TIDMKIST
RNS Number : 6308L
Kistos PLC
14 September 2021
14 September 2021
Kistos plc
("Kistos", the "Company" or the "Group")
Interim results for the 37 weeks to 30 June 2021
Kistos (LSE: KIST), the low carbon intensity gas producer
pursuing a strategy to acquire assets with a role in energy
transition, is pleased to provide its interim results for the
period to 30 June 2021.
The numbers referred to as "actual" in this announcement include
the results of Kistos plc from incorporation on 14(th) October 2020
and the results of Kistos NL1 and Kistos NL2 from acquisition on 20
May 2021. The "pro forma" numbers include the results of Kistos plc
from incorporation on 14(th) October 2020 and the results of Kistos
NL1 and Kistos NL2 as if they had been part of the Group from 1(st)
January 2021.
Highlights
Following the incorporation and listing on AIM of Kistos plc in
the final quarter of 2020, the Company completed the acquisition of
Tulip Oil Netherlands B.V. and its wholly owned subsidiary Tulip
Oil Netherlands Offshore B.V. (subsequently renamed Kistos NL1 B.V.
and Kistos NL2 B.V. respectively) for EUR223MM (comprising EUR140MM
plus an EUR87MM bond refinancing and other adjustments) in May
2021.
This acquisition brought 2P reserves of 19.7 MMboe plus 2C
resources of 99.1 MMboe. The Q10-A gas field, which is operated by
Kistos NL2 with a 60% working interest, produced at an average rate
of 1.42 MM sm(3) /d (gross), equivalent to 48 MMcf/d or 8.6 kboe/d,
in the six months to 30 June 2021.
Our scope 1 emissions of 0.09 kg CO(2) e/boe in 2020 are
industry leading. Kistos expects that position to be maintained
following the recent upgrade of wind turbines on the renewably
powered Q10-A platform during the period.
Kistos remains well-funded after issuing EUR150MM of Nordic
Bonds and raising over GBP100MM from equity investors since
incorporation. Cash balances on 30 June 2021 were EUR59.1MM. Given
this financial strength and in line with its strategy, the Group
continues to evaluate several business development opportunities in
the energy transition space.
Proforma unaudited period ended 30 June 2021
H1 2021 H1 2020 Change %
------------------ -------------- -------- -------- ---------
Production million sm(3) 155 190 -19%
Production 000 MWh 1,598 2,230 -28%
Revenue EUR'000 33,740 17,141 97%
Unit opex EUR/MWh 3.00 1.60 88%
Adjusted EBITDA EUR'000 29,243 12,415 136%
Average realised
gas price EUR/MWh 20.76 7.69 170%
------------------ -------------- -------- -------- ---------
1. Proforma figures are based on six months of Kistos NL1 and
Kistos NL2 in each half year period and 37 weeks of Kistos plc
since incorporation.
2. Non-IFRS measures. Refer to the alternative performance
measures definition within the glossary at the end of this
document.
3. Adjusted EBITDA is calculated on a business performance
basis. Refer to the alternative performance measures definition
within the glossary at the end of this document.
Outlook
Kistos is currently undertaking a work programme to enhance
production at the Q10-A field and appraise the Q11-B gas discovery
and the Vlieland light oil discovery. Borr Drilling's Prospector-1
jack-up drilling rig has been on location since mid-July and is
expected to remain on contract with Kistos until the end of
November.
As a result of this campaign, Kistos expects the Q10-A field to
exit 2021 with gross production of more than 2.0MM sm(3) /d (71
MMcf/d or 12.7 kboe/d). The appraisal drilling is designed to start
the process of converting approximately 100 MMboe (gross) of 2C
resources into 2P reserves. If successful, it could lead to a
further significant uplift in Kistos' production by the
mid-2020s.
We were pleased to report earlier this month that the initial
results of the appraisal of the Vlieland sandstone formation, which
was the first stage of the drilling campaign, were highly
encouraging. After encountering the target formation on prognosis
at a depth of 1,562 metres TVDss, an 825 metres horizontal section
was drilled by the Prospector-1. The Q10-A-04 A well was then flow
tested for 5 days between 26(th) and 31 August 2021.
During this time, a maximum stable rate of 3,200 barrels of oil
per day (bopd) was achieved. This was higher than anticipated and
the oil is of good quality with an API of 33 degrees. The
information obtained from the well, along with reservoir and
surface samples taken during the flow test, will be analysed as
Kistos prepares a field development plan for this project. Kistos
has previously estimated 2C resources for this accumulation of over
70 MMbbl (gross). This estimate was independently audited by
Sproule and will be refined following review of all the data.
