Kistos (LSE: KIST), the low carbon intensity gas producer pursuing a strategy to acquire assets with a role in energy transition, is pleased to update the market on performance and operations.
· Benriach well now sanctioned, and rig contract signed. Drilling to commence in Q2 2023
· Cash of €211MM as of 31/12/22
· Gross debt reduced to €82MM (from €150MM) through repurchase of €68MM of bonds in the market, resulting in net cash position of €129MM as of 31/12/22
· Pro-forma production for the full year to 31/12/22 was 10,700 boe/d from the Greater Laggan Area (GLA) and Q10-A
· 2022 average realised gas price €93/MWh (~$175/boe)
· Opex was ~20% below guidance at ~€5.50/MWh(~$10/boe)
Greater Laggan Area
· The Benriach well, operated by our partner Total Energies, has been confirmed to be drilled in 2023, starting in Q2. A contract has been signed for a rig by the Joint Venture partners to carry out the drilling of this well. This well is targeting recoverable resource of 638bcf (110MMBoe) gross with Kistos holding a 25% stake. The well is forecasted to cost £16.3MM net to Kistos (£2.4MM post tax).
· Since Kistos completed the acquisition of a 20% working interest in the GLA in July 2022, the asset has continued to perform well. On a pro forma basis, average production for the year was 6,000 boe/d net to Kistos and uptime was more than 95% (excluding planned maintenance).
· The decision on Glendronach Field Development will now be taken later in 2023 to allow further technical reviews to be undertaken with the aim of reducing costs.
· The Q10 area continues to enjoy good up time, and export through the P15 platform has also been more reliable. Given the variable productivity of the reservoir means that we will continue to intervene regularly to maximise production.
· A programme of side-tracks and stimulations is being implemented.
· The Valaris 123 rig that arrived at the field in December 2022 is undertaking a work programme that is due to complete during Q1 2023 and includes the following:
o Sidetrack of the A01 well in the Slochteren formation
o Stimulation of the A04 well in the Clastics
o Installation of velocity strings on A05 and A06 wells
· Further clastics wells are being considered over the next 18 months
· Following the successful drilling and flow testing of an appraisal well in 2021, the Orion oil field development has moved from the concept assess phase to the concept select phase. This development would not be subject to the ‘windfall tax’ of Cijns due to it being oil not gas.
· Following the successful restructuring of the group under Kistos Holdings plc, it is now in the position to look to utilise this structure for more flexible financing and distributions, both options currently being reviewed by the Board.
· The scale and the manner of the tax changes in the Netherlands (Cjins and EU Solidarity tax) and in the UK (Energy Profits Levy (EPL)), has made investment decisions more challenging for the Board.
· Kistos continues to evaluate potential acquisition opportunities the changes have created.
· The Company is actively evaluating opportunities outside of the UK and Dutch jurisdictions.
Commenting, Andrew Austin, Kistos’ Executive Chairman, said:
“Kistos has generated substantial value for shareholders through 2022 and will strive to continue to do so, following what can only be described as a turbulent year. The environment we have been investing in has significantly changed through the implementation of EPL and Cijns. These aggressive tax regimes that governments put in place are to the detriment of Europe’s future energy security. However, while they provide further challenges for the independent oil and gas companies to generate shareholder value, this also creates opportunities and Kistos is well placed to take advantage of these as and when they arise.
Kistos expects to continue to invest in its existing asset portfolio to maximise recovery at these high commodity prices and utilise the EPL investment allowance where possible. While we continue to actively look for value accretive acquisitions in the North Sea and Europe, the asymmetry created by these tax regimes makes this challenging.
If we cannot identify worthwhile transactions to pursue, we will consider returning cash to shareholders during this year.”
via Hawthorn Advisors
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