March 27, 2013 / 9:54 AM / in 5 years

UPDATE 1-Enquest sees tax clarity stoking North Sea deals

LONDON, March 27 (Reuters) - Britain’s EnQuest, which specialises in extending the life of old oil fields, expects to snap up more assets in its core North Sea region following the government’s move to clarify tax relief on closing pipelines and platforms.

The government said earlier in March it would sign contracts with companies to provide certainty on tax relief linked to the cost of shutting down old North Sea operations.

Analysts think that should make dealmaking easier for small companies like EnQuest, for whom smaller reserves of oil and gas are more meaningful than for major international companies like BP, as they will now need less financial security to cover the ultimate costs of abandoning sites.

“We see we’ll be in prime position to take advantage of that increase in asset sales over the coming years,” Chief Financial Officer Jonathan Swinney told reporters on Wednesday.

“These are going to be late life fields where we can show our expertise.”

EnQuest specialises in extending the life of fields by drilling additional wells and using techniques to boost reserves and production at fields which have become too small to be of interest to oil majors.

With declining fields and modest recent discoveries, the British North Sea is increasingly the domain of small firms.

EnQuest, which last year announced plans to work outside Britain for the first time by buying a Malaysian company and applying for a licence to work in the Norwegian North Sea, said it continued to consider other overseas opportunities.

“South East Asia and Norway are the two focus areas. We’re also looking selectively in North Africa,” Chief Executive Amjad Bseisu said.

The firm, which invested $803 million in its projects in the North Sea in 2012, said its Alma/Galia development there was on track to start pumping oil in the fourth quarter of this year. It expects to submit a plan to develop the Kraken field, also in the North Sea, in the second quarter of this year.

Annual pretax profit rose 3.8 percent to $405.1 million, on production which dipped slightly, and was offset by a higher realised average oil price and a reduction in costs.

Shares in EnQuest, which was spun-out of oil engineering company Petrofac in 2010, were 0.2 percent lower in early trading.

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