Angus Energy Share Discussion Threads

[3put] 27/10/2021 14:17

Natural gas prices have risen to seasonal record highs as global gas demand is expanding and supply is not able to keep up. Bullish fundamentals combined with weather-related events have acted as tailwinds to propel prices. The extreme supply tightness of the global gas market is now spilling into oil markets.

When Inelastic Demand Meets Acute Supply Shock

In Europe, natural gas prices have surged to record-high price levels. The front-month contract for the Dutch Title Transfer Facility (TTF), the benchmark price for the European market, has risen fivefold since the beginning of 2021 – from 20 EUR/MWh to more than 100 EUR/MWh (>30 $/MMBtu) in early October. Market observers attribute this unprecedented price rise to a confluence of factors.

Following a colder-than-average 2020-21 winter, gas storage facilities in Europe have not been able to replenish their stocks to sufficient levels ahead of the start of the new winter season. As of October 10, storage levels in Europe were at 77% capacity. At the same time last year, they stood at 96%, and 97% the year prior. LNG imports to Europe have not helped enough since Asian demand for liquefied gas continues to pull many cargoes eastwards.

Gazprom (MCX: GAZP), which remains the single largest supplier to the European market, has met contractual delivery obligations but has not been able to deliver additional volume to its customers. Compounding the issue, weak wind output and low hydro storage levels due to drought conditions during the summer means that demand for natural gas for power generation is unusually strong. Industrial demand for natural gas is responding to these unprecedented prices, with some fertilizer plants idling production in recent weeks.

Less Flexibility in Supply

While these factors may be transitory in nature, structural changes in the European natural gas landscape have aggravated the challenging situation. Domestic production is in long-term decline, making European markets more vulnerable to issues in other regions, most notably North Asia. Europe’s largest gas field, Groeningen in the Netherlands, will completely halt production in the coming years. The Rough storage facility in the UK is closing. Overall, that means less flexibility for natural gas supply.

At the same time, demand for natural gas for power generation is only increasing. High carbon emission prices mean that coal plants have become uneconomical, and nuclear energy is out of fashion. That leaves the European market dependent on intermittent renewables and natural gas. As always with fossil fuels, there are geopolitical considerations. It was not lost on market observers that the price of TTF, which reached an intraday high of 160 EUR/MWh on Oct. 6, sold off after Vladimir Putin, the Russian president, said that Russia would be willing to help stabilize gas markets. Russia is also seeking approval of Nordstream 2, the controversial pipeline that will link Russia to Germany directly, bypassing transit countries such as Poland and Ukraine.

U.S. As the World LNG Swing Supplier

U.S. natural gas prices are also rallying but well below international levels. Henry Hub natural gas prices more than doubled since the beginning of the year and now trade at above $5/MMBTu. The October futures contract month expired at $5.841 – an increase of 178% compared to the same period last year.

The price upswing is attributed to the resiliency of gas demand from the LNG export and industrial sectors while supply is constrained. According to S&P Global Platts Analytics data, feedgas nominations to U.S. Gulf Coast liquefaction facilities currently operate at near full capacity and averaged 10.3 Bcf/d for the week ending Oct. 5. The export growth has been driven by Asian demand – predominantly China, Japan, South Korea and India. These countries have imported about 38.4% of U.S.-sourced LNG since February 2016, while Europe and South America received 31% and 20% respectively.

On the supply side, U.S. domestic storage levels are below the historical average and natural gas production has been limited for a while as most upstream producers have adopted strict capital discipline. In addition, Hurricane Ida caused shutdowns of more than 90% of Gulf Coast natural gas production by late August. Subsequently, the combination of tightened supplies and the surge in LNG exports has exacerbated the upward pressure on Henry Hub natural gas prices.

The U.S. acts as the world swing producer primarily due to its ability to either increase or decrease its flexible-contracted exports in response to market conditions. The LNG margin or arbitrage drives the destination of U.S. LNG cargoes. The evidence of this dynamic was previously manifested in Summer 2020 when many LNG cargoes were canceled due to pandemic-related demand destruction in importing countries.

Gas-to-Oil & Gas-to-Coal Switching

The rise of natural gas prices has started to impact crude oil markets. With gas prices at current levels, some analysts believe that oil-fired power generation could increase in Asia. JP Morgan (NYSE: JP) Mestimates that gas-to-oil switching could lead to an incremental demand of 750,000 barrels per day (bpd) of crude oil. The International Energy Agency (IEA) forecasts increased oil demand of 200,000 bpd.

