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nolungu - not a mistake in the calculation but a mistake in my writing. It should have said:
With the sidetrack it will be a revenue of £2.5 million per month
Without the sidetrack it will be a revenue of £1 million per month
Apologies for the confusion.
HeadInTheSand, Thanks very much for the Saltfleetby link. It makes interesting reading. However, now I have analysed the figures properly they do seem to back up everything that Angus have said and indeed everything that I mentioned yesterday without having had the advantage of seeing the OGA figures at that time.
In 2017 there are three months (Jan, Feb and May) where the OGA figures show Saltfleetby producing in excess of 5mmscf/d. The there are 4mmscf/d produced in March; 3 in April and July; 2 in June; 1 in August and November and nothing at all in September, October and December. This would be totally in keeping with the question that Angus answered saying that when the compressor was working properly then Saltfleetby was producing in excess of 5 mmscf/d.
The full figures are here:
January 2017 5mmscf/d
Feburary 2017 5mmscf/d
March 2017 4mmscf/d
April 2017 3mmscf/d
May 2017 5mmscf/d
June 2017 2mmscf/d
July 2017 3mmscf/d
August 2017 1mmscf/d
September 2017 0mmscf/d
October 2017 0mmscf/d
November 2017 1mmscf/d
December 2017 0mmscf/d
However, what is actually more interesting is if you go back to the figures for 2016 and 2015.
In 2016 for 5 months (Feb,March,May,June & December) where Saltfleetby is produced in excess of 6mmscf/d; there are four months (April, July, August and October) where it produced in excess of 5mmscf/d; there were two months (Jan, Dec) where it produced in excess of 4 mmscf/d and there was one month where it produced 3mmscf/d (September). So it is clear that the field easily provides 6 mmscf/d.
January 2016 4mmscf/d
Feburary 2016 6mmscf/d
March 2016 6mmscf/d
April 2016 5mmscf/d
May 2016 6mmscf/d
June 2016 6mmscf/d
July 2016 5mmscf/d
August 2016 5mmscf/d
September 2016 3mmscf/d
October 2016 5mmscf/d
November 2016 6mmscf/d
December 2016 4mmscf/d
In 2015 for the 8 months that there are a record for five of these were producing in excess of 6mmscf/d (May, June, July, August and December); one produced 3mmscf/d (November); one produced 1 mmscf/d (September) and one produced nothing (October)
May 2015 6mmscf/d
June 2015 6mmscf/d
July 2015 6mmscf/d
August 2015 6mmscf/d
September 2015 1mmscf/d
October 2015 0mmscf/d
November 2015 3mmscf/d
December 2015 6mmscf/d
It is very clear going back through the OGA figures from 2017, 2016 and 2015 that whenever the machinery was working properly the existing two wells were producing in excess of 6 mmscf/d. There were clearly problems that regularly occurred reducing these numbers down to zero but his would almost certainly be due to old and unreliable equipment, which Angus have now replaced.
We should now get all of the old 6mmscf/d production plus the benefits of increased pressure from the well having been shut in for nearly 5 years. Frankly, based on these figures it would not surprise me if the existing wells could produce around 7mmscf/d without any need for a sidetrack.
As soon as one understands that the reason for the 4.17mmscf/d average of production in 2017 was because the compressor was offline for almost 4 months (as Angus clearly explained in their Q&A) then it becomes pretty clear that it is not optimistic but rather realistic that the well should produce in excess of 6mmscf/d.
But look, we all analyse the data in front of us and make our own investment decisions. I think that there is no risk to Angus in meeting their hedge requirements even without the sidetrack and that Saltfleetby will still be generating a revenue of £1 million a day in that circumstance. With the sidetrack, it will be £2,5 million per day.
As you point out time will tell which one of us is right, but I have invested fairly heavily here and if I am correct then I will be substantially richer because of it.
HeadInTheSand, yes I do agree it depends on how realistic Angus’ production projections are. However, I am unclear as to why you have such a great doubt about the figures that Angus are using. I realise that you cannot necessarily take at face-value everything an AIM company says, but in this instance I think that there are a number of checks that one can do to see that the numbers that they are coming out with are not only very credible but probably, in themselves, conservative.
