Share Talk highlight Oil & Gas AIM-listed companies: Part 2 –  Angus Energy PLC (AIM:ANGS)

 

Today Share Talk re-visit Angus Energy PLC (AIM:ANGS) who we covered in Part- 1 5 August 2017.

With investors looking for a quick buck these days. It is achievable if you do your own due diligence, don’t follow the herd and don’t listen to the noise across social media. My personal experiences investing over the years, if it’s unloved – but the fundamentals add up, the good management team in place, assets – cash positive with a structured road map, sit up and pay attention.

In Ppart-1 we covered Angus Energy PLC, today we take a look at Angus Energy PLC (AIM:ANGS) from the IPO to the present and what could the future hold.

Chart and a small over view of the company from Zak Mir 

Angus Energy PLC (AIM:ANGS)

 

We have covered ANGS on Share Talk on numerous occasions, highlighting the IPO launch back in November 2016 and what progress the company has made to date.  Personally, I have taken a keen interest in oil play’s over the years and the Horse Hill story has been sheer drama, politics, hype, blood, sweat and tears for a few. We will cover the history behind horse hill, Angus Energy’s involvement as founders and the true prize that lay less than five miles to the southeast ‘Brockham’.

For our reader who is not familiar with Angus Energy,  they are an independent onshore oil and gas development company UK-based. Angus Energy holds a 50% interest in the Lidsey licence PL 241 and a 40% working interest in the Lidsey-2 well.  Angus Energy’s operated production fields provide conventional, low-risk exploration production opportunities that are cash flow efficient. Angus Energy owns and operates conventional production fields in Brockham and Lidsey.

 IPO presentation brochure.

[idz_button color=”orange” size=”large” label=”Angus Energy IPO Presentation” icon=”” link=”/oilandgas/angus-energy/0/” target=”_blank” type=”square_shape” class=””]

Admission and First Day of Dealings

Angus Energy and its subsidiaries (together the “Group”) operate a UK onshore focused oil and gas business with majority interests in two production oil fields in the UK Weald Basin in southern England with development and exploration upside. The Group is an OGA approved operator and owns a 55% interest in the Brockham oil field in Surrey in PL235 and a 50% interest in the Lidsey oil field located in West Sussex in PL241. The Weald Basin is a proven petroleum system with several commercial producing fields and discoveries.

The Company raised £3.5 million (gross) in conjunction with Admission to fund its share of the costs of phased development programmes on the Brockham and Lidsey fields.

Further details can be found on the Company’s website www.angusenergy.co.uk

Summary of the placing: The placing raised £3.5 million (gross) at a price of 6 pence per ordinary share (the “Placing Price”) to fund its share of the costs of phased development programmes on the Brockham and Lidsey fields targeting the Portland Sandstone formations as well as, at Brockham, the extension into the lower Kimmeridge Limestone formation

The number of ordinary shares in issue immediately after admission will be 214,980,287 giving the Company a market capitalisation of £12.89 million at the Placing Price.
The placing raised £3.5 million (gross) at a price of 6 pence per ordinary share (the “Placing Price”) 14 November 2016

Jonathan Tidswell-Pretorius, Angus Energy’s Chairman, commented: “Today marks an important milestone in the development of Angus Energy. With existing cash resources and today’s placement proceeds, we now have sufficient funds to undertake the drilling programme at Brockham and Lidsey. Significantly, as an OGA approved operator and with two production licences for these fields, we are able to undertake this programme with the expectation that the additional production can be bought on line shortly after drilling is completed. We look forward to updating the market as the results of this drilling become available.”

On the same day, another RNS landed that told the world ANGS intentions from the first day of listing that they meant business.

Environment Agency permission received for drilling of the Brockham side-track

Received permission from the Environment Agency to drill the BR-X4Z sidetrack at its Brockham production oil field, license PL 235. The Group will now seek the Health and Safety Executive (“HSE”) and Oil and Gas Authority (“OGA”) permissions needed to drill the BR-X4Z sidetrack at Brockham and will update the market in due course.

