Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
So people now expect us to be worried about the well not producing by June. It is once again the creation of a straw man argument. Yes, of course it is possible that the company will not be in production in June 2022 and will fail to produce any revenue to service the debt and will have to return to the market to raise equity to service this, but the risk of this is infinitesimally small. In fact, it is more likely that the company will have generated enough money to pay off almost all of the debt by June than it is that they will not have any money to pay the first instalment.
As we all know, Angus is targeting production of first gas to be in February 2022 and so this gives the company a quarter of a year window of delay before the lack of gas becomes an issue in terms of paying off any debt payments due. Personally, I have not seem any specific information in the CPR to show how much money Angus need to pay as their first debt repayment but using the ICE forward prices and a conservative production estimate of 5mmscf/d then it is perfectly possible that if the company started production on the 1st February that they could generate:
February with 5mmscf/d at £2.2675 / therm = £3.3 million
March with 5mmscf/d at £1.9775 / therm = £2.9 million
April with 5mmscf/d at £1.0800 / therm = £1.5million
May with 5mmscf/d at £1.0800 / therm = £1.5 million
June with 5mmscf/d at £1.0800 / therm = £15 million
This would give a profit of £10 million + and pay off almost all of the debt by the end of June.
Of course, this will not happen, but it is more likely than them producing no gas by June 1st. I merely cite the example to show how ridiculous the straw man argument is.
Whatever way you break things up the company is going to be earning in excess of £500,000 per month every month even if it only produces 5mmscf/d; even after the hedge comes in and even if they do not drill a sidetrack. So these scare stories that Angus may not be able to pay off the debt are absolutely ludicrous. Interestingly, if you look at page 53 of the current CPR you see that the company’s own projections show a cash flow forecast with them paying off £9 million of debt in 2022.
The “what if they are not producing by June” argument is absolute nonsense. It is just about still possible, but frankly it is more likely that Newcastle United can still win the 2021-2022 Premier League title than it is that Angus will not be producing gas by June.
Dan, I absolutely agree that ADM need to go through the proper channels rather than replying to individual emails from shareholders but this is what I have been asking them to do for months. All that I want them to do is to make an announcement clarifying their position as to what is going on.
The reason that I have complained about them and their nomad to aim regulation is precisely because they have not made any announcement about this entire mess. When NHNL (a company that ADM claimed in their 23rd March RNS was a subsidiary of KOHN) has now gone public and announced that they are unconnected with KOHN and have issued “cease and desist” letters to KOHN to prevent them from claiming “all statements of Ownership in NHNL or participation in the NW OML 141 RSC” then there is clearly an massive problem.
However, with the lack of response from ADM, the issue has become even bigger. Whether NHNL are telling the truth or not is not even the issue any more. It is the silence from ADM that has become the problem. NHNL have made a claim that materially effects the ADM share price as (if true) it would mean that ADM no longer owns any of its biggest asset and so ADM should absolutely address it with a formal announcement even if it only to say that this is all lies. Also, the Nomad should have forced them to do this.
The fact that there has been no announcement from ADM does, as I have said on numerous occasions before, make me 100% convinced that they have lost the asset but this is of secondary importance. The key issue now is that they are so contemptuous of shareholders that they can’t even be bothered to let us know about what is going on.
If (and note that I said if) they have been lying about their rights to OML141 in the annual report and lying about their rights to OML141 during the recent fundraise then this is a huge market abuse. This is why I have reported them to aim regulation. All of this could be cleared up with a single RNS but they haven’t announced anything. Why? And why have the Nomad let them get away with it?
Well they have been reported by three different people on this board alone now so hopefully we will get to the bottom of it sooner rather than later. But I don’t think that the truth is going to be pretty.
I have had a similar response to you and it does not seem automated so maybe this is a good sign that they are looking into it. I have not received any response from the Nomad. Did you copy in the Nomad on your email?
If we have both had a response from aim regulation then maybe it will help if others report this situation too.
