The chairman of Kistos has said it intends to take “full advantage” of the government’s new North Sea investment incentives as it looks to new opportunities in the basin.
In an operational and trading update ahead of its AGM on Thursday, chairman Andrew Austin said the company had “started the year strongly, delivering a solid operational performance and benefiting from high gas prices.”
He pointed to the recent measures included within the Chancellor’s Energy Profits Levy as a driver for the next phase of the company’s investments.
“We remain guided by our founding principle to play a role in the energy transition and are evaluating several attractive opportunities in the North Sea. We continue to benefit from high gas prices in the Netherlands, and we are assessing opportunities in the UK that would enable us to take full advantage of the investment allowances implicit in the recently introduced UK Energy Profits Levy,” Mr Austin added.
Alongside an increase in the headline rate of tax on oil firms, from 40% to 65%, the measures include a near-doubling of investment allowances to 80%. Combined with other measures, it allows oil and gas firms investing in North Sea projects to claim 91 pence back per £1 spent – a total relief rate of 91.25%.
Mr Austin said the company has almost €130 million (£111m) of cash at its disposal to fund these potential investments.
In its update, the company pointed to ongoing studies on discoveries in the Q block off the Netherlands, including at the Q11-B gas discovery and the Orion oil discovery, as well as exploration and infill drilling opportunities at the Q10-A gas field.
Kistos is also evaluating “several potential growth opportunities” that meet its investment criteria, it said.
Pro forma net production for the year to date up to the end of May 2022 was 12,000 barrels of oil equivalent per day.
The AIM-listed company was formed in November 2020 by Mr Austin, also the founder of RockRose Energy, after he sold that company to Viaro Energy last July for £247.5m.
Kistos struck a $125 million deal earlier this year to acquire 20% working interests in the producing Laggan, Tormore, Edradour, and Glenlivet gas fields from TotalEnergies.
The acquisition also included a 20% interest in the undeveloped Glendronach gas field, and a 25% interest in block 206/4a, which contains the Benriach prospect.
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