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Torreaguas: "How do you know for a fact that the OGA will not accept ANGS without a deposit?"
Obviously none of us here (unless we have inside knowledge) know for certain what the OGA will request, but I would argue that they may sensibly consider the following:
1) ANGS is a small AIM listed company with no current income
2) ANGS have a long history of failure
3) ANGS have historically had poor relations with planning authorities and suffered disputes with regulators
4) ANGS currently still employ Tideswell (the cause of 99% of this company's misery) and who is himself in breach of AIM rules due to dodgy share trading
... before deciding that it would be imperative to have legally binding undertakings from this BOD to ensure full compliance.
And if I'm thinking this "as a mere investor" I would argue that it will not have escaped the attention of the men in grey suits who will make the final decision for the OGA.
Ocelot,
By granting planning permission, the OGA are relinquishing control of Saltfleetby to ANGS and in doing so they must "first and foremost" be confident that this new operator can comfortably cover all its financial obligations. "IF" ANGS were granted permission and began testing only to find that this was un-commercial for whatever reason, then not only would the SP crash... but their ability to raise further funds would also be diminished. If they had already spent a fair proportion of the money set aside for abandonment... how are they supposed to meet their obligations?
Whilst I appreciate the above is only one scenario... given the risk involved in oil & gas ventures generally and ANGS terrible history of past failure, I really do not honestly think the OGA would accept merely the word of a small Aim listed BOD and would be failing in their legal duties not to ask for a substantial sum to be set aside.
Let's see how this plays out, but my take is that ANGS will RNS news of a placing asap in order to progress the Saltfleetby planning application and acknowledge that the reason for this is as result of undertakings they had to make via the OGA to gain necessary approval.
As I said... I can wait... I just would rather wait with my eyes and ears open to what's coming... no more surprises... no more unrealistic expectations here any more.
YL,
The OGA's text comes across as very reasonable.
Obviously, in reality, all depends upon the way in which the text is interpreted and applied, but, if ANGS is proposing to re-activate Saltfleetby for 10 or 12 years, I find it hard to believe the OGA will seek to discourage them (whilst, at the same time, of course, wanting to be comforted about ANGS's ability to meet its obligations).
I have no problem with you trying to read between the lines, but your conclusions are just you opinion with no facts.
You cannot say if they will need to deposit funds, and if they do need to when they need to.
How do you know for a fact that the OGA will not accept ANGS without a deposit?
The OGA will want cast iron guarantees on the abandonment cash = generally they take a companies word but they have in the past insisted on legally y binding arrangements for dodgy outfits - including I believe escrow and personal guarantees by the Directors.........
Torreaguas,
I appreciate we may have differing views here, but my only "agenda" is to read between the lines and discover the truth.
I am no longer interested in spikes, trader hype or jam tomorrow promises. I would just like this company (at long last) to turn a corner... dump Tideswell ( thus drawing a line under all his past failures) and move forward with a cast iron bullet-proof plan to restore shareholder's value and long lost faith in this company.
I don't mind if it takes a year or more to do this... so long as they TELL THE TRUTH and plan accordingly.
Ocelot,
I'm invested here too. I want this to go up like anyone else (including the day traders) but I am being realistic THIS TIME AROUND.
The very reason those rules were adopted was to cover the general public from the consequences of small - poorly financed - companies "such as ANGS" getting their hands on assets and promptly going bust or at the very least being unable to finance their eventual obligations. ANGS have already "themselves" mentioned needing to allow for this in their RNS. ANGS need to raise to continue as they have no worthwhile income for the next six months at least, therefore the OGA allowing them to use money set aside for abandonment would be foolish in the extreme and simply will not happen IMHO.
But - everyone is fully entitled to their opinion... and I respect that.
He is reading it that way becuase it suits his agenda.
I prefer the official OGA explanation to his made up one.
... it might include ...
How do you get from "might" to "need" (as in "ANGS will need to set aside money before the application is even approved..."), YL?
Aren't you reading the text in the way you want to read it?
... it might include ...
How do get from "might" to "need" (as in "ANGS will need to set aside money before the application is even approved..."), YL?
Aren't you reading the text in the way you want to read it?
Torreaguas:
Which part of
"Where OGA is not sufficiently confident of this, OGA is empowered to
require the company to take further action that will bring the necessary level of confidence,
and while the action is not specified it might include the creation of financial security such as a
Letter of Credit for the required amount under OGA’s control. "
Do you not understand and I will try to help you!
ANGS will need to set aside money before the application is even approved... because they could potentially go bust and leave the tax payer picking up the bill. They have a lousy track record and a history of bad relations with various authorities... if you think the OGA are going to trust them to do the right thing and take their word for it... you are living in cloud cuckoo land!