In Asia, most power generation is coal-based, but coal markets face challenges of their own. Coal supply is constrained with less financing available, low inventories and supply chain issues – floods in Shanxi in central China have impacted domestic Chinese supply, and many Indian coal power plants have only limited coal reserves to run their plants.

European coal plants are now making a tentative comeback. The run-up in TTF prices has pushed coal generation units into the money, despite coal prices being at multi-year highs and EUA carbon prices remaining elevated (since coal power generation is more polluting than natural gas, higher carbon prices should favor natural gas over coal all else being equal). The switching potential is limited, however, with European countries having already closed or scheduled to close more than half their fleet of coal power plants.

Finding a New Balance

2020 LNG exports drove the U.S. trade balance in energy products to a surplus of $26 billion — the first surplus since at least 1974, according to the EIA and the U.S. Census Bureau’s trade value data. While exporting U.S. LNG cargoes brings an array of economic and strategic advantages, it has also tethered the U.S natural gas system to global dynamics with its ups and downs.

In Europe, meanwhile, a combination of short- and long-term factors has pushed local prices to unprecedented levels. The question is when will the market find a new balance? A key variable will be the temperature over the coming winter months, as well as any new development with regards to Nordstream 2 and Russian gas deliveries.
Source: CME Group

[3put] 27/10/2021 14:16

What are the views of managment on the value of the company given its current prospects? Asked on 21 September 2021
We have argued recently for a sum of the parts valuation of nearer 3.5 pence. That may seem ambitous but at current spot and forward gas prices the cash generating potential of Saltfleetby has been grossly underestimated merely by virtue of the lapse of time snce the last CPR was done on Saltfleetby in early 2020 when the gas price was near an historic low. We are still confident of restoring value to the oil assets after the drilling results at Lidsey in 2017 and Brockham in 2018/19 and the difficulties with planning permissions at Balcombe. This process continues unabated, albeit in a slow or sometimes difficult regulatory and planning environment. Finally we believe that our venture into geothermal will come to form the greater part of the Sum of the Parts of Angus in the future and will meet with a more enthusiastic response from all stakeholders – regulatory, planning, financing and others.

[3put] 27/10/2021 14:15

Some board posters are saying that a side track done in November would delay First Gas by up to 3 months. This sounds like nonsense. Can you comment? Asked on 21 September 2021
No it would emphatically not delay First Gas by three months. In fact there is no reason for it to delay First Gas by any material length of time and it is certainly not in the plan that it does. We are planning to execute the limited foundation work required beforehand and move heavy equipment in both before and after the drilling programme and will be following this week’s HAZOP with further SIMOP (Simultaneous Operations) planning which will allow for sensibly risked continuous working on the site during the programme. Again this poster may have misunderstood the nature of the equipment coming onto site, almost all of which is skid-mounted and pre-fabricated for immediate tie-in to the pipework and control lines. Thus some of the equipment won’t come on until February but none of the units will require on-site fabrication beyond connection work.

[3put] 27/10/2021 14:15

There has been much recent comment on the investment forums about how long the sidetrack would take to drill at Saltfleetby. Certain posters have claimed that they have internal company documents that say this will take 16 weeks. Please can you let me know if this is correct or if you expect it to take a different amount of time?

Also being speculated about is the volume of gas that has been hedged. It has been claimed that you have hedged 70% of 10mmscf/d and therefore the sidetrack has to be completed and everything has to run well for the project to be viable. Please could you confirm if this is correct or if the hedge is for different figures? Asked on 23 September 2021
We would be surprised and disappointed if the drilling part of the programme exceeded 28 days and the entire programme involved more than 7-10 days either side. On behalf of the Board, we have never heard or seen of any internal document which suggested we were planning for a 16 week side-track at Saltfleetby and we would challenge the poster to produce it. For that matter I haven’t heard of a drilling programme anywhere to these depths which could conceivably take 16 weeks – except perhaps on Mars, which is possibly where your poster hails from.

Supplementally, one poster has pointed out that the Planning Application allowed for 16 weeks time. This is not some “internal document” which the poster only had access to, but part of an application that is publicly available. Every company puts in their application for more time than is absolutely necessary in every sphere of life. This is hardly news. We reiterate drilling to these depths does not take 16 weeks as every reasoning investor in this industry knows.

