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Irish Mouse
Thanks for replying.
Regarding Paul Forest Offy Prosser said “He’s not built a business for shareholders”. I think this is accurate. AAOG could have been reversed into any equity that generates cash flow some two years ago. But he did not do that and I hope that Ms Cope resignation has nothing to do with this. RMP after going bust was reversed into FME in a very short period ot time.
I still think that Angus will be a buying opportunity in the future but only after AAOG shares of about 500 m are dealt with. I calculated the NPV of both ANGS and SEL some time ago and it is equivalent to mid cap company market cap. The future cashflow generated from SFB can absorb tax losses from ANGS,SEL and AAOG.
The gas price is not going to get cheaper with time.
Irishmouse: I’m sorry about the repetition, my old IPad playing up.
You’re right, I’m not very impressed with Angus, or with anyone connected with them - with the exception of Mercuria. And Gneiss! The information I’ve got on Mr. Forrest is scanty, it’s impossible to form a conclusion from it. What is it that you’ve identified, that gives you confidence in him?
I think it would be interesting if more light were shed on the relationships between the players here. Mr Forrest has kept his head largely below the parapet. His assets are largely related to Angus. Lucan is in charge there and has had umpteen equity raisings, in addition to the huge loan, to keep Angus’s head above water while building the plant. It seems to me the recent re-arrangement at SEL/Angus may haveresulted from Mr Forrest’s coming to the conclusion that Saltfleetby will not be finished in time. It’s only the huge rise in the gas price that’s enabled him to walk away with a profit on his investment in Saltfleetby. His assets are in a privately-held company owned by himself, where he’s done deals with people known to him, who were running companies in the same or contiguous offices. He’s not built a business for shareholders. Whether the recent deal represents good value to Angus shareholders, we’ll find out within the next four months. Whether he’s going to be good for AAOG shareholders, we’ll have to see.
Let’s just trust his horizons go further than Angus, have a good weekend.
Irishmouse: RedbullRJ wrote an interesting post here on all this on 18 January. In fact, Wingas, the Gazprom subsidiary that owned and operated the Saltfleetby gas field at the time the latter was closed in late 2017, gave the field, with a cash sum ostensibly to cover eventual de-commissioning expenses, to Paul Forrest. Angus promptly paid him £1 for their 51% stake in it, and received a payment of £2.5mm, while Mr. Forrest kept the rest of the cash and the pipeline de-commissioning liability, and the “tax losses”. Angus then told its shareholders, and anyone else who wanted to listen, that they could build a whole gas plant, and complete the pipeline to the NG pipeline at Theddlethorpe, for the £2.5mm. they’d been given. And that it would be completed by May-August 2020. Lord Lucan had been Interim MD at Angus for three months when this investment was made and these forecasts given. The office which Angus inhabited at the time had the same address as the Wingas office. Wingas shortly afterwards became SEL.
The gas price pretty promptly fell away to wholly uneconomic levels and Lucan found that his forecasts re costs and completion date were a bit optimistic (as has been every one of the very many updated forecasts since then). It took him 18 months to negotiate a £12mm. loan at usurious rates, which loan he never once mentioned until he had to in September 2020. Even this £12mm. has proved grossly insufficient. The whole project would be worthless without the recent huge, and unforeseen by anyone involved, rise in the gas price.
SEL guaranteed the £12mm. loan. Mr. Forrest has now sold SEL to Angus for £250,000 in cash, £1.4mm. in debt forgiveness, a 25% or so holding in Angus and an interest in any net earnings from Saltfleetby until 2025. I can see that this aids his cash flow (I believe Angus said one of the reasons for the deal was to finance cash calls at SEL) but fail to see how it benefits anyone else. None of his companies appears to amount to much - though Forum’s next Accounts will be interesting. The tax losses at AAOG don’t appear to be useable at Angus.
I’d say that at best, the jury is out.
Oofy , you are Angus bashing again (:-)) .
My post and reply was about Paul Forrest personally.
