Kistos Holdings plc has signed a rig contract to drill during Q2 the joint venture Benriach well in the Greater Laggan Area (GLA), west of Shetland.
GREATER LAGGAN AREA
The GLA includes producing subsea gas fields of Laggan, Tormore, Glenlivet and Edradour tied back via a 143km flowline system to the Shetland Gas Plant (SGP) at Sullom Voe on the Shetland Islands.
In July 2022, Kistos purchased 20% of the JV from operator Total Energies UK, with other partners being INEOS E&P UK Ltd (20%) and RockRose UKCS15 Ltd (20%).
BENRIACH
Kistos said in its operational report that the JV would target recoverable resource of 638bcf (110MMBoe) gross with the company holding a 25% stake.
The well is forecast to cost £16.3 million net to Kistos (£2.4m post tax).
The company added that since acquiring the working interest in the GLA, average production for the year was 6,000 boe/d net to Kistos and uptime was more than 95%, excluding planned maintenance.
Kistos added that the decision on Glendronach field development would be taken later in 2023 after further technical reviews aimed at reducing costs.
Q10
The company said that Q10 area, in which it holds 60% working interest with Energie Beheer Nederland owning 40%, continued to “enjoy good up time”.
Export through the P15 platform has also been more reliable but given the “variable productivity” of the reservoir the JV will continue to intervene regularly to maximise production.
The JV is implementing a programme of side-tracks and stimulations and the Valaris 123 rig is conducting a work programme due for completion during Q1 2023.
Work includes a sidetrack of the A01 well in the Slochteren formation, stimulation of the A04 well in the clastics and installation of velocity strings on A05 and A06 wells.
Kistos said that further clastics wells were being considered over the next 18 months.
The Orion oil field development has moved from the concept assess phase to the concept select phase.
The development would not be subject to the ‘windfall tax’ of Cijns due to it being oil not gas, added the company.
Kistos is also actively evaluating opportunities outside the UK and Dutch jurisdictions.
FINANCES
As at 31 December 2022, the company held cash of €211m and reduced debt from €150m to €82m through repurchase of €68m of bonds in the market, resulting in net cash €129m.
Pro forma production for the full year to 31/12/22 was 10,700 boe/d from the GLA and Q10-A in the Netherlands.
TAX REGIMES
Chief executive Andrew Austin said that the company aimed to increase its assets or return cash to shareholders this year.
He added that the “aggressive tax regimes” of the UK’s energy profits levy (EPL), the Netherlands Cjins and the European Union’s solidarity tax provided challenges to generate shareholder value, but also created opportunities.
“Kistos expects to continue to invest in its existing asset portfolio to maximise recovery at these high commodity prices and utilise the EPL investment allowance where possible.
“While we continue to actively look for value accretive acquisitions in the North Sea and Europe, the asymmetry created by these tax regimes makes this challenging.
“If we cannot identify worthwhile transactions to pursue, we will consider returning cash to shareholders during this year.”