Chairman's comment
"I am delighted to be able to report Kistos' maiden set of
interim results covering the period from incorporation to 30 June
2021, which included approximately six weeks of production from the
Q10-A field. I am also pleased to announce the successful
integration of the two companies acquired from Tulip Oil Holdings
into the wider Group.
After the success of the oil test from the Vlieland sandstone
formation, we are looking forward to sharing further results of the
current drilling campaign with stakeholders. In the meantime, the
Company continues to mature further opportunities within its
existing portfolio. This work is expected to lead to additional
drilling in the medium term. We are also evaluating an active
pipeline of business development opportunities.
On behalf of our shareholders, we are striving to build a
first-class energy transition business. We have taken great strides
in a short period of time, and we will continue to pursue rapid,
disciplined growth both organically and through acquisitions."
Richard Benmore, Interim Chairman
Enquiries:
Kistos plc
Andrew Austin c/o Camarco Tel: 0203 757 4983
Panmure Gordon
Nick Lovering / Atholl Tweedie Tel: 0207 886 2500
/ Ailsa MacMaster
Camarco
Billy Clegg / James Crothers Tel: 0203 757 4983
Notes to editors
Kistos plc was established to acquire and manage companies in
the energy sector engaging in the energy transition trend. The
Company has acquired Tulip Oil Netherlands B.V., which has a
portfolio of assets, including profitable, highly cash generative
natural gas production, plus appraisal and exploration
opportunities. The Company has 19.5 MMboe of 2P reserves and an
additional 99.1 MMboe of contingent resources.
Kistos is a low carbon intensity gas producer. The Q10-A gas
field in the Dutch North Sea (60% operated working interest) has
recorded a Scope 1 carbon emissions intensity of 13g CO(2) e/boe
since inception. This compares to an industry average of 22kg CO(2)
/boe for gas extracted from the UK continental shelf. The Q10-A
normally unmanned installation is located approximately 20 km from
the Dutch shore. It is powered sustainably via wind and solar power
and is remotely operated, limiting offshore visits, which are
conducted by boat.
https://kistosplc.com/
Financial Review
Unaudited results for the 37 weeks ending 30 June
30 June 2021(actual) 30 June 2021
(pro forma)(4)
-------------------------- -------------- --------------------- ----------------
Production million sm(3) 24 155
Production '000 MWh 248 1,598
Revenue EUR'000 6,638 33,740
Unit Opex(1) EUR/MWh 4.84 3.00
Adjusted EBITDA(2) EUR'000 5,203 29,243
(Loss)/profit before
tax EUR'000 (5,212) 2,625
Earnings per share EUR cents (10.4) n/a
Net cash from operations EUR'000 2,894 n/a
Average realised
gas price EUR/MWh (3) 26.40 20.76
Total cash EUR'000 59,146 59,146
-------------------------- -------------- --------------------- ----------------
Note The financial results are prepared in accordance with IFRS,
unless otherwise noted below:
1. Non -IFRS measures. Refer to the alternative performance
measures definition within the glossary at the end of this
document.
2. Adjusted EBITDA is calculated on a business performance
basis. Refer to the alternative performance measures definition
within the glossary at the end of this document.
3. Average realised gas prices exclude the impact of realised
and unrealised gain on commodity hedges
4. Pro forma information in respect of the enlarged Group is
based on six months of Kistos NL1 and Kistos NL2 and 37 weeks of
Kistos plc.
Production and revenue
Actual production on a working interest basis totalled 24 MM
sm(3) (0.8 kboe/d) in the first half of 2021. This reflects the
acquisition of Tulip Oil Netherlands ("TON") on 20 May 2021. Had
Kistos acquired TON on 1(st) January 2021, average production in
the first half of 2021 would have been 155 MM sm(3) or 0.86 MM
sm(3) /d (5.1 kboe/d).
The Group's average realised gas price from the date of
acquisition was EUR26.40/MWh and total revenue from gas sales was
EUR6.5MM. On a pro forma basis, these figures were EUR20.76/MWh and
EUR33.2MM. Revenue from condensate sales, for the period ending 30
June 2021 was EUR0.1MM or EUR0.5MM on a pro forma basis.
Costs
Operating expenses for the period following the acquisition of
TON was EUR1.2MM or EUR4.84 per MWh. The latter figure would have
been 38% lower or EUR3.00 per MWh if the acquisition of TONO had
completed on 1(st) January 2021. Operating expenses include certain
pre-FID costs relating to the proposed new export pipeline to
Ijmuiden. Excluding those costs, the underlying pro forma unit
operating expense for the first half was EUR2.63 per MWh while the
reported number would have been EUR3.00 per MWh. Because Q10-A did
not require compression or annual structural surveys in the very
early stages of its life, its underlying operating costs in the
first half of 2020 were lower than in the first half of 2021.