PART 2 OF EMAIL
Regardless of who is telling the truth in this situation it is clearly necessary for to release a statement clarifying their own position on this matter in order to clarify what is going on. They have claimed ownership of the NWOML141 asset: on their website, in their annual report and (presumably) in last week’s (15/11/2021) fundraise. If they have known all along that these rights have been rescinded then this is a clear case of market abuse. If their NOMAD Cairn Financial have not done anything to sort out this situation then it raises the question as to whether they are the correct organisation to carry out the NOMAD role.
Please can you ensure that an announcement is made to the market immediately to clear up the mess that the dispute over the asset ownership is causing as it is private investors who are (as usual) being most damaged by this lack of transparency.
Yours sincerely,
Peterashbeck
Let's see if we get any more information this time. I am not going to give up...
I have now reported both the company and the Nomad to aim regulation in the hope of forcing them to make an announcement. Email below:
Dear Sirs,
I am writing to you to urgently request that you carry out your duty as Energy’s NOMAD and require the company to issue an announcement to investors explaining what is happening with the OMNL141 asset. I have also sent a copy of this email to AIM regulations as I believe that Cairn Financial Advisors are currently being negligent in their regulatory duties to ADM and its shareholders.
I have written a number of times before to both Cairn Energy and ADM requesting that they issue clarification on whether the company still retains it’s investment in OML141. The question was brought about when Zenith Energy announced on August 31st 2021 that they had signed an exclusivity agreement with Noble Hill-Network Limited who own the Risk Service Contract for the NW OML141 asset.
I have not had any satisfactory reply to these emails.
The situation took an additional turn last week when Noble Hill-Network Limited updated their website and announced that they received a proposal from KOHN- Energy about the development of NW OML141 on April 28th 2021. They also make it clear that on August 17th 2021 that NHNL rejected this proposal and declined to participate “due to lack of funding and misrepresentations. Further to this the legal Counsel notified K.O.N.H. to Cease and Desist all statements of Ownership in NHNL or participation in the NW OML 141 RSC. Further to this the legal Counsel notified K.O.N.H. to Cease and Desist all statements of Ownership in NHNL or participation in the NW OML 141 RSC”.
So we now have a situation where there are three different claims on who has the rights to the NWOML141 asset and two of them state that it is not ADM.
1. ’s website claiming that they still have an interest in this asset as of today. https://energyplc.com/operations/barracuda-field/
2. Zenith Energy’s official announcement claiming that they in exclusive negotiations for NW0OML141 since August 31st 2021: https://polaris.brighterir.com/public/zenith_energy/news/rns/story/xoz83mw
3. The NHNL website claiming that have been informed (via their 51% ownership of KOHN) on August 27th 2021 that they have no rights to this and have been told to cease and desist in all statements of ownership. http://www.noblehillnetwork.com/
The ceiling and the floor are exactly the same thing, it just depends on which side of the price you are currently standing. Crash through the floor and it becomes a ceiling - but 1.5p is a floor at the moment.
I think that the company has clearly decided to keep quiet about the loss of Barracuda on the basis that saying nothing and having investors assume that you have been lying to the market is better than saying something and having to admit it. At some stage it will be clear though and this is when the share price will take a real knock as, despite what has been said on here, the real value to the share price here was in he potential of Barracuda and not AJE.
It must also be clear to everyone that the lack of any news coming from the company about Barracuda means that it has definitely gone as it would have been such a simple matter to clear up in RNS. I assume that nobody here actually thinks that we still have any rights to Barracuda or OML141?
Saltfleetby does have a time-critical element in terms of delivering sufficient revenues to meet debt financing costs, but as we have discussed plentifully on this board these timescales are very conservative
To recap
Angus only HAS to start delivering gas by July 2022 when it is contracted to deliver 3.38mmscf/d for the hedge. Since the company expect the field to produce 7mmscf/d with the additional pressure from the well being locked-in then this should be simple. Even if there is no additional pressure then according to the OGA figures the well will still deliver 6mmscf/d. This will create a revenue of £1 million per month after operating costs. Once a successful sidetrack is delivered then production should increase to 10mmscf/d and revenue of £2.2 million per month.
We know from the 26th October RNS that the company are planning to deliver first gas in March and we have had no updates to say that the sidetrack should be delayed. However, in case there are any delays in this then there is a three-month margin for error on first gas production (to when the gas needs to be delivered for the hedge) and as I have already mentioned the hedge can be met without the sidetrack at 6mmscf/d. When you add in the fact that the sidetrack can be drilled without affecting production then there really are not any major issues.
