Kistos Share Discussion Threads

[mariopeter] 14/7/2022 10:48

Yes the fact that KIST are cash piling too makes them want to expand while the sun is shining. The SQZ offer for KIST which was clearly unresearched, I feel shows SQZ management might not be very good at acquisitions. I can see the synergy for everyone going forward and everyone needs to think what is left when the sun goes down some. As for a little debt my view is the same as why I took out a mortgage to buy a home and that keeps me, as the manager, on my toes as well as allowing me use of an asset base that happens to grow.

I question why SQZ management are losing millions on hedging and feel they really need to do something better with their cash. Stopping hedging would be a good start.

SQZ management have done extremely well over the last 7 years or so but they should really expand on the success now when the going is good. Organic growth is fine but it is all terribly slow. There is a short window on transitional gas I would propose, possibly 20 years, and speed to production must be paramount to enjoy high prices (not quite as lofty as currently) while the majors bail from hydrocarbons.

I personally would prefer an all share deal and leave some serious expansion cash (and dividend cash) inside. The weighting of the shareholdings going forward should depend on both companys' 5/10 year plans and reserves to include heavy discounting for undrilled resources even ones with the drill bit spinning.

Hopefully the laundry can be done in the wash rooms from here and not in the public eye which I can see KIST were forced to do.

[anley] 13/7/2022 15:13

A very difficult fight on AA hands with heavy weight City advisers..............

As I wright the market is betting that Kistos is going to have to come up with a better financial package - AA likes gearing and SQZ likes cash piling in every day.

Two very different management teams.

[mariopeter] 12/7/2022 17:54

Good spot Officer Digby. Organic growth plans and paying off some debt will swallow some cash. I did note that they feel as separate companies they would be valued at 1.3 times EBITDA and combined that multiple rises to 1.8 EBITDA in the present market.

If you take that as being correct and I reckon KIST will make about £600m this year then we should be capped at £9.42 a share by Christmas if KIST stays away from the deal. That kind of makes sense.

Whatever happens I am staying with the KIST management team.

[fandagle] 12/7/2022 17:31

never a dull moment with AA, he clearly wants more than £18.50 for KISTOS this time around...

[officerdigby] 12/7/2022 17:07

MP presentation has KIST 2022E FCF at £0.3bln and SQZ at £0.5bln

[tazerface] 12/7/2022 15:45

This rabid dog is going down. Overvalued debt ridden junk.

[alxo82] 12/7/2022 15:42

Premier Miton Group has also disclosed a position in Kistos

[thefartingcommie] 12/7/2022 15:06

Form 8.3 - Maitland Institutional Services Limited Re: Kistos Plc (Opening Position Disclosure) #KIST
orm 8.3 - Maitland Institutional Services Limited Re: Kistos Plc (Opening Position Disclosure)
12th July 2022, 14:43
3,125,000 3.77% Opening position disclosure as at 12 July 2022

[piratepeter] 12/7/2022 14:49

Malcy’s initial thoughts: I am away today which may not be such a bad thing, it will give me a chance to listen to the webcast and catch up with both companies today and tomorrow before trying to assess what is best for both sets of shareholders.

However my initial thoughts must be that the Kistos bid for Serica looks like having potentially more upside for shareholders than the other way round. All the numbers are above but I can’t quite see how Kistos shareholders (obviously as AA has such a big holding but would be locked in) can get to any significant upside.

As I said I’m hoping to catch up with Mitch Flegg and Andrew Austin to see what they are saying, it may not be much and I fear that advisors will make everybody keep schtum. There are a number of factors at play as well, UK gas prices are way lower than TTF levels and of course Serica have just spudded the North Eigg well which will have a marked valuation effect should it come in.

Also the Kistos bid for Serica would seemingly put together the best parts of both managements, which are amongst the best in the sector and yet should Serica win then nobody from Kistos will be in the combined team. The Kistos deal would also commit the combined group to a Premium listing with the possibility of becoming a fast growing, UK based oil and gas company with potential for admission to indices such as the FTSE 250, surely a good move for bigger shareholders?

Finally as I said I’m going to try and catch up with both sides in the next 24 hours, I may not get everyone I want but I’m sure at some stage Kistos will talk even if they are under strict control by advisors.

