Kistos completes acquisition of Greater Laggan Area interest

Gas producer Kistos completed the acquisition of a 20% interest in the Greater Laggan Area (GLA) producing gas fields and associated infrastructure on Monday, from TotalEnergies.

The AIM-traded firm said the acquisition also included various interests in other exploration licences, including a 25% interest in the Benriach prospect, with the effective date of the acquisition being 1 January.

It said completion marked its entry into the UK Continental Shelf (UKCS), adding around a net 6,000 barrels of oil equivalent per day to its production in 2022, with 2P reserves increasing by 6.2 million barrels of oil equivalent.

The purchase “substantially increased” Kistos' total production base to about 12,000 barrels of oil equivalent per day.

Kistos said the acquisition included a 20% working interest in the producing Laggan, Tormore, Edradour, and Glenlivet gas fields, located offshore in the West of Shetland.

The acquisition included a 20% interest in the undeveloped Glendronach gas field, which was discovered in 2018 and was expected to use existing infrastructure, with a final investment decision anticipated later in the year.

It also included a 25% interest in block 206/4a, which contains the 638 billion cubic feet Benriach prospect.

Emissions from GLA production operations were forecast by Kistos to be about 13 kilograms of carbon dioxide per barrel of oil equivalent in 2022, which was “significantly below” the North Sea average of 22 kilograms per barrel.

Glendronach would be developed via a single production well, with the net cost of the project estimated to be about £20m, and Kistos' share of that to be subject to the super deduction in the UK's Energy Profits Levy.

“We look forward to working with TotalEnergies and our partners within the GLA,” said executive chairman Andrew Austin.

“The addition of the GLA interest to our portfolio is an important step towards expanding and diversifying our producing asset base in one of the largest gas hubs in the UK.”

In addition to the “immediate significant increase” in the company’s daily production, Austin said the assets also offered investors “significant upside potential” from the Glendronach development project and the “highly prospective” Benriach exploration target.

“Progression of these two projects is expected to meet the investment criteria for the UK's recently implemented Energy Profits Levy.”

At 1349 BST, shares in Kistos were up 0.59% at 462.7p.

Reporting by Josh White at Sharecast.com.