Member Info for OofyProsser

Apologies for repetition in that post. My old iPad is having difficulty writing on this site.

Bubblepoint: I’m referring to the revised Wingas report on the status of Saltfleetby in 2012, when they were seeking permission to use it for gas storage. Among the references to wells drilled (3) in SF07 are these:

“The well SF07y produced free water during the initial test in December 2003. The reservoir pressure was 116 bar(1680 psi).”

“Two wells on the Western part of the field and one on the southern structure are able to produce. Due to the production of free water, the remaining wells are shut-in. The available information indicates this water is produced from the Namurian sandstones in the wells that have entered this layer.”

None of the 3 wells/sidetracks drilled on SF07 produced anything commercial until the latest sidetrack. Water seems to have been the principal issue.

Bubblepoint: I’m referring to the revised Wingas report on the status of Saltfleetby in 2012, when they were seeking permission to use it for gas storage. Among the references to wells drilled (3) in SF07 are these:

“The well SF07y produced free water during the initial test in December 2003. The reservoir pressure was 116 bar(1680 psi).”

“Two wells on the Western part of the field and one on the southern structure are able to produce. Due to the production of free water, the remaining wells are shut-in. The available information indicates this water is produced from the Namurian sandstones in the wells that have entered this layer.”

None of the 3 wells/sidetracks drilled on SF07 produced anything commercial and they were shut in. Water seems to have been the principal issue.

Yes, HITS. It’s puzzled me too. Mercuria will have covered their potential loss at the time they wrote these contracts with some kind of offset that offered them a profit. Or else there’s something as yet undisclosed here. I agree that at face value they don’t make commercial sense.

WG: in August last year, Angus had to go to Mercuria to re-negotiate their existing forward contracts, which were set at price levels way below the spot price of gas and would have cost Angus money they didn’t have. Mercuria merely agreed to defer settlement for some months. They may have exacted a further penalty but if so, we don’t know about it. Angus are still paying Mercuria the balance outstanding on these re-negotiated contracts. Angus had wrongly estimated that income from gas sales would cover the losses on those contracts, but the gas was several months late. If they had had enough money in the bank, their gas production would have been irrelevant to the forward contracts, which are just financial contracts. You or I could arrange one, if we had a derivatives broker prepared to take our business.

At the same time, Angus offered its shareholders a vague statement about fresh contracts set at higher prices. They were revealed in the annual report and accounts. How these fresh contracts and the prices for them were arrived at is unknown but, as I said earlier, I doubt if Mercuria has lost money on them. The fact is, though, that unless the wording by Angus of the subsequent releases on the subject are incorrect, they will have received large sums from the profits on both sets of new contracts.

These are merely financial contracts, with no direct connection to whether Angus is producing gas or not. They are Mercuria’s meat and drink.

I’ll have another look at the latest accounts and try to identify the reason for this confusion.

WG818: all the gas Angus produce is sold to Shell. No gas changes hands in settlement of the monthly forward contracts (“hedges, or “swaps”). Angus gets the spot price from Shell, minus certain small charges, for all its gas. The forward contracts are settled in cash with Mercuria.

The forward contracts commit Angus to “sell” set volumes of gas at fixed prices every month for 36 months. If the contract price when each respective contract matures is below the spot price, it’s the same as selling gas to Mercuria at a discount, and therefore represents a financial loss to Angus. If the contract price is higher than the spot price, it’s the same as selling the gas to Mercuria at a premium and therefore represents a financial profit to Angus. I’ve no idea how they came to the arrangement last August re the prices on the new contracts and I’m sure Mercuria will have hedged them away and guaranteed themselves a margin on them. The fact remains, Mercuria will have paid Angus substantial sums on the second set of forward contracts, in respect of the first and second quarters respectively. The level of actual gas production is irrelevant to these contracts, they’re purely financial arrangements.

Please let me know if there’s a fault in the above.

Bubblepoint: you know far more than I do about gas drilling, but the earlier drilling attempt to find gas with SF07 was plugged without producing any commercial gas, owing to free water. Why is it not possible that they’re encountering similar problems with the sidetrack. I believe they ran the original well for three months before plugging it.

WG818: am I understanding what you are saying re the hedges properly? Surely they will have made a fat profit on the secondary hedges in the first 2 quarters of 2023? The spot price of gas was consistently far lower than the hedged price. These are financial contracts - they will have taken the profit on the difference.