Therefore the time critical element of this whole project is merely to get first gas delivered by July 1st. Since it is currently budgeted to happen on March 15th (as per 26th Oct RNS) this gives 3.5 months leeway for things to be delayed before there are any issues. It is also worth mentioning that this “time critical” date is three quarters of a year away. Hardly something to get too panicked about IMO.
Dan - I agree that the Zenith RNS does not confirm that we are out so far - though I note from reading the Zenith forum on this website that is a recent investors call the CEO was asked:
"Can you clarify the Nigeria announcement. There is speculation about the ownership of this asset. Is there any comment you can make?"
He then apparently replied that "I can only say to investors that we have never made imprecise descriptions of our situation regarding acquisitions. We have declared that OML141 NW is the object of our exclusivity agreement. The fact that this is exclusive means that nobody ekse is there and I have nothing else to add."
So I ) do think that ADM and Zenith are both talking about the same asset and I do not think that Zenith are talking about a partnership the way their CEO refers to exclusivity meaning that nobody else is there. However, but I agree that we probably have to wait for the next RNS from Zenith to be sure of this 100%. I would love to think that ADM may inform shareholders themselves but after my experiences over the last few months I rather doubt that they will.
I may have to do some investigations into whether Zenith are an investable company if they do acquire Barracuda as the license is likely to be incredibly valuable if it is run by somebody who actually has the money to finance the wells. It is just a damned shame that it could not have been us and that I (we) had to find out the hard way what a bunch of duplicitous people appear to be running this company.
Nobody has responded to my emails either from the company or the broker.
The fact that there has been no RNS released even to say that they are looking into things speaks volumes in my opinion. ,
The first official news we are likely to get is ironically going to be an RNS from Zenith on November 30th where they announce that they now own an asset that we were assured belonged to ADM.
Absolutely ridiculous.
I agree that the NHNL website is a bit unusual, but I have emailed ADM and their Nomad and asked them to release an RNS with clarification at 12.30 today so they do know about this:
1) If the NHNL website has been hacked, this is all fake and NHNL is still a subsidiary of KOHN which ADM own 51% of then ADM should release an RNS saying this is the case.
2) If the NHNL website is legitimate then ADM should release an RNS explaining why they have misled the market for the last three months including through the recent fundraising.
Whatever happens there should be an RNS. The fact that nothing has been released seems very dodgy to me. I have been emailing them for months with questions about OML141. The few times they replied they were evasive and when I asked direct questions they stopped responding. I believe that they have indeed lost all claim to OML141 and anyone beliveing different is just clutching at straws - but we need clarification either way.
Has anybody else emailed the company? Have they replied to you?
“And they borrowed £ 12million - which has to be repaid - which leaves £ 7 mm to cover their G&A costs over 2 years - it sort of disappears before your eyes doesn't it?”
The figures that I quoted are after operational expenses. So I guess another way of putting it is that in the event that the sidetrack is unsuccessful and there is no additional pressure in the well then they will still pay off the £12 million in 18 months and have generated £3.5 million in profit plus whatever they can generate before the July hedge kicks in which would be 51% of between £5 million and £7.5 million dependent on whether they start producing gas in April or May. This means paying off all debts and generating approx £6 million in revenue over 18 months in the low -case scenario. I don’t think that is bad going myself, especially as we also have the potential upside of the best case scenario. Under this, with a successful sidetrack , they would pay off all debt and bank £16 million in revenues over 18 months; let alone what they make over the subsequent years.
My calculations below of Saltfleetby revenues at an average of £0.98 per therm over the 18 month period (max £1.16 and min £0.94. This is fairly below the current summer forward pricing which is £1.08 / therm.
1. In the event that everything goes to the company’s plan then Saltfleetby will generate 10mmscf/d after the sidetrack. This will result in delivering between £2 million and £2.4 million per month in revenue even after the hedge is factored in at the highest rate of 5.38mmscf/d in Jan-March 2023 – Total value between July 2022 and December 2023 of £41 million before operating costs.
