WTI (Oct) $62.63 +37c, Brent (Nov) $66.39 +37c, Diff -$3.76 u/c
USNG (Oct) $3.12 +3c, UKNG (Oct) 80.69p -0.51p, TTF (Oct) €33.015 -€0.105

Oil price

Oil remains strong after the Israeli action in Doha yesterday. The API stats were mixed but more importantly lets see the EIA numbers later. Also the US are stepping up sanctions against Russia and along with EU states and Nato forces from Poland attacked Russian drones who were out of their airspace.

Kistos

Kistos, an independent energy company focused on generating value across the upstream and midstream markets, has provided a trading and operational update ahead of its half-year results for the period ended 30 June 2025.

Balder Ramp-Up

• Balder Future has reached peak production
  • The Jotun FPSO was brought onstream on 22 June 2025
  • All 14 subsea production wells are now online and producing in line with expectations
  • Production from the Jotun FPSO is now over 80,000 barrels of oil equivalent per day (boepd), adding to the approximately 30,000 boepd from the Balder FPU and Ringhorne facilities. This brings the total output for the Balder Area to more than 110,000 boepd (gross), with Kistos holding a 10% stake in the licence
• Balder Phase V is ongoing
  • Six new multi-branch subsea production wells are underway, with expected production rates and reserves equivalent to the wells installed within the Balder Future project
  • Two of the Phase V wells are expected to come on stream in Q4 of this year, with the remaining wells being completed during 2026
• Balder Phase VI is being progressed following the positive investment decision announced on 18 June 2025
  • The project consists of a single multi-lateral well tied back to the Jotun FPSO via the installation of a new subsea template and flowline
  • The project will target reserves of approximately 15 mmboe (gross), with start-up expected by the end of 2026 and payback in less than one year

Q10-A, GLA & GAS STORAGE

• Q10-A production was affected during the first half of 2025
  • Aside from natural decline, a planned shutdown of the TAQA-operated P15-D platform overran for longer than expected, although this will be partially offset by flush production post start up, which was achieved on 16 July 2025
• GLA production during the period fell in line with management's expectations
  • Imminent start-up at the Shell-operated Victory gas field is due to provide significant OPEX savings for the GLA partners, with increased gas throughput at the SGP
  • TotalEnergies maintains its 40% stake in the GLA, following Prax going into administration
  • Kistos remains confident that TotalEnergies will continue to operate the assets responsibly and efficiently
• A Final Investment Decision (FID) on Hole House re-instatement is anticipated late in Q3 2025. If positive, it is expected to increase working capacity by a further 63%. A further announcement will be made at the point the FID is made

Corporate guidance

• Full-year average daily production guidance of 8,000 - 9,000 boepd reaffirmed with daily production reaching 16,000 boepd on 8 September
• Cash at 30th June 2025 was $104 million (of which $20 million is currently restricted), compared to the $143 million cash at 31 December 2024, reflecting significant capital expenditure on the final stage of the Balder Future project
• Net debt* at the end of the period stood at $86 million.

*Cash and cash equivalent, restricted funds and current tax receivables less the face value of outstanding bond debt.

Andrew Austin, Executive Chairman of Kistos, commented:
"With our partner Var, we set out a very clear priority at the beginning of the year to deliver the Balder Future development project. Not only have we achieved first oil by the half-year-end, but we have also accelerated the production ramp-up to reach peak production well ahead of schedule.

"Total Group production hit 16,000 boepd on the 8th September. The additional 8,000 boepd (net) that Balder Future is now contributing adds substantial near-term production and, with the installation of the Jotun FPSO and associated infrastructure, further near-term development of the Balder Area is now ongoing, unlocking additional value at a low cost with greater certainty.

"Our desire for value-accretive acquisitions remains. Our M&A remit covers areas outside of the North Sea; however, we are committed to only pursuing opportunities that provide a good balance to our current portfolio, at the right price and on terms that are accretive to Kistos shareholders."

The fact that the Balder Future development project has not only achieved first oil but that it has already accelerated to peak production so soon is a tribute to the team responsible but it is a sad indictment of the market that it has yet to be fully recognised in the share price.

