 | $’000 | $’000 | |
At 31 December 2023 | 755,762 | 25,355 | 14,180 | 795,297 |
Additions during the year (i) | 2,893 | – | 835 | 3,728 |
Changes in estimates (i) | 3,032 | 412 | – | 3,444 |
Unwinding of discount | 30,290 | 911 | – | 31,201 |
Utilisation | (50,412) | (8,319) | (9,063) | (67,794) |
Foreign exchange | – | (11) | 241 | 230 |
At 31 December 2024 | 741,565 | 18,348 | 6,193 | 766,106 |
Classified as: | ||||
Current | 42,030 | 7,700 | 5,400 | 55,130 |
Non-current | 699,535 | 10,648 | 793 | 710,976 |
741,565 | 18,348 | 6,193 | 766,106 |
(i)
Includes $6.7 million relating to assets in decommissioning disclosed in note 4(d) and $(0.7) million related to producing assets disclosed in note 9
Decommissioning provision
The Group’s total provision represents the present value of decommissioning costs which are expected to be incurred up to 2050, assuming
no further development of the Group’s assets. Additions during the year primarily relate to the decommissioning provision recognised due
to drilling of new wells in Golden Eagle. Changes in estimates during the year primarily reflect the net effect of $78.0 million increase in the
underlying cost estimates partly offset by $59.0 million impact from the increase in the discount rate and $12.4 million foreign exchange
impact due to the weakening of Sterling to US Dollar exchange rates. At 31 December 2024, an estimated $281.1 million is expected to be
utilised between one and five years (2023: $175.7 million), $280.0 million within six to ten years (2023: $355.6 million), and the remainder in
later periods. For sensitivity analysis see Use of judgements, estimates and assumptions within note 2.
The Group enters into surety bonds principally to provide security for its decommissioning obligations (see note 13). The surety bond
facilities, which expired in December 2023, were renewed for 12 months, subject to ongoing compliance with the terms of the Group’s
borrowings. At 31 December 2024, the Group held surety bonds totalling $277.0 million (2023: $250.4 million).
Thistle decommissioning provision
In 2018, EnQuest exercised the option to receive $50.0 million from bp in exchange for undertaking the management of the physical
decommissioning activities for Thistle and Deveron and making payments by reference to 7.5% of bp’s share of decommissioning costs
of the Thistle and Deveron fields, with the liability recognised within provisions. At 31 December 2024, the amount due to bp by reference
to 7.5% of bp’s decommissioning costs on Thistle and Deveron was $18.3 million (2023: $25.4 million), with the reduction mainly reflecting
the utilisation in the period. Change in estimates of $0.4 million are included within other expense (2023: $1.6 million) and unwinding of
discount of $0.9 million is included within finance costs (2023: $1.1 million).
Other provisions
At 31 December 2023, the provision included a dispute with a third-party contractor of $9.1 million including legal costs and interest
charges. In August 2024, the Malaysian Court of Appeal issued a judgement that funds held in escrow should be released to the third-
party supplier pending resolution of the final arbitration decision. As such $8.6 million was released from escrow and hence deducted
from the provision. Should the final arbitration decision find in the favour of EnQuest, EnQuest would seek reimbursement of any funds
As a lessee
The Group recognises a right-of-use asset and a lease liability at the lease commencement date.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted
by using the rate implicit in the lease, or, if that rate cannot be readily determined, the Group uses its incremental borrowing rate.
The incremental borrowing rate is the rate that the Group would have to pay for a loan of a similar term, and with similar security, to obtain
an asset of similar value. The incremental borrowing rate is determined based on a series of inputs including: the term, the risk-free rate
Lease payments included in the measurement of the lease liability comprise:
•
fixed lease payments (including in-substance fixed payments), less any lease incentives;
•
variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date;
•
the exercise price of purchase options, if the lessee is reasonably certain to exercise the options; and
•
payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease.
The lease liability is subsequently recorded at amortised cost, using the effective interest rate method. The liability is remeasured when
there is a change in future lease payments arising from a change in an index or rate or if the Group changes its assessment of whether it
will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is
made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has
been reduced to zero. The Group did not make any such adjustments during the periods presented.
The right-of-use asset is measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments
made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove
the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received. Right-of-use
assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of the
underlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise a purchase option, the related right-of-
use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease.
The Group applies the short-term lease recognition exemption to those leases that have a lease term of 12 months or less from the
commencement date. It also applies the low-value assets recognition exemption to leases of assets below £5,000. Lease payments on
short-term leases and leases of low-value assets are recognised as an expense on a straight-line basis over the lease term.
The Group applies IAS 36 Impairment of Assets to determine whether a right-of-use asset is impaired and accounts for any identified
impairment loss as described in the ‘property, plant and equipment’ policy (see note 9).
Variable rents that do not depend on an index or rate are not included in the measurement of the lease liability and the right-of-use asset.
The related payments are recognised as an expense in the period in which the event or condition that triggers those payments occurs
and are included within ‘cost of sales’ or ‘general and administration expenses’ in the Group income statement.
For leases within joint ventures, the Group assesses on a lease-by-lease basis the facts and circumstances. This relates mainly to leases
of vessels. Where all parties to a joint operation jointly have the right to control the use of the identified asset and all parties have a
legal obligation to make lease payments to the lessor, the Group’s share of the right-of-use asset and its share of the lease liability will
be recognised on the Group balance sheet. This may arise in cases where the lease is signed by all parties to the joint operation or the
joint operation partners are named within the lease. However, in cases where EnQuest is the only party with the legal obligation to make
lease payments to the lessor, the full lease liability and right-of-use asset will be recognised on the Group balance sheet. This may be
the case if, for example, EnQuest, as operator of the joint operation, is the sole signatory to the lease. If the underlying asset is used for the
performance of the joint operation agreement, EnQuest will recharge the associated costs in line with the joint operating agreement.
As a lessor
When the Group acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease. Whenever
the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance
lease. All other leases are classified as operating leases.
When the Group is an intermediate lessor, it accounts for the head-lease and the sub-lease as two separate contracts. The sub-lease is
classified as a finance or operating lease by reference to the right-of-use asset arising from the head-lease.
Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred
in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line
basis over the lease term.
Amounts due from lessees under finance leases are recognised as receivables at the amount of the Group’s net investment in the leases.
Finance lease income is allocated to reporting periods so as to reflect a constant periodic rate of return on the Group’s net investment
outstanding in respect of the leases.
When a contract includes lease and non-lease components, the Group applies IFRS 15 to allocate the consideration under the contract to
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
172—173
Notes to the Group Financial Statements
continued
For the year ended 31 December 2024
Right-of-use assets and lease liabilities
Set out below are the carrying amounts of the Group’s right-of-use assets and lease liabilities and the movements during the period:
Right-of-use | Lease | |
assets | liabilities | |
$’000 | $’000 | |
As at 31 December 2022 | 429,378 | 482,066 |
Additions in the period | 28,378 | 28,378 |
Depreciation expense | (55,979) | – |
Impairment reversal | 6,077 | – |
Disposal | (122) | – |
Interest expense | – | 43,801 |
Payments | – | (135,675) |
Foreign exchange movements | – | 3,604 |
As at 31 December 2023 | 407,732 | 422,174 |
Additions in the period (see note 9) | 16,453 | 16,453 |
Depreciation expense (see note 9) | (54,735) | – |
Impairment reversal (see note 9) | 4,014 | – |
Interest expense | – | 27,673 |
Payments | – | (130,065) |
Foreign exchange movements | – | (979) |
As at 31 December 2024 | 373,464 | 335,256 |
Current | 46,994 | |
Non-current | 288,262 | |
335,256 |
The carrying value of the right-of-use assets include $340.9 million (2023: $372.6 million) of oil and gas assets and $32.6 million
(2023: $35.1 million) of buildings.
The Group leases assets, including the Kraken FPSO, property, and oil and gas vessels, with a weighted average lease term of four years.
The maturity analysis of lease liabilities is disclosed in note 27.
