Kistos Holdings – startup news on its Jotun FPSO in Norway could get these shares running strongly ahead, now 180p TP 330p

24.06.2025

Next Monday Kistos Holdings (LON:KIST) will be holding a ‘virtual’ Annual General Meeting, not just to consider the group’s progress in its 2024 Trading Year, but also to approve a Capital Reduction.

If approved that would have the effect of creating distributable reserves and provide the company with the ability and flexibility to return capital to its shareholders in future.

That is, of course, good news for its investors but nowhere near as appealing as the group’s potential for its 10% interest in the Balder Field in the North Sea.

Big News

Yesterday the company noted the announcement made today by Vår Energi, the 90% operator of the Balder Area, Norway, confirming the start of production from the Jotun FPSO.

Bringing the Jotun FPSO onstream, production is expected, within three to four months after start-up, to increase by some 80 thousand barrels of oil equivalent per day (kboepd) gross, on top of the current production of approximately 30 kboepd gross through the Balder FPU and Ringhorne facilities.

The Jotun FPSO will have a low operating cost of around $5 per barrel and estimated gross proved plus probable recoverable reserves from the project at 150 million barrels of oil equivalent (mmboe).

Management Comment

Chairman Andrew Austin stated that:

"First oil from the Balder Future project is a significant milestone for Kistos.

Working alongside our partner in the Balder Area, this provides the foundation for further incremental value accretion from our interest in Norway.

With production set to ramp up over the next few months, adding 8,000 boepd (net) to our existing 3,000 boepd (net) from the wider Balder Area, peak production in Norway is expected to exceed 11,000 boepd (net).

These low-cost barrels will notably increase the oil weighting of our portfolio and deliver significant cashflow.

Utilising the infrastructure now in place, Balder Phase V and the recently sanctioned Phase VI project will bring new production wells onstream as early as this year, accelerating the conversion of 2C resources to 2P reserves and offering fast-track developments to sustain long-term, high-value production.

Our entry into Norway, has delivered significant upside for the Company and its shareholders, for a nominal consideration with significant mitigations put in place around the timing of the completion of the Balder Future project.

It highlights the importance that we will always place as a management team on identifying opportunities which offer significant near-term value accretion, at the right price and on the right terms.”

Balder is located in the central part of the Norwegian sector of the North Sea, just west of the Grane field in a water depth is 125 metres.

The field was discovered in 1967, production started in 1999 and has been developed with subsea wells tied-back to the Balder floating production unit.

The Business

Kistos, which floated on AIM in late November 2020 by way of a Placing at 100p a share, is an independent, integrated energy company with upstream and midstream operations across international markets.

Led by an experienced management team with a successful track record of value creation, Kistos’ strategy is built around the pursuit of growth through strategic mergers and acquisitions and prioritising operational excellence to accelerate organic development opportunities.

Its operations span the UK, Norway, and the Netherlands.

The group’s investments across the value chain include upstream operations, both offshore and onshore, and the operation of critical infrastructure to process and store hydrocarbons for ready deployment in the energy market.

Executive Chairman Andrew Austin stated that:

“Since we founded Kistos in 2020, we have remained focused on finding new opportunities through strategic M&A, delivering a transaction every year since inception, whilst capitalising on near-term development opportunities within our portfolio.

Through the ongoing implementation of this strategy, our experienced management team is building on its track record of delivering significant returns for shareholders.”

Three years ago, Kistos made an unsuccessful approach to take over the much bigger Serica Energy, with the aim of building up a large North Sea-focused oil and gas grouping.

Analyst Views

Analyst James Carmichael, at Berenberg, earlier this year stated that the group was on track to deliver the first oil from its Norwegian project by mid-2025, putting it in ‘good shape’ for the future, increasing production and generating long-term value for the company.

He had a Buy rating on the group’s shares, with a 230p Target Price.

He noted that the group had further potential upside in the UK gas storage business, and potential for additional investment in the offshore UK portfolio once operatorship is transferred in the first half of 2025.

“We believe that Kistos is in good shape with its key asset approaching first oil and the balance sheet providing flexibility to continue screening potentially accretive inorganic opportunities.”

This morning analyst Ashley Kelty, at Panmure Liberum, published a Buy note for the group’s shares with an increased Target Price of 330p.

“Kistos is also well placed to undertake further accretive M&A.

With a healthy balance sheet and all planned activity fully funded, the growth potential is clear.

We upgrade our TP to 330p (from 302p) and reiterate our BUY recommendation.”

His estimates for the current year to end-December look for sales of $249.0m ($222.0m), turning the 2024 loss of $95.9m into a current year profit of £11.0m, giving a much smaller earnings figure of $1.39 loss against a loss of $62.75 per share.

For 2026 Kelty goes for $346.0m sales with a $48.0m profit, and earnings of $14.35 per share.

In My View

This group is capitalised at just £161m, with its shares now at 180p with a solid break into trading the 200p to 250p range very soon as it reflects even more positive news.