WTI (Nov) $70.10 +27c, Brent (Dec) $73.90 +34c, Diff -$3.80 +7c
USNG (Nov) $2.89 -1c, UKNG (Nov) 96.56p -2.55p, TFF (Nov) €38.15 -€1.45

Oil price

The oil price has risen again today and it’s not all about the Opec+ meeting I can tell you for certain. Ministers  agreed to leave policy unchanged so whilst the 180/- b/d release has been pushed back a couple of months to December that is staying put. Please don’t waste time trying to get a bookie to give you a price on that…

The situation in the Middle East remains tense, the oil price has risen after Sleepy Joe was asked this morning whether he would support ‘Israel striking Iran’s oil facilities’. His reply was ‘We’re discussing that. I think that would be a little … ‘anyway, nothing will happen today’. 

On the more mundane note, the EIA stats were predictably mixed following the hurricane of the last couple of weeks and the build in crude and gasoline was higher than expected but will probably unwind with the season change. 

Kistos

I wrote about the Kistos interims last Wednesday and said that I thought that there was plenty of upside in the share price. Following that, I had a couple of conversations with Chairman Andrew Austin, in which we discussed the fact that the market may be slightly missing the point by worrying about the net debt figure.

In the report, the net debt figure was announced as being $175m, with cash of $72m, and without any specific reference to the tax receivables within the balance sheet. The first of these receivables will arrive on 1st December, relates to 2023, and is as good as guaranteed given it is a rebate against 71.8% of that year’s tax loss in Norway. Surely, this is almost as good as cash in the bank.

Hence, net debt is, arguably, some $84m lower than the published figure and the amount Kistos receives in December will be closer to $90m as the amount owed attracts interest. Furthermore, continued capital expenditure on The Balder X project meant that Kistos built up an additional tax receivable of almost $40m in the first half of 2024.

This amount is payable by the Norwegian tax authorities in December 2025, but the actual figure will be larger given that, due to the delay to the sail away of the Jotun FPSO, the tax loss will continue to build in the second half of this year. In addition to the forthcoming cancellation of the hybrid bonds, this dynamic provides a further layer of protection for Kistos’ shareholders.

So, with an $84m (plus interest) tax receivable due this December, almost $40m already earmarked for receipt in December 2025, and $72m in the bank at mid-year, Kistos’ true net debt figure looks more like $50m. Added to its market capitalisation of ~$125m, that gives an enterprise value of ~$175m. For a company with 2P reserves of 28 mmboe and production of over 8,000 boe/d (rising to ~15,000 boe/d in mid-2025), that looks very cheap indeed.

And of course here is the interview that I recorded yesterday with Andrew Austin, Executive Chairman of Kistos.

Core Finance CEO Interview: Andrew Austin of Kistos

Beacon

Beacon has provided the following update in relation to its financial accounts.

The Company expects to be in a position to publish its 2023 Annual Report and H1 2024 Interim Results during the week commencing 7 October 2024. 

As a result, trading in the Company’s ordinary shares on AIM will continue to be suspended. It is expected that suspension from trading will be lifted with the publication of the Annual Report and H1 2024 Interim Results.

I’m not expecting anything from Beacon until the restructuring is complete and also the documents above are filed. After that I’m sure that Stewart MacDonald will come back to us with what be called the New Beacon…

UK Oil industry

The oil and gas sector contributes £25 billion to the UK economy and supports an estimated 200,000 jobs across the country. Many of these jobs are currently under threat from potential Government policies making future investment financially impossible. This short film, made with Brindex and the GMB, focuses on the hopes and fears of some of our colleagues from the Bruce platform. Their stories have parallels on many other platforms, in many other families across the UK. Welcome to ‘A Town Called Bruce’.

Watch the video: Welcome to 'A Town Called Bruce'    l   A Town Called Bruce (PDF)

KeyFacts Energy Industry Directory: Malcy's Blog