RE: “Material uncertainty” in financials make this a sell12 Nov 2024 18:18
Yeah I think this is a good summary from Malcy about the debt situation and AA seemed upbeat in the last interview. It's still going down every day though:D maybe we would be better off to just sell the company to some PE fund for £2 and job done.
I thought that there was plenty of upside in the share price. Following that, I had a couple of conversations with Chairman Andrew Austin, in which we discussed the fact that the market may be slightly missing the point by worrying about the net debt figure.
In the report, the net debt figure was announced as being $175m, with cash of $72m, and without any specific reference to the tax receivables within the balance sheet. The first of these receivables will arrive on 1st December, relates to 2023, and is as good as guaranteed given it is a rebate against 71.8% of that year’s tax loss in Norway. Surely, this is almost as good as cash in the bank.
Hence, net debt is, arguably, some $84m lower than the published figure and the amount Kistos receives in December will be closer to $90m as the amount owed attracts interest. Furthermore, continued capital expenditure on The Balder X project meant that Kistos built up an additional tax receivable of almost $40m in the first half of 2024.
This amount is payable by the Norwegian tax authorities in December 2025, but the actual figure will be larger given that, due to the delay to the sail away of the Jotun FPSO, the tax loss will continue to build in the second half of this year. In addition to the forthcoming cancellation of the hybrid bonds, this dynamic provides a further layer of protection for Kistos’ shareholders.
So, with an $84m (plus interest) tax receivable due this December, almost $40m already earmarked for receipt in December 2025, and $72m in the bank at mid-year, Kistos’ true net debt figure looks more like $50m. For a company with 2P reserves of 28 mmboe and production of over 8,000 boe/d (rising to ~15,000 boe/d in mid-2025), that looks very cheap indeed.
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