Amounts recognised in profit or loss
Year ended | Year ended | |
31 December | 31 December | |
2024 | 2023 | |
$’000 | $’000 | |
Depreciation expense of right-of-use assets | 54,735 | 55,979 |
Impairment reversal of right-of-use assets | (4,014) | (6,077) |
Interest expense on lease liabilities | 27,673 | 43,801 |
Rent expense – short-term leases | 13,860 | 5,153 |
Rent expense – leases of low-value assets | 33 | 113 |
Total amounts recognised in profit or loss | 92,287 | 98,969 |
Amounts recognised in statement of cash flows
Year ended | Year ended | |
31 December | 31 December | |
2024 | 2023 | |
$’000 | $’000 | |
Total cash outflow for leases | 130,065 | 135,675 |
Leases as lessor
The Group sub-leases part of Annan House, the Aberdeen office. The sub-lease is classified as an operating lease, as all the risks and
rewards incidental to the ownership of the right-of-use asset are not all substantially transferred to the lessee. Rental income recognised
by the Group during 2024 was $2.2 million (2023: $2.3 million).
The following table sets out a maturity analysis of lease payments, showing the undiscounted lease payments to be received after the
reporting date:
2024 | 2023 | |
$’000 | $’000 | |
Less than one year | 2,029 | 2,682 |
One to two years | 858 | 2,011 |
Two to three years | 860 | 872 |
Three to four years | 875 | 873 |
Four to five years | 882 | 889 |
More than five years | 1,856 | 2,790 |
Total undiscounted lease payments | 7,360 | 10,117 |
Year ended | Year ended | |
31 December | 31 December | |
2024 | 2023 | |
$’000 | $’000 | |
Deferred income | 138,095 | 138,416 |
In December 2023 a farm-down of an equity interest in the EnQuest Producer FPSO and certain capital spares related to the Bressay
development was completed and cash received of $141.3 million. The same amount was lent back to the acquirer in December 2023 as
vendor financing (see note 18(f)). Proceeds from the farm-down are reported within deferred income, as these are contingent upon the
Bressay development project achieving regulatory approval. Both parties are committed to delivering the development, however should
Capital commitments
At 31 December 2024, the Group had commitments for future capital expenditure amounting to $13.3 million (2023: $43.8 million). The key
components of this relate to commitments for the new stabilisation facility at Sullom Voe Terminal and Magnus 2025 drilling campaign.
Where the commitment relates to a joint venture, the amount represents the Group’s net share of the commitment. Where the Group is
not the operator of the joint venture then the amounts are based on the Group’s net share of committed future work programmes.
Other commitments
In the normal course of business, the Group will obtain surety bonds, Letters of Credit and guarantees. At 31 December 2024, the Group
held surety bonds totalling $277.0 million (2023: $250.4 million) to provide security for its decommissioning obligations. See note 22 for
Contingencies
The Group becomes involved from time to time in various claims and lawsuits arising in the ordinary course of its business. Outside of
those already provided, the Group is not, nor has been during the past 12 months, involved in any governmental, legal or arbitration
proceedings which, either individually or in the aggregate, have had, or are expected to have, a material adverse effect on the Group
balance sheet or profitability. Nor, so far as the Group is aware, are any such proceedings pending or threatened.
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
174—175
Notes to the Group Financial Statements
continued
For the year ended 31 December 2024
The Group financial statements include the financial statements of EnQuest PLC and its subsidiaries. A list of the Group’s principal
subsidiaries is contained in note 28 to these Group financial statements.
Balances and transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation
and are not disclosed in this note.
All sales to and purchases from related parties are made at normal market prices and the pricing policies and terms of these transactions
are approved by the Group’s management. With the exception of the transactions disclosed below, there have been no transactions with
related parties who are not members of the Group during the year ended 31 December 2024 (2023: none).
Within the $150.0 million term loan, which was fully repaid in October 2024, Double A Limited, a company beneficially owned by the
extended family of Amjad Bseisu, lent $9.0 million on the same terms and conditions as all other lending parties. This was considered a
smaller related party transaction under Listing Rule 11.1.10 which ended on repayment of the term loan. Double A Limited’s share of the early
repayment fee was $0.3 million.
The following table details remuneration of key management personnel of the Group. Key management personnel comprise Executive
and Non-Executive Directors of the Company and the Executive Committee.
2024 | 2023 | |
$’000 | $’000 | |
Short-term employee benefits | 5,138 | 5,360 |
Share-based payments | 124 | 144 |
Post-employment pension benefits | 226 | 241 |
Termination payments | 947 | 367 |
6,435 | 6,112 |
Risk management objectives and policies
The Group’s principal financial assets and liabilities comprise trade and other receivables, cash and cash equivalents, interest-bearing
loans, borrowings and leases, derivative financial instruments and trade and other payables. The main purpose of the financial
instruments is to manage cash flow and to provide liquidity for organic and inorganic growth initiatives.
The Group’s activities expose it to various financial risks particularly associated with fluctuations in oil price, foreign currency risk, liquidity
risk and credit risk. The Group is also exposed to interest rate risks related to SOFR on cash balances and the RBL. As the RBL was undrawn
at 31 December 2024, no sensitivities have been provided. Management reviews and agrees policies for managing each of these risks,
which are summarised below. Also presented below is a sensitivity analysis to indicate sensitivity to changes in market variables on the
Group’s financial instruments and to show the impact on profit and shareholders’ equity, where applicable. The sensitivity has been
prepared for periods ended 31 December 2024 and 2023, using the amounts of debt and other financial assets and liabilities held at those
reporting dates.
Commodity price risk – oil prices
The Group is exposed to the impact of changes in Brent oil prices on its revenues and profits generated from sales of crude oil.
The Group’s policy is to have the ability to hedge oil prices up to a maximum of 75% of the next 12 months’ production on a rolling annual
basis, up to 60% in the following 12-month period and 50% in the subsequent 12-month period. On a rolling quarterly basis, under the RBL
facility, the Group is required to hedge a minimum of 45% of volumes of net entitlement production expected to be produced in the next
12 months, and between 35% and 15% of volumes of net entitlement production expected for the following 12 months dependent on the
proportion of the facility that is utilised. This requirement ceases at the end date of the facility.
Details of the commodity derivative contracts entered into during and open at the end of 2024 are disclosed in note 18. As of 31 December
2024, the Group held financial instruments (options and swaps) related to crude oil that covered 4.4 MMbbls of 2025 production and 1.3
MMbbls of 2026 production. The instruments have an effective average floor price of around $69/bbl in both 2025 and 2026. The Group
utilises multiple benchmarks when hedging production to achieve optimal results for the Group. No derivatives were designated in
hedging relationships at 31 December 2024.
The following table summarises the impact on the Group’s pre-tax profit of a reasonably possible change in the Brent oil price on the fair
value of derivative financial instruments, with all other variables held constant. The impact in equity is the same as the impact on profit
before tax.
Pre-tax profit | ||
+$10/bbl | -$10/bbl | |
increase | decrease | |
$’000 | $’000 | |
31 December 2024 | (47,600) | 47,200 |
31 December 2023 | (4,000) | 7,400 |
Foreign exchange risk
The Group is exposed to foreign exchange risk arising from movements in currency exchange rates. Such exposure arises from sales or
purchases in currencies other than the Group’s functional currency and the 9.00% retail bond and any UK EPL cash tax payments which
is denominated in Sterling. To mitigate the risks of large fluctuations in the currency markets, the hedging policy agreed by the Board
allows for up to 70% of the non-US Dollar portion of the Group’s annual capital budget and operating expenditure to be hedged. For
specific contracted capital expenditure projects, up to 100% can be hedged. Approximately 12% (2023: 22%) of the Group’s sales and 97%
(2023: 95%) of costs (including operating and capital expenditure and general and administration costs) are denominated in currencies
other than the functional currency.
The Group also enters into foreign currency swap contracts from time to time to manage short-term exposures. The following tables
summarise the Group’s financial assets and liabilities exposure to foreign currency.
