The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
But the hedges will still apply. They will need the existing wells to perform as predicted and a successful sidetrack to make enough money to justify paying back the £12mm loan and interest and taking on the hedges and the royalty. And the potential delays to do with regulatory approvals. Delays beyond 1 July would make the hedges very expensive to an acquirer.
Also Europe is struggling for gas and they declared a its as green enegy. The UK in slightly better situation. Demand for gas is not going to slow down and the supply is not going to improve.
The government should interfere for national interest. The cost of bringing Angus on stream is nothing .
I will put another spanner in the works.
If we have murky Russian money floating around cash should be no problem. Then employ a team who know what they are doing and Bobs your uncle…. Problem solved.
irishmouse: I don’t know more than I’ve read. I could be completely wrong, though my comments on the Debenture, the charges and the hedges are, I believe, accurate. You’re right though, it’s very murky and open to all sorts of interpretation. My sceptical bent is based on the past performance of the management of Angus, which has been execrable.
OofyProfrosser.
I am so baffled now that I shall stay on the sidelines and leave it to you and Skittish, please keep up the good work.
..sorry, “be obliged” should read “feel obliged” - i.e. there might be a compelling case to bid for Angus in these circumstances. The Lenders might start with a very low bid, though, which in the absence of a competing bid, the management might have to put to shareholders, with a description of the alternatives open to the company.
As someone has pointed out today on one of the Angus sites, it’s also possible that the Lenders will be obliged to bid for Angus, if they’ve laid off all or part of their hedges in the forward markets. If Angus has taken its foot off the accelerator in the knowledge that it can’t now get Saltfleetby producing in time to save itself, the financial risk to Mercuria could be higher than the cost of paying to take over Angus now and spending the money needed to get it finished quickly. This would explain Angus’s putting itself up for sale at this stage. They’ve no confidence in their ability to avoid seizure of their assets in July. So they point out to the Lenders the potential cost of allowing the Angus management to continue mucking it up until the hedges start to cost them millions. Of course, if Mercuria has not offset the hedges with monthly foward contracts, and is merely waiting for the profits to roll in, they may take the view that the Angus management should not be rewarded in this way.
ANGS RNS 17 Jan - 6 approaches.
Strategic Review, Formal Sale Process ("FSP") Update
The Company is pleased to announce that it has had at least six bona fide approaches to participate in the FSP and/or other indications of interest in a potential offer for either all of the shares of the Company or the Company's licence interest in the Saltfleetby Gas Field ("Parties"). In accordance with the Company's announcement of 6 January, the Company considers it inappropriate to identify the Parties but the Company will engage with and evaluate each expression of interest until a firm proposal can be agreed and announced.
Angus is not a large and complicated group and the Company does not envisage an extended period of time will be necessary for the Parties to complete due diligence, other than that involved in familiarising themselves with the documentation details of the £12m Saltfleetby Gas Field Development Loan Facility (the "Loan") and associated security arrangements and gas sales hedge ("Hedge").
Consideration of the capital structure of any combination will be of critical importance not just to shareholders, in the instance of a share for share offer, but also to the Loan and Hedge counterparties, each of whom benefit from change of control provisions. Such provisions require the consent of those counterparties to any change of control if the Loan is not to be immediately refinanced and/or the Hedge accelerated.
Additionally, regulatory guidance, newly restated on 13 January 2022 by the Oil and Gas Authority ("OGA"), lays emphasis on evaluation of the financial resources available to the combined group and interested parties, whether for the Company or its Licence interests, are strongly advised to consult the OGA on this point.
Petroleum1: the terms of the charges on the Debentures don’t allow any more borrowings. In any case, if you’ve accepted usurious terms from a commodity trading company it means the banks won’t touch you. And we don’t know if the Debenture holders have laid off their Saltfleetby hedge contracts and guaranteed themselves a profit (assuming Angus can produce the gas required or can afford to buy it in the market at market prices to make up the deficit). Or whether they're just watching prices go higher and higher and looking forward to the profits on the hedges as they are. Either way, would a commodity trader turn down the option of taking over the Saltfleetby asset unless he were getting a better deal? And Angus can’t afford to offer a better deal. They’ve got a placing coming, which may only raise enough money for another month or so. They can’t borrow. They can’t sell assets, either, without the Debenture holders’ permission. All they can do is have share issues and hope the equipment, some of which is very late, arrives in reasonable time.
