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that last trade was a better one: 4.002m at 0.805p.
Fair point ocelot. Take Alba as an example, it was considered a dog a few months back and shackled with a CLN. It’s now not far off it’s Weald oil highs based on a Welsh gold mine that most people viewed as a dog. I’m not casting a view either way on that project’s success, just evidencing your assertion that shares can be beaten up and then quickly recover fast on aim.
"They’ve had to rely on data provided by Snake Oil. "
This is true but remember that ANGS haven't any data of their own - everything THEY have they got from WINGAS or the Onshore Geological library etc.
Any decent consultant will read all the old reports and any missing data would stand out like a sore thumb. It doesn't matter who hands the data over - even the Archangel Gabriel couldn't add anything extra as it's just never been collected. Of course a different set of experts might come to different conclusions and no doubt ANGS tried to steer things in a positive direction but that pretty much applies to whoever owns the field and whoever is the expert.
The CPR is a fairly honest snapshot and forecast (or guess) - and it would be similar whoever was involved. We need to look at the risks - which would be the same for anyone else and the things which are in ANGS control - such as sourcing the kit - which I'm afraid shows that a leopard has trouble changing their spots
"The CPR is full of exclusions. "
they always are - whatever the asset - the Experts don't want to be sued
Oilfield International , who did the CPR, are mainly Middle East specialists but they've done a wide range of work for decent outfits so I don't think they're too bad. The CPR , which i have read carefully, seems a fair take - issues are flagged and discussed in a coherent manner (which isn't always the case).
Yes there are problems with the 3D - but they're going to be the same for whoever takes over SFB - including the previous owners. Most UK onshore fields don't (eg Horse Hill) don't even have a 3D survey. The production forecast is based on the 17 years of prior production and this will be more accurate than an estimate made prior to production.
However the graph on page 34 shows how, by changing which points you use in the prediction , ultimate cumulative gross production varies from 80 Bcf to over 120 Bcf. (66 Bcf to date). The original recoverable estimate given in Tony Hodges paper in 2004 is around 80 Bcf. The CPR doesn't have a graphic of historic production with time (which is a bit odd) as there is one in an ANGS presentation in 2019 - this indicates 10 - 18 Bcf of further recoverable reserves at low rates.
My concern is that we're much more likely to get the P90 (low) production than the P50 or the P10
In their RNS of 21/09, UKOG described Saltfleetby as "the UK onshore's largest gas field to date, which produced approximately 73 bcf".
Thanks Mirasol.
As an aside, I found out by chance (via Pointless yesterday) that Mirasol is a type of Mexican chilli used to make Mole.
Not very interesting, but true nonetheless.
"Do you subscribe to those particular odds for SF (circa 6:1), or do you have a different view on the potential SP for a successful operation at SF? What is your average here?"
Croq - I see the main risks are execution (which we're now well aware of) and flow rates. In general few onshore UK fields reach the production levels forecast before development. SFB has the benefit of several years of historic production but it was never a major producer. My worry is that they will have issues that require more money to fix and that they only reach a percentage of forecast flows - I'd be really amazed if they didn't produce anything - it's the size and timing which worry me. Commerciality may be hard to achieve consistently
"it’s also a bit dodgy repeating what the CPR says. Large sections rely on unchecked data supplied by Angus."
Well who else can supply the data? You have to be fair - they guys doing the CPR will look at similar fields elsewhere and bring their experience t bear - but at the end of the day they can't invent data, however badly needed, if it doesn't exist. Hence it's an "opinion".
over the years the value of a CPR has declined - one from a major outfit - Gaffney Cline, or a Sproule etc is still gold standard - but a lot of smaller outfits have waded into a lucrative market. You should look carefully at the company who does the CPR - id its by a small outfit in the UK valuing some asset in S Australia you gave to ask what they bring to the party other than lower costs and being more willing to listen to their paymasters than one of the bigger outfits.
Mirasol,
Do you subscribe to those particular odds for SF (circa 6:1), or do you have a different view on the potential SP for a successful operation at SF? What is your average here?
I have always been more cautious, and looking at the lower estmate from the CPR, but with the news over this year, the CPR, the off-take agreement, and now the proposed funding, I would hazard that the odds of success are perhaps more aligned with the lower estimate now (albeit with the possibility of some time slippage and additional expense).
As mentioned in my previous posting, I am only interested in SF, although, obviously am aware that any news (good or bad) elsewhere will have an impact.
