Kistos (LON: KIST), notes that Var Energi ("Var" or "the Operator"), released an update for the Balder X project this morning, in which Kistos Energy (Norway) AS ("KENAS") has a 10% interest. Var reported that the target production start date has been moved to the second quarter 2025.
When Kistos acquired Mime Petroleum this scenario was envisaged. In the deal structuring with the bond holders (who effectively controlled MIME at the time) we protected Kistos from such a delay and cost increase by the provision of the $45 million Hybrid Bond. This $45 million is structured such that if 500,000 bbls (gross) isn't lifted from the Jotun FPSO before the 31st May 2025 then the full $45 million is not payable. Therefore, we as a board are confident that there will be no adverse impact from the delay. It is likely that the effect of the delay on Capex will be significantly less than the positive effects of the Hybrid Bond not being paid in full.
In reaching the decision to delay Balder X, a key consideration was to limit as much as possible the carryover of work on the Jotun FPSO into the offshore installation and start-up phase. With all development wells completed and all subsea production systems installed, the plan now is to complete the vessel fully onshore.
The operator has reviewed its cost estimate for the project to reflect sail-away of the Jotun FPSO in the spring of 2025. The revised CAPEX forecast represents an increase of approximately US$400 million gross pre-tax (approximately $40 million net to Kistos pre-tax, of which $8.8 million is the approximate post-tax impact) of which 75% is expected to be incurred in 2025.
As announced by Var this morning, Balder X, will secure production from the Balder Area beyond 2045. It will unlock gross proved plus probable (2P) reserves of around 150 mmboe (gross) and peak output of about 90 kboepd (gross).
Importantly, as an area host, the Jotun FPSO will enable future growth opportunities. Balder Phase V is being progressed, including the drilling of six production wells to utilise the remaining subsea template well slots to capture gross 2P reserves of over 30 mmboe. Drilling of these wells will commence in the first half of 2025 and be completed in 2026.
In addition, the Balder Phase VI project is being matured, to add new subsea facilities and wells, with an investment decision expected in the first half of 2025. Var notes there remains significant resource upside in the area and further exploration drilling and tie-back development phases are being planned.