Also the news from Balder Phase V is good, as the progress is ongoing, six new multi-branch subsea production wells are underway, with expected production rates and reserves equivalent to the wells installed within the Balder Future project.  Two of the Phase V wells are expected to come on stream in Q4 of this year, with the remaining wells being completed during 2026.

Looking to Balder Phase VI it too is now moving ahead following the recent positive investment decision announced on 18 June 2025, the project consists of a single multi-lateral well tied back to the Jotun FPSO via the installation of a new subsea template and flowline. The project will target reserves of approximately 15 mmboe (gross), with start-up expected by the end of 2026 and payback in less than one year.

Elsewhere Q10 was slower than expected in the period due to longer than expected planned shutdown and the GLA production fell as expected. And with the imminent start up of the Victory gas field will provide ‘significant OPEX savings’. 

Guidance remains solid at 8,000-9,000 boepd and with daily production reaching 16,000 boepd on 8th September. Cash at 30th June 2025 was $104 million (of which $20 million is currently restricted), compared to the $143 million cash at 31 December 2024, reflecting significant capital expenditure on the final stage of the Balder Future project.

Finally, net debt (cash and cash equivalent, restricted funds and current tax receivables less the face value of outstanding bond debt) at the end of the period stood at $86 million. This also has yet to be recognised by the market, Kistos has enormous balance sheet strength and extremely low net debt having travelled through the exploration stages in Norway.

Kistos’ management has a justified excellent record in M&A activity and now that is still the case. Chairman Andrew Austin says that ‘Our desire for value-accretive acquisitions remains’ and he told me that whilst they are pursuing a number of potential deals the M&A market is very hot and achieved prices have been very high. 

That in itself should tell you that the Kistos share price is way too low, I would be very happy with 200p but if you took a line through recent deal valuations it would look a great deal higher. The shares are in the Bucket List and have a significant following, operationally Balder brings much welcome production and a simplification of the debt, Kistos is in very good nick. 

Serica Energy

Serica has announced that, following a successful ramp up which helped wider portfolio production reach over 55,000 boepd in mid-August, the operator of the Triton FPSO, Dana Petroleum, has notified Serica of a temporary reduction in production while further maintenance takes place. In addition, Dana has also notified the Company that subsea intervention work on the Bittern field has been scheduled for November 2025. The resultant production deferrals mean that Serica’s production guidance for 2025 has been reduced to 29,000 to 32,000 boepd (previously 33,000 to 35,000 boepd).

Due to a vibration issue within the compression trains on the Triton FPSO, production is currently running at a significantly reduced rate. Following the required repairs, normal production operations are expected to resume around the end of September. Work is currently continuing to deliver two compressor operations, which will facilitate the full ramp up of production at the FPSO. Production net to Serica from the Triton FPSO reached over 25,000 boepd in August, and running with two compressors can deliver an increase from this figure through the addition of production from the EV-02 well on the Evelyn field.

Work on the Bittern field subsea infrastructure, which is scheduled to take three weeks to complete, is to address an emerging vulnerability. The work scope had previously been removed from the outage in summer 2025 and was expected by Serica to be completed in 2026, but the operator has now confirmed that it will take place in November this year. Given the location of the pipework, in addition to the Bittern field this will also halt production from the Evelyn and Gannet fields, resulting in a temporary reduction of over 20,000 boepd net to Serica.

This must be deeply frustrating for Serica and that is emphasised by the fact that  they have not offered a comment from the CEO, viz. if you can’t say anything nice don’t say anything at all. I know that this doesn’t change the investment thesis and only pushes back production rather than reduce value but at this level it’s not good enough. 

On the big picture I can suspect that whilst this is not the same issue as before, and should be a relatively swift mechanical fix, it cannot have helped relationships with the operator and therefore all options with Dana/KNOC must be being looked at going forward. 

Having said that, we are talking about a major North Sea development which still has significant value and wont move my valuation needle noticeably. Given there should be only a very short term impact of the current outage, the shares look highly oversold today, and the company is still highly attractive and deserves its place in the Bucket List. 