1) As you pointed out, we know that from the last full year of production from Saltfleetby the production over the period was 4.17mmscf/d even with vastly reduced pressure. However, it was running not running unhindered as you suggest, because there were consistent problems with the Theddlethorpe compressor in 2017 which resulted in it being offline for nearly 4 months that year.
If we refer back to the Q&A answer of Jan 30th 2020 which asked why the company thought that they could get at least 5.5mmscf/d then the company were clearly stated that they had data showing that the flow from the wells EXCEEDED 5mmscf/d on the days that it was operationally functional.
The fact that production was only 4.17mmscf/d throughout the year is based on the fact that it spent such a large amount of time between August and November being completely off-line. The maths shows that if the compressor was offline for anywhere between 3-4 months then it must have been producing significantly in excess of 5mmscf/d when it was actually producing jus to give the average annual production figure of 4.17mmscf/d that you quoted.
2) As you also point out, there will have been a significant build up of pressure in the reservoir over the 4.5 years since it last produced. We do not know exactly what affect this will have on the gas flow but we do know that it will improve it at least in the short term (which judging by the hedge volumes appears to be the first two years of production).
Since we already know that the reservoir was already producing in excess of 5mmscf/d without this pressure (see point 1) I do not think that it is unreasonable to think that there could be a 20%+ increase in production giving us in excess of 6 mmscf/d or perhaps even more.
3) Finally, the big one. Angus were lent £12 million by Aleph et al to develop Saltfleetby based almost entirely on the figures provided by the CPR. They thought that the numbers were compelling enough to hand over this money secured against the site and they would not have handed over such a large amount of money without having these figures thoroughly checked over by their own technical experts. If there was doubt about their veracity then they would not have lent the money, but they did. They made a £12 million investment based on the fact that Angus’ figures are indeed correct.
HeadInTheSand,
You have over the course of the lsat few months made some very valid points about they "what if" scenarios that have been presented. However, here I think that you are simply mixing things up.
You said: " I maintain that for any O&G company to bank on any sidetrack to be drilled being successful is not conservative" and I would absolutely agree with you. However, the whole point is that Angus ARE NOT banking on the sidetrack to be successful. They deliver more than enough money to meet the hedge without the sidetrack being drilled at all.
Angus are clearly assuming that they are going to make 6mmscf/d without the sidetrack. Yes, I know that this is an assumption but they are clearly assuming that they will make more than the 5.38mmscf/d that is the maximum they have hedged on any given month and we know (because the company have publicly told us in answer to my question) that "the hedged production should be able to be covered by these two wells in the event of failure of the sidetrack."
Even in the event that the sidetrack never gets drilled and SFBY only ever produces 6mmscf/d then the company will still make £875k per month from the hedge and then another £180k per month from the unhedged extra. So in a worst case scenarion they are still making over £1 million per month. In a best case scenario with the sidetrack being successful and the full 10mmscf/d being produced then they are making £2.5 million per month.
So if Angus drills the sidetrack and it is unsuccessful then Saltfleetby makes £1 million a month and if they drill the sidetrack and it is successful then they make £2.5 million a month.
It seems pretty conservative to me.
HeadInTheSand,
Once again, it is all a matter of persepctive. You say that from October next year they have 10 months of having to produce 5+mmscf/d to deliver on the hedged volumes and you claim that this is not conservative.
You would be correct if Angus were budgeting on delivering (as they must be) approx 6 mmscf/d from the existing wells. This would not be conservative, although it would be perfectly manageable.
However, Angus are not planning on only delivering gas from the existing wells. As you have mentioned a lot in the past they are planning to drill the sidetrack which would enable them to deliver in excess of 10mmscf/d were it not limited by the process equipment.
As soon as you look at the company delivering 10mmscf/d per day and heding only 54% of this then you see that the forecasts are in fact incredibly conservative and also the cash revenue increases dramatically.