Adjusted EBITDA
EURMM 30 June 2021 (actual) 30 June 2021 (pro
forma)(1)
------------------------------- ---------------------- ------------------
Adjusted EBITDA 5,203 29,243
Depreciation and amortisation (2,267) (9,238)
Impairment - (7,471)
Transaction costs (2,864) (2,864)
Operating profit 72 9,670
------------------------------- ---------------------- ------------------
1. Pro forma information in respect of the enlarged Group is
based on 6 months of Kistos NL1 and Kistos NL2 and 37 weeks of
Kistos plc.
The Group reported adjusted EBITDA of EUR5.2MM or EUR20.98 per
MWh in the 37 weeks to 30 June 2021. On a pro forma basis, adjusted
EBITDA was of EUR29.2MM or EUR18.30 per MWh in the period. The
impairment of EUR7.47MM relates to amounts previously capitalised
for the A-04 well at the Q10-A field, which is being recompleted as
part of the Company's 2021 drilling campaign.
Profit / loss before tax
There was an actual operating profit of EUR0.1MM during the
period but a loss before tax of EUR5.2MM. This deficit reflected a
combination of interest charges relating to the EUR150MM of Nordic
Bonds issued by Kistos NL2 during the period plus a loss on
redemption of EUR3.5MM relating to an EUR87MM Nordic Bond
refinancing. On a pro forma basis, there was a EUR2.6MM pre-tax
profit for the period. This figure reflects the redemption loss and
interest charges on the new bonds as well as interest charges
relating to the EUR87MM bond prior to its redemption.
Financial position
EUR'000 30 June 2021 pro forma)
---------------------------------------------- ------------------------
Cash and cash equivalents at beginning
Net cash generated from operating activities 2,894
Net cash used in investing activities (100,733)
Net cash used in financing activities 156,985
Net increase/(decrease) in cash and
cash equivalents 59,146
Cash and cash equivalents on 30 June 59,146
---------------------------------------------- ------------------------
1. Pro forma information in respect of the enlarged Group is
based on 6 months of Kistos NL1 and Kistos NL2 and 37 weeks of
Kistos plc.
Before expenses, Kistos raised GBP102.1MM (EUR118.5m) from
equity investors and issued EUR150.0MM of Nordic Bonds during the
period. After paying EUR222.8MM (EUR140MM plus an EUR87MM bond
refinancing and other adjustments) for the Tulip Oil Acquisition
and other expenses, this led to the Company holding cash and cash
equivalents of EUR59.1MM on 30 June 2021.
During the first half of 2021, Kistos hedged 100,000 MWh per
month at a price of EUR25/MWh for the nine-month period from July
2021 to March 2022. Based on the prevailing gas price of EUR33/MWh,
this resulted in the creation of a EUR8.4MM hedge reserve at
mid-year.
Going concern
When assessing the going concern status of the Group, the
Directors have considered in particular its financial position,
including its significant balance of cash and cash equivalents. The
Directors have also considered the Group's commodity price
forecasts, expected production, operating cost profile, capital
expenditure, abandonment spend, and financing plans. The Directors
have taken into consideration the key risks that could impact the
prospects of the Group, with the most relevant risk being the gas
price outlook. Robust down-side sensitivity analyses have been
performed, assessing the impact of a significant deterioration in
the gas price outlook. These stress-tests all indicated results
which could be managed in the normal course of business. Based on
their assessment of the Group's prospects and viability, the
Directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for at least 12
months from the date of approval of the condensed consolidated
interim financial statements.
Review of Operations
Q10-A
Production from the Q10-A gas field (Kistos 60% operated working
interest) averaged 1.35 MMcm/d (48 MMcf/d or 8.6 kboe/d) in the
first half of 2021 from five producing wells. A planned upgrade of
the wind turbines on the renewably powered Q10-A platform was
undertaken during the period. The new configuration has resulted in
improved generation capacity due to the wider operating window of
the equipment. In turn, this has reduced diesel consumption by the
back-up generator and ensured that the platform continued its
excellent emissions track record.
Export route
Kistos' plans to build a 23 km gas export pipeline from Q10-A to
a new gas treatment facility (GTF) at IJmuiden continued to
progress in the first half of 2021. Visits to the proposed onshore
site were undertaken to verify and investigate that portion of the
route and the GTF concept selection was completed in April. In May,
an offshore geophysical survey of the proposed pipeline route was
undertaken using a hybridised vessel.
