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OofyProsser
Dont understad the question
Is this AAOG Chatboard on ANGS ??
Petroleum1: there are two existing producer wells which are being commissioned with the rest of the plant. One is at Site A, half a mile away. The other is on Site B, long with SF07, the well from which the sidetrack is planned. The flare is in the corner of the extension site and there is a gas engine generator present. If Angus have been told they may drill it while producing gas, they haven’t told us, and they’re short of good news.
It may be easy to drill these sidetracks but several previous attempts from the SF07 well have been unsuccessful. It was not their preferred well to drill from - in fact when they were discussing their original first choice, SF05, they were somewhat dismissive of SF07.
If they manage to get it going from the start of next month at forecast levels, they’ll get some positive cash flow, it’s true, but the gas price will have to rise a lot more to enable them to meet their debt service charges that month. In addition, we don’t know what “a portion of” their 3rd quarter hedges means. One month’s worth? Two months? From October, they will be unable to meet the hedges without a successful sidetrack.
Re their cash position, of the £6mm they raised in May, £4mm was spoken for in immediate payments and a cash reserve required by the regulators and by the loan covenants. They had just £2mm. left for working capital. That was three months ago. They’re 10 weeks behind their May schedule. How can they order a sidetrack? What will they use for money? Mercuria may defer more of the hedges but that’s storing up more issues into the future. And Mercuria are in a position to require further compensation for doing Angus more favours. And unless they’ve got guarantees re this from Mercuria (or Aleph) they can’t very well enter into further contracts, can they? If they have got such guarantees, they should tell their shareholders,
OofyProsser
To me ,as a reservoir engineer, drilling successfully a sidetrack in a a reservoir with 19 years of history is straight forward job. Why do they have to mothball the plant while drilling the sidetrack miles away is incomprehensible.
If they manage to start the gas flow now I do not foresee any problem with the gas price so high. One poster on the other site was mentioning water cut as a killer but the post was deleted. Water cut in gas reservoir will not stop the well from flowing but will give problems at commissioning.
Petroleum1. Angus haven’t got permission for a sidetrack while they’re still commissioning the plant. They may not even be able to drill one while the plant is operating at all. In which case they’ll have to mothball the plant while they drill it. Lord Lucan says it will take 50 days, assuming no holdups. Well, he’s never got anywhere near meeting a schedule so far, in all his three and a half years at Angus. And there’s no guarantee they’ll find significant gas with it. It was budgeted, I think, in the CPR, at £2.8mm. That was last October. Inflation will have taken this sum well over £3mm. Where are they going to find the money for this? £5mm of debt service costs next month. A further very large loss on the hedges this month. Unbudgeted 5 months (and counting) work on the plant in excess of the mid-March schedule in the CPR. They’ve raised £6.6mm since end-March, when they had cash of £1.4mm and creditors of almost twice this number. G&A expenses of £1mm+ since then. Lots of new employees to man the plant, who have had to be trained. Do the sums and please tell me how they’re going to meet their bills over the next six weeks, even without starting a sidetrack. And they're required by the terms of the £12mm. loan Charge to maintain a significant cash sum at all times.
Mercuria is going to have to let them off paying even more money that Angus will owe them. Mercuria is a privately owned commodity firm, not a charity . Do you think they’ll give Angus something for nothing? Is Angus even a going concern?
Petroeum1: I see you are now interested in Angus Energy on its LSE site, where you are taking the very well-researched Headinthesand to task.
I think you will find, however, that the monthly forward contracts agreed between Angus and Mercuria for nine months from 1 October cover 1.75mm therms, not 1.5mm. The historical data suggest a 15% p.a. depletion rate, so they'll be short for the life of the hedges without a successful sidetrack. . The company is in hock to Mercuria. They will decide its future. They’d make more money by merely exercising the Loan Charge provisions. But there may be complications related to NSTA approval of a new owner. So they may merely require changes in the covenants giving them an even bigger share of the project’s revenues. Either way, Angus shareholders appear to be stuffed, no matter how hysterical the claims of the boiler room cabal.
Irishmouse
You will be a rich man if AAOG is combined with ANGS.
When the last CPR was made the gas price was 64p/therm. Now the gas price is 490p/therm.
https://tradingeconomics.com/commodity/uk-natural-gas
All evidence indicate that the preesent gas price will shoot up yet again when the winter season arrive.
Mr Forest could have reversed AAOG into any trading entity two years ago but he did not.
It is all quite now and no one knows what will happen next. I will not be surprised if the UK government do not get involved if not for the gas for this winter but for the gas storage possibilities of SFB. Rough gas storage is not an ideal place to store gas as there was some evidence in the past of gas leaks to surrounding areas around Rough reservoir.
Note: The production profile supplied in the CPR was based on reservoir simulation study carried out by the original owner assuming a wellhead pressure of 90 psi. If this pressure is decreased to say 50 psi the flowrate could increase siginificantly.