So a forecast that shows that even if they do not drill the sidetrack then they still meet the hedge and once they have drilled the sidetrack then the maximum amount of the hedge is only 54% of the gas produced iIS INCREDIBLY conservative.
It is also worth pointing out that the company appear to think that they will probably be able to drill the sidetrack without stopping the other production which is something I certainly wasn't expecting and another point in the "conservative" column.
HeadInTheSand – I asked the three-part question about the production at Saltfleetby and I have a significantly different interpretation to the answers that you do.
If we look at the amount of gas that has been hedged then we see that it is:
3.38mmscf in Q3 20221
5.25mmscf in Q4 2022
5.38mmscf in Q1 2023
5.31mmscf in Q2 2023
4.5mmscf in Q3 2023
4.5mmscf in Q42023
4.6mmscf in Q1 2024
4.6mmscf in Q2 2024
3.75mmscf in Q3 2024
3.75mmscf in Q4 2024
3.84mmscf in Q1 2025
3.79mmscf in Q2 2025
The answer given by the company makes it absolutely clear that both the company and its technical advisors (who presumably included the lenders) think that the two existing wells will deliver in excess of 5mmscf per day.
To me this makes it very clear that they expect that all of the value of the gas that they are hedging will be covered by the two existing wells. It has to be as they would be complete fools to hedge an amount that was a little bit more than they thought that they would actually produce and George Lucan is not a fool.
I think that it is very telling that the company has not specified exactly how much in excess of 5mmscf that they think it will produce, as it is clearly in excess of 5.38mmscf per day and I would imagine that it is significantly in excess as it would be foolish to be too close.
You make a very good point about the fact that the sidetrack may not be successful, but you have missed the fact that this answer shows that the sidetrack does not need to be. If the sidetrack does not work at all then it is clear that the company can still meet the obligations for the hedge from the existing two wells and if the sidetrack is successful then it will deliver a massive amount of unhedged gas to the company that can be sold at market rates. I will calculate exactly what this will mean in terms of cashflow later today.
I have to say that the answer sets my mind at rest completely that Angus can deliver all of the gas required for the hedge without even needing to drill the sidetrack.
So we have learned quite a lot more about Saltfleetby and it’s expectations thanks to the publication of the new CPR yesterday. Others have already pointed out that the CPR includes the previously unknown hedge prices which are shown on page 49.
However, if you look a little further into it (to table 6.7 on page 52 of the CPR) and review the P90 cash-flow forecast then then it also appears that we can work out how much gas the company think that they are going to produce each year. And it is a lot…
In 2022 this is projected to be
2022 = 2.8 BCF which equates to 2,800MMCF which in turn equates to 7.67MMSCF/day
2023 = 3.6BCF which equates to 3,600MMCF which in turn equates to 9.8MMSCF/day
I would say that it is pretty certain that these numbers have to be post sidetrack and it is for this reason that the 2022 numbers are lower than the 2023 ones (as we know, there is a big chunk of the year in 2022 when the company is merely preparing for production and not actually producing).
According to the cash flow figures in the CPR this means that after all costs Saltfleetby should show a pre-tax net revenue of £48.4 million over 2022 and 2023 (£26.4 million in 2022 and £22 million in 2023 – when gas prices are currently predicted to be significantly lower (see table 6.5 page 50).
Pre-tax net to Angus this would deliver £13.5 million in revenue in 2022 and £11.2 million in revenue in 2023 – total £24.7 million over the two years. This is enough revenue to pay off the entire £12 million loan in year one if the company wanted to and leave £12 million in the bank by the end of 2023. Given that our current market cap is a paltry £9 million the market has to catch up with Saltfleetby’s potential soon.
I am sure that some will take issue with the figures in the CPR but it is important to remember that these were the figures that convinced industry experts to loan the company £12 million so the people that count do believe they are real. Also, from my analysis of them (and I have not been through it page by page yet) I think that they are pretty conservative. For example they are predicting a gas price per therm of £2.54 in 2021 but only £1,50 in 2022 and right down to 85p in 2023. Given that I personally don’t actually think that gas prices will be going down any time soon then I believe that there could be a LOT more profit potential than has actually been stated in the CPR.
