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Petroleum1: I agree with you on this!

Re my post last night, in the second paragraph re Forum having a carried interest after the loan is repaid: I’m afraid this was incorrect, they’ may be eligible for £6mm+ from the Saltfleetby earnings up to 2025, not after 2025. Apologies for this.

The interview with Lord Lucan, available this morning, is not very convincing. More delays presaged and it looks like cost overruns too. Look out for tomorrow’s IQ answer re the sidetrack.

Yes, but to monetise the reserve, they need to have it producing at target levels by the end of June, they need EA approval (which appears to be still outstanding), NG approval and HSE approval. The parts are all there now but they haven’t finished connecting them up yet - they’re constantly two weeks behind every revised schedule and way beyond their successive cost estimates. Then they need to be able to drill a sidetrack while producing gas from an adjacent well, flare etc. We should know this Tuesday whether this can be done - there’s an IQ on the subject which hits the nail on the head. The regulatory checks as they commission the plant are very exacting.

I have little doubt that someone will make money from Saltfleetby at these prevailing gas prices (about 148p/therm last Friday, wasn’t it?). I merely question whether it will be Angus. They’ve just announced a further dilution of close to 100% in additional shares, assuming Aleph take up the second half of their planned placing on 13 June. Half of their total £6mm. placing money appears to be to cover yet more cost overruns. Most of the rest is to cover the loan covenants. A little over half the increase in the number of shares is to pay for SEL’s 49% of Saltfleetby. The terms of this acquisition give Forum a carried interest in earnings from Saltfleetby after the loan is repaid. It also transfers the large pipeline abandonment liability to Angus. The Debenture charges give the Lenders rights to claim all Angus’s increased assets in the event of a default, which includes missing payments on the loan and the associated hedge contracts.

It may work for Angus but the risks are constantly getting higher, not lower as they’d have you expect.

Yes, Petroleum1, I agree that this is a very valid explanation of the latest dilutive efforts on the part of the Anguish Board. It’s also possible that the £3mm. placing with Aleph has cost the latter nothing. The volume of shares traded this week has been massive. It seems likely that either or both of Forum and Aleph have pre-sold all or part of their new shares. It’s also possible, if Anguish can’t assure Aleph by the date of the EGM that Saltfleetby will be ready to pipe gas for sale to Shell by July, and/or that they don’t know when the overdue permission from the EA will arrive, and/or that they won’t be allowed to drill a sidetrack while gas is flowing in the surrounding pipes (with gas engine generators operating and a flare with a permanent pilot light just yards away), that Aleph will not take up the next £3mm. of Anguish shares. In which case, the initial £3mm. may not last long. There’s an IQ answerable by 31 May on the sidetrack which is absolutely to the point. In the absence of other news, that’s the thing to look out for. If they dodge the question altogether, or choose to answer instead just the other question re the sidetrack, I think it will mean the situation doesn’t look very promising.

George Lucan has just given a talk to Zak Mir, in which I think I heard him say that Angus has £22mm of tax losses, SEL, which they’re taking over, has £27mm. of tax losses. There doesn’t seem to be an immediate need for AAOG’s tax losses, does there?

This deal looks like a sweet one for Paul Forrest. And Angus are raising £3mm in a placing with Aleph at just under 1.1p to enable them to meet their further substantial cash shortfall in completing the Poundland project. Plus a possible further £3mm. in order to meet the loan charge requirements re cash levels. Lucan is now projecting first gas on about 15 June, the date of the EGM to approve the proposed increase in the number of authorised shares, required for the second tranche of £3mm. worth of shares to be issued to Aleph. So this second tranche may go ahead, or, if the start date at Poundland is deferred again, it may be cancelled.

There’s a lot of large share deals going through the market currently, including one of 91mm. last evening (the number being given immediately to Forum), another of 82mm. and two or three of 5mm. each last evening, plus another of 10mm this morning, all apparently at the Aleph purchase price. Make of that what you will. There’s only one other existing shareholder with a holding of this size.

Frazer Lang got out recently at the 1.3-1.4p level then prevailing. He had 12%. Make of that what you will. Watch this space.

There’s a statement of Administrators’ proposals running to 95 pages on the company's site at Companies House. It’s grinding on, isn’t it?

There’s a progress report by the Administrators on the NMC Companies House site. It says the preferential creditors have been paid out in full and they expect some kind of payment to the unsecured creditors but they don't expect anything to be left for the shareholders. They’re suing the auditors!

Petroleum1: if Angus fails, so will SEL. SEL has guaranteed the loan on Saltfleetby whose terms are deterring all but the most adventurous investors. If Angus can’t meet the loan repayments or the interest payments, or the terms of the hedge contracts, the Lenders will go to SEL for the money.

SEL NPV=£122.5mm?

You can say it but that won’t make it so.

..and they’ve predicted pressure build-up, they haven't reported it, as far as I’m aware.

Incidentally. If you look at p.2 of your attachment, you’ll see a photo of the site as it was when Angus bought it, with the planned new processing facilities marked in yellow. Compare it with the recent Twitter photos and Angus’s presentations. This shows the absence of any expertise in these things on the part of the Angus management, or their unwillingness to be candid with investors. Consequently they’ve never met a timetable, even when reiterated with delays multiple times, nor a budget. Not once.

Well, they say they’re expecting more than 5mmscfd when production starts from the 2 existing wells. And that they're expecting a further 5mmscfd from the sidetrack. If they find the wells can produce more than this after the sidetrack is drilled, it makes no difference - the plant they’re building can’t handle more than 10mmscfd. If they get and maintain that volume, they’ll be in clover while high gas prices prevail. There’s no doubt about that.