2. In the event that the sidetrack is unsuccessful then we should still be looking at a gas generation of approx. 7mmscf/d from the two existing wells at the field producing with the extra pressure that the company think will be available for 18 months post shut-in. In this instance Saltfleetby would generate between £1.1 - £1.5 million per month even after the hedging is factored in. Total value between July 2022 and December 2023 of £24 million before operating costs.
3. In the event that the sidetrack is unsuccessful AND there is no additional pressure in the well then according to the OGA figures the field should still deliver a gas flow in excess of 6mmscf/d. In this scenario the field will deliver between £800k per month and £1.2 million per month - Total value between July 2022 and December 2023 of £19 million before operating costs.
So there is a £22 million difference between the revenue generated over 18 months if the sidetrack is successful, which is clearly substantial - but £19 million over 18 months even without the sidetrack is still a very significant amount of money.
If the gas prices continue to rise then the numbers could be stratospheric.
I have just emailed the company and their nomad requesting the urgent release of an RNS to inform the market whether or not the claims made on the Noble Hill website are true or if it is the result of a hacking attack.
Let's see if we get any response...
I believe that the NHNL website is genuine, but if it is not then we should expect ADM to come out with an RNS denial immediately confirming that NHNL is a wholly owned subsidiary of their 51% owned KOHN and that the website has been hacked and there is nothing to worry about.
In fact, they should have done this already. The fact that they have not and the fact that they have always refused to answer my emailed questions on this matter is a huge red flag and, as you know, I have publicly voiced my suspicions on this for months.
If the NHNL website is fake it should be investigated for fraud and market deception and if it is not then the AMD and the board of directors should be investigated from fraud and market deception.
The one thing that we can all be sure of in this sh*t-show is that there will be an investigation. The only question is who will be the ones being investigated...
"even if ADME is disputing NNHL’s assertions, surely it needs to be RNS’d to shareholders that a cease and desist notice of this kind was issued, and how ADME is responding to this?"
You would have thought so, but I thought that they would need to release an RNS when Zenith Energy released an RNS to announce that they had signed an exclusivity agreement for an asset that ADM claimed that they already owned and they didn't do that either.
The only hope for ADM shareholders is that NHNL are lying but the trouble is, since ADM have previously claimed that NHNL is a wholly owned subsidiary of KONH and now NHNL have publicly announced that they were never in business with KONH let alone wholly owned by them then it does not look likely that any of the things we have been told were ever true.
The best case interpretation on this would be that ADM were stupid and naive and were deceived by KONH (as they were the company we paid the money and shares to) . At least this way management were just stupid. The alternative is that they were party to a deliberate deception of shareholders.
The really dark part is that (again assuming that NHNL are telling the truth) ADM have known about this issue via legal letter for nearly 3 months but have not mentioned anything to the market in this time. Surely this is breaking just about every rule in the book?
The more I think about it, the worse it gets.
All the details about the loss of the asset can be seen on the Noble Hill website: http://www.noblehillnetwork.com/index.pdf
I am afraid that I have very bad news for all ADM shareholders today (for clarity’s sake I must declare that I sold out last month because of my suspicions) as I now have proof that ADM no longer hold any rights to Barracuda or OML141 and have not done since August 17th 2021.
As many of you know, I have had my suspicions about whether we still retained any rights to OML141 ever since Zenith Energy published their RNS about having an exclusivity agreement for OML141 on August 31st 2021. To try an clarify my concerns I:
1) Emailed the company – who replied that Zenith Energy’s announcement did not conflict with their interest in the RSC but that they knew nothing about NHNL’s negotiations with Zenith,
2) I then wrote again querying if Noble Hill Network Limited was actually a subsidiary of KOHNUK Ltd and queried why (if this was the case) (a) they NHNL website said that they were 100% Nigerian owned and (b) why ADM knew nothing about the negotiations between their subsidiary and Zenith. – They never replied.
3) I emailed the same queries to Cairn, the ADM nomad and got no reply.
4) I emailed the same queries to haysmacintyre, the ADM auditors and got no reply.
5) I emailed the same queries to Noble Hill Network Ltd and got no reply.
