Proposed Acquisition of Tulip Oil Netherlands B.V.
12 March 2021
THIS ANNOUNCEMENT, INCLUDING THE INFORMATION CONTAINED IN IT, IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, OR THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE OR DISTRIBUTION WOULD BE UNLAWFUL.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF REGULATION 2014/596/EU (WHICH FORMS PART OF DOMESTIC UK LAW PURSUANT TO THE EUROPEAN UNION (WITHDRAWAL) ACT 2018) ("UK MAR"). UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION (AS DEFINED IN UK MAR) IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN. PLEASE SEE THE IMPORTANT NOTICE WITHIN THIS ANNOUNCEMENT.
For immediate release
("Kistos", the "Company" or the "Group")
Proposed Acquisition of Tulip Oil Netherlands B.V.
Suspension of Trading on AIM
Kistos (AIM: KIST), the closed-ended investment company which has been established with the objective of creating value for its investors through the acquisition and management of companies or businesses in the energy sector, is pleased to announce that it has entered into a binding share purchase agreement, subject to customary conditions precedent, to acquire the entire issued and outstanding share capital of Tulip Oil Netherlands B.V. ("TON") from Tulip Oil Holding B.V. (the "Seller" or "Tulip" or "TOH") (the "Acquisition").
· Kistos proposes the acquisition of TON, which, via its wholly-owned subsidiary, Tulip Oil Netherlands Offshore B.V. ("TONO"), owns an operating interest in the Q10-A offshore gas field and interests in other fields in the Dutch North Sea, including the Q10-B, Q11-B and M10/M11 discoveries, and other exploration and appraisal projects.
· The total upfront consideration for the Acquisition, subject to completion adjustments, is EUR 220 million. This consideration will be satisfied through a combination of cash, the assumption by Kistos of an existing bond instrument issued by TONO, the issue of a new debt instrument and the issue to the Seller of equity in Kistos. Kistos will also issue warrants over EUR 5 million of ordinary shares at a premium of 30% to the price of any equity placing to TOH. In addition, contingent consideration of up to EUR 163 million is payable on certain development milestones.
· It is anticipated that the Company will carry out an equity placing to existing and new investors in connection with the Acquisition (the "Placing"). The Company is exploring how the Placing can be accessed by retail shareholders. Both the Seller and various Directors of the Company will participate in the Placing.
· The Company is working with debt advisors in Norway to explore the options for the new debt instrument which will be issued as part of the consideration.
· The completion of the Acquisition is subject to, inter alia:
o certain regulatory consents and confirmations;
o finalisation of the Placing and the debt financing associated with the Acquisition;
o the publication of an AIM admission document;
o shareholder approval of the Acquisition; and
o Admission of the enlarged share capital of Kistos to trading on AIM.
· Upon completion of the Acquisition, the Company expects to cease to be an investing company under the AIM Rules for Companies and instead become a trading company. The Group will continue to review acquisition opportunities as they arise.
Andrew Austin, Chairman of Kistos, commented:
"We are very excited to be beginning the next phase of Kistos' journey with the acquisition of these profitable and cash generative assets, which have probably the lowest carbon footprint of any production assets in the North Sea. To be producing gas, a vital transition fuel, from normally unmanned platforms powered by solar and wind is exactly what we set out to do. In addition, we see potential for significantly increased production from discovered hydrocarbons within the licences being acquired by Kistos.
"The team at Tulip have done a fantastic job to date in getting this low carbon production operation up and running and we are looking forward to working with them and our partners at EBN in replicating this success and being a model for future low impact developments."
Information on TON
· The Acquisition comprises a controlling (60%) interest in the Q10-A offshore gas field together with interests in a suite of offshore exploration and production licences in the Dutch North Sea.
· The Q10-A field has 2P reserves of 19.5 mmboe and generated total net production of 5.47 mboe/d in 2020.
· Q10-A is reliant on solar and wind power. Its carbon emissions from production operations were <10g C02e/boe1 in 2020 and 17g C02e/boe1 in 2019. These are significantly below the North Sea average of 21 kg C02/boe. The Acquisition is consequently in line with the Company's strategy to acquire assets with a role in the energy transition.
· Plans for the future developments of the assets being acquired by Kistos utilise wind and solar power, which will make Kistos one of the lowest CO2/boe emitters of Scope 1 emissions from upstream operations in North West Europe.
