Member Info for Peterashbeck

Head In The Sand, you and I were having this same discussion over 6 months ago and I thought that we had settled it when I sent the questions to Angus explicitly asking:

A) What is the predicted output of Saltfleetby without the sidetrack being drilled? Will it be enough to cover the 5.4mmscfd of the hedge in November 2022?
B) If the sidetrack is successfully drilled, what would you hope would be the total gas output of Saltfleetby mmscfd in a worst, probable and best case scenario?
C) Will it be possible to continue producing gas at Saltfleetby while the sidetrack is being drilled or does all production have to stop during this time period?

The full answers to these questions from October 27th 2021 can still be seen here: https://www.angusenergy.co.uk/media/investor-questions/ however a short version of them is:

A) The two existing wells will cover all of hedged production even at its highest point.
B) A successful sidetrack would deliver 7mmscfd in a worst case scenario and the probable case is 10 mmscrfd.
C) It should be possible to drill the sidetrack while continuing to produce from the existing two wells.

So an unsuccessful sidetrack, while being disappointing for both the company and investors will not be the disaster you are claiming. In fact, assuming that production does not commence until June and is then capped at 5.4 mmscfd (the minimum required to fulfil all of the hedge requirements) then Saltfleetby would still generate £12 million (£6 million net to Angus) between June 2022 – December 2022.

If the sidetrack is drilled in July this year (and becomes operational in August) then these figures will increase to £30 million generated and £15 million net to Angus. If, as you suggest the sidetrack is drilled in September with production ready for October then we would be looking at £23 million by December and £11.5 million net to Angus.

So in all we are looking to generate in 2022 anywhere between £6 million net to Angus (in the event of an unsuccessful sidetrack) and £15 million net to Angus in the event of a successful sidetrack being drilled in July.

In 2023 (and a gas price of £2.50 per therm) the difference between the sidetracked and un-sidetracked numbers does become substantially more significant. At production of 5.4mmscfd Saltfleetby generates £11 million (£5.5 million net to Angus) and at a production of 10mmscfd generates £54 million (£27 million net to Angus).

So you are correct in saying that in the current gas-price environment that a successful sidetrack will be an utterly transformation game changer for the company. However, you are incorrect in saying that an unsuccessful one would be very damaging. In fact, it would still be making more than twice as much money as Saltfleetby was originally budgeted to generate when Angus were loaned the £12 million to develop the Saltfleetby site. The difference is simply between Saltfleetby being better than expected and being truly company-changingly

Interesting to get a formal confirmation of the information leaked by the LadyOfAim twitter account back in November that there are offers on the table to buy out Angus’ share of Saltfleetby and even the company itself.

We also see the same negative posters coming out and making more laughably untrue statements about how nobody is really interested in buying the asset and it is all made up in order to hold another raising… These are the same people who once called Saltfleetby Poundland and said that it would never be worth anything and yet here we all are, discussing how many millions that it might be bought for. I wish they would just be realistic. There has been plenty to criticise Angus for over the years but Saltfleetby is a success story and it should be recognised as such.

There has clearly been ongoing interest in acquiring Saltfleetby and the only question really is how much should Angus accept for it. The basic level of money that has been suggested is £20 million (£14 million plus Angus’ share of the loan which would be another £6 million) which would value the entire asset at approx. £40 million. To me personally, even though this would be a cash influx of more than double yesterday’s closing market cap I do not think that it is enough. Looking at the Ice UK natural gas futures and putting them into my long-term calculations it now shows that there is the potential for Saltfleetby to deliver £32 million in revenue during 2022 as opposed to my previous forecast of £19 million. Realistically, I would say that this would put a £66 million value onto SFBY with £12 million removed for the loan meaning that I would be looking at a value of Angus’ share of approx. £27 million.

Of course, the big question is whether it is worth selling Saltfleetby even for £27 million especially since (assuming that gas prices stay at the value they are now) then the asset will generate approx. £50 million per annum (£25m net to Angus) each year. The answer to this really depends on what other assets that they have in mind to buy with the revenue – repeating the value reaped from Saltfleetby four or five times over the next 5 years would certainly keep me happy and I think that in both gas and geothermal it would be possible to do this. Geothermal has certainly shown some fairly significant revenue generation in the USA over the last few years as larger companies have moved into the sector and snapped up the smaller players.

