636 – The Weekend Podcast: 4 reasons to put Angus Energy #ANGS on your watchlist

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636 – The Weekend Podcast: 4 reasons to put Angus Energy #ANGS on your watchlist

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636 – The Weekend Podcast

angus-energy

About Angus Energy

Angus Energy is an independent onshore oil and gas development company focused on advancing its portfolio of licensed UK assets. They have two assets, Brockham and Lidsey, both in the Weald Basin, close to Horse Hill.

A person quite close to the story has decribed it as, “the most important well to be drilled in the UK this year”.

I had the MD Paul Vonk, on the podcast on Friday, click here and scroll to 10 minutes 40 to listen to it.

To hear Barney Gray, independent oil & gas equity analyst talk about Angus Energy click here

(If you want to read why Angus Energy possesses excellent potential, scroll down to the, “Exciting Bit”, below).

They list on AIM on Monday (14th November 2016).
Expected Share Price: 6p
Shares In Issue: On listing they will have 214,980,287 shares.
Market Cap: £12.8m
To read their investor presentation click here.

the-story-so-far

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Back in April 2015, Chief Executive of UK Oil & Gas (UKOG), Stephen Sanderson made this announcement, “We believe the Horse Hill well has discovered a possible world class potential resource, By 2030 we could produce 10 per cent to 30 per cent of the UK’s oil demand from within the Weald area.”

This became front page news on most of the countries newspapers.

Of the 100 billion barrels in the 55 square mile area of Surrey and Sussex UKOG estimated it could extract up to 5 billion to 15 billion barrels.

This compares to about 45 billion barrels produced in the entire UK portion of the North Sea in the past four decades.

The company behind this drill, was Angus Energy.

independent-ukog

At the time Angus Energy held a 16% share of Horse Hill but in 2016 divested their final holding there.

Odd don’t you think? Why would a company choose to sell a share in one of the biggest oil finds, ever, onshore in the UK?

3 Reasons:

1. They didn’t believe their share was big enough.

2. The licences at Horse Hill are exploration licences, which means there’s still a bit of time and money that needs to be spent to get them through to a point where they become production licences.

And probably the most important point of all…

3. Five miles down the road, at Brokham, they are operator and 55% owner of an asset that shares the same geology as Horse Hill and has a production licence. So it’s entirely possible it could not only have the same, if not  better potential than Horse Hill but can be producing oil sooner.

 

4 reasons to put Angus Energy #ANGS on your watchlist after the IPO

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1. CASH

Cash 004

Angus will be raising £3.5m in cash at IPO by issuing 58,333,333 at 6p per share, for working capital and for the drilling of new side-track at Brockham and horizontal producer at Lidsey oil field.

Also worth pointing out is, the fact, that Brockham and Lidsey have been producing wells and with the money they raise, they intend to improve the production rates. It’s expected that Lidsey will produce around 350 bopd, whilst Brockham will produce around 150 bopd.

This will bring in cash flow, negating the possibility of them needing to go back to the market again to raise more money using equity.

 

2. ASSETS

angs-site-location-map

Angus Energy have 2 assets both recently producing oil fields in the UK Weald Basin in southern England: Brockham & Lidsey.

brockham
In regards to Brockham, the money raised at IPO will be used put to to do 2 things:

1. Production

Angus intend to drill a side-track well to increase production to 150bopd from the Portland Sandstone, which is around 615 meters below surface.

A sidetrack means to reenter a well from the well’s surface location with drilling equipment for the purpose of deviating from the existing well bore to achieve production from an alternate zone or bottom hole location

2. Exploration

the-exciting-bit-001

They also intend to assess and test the Kimmeridge Limestone.

It was the results, of tests from the Kimmeridge Limestone, that focused national attention on Horse Hill.

