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Hi petroleurm1. Sorry, what is now an excellent buying opportunity - buying ANGS shares or AAOG 'buying' into Saltfleetby? Cheers MrEMC2
PS does anybody know how long we can lay dormant before really RIP?
The gas price now is £4.50/therm.
https://tradingeconomics.com/commodity/uk-natural-gas
My calculations show that the loan of £12m can be repaid in 42 days
at a gas flowrate of 6 mmscf/d. I am certain the field can flow at much higher
flowrate than above. It will not make sense if some one do not pay off this loan. The only
risk here is Angus fails to meet Hedge fund obligations otherwise it is an excellent
buying opportunity. Onsite work progress seems to be progressing well..........
Interesting information by DoneK on Angus board.
".....The lenders technical advisers and Angus evaluated the deliverability of the existing two wells as being likely to be greater than 5 mmscfd. The reasoning was twofold. In the last years of delivery to the old Conoco refinery, average production was constrained by persistent issues with the main compressor at Theddlethorpe. Secondly it was the view of technical experts that, following a prolonged shut-in, the two wells should have improved deliverability in the first 18 months or so of operations. This is because prior to shut in there was an area of reduced pressure around the producing wells. Since then the pressure has equilibrated across the field resulting in significantly higher pressure around the producers. So it is our view that the hedged production should be able to be covered by these two wells in the event of failure of the sidetrack"
Petroleum1: quite a lot of buying this afternoon in Angus. It looks like a pre-placing ramp to me.
Yes Petroleum1, if Angus can pipe that quantity of gas for a month before the hedge applies, and keep it going for a further year or so, they’ll be fine. They’re in a race against the clock and they haven’t got planning permission yet from LCC, or EA approval. Three pieces of kit are not likely to arrive much before the end of April. They’ve got an enormous amount of pipe to weld. Meanwhile the Sound “bid” currently values Angus shares at 1.05p each and there’s no sign of a counter-bid from any of the other five candidates in the data room.
If this were Shell or BP assuring their shareholders of where they’d be in three months time, that would be a different matter. Angus management’s history, however, is of missing every deadline, exceeding every budget and telling shareholders about the resulting problems very late in the day, even while they’re continuing to reassure them. There is no exaggeration in any of these statements. It’s possible though, as you say, that they’ll make it in time. But why have they put themselves up for sale at this stage, if gas production is just round the corner?
I forgot to include the gas proce plot
https://tradingeconomics.com/commodity/uk-natural-gas
Gas price has so far shot up to £3.10/therm.
I am certain that Saltfleetby gas rservoir will flow at higher gas flowrate than 6 mmscf/d when put on stream. But if we assume a gas flowrate of 6 mmscf/d, The loan amount of $12m can be paid off in less than 64 days.
12x10m/(6m/100)x3.1=64 days. One them is equivalent to 100 scf.
Those people in the data room knows that and we could hear some news shortly of the traders loan being thrown out of the windows.
Thanks for that, interesting read. I just wondered if they did relist it would be under a different name and as such we lose out!?
PeaceyA
There is no reason why you should loose your investment in AAOG. It carry a tax allowance of £42m which can be used by any company. I am hoping it will be used by Saltfleetby enegy (SEM).
I give you an example :
Red emperor oil co went bust two years ago by drilling a dry hole in Greenland and was delisted.
They relisted recently as a mining co. called Future metals. I am getting my money back gradually as the following plot show:
https://uk.advfn.com/cmn/chrt/chrt_wrap.php?epic=LSE%3Afme&name=&type=1&size=2&period=1&ind_type1=1&ind_type2=0&ind_type3=0
petroleum1: they’ve sold the c. 3.34mmscfd forward at 41.4p/therm. The volume rises to c. 5.2mmscfd from October, at 52.05p/therm. The margin between your £2.20 and this 41.4-52.05p. will be enjoyed by the lenders, not by Angus. If Angus doesn’t manage to produce gas at the hedge rates, they will have to go to the market and buy gas at your £2.20 (or whatever is the prevailing price) and sell it to the Lenders at 41.4p to meet the hedge terms. If they produce more than the hedge volume, they will enjoy the market price for it.