But it is a nice position for the company to be in and also for us as shareholders – especially when it is all about an asset that was for a long time deemed by many to be worthless.

7. The high court injunction would not have been issued if the judge was not satisfied that the ADME claim was solid. KONH should be shown on the NHNL share registry and ADME were never obliged to make a $1.75 million payment to NHNL. If they were meant to have made this payment then they would have made it or said they could not pay. They would not just have ignored it. Shareholders were not notified about this because this is just standard business arm-twisting. It happens all the time but ADME would not make public statements if they were not true.

8. Anyone who wants to know what he (and any of the other directors of the company) have earned just needs to look at the annual report. It is all there and it is not a secret.

9. Going forwards the board are looking to progress AJE and Barracuda and are looking to acquire new assets in Guinea, Brazzaville and Gabon. They like appraisal assets as they can buy them cheap and sell them for ten times the amount. They are also looking for production assets for the sake of cash-flow. They are very happy with the current boards and are very capable of defending their positions.

The ball is in Align’s court now, but overall this was an impressive performance from Osa. He certainly seems very confident in the ADME position on NHNL and I look forward to seeing how the company handles the Jennings accusations in their circular

I logged into the investor call without any issues either. Made some notes too. Overall it was a fairly impressive performance and although it did not answer any questions on the Jennings allegations as these will be addressed in the circular it was pretty informative.

1. About AJE – YFP who operate the concession are open to being helped by their partners and ADME have assembled a team of their own that have done all of the technical planning an the engineering. Essentially ADME staff are running the project. Osa refused to speculate on when AJE will generate any revenue to ADM but says that the board are eager to get to this point.

2. The Barracuda CPR has been delayed because they have started to look at deeper reservoirs rather than shallow ones as the deeper ones are much more economically attractive. He said that the delay has been useful as it has deepened their understanding of the license. It was unclear if the CP had been paid for, he appeared to say in one sentence that it had been paid for and in the next that it hadn’t.

3. Nigerian Marginal Bid Round – the company are not really interested in this any more. The Nigerian govt basically wanted $1.50-$1.80 per 2c barrel and the wider market in Nigeria has better opportunities (like Barracuda). But partnerships are still being formed and it is still a work in progress.

4. The company is confident that it will cover operating costs in 2022 in the same way it always has, with a mixture of debt, equity and directors investing.

5. The company are eager to use the Trafigura facility and are looking over 2-3 possible new transactions each quarter. It is a work in progress.

6. Ginsky was correct to the letter in his assessment of KONH. It was an SPV that took over the assets from an offshore company that ADM did not want to run an offshore jurisdiction so they onshored it. They paid $250,000 (and presumably the $550,000 in shares though this was not specifically mentioned) in order to acquire their share of KONH and this money went directly to pay the company owners who can be seen listed in the Calabar Capital list of directors. NHNL were fully aware of all of these actions and to suggest that they were not is insulting.

These are the questions that I have submitted so far for tomorrow;s investor call. I wonder if the company will see fit to actually answer any of them?

1. ADME claim that KONH Ltd own a majority share of NHNL. How can this be possible when KONH was only formed on 19th February 2021 and it appears that the only money ever put into it was $250,000?

2. NHNL have published documentation showing that KONH was meant to make at least one payment of $1.75 million which never got paid. How do you explain this?

3. If NHNL is a subsidiary of KONH (as you have announced on multiple occasions) why is KONH not shown on the NHNL share registry?

4. Why is it that if you were informed by NHNL that they declined participation in the KONH proposal on August 17th that shareholders were not notified of this action. Even if you believed that the contract was watertight, surely shareholders should have been informed that a company that you claimed was KONH’s subsidiary saw itself as no such thing?

5. What has happened to the bid that was submitted to the Nigeria Marginal Field round?

6. Why has there been no publication of the new Barracuda CPR? Has this been paid for and completed.

Spikey, in that case then, assuming that Dan is right and it is Align selling, then we should get an announcement from them on Monday as they should already be down to 4.12% from 5.78%.

Of course, there is every possibility that Align could actually be buying in order to strengthen their position in the upcoming vote. To be honest, that would make more sense to me than them selling now.

Dan, I am not convinced that it is Align selling as it would be a strange strategy for them to call an EGM and then sell out their own votes in the EGM before it happens. However, if you are right then they are currently down to 4.31% of the company and if they sell another 1.5 million on Monday and Tuesday they will be down to 2.84% and will have to issue an announcement as being under 3%. So, I guess we find out soon one way or another.

