Member Info for HeadInTheSand

Urraca, that's a bizarre question and no I don't agree with that.

Since you ask BV, according to the company itself, "this would incur a normal mark to market charge". Which basically means this:-

"In futures trading, accounts in a futures contract are marked to market on a daily basis. Profit and loss are calculated between the long and short positions."

So, if ANGS wanted to break the hedge at any given time, its exposure (positive or negative) on any future positions would be worked out at that point, and that would be the charge applied. As I've said, that's what the company has stated.

IF ANGS can get 1.5 million therms out from existing wells by Jun 1st...

And IF ANGS manages to drill a sidetrack successfully...

And IF this sidetrack then doubles production volumes up to 3 million therms from Oct 1st this year (which is the max current planned equipment can handle)...

And IF future gas pricing stays around the 280p per therm level...

Then, presuming all those ifs happen, the field would deliver around £92 million pounds worth of revenue between Jun 22 and Jun 23.

Of this, £44 million goes to Mercuria under the cast-iron hedge agreement. ANGS and SEL get £24 million each.

As I've said before, I'm only interested in facts.

People here over the last few days have been making the most ludicrous and literally impossible claims, like "£7.2 million revenue a month! That equals £86 million a year!"

Whether deliberate or not, this is misleading nonsense on multiple fronts. Gas pricing for May and June is sub 300p per therm for starters (plus ANGS has never once said it can get to full production by May 1st).

And again either through ignorance or a desire to deceive, numerous posters are not taking into account what effects the 36 month hedge, with its fixed volumes and fixed pricing has on any potential revenues.

None of the above is in any way supposition. It's all entirely factual and based on ANGS's own public.y released information.

So... question. Do people think it's right or fair for literally impossible revenue forecasts to be spouted as "facts" by a certain breed of poster here, when these are categorically and provably falsehoods? I don't.

I find it amazing you're so surprised at very easily verifiable facts? If you take George's latest production forecast as gospel, it's a minute's effort to work out what monthly revenues will be.

Basic maths doesn't care about geopolitics.

I've not worked out if Maddock is deliberately deceptive or just plain ignorant.

We know the fixed timings, the fixed quantities and the fixed pricing for all 36 months of the hedge - ANGS disclosed these last October.

We know future gas prices per month, courtesy of ICE - the same measurement ANGS told us it uses.

And we know what level of monthly production ANGS is hoping for, both without and with a successful sidetrack - because George literally just told us.

All that's now needed is the ability to use a calculator (smething apparently beyond maddog).

People may not like the above, but that makes not a blind bit of difference. Those are the facts.

Sageman,

https://www.theice.com/products/910/UK-Natural-Gas-Futures/data?marketId=5253318

maddog, it's still not my fault that you clearly have no clue how a hedge contract works.

Sageman yes, any production achieved in May (highly unlikely - George has said he hopes for first gas and not full production by late May) or June (still just about possible) would be entirely unhedged.

June is at 286p per therm today, so 1.5 million therms in June (George's latest monthly forecast without a sidetrack) would produce a total revenue for that month of just under £4.3 million, of which ANGS would get half.

July and onwards are as I've listed.

Maddog, it is not my fault if you can't handle/understand basic maths.

Again, people are forgetting about the hedge (or just making stuff up).

It's ever so simple really. Let's sat George does get 1.5 million therms out in July. 1.125 million of those he is obliged under the hedge to sell for 41.4p per therm for a revenue of £460k. The remaining 0.375 million therms would deliver a monthly revenue of £1.07 million, if sold on the open market at today's gas futures pricing. So that would be roughly £1.47 million of revenue per month of which ANGS gets 51%, so call that £750k. The same for August and the same for September.

Now... October. Let's suppose that George has drilled a successful sidetrack and has managed to produce 3 million therms per month. 1.75 million of those he is obliged under the hedge to sell for 52.05p per therm, delivering a revenue of £890k. The balance of 1.25 million therms he can sell on the open market at today's pricing, giving a further monthly revenue of £3.56 million. That woudl be a total monthly revenue of roughly £4.6 million of which ANGS gets 51%. (And the same for Nov 22 to Jun 23.... well actually a little less, because the fixed hedged pricing drops in Q2 2023).

