REG - Kistos Holdings PLC - UK Onshore Gas Storage Assets

Kistos HoldingsAnnouncement

20/02/2024 07:00

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RNS Number : 7469D  Kistos Holdings PLC  20 February 2024

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
REGULATION 2014/596/EU WHICH IS PART OF DOMESTIC UK LAW PURSUANT TO THE MARKET
ABUSE (AMENDMENT) (EU EXIT) REGULATIONS (SI 2019/310) (UK MAR). UPON THE
PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION (AS DEFINED IN UK
MAR) IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

 

20 February 2024

 

 

Kistos Holdings plc

 

("Kistos")

 

UK Onshore Gas Storage Assets

 

 

Kistos (LSE: KIST), the low carbon intensity hydrocarbon producer pursuing a
strategy to acquire assets with a role in energy transition, is pleased to
announce that it has entered into a Sale and Purchase Agreement ("SPA") to
acquire EDF Energy (Gas Storage) Limited ("the Company"), from EDF Energy
(Thermal Generation) Limited ("the Seller"), which owns two gas storage
facilities onshore UK, Hill Top Farm ("Hill Top") and Hole House Farm ("Hole
House") (the "Transaction"). The total consideration for the Transaction is
£25 million.

 

The Transaction is in line with Kistos' acquisition strategy to pursue
opportunities that align with the energy transition. Kistos' entry into the
gas storage sector provides business diversity to its upstream portfolio
within a stable marketplace that offers significant growth potential. Kistos
will assume operatorship of both sites and will put in place an agreement to
work alongside a partner to trade the gas.

 

Hill Top's gas capacity is 17.8 million therms, with an ongoing programme to
increase this working volume to 21.2 million therms in the short term. At
current working capacity, Hill Top accounts for 3.1% of the UK's total
available onshore gas storage capacity. Due to the fast cycle nature of the
facility, Hill Top can deliver up to 11% of the UK's flexible daily gas
capacity if called upon.  With the addition of the Hole House facility, which
is currently non-operational, it is possible to increase its proportion of the
UK's total onshore gas storage materially with reactivation and further
development.

 

Both facilities have the potential to be repurposed for future energy storage
uses, including the storage of compressed air or hydrogen and concept studies
are underway. This would place these assets firmly into the transitional
energy space beyond the current key role they play in the UK's supply of gas.

 

Commenting on the acquisition, Andrew Austin, Kistos' Executive Chairman,
said:

 

"Our entry into the gas storage market marks another advancement in our growth
strategy to expand the business through value-accretive acquisitions. Not only
do these assets complement our upstream UK assets, but they also diversify our
presence across the energy value chain with a foothold in the midstream
market.

 

We look forward to benefitting from the experience of the existing team at
these sites as we assume operatorship. Their specialist expertise will be
highly valuable as we seek to maximise the potential of the assets and
evaluate all options to expand operations via other energy storage sources
such as compressed air or hydrogen. In essence, Kistos will own one of the
most flexible "batteries" in the UK, vital for energy security and supply."

 

 

Assets overview

 

The Hill Top and Hole House facilities are located close to Warmingham in
Cheshire, beneath two working farms. In 2022, the last year for which audited
accounts are available, Hill Top was owned by Cheshire Cavity Storage 1
Limited and Hole House was owned by EDF Energy (Gas Storage) Limited. EDF
Energy (Gas Storage) Limited entered into a sale and purchase agreement to
acquire the business (comprising the assets) of Cheshire Cavity Storage 1
Limited on 28 November 2023 as part of an internal reorganisation. The
approximated pre-tax profit of these companies in the 12 months to 31 December
2022 was in the order of £32.3 million.

 

Hole House was developed specifically for gas storage in 1997 and was
operational from 2001 through to 2018 when a period of re-brining the caverns
was commenced. Three out of the total four caverns are now brine filled, with
cushion gas sold to market, and the remaining cavern will also be re-brined
over the short-term. A decision will then be taken whether to re-instate these
caverns for commercial operation in the future. Hill Top was developed by
British Salt Ltd. for the purpose of brine extraction over a total of ten
caverns. Subsequently the site was developed for gas storage, with a design
life of 30 years. The first three caverns have been operational since 2014 and
a further two caverns were added in 2018, taking the working gas capacity to
17.8 million therms. The caverns are cycled together and operate within a
pressure envelope of 32-45 barg.  Facility modifications are underway that
will result in the working gas capacity increasing to 21.2 million therms in
the near term.

 

The Hill Top and Hole House sites are currently operating on long term leases
with the freeholder; British Salt Limited. The Transaction also includes the
freehold of Spring Moss farm, which is currently used for agricultural
purposes and covers an area of 71 acres. It is located adjacent to Hill top
and Hole House. The sites are both operated from a common control room, with
connection into the gas National Transmission System through a pipeline, with
two separate connection points.

 

Hill Top is one of only seven operational gas storage assets onshore the UK
and is of strategic importance for both the energy transition and UK energy
security. The fast cycle ability of the plant allows additional value to be
captured in times of increased market price volatility.

 

Upon completion of the acquisition, Kistos will continue to evaluate whether
the Hole House facility is in a favourable position to be re-developed and
brought online in the future, offering further potential upside.

 

Transaction terms

 

Under the terms of the SPA, Kistos will pay a total consideration of £25
million (in cash), to acquire 100% of the share capital of EDF Energy (Gas
Storage) Limited.

 

Kistos will take on operatorship of the site through the acquisition of the
Company and a highly competent team of staff and contractors.

 

The Transaction is conditional on Kistos making a voluntary notification of
the proposed acquisition under the National Security and Investment Act 2021
(NSIA), and there being no action taken by the Cabinet Secretary to block the
change of control of the Company on national security grounds. The voluntary
notification has been made today. A further announcement will be made in due
course upon completion of the Transaction.

 

 

 

Enquiries

 

 Kistos Holdings plc                           via Hawthorn Advisors

 Andrew Austin / Peter Mann

 Panmure Gordon (NOMAD, Joint Broker)          Tel: 0207 886 2500

 James Sinclair-Ford / Dougie McLeod

 Berenberg (Joint Broker)                      Tel: 0203 207 7800

 Matthew Armitt / Ciaran Walsh

 Hawthorn Advisors (Public Relations Advisor)  Tel: 0203 745 4960

 Henry Lerwill / Simon Woods

 Camarco (Public Relations Advisor)            Tel: 0203 757 4983

 Billy Clegg

 

Notes to editors

 

Kistos plc was established to acquire and manage companies in the energy
sector engaging in the energy transition trend. The Company has undertaken a
series of transactions including the acquisition of a portfolio of highly cash
generative natural gas production assets in the Netherlands from Tulip Oil
Netherlands B.V. in 2021. This was followed in July 2022, with the acquisition
of a 20% interest in the Greater Laggan Area (GLA) from TotalEnergies, which
includes four producing gas fields and a development project. In May 2023,
Kistos completed its third acquisition, acquiring the total share capital of
Mime Petroleum and its Norwegian Continental Shelf Assets. These comprise a
10% stake in the Balder joint venture spanning Balder and Ringhorne oil
fields.

 

Kistos is a low carbon intensity gas producer with Estimated Scope 1 CO₂
emissions from its operated activities offshore of less than 0.01 kg/boe in
2022 (excluding necessary flaring during drilling campaigns).

 

www.kistosplc.com (http://www.kistosplc.com)

 

ENDS

 

 

 

 

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