Other options continue to be evaluated ahead of a final
investment decision on the IJmuiden route. However, at the present
time, Kistos continues to believe that the Ijmuiden solution is
best placed to meet the Company's objectives. These include:
-- providing reliable infrastructure for the future of the
field
-- enhancing the Company's low carbon credentials
-- eliminating reliance on mature third-party infrastructure
-- reducing operating costs
On 1(st) September 2021, Kistos announced that it had entered
into exclusive negotiations to acquire Windpark Ferrum. This
comprises three wind turbines on the site in IJmuiden where Kistos
proposes to reroute gas production from Q10-A and build a
compression station adjacent to an existing facility. The wind farm
can produce up to 7MW of electricity and would enable Kistos to
supply a material proportion of the power required by the new
facility from a renewable source. This would have the effect of
materially reducing the overall carbon emissions of the new
plant.
Drilling campaign
Borr Drilling's Prospector-1 jack-up drilling rig arrived on
location at the Q10-A field in mid-July and commenced the Company's
2021 drilling campaign. This is scheduled to last approximately
four months and will include:
-- a flow test of the Vlieland light oil discovery, which is
located in a naturally fractured reservoir overlying the producing
Q10-A field. It is estimated to contain gross 2C resources of more
than 70 MMbbl.
-- a sidetrack the Q10-A-04 well, which is not currently
onstream, to a new location in the Slochteren formation. This is
the field's primary producing reservoir.
-- a re-perforation of the Q10-A-06 well to increase output.
-- an appraisal well on the Q11-B gas discovery, which is
estimated to contain 2C resources of over 170 Bcf or 30.8 MMboe
(gross).
The recent success of the Vlieland light oil test could lead to
over 70 MMbbl of gross 2C resources being converted to 2P reserves
and to a further significant uplift in Kistos' production by the
mid-2020s. Similarly, the forthcoming appraisal of the Q11-B gas
discovery could convert over 30 MMboe of 2C resources to 2P
reserves and result in the field coming onstream as early as 2023.
In the meantime, the work programme is expected to boost production
from the Q10-A field to more than 2.0 MMcm/d (71 MMcf/d or 12.7
kboe/d).
Principal Risks and Uncertainties
The Directors do not consider that the principal risks and
uncertainties have changed since the publication of the Admission
Document dated 20 April 2021. There are a number of potential risks
and uncertainties that could have a material impact on the Group's
performance over the remaining six months of the financial year and
could cause actual results to differ materially from expected and
historical results. A detailed explanation of the risks summarised
below can be found in the section headed "Risk Factors" in Part III
of the Admission Document dated 20 April 2021, which is available
at www.kistosplc.com.
Key headline risks relate to the following:
-- operational performance
-- production and revenues come from one eld
-- commodity prices
-- reserves additions, development and project delivery
-- fluctuations in exchange rates
-- credit
-- changes in environmental legislation
Our Environmental, Social and Governance Ambitions
Our work is always in transition. We constantly explore
opportunities for growth, adapting to support global sustainability
efforts and adding value for our shareholders.
In 2021, Kistos will carry out a thorough materiality
assessment, to identify the environmental, social and governance
(ESG) issues that are most important to the business, and to our
stakeholders. This exercise will enable us to develop a full
sustainability strategy, formed around key performance indicators
(KPIs) that align with the United Nations Sustainable Development
Goals (SDGs).
We already have a Code of Business Conduct in place, along with
policies to ensure consistency across the business for issues such
as anti-bribery and corruption, whistleblowing, major accident
prevention, health, environment, safety and security.
Taking a stewardship approach
Building on our existing health, safety, and responsible
business practices, we are broadening the scope of our stewardship
approach to include enhanced environmental considerations. For
example, our current Sustainability Policy outlines our dedication
to working safely and avoiding unnecessary depletion of natural
resources.
We are creating an environmentally aware work culture, working
with suppliers to promote sustainable practices, learning from and
reporting any incidents that occur. In alignment with the Paris
Accord, the European Union (EU) has set a target to reduce
greenhouse gas (GHG) emissions by 55% by 2030, aiming to reach net
zero by 2050. As we operate in the Netherlands, an EU member state,
this target may become legally binding.
In this era of transition to cleaner energy, many exploration,
production and infrastructure companies have been slow to respond
to sustainability challenges. The Kistos Directors fully embrace
the Net Zero 2050 agenda as an opportunity to demonstrate
leadership. Our forward-looking stewardship mindset, combined with
our industry experience, instils confidence that we can drive
sustainability without compromising business growth.