The other assertion is equally bizarre and must be challenged. We have already clearly stated that the hedge was for “approximately 70% of the Company’s future gas sales …. under a conservative projection” and this was prudently set by the lenders, based, as we understand it, on their own estmates of achievable flow from the existing wells and excluding the contribution from the side track. Otherwise it would obviously not be a conservative projection.

[3put] 27/10/2021 14:15

I have just checked your planning statement on slide 13, It states the sidetrack duration will take up to 16 weeks as mentioned from another poster. Please could you clear this query up once and for all. Asked on 1 October 2021
As now already noted, all applicants for permits and permissions in any walk of life give themselves much more time to complete a task than is necessary. This is because of the length of time and the cost incurred in obtaining the permission in the first place. They will then advise to market, at commencement of operations, a shorter period and expect to come in on the short end of that.

Reabold for instance advised six to ten weeks for drilling the West Newton WNB1 and completed in 6 weeks before moving onto the sidetrack. This was drilled to 2250 m. We are side-tracking from about 1150m to a Measured Depth (including horizontal sections) of about 3000m or 1850 metres of drilling. Nor are we doing a well test which might extend the programme, because we are moving straight from drilling into production here, so there is no need for a well test.

The hardest rock in Europe gives a rate of penetration of about 3m/hour (see page 6 of hxxps://pangea.stanford.edu/ERE/pdf/IGAstandard/SGW/2017/Baujard.pdf). That would imply 600 hours here or 25 days/3-4 weeks of continuous drilling. Even assuming the drilling was no more than half of the time advised, then to drill through this much granite would be only be 7 or 8 weeks.

Granite of course wears drill bits faster and there is much changing of drilling equipment when addressing such hard rock. We are not drilling through granite in Cornwall or Scotland but through sandstones, clays, coals and limestones in Lincolnshire. We anticipate 20 odd days of 24/7 drilling – so a rate of penetration of over 12m/hour (verify by page 29 of Halco’s helpful graphs on rates of penetration hxxps://www.halco.uk/wp-content/uploads/2020/06/A-Z-Drilling.pdf). Of course drilling is not the only workstream here, and even if we were to more than double the time, to suggest five to six weeks of work, we would actually expect the rig to be down inside that envelope. Things can go wrong and extend the timetable – we have always been frank about that – but this is a reasonable verifiable estimate.

What disturbs me about assertions by this poster (and concert parties) – and they are hardly the first instances of obvious falsheoods deliberately spread – is that he holds himself out to be a knowledgeable investor and could have fact checked any of this with online sources in a matter of minutes. Worse still by claiming to have discovered an “internal̶1; company document he implies some great conspiracy by the Company and its Board, rather than sharing his source from the outset and pointing to the very obvious conclusion here: that people give themselves ample leeway in any official permission!

[jtidsbadly] 27/10/2021 13:43

HITS: and the fact remains that shareholders have been fairly consistently misled by the Interim MD. He’s also withheld information that should have been part of the Anguish news releases. I agree with you that these hedges are not based on conservative assumptions at all. They’re at about 70% of the volumes that Anguish management have been telling the market they can produce once the thing is running. Though they seem to assume that the sidetrack may not be producing before September. Shareholders here are relying on the goodwill of the Lenders. It appears likely that the Lenders will be able to exercise their rights under the charges from next summer and it’s hard to see why the charges would be so detailed and onerous if they didn’t have this in mind. I can’t see how they’ll justify paying the best part of £500,000p.a. in Board salaries to this lot once they can get rid of them. They’re not very good at what they do, are they?

[sincero1] 27/10/2021 13:21

hits - it is undeniable that the company has improved confidence in the sidetrack ....

[headinthesand] 27/10/2021 13:15

Sincero, the point you're missing (or avoiding?) relates to the quantities hedged by ANGS (which we now finally know as of yesterday).

It's specifically those quantities that George continually stated were based on c. 70% of conservatively predicted production volumes.

And yet looking at the data contained within yesterday's released/updated reserves valuation report (page 49), we see that:-

A) the average hedged quantity for Jul-Sep 2022 is around the 3.4 mmscfd equivalent. That's toppish to me sans sidetrack, given the field was only producing around 4 mmscfd (and declining month on month) during its last 12 months of operation - I was personally expecting a figure of between 2.1 and 2.8 mmscfd, if one were being conservative.

