LONDON (ShareCast) - (Sharecast News) - Energy company Kistos has entered into a conditional asset purchase agreement and a conditional share purchase agreement with TotalEnergies to acquire a 20% interest in the Greater Laggan Area (GLA) producing gas fields and associated infrastructure, it announced on Monday.
The AIM-traded firm said the acquisition also included various interests in other exploration licences, including a 25% interest in the Benriach prospect.

It said it would acquire 20% working interests in the producing Laggan, Tormore, Edradour, and Glenlivet gas fields, located offshore the UK West of Shetland.

In addition, the acquisition included a 20% interest in the undeveloped Glendronach gas field, and a 25% interest in block 206/4a, which contains the 638 billion cubic feet Benriach prospect.

Kistos said it expected production from the assets to average around a net 6,000 barrels of oil equivalent per day during 2022, with 2P reserves as at the effective date of the acquisition of 6.2 million barrels of oil equivalent per day.

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

The effective date of the acquisition would be 1 January 2022, and the consideration payable would consist of initial cash of $125m payable on completion, and further contingent cash payments.

In the event the average day-ahead gas price at the National Balancing Point exceeded 150p per therm in 2022, up to $40m would be payable in January 2023, and should Benriach be developed, Kistos would pay 25 US cents per million British thermal units of net 2P reserves after first gas.

The company said it would finance the acquisition from its internal resources, with completion expected in the second quarter subject to customary regulatory and partner consents.

"We are delighted to announce this transaction with TotalEnergies and look forward to working with them and the other partners in the Greater Laggan Area," said executive chairman Andrew Austin.

"The deal increases our gas production and complements Kistos' strategy in the Netherlands."

Austin said that on completion, the company would have a "solid foothold" in both the UK and the Netherlands from which it could implement its growth strategy.

"We expect the acquisition to increase the company's 2P reserves by 6.2 million barrels of oil equivalent, and effectively double our end-2021 production rate to 13,500 barrels equivalent per day on a proforma basis."

At 1101 GMT, shares in Kistos were down 6.57% at 385.88p.

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