RockRose follow-up Kistos PLC strikes €220mln deal for lower carbon gas operation

() has struck a deal to acquire a low-carbon footprint gas operation in the Dutch North Sea and a portfolio of other discoveries in a deal worth €220mln (£188mln).

It has agreed to acquire the Tulip Oil Netherlands BV (TON) subsidiary from Tulip Oil Holding, picking up the producing Q10-A offshore gas field plus the Q10-B, Q11-B and M10/M11 discoveries.

Q10-A is described as “probably the lowest carbon footprint of any production assets in the North Sea”.

It is powered by solar and wind power, and future expansion is planned to follow this approach too.

Kistos highlighted that Q10-A’s carbon emissions from production operation were less than 10 grams of CO2 per barrel of oil equivalent, which is significantly less than the North Sea average as noted by the company as 21 kilograms per barrel.

As such, the company highlights that the proposed deal is in line with its strategy to acquire assets with a role in the energy transition.

TON generated some €30.6mln of earnings in 2020, with pre-tax profit marked at €16.27mln.

The Q10-A is host to proved and probable (2P) reserves of 19.5mln barrels oil equivalent and produced at a rate of 5,470 boe per day in 2020.

Meanwhile, the undeveloped  Q10-B, Q11-B and M10a/M11 discoveries are said to have the potential for 78.5mln barrels oil equivalent (contingent resources) and each has development plans in place.

The proposed transaction sees Kistos pay €220mln partially in cash, the assumption of an existing debt, and an issue of shares in Kistos. Future contingent payments could see the deal value rise by €163mln, subject to project milestones being reached.

Alongside the deal news, Kistos announced it will carry out an equity placing to existing and new investors and it also noted that it is working with debt advisors in Norway to explore the options for new debt instruments.

Kistos is a vehicle chaired by Andrew Austin, formerly of RockRose Energy (sold to Viaro for £250mln in August) and IGas PLC, which floated as an investment company on AIM in November 2020 with a £31.75mln raise pending acquisitions.

“We are very excited to be beginning the next phase of Kistos’ journey with the acquisition of these profitable and cash generative assets, which have probably the lowest carbon footprint of any production assets in the North Sea.

“To be producing gas, a vital transition fuel, from normally unmanned platforms powered by solar and wind is exactly what we set out to do. 

“In addition, we see potential for significantly increased production from discovered hydrocarbons within the licences being acquired by Kistos.”

Austin owns 33.54% of the company, prior to the Tulip deal and upcoming placing, following a £10mln investment as part of November’s IPO.

With something of a nod to the company’s origins and perhaps a hint to its strategy, the listing doc last year noted that the name Kistos ‘is a genus of flowering plants in the Rockrose family. With the Kistos genus being hardy plants, the board considers the company’s name to be reflective of the principles underlying its investing policy and strategy”.

RockRose built a portfolio of interests in the Netherlands and the UK North Sea gas assets in fairly short order, after a 2016 London float.