Member Info for HeadInTheSand

It now looks like actual and valid SP information is kicking in.

Foe some reason, LSE almost always shows some ridiculous SP and spread for about 10 minutes before opening. I've no idea why this happens, but it's never worth paying attention to, for the brief time it lasts.

Tigra, you are of course quite correct to point out that re-injection of produced water from a site entirely avoids disposal costs for such. That is without doubt a good and helpful thing, commercially speaking

However, what I think you may not be considering is that only water produced from Brockham can be re-injected - so there will inevitably be a nett fluid loss (representing the oil obtained alongside the water). In simple terms, say 70 barrels of oil are produced along with 30 barrels of water. That's 100 barrels of fluid. Now re-inject the water... I'm surer you'll get the drift.

The study you post a link to indeed shows how injection of water can definitely help oil production, but only if there is no limitation on how much water can be injected. So it doesn't deal with solely being allowed to re-inject water produced from site.

However as I've mentioned, what site water re-injection will achieve is a slow down in any decline in production from site by minimising pressure drop as much as possible/permitted, which again is not a bad thing.

Re Brockham, as before, I'm not sure how re-injecting produced water can increase BOPD production - though it can undoubtedly slow down any reduction in production.

Anyhow, the Saltfleetby news is of larger significance in the greater scheme of things.

Yes, another hurdle cleared re Saltfleetby, so that is a positive for sure.

We already knew re Brockham re-injection though - it was being discussed here last week.

So... you're saying I shouldn't have posted the news? Very logical...

That doesn't really stack up. For example, I was the one to first point out that revised planning had been approved at Saltfleetby.

I'm all for hard and verifiable facts. It's irrelevant whether those are positive or negative.

Gideons, nobody yet knows what volume the field will produce without a sidetrack. Therefore nobody yet knows if any gas that a successful sidetrack may produce will be at least in part needed to meet the hedge.

To claim anything different to the above is to be as truthful as your much repeated assurances of earlier this month that first gas would be reached by the end of March.

Why are you incapable of sticking to the very obvious facts?

...to have such a civil day on this BB?

I'm sure it'll soon swing back, but it's nice while it lasts.

It's odd that those of a more forthright mode of expression are all absent at exactly the same time? Hey ho...

BV obviously the sooner full production starts, the better. And equally obviously, the more gas produced for sale before the hedge kicks in, the better.

However, George's latest projection was for a total first production in June (so, all unhedged) of 1.5 million therms. that would equate to £3.5 million of total revenue at current June 22 gas forward pricing of 235p per therm (I dunno where he got £7.2 million from just ten days ago).

Still, a very healthy result IF full production can be achieved from June 1st. I personally think that's again liable to be over-optimistic, if first gas is only achieved at the end of May... but the only real important thing is to be in full swing by July 1st.

You already know that any gas produced from any sidetrack will only be unhedged a) if it's successfully drilled (obviously) and b) if the existing wells produce enough gas by themselves to fulfil the hedged quantities.

Bound to be, BV. They're both jointly liable for both the loan and the separate hedge.

Well, given that George's just 10 day old predictions for June 22 revenues were £7.2 million based on producing 1.5 million therms that month...

...and given that gas futures pricing for June 22 is now 235p per therm and so delivering gross revenue of less than half the above prediction at nearer £3.5 million...

...maximising wellhead revenues would seem to be a good idea..

BV two things.

1. Yes if ANGS pulls this off, I'll certainly give them credit for delivering returns to genuine long-term holders. I'm not bothered how well any short-term traders do.

2. Mirasol is quite correct. As with any futures or derivative contract, the hedge is for a fixed volume of a commodity at a fixed price over a fixed period of time. It's utterly irrelevant how that fixed quantity is obtained. So, when George states "production from the sidetrack, itself 100% unhedged", he is making two major assumptions.

The first is obvious. He's assuming a sidetrack will be successfully drilled.

Re the second, he's making the assumption that the gas flows from the existing wells (i.e. without a sidetrack) will be enough to fulfil the hedge obligations. That will only be true - as earlier mentioned - if the hoped-for pressure build-up delivers a 30% increase on production volumes from the existing wells, compared to Saltfleetby's previous last full 12 months of average production before there were no problems at Theddlethorpe.

BV and ANGS would happily be able to pay a dividend, provided it has generated enough revenue to pay the loan off early and continues to do so to cover off the regular monthly shortfall on the derivative swaps.

As I keep saying - as has the company itself as well - the two commitments are entirely separate.

As to the claim that there's no hedge on any gas produced from the sidetrack, that is entirely unknown at the moment, not least because no sidetrack has yet been attempted by ASNGS, let alone been successful.

What's more, if ANGS's hoped-for pressure build-up causes an ongoing 30% increase in production levels, compared to what Saltfleetby was last producing in its final 12 months of unhindered production (i.e. before Theddlethorpe issues kicked in), then any gas produced by a sidetrack would indeed be unhedged - providing of course that a sidetrack is drilled successfully at some stage.

However, if the hoped-for pressure build-up does not increase production by 30% compared to that average, then a successful sidetrack will be needed to meet (and to be fair, no doubt exceed) the hedge come October this year.

BV, yes the hedge extends out into 2025 (it's 36 month as you know). And yes, both ANGS and SEL are jointly committed to both the loan and the hedge.

As to the derivative swaps being able to be made at any time? They may be able to be made early if those on both sides of the hedge agree, but I am sure they can't be made late.

It's all moot if enough gas is forthcoming within the timescales required.

BV the two are separate things.

The loan could indeed be paid off early (providing ANGS has generated the cash to do so) and that would presumably save on overall interest payable.

As has been made expressly clear, the hedge is an entirely separate arrangement and as noted its liabilities to the company are equally made expressly clear in the just released AR.

For the record, one can't blame ANGS for entering into the hedge. It was the only way to get the £12 million loan, because Mercuria (as primary lender) insisted upon it. The fact that gas pricing has shot up so dramatically could not have been foreseen.

However, current gas pricing has caused two things regarding the hedge: it's made it extremely lucrative for Mercuria and it's made it even more crucial for ANGS to fulfil it. That's pretty much it.

As is made clear by ANGS itself in its recently annual report, the current total valuation of the hedge obligations are worth nigh on £26 million to those sitting on the other side (and that's Mercuria, as the annual accounts again make clear). That's the difference between what METS pays to ANGS at the fixed hedge prices and what ANGS has to pay to METS at market rate prices, under the contractual derivatives arrangement.

It's all in note 24 on page 69.

I'll stand by that. I'd be delighted for liars and those looking to deliberately mislead not to prosper, regardless of the company. - however and as clearly stated, not at the expense of the genuine.

...which is exactly why the financial implications of the hedge are specifically mentioned in the annual results just released, under both current period liabilities and future liabilities.

However, not a problem if enough gas is forthcoming over the fixed timescale.