I bought £30,000 worth of shares in RMP(Red Emperror) some 2 ears ago. They went bust and the company re-emerged as FME(Future Metals) soon afterward. Total trading history is shown below:
https://uk.advfn.com/cmn/chrt/chrt_wrap.php?epic=LSE%3AFME&name=&type=1&size=2&period=12&ind_type1=1&ind1_1=&ind2_1=&ind_type2=0&ind1_2=&ind2_2=&ind_type3=0&ind1_3=&ind2_3=
John Forest could have done similar thing 2 years ago but he did'nt. He can still do it now before next prime minister election next month. Can we share holders sign a petition asking for ths to be expedited?
Irishmouse: I don’t either. I came across it when I was looking at one of the late unlamented NMC Health’s Directors, who was also an Angus Director. It’s been a very interesting introduction to AIM and to the appalling absence of any investor protection whatsoever. I’m more interested in this being exposed in due course, rather than in Angus per se. I’m posting here because I don't think the connection with Mr. Forrest and Angus can be relied on to be of any benefit at all to AAOG shareholders, and arguments to the contrary should be met. I’ll probably be banned from this site now!
I really don’t give a stuff anymore about Angus, I just want us to move on, find an asset and start trading again.
Ah, yes, the CPR. Which assumed a start date of mid-March 2022 and 3.5 months of unhedged production until end-June at market prices at a rate of 5mmscfd. Instead of which they’ve produced nothing in those months and are currently owing £4-4.5mm on the July/August hedges and counting. The CPR assumed a sidetrack to double production would be drilled before the plant began operation, instead of which it looks as if they won’t be able to drill it without stopping production (once production starts - they’re certainly not allowed to drill while building and commissioning the plant) at the existing wells. They haven’t got the money to drill a sidetrack in any case and there wouldn’t be time for full planned capacity production from a sidetrack to meet the hedge requirement in October even if they could do it. The existing wells won’t meet the increased volume required by the hedges in each of the nine months from 1 October, so there’s a virtually guaranteed substantial shortfall for at least the balance of this year on the hedges. In other words, really big losses. Mercuria, with whom they have signed the forward (hedge) contracts, have agreed to roll over the losses on part of the Q3 shortfall into Q1and2 of 2023, but we know none of the detail. If Angus can’t drill a sidetrack, they’ll be losing money until at least June 2023. If they can drill a sidetrack, they’ll be producing very little gas in 2022, since the existing wells will probably have to stop production while it’s drilled. From June 2023 the hedges decline to the level of the production from the two existing wells but the hedge price falls as well, reducing their income further. Meanwhile the 15% or so long-term annual reduction in production experienced since the field began production will start to resume. Even if they were to find the money, and the regulators were to allow simops of production from the existing wells while they were drilling a sidetrack, there’s no certainty the latter would find gas. They’re currently existing on the charity of Mercuria, which can pull the plug if Angus can’t meet the hedge payments. Mercuria are also due £3.5mm in debt repayments, probably by end-September, plus £1.5mm. of interest. They may agree to roll these over as well but they’ll doubtless want a sweetener for agreeing to do so. Meanwhile the weight of debt continues to increase and will have to be repaid one day from cash flow. Having taken over SEL in a very generous deal for Mr. Forrest, the losses and debt payments will all fall to Angus’s account.
There’s little doubt that Saltfleetby gas will prove a highly profitable resource. Probably not for Angus, though. Mercuria is going to take virtually all of it, in my view. Unlike the Angus management, they know what they’re doing. Angus may be kept in business but to attribute to them a prospective value of 3p per share or more seems to me to misunderstand their position.
OofyProsser
CPR values on 26th Oct for Angus only when gas price was 64p/therm was:
NPV P90 = £31.7m
NPV P50 = £55.4m
I believe that the above values are reported in RNS.
As the gas price now is 408p/therm the above NPV values for Angus only are calculated as follows:
NPV P90 = £202m
NPV P50 = £353m
If you add SEM share of 49%, the NPV for Saltfleetby field will be:
NPV P90 = £301m
NPV P50 = 526m
Calculated by whom?
Angus shares in issue 2590 m
At a gas price of 359p/therm, the NPV was calculated to be £408m.
Therefore the expected share price at a gas price of 359p/therm will be £408 /2590m = 15.75 p.
But the gas price today is 408p/therm.
https://tradingeconomics.com/commodity/uk-natural-gas
Therefore the expected share pprice to exceed 15.75p.
The Angus chat board on LSE is largely the preserve of company shills, boiler room types and irremediable dimwits. Most of the informed people have been banned from it by a complicit admin and/or moved to ADVFN, where the conversation can be quite intelligent.
The issues discussed by the rather superior people who’ve done lot of research on the other site are the monthly hedge contracts, the sidetrack, Angus’s current cash position vs. its debts and trade invoices, and the extremely late and slow progress toward producing gas for sale. The eventual flow rate is anyone’s guess. Yes, they should in theory be able to get 1.5mm therms per month but when will it start? And will they be required to stop operations to drill a sidetrack? And it’s too late now for even a successful sidetrack to meet the flow rate required by the October hedge. If it’s not drilled, or is unsuccessful in finding gas, Angus can’t meet the 9 months’ supply required by the hedges from October. Even if gas flows from the two existing wells at the required monthly rate from tomorrow, they’ll still be losing money on the August hedge. There’s also a massive share overhang from Mr. Forrest’s deal with Angus and from Aleph.