Remember, it was Angus Energy who drilled the Kimeridge Limestone at Horse Hill, so they know exactly what they’re looking for.

kimmeridge-limestone-001

Angus’ Brockham field (~5 miles away from Horse Hill) was drilled by BP in 1987. BP drilled through the Kimmeridge Limestones (micrites) although it did not test them.

So they know the presence and thickness of these layers at Brockham that tested so successfully at Horse Hill-1.

Angus’ Brockham field partner Doriemus commissioned Nutech to make a comparative analysis of the Horse Hill-1 well and Brockham-1.

Here’s the technical results from that Nutech analysis:

nutech-analysis

At Brockham 1 the Upper Kimmeridge Micrite:
Has been estimated to contain 11 MMBO per square mile over an 85 foot interval;
Horse Hill 1’s OIP for the upper Micrite was 6.96 MMBO per square mile over an interval of 105 feet.
The HH 1 well was perforated over an interval of 88 feet and naturally flowed to surface 901 bopd of 40 API

Brockham Middle Kimmeridge Micrite:
Contains an estimated 8.8 MMBO per square mile over an interval 67 feet
At HH 1 the well was perforated over this interval of 80 feet and naturally flowed to surface 464 bopd of 40 API

Brockham Lower Kimmeridge Micrite:
Has an estimated 4.3 MMBO per square mile over an interval 29 feet with an average porosity of 8.4% and permeability of 0.032 mD.
The HH 1 well did not flow test this zone

There are three Kimmeridge Limestone intervals at Brockham, where the formation is believed to be more mature, that could potentially be put into production if it delivers equivalent or potentially superior rates to those at Horse Hill.

 

lidsey

They intend to drill a new horizontal well 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.

 

lidsey-production-cycle
The new well is anticipated to deliver solid, long term cash flows and rapid payback due to the strong initial flow rates and low decline, long-life production.

 

3. SHAREHOLDERS
angs-share-holders

 

The shares are quite tighly held, the Directors, JDA and Knowe, together hold 60.47 per cent. These are also locked in for a period of one year from admission, save in certain circumstances.

Knowe Properties: one of the original investors hold 21.3%

Jonathan Tidswell-Pretorius: Executive Chairman & Founder holds 18.4%

JDA Consulting: are the main technical advisors, hold 14%

Paul Vonk: Managing Director holds 7%

UK Oil & Gas (UKOG): holds 2.79%

So there’s only around 84.4m in free float, 58m of which have been placed in this fundraise.

 

4. HEAD HONCHOS

The top 2 guys here, were involved in the Horse Hill discovery, so it goes without saying, that they know their stuff.

Jonathan Tidswell-Pretorius – Executive Chairman & Founder
jonathan-tidswell-pretorius
Jonathan is an experienced drilling and production engineer, responsible for building Angus Energy into a qualified and recognised UK operator by the OGA.

He has overseen the drilling and commencement of production at a number of wells onshore, including the high profile Horse Hill-1 well, adjacent to Gatwick airport.

 

Paul Vonk – Managing Director
paul-vonk
Paul is an experienced oil and gas professional with strong financial skills, sector knowledge and relevant transaction track record.

Prior to joining Angus Energy, Paul was an investment banker at Nomura and RBS and worked directly with junior E&P companies on farm-out transactions.

 

in-summary

Angus Energy have the cash to increase production at their current assets, meaning they won’t need to approach the market for more money.

BUT more importantly, this cash will also be used to test the Kimmeridge Limestone, which far exceeded expectations at Horse Hill, where they were the people behind the drill.

ALSO early tests suggest the potential could not only be better than at Horse Hill but they have production licences, which means the can move quickly into cash generating production.

The content of this podcast (or content associated with it) is not intended as investment advice and people featured may hold positions in the companies they talk about. Please do you own research.

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If you find this podcast useful please could you give it a 5 star rating and review on iTunes by clicking here and I’ll return the favour by giving you a mention on the podcast!

The content of this podcast (or content associated with it) is not intended as investment advice and people featured may hold positions in the companies they talk about. Please do you own research.