The amortising loan is repayable by end-2024 and there’s interest at 12%+pa. We don’t know the repayment or interest payment schedule but an amortising loan is repayable in regular instalments, not in a final lump sum.
Re SEL, they have guaranteed Angus’s performance under the terms of the loan contract, including the hedges. If Angus can’t make the loan payments, interest and capital, it’s an event of default and the lenders can take over their assets, as I understand the charges on the loan. SEL has guaranteed Angus’s payments. I’ve read the SEL charge but can’t recall the detail, having no interest in SEL. It’s on the Companies House site.
OofyProsser
I said in post 113 “ Hedge fund obligation is 3.5 mmscfd/d and this can be met for a long long time if the reservoir gas flowrate is throttled down just to meet the obligation requirement.
You disagreed and said in post 5440 “… if they produce just the volume of gas required to meet the hedges, they’re extremely unlikely to be able to meet the interest/capital repayment schedule on their amortising loan.”
But when I calculated the no of days required to generate £1.5m from flowing gas at a rate of 3.5 mmscf/d I found it is 19 days only. (assuming 1 therm price is £2.2 and is equivalent to 100 scf ).
So there is no reason why they cannot make a success out of this project.
Can you please explain why a default by Angus will affect Saltfleetby Energy (SEM)as the latter being the guarantor to Angus.
Hi I haven’t been in here for a while. Just catching up on recent views. I still hold many shares in AAOG since their delisting. Not sure what I should do with them really. Is it worth leaving them in my share dealing account just in case they ever relist (can’t imagine it will happen?). Or should I just transfer them to a certificate and put it in the attic in hope that one day they may have some value? Any thoughts appreciated. Cheers Andy
I should have added that if they produce just the volume of gas required to meet the hedges, they’re extremely unlikely to be able to meet the interest/capital repayment schedule on their amortising loan. That’s assuming they can meet the payment I’m assuming will be due in June. Failure to meet the terms of the loan is an Event of Default.
petroleum1: I can’t get into the OGA data on my old and erratic IPad, so am attaching the below extract from a post of HITS’s in early November 2021:
“I am fully aware of the compressor problems affecting Theddlethorpe from August 2017.
Which is PRECISELY why the 12 month average I took to give my 4.17 mmscfd figure ran from August 2016 to July 2017, so SPECIFICALLY EXCLUDED that production-impeded period.
The OGA data on Saltfleetby production by month from first start point is freely viewable and downloadable from https://ogauthority.maps.arcgis.com/apps/webappviewer/index.html?id=984eeea3b1664049b12c02a28478bdaa “
In addition, the poster WG818 quoted the increase in the flow rate after an earlier prolonged shut-in and noted that it was maintained for just one of two months. And if you look at the bar charts of monthly production over the longest term, you’ll see that the decline is progressive. Both he and HITS accepted that a month or two of increased flow was likely but that it was very unlikely to be sustained.
There are further issues to do with the post-September increased hedged volumes and the prospective sidetrack, as follow:
1. It’s unclear whether they will be permitted, for safety reasons, to drill a sidetrack while producing gas from wells on the same site. If they have to stop production to drill the sidetrack, they will be in trouble. And without the 5mmscfd from the sidetrack production after September, they are unlikely to meet the hedge volume requirements. .
2. All the previous sidetrack attempts from this well have been unsuccessful.
3. They may already have spent the sidetrack money in getting the project into production.
I keep saying that there’s a possibility they’ll manage to make a success of it, but the Angus management does not inspire confidence (or trust) and the timescale is short. As well as all the other issues I’ve mentioned in earlier posts, there’s an enormous amount of pipe welding that needs to be done. They appear to have good people on site doing the work but it’s painstaking. Their multiple independent local contractors must be complicating the management of the project and it appears that kit has been delivered for which the supports are not ready. It’s a complicated process. So there’s a risk that it won’t be ready in time or within even their latest budget. The time factor is the crucial element.
