Angus Energy Share Discussion Threads

[1347] 01/7/2024 05:44

I think Bill put it best...

Whether 'tis nobler in the mind to suffer
The slings and arrows of outrageous fortune,
Or to take arms against a sea of troubles
And by opposing end them.

[jtidsbadly] 30/6/2024 16:30

1347: yes, but as we know, they don’t want education, they want to be allowed to ramp it up unopposed.

[1347] 30/6/2024 13:02

JT Yes but the deal with Trafigura only came in December around 6 months after the 14th July 2023 when they mentioned unwinding the hedges, and they only mentioned novating the hedges in February 2024. Yes I agree and as I've said already it's not clear what they are doing now (which is probably the intention) thus making it even more difficult to determine what future earnings and cash flow will be, except that it will be less with the new hedges.

Either way it's just more red flags if anyone was considering Anguish Energy as an investment, hence why the share price is so low, which I rather suspect suits someone's interest. We'll see, the journey on Snake Pass continues.

BTW Funny how some weirdos get upset if you discuss companies on an investment/trading BB isn't it. You'd think they'd appreciate some free education on such matters.

[jtidsbadly] 30/6/2024 12:10

bbd2: Grinder? You’re even more unfortunate than I thought.

[bionicdog] 30/6/2024 11:52

Is this the Reform party conference?

[jtidsbadly] 30/6/2024 11:41

bbd2: you are an unfortunate combination of narcissist and insomniac if this is your recommendation.

[bionicdog] 30/6/2024 11:34

Can I recommend that you take your own advice.

[bbd2] 30/6/2024 11:30

Can I recommend simply talking to yourself in the mirror rather than boring us all to death day and night on here. The sun is shining you know - go get some rays for goodness sake !!!

[jtidsbadly] 30/6/2024 07:14

1347: re the Trafigura offtake agreement, the interims statement says “The existing hedge contract was replaced with a gas offtake, with embedded price protection.” As I understand it, the old gas offtake agreement with Shall was merely “novated”; to Trafigura. Is this sentence referring to the new series of hedges, or the old series crystallised and put back in place, or is it something new (i.e. not a hedge at all) and separate? The people who interview Brother ‘erbert should be asking him these questions. Most of the mugs don’t see any obfuscation here. It’s either been written by a semi-literate or by someone trying to obfuscate. Try to discuss hedges with the mugs and they’ll say it’s privet information. These things matter though.

[1347] 30/6/2024 06:57

JT Yes but normally crystallisation relates to the the selling of a security to trigger a capital gain or loss, I have not seen it applied to hedges which are a different beast.

Originally these were straight forward cash swaps remember, based on agreed gas volumes and prices and which covered a particular period. After that period ended they should have been closed, netted off and settled.

However now they say they are writing *new hedges to price protect the Mercuria hedges crystallized in July 2023. Those hedges should have been netted off at the time and settled (even if that settlement was deferred).

If you look at the RNS of 14 July 2023, as well as the outstanding £3.5 m on the hedges before first gas, which they said they'd mostly paid already in December 2022 out of the placing (but which they obviously hadn't, thus giving incorrect information to market) they also said they would unwind 50% of the hedges to later (deferred) settlement.

However they are not settling them now the period to which they relate has arrived but rather writing new hedges at 50% of the previous fixed prices. Now they not only have the "now you can borrow enough to get completely out of debt" loan round their necks, plus the royalties etc. they are writing new additional hedges thus effectively 'mortgaging' future gas sales to cover the previous hedges they haven't settled. It's a horlicks.

The style may have changed with 'erbert but the obfuscation and disingenuity hasn't has it?

[jtidsbadly] 29/6/2024 14:59

1347: yes, your third paragraph is what I’m suggesting. It could be they’ve got some downtime or reduced production planned while they do some work on the existing wells. If prices took off and they weren’t producing enough to cover the 26p/therm contracts, they’d go spectacularly bust in short order without some protection. I seem to recall that the previous Pen Holder said that at that price they and half the industry would be doing no better than break even. That was when the price was at about 18p. Who knows though? Brother ‘erbert remains uncommunicative.

“Crystallisation”, according to the definition I looked at on the internet, is where you close an open position and open an identical one immediately thereafter. Largely a tax wheeze, I think.

[1347] 29/6/2024 13:26

JT All of their 'deals' have been favourable to parties other than 'normal' Anguish Energy shareholders. I'm not sure what Carlos does, the audited accounts are done by others and they've bought in others to do the finance deals. Pretty much goes for most of the other directors though.

