WTI $96.23 – $5.73, Brent $101.07 -$5.57, Diff -$4.84 +16c, NG $6.03 u/c, UKNG 235.0p +21.7p

Oil price

Sanctions, what sanctions? The EU are dancing to the tune of Germany, have so far bottled the decision on stopping buying Russian oil and gas, yesterday they got as far as a ban on coal. Oil weakened partly as the 3m b/d shortfall from Russia hasn’t happened yet and partly as Covid shuts down more of China every time you look.

The IEA noted that members had announced 120m barrels of stock releases of which 60m are from the US and overall it includes products and crude oil.

The EIA inventory report showed a build of 2.42m barrels of oil, a rise of  just 771/- b’s in distillates but a draw of 2.04m in gasoline.


Kistos has provided its audited results for the period to 31 December 2021. A copy of the Company’s annual report and accounts will be made available shortly on the Company’s website at www.kistosplc.com.

The numbers referred to as “actual” in this announcement include the results of Kistos plc from incorporation on 14th October 2020 to 31 December 2021 and the results of Kistos NL1 and Kistos NL2 from acquisition on 20 May 2021 to 31 December 2021. The “pro forma” numbers include the results of Kistos plc and the results of Kistos NL1 and Kistos NL2 from 1 January 2021, which was the effective date of the acquisition and so the date from which Kistos economically benefitted from the assets to 31 December 2021.


Strategic & operational

  • Completed the acquisition of Tulip Oil Netherlands B.V. and Tulip Oil Netherlands Offshore B.V. (subsequently renamed Kistos NL1 B.V. and Kistos NL2 B.V. respectively) in May 2021.
  • Year-end 2P reserves of 18.1 MMboe in the Q10-A gas field (Kistos 60% and operator).
  • Q10-A gas field produced at an average gross rate of 1.31 MM Nm3per day on a pro forma basis in the year to 31 December 2021.
  • Average gross production since completion of the Tulip acquisition of 1.17 MM Nm3per day.
  • Successful drilling campaign commenced in July 2021 and completed in February 2022:

o  Appraisal of the Orion oil field tested 3,200 b/d. Development studies are underway.

o  Appraisal of the Q11-B discovery successfully flowed at a combined rate of over 0.27 MM Nm3 per day from the Bunter and Zechstein reservoirs. Development studies are underway.

o  Side-track of the A-04 well at Q10-B increased production by >0.8 MM Nm3 per day.

  • The wind turbines on the renewably powered Q10-A platform were upgraded in 2021 to help minimise CO2.emissions.
  • In January 2022, Kistos announced that it had reached agreement with TotalEnergies to acquire a 20% interest in the Greater Laggan Area (GLA) West of Shetland. This transaction is expected to complete in the second quarter of 2022, subject to customary regulatory and partner consents.
  • On a pro forma basis, this transaction is expected to add 6.2 MMboe of 2P reserves and 2.5 MMboe of 2C resources plus net production in 2022 of approximately 6,000 boe/d. This will increase Group production in 2022 to approximately 12,000 boe/d (net).


  • Pro forma adjusted EBITDA of €102.9MM in the 12 months to 31 December 2021
  • Loss after tax of €40.1MM reflects total impairments of €121.0MM.
  • Impairments of €121.0MM include €119.8MM related to the result of the Q11-B appraisal well, which did not encounter gas in the Slochteren formation.
  • Issued €150MM of Nordic Bonds (€60M of new bonds and €90M of refinancing) in conjunction with the €223MM Tulip Oil acquisition.
  • Raised over €100MM from equity investors between incorporation (October 2020) and the end of 2021.
  • Capital expenditure in 2021 was €23.8MM on an accruals basis, 95% of which occurred in the second half of the year when the drilling campaign was underway.
  • Cash balances on 31 December 2021 were €77.3MM (30 June 2021, €59.1MM).
  • The Group is unhedged as of 1 April 2022.
  • Given its financial strength and in line with its strategy, the Group continues to evaluate several business development opportunities in the energy transition space.