GBP | MYR | Other | Total | |
Year ended 31 December 2024 | $’000 | $’000 | $’000 | $’000 |
Total financial assets | 219,758 | 22,570 | 3,024 | 245,352 |
Total financial liabilities | 455,128 | 21,731 | 3,801 | 480,661 |
GBP | MYR | Other | Total | |
Year ended 31 December 2023 | $’000 | $’000 | $’000 | $’000 |
Total financial assets | 241,844 | 42,233 | 954 | 285,031 |
Total financial liabilities | 479,819 | 9,801 | 1,295 | 490,915 |
The following table summarises the sensitivity to a reasonably possible change in the US Dollar to Sterling foreign exchange rate, with all
other variables held constant, of the Group’s profit before tax due to changes in the carrying value of monetary assets and liabilities at the
reporting date. The impact in equity is the same as the impact on profit before tax. The Group’s exposure to foreign currency changes for
all other currencies is not material:
Pre-tax profit | ||
10% rate | 10% rate | |
increase | decrease | |
$’000 | $’000 | |
31 December 2024 | (19,956) | 19,956 |
31 December 2023 | (20,398) | 20,398 |
Credit risk is managed on a Group basis. Credit risk in financial instruments arises from cash and cash equivalents and derivative
financial instruments where the Group’s exposure arises from default of the counterparty, with a maximum exposure equal to the carrying
amount of these instruments. For banks and financial institutions only those rated with an A-/A3 credit rating or better are accepted. Cash
balances can be invested in short-term bank deposits and AAA-rated liquidity funds, subject to Board-approved limits and with a view to
minimising counterparty credit risks.
In addition, there are credit risks of commercial counterparties, including exposures in respect of outstanding receivables. The Group
trades only with recognised international oil and gas companies, commodity traders and shipping companies and at 31 December 2024,
there were no trade receivables past due but not impaired (2023: nil) and no joint venture receivables past due but not impaired (2023: nil).
Receivable balances are monitored on an ongoing basis with appropriate follow-up action taken where necessary. Any impact from ECL
is disclosed in note 15.
2024 | 2023 | |
Ageing of past due but not impaired receivables | $’000 | $’000 |
Less than 30 days | – | – |
30–60 days | – | – |
60–90 days | – | – |
90–120 days | – | – |
120+ days | – | – |
– | – |
At 31 December 2024, the Group had two customers accounting for 91% of outstanding trade receivables (2023: one customer, 58%) and
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
176—177
Notes to the Group Financial Statements
continued
For the year ended 31 December 2024
The Group monitors its risk of a shortage of funds by reviewing its cash flow requirements on a regular basis relative to its existing bank
facilities and the maturity profile of its borrowings. Specifically, the Group’s policy is to ensure that sufficient liquidity or committed
facilities exist within the Group to meet its operational funding requirements and to ensure the Group can service its debt and adhere to
its financial covenants. At 31 December 2024, $194.3 million (2023: $166.2 million) was available for drawdown under the Group’s facilities
(see note 17).
The following tables detail the maturity profiles of the Group’s non-derivative financial liabilities, including projected interest thereon. The
amounts in these tables are different from the balance sheet as the table is prepared on a contractual undiscounted cash flow basis and
includes future interest payments.
The payment of contingent consideration is limited to cash flows generated from Magnus (see note 21). Therefore, no contingent
consideration is payable if insufficient cash flows are generated over and above the requirements to operate the asset and there is
no exposure to liquidity risk. By reference to the conditions existing at the reporting period end, the maturity analysis of the contingent
consideration is disclosed below. All of the Group’s liabilities, except for the RBL, are unsecured.
On demand | Up to 1 year | 1 to 2 years | 2 to 5 years | Over 5 years | Total | |
Year ended 31 December 2024 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 |
Loans | – | 34,168 | – | – | – | 34,168 |
Bonds | – | 69,095 | 69,095 | 701,197 | – | 839,387 |
Contingent consideration | – | 20,675 | 64,877 | 265,854 | 425,027 | 776,433 |
Obligations under lease liabilities | – | 66,092 | 71,600 | 222,093 | 31,696 | 391,481 |
Trade and other payables | – | 414,390 | – | – | – | 414,390 |
– | 604,420 | 205,572 | 1,189,144 | 456,723 | 2,455,859 | |
On demand | Up to 1 year | 1 to 2 years | 2 to 5 years | Over 5 years | Total | |
Year ended 31 December 2023 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 |
Loans | – | 64,518 | 131,081 | 221,311 | – | 416,910 |
Bonds | – | 50,749 | 50,749 | 576,415 | – | 677,913 |
Contingent consideration | – | 46,555 | 95,335 | 289,823 | 393,187 | 824,900 |
Obligations under lease liabilities | – | 160,341 | 70,062 | 229,310 | 36,322 | 496,035 |
Trade and other payables | – | 347,408 | 13,167 | 19,750 | – | 380,325 |
– | 669,571 | 360,394 | 1,336,609 | 429,509 | 2,796,083 |
The following tables detail the Group’s expected maturity of payables for its derivative financial instruments. The amounts in these tables
are different from the balance sheet as the table is prepared on a contractual undiscounted cash flow basis. When the amount receivable
or payable is not fixed, the amount disclosed has been determined by reference to a projected forward curve at the reporting date.
Less than 3 | 3 to 12 | |||||
On demand | months | months | 1 to 2 years | Over 2 years | Total | |
Year ended 31 December 2024 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 |
Commodity derivative contracts | – | 546 | 8,908 | 999 | – | 10,453 |
Foreign exchange derivative contracts | – | 1,105 | 1,249 | – | – | 2,354 |
Other derivative contracts | – | 23,902 | 3,802 | 1,928 | – | 29,632 |
– | 25,553 | 13,959 | 2,927 | – | 42,439 | |
Less than 3 | 3 to 12 | |||||
On demand | months | Months | 1 to 2 years | Over 2 years | Total | |
Year ended 31 December 2023 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 |
Commodity derivative contracts | 414 | 3,111 | 17,264 | 1,000 | – | 21,789 |
Other derivative contracts | – | 8,261 | – | – | – | 8,261 |
414 | 11,372 | 17,264 | 1,000 | – | 30,050 |
The capital structure of the Group consists of debt, which includes the borrowings disclosed in note 17, cash and cash equivalents and
equity attributable to the equity holders of the parent company, comprising issued capital, reserves and retained earnings as in the Group
statement of changes in equity.
The primary objective of the Group’s capital management is to optimise the return on investment, by managing its capital structure to
achieve capital efficiency whilst also maintaining flexibility for downside protection and growth initiatives. The Group regularly monitors
the capital requirements of the business over the short, medium and long term, in order to enable it to foresee when additional capital
will be required.
The Group has approval from the Board to hedge external risks, see Commodity price risk: oil prices and foreign exchange risk. This is
designed to reduce the risk of adverse movements in exchange rates and market prices eroding the return on the Group’s projects
and operations.
The Board regularly reassesses the existing dividend policy to ensure that shareholder value is maximised. Any future shareholder
distributions are expected to depend on the earnings and financial condition of the Company and such other factors as the Board
considers appropriate.
The Group monitors capital using the gearing ratio and return on shareholders’ equity as follows. Further information relating to the
movement year-on-year is provided within the relevant notes and within the Financial review (pages 34 to 38).