Angus Energy was looking to expand their existing wells at Brockham, near Dorking, in Surrey, and in the Lidsey oil field near Bognor Regis, in West Sussex. Now they have the chance perform a side-track at Brockham-1 and drill a new horizontal well on the other licence, Lidsey, in West Sussex.

In drilling the side-track at Brockham, Angus will drill the Portland sandstone zone, host to a known oil play that is already generating 35 barrels a day. The Kimmeridge is the main target to prove on Brockham if the geological structure replicates the well at Gatwick (Horse Hill-1) that produced 1,688 barrels a day.

Angus Energy: Major shareholders

Angus (14 November 2016) has 150.0 million shares in issue, all of which are held by Directors of the company and associated individuals and entities: The major shareholders are as follows:

Shareholder Interest (%)
Knowe Properties ltd 22.2%
Jonathan Tidswell 19.2%
JDA Consulting ltd 14.6%
Paul Vonk 7.3%
Others 36.7%
Total 100.0%
Source: Angus Energy

In December 2016 the news started to flow with the share price creeping up from the 6p IPO launch with the SP sitting at 8p when the markets close 14 December 2016.

On 15 December 2016 Angus receives OGA approval and commences operations at the onshore Brockham oil field.

Angus Energy announces that it had received the final approvals required from the UK Government Oil and Gas Authority’s (“OGA”) and the Health and Safety Executive (“HSE”) to commence the work on the BR-X4Z well on UK onshore Production Licence PL 235. The rig is now on site and has started work on the approved program.

Interest in Brockham Oil Field (PL 235): The Group owns a 55% direct interest in the Brockham Oil Field which is held under UK Production Licence PL 235.

 

The following day, 16 December 2016 Angus RNS stated an Increases interest in Brockham oil field to 65% and acquires Lidsey Option

Angus Energy plc. (the “Group”) is pleased to announce that it has today signed a sale agreement with Terrain Energy Ltd. (“Terrain”) to acquire a 10% interest in the Brockham oil field (PL 235, “the License”) increasing the Group’s interest in the License from 55% to 65% in exchange for a cash payment of £100,000, relinquishment of Terrain’s existing debt to Angus Energy’s wholly owned subsidiary Angus Energy Weald Basin No.3 Limited (“AWB3” or the “Operator), at completion and the carry of Terrain’s remaining 10% interest share of the upcoming well costs at Brockham. In addition, for the 12 months following this agreement, Terrain has agreed to vote in-line with the Group on matters which under the JOA are to be submitted to a vote, or require approval of all Participants in the Licence. The transfer of this interest in the Licence is subject to approval by the licence parties and the OGA, such approval being expected early 2017.    

On the same day, Share Talk put out an article that stated the Brockham side track well – commence work on the BR-X4Z well  along with the other two companies involved in the Weald Basin: 

Image result for Doriemus PLC

Doriemus PLC (LON:DOR) Doriemus owns a 10% direct interest in the Brockham Oil Field which is held under UK Production Licence PL 235. 

Alba Min Res PLC (LON:ALBA), Brockham Oil Field (“Brockham”), in which Alba is earning a 5 per cent interest.  Brockham is located near Gatwick Airport and is only a few miles from Alba’s other UK onshore oil and gas interests at Horse Hill.

Image result for Doriemus PLC

The Brockham oil field

The Brockham oil field is located on licence PL 235 in Surrey which covers 8.9 km2 (3.44 square miles). The field was discovered by BP in 1987 with the drilling of the Brockham-1 well. Angus Energy currently holds a 55% interest and operatorship of the licence. The field has been shut in since late February 2016 in order for the completion of surface upgrades to make the production facility compliant with future regulatory requirements and to prepare the site for future drilling activity. Prior to shut-in, the field was producing approximately 20 bopd from the Brockham-2Y well over 2015.

