Member Info for OofyProsser

WG818: I think it’s extremely unlikely that Angus will lose its lease on the Saltfleetby permit area in 2027, as long as they’re still producing gas at a reasonable rate. They may not get a long extension, though. Once the gas flow becomes uneconomic and the storage option looks better, it’s quite possible that the entity offering the best terms for a lease will get it. Don’t they have to pay the farmers under whose land the gas field lies some kind of rent too? In any case, it’s not going to be worth hundreds of millions to Angus, or anything like it.

HITS: they said it would cost £2.75mm (or was it £2.5mm?) minimum and take 48 days maximum. It actually took six months and cost £12.5mm and counting. At what total cost would you say is the dividing line between success and failure? £20mm? £30mm.? More? Or is it a success at any price because, technically, they eventually found gas? Like a university experiment, not a commercial enterprise.

Garwool: the hedge contracts are with Mercuria. Any renegotiations will include them. Angus announced changes in one of their latest RNS’s which are not easy to understand. Re pre-payments for their gas, their counterparty will presumably be a commodity trader and the medium will be a futures contract of some kind, since all of Angus’s gas is contracted for sale to Shell. So something akin to another hedge contract? Or else a series of expensive short-term loans. I think the management is, consciously or not, distracting investors with ambiguous and/or impenetrable terminology. They’re not noted for clarity in their use of English.

WG818: no, it doesn’t seem to be a level playing field. The only people to have benefited from Angus Energy’s existence since they bought the heavily depleted gas field at Saltfleetby in 2019 are the Lenders, Mr. Forrest, the drillers and the management. Ever since Lucan turned down bank financing in late 2019, it’s been a series of expensive fiascos - usurious loans, huge placings, gross overspends on virtually everything and incompetent cost and timescale estimates. Mr. Herbert is left with a depleted field and depleted investor interest, and has felt it appropriate to exclude further share issues, while loading the company with more and more usurious loans with conversion options which may cede control to the lenders at half the current share price. It’s highly misleading to characterise this as a major change of financing policy in response to shareholder concerns about dilutive share placings.

Of course, another big, sustained rise in the gas price will bale them out - if they’re not acquired, as you suggest, for 0.40p beforehand.

I don’t think anyone is suggesting that Angus is going bust. This would be in no one’s interest. The lenders have made it pretty clear that they don’t want to manage the assets themselves. What’s more likely is that as Angus repeatedly misses time deadlines for debt repayments etc., their lenders will continue to add yet more onerous terms on the company, such that Angus will continue to struggle and the lenders will continue to get rich. An alternative may be that the new management (and who believes Lord Lucan’s claim that Mr. Herbert’s appointment had nothing to do with the lenders?) is allowing the share price to fall towards the 0.40p price at which the Aleph people can gain control.

As to whether the sidetrack was successful, well, virtually anything will succeed if you continue pouring more and more money into it. They’ve had to borrow over £12mm and counting, the borrowings costing 20%+ p.a., to finance it. If they’ve increased monthly revenues with it by £750,000, at a monthly interest cost of £200,000, its going to take them two years to cover the capital cost from revenues, even without allowing for the 10% annual downtime for maintenance and the annual 10% decline in gas flow rates after the initial 12-15 months predicted in the CPR and the final Wingas report.

I dare say that HS2 will be completed. The initial cost estimate, as far as I recall, was about £27bn. Estimates of more than £110bn. seem closer to the mark, all in money borrowed by the Government and serviced by the taxpayer. Does this make it a success? Does it all seem a bit familiar?

PD101: “Yes, diamond news is certainly overdue here...”. You’ll get no argument on this. Vast is at the mercy of its lenders as long as the loan remains outstanding. I can’t believe that their lenders have very much confidence in the availability of the packet of diamonds, which has become a laughing matter. Sooner or later, they’re going to want recompense for non-payment. Without the diamonds, Vast’s only recourse is to its shareholders.

SandyShore459: investment banks used to give their senior staff share etc. dealing facilities. The shares they bought were lodged in the bank’s nominee account. If this is still the case (and some if not all of them offered these facilities, as a means of keeping an eye on what their employees were doing on their personal accounts, and they stipulated that all deals their employees made went through the bank, so I dare say it is still the case) it may be possible that this Capstone holding represents one of their employees, not the firm. There will be plenty of people there with more than enough spare cash.

I don’t think algorithms would be applied to AIM companies. On the whole, they’re used to get orders on fractions of seconds before others can, aren’t they?

