Member Info for HeadInTheSand

Although (despite myths continually perpetrated on this BB) I am no Greta fan (at all - sanctimonious, compulsively virtue-signalling, clueless little dreamer woke poster child that she is), I must admit being unable to not chuckle at anything causing "Bahamas here we come" Sando any embarrassment or inconvenience.

Howey, to correct you, I'm not in the least desperate - just sticking to the facts.

Today's announcement (if it is to be relied upon) contains two meaningful pieces of information.

1. That production of sellable gas has been delayed (again) by a couple of weeks. I think we can bank on that one being true, but in the greater scheme of things, it may not matter - see below.

2. That expected production from the two existing wells is now predicted by George as being 1.65 million therms a month - so 10% more than he'd previously been assuring. That strikes me as a little convenient on a "good news along with bad" basis, but let's go with it (as I have done since today's RNS).

So, what dos this mean? If 2) above is accurate, ANGS could actually afford to be delayed on full production for almost the whole month of July. Why? Because they've only hedged 3.375 million therms in the quarter, that's why.

Again, if 2) above is accurate, using the very latest ICE gas futures pricing, the gross revenue ANGS would be left with over the next three years after paying off the hedge would rise from £22 million (the 1.5 million therms per month figure) to £33 million (the 1.65 million therms per month figure).

That's quite a significant difference, if only because it would tip Saltfleetby from nett loss into nett profit over those three years, taking into account the various obligations ANGS has already tied to the field between now and mid 2025..

So, to me, all that remains is for George to categorically prove he can get 5 million therms a quarter out of the field - any long-term ANGS watcher will know all about phraseology such as "expects", "is targeting", "is aiming for" etc etc. So, seeing is believing.

And sure, even if it's 1.65 million therms a month, that wouldn't be quite enough to cover the hedged quantities between Oct 22 and Jun 23, but no matter. I've taken that into account in the above revenue calcs.

I

Really?

I'm perfectly sanguine, though to be fair, a little irritated that there are posters claiming to be experts over there that are also too ignorant to be able to work out the current ANGS MCap. (Just for info, it's about £28 million).

However, never let the truth get in the way of a good story, eh?

Whyat Silverlight has entirely failed to take into account is that, although the hedged quantity for Jul-Sep is indeed 3.375 million therms, it rises to 5.25 million therms for the next three quarters, starting Oct 1 2022.

As anyone with half a braincell knows, the hedge is - and has always been - a volumetric monthly commitment on the field, entirely irrelevant of who owns what percentage of the production output.

It is true that, if ANGS can get 1.65 million therms out a month, then that would cover the 3.375 million therm Jul-Sep hedged quantities (in fact they could almost be a month late in starting). It would not cover the monthly hedged quantities between Oct 22 and Jun 23 though (1.75 million therms a month hedged over those nine months).

As to the claim that today's RNS suggests "£1 million of profit to ANGS per month", that is literally insane. Utilising the same ICE gas futures pricing that ANGS has said it does, at 1.65 million therms a month consistent production, ANGS would be left with c. £33 million of gross revenue over the next three years after paying out on the hedge.

That's £33 million of gross revenue over 36 months, if George's latest prediction of production output is to be believed... so just a tad tricky to see how that can be equated to "£1 million of profit per month".

Tomhuk, as has been politely pointed out to you by DaveyShares, there are in fact 2,283.6 million ANGS shares currently in issue, as confirmed by RNS and as I stated.

Honestly, how can you not know this? One would have hoped that any even vaguely intelligent/serious investoror potential investor in a company would know how many shares in issue that company has.

Apology not required. The egg on your face is a matter for you to attend to.

Tony_C, if maths is easy, then you really ought to be able to work out a company's MCap.

Shares in issue x SP.

So... 2,283.6 million x 1.275p. That's ANGS right now at an MCap of just over £29 million .

At an alleged 5 million therms a quarter, ANGS can afford to be almost a month late and still hit the calendar Q3 hedge. However, seeing is believing.

Silverlight, the ANGS MCap is not £12 million, or even £18 million. It's currently £29 million.

While we're talking about simple facts, at a consistent production rate of 1.65 million therms a month over the next three years, at today's future gas prices, that would now deliver:-

£10.1 million of gross revenue for ANGS nett of the hedge in the 12 months to end Jun 23.
£10.6 million of gross revenue for ANGS nett of the hedge in the 12 months to end Jun 24.
£12.2 million of gross revenue for ANGS nett of the hedge in the 12 months to end Jun 25.

ANGS was compelled to sign up to the hedge by the lenders in order to get the £12 million loan that it so desperately needed. Hedge agreements don't have "get out of jail free" clauses - just like horse racing bets don't have "your entire stake returned if you lose". In fact ANGS clearly states the (then) first year's financial liability on the hedge in its most recent set of accounts.

"Why Aleph hasn't subscribed for the second tranche of £3,000,000?"

"they probably have it just hasn't been RNSed. You don't have to confirm something that you have already stated is happening."

However what a company absolutely DOES have to RNS is when there's been a change in its number of shares in issue. For Aleph to be be able to take that second tranche of shares for £3 million, the ANGS board would need to have newly issued a further 273 million shares, using the authority granted by shareholders two weeks ago.

That would have taken the number of shares in issue up from 2,283 million to 2,556 million. It would be compulsory to communicate such an increase in shares in issue... this has not been done... therefore to date Aleph has not taken up the second swathe of placing shares.

Ironically, that's the snippiest I've seen Ocelot ever get. I suspect the ticking clock is finally eroding his/her eternal rose-tinteds.

And of course it's primarily all about the sidetrack. Thie success of that is crucial to ANGS if it is going to make a nett profit out of Saltfleetby over the next three years.

Well I would BV, except...

