Shares in Kistos PLC (AIM:KIST) rose 5% on Wednesday after the oil and gas group announced it had signed off on the next phase of development at the Balder field in Norway.
Panmure Liberum believes the move will significantly boost production and add value.
In partnership with Var Energi, Kistos has taken a final investment decision on Balder Phase VI. The project will convert 15 million barrels of contingent resources into proven and probable reserves, adding 1.5 million barrels to Kistos’s own portfolio.
This phase will involve drilling a new multilateral well and tying it back to the Jotun floating production vessel.
The economics are strong: Kistos’s share of the capital spend is $26 million, with a breakeven oil price below $35 per barrel, an internal rate of return above 35% and a payback period of less than one year.
Panmure sees further upside from future phases, particularly Balder Next, which could bring additional reserves and lower both operating costs and emissions.
The broker values the shares, up 8.8p to 188.8p, at 302p.