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Isn’t this conversation jumping the gun a bit? Angus has got to find the time and the money to bring Saltfleetby into sustained production before the payments on the loan become a problem and before the hedges kick in.
Petroleum, just for info, the official OGA figures for Saltfleetby's last 12 months of unimpeded production (during the field's final six months of production, there were issues with the nearby Theddlethorpe processing plant, so those should be discounted) show an average equivalent daily production rate of around 4.2 mmscfd.
Which would be okay for the first three months of the hedge, but not enough for the nine months after that. So yes I agree, a successful sidetrack is very likely to be necessary. But the problem with that is twofold:-
Firstly, all previous attempts to sidetrack from the relevant well (SF07 - and there have been more than a few) have been unsuccessful.
Secondly, although not impossible, it is very complex to drill any sidetrack while production is ongoing. Which makes things a bit of a rock and a hard place for ANGS...
correction: flowrate above 3.2 mmscf/d should read flowrate above 5.1 mmscf/d.
What I can see is that they may need money after 3-5 months of production to sidetrack wells or
drill new shallow wells 7500ft deep(not so expensive, onshore) to keep the flowrate above 3.5 mmscf/d.
Apology .. The 67 bcf is cummulative production. I apologise.
HIT: Thanks for the information
....[hedge obligations (... being c. 3.4 mmscfd Jul-Sep, then ramping up to well over 5.1 mmscfd for the next 9 months before dropping back again)]
The Saltfleetby reservoir gas flowrate before shut in was 67mmscfd/day.
https://www.angusenergy.co.uk/wp-content/uploads/2019/12/Saltfleetby-Gas-Field-Dec19.pdf
Also Angus said the reservoir pressure built up slightly over the shut in period. For a gas reservoir with good transmissibility this will translate into a higher flosrate than reported above. Looking a the reservoir map you see a lot of faultings and this could explain the rise in reservoir pressure over the shut in period due to isolated portions of the resevoir. So raising the flowrate by sidetracking existing wells or drilling new wells is quite feasible.
If I work for management I would advise agaist selling the field and keeping it all to themselves and shareholders.
Irishmouse, the SOU all confetti offer is just a "possible offer", so wouldn't really need retraction.
If ANGS hasn't started to get gas out of the ground in sufficient volumes to meet both its debt repayment and hedge obligations (the former being c .£1.35m per quarter and the latter being c. 3.4 mmscfd Jul-Sep, then ramping up to well over 5.1 mmscfd for the next 9 months before dropping back again), then its future looks exceedingly bleak.
Both of those liabilities start kicking in from July this year absolute latest...
Morning all.
Unless Angus speed things up rather quickly I have the feeling that SOU may retract their offer and no one else will jump in.
Good morning all. Just dropping in after some time, but glad to see some excellent research and discussion here from the regulars. Well noted by irishmouse that Paul Forrest has just been appointed as Finance Director of AAOG as recorded by Companies House. That certainly indicates that the game is afoot.
What the game is, I think we will find out in 2022. For those of us who suspect that Forrest has Russian connections and backers, the current shenanigans of the USA and Britain in terms of poking at Russia may have some impact. Most recently is Biden's laughable asssertion that he could stop the NordStream2, as if Germany has no spine to stand up for its best interests. Anyway, I am sorry for the Ukrainians who are the latest pawns in US neocon geopolitics (see how well that turned out for Yugoslavia, Libya, Afghanistan, Syria and anywhere else that NATO has been "helping" under the guidance of the psychos in Washington). Let's hope that the useless Biden, Bojo and co do not "help" Ukraine any more than they have already. I have no doubt Ukraine would still have Crimea if the US has not "helped" them back in 2014. IMHO
petroleum1: whoever buys Angus will have to buy out the shareholders and repay £4mm of debt and £1.5mm of interest in June. In July, a buyer would be taking over the hedges. The hedges are a big risk and the risk depends on whether Angus can produce enough gas to meet their terms. Whoever is in the data room should soon be aware of these factors. A big oil/gas company with deep pockets would be able to buy it, but why would it bother? Mercuria seems to be the only entiity to which the hedge terms wouldn’t matter and they appear to have a good chance of acquiring Angus for nothing in the summer. If they don’t want to take it over, they’ll be in a position to require even more stringent terms for not doing so. The data in the data room will not answer the important questions: will they get the plant finished in time and will gas flow at the rates required at least to meet the hedge terms? In addition, if Angus can’t make the loan payments and/or the hedge terms, SEL as guarantor of the loan has to make up the balance. The pipeline and the lease on the land on which the plant is being built belong to SEL. If there’s insufficient cash in their accounts to meet the guarantees, these and their 49% can be taken over by the Lenders.
Yes, at current gas prices, Saltfleetby will be developed and if Angus manages to finish it and get the required gas flow in time, everyone involved will be happy (very). But there seems to me to be a very good chance that neither Angus nor SEL will own it by July/August.
If AAOG is combined with SEM they will be a winning combination no matter what happen to ANGS.