Ginsky -It also would not make any sense to transfer a company and its assets from a jurisdiction where there is no taxes on profit, income or capital gains (Bermuda) to a separate jurisdiction where there is taxes on all of these things (the UK).

I cannot understand why anyone would do this and I cannot recall any interview with Osa in which he mentioned this. I am happy to be proved wrong though if you can dig out the link for the interview in which he said it.

Ginsky - the idea that the deal between KONH and NHNL could have been done years ago is just mindless optimism. It only works if you ignore all facts.

KONH UK Limited was only incorporated on 19th February 2021 so it could not have set up NHNL originally, nor could it have done a deal with them years ago. There is also no way it had any money in it before ADME paid for 51% and the $250,000 that they put in would not have paid for anything significant from NHNL even assuming that it went to KONH, which considering the shares wen to Calabar, I sincerely doubt.

I get that you want to be optimistic about ADME's claim but you have to find some facts to support your theories.

Ginsky, defending shareholders rights over Barracuda in court is only beneficial to shareholders if ADM win and from everything that I have seen so far I cannot see how they are going to win as I cannot see when and how KONH can ever have paid NHNL any money.

It is entirely possible that instead of getting any money back Osa is just throwing more of it down the drain. It is a relatively easy thing to get a temporary injunction to stop somebody selling an assets but a completely different thing to win a court case showing you own that asset.

Obviously the company have access to much more information than is currently in the public domain but from what is out in public I just cannot see how ADME or KONH could have paid any money to NHNL. And, if they have not paid any money then they do not own any of NHNL.

The key thing here is, in my opinion, that even if ADME knew fine well that they had no claim on NHNl then they would have to commence a legal case or they would effectively be admitting that they had been lying to the market all this time. I am not saying that this is what they have done, I am just saying that if they did know that they were in the wrong they would have to take this course of action anyway.

Basically, on it’s own the injunction and legal action mean nothing. I will be interested to see if the information that Align have promised to publish at the weekend sheds any more light on Barracuda or not.

In all seriousness, I am leaning towards Jennings and what Dan has accurately described as the cash-out option.

I don't trust Osa to be straight with shareholders as he has consistently shown that all he ever wants to do is to give the bare minimum amount of information that he has to and if he can avoid even that then he would prefer it. I simply don't see how the company can continue with him at the helm.

Keeping OSA

PROS: No Richard Jennings and Align.
CONS: We keep Osa.

Getting rid of OSA
PROS: We get rid of OSA
CONS: We end up with Richard Jennings and Align.

It is like being caught between the devil and the deep blue sea.

Spikeyj, I love that idea, except for the fact that it would leave ADME with no management whatsoever. Would no management be worse than the existing management or Richard Jenner?

Dan, you are absolutely right, I don't know how I missed that, my apologies. It should have been released last night though, especially as Winnifrith had already leaked that it was happening - but that is not to excuse my own incompetence, Sometimes I wish there was a delete message button on this forum.

I will now begin to gradually accumulate some shares in order to be able to participate in this vote - buying on dips if possible.

Assuming that Winnifrith is telling the truth, and I think that he is as it seems clear to me that it is both Align who called the EGM and Align who tipped off Winnifrith, then why haven't the company released an RNS letting us know that this is happening.

It is another example of how ADME under Osa deliberately keep shareholders in the dark and only give out even the slightest morsels of information when they are forced to. Shareholder communication and transparency is never going to improve under Osa as he just wants us all to sit down, shut up and hand over money when requested. He doesn't care about us at all.

I sold out my ADME shares in October after failing to get any sensible answers from the company about Barracuda but as soon as they issue an RNS announcing the vote I will buy back in in order to participate. I am not doing this until I have an RNS confirming the EGM though as I do not want to hold shares here if Winnifrith is wrong.

With the right management this company could be successful.

According to Tom Winnifrith there has been an EGM called to sack the board. Apparently the motion calls for the The immediate removal of CEO Osamede Okhamino and also Richard Carter and Oliver Andrews. It proposes that they are replaced by Richard Jennings - so I guess that we can all guess who put forward the motion.

https://www.*************.com/views/59614/breaking-sack-the-board-gm-called-for-adm-energy

Obviously this is Winnifrith so it is not 100% certain to be true but it would also be a stupid thing for him to lie about if he is not sure, and he has clearly been tipped off by Jennings himself.