Making sustainability central to our projects
Since May 2021, we have been integrating sustainability
considerations across our operations and continuing to review and
improve upon our performance. We believe domestic offshore gas,
which has a much lower carbon footprint than coal supplies, has a
vital role to play as a transition fuel in the Netherlands.
We are well placed to become low carbon producers of natural gas
and we are committed to exploring opportunities to develop our
existing assets in ways that contribute to realizing a more
sustainable future.
For example, our Q10-A platform, located in an oil field 20km
offshore from the Netherlands, was designed to minimize GHG
emissions and will serve as a blueprint for future projects. It
provides power from south-facing solar panels and two wind
turbines, producing gas with minimal Scope 1 emissions.
To keep emissions as low as possible and exceed regulatory
requirements, Kistos has implemented the Lead Detection and Repair
(LDAR) program to identify and prevent methane leaks from its
operations. We plan to perform a full platform inspection every
year, surpassing the four-year inspection requirement. Access
points that are not measured through LDAR are assessed using a
Forward-Looking InfraRed (FLIR) camera to identify any leaks as
quickly as possible.
Cautionary statement about forward-looking statements
This half-year results announcement contains certain
forward-looking statements. All statements other than historical
facts are forward-looking statements. Examples of forward-looking
statements include those regarding the Group's strategy, plans,
objectives or future operating or financial performance, reserve
and resource estimates, commodity demand and trends in commodity
prices, growth opportunities, and any assumptions underlying or
relating to any of the foregoing. Words such as "intend", "aim",
"project", "anticipate", "estimate", "plan", "believe", "expect",
"may", "should", "will", "continue" and similar expressions
identify forward-looking statements. Forward-looking statements
involve known and unknown risks, uncertainties, assumptions and
other factors that are beyond the Group's control. Given these
risks, uncertainties and assumptions, actual results could differ
materially from any future results expressed or implied by these
forward-looking statements, which speak only as at the date of this
report. Important factors that could cause actual results to differ
from those in the forward-looking statements include: global
economic conditions, demand, supply and prices for oil, gas and
other long-term commodity price assumptions (as they materially
affect the timing and feasibility of future projects and
developments), trends in the oil and gas sector and conditions of
the international markets, the effect of currency exchange rates on
commodity prices and operating costs, the availability and costs
associated with production inputs and labour, operating or
technical difficulties in connection with production or development
activities, employee relations, litigation, and actions and
activities of governmental authorities, including changes in laws,
regulations or taxation. Except as required by applicable law, rule
or regulation, the Group does not undertake any obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise. Past
performance cannot be relied on as a guide to future
performance.
Financial Statements
Profit and loss account
EUR'000 Note 37 weeks ended 30 June
2021
------------------------------- ----- -----------------------
Revenue 2 6,638
Exploration expenses (58)
Production costs (1,500)
Depreciation and amortisation 9 (2,267)
Other operating expenses (2,740)
Total operating expenses (6,566)
Operating profit 72
Interest and other income 6 15
Interest expenses 6 (1,620)
Other financial expenses 6 (3,679)
Net finance costs (5,284)
(Loss)/profit before taxes (5,212)
Tax (charge)/credit 7 509
(Loss)/profit for the period (4,704)
Basic (loss)/earnings per
share (cents) 4 (10.4)
------------------------------- ----- -----------------------
EUR'000 37 weeks ended 30 June
2021
---------------------------------------- -----------------------
(Loss)/profit for the period (4,704)
Items that may be reclassified
to the income statement in subsequent
periods:
Foreign currency translation
reserve (151)
Cash flow hedge:
Gain/(loss) arising in the period (8,425)
Tax relating to components of
other comprehensive (expense)/income 4,213
Total comprehensive expense
for the period (9,067)
----------------------------------------- -----------------------
Balance Sheet
EUR'000 Note 30 June 2021
------------------------------------------ ----- -------------
ASSETS
Goodwill 5 19,100
Intangible exploration and evaluation
assets 5,8 67,500
Property, plant and equipment 9 136,686
Deferred tax assets 7 19,810
Total non-current assets 243,096
Inventories 780
Trade receivables 8,340
Other short-term receivables 464
Cash and cash equivalents 59,146
Total current assets 68,730
TOTAL ASSETS 311,826
EQUITY AND LIABILITIES
Equity