Audited results for the period ending 31 December 2021

  31 December 2021 (actual)31 December 2021

(pro forma)4

Productionmillion nm3157288
Production‘000 MWh1,8923,460
Unit Opex1€/MWh3.252.83
Adjusted EBITDA2€’00078,861102,862
(Loss)/profit before tax€’000(73,857)(65,940)
Average realised gas price3€/MWh47.3133.58
Total cash€’00077,28877,288

Note: The financial results are prepared in accordance with IFRS, unless otherwise noted below:

  1. Non-IFRS measures. Refer to the alternative performance measures definition within the glossary.
  2. Adjusted EBITDA is calculated on a business performance basis. Refer to the alternative performance measures definition within the glossary.
  3. Includes the impact of effective realised gain on cash flow hedges.
  4. Pro forma information in respect of the enlarged Group is based on Kistos NL1, Kistos NL2, and Kistos PLC from 1 January 2021 to 31 December 2021.

Andrew Austin, Executive Chairman comments:

After listing on AIM in the final quarter of 2020, the first half of 2021 saw Kistos commence the execution of its strategy to acquire assets with a role to play in the energy transition. We did so by purchasing Tulip Oil Netherlands (renamed Kistos NL1) and its subsidiary, Tulip Oil Netherlands Offshore (renamed Kistos NL2), from Tulip Oil Holding B.V. (the “Acquisition”). This transaction brought with it 60% interests in and operatorship of the producing Q10-A gas field as well as the Orion oil discovery and the Q11-B gas discovery exploration and evaluation assets in the Dutch sector of the North Sea.

In the six months to the end of June 2021, production from Q10-A averaged 1.43 MM Nm3 per day. Two months after the completion of the acquisition, Kistos announced the commencement of a six-month drilling campaign, which resulted in Q10-A exiting the year with output significantly higher at 1.8 MM Nm3 per day. In addition, an appraisal of the Orion oil discovery tested at a rate of 3,200 b/d and an appraisal of the Q11-B gas discovery flowed gas from the Bunter and Zechstein formations, although it failed to encounter gas in the primary Slochteren target, leading to an impairment of €119.8MM. Studies are now underway to establish the optimum way of developing both fields.

As detailed in the independent Competent Persons Report (CPR) published in conjunction with the Acquisition, the 2P reserves associated with the acquired assets were 20.0 MMboe as of 31 December 2020. After taking account of production from Q10-A during the course of last year, the figure was 18.1 MMboe on 31 December 2021. Kistos expects this to increase as we progress towards a Final Investment Decision (FID) with the Orion and Q11-B projects, enabling us to convert 2C resources to 2P reserves.

Crucially, Kistos achieved this increase in reserves and production while abiding by its founding principle of being part of the energy transition. Natural gas will be critical to Europe’s transition to a low carbon economy, which is demonstrated by the European Commission’s decision to categorise investments in natural gas production as ‘transitional economic activities’. Our Q10-A platform has an extremely low carbon footprint thanks to the integration of wind turbines and solar panels into its design. We will take a similar approach to any future development projects.

Reported adjusted EBITDA for 2021 was €78.9MM (see Financial Review) while adjusted pro forma EBITDA, which includes a full 12 months contribution from Kistos NL1 and Kistos NL2, was €102.9MM. This was weighted towards the second half of the year, when gas prices were significantly higher and production responded to our drilling and workover campaign. Hence, we ended the year with cash balances of €77.3MM, which was achieved after capital expenditure of €20.0MM on a cash basis. With high gas prices carrying over into 2022 and production from the Q10-A gas field significantly higher than when we acquired it, the current year has started strongly.

Central to our operations is our health, safety, and environmental (HSE) performance. I am pleased to report that we did not suffer any Lost Time Injuries in 2021 despite undertaking more than five months of drilling and testing operations. Neither did we suffer any disruption to our operations from COVID-19 thanks to the rigorous procedures we have in place to combat and, if necessary, contain the virus. Meanwhile, the wind turbines, which were upgraded in 2021, and the solar panels on the Q10-A platform continue to minimise our CO2 emissions.