2024 | 2023 | |
$’000 | $’000 | |
Loans, borrowings and bond (i) (A) (see note 17) | 666,073 | 794,453 |
Cash and cash equivalents (see note 13) | (280,239) | (313,572) |
EnQuest net debt (B) (ii) | 385,834 | 480,881 |
Equity attributable to EnQuest PLC shareholders (C) | 542,466 | 456,728 |
Profit/(loss) for the year attributable to EnQuest PLC shareholders (D) | 93,773 | (30,833) |
Adjusted EBITDA (F) (ii) | 672,585 | 824,666 |
Gross gearing ratio (A/C) | 1.2 | 1.7 |
Net gearing ratio (B/C) | 0.7 | 1.1 |
EnQuest net debt/adjusted EBITDA (B/F) (ii) | 0.6 | 0.6 |
Shareholders’ return on investment (D/C) | 17.3% | N/A |
(i)
Principal amounts drawn, excludes netting off of fees and accrued interest (see note 17)
(ii)
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
178—179
Notes to the Group Financial Statements
continued
For the year ended 31 December 2024
At 31 December 2024, EnQuest PLC had investments in the following subsidiaries:
Proportion of | |||
nominal value of | |||
issued Ordinary | |||
shares | |||
Country of | controlled by the | ||
Name of company | Principal activity | incorporation | Group |
EnQuest Britain Limited | Intermediate holding company and provision of Group | England | 100% |
manpower and contracting/procurement services | |||
EnQuest Heather Limited (i) | Exploration, extraction and production of hydrocarbons | England | 100% |
EnQuest Thistle Limited (i) 4 | Exploration, extraction and production of hydrocarbons | England | 100% |
Stratic UK (Holdings) Limited (i) 4 | Intermediate holding company | England | 100% |
EnQuest ENS Limited (i) | Exploration, extraction and production of hydrocarbons | England | 100% |
EnQuest UKCS Limited (i) 4 | Exploration, extraction and production of hydrocarbons | England | 100% |
EnQuest Heather Leasing Limited (i) | Leasing | England | 100% |
EQ Petroleum Sabah Limited (i) | Exploration, extraction and production of hydrocarbons | England | 100% |
EnQuest Dons Leasing Limited (i) | Leasing | England | 100% |
EnQuest Energy Limited (i) | Exploration, extraction and production of hydrocarbons | England | 100% |
EnQuest Production Limited (i) | Exploration, extraction and production of hydrocarbons | England | 100% |
EnQuest Global Limited | Intermediate holding company | England | 100% |
EnQuest NWO Limited (i) | Exploration, extraction and production of hydrocarbons | England | 100% |
EQ Petroleum Production Malaysia Limited (i) | Exploration, extraction and production of hydrocarbons | England | 100% |
NSIP (GKA) Limited 1 | Dormant | Scotland | 100% |
EnQuest Global Services Limited (i) 2 | Provision of Group manpower and contracting/procurement | Jersey | 100% |
services for the international business | |||
EnQuest Marketing and Trading Limited | Marketing and trading of crude oil | England | 100% |
NorthWestOctober Limited (i) 4 | Dormant | England | 100% |
EnQuest UK Limited (i) 4 | Dormant | England | 100% |
EnQuest Petroleum Developments | Exploration, extraction and production of hydrocarbons | Malaysia | 100% |
Malaysia SDN. BHD (i) 3 | |||
EnQuest NNS Holdings Limited (i) 4 | Intermediate holding company | England | 100% |
EnQuest NNS Limited (i) 4 | Exploration, extraction and production of hydrocarbons | England | 100% |
EnQuest Advance Holdings Limited (i) | Intermediate holding company | England | 100% |
EnQuest Advance Limited (i) | Exploration, extraction and production of hydrocarbons | England | 100% |
EnQuest Forward Holdings Limited (i) 4 | Intermediate holding company | England | 100% |
EnQuest Forward Limited (i) 4 | Exploration, extraction and production of hydrocarbons | England | 100% |
EnQuest Progress Limited (i) | Exploration, extraction and production of hydrocarbons | England | 100% |
North Sea (Golden Eagle) Resources Ltd (i) | Exploration, extraction and production of hydrocarbons | England | 100% |
Veri Energy (CCS) Limited (i) | Assessment and development of new energy | England | 100% |
and decarbonisation opportunities | |||
Veri Energy (Hydrogen) Limited (i) | Assessment and development of new energy | England | 100% |
and decarbonisation opportunities | |||
Veri Energy Holdings Limited | Intermediate holding company | England | 100% |
Veri Energy Limited (i) | Assessment and development of new energy | England | 100% |
and decarbonisation opportunities |
(i)
Held by subsidiary undertaking
The Group has two branches outside the UK (all held by subsidiary undertakings): EnQuest Global Services Limited (Dubai) and EnQuest
Petroleum Production Malaysia Limited (Malaysia).
Other than those listed below, all entities have a Registered office address as Charles House, 2nd Floor, 5-11 Regent Street, London,
SW1Y 4LR, United Kingdom.
1
Annan House, Palmerston Road, Aberdeen, Scotland, AB11 5QP, United Kingdom
2
Ground Floor, Colomberie House, St Helier, JE4 0RX, Jersey
3
c/o TMF, 10th Floor, Menara Hap Seng, No. 1 & 3, Jalan P. Ramlee 50250 Kuala Lumpur, Malaysia
4
Cash generated from operations
Year ended | Year ended | ||
31 December | 31 December | ||
2024 | 2023 | ||
Notes | $’000 | $’000 | |
Profit/(loss) before tax | 166,614 | 231,779 | |
Depreciation | 4(c) | 6,040 | 6,109 |
Depletion | 4(b) | 263,252 | 292,199 |
Exploration and appraisal expense | 183 | 5,640 | |
Net impairment charge to oil and gas assets | 9 | 71,414 | 117,396 |
Net (write back)/disposal of inventory | (5,539) | (622) | |
Share-based payment charge | 4(e) | 983 | 3,320 |
Change in Magnus related contingent consideration | 21 | 15,904 | (10,811) |
Change in provisions | 22 | 39,116 | 59,970 |
Other non-cash income | 4(d) | – | (4,058) |
Change in Golden Eagle related contingent consideration | 21 | – | 1,663 |
Unrealised (gain)/loss on commodity financial instruments | 4(a) | (3,090) | (28,463) |
Unrealised loss/(gain) on other financial instruments | 4(b) | 2,823 | 3,832 |
Unrealised exchange (gain)/loss | (8,714) | 12,401 | |
Net finance expense | 113,711 | 140,213 | |
Operating cash flow before working capital changes | 662,697 | 830,568 | |
(Increase)/decrease in trade and other receivables | (4,561) | 51,724 | |
(Increase)/decrease in inventories | (5,786) | (9,518) | |
Increase/(decrease) in trade and other payables | 33,596 | (18,028) | |
Cash generated from operations | 685,946 | 854,746 |
Changes in liabilities arising from financing activities
Loans and | Lease | |||
borrowings | Bonds | liabilities | Total | |
$’000 | $’000 | $’000 | $’000 | |
At 1 January 2023 | (413,528) | (597,283) | (482,066) (1,492,877) | |
Cash movements: | ||||
Repayments of loans and borrowings | 289,684 | 138,052 | – | 427,736 |
Proceeds from loans and borrowings | (190,657) | – | – | (190,657) |
Payment of lease liabilities | – | – | 135,675 | 135,675 |
Cash interest paid in year | 36,285 | 62,130 | – | 98,415 |
Non-cash movements: | ||||
Additions | – | – | (28,377) | (28,377) |
Interest/finance charge payable | (30,708) | (58,999) | (43,801) | (133,508) |
Fee amortisation | (1,476) | (3,091) | – | (4,567) |
Foreign exchange and other non-cash movements | (810) | (11,828) | (3,605) | (16,243) |
At 31 December 2023 | (311,210) | (471,019) | (422,174) (1,204,403) | |
Cash movements: | ||||
Repayments of loans and borrowings (i) | 312,304 | – | – | 312,304 |
Proceeds from loans and borrowings (ii) | (26,928) | (160,000) | – | (186,928) |
Payment of lease liabilities | – | – | 130,065 | 130,065 |
Cash interest paid in year (iii) | 18,524 | 52,494 | – | 71,018 |
Non-cash movements: | ||||
Additions | – | 3,362 | (16,453) | (13,091) |
Interest/finance charge payable | (18,524) | (54,971) | (27,673) | (101,168) |
Fee amortisation | (5,036) | (3,493) | – | (8,529) |
Foreign exchange and other non-cash movements | (3,102) | 2,742 | 980 | 620 |
At 31 December 2024 | (33,972) | (630,885) | (335,255) | (1,000,112) |
(i)
Repayments of loans and borrowings include $140.0 million repaid under the RBL facility, $150.0 million term loan repayment and $22.3 million repaid under the SVT working
capital facility (note 17). In the Group Cash Flow Statement, the repayment of loans and borrowings line does not include the term loan repayment. This was fully repaid utilising
the proceeds from the high yield bond tap and as such netted against the proceeds of the high yield bond tap in the Group Cash Flow Statement on the proceeds from loans
and borrowings line
(ii)
Proceeds from loans and borrowing include $26.9 million draw-downs under the SVT working capital facility and $160.0 million high yield bond tap. In the Group Cash Flow
Statement, proceeds from loans and borrowings of $31.7 million includes amounts outlined in the table above less the term loan repayment of $150.0 million, associated fees on
termination $4.7 million and $0.4 million relating to the high yield bond issue premium net of issue fees. See note 17 for further details
(iii)
The cashflow statement includes interest on decommissioning bonds and Letters of Credit
Strategic Report
Corporate Governance
Financial Statements
Statement of Directors’ Responsibilities
for the Parent Company Financial Statements
EnQuest PLC Annual Report and Accounts 2024
180—181
Notes to the Group Financial Statements
continued
For the year ended 31 December 2024
Reconciliation of carrying value
Loans | Bonds | Lease liabilities | ||
(see note 17) | (see note 17) | (see note 23) | Total | |
$’000 | $’000 | $’000 | $’000 | |
Principal | (319,784) | (474,669) | (422,174) | (1,216,627) |
Unamortised fees | 8,553 | 10,724 | – | 19,277 |
Accrued interest | 21 | (7,074) | – | (7,053) |
At 31 December 2023 | (311,210) | (471,019) | (422,174) (1,204,403) | |
Principal | (33,972) | (632,101) | (335,255) (1,001,328) | |
