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I don’t think Paul Forrest has any regrets.

Gasprom paid him to acquire Saltfleetby, he handed over Gazprom’s cash and 51% of SFY to Angus, waited patiently whilst Angus developed SFY, and then sold his remaining 49% for over £14 million (since parts of the payment were in shares the exact amount depends upon the price at which he sells them - he’s done well so far selling many well above the issue price).

That said, I don’t think Angus shareholders should any regrets either. We’ve acquired a very valuable asset (gas now, storage in the future) for very little.

It’s true that Angus’ financiers will also make a great deal of money (although they got very lucky with the hedge), but then they took most of the risk. They’d have nothing if the processing plant hadn’t worked and we wouldn’t have that much, for now at least whilst the hedge is in place, if they hadn’t also funded the initial stages of the sidetrack (it’s a nuisance that it overrun in time and expense, but that was always a foreseeable risk and one that will become less important in time).

On June 1st the gas price for July was 54p.

Although the price has been turbulent since then with large day rises and falls, it’s current just over 80p (an almost 50% increase so far this month).

It’s worth remembering that June is usually the month that prices reach their year low and then start to recover. At the moment this year looks to be no exception.

Given Angus’ steady and significant gas production flows (hopefully they’ve got this months’ expected maintenance out of the way), its share price should follow the gas price up.

Perhaps they knew gas was about to jump? Of course they didn’t, but it’s just reached 74.75 - the highest this week and a 17.9% jump on the day https://www.bbc.co.uk/news/topics/cxwdwz5d8gxt/natural-gas.

From the FT: https://www.ft.com/content/f69e5069-1a00-42c1-8219-84ccd5cbbfd9

“Britain’s windfall tax on oil and gas producers is set to be scaled back as part of efforts to boost investment in the North Sea, according to three people briefed on the government’s plans.

“The chancellor, Jeremy Hunt, is expected to confirm plans to introduce a “floor” on the 35 per cent levy in the coming days so that it only applies if oil and gas prices trade above a certain level. Treasury officials are due to meet the oil and gas industry on Friday at a forum in Aberdeen.”

The Telegraph reports that the announcement could be made as soon as today (Friday): https://www.telegraph.co.uk/business/2023/06/08/jeremy-hunt-poised-ease-windfall-tax-boost-north-sea-oil/

I agree with the others who thought it was a typo - there are only two compressors and the second was only recently installed (it wasn’t a quick job either, but one that took months). I wonder whether it was Freudian typo though? Previously the next step after the sidetrack was to consider a second sidetrack to open the southern lobe, but in the recent interview Richard Herbert raised the prospect of increasing the plant capacity so that the gas they already have access to can be extracted faster. If that provides a better/quicker return on capital, it’ll be a good option.

Perhaps the planned shut down referred to in this answer:

“What is the cause of the current inconsistent flow readings, is the well cleaning up as expected or are you experiencing increased waste liquids? Are Works to the permanent pipeline causing stoppages? Are you experiencing tripping similar to when the initial wells were brought online?

“Asked on 31 May 2023

“Principally tripping has been to do with increased flow rates but also load balancing around the compressors, the control systems and ongoing teething problems with the units as the third compressor is settling in. The plant seems to have steadied now but we do have a two/three day shutdown planned for June, and will have shutdowns in future months. They do not mean that there are any insurmountable problems and we aren’t budgeting for regular outages, beyond a day a month’s maintenance shut down.”

You haven’t read last week’s Q& A Paddylogic. The company is in a closed period until June 30th which prevents the directors from buying.

“Hi, Since the most recent LSE interview, have any of senior management purchased shares in the company? Are senior management in a closed period? Thanks Asked on 31 May 2023

“We are in a close period due to forthcoming interim accounts. For general information this is the definition from the AIM Rules for Companies:

“CLOSE PERIOD (i) The period of two months preceding the publication of an AIM company’s annual results (or, if shorter, the period from its financial year end to the time of publication); and ♦ if it reports only half-yearly, the period of two months immediately preceding the notification of its half-yearly report or, if shorter, the period from the relevant financial period end up to and including the time of the notification; or ♦ if it reports on a quarterly basis, the period of one month immediately preceding the notification of its quarterly results or, if shorter, the period from the relevant financial period end up to and including the time of the notification; (ii) any other period when the AIM company is in possession of unpublished price sensitive information; or (iii) any time it has become reasonably probable that such information will be required by these rules to be notified.”

On June 7th 2022 the gas price was 136.29p.

By June 15th 2022 it had increased by 88% to 257.78p.

Angus’ share price would surely benefit from a similar increase, which would take the gas price from 69p to 129.7p, this June.

Reading through the comments on the Crowd Justice page that’s seeking funds for the judicial review against the Balcombe planning decision (see https://www.crowdjustice.com/case/stop-balcombe-oil/,) it’s interesting to see that people are willing to hand over their hard earned money without checking the facts: there are numerous references to how this “fracking” project mustn’t be allowed to go ahead.

