Kistos (KIST.L) has paid its outstanding bond debt in the Netherlands, creating an opportunity for the firm to return more cash to shareholders, said an industry analyst.
The business announced it has repaid all of the debt acquired in the original Tulip acquisition in a “positive update” for shareholders, says Ashley Kelty of Panmure Gordon.
London-headquartered Kistos agreed to buy Tulip Oil Netherlands (TON) from exploration and production firm Tulip Oil.
The takeover deal was made for £190 million in March 2021.
Mr Kelty writes: “Shareholders will be pleased at Kistos delivering on its promises of repaying debt early and getting itself into a position to make distributions to investors.”
Shifting its debt allows Kistos to move cash around the group, meaning the firm could move funds from the Netherlands back to the UK.
The only debt remaining in the group is the $225m of bonds acquired under the Mime acquisition earlier this year, with the earliest maturity being September 2026.
Earlier this year Kistos completed its acquisition of Mime Petroleum in a deal valued at around $111 million, excluding contingent payments.
At the time, Kistos cited “windfall taxes and a lack of fiscal certainty” for the lack of UK investment as it turned its attention to Norway.
Andrew Austin, executive chairman of Kistos, said: “The redemption of the Kistos NL2 B.V. bonds from our cash resources will boost Kistos’ profitability by reducing our net interest costs.
“By removing certain covenants contained in the Bond Terms, it will also enhance our financial flexibility.”
Shetland Gas Plant shutdown
However, Kistos’ perspective UK projects have hit something of a stumbling block as of late with TotalEnergies’ Shetland Gas Plant shutting down on Tuesday 5 December.
An investigation is ongoing into a safety incident which saw the plant, which Kistos is a co-owner of, shut down.
TotalEnergies provided no additional details on the situation when asked if there was a timeline in place for the plant to restart operations.
The plant takes gas produced in fields West of Shetland and processes it before piping the hydrocarbons to the Scottish mainland.
Kistos, a 20% partner in the West of Shetland region, is looking to pursue the Edradour West development.
In conjunction with an “expected new third-party throughput across the Shetland Gas Plant”, Kistsos claimed earlier this year that Edradour West will extend the life of the existing facilities and “give more certainty to potential future developments such as Glendronach.”
TotalEnergies has been working on the Glendronach and Edradour West projects – the former being a 100 million-barrel discovery.
Kistos share woes
Following the shutdown of the Shetland Gas Plant shutdown Kistos share prices dropped on Wednesday morning.
Despite the value of Kistos stock increasing as of last Thursday, prices have not returned to the levels seen by the firm before the shutdown.
At the time of the Shetland Gas Plant shutdown, a TotalEnergies spokesperson said: “Following the failure of an element of the heating medium system at Shetland Gas Plant yesterday, production remains shut down whilst we conduct an investigation into the incident.
“Separately, we are also assessing when it will be safe to restart production. We will not restart production until it is safe to do so.”