3 Reasons to add Angus Energy #ANGS to your Watchlist

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3 Reasons to add Angus Energy #ANGS to your Watchlist

The content of this blog (or content associated with it) is not intended as investment advice. Please do you own research.

Angus Energy (ANGS)
Share Price: 9.125p
Market Capitalisation: 21.37m

Angus Energy is an independent onshore oil and gas development company focused on advancing its portfolio of licensed UK assets.

THE STORY
Angus Energy’s assets (see below) are located in the Weald Basin in south east England.

This is where it gets interesting. In 2015 the Weald Basin became a major news item across, national media, due to UK Oil & Gas’s (UKOG) claim that, results of exploratory drilling showed there could be 158 billion barrels of oil in place.

To put this into context, the North Sea, has reportedly produced about 45 billion barrels in 40 years. So this was quite a bold claim.

Since that date, numbers stating the amount of oil that’s actually recoverable have, obviously, been reduced. On 21st October 2015 UK Oil & Gas employed the services of Nutech to carry out a survey on their licenses.

The survey concluded that a gross best estimate (“P50”) OIP of 15.7 billion barrels is calculated to lie within the 8 licence areas in the Weald Basin in which UKOG has an interest.

This does not include the Upper Portland sandstone oil discovery which shows P50 Oil in Place of 32 million barrels.

Flow tests by UK Oil & Gas reckon they could produce around 1688 barrels of oil per day, the highest stable dry oil rate of any UK onshore discovery well.

What has this got to do with Angus Energy?

Not only did Angus Energy operate the drill at Horse Hill but on 3rd March 2017, they revealed the results of their own sidetrack well at Brockham, where they tested the Portland, Corallian and Kimmeridge layers (5 miles away from Horse Hill’s license):

“Angus Energy is pleased to announce that the preliminary results from Brockham X4Z confirm very similar thickness of reservoir and properties to those reported at Horse Hill.

Based on the evidence so far, Angus has confidence that the well will be similar to Horse Hill and perhaps given that the reservoir is potentially much thicker in zones not previously tested the results could be even better. These results achieve everything short of production to prove the potential from this zone.”

 

3 Reasons to add Angus Energy to your Watchlist.

 

REASON 1

Brockham Oil Field
Majority Partner & Field Operator – Angus Energy
Angus 65% license interest
License area 8.9km2

They have planning permission for the drilling of up to six wells at the site but only currently have three well bores to surface.

The reason Angus Energy’s share price has fallen of late is to do with the controversy surrounding Brockham. A report on BBC London news claimed that the Brockham X4Z well drilling was ‘unauthorised’.

THIS CLAIM IS NOT TRUE.

Angus believe this report was deeply flawed and that it violated the BBC’s own editorial guidelines. They have now filed a complaint with the BBC.

Angus’s operation at Brockham has been approved by all the necessary bodies, that is, the Oil and Gas Authority (OGA), the Environment Agency (EA) and the Health and Safety Executive (HSE). Therefore it does not constitute a breach of the planning consents.

The reason the BBC News claimed Angus’s drilling was unauthorised was because they didn’t seek permission from Surrey County Council.

They do have permission.

The Council’s permission only needed to be sought, if a new well was drilled at Brockham. A new well hasn’t been drilled.

They have used an existing well and sidetracked, subsubface. Changes to subsurface operations require permission from Environmental Agency (EA), the Health and Safety Executive (HSE), the Oil and Gas Authority (OGA) not the council.

Production at Brockham will go ahead. Angus Energy have all the legal permissions to carry out their operations there. You can read more on Angus Energy’s website here.

Brokham Portland Sandstone

Angus intend increase production to 150 bopd from the Portland Sandstone, which is around 615 meters below surface.

Kimmeridge Limestone

There’s no knowing how much oil will flow from the Kimmeridge Limestone but Horse Hill flowed 1,688 BOPD and as yet the test results from Brockham suggest, “that the reservoir is potentially much thicker in zones not previously tested the results could be even better.”

 

REASON 2

The Lidsey Oil Field

License – PL241 (Production License)
Field Operator – Angus Energy Plc
Angus 60% license interest
License area 5.3km2

Angus intend to drill a new horizontal well (Lidsey-X1), which is expected to increase daily production to ~300 bopd. The new well will target the producing Great Oolite reservoir which has low geological risk.

Angus also intend to drill the Lidsey-X2 horizontal producton well to pass through the Kimmeridge layers allowing for electronically logging of the layers and sampling of the drill cuttings for a detailed comparison to the encouraging results Angus encountered at Brockham-X4Z.

All they need for Lidsey-X2 is approval from the Health and Safety Executive and Oil and Gas Authority.

 

REASON 3

Their Production License

We can reasonably assume that there is quite a lot of oil in the Weald Basin but the exciting bit is that Angus Energy is the only company, presently, with a production licence, in this area.

So other companies can’t produce and sell a drop of oil they discover, unless they either acquire a production license, which takes time, money and requires a lot of jumping through regualtory hurdles. OR they use Angus Energy’s production licenses at Brockham and Lidsey to access and produce their oil, which is entirely possible.

These production licenses have the potential to unlock a lot of value from the entire Weald Basin. In short it is worth a lot of money to a lot of companies, its shareholders and ultimately, to Angus Energy.

If production from the Kimmeridge layers prove successful at Brockham and Lidsey, it could mean up to 2,000 barrels of oil a day for Angus Energy. If they clear a modest $10 per barrel profit, this is $7.3m (£5.6m) profit per annum. If we apply P/E of 10, this means Angus Energy market cap would be £56m. Their current market capitalisation is £21m.

This attributes no value to their 12.5% interest in the  Holmwood Prospect. Holmwood is predicted to have conventional Jurassic sandstone and limestone reservoirs, which are proven to be productive at the nearby Brockham oil field and at the Horse Hill oil discovery.

The Holmwood prospect has been assigned gross mean prospective resources of 5.6 million boe with a range of 1 to 11 million barrels. Were it to come in at 5.6 million boe, Holmwood would become the fifth largest onshore oil field in the UK. Operator, Europa, regards Holmwood as one of the best undrilled prospects onshore UK.

More importantly, this £56m valuation also attributes zero worth to one of Angus Energy’s most valuable assets, that is their production license. One could only guess, as to, what this is worth to them (and others).

 

The content of this blog (or content associated with it) is not intended as investment advice. Please do you own research.

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The content of this blog (or content associated with it) is not intended as investment advice. Please do you own research.