In a flash note on Monday, analysts at Berenberg noted that Kistos had confirmed press reports published late last week that it was participating in a process through which TotalEnergies hopes to sell interests in certain of its West of Shetland assets.
Berenberg stated that the reports indicated the discussions were related to 20% of Total’s interest in the Laggan-Tormore gas fields and, while the company has not been selected as preferred bidder and there was no certainty that discussions will lead to a definitive transaction, if the talks were to be successful, any deal was expected to be completed from existing resources.
The German bank, which has a ‘buy’ rating and 495.0p target price on the stock, also highlighted that Kistos’ stated strategy was to grow by acquisition, and therefore its participation in potential sales processes was not a surprise.
“Clarity on the terms are clearly needed to take a view on valuation, but we note management’s strong track record of completing deals on attractive terms that are accretive to NAV. Kistos is currently trading on FY22/24 EV/DACF of 4.9x/1.4x, EV/EBITDA of 4.0x/1.2x, an FCF yield of (5%)/45% and at a 20% discount to our price target,” said the analysts.
