Angus Energy plc (AIM: ANGS) is pleased to share the updated Competent Persons Report (“CPR”) for the Saltfleetby Gas Field (“SGF”) which reflects the higher revenues expected from the field. The Full Report is available for download in the Presentations section of the Company’s website.
The CPR, performed by Oilfield International Limited, gives the net present value of the cash flows from the SGF, including the impact from the revised capex, the loan facility debt service costs, the associated royalties and the mandatory hedging. Oilfield International Limited has used a conservative discount rate of 10%. The previous February 2020 report values in parentheses, presenting the values attributable to Angus:
· A conservative case, or P90, NPV10 of £25.4 million (previously £16.7 million)
· A mid-case, or P50, NPV10 of £38.5 million (previously £25.2 million)
Alternatively expressed as estimates of net future cashflows, again after all taxes, but without discounting, Angus’ 51% interest can be summarised as follows
· A conservative or P90 sum of future cashflows to Angus of £31.7 million (previously £21.5 million)
· A mid-case, or P50, sum of future cashflows to Angus of £55.9 million (previously £36.3 million)
In summary the Report estimates production giving rise to gross field revenues, before costs etc on a mid-case basis of £230 million (previously £141 million) of which Angus’s share is 51%. This approximates to a gas price of 64p/therm being a mix of the actual volumes already hedged at 43p/therm and the remaining unhedged volumes accorded prices derived from the quoted and traded NBP forward curve to December 2026 and thereafter escalated by 1.5% per annum. The gross volume of reported Gas Reserves is unchanged.
Update on Timing of Side-Track and Facilities
In the light of an extraordinary global logistical disruptions, the CPR makes a conservative assumption of 15 March 2021 First Gas date, but the Company continues to pursue its schedule of commissioning and First Gas during February 2021.
In addition, the CPR notes, for similar reasons, that there exists uncertainty about the precise start date for the side-track well. This uncertainty is due to one major piece of rig equipment being sourced from overseas and currently awaiting shipping. All suppliers have been advised of this potential bottleneck and the Company is evaluating the best management of the simultaneous operations of drilling concurrent with construction of parts of the process facilities. We do not presently anticipate any overrun into the commissioning period but will plan for all eventualities.
The CPR also notes a 16% anticipated cost overrun on the side-track. Some of this is the result of rising material and logistics costs, recently advised to the Company. Additionally, Angus undertook a full third party reprocessing of the 3D seismic and has reinterpreted a limited block around the target well path.
Furthermore, conscious of the great importance of this operation to shareholders, we have engaged a group of supporting contractors to advise on each element of the drilling programme. They include a new Wells Manager, a mud and drilling fluid specialist, a rig evaluation specialist, the drilling engineering house, Netherlands based Wellspec, to advise on managed pressure environments, and a third party review of our drilling programme by renowned Aberdeen house, Norwell Engineering:
Moreover, the drilling programme has been reviewed by the senior lenders’ own upstream technical committee composed of a variety of industry professionals.
We aim to update shareholders during the course of November with a more defined and detailed timetable for both the side-track and commissioning schedule.
Brockham Licence PL235
The Company also takes this opportunity to update investors on its Brockham Licence, as follows. The Oil & Gas Authority have extended the current petroleum licence by five years until 28 October 2026. Currently the Company has issued notices to local residents in advance of the submission of a planning application to Surrey County Council to abandon the Kimmeridge layer at BRX4-Z and reperforate the Portland layer in order to increase production from the Portland reservoir. We continue to expect determination of our Environment Agency application to re-inject produced water during Q4 which, if granted, will also provide reservoir support to increase Portland production and reduce truck movements and the environmental cost of incinerating produced water off-site.
George Lucan, CEO, comments: “Obviously this Report is a solid validation of our efforts to restore this great onshore gas field to production with the help of our many UK based suppliers, advisors and contractors. Regardless of near-term fluctuations in the gas price, the higher forward gas price curve from mid 2022 onwards, which is reflected in this CPR valuation, is the result of structural gas supply-demand imbalances which, whilst only brought to light recently, are likely to favour producers for many years to come and highlight the national importance of this domestic gas supply.”
Qualified Person’s Statement:
Andrew Hollis, the Technical Director of the Company, who has over 40 years of relevant experience in the oil and gas industry, has approved the information contained in this announcement. Mr Hollis is a Fellow of the Geological Society and member of the Society of Petroleum Engineers.
Angus Energy Plc
Tel: +44 (0) 208 899 6380
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