Member Info for ab76

For anyone who’s interested, here’s a bit more on the Eden Project’s new geothermal energy project: https://www.edenproject.com/mission/our-projects/eden-geothermal-energy-project and https://www.bbc.co.uk/news/articles/c2l4403kevyo

I think an important observation about geothermal is that, as one of the articles says, it’s the only renewal energy source that’s available all of the time. There’s also enough of it to provide all of the country’s heating.

As the FT’s article this morning pointed out, a government white paper is due in the coming weeks. There’s a research paper at https://researchbriefings.files.parliament.uk/documents/POST-PB-0046/POST-PB-0046.pdf and it makes the argument that geothermal will be assisted by government support.

It’s also worth noting that an institutional investor partly funded the Eden Project’s geothermal well (when the loan for Saltfleetby’s development was initially arranged there was a provision that Aleph would try to assist Angus in raising another £8 million for geothermal which presumably didn’t get anywhere).

I’m interested to hear more about Angus’ geothermal plans and perhaps now is the right time to be making progress.

Paul Forrest can’t sell any shares at the moment.

Further, when he does sell shares for the most part he tends to find someone to buy them. Here’s the RNS for his last sale: https://polaris.brighterir.com/public/angus_energy/news/rns/story/r774kgr

He didn’t deal and quote on his broker’s website to sell that many shares. Someone agreed to buy them from him.

There’s an interesting article about geothermal on the front page of today’s FT.

The Eden Project has just switched on the first deep geothermal project in 36 years. According to the article, “the well cost about £24mn to build and the current system will produce around 1.4MW of energy.” It’s going to reduce the Eden Project’s energy bills by about 40%, but exporting electricity to the grid (which they’d like to do) is a problem as the “grid connection is for December 2036”.

However, the article also notes that there’s growing interest in geothermal (despite the high initial costs) and that a “government white paper on deep geothermal energy is expected in coming weeks”. Maybe now’s a good time to be invested in a company with both deep drilling experience and a geothermal project?

See https://www.ft.com/content/774c05ac-373d-45dc-bcaa-8377ddacb58f

Angus has only really benefited from high gas over the past six weeks or so as before then most of the output went towards meeting the hedge - a hedge that was agreed before the big jump in prices.

I don’t think it’s correct therefore to say that without high prices the company would have failed. I accept though that high prices will soon make the significant cost overruns on the sidetrack much less important (there can be no doubt that the sidetrack was more expensive and time consuming than envisaged, but it wasn’t an easy project and they’ve succeeded with it to what will be the great benefit of shareholders).

Plus another £100,000 or so from condensate.

Unfortunately the FT is reporting on yesterday’s price rise, whereas today it fell by 20% (it’s still 82p for July compared with 52p at the beginning of the month). I expect the price will remain turbulent, but the trend this month (and historically at this time of year) is very much upwards. Problems in Norway and closures in Holland will only make that more so.

Hope9, I don’t think Angus are permitted to buy back any shares or pay a dividend until the main loan is repaid (from memory it’s a term of the loan and an understandable one as the lenders want their money back before any is taken out of the company).

It’s a waste of time discussing things with you rossannan. When you’re not insulting people you insist on commenting on things repeatedly without bothering to look at the materials.

If you watch the presentation, which is available free of charge on InvestorMeetingCompany’s website, you’ll hear James Menzies say that Jacobin “is more an appraisal than exploration” at about 26:34 in. That’s just after he said there’s a very good chance of finding hydrocarbons and explained that a 63% chance of success is unusually high.

If you read a Cenkos report they don’t blindly accept Trinity’s figures. For example, the March 30th 2023 report acknowledges that Trinity assess the chance of success of a typical deep well at 55%, but they state that’ve given Jacobin a 33% change of success. No explanation is given as to where that figure comes from and they don’t explain that oil is being explored for in the three different levels, which raises the possibility that they simply took the chance of success of one of the levels and failed to work out the probability of a success over three. From the beginning Trinity have said 55% is the typical chance and Mr Menzies has stated that Jacobin looks like the best which plausibly explains why the chance is a bit higher.

