Kistos (LSE: KIST), the low carbon intensity energy producer pursuing a strategy to acquire assets with a role in energy transition.
Is pleased to announce that it has entered into a conditional asset purchase agreement and a conditional share purchase agreement with TotalEnergies S.E. (“TotalEnergies”) to acquire a 20% interest in the Greater Laggan Area (“GLA”) producing gas fields and associated infrastructure alongside various interests in certain other exploration licences, including a 25% interest in the Benriach prospect as detailed below (the “Acquisition”)
Details of the Acquisition:
· Kistos will acquire 20% working interests in the producing Laggan, Tormore, Edradour, and Glenlivet gas fields, located offshore the UK West of Shetland.
· In addition, the Acquisition includes a 20% interest in the undeveloped Glendronach gas field.
· The Acquisition also includes a 25% interest in block 206/4a, which contains the 638 Bcf (operator’s P50 resource estimate) Benriach prospect.
· Kistos expects production from the assets to be acquired to average approximately 6,000 boe/d (net) during 2022 with 2P reserves as at the effective date of the Acquisition of 6.2 MMboe (operator’s estimate).
· Emissions from GLA production operations are forecast by Kistos to be approximately 13 kg CO2e/boe in 2022, which is significantly below the North Sea average of 22 kg CO2e/boe (as estimated in the OGA’s “UKCS natural gas carbon footprint analysis” of 26th May 2020).
· The effective date of the Acquisition is 1st January 2022.
· The consideration payable in respect of the Acquisition comprises initial cash consideration of US$125 million (subject to customary closing adjustments), payable on completion, and further contingent cash payments as follows:
o In the event the average day-ahead gas price at the National Balancing Point exceeds 150p/therm in 2022, up to US$40 million will be payable in January 2023.
o Should Benriach be developed, Kistos will pay US$0.25 per MMBtu of net 2P reserves after first gas.
The Company will finance the Acquisition from internal resources. Completion is expected to occur in the second quarter of 2022 subject to customary regulatory and partner consents and the Company expects to make a further announcement at such point.
Further background to the GLA assets:
· The producing GLA gas fields are located in water depths of approximately 300m to 625m and are located up to 125km north-west of the Shetland Islands.
· Development approval for the GLA was originally granted in 2010 and first gas was achieved at the Laggan and Tormore fields during 2016. The Glenlivet and Edradour fields received development approval in 2015 and subsequently came on-stream in 2017.
· The Glendronach field was discovered in 2018 and it is anticipated that the development will utilise existing infrastructure
· Produced gas is routed through two dedicated flowlines which surface at the purpose-built Shetland Gas Plant (SGP), where further processing is carried out prior to export to the St. Fergus Gas Terminal in Scotland.
Andrew Austin, Executive Chairman of Kistos, commented:
“We are delighted to announce this transaction with TotalEnergies and look forward to working with them and the other partners in the Greater Laggan Area. The deal increases our gas production and complements Kistos’ strategy in the Netherlands.
“On completion, we will have a solid foothold in both the UK and the Netherlands from which we can continue to implement our growth strategy. We expect the acquisition to increase the Company’s 2P reserves by 6.2 MMboe and effectively double our end-2021 production rate to 13.5 kboe/d on a proforma basis.”
Enquiries:
Kistos plc
Andrew Austin, Executive Chairman
c/o Camarco Tel: 020 3757 4983