The field produces from a historically drilled off-structure well where production is realised via an acidized pathway through the overlying limestone reservoir seal. This suboptimum solution is the primary rationale behind Angus’ strategy to drill a side-track well to the BR-X4 well to target the crest of the Portland Sandstone reservoir and access significantly greater volumes of oil. This well will be termed BR-X4Z.

The field has been shut in since late February 2016 in order for the completion of surface upgrades to make the production facility compliant with future regulatory requirements and to prepare the site for future drilling activity. Prior to shut-in, the field was producing approximately 20 bopd from the Brockham-2Y well over 2015. The field produces from a historically drilled off-structure well where production is realised via an acidized pathway through the overlying limestone reservoir seal.

This suboptimum solution is the primary rationale behind Angus’ strategy to drill a side-track well to the BR-X4 well to target the crest of the Portland Sandstone reservoir and access significantly greater volumes of oil. This well will be termed BR-X4Z.

Prior to shut-in, the field was producing approximately 20 bopd from the Brockham-2Y well over 2015. The field produces from a historically drilled off-structure well where production is realised via an acidized pathway through the overlying limestone reservoir seal. This suboptimum solution is the primary rationale behind Angus’ strategy to drill a side-track well to the BR-X4 well to target the crest of the Portland Sandstone reservoir and access significantly greater volumes of oil. This well will be termed BR-X4Z.

Current equity partners in licence PL 235

Company Interest
Angus Energy (operator) 55%
Terrain Energy 20%
Doriemus 10%
Brockham Capital Ltd (BCL) 10%
Alba Minerals 5%
Source: Angus Energy

With the two market update’s the SP started to pick up with volume increasing, by 19 December 2016 the SP had hit a year high of 12.25p, not a bad return from the IPO placing of 6p the previous month, holders had now bagged a 100% return in such a short time frame. Would 2017 offer the same excitement, if only investors had a crystal ball!

 

30 December 2016 Annual Report and Accounts for the year ended 30 September 2016 – Angus Energy plc (the “Group”) announced its audited accounts for the year ended 30 September 2016.

A full copy of the Company’s audited annual accounts for the year ended 30 September 2016 (“the Accounts”) is being posted to all shareholders today and is also available on the Company’s website, http://www.angusenergy.co.uk 

Image result for Doriemus PLC

At the moment, there are 13 producing sites in the Weald Basin, but some are almost 30 years old and many reservoirs are declining. However, the last decade has seen a considerable resurgence of interest in the area, with some very interesting well results. “More than 70% of the wells in the Weald Basin, most of which were drilled between the 1960s and early ’80s, have encountered hydrocarbon shows,” says Chris Pullan, a consultant with Magellan Petroleum.

For those who enjoy reading, here is an in-depth 89-page document from The Department of Energy and Climate Change: The Jurassic shales of the Weald Basin: Geology and shale oil and shale gas resource estimationRelated image

 

Let’s push on – 2017 calling!

January

January 2017 would have a quiet start to the year with the SP finding a support base of 10p, Jan 10 news arrived with Exercise of Options and Issue of Equity, the SP push up to around 13.75 by Jan 12.

On the January 18, Angus announced Brockham Field Update: Angus Energy plc. (the “Group”) is pleased to confirm that, further to the 15 December 2016 announcement, site upgrade works to the production bunds are now complete and well intervention continues on site at Brockham.

Share Talk published this RNS and we took the opportunity to answer questions about an article we had published on December 19, 2016: Read more here

Brockham well commences- RIG working on the BR-X4Z well

 

The month of January would deliver another Brockham Field Update: Work completed and hydrocarbons encountered in all targeted zones announced on January 26. As we moved into February 2017 the SP was hovering around 13.93p February 3. 