So the maximum possible revenue for ANGS, at today's gas pricing and making the hardly small presumption that the sidetrack drill a) will be successful and b) would double overall gas production up to 3 million therms per month would be 51% of £4.6 million... so £2.3 million per month absolute max.

It's all in the Oct 26th CPR report.

...and as I have said, £7 million of revenue per month is literally impossible to achieve, even at today's gas futures pricing and even if the currently unattempted sidetrack does result in an overall production volume of 3 million therms per month. The fixed avg price on the hedged volumes make that impossible.

As I've said, George never mentions 1.5 million therms from May.

Erm... £7m revenue per month is just not possible with the hedge in place... even if a successful sidetrack raises overall production of 3 million therms per month. If that production volume is achieved, 50% of it will have to be sold at roughly 45p per therm over the next three years from July.

Gideons, LSE claims that George stated production would be 1.5 million monthly therms from May (George never said anything of the sort).

As is obvious to anyone with a calculator, the only way George can pay off the debt by the end of this year is if he achieves a monthly production of 3.0 million therms - and for that he absolutely needs a VERY successful sidetrack. Which is also crucial for the company to be able to meet - and sure, exceed - the 1.75 million monthly therms hedged from Oct 22.

Even if the existing wells produce 1.5 million therms as George claims they will , more production is needed from Oct 22 or ANGS falls short on the hedge.

Gideons, that's what LSE said he said.

For that to happen, ANGS needs a successful sidetrack producing an additional 1.5 million therms per month, thus doubling field production to 3.0 million therms per month.

Reality check time (something else you'll be allergic to).

However, ANGS isn't even going to attempt a sidetrack for several months - unsurprising, because they've not got the two producing wells to first gas yet. And as the publicly available OGA shows, the last four attempts to sidetrack from well SF07 (the one ANGS is also going to try from) have all been unsuccessful.

Counting chickens before they hatch comes to mind...

Allergic to facts again, Gideons? No change there then.

You'll agree that George's latest production estimate from the two producing wells is 1.5 million therms? One would hope so - that's what he said this week.

You'll agree that the volumes hedged per month from Oct 22 to Jun 23 are in fact more than that... 1.75 million therms? One would again hope so - that's fully detailed in black and white in the company's latest CPR valuation.

Therefore the company needs a successful sidetrack by Oct 22 to make up the shortfall, or the swap contracts will cost them £500k per month (at today's future gas prices).

All that's factual, so I expect another allergy attack from you near on immediately.

Scored, with current/future gas pricing the hedges are worth an absolute fortune to Mercuria (they sit on the other side, are the primary party in lending ANGS the £12 million loan and the ones who insisted on the hedge as a condition of the loan in the first place).

There's no reason why they would agree to the cancellation of something that's worth tens of millions of pounds to them. They'd need to be paid off.

Well, the figures quoted are ANGS's own figures directly taken from their own valuation report....

https://www.angusenergy.co.uk/wp-content/uploads/2021/10/Angus-Energy-Saltfleetby-Reserves-Valuation-Report.pdf

Page 49 has the table with all the info on the hedge (by month, fixed volumes required and fixed pricing). Anyone can take a look for themselves.

So if that's "green hogwash", then it's the company that are the authors of it.

Again, referring to real company data...

https://www.angusenergy.co.uk/wp-content/uploads/2021/10/Angus-Energy-Saltfleetby-Reserves-Valuation-Report.pdf

See page 49.

Under the hedge, the first 1.125 million monthly therms produced by ANGS between Jul-Sep this year only deliver £0.45m of gross revenue per month (though it can of course sell any excess production over and above that at market rates).

Then and again under the hedge, the first 1.75 million monthly therms produced by ANGS between Oct 22 and Jun 23 only deliver £0.89m of gross revenue per month. Obviously it is essential for ANGS to produce at least this 1.75 million therm volume every month during this period - or it will have to make up any shortfall at market rates.

Which is exactly why a successful sidetrack absolutely will be needed by October this year, if the ANGS CEO's production forecast of 1.5 million therms per month from existing wells is to be believed as accurate.

Scored, the price and the quantities vary month on month, but it's a 36 month hedge.

All the details are on page 49 of the Oct 26th 2021 valuation report that's freely available from the news section of the ANGS website.

As I've said before, I'm one for facts. And facts are facts - motivation doesn't come into it.

I trust you guys have all actually listened to the entire interview and what George actually said, rather than how LSE summarised it in its title?