Kistos looks to Norway as it sets out to acquire Mime Petroleum, citing “windfall taxes and a lack of fiscal certainty” for the lack of UK investment.
Commenting on the proposed acquisition, Andrew Austin, Kistos’ Executive Chairman, said: “After a period during which commodity price volatility and fiscal uncertainty has made it difficult to agree deals in the UK and the Netherlands, I am very pleased to be able to announce Kistos’ expansion into Norway.
“Kistos has evaluated several transactions in the UK and Dutch sectors, but the imposition of punitive windfall taxes and a lack of fiscal certainty have meant that both countries remain difficult places to commit capital and ensure continuity of shareholder returns.”
Kistos aims to buy all of Mime’s outstanding shares, as it sees its predicted production rates increasing to 80 million barrels of oil equivalent (MMboe).
The acquisition will adds over 2,000 barrels of oil equivalent per day (boe/d) to Kistos’ portfolio, meaning the firm will produce more than 15,000 boe/d in 2025, once the Jotun FPSO begins production.
Current estimates predict between 8,500 and 10,500boe/d throughout 2023.
Kistos says the consideration for the transaction is as follows: “US$1 plus the issue of up to 6 million warrants exercisable into new Kistos ordinary shares at a price of 385p each, which represents a premium of 31.4% based on the last trading date prior to this announcement of 293 pence on 18 April 2023.
“3.6 million of the warrants can be exercised between completion of the transaction and 18 April 2028. The balance will be exercisable from 1 June 2025 until 18 April 2028.”
Analyst Ashley Kelty writes: ” The deal adds a 10% WI in Balder and 7.4% WI in Ringhorne East – delivering c24mmboe of 2P reserves and 30mmboe of 2C resources.
“This implies an acquisition price of $4.63/2P boe – which is cheap when compared to the Balder operator Var Energi which trades at c$8/2P boe.”
Mr Kelty added: “This deal is transformational for Kistos (and very much akin to the accretive deals that RockRose made) as it delivers a material production uplift, alongside adding substantial reserves and future upside, whilst also opening the door to a new geography.”
Based in Oslo, Mime holds a 10% interest in the Balder joint venture, which comprises the Balder and Ringhorne fields, and a 7.4% stake in the Ringhorne East unit, all operated by Var Energi A.
Mr Austin added: “I expect Mime to be a platform for growth on the NCS and I believe Mime’s management team – whose strategy and goals are aligned with ours – can help us achieve that.
“Critically, as well as providing us with visibility on a rising production profile over the next few years, principally though it’s oil, the hydrocarbons produced at Balder will also enable us to maintain our industry-leading Scope 1 and Scope 2 CO2 emissions in the medium-term.”
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