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(Alliance News) -Â Kistos PLC stepped into deep, unchartered waters on Monday, and shareholders showed some reluctance to follow.
The AIM listing confirmed it has bought a stake in West of Shetland fields from French oil major TotalEnergies SE. Kistos is an investor in low-carbon energy assets, and previously had bought Tulip Oil Netherlands BV, giving it gas fields in the Dutch North Sea.
Kistos was down 7.5% at 382.00 pence in London. The company has a market capitalisation of about GBP312 million. In Paris late Monday, TotalEnergies shares were down 1.8% at EUR50.33.
TotalEnergies separately confirmed it is selling to Kistos 20% working interests in the producing Laggan, Tormore, Edradour, and Glenlivet gas fields, located offshore the UK West of Shetland. The deal also includes a 20% interest in the undeveloped Glendronach gas field and a 25% interest in block 206/4a, which contains the 638 billion cubic foot Benriach prospect.
The transaction has a firm consideration of USD125 million as well as two contingent payments, the first one up to USD40 million and dependent on gas prices and the second one in the event Benriach is developed.
Kistos said it expects production from the assets to average around 6,000 barrels of oil equivalent per day net during 2022. It will finance the acquisition from internal resources. Back in late December, Kistos had confirmed it was participating in the assets sales process being run by TotalEnergies.
Completion is expected in the second quarter of 2022, and needs approval from UK authorities.
Following the sale, TotalEnergies E&P UK Ltd will hold a 40% operated interest in the Laggan, Tormore, Glenlivet, Edradour and Glendronach fields, including infield facilities and the onshore Shetland Gas Plant, alongside partners Kisto on 20%, Ineon E&P UK Ltd on 20% and RockRose UKCS15 on 20%.
"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," said Kistos Executive Chair Andrew Austin.
Commented Sam Wahab of broker SP Angel: "In light of sustained strength in commodity pricing, it comes as little surprise that Kistos is seeking to augment its Dutch portfolio with UK gas fields. On completion, the company will have a solid foothold in both the UK and the Netherlands from which it can continue to implement its growth strategy. The acquisition will serve to increase the company's 2P reserves by 6.2 million barrels of oil equivalent and effectively double end-2021 production rate to 13,500 barrels of oil equivalent per day on a proforma basis.
Kistos listed on AIM in London in November of 2020, raising GBP32 million to invest in "energy and the energy transition".
Back in October last year, the company hired Peter Mann as chief executive officer and Richard Slape as chief financial officer, with Founder Austin reverting to executive chair from interim CEO.
The appointments brought a team back together. Mann and Slape were CEO and CFO respectively of RockRose Energy PLC, a London-listed oil explorer that Austin had chaired until it was acquired by Viaro Energy Ltd last year.
By Lucy Heming;Â lucyheming@alliancenews.com; and Tom Waite; thomaslwaite@alliancenews.com
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