AIM-quoted oil and gas producer Kistos (LON: KIST) has made a bid approach to the much bigger AIM rival Serica Energy (LON: SQZ) in order to create large North Sea-focused oil and gas company worth around £1.8bn that could become a consolidator. The plan would be to move to the Main Market and join the FTSE 250 index.
The proposal is described as a possible offer. Kistos is offering 0.2932 of one of its shares and 246p in cash – 67p distributed by Serica Energy from its cash pile and 179p paid by Kistos. This offer was 90p a share in cash plus 1.29 Serica Energy shares.
Kistos has announced its offer to put pressure on Serica Energy to negotiate. The first approach was in May and later in the month the proposed terms were outlined. Serica Energy says that it has previously rejected the Kistos offer and it made an offer for Kistos which was also rejected.
Serica Energy said in June that average net production in the year to date is in excess of 26,000 barrels of oil equivalent per day. Serica Energy’s production is more than 85% gas, which is equivalent to more than 5% of the UK’s gas production. Serica Energy says that the new energy levy does not cover profit made prior to 26 May. Capital investment will offset a significant amount of the levy cost.
Kistos floated on AIM on 25 November 2020 as a shell at a placing price of 100p a share and in May 2021 bought a Netherlands-focused oil and gas business. The share price has subsequently jumped to 486.5p, including a 5.1% rise today. That values the offer at nearly 470p a share.
Serica Energy shares have risen 12.3% to 342.5p. That is well below the possible offer. Serica Energy is expected to have net cash of around £640m by the end of 2022.
