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Redid my calculations on this. last lot last week were wrong. ( I did say at the time I would have liked to someone else's)
Anyway, works out at £4.4M Gross income per year for 9 years.
Question is, If the contract is signed before the O.O. ends. Is it enough for the market to save it ?
We will soon see.
that sounds about right - £ 2 mm a year net Angus - enough to keep the lights on but that's about it
Definitely a Plan B move...............
It will keep the BOD employed if the current testing is not positive...
Pay £1 and keep getting Directors Fees - nice for some; not necessarily good for share holders.
Angus and it's shareholders are not in a position to turn any profit down,so if the gas project doubles the present market cap that will do for me and hopefully Brockham and Balcombe will be very good ( although the initial rates from Brockham I suspect will be on the low side as they proceed with caution ).
Knowing there is X amount of gas in place is one thing, but the infrastructure to access and export it is no longer in place.
Capital expenditure on re-connection to gas grid is stated as £1.7m + , so ROI might be a year, without spending on any well refurbishment required.
Doesn't this fact impact the Lucan 'doubling the market cap on clinching the deal' statement?
I thought Lucan said the wells were simply capped - so it's a (relatively) simple job to weld on a new well head and then drill out the concrete plus and run a new completion?
Will cost but nothing like starting a new new bore.............
and then the pipes may still be in place underground - connect and pressure test I guess..........
Biggest worry is if the OGA pick up on his using cash set aside for abandonment as working capital - they might ask him to stick it in escrow - and £2 mm to fully abandon 8 wells looks very light to me
From Page 21 of the April 2019 presentation:
The field presents an opportunity for field rehabilitation and further development. To get production going
we believe the following would be required:
• A short pipeline extension (1.2km) to bypass the old terminal
• New hydrocarbon and water dewpoint control. Compression to enable export into the national grid
• Agreement of the national transmission system to feed into the grid
From Page 19:
SMALL – SCALE PROCESSING
In-house processing including compression and dewpoint control are estimated to cost £1million to install
NEW PIPELINE
New 10 inch flowline (1200m) to divert around current
facilities and feed directly into National Grid (£500-700k)
From Page 20:
Workover of existing wells: £1 million
From 30.04.2019 RNS:
"Under the currently discussed terms, the Proposed Acquisition licence would also bring with it a cash contribution toward eventual abandonment costs. The Directors believe, taking into account site visits and discussions with abandonment operators and extrapolating from abandonment quotes on the Company's existing wells, this contribution will cover the Company's 51% share of abandonment costs on the Gas Field. Alternatively, but not additionally, the same cash contribution will, in the opinion of the Directors but without external verification, suffice to pay for the reconnection costs of the Gas Field to the National Gas Grid. This, plus anticipated additional work on the Gas Field, is currently anticipated to cost a total of £1.7million."
These costs (£2.7 Million as a minimum), will need to be incurred to make gas available to the grid.
A gas professional to oversee the project would be a wise move, with or without board appointment.
The costs indicated are imho too low. The connection to the grid alone could cost £1m [ including metering] and the pipeline, depending on what the route involves £0.5m more than indicated. Furthermore, knowing how national grid work this project will take around 2 years . They do need a gas professional / reliable consultants because it seems to me they are being too optimistic with this project.
Ok so they buy it for a pound they also get 2 million to decommission the plant,so it costs them nothing for the time being.They can sit on it till they get revenue coming in from Brockham if successful and from Balcombe and Lidsey.Then open it up at an appropriate time when revenue is coming in.It's a no brainer from where I am sitting.
But it was shut down for a reason?
For sale for £1 plus decommissioning money?
I pay you to take it away?
I suppose that there may be a reason why the seller wants to walk away from the asset - but what is the asset?
It was shutdown because they closed the theddlethorpe terminal. with no gas no coming in from the north sea via this route the asset became stranded
They only pay 51% on decommissioning do you not read anything.They get 51% for the £1 and 2 million towards the decommissioning.Which tree did you climb down off.
If you want to know why the other company wants to sell it watch the fkin video instead of posting shit.
I see some derampers on here this evening. Typical recovery rates are 70-80% not 60%, it’s in the RNS. This could equate to roughly £20 million profit. Also the reason the current owner isn’t going to extend the pipeline themselves is because they are a massive gas company and for them it’s not worth the effort, however for a small company like Angus it’s well worth it.
