Strong oil prices lifted earnings, but a jump in net debt and a production dip unsettled investors.
Kistos (AIM: KIST) shares dropped 6% on Monday even as the oil and gas producer reported pro forma earnings of around $280m for the first nine months of the year, buoyed by strong energy prices and the completion of its expansion into Oman.
The sell-off came despite the apparent strength of the numbers, with investors instead focusing on a sharp rise in net debt, heavier capital spending and a softer production quarter, all of which appear to have outweighed the benefit of higher realised prices.
The company, which produces oil and gas across the UK, Netherlands and Norway, said it had completed the acquisition of two licence blocks in Oman during September, with a third deal expected to close by the end of the year. Unhedged exposure to the market meant Kistos captured an average of $95 a barrel for its oil during the period.
Production averaged around 20,000 barrels of oil equivalent a day over the nine months but slipped to 18,500 boe/d in the third quarter because of planned maintenance, including a turnaround at the Jotun floating production vessel in Norway. The company kept its full-year guidance unchanged at 19,000 to 21,000 boe/d, pointing to new wells due online to support volumes.
Net debt climbed to $101m from $23m just three months earlier, reflecting the Oman completion payment, ongoing capital investment and scheduled debt repayments. Kistos said it remains on the lookout for further acquisitions within its core operating regions, suggesting the balance sheet could see further movement as consolidation continues.
This report is based on Kistos’s announcement and coverage by UK Investor Magazine. Company announcements can be tracked via London Stock Exchange RNS and Investegate, and the full results calendar is worth watching for the next update.
This article is for general information only and does not constitute investment advice or a recommendation to buy or sell any security. Photo: Maria Lupan on Unsplash.