B) and more importantly that for the 10 month period from Oct 22, ANGS has hedged amounts above 5 mmscfd equivalent? That is definitively not conservative, because it 100% banks on a successful sidetrack. And that is of course pretty much a digital thing.

[sincero1] 27/10/2021 12:25

hits -And banking on any sidetrack being successful - let alone one being drilled from a well that has already had multiple unsuccessful sidetrack attempts made on it - can in no way on earth be described as taking a "conservative" approach." So this reply on the q&a isn't a conservative view ... as it certainly seems like one to me ...

Again we go into this armed with previous operators’ experience and indeed a full audit of our programme by an Aberdeen based but internationally renowned engineering and drilling consultancy as well as the Lender’s own Technical Committee, manned by experts from a variety of backgrounds. We also have fully reprocessed seismic to guide us past any localised faulting.

Nothing in drilling is without risk – but in terms of basics such as where to drill (finding the most productive layer) & how to drill (and avoid sticking or hole collapse), most seasoned operators would see this as much lower risk, in fact, than would be the case on any relatively newly addressed reservoir.

[headinthesand] 27/10/2021 11:31

JTids, what's blindingly obvious is that none of ANGS's hoped-for production levels out of Poundland are "conservative", no matter how much George may have repeatedly assured everyone that this is the case.

We now (finally) have the volumes hedged by month over the 3 year life of the hedge. From Oct 2022, those hedged volumes exceed 5 mmscfd for an extended period. Looking at the last 21 year entire history of production out of Poundland, courtesy of the OGA's easily downloadable figures, it's evident that production rates decline over time (no surprise there).

As I've just posted next door, the average daily production in the last 31 months of the field being in full production (Jan 2015 to Jul 2017) was around 4.7 mmscfd, though the last 12 months of that period show a marked dip down to a daily average of 4.17 mmscfd.

Given that ANGS has hedged volumes of well over 5 mmscfd for the ten months from Oct 22 onwards, that sidetrack being successful is clearly absolutely essential to significantly increase produceable volumes.

And banking on any sidetrack being successful - let alone one being drilled from a well that has already had multiple unsuccessful sidetrack attempts made on it - can in no way on earth be described as taking a "conservative" approach.

[sincero1] 27/10/2021 10:52

jtisadly - you claimed i was filtered but again you reply ... you really do have an allergy to telling the truth .... do i really need to post your roll call of shame recent comments ? clearly i do ...

5.7.21 "placing this week or next"
8.7.21"another placing or two in the next few months"
9.7.21 "" placing is in the queue and will come once the latest UKOG issue has been digested"
14.7.21 ""I'm expecting two placings this year"
21.5.21 "poor angus 0.20 soon" 24+ weeks ago. " share price into the sixties shortly " 24+ weeks ago.
"oga approval doubt" .
" financing doubt" .
" running out of money " weekly prediction for last 9 months.
" 0.15 by end of year".
" placing soon " daily prediction for last 10 months.
"its a pump & dump" - it wasn't.
"gas to Shell at current prices from New Year until July in decent volumes. I' put the chances of that at about 1%" "you should be pleased - that 0.70p re-entry level of yours is just round the corner.
and my favourite " They did run out of money towards the end of March, as we predicted" - And from the interim : As at 31 March 2021 the Group had cash of £591,000. As at 31 March 2021 the Group had net current assets of £1,351,000"

[sincero1] 27/10/2021 10:50

ja51contractvoidoiler - clearly you have realised you have messed up again and are now soiling yourself and trying to reassure yourself .....you really are a cpr jones dads army type "don't panic , don't panic" ... ignorance is no defence ... the truth is .. is that a knock at your door...

[1347] 27/10/2021 10:38

Well as has been mentioned before anyone that just wants to make stuff up can demonstrate whatever they want to. It's their problem if those in Kansas can't understand what's been published in accounts and reports and the history of this company.

What I see is that any value that there may have been in Poundland, especially with the higher gas prices, is being salami sliced away from shareholders, Knowe excepted as they'be been compensated by the circa £112k equivalent in shares they'll get.

What's the real plan here though as I don't see it's to return any value to the majority of the ordinary shareholders, maybe salami was on the menu all along?

I still think there's more shares to be issued for something to go alongside those to be issued to Knowe, the delay admitting them has to be for a reason in my view.