No it's not clear what purpose those additional hedges serve but whatever it is they seem to have to keep writing new ones to cover the previous ones that have crystallised. The end effect though is to reduce earnings attributable to Anguish Energy shareholders and operating cash flow.

I'm not sure why they would need to guard against high gas prices alone, Mercuria would make on the hedged portion and Anguish on the unhedged portion. May be more to do with a possible combination of low gas volume and high gas prices though, i.e. not producing enough gas to cover the main hedges.

They say they've submitted a planning application for 4 more wells post period end, which is sometime from April onwards. Odd then that LCC are not showing any planning applications from Anguish Energy this year at all, perhaps they sent it to the wrong LPA?.

Yes Kneeler Starmer and Red Milliband seem keen to finish the job started by PartyGate Sunak to destroy the UK Oil and Gas industry. They are too thick to grasp the simple fact that destroying your own supply when still a net importer is as stupid an act of national self harm as I've ever seen. It's worse for the economy and worse for energy security and worse for the environment. Far too many thickos now in positions of authority in the UK.

[jtidsbadly] 29/6/2024 10:56

1347: … and I’ve lost touch with well drilling at Poundland. Do they require planning and other permissions for further wells and the associated piping, storage tanks, bunding, noise, traffic movements etc? If so, whoever does this work at Anguish had better get his pencil out. Perhaps that person and Anguish shareholders will be rescued by an incoming Labour government.

[jtidsbadly] 29/6/2024 10:43

1347: I wonder who negotiated the terms of the Global Re-financing. They seem to be extremely favourable to the lender. It’s possible Angus poisoned the well as to bank finance with their public dispute with Gneiss. I dare say the only Anguish Director who understands them is Carlos, and even then I’m not sure. Brother ‘erbert should put him up for interview with the fat dandy or the more penetrating Katy. I’ve taken the view that there’s no sense in asking a question of them if they don’t understand what they’ve got themselves into.

Is it possible that Anguish are worried that their production will fall short of the forward sales contracts volumes negotiated three years ago and that the new hedges are in fact forward purchase contracts, to offset the former and limit their losses in the event that UK gas prices take off later in the year?

[1347] 29/6/2024 08:41

JT Well if we two struggle to properly understand them then the jayhawkers have no chance. Every time they issue a report they change the volumes and prices so you can't predict with any confidence what the earnings or cash flow will be.

These extra hedges with the higher prices I've never really understand as they tend to favour Anguish Energy, unless the gas prices go sky high, which is what I think Mercuria were expecting to happen in the winter of 2022/2023, but the market moved against them.

We've also been told that the hedges that crystallised before first gas were settled out of the placing and the Bridge Loan Too Far yet they are still writing extra hedges to 'price protect' hedges that have crystallised since and so should have been netted off at the time. Makes no sense.

Yes the other thing is that the novated hedges are worse, they are back to the orignal hedged volumes but at a lower price, then they are adding extra future hedges to cover past crystallised hedges. As you say these new hedges will have a negative effect on their cash flow.

I'm not a port man, just a decent beer or wine will do for me.

[jtidsbadly] 28/6/2024 21:19

1347: well, it seems to me it is either deliberately obfuscatory or they simply don’t know what they’re doing. I don’t know what a crystallised hedge is, either. They’ve got two prices for the four sets of new hedges. It could be interpreted as setting prices and volumes for the exercise dates of the two corresponding sets of contracts so as to give Mercuria the difference. This would cover, presumably, the money they owed Mercuria for the missed payments in July/August 2022, payable on this deferred basis. Though if this is the case, it’s hard to see how they’ll afford the payments. Note 11 in the interims covers it but makes it no clearer. There’s a summary table there that shows a net liability of £12.7mm, of which £10.1mm. appears to be payable at the end of March 2025, £2.6mm. in June 2025. This must be based on the known hedge prices and the estimated future gas prices, for both the new Mercuria hedges and the pre-ezisting but lower-priced Trafigura ones. I can’t make it add up otherwise.

Taken in conjunction with the much lower forward contract prices detailed in this note for the remaining life of the pre-existing hedges (the ones passed across from Mercuria to Trafigura) compared with the prices of these contracts in the October 2023 CPR, there appears to be a very significant potential negative cash flow effect next year. Maybe I’ve got it all wrong. Perhaps Katy or the fat little dandy will ask Brother ‘erbert to explain it at their next interview, what? It’s enough to drive you to a large glass of port.