As Malky said today “Angus is a senior player in this (the gas) market and its importance is more than significant, it should be observed by Government as a leading company who can deliver gas for the United Kingdom”.
We understand the potential, now we just need the wider market to catch on. But sooner or later this is going to happen and when it does we will fly.
It has been clear for a long time that Saltfleetby will generate vey significant amounts of cash as soon as production starts. This was evident to everybody who properly researched the asset and was confirmed beyond all doubt when the company was able to borrow £12 million secured against it.
I will go back to re-look at the figures I worked out later today but it is safe to say that as long as they can keep to their planned timescales Angus have a four month window where they can make millions at incredibly high gas prices and use this to pay down a very large element of the loan before the hedge kicks in on a percentage of their production.
It is also worth noting that, from what has been said on here, the hedge will not be on everything that the company produces but just on a finite amount of production (for example 70% of the first 5 mmscf/d production levels) and so anything over this fixed amount (whatever that amount it as my 5mmscf/d figure was just an example not a fact) would generate significant additional revenue that has not been budgeted for. If this is correct then it will be worth millions more the the company even after the hedge is in place.
As most of you know, I have had concerns for some time now as to whether or not the company still owns any share of Barracuda. Robert Sham is now saying that the asset has definitely been lost and while I have no direct evidence to agree with this claim I think that there is a lot of circumstantial evidence that points in this direction.
The annual report focused exclusively on AJE with barely a mention of Barracuda anywhere. Alongside the recent news that ADM have appointed a new chief engineer for AJE it seems that the company’s focus is totally on the small and relatively insignificant asset as opposed to the potentially company-making one. When this is combined with the fact that company did not respond to any of my questions asking them to clarify on this ownership question and it seems fairly clear to me that there is something rotten here.
Even in the event that AMD still somehow hold on to any of OML141 (which, as I have said, I have my concerns about) I think that we are on borrowed time anyway. As DanBrown and Spikey have mentioned, it is clear from reading the company accounts that ADM has no money to carry out any operations in Nigeria. However, it is also clear from the announcements about Barracuda that providing the money for the development was one of the key reasons that ADM was involved in the first place. If ADM are unable to come up with any money then I strongly suspect that we will be kicked out anyway.
It's a terrible situation really. We have either (a) lost Barracuda already as Robert Sham claims and I suspect. (b) We are about to lose Barracuda because we are unable to come up with any money to cover our investment obligations (c) We are going to have a fund raising of £1 or more million at our 52 week low in share price and are going to dilute existing shareholders by more than 33%. Though I doubt we will be able to easily raise any significant funds with the company in the current mess it is in anyway. Even death-spiral financing is probably out of the question as liquidity in ADM is so miniscule.
All three of these are terrible options. Can anyone come up with anything optimistic where we are not facing anything but disaster in the near future?
"or could it just be that they don’t like what the preliminary report said about barracuda, & are deliberately wanting to slow down the release of some bad news? - "
It is definitely noticeable that almost no attention was given to Barracuda or OML141 in the annual report. It was in there but it felt that it was only in there because it had to be and the emphasis of the whole report was definitely on AJE rather than Barracuda/OML141. This is a very surprising because the long-term potential of Barracuda / 141 is much greater than that of AJE . So is there anything to read into this? I think that it is unlikely to be bad news about Barracuda from the CPR but it does make me wonder again about how secure our rights to OML141 actually are. I am going to chase up all parties again and try and get a clear answer to one question:
Is the NNHL which owns the RSC definitely the one that is a subsidiary of KOHN and not, as it says on their website, a different one that is "100% Nigerian owned".
Well, the accounts make abysmal reading. Administrative expenses going up by over 50% on 2019 when at the same time income is dropping down to 33% of 2019 is a total joke. I don’t really care about the impairment as this always skews the figures but even if you remove the impairment then losses have nearly doubled from £1.6m in 2019 to £2.9m in 2020 and £900k of that is administrative expenses which the company have control of. Frankly in the covid period the administrative expenses should be going down not up. The fact that they are not just shows how little the company cares for shareholder’s funds.
