WTI (Feb) $55.99 -$1.14, Brent (Mar) $59.96 -74c, Diff -$3.97 +40c
USNG (Feb) $3.53 +18c, UKNG (Feb) 71.26p -1.75p, TTF (Feb) €27.85 -€0.92

Oil price

 Oil fell sharply yesterday despite the small rally after the better than expected EIA inventory data, which showed a crude draw of 3.832m barrels against a forecast of -1.2m b’s surprised the market.

In the US the authorities ‘commandeered’ 50m barrels of Venezuelan crude after continued raids on tankers around the globe. The money will allegedly go to Venezuela and will raise more than they would get for it under sanctions. 

As already mentioned here getting production up in any realistic scale will take time and money, and whilst might be attractive for Chevron et al they will need guarantees particularly as costs will come early and production later, after the next US President is sworn in. 

Trump appears to favour $50 which also won’t enamour him in the US oil patch but it has meant that Secretary of State Chris Wright has said he wants to refill the SPR and more quickly than at present. 

Finally it is worth mulling over where else the US may go for oil interests, not Greenland for starters but they have talked about Iran where there is dissent at present and of course in Syria there is significant potential, especially if invited in… But remember Libya where President Obama despatched Gaddafi but didn’t create a Government to take over and has been a mess ever since.

But he could of course settle on the UK where the incumbent Government is even more unpopular than Nicolas Maduro and has probably made an even bigger mess of the domestic hydrocarbon industry than he and Chavez put together. The ‘Trump welcome here’ sign should be raised above the North Sea. 

Kistos

Kistos has provided the following unaudited trading and operational update ahead of its results for the year ended 31 December 2025.

Value accretive M&A activities

• Kistos entered into a binding agreement to acquire a 5% working interest in Block 9 (Occidental as operator) and a 20% working interest in Blocks 3 & 4 (CCED as operator) in Oman from Mitsui E&P Middle East B.V. (the “Oman Acquisition”), with an effective date of 1 January 2025 (the “Effective Date”), as announced on 9 December 2025. Completion of the Oman Acquisition is subject to customary governmental and regulatory approvals and partner consents. Further announcements will be provided in due course, upon completion of the Acquisition, including any information on completion mechanics and the financial impact of the transaction on the Company.
• Expected to add 25.6 mmboe (operator estimates) of 2P reserves net to Kistos as at the Effective Date, with a valuation of approximately $5.80/boe of 2P reserves.

Production and reserves

• 2025 proforma(1) exit production rate was 22,700 boepd, including Oman interests and augmented by the ramp-up of two of the six Balder Phase V wells
• Actual production for 2025 averaged 9,000 boepd at the top end of guidance (8,000 – 9,000 boepd)
• Year-end proforma net 2P reserves estimated to be 49 mmboe (Company estimate)
• FY26 proforma production guidance remains at 19,000 boepd – 21,000 boepd

Financial

As at 31 December 2025:

• Cash, including near-cash, of $199 million (2), following receipt of $75 million in tax rebates in December 2025 relating to the Company’s Norwegian assets (the anticipated receipt, attributable to activity in 2024, which was noted in the Company’s Interim Results)
• Tax rebates receivable of approximately $28 million in respect of net expenditure in Norway during the 2025 calendar year payable in December 2026
• Adjusted net debt(3) of approximately $81 million (representing cash and near-cash equivalents, net of the carrying amount of outstanding bond debt of $280 million) 

(1) Proforma figures include production from the Oman Acquisition. The acquisition is expected to complete in the first quarter of 2026.
(2) Non-IFRS measure. Includes $28 million of near-cash, assuming receipt of the 2025 Norwegian tax rebate as at 31 December 2025. A further $22 million is maintained in escrow for standard credit and decommissioning arrangements.
(3) Non-IFRS measure. Adjusted net debt is a measure that the management team believes is useful as it provides an indicator of the Group’s overall liquidity. It shows the impact on net debt as if the 2025 Norwegian tax rebate of approximately $28 million had been received as at 31 December 2025 and is defined as cash and cash equivalents, including restricted cash, less the carrying amount of outstanding bond debt.