Angus has, as you know, put itself on the blocks. Bids are invited, for the company or the Saltfleetby asset. But they can’t sell the asset or part of it without the Debenture holders’ permission and OGA approval. And it seems likely that if they were to accept a bid for Angus itself, the change in ownership might need OGA approval, which can take 18 weeks (I think that’s the figure). The delay would have a serious cash flow effect, particularly as it affected their ability to meet the hedge terms. In any case, even if the loan is repaid, the hedges and the royalty remain intact, or a buyer will be required to pay a premium.
Re the gas transmissibility in the reservoir, they are planning a sidetrack from well SF07. They originally said they were doing it from SF05 but found belatedly that they didn’t have planning permission for that. The previous owners tried 9 sidetracks (I think, it may have been 7) from SF07, all unsuccessful. Angus think they know why and are doing it differently, but the fact remains that in earlier announcements, where they were touting SF05, they were pretty scathing about the prospects of a successful sidetrack from SF07. What this all implies about the reservoir, I don’t know. The fact is, this is what they’re planning to do.
They say they've had indicative, non-binding offers but have no offer on the table and are not currently in discussions with a potential bidder. Some suspect this is just to get the price up for a placing. I can’t believe they'd do that, it’s far too obvious. I suspect they may be serious, since they may think the prospects of Angus finishing the project in time are slim. There’s clearly a chance of a deal such as Skittish suggests, or with Cindrigo. But none of these companies can afford to buy Angus at current prices and the banks are unlikely to finance them.
The economics has changed now with the gas prices rocketing. The CPR figures now are no were
near to represent the true value of the reservoir. Surely the management can do something by aproaching other lenders / governments etc....
OofyProsser
Intereting that The field will be owned by hedge fund provider if the terms of the hedge are not met. Thanks for pointing this out. With gas prices are now sky high can't they correct this now?
Also gas transmissibility within the reservoir is very good and you do not need to sidetrack the well to make it flow unless they are looking for reservoir extension behind a fault block.
Part 2: .. earlier predicted, but that this would not result in material delays. All their announcements are accompanied by provisos that their forecasts, including any containing the word “will”, are not necessarily to be relied upon.
So these are the reasons why doubts remain about Angus, even while the huge rise in gas prices has made Saltfleetby much more attractive to potential investors. Any sale of Saltfleetby, or part of their share in it, would have to be agreed by the Debenture holders. As it stands, there’s a good chance that the Debenture holders will be able to take ownership of the field in the summer. There’s also a chance that, with or without a sidetrack, Angus may not produce enough gas to meet the terms of the hedges, with a similar result. It’s Saltfleetby that’s attractive, not Angus. And any buyer of all or part of Angus’s share will have to meet the terms of the hedges, which remain in place until the summer of 2025, shortly after which gas volume projections suggest a quite large and progressive decline.
Angus may meet the deadlines set out in the Debenture charges and the terms of the hedges. It’s possible. If they fail to, the Debenture holders may be willing to defer the terms of the loan to tide them over - though they will want a quid pro quo to do so. The big risk is that the Debenture holders, who are commodity trading firms, will see a better opportunity in taking over Angus’s assets. This is the risk/reward equation here. And you have to take a decision on the management, who have missed every deadline and exceeded every budget, and have been consistently slow to reveal the state of play to the market.
I don’t know whether your conspiracy theories, which I have genuinely enjoyed reading, will be borne out by events from here. I normally prefer the ****-up theory. It’s simpler. I do agree that the Forum/SEL/AAOG situation is interesting. So is the fact that The Earl of Lucan and Jonathan Tidswell were for some months non-exec Directors at Challenger Acquisitions, a company which shares large shareholders with Angus. Challenger, a suspended cash shell, was recently merged with Cindrigo, a green energy tiddler. There’s a potential conspiracy behind every door with these companies. And as I’ve posited before, are these individuals behind the companies we’re discussing Machiavelli or Baldrick?
