Malcy’s Blog – Oil price, Angus Energy & finally

WTI $108.70 -$15.00, Brent $111.14 -$16.84, Diff -$2.44 -$1.84, NG $4.53 u/c, UKNG 350.1p -99.9p

By Malcolm Graham-Wood

Oil price

Oil finally fell sharply yesterday after talks of compromise re NATO membership gave credibility to a cease-fire but after this mornings talks have fallen apart.

Also, there have been some offers of increased oil production, notably OPEC where the UAE suggested that a case could be made for sidestepping the current agreement. As I wrote here earlier in the week it is OPEC  and mainly the KSA who can deliver the necessary millions of barrels that can help albeit only somewhat.

EIA inventory stats showed draws across the board, crude 1.9m b’s, gasoline 1.4m and distillates 5.2m…

Angus Energy

Angus Energy Plc

Update on Installation Schedule at Saltfleetby

Settlement of litigation and issue of equity

Strategic Review & Formal Sale Process (“FSP”)

Progress continues at the Company’s 51% owned Saltfleetby Gas Field on fabrication, testing, assembly and certification on each of the skids together with, where fully advised, estimated delivery dates to site.

Skid/Unit

Basc Fabrication Status

Blasting, Painting Assembly, Testing, Certification etc

Target Delivery Date

Metering Package

100% complete

Completed

Completed

Analysis Package

100% complete

Completed

Completed

Compressor Coolers

100% complete

Completed

Completed

Condensate Tanks

100% complete

Completed

Completed

Water Storage Tanks

100% complete

Completed

Completed

Flare Package

100% complete

On site, modifications, reassembly in situ in March

Completed

Fuel Gas Skid

100% complete

Completed

17 March

Flare Knock Out Skid

100% complete

Completed

18 March

1st compression (i.e pre side track)

Compressor:70%

Driver:  90%

Black build underway

31 March

Gas Engine Generator

100% complete

Re-assembly underway

4 April

Separator Vessel

Modifications 100%

Painting complete, awaiting reassembly

5 April

Passive Dehydration

>95% complete

Painting underway

Awaiting reassembly

8 April

Joule Thomson Skid

>95% complete

Pressure Testing on 18 March, Painting 31 March

27 April

Condensate Stabilisation Skid

>95% complete

Pressure Testing on 11 March, Painting 4 April

29 April

The heat exchangers referred to as a potential long lead item causing delay have now been secured and are being fitted to skids.  There are no other significant long lead items which will delay the fabrication schedule.

Civil engineering works continue apace.  Piling operations are complete.  Foundations and plinths for the pipe-rack are almost complete with pipes now being fitted to shoes and ancillary frames being fabricated.  Bases for the other skids are due to be poured over the coming weeks:  Flare base (18th March), Compressor Base (21st March), bunding for Separator (24nd) and Condensate Stabiliser (24th) Storage tank base (30th March).

As regards electrical installation, all cables and trays have been ordered and installation and cable pull will begin in late March/early April with connections made during April as skids arrive.  Pipe-work is about 15% complete with pipe now being set to racks.

Some dry commissioning, including hydrotesting and electrical and control circuit tests and verification, will take place before the arrival of the final skids at the end of April, allowing for a reasonably truncated commissioning process on what is actually a relatively simple arrangement of equipment with few moving parts outside of the combustion engines and compressors.

We are presently advising contractors of a spud date for the side track of during June 2022 to allow a few weeks of steady production prior to works.

Settlement of Litigation

Further to our announcement of 9 June 2021 the Company has reached a settlement agreement with a financial services provider (not being the Company’s broker or Nomad) with whom it has been in dispute relating to the Saltfleetby Loan Facility.  As part of this settlement agreement the Company has issued 39,200,000 ordinary shares (the “Shares”) of 0.002 pence each representing approximately 3% of the enlarged issued and allotted share capital of the Company.  The Board considers this settlement to be in the best interests of all shareholders as it will avoid further and considerable expenditures on legal costs and the burdensome call on management time at a critical juncture in the Company’s development.