We expect to drive further operational progress across our portfolio in 2022. Currently, our plans to construct a new gas export pipeline from Q10-A to IJmuiden, are on hold while we review alternatives that have been proposed by other stakeholders, thus ensuring that we pursue the option that adds most value for shareholders. Similarly, with the help of Rockflow Resources, our technical team in the Netherlands is taking a rigorous approach to the Concept Assess and Concept Select phases of the Q-10 Orion oil field development project.

In January 2022, we announced that we had reached agreement with TotalEnergies to acquire a 20% interest in the Greater Laggan Area (‘GLA’) offshore the UK. Once this transaction completes, which we expect to occur during the second quarter of 2022, Kistos’ output is expected to increase by approximately 6,000 boe/d. Importantly, with an effective economic date of 1 January 2022, the Company secured exposure to the high commodity prices that have prevailed since the beginning of the year has been for our account and will be reflected in the amount payable to the vendor at completion.

Although we do not set explicit long-term targets for reserves or production, believing instead that shareholder value is a more important metric, we remain committed to growing the business. From a standing start in the fourth quarter of 2020, we have built an excellent platform from which to do so, and we will seek to deploy further capital for the right opportunities. With that in mind, we continue to evaluate potential acquisitions. However, it is critical that we maintain capital discipline and we must be prepared to walk away from transactions if we do not believe they will be accretive to shareholder value.

The Remuneration Committee seeks to ensure that all employees are appropriately incentivised to deliver results for the Company. The Company announced on 15 and 16 February 2022 an intention to establish a Value Creation Plan to maintain alignment of the Company’s executive directors with shareholders, to achieve exceptional levels of performance, and to deliver further returns. Since these announcements, the Board confirms that it has commenced a consultation process with its major shareholders. No decision has yet been made as to the terms, structure, or timing of implementing any incentive plan and a further announcement will be made at the appropriate time.

Finally, I would like to thank all our stakeholders for their work and commitment to the Company and to thank staff, contractors, co-venturers and others for their continued support. I believe we are well- placed to continue generating substantial returns for investors and look forward to reporting further progress during 2022.

This is a full announcement covering all of Kistos’ history in which it has packed in more than some company’s in many years. The numbers speak for themselves and investors will be very happy with the pro forma adjusted EBITDA of €102.9MM in the 12 months to 31 December 2021, better than originally expected due to strong gas prices. 

The bean counters have made impairments of €121.0MM which seems to me to be a ridiculous treatment especially when assets such as these will be highly dependent on the rise and fall of hydrocarbon prices, what might have happened if gas prices had fallen? The main message here is that technically Kistos is in a very strong position despite the impairment misnomer which is driven by accounting standards and that there is no question that the value of the assets acquired is significantly more than at the time of the deal. 

Due to positive operational developments and those gas prices, cash balances on 31 December 2021 were €77.3MM (30 June 2021, €59.1MM), after capex of some €20.0MM on a cash basis. The group is now unhedged which readers will know I am supportive of and whilst a commitment to offset against capex is inevitable and thus hedging will come in time, at the moment Kistos is set very favourably. 

There is one further point to make about the cash generation of the company and how it affects shareholders. I have seen published research showing how much of that cash will transfer to benefits for investors and the eagle eyed will see that by Q3 this year the company will have been able to retire its debt. This will mean that there will be no covenants on dividends or blocks on returns to shareholders and with cash at year end 2022 according to analysts of some €237m pre retiring the debt, distributions could well be part of the offering by Kistos.

Finally as if to rub it in the company reiterates that ‘given its financial strength and in line with its strategy, the Group continues to evaluate several business development opportunities in the energy transition space’. This was proved when the company announced that it had farmed-into TotalEnergies’ Greater Laggan area offshore the UK which adds 6/- boe/d  and is backdated to Jan 1 which will encompass the 1Q strong price period. I wouldn’t be at all surprised to see further deals from Kistos if only to upset the bean counters…

PetroTal Corp

PetroTal has announced a signed government agreement to end the social protest, previously announced on March 3, 2022, and recommencement of production and oil sales upon opening of the loading dock.

