Shore Capital sees more than 100% upside in Enquest PLC (AIM:ENQ) after the oil and gas producer struck a Malaysian acquisition that the broker said could transform the group’s scale and cash generation.

The broker reiterated its ‘Buy’ rating and 39p target price on the shares, compared with a current price of 19p, implying upside of 104%.

EnQuest is acquiring three asset packages from Petronas Carigali and E&P Malaysia Venture, comprising stakes in producing shallow-water oil and gas fields in Malaysia. The deal includes US$554 million of upfront cash consideration, US$189 million deferred over the following three years and up to US$90 million of contingent payments tied to the sanctioning of three specific development projects.

Shore Capital analyst James Hosie, in a note, highlighted that the transaction would move EnQuest above 100,000 barrels of oil equivalent per day of production, while shifting the balance of the business towards South East Asia and away from the UK North Sea.

“We expect the transaction to be immediately free cash flow accretive on completion (scheduled for end-FY26F), with EnQuest becoming a >100kboe/d producer,” the broker said.

The acquired portfolio brings net 2P reserves of 138 million barrels of oil equivalent, 47% of which is natural gas, and averaged around 57,000 barrels of oil equivalent per day in FY25.

Shore Capital highlighted the cost profile of the assets, with operating costs of around US$10 per barrel, compared with around US$26 per barrel across EnQuest’s existing portfolio.

The broker said the Malaysian assets generated around US$400 million of EBITDA in FY25 and estimated they could add US$200 million to US$250 million of operating cash flow after tax and additional borrowing costs in an FY25 commodity-price environment.

“Therefore, we anticipate the deal having a significant positive impact on Group free cash flow from FY27F onwards,” Shore Capital said.

The Shore Capital analyst added that the deal won’t end EnQuest’s appetite for UK consolidation, adding that it remains confident the company has the financial capacity to continue pursuing transformational acquisitions in the UK.