All of this can be seen in my posting history here and the lack of replies made me incredibly suspicious because it would only have taken a 2 minute email from any of these people to put all of my concerns to rest – and yet there was never any response. Well now I know why.
On the Noble Hill website (which has now been significantly updated) index.pdf (noblehillnetwork.com) they make it very clear that they received a proposal from KOHN-ADM Energy about the development of NW OML141 on April 28th.
They also make it clear that on August 17th 2021 that NHNL rejected this proposal and declined to participate “due to lack of funding and misrepresentations. Further to this the legal Counsel notified K.O.N.H. to Cease and Desist all statements of Ownership in NHNL or participation in the NW OML 141 RSC. Further to this the legal Counsel notified K.O.N.H. to Cease and Desist all statements of Ownership in NHNL or participation in the NW OML 141 RSC”.
NHNL also say on their website that “Currently Noble Hill-Network Limited is in discussions with viable potential funding partners” (who are presumably Zenith Energy).
So to put it simply, ADM have known for nearly 3 months that they no longer own any rights to OML 141 and (assuming that NHNL are telling the truth) they have also been asked for 3 months to take down all claims of ownership from their website. However not only have they declined to do so, they have also published their accounts claiming that they still own it.
This is a disaster. As I had expected all along, ADM have been deliberately lying to shareholders for months now. We cannot trust a word that comes out of their mouths.
The salient point from my last post was not about the semantics of language and whether someone can have an unequivocal opinion or not. It was actually to point out that it does not really matter whether there is any increased pressure in the well or not. It makes a small amount of financial difference whether the well produces at 6 mmscf/d or 7mmscf/d and obviously it would be nice to get this. However, the key point is that in either circumstance this production is still more than enough to cover the hedge even without the sidetrack. This means that the safety net is there for the company and they are going to be able to meet their production commitments under any circumstances.
Once the sidetrack is drilled then the pressure issue is completely redundant as Saltfleetby will then be producing 10mmscf/d regardless., and this means a revenue of £2.5 million per month.
The pressure is definitely not going to be like opening a can of Pepsi (ie massive pressure for an instance and then all gone). If you look at the answer to the question that I asked last week then Angus specifically explain that:
“it was the view of technical experts that, following a prolonged shut-in, the two wells should have improved deliverability in the first 18 months or so of operations. This is because prior to shut in there was an area of reduced pressure around the producing wells. Since then the pressure has equilibrated across the field resulting in significantly higher pressure around the producers.”
So the company are pretty unequivocal that the pressure increase should be all around the well and that it should last for approximately 18 months.
On the one hand, this is fantastic news as a 20% increase in pressure should push initial production up in excess of 7mmscf/d. But on the other hand it doesn’t really matter that much. We know that the company are planning to drill the sidetrack and once this is done then (barring disaster) Saltfleetby should be producing 10mmscf/d which is the maximum that the process equipment can deal with, so whether the initial flow rates are 6 or 7 will only matter for a couple of months.
What is far more important that this is the fact that the production from the two wells without the sidetrack will still comfortably cover the hedge and this means that even in this worst case scenario Saltfleetby will generate £1 million per month in revenue.
Apologies, I have just realised that there was a record for the whole of 2015. For all four months I was missing the wells were producing in excess of 6 mmscf/d
January 2015 6 mmscf/d
Feburary 2015 6 mmscf/d
March 2015 6 mmscf/d
April 2015 6 mmscf/d
May 2015 6 mmscf/d
June 2015 6 mmscf/d
July 2015 6 mmscf/d
August 2015 6 mmscf/d
September 2015 1 mmscf/d
October 2015 0 mmscf/d
November 2015 3 mmscf/d
December 2015 6 mmscf/d
This means that in the 12 months of 2015 Saltfleetby was producing in excess of 6 mmscf/d for 9 months and then 3,1 and 0 for the other three months. Clearly there were some pretty seious issues with the equipment for it to go so significantly offline in the Sept-November but, as I said before, I am sure this will have been solved by Angus putting in their own new and refurbished equipment.
They certainly prove what Angus have been saying though – the amount hedged is going to be easily covered by existing production even if they do not actually drill the sidetrack.