[1347] 28/6/2024 20:33

JT The thing is I have no idea what is meant by "*new hedges to price protect the Mercuria hedges crystallized in July 2023".

Regardless of what it means this looks to me like something that was agreed ages back, when they published the revised hedge profile in the Annual Report to 30th September 2022 (Note 25. Derivative Liability).

I recall we had quite some discussions about them at the time as they'd split the hedges into two, quite different, prices. It's almost as if these new hedges are a retrospective hedge against the gas prices moving against Mercuria then (which they did) and so would form part of an agreement at that time.

So it seems to me that they withheld this information from market at the time and only tell us now, a similar scenario to the loan they didn't need, until they did.

What's your take on this, have I misunderstood this completely?

[jtidsbadly] 28/6/2024 15:50

1347: re the hedges, there are 4 extra ones we didn’t know about, at higher prices, so possibly not very onerous unless production falls off a fair bit when they’re due while the gas price is higher than the hedge price. Anguish could, possibly, make money on them if the gas price falls. The dodgier element is the very low prices on the hedges that Trafigura has taken over from Mercuria. These will substantially reduce Anguish’s cash flow, whatever the price of gas is. The refinancing, as I said earlier, looks as if it could be more expensive pound for pound than the Mercuria loan. Brother ‘erbert was in every bit as tight a spot as his less ascetic predecessor. The only justification for an investment here is the expectation of a big gas price rise. Or, of course, another p&d.

[1347] 28/6/2024 11:32

JT No with the amount of cash they have and the cash flow as it is they won't have enough cash to fund the first drill plus a compressor unless the gas prices spike over the next few months.

I do expect more corporate activity so there may be others prepared to foot the bill for a % interest, or possibly a low ball take over by someone with deeper pockets. In any event given how long it took last time don't they need to start mobilising rigs soon? Given the environment now will they even get further planning permissions?

The hedges are so obfuscated now it's virtally impossible to figure out what the net revenue will be or what the liability is. They are supposed to have paid those oustanding Mercuria hedges off in December 2022 then said they had another £3.5 million to pay out of the Bridge Loan Too Far on July 2023, yet they are now taking on more hedges to cover the hedges they previously said they'd settled?

Oh and they are only getting £35 (say $42) per barrel for the condensate, very low price compared to Brent unless they are netting off the cost of water disposal?

[bbd2] 28/6/2024 10:57

Thank you. So you get more pleasure now from bashing the company (having written off your original investment), than having any hope that the share price will recover and
therefore getting any pleasure from recovering your money.
Ok fair enough. I guess We all make investment mistakes along the line ( and anyone who says they have never made a poor investment decision is just lying).
I hope your other investments are proving more fortuitous for you. I too am down here, on a small flutter, but prefer to use my puff positively on other pursuits rather than dwelling on past mistakes. Each to there own I guess, and I wish you luck with your investment strategy.

[1347] 28/6/2024 10:35

bbd2 I'll give you the benefit of one reply since you said please, not that I need to explain anything at all to you or anyone else. I still own some shares in Anguish Energy (to my regret) and am seriously hacked off at the way the company has behaved over the years and so am posting my views. If you don't like them just use the filter. I don't short stocks, the broker I use does not provide that facility.

[bbd2] 28/6/2024 10:27

1347, what’s your interest here please? Surely there is no value left in shorting this

[1347] 28/6/2024 10:19

JT On the P&L The important figure is this one Operating Profit £2,151,000, from which they have to pay £1,915,000 of Finance Costs, leaving an actual profit of just £236,000 for the HY, excluding derivative adjustments.

Clearly the only people making money here are those on a salary or getting interest, royalties, fees or deferred consideration, which is exactly how it's intended to be. 'Normal shareholders' are just being taken for a ride.

On the BS they have £44 m in liabilities, yes they may be £76 m showing on production assets but that's not their real value, i.e. no-one would pay anywhere near that for them.

On the cash flow, very litle FCF if any. What's the net proceeds from issue of share capital of £4,411,000? They didn't do a placing & subscription in the last 6 months did they?

Hedges, I saw that but need to take a closer look. They're just following the loan tradition of borrowing more to pay off the loan they couldn't afford to pay before and now they are taking on more hedges to cover the others hedges they couldn't afford to close. Total horlicks really.