As I said before this is the best bulletin board in the world and I thank the contributers
who made as such.
If I may add some information to this board:
HIT said the following:"Theddlethorpe processing plant, so those should be discounted) show an average equivalent daily production rate of around 4.2 mmscfd.". But looking at Dec 2019 presentation The gas flowrate was 6 mmscfd/d after a shutdown period of 3 months only (01.09.2017-01.12.2027).
https://www.angusenergy.co.uk/wp-content/uploads/2019/12/Saltfleetby-Gas-Field-Dec19.pdf
Now that the reservoir has been shut down for 5 years and due to the comparmentlsed nature of the reservoir the gas flowrate should be a lot higher. Angus reported an a small increase in reservoir pressure in (Question and Answer)section. For a gas reservoir with high transmissibility this should translate in higher flowrate. Hedge fund obligation is 3.5 mmscfd/d and this can be met for a long long time if the reservoir gas flowrate is throttled down just to meet the obligation requirement. This will give ample time for Angus to accelerate drillimg or workove activities to meet the next obligation of 5.1 mmscf/d.
May I also say that I am not a shareholder in Angus and my main interest is AAOG who I have been a shareholder for 3 years.
Thankyou for maintaining your engagement. Thanks to you, irishmouse, petroleum and others there has been an excellent level of info maintained in this board.
As for dodgiest of the dodgy end of AIM, that's an accurate assessment. More smoke and daggers than a spy novel.....
Zaphod: if it’s not finished and producing at the level required by their hedge commitments by July, Angus will need a ton more money to keep going. Placings won’t raise enough. I can’t imagine their Lenders being prepared to give them much more rope.
There’s still a slim chance that they may get the thing completed and approved in time, though they may be close to being stuck currently. The absence of LCC planning permission must mean they’ll either have to ignore it and carry on building without it, or stop some of the work soon. The EA has still not, apparently, received an answer from Angus to questions it raised re noise levels from the new plant design, which is the subject of the LCC planning application. Angus said in December that EA approval should be given in early January (it had been expected “at the latest” by 17 December). The CPR on 1 October based its forecast of “first gas” in mid-March on receipt according to Angus’s schedule of regulatory approvals. Then there’s the specialised kit for which they still haven’t got delivery dates. One of these has to come from Texas. Angus’s latest forecast for completion is, at the latest, 30 April. Meanwhile, they have the distraction of six “potential bidders” in the data room! And once completed, the HSE and National Grid have to approve it. They, as has been observed before, work at their own pace.
I’ve no doubt the plant will be in production by the autumn. It’s merely a question of by whom, who will own it then, and, if it’s still Angus, on what terms. Who knows, though? This is the dodgiest end of the extremely dodgy AIM. And you only have to look at the Angus site here to see how many company shills and short term traders there are, all trying to lure in the gullible.
Oofy: "The building of the plant is miles behind schedule, they haven’t got planning permission for large parts of it, nor EA or HSE approval of their plans and they’re probably short of the money they'll need, even with the recent £1.4mm placing. "
Doesnt sound like ANGS have a hope in hell of being ready in 2022, would you agree?
Luckily I've never been tempted into buying any Anguish shares! :-)
Zaphod: just a further clarification: the £12mm Debenture negotiated with Mercuria and Aleph is not for the pipeline, which was virtually completed by this time last year, three months before the loan was signed (there’s just a few yards left to build, and the connection to the NG pipeline to be welded). The loan is largely for replacing the refining facilities which the Theddlethorpe refinery used to provide for Saltfleetby gas, with a smaller refining plant at Saltfleetby itself, to be run by Angus (who’ve never done anything like this before). Yes, I’m sure there will be options for the operator of the field as things progress. The issue I’m commenting on is whether Angus and SEL will still own the field. The building of the plant is miles behind schedule, they haven’t got planning permission for large parts of it, nor EA or HSE approval of their plans and they’re probably short of the money they'll need, even with the recent £1.4mm placing. And the amortising Debenture will require substantial service payments, probably in June, and the hedges apply from 1 July. Failure to meet the terms of either represents an Event of Default, putting the Debenture holders in the driving seat. The Debenture holders are commodity trading firms, not banks or even hedge funds. I don’t know what is going to happen, clearly, but you’d have to be pretty inexperienced not to see the risks in this, wouldn’t you?