Is Jennings and better than Osamede? He's a terrible investor but honestly could he be any worse at running the company?

Which way will you be voting?

Dan,

This is just my speculation but I think that what must have happened is that:

1. KONH did have an arrangement with NHNL to buy a stake in them - this is effectively acknowledged in the letter that Tom Winnifrith published where NHNL were demanding a payment of $1.75 million from ADME for “project funding”.

2. Based on the arrangement that Zenith Energy have subsequently announced whereby they are paying $20 million (presumably the entire cost of the well) for a 42% stake in NHNL then one would expect that the deal made between KONH and NHNL would be fairly similar – ie you get us $20 million funding to drill the well and we give you a large percentage of the company.

On this basis you would expect the $1.75 million to simply be the first instalment of at least 10 or 11 more. After all it is only 9 months since ADME first mentioned the deal and Zenith Energy announcing that they have an option deal. As far as I can tell, nothing has changed in this time period and so there is no reason that the price would change much either.

3. We know for a fact that KONH and ADME have not paid any money to NHNL partly because NHNL’s document has told us that, but mostly because ADME would have had to announce if they did pay anything – and they haven’t had the money to anyway.

4. So in my opinion KONH had an option to buy a stake in NHNL but never cam up with the money and so never got their stake. I assume that they were hoping that ADME would be able to raise the money to fund the drill and then they would get their share out of this – but obviously it didn’t work. So in essence ADME bought 51% of a company that was worth nothing.

5. The big question is how much ADME knew about this (ie how much due diligence they did). IMO, we are never going to know as, whatever the truth, they now have to say that they believed that KONH owned NHNL. This may make them look incompetent at their due diligence but it is better than the alternative which is that they are shown to have misled the market.

As I say, this is all just my own supposition and of course it is possible that NHNL are lying through their teeth and have a watertight agreement with KONH that they are trying to get out of. However, looking at the evidence that we have it front of us I find this unlikely. I think that ADME has 100% lost Barracuda but time will show if I am right.

It doesn't feel like a pump and dump to me - more like a propping up and stabilising of the share price by those who had a lot to lose if it kept going down.

Dan,

You made a very convincing argument that the claim in the March 23rd RNS that the statement that: ““KONH holds, through its subsidiary Noble Hill - Network Limited ("NHNL"), a 70% indirect interest in the rights, benefits and obligations under the RSA relating to the Barracuda area of OML 141” was just a one-off mistake and it was corrected by omission in subsequent announcements.

However, I have just been looking at the company’s Twitter and as recently as November 30th they confirmed this position by tweeting that:

“#ADME notes the recent announcement made by Zenith Energy Limited in respect of its option agreement for OML 141 risk service contract
$ADME confirms that there has been no subsequent change to KONH's position as majority shareholder in NHNL”
https://twitter.com/ADMEPLC/status/1465604645733212160

It is clear that the company believe that their stake in KONH gives them control over NHNL yet at the same time NHNL have proved beyond doubt that KONH has no ownership of NHNL. It is looking to me more and more like ADME did not do proper DD and bought a stake in a company (KONH) that had no assets…

Dan, what evidence do you have that Calabar Capital had a contract for the RSA? Is this purely a supposition based on the fact that Calabar Capital ended up with all of the ADM shares or is there anything more concrete than that?

It sems unlikely to me that CC have any ownership of the RSA, not least because they were incorporated only a day before KONH on 18th Feb 2021 and whereas the nature of business of KONH is described as “09100 - Support activities for petroleum and natural gas extraction” CC is described as “70229 - Management consultancy activities other than financial management”.

It looks to me as if CC was set up purely as an entity to take the money that was gained from selling 51% of KONH to AMD.

Whatever way you break it up, Calabar Capital does not hold any stake in NHNL any more than KONH does. But you are absolutely right, MADE need to clear up the absolute pigs ear that they have made of the entire ONL141 transaction. They only ever release any information when they are forced to and they increasingly come across like a collection of individuals who have a lot to hide.

Now NHNL have published papers showing that ADME’s claim that KONH owns NHNL is nonsense (and has flat out said that it has no business dealings with KONH or ADME) then the onus is on ADME to explain why it believes that it still has any claim to the RSA of OML141.