Irishmouse: RedbullRJ wrote an interesting post here on all this on 18 January. In fact, Wingas, the Gazprom subsidiary that owned and operated the Saltfleetby gas field at the time the latter was closed in late 2017, gave the field, with a cash sum ostensibly to cover eventual de-commissioning expenses, to Paul Forrest. Angus promptly paid him £1 for their 51% and £2.5mm, while Mr. Forrest kept the rest of the cash and the pipeline de-commissioning liability, and the “tax losses”. Angus then told to shareholders, and anyone else who wanted to listen that they could build a whole gas plant, and complete the pipeline to the NG pipeline at Theddlethorpe, for the £2.5mm. they’d been given. And that it would be completed by May-August 2020. Lord Lucan had been Interim MD at Angus for three months when this investment was made and these forecasts given. The office which Angus inhabited at the time had the same address as the Wingas office. Wingas shortly afterwards became SEL.
The gas price pretty promptly fell away to wholly uneconomic levels and Lucan found that his forecasts re costs and completion date were a bit optimistic (as has been every one of the very many updated forecasts since then). It took him 18 months to negotiate a £12mm. loan at usurious rates, which loan he never once mentioned until he had to in September 2020. Even this has proved grossly insufficient.
SEL GUARA
Two years ago everyone thought he was just a double glassing salesman, look what he has now pulled off at Angus, he took an asset and paid £1 out of his own pocket, I wonder what is in his pocket now ?
Irishmouse: what do you see in Mr. Forrest that I’m missing?
petroleum1.
I can see how you think that Sarah Cope did nothing for us but with a little hindsight I think I can change your mind.
She inherited a dreadful mess, two failed drills, law suits against us , trust of The Congolese government at an all time low. and not a hope of raising any money. If something was not done and very quickly we would have gone into administration and our shareholding gone for ever.
She managed to sell this disaster to Zenith for £200,000 and clear our law suits and liabilities in The Congo, Zenith have managed to do sweet FA with their purchase to date and to be honest I feel they never will. She then got Paul Forrest on board.
We are now a shell company and Sarah has moved on to pastures new and I personally thank her for what she has done and wish her luck for the future. I hope Paul Forrest will become our new CEO and use some of his enterprising entrepreneurial skills to get us up and running again.
Mouse.
Irish
Do you have an opinion whether it is good or bad, for AAOG, that Cope has gone? She never has been a great help. That is for sure.
Re Orwell Group, it’s been commented on on one of the Angus chat sites that this company shares its registered office address with Lucan fashion, of which Lord Lucan is a Director. It would be exaggerating to say that Orwell Group is a well-capitalised company, but the Directors are both accountants so there’s doubtless a solid reason for it’s incorporation - which coincided quite closely with the arrival as Interim MD at Angus of Lord Lucan. I read nothing into this - make of it what you will. I regard the management of Angus as half-competent at best, I don’t think they’re financial or oil/gas gurus, any of them. And I think it’s perfectly valid to regard the latest developments at Angus and Forum as akin to a re-arrangement of the bar stools on the Costa Concordia.
Paul Forrest and Carlos Dos Santos Fernandes (Portuguese) both accountants have links through 'The Orwell Group' (live). Both are also with ANGS.
I wonder if we will see Fernandes popping up on the AAOG board?
Meanwhile Paul Forrest is still with Forum Energy (live)- who pumped £500,000 into AAOG
Where does the merry go round spin to next?
Meanwhile we are still in the dark about the future and all our investments in AAOG are still worth zero.
Irishmouse: he’s going onto the Angus Board too, so you never know.,
I hope so! PF as AAOG's chairman would be perfect
Thanks oofy,
We certainly need luck, I believe Paul Forrest will become chairman of AAOG, where he will take us is anyone’s guess.
Irishmouse: I’m not aware of it either. In view of the recent changes in oil and gas company taxation, it’s hard to see what use Angus would have for AAOG’s tax losses - though Lord Lucan at Angus doesn’t seem quite au fait with the proposed legislation on the subject.
Mr. Forrest didn’t sell his stake back to Angus, by the way. He sold them the 51% that was Angus’s total holding in Saltfleetby until last week’s announcement, in 2019. Now, he’s sold them the 49% that he kept. He’s done a nice deal in the circumstances. I think he will turn out to have done rather better from his investment than Angus shareholders will in theirs. Time will tell. No work is likely to be done from this evening to 6 June. The first monthly hedge contract applies in July. I think Angus will be using the proceeds of their placing with Aleph to defray the cost of their gas production falling short in July. They must be hoping for a much lower UK gas price. And they still haven’t worked out whether they’re allowed to drill a sidetrack while producing and piping gas from the plant. If they have to cease gas production while they do it, there will have to be more, substantial, cash raising through the sale of new shares to cover their hedge losses, in my view. And success with the sidetrack is still in doubt.