Skittish, the EB version could read “we are running a laureate in Mosco “
Skittish: Angus said in about February last year that the hedges were arranged with the lenders, at their insistence. So not SEL/Forum. The Saltfleetby gas field and Angus should not be considered to be the same thing. Angus owns 51% of the Saltfleetby gas licence area. It has arranged a £12mm amortising Debenture to finance it - after initially predicting it would cost only £2.5mm to do so and having exhausted its own resources - at an interest rate of 12%, with final capital repayment in December 2024. Once the loan has been repaid, or is close to being repaid, the Debenture holders will have a royalty of 8% of the field’s revenues. There are limits on the minimum amount of cash Angus must maintain over the life of the loan. Most important, there are hedges in place which start in July this year and by October will exceed the expected production from the two wells which will be put into production, for 9 months. They are planning to drill a sidetrack from an old well from which (I think this is the figure) 9 previous sidetrack attempts have failed to find gas. The drilling of the sidetrack has been pushed back into the spring because the works at the site are way behind schedule. The hedges were arranged at a time when gas prices were far lower and commit Angus to sell at a fraction of the current price. When the Debenture was arranged, charges were put in place whereby a failure by Angus to meet the terms of the Debenture is defined as an event of default, which would enable the Debenture holders to take over Angus’s assets.
So there are two issues: first, Angus’s ability to repay £1.4mm. of interest and an unknown amount of loan capital, but at least £3.4mm by, presumably (we haven't been told the repayment or interest dates) the end of May or June (the loan was signed in mid-May). Second, Angus’s ability to meet the terms of the hedges. Both of these appear to be existential issues.
The gas project is behind Angus’s latest schedule for it. There’s no data on the flow rates of the existing two wells, which have not been tested yet. There is uncertainty as to whether the planned sidetrack will find gas, or be able to produce enough by the time the hedges come into effect. Certain regulatory permissions have not yet been received for elements of the project, including from the Lincolnshire County Council, the Environment Agency and the Health and Safety Executive.
The Angus Board has made a number of forecasts about the start date of gas flowing. The first was May-August 2020. In September 2020, when they announced the requirement for a further £12mm, on top of about £2.5mm already spent, to get it into production, they forecast it would be by the end of the year. The latest forecast was part of the 1 October data in the second CPR. It predicted “first gas” in mid-February 2022. They’re latest announcement, a week or two ago, suggested the6 were another 10% over budget and some parts would be delivered some weeks later than
Oh, one thing I forgot to mention was the ANGS hedge, necessary for the £12M loan, guaranteed by SEL.
What if the counter party is Forum, or parties associated therewith?
Preamble....
Yes, recovered now, thanks, just to follow up I find the ANGS site of very little use due to constant bickering, whether designed or otherwise.
Sorry to some who may think I'm repeating myself (which I am to an extent, but there are some very juicy new bits in here), but I'll fill in my timeline with a bit of commentary here, highlighting the points I find interesting.
I'll begin with the premise that I believe that the most crucial aspect of the whole is that the Saltfleetby Gas Field (SGF) was originally owned by a German/Russian consortium and then from Summer 2017 onwards by Gazprom alone.
Both AAOG and ANGS are bit players here, I believe, and consider that the whole ANGS/SGF/AAOG thing is moved by much more powerful outside forces.
cont/
Part 1/
So here goes...
On 15 April 2005 the operator of the SGF, Wingas Storage UK Limited (WSL) changes its registered office to Building 3 Chiswick Park 566 Chiswick High Street London W4 5YA .
On 1 June 2015 a new company Angus Energy Holdings Limited is created. On 18 March 2016 its registered office is changed to Building 3 Chiswick Park 566 Chiswick High Street London W4 5YA . On 14 November 2016 Angus Energy lists on the LSE – ANGS, its registered office remaining to this day 566 Chiswick High Road.
On 26 October 2016 the controlling shareholder of WSL is listed as The Russian Federation c/o The Federal Agency for State Property, Moscow 109012.
On 28 February 2017 Wingas GmbH, a subsidiary of Gazprom announces that Wingas Storage UK Limited will be transferred from a JSC to the sole ownership of Gazprom.
The Theddlethorpe gas plan was shut down in 2017 leaving Saltfleetby (SGF) stranded and unable to export gas.
2017/8 major changes in directorships at Wingas relating to persons with Russian sounding names.
15 October 2018 Wingas Storage UK Limited changes its registered office address from Building 3 Chiswick Business Park 566 Chiswick High Road Chiswick London W4 5YA to 20 Triton Street London NW1 3BF.
