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You seem bored this morning Yanis. Your payroll comment seems a little strange and clearly designed to reignite old arguments. I'm sure the BB will appreciate that very much.
It's good that you have moved on from the 5.5 saga and now going with the 10.5. imo you are flirting with ramping here as you seem to think the sidetrack is a dead cert. Been in too many shares to know very little is dead cert. Didn't even GL offer a word of caution around the sidetrack "even if it's a dud". It's worth sharing your views on what the numbers look like at 10.5 but you should always caveat them with a more prudent tone in case things don't pan out the way we hope.
You are obviously held in high esteem here and lots of holders hang on every word you say. You've built yourself into a high level of responsibility and it's important you treat that responsibly. Just my opinion and I'm sure you'll ignore every word of it.
When we start seeing the top number decline then you'll have a fair point but whilst revenue is increasing especially in such large % then imo it can't be deemed a failure. To be fair to GB, he's been rapidly growing the business through some serious headwinds so hats off to him for that.
Some people were expecting 10mscf per compressor. GL mentioned a couple of interviews back that 5-6mscf is the range they are working to. In his last interview he confirmed this again and clearly states with 2 compressors and 3 wells we can get 10-12mscf. That for Angs is huge and this is what we should be basing our expectations on when the time comes.
For now it's 5-6mscf.
Jan23 with 2 compressors and 2 wells 7-9
Jan23 with 2 compressors and 3 wells 10-12
Over to GL to make it happen.
LL, net debt is not total liabilities as far as I'm aware. In there you'll have all sorts of accruals, leases and trade creditors.etc. Net debt is cash & cash equivalents minus short term and long term loans. I believe so anyway.
Hits, yes appreciate they have costs to settle over the next few years but one of my forecasts include the 2nd compressor which could quite easily generate £40m profit in the first year. That more than covers the costs you elude to and generates a profit.
Question for all. Are there any risks associated with installing the 2nd compressor or is it just a case of when not if?
WG, from your post
I suggest you have a listen to the investor one2one presentation where GL himself says they will take a couple of months break to drill the sidetrack.
I have not listened to it but I'm assuming plans have changed as a couple of months break now would kill the hedge. GL has committed to commencing the sidetrack in the coming weeks so I'm not convinced that a 2 month break is required.
Worse case if it was would be flexing the Q4 hedge and moving some out to H2. Mercuria may accept this as gas prices are dropping currently and Mercuria will likely benefit from higher gas prices in H2.
Then you'd have £3m costs for the sidetrack and £400k admin costs for the business. £3.5m costs with no revenue. GL has not mentioned anything about this recently so if he hit us with anything like that now then that would be the ultimate cheap shot and career suicide imo. Is it worth it for GL. Not with how bullish he is being recently.
Too close for comfort Howey imo. Q4 average is 5.24 ish. GL did say they will be creeping it up towards 6. We need at least 5.5 I'd say on average across Q4 just so we can have a little safety net on the hedge and start building a cash pile.
Did you manage to recalculate H1 with the deferred amounts?
WG, agree that Mercuria will take what they are contractually obliged to. The flex from Jul/Aug would have cost Angs something for sure. I doubt it would be £10m at this point.
The main point is that with the 2nd compressor inbound then both Mercuria and Angs are onto a winner imo.
Angs have an obligation to deliver to Mercuria and Mercuria need Angs to deliver it or they risk losing tens if not hundreds of millions. We're both on the same team working towards the same goals so at this stage I don't have any concerns as to whether the hedge will be met or how.
BV, new investors won't know what you've debated with WG over the past 5 years so unfortunately it's best to either ignore it or hit it head on with reasoned argument. The belittling and name calling just distracts from the facts and sensible opinions. You're obviously free to do as you wish.
WG,
With regards to my “fair to say” comment. A contract was in place and would need to be fulfilled for the amount agreed….. end off!!
Not entirely true. Mercuria have already shown they are willing to flex. They could have held firm and demanded the Swap value in July and gone legal on us but where would that have got them. It would have probably finished Angs and Mercuria would have got what a few million quid. This 3 year contract is likely to be worth £200m+ for Mercuria. They will bend over backwards to maximise it's potential. Albeit, if Angs do need to flex then there will be a cost but imo it's certainly not a case of "this is the contract and that's that".
WG, not sure what implications will arise from the sidetrack installation but my figures were based on just the 2nd compressor being installed. It should with the high forecast prices be more than enough to cover any opex/capex and finance obligations. Even if the sidetrack is delayed until H2 when we have a much stronger balance sheet then any possible break at SFB can be forecasted in and worked around. This isn't a 10p by Xmas job but it's certainly got the potential of 7p by end of Dec23. Imo
I here what your saying about the costs but many of those are spread out over 3 years. Running at 8mscf/D is likely to generate for argument's sake 1.5mscf/D unhedged. Hopefully we hit that in Jan so H1 would generate 364mscf of unhedged revenue. Using Angs 10,800 conversion that's almost 4m therms. At £4/t that's £16m before end of Jun23, most of which is pure profit as oil and condensate will cover overheads.
From Jul23, things get easier as the hedge drops down.
Even without the sidetrack the costs you mention are more than covered.
Agree WG. I believe Mercuria will be flexible with Angs but that flexibility will come with a cost. A cost we are unable to calculate. It's best to ignore the flexibility for the purpose of the base calculations but consider the flexibility as a worse case scenario.
The flexibility is only required if we don't get the 2nd compressor and GL seems pretty confident we'll have it by year end so my base calcs are based on what GL says but I always consider the what if risk of not getting the 2nd compressor on time.
Howey, I know some companies can have lengthy shutdowns for maintenance periods. Serico for example had 4 weeks. Angs is smaller so I wouldn't expect 4 but possibly 2. Yanis will probably be able to give a more accurate timescale. Definitely worth factoring in. I didn't as I believe the usual time for a shutdown is summer which is after Jun23 but worth considering for your full hedge approach. Tbh, the hedge looks pretty sound after H1