SEM owns 49% of Saltfleetby gas reservoir.
If Angs succeeds in flowing the resevoir every one will happy.
If ANGS is sold the new owner will have to develope the reservoir.
If ANGS fail to deliver and the hedge fund takeover they have to develope the reservoir.
So in all scenarios AAOG and SEM will not loose.
I remember that in the past year there was a thought to reverse 1/2 SEM reservoir in AAOG to get the latter to trade but the idea was abandoned.
I think Angus is a typical AIM company that exists to keep its otherwise hard-to-employ Directors in well paid jobs. SEL appears to have essentially a free carried interest in the Saltfleetby project. Its liability in the event of a default is limited to its stake in the project. Angus’s liability under the loan terms extends to all its assets and it pays all the costs of bringing the project into production.
There are companies in London and everywhere else whose job is to look for financialy distressed companies. They offer to bail them out and in the process they end up owning them or stripping off some of their assets. I think that Forrest being an accountant know this fact and this is why he split Saltfleetby reservoir into two companes, Angus and Saltfleetby Energy . I am an engineer and not an accountant and I hope that Angus will survive.
Petroleum1: Angus haven’t got a single large shareholder, just Frazer Lang and his family, Knowe Properties etc. In my opinion, the FCA. and AIM should be taking a retrospective look at certain claims they made in 2020 in broadcast interviews re their financial requirements. They won’t though, AIM is generally, in effect, unregulated. I think Angus will remain unmolested by regulators until either Saltfleetby makes their fortune, or they get taken over either without compensation or for peanuts. There may be a chance that someone with deep pockets who wants the gas field for eventual gas storage purposes may be in the data room but I doubt it.
OofyProsser
Not sure if AAOG case will be similar to that of Petroceltic International case.
Petroceltic international violated the rules of Investment funds some twenty years ago. The latter took them to court and managed to own the company. Here is an extract from Wikepedia:
"The Company's shares were delisted on the AIM of the London stock exchange and the ESM of the Irish Stock exchange following a process of examinership, approved by the High Court of Ireland. The company is now a private company owned by Investment Funds under the management of Worldview Capital Management Limited."
The Lenders are commodity traders. They have arranged the hedges on 70% or so of the project’s expected production. These are not your friendly neighbourhood bank. If they’re on the other side of the hedges and haven’t covered them elsewhere, and Angus is incapable of meeting the hedge terms from July, what would you expect a commodity firm to do, who has screwed Angus down to extremely ungenerous loan terms and stands to make a great deal of money from the hedges? They must have a couple of capable young MBA’s among their staff who wouldn't mind having a project to manage. With deadlines.
I don’t know why the Lenders would be buying shares, either in the market or in the placing. Why would they do it, if they’re expecting to be able to take it over in the summer? And Angus is reliant on placings to make up any further shortfall. Borrowings and asset sales are closed to them.
I don't think lenders lend hoping for default, unless they are in the loan shark bracket. Are they?
irishmouse
You are talking about a gas reservoir whose net asset value is:
NPV P90= £213.5m
NPV P50=£376.75m
Plus other assets.
By lending £12m only in return for taking over all these assets, I would say everybody wants it.
I t has been said that Forrest may have other backers. I f he did , would he be in such predicament. I t would be nightmare senario if the recent placing went to the lenders themselves.
Gentlemen. I would assume that anyone taking a stake in Angus would be in negotiations with the lender as current agreements seem to be untenable. Yes the lender can on default take over the asset but do they really want it. A new owner could on different terms give the lender a good chance of getting a return.
Nomlungu: I’ve been following your, Mirasol’s and HITS’ admirable posts on the Angus site. There’s quite a lot of pretty ill-informed people to contend with there.
The reason I didn’t mention the royalty is that I seriously doubt that Angus will make it that far.
skittish,
Apologies - I had not read the entire thread and was not referring to you; I did not even realise there was a poster called 'skittish'.
I was making a sarcastic comment that the situation is even worse than OofyProsser pointed out, as the 8% royalty on gross revenue after the loan is repaid seems to siphon off a lot of the profits whilst avoiding any responsibility for abandonment costs by the lendee.
Skittish, I’ve just been back over the Wingas/SEL deal and can’t see it.
As for cash, it is referred to in the accounts of Wingas/SEL - the company was transferred with the cash in the bank account. Wingas and SEL are the same entity of course, simply different names, as I'm sure you appreciate. Ownership of the shares in that company were transferred from The Russian Federation to Forum Energy Services Limited.
As for being a ramper, maybe I am a bit, but with AAOG, which is my only interest here, it is difficult to ramp as they are delisted.
Skittish: further to our conversation re SEL/ Wingas, can you recall where you saw the data re the cash paid by Wingas to SEL/ Paul Forrest?
"Skittish"? You sound more like a ramper to me, but I am less enthusiastic; you omit:
"an override of 8% on gross revenue following repayment of the facility"
Of gross revenue, not even profit. Not even after wages...