Kistos Holdings Investment thesis
Investment decisions

Kistos Holdings Operational Update

Kistos Update

Kistos published today an operational update which contains a lot of information about the company. Not only financial & operating figures but also what we understand as the outlook for 2023.


Kistos operational update shows a net cash position of €129MM as of 31/12/22 (we assume that they still have to pay taxes, so in practice, not very useful the figure)
Gross debt reduced to €82MM (from €150MM) through repurchase of €68MM of bonds in the market


Pro-forma production for the full year to 31/12/22 was 10,700 boe/d from the Greater Laggan Area (GLA) and Q10-A. A bit lower than the 12,000 boe/d guidance but as expected due to lower production in the Netherlands. We expect that the current works in Q10 will boost the production to previous levels as we detailed in the 4Q22 letter.
Opex was ~20% below guidance at ~€5.50/MWh(~$10/boe)
The Q10 area continues performing well as the P15 platform has been more reliable. However, the production from Q10 wells has diminished considerably in the last few months.
The Benriach well has been confirmed to be drilled in 2023, starting in Q2. Kistos owns 25% of it. The well is forecasted to cost £16.3MM net to Kistos (£2.4MM post-tax).
The decision on Glendronach Field Development is postponed and will be taken later in 2023 to “allow further technical reviews to be undertaken with the aim of reducing costs”. This is a setback as we expected it in production at the end of next year and we feel it is going to take longer.
We understand that developing Orion (oil) will be the next step in the Netherlands as this development is not subject to the WFT.

Kistos Holdings Outlook

Reading the RNS, we feel that Kistos is not going to buy anything in Europe & the UK anytime soon. Consequently, the deals they are negotiating at the moment are related to Norwegian oil as we advanced.

They also say that the environment is challenging due to new legislation and that if they “cannot identify worthwhile transactions to pursue, we will consider returning cash to shareholders during this year”. We should remember that from May on, the covenants of the bonds allow them to buy back shares.

Our thoughts about Kistos Holdings

Kistos has been severely affected by the new regulations and warmer weather than usual in Europe. We see that the upside has been damaged and the multi-bagger potential we saw one year ago in this company has been compromised. In short term, the share price will be tied to TTF prices, as we cannot see any other catalyst (apart from a Norwegian deal). However, we think that later in 2Q23/3Q23 they will announce a tender /buyback if the share price continues like today and they cannot find a more accretive deal.

Join the over 1,400 subscribers who have already signed up for our weekly newsletter!

By subscribing, you’ll receive a comprehensive summary of our latest small-cap analysis and market insights, delivered straight to your inbox every Sunday.

You’ll also have access to exclusive resources related to the analysis published.