Kistos inks deal to acquire Mime Petroleum

Kistos announced a conditional agreement to acquire all outstanding shares of Mime Petroleum on Wednesday.

The AIM-traded firm said the move would add 24 million barrels of oil equivalent of 2P reserves, and 30 million equivalent barrels of 2C resources, increasing its total reserves and resources to around 80 million equivalent barrels.

It said the acquisition would also immediately add more than 2,000 barrels of oil equivalent per day of production, and boost group output to more than 15,000 barrels per day in 2025, once the Jotun FPSO was in production.

Management estimated that the enlarged group's production in 2023 would be between 8,500 and 10,500 equivalent barrels per day.

Through its subsidiary, Kistos said it had agreed to acquire 100% of the issued and to-be-issued share capital of Mime from the vendor for consideration of $1.00, plus the issue of up to six million warrants exercisable into new Kistos shares at a price of 385p each, representing a 31.4% premium.

It said 3.6 million of the warrants could be exercised between completion of the transaction and 18 April 2028, while the remaining balance would be exercisable from 1 June 2025 until 18 April 2028.

Mime had cash of $109m as at 31 March, and was expected to receive a tax refund of $80m in December.

On completion, Mime would repay $75m of its debt, and the enlarged group would assume the remaining $225m.

A payment to Mime's bondholders of up to $45m in 2025 would be contingent on certain operational milestones being achieved.

Completion of the transaction remained conditional on receiving customary regulatory approvals.

“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,” said executive chairman Andrew Austin.

“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.”

Austin said he expected Mime to be a “platform for growth on the NCS”, adding that he believed Mime's management team’s strategy and goals were aligned with Kistos.

“Critically, as well as providing us with visibility on a rising production profile over the next few years, principally through its oil, the hydrocarbons produced at Balder will also enable us to maintain our industry-leading scope one and scope two carbon dioxide emissions in the medium-term.”

At 1254 BST, shares in Kistos Holdings were up 13.24% at 331.8p.

Reporting by Josh White for Sharecast.com.