Given that the cash burn (without impairment) is slightly more than £200k per month and they only had cash of £30k plus the equity fundraising of £1.2 million (from March 2021) then frankly it is an absolute shock that they did not run out of money in June. There is definitely a placing round the corner, but the fact that we are in September and have not run of money does seem to indicate that the company do seem to have more of a handle on expenses in 2021.
However, the massive relief to me, as will surprise absolutely nobody who reads these boards regularly, is that the accounts do confirm the fact that we do still own the rights to Barracuda via our 51% share in KONH. From the company’s evasive answers to my emails I was genuinely worried that we did not and that they company had been misleading us all, but thankfully this is not the case.
Barracuda is the only reason for investing in ADM IMO and it is easily the most valuable asset that we own. As long as we have this on boards and management can get a grip on the out of control administrative expenses then ADM still has a chance of delivering decent returns for investors in the future.
This company never makes anything easy. I was also expecting a 7am RNS this morning delivering the accounts and confirmation of all that I talked about yesterday.
I do realise that we have the rest of the day to make the announcement but once again I am uncomfortable about the lack of information - and the time from a regulatory point of view. A suspension for ADM would be a disaster and it would also indicate that my initial concerns about Barracuda were warranted.
Come on, just publish the accounts already and put me out of my misery!
Just to keep you all updated, I have not heard anything back from NHNL by email confirming or denying that they are a subsidiary of KOHN, so that still leaves me completely in the dark. However, I did email the company auditor with the same request on Monday so hopefully everything will be clarified in the accounts when they come out tomorrow.
Although I have been very unimpressed by the terrible corporate comms on this matter (though it was probably wishful thinking to even consider that corporate comms would be a priority for ADM) I am happy that it would appear that my worries were unfounded and ADM do still own their share of the rights to Barracuda and the rest of OML141.
There is no way that ADM could put out annual accounts reflecting their ownership of this asset if the ownership was not true and they would have had to release an RNS reflecting any change in ownership this morning before the accounts come out tomorrow. The lack on any RNS notifying of a change leads me to believe that our Barracuda ownership will be reflected in tomorrow’s accounts and therefore it must be safe. Obviously we will only get confirmation of this when the accounts are released tomorrow but I think that it is 99.9% certain that OML141 will be there.
I am sorry if my posts have confused anybody but I have been deeply concerned that we were going to lose the only asset of any significant value that we own and this would see my investment go up in smoke. The worst part is that the company could have cleared this up in a two minute email but they just chose not to. If they engaged with corporate comms in a less ham-fisted manner then I am sure the potential of Barracuda and the rest of ONL141 would be more accurately reflected in our share price.
Although I have modelled Saltfleetby extensively, I have to say that that while I believe it is going to deliver millions in revenues to Angus in the short and medium term and will clearly drive the share price up and deliver ongoing cash flow for decades, I actually think that what has much more interesting potential for massive future growth is the geothermal side of the business. Cash income of £15-20 million per year is absolutely fantastic for the company but it is not necessarily life-changing for investors. The geothermal on the other hand could really make the share price increase exponentially.
Obviously there are no companies that are really doing completed geothermal in the UK at the moment but it is a market that has been taking off in the US over the last couple of years and the returns look like they could be company making. The really interesting part of it is if you put together “exploration” geothermal funded by debt and with the debt serviced by the gas revenue from Saltfleetby then Angus has the potential to budget for very significant development investment into this area. It should also be easy to get funding in the many tens of millions for this when they have proven cash-flow to service the debt. Also, I am pretty sure that there will be significant government grants in this area too as we are all pushed down Boris Johnson’s environmental pathway.
Anyway, that is where I think that Angus’ future could really lie and I think that Saltfleetby is just a stepping stone to the geothermal. Obviously, if any other Saltfleetby-like opportunities come up that couls also deliver £15-20 million per annum then the company should seize them with open arms, but in my opinion the long term future is clearly geothermal. I have been doing some research into this area on companies in the US and I will share my findings on here when they are finished.
