Gas field19 Jun 2019 11:07
Angus Energy Plc
("Angus Energy", "Angus" or the "Company")
Acquisition of Interest in Saltfleetby Gas Field
Angus Energy is pleased to announce, further to its announcement of 30 April 2019, the completion of a Farmin Agreement with Wingas Storage (UK) Limited (to be renamed and hereinafter "Saltfleetby Energy") for a 51% interest in the Saltfleetby Gas Field (the "Field") in Lincolnshire. Saltfleetby Energy is expected to retain a 49% interest in the Field.
Key Terms of the Farmin Agreement
The terms of the Agreement are that Saltfleetby Energy will pay to Angus Energy Weald Basin No. 3 Limited ("AWB", a wholly owned subsidiary of the Company, together the "Group") an initial contribution of £2.5 million which funds will then be applied by Angus either (a) to assume 100% of the costs to be incurred during the reconnection of the Field to the National Gas Grid or (b) to satisfy all abandonment costs at the Field (excluding existing subsurface pipework beyond the immediate sites) if reconnection at commercial rates is not available. At this stage the Directors are confident that reconnection at commercial rates is possible within the £2.5 million budget and advised timescale of completing work between May and August 2020.
Following reconnection and a declaration that gas can be extracted and sold in a commercially viable manner, future abandonment costs together with ordinary Field costs and revenues will be shared 51%/49% by the Group and Saltfleetby Energy under a standard JOA. AWB expects to execute agreements, subject to OGA approval, under which Saltfleetby Energy will transfer to AWB, as soon as regulatory consent is obtained, a 51% share in the relevant blocks, comprising the Field, of the PEDL 005 Licence together with the Operatorship thereof. These, together with assignment of the underleases of the sites and regulatory assents, are the sole conditions precedent.
Angus Energy has obtained quotes for the work and equipment required to effect reconnection (£2.25 - £2.5 million) and separately to effect abandonment (£1.75 - £2.5 million), each of which fall below the sum of the proposed payment by Saltfleetby Energy. Saltfleeby Energy has agreed to retain the liability for all abandonment costs surrounding the subsurface pipelines from the two sites to the Theddlethorpe Gas Facility together with certain redundancy costs which would otherwise fall to be treated as expenses under the JOA.
Details on the Field
On the Company's website is a detailed presentation on the Field. The Saltfleetby Gas Field is located onshore UK at the western extent of the Humber Basin, in the PEDL005 licence area. A commercial discovery was made in 1996 after re-entering an exploration well drilled in 1986. The field was put on stream in December 1999 producing from Early Westphalian sandstones at a depth of 2300m.
This is a proven reservoir comparable with other established oilfields in East Midlands Basin with mult
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