On Angus board some people accuse management of fraud and say SFB will not flow.
SFB was flowing at 5 mmscf/d prior to shutting in in 2017.
https://www.angusenergy.co.uk/wp-content/uploads/2019/12/Saltfleetby-Gas-Field-Dec19.pdf
The reseevoir pressure at that time was 1400 psi (95+ bars) from the plot of P/Z vs Cumulative production. If you subtract the the pressure of the hydroststic column of 2300m (reservoi depth) you get a wellhead pressure of 80+ bars as reported by recent RNS. There is no reason why SFB will not flow at 5 mmsc/d when put on streaam now.
What do you mean by “our 8 million”? AAOG were going to issue to SEL options over shares to a theoretical value of £8mm to pay for AAOG’s acquisition of 25%, i.e. approx. 50% of SEL’s then interest of 49%, of Saltfleetby. This deal didn’t take place and was superseded by Angus’s takeover of the whole of SEL’s holding in Saltfleetby later in May. I’ve got this right, haven’t I? I don’t see how AAOG is now in any way involved in Saltfleetby. Nor is SEL, though Mr. Forrest still has a lot of embargoed shares to sell in stages in Angus, and a free carried interest (or equivalent) in its earnings once the debt is repaid. Good luck to him with that.
If Angus can get gas flowing abet late our 8 million could be a life saver and give us a slice to allow us to start trading again, yes grasping at straws but who knows.
Very good, Irishmouse! For some reason, Mr. Forrest thought it more prudent to get out of Saltfleetby as soon as he could shortly after that RNS. The terms on which he did so must have taken a while to negotiate, but were very favourable to him. Particularly in view of the delays at Saltfleetby.
Angus could definitely do with the injection of £8mm. Cash, though - not shares or options. If they don’t get gas flowing at the Saltfleetby plant’s rated capacity by tomorrow, they’ll owe another £100,000+ PER DAY for the rest of August (and counting) to Mercuria. The latter will have to allow Angus another rollover of what they owe on the hedge contract. They’ll want a quid pro quo. Then there’s the £5mm. in debt interest and capital repayment that seems to be owed by end-September. Then there’s the £3mm. they’ll need for a sidetrack. Without that, there’s no chance of meeting the hedge volume requirement from 1 October. They haven’t got permission yet to drill the sidetrack while operating the plant.
Meanwhile, the Angus Board seem to have renewed their Trappist vows.,
No word from Angus for over a week now, I wonder if the 8 million we were going to raise for saltfleeby could be useful to them. I
It does not look like we are dead in the water.
"Polls suggest Liz Truss is most likely to become the next prime minister"
https://news.sky.com/story/the-tory-leadership-race-might-seem-a-foregone-conclusion-but-its-much-more-complicated-than-that-12665134
Ex presedential hopefuls are now behind Liz Rruss such as Penny Moerdaunt, Javid Javis etc...
Long live AAOG.
I’ll have to rise to this!
Yes, Petroleum1, Lord Lucan has gone cap in hand to Mercuria for a reprieve and got a short one. However, you have to read between the lines with him, since none of his utterances is to be relied on at face value. He says there’s no up-front payment [as a quid pro quo] but I’d be prepared to bet they’re getting a shedload of Angus shares. He’s obfuscating the volume of the gas production that remains hedged in the next two months: “a portion” could mean the month’s worth they've already missed. They’ve still got all those debt service payments to make by the end of September, and a sidetrack to drill, for which they haven’t got the money or, apparently, regulatory permission and the deferral of part of this quarter’s hedge merely increases the urgency to get a successful sidetrack drilled. Their g&a and the staffing bill for Saltfleetby have to be met. Their multiple local contractors and commissioning team are still there, their bills will have to be paid. It’s not clear when they will be able to start piping gas - which is two years late already, even on their initial conservative projection. This deferment was not a precautionary measure, it’s a lifeline.
For AAOG, how does this change the outlook? The gas is late, the hedge losses are building up, they're short of the cash they’ll need to pay the next two months’ bills, there’s no news on a sidetrack, which they also probably can’t afford. Not without substantial cash flow from their gas. Which may, for all we know, continue to be hedged this month and next. They haven’t got money for buying AAOG and they don’t need AAOG’s losses. Their ability to place more shares is compromised by the huge number overhanging the market. But yes, they continue in business for a few more months.
The last paragraph of Angus today RNS said the following:
"As a precautionary measure, the Company has worked with its hedge provider to roll a portion of the Q3 2022 hedge into Q1 and Q2 of 2023."
I see this that the company will not be liquidated by Mercura anytime soon..
Irishmouse: that hadn’t occurred to me, I’ve paid him the compliment of taking him seriously and have quite enjoyed the debate. It’s not difficult enticing me to take the bait though!
This is going to be an interesting seven days for Angus.
Oofy I think at this stage he is winding you up mate.