Asimpleinvestor: thanks for this correction, I didn’t know that diamonds were traded only in US$. Nevertheless, if the packet of diamonds is not found in the bank, will Vast get a similar packet of diamonds or the monetary value in $ or in Zimbabwe currency? And either way, will they be able to repatriate the proceeds? I’m not sure that the Government of Zimbabwe would support the Reserve Bank in making early restitution to a small foreign company. The Reserve Bank has not got large fx reserves and inflation is nearly 200% p.a. The currency is consequently very weak.

My principal point is that it seems likely that the diamonds are missing and that the proceeds of their sale are unlikely in the foreseeable future to be available to Vast for repayment of debt. The debt will have to be repaid and investors should factor this probability into their calculations.

SandyShore459: well, they’ve got a High Court order in their favour, but if the diamonds are simply not there, how is the order to be enforced? What happens if they eventually get Zimbabwe currency for them, depreciating at a huge rate every year (inflation close to 200%)?

This is just my opinion, obviously. There’s a range of possibilities, though.

Re diamonds (again): I understand why the diamonds are important to Vast and its shareholders, so I think people should be realistic about the chances of their turning up.

Zimbabwe has clearly been one of the most corrupt countries in the world since Mugabe took power there (he was a very greedy acquisitor of State and other assets). Something that may have been been overlooked, however, is that the Governor of the Reserve Bank for 10 years until the end of 2013, one Gideon Gono, was Mugabe’s personal banker and a member of his inner circle, and got rich on it. I think Vast will be very lucky indeed if a packet of diamonds on a shelf in the Reserve Bank vault escaped his and his boss’s attention. The natural reaction of the current Governor of the Reserve Bank, faced with the embarrassment of his inability to find them and comply with the court order, would be to do what the average CEO of an AIM listed company would do in comparable circumstances. Say nothing, play for time and hope the issue will go away with the passage of time.

Ab76: so who’s selling?

Yes, the Interims have always been published by the end of June so we should see them today. Angus are still late with their confirmation statement though.

Ab75: Mr. Forrest got a very good price from Angus for SEL. The term “profit” therefore hardly applies, does it? He’s either got a better use for the money he’s raising by selling his Angus shares, or he thinks they’re over-priced. He’s only likely to stop selling when he thinks they’re too cheap. He’s a qualified accountant and an insider so he has better information on the value of his shares than do small shareholders here.

Mr. Forrest is a Director of Angus and therefore precluded from dealing in shares in the company in the month before the Interim figures are due. He can start selling again on 1 July, assuming that Angus have published their figures by then. I’d like to know what he’s doing with the cash he’s raising from his Angus sales: it must be something pretty good for him to have been selling even at the levels prevailing before 1 June.

Any insurance company looking at covering a packet of diamonds on a shelf in a bank in Harare would need to possess quite a large risk appetite and would require a massive annual premium. I haven’t noticed a note in the Vast accounts detailing such premiums so I presume that Vast haven’t got them insured. If the bank has them insured, that opens up a whole new line of litigation. The bank in question is the Reserve Bank. They’ll have sovereign/State immunity, so good luck with that. Still, who knows?

Whether they’re there or not, I find the question “why would they not be there?” amusing. Lost or stolen, is the answer, with the latter more likely than the former, I should say. This is an extremely corrupt country, it’s been many years since anyone has seen these diamonds and there have been two very dodgy Presidents in that time with a fondness for easily negotiable assets. It would demonstrate surprising forbearance on their parts if this packet of diamonds has been left unmolested.

Shareholders will want more information on the interest rate on the proposed loan and the definition of “gearing”. Sound will struggle to meet the 65% gearingt condition if it’s debt:equity.

Finablr plc shares appear to be worthless, according to the latest Administrators’ report lodged at Companies House. It would be surprising if the UK tax authorities were not to recognise this and allow losses to be offset against gains for tax purposes.

Bowlers12: where did you see Finablr shares had shot up?

Barry7376: it seems to me most likely that both lenders will need to defer most or all of their scheduled debt repayments but it will come at a price to Vast shareholders. For how long the debt will be deferred is also an issue. Even with full debt deferrals, Vast will still be needing more cash soon. I think you can discount the diamonds.

If GSA are responsible for some of the 1mm.+ purchases recently, they’ll soon be square. From the end of this month, Mr. Forrest will be able to sell his shares again. The Interims are due by Friday. They should be accompanied by a news update.

Rockfordd: you appear to have a short memory. 10.41 today: