EnQuest is the latest oil and gas producer to report a surge in profits following the steep rise in the price of hydrocarbons.
Earnings before interest, taxes, depreciation, and amortisation (EBITDA) jumped to $536.3million (£467million) in the first half of this year - a 55% rise on the same period in 2021.
Production was also ahead by 7.7% to almost 50,000 barrels of oil equivalent per day.
The company, whose office locations include Aberdeen, has operations in the UK North Sea and Malaysia.
Chief executive Amjad Bseisu commented: "Strong production, together with high commodity prices saw the group generate free cash flow totalling $332million (£289million) in the first half of 2022, driving a significant reduction in net debt to $880million (£766million)."
He said the business has a significant work programme to deliver in the second half of this year, but remained on track to deliver operational targets in the core business.
The CEO added: "We are also committed to supporting the UK's twin objectives of delivering energy security and decarbonisation.
New energy and decarbonisation opportunities
"Through our infrastructure and new energy business, we intend to repurpose and utilise existing assets to progress new energy and decarbonisation opportunities, including carbon capture and storage (CCS), electrification, and the production of green hydrogen.
"We remain focused on further strengthening our balance sheet, which will position us well to utilise our capability to unlock organic and inorganic growth opportunities - including the capital-light infrastructure and new energy business - and deliver returns to shareholders in the future."
EnQuest reported that the Sullom Voe Terminal (SVT) and its related infrastructure maintained safe and reliable performance with 100% export service availability during the first half of 2022.
The firm added that it continues to develop cost-effective and efficient plans to transform the terminal and prepare and repurpose the site to progress decarbonisation opportunities at scale, focused on CCS, electrification and green hydrogen.
It goes on: "The terminal site offers several unique competitive advantages, including a 1,000-acre industrial site with access to existing oil and gas pipeline infrastructure, a deep-water port and jetties, the highest wind capacity factor across Europe, and a highly-skilled workforce and local supply chain.
"In advancing its infrastructure and new energy business, the group will maintain its focus on capital discipline and, having secured exclusivity from the Shetland Islands Council to progress new energy opportunities on the site to achieve value for the council, the Shetland community and EnQuest, the group is well placed to deliver on its new-energy ambitions alongside strategic delivery partners."
On CCS, the company said the availability of the deep-water port and jetties and a pipeline network linked to several well-understood offshore reservoirs presented the opportunity to repurpose infrastructure to import and permanently store material quantities of CO2 from isolated emitters in the UK, Europe or further afield.
Carbon storage concept
It added: "EnQuest has conducted initial phases of feasibility and economic screening work in respect of this carbon storage concept. These studies have indicated the capability of the existing infrastructure, including the EnQuest-operated East of Shetland pipeline system, and storage sites to support a project of up to 10million tonnes per annum of CO2.
"In May 2022, the group made two CCS licence area nominations in locations which are both accessible from EnQuest's existing infrastructure. These were both accepted and EnQuest expects to make two applications in respect of these licence areas in the forthcoming North Sea Transition Authority UK offshore CCS licensing round, with results expected to be announced in the first quarter of 2023."
EnQuest also said it is assessing the potential to leverage its existing infrastructure and subsea projects expertise to facilitate the electrification of nearby offshore oil and gas assets and planned developments by way of a grid connection supplemented with renewable power.
"This would lead to significant emissions reductions for platforms which are expected to operate into the 2050s. In addition, the group is also currently assessing onshore wind potential and a new power solution for the Sullom Voe Terminal, which has the potential to significantly reduce the group's carbon footprint."
Looking at green hydrogen, the group is exploring the potential for repurposing areas of the existing SVT site and harnessing the wind resource around Shetland for the production of green hydrogen and derivatives at export scale to provide a low-carbon alternative fuel which could help to decarbonise a number of industries.