Application will be made for the Shares to be admitted to trading on AIM (“Admission”) and it is expected that Admission will become effective on or around 16 March 2022.  The Shares will rank pari passu with the existing ordinary shares.  Following the issue of the Shares the Company will have 1,307,286,880 Ordinary Shares in issue, each share carrying the right to one vote. The Company does not hold any Ordinary Shares in treasury. The above figure of 1,307,286,880 Ordinary Shares may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the Financial Conduct Authority’s Disclosure Guidance and Transparency Rules.

Formal Sales Process and Strategic Review Update

The Company is pleased to confirm that it is continuing due diligence with a number of parties under or alongside its Formal Sales Process.

George Lucan, CEO, commented:

“The focus is now away from skid delivery to installation with the aim of having the site ready for commissioning during April and producing during May.  The present gas price forward curve shows very high average prices of over 400 pence per therm for 2022.

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.

Gross production solely from the side-track, should it be successful, is again wholly unhedged for the remainder of the year and is expected to yield a further 1.5 million therms each month of which Angus share is 51%.

The forward curve remains very high and seems likely to remain high this year and the company is more than anyone else acutely conscious of the need to preserve our timeline in order to provide value to shareholders whether through revenue sales or corporate action.”

Formal Sale Process (“FSP”)

Any interested party will be required to enter into a non-disclosure agreement with the Company on terms satisfactory to the Board. The Company then intends to provide such interested parties with certain information on the business, following which interested parties will be invited to submit their proposals to Beaumont Cornish Limited.

Further announcements regarding timings and procedures for the FSP will be made as appropriate.

The Board reserves the right to alter any aspect of the process or to terminate it at any time and will make further announcements as appropriate.

The Board also reserves the right to reject any approach or terminate discussions with any interested party or participant at any time.

The Takeover Panel has granted a dispensation from the requirements of Rules 2.4(a), 2.4(b) and 2.6(a) of the Takeover Code such that any interested party participating in the formal sale process will not be required to be publicly identified as a result of this announcement (subject to Note 3 to Rule 2.2 of the Takeover Code) and will not be subject to the 28 day deadline referred to in Rule 2.6(a), for so long as it is participating in the formal sale process. Interested parties should note Rule 21.2 of the Takeover Code, which will prohibit any form of inducement fee or other offer-related arrangement, and that the Company, although it may do so in the future, has not at this stage requested any dispensation from this prohibition under Note 2 of Rule 21.2. Following this announcement, the Company is now considered to be in an “offer period” as defined in the Takeover Code, and the dealing disclosure requirements summarised below will apply.

This announcement is not an announcement of a firm intention by any party to make an offer under Rule 2.7 of the Takeover Code and there can be no certainty that an offer will be made, nor as to the terms on which any offer will be made.

All systems go at Saltfleetby as Angus progress the commissioning of its blue riband project and despite some problems from delayed parts is now close to production. The company also announce the settlement of litigation and focus on operations and the strategic review and FSP. 

With a  number of indicated buyers in the data room to potentially acquire Angus one would imagine that one of them would put enough moolah down to secure Angus. The current situation will have made the company that much more attractive and of course there are a number who will have significant benefits from a merger with Angus. 

With that in mind I would suspect that the current market price of Angus is still somewhat below what a successful offer might come in at, if not I hope that the board will consider remaining independent. 

And finally…

Last night the Noisy Neighbours drew 0-0 with Sporting Lisbon and duly went through to the QF’s 5-0 overall. In the other game as expected it was a thriller with Real beating PSG 3-1 to go through 3-2 overall.

In the cricket England made 311, OK but not enough, after a good start against the Windies apart from Woakes who sprayed it around they closed at 202-4.

F1 pre-season testing in Bahrain has been exciting with all the cars showing off their new designs. Unsurprisingly Christian Horner of Red Bull has already complained about Mercedes’ new side pods in the hope that they can be banned before the start of the season as they can’t do it mid-season…

The opinions expressed here are those of the author

Malcolm Graham-Wood

Disclaimer: Malcy’s Blog is provided for general information about the international oil and gas industry and the companies that operate within it. It does not constitute investment advice and Malcy does not buy or sell shares, warrants or bonds in any company written about within the blog. Information is taken from publicly available sources and any comment is that of the author who does not take any third party comment in the blog


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