Fracking has unfairly been demonised as a consequence of some US operators making unnecessary short cuts, but there will be no fracking at Balcombe. There will still be plenty of green fields in Balcombe (a place where, if you look on Google Maps, almost every house appears to have a driveway with a least one car parked on it; there aren’t many solar panels either and I suspect that the large sawmill means that plenty of HGVs already pass through) as the well site is very small (it’s just below the station - which has a rather large carpark even though most of the houses are nearby).

From the Annual Report:

“On 24 October 2022, the Company agreed the grant of 165.5 million share options under the Company's existing Employee Incentive Scheme to Directors and other staff. The share options have an exercise price of 2 pence per share (being a premium of 23% to the closing price on 21 October 2022) and vest as to 100 per cent., upon the closing mid‐market price of the Ordinary Shares being 3 pence or above (being 50 per cent. above the Exercise Price. The options have a 4 year term from the date of issue.”

Some more options were granted, on the same terms, to Richard Herbert when he was appointed Chief Executive.

“European gas futures jumped as much as 20%, the biggest jump since March amid signs of a tighter liquefied natural gas market and potentially stronger Asian demand for the fuel. ”

“The uptrend in European gas following the jolt in oil prices is a sign that prices may escalate,” said Bloomberg Intelligence analyst Patricio Alvarez. “So far, weak demand has kept gas benchmarks at bay, likely masking the region’s thinning supply buffer ahead of next winter and potential recovery in Asian LNG demand in the second half.”

https://www.bnnbloomberg.ca/european-natural-gas-prices-jump-as-lng-market-shows-signs-of-tightening-1.1928900.amp.html

Paul Forrest was paid partly in shares and partly in deferred payments for his 49% share of Saltfleetby. What follows is from the May 24th 2022 announcing the purchase:

“· up to £6,250,000 deferred consideration to be paid in instalments from net cash payments to Angus Energy from the Project through to 31 March 2025 (and subject to an upward or downward net cash adjustment) as and when those payments would have been available to SEL under the Company's Senior Debt Facility of May 2021.”

At the risk of sounding like a broken record, the shares that Paul Forrest has sold are roughly equal to the shares that Kemexon has bought. In such circumstances, how do Mr Forrest’s sales depress the share price?

Also, why would someone who still owns 10.46% of the company (making him still the largest shareholder) want to depress the share price? It’s likely that he wants to sell his shares, but it’s equally likely that he wants the best price he can get for them. Expect more sales to parties wanting to acquire.

As for the share price, look not at Mr Forrest’s sales but at the gas price. It was £4 in September, but by Friday had fallen to 54p. Fortunately it’s up 13.78% at the moment (https://www.bbc.co.uk/news/topics/cxwdwz5d8gxt/natural-gas) and May/June is usually when it’s at its lowest.

When Paul Forrest converted his 49% share of Saltfleetby into Angus shares what did people expect he was going to do? If he didn’t want to sell down his investment, he would have kept his direct ownership. Angus’ management clearly understood this was going to be the case as they staggered the timing of his sales.

However, Mr Forrest’s sales are only part of the story. Yes he’s sold some 322 million over the past 12 and a bit months, but then Kemexon has acquired 307 million shares over the past nine months (paying 2.2p for at least some of them). Aleph and its associates have also bought plenty of additional shares, paying at least 1.65p for them.

Moreover, would Angus be in a better position today if they hadn’t acquired the remaining 49% of Saltfleetby for shares and future cash payments? I don’t think so. It was and remains a good deal. Obviously it would have been better if production from the initial wells and/or the sidetrack had started sooner as originally planned, but sticking to schedules when extracting had formed underground millions of years ago is notoriously difficult, but they’ve still managed to acquire a valuable asset for very little.

Angus have answered this month’s questions early. They’re on the website now: https://www.angusenergy.co.uk/media/investor-questions/

…now up 14.2% today: https://www.bbc.co.uk/news/topics/cxwdwz5d8gxt/natural-gas

Perhaps the better question is when will Angus be free of its restrictive debts (ie, the debts that must be paid before there can be investment elsewhere and dividends)? If they pay it back from earnings, it’s going to be a year or two depending upon the gas price (which is up 4.6% at the moment). But perhaps they’ll be able to refinance (which might help fund those “inorganic growth opportunities” referred to in this morning’s announcement).

Since Saltfleetby came into production Angus say they’ve been paying down debt (see the Q and A from October below), but cost overruns on the sidetrack meant they had to borrow another £3 million or so on a short term basis.

Q: SFB is now producing at a stable flowrate, exceeding the hedge, and making a profit?

in addition to assumed production at brockham, is Angus now making money and profit for the first time in its history?

Asked on 2 October 2022

A: Yes. We are already meeting and exceeding the current hedge profile and already paying down debt.

This is the sort of forecast that organisations such as Kemexon and Aleph base their investment decisions on.

Especially now that production is de-risked, it wouldn’t surprise me to see further purchases by them or similar organisations. We’ll find out soon enough.

LSE are reporting that GSA Capital Partners yesterday increased their short from 0.7% to 0.8%. That increase amounts to just over 3.5 million shares.

It seems a risky short to me given the increased production figures.