In early 2019 there was a boardroom coup at ANGS leaving the company in the hands of new directors many of which had former CIS/Russian associations.
On 17 June 2019 SGF transferred from the ownership of The Russian Federation to the ownership of Paul Forrest via a change of ownership of Saltfleetby Energy Limited (SEL) formerly Wingas Storage UK Limited to Forum Energy Services Limited (FESL) .
There are two curious aspects to this, firstly the sole director and secretary to SEL and FESL is Paul Forrest who from Companies House just appears to be a one man band provincial accountant (although he until shortly before FESL existed, was company secretary to a Philippine oil outfit Forum Energy Limited, no relation it appears to FESL). Secondly the SEL accounts show that upon transfer from Gazprom it acquired £14M in cash for “decommissioning costs”, which was allegely the liability cost of decommissioning SGF.
Two days later SEL sells 51% of SGF to ANGS for £1, paying them £2.5M in decommissioning costs for their share, this liability subsequently reduced to £1.75M, and further reduced in the SEL accounts to £700K.
cont/
Part 2
So if decommissioning was to be only actually costing somewhere between £1.4 to £3.5M, what was the purpose of the other £10M+ in cash received by SEL on transfer from Gazprom?
Additionally SEL was handed £61M in losses (having made a huge loss in 2016) to be set against tax liabilities.
Ariund this time there was another Aim listed company in financial difficulties Anglo African Oil & Gas, AAOG, which on 3 July 2019 announced it had organised a fundraising of around £8.5M with EHGOSF. Riverfort made an alternative proposal of an immdeiate £2.5M in immediate cash and upto £5M in deferred shares to be issed at a later date.
This funding was completed on 17 July 2019 with Riverfort, who was also ANGS financier. The funding of up to £8.5M was supposedly to arranged to redrill a highly prospective drill site in Congo, but in reality most of the money was used to pay off pre existing debts.
Hidden in the small print was that the Chairman of AAOG had control of all the shares which were to be issued to Riverfort, even when those shares had not actually been issued or paid for, giving the said Chairman effective control of AAOG.
During the autumn of 2019 AAOG issued several RNS's about contracts to finance and drill Congo, the shares falling from 5p to 2.5p, due to the constant monthly issuance to Riverfort under the financing deal to finance ongoing operations, and payment of debts at AAOG.
On 2 December 2019 ANGS announces that the transfer of ownership of SGF to ANGS/FESL had been approved by UK authorities.
On 11 December 2019 AAOG announces it had run out of cash, had no realistic means of raising further funds, and was curtailing all operations. The shares, predicably, fall to 0.5p.
On 23 December 2019 AAOG announced it had an offer to buy its existing Congo business, and on 27 December 2019 announces an AGM for the sale of Congo to Zenith Energy for £1M. On 6th January 2020 Brian Moritz an AAOG director of 20 years standing, resigns.
On 13 January 2020, following the rejection of alternative offers, the AAOG Chairman uses the unissued Riverfort shares to force through the sale to ZEN.
On 20th January 2020 FESL buys up the remaining shares yet to be issued to Riverfort for 0.5p (a 43% premium to the market price!) for £420,000 using part of the £14M Gazprom bequeathed to SEL.
Issues to note here, I believe, are the timing of the AAOG “we're broke” announcement, just 9 days after the UK approval of the transfer of SGF to ANGS/SEL, the predicatable effect it had on the share price (collapse), the use of the Riverfort shares to force through the proposal to turn AAOG into an “investing company”, which then set the clock ticking on delisting, and following the share price collapse FESL was then able to buy up a cheap 25% or so of AAOG, giving them effective
cont/
Part 3
continued...
control of the company.
Following some delays in Congo, on 4 May 2020 AAOG holds a GM to approve the sale of all of Congo to ZEN for £200,000, FESL using its 25% shareholding to push through the proposal. This sets the 6 month clock ticking on suspension, and the 12 month clock ticking on delisting.
On 8 May 2020, just 4 days later, ANGS files the planning application necessary to re open SGF.
On 23 September 2020 ANGS announces it is negotiating a £12M facility to develop the SGF.
On 4 May 2021 AAOG announces it is to delist the next day.
On 5 May 2021 at 8.00am AAOG is delisted, having failed to find a “suitable” investment opportunity.