Share capital 9,627
Share premium 106,560
Hedge reserves(1) (8,425)
Foreign currency translation reserve(2) (151)
Retained earnings (4,704)
Total equity 102,907
Non-current liabilities
Abandonment provision 10 12,967
Borrowings 11 146,733
Deferred tax liability 29,523
Other non-current liabilities 33
Current liabilities
Trade and other payables 6,521
Abandonment provision 1,199
Other current financial liabilities 1,621
Other liabilities 10,322
Total current liabilities 19,663
Total liabilities 208,919
TOTAL EQUITY AND LIABILITIES 311,826
------------------------------------------ ----- -------------
1. The hedge reserve represents gains and losses on derivatives
classified as effective cash flow hedges
2. The foreign currency translation reserve represents exchange
gains and losses arising on translation of foreign currency
subsidiaries
Group statement of changes in equity
EUR'000 Share Share Retained Foreign Hedge Total
capital premium earnings currency reserve equity
translation
reserve
------------------------ --------- --------- ---------- ------------- --------- --------
Equity as of beginning - - - - - -
of the period
Profit/(loss) for the
period - - (4,704) - - (4,704)
Shares issued in the
period 9,627 108,915 - - - 118,542
Shares issued payment
charges - (2,355) - - - (2,355)
Movement in the period - - - (151) (8,425) (8,576)
------------------------ --------- --------- ---------- ------------- --------- --------
Equity as of 30 June
2021 9,627 106,560 (4,704) (151) (8,425) 102,907
------------------------ --------- --------- ---------- ------------- --------- --------
Cashflow Statement
EUR'000 Note 37 weeks ended
30 June 2021
------------------------------------------------ ----- ---------------
Cash flow from operating activities
Profit/(loss) for the period (4,704)
Tax charge/(credit) 7 (509)
Net finance costs 6 5,284
Depreciation and amortisation 9 2,267
(Increase)/decrease in trade and other
receivables (366)
Increase/(decrease) in trade, other
payables and provisions 1,087
(Increase)/decrease in inventories (165)
Net cash flow from operating activities 2,894
Cash flow from investment activities
Payments for acquisition of Kistos NL2
and NL1 (100,696)
Payments to acquire tangible fixed assets (37)
Net cash flow from investment activities (100,733)
Cash flow from financing activities
Proceeds from bond issue 60,000
Proceeds from share issue 102,442
Repayment of long-term payables (16)
Costs incurred for share issue (2,356)
Costs incurred in respect of bond refinancing (3,069)
Other finance charges (net) (16)
Interest paid -
Net cash flow from financing activities 156,985
Increase/(decrease) in cash and cash
equivalents 59,146
Cash and cash equivalents at beginning -
of the period
Cash and cash equivalents at 31 December 59,146
------------------------------------------------ ----- ---------------
Notes to the financial statements (unaudited)
Note 1a: General information
The condensed financial statements for the six-month period
ended 30 June 2021 have been prepared in accordance with
International Accounting Standard (IAS) 34 Interim Financial
Reporting and the requirements of the Disclosure and Transparency
Rules (DTR) of the Financial Conduct Authority (FCA) in the United
Kingdom as applicable to interim financial reporting. The Condensed
financial statements represent a 'condensed set of financial
statements' as referred to in the DTR issued by the FCA.
Accordingly, they do not include all the information required for a
full annual financial report. The Condensed financial statements
are unaudited and do not constitute statutory accounts as defined
in section 434 of the Companies Act 2006.
These interim financial statements for Kistos plc are the first
interim financial statements of the Company and Group following
incorporation on 14 October 2020. The initial period for Kistos plc
covers the 37 weeks ended 30 June 2021. On 20 May 2021, Kistos plc
completed the acquisition of Tulip Oil Netherlands B.V. (now called
Kistos NL1 BV) and its wholly owned subsidiary Tulip Oil
Netherlands Offshore B.V. (now called Kistos NL2). The financial
results include the results of Kistos NL1 and Kistos NL2 from this
date onwards. Further details of the acquisition are included in
note 5.
These unaudited interim financial statements were authorised for
issue by Kistos plc's ("Kistos") Board of Directors on 13 September
2021.
Note 1b: Accounting principles
The accounting principles used for this interim report are
consistent with the principles used in the Kistos NL2 B.V. annual
financial statements as at 31 December 2020.
In preparing these unaudited interim financial statements,
management has made judgements, estimates and assumptions
concerning the future that affect the application of accounting
policies and the reported amounts of assets and liabilities, income
and expense. Different estimates, assumptions and judgements could
significantly affect the information reported, and actual results
may differ from the amounts included in these financial statements
and notes.