February

February 6 Placing and Acquisition of interest in PEDL143 was released: The Acquisition  Angus Energy  has entered into an agreement to acquire a 12.5% economic interest in PEDL143 through the immediate payment of certain historic costs incurred by the Operator along with 25% of the costs of the Holmwood-1 exploration well up to a gross well cost of £3.2 million (£800,000 net cost to Angus), and certain further contingent costs as further set out: The Company will participate in the drilling of the planned Holmwood-1 exploration well, which obtained planning consent during 2015, that will test the Holmwood Prospect’s identified Portlandian and Corallian sandstone reservoirs and the same Jurassic section that tested oil from Kimmeridge limestones at Horse Hill.The Placing: The Placing raised gross proceeds of £2,000,000 at a price of 11p per Placing Share conditional only on Admission

We see the first mention of the NEX Exchange in February Application to NEX Exchange Growth Market.

Considering that would be the last news release for the month, the SP hit a new high of 14.13p February 23.

March

The news flow was unstoppable in the month of March with the following updates, yet by the end of the month, the SP would tumble to 9.54p.

The month would start with Notice of AGM and concluded with Result of AGM it is the news wedged in between that we will look at more closely.

March 3 Brockham Field Update: Following the extensive analysis of the BR-X4Z sidetrack well, the Company’s intention is to bring the Kimmeridge into production at its existing Brockham production facility as soon as the necessary OGA approval is in place

Brockham lorry 2 Brockham Protection Camp

Photo: Brockham Protection Camp
Opponents of onshore oil and gas developments were suspicious about operations at the Brockham site in the green belt near Dorking. There were reports that 180 sections of pipe 10m long had been delivered to the site, along with drill bits.

Council “extremely disappointed over Brockham well drilled without permission”

March 10 will be a date both Angus Energy & Surrey County Council won’t forget, all hell broke loose when Surrey County Council released this statement: “We were extremely disappointed to find out that Angus Energy has acted without planning permission and contrary to our advice and guidance so we are meeting with them this week as a matter of urgency to resolve this.”

March 14 OGA Approval of Acquisition of Interest in PEDL143 incorporating the Holmwood Prospect & March 22 Update on NEX Exchange Bond Issue

April 

Only two RNS updates appeared in April, first RNS landed on April 18 Update on Lidsey Oil Field: West Sussex County Council have now approved details under the provision of the planning consent for the proposed drilling of the second well, the new Lidsey-X2 onshore production well at the Lidsey Oil Field (PL241) near Bognor Regis in the south of the United Kingdom. 

April 25 Update on NEX Exchange Bond Issue

May 

May was another month that Angus proved to the markets and share holders they meant business, May 2 EA permission to drill at Lidsey-X2 well received, then on the 4th Exercises Lidsey Option to increases interest in Lidsey Oil Field to 60%.

Next was Alba RNS May 11 Alba completes acquisition of interest in Brockham: Farm-Out Agreement between Alba and Angus Energy Weald Basin No 3 Limited (“Angus”), and following receipt of the consent of the Oil and Gas Authority (“OGA”), the Brockham partners have now completed the assignment from Angus to Alba of a 5 per cent participating interest in Production Licence (PL) 235 comprising the Brockham Oil Field.  Alba is now, therefore, a licensee under PL 235.

May 11 Brockham Oil Field FDP Addendum submitted: This answered the questions raised by Surrey County Council over planning permission: The various press reports have created unwarranted and groundless speculation pertaining to the BR-X4Z sidetrack, the legal status of said sidetrack and the future of production from the Brockham Oil Field. For the avoidance of any doubt following the erroneous reports, the Company has taken the precaution of obtaining additional legal review from Queen’s Counsel.

Another Nex Exchange update release landed May 25 Update on Update on NEX Exchange Bond Issue this would finish the month with the SP at the high point of 12.25p May 25. It would be later June before the next news update arrived and the SP would flat line to 10.50p.

June

If you have stuck with this blog you are a serious reader, l am glad we cut this into two part, just stick with me because things are about to get very interesting! I never give out advice, apart from why would anyone listen to a total stranger?