Prospex Energy

Prospex has announced its unaudited Interim Results for the six months ended 30 June 2025.

Corporate and Operational Overview:

• No reportable Health and Safety incidents or environmental issues across both its operations in Italy and Spain.
• The Selva Malvezzi investment continues to provide steady and reliable income from gas production, with a supportive and stable regulatory regime in Italy which encourages activity related to indigenous natural gas production as it emphasises the security of energy supply.
• During this reporting period a further £905k was invested in the Viura asset and £484k was paid for the shares of Tarba Energía S.L. (“Tarba”) not already owned taking the Company’s ownership of Tarba to 100%.  These additions, made via interest bearing loans to the Company’s investment vehicles, were all funded out of the Company’s existing cash reserves.
• A further £941k net share of HEYCO Energy Iberia EBITDA, accruing to the Company’s investment during the reporting period, has been retained in the joint-venture vehicle and is being applied to the ongoing drilling and workover programme.
• At the end of the reporting period the Company closed an equity placing and subscription offer raising gross proceeds of approximately £1.2 million through the issue of 26,170,193 new Ordinary Shares at 4.5p per share.
• In April 2025, the Company appointed Hannam & Partners as Joint Corporate Broker to the Company.

Post period

• Total net proceeds of £1.12m were received from the above equity raise, of which £283k was received by 30 June.
• At the date of this report, a further direct investment of €1.3m has been made in the Viura asset.
• New Gas Sales Agreement signed with Hera Trading to supply gas from the Selva Malvezzi production concession replacing the current Gas Sales Agreement with BP Gas Marketing which expires on 1 October 2025. 

Financial Overview

• The Company reports a £180,101 (H1 2024: £275,120) loss after taxation from continuing operations for the six-months ended 30 June 2025, a 34% reduction on last year.
• The reported loss includes a £32,715 unrealised loss (H1 2024: £nil) of financial assets at fair value.  Forward gas prices and exchange rates at 30 June 2025 were taken into consideration as well as gas produced from the assets in calculating the reported loss.
• The Company’s Net Asset value (Shareholder Equity) increased by £938,246 in the six-months ended 30 June 2025 – From £24,590,154 at 31 December 2024 to £25,528,400 at the reporting date.
• The Company remains free of any interest bearing or secured debt.
• At 30 June 2025, the Company held cash and cash equivalents of £147,134 (Year-end 2024: £1,185,386).  Cash and cash equivalents held in Euros in the Company’s wholly owned non-consolidated investment companies amounted to €1,009,095 (Year-end 2024: €338,628).
• Of the £1,834,203 increase in trade and other receivables, £967,263 comprises increased loans to the Company’s investment companies and interest accrued, net of debt repayments to the Company on investment loans made during the exploration and development phases of its projects.
• The Company and its investment vehicles are expected to have sufficient funds to continue in operation and meet future operating and known capital costs.

Mark Routh, CEO of Prospex, said:
“2024 was a transformative year for Prospex.  With the Viura investment, we added a third producing onshore European gas field to our portfolio, lifting production across our portfolio by 230%.  The purchase in 2025 of the remaining interests in Tarba further strengthened our position, consolidating our ownership of El Romeral and adding the suspended Tesorillo asset, together contributing over 750 Bcf (21.3 Bcm) of best-case prospective gas resources to our portfolio, at very low cost.

While short-term production interruptions at Viura and El Romeral are frustrating, both assets are now positioned to deliver stronger performances, with permits in place to drill new wells on Viura and advancing on El Romeral.  Meanwhile, Selva Malvezzi continues to deliver steady income and commands premium pricing under our new gas sales agreement with Hera Trading.

We remain confident that our growing portfolio of producing assets offers significant upside potential and we look forward to converting our contingent and prospective resources into proven producing reserves that will drive long-term value for shareholders.”

This is part of a much more extensive statement but even so as, a historical statement it doesn’t include anything not already in the market. I rather like the company and feel that the poor share price doesn’t accurately reflect its prospects…

Original article   l   KeyFacts Energy Industry Directory: Malcy's Blog