Operational

• Following the start-up of the Jotun FPSO in Norway and ramp-up of the 14 Balder Future wells, total Balder area production exceeded 11,000 boepd (net) in September.
• A Final Investment Decision (FID) on Balder Phase VI was taken in 2025 to develop circa 1.5 mmboe (net), which will be drilled in 2026.
• The first phase of the Balder Next project has now been sanctioned and consists of the debottlenecking at Jotun FPSO to increase production capacity in addition to the drilling of new production wells targeting additional reserves of approximately 3.6 mmboe (net). The subsequent phase will include the decommissioning of the Balder FPU in 2028, with preparation work starting in 2026, which will significantly reduce the operating costs of delivering hydrocarbons from the Balder area.
• Serica Energy is anticipated to assume operatorship of the Greater Laggan Area from TotalEnergies in the first quarter of 2026. This change offers significant organic growth potential and opportunities to extract near-term value from infill drilling and the development of further third-party tie-backs to the Shetland Gas Plant.
• Uptime substantially improved on Q10-A asset in the Netherlands in H2 2025, with production efficiency at circa 97%, following an unplanned extended outage at the Taqa-operated P15 tieback facility, which significantly impacted our ability to deliver gas into the network.
• Work has commenced on returning the Hole House gas storage facility to service following a FID in September. This will increase our gas storage capacity by 63% during the course of the next two years.

Andrew Austin, Executive Chairman of Kistos, commented:
“Kistos again delivered growth in 2025. We successfully executed on all four of our stated priorities: achieving Balder Future first oil, meeting the higher end of our full-year production guidance (8,000-9,000 boepd), continuing to convert 2C resources to 2P reserves, and executing a value-accretive M&A transaction while continuing to invest in our existing asset base.

The agreement to acquire interests in Block 9 and Blocks 3 & 4 in Oman represents a material step for Kistos. This acquisition geographically diversifies our portfolio beyond the North Sea and provides exposure to high-quality onshore assets with significant growth potential. Completion is expected in the first quarter of 2026, and we are well advanced in preparation for the integration of these world-class assets into our portfolio.

Operationally, the successful start-up of the Jotun FPSO and Balder Future wells drove Balder area production above 11,000 boepd (net) in September, whilst the ramp-up in late December of the first two of six planned Balder Phase V wells means we can look forward to maintaining high production rates going forward. We also sanctioned Balder Phase VI and the first phase of Balder Next, which will enhance capacity, reduce operating costs, and add meaningful reserves.

In the UK, the anticipated transition of operatorship of the Greater Laggan Area in early 2026 offers near-term opportunities for infill drilling and tie-backs, and we commenced work to return the Hole House gas storage site to active service, increasing capacity by 63% over the next two years.

In the Netherlands, uptime at Q10-A improved to ~97% in the second half following earlier challenges with the third-party tieback facility.

Financially, Kistos remains robust. Year-end cash, including near-cash, stood at $199 million, including Norwegian tax rebates, while adjusted net debt was approximately $81 million. Our balance sheet strength is underpinned by our ability to fund further growth opportunities, maintain flexibility, and continue to enhance shareholder value.

Looking ahead, our priorities for 2026 are clear:

• Complete and integrate the Oman acquisition;
• Work with our partner Vår Energi to deliver the next phases of the Balder Area development;
• Unlock organic growth in the Greater Laggan Area; and
• Enhance our UK gas storage assets, which are material to the country’s energy security.

We continue to focus on further near-term value accretive M&A opportunities in both the North Sea and MENA regions that enhance the group and shareholder value.”

Kistos enters the new year in fine fettle, today’s trading update shows that FY 2025 production was 9/- b/d, right at the top of guidance but more importantly looking forwards, the exit rate was 22,700 b/d. Guidance for this year is 19-21/- b/d which includes the pro-forma contribution from Oman and with Balder beating expectations should prove to be conservative.

The balance sheet remains strong, adjusting for the Norwegian tax receivable due later in the year net debt is just $81m and the company is in a robust condition to continue its highly respected M&A strategy which has always been accretive.

Indeed the Oman deal announced recently looks like a gem, it doubles production and reserves (to 49m boe) and the portfolio has significant upside over any timescale. (See note 12th December 2025)

In the UK the gas storage assets are constantly evolving, at Hole House the operation is being brought back into operation and capacity will be 35m+ therms up some 63% and at Hill Top the expansion has led to 22m therms of storage. This business is showing increasingly valuable tendencies from a slow start. 

