Kistos PLC (AIM:KIST) shares jumped 10% as the oil and gas group agreed to acquire the Norwegian North Sea assets of Oslo-based Mime Petroleum.
The deal will add 24mln barrels (MMboe) of 2P reserves plus 30 MMboe of more uncertain 2C resources, increasing total group reserves plus resources to approximately 80 MMboe, Kistos said.
In addition, Mime will add 2,000 boe/d (barrels daily) of production immediately and boost Kistos group's output to over 15,000 boe/d in 2025 once the Jotun FPSO is on production.
Management estimates that enlarged group production in 2023 will be in the range of 8,500 and 10,500boe/d.
Terms of the all-paper deal (plus US$1) are six million warrants exercisable at 385p, a 31% premium to the current share price.
Kistos will also assume debt of US$225mln, though Mime currently has cash of US$109mln and is due to receive a tax refund of US$80mln at the end of the year.
At completion, Mime will repay US$75mln of Mime’s debt with a further payment to bondholders of up to US$45mln in 2025 contingent on milestones being achieved.
In total, the Mime debt being retained by Kistos or retired by Mime, less cash balances at 31 March 2023 and the tax refund due in December 2023, equates to approximately US$111mln, said the statement.
Mime holds a 10% interest in the Balder joint venture (comprising the Balder and Ringhorne fields) and a 7.4% stake in the Ringhorne East unit, all operated by Var Energi.
Andrew Austin, Kistos' executive chairman, said he was pleased to announce its expansion into Norway.
"Kistos has evaluated several transactions in the UK and Dutch sectors, but the imposition of punitive windfall taxes and a lack of fiscal certainty have meant that both countries remain difficult places to commit capital and ensure continuity of shareholder returns.
"I expect Mime to be a platform for growth on the NCS and I believe Mime's management team - whose strategy and goals are aligned with ours - can help us achieve that.
“Critically, as well as providing us with visibility on a rising production profile over the next few years, principally though it's oil, the hydrocarbons produced at Balder will also enable us to maintain our industry-leading Scope 1 and Scope 2 CO2 emissions in the medium-term."
Shares rose 10.07% to 322.50p.