That same day, 5 May 2021, AAOG signs an option with SEL to invest £8M in SGF via a share issue, price not disclosed.
On 13 May 2021 ANGS enters into a £12M finance facility to develop SGF, this facility being guaranteed by SEL.
This finance facility is coincidentally roughly the same amount as the remaining amount in the hands of SEL, £12M left to it by Gazprom, after purchase of the AAOG shares and some property.
On 6 January 2022 ANGS announces it is on the receiving end of some form of bid.
I must say the fact that ANGS has always shared the same registered office as Wingas/SEL has floored me somewhat.
The coincidence of dates, times etc and the suspicion that the demise of AAOG, (given its financial problems in mid 2019 the demise is not surprising), the ANGS links has all been carefully choreographed.
I had thought that the scheme went back to around 2017, but maybe it goes back even further, possibly to 2015. The suspicion is that the transfer from Gazprom of the SGF with the £14M cash and large tax losses could be part of a wider scheme (can't really say more than that!).
To conclude, I believe it is the SGF which is the only really valuable asset here, everything else is smoke and mirrors, and AAOG and ANGS are mere pawns in a much wider transaction.
You could even argue that the sole (real) reason for the existence of ANGS was to enable SGF to be developed, and partly financed with AAOG being there to ensure that ownership the asset ultimately ended up in the correct place.
The possibility exists that in the belief of the new owners SEL holds much more gas than publicly disclosed hence this tortuous, tautological means by which ownership is being transferred under a plan which, so far, appears to have had a gestation of some 7 years.
And it ain't over til the fat lady sings.
Only question is, who is the fat lady?
On the other hand I may be barking up the wrong tree completely. You have to make up your own mind.
RNS issued by Angus on 26th OCT 2021 says the nmbers are for Angus interest of 51% only. It also include taxes and royalties. With AAOG in this will be nil.
{The CPR, performed by Oilfield International Limited, gives the net present value of the cash flows from the SGF, including the impact from the revised capex, the loan facility debt service costs, the associated royalties and the mandatory hedging. Oilfield International Limited has used a conservative discount rate of 10%. The previous February 2020 report values in parentheses, presenting the values attributable to Angus:
· A conservative case, or P90, NPV10 of £25.4 million (previously £16.7 million)
· A mid-case, or P50, NPV10 of £38.5 million (previously £25.2 million)}
Irish
Angus Assets is only 51%. So I guess that the total assets will be double. I remember an RNS
was reporting data from CPR some time ago for the whole fields. I will try to find it.
petroleum 1.
I personally would not use the Angus board for any kind of research as the posters there seem to spend all day every day and often at night arguing with each other. According to them everyone on there has multiple ID’s, are shorting the stock or are disgruntled shareholders. However there are a couple of posters on here that should be able to answer questions you may have. The Angus twitter account is useful as it often posts photos of progress on the site.
I trust we will soon get news of a RTO and I hope and pray that our board remembers ,that it is us shareholders who put money in here and given the company massive tax relief (our only asset) and will look after us accordingly.
Not sure if SEM assets are included above.
If I understand correctly AAOG, ANGS and SEM will be combined in one entity. So what are the
assets of this entity. I have been trying to get information from Angus websie bulletin board and the following information were reported:
Saltfleetby £20m low risk
Lidsey £15m moderate risk after 80% prudential discount
Geothermal £8m higher risk after 90% prudential discount.
Management view of SoTP: £43m = 3.9p per share.
Uplift Saltfleetby by 54% for the revised CPR of 26/10/21: +£10.8m
Reduce the prudential discount re Lidsey from 80% to 60% to reflect progress made since 18/06/21: +£15m
Adjusted sum of the parts = £68.8m = 6.3p per share. Present share price is 1p.
But another poster points out that those numbers are exagerated:
Putting £8 million value on geothermal is ficticious.
Lidsey isn’t producing and would now need an injector well and another drill at least 2 basket case partners and the cooperation of the adjoining licence holder. So it may mean that reservoir pressure is depleted.
And as Saltfleetby is not producing and when it does you do not know the flowrate will be.
So I can see how important a tax benefit of £42 million that AAOG carries to everyone and you would think that the share price of ANGS will not drop after issuing another 900 million shares..
For holders of AAOG shares ?
I have a load worth nothing ...
but maybe if transferred to new assett/shell or something ?
Dutch