It’s crazy too, at a time when there’s a greater need local energy, that the achievement of bring Saltfleetby back into production has been more widely recognised in the UK.

The UK needs more Saltfleetbys, but I suspect that no one’s really looking for them now. The environmental justification for not doing so is weak whilst there’s still a need for gas as we just end up importing it from dangerous unstable places and, even worse, paying them a premium. I was near Brockham the other week and it’s very hard to tell that there’s a tiny oil facility there (I’d rather a gas or oil facility on a football pitch of land than a quarry): it’s still a very green place.

When did Trinity say that the deep wells only have a 33% prospect of success? As far as I’m aware that was an opinion expressed by Cenkos.

In the May 2022, when Trinity first provided details of their deep well programme, they said that the deep wells identified typically had a 55% chance of finding 1 to 5 mmbls in place. Yesterday James Menzies told us that Hummingbird looks like the best of the nine Hummingbird prospects, which presumably accounts for the slightly higher than typical chance. He’s clearly optimistic - he made the point yesterday that a 50% chance is usually as good as it gets and to have a 63% chance almost makes the drill like an appraisal instead of exploratory, but he also know that nothing is certain (he said yesterday that “seismic can be deceptive”). He’s also very optimistic about Buenos Ayres and explained in great deal why (it’s largely unexplored as it had been considered non-prolific due to the basin shape, but Trinity have discovered through careful analysis of the seismic various fault lines that mirror the prolific production areas of their other licence and which they hope will also be very prolific).

As I wrote before, investors and potential investors will struggle to find another company Trinity’s size that is taking a more rigorous approach to drilling. It’s a nuisance that not much has happened over the past couple of years whilst they been carefully analysing all of the data they have, but hopefully it will be worth it. We’re about to start finding out.

The Jacobin well is drilling to a total depth of 9,800 feet and is the deepest well drilled in the area for over a decade.

For the first 5,500 feet or so it will go through some of the most prolific oil producing land in Trinidad. As a consequence, James Menzies was able to say yesterday that the well will find oil, but Trinity isn’t targeting oil in the first 5,500 feet (they’re already producing oil at that level from other wells).

Rather they’re targeting three deeper levels. The first target reservoir, T6, is just over 6,500 feet deep. The second target, T7, is almost 7,500 feet deep. The third, T8, is about 9,000 feet deep.

In other words, there’s almost a quarter of a mile in distance between the existing producing oil reservoir and T6, and then almost another quarter of a mile to T7, and then another quarter of a mile to T8. These reservoirs have developed and, hopefully, filled with oil over millions of years. The presence or absence of oil in any one reservoir is unlikely to meaningfully increase or decrease the prospect of it being in another. Were it otherwise the chance of success in T6 would likely be much higher given that it sits under a known oil reservoir.

Rather Trinity has assessed and published the chances of success of finding oil at each of the three levels they’re exploring, and then using quite proper probability calculations provided an estimate of the chances of at least one of the three reservoirs containing oil. Those assertions have been backed up by the competent person and are in turn backed up by a Technical Committee that consists of Mr Menzies (a geologist, non-executive director of Trinity, and the founder/former CEO of Salamander Energy), Derek Hudson (a geologist, non-executive director of Trinity, and Shell’s former Vice President and Country Chairman of it’s operations in Trinidad) and “three other independent experts who bring complementary and relevant expertise” to the deliberations (see page 36 of https://trinityexploration.com/wp-content/uploads/2023/06/Trinity-EP-2022-Annual-Report.pdf). It’s unlikely that any other smallish energy company has more rigorous oversight of its drilling plans and it’s an approach that has led to considerable refinement of Trinity’s drilling plans.

It’s also worth remembering that Jacobin is about more than finding oil on this occasion. It’s the first of nine deep wells and, if no oil is found, it will likely provide useful information that will assist the rest of the campaign.

In any event, it’s not long to wait now until we find out what Jacobin has discovered - the report is due by about mid-July (although Mr Menzies cautioned yesterday that “God laughs at oil drillers timescales”).