My hope is one decent lender with one set of fees and one aim. And that they will require certain fundamental changes to the ANGS management and insist that the company is run by people who know what they're doing
Then we stand a chance of recouping our investment
Mirasol,
It certainly sums up the market's current view of ANGS's chances of commercial success, but that is the whole point, the market is notorious for changing its view, sometimes very abruptly.
Assuming that you believe the CPR then "The current share price of 0.80p offers, therefore, a discount of 83.2% to that figure"
I would suggest that sums up the market view of ANGS chances of commercial success - 17% or 6:1 against
Net assets at 31/03/20 + the net present value at 01/01/20 of the CPR's mid-case forecast, discounted at 10% pa and reduced by 9.1% for the RNS of 23/09 = 4.75p.
The current share price of 0.80p offers, therefore, a discount of 83.2% to that figure, before any upside potential from Balcombe is taken into consideration.
A revision of my post of yesterday of 11:36:
They are proposing to repay (£6.12m + say, £1m of interest =) c£7.12m in "nearer 3 years" than 4, so, say, 3 years 3 months, from the cash generated by Saltfleetby.
Saltfleetby's anticipated cash generation potential is not reflected in the current market cap of £5.72m, with the share price at 0.80p.
My capitals, from an answer to an Investor Question dated 30/09:
We began approaching lenders during lockdown shortly after the publication of our CPR as we regarded this asset as eminently well suited to debt finance, in particular so-called Reserves Based Lending. This is a specialist form of credit advanced by a now small number of international institutions. Indeed NONE OF THE LENDERS WE SPOKE TO HAD ISSUES WITH QUALITY OF THE ASSET AS SECURITY OR THE ABILITY OF THE CASHFLOWS TO AMPLY SERVICE THIS LEVEL OF DEBT.
Our principal problem was size – generally speaking the larger lenders have high fixed costs associated with evaluating, structuring and approving a loan and reserves based lending is complex and requires a significant time allocation. The larger lenders tend to have a minimum “ticket size” of $20 m and above and ESG has become an issue for some as well. We nonetheless spent the summer doing technical and financial due diligence with one well known institution and were only pushed back due to this size issue at the last minute...
The terms will be the same for all participants, fees will be a bit higher than if the full amount had been made available by one lender.
Its pretty common to get syndicated loan facilities - I don't know whether that extends to smaller principal amounts such as this, but can't see why not.
That would be a pity - firstly that means 4 or more sets of fees for the slugs in the City and secondly you get conflicting interests and agreements
I think he sounded very cautious on how long this was going to take to nail down
Sounds as if it's more a question of a small number of lenders, each lending £2m, £3m, £4m, £5m, something like that.
"Another way of putting it: buy ANGS today for £5.72m and get back £6.12m over a period of, say, 3 years and 3 months, less interest but with the subsequent cash flow from Saltfleetby and everything else thrown in for free. Not sure, financially, that makes much sense."
That's a fair summary - you COULD buy the company and make a medium term profit - but it depends on delivering the project on time and cost, getting the production right and the gas price. If you bought the company you'd sure as hell get rid of the motley crew in place right now so you might remove risk 1 but the other 2 are still lurking........
It'll be very interesting to see what conditions any lender places on the company if they lend them £ 12 mm........
No, I've exaggerated, it'll be less interest and the debt, of course.
Another way of putting it: buy ANGS today for £5.72m and get back £6.12m over a period of, say, 3 years and 3 months, less interest but with the subsequent cash flow from Saltfleetby and everything else thrown in for free.
Not sure, financially, that makes much sense.
At 0.80p, market cap = £5.72m.
They are proposing to repay £6.12m in "nearer 3 years" than 4, so, say, 3 years 3 months, from the cash generated by Saltfleetby.
Can't help feeling there's a mis-match between their current market cap and their mid-term cash generation potential.
Still plenty of green posts on my screen (no surprise there), but good to see some sensible and constructive debate from some posters here (and without all the yeehah boomtime rubbish too).
This board is a lot more balanced of late with realistic views being represented
gla
£12 m is the headline number for this facility. Of that £3.9m (£2.4m of sidetrack for 2021 and £1.5m of Abandonment Resere) is unrelated to restarting production but is raised to give debt investors the comfort and assurance they require such that all needs of the Field Development Plan are covered at the outset.