Member Info for petroleum1

IMO..... The existing two gas wells belong to Mercuria for the following 3 years. Lugan wants to
drill a horizontal well, expensive and twice as productive as a vertical well, for the new combined
entity ANGS+SEL and hence the massive share dilution. He could not risk waiting for the field revenues to enable him to do this.

I posted on 12th Apr 2022 (Post no 146 ) the following:

“I re-calculated the Net Present Value (NPV) for Saltfleetby reservoir, based on gas price of £2.24/therm, to be £250m. That will make the interest of ANGS and AAOG to be £127.5m and £122.5m respctively. To me it seems that the AAOG £42m tax allowance can only be used efficiently if applied on both ANGS and AAOG"

With gas price now below £2/therm the above conclusion is more valid.

https://www.angusenergy.co.uk/wp-content/uploads/2021/10/Angus-Energy-Saltfleetby-Reserves-Valuation-Report.pdf

This CPR Dated 22nd Oct 2021 was posted yesterday by oselot on Angus bulletin board..
In page 7 they are talking about the sidetrack to be horizontal. This will increase the chances of success for the well to be a producer even if poor reservoir quality is encountered due to hetrogeniety .
Also they are mentioning “Condensate banking may increase the skin (excess pressure drop) of the wells, reducing the gas productivity index …”
and hence the sidetrack.
I really cannot see how they will fail given that they have 17 years of production history in SFB.
I am trying to determine whether I should bail out after getting my money back or stay on for the long run.
Does anyone know if SEM only own 49% of SFB or share in the ownership of other assets with Angus.

I bought into AAOG at 10p. I averaged down to 3p while going down before going bust. Now I am waiting to get my money back.
Also I bought into RMP(Red emperor) which went bust after drilling a dry hole in Greenland. It re-emerged again as FME. So far I am got back 1/3rd of my investment. I made a mistake by not averaging down .
I am watching the following AIM listed companies in case any of them fall in the above category.
UJO,JOG,MATD,88E,AMOI,ARG,AST,CCZ, EOG,I3E,IGAS,MSMN,PTAL,RBD,SDX, ZEN , RKH,RBD,NTOG,EOG,EME, CLON, AEX …etc

Averaging down will not work in the following cases:
-ANGS it is under loan and hedging obligations.
- COPLis also under loan obligatios
- PCI who was taken out by a major investor through a court case.
-Tuskar went bust as they did not have legal ownership of the field they worked on and their Nigerian partner pulled the mat from underneath their feet.
The answer to headline question Is:
Averaging down before going bust is a good trading pracise but also depends on circumstances of each individual case. Sharing detailed information about each case is vital.

offy prosser
I am 100% aware of that. We are alking about which company to average down. SEL and AAOG merger is a different subject.

There is no eason why this do not reappear in some forrm as it carries a lucrative £42m tax
alloance. I was invesred in RMP(Red Emperor) some two years ago and when it went bust after drilling a dry hole i Greenland it reappeared again as FME(Future Metals) in Australia. Although I am still 2/3rd down on my original investment but eventually I should get my investment back. I made an a mistake by not averaging down like I did in AAOG.
One should not do an average down on companies that are under debt situation like ANGS or COPL as these will end up in debtor pocket.I think a meger with SEL is an exellent choice and the reason for the lack of communications with management is sensitivity nature of the whole issue.

Can one say the following:
SEL NPV= £122.5m
AAOG shares in issue = 439,958,935
If AAOG change name to SEL, the resultant company expected share price will be £122.5/439,958,935 = 28p

I do not think that the sidetrack is intended to find an undepleted compartment in the reservoir. I think it is intended to complement the existing production from the two wells as their productivities are constrained by condensate build up at sand face. Looking at the plot of pressure vs cumulative production for the whole reservior
https://www.angusenergy.co.uk/wp-content/uploads/2019/12/Saltfleetby-Gas-Field-Dec19.pdf
it shows the various parts of the field are in communication. Also Angus reported slight pressure build up during prolonged shut down.

As I understand it if ANGS gets £7m of unhedged production during June SEL also get a similar amount during the same month. The same thing can be said for future hedged production for both companies. It seem to me that the bes tway to protect against Mercura taking over is to combine the two companes(ANGS and SEL) in one enrity and if you add AAOG as well that will annul the royalties payments as well. After all both companies will be finished if Mercura take over.

I re-calculated the Net Present Value (NPV) for Saltfleetby reservoir, based on gas price of £2.24/therm, to be £250m. That will make the interest of ANGS and AAOG to be £127.5m and £122.5m respctively. To me it seems that the AAOG £42m tax allowance can only be used efficiently if applied on both ANGS and AAOG.

Angus said today:
"Anticipates wet commissioning to begin at or around May 15 and expects it to last around two weeks. Continues to target first gas by June 1, allowing for one full month of unhedged production."
This could be the reason for the sale termination.

OofyProsser
I took your advice and not bought into ANGS. But if I was to gamble between a newly drilled well
becomming productive and not dry and ANGS finish on time I wil bet on the latter.

Every one is talking about first gas in April. If they need more money to acheive that there will not be a shortage of lenders with the gas price so high. Lucan said they will be debt free by end of year. There is no need to sell the company.

ANGS keeps talking about being taken over by other companies. It will be better for them to takeover AAOG and stop all this nonsense of takeover by SOU or any other.

How about SEL reverse takeover of AAOG? Problem solved and SEL will be richer by £42m. This is more than market capitalisaton of ANGS by 2.5 times.

Those people in the data room as well as SOU are taking their time to make an offer for Angus.
Perhaps they are waiting to see if Angus makes it to the finishing line on time. I will also wait and see what wil happen next.

Also the last RNS said Angus will be making £1.5m/month from the unhedged gas only as they are expecting a flowrate of 5 mmscf/d. They can drill a new well (onshore)anywhere throughout the field. I am expecting that the flowrate is higher than 5 mmscf/d.

Hedge fund people are traders. They cannot develope the field if they decide to take it over from Angus. It will be in their interest to let the hedged gas flow and make a fortune ie let Angus continue their work.

Irishmouse
The way I see it is a win win situation for AAOG. AAOG wil change name for SEL who will be richer by £42m overnight. As SEL own 49% of Saltfleetby field they will get revenue from the gas flow irrespective who will own the 51% share of Angus share. It has been put forward that SEL is a gurantoor to SEL operation but that liability surely will cease to exist if the hedge fund take over Angus for failing to meet obligation.
What is more important to me is now is if I should buy in Angus and when.
Where is Skittish? He said he will come back when things become clear.

Iam bot sure if this is also concluded on Angus board.
George Lucan said in Today's RNS:

"In fact, gross production, of which we have a 51% share, solely from the existing wells and which is wholly unhedged for the month of June, is expected to yield 1.5 million therms or gross revenue of £7.2 million at today's forward price for that month alone"

1.5 million therm for June.
Therm per day = 1.5m/30 = 50,000 therm/day
Each therm s equivalent to 100 scf.
Therefore gas flow rate for the unhedged gas volume 50,000 x 100 = 5 mmscf/d
As the hedged gas flowrate 3.34 mmscf/d the total gas flowrate is 5+3.34 = 8.34 mmscf/d

So a flow rate of about 8 mmscf/d is expected for Saltfleetby reservoir is expected by the management.