Nonetheless, all of these calculations are based on two big suppositions. Firstly that the hedge is 70% of production not 70% of volume and secondly that the time for the side-track is indeed 16 weeks – and I know that there are people on here who disagree with both of these assumptions.
While there is little point in modelling every variable in this equation at the moment we can definitely make some logical assumptions from the data that we already have.
The first assumption that I am willing to make is that 16 weeks must be pretty much the maximum amount of time that the side-track could take to complete. This means that if it takes less time than this then there will be more revenue for Angus than I have modelled so far, so the income will be greater than currently estimated.
The second assumption is that if the 70% of the hedge is volumetric and not total production then it is unlikely to be for the whole 10mmscf/d. If it was then that would mean that Angus had no choice but to do the side-track immediately but then they would still deliver approximately £15 million of revenue from Saltfleetby in 2022. However, if the hedge was based at a volume of 5mmscf/d or 7mmscf/d then there would be a massive upside for Angus. At 5mmscf/d then only 35% of total production would be hedged and 65% could be sold on the open market , while at 7mmscf/d only 50% of total production would be hedged and 50% could be sold on the open market. With the direction that gas prices are going this is likely to have a significant benefit to Angus.
So, in short, whatever way I look at this my financial model tells me that we would be looking at a minimum of £10-15 million income from Saltfleetby in 2022 even if the side-track took 16 weeks to complete and the hedge was a volumetric one of 70% of 10mmscf/d. If the side-track takes less time and the hedge is volumetric at less than 10mmscf/d then there would be a significant increase in revenue.
I think that this is a good start on a guide estimation of what Saltfleetby can bring into Angus as revenue in 2022 but in order to make the model more accurate I will be writing to this month’s Q&A session to see if we can get accurate figures on how long the side-track will take to complete and also how the hedge works – whether it is a volumetric or not and, if so, what the volume is based on.
I do not think that the issue with the side-track is anywhere near as important as some seem to think that it is. The key element is clearly to make as much money as possible over the course of the year, whether that is before or after the side-track. To try and get clarity on what this would mean I have modelled the revenue that
If Angus stopped production after June and only then carried out the work on the side-track then even if no gas production was possible while it was happening and it took the full 16 week timescale which has been claimed on these boards then I cannot see it as being a major issue.
The company would already have banked £8.6 million for the 4.5 months of production before they shut down – as per the figures that I put in my previous post.
If they stopped producing for July- October then they would presumably have to make good on the profits that the hedge provider would otherwise have made.
Working on the same costings from before where the gas price is 87.23p per therm then the company that provided the hedge would technically miss out on an income of 44.23p per therm during this period (the 87.23p sale price minus the 43p price guaranteed to Angus). This would mean that they missed out on approx. £750,000 per month in revenue for the four months that there was no production. This totals £3 million.
Since Angus had already made £8.6 million from production from February through to June then they would simply pay the hedge provider the £3 million out of the £8.6 million that they had already made and be £5.6 million up. Add in the fact that there would then be production for November and December at extremely high gas rates as well as 10mmscf/d production levels and they would probably be looking at a total of about £10 million for the year.
If Angus did the side-track immediately in February and only commenced gas production in June then they would have the advantage of producing 10mmscf/d after the side-track and would bank £2.8 million for June (before the hedge) and £1.8 million each month from July to October, totalling £10 million in revenue by the end of October. Add in the additional revenue for November and December at extremely high gas rates as well as 10mmscf/d production levels and they would probably be looking at a total of about £15 million for the year.
So actually by these calculations it would appear to be more advantageous for Angus to drill the side-track straight away as the extra revenue that would come in from 10mmscf/d production would counteract the fact that 70% of this production would only bring in 43p of income due to the hedge.
Obviously, this is all based on 5mmscf/d and the company have stated that production even without the sidetrack will exceed this. If it goes up to 7.5mmscf/d then the profit on site goes up to nearly £17 million between Feb-September and even if the naysayers are right and it goes down to 2.5mmscf/d then it still makes almost £6 million profit between Feb-September and there are still three months left of the year where the gas price is likely to go back up to where it is today and increase profits significantly.