Aleph itself didn't buy all 273 million shares in the first half of the 2 stage £6 million placing. It (allegedly) bought 164 million of them - according to the ANGS webpage on Significant Shareholders anyway. But that's okay - we were told they had a few other parties in tow (though the lack of a TR-1 against such a significant shareholding remains a slight surprise, but still...)

As to the second 273 million Aleph was going to take subject to shareholder approval being granted for the issuance of new shares (and this was granted almost two weeks ago now)...

...what's going on with that? Thee's been not one word announced about this - and this should again be disclosable, not least because it would expand the number of shares in issue up from its current 2,283 million (again as today listed on the ANGS website) to 2,556 million.

One can only assume that for whatever reason this second swathe of £3 million investment by Aleph has been delayed, no? I mean a company can hardly conceal the number of shares it has in issue, can it?

It really is all about the gas - and it really is binary. How much and by when?

Both Mercuria and Aleph in their position as lenders have first charge on the field, which as a raw asset is more than security enough against a c. £14 million loan.

Separately as has been mentioned earlier today, Mercuria is currently guaranteed £86+ million over the next three years for sitting on the other side of the contractually enshrined hedge.

The other major investor is of course Forum Energy Services Ltd... but they only became a major investor because they thought it smart to offload their 49% of Saltfleetby, including the upsides of revenue generation and the downsides of liabilities.

What Saltfleetby is worth as a raw asset is unfortunately not necessarily the same thing at all as what it will be worth to ANGS, given the obligations that the latter has already tied to the field.

BV, I've always said that a successful and production-doubling sidetrack would be literally transformative for ANGS. No change there at all.

I simply put forward the scenarios of what's likely to happen with one of those... and what's likely to happen without.

I'll make it even simpler for you, Silverlight.

Say ANGS manages to achieve production of 1.5 million therms per month throughout the next 36 months (not looking too likely now for July, but we'll presume it does).

That would be 54 million therms of production over the next three years - and the total gross revenue on that, using latest gas futures pricing would be £109.2 million.

Now because ANGS has hedged pretty much all of that 54 million therm production, out of that £109.2 million, it is contractually obliged to pay Mercuria £86.8 million, leaving itself just £22.4 million of gross revenue over the next three yhears.

That would result in Saltfleetby delivering a net loss over the next three years, because of the £20+ million obligations ANGS has already tied to the field (the c. £14 millon loan plus interest payback and the £6.25 million cash part of the 49% acquisition from FESL). Throw in three years of fixed and variable field opex costs and you've got a nett loss over those three years.

Now of course, if ANGS is successful with its sidetrack and that does double production up to 3 million monthly therms say from Oct 1st, then ANGS would benefit from spot market rates from all that unhedged excess gas produced.

This time, the field would deliver over £208 million in gross revenue over the three years. Now sure, Mercuria still gets its £86.8 million (that of course does not change)... but ANGS would get over £120 million of gross revenue over the 36 months - and that's a literal game changer.

All of which is why it's crucial for ANGS to a) drill a successful sidetrack and b) get that second compressor in on time.

Silverlight, it's rather naive to expect LSE admin to ban anyone for stating cold hard and easily verifiable facts, no matter how uncomfortable you may find said facts.

What Mirasol has said about how the hedge operates is absolutely accurate. ANGS has contractually hedged 52.125 million therms of production over the next three years and starting from next month to be sold at average pricing of 43.7p per therm.

The result of that - using very latest monthly gas futures pricing - is that Mercuria is owed over £86 million by ANGS over the next 36 months, regardless of how much or how little gas ANGS produces.

Boo80.

ANGS has contractually committed to sell a fixed volume of gas (that volume ranges between 1.125 million therms and 1.75 million therms, depending on the month) at a fixed price (that price ranges between 35.25p per therms and 52.05p per therm, depending on the month) over the next 36 months.

If ANGS produces more gas than it has hedged in any given month, it may sell any excess at the then (almost certainly miles higher) spot market rates.

If ANGS produces less gas than it has hedged in any given month, it then has to effectively "buy" any shortfall at the then (almost certainly miles higher) spot market rates to sell at the much lower hedged price.

(Actually, what ANGS will do is simply pay the differential in each month's swap contracts to Mercuria, the party on the other side of the hedge).

That's the way a hedge works.

BV, if I expected a max monthly production level of 1.5 million therms, then no, I would not bother going to the expense and time of putting in a second gas compression engine at this moment, because there'd be no point to putting a dent in cash at this time.

If however, I expected a pressure buiild-up over the last 4+ years to mean that the two producing wells would deliver meaningfully more than 1.5 million therms a month, then with the current spot price of gas, I absolutely would be putting in the second gas compression engine right now.

From drone site pix and ANGS RNSes (the latter being as is typical rather woolly), it looks like ANGS has gone down route 1 of the above.

The company has stated that it hopes for 1.5 million therms a month from the two existing producing wells. With just the one gas compression engine on site. that's the maximum production capacity of the field anyway with current equipment (a second gas compression engine has apparently been ordered by ANGS, but isn't currently on site - and according to ANGS-issued information, probably won't be unless and until the as yet to be attempted sidetrack proves successful.

If achieved, 1.5 million therms a month of production would be fine for the months of Jul, Aug & Sep, because it exceeds the monthly quantities hedged, so ANGS could sell any excess gas at spot market pricing.

However from Oct 22 and for the next nine months, the monthly hedged quantity rises to 1.75 million therms - so by that point, ANGS will definitely need that second gas compression engine in place and initially hoped-for production levels to have increased, whether by successful sidetrack or pressure build-up or both.

Typo... the amount hedged by ANGS in July is 1.125 million therms.

The calculation showing that Mercuria is owed - come what may - just over £1.4 million by ANGS in July remains true and accurate.