Member Info for ab76

What’s the relevance of missed deadlines now Average_Dave? If Saltfleetby wasn’t producing from all three wells I accept that they might be a reason to doubt that production would start up, but Angus is now producing at up to about 9.5 mscf with a bit more to come as the well cleans up and the permanent line is commissioned.

I agree there’s no clearly published forward plan for the oil assets, but that’s not new and Angus now has the cash flow to fund development/management time to spend on it.

No idea Rusty58.

You can’t even say today that more people are selling shares than buying them.

The gas price is down a bit more today, but that’s what happens at this time of year. It’ll probably start increasing again in about a month.

The stock market is irrational. I take comfort from the fact that companies such as Aleph and Kemexon bought shares at a price considerably higher than the current one, and from the fact that Saltfleeby is clearly producing lots of gas (there will be days, such as today, when production is lower, but I’m sure that’s just them sorting out the little issues that come along when you bring a field back into production and have a well that’s cleaning up).

The operating costs have been taken into account and are clearly set out in the information available on Angus’ website - for example, see https://www.angusenergy.co.uk/wp-content/uploads/2021/10/Angus-Energy-Saltfleetby-Reserves-Valuation-Report.pdf (which is a more up-to-date report than the earlier one I posted yesterday).

The operating costs for gas production will be between £2.8 million and £3.4 million (the earlier report estimated £2.5 million) - see page 52. That leaves plenty of profit given the amount of gas that’s being produced and the price it’s being sold at: Saltfleetby was profitable under the hedged gas price.

As far as condensate is concerned, it sells for a £5 discount to Brent (the earlier report said £10) and the operating costs (mainly water disposal and haulage) are just under £26 per barrel.

I’m not sure that I agree that there’s a vested interest in keeping the share price low Woltan. When the, modestly paid, directors were awarded bonus shares if the share price reaches 3p and when someone like Kemexon bought 4.4% (since increased to over 8%) of the company for 2.2p I think there were probably hopeful that the share price would go up. I think though they may well be the sort of people who respond to an opportunity: if bonus shares at 3p looks unlikely, why not consider taking the company private and making a load of money that way?

Hopefully the share price will pick up in the coming days and weeks as the higher production figures sink in and future plans are revealed - we get answers to questions in just over a week, some sort of presentation is expected in June (see this month’s answers to questions), the interim results are due on June 30th, and gas prices will likely soon start to rise again. But if not, some sort of buy out/takeover becomes more likely. Angus was a target before Saltfleetby, the largest onshore producer of gas by a large margin, came into production (and before gas prices spiked). It’s appeal can only have increased since.

The board, supported by its strategic shareholders, has the skills to arrange the financing for a buy out. A 2.5p bid would value the company at just under £90 million (plus the cost of buying out the warrants, less the money they bring in). If the oil assets are worth £10 million (their book value), they’d be getting Saltfleetby for not much more than £80 million (plus debt) and could easily double their money. Although some small shareholders might not want to accept 2.5p, there’s a good chance any bidder would receive 90% acceptances and could then compulsory acquire the remaining 10%. Whilst the share price remains at these levels, a low price bid is a possibility. If someone other than the existing shareholders wants to bid they’d obviously have to offer them enough to persuade them to sell (Kemexon was buying at 2.2p and before the sidetrack had succeeded).

The hedge doesn’t make Angus unprofitable.

Angus borrowed money to bring Saltfleetby back into production and the lenders required them to hedge their initial production (ie, production before the sidetrack - which wasn’t certain) so that they could be satisfied that the loan would be repaid.

As a consequence of the huge jump in gas prices since the hedge was entered into, Angus are getting a lot less than the current market price for the hedged portion of their production. However, gas production costs are low (about £2.5 million per year), the production from the sidetrack is unhedged, and even at the price of 39.33p per therm (which is a lot less than Angus is now receiving when hedged and unhedged production are combined) Saltfleetby was estimated to make about £13 million in pre tax profits in its first full year of production (including side track production) - see page 51 of https://www.angusenergy.co.uk/wp-content/uploads/2020/03/Reserves-Resources-Valuation-Report-Angus-Energy-Saltfleetby-Assets-Effective-Date-28th-February-2020-Report-Date-4th-March-2020.pdf and ignore the “net” columns on the right as when the report was prepared Angus only owned 51% of Saltfleetby (it’s now 100%).

With regard to condensates, according to the 2020 Saltfleetby Reserves/Resources Report, the condensate was estimated to sell for a £10 discount to Brent Crude.

Additionally, for each barrel there’s a £20 water disposal tariff and a £4 haulage tariff. The other production costs are about £1.80.

Brent’s about £60.36 at the moment. So on 120 barrels per day, Angus should be making about £2,947 profit per day or £1,075,728 per year. The oil price has been higher over the past six months and may be higher again. Every £10 increase adds (or removes if the price falls) about £430,000 to that annual profit figure.