Unamortised fees | – | 10,661 | – | 10,661 |
Accrued interest | – | (9,445) | – | (9,445) |
At 31 December 2024 | (33,972) | (630,885) | (335,255) | (1,000,112) |
In January 2025, EnQuest announced that it had signed a Sale and Purchase Agreement to acquire Harbour Energy’s business in
Vietnam, which includes the 53.125% equity interest in the Chim Sáo and Dua production fields. These fields are governed by the Block
12W Production Sharing Contract, which runs to November 2030 with an opportunity to extend. The transaction has an effective date of
1 January 2024 and is scheduled to complete during the second quarter of 2025. The headline value of the transaction is $84.0 million and,
net of interim period cash flows, the consideration to be paid by EnQuest on completion is expected to equal c.$35 million. As at 1 January
The Directors are responsible for preparing the Parent Company financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law, the Directors have elected
to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom
Accounting Standards and applicable law) including FRS 101 ‘Reduced Disclosure Framework’. Under company law, the Directors must not
approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of
the profit or loss of the Company for that period. In preparing the parent company financial statements, the Directors are required to:
•
Select suitable accounting policies and then apply them consistently;
•
Make judgements and estimates that are reasonable and prudent;
•
State whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained
in the financial statements; and
•
Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue
in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that
the Company financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the Company’s specific corporate and financial information included
on the Group’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
182—183
(Registered number: 07140891)
At 31 December 2024
2024 | 2023 | ||
Notes | $’000 | $’000 | |
Fixed assets | |||
Investments | 3 | 372,243 | 299,770 |
Current assets | |||
Trade and other debtors | |||
– due within one year | 4 | 811,983 | 661,631 |
– due after one year | 4 | 38,453 | 36,276 |
Cash at bank and in hand | 265 | 178 | |
850,701 | 698,085 | ||
Trade and other creditors: amounts falling due within one year | 6 | (3,328) | (152,634) |
Net current assets | 847,373 | 545,451 | |
Total assets less current liabilities | 1,219,616 | 845,221 | |
Trade and other creditors: amounts falling due after one year | 7 | (630,885) | (463,946) |
Net assets | 588,731 | 381,275 | |
Share capital and reserves | |||
Share capital and premium | 8 | 392,054 | 393,831 |
Treasury shares | (4,425) | - | |
Other reserve | 40,143 | 40,143 | |
Share-based payment reserve | 13,949 | 13,195 | |
Capital redemption reserve | 2,006 | - | |
Profit and loss account | 145,004 | (65,894) | |
Shareholders’ funds | 588,731 | 381,275 |
The attached notes 1 to 13 form part of these Company financial statements.
The Company reported a profit for the financial year ended 31 December 2024 of $215.5 million (2023: loss of $93.4 million). There were no
other recognised gains or losses in the period (2023: nil).
The financial statements were approved by the Board of Directors and authorised for issue on 26 March 2025 and signed on its behalf by:
Jonathan Copus
Chief Financial Officer
For the year ended 31 December 2024
Share | ||||||||
capital and | Share-based | Capital | ||||||
share | Treasury | Other | payments | redemption | Profit and | |||
premium | shares | reserve | reserve | reserve | loss account | Total | ||
Notes | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | |
At 31 December 2022 | 392,196 | – | 40,143 | 11,510 | – | 27,513 | 471,362 | |
Profit/(loss) for the year | – | – | – | – | – | (93,407) | (93,407) | |
Total comprehensive expense for the | ||||||||
year | – | – | – | – | – | (93,407) | (93,407) | |
Issue of shares to Employee Benefit Trust | 1,635 | – | – | (1,635) | – | – | – | |
Share-based payment charge | – | – | – | 3,320 | – | – | 3,320 | |
At 31 December 2023 | 393,831 | – | 40,143 | 13,195 | – | (65,894) | 381,275 | |
Profit/(loss) for the year | – | – | – | – | – | 215,491 | 215,491 | |
Total comprehensive income for the year | – | – | – | – | – | 215,491 | 215,491 | |
Issue of shares to Employee Benefit Trust | 8 | 229 | – | – | (229) | - | – | – |
Repurchase and cancellation of shares | 8 | (2,006) | (4,425) | – | – | 2,006 | (4,593) | (9,018) |
Share-based payment charge | – | – | – | 983 | – | – | 983 | |
At 31 December 2024 | 392,054 | (4,425) | 40,143 | 13,949 | 2,006 | 145,004 | 588,731 |
1. Corporate information
The separate parent company financial statements of EnQuest PLC (‘EnQuest’ or the ‘Company’) for the year ended 31 December 2024
were authorised for issue in accordance with a resolution of the Directors on 26 March 2025.
EnQuest PLC is a public limited company incorporated and registered in England and is the holding and ultimate controlling company
for the Group of EnQuest subsidiaries (together the ‘Group’). The Company address can be found on the inside back cover. of the Group
Annual Report and Accounts.
2. Summary of significant accounting policies
Basis of preparation
These separate financial statements have been prepared in accordance with Financial Reporting Standard 101, ‘Reduced Disclosure
Framework’ (‘FRS 101’) and the Companies Act 2006. The Company meets the definition of a qualifying entity under FRS 100, ‘Application of
Financial Reporting Requirements’ as issued by the Financial Reporting Council. The Company has previously notified its shareholders in
writing about, and they do not object to, the use of the disclosure exemptions used by the Company in these financial statements.
These financial statements are prepared under the historical cost basis, except for the fair value remeasurement of certain financial
instruments as set out in the accounting policies below. The functional and presentation currency of the separate financial statements is
US Dollars and all values in the separate financial statements are rounded to the nearest thousand ($’000) except where otherwise stated.
As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions available under that standard in relation to
share-based payments, financial instruments, fair value measurement, capital management, presentation of comparative information
in respect of certain assets, presentation of a cash flow statement, standards not yet effective, impairment of assets and related party
transactions. Where relevant, equivalent disclosures have been given in the Group accounts. For new standards and interpretations see
note 2 of the Group financial statements. No material impact was recognised upon application in the Company financial statements.
The Directors have taken advantage of the exemption available under Section 408 of the Companies Act 2006 and not presented
an income statement or a statement of comprehensive income for the parent company. The parent company’s accounts present
information about it as an individual undertaking and not about its Group.
Going concern
The Directors’ assessment of going concern concludes that the use of the going concern basis is appropriate and the Directors have a
reasonable expectation that the Group, and therefore the Company, will be able to continue in operation and meet its commitments as
they fall due over the going concern period. See note 2 of the Group financial statements for further details.
The accounting policies which follow set out those policies which apply in preparing the financial statements for the year ended
31 December 2024.
Critical accounting estimates and judgements
The management of the Group has to make estimates and judgements when preparing the financial statements of the Group.
Uncertainties in the estimates and judgements could have an impact on the carrying amount of assets and liabilities and the Group’s
results. The most important estimates in relation thereto are:
Key sources of estimation uncertainty: Impairment/reversal of impairment of investments in subsidiaries
Determination of whether investments have suffered any impairment requires an estimation of the assets’ recoverable value. The
recoverable value is based on the discounted cash flows expected to arise from the subsidiaries’ oil and gas assets, using asset-by-asset
life-of-field projections as part of the Group’s assessment for the impairment of the oil and gas assets. The Company’s investment in
subsidiaries is tested for impairment annually (see note 3 for recoverable values and sensitivities). See Group critical accounting estimates
and judgements in note 2 for recoverability of oil and gas subsidiary asset carrying values.
No critical accounting judgements have been identified in the preparation of these financial statements.
Foreign currencies
Transactions in currencies other than the Company’s functional currency are recorded at the prevailing rate of exchange on the date
of the transaction. At the year end, monetary assets and liabilities denominated in foreign currencies are retranslated at the rates of
exchange prevailing at the balance sheet date. Non-monetary assets and liabilities that are measured at historical cost in a foreign
currency are translated using the rate of exchange as at the dates of the initial transactions. Non-monetary assets and liabilities
measured at fair value in a foreign currency are translated using the rate of exchange at the date the fair value was determined.
All foreign exchange gains and losses are taken to the statement of comprehensive income.