[mariopeter] 12/7/2022 11:00

Welcome to this board Swanvesta. Love your spreadsheet and will study it in greater detail as things progress.

[mariopeter] 12/7/2022 10:53

KIST, I think, have made £200m+ in the first half to 30th June 2022 and if current gas prices prevailed in the whole of the second half pre-tax profit then roughly double that for the second half. There are tiny development cost left to w/off so profit and cash are similar at KIST. Zero hedging now at KIST.

For sure any deal will be designed to be win win for both sets of shareholders. Andrew will make sure of that and will not waste anybody's time. In his own words he does not try and win a deal for KIST at the detriment of vendors he wants everyone to be happy or he is wasting his time. Anyway not that this is a full blown acquisition as its not, everyone enjoys the fair benefit of both companies going forward.

Think an issue is current profitability at KIST is not well known and for sure cannot be easily gleaned from historics but for the benefit of SQZ a summary of KIST:

12k boepd ...half in Holland and half in the UK so that's 10K MWhrs per day in Holland at this price:



Costs in Holland are US$3 per boe with extremely low carbon throw off.

In the UK 6K boepd or 340k therms per day at UK prices and the costs (not disclosed) we think might be US$15 per boe.

and G and A are tiny (say 15m)and deduct some delivery costs (not big) and directors bonuses? say £10m.

On reserves KIST have a very nice oil find ready for development (recently appraised but no recent CPR) and nearly ready for project sanction. Reserves at last CPR were 2p 20mmbo and 2c 99mmbo net to KIST.

Got another 2.5 years on UK gas (much longer in Holland). Tie back in both countries being appraised to improve lifespan and production nos. Also own a share in the very big Benriach (think .6TCF) via their recently wrapped up Total deal.

Simple, very lean and room for vast organic growth. Management think purely like shareholders.

[swanvesta] 12/7/2022 10:37

No, sorry. Just went to town on SQZ, having decided I needed to really tear apart the accounts of at least one oil and gas company. Too bad that they're all different!

[soundsplausible] 12/7/2022 10:21

@swanvesta that is one hell of a spreadsheet. Have you one for Kistos?

[swanvesta] 12/7/2022 09:59

I think SQZ pretax will be £900m-£1bn, after tax £400m

[mariopeter] 12/7/2022 09:48

Farmscan . Thanks. What do they have for KIST?

[farmscan] 12/7/2022 09:38

mario Sharescope have SQZ pre tax of £742m and EPS of 129p for 2022.

[hiddendepths] 12/7/2022 09:37

It looks to me as though KIST has been pumped ahead of this RNS. I've sold about a quarter of my shares into today's rise and hope to buy them back when the inevitable rebuff occurs.

I'm aware that sale might be a bad move!

Tidy - I totally agree. I think there will be a wave of bids and mergers transforming the landscape.

[tidy 2] 12/7/2022 09:35

Good news that it puts all the NS producers on the investor radars. SQZ KIST iOG TINY CAPS and majorly in demand.

[hiddendepths] 12/7/2022 09:35

mp - no, haven't looked too hard at SQZ profit for this year as gas price will continue to be very volatile and it would just be a shot in the dark at this stage. £400m doesn't sound unreasonable though.

[mariopeter] 12/7/2022 08:50

The retaliatory offer for KIST was a market cap of £480m. Kist value KIST at £1b in their offer to SQZ. Hiddendepths got an idea of profit expected at SQZ this year? Looks like KIST think profit will be £400m this year at SQZ.. Should add pre-tax btw. Just to say that KIST will make minimum pre-tax PROFIT of £400m in 2022 and maybe more like £600m + with higher gas prices in the second half.

[bountyhunter] 12/7/2022 08:36

Absolutely!

[hiddendepths] 12/7/2022 08:22

SQZ shareholders aren't going to go for this. It'll need to be sweetened quite a bit, I think.

[mariopeter] 12/7/2022 08:00

They value SQZ at £1.037B and that's 50% of the proposed combined entity. Should be win win and that's what Kistos look to do.

[hiddendepths] 12/7/2022 07:54

Good grief! I've got plenty of both - with more in SQZ.

Don't know what to think......

[mariopeter] 12/7/2022 07:43

Both companies are significantly undervalued on the market.