SandyShore459: well, yes, the poster asimpleinvestor was good enough to engage with me on the subject a week or two ago. I don’t understand, however, how an investment management company can use a swap agreement to its advantage in a non-dividend paying equity, particularly a dodgy AIM one. And I don’t understand why the latest RNS stated that their voting rights were held indirectly. I claim no expertise in these areas and have no axe to grind here. It seemed to me earlier that if Capstone held 8% of the equity in this, the outlook might be better than the fundamentals suggested. On further consideration, however, I think I may have given this factor too much credit. There may be less to the Capstone situation than meets the eye.

Can someone explain to me why the Capstone shareholding was referred to in the 14 April RNS as a “swap”. And why a subsequent RNS detailed the acquisition by Barclays of a position of identical size? I’ve no doubt I’ve missed something but would like to know what it is.

In my limited experience with derivatives, people who really understand what they are trying to sell you are capable of describing the workings of their products in words of one syllable. You are thus enabled to explain what you’ve bought to colleagues/clients. Obfuscatory language has always meant, to me, either that they don't fully understand the product or that they do but are trying to pull the wool over your eyes.

SillyButtons: yes, again, to all of this. I have three people on filter and you’ve identified the second! There is value neither in their posts, nor in responding to them. .

SillyButtons: yes, your points are all well made and emphasise the opacity of the recent RNS’s. There’s no way of telling from the data we’ve been given so far or from the language of the spiel that accompanied them. Whether this is deliberate or not is open to debate. It is, however, entirely in line with Angus announcements going back beyond the September 2020 £12mm. loan bombshell.

HITS: you’ve mentioned the 10% fall in production expected per annum from about the end of August. You haven’t mentioned the annual 10% downtime for maintenance. Not the fact that, as what’s left of the £12mm loan is being repaid early from the new planned £20mm. loan, the 8% of turnover royalty will apply immediately, some two years or so early. If you factor this into the cost of the new facility, it begins, once again, to look like a good deal for Mercuria

Robday: it seems to me that HITS (whose motives in posting are less relevant than the quality of the research evidenced in his posts) spends no more time on this board than you do in just rudely criticising him and speculating groundlessly on his bona fides. I agree with wasred15: if you don’t like reading his posts, then filter him. I use the filter sparingly, prefer to read the spectrum of views here, but in your case I’m making an exception.

I think everyone understood what was meant by 3.6bn shareholders. If people want to argue about terminology and syntax, how about the use of the term “equities” ” to refer to shares and equity holders to shareholders? There’s very little equity in the way shareholders here have been treated in all the placings and the loan terms recently. Everone would have been better off if they’d been offered these bridging loans convertible into equity than been left with diluted shareholdings and interest paid away of 30%+, annualised and with the fees added.

HITS: I hesitate to correct one of your excellent posts and feel churlish in doing so really, but the reference to Martians as green is not borne out by the facts. As we all know, Martians are a sort of brown colour. Venusians (Treens) are green. Ack Ack Ack.

Bubblepoint: re the last paragraph in your 20.04 post, Angus owe Forum Energy Services an additional £5.5mm in consideration for the purchase of the latter’s 49% of Saltfleetby. And they still haven’t finished building the plant.

HITS: in defending Angus’s usurious loans, it seems to me one of your less balanced interlocutors is offering Eric Morecambe’s well-known saying: “Ernie and I split everything right down the middle, 60/40. I’m no fool - he pays more tax.”

Bubblepoint: my money would be on payments to Mercuria for those missed hedge payments. It’s always been a mystery to me how Mercuria were compensated for those. There have been belated revelations but it may well be that there’s yet more to it. All Angus have done is obfuscate. I may be thick and they may have given a full explanation but if so, a huge majority of small shareholders must be in the dark.

Robday: I think part at least of the reason that Angus can’t get a bank loan is that their properties are mortgaged to Mercuria as security for the original £12mm loan in May 20201. Even that loan, at SONIA+3%, took 9 months to negotiate. That’s also why the new loans are so short term. Even so, I agree, these loans are expensive and reflect the real risks still inherent in Saltfleetby. As for Angus going from strength to strength, they’ve got some cash flow now but it’s still insufficient to cover their costs, and the gas flow rate is not going to go up much from here, it’s more likely to start falling within the next quarter if the CPR is to be believed. They can increase the flow rate if they drill more (successful) wells but these are risky and expensive and they’re clearly clearly short of money even now. The worst thing for the share price, however, is the massive overhang of shares in non-sticky hands.

WG818: surely if Angus default, Mercuria can exercise their rights under the charge and take over the assets? For Aleph to be able to do very much, the balance of the £12mm loan, capital and interest, will have to be repaid. That will depend on the bridging loans going through. So I expect they will. After that, who knows? Mercuria will immediately get their 8% royalty, which will be an additional significant cost. And there will still be a massive overhang of shares.