3. Investments
Accounting policy
Investments in subsidiaries are accounted for at cost less any provision for impairment.
(a) Summary
2024
$’000
2023
$’000
Subsidiary undertakings
372,237
299,764
Other financial assets at FVPL
6
6
Total
372,243
299,770
(b) Subsidiary undertakings
$’000
Cost
At 1 January 2023
1,398,876
Additions
3,320
At 31 December 2023
1,402,196
Additions
983
At 31 December 2024
1,403,179
Provision for impairment
At 1 January 2023
1,028,527
Impairment charge for the year
73,905
At 31 December 2023
1,102,432
Impairment reversal for the year
(71,490)
At 31 December 2024
1,030,942
Net book value
At 31 December 2024
372,237
At 31 December 2023
299,764
At 31 December 2022
370,349
The Company has recognised an impairment reversal of its investment in subsidiary undertakings of $71.5 million during the year
(2023: $73.9 million charge). The impairment reversal for the year ended 31 December 2024 is primarily driven by profits generated in the
underlying subsidiaries.
The Group’s recoverable value of its investments is highly sensitive, inter alia, to oil price achieved. A sensitivity has been run on the oil price
assumption, with a 10.0% change being considered to be a reasonable possible change for the purposes of sensitivity analysis (see note 2
of the Group financial statements). A 10.0% decrease in oil price would have decreased the net book value by $179.0 million.
The oil price sensitivity analysis does not, however, represent management’s best estimate of any impairments that might be recognised
as they do not fully incorporate consequential changes that may arise, such as reductions in costs and changes to business plans,
phasing of development, levels of reserves and resources, and production volumes. As the extent of a price reduction increases, the more
likely it is that costs would decrease across the industry. The oil price sensitivity analysis therefore does not reflect a linear relationship
between price and value that can be extrapolated.
Details of the Company’s subsidiaries at 31 December 2024 are provided in note 28 of the Group financial statements.
(c) Other financial assets at fair value through profit or loss
The interest in other listed investments at the end of the year is part of the Group’s investment in the Ordinary share capital of Ascent
Resources plc, which is incorporated in the United Kingdom and registered in England and Wales.
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
184—185
Notes to the Company Financial Statements
For the year ended 31 December 2024
4. Trade and other debtors
Financial assets
Financial assets are classified at initial recognition as amortised cost, fair value through other comprehensive income (‘FVOCI’), or fair
value through profit or loss (‘FVPL’). The classification of financial assets at initial recognition depends on the financial asset’s contractual
cash flow characteristics and the Group’s business model for managing them. The Company does not currently hold any financial assets
at FVOCI, i.e. debt financial assets.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial
asset and substantially all the risks and rewards are transferred.
Financial assets at amortised cost
Trade debtors, other debtors and joint operation debtors are measured initially at fair value and subsequently recorded at amortised cost,
using the effective interest rate (‘EIR’) method, and are subject to impairment. Gains and losses are recognised in profit or loss when the
asset is derecognised, modified or impaired and EIR amortisation is included within finance costs.
The Company measures financial assets at amortised cost if both of the following conditions are met:
•
The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows;
and
•
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest
on the principal amount outstanding.
Prepayments, which are not financial assets, are measured at historical cost.
Impairment of financial assets
The Company recognises a loss allowance for expected credit loss (‘ECL’), where material, for all financial assets held at the balance sheet
date. The measurement of expected credit losses is a function of the probability of default, loss given default and exposure at default.
ECLs are based on the difference between the contractual cash flows due to the Company, and the discounted actual cash flows that are
expected to be received. Where there has been no significant increase in credit risk since initial recognition, the loss allowance is equal to
12-month expected credit losses. Where the increase in credit risk is considered significant, lifetime credit losses are provided. For trade
receivables, a lifetime credit loss is recognised on initial recognition where material.
The Company evaluates the concentration of risk with respect to intercompany debtors as low, as its customers are intercompany
ventures, and has considered the risk relating to the probability of default on loans that are repayable on demand. The Company
has evaluated an expected credit loss of $nil for the year ended 31 December 2024, as required by IFRS 9’s expected credit loss model
(2023: $nil).
2024
$’000
2023
$’000
Due within one year
Prepayments
13
51
Amounts due from subsidiaries
811,970
552,753
Other receivables – vendor financing facility
–
108,827
811,983
661,631
Due after one year
Other receivables – vendor financing facility
38,453
36,276
38,453
36,276
Included within the amounts due from Group undertakings are balances of $669.8million (2023: $512.4 million) on which interest was
charged at between 9.0%-13.36% (2023: 9.0%-11.625%). All other balances are interest free.
Amounts owed by Group undertakings are unsecured and repayable on demand, however, the Company does not anticipate needing to
recall any funds in the next twelve months. The prior year comparative of $552.8 million has been reallocated to amounts due within one
year reflecting the contractual term of the balance.
A vendor financing facility was entered into with RockRose Energy Limited on 29 December 2023 following the farm-down of a 15.0%
share in the EnQuest Producer FPSO and capital items associated with the Bressay development. $107.5 million was repaid in the first
quarter of 2024 with the remainder repayable through future net cash flows from the Bressay field. Interest on the outstanding
amount accrues at 2.5% plus the Bank of England’s Base Rate.
5. Deferred tax
The Company has unused UK mainstream corporation tax losses of $54.3 million (2023: $67.8 million) for which no deferred tax asset has
been recognised at the balance sheet date due to the uncertainty of recovery of these losses.
6. Trade and other creditors: amounts falling due within one year
Accounting policy
Financial liabilities
Financial liabilities are classified at initial recognition as amortised cost or at FVPL.
Financial liabilities are derecognised when they are extinguished, discharged, cancelled or they expire. When an existing financial liability
is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified,
such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The
difference in the respective carrying amounts is recognised in the Group income statement.
Financial liabilities at amortised cost
Loans and borrowings, trade creditors and other creditors are measured initially at fair value net of directly attributable transaction costs
and subsequently recorded at amortised cost, using the EIR method. Loans and borrowings are interest bearing. Gains and losses are
recognised in profit or loss when the liability is derecognised and EIR amortisation is included within finance costs.
2024
$’000
2023
$’000
Bond and other interest (see note 7)
-
7,073
Amounts due to subsidiaries
3,086
145,434
Accruals
242
127
3,328
152,634
Included within the amounts owed to Group undertakings are balances of $nil million (2023: $7.9 million) on which interest was charged at
13.36% (2023: 10.98%). All other balances are interest free.
All amounts owed to Group undertakings are unsecured and repayable on demand.
7. Trade and other creditors: amounts falling due after one year
2024
$’000
2023
$’000
Bonds
(i)
630,885
463,946
(i)
Accrued interest on borrowings has been reclassed in the current period to better reflect the total borrowings balance (comparative information has not been restated as it is
not material)
At 31 December 2024, bonds comprise a high yield bond and a retail bond. The carrying value of the high yield bond is $454.3 million
(2023: $294.3 million). In October 2024, the Group concluded a tap of an additional $160.0 million of the high yield bond on the same terms
and conditions as the existing bond. The notes accrue a fixed coupon of 11.625% bi-annually with a maturity date of November 2027. The
retail bond has a carrying value of $167.1 million (2023: $169.7 million) and pays a coupon of 9.00% with a maturity date of October 2027.
Included within the bond value for 2024 is accrued bond interest of $9.4 million. See note 17 of the Group financial statements. The maturity
profile of the bonds is disclosed in note 27 of the Group financial statements.
8. Share capital and share premium
The movement in the share capital and share premium of the Company was as follows:
Authorised, issued and fully paid
Ordinary shares of
£0.05 each
Number
Share
capital
$’000
Share
premium
$’000
Total
$’000
At 1 January 2024
1,912,304,113
133,285
260,546
393,831
Issue of shares to Employee Benefit Trust
3,620,226
229
–
229
Repurchase and cancellation of shares
(30,894,836)
(2,006)
–
(2,006)
At 31 December 2024
1,885,029,503
131,508
260,546
392,054
During 2024, a share buy-back programme was executed with a total of 55,894,836 Ordinary shares repurchased as at 31 December 2024.
The first 25,000,000 Ordinary shares purchased under the Programme are held in Treasury for issue in due course to the Company’s EBT
to satisfy the anticipated future exercise of options and awards made to employees and Executive Directors of EnQuest PLC pursuant to
certain of the Company’s existing share plans. The remaining 30,894,836 Ordinary shares were cancelled.