Protest Conclusion

On Wednesday April 6, 2022, Peruvian government officials reached an agreement with the Asociación Indigena de Desarrollo y Conservación de Bajo Puinahua (“AIDECOBAP”), to end the social protest, which has been blocking PetroTal’s loading dock.  AIDECOBAP was protesting against the government on three core issues:  prosecution of protesting rights, allocation of the Basic Needs Trust capital to close the social gaps that exist in Peru, and that the government expedite the formalisation of the Bretana 2.5% social fund, offered by PetroTal, into the Block 95 license contract.

Peruvian government officials, which included the Prime Minister, with support from PetroTal and local community members, agreed to the following items:

·    The Ministry of Energy and Mines presented the proposal for a Ministerial Resolution for the creation of a technical working group to analyse the needs of local communities in the Block 95 area;

·    Perupetro has agreed to propose the incorporation of the 2.5% social development fund as an addenda into the license contract through a supreme decree; and,

·    AIDECOBAP will immediately lift the blockade near PetroTal’s loading dock.

Based on the current trust framework, PetroTal has funded trust allocations totalling $1.1 million to date, for the eligible fortnight periods in 2022.  The working group will observe, recommend and support social trust policy, while day to day operations of the social trust will be managed by an independent third party.  PetroTal will also continue to fund and support its ongoing social project commitments directly or via independent project contractors.  PetroTal wishes to thank local residents and government officials for continued support through this protest period.

Production Restoration Plan

In anticipation of an agreement being reached, PetroTal has oil barge support ready to arrive within hours of the loading dock’s formal reopening.  The first technical priority is to unload approximately 90,000 barrels of crude oil stored at the oil field, with four to five barges currently engaged.  Next, the operations team will ramp production back up over a five to seven day period.  This production, along with the stored volumes, will be sold to the Iquitos refinery and through the Brazilian sales export route thereafter. 

In Q1 2022, PetroTal produced over 1 million barrels of oil, approximately 11,700 bopd, despite being significantly production constrained for most of March 2022.  This is a PetroTal record for quarterly production and equates to a sixth straight quarter of production growth for the Company. 

ONP Pipeline Status

As previously announced on March 3, 2022, the Petroperu operated Northern Peruvian Pipeline remains closed due to erosion caused by the rainy season, with no firm timeline of maintenance completion provided by Petroperu.  The Company is now focusing all efforts to maximize sales to the Iquitos refinery and the Brazilian export route.  Commercial and technical efforts to eventually sell 400,000 barrel (13,000 bopd) monthly cargos through the Brazil route are being explored.

CPF-2 Approval

The Company’s fully commissioned central processing facility (“CPF-2”) received ministry approval on March 11, 2022 and is now able to operate up to 26,000 bopd.

Bond Update

Bondholders have formally accepted PetroTal’s call provision notice regarding repayment of the $20 million in bonds dedicated to M&A activities.  PetroTal made the payment on April 1, 2022, and now has $80 million in bonds remaining with no required amortisation payments in 2022.

Liquidity Update

The Company’s cash position at March 31, 2022 is approximately $53 million, of which $32 million is restricted.

Manuel Pablo Zuniga-Pflucker, President and Chief Executive Officer, commented

“We are pleased with this agreement that has ended the protesting near our loading dock.  We are also extremely appreciative of Perupetro and the Peruvian government’s support towards PetroTal’s social fund initiative that is aimed at creating long lasting peace in the region for the benefit of all and without any discrimination whatsoever.  We can now turn our focus to operational optimization and continued development of Bretana.”

This is a very good deal for PTAL who have clearly been preparing for this day, they are ready to unload 90,000 barrels of crude en route to the Iquitos refinery and then the Brazilian sales export route. With the problems affecting the ONP pipeline the company is expecting to put some 13,000 b/d in that direction until Petroperu complete maintenance. 

I have been looking at my price target for PTAL in the light of $100 oil and clearly I need to up my game a bit especially now with CPF-2 expansion and the protest over. Without being too optimistic and even taking a production range of 13/- to 26/- b/d at a conservative discount rate I can get to well in excess of 100p per share against my current 75p target. For the time being I am going to settle with 100p with the chance that it could grow significantly if current oil prices become the norm. 