Despite the strength in the shares, they are up 60% y/y, they still offer exceptional value. An exit production rate of around 23/- b/d when compared with the market cap of less than £150m is outstanding value and gives a sub £200m EV whilst looking at the c.50m barrels of reserves gives a £4 per barrel rate which is way too cheap.

At the time of the Oman acquisition I updated my TP and I am sticking with that, 450p a share and the above cheap ratings ensure a Bucket List certainty, makes Kistos one of the best value in the sector and the management has recently proved that it hasn’t lost any of its sparkle…

The interview with Chairman Andrew Austen from December is below.

Core Finance interview: Andrew Austin of Kistos

Reabold Resources

Reabold has announced that, further to its release of 26 August 2025,  which stated that LNEnergy Limited (“LNE”)’s Small Scale -LNG development plan in Colle Santo, Italy was given a positive opinion by the Italian Ministry for the Environment and Energy Security (“MASE”), MASE has now issued LNE the favourable formal decree and published this decision on its website. This can be found at: https://va.mite.gov.it/en-GB/Oggetti/Info/10561.

More good news today for Reabold as the Italian Ministry for Environment and Energy Security has given a positive opinion for the Small Scale LNG development plan for Colle Santo. They have now issued the favourable decree to LNE and published it. 

Whilst this is a fairly straightforward announcement, nothing should be taken for granted, and this is a further vindication of Reabold’s decision to invest in Italy, where the Government is exhibiting highly commendable backing for its domestic hydrocarbon industry. 

I wrote about Reabold on Tuesday after activities in the Christmas break prompted an investigation, which resulted in a sharp rise in the share price. Reabold shares are also up some 70% Y/Y, and with so much optionality in Italy and at West Newton, there is a great deal of upside still. 

Predator Oil & Gas

Predator yesterday announced a significant increase in Trinidad production following the completion of drilling and heavy workover operations ahead of schedule in the Bonasse and Goudron fields.

As at 4 January 2026

• Daily oil production up at 367 bopd at 04/01/26 (308 bopd at 30/11/25).
• B0N-17 development well in the Bonasse field completed.
• BON-17 established a new producing interval, with a lower water cut (20%), at only 120 feet measured depth.
• GY-211 heavy well workover in the Goudron field completed.

The interval from 2,603 to 2,868 feet was abandoned by the legacy operator in 1977 and plugged off.

The plug was penetrated on the 16th December 2025 resulting in an output of 221 barrels of oil in 14 hours with an initial flowing pressure of 200 psi.

Results demonstrate the potential to significantly increase Goudron production with the scheduled heavy workover programme by selectively targeting previously abandoned producing reservoirs.

• The transformer installed at the Goudron field has eliminated diesel used for generating electricity and improved lifting efficiency.

Predator has no exposure to current and future field operating and employee costs and does not have to provide any working capital for drilling and heavy well workovers for the assets operated by NABI.

Predator receives 30% of gross sales revenues from existing production less taxes and royalties  and 15% of new production until recovery of NABI costs, thereafter 30% of net sales revenues.

Fully-funded forward programme over the next month

• Prepare to drill a new high impact development well in the Goudron field based on the GY-211 results.
• Commence two heavy workovers in the Goudron field.
• Scheduled work programme targeting another significant increase in field production.
• Drilling, testing and geological programme for submission for regulatory approval to drill the high impact Cory Moruga Snowcap-3 (designated SC-3) appraisal/development well.

Paul Griffiths, Chief Executive Officer of Predator, commented:
“The initiation of the fully-funded drilling and well workover programmes at the end of 2025 has seen a material increase in production from Trinidad. We are excited about the potential production capabilities of the new well scheduled for Goudron given the unexpected higher level of production from the GY-211 well workover. We are already ahead of our production target for February 2026.

Trinidad is part of a World Class oil and gas province that has recently assumed greater geopolitical strategic significance. The potential future re-entry of the oil majors to Venezuela could facilitate a return of larger service companies to Trinidad, thereby increasing competitiveness and  access to in-country materials and services to lower drilling costs.

Our decision to expand our footprint onshore Trinidad in 2025 has been fully justified and we look to further develop our strategic business opportunities in 2026.”

Success so far is ‘unexpected’ and ahead of current production targets for February so a good, if modest start to the year in Trinidad. I look forward to hearing an update from Morocco to see how the year progresses. 

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