Business Review
Company profile
Kistos NL2 B.V. (“Kistos NL2” or the
“Company”) is a 100%-owned subsidiary
of Kistos NL1 B.V. (“Kistos NL1”), which is
a 100%-owned subsidiary of Kistos plc.
The address of its registered office and
principal place of business is Alexanderstraat
18, 2514 JM Den Haag, The Netherlands.
Kistos plc acquired Kistos NL1 (formerly
Tulip Oil Netherlands B.V.) on 20 May 2021.
Together with Kistos NL2 (formerly Tulip Oil
Netherlands Offshore B.V.), it forms the Kistos
Group, hereinafter referred to as “the Group”.
The Company is wholly and directly controlled
by Kistos NL1 and by its ultimate parent
Kistos plc. The main focus of the Company is
upstream development and production with
a focus on the exploitation opportunities
in undiscovered and undeveloped offshore
oil and gas fields in The Netherlands. As
at 31 December 2021 Kistos NL2 holds the
exploration licences for Q8, Q10-B and Q11 and
holds the production licences for Q7 and Q10-A.
Together with Energie Beheer Netherlands
(“EBN”) as partner, Kistos NL2 acts as the
operator in the joint operation agreements of
the abovementioned offshore licences.
Overview
The Board hereby submits to the shareholders
the financial statements for the financial
year 2021, as prepared by management
and approved by the Board on 6 April2022.
BDO Audit & Assurance B.V. audited the
financial statements. Its report can be
found on page43. The Board recommends
that shareholders, in accordance with the
Articles of Association, adopt these financial
statements and, as proposed by the Board,
transfer the profit for the 2021 financial year
of €34.4MM to retained earnings.
Business review
In the six months to the end of June 2021,
gross production from Q10-A averaged
1.43MM Nm
3
per day. However, two months
after the completion of the acquisition of
Kistos NL1 and Kistos NL2 by Kistos plc,
Kistos NL2 announced the commencement
of a six-month drilling campaign, which
resulted in Q10-A exiting the year with output
significantly higher at 1.8MM Nm
3
per day.
In addition, an appraisal of the Orion oil
discovery tested at a rate of 3,200 b/d. The
Q11-B appraisal targeted three reservoirs:
Slochteren, Bunter and Zechstein. Slochteren
target was completed prior to year end and
was water bearing. Bunter and Zechstein
formations flowed gas. The well has now
been suspended pending further development
studies.
As detailed in the independent Competent
Persons Report (CPR) published in
conjunction with the transaction related to
the acquisition of Kistos NL1 and Kistos NL2,
the 2P reserves associated with the acquired
assets were 20.0 MMboe as of 31 December
2020. After taking account of production
from Q10-A during the course of last year, this
figure was 18.1 MMboe on 31 December 2021.
This figure has the potential to increase as we
progress to Final Investment Decision (FID)
with the Orion and Q11-B projects, enabling
the conversion of 2C resources to 2P reserves.
Crucially, Kistos achieved this increase in
reserves and production while abiding
by its founding principle of being part of
the energy transition. Natural gas will be
critical to Europe’s transition to a low carbon
economy, which is demonstrated by the
European Commission’s decision to categorise
investments in natural gas production
as “transitional economic activities”. Our
Q10-A platform has an extremely low carbon
footprint thanks to the integration of things
such as wind turbines and solar panels into its
design. We will take a similar approach to any
future development projects.
Central to our operations is our health, safety
and environmental (HSE) performance. We are
pleased to report that we did not suffer any
Lost Time Injuries in 2021 despite undertaking
more than five months of drilling and testing
operations. Neither did we suffer any disruption
to our operations from COVID-19 thanks to the
rigorous procedures we have in place to combat
and, if necessary, contain the virus. Meanwhile,
the wind turbines, which were upgraded in 2021,
and the solar panels on the Q10-A platform
continue to minimise our CO
2
emissions.
Financial position
Reported EBITDA for 2021 was €104.3MM. This
was weighted towards the second half of the
year, when gas prices were significantly higher.
Hence, we ended the year with cash balances
of €44.4MM, which was achieved after capital
expenditure outflow of €20.8MM. With high gas
prices carrying over into 2022 and production
from the Q10-A gas field significantly higher
than when Kistos plc acquired the Company,
the current year has started strongly.
Outlook
We expect to drive further operational
progress across our portfolio in 2022.
Currently, our plans to construct a new gas
export pipeline from Q10-A to IJmuiden are
on hold while we review alternatives that
have been proposed by other stakeholders,
thus ensuring that we pursue the option that
adds most value for shareholders. Similarly,
with the help of Rockflow Resources, our
technical team in The Netherlands is taking
a meticulous approach to the Concept Assess
and Concept Select phases of the Q-10 Orion
oil field development project.
Our thanks and appreciation to all our
staff, contractors and partners for their
contributions and cooperation during an
exciting and successful 2021.
Summary Report of the Board Audited Financial Statements Independent Auditor’s ReportKistos NL2 B.V. 2021 Annual Report and Audited Financial Statements 05