Kistos Holdings: Keeping the Lights On: Kistos’ North Sea Contribution

Kistos holds a net interest in Norway’s Balder Future project, which hit first oil in June 2025 and is ramping toward an operator‑guided peak of about 110 kboepd gross, roughly ~11 kboepd net to Kistos at peak. Operating costs are indicated around USD ~5 per barrel on the Jotun FPSO, supporting attractive margins as more wells come online. With additional phases (V and VI) progressing, Balder is designed to produce beyond 2040, offering a visible, low‑cost cash flow runway.

Kistos’ UK gas storage adds earnings that don’t depend on drilling or buying gas when it’s cheap, and selling when demand and prices rise. After “soft‑cycling,” working gas capacity increased by about 24% to roughly 22.1 million therms, improving the ability to capture seasonal spreads; studies on further options, including Hole House, are underway. This midstream exposure helps smooth cash flows during winter peaks and periods of price volatility.

FY24 disclosed 2P reserves of 24.4 mmboe and 2C resources of 57.5 mmboe, alongside an estimated NOK 746 million Norwegian tax refund expected in early December 2025, which can strengthen liquidity as Balder ramps. External screens often value Kistos below the implied worth of its producing and near‑producing assets; stating reserves correctly and the upcoming refund sharpens that case.

• Balder X ramp to peak: Confirmation that Balder X reaches its planned peak around September signals that the new wells and facilities are working as intended, which supports confidence in near‑term production and cash flow. Hitting this milestone reduces timing risk for 2025 volumes and helps the market gauge how quickly liftings translate into revenue.

• Trading update cadence: Updates on gas storage utilisation and winter hedging will show how effectively seasonal price swings are being captured. Clear commentary on inventory levels, capacity use, and hedge coverage helps investors understand how earnings may hold up through colder months.

• Q4 2025 Balder Phase V first well: The first Phase V well moving into production tests the project schedule and adds incremental barrels that can build 2026 momentum. Delivering on this step also supports confidence that subsequent wells can follow on time and within budget.

• Norway tax refund receipt: An expected Norwegian tax refund in December 2025 boosts liquidity, giving more room to manage debt, fund development, or consider selective growth. The timing and size of this inflow are practical supports for the balance sheet heading into 2026.

• Balder Phase VI timeline: Phase VI, targeted for first oil by end‑2026, extends the production life of the area and helps smooth the decline curve. Hitting this timeline supports a steadier medium‑term production base, which can stabilise cash generation beyond initial ramp phases.

• UK policy evolution: If the UK shifts away from windfall‑style taxes and sets clearer long‑term rules, it can improve investment appetite and reduce valuation discounts. Stable policy doesn’t guarantee growth, but it makes project planning easier and can encourage capital back into the basin

The UK’s recent windfall levy history has chilled investment, and uncertainty around future policy could weigh on reinvestment and valuation. While new-spend allowances exist, inconsistent signals can still raise hurdle rates and slow projects. A stable policy reset would be a tailwind; absent that, North Sea premiums may remain depressed versus Norway, keeping a discount embedded in shares.

Balder X is in commissioning and early production; delays, underperformance, or higher opex could defer free cash flow expectations. Operator guidance indicates all 14 wells to be brought onstream with peak around September; any slippage would shift volumes and receipts into later periods. Early cargo pricing and production efficiency need to translate consistently as liftings normalise under the PQ arrangement.

Sector cyclicality and project schedules can stretch balance sheets; external trackers show elevated debt ratios and weak equity-to-asset metrics. While company-level disclosures and IR presentations guide to manageable liquidity aided by tax refunds and storage cash flows, investors should monitor financing costs, covenant flexibility, and allocation priorities through FY25.