At 31 December 2024, there were 972,269 shares held by the EBT (2023: 8,449,793) which are included within the share-based payment
reserve. The movement in the year was 11,097,750 shares used to satisfy awards made under the Company’s share-based incentive
schemes offset by a subscription for 3,620,226 additional Ordinary shares.
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
Notes to the Company Financial Statements
continued
For the year ended 31 December 2024
186—187
9. Reserves
Share capital and share premium
The balance classified as equity share capital includes the total net proceeds (both nominal value and share premium) on issue of
registered share capital of the parent company. Share issue costs associated with the issuance of new equity are treated as a direct
reduction of proceeds. The share capital comprises only one class of Ordinary share. Each Ordinary share carries an equal voting right
and right to a dividend.
Other reserve
The other reserve is used to record any other transactions taken straight to reserves as non-distributable.
Treasury shares
Represents amounts transferred following purchase of the Company’s own shares out of distributable profits, with those shares available
for resale into the market, transfer to the Group’s Employee Benefit Trust (‘EBT’) where they can be used to satisfy awards made under the
Company’s share-based incentive schemes, or cancelled.
Capital redemption reserve
Represents the par value of shares cancelled following the purchase of the Company’s own shares out of distributable profits.
Share-based payments reserve
The reserve for share-based payments is used to record the value of equity-settled share-based payments awards to employees and
the balance of the shares held by the Company’s Employee Benefit Trust which are held to satisfy these awards. Transfers out of this
reserve are made upon vesting of the original share awards. Share-based payment plan information is disclosed in note 20 of the Group
financial statements.
10. Auditor’s remuneration
Fees payable to the Company’s auditor for the audit of the Company and Group financial statements are disclosed in note 4(f) of the
Group financial statements.
11. Directors’ remuneration
The emoluments of the Directors are paid to them in their capacity as Directors of the Company for qualifying services to the Company
and the EnQuest Group. Further information is provided in the Directors’ Remuneration Report on pages 111 to 114.
12. Distributions proposed
Further details are disclosed in note 8 of the Group financial statements.
13. Contingencies
The Company provides a number of parent company guarantees. These have been assessed as having no material value.
The Group uses Alternative Performance Measures (‘APMs’) when assessing and discussing the Group’s financial performance, balance
sheet and cash flows that are not defined or specified under IFRS but consistent with accounting policies applied in the financial
statements. The Group uses these APMs, which are not considered to be a substitute for, or superior to, IFRS measures, to provide
stakeholders with additional useful information to aid the understanding of the Group’s underlying financial performance, balance sheet
and cash flows by adjusting for certain items, as set out below, which impact upon IFRS measures or, by defining new measures.
As set out in note 2, the Group no longer separately presents business performance results and remeasurements and exceptional items.
However, the Group continues to adjust for material items consisting of income and expense within its APMs which, because of the nature
or expected infrequency of the events giving rise to them or they are items which are remeasured on a periodic basis, merit separate
presentation to allow shareholders to understand better the elements of financial performance in the year, so as to facilitate comparison
with prior periods and to better assess trends in financial performance.
Adjusting items include, but are not limited to:
•
Unrealised mark-to-market changes in the remeasurement of open derivative contracts at each period end;
•
Impairments on assets, including other non-routine write-offs/write-downs where deemed material;
•
Fair value accounting arising in relation to business combinations. These transactions, and the subsequent remeasurements of
contingent assets and liabilities arising on acquisitions, including contingent consideration, do not relate to the principal activities and
day-to-day underlying business performance of the Group; and
•
Other items that arise from time to time that are reviewed by management and considered to require separate presentation.
In considering the tax on exceptional items, the Group applies the appropriate statutory tax rate to each item to calculate the relevant tax
charge on exceptional items.
Adjusted net profit attributable to EnQuest PLC shareholders (i)
2024
$’000
2023
$’000
Net profit/(loss) (A)
93,773
(30,833)
Adjustments – remeasurements and exceptional items:
Unrealised gains on derivative contracts (note 18)
267
24,631
Net impairment (charge)/reversal to oil and gas assets (note 9, note 10 and note 11)
(71,414)
(117,396)
Change in Magnus contingent consideration (notes 4(d))
(15,904)
(10,811)
Movement in other provisions (notes 4(b) and note 4(d))
–
(1,717)
Insurance income on Kraken shutdown and PM8/Seligi riser incident (see note 4(d))
1,663
4,127
Write-off of exploration costs (see note 4(d))
(183)
(5,640)
Drilling rig contract regret costs (see note 4(d))
(14,629)
–
Pre-tax remeasurements and exceptional items (B)
(100,200)
(85,184)
Tax on remeasurements and exceptional items (C)
58,760
25,138
Post-tax remeasurements and exceptional items (D = B + C)
(41,440)
(60,046)
Adjusted net profit attributable to EnQuest PLC shareholders (A – D)
135,213
29,213
(i) APM changed from business performance net profit to adjusted net profit, which have been calculated on a consistent basis
Adjusted EBITDA is a measure of profitability. It provides a metric to show earnings before the influence of accounting (e.g. depletion
and depreciation), financial deductions (e.g. borrowing interest) and other adjustments set out in the table below. For the Group, this
is a useful metric as a measure to evaluate the Group’s underlying operating performance and is a component of a covenant
measure under the Group’s reserve based lending (‘RBL’) facility. It is commonly used by stakeholders as a comparable metric of
core profitability and can be used as an indicator of cash flows available to pay down debt. Due to the adjustment made to reach
adjusted EBITDA, the Group notes the metric should not be used in isolation. The nearest equivalent measure on an IFRS basis is
profit/(loss) before tax and finance income/(costs).
Adjusted EBITDA
2024
$’000
2023
$’000
Reported profit from operations before tax and finance income/(costs)
311,528
397,373
Adjustments:
Unrealised gains on derivative contracts (note 18)
(267)
(24,631)
Net impairment charge/(reversal) to oil and gas assets (note 9, note 10 and note 11)
71,414
117,396
Change in Magnus contingent consideration (notes 4(d))
15,904
(10,811)
Insurance income on Kraken and PM8/Seligi riser incident (see note 4(d))
(1,663)
(4,127)
Write-off of exploration costs (see note 4(d))
183
5,640
Drilling rig contract regret costs (see note 4(d))
14,629
–
Depletion and depreciation (note 4(b) and note 4(c))
269,292
298,308
Inventory revaluation
(5,539)
(622)
Change in decommissioning and other provisions (note 4(b) and note 4(d))
7,078
34,481
Net foreign exchange (gain)/loss (note 4(d))
(9,975)
11,659
Adjusted EBITDA (E)
672,584
824,666
Total cash and available facilities is a measure of the Group’s liquidity at the end of the reporting period. The Group believes this is a useful
metric as it is an important reference point for the Group’s going concern and viability assessments, see pages 37 to 38.
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
Notes to the Company Financial Statements
continued
For the year ended 31 December 2024
188—189
Glossary – Non-GAAP Measures
Total cash and available facilities
2024
$’000
2023
$’000
Available cash
226,317
313,028
Restricted cash
53,922
544
Total cash and cash equivalents (F) (note 13)
280,239
313,572
Available credit facilities
(i)
248,356
518,794
Credit facility – drawn down
–
(290,000)
Letter of credit – utilised (note 17)
(54,100)
(43,545)
Available undrawn facility (G)
194,256
185,249
Total cash and available facilities (F + G)
474,495
498,821
(i)
Includes amounts available under the RBL: $176.4 million (2023: $306.2 million), letters of credit: $54.1 million (2023: $43.5 million), term loan: $nil (2023: $150.0 million) and vendor
loan facility providing capacity for refinancing the payment of existing invoices up to an amount of £23.7 million: $17.9 million available (2023: In the prior year, this includes $19.0
million in relation to a vendor loan facility which expired on 1 January 2024)
Net debt is a liquidity measure that shows how much debt a company has on its balance sheet compared to its cash and cash
equivalents. It is an important reference point for the Group’s going concern and viability assessments, see pages 37 to 38. The Group’s
definition of net debt, referred to as EnQuest net debt, excludes unamortised fees, accrued interest and the Group’s lease liabilities as the
Group’s focus is the management of cash borrowings and a lease is viewed as deferred capital investment.