Note 2: Segment analysis
EUR'000 Netherlands 37 weeks ended 30 June
2021
-------------------- --------------- -----------------------
Sale of crude
Revenue by product oil 101
Sale of gas 6,537
Revenue 6,638
Adjusted EBITDA 5,203
Production (gas) million sm(3) 24
000 MWh 248
------------------------------------ -----------------------
Note 3: Reconciliation of adjusted EBITDA to operating
profit
Actual unaudited 37 weeks ended 30 June 2021
EUR'000 37 weeks ended
30 June 2021
--------------------------------------- ---------------
Adjusted EBITDA 5,204
Depreciation and amortisation expense (2,267)
Impairment -
Transaction costs (2,864)
Operating profit 72
---------------------------------------- ---------------
Proforma unaudited 6 months ended 30 June 2021
EUR'000 6 months ended
30 June 2021
--------------------------------------- ---------------
Adjusted EBITDA 29,243
Depreciation and amortisation expense (9,238)
Impairment (7,471)
Transaction costs (2,864)
Operating profit 9,670
---------------------------------------- ---------------
The impairment of EUR7.47MM relates to amounts previously
capitalised for the A-04 well at the Q10-A field, which is being
recompleted as part of the Company's 2021 drilling campaign.
Note 4: (Loss)/earnings per share
The calculation of basic (loss)/earnings per share is based on
the loss for the period after taxation attributable to equity
holders of the parent of EUR4.7MM and a weighted average number of
shares in issue of 45.4MM.
Note 5: Acquisition
On 20 May 2021, Kistos plc completed the 100% acquisition of
Tulip Oil Netherlands B.V. (now called Kistos NL1 BV) and its
wholly owned subsidiary Tulip Oil Netherlands Offshore B.V. (now
called Kistos NL2) for EUR140MM.
The transaction assets constitute a business and the acquisition
has been accounted for using the acquisition method, in accordance
with IFRS3 business combinations. The consolidated financial
statements include the fair value of the identifiable assets and
liabilities as at the acquisition date and the results of Kistos
NL1 and Kistos NL2 from 21 May 2021 till 30 June 2021.
EUR'000 Provisional
fair value
------------------------------------ -------------
Deferred tax assets 19,477
Cash and cash equivalents 23,529
Trade and other receivables 8,602
Inventory 615
Property, plant and equipment 138,781
Exploration and evaluation assets 67,500
Trade and other payables (4,500)
Provisions (17,710)
Deferred tax liability (30,000)
Borrowings (85,419)
Net assets acquired 120,875
Total consideration paid 139,975
Goodwill 19,100
------------------------------------- -------------
The table above shows management's assessment of the provisional
calculated fair values. As the date of the acquisition is close to
the reporting date, management's assessment of the provisional fair
values is ongoing. Any adjustments made to the provisional
assessment of fair values within 12 months will result in the fair
values being revised. Any adjustments made beyond 12 months will be
recognised in the income statement as a change in estimate.
EUR'000 Cash Non-cash Total
---------------------------------- --------- ---------- --------
Cash 60,000 - 60,000
Cash raised through additional
borrowings 60,000 - 60,000
Surplus cash extraction 5,108 - 5,108
Other SPA adjustments (883) - (883)
Shares in Kistos plc - 15,750 15,750
Total consideration transferred 124,225 15,750 139,975
Cash held in Kistos NL2 (23,529)
Cash outflow on acquisition 100,696
----------------------------------- --------- ---------- --------
Note 6: Net finance costs
EUR'000 37 weeks ended 30 June 2021
-------------------------------- ----------------------------
Interest income -
Other financial income (15)
Total financial income (15)
Interest expenses 1,619
Other interest charges 1
Total interest expenses 1,620
Loss on redemption 3,528
Unwinding of bond discount -
Accretion expenses 8
Amortised bond costs 143
Total other financial expenses 151
Net finance costs 5,284
-------------------------------- ----------------------------
Note 7: Taxes
Deferred tax assets of EUR19.8MM at the end of June 2021 mainly
comprise State Profit Share (SPS) losses in Kistos NL2.
The tax losses are made up of SPS losses. SPS losses can be
carried forward indefinitely. Provisions relate to temporary
differences on abandonment provisions and other relates to
temporary differences on abandonment fixed assets and other
provisions/liabilities.
The deferred tax liability of EUR29.5MM at the end of June 2021
arises on the fair value step-up recognised on the acquisition of
Kistos NL1 BV and Kistos NL2 BV.
