WTI (Sep) $77.07 +$1.42, Brent (Sep) $81.07 +$1.20, Diff -$4.00 -45c
USNG (Aug) $2.71 -5c, UKNG (Aug) 70.81p -0.19p, TTF (Aug) €28.495 -€1.94

Oil price

Oil was up last week but not by much, today it is slightly better, Wednesday is the Fed day and markets are expect a 25bp hike. The Baker Hughes rig count showed a fall of 6 units overall to 669 but oil was down 7 at 530.

Economic data in the Eurozone is grim today particularly in France and Germany whilst in Spain the election result wasn’t clear and another vote is likely in the autumn.

Finally for whatever reason Chevron brought its numbers forward and at $6bn for Q2 it beat the whisper. It pointed out that it could maintain the dividend and all Capex at ‘well below $50’. In the 2nd Q it paid out $7.2bn, the CNBC interview with Mike Wirth is at 1330 BST.

Angus Energy

• Angus, late on Friday announced a Financing & Corporate Update as well as an Issue of Equity and TVR.
• Average Production of 80,000 therms per day in June and 92,000 therms per day in July to date.
• Gas revenue of £1.735 million in June 2023.
• Hedged volumes now 50,000 therms per day to July 2024.
• Future Hedges partially unwound to allow exposure to gas price increases
• £6m Bridge Facility signed and being drawn
• Existing £3m Bridge facility rolled

Production & Revenue Update
The Company averaged production of 80,000 therms per day in June and has averaged 92,000 therms per day in the first 18 days of July. As of 1st July, the daily hedged volume has reduced to 50,000 therms per day until July 2024 when it reduces further to 21,666 therms per day. As a result, Angus is now producing significantly above the hedged volumes and is benefiting from strong gas prices. It is anticipated that production will be maintained at 90-95,000 therms per day over the next quarter. With current prices and after hedges, the Company generated gas revenue of £1.735 million in June.

Partial Hedge Unwind
The Company believes that the winters 23/24 and 24/25 will present the possibility of price spikes as geopolitical tensions and the potential for cold snaps remain. As a consequence, the Company has reduced its future hedge exposure, taking advantage of the recent sell off in gas prices. As announced, the Company has unwound 50% of its hedge position in the second half of 2024 and the first half of 2025. Angus has agreed to settle the following volumes at the following fixed prices: in 3Q24, 1,840,000 therms at GBP1.226/therm; in 4Q24/1Q25, 3,640,000 therms at GBP1.37/therm; in 2Q25, 1,820,000 therms at GBP1.07/therm. This action will provide the Company with exposure to price upside during this period, while keeping 50% of current hedges in place. Settlement of these transactions will take place in the future in the normal way.

Signature of New Bridge
Angus is pleased to announce that, in line with the announcement of 14 July 2023, it has now closed the GBP 6 million junior debt facility (the “Bridge Facility”) with Aleph Finance Limited (“AFL”), an associate of the Company’s Substantial Shareholder Aleph Commodities Limited (“ACL”). The Bridge Facility has an initial term of three months, extendable, at the option of the Company, for a further 3-month period. Thereafter any roll is with mutual agreement. A roll fee of 3% applies.  Interest on the Bridge Facility, which is payable quarterly, is capitalized on each 3-month period and added to loan balance. There is no exit fee. A  3% penalty fee  applies should the Bridge Facility be repaid earlier than its stated maturity.

The Bridge Facility is priced at SONIA (Sterling Overnight Index Average) + 15% . The Company will also issue 300 million 3 year warrants to ACL (or associates or parties nominated by ACL) at a strike of 1.5p per share, for which authority will be sought at the next general meeting of the Company.  The warrant strike price will adjust to the price of any equity issued during the term of the Bridge Facility if such equity issuance is at a price which is lower than the Warrant strike price.  The Company is not planning any issuance ahead of a refinancing.

The proceeds of a proposed Global Refinancing, as referenced in the RNS of 14 July 2023, are expected to repay both the current outstanding of £7.3 million under the senior facility and the combined £9 million bridge facilities.  Alternatively, the Company and the Lenders, by mutual consent, may either agree to extend the bridge facilities until the Saltfleetby Field cashflows can be utilized for debt service or, convert part or whole of the Bridge Facility into shares at a 25% discount to the 30 day VWAP, subject to a floor of 0.4p/share, including in an event of default, in which case it will be at the Lender’s option, if neither cure nor other remedy can be agreed between the parties.

As identified in the Company’s Interim Results announced on 30 June 2023, the Company is required to make a payment due under the derivative instrument of approximately £3.5 million by 20 July 2023 for financial hedges not settled in July and August 2022 due to late start-up of gas production at the Saltfleetby Gas Field. This Bridge Facility will meet this obligation as well as providing funds for existing and proposed capital, general working capital and operating expenditures around the temporary and permanent flowlines at Saltfleetby Gas Field.

Related Party Matters
ACL and its associates are Substantial Shareholders in the Company and accordingly ACL and its associates, which includes Aleph Finance Limited, are related parties under the AIM Rules. Therefore, both the Bridge Facility and associated warrants and fees (together the “Transaction”) are related party transactions under the AIM Rules.

ACL are entitled to an upfront 5% introducer fee (being £300,000). The fee will be settled in shares at the 30 calendar day VWAP of 0.9534 pence per share prior to the date of issue of the Bridge Facility; accordingly Angus will issue and allot 31,466,331 shares in respect of the fee (the “New Shares”).

Noting that ACL and its associates are Substantial Shareholders in the Company, the Transaction taken as a whole, being the issue of the £6 million Bridge Facility together with warrants and associated fee arrangements with ACL, is a Related Party Transaction under AIM