With gas now at 118p for July we’re now looking at revenues of almost £2.5 million for that month. With gas now at 160p for December, it’s going to be much higher in the winter.

The gas price has now more than doubled since the beginning of the month, but Angus’ share price has barely risen. The market will catch up before too long.

The probability of Trinity finding oil in at least one of the three levels is almost 63%. There are two ways of working out the probability of at least one of three events occurring.

First the manual method, which involves the following steps:

1. As a fraction deduct the chance of each event occurring from 1, which in this case gives us 0.66 (K6 has a 1 in 3 chance, 1 minus 0.33 = 0.66), 0.75 (K7 has a 1 in 4 chance, 1 minus 0.25 = 0.75) and 0.75 (K8 also has a 1 in 4 chance, 1 minus 0.25 = 0.75).

2. Multiply the deductions, which in this case gives us 0.3712.

3. Deduct the multiplied amount from 1, which in this case gives us 0.6287.

4. Convert the above into a percentage, which in this case gives us 62.87%.

Second the automatic method, which involves using this website: https://www.omnicalculator.com/statistics/probability-three-events

Using 33.33333%, 25% and 25% as the inputs, that website says that the prospect of at least one event with those prospects occurring is 62.5% (unfortunately the prospect of all three occurring is just 2%).

Angus recently told us that when gas prices are 124p they make £2.5 million per month from gas sales (see https://polaris.brighterir.com/public/angus_energy/news/rns/story/xel8qzr ).

Over the next six months, using the prices available at https://www.ice.com/products/910/UK-NBP-Natural-Gas-Futures/data?marketId=5419492&span=2 , the gas price now averages 133.7p per month (lower in July, higher in December). Therefore at the moment, it looks as though Angus is going, on average, to receive more than £2.5 million per month over the next six months. With low running costs (between £2.5 million and £3.5 million per year according the valuation reports), that’s a lot of profit and cash.

99.9p now. Angus were trading at 1.8p when gas prices were last this high (back in April) and there was no sidetrack production.

Thanks ocelot. Now that you’ve pointed it out, I can see that ICE’s prices are more up-to-date than the BBCs (which at the moment is a shame as the BBC is showing 96p and ICE 94.4p).

ICE provide more detail (primarily by attaching a particular month to the prices), but their prices appear to be delayed by an hour. The BBC https://www.bbc.co.uk/news/topics/cxwdwz5d8gxt/natural-gas only delays prices by 15 minutes, but doesn’t make clear that the price it’s quoting is for July. Does anyone know what market price Angus receives for gas sold today (I appreciate that it doesn’t matter for the half of production that’s hedged)? Is that price published? Is it increasing (obviously it will in July, but it would be nice if we’re benefiting this week)?

I haven’t owned and don’t own any Challenger shares, but I’m familiar with the onshore licensing round in Trinidad as I have investments in other companies that participated.

In order to bid on a licence Challenger had to pay a fee of $30,000. It’s a requirement of this bidding round that successful parties give Heritage (the state oil company) a carried interest in the new licence and the rules provide for the possibility of a signature bonus. Touchstone had to give Heritage 20%, whereas Trinity only had to give 15%. In Trinity’s case the carried interest covers the seismic and the first four drills. Neither have announced the payment of a signature bonus. The percentage amount of the interest, what is carried and whether a signature bonus is paid appears to negotiable. There are some details in this presentation: https://www.energy.gov.tt/wp-content/uploads/2022/07/Onshore-and-Nearshore-Competitive-Bid-Round-presentation.pdf

It’s another turbulent day for gas prices. At 10am the price was down 9p to about 83p, but now it’s up 3p to just under 95p. Fortunately, the trend remains upwards (it was 54p on June 1st).

This morning’s presentation is now on InvestorMeetCompany’s website. James Menzies’ part of the presentation is particularly valuable. The slides from his presentation are available at https://trinityexploration.com/wp-content/uploads/2023/06/Investor-Technical-Presentation-June-2023-Hummingbird-Buenos-Ayres-vF.pdf, but most of us probably need to hear the presentation to make sense of them.