[markbarker] 27/10/2021 10:36

Rerate is in front of your eyes brownie

[ja51oiler] 27/10/2021 10:20

I see the "MORON" has been posting brown trouser comments again!

I suggest you read page 46 of the CPR. The Author of the report has put it down in black and white (and the important bit in RED) for you!!

Get to the back of the class boy!

[jtidsbadly] 27/10/2021 10:14

If you want some supposition, Sincero, I recommend the nonsense posted elsewhere this morning by one PeterAshbeck! Is he by any chance in Chiswick somewhere? It’s all wrong and HITS, I’m amazed you haven’t taken it apart. Well, I suppose if they get an immediate 5mm from the two existing wells and a successful sidetrack for another 5mm by their February target, there may be a chance. Good luck with that.

Then up pops BalancedViewer with the view that good old George’s forecasts are usually conservative. If they hadn’t made this stuff up, you’d think they couldn’t.

[sincero1] 27/10/2021 09:25

supposition everywhere...and all negative .......as usual ....yawn..

[jtidsbadly] 26/10/2021 20:44

1347: I think gas had better be flowing and the sidetrack completed by then or the knives may be out.

[1347] 26/10/2021 20:16

PS Yes the ides of March, didn't Isaiah (sorry, can't remember his surname) write a play about some chap called Julian or something that came to a sticky end on that date? Or was it that chap from Warwickshire, Bill someone or other? You know the one that wrote that play about turning swords into plowshares or something? I'm not sure what exchange plowshares were traded on though, before my time. Maybe they should push first gas back to the first of the next month to give them a full month of production figures?

[jtidsbadly] 26/10/2021 20:16

1347: I think all these newly revealed details should have been divulged to the market last June. It makes you wonder what else we may not have been told. Poor old Paddy, he must have missed that Board meeting, what?

Rolling the dice is better than the alternatives, they may think. It will also confer the benefit of giving Jamesll and Cudswallop the opportunity for which they have been gagging to top up again at bargain prices.

[1347] 26/10/2021 19:52

JT So it seems I was right, this is seperate to the override royalties and hence is material and hence will reduce FCF available to Anguish. I only skimmed the CPR earlier but I'll take a closer look later in the week.

I can't see how Brockham and/or Lidsey help them, Kim is now proven to be non viable other than short term flows, Horse Hill was an abberation for a while but now has the same problem with declines and increasing water cut and they are losing money on every barrel if you factor in depletion, depreciation and amorisation, it's all in the last UKOG interims.

Without water injection there's only a few BOPD to be had from the Portland or Oolite (the shut ins might improve that short term due to PBU but that won't last). Even if they are allowed to inject at Brockham I'm pretty sure they'll have to upgrade the site to meet the latest ground water regulations. The Capex required will have a negative effect on cash flow won't it.

When are they going to tell us about Balcombe?

[jtidsbadly] 26/10/2021 19:47

...and did you notice the bit about the expiry date of the £12mm. loan? 31 December 2024. That’s six months before I’d assumed it had to be repaid. 42 months, not 48. An extra £35,000/month. Payment of £285,000/month. Plus £1.45mm of interest in the first year, though probably less, since they’ve only apparently taken only a short £6mm so far. £1mm is probably closer to the mark. £4.4mm p.a. altogether to service/pay amortisation on the loan in the first year.

I’d assumed that Lidsey’s and Brockham’s rehabilitation was a mirage, invented merely to avoid abandonment reserving. Now I think they may be a roll of the dice. Anguish will need more cash flow quite quickly. I wouldn’t be surprised now to see a cash call at some stage soon to pay for a drill at one - or both. They’re in a tight spot, aren’t they? Worse than those Rouser Trousers.

[sincero1] 26/10/2021 19:43

ja51"contractvoid"oiler "
They are going to run out of money, aren't they!"
You are brave posting that on a public website...using an exclamation mark instead of a question mark .... brown trousers and sleepless nights time again for you...

[jtidsbadly] 26/10/2021 19:30

1347: it’s going to have to be quick, what? It’s now scheduled to start in early-mid January, assuming they’ve got that bit that goes on the top of the rig from the US by then. They’re scheduling first gas at or about The Ides of March (it’s a good job that the assiduous scholar and linguist at the Anguish helm was such a slacker in those Shakespeare classes..). And they’re expecting to complete the sidetrack before first gas, as we now know. That’s about eight or nine weeks then. Definitely no well test.