Member Info for Peterashbeck

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.

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".