30 Jun 2017 7:00 am RNS Factsheet Angus Energy PLC (ANGS) Half-year Report
29 Jun 2017 12:00 pm RNS Factsheet Angus Energy PLC (ANGS) Update on NEX Exchange Bond Issue
28 Jun 2017 2:13 pm RNS Factsheet Angus Energy PLC (ANGS) Investor Call
26 Jun 2017 12:00 pm RNS Factsheet Angus Energy PLC (ANGS) Brockham Field Update

Angus Energy plc (AIM: ANGS) News is coming thick & fast in June

This was a strange month with all the news updates landing in the last week with the SP hit a low point mid-June 14, 9.88p. With the June 26 RNS, the SP was at 12.75p and looked to be heading north as volume picked up.

The investor’s update was an excellent idea from the company and it is a shame other listed companies don’t build a better relationship with share holders. I am sure a few reader know the companies they invest in that stay silent yet put their hand out for placings, strange old game on AIM.

July 

27 Jul 2017 12:00 pm RNS Factsheet Angus Energy PLC (ANGS) Update on NEX Exchange Bond Issue
25 Jul 2017 9:41 am RNS Factsheet Angus Energy PLC (ANGS) Exercise of Options, PDMR Notification and TVR
12 Jul 2017 10:15 am RNS Factsheet Angus Energy PLC (ANGS) Investor Call
07 Jul 2017 8:41 am RNS Factsheet Angus Energy PLC (ANGS) Issue of Equity
05 Jul 2017 9:06 am RNS Factsheet Angus Energy PLC (ANGS) Second Price Monitoring Extn
9:01 am RNS Factsheet Angus Energy PLC (ANGS) Price Monitoring Extension

July 7 Issue of EquityAngus Energy issued and allotted 1,916,667 new Ordinary Shares of £0.002 each (the “Ordinary Shares”) in the Company following receipt of an exercise notice in respect of 1,916,667 Broker Warrants issued at Admission at an exercise price of 6p per warrant. An application is being made for the new ordinary shares to be admitted to trading on AIM with admission to take place on or around 13 July 2017. The new ordinary Shares will rank pari passu in all respects with the existing ordinary shares in Angus Energy.

uk.finance.yahoo.com/chart/ANGS.L

July 7 the SP was around 22.88p and would hit 26.88p on July 13. The next step up on from July 19 would catch a lot of day traders, investors out with the share price hitting a year high to date, June 24 – 33.50p.

The Company has raised £3.5 million (gross) (“AIM Proceeds”) in conjunction with its admission to trading on the AIM market of the London Stock Exchange plc of its ordinary shares on 14 November 2016 (“AIM Admission”), and it will use these proceeds to fund its share of the costs of phased development programmes on the Brockham and Lidsey oil fields.

Since AIM Admission, the Company has raised a further £2 million (gross) by way of a private placing of 18,181,818 of its ordinary shares in conjunction with the acquisition ofa 12.5% economic interest in the Holmwood Licence (located in PEDL143 in Surrey) from Europa Oil and Gas Limited (further details of which are contained in the announcement published by the Company on 6 February 2017).

The Company is proposing to issue up to 3,500,000 sterling denominated secured bonds of denomination £1, with a maturity date of 30 June 2022 (“Bonds”). The Bonds will bear interest at the rate of 8.5 per cent. per annum, payable quarterly in arrears.

Angus Energy PLC (AIM:ANGS) Update on NEX Exchange Bond Issue Was the last RNS release of the month and one that looks to be a serious game changer for the company and investors alike. The market would see this as move forward surely as a company that doesn’t want to dilute share holder value, rather the opposite with an offer of secured bonds with a rate of return -8.5% interest per annum being paid quarterly. We see a company that is planning for the future months, years ahead and this should be well received by the city institutional investor houses.

August

We move into August and all Angus shareholders were waiting for the news update on Oil and Gas Authority (“OGA”) giving permission to drill and produce the Lidsey-X2 horizontal production well at its license PL 241.

The update was announced to the markets on August 9  OGA approval received regarding Lidsey-X2 well

The share price had slid to a low point of just under 22p August 8, when this news update arrived the following day at 14.20pm GMT, the share price went mad, hitting a high of 31.50 with in less than an hour. The only sting in the tail would be the delay of sourcing the rig.

