Kistos acquires Mime Petroleum in $110m deal

The AIM-traded firm said the transaction marked its entry into the Norwegian continental shelf, and would significantly strengthen its reserve and production portfolio.

It said it added 24 million barrels of oil equivalent of proven and probable, or ‘2P’, reserves as estimated by the operator, and an additional 30 million equivalent barrels of contingent, or ‘2C’, resources.

That, Kistos said, brought total group reserves and resources to around 80 million barrels of oil equivalent.

The acquisition also contributed more than 2,000 barrels of oil equivalent per day of immediate production, with Kistos expecting group output to exceed 15,000 equivalent daily barrels by 2025, once the Jotun floating production, storage and offloading (FPSO) facility was operational.

Kistos said the acquisition’s terms remained unchanged from its initial announcement on 19 April, with adjusted consideration totalling $111m, excluding contingent amounts.

As part of the deal, Mime would repay $75m of its debt, and the enlarged Kistos Group would assume the remaining $225m.

Mime's bondholders could potentially receive up to $45m in 2025, subject to the achievement of specific operational milestones.

Taking into account the Mime debt being retained by Kistos or retired by Mime, the cash balances as at 31 March, and an expected tax refund in December, the overall transaction equated to about $111m.

Based on pro forma calculations on 31 March, excluding contingent amounts payable, Kistos estimated that the enlarged group would have net cash of €5m.

That included cash of €293m and outstanding Nordic bonds of €288m.

“Our entry into Norway signifies our commitment to securing sustainable growth opportunities across the North Sea Basin, and positions us as an influential independent producer across three jurisdictions,” said executive chairman Andrew Austin.

“Mime's assets give us visibility on a rising production profile over the next few years whilst enabling us to maintain our industry-leading scope one and scope two carbon dioxide emissions in the medium-term.”

Austin said the focus would now be on immediately integrating Mime into Kistos.

“We look forward to working with Mime's experienced management team and leveraging their valuable knowledge of the assets and basin to achieve our shared objectives for the group, while maintaining the responsible energy production at the heart of our operations.”

At 1416 BST, shares in Kistos Holdings were up 4.74% at 265p.

Reporting by Josh White for Sharecast.com.