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PeterA, as I am sure you're well aware, it all depends on how realistic one views ANGS's projections to be (or what level of credibility one is prepared to give to them).

I (and by the looks of things, the market in general as well) think that getting the field to 6 mmscfd consistent production levels without a successful sidetrack is decidedly optimistic. My opinion is based on the last 12 months of full and unhindered production coming out of Sfby back in 2017. The average production over that period was 4.17 mmscf (and also slowly but inexorably declining over time).

Yes I know there may have been a pressure build-up/reservoir refill over the 4+ years of non-production - but enough to increase consistent production up to hedge-fulfilling levels? Personally I strongly doubt that.

Your figures are calculated entirely correctly - but are all based on the assumptions given by ANGS as to a) what the field will consistently produce without a successful sidetrack and b) what it will consistently produce with one.

With a view to history (which is of course auditable) I'm simply a great deal more wary about ANGS's assumptions than you are, that's all.

This will all be revealed by real-world data some time in Q2 next year (or maybe Q3, if we're left to rely on OGA-supplied reporting). We'll see... "how much and by when?"

PeterA, what you say is correct, provided that:-

a) ANGS drills a successful sidetrack
and
b) said sidetrack has the production-enhancing effect that ANGS hopes for

(...and I trust you'll grant that those are two separate conditionals).

Now sure, ANGS has said that it hopes for a successful sidetrack increasing average daily production up to 7.5 mmscfd worst case and 10 mmscfd best case (but that upper figure being limited by other on-site factors). And yes, if ANGS drills the sidetrack... and if it is successful... and if that gets consistent average production volumes up to 10 mmscfd... then of course it's happy days for one and all.

But there's a fair few "if's" in the above. Which is why I maintain that for any O&G company to bank on any sidetrack to be drilled being successful is not conservative - you just can't bank on one automatically succeeding. And yes I know that ANGS has stated that it has learned from the previous four unsuccessful attempts to sidetrack the particular well... but that doesn't guarantee success either.

As ever and as BV states, we'll need to see real-world figures before we know what's going on.

That's true. The gas flowed and it wasn't a lack of flow that caused production to stop. However, the OGA figures show that during the last 12 months of NB full and uninterrupted production, gas produced averaged at 4.17 mmscfd.

So for ANGS to now claim that they estimate to be able to fulfil all hedge commitments WITHOUT a sidetrack shows no sign of being "conservative". As we all now know, from Oct next year, they've got 10 solid months of needing to produce 5+ mmscfd to deliver on the hedged volumes. Okay, it's possible there'll have been some sort of pressure build-up over the last 4+ years of non-production... but enough to cause a 20% increase in produceable volumes over a ten month period? That strikes me as more than a bit of an optimistic ask - and certainly one that isn't based on "70% of a conservative projection".

I want to know what happened to the 30% safety margin that ANGS kept stating it had built into the volumes hedged?

Remember? According to George repeatedly, the hedged volumes equated to "c. 70% of a conservative projection" of production volumes...

But from what we're being told now, the company hopes that the existing wells will produce at 5 mmscfd without a sidetrack. Banking on hope and a possible - and sustained (really?) - build-up of pressure during the field's 4+ years of non-production is about as "conservative" as banking on any planned sidetrack being successful... i.e. not conservative at all. "Conservative" would have been to hedge under 3 mmscfd equivalent over the 36 months... and that's what I honestly expected to have been done, before the numbers were finally revealed in the recent revamped CPR.

So IMO ANGS is indeed going to need a successfully drilled sidetrack by Oct next year. It is going to be interesting to see when they decide to start on this - there's arguments both for and against early sidetrack drilling.

However, bottom line... it's all conjecture at this stage. As ever, we all need to see how much gas can be consistently produced and starting from when. And as ever, nothing else matters.

Also true, Mirasol. There were a few sketchy surprises in the revamped CPR, but nothing definitive.

I suspect the recent retrace may have something to do with the equally recent drop in future gas pricing. It's still high, but not as high as it was (which is why it's not so much of an endless themesong for the cheerleaders any more).

All these complicated conspiracy theories about why the SP isn't going up. Berenburg this, AAOG that... it's all just fairy stories.

Occam's razor applies here - the simplest answer is by far the most likely. After the unrelieved litany of over-optimistic estimations by ANGS (very definitely including the current management), the company clearly has a major credibility issue in the eyes of the market, IMO - and understandably so.

Hence what's going to be needed is cold hard real-world data on how much gas will consistently flow and when it will start doing so. I am beyond certain that's what the market is waiting on.

ED as I have often said - and as ANGS watchers over a much longer period than yourself will be more than aware - we've been here multiple times before. The market very clearly is not viewing George's latest set of estimates, projections and predictions as having much credibility at all (unsurprisingly, given both the company's and his track record on accuracy to date). It is going to want to see actual hard and fast, real world and independently verified numbers before reacting IMV.

Again, back to "How much gas and by when?"

PeterA, credit where it's due. That was the best and most pertinent question asked of ANGS that I can remember.

Yes of course, if the field consistently flows 5+ mmscfd without a sidetrack, then the hedged quantities will all be met. You're bang on correct in stating that.

As I keep asserting, it's all projections and estimates. We need to see what levels of production the field can be made to consistently deliver.

To your point about what the company believes the field will produce - and also with reference to George having repeatedly stated that the hedged volumes were "conservative" and "around 70% of expected production"...

According to that, ANGS seems to be expecting the field to be producing over 7.5 mmscfd, come Oct next year (5.3/0.7). I would not call that expectation "conservative" and in my view getting to those consistent volumes will definitely need a successful sidetrack.

It may be shocking to you, JT2, but I would bet it's simply that the market has a different take on the updates. Once you realise that, it's not surprising at all, given the nature of ANGS's answers to that excellent and very much on point three part question.

As to whether gas "will flow better than expected"? I've mentioned earlier today that there may be some initial benefit due to possible pressure build-up (after all, the site's not been in production for 4+ years). Whether this means that gas will consistently flow "better than expected" remains very much to be seen. Also, looking at ANGS's answers to projected gas flows with and without sidetrack, I would personally say that their stated expectations are already on the optimistic (rather than conservative) side.

As usual, we'll have to wait and see. It remains all about how much and by when?

That three part question that just got asked is the most relevant question that's been asked of ANGS in months and months. Hats off to whoever asked it.

As to the answers? All I'll really say following those is that I don't think that items such as the volumes hedged can correctly be said to have been based purely on "conservative projections".

It's all very well giving worst/mid/best case predictions on a successful sidetrack - but the presumption there is that the sidetrack is 100% going to be successful, with its delivered outcome simply being a matter of degree. Said assumption certainly does not reflect all the possibles.

"...from Oct 22 onwards..."

But ED, the thing surely is that it's impossible to "experiment" to much of a worthwhile degree of certainty with methods to increase production?

Yes of course methods can be modelled, and yes that modelling can be based on both latest available data, plus historic data from previous failed sidetracks - but quite literally the only way to gauge the success of any attempt is to actually make that attempt, cross your fingers and then see what the results are. (Otherwise, any sidetrack attempt drilled by any O&G company would be successful every time - and we all know that's nowhere near the case).

Which is why I keep banging on about the only important things being complete clarity on how much gas can consistently be got out of Sfby and from when. The first part of that question is now even more critical, given the revelation that ANGS has hedged over 5 mmscfd from Ct 22 onwards for 10 months... they're going to need that sidetrack to deliver, in my very firm opinion.

Posting problems on LSE again?

Thanks Oktane. That explanation pretty much matches what I believe to be the case - namely that it is crucial for ANGS to produce enough to at least fulfil its volumetric hedge commitments over the 36 month period. If it doesn't, I also believe the downside to be potentially notably costly (that's the other side of the two-edged sword that is currrently significantly elevated gas pricing).

Regardless, I wholeheartedly agree - that sidetrack needs to be successful and have the level of production-increasing effect that ANGS is hoping for. Well, it does at least by Oct 2022, when committed to hedge volumes rise to over 5 mmscfd for an extended ten month period.

Anyone got a different interpretation on what would happen if ANGS were to fall short on delivering the hedged volumes?

ANGS has (as we now know) decided to commit to a 36 month hedge agreement, within which , they have hedged over 5 mmscfd of produced gas volumes for a ten month period from October next year. I think many believe that getting Sfby to such a level of production is going to require a successful sidetrack t be drilled.

So here's the question. What happens if ANGS cannot manage to produce the volumes of gas it has agreed to hedge?

My understanding of a typical hedge agreement is that, similar to an agreed futures trade, it's a contractually enshrined obligation to sell x quantity of something at y price over z period - and that once specified, none of those criteria can be changed.

Not wanting to rain upon anyone's parade here, but I've long presumed the ANGS SP won't do anything dramatic until there's far greater clarity on when consistent gas production will be achieved and what consistent volumes will be produced.

On top of that, with regard to the recent revelation of the actual hedged volumes by month over the 36 month hedged period, you can now add visibility of what positive effect the planned and without a doubt essential sidetrack delivers to that short list. Let's hope it's successful, eh?

Malcy as ever showing that he's no more than a gushing sycophant for hire.

BV, the Sfby previous production numbers (as per the link which WG818 has again kindly provided below) are worth a read, if you haven't already done so.

Full history of production out of Sfby by month (and importantly, by mmscfd equivalent) , going back as far as you like (I went back to Jan 1 2000). Easily downloadable as a csv, if you're so minded. The average daily production in the last 31 months of the field producing (Jan 2015 to Jul 2017) was around 4.7 mmscfd, though the last 12 months of that period show a daily average of 4.17 mmscfd.

Looking just at the newly revealed hedged volumes from Q4 next year (in excess of 5 mmscfd) , they really are going to need that sidetrack to be successful.

BV, I'm not at all sure it's true that "GL always uses conservative figures on the side of caution." Just look at some of his previous assurances/estimates that have turned out to majorly differ from the eventual reality of things (e.g. cost of getting Sfby to production and time needed to get Sfby to first gas, to name two very obvious examples).

Having said that, it is without a doubt true (and blindingly obvious) that elevated gas prices offer a significantly increased potential for ANGS - as has been continually mentioned on this BB ever since said gas prices started on their steep rise.

We now know the quantities in mmscfd that ANGS has hedged (by month) over the 36 month lifespan of the hedge - and they are not insignificant. PeterA's post below referring to annual production targets in BCF makes the same point.

What seems very clear is that to achieve these volumes (and especially those from Q4 next year onwards) a successful sidetrack will need to be drilled - and get close to doubling extractable production volumes, as ANGS hopes. Because I can't see Sfby producing more than 5 mmscfd without one.

The question then arises - how "conservative" is it for ANGS to bank on any drilled sidetrack being successful?

Back to "how much gas and by when?" as usual.

Perhaps we'd better wait to find out how much gas ANGS can produce and by when? That's what the market seems to be doing, given its underwhelming reaction to today's RNSed update.

But on the bright side, at least people can get excited all over again if/when ANGS "busts through" the 1.0p barrier. Again. For what will be the 15th time in the last 24 months, by my reckoning...