Kistos Energy, former RockRose Energy CEO Andrew Austin’s latest venture, has completed the acquisition of a stake in a package of West of Shetland assets.
The London-listed company now has a 20% interest in the Greater Laggan Area and associated infrastructure, alongside various interests in certain other exploration licences, such as a 25% share in the Benriach prospect.
The £123 million deal was first announced at the start of this year and is effective from January 1.
It also adds about 6,000 barrels of oil equivalent a day (boe/d) to the company’s production in 2022, with 2P reserves increasing by 6.2 MMboe.
This substantially increases Kistos’ total production base to approximately 12,000 boe/d.
Greater Laggan Area
The Greater Laggan Area comprises the producing Laggan, Tormore, Edradour, and Glenlivet gas fields, located around 85 miles west of Shetland.
Following completion, TotalEnergies now has a 40% in the region, alongside partners Kistos (20%), Ineos E&P UK (20%) and a RockRose Energy subsidiary (20%).
The acquisition also includes a 20% interest in the undeveloped Glendronach gas field, which was discovered in 2018.
A final investment decision (FID) on Glendronach had originally been expected in July 2020, but was pushed back to 2021 and is now expected later this year.
It is anticipated that the development, one of the largest discoveries in UK waters in recent times, will utilise existing infrastructure at Eradour.
Glendronach will be developed via a single production well, and the net cost of the project is estimated to be approximately £20 million.
Kistos’ share of this expenditure is expected to be subject to the investment relief included as part of the Energy Profits Levy.
Emissions from Greater Laggan Area production operations are forecast by Kistos to be approximately 13 kg CO2e/boe in 2022.
That is “significantly below” the North Sea average of 22 kg CO2e/boe.
Mr Austin, executive chairman of Kistos, said: “We look forward to working with TotalEnergies and our partners within the GLA.
“The addition of the GLA interest to our portfolio is an important step towards expanding and diversifying our producing asset base in one of the largest gas hubs in the UK.
“In addition to the immediate significant increase in our daily production, these assets also offer investors significant upside potential from the Glendronach development project and the highly prospective Benriach exploration target.
“Progression of these two projects is expected to meet the investment criteria for the UK’s recently implemented Energy Profits Levy.”