I wish you and Petroleum1 good luck with your investment in AAOG.
Petroleum1.
You seem to be under the impression that aaog has transferred shares into Angus , I am not aware of that. Paul forrest sold his 49% holding back to Angus, that has nothing to do with aaog. I assume that our agreement to buy 25% of Angus is now off the table and we are still just a shell company. So I now have no intrest in what Angus have or don’t have.
Or am I missing something ?
The last paragraph should read:
The expected wellhead pressure of SFB is about 778 psi. The resevoir pressure is 1280 psi :while the original reservoir pressure was above 4000 psi.
Here is an attempt to calculate the existing wellhead pressure of Saltfleetby field.
From the following CPR :
https://www.angusenergy.co.uk/wp-content/uploads/2019/12/Saltfleetby-Gas-Field-Dec19.pdf
the following data were extracted:
-Last P/Z value was reported to be 1600 psi
-Average reservoir depth 2300m(7550 ft)
From google:
The gas gradient ranges between 0.003 to 0.130 psi/ft.
The average gas gradient of 0.0665 psi/ft was taken.
The Z factor is always less than 1 and need to be calculated. If we assume it to be 0.8 then the last recorded reservoir pressure would be 0.8 x 1600 = 1280 psi.
The hydrostatic gas coloumn pressure is
7550 x 0.0665 = 502 psi.
By subtracting this from reservoir pressure of 1280 as calculated above we get the existint wellhead pressure:
1280-502 = 778 psi
The expected wellhead pressure of SFB is about 778 psi while the original reservoir pressure was above 4000 psi.
Irish
I was trying to see if I could buy some ANGS shares before dilution but was put off by Oofy Prosser. I am still trying to enter into ANGS but cannot see how the inclusion of AAOG shares would not bring further dilution.
And there’s the answer on the sidetrack! Hardly different from last September’s answer to a similar question. They haven’t got regulatory approval yet to drill one while producing gas from the existing wells. Yet they’re predicting drilling to start in the first three weeks of July.
Petroleum1: I agree with you on this!
Re my post last night, in the second paragraph re Forum having a carried interest after the loan is repaid: I’m afraid this was incorrect, they’ may be eligible for £6mm+ from the Saltfleetby earnings up to 2025, not after 2025. Apologies for this.
The interview with Lord Lucan, available this morning, is not very convincing. More delays presaged and it looks like cost overruns too. Look out for tomorrow’s IQ answer re the sidetrack.
SEM is now absorbed by ANGS. I am hoping that AAOG will not be obsrbed into the setup just yet. I would like first to see the field produces at steady rates to meet the hedge requirements.
Yes, but to monetise the reserve, they need to have it producing at target levels by the end of June, they need EA approval (which appears to be still outstanding), NG approval and HSE approval. The parts are all there now but they haven’t finished connecting them up yet - they’re constantly two weeks behind every revised schedule and way beyond their successive cost estimates. Then they need to be able to drill a sidetrack while producing gas from an adjacent well, flare etc. We should know this Tuesday whether this can be done - there’s an IQ on the subject which hits the nail on the head. The regulatory checks as they commission the plant are very exacting.
I have little doubt that someone will make money from Saltfleetby at these prevailing gas prices (about 148p/therm last Friday, wasn’t it?). I merely question whether it will be Angus. They’ve just announced a further dilution of close to 100% in additional shares, assuming Aleph take up the second half of their planned placing on 13 June. Half of their total £6mm. placing money appears to be to cover yet more cost overruns. Most of the rest is to cover the loan covenants. A little over half the increase in the number of shares is to pay for SEL’s 49% of Saltfleetby. The terms of this acquisition give Forum a carried interest in earnings from Saltfleetby after the loan is repaid. It also transfers the large pipeline abandonment liability to Angus. The Debenture charges give the Lenders rights to claim all Angus’s increased assets in the event of a default, which includes missing payments on the loan and the associated hedge contracts.
It may work for Angus but the risks are constantly getting higher, not lower as they’d have you expect.