EnQuest net debt
2024
$’000
2023
$’000
Loans and borrowings (note 17):
RBL facility
–
135,080
Term loan facility
–
146,367
SVT working capital facility
33,972
29,784
Bonds (note 17):
High yield bond
454,339
294,276
Retail bond
167,101
169,669
Accrued interest
9,445
–
Loans and borrowings (H)
664,857
463,945
Non-cash accounting adjustments (note 17):
Unamortised fees on loans and borrowings
–
8,553
Unamortised fees on bonds
10,661
10,724
Accrued interest
(9,445)
–
Non-cash accounting adjustments (I)
1,216
19,277
Debt (H + I) (J)
666,073
794,453
Less: Cash and cash equivalents (note 13) (F)
280,239
313,572
EnQuest net debt (J – F) (K)
385,834
480,881
The EnQuest net debt/adjusted EBITDA metric is a ratio that provides management and users of the Group’s consolidated financial
statements with an indication of the Group’s ability to settle its debt. This is a helpful metric to monitor the Group’s progress against its
strategic objective of maintaining balance sheet discipline.
EnQuest net debt/adjusted EBITDA
2024
$’000
2023
$’000
EnQuest net debt (K)
385,834
480,881
Adjusted EBITDA (E)
672,585
824,666
EnQuest net debt/adjusted EBITDA (K/E)
0.6
0.6
Cash capital expenditure (nearest equivalent measure on an IFRS basis is purchase of property, plant and equipment) monitors investing
activities on a cash basis, while cash decommissioning expense monitors the Group’s cash spend on decommissioning activities. The
Group provides guidance to the financial markets for both these metrics given the materiality of the work programme.
Cash capital and decommissioning expense
2024
$’000
2023
$’000
Reported net cash flows (used in)/from investing activities
(183,573)
(262,695)
Adjustments:
Purchase of other intangible assets
1,138
876
Payment of Magnus contingent consideration – Profit share
48,466
65,506
Payment of Golden Eagle contingent consideration – Acquisition costs
–
50,000
Proceeds from vendor financing facility receipt
(107,518)
–
Proceeds from Bressay farm-down
(1,263)
–
Interest received
(10,101)
(5,895)
Cash capital expenditure
(252,851)
(152,208)
Decommissioning expenditure
(60,544)
(58,911)
Cash capital and decommissioning expense
(313,395)
(211,119)
Adjusted free cash flow (‘FCF’) represents the cash a company generates, after accounting for cash outflows to support operations and
to maintain its capital assets. It excludes movements in loans and borrowings, net proceeds from share issues, the impact of acquisitions
and disposals and shareholder distributions. Currently, this metric is useful to management and users to assess the Group’s ability to
allocate capital across a range of activities – including investment shareholder distributions, transactions and debt management.
Adjusted free cash flow
2024
$’000
2023
$’000
Net cash flows from/(used in) operating activities
508,769
754,244
Adjustments:
Purchase of property, plant and equipment
(249,165)
(141,741)
Purchase of oil and gas and other intangible assets
(4,824)
(11,343)
Payment of Magnus contingent consideration
(48,466)
(65,506)
Estimated cash tax on disposal proceeds
(i)
50,000
–
Interest received
10,101
5,895
Payment of obligations under finance lease
(130,065)
(135,675)
Interest paid
(83,162)
(105,877)
Adjusted free cash flow
53,188
299,997
(i)
Estimated by reference to disposal proceeds of $141.4 million and the EPL tax rate of 35%
Average realised price is a measure of the revenue earned per barrel sold. The Group believes this is a useful metric for comparing
performance to the market and to give the user, both internally and externally, the ability to understand the drivers impacting the Group’s
revenue.
Revenue sales
2024
$’000
2023
$’000
Revenue from crude oil sales (note 4(a)) (L)
1,020,266
1,127,419
Revenue from gas and condensate sales (note 4(a))
164,647
338,973
Realised (losses)/gains on oil derivative contracts (note 4(a)) (M)
(12,907)
(11,264)
Barrels equivalent sales
2024
kboe
2023
kboe
Sales of crude oil (N)
12,554
13,714
Sales of gas and condensate
(i)
2,400
4,107
Total sales
14,954
17,821
(i)
Includes volumes related to onward sale of third-party gas purchases not required for injection activities at Magnus
Average realised prices
2024
$/Boe
2023
$/Boe
Average realised oil price, excluding hedging (L/N)
81.3
82.2
Average realised oil price, including hedging ((L + M)/N)
80.2
81.4
Strategic Report
Corporate Governance
Financial Statements
EnQuest PLC Annual Report and Accounts 2024
190—191
Glossary – Non-GAAP Measures
continued
Operating costs (‘opex’) is a measure of the Group’s cost management performance (reconciled to reported cost of sales, the nearest
equivalent measure on an IFRS basis). Opex is a key measure to monitor the Group’s alignment to its strategic pillars of financial discipline
and value enhancement and is required in order to calculate opex per barrel (see below).
Operating costs
2024
$’000
2023
$’000
Total cost of sales (note 4(b))
787,383
946,752
Adjustments:
Unrealised (losses)/gains on derivative contracts related to operating costs (note 4(b))
(2,823)
(3,832)
Movement in contractor dispute provision (note 4(d))
–
(1,818)
Depletion of oil and gas assets (note 4(b))
(263,252)
(292,199)
(Charge)/credit relating to the Group’s lifting position and inventory (note 4(b))
(2,172)
4,244
Other cost of operations
(i)
(note 4(b))
(136,318)
(305,919)
Operating costs
382,818
347,228
Less: realised (losses)/gains on derivative contracts (P) (note 4(b))
(4,735)
2,839
Operating costs directly attributable to production
378,083
350,067
Comprising of:
Production costs (Q) (note 4(b))
307,634
308,331
Tariff and transportation expenses (R) (note 4(b))
70,449
41,736
Operating costs directly attributable to production
378,083
350,067
(i)
Includes $125.7 million (2023: $294.0 million) of purchases and associated costs of third-party gas not required for injection activities at Magnus, which is sold on
Barrels equivalent produced
2024
kboe
2023
kboe
Total produced (working interest) (S)
(i)
14,909
15,992
(i)
Production 724 kboe associated with Seligi gas (2023: 220 kboe)
Unit opex is the operating expenditure per barrel of oil equivalent produced. This metric is useful as it is an industry standard metric
allowing comparability between oil and gas companies. Unit opex including hedging includes the effect of realised gains and losses on
derivatives related to foreign currency and emissions allowances. This is a useful measure for investors because it demonstrates how the
Group manages its risk to market price movements.
Unit opex
2024
$/Boe
2023
$/Boe
Production costs (Q/S)
20.6
19.3
Tariff and transportation expenses (R/S)
4.7
2.6
Total unit opex ((Q + R)/S)
25.3
21.9
Realised loss/(gain) on derivative contracts (P/S)
0.3
(0.2)
Total unit opex including hedging ((P + Q+ R)/S)
25.6
21.7
EnQuest PLC Annual Report and Accounts 2024
Glossary – Non-GAAP Measures
continued
Registered office
5–11 Regent Street
London
Corporate brokers
J.P. Morgan Cazenove
25 Bank Street
London
E14 5JP
BofA Securities
2 King Edward Street
London
EC1A 1HQ
Auditor
Deloitte LLP
2 New Street Square
London
EC4A 3BZ
Legal adviser
Ashurst LLP
London Fruit & Wool Exchange
1 Duval Square
London
E1 6PW
Corporate and financial public relations
Teneo
85 Fleet Street
London
EC4Y 1AE
EnQuest PLC shares are traded on the
London Stock Exchange using the code ‘ENQ’.
Registrar
MUFG Corporate Markets
10th Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
Financial calendar
27 May 2025: Annual General Meeting
September 2025: Half-year results
More information at
www.enquest.com
Company information
Forward-looking statements
This announcement may contain certain forward-looking statements with respect to EnQuest’s expectations and plans, strategy,
management’s objectives, future performance, production, reserves, costs, revenues and other trend information. These statements
and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that may occur in the future.
There are a number of factors which could cause actual results or developments to differ materially from those expressed or implied by
these forward-looking statements and forecasts. The statements have been made with reference to forecast price changes, economic
conditions and the current regulatory environment. Nothing in this announcement should be construed as a profit forecast. Past share
performance cannot be relied upon as a guide to future performance.
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CBP00019082504183028
London, England
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T +44 (0)20 7925 4900
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