EnQuest PLC 

EnQuest PLC (LSE: ENQ) is an FTSE All-Share index-listed provider of energy transition solutions that explore new energy and further decarbonization opportunities. This Report covers the Key Recommendation Rationale, Conclusion, and Recommendation on the stock.

Key Recommendation Rationale – Sell at GBX 15.30

• Resistance near Current levels: ENQ’s stock price crossed the Resistance (R2) which was stated in the previous report on 19 February 2025 therefore, there can be a possibility of a decline from resistance levels. Considering the market conditions and the price action, it is prudent to exit the stock.
• Revenue decline of 20.6%: EnQuest's total revenue fell to $1,180.7 million in 2024 from $1,487.4 million in 2023, primarily due to lower commodity prices and a 7.0% drop in production from 43,812 Boepd to 40,736 Boepd.
• Fall in free cash flow and EBITDA: Adjusted free cash flow dropped 82.3% from $300.0 million in 2023 to $53.2 million in 2024, while adjusted EBITDA decreased 18.4% to $672.6 million, reflecting rising costs and reduced profitability.
• Rising operating costs and weaker margins: Average unit operating costs increased by 15.5% from $21.9/Boe in 2023 to $25.3/Boe 2024, driven by higher tariffs and transportation expenses at SVT, impacting cost efficiency and margins.
• Macroeconomic Risk: The market sentiments can remain weak in the short term due to the subdued consumer disposable income, geopolitical tensions, and political risks.

Valuation Methodology: Price/ Earnings Approach

Share Price Chart  

Conclusion

ENQ is expected to trade at a premium, supported by its recent dividend declaration, rising oil and gas demand, improved production efficiency of approximately 90% in FY24, new strategic acquisitions for exploration, and a favourable interest rate environment. For conducting the valuation, the following peers have been considered: Serica Energy PLC (LSE: SQZ), Jadestone Energy PLC (LSE: JSE), etc.

Given its current trading levels, the recent strategic investments and partnerships, market expansion and cost optimization strategies, along with a homecare acquisition in France, recent rally in the share price, relative valuation, and associated risks, it is prudent to exit the stock at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the Closing Market Price of GBX 15.30 as of 27 March 2025.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 27 March 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and/or technical analysis taking into consideration both short-term and long-term scenario.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Note 6: Dividend Yield may vary as per the stock price movement.