To see the above cost figures, look at page 47 of https://www.angusenergy.co.uk/wp-content/uploads/2020/03/Reserves-Resources-Valuation-Report-Angus-Energy-Saltfleetby-Assets-Effective-Date-28th-February-2020-Report-Date-4th-March-2020.pdf

Gas prices have fallen a lot since September (but may well rise again as restocking for next winter begins), but here’s what Angus thought about the possibility of bids back then:

“Q Given the crazy gas prices forecasted for several years ahead, I just wondered if the company has been approached by any of the multinationals interested in Saltfleetby, or indeed if you expect them to be interested? Thanks. Asked on 1 September 2022

A. There is a dearth of new assets coming online so we would not be surprised to have further approaches this year.”

I wonder whether any bidder for Saltfleetby would also be interested in the oil assets (which Angus estimate to be worth about £10 million) and bid for the whole company or whether they would only want Saltfleetby, leaving Angus with cash and those oil assets.

Highest daily production figures ever, lowest share price for months: I bought more shares today.

Angus have told us that the three wells have been flowing at 9.5 mmscf. There are bound to be days, especially whilst everything has just been configured, where there is disruption to production and that’s likely what’s been happening for the past few days. If there were any material problem they would have to announce it, but it’s more likely to be just a bit more getting to grips with the three wells and the compressor. We’ve seen that plenty of times before in the production figures.

Over the past 8 months, Paul Forrest has sold 153,750,000 shares so the suggestion that he’s going to be selling 130,000,000 million each quarter isn’t supported by past experience. In any event, as I pointed out last night, since September Kemexon have bought 340,473,894 million.

Most of the outstanding warrants are exercisable at 1.65p. 230 million of them will raise £3,795,000 in cash for Angus - cash that will pay off debt and save interest payments. There will be a bit of dilution, but not much and but much when compared with the value of Saltfleetby.

The share options, which have been given to management instead of large cash salaries, have an exercise price of 2p. They will also bring in a lot of cash when exercised and not much dilution.

Whilst some here are taking already about natural decline in Saltfleetby’s flow rates (less than a week after all three wells came on line together), Angus are working on plans to boost production either by further drilling or by enhancing the plant so that more gas can be extracted in one go (see last week’s presentation). We know that there’s hundreds of millions of pounds worth of gas still to produce.

You’re quite right balancedviewer, we mustn’t forget Aleph. They directly own 7.86% of Angus and, as you say, are reckoned to have associates who own a lot more but who are each under the 3% level. What do Aleph do? According to their website they: “specialise in generating outsized returns in niche markets that support the Energy Transition” - see https://www.alephcommodities.com/.

Since September 2022, Paul Forrest has sold 153,750,000 Angus shares.

However, over the same period Kemexon has bought 340,473,894 Angus shares.

Mr Forrest has good reasons to cash out. It doesn’t look as though his 49% share in Saltfleetby cost him anything (it seems he did a deal with Gazprom whereby they paid him £2.5 million to take it off their hands and he simultaneously did a deal with Angus to pay them £2.5 million to take 51% off his hands) and he’s made £15 to £20 million out of it.

Kemexon specialise in commodity trading and presumably know a good deal when they see one. They’ve been buying Angus shares since they were 2.2p.

When the time comes Paul Forrest may well sell more shares (that’s probably why he converted his illiquid 49% stake in Saltfleetby into liquid Angus shares), but so what? Others have been buying up his shares and at a significant premium to current share price. For example, on November 8th 2022 Kemexon announced that they’d just acquired 4.12% of the company (see https://www.lse.co.uk/rns/ANGS/holdings-in-company-g7302h13r47097j.html) and they’ve subsequently increased their holding to 8.78%.

The company have issued an RNS. It was headed “Production Ramp Up” and was given on Monday. We can all see that production has indeed ramped up as the gas people publish the figures at about 12pm each day.

Angus’ interim accounts are due on June 30th - see https://www.angusenergy.co.uk/investors/financial-calendar/

Anyone looking at historic gas prices will see that May/June is usually when they’re at the lowest (the cold weather is over and stockpiling hasn’t yet begun). Angus’ fortunes aren’t going to be determined by today’s gas price, but by likely average prices over subsequent years. They remain high.

So what if lots of shares have been issued. The relevant facts are that Angus has an assets worth a few hundred million pounds that’s now generating plenty of cash to pay off a fairly modest amount of debt in comparison with that asset (debt that will fall even faster as warrants bring in cash) and a market capitalisation of around £50 million.

A very impressive announcement that might also, following what was said during last week’s presentation, open the door to some director buys at 8am?

does lse really censor the country ****stan as asimpleinvestor’s post suggests? i thought i’d try and see for myself.

And yet Angus have clearly stated, most recently in this week’s presentation, that they’re looking for acquisitions bigger than Saltfleetby and targeting a much larger market capitalisation. They’ve also attracted, and are backed, by a couple of long term strategic shareholders. They’ve also made clear that if a sensible offer is made for the business they’ll consider it, but they’re planning for bigger things. And why shouldn’t they now that they’ve got a cash generator to fund them.

The permanent pipe was discussed in the presentation earlier this week.

It wasn’t possible to construct the pipe whilst drilling the side-track as there was insufficient room on the site.

The absence of the permanent pipe isn’t too much a problem though as the sidetrack’s output is being diverted as part of the continuing clean up process.

Although there have been delays and cost overruns, Angus have achieved the remarkable in bringing Saltfleetby back into production (Gazprom, long before they were sanctioned, couldn’t manage it).