Berenberg lowers target price on Kistos following Greater Laggan acquisition

(Sharecast News) - Analysts at Berenberg lowered their target price on exploration and production firm Kistos from 530.0p to 455.0p on Tuesday but said a recent accretive acquisition would provide the group with "material cash flow".
Kistos announced the acquisition of an interest in the Greater Laggan Area from TotalEnergies on Monday, a move Berenberg sees adding roughly 85% to pro-forma 2022 production and about 33% to the company's reserve base.

However, the German bank also said results of Kistos' Q11-B appraisal were also announced and came in "significantly below expectations", with the main reservoir water-wet, although it acknowledged there was "some encouragement" in two shallower horizons.

"The net effect of our changes is a 15% reduction in risked NAV to €494.0m, or 497.0p per share (from 583.0p per share). We continue to exclude the M10/M11 assets from our price target, which is now set at 455.0p (from 530.0p) - offering circa 20% upside from the current share price - and we retain our 'buy' rating," said the analysts.

"On our updated forecasts, the shares are trading on FY 2022 EV/EBITDA of 1.5x, EV/DACF of 2.2x and an FCF yield of 40% (or 12% once adjusting for the GLA consideration)."