· The group to be acquired recorded aggregated EBITDA1 of EUR 30.60 million in the year to 31 December 2020 (2019: EUR 36.27 million) and profit before tax in the same period of EUR 16.27 million (2019: EUR 38.66 million).
· The realised gas price in the year to 31 December 2020 was EUR 11.58/mWh (2019: EUR 12.55/mWh). The realised prices and forward curve imply an average 2021 gas price of EUR 18.30/mWh.
The Q10-B, Q11-B and M10a/M11 discoveries potentially have in total 78.5 mmboe1 of 2C resources, each with development plans prepared, and provide material growth opportunities for Kistos going forward. In addition to the contingent resource, TON holds various exploration prospects and appraisal projects that provide optionality and upside to investors across the portfolio.
Assets to be acquired
Q8, Q10-B, Q11
Temporary suspension of trading
The Acquisition constitutes a reverse takeover in accordance with Rule 14 of the AIM Rules for Companies. A further announcement with full details of the Acquisition will be issued at the appropriate time and an AIM admission document setting out, inter alia, details of the Acquisition (including a competent person's report on the material assets and liabilities of TON) will published and sent to Kistos' shareholders with a notice of general meeting. Accordingly, at the request of the Company, the Company's ordinary shares will be suspended from trading on AIM with effect from 7:30 a.m. today and will remain so until either the publication of an AIM admission document or until confirmation is given that the Acquisition is not proceeding.
The Company will release further announcements as and when appropriate.
For the purposes of UK MAR, the person responsible for arranging for the release of this announcement on behalf of Kistos is Andrew Austin, Executive Chairman.
c/o Camarco Tel: 0203 757 4983
Nick Lovering / Atholl Tweedie / Ailsa Macmaster
Tel: 0207 886 2500
Billy Clegg / James Crothers
Tel: 0203 757 4983
This announcement does not constitute, or form part of, any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any securities in the United States, Canada, Australia, Japan or the Republic of South Africa or in any other jurisdiction in which such offer or solicitation is unlawful, prior to registration, exemption from registration or qualification under the securities laws of any jurisdiction. The distribution of this announcement and other information in connection with the placing and admission in certain jurisdictions may be restricted by law and persons into whose possession this announcement, any document or other information referred to herein comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. Neither this announcement nor any part of it nor the fact of its distribution shall form the basis of or be relied on in connection with or act as an inducement to enter into any contract or commitment whatsoever.
Panmure Gordon (UK) Limited ("Panmure Gordon"), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for the Company as Nominated Adviser and Broker in connection with the placing and admission, and will not be responsible to any other person for providing the protections afforded to customers of Panmure Gordon or advising any other person in connection with the placing and admission. Panmure Gordon's responsibilities as the Company's Nominated Adviser under the AIM Rules for Companies and the AIM Rules for Nominated Advisers will be owed solely to the London Stock Exchange and not to the Company, the directors or to any other person in respect of such person's decision to subscribe for or acquire ordinary shares. Apart from the responsibilities and liabilities, if any, which may be imposed on Panmure Gordon by the Financial Services and Markets Act 2000, as amended or the regulatory regime established under it, Panmure Gordon does not accept any responsibility whatsoever for the contents of this announcement, and no representation or warranty, express or implied, is made by Panmure Gordon with respect to the accuracy or completeness of this announcement or any part of it and no responsibility or liability whatsoever is accepted by Panmure Gordon for the accuracy of any information or opinions contained in this announcement or for the omission of any material information from this announcement.
This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will", or "should" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include matters that are not historical facts. They appear in a number of places throughout this announcement and include statements regarding the directors' current intentions, beliefs or expectations concerning, among other things, the Company's results of operations, financial condition, liquidity, prospects, growth, strategies and the Company's markets. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual results and developments could differ materially from those expressed or implied by the forward-looking statements. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements in this announcement are based on certain factors and assumptions, including the directors' current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Company's operations, results of operations, growth strategy and liquidity. Whilst the directors consider these assumptions to be reasonable based upon information currently available, they may prove to be incorrect. Save as required by applicable law or regulation, the Company undertakes no obligation to release publicly the results of any revisions to any forward-looking statements in this announcement that may occur due to any change in the directors' expectations or to reflect events or circumstances after the date of this announcement.
Neither the content of the Company's website nor any website accessible by hyperlinks on the Company's website is incorporated in, or forms part of, this announcement.
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