Oil company Tulip Oil has agreed to sell its Dutch subsidiary Tulip Oil Netherlands to Kistos for 220 million euros, plus 163 million euros of contingent payments, and 5 million euros of warrants.
Tulip Oil Netherlands owns an operating interest in the Q-10A offshore gas field, the Q-10B, Q-11B, and M10/M11 discoveries, and other exploration and appraisal projects in the Dutch North Sea.
The total upfront consideration for the transaction is EUR 220 million (~$262 million). The amount will be comprised of a cash consideration, a new debt instrument, equity in Kistos plc, and the assumption and refinancing of the existing bonds of Tulip Oil Netherlands Offshore B.V. (“TONO”) by Kistos.
Tulip said Kistos was working with debt advisors, in Norway, to explore the options for a new debt instrument, which will be issued as part of the consideration. Kistos will also issue EUR 5 million of warrants to Tulip Oil at a premium of 30% to the price of any equity placing in addition to contingent consideration of up to EUR 163 million payable on certain development milestones.
The completion of the acquisition is subject to, regulatory consents and confirmations; closing of the new TONO bond and finalization of the equity component associated with financing the transaction, the publication of an AIM admission document on the enlarged Kistos Group; Kistos shareholder approval of the Transaction; and admission of the enlarged share capital of Kistos to trading on AIM.
Leo Koot, Chairman of Tulip Oil, commented: "We are very proud for our Dutch portfolio to be the foundation of Kistos growth story. The Tulip team has built a strong portfolio of producing, development, and exploration assets and has an excellent reputation for exploration successes and on-time and on-budget project delivery."
"More importantly, the low carbon operations on Q10A and high-quality assets will allow Kistos to play an essential role in the Dutch energy transition. We are very confident Kistos will continue the success story and look forward to partnering with Kistos as an equity and debt holder on this exciting new phase for Tulip’s Netherlands operations," he said.
Gas production from the Q10A field started in February 2019. The development comprises an unmanned remote-operated platform and a 42.5km pipeline to the P15D platform. The Q10-A field has 2P reserves of 19.5 mmboe and generated total net production of 5.47 mboe/d in 2020.
The Q10-B, Q11-B and M10a/M11 discoveries potentially have in total 78.5 mmboe1 of 2C resources, each with development plans prepared.
Koot said Tulip would focus on its assets in Germany.
"With the recent exploration success in the Stieg 1 well, Rhein Petroleum will be Tulip Oil’s next chapter to advance. We plan to build a material business producing German Oil for the German economy with a minimum carbon footprint. Using renewable energy sources and adhering to the strict German environmental standards, we expect to become the responsible choice for providing energy to the transport sector and petrochemical industry," Koot said.
Andrew Austin, Chairman of Kistos, said:"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 licenses 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."
Austin was previously executive chairman of North Sea-focused oil company RockRose Energy from 2016 until 2020. RockRose was sold to Viaro Energy Limited in August 2020. Interestingly, the name Kistos comes from the Greek work "Kistos" which is a genus of flowering plants in the rockrose family “Cistaceae."
"They are perennial shrubs found on dry or rocky soils. With the Kistos genus being hardy plants the Board considers the Company’s name to be reflective of the principles underlying its Investing Policy and strategy," info on Kistos' website says.