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EnQuest strikes $80 million oil prepayment deal with Mercuria

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EnQuest strikes $80 million oil prepayment deal with Mercuria

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(Reuters) – Oil producer EnQuest <ENQ.L> has struck an $80 million (£60.55 million) prepayment deal with trading house Mercuria for oil deliveries from a field in Malaysia, boosting the company’s liquidity that has suffered amid weak prices and a North Sea project delay. EnQuest has also announced a $37.25 million refinancing agreement with Castleton Commodities Merchant Asia to replace a credit facility held with Development Bank of Singapore in relation to the same field, the Tanjong Baram oilfield offshore Malaysia. The largely North-Sea focussed oil producer reported a sharp decline in half-year earnings last month due to weaker production and a delay in the start-up of the Kraken field in the North Sea. Debt had risen to nearly $2 billion by the end of June. “This is part of the ongoing programme of prudent measures to improve liquidity,” the company said about deals announced on Thursday which will boost liquidity by more than $100 million. The prepayment deal with Mercuria ties EnQuest to delivering 1.8 million barrels over 18 months in order to repay the loan in equal instalments. Shares in EnQuest were down nearly 3 percent by 0903 GMT, with one analyst saying the deals highlighted the company’s precarious funding situation, though some also saw positives. “Today’s $100 million injection will buy EnQuest valuable breathing space, for now at least,” said analysts at Mirabaud Securities. EnQuest, which specialises in applying new technologies and stricter spending programmes to squeezing more out of old fields, has turned to innovative dealmaking to weather the weak oil price environment. Earlier this year, it bought a 25 percent stake in BP’s <BP.L> Magnus oil field and surrounding assets in the North Sea, an acquisition it financed through future returns.

(Reporting by Karolin Schaps; Editing by David Holmes)
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