It's always nicer to be sitting on a gain!
big worry for those invested above current sp
The wells are drilled. They are just reopening them. No worries there.
but then goes on to say:
This power applies equally to all wells, whether onshore or offshore, drilled under a Petroleum Act licence or a Gas Storage Licence...
PS: although that paragraph relates to companies that have drilled, or started to drill, a well.
Thanks, Torreaguas: looks as if 39. may be the relevant paragraph:
39. Additionally, S75 of the Energy Act 2008 added a provision to the Petroleum Act 1998 that
grants to the Secretary of State the power to require financial information and documents
from a company that has drilled, or started to drill, a well. OGA will analyse that information
and decide whether or not it is satisfied that the company will later be able to plug and
abandon the well. Where OGA is not sufficiently confident of this, OGA is empowered to
require the company to take further action that will bring the necessary level of confidence,
and while the action is not specified it might include the creation of financial security such as a
Letter of Credit for the required amount under OGA’s control. This power applies equally to all
wells, whether onshore or offshore, drilled under a Petroleum Act licence or a Gas Storage Licence...
ocelot, they dont. I have checked. This is worth reading.
https://www.ogauthority.co.uk/media/2915/revfinancialguidancev4.pdf
Agreed, Torreaguas,
It does sound totally draconian that the OGA should require projected abandonment costs to be reserved in full right at the start of, in the optimistic scenario, 12 years of operations.
That is no way to encourage work onshore in the UK.
If you can point me to somewhere where it states when an abondonment deposit has to be paid it would be helpful.
If a field has another 6 or 7 years producrtion life left when does an abandonment deposit become payable.??
YorkshireLife. Wrong again.
Yes there will need to be a deposit for the abandonment plan. There are 2 scenarios.
1. The company do not go ahead with reconnecting. Then the £2.5m received will be used for abandonment.
2. If they go ahead with reconnection then the abandonment costs will be split 51/49 between the 2 parties. Meaning Angus need to come up with 51% of the £2.5m. However, they will have production income.
"Should the Company be successful in its application to the OGA, as referred to above, it would also need to agree an abandonment programme and associated cash reserving with the OGA at that time."
Nothing states when the cash reserving will be required. It could be paid over a period of time from production income. Unless you know better of course??
Re 1):
The notes of the Balcombe CLG meeting of 28/08 included this:
11 ... The Lincolnshire gas field represents very good cash flow so they will not need to fund
raise.
Don't doubt the "very good cash flow" of the Saltfleetby projet, but surprised "they will not need to fund raise".
No3 YL. talking *******s. and I'm not going to waste my time explaining why.
Hi Ocelot,
My understanding is that the money would be held in an escrow account (to safeguard against bankruptcy) under joint authority with the OGA. Apprval would NOT be granted in any eventuality until a legal undertaking was agreed and signed.
I appreciate that Torreaguas wants to paint a rosier picture - where ANGS can use this money instead of another "inevitable" placing. I think Lucan would have loved PI's to fall for that one too!
But - back to reality: successful large companies do not give away their cash generating assets for £1 with a substantial cash bonus because they are feeling generous.
There is ALWAYS a caveat... and in this case the caveats are:
1) Full detailed planning approval required.
2) Cash reserving for abandonment to be agreed with OGA in advance.
3) Risk of un-commercial production levels.
4) Risk of lower reserves than anticipated.
5) Cost of re-connection to grid
6) Time taken to achieve all the above!
Whilst I do believe this is achievable... I am simply warning that expectations should be realistic here:
1) Saltfleetby is NOT going to be approved, connected and producing cash this side of summer 2020 (and that is being exceptionally generous!) And... bearing in mind we have only Lidsey (LOL) as our cash cow for the time being... there will need to be further substantial dilution before any of this work can be undertaken.
2) Unless (and unlikely) that Brockham can be sold off now - which means we will also be liable for abandonment costs here too. Can we sell UKOG Brockham for £1 and some ANGS shares to avoid this liability?
3) Balcombe is reliant on Cuadrilla and they evidently are not interested in pursuing this (after all this time...I wonder why? I expect they cannot get oil at commercial rates without chemical fracking - and they cannot get planning passed for this.) So I honestly believe we have yet another white elephant in our folio here too.
All THE FACTS will emerge in the fullness of time - but the BOD will try to pull the wool over investor's eyes for as long as humanly possible IMHO.
YL,
The question is: how will the OGA require the cash reserving to be done?
1/ In full, at the beginning of years of operations;
2/ progressively, out of cash flow;
3/ a combination of 1/ and 2/.