Kistos (LSE: KIST) has said it is “now undergoing a recycling of project economics” at the Greater Laggan Area due to changes in “the cost environment.”
Glendronach is the project in question, despite having previously passed all technical stage gates with the operator TotalEnergies and partners.
Previously Kistos has said that “adverse changes” in the fiscal environment within the UK meant that TotalEnergies’ Edradour West would go ahead, rather than the previously expected Glendronach.
Kistos has now said in its 2023 full year results that the Greater Laggan Area (GLA) partners are “progress options for the Edradour West development”.
The North Sea oil and gas firm added: “Both of these projects have so far exhibited accretive economics and would utilise the existing GLA subsea infrastructure and the SGP [Shetland Gas Plant] if they are approved for development.”
Kistos has claimed the Edradour West development will increase its 2P reserves by 3.8 million barrels of oil equivalent (MMboe).
TotalEnergies has been working on the Glendronach and Edradour West projects – the former being a 100 million-barrel discovery.
This comes amid rumours that the French Supermajor may be looking to vacate its position in the GLA project.
It was said in September last year that a sale of the assets by TotalEnergies would continue a trend of oil majors and private equity firms leaving the ageing North Sea.
However, the oil and gas major refused to comment on this speculation at the time.
Kistos added that the joint venture partners were also evaluating other infill drilling opportunities on the Laggan and Tormore fields.
Andrew Austin, executive chairman of Kistos, commented: “2023 saw significant changes to the operating environment with commodity prices sharply down on the previous year and an increasingly restrictive fiscal regime in the UK.”
Kistos is not the only UK oil and gas firm to hit out at the UK’s current fiscal policy.
The UK’s largest producer of oil and gas Harbour Energy, alongside others, has previously called out the Energy Prfits Levy which raises the headline rate of tax for oil firms to 75%.
Last week the Kistos chairman said oil and gas firms are being framed as the “devil incarnate” as general election rhetoric ramps up.
Mr Austin later added: “As a management team fully aligned with shareholders, we remain focussed on seeking value for our investments which complement our existing portfolio and offer value-accretive upside.”
The chairman said that his firm has made moves to diversify its portfolio as the UK oil and gas market has become a more challenging environment to invest in.
Last month Kistos acquired a 100% stake in EDF Energy’s gas storage company, resulting in the firm picking up two UK storage sites.
The deal was signed for a total consideration of £25 million, paid from existing cash resources.
The two sites Kistos will be taking ownership of are Hill Top Farm and Hole House Farm, both located in Cheshire.
On this, Mr Austin said: “The acquisition of UK onshore gas storage assets is a demonstration of the Group’s ability to identify opportunities outside of its offshore production portfolio and broaden its sources of revenue.”
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