Having looked at the statement of affairs and the huge deficit, including very large sums owed to legal and financial advisers, I am now wondering why 8 Directors, including probably the most high profile female businesswoman in The Emirates, have not resigned. Whether this represents grounds for a glimmer of hope, I don’t know, obviously, but the constitution of the Finablr Board might be worth watching.

Mercuria can only get the Angus assets if Angus fails to meet the terms of the loan, including the hedge contracts. All the income from the project (both Angus’s and SEL’s) will go towards defraying the loan costs until the loan is paid off. The risk here is that they won’t produce enough gas in July-September to meet the hedge contract terms for those months, and then enough gas to meet the even higher volume required from October - which will require a successful sidetrack. It seems to me quite doubtful that they’ll be producing much in June. They’re talking about early June for first gas but as I keep saying, first gas is not sales gas and HSE and NG work at their own pace when inspecting and approving new facilities.

Even when the loan is paid off, the hedge contracts remain in place. And the royalty of 8% of revenue, which kicks in as soon as the loan is repaid, will cost Angus more than the interest on the loan. The Lenders exacted usurious terms for extending their £12mm to complete the project.

Why is Saltfleetby still for sale? Angus itself was for sale for three months but there were no buyers for it. Why was that? It’s been suggested that the whole sale process was just a ramp to help them get two placings away but that’s rather cynical, isn’t it? What kind of management would do that?

The NPV of the gas project at Saltfleetby should not be confused with the value of the project to Angus and SEL. There is a £12mm. loan with Interest (currently) at 12.7%, highly onerous hedge contracts on a large part of production over most of its really productive years and an 8% of revenue royalty once the loan is repaid. And Angus’s ability to meet the hedges depends on their producing enough gas by 1 July. And then drilling a sidetrack (for which HSE/NG approval will be required) to meet the more onerous terms of the hedges contracts in place from 1 October. Several sidetracks have been attempted from the well they are using: all have failed. And this is a company that has never met a timetable and never met a budget. Every time so far that they’ve got close to the date they’ve scheduled for gas production, it’s moved further into the future.

If Mercuria gets ownership of the field, your NPV may be close to its value to them. I suppose they might prefer to take the profits on their hedge contracts and allow Angus to defray the tax on their gas revenue from their earlier tax losses. Or they might prefer to get ownership at the first opportunity. Who knows? But if Angus are as confident as they say they are of producing gas in early June, to earn them £7mm. before the hedges apply, why have they put the company and/or the Saltfleetby project for sale? And why has no one wanted to take them over?

It’s the company that was dodgy. The fact that there is nothing left to shareholders is the fault of the Directors. There’s a lot of money owing to lawyers and accountants though. Are US shareholders being treated differently from shareholders? Are there any?

I don’t understand. What would be stopping them? Announcements from Angus are unreliable, they could be talking with Aleph Saltfleetby, for all we know. They claim they’re still talking to two interested parties, about selling to them all or part of the Saltfleetby project. Four parties have dropped out. But they could have been anyone, couldn’t they? And where is the Angus “data room”? In the Chiswick office that Lord Lucan went to some pains in July 2020 to assure shareholders would be abandoned by the end of September 2020. It was supposed to be a money-saving initiative. They were all working form home and preferring it. It was all working very well, he said. No need for a large office with a conference room.

The thing investors should ask themselves is why Angus wants to sell itself or the Saltfleetby project on which it’s been working for three years less than two months before they say that project will make them over £7mm in a single month.

There’s a statement of affairs on the Companies House site now, which gives some indication of the situation. There appears to be cash of about £5,000 and a deficit of over £8mm. if I’m reading it right. Robert Miller’s statement near the end, among the Directors’ sign-offs, suggests there’s a doubt as to whether the value of the subsidiaries amounts to zero but that’s th only dumb of comfort. It looks almost as bust as it’s possible to be.

They also said that there are just two parties with which they are still in talks. These parties are not discussing buying Angus, they’re discussing some ownership arrangement with regard to Saltfleetby. If Angus is to sell all or part of Saltfleetby, they have to get the approval of the Lenders first. And why are they in negotiations to sell the only asset they’ve got that stands a chance of rendering them a cash flow sufficient to meet their annual expenses? The two parties they’re talking to are not identified, so they could be AAOG and Forum, couldn’t they?

The can has been kicked further down the road at Saltfleetby today. First gas is not sales gas, there’s a ton of inspections/sign-offs before the gas can flow to the NG pipeline. It’s a sign of the trouble they’re in that the good news today is another fall in the UK price of gas. There’s a placing round the corner too.

Only the final paragraph applies to the shareholders here. Shareholders aren’t creditors. It’s regrettably very unlikely that the Administrators will find enough plundered money to meet the claims even of the creditors. Shareholders here have been robbed while the Board looked on. Particularly, you might think, the Chairman of the Audit Committee and his fellow committee members. The former had no financial qualification or experience, but he is a member of the Irish peerage. He’s currently Chairman of an AIM oil and gas company. No one is held to account or even feels any sense of responsibility any more.

The only news I can see is the 29 March announcement that the period of Administration has been extended for another three years - until April 2025. Administrators don’t work for nothing. Even if they find anything, it’s likely to go to pay legal etc. fees and secured and unsecured creditors. Shareholders are at the bottom of the pecking order.