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It's just the usual ramptastic attempt to confuse the raw value of the field itself (which of course has tisen very sharply) with what the field's worth to ANGS, which are two massively different things.

Given all the various financial commitments ANGS has already irrevocably tied into the field, there is a very significant risk - increasing with every day of non-production that passes - that ANGS will run out of the working capital it needs to service its sizeable obligations (loan repayments, hedge settling, FESL scheduled payments, to name but three) and go pop.

It's all about a successful sidetrack. Nothing else.

As noel has pointed out , all that has happened is that, due to an ongoing failure to produce, a portion of the hedge has merely had to be deferred - though at a cost of several million quid extra to ANGS.

I'll happily be positive about ANGS if either they drill a successful sidetrack that meaningfully increases production levels, or if production from the two existing wells reaches a consistent 1.75 million therms a month minimum.

Otherwise not so much, because I'm aware (as everyone should be) what the financial implications of failing to achieve either of the above actually are.

ANGS had to agree to 36 months of hedge contracts insisted upon by the lenders as a condition of getting the £12 million loan, so it ends June 2025.

Finding out that ANGS has finally managed to get to full production is obviously meaningful.

But it pales into near total insignificance compared to finding out how much gas it can consistently produce per month.

If the two existing wells flow at George's most optimistic forecast rate (1.67 million monthly therms), ANGS is already too late to meet the total of the Aug 22 and Sep 22 hedges combined (2.25 million therms), so hopefully it deferred more than just July 22's hedge into Q1 and Q2 next year.

And even if the two existing wells flow at George's most optimistic forecast rate, that's not enough to meet the Q4 hedge (5.25 million therms total) or the already increased Q1 and Q2 hedges (min 5.8 million therms each).

With today's gas prices, Mercuria is owed £32 million by ANGS for Q4 and at least £37.5 million for Q1 (and quite possibly more, depending on how much more of the Q3 hedge now needs to be deferred because of the failure to produce).

Again, the all-time high on UK gas prices is really not at all good for ANGS unless it is producing more gas than it has hedged.

So far it has produced nothing at all, which has forced it to defer portions of the current quarter's hedge into next year, and so increasing the hedged volumes in months that are considerably more expensive.

As a result, ANGS now contractually owes Mercuria around £3.5 million more in Q1 next year (now £33.7 million, compared to £30.3 million, just on that quarter). And it cannot generate that revenue without a sidetrack.

Petroleum, I don't deny (and never have) that a production-doubling sidetrack would be a literal game changer.

Your big assumption is that the success of the sidetrack is nailed on. I disagree.

The fact remains - as you have inadvertently pointed out - that ANGS cannot meet the Q4, Q1 and Q2 hedged volumes without one. And if ANGS cannot meet those hedged volumes, that will cost it millions of pounds that it simply does not have.

A successful sidetrack is literally crucial.

Petroleum

I agree with your figures of 1.5 million therms a month. In fact, I went even further and used George's latest and even more optimistic production forecast of 5 million therms a quarter.

Unfortunately, the amount hedged in Q4 is 5.25 million therms and the amounts hedged in Q1 and Q2 around a minimum of 5.8 million therms, following the recent forced deferment.

Therefore it is absolutely correct to assume that the flowrate will indeed fall below the hedge requirements.

(How can you not know this?)

1. A rising gas price is great for ANGS if it produces more gas than it has hedged.

2. A rising gas price makes no difference to ANGS if it produces the exact amount of gas it has hedged.

3. A rising gas price is terrible for ANGS if it produces less gas than it has hedged.

Let's take Q1 next year. ANGS has hedged 5.25 million therms, plus whatever it has had to shunt out of Q3 this year. Let's say it only had to defer July 22's hedge (at this rate, it's going to be more) , so call that 600k therms that's got added to Q1's hedge. So that's 5.85 million therms in Q1.

The average gas futures price in Q1 2023 is 630p per therm. ANGS's contractual hedged price in Q1 2023 is 52.05p per therm.

So in all three cases above, ANGS owes Mercuria £33.8 million on the Q1 hedge in this quarter. This is utterly regardless of how much or how little gas it produces. But how much revenue does ANGS generate?

Okay case 1. Let's say ANGS has drilled a successful sidetrack and it has doubled production up to the maximum field output of 10 million therms a quarter. 10 million therms x 630p = £63 million. Take away the £33.8 million owed to Mercuria and ANGS is left with £29.2 million of revenue for the quarter. Happy days.

Case 2. ANGS manages to produce 5.85 million therms (which is c 20% higher than George's most optimistic production forecast without a sidetrack, but still). In this case, 5.85 million therms x 630p = £36.8 million. Mercuria still gets its £33.8 million and ANGS is left with £3 million of revenue. Not great, given all the other financial obligations the company owes on the field, but better than nothing.

Case 3. ANGS only manages to produce to George's most optimistic production forecast, namely 5 million therms a quarter. 5 million therms x 630p = £31.5 million. But hang on... Mercuria is still owed its £33.8 million, so in this case ANGS actually loses £2.3 million in that quarter. Yes it'd have a negative £2.3 million revenue out of Saltfleetby.

Case 1 gets better and case 3 gets worse as the gas price rises.

Feel free to work the numbers out for for yourselves. But the bottom line remains...

...If the company doesn't drill a production-increasing sidetrack, it will not be able to afford its already incurred debts and will run out of money.

Typo... Merccuria gets 537p per therm. But the point remains.

Mecuria will be owed well over £9 million by ANGS in April 23 alone, courtesy of the hedge. And ANGS will generate negative revenue in April 23 unless it has a successful sidetrack.

And the contractually agreed price per therm that ANGS will receive next April for all production from the rwo existing wells? 37.5p.

Mercuria on the other hand will get 573p per therm on all that production.

A raised gas price is in fact REALLY bad for ANGS unless it manages to produce more gas than it has hedged. And to do that, it MUST drill a successful sidetrack. If it doesn't, IMV it's game over.

Let's not forget that Lemonleaf is also Gideons (aka Adrian) who spent all of March categorically guaranteeing that production would start by the end of that month.

I'm not at all sure that continually being forced through lack of production to beg to shunt hedged quantities out of the current quarter into even higher priced quarters in the first half of next year can be viewed as nothing but a positive.

Sure, it stops ANGS running out of working capital right now Mercuria has let it not make good on the July swap contract at least (which is a good thing)...

...but all it does is increase the hedged amounts in Q1 and Q2 next year. These already totalled 10.5 million therms before all the forced deferment shenanigans, so add in July 22's deferred 1.125 million therm and Q1+Q2 must now be well over 11.6 million therms - and that's considerably more than George's most optimistic forecast ever from the two existing wells.

It is now almost certain that more hedged volumes need to be deferred as well (i.e. at least some if not all of the Aug 22 hedge) - and that is simply going to make matters worse.

Not only will ANGS's revenue opportunity in the first half of next year be even more stifled (it'll effectively be forced to sell the first 12 million therms it produces at at around a 44p average per therm instead of at least 400p higher)...

...but also the financial risks resulting from it not managing to drill a successful sidetrack massively increase, with the ongoing rise in gas futures pricing.

In fact, given the many very onerous financial obligations George has already contractually tied into Saltfleetby, a failure to drill a successful sidetrack would almost certainly be company-ending IMO.

360Phil, Adrian has so many IDs, flip-flops position so many times on so many O&G shares and is blessed with so few braincells that it's more than possible that he's twisted his own melon and is both ramping and deramping the same share under different IDs.

Lemonleaf aka Gideons aka Adrian seems to still believe that maximising his output of utterly BS predictions is going to have some sort of positive effect on the company.

God knows why... it's not like his go-to tactic has ever worked the last 500 times he's tried it under various different IDs...

Shell investing time? Get real.

All Shell has said (as they'll say to any potential gas producer) is "Yeah okay, if you produce any gas, we'll buy it at market rate. If you don't, we're really not bothered."

HUUUUGE time investment from them, huh?

SB he can't. You've laid out a series of undeniable facts which do not fit in with any of his various delusions.

So I expect he'll accuse you of being some multi-ID of some green activist or something. It's his only riposte, however tragically lunatic it may be.

More farcical mudslinging, BV?

Unsurprising, since you're incapable of dealing at all with the point made.

A rising gas price is really REALLY bad for ANGS unless it can meet or exceed the quantities it has hedged.

And the most optimistic production projection from the two existing wells that ANGS has ever issued is lower than the quantities it has hedged in Q4 22 and now especially Q1 and Q2 23.

Therefore, the as yet to be attempted sidetrack (which one hopes they've got the funds to pay for) is literally crucial. Without it, they'll be generating negative revenue in Q1 and Q2.

Ocelot quite correctly mentions a natural gas price of 610p per therm for Jan 23.

The reason the well-researched find the mention of this intensely irritating is that, even if ANGS manages to produce the 1.75 million therms it has hedged for the month of January, it will only receive 52p per therm for those. It has to pay Mercuria the balance of 558p per therm on the January hedge swap contract.

Of course, with the deferment of part of the current Q3 hedge into Q1 and Q2 next year, the January hedged volume will now almost certainly be higher than its original 1.75 million therm level, which itself was already higher than ANGS's most optimistic production forecast from the two existing wells. And I reckon ANGS is just a few days away from having to ask to defer even more of the current Q3 hedged volumes into early next year.

Higher gas prices are only good for ANGS if it manages to produce more gas than it has hedged, If it can't do that for whatever reason, then higher gas prices are the absolute worst thing that can happen to it while the hedge is in place.

That sidetrack drill (whenever the company gets round to attempting it) simply has to turn out successful for ANGS or it'll pretty much instantly be right up the creek without a paddle.

What's currently happening?

The week old ID Lemonleaf - a "genuine investor and "brand new" to this BB (shyeah right) - seems ro have decided that, because his ramptastic predictions of how much money ANGS is going to earn PIs by getting gas out of Saltfleetby are looking more ludicrous each day...

...he's having to switch horses and is now doing his best to convince anyone dumb enough to listen that ANGS will make them a fortune by putting gas into Saltfleetby instead.