The Company notes its timeline for Lidsey-X2 to re-commence production from Lidsey may now be delayed by a few weeks due to the extension of BDF Rig 28’s current work obligations for an unrelated third party. These modified operations have postponed the equipment mobilisation date to the Lidsey oil field.  The delay will not have any material impact on Angus Energy. Angus expects an operating window of approximately six weeks from the rescheduled mobilisation date, once confirmed, to actual production from Lidsey-X2. A further announcement will be made in due course.

Conclusion 

I won’t go through the full hit list as l am sure this blog is long enough, but a few quick pointers you should consider when you look ay Angus Energy and what the future may hold for them.

I see a good management team who have a proven track record as founders of Horse Hill Development Ltd. (HHDL). Seven years ago they qualify as a UK O&G Operator (this was a major step for the company as a private operator) and in 2012 Brockham and Lidsey Oil Field Acquisition. Operators, holders in Horse Hill that put the Weald Basin on the map to investors, public and the government of the day.

Back to today!

Lidsey-2:  OGA approval received regarding Lidsey-X2 well : We see a slight delay in the BDF Rig 28 arriving on site, but in the Oil & Gas industry that is all part and parcel of the hydrocarbon game. You are looking at cheap production costs, land based, infrastructure in place and easy accessibility for equipment and personnel. With a low OPEX of $14.4/bbl (see below) and the well in production, Angus with planning permission in place are in strong cash flow position that can only help future growth of the asset, company.

50%interest * operated by Angus Energy, Gross mid-case: 9.7 MMbbl of oil in place, High-quality oil (38 ◦ API), Second well-planned lifting production to ~ 300 bopd

Lidsey-2 horizontal producer to maximise recovery from producing reservoir
 Development well, no exploration risk
 Low oil price environment reduced CAPEX to previous estimates
 Low OPEX for field production (P50 first 3yr avg. of $14.4/bbl)
 Planning permits in place for new horizontal well

Info: www.angusenergy.co.uk

NEX Exchange: 3,500,000 Sterling denominated secured bonds of denomination £1, with a maturity date of 30 June 2022 (“Bonds”). The Bonds will bear interest at the rate of 8.5 per cent. per annum, payable quarterly in arrears. All l see is positive’s here because once again Angus Energy is positioning themselves to be in a very strong flow cash position and shouldn’t have to dilute share value in having to have a placing anytime soon. The principle applies’s that cash is king, for me, this is a company that has a road map and wants to consolidate its business model in a competitive market for future growth.

One Question no one is asking? Octopus drill,  multi-well pad drilling, call it what you may but no one is answering the question

octopus

Copyright:  Brian Hicks

Now you could apply this drilling technique to Holmwood with Europa Oil & Gas (Holdings) PLC which ANGS have a similar interest percentage, stake. Take this mode of thought a step further and apply this idea to Brockham, you really could drill into Horse Hill next door. Schlumberger is one of the world leaders in this technology, so what is to stop companies gaining assess to other competitors reservoirs, its a question worth asking?

Normally, for a company to drill just four wells using traditional horizontal drilling, it would need four different pads or land sites. But the Octopus (or multi-well pad) allows for those same four wells (and as many as 18 wells, in fact) to be drilled from the one single site. So one pad equals between 4 and 18 wells. Even more impressive: As many as 2,000 acres of shale reservoir can be tapped from one single drill pad on just 7 acres of land — and recover oil and gas 8x faster than traditional horizontal drilling.

Thanks for reading.

@ABMckinley

I would like to take the opportunity to thank Ray Hollister @hollister_ray for sharing his research notes and unearthing some great info.

Disclaimer: I receive no personal payment’s nor does Share Talk receive any monies, stock for writing these blogs. These are my own personal view’s expressed in these blog’s and should be treated as such.

Useful links:

Oil and Gas Authority Open Data

www.gov.uk/weald-basin-jurassic-shale-reports

www.gov.uk/government/JurassicWealdShale

Linking Shareholders and Executives :Share Talk

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