RE: Share Price11 Jun 2023 22:02
When Angus acquired 51% of Saltfleetby Energy Limited on June 19th 2019 there was no certainty that it would have any producing assets.As the RNS announcing that acquisition stated, “Angus Energy has obtained quotes… to effect abandonment (£1.75 - £2.5 million), each of which fall below the sum of the proposed payment by Saltfleetby Energy. Saltfleeby Energy has agreed to retain the liability for all abandonment costs surrounding the subsurface pipelines from the two sites to the Theddlethorpe Gas Facility together with certain redundancy costs which would otherwise fall to be treated as expenses under the JOA.”
Therefore, at that stage Angus was responsible for the abandonment costs other than those concerning the subsurface pipelines, which remained the responsibility of Saltfleetby Energy. Saltfleetby Energy appears to have estimated those further costs at £1.225 million, taking the total abandonment costs to between £2.975 million and £3.725 million (Angus’ last account show abandonment costs of £4.36 million and that also includes its share of the various oil assets).
Although abandonment costs are estimates, Angus’ accounts make clear that provision for decommissioning is recognised on full installation of oil and gas production facilities and the amount recognised is the present value of the estimated future expenditure (see page 54 of the accounts).
In those circumstances the decommission costs of Saltfleetby are unlikely to be anywhere in the region of £12.5 million.
Although the production assets at Saltfleetby were correctly re-recognised as tangible assets as the field came back into production, the two pipelines to Theddlethorpe can’t have been included in that as there’s no gas facility there anymore.
Sign In
Follow the stocks