Saltfleetby has got options. If the field is well compartmentalized by faults that does make competent geological planning of future work essential. The field can be monetized for gas storage as well as gas production, and l wonder if anyone has looked at enhanced gas recovery options using injected carbon dioxide, thus getting paid for sequestration while producing. Just mulling what l would do with the field if l were running the show.
Maybe Paul Forrest's backers, and l am sure he has them, have their own plans, and he is literally just "caretaking" for them. Sorry, l just have a suspicious mind around all the shenanigans with AAOG. 2022 does look to be the year when hands may need to be shown.
Thanks petroleum1, will take a look. The next six months, or even weeks, will be pivotal for the future of Saltfleetby. I wonder if our resident Sherlock Holmes has turned out any connections between the hedgefund lending to Lucan and the incompetent man himself, but as OofyProsser has said, it is a weirdly exploitative arrangement made for the loan.
petroleum1: please excuse my responding to a message addressed to another poster.
The terms of the Angus Debenture specifically preclude any more borrowings, or asset sales, without the specific permission of the Lenders. It’s all in the Charge document listed on the Angus Companies House site. SEL is guarantor to the loan and its Charge document is also worth a read.
All Angus can do to meet a prospective cash shortfall is 1): get the gas out and sold ASAP, or 2) negotiate with the Debenture holders for a bigger loan or for permission to look for one elsewhere, or to sell Balcombe/Lidsey/Brockham or 3): raise more equity capital. They’re very poor at 1 and 2, as discussed earlier but reasonably good at 3. FSP, anyone? What’s going on in the data room? Sound Energy have three weeks to confirm their “bid”.
ZaphodBeeblebrox
This presentation (I found thrpogh th internet) to develope Saltfleetby gas reservoir was made in Dec 2019 when gas price was 50p/therm. Now it is above 200p/therm.
https://www.angusenergy.co.uk/wp-content/uploads/2019/12/Saltfleetby-Gas-Field-Dec19.pdf
They are talking about a field life of 10-12 years from now. The reason for the field shutdown was the shutdown of the terminal downstream. Now they are bypassing this terminal by placing 800 m long pipe to connect to the main national grid. They are also talking about a comparmentalsed reservoir through faulting and further drilling and workovers and sidetracking to develope the reservoir are needed. They need money to develope the reservoir and a hedge fund gave them £12m. I cannot see why they cannot get more money from other sources.
Zaphod: if Mr. Forrest has shadowy Russian backers , they were ill-advised to allow it to get this far. The £12mm loan will have to be repaid and part of that will be the value of the hedges, which will, if current prices prevail, cost them many, many millions. If SEL had not guaranteed the loan last year, Angus would have been obliged to sell the Saltfleetby project. Why not buy it then? There’s an 8% (of turnover) royalty to be paid to the Lenders once the loan has been repaid too. That’s going to cost a lot to get out of. I’ve mulled over lots of possibilities and have come to the conclusion that the simplest explanation appears to be the best: Angus have made it up as they’ve gone along and proved that they can’t budget, can’t negotiate and can’t project-manage.
Within a year of the expiry of the hedges, the volume of gas produced at Saltfleetby is predicted (in the CPR) to fall off quite sharply and continue falling. I suppose that if the shadowy backers want the Saltfleetby field for storage long-term, they may have cast a slide rule over that. But then, why sell it for £1 and give the buyer £2.5mm to take it away with them in the first place?
That's true Oofy. Am a bit behind on Anguishs progress under it's blue blood figurehead Lucan, hard-bitten oilman that he is not.
So reservoir is presumably repressurised,
borehole conditions assumed good, hopefully they can produce the necessary 3-5 mmscf/d needed.
If not, who wants to bet that Paul Forrest's shadowy backers will be willing to step in and pick up ANGS for a firesale price later this year?