It's very, very simple why ANGS has this opportunity. The gas field appears to be owned by Wingas. That's Gazprom and Wintershall. Two very large companies. The remaining gas reserves aren't even crumbs to those companies, but to ANGS, it represents a very simple, low risk, low cost way to bring in twenty million or so clear profit. Contrast that with the market cap of the entire company. It's a gift to be honest. I can fully understand why Lucan is quite excited about it. In terms of hardware, few bits of ten inch pipe and an off the shelf compression skid. You're in business. It really doesn't get much simpler or cheaper than this. I expect the expenditure to be less than the dowry they receive from Wingas. It looks a great low risk opportunity to me.
I feel that posters (myself included) on the subject of the gas field have not given full weight to the information on page 15 of the April 2019 presentation.
Please read the quote carefully, particularly the RISK WARNING:
"*Figures quoted in this presentation with regards to the Gas Field represent gross capital
requirements and total production. Angus will be liable for 51%.
RISK WARNING:
The heads of terms (including exclusivity provisions) agreed note that completion of the
acquisition of 51% of the licence is conditional on the prior acquisition of the field and licence by
a third party abandonment operator.
Therefore, over and above operational risks, there exists the risk that the transaction will not
proceed to completion.
In addition, considerable due diligence is required prior to completion which is expected to
occur within 45 days."
++++++++++
In order for ANGS to acquire a 51% working interest in Saltfleetby:
1 The gas field and license must first be acquired by a third party abandonment operator from Gazprom and Wintershall.
ANGS must be working on this with such an operator, or a deal would not be as near as Lucan implies.
So Angus's partner on this project is the abandonment operator.
2 51% of the license is to be acquired from the partner.
3 51% of the following known costs to be the responsibility of Angus, the rest is the responsibility of the partner:
a £1M workover of existing wells
b £500-700K for new 10 inch flowline (1200m)
c £1M compression and dewpoint control installation.
4 Although not stated, once the field is supplying gas to the grid, the abandonment operator is a sleeping partner, responsible for 49% of running cost, and benefiting from 49% of profit.
So is the abandonment operator making abandonment funds available to ANGS, (£2M) in the form of a loan?
Nobody on the this BB can say how abandonment costs can be made available to an operator for uses other than abandonment.
*** For those not keen on this gas project, Angus highlights the risk that the transaction (gas field purchase by abandonment operator) might not proceed to completion. ***
Fredd, try negotiating and then making a connection to the national grid network - it costs a fortune and takes forever.
Excellent point B2H
" conditional on the prior acquisition of the field and licence by a third party abandonment operator."
But in 30 years investing in UK Onshore and offshore I've never seen that phrase used. There are companies who specialise in offshore abandonment etc but they are never Operators on the Licence. You'd have thought Angus, as an OGA approved production operator would qualify themselves (UKOG wouldn't right now...) so that really leaves IGas or Egdon onshore UK - it's very much Egdon's back yard but what is in it for therm? 49% for a quid???
An alternative would be to bring in someone like PW Well test or Moorhouse - the contractors - but I heard that IGas tried to sell some old Midlands fields to PW and it fell through as the OGA weren't comfortable that PW could "operate" properly or something similar........
If connecting too the grid might be a problem, I would expect the BoD to be aware of this. I think I would want some firm assurances from the National Grid people that they will look favourably on the connection application before signing on the dotted line.
https://www.nationalgrid.com/group/case-studies/connecting-gas-more-quickly-and-cheaply
Mirasol, - I feel this is the present owners - Gazprom and Wintershall - making as sure as they can be that they are not found liable at a later date for any abandonment costs. Is this your interpretation of the situation?
B2H
In a perfect world - yes - they want to be rid of the liability once and for all.
This was a serious issue 10-20 years ago in the N Sea as minnows started to buy old fields. National Authorities, like the OGA, made it very clear that if you sold a field to a minnow and they didn't abandon it they still had the legal right to come after the original seller. Now basically the big boys still underwrite the Ultimate liability but there are still advantages as it was explained to me.
Firstly you defer the cost of abandonment - maybe 10+ years at say Saltfleetby - the time value of money means that this is a serious advantage - even if you just stick the cash in a Building Society a£ 2 mm it will accumulate a lot of cash- and hey! when did it ever hurt to kick the can down the road?? You'll be long gone (personally) before some other schmuck in the company has to deal with it.........
Secondly costs of abandonment tend to fall in real terms (especially offshore) - specialist contractors, new, bigger, more efficient kit, mew methods. Most offshore fields are now abandoned in money of the day costs (totally ignoring inflation) that are 50% of the estimates made 10-15 years ago. Onshore.. maybe not but you can always hope.
So GAZPROM are still on the hook probably but I doubt it worries them