Kistos Announces Full-year Results for the Year Ended 31 December 2022

Kistos (LSE: KIST), the low carbon intensity gas producer pursuing energy opportunities in line with the energy transition, is pleased to provide a summary of its audited full-year results for the year ended 31 December 2022. A copy of the Company's full audited annual report and accounts will be made available shortly on the Company's website at www.kistosplc.com.

2022 Highlights

· On a pro forma basis, the Group production averaged 10.6 kboe/d (2021: 4.3 kboe/d), reflecting a full-year contribution from the Q10-A gas field offshore the Netherlands, and almost six months production from the Greater Laggan Area ("GLA") offshore the UK.

· Adjusted pro forma EBITDA, which includes a full 12-month contribution from the GLA, was €517.2 million (2021: €102.9 million).

· Completed the acquisition of a 20% interest from TotalEnergies E&P UK Limited ("TotalEnergies") in the GLA, more than doubling Kistos' net daily production.

· Year-end 2P reserves of 12.7 MMboe increased to 36.3 MMboe on completion of the Mime Petroleum A.S. ("Mime") transaction.

Financial

Strong cash generation in both halves of the year, with movements in gas prices and production rates offsetting each other

· Profit after tax of €73 million, including €44 million of impairment charges relating to exploration assets in the Netherlands, €27 million of gains from changes and releases in acquisition contingent consideration balances, and a total tax charge of €228 million.

· The tax charge (resulting in an effective tax rate for 2022 of 89.8%) includes impact of the Energy Profits Levy in the UK and the EU Solidarity Contribution Tax in the Netherlands.

· Cash balances on 31 December 2022 of €212 million (31 December 2021: €77 million) and net cash of €130 million (31 December 2021: net debt of €73 million).

· Retired 46% of outstanding debt by repurchasing €68 million of Nordic Bonds, leaving €82 million outstanding.

· Capital expenditure on a cash basis, excluding business acquisitions, was €19.5 million.

Operational

Increasing the Group's production base with organic and inorganic growth

· Year-end 2P reserves of 12.7 MMboe increased to 36.3 MMboe on completion of the Mime Petroleum A.S. (Mime) transaction.

· Drilling of the Benriach exploration well (Kistos 25%) approved and was spudded in March 2023.

· Estimated Scope 1 CO2 emissions from our operated activities offshore were less than 0.01 kg/boe in 2022 (excluding necessary flaring during drilling campaigns)

Outlook

Transforming Kistos into an influential independent North Sea E&P across three proven energy markets

· Mime acquisition completed in May 2023, adding 2P reserves of 23.6 mmboe and 2,000 boe/d of production in 2023, increasing to over 15,000 boe/d in 2025 once the Jotun FPSO is onstream.

· The Mime acquisition provides a platform for growth on the Norwegian Continental Shelf

· Kistos is ready to sanction the Edradour West and Glendronach developments in the GLA (subject to JV partner approval), utilising investment allowance under the terms of the UK Energy Profits Levy. If approved, Edradour West development programme anticipated to commence by year-end 2023.

Andrew Austin, Executive Chairman of Kistos, commented:

"Kistos' accelerated evolution over the course of 2022 has been driven by targeted value-accretive acquisitions which have provided both immediate and longer-term upside for the Group. Our entry into the UKCS, followed this year by Norway, has created a diversified and flexible portfolio across multiple jurisdictions.

The Group benefited from strong commodity prices resulting in significant cash generation, which will allow us to continue to capitalise on the exploration, appraisal, and development opportunities within our portfolio. However, these strong commodity prices have resulted in authorities imposing so-called windfall taxes on our operations. This is difficult to comprehend, given that greenhouse gas emissions associated with imported hydrocarbons are typically much higher than those associated with those produced locally. This tax instability has already resulted in Kistos and companies with international asset portfolios cancelling or scaling back North Sea projects and diverting capital elsewhere, with significant implications for local energy security of supply.

In particular, the imposition of the retrospective and regressive Solidarity Contribution Tax on our Netherlands profits means that the Group, and other energy industry participants in the EU, will find it difficult to justify future material investments and developments due to the risk of confiscation of profits should oil or gas prices rise again. We believe our Dutch subsidiary is out of scope of the charge, but have nonetheless made a provision for it in these results, pending further clarification and the outcome of legal challenges from other parties.

From a standing start in 2020, we have built an excellent platform, and we will seek to deploy further capital in the right opportunities or make distributions to shareholders. The instability of the fiscal regimes in which we operate has prompted us to review our investment options and, as we have already demonstrated with our entry into Norway, our pipeline of business development opportunities includes assets in jurisdictions other than the UK and the Netherlands in which we can continue to generate substantial returns for investors."