SDX Energy

SDX has provided an update on well-testing operations at the recent SD-5X (Warda) discovery well (SDX Working Interest: 36.85%) in the South Disouq Development lease.

The well was perforated in the basal Kafr El Sheikh gas sand and was tested on 30 March 2022, opening the well for a two-hour clean-up period only. The well flowed at a controlled rate of 10.4 MMscf/d on a 26/64″ choke. When connected, it is anticipated that the well will produce at an optimum stabilised rate of 8-9 MMscf/d.

SD-5X will now be tied-in via a short connection (600 metres) to the SD-4X flow-line and into the CPF. It is estimated that the tie in cost will be c.US$0.5 million (gross) and that SD-5X will be on production in June 2022, when the well will be subject to a longer rig-less test. By conducting the longer test after tie-in, SDX will maximise saleable production from the well. The results of the longer test will be the subject of a further update to the market in due course.

With the completion of SD-5X operations, the rig is now moving to the second well in the three well campaign, SD-12_East on the Sobhi Field (with a planned spud date in mid-April). The third well in the campaign will be the MA-1X well targeting the Mohsen prospect (planned spud in mid-to-late May).

Mark Reid, CEO of SDX, commented:

“This is a very good result and a pleasing start to our 2022 drilling campaign, which aims to accelerate cash flow and exploit the continued potential that we see in the South Disouq area. The tie-in of the well is short and low cost, and the well is expected to be on production in June. I look forward to updating the market on the longer-term test in the coming months and on the progress of the other wells in our 2022 campaign.”

SDX have announced a good result at South Disouq which should kick start the abysmal share price which has halved on a year’s viewing. I have been trying to find out why my bullishness of a few months ago was wasted and I am putting together some ideas. 

If I had to guess, as I mentioned in previous blogs, this may have something to do with the major shareholder who may be a badly disguised seller at the wrong price or that it has been conducting some sort of an auction of its stake. If there is some sort of data room that might be the answer but I have yet to get to the bottom of the situation. I am still digging but if a really good run of well results can’t get the share price up I don’t quite know what can. 

Block Energy

Block has announced the following operations update for the three months ended 31 March 2022.


·    Over 92,000 operational man-hours worked in Q1 2022, with no lost-time incidents

·    Strong exit Q1 production rate of over 630 boepd

·    Q1 production of 46.1 Mboe (Q4: 34.6 Mboe) or an average of 512 boepd

·    Q1 revenue of $2,361,000 (Q4: $2,550,000)

·    Long-lead items received and gathering pipeline being built for well WR-B01 side-track

Block Energy plc’s Chief Executive Officer, Paul Haywood, said:

“As the first quarter production results demonstrate, the Company is delivering operationally, which combined with improved commodity prices, creates a robust financial result. This gives us a stronger platform to deliver on the inherent value of Block’s assets and monetise the wider reserves and resources within our portfolio. We believe we now have a better understanding of the subsurface, which we have translated into a practical plan to grow production and create value for shareholders. While we can do this with our existing resources, we are also looking into non-dilutive financing options to accelerate production growth, and other ways to enhance value for shareholders.”

The operations update is certainly fair based on historic updates, this year has been way better than the admittedly average former years but credit where it is due. Not so good is the financial outlook where a non-dilutive raise is flagged to grow production. This has to be non-dilutive because the increase in production is intended to ‘create value for shareholders’. The board are looking at options in this respect so we will watch with interest what transpires. 


Getech yesterday provided an update on its trading and outlook ahead of the publication of its full year results for the year ended 31 December 2021, which will be announced during May 2022.


·    Following receipt of £6.25 million of equity proceeds in April 2021, Getech repositioned its business model and strategy to support the accelerated delivery of secure and sustainable path to decarbonisation.

·    During FY2021, the Company has done this by:

o  expanding the application of Getech’s unique geoscience and data products into essential tools for locating and developing new geothermal, critical minerals, carbon/energy storage and green hydrogen projects;

o  establishing a new low carbon ‘locate-develop-operate’ business model;

o  investing in the team – hiring senior executives in engineering, economics, project delivery and business development, and adding Board skills in business scale up, ESG and low carbon asset management;

o  leveraging its status as a trusted partner to build strategic relationships for participation in decarbonisation projects; and

o  acquiring a green hydrogen development company, and securing the first two development projects in Shoreham and Inverness.

