Kistos reports progress in UK, the Netherlands

Oil and gas producer Kistos updated the market on its drilling activities in the Netherlands and the United Kingdom on Wednesday.

The AIM-traded firm said that in the UK, it had spudded the Benriach exploration well on block 206/05c, located West of Shetland and operated by TotalEnergies E&P UK.

It said the Transocean Barents rig estimated that the well was targeting P50 prospective resources of 638 billion cubic feet of gas, with 160 billion cubic feet, or 28 million barrels of oil equivalent, net to Kistos.

The well was expected to complete in the third quarter, with a dry hole post-tax cost net to Kistos forecast to be around £2.5m.

That was due to Kistos' tax-paying position, and enhanced investment allowances from the energy profits levy.

Meanwhile, Kistos' drilling activities in the Netherlands had been completed, with the Valaris 123 rig, which arrived on location at the Q10-A gas field in November, recently departing after safely completing its work programme.

The results of the campaign were said to have been mixed, primarily due to mechanical issues arising from utilising the existing well stock rather than reservoir performance issues.

Kistos said its technical team, with the help of external consultants, was currently undertaking a detailed evaluation of the results and future production enhancement options.

Looking ahead, Kistos said it was considering future work programmes, which could include the drilling of further Zechstein clastics wells in 2024 in combination with development drilling at the Orion oil field.

Engineering design work had been completed to allow the installation of two more risers on the platform, which would enable it to host additional wells.

The Orion field was currently progressing through the concept select phase, which Kistos was undertaking with the assistance of Rockflow Resources.

“We are excited that the Benriach well is underway,” said executive chairman Andrew Austin.

“It is an important milestone for the company with the potential to add significant reserves.

“I look forward to updating stakeholders with the results of the well in due course.”

Austin also noted the safe completion, under “difficult weather conditions”, of the Netherlands operational work programme.

“The process of fully evaluating the results of the campaign is ongoing, and will inform the planning of future work programmes, including the potential operational synergies with the Orion oil field development.”

At 1157 BST, shares in Kistos Holdings were down 4.41% at 292.5p.

Reporting by Josh White for Sharecast.com.