The key point of all of this really is that whatever figures you use (high or low) we are all simply arguing about how much money Saltfleetby will make and how quickly. This is not exploration where we might not find anything or first production where the reservoir might not flow – we know the gas is there and we know it is going to come out. It is just a case of how quickly it comes and what the gas price is.
If I had to guess personally then I would go for the middle figure of 5mmscf/d but that is just because it seems sensible to me to go for something average and hope for a better upside – but even the “bad” production figures deliver the company a lot of money.
The absolute worst case production figures of 2.5mmscf/d deliver a profit of £8 million per annum (pro-rata and without putting any uplift on the winter 2022 prices).
The sensible production figures of 5mmscf/d deliver a profit of £12.5 million
The very high production figures of 7.5 mmscf/d (without sidetrack) deliver a profit of around £22 million.
As per the Competent Persons Report that Angus commissioned the company are due to produce 5 million scfs per day without having any need to drill a sidetrack. In the Q&A of the website they confirmed that it will exceed 5mmscf/d. I guess that this means it could be anything up to 7 or 8 to begin with but to keep things conservative we will stick with the 5 that both the company and the CPR have assured we will get. We will also assume a first gas date of February as Angus have stated in their 11th August RNS. Again, to be conservative we will say that this is half way through February and not February 1st.
5mmscf/d equates to 1.6 million therms per month.
The current prices for gas futures were updated the other day on www.theice.com
Feb 2022 – 189.02 pence per therm
March- 172.5 pence per therm
April – 100 pence per therm
May & June – 87.5 pence per therm
On this basis Angus will have
Feb 2022 – (half month) = 800,000 therms x 189.02 pence per therm = £ 1,512,160 income
March 2022 – 1.6 million x 172.5 pence per therm = £2,760,000 income
April 2022 - 1.6 million x 100 pence per therm = £1,600,000 income
May 2022 - 1.6 million x 87.5 pence per therm = £1,400,000 income
June 2022 - 1.6 million x 87.5 pence per therm = £1,400,000 income
Total for the 4.5 month period £8,672,160
After June the hedge will then kick in and the value to Angus of most of the production will decline significantly. The futures prices for July / Aug / Sept are set at 87.23 pence per therm currently and assuming that they stay this way then the revenue would look like this.
The gas allocated to the hedge would be 70% of 1.6 million therms = 1,120,000 therms
The gas that was free to sell to market would be 30% of 1.6 million therms = 480,000 therms
The revenue generated would be:
July-September 2022 – At 75p per therm the hedged 70% would generate £481,600 per month and the unhedged 30% would generate £418,704 per month. The total revenue over the three months would be £2.7 million.
If you look at the monthly operating costs, (that can be seen on page 47 of the CPR) the you can see that the annual opex for the fixed opex is £1.39 million and the G&A is £520,000 = £1.9 million. This gives a monthly opex of just £160,000. So in the 7.5 months that I have given figures for here the company will have generated £11.3 million in cash with total opex of £1.2 million giving a total profit on the site of £10.1 million.
This is even with the hedge in place, and without drilling the sidetrack. This means that when you include the end of next year and the annual winter uplift then Angus will have generated enough money to pay off the loan even without the sidetrack and even with the hedge in place.
Those responsible for the hedge would get the gas that they need to make profit and there would be plenty of cash to pay off the debts.
I very much disagree with those of you who have posted that things are ok here and the idea that the reply from ADM was written by "someone who confused themselves" is simply clutching at straws. I still maintain that the company are being deliberately misleading. They answered my original emails in a very evasive way and then when I asked them direct questions they simply stopped replying at all.
As I have said on numerous occasions here, I think that there is some real skullduggery going on behind the scenes here. I want to know why NHNL are described on their website as being "100% Nigerian owned" but are described in ADM's RNS as being a subsidiary of KOHN. I believe that the truth of the matter is that NHNL are NOT a subsidiary of ADM and this is why the company have not answered my question about the ownership of NHNL.
Anyway, I have today written to NHNL asking them if they are a subsidiary of KOHN. It is a simple question and I hope to get a straightforward answer. I will let you know if I receive one.