Note 8: Intangible exploration and evaluation assets
Exploration and evaluation intangible assets of EUR67.5MM
relates to the step-up on assets acquired following the acquisition
of Kistos NL2 BV.
The assets relate principally to Q11B, Q10 Gamma and Q10-B Gas
in the Netherlands.
Note 9: Property, plant, and equipment
EUR'000 Assets under Production Fixtures Total
construction and wells & fittings
------------------------------ -------------- ----------- ------------ --------
Cost at beginning of the - - - -
period
Additions 35 121 16 172
Acquisition of Kistos NL2 5,796 132,844 141 138,781
Cost on 30 June 2021 5,831 132,965 157 138,953
Depreciation at beginning - - - -
of the period
Depreciation for the period - (2,247) (20) (2,267)
Impairment - (2,247) (20) (2,267)
Depreciation on 30 June 2021
Net book value at beginning - - - -
of the period
Net book value on 30 June
2021 5,831 130,718 136 136,686
------------------------------ -------------- ----------- ------------ --------
Impairment tests of individual cash-generating units are
performed when impairment triggers are identified. Kistos plc and
its subsidiaries have taken measures in response to the COVID-19
outbreak, including provisions for business continuity and a
reduction in expenditure levels. Given the COVID-19 situation the
Q10-A asset has been retested for impairment. No impairment has
been identified.
Note 10: Provision for abandonment liabilities
30 June 2021
Provisions as of beginning of the period -
Accretion expense 8
Additions 14,158
Change in estimates and incurred liabilities -
Total abandonment provision at period end 14,166
Analysis of the abandonment provision to short-term
and long-term liabilities
Short-term 1,199
Long-term 12,967
Total abandonment provision 14,166
----------------------------------------------------- -------------
Following clarifications of the proposed legislative changes
regarding abandonment requirements, the cost to abandon is now
estimated based on cleaning and leaving the pipeline between Q10-A
and P15 in place. Abandonment provisions are determined using an
inflation rate of 1.0% (2020: 1.0%) and a discount rate of 0.5%
(2020: 0.5%) in line with publicly available economic
forecasts.
Note 11: Borrowings
EUR'000 30 June 2021
---------------------------------- -------------
9.15% Senior secured bond EUR60m
due 2026 60,000
8.75% Senior secured bond EUR90m
due 2024 90,398
Bond issue costs (3,726)
Total borrowings 146,672
---------------------------------- -------------
During the period, Kistos NL2 refinanced an existing EUR87MM
bond with a new EUR90MM bond that has a coupon of 8.75% per annum
and a maturity date of November 2024. An additional EUR60MM bond,
with a coupon of 9.15% and a maturity date of May 2026, was issued
to Tulip Oil Holdings in conjunction with the acquisition of Kistos
NL2 by Kistos plc. The refinancing incurred a loss on redemption of
EUR3.5MM disclosed under finance charges.
Included under borrowings in the balance sheet are also other
ROU liabilities of EUR61K.
Glossary
2C resources best estimate of contingent resources
2P reserves the sum of proved and probable reserves, denotes
the best estimate scenario of reserves
Adjusted EBITDA The Board uses Adjusted EBITDA as a measure to
assess the performance of the Group. This measure
excludes the effects of significant items of
income and expenditure which may have an impact
on the quality of earnings such as reversal of
provisions and impairments when the impairment
is the result of an isolated non-recurring event.
Average realised calculated as revenue divided by sales production
oil/gas price for the period. Sales production for the period
may be different from production for the period.
bbls barrels of oil
boe barrels of oil equivalent
bopd barrels of oil per day
Earnings per calculated as profit for the financial period
share divided by weighted average number of shares
for the period
MMbbl million barrels of oil
MMboe Million barrels of oil equivalent
MM sm(3) /d millions of normal cubic metres per day
TVDss true vertical depth sub-sea
Unit opex calculated as production costs divided by production.
----------------- ------------------------------------------------------
Dr Richard Benmore, Interim Chairman of Kistos with a Bachelors,
Masters, and PhD in Geosciences and who has been involved in the
energy industry for more than 37 years, has read and approved the
disclosure in this regulatory announcement.
The Company's internal estimates of resources contained in this
announcement were prepared in accordance with the Petroleum
Resource Management System guidelines endorsed by the Society of
Petroleum Engineers, World Petroleum Congress, American Association
of Petroleum Geologists and Society of Petroleum Evaluation
Engineers.
The information contained within this announcement is considered
to be inside information prior to its release, for the purposes of
Article 7 of Regulation (EU) No 596/2014 (as it forms part of
retained EU law as defined in the European Union (Withdrawal) Act
2018).
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END
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