·    Strong performance in FY2021 has continued into FY2022:

o  FY2021 revenue from geoenergy products and services rose c. 20% to £4.3m (2020: £3.6m), in line with market expectations;

o  orderbook grew by 25% to £3.3m at 31 December 2021 (31 December 2020: £2.7m);

o  focus on responsible capital management with strong net cash position of £5.1m at 31 December 2021; and

o  growth in revenues and sales continued into FY2022 with robust Q1 22 performance, facilitating a strong outlook ahead.

Outlook and growth strategy

Increased global demand for sustainable and secure energy provides a solid platform for Getech to deliver growth and expansion. Aligned with growing revenue, a strong balance sheet and a robust business development pipeline, Getech’s Board is confident in the Company’s outlook.

The growth in sales and revenue achieved during FY2021 has continued into Q1 2022, demonstrating strong demand for Getech’s products and services in locating and de-risking a wide range of energy and mineral resources, across different geographies. The Company anticipates this growth momentum to continue as the pace of progress to net zero accelerates.

The Company’s first two green hydrogen hubs in Inverness and Shoreham are progressing towards development. In Shoreham, the Company is finalising a detailed development schedule, which it expects to review and agree with the port authority in Q2 2022. Development planning is also underway at the Inverness site, with an agreement with the Highland Council opening the potential for this anchor project to be scaled into a regional green hydrogen network.

Across the balance of 2022 Getech’s focus will be on the continued delivery of its growth strategy, which is positioned to accelerate the energy transition and deliver shareholder value by:

o  expanding the Company’s robust pipeline of products and services for the energy transition;

o  replicating and scaling up its green hydrogen asset development model, both in UK and internationally;

o  building strategic partnerships to secure and develop geothermal energy projects; and

o  pursuing energy co-location opportunities within the critical minerals sector.

Getech’s Chief Executive Office, Dr Jonathan Copus, commented:

“It is clear the world needs to substantially increase energy investment to meet the goals of energy security and transition to a low carbon future. In 2022, fuelled by growth in company and government spend, energy investment could total as much as 13% of global GDP, the highest level on record.

Getech is ideally positioned to support this ‘waterfront’ expansion in energy capital spending. This has driven revenue and orderbook growth by 20% and 25% respectively in FY2021 and has resulted in a significant broadening in our sales and business development pipelines, with the positive trend continuing into 2022.

By investing in our unique geoscience data and software products, we are extending their application to high-growth geoenergy sectors beyond petroleum – targeting geothermal, critical minerals, hydrogen and carbon storage. The rapid expansion of our green hydrogen development activities also demonstrates how we are leveraging our foundation products and expertise to build strategic relationships that open opportunities for Getech to participate in high-value decarbonisation projects.

We have positioned our locate-develop-operate business model to maximise the value of our products, technologies, and skills, and to deliver transformational growth in shareholder value. We have moved into 2022 with confidence and look forward to increasing our share of a primary energy market that is undergoing unprecedented change and growth.”

In the extended details of the RNS Getech in more detail explain that it is now a ‘geoenergy and green hydrogen company. Geoenergy encompasses technologies, raw materials and energy sources that interact with the geological subsurface, and these dovetail with other distributed energy solutions – such as green hydrogen’.

The company are betting that by investing in its unique geoscience data and software products, they are extending their application to high-growth geoenergy sectors beyond petroleum – targeting geothermal, critical minerals, hydrogen and carbon storage.

What is more, the rapid expansion of green hydrogen development activities further demonstrate how Getech is leveraging its foundation products and expertise to build strategic relationships that open opportunities to participate in high-value decarbonisation projects.

And finally…

Last night in the Champions League Chelsea lost 1-3 at home to Real Madrid and may struggle to make the semi finals. On Tuesday night Liverpool went to Benfica and won 1-3 whilst the Noisy Neighbours beat Athletico 1-0.

Tonight its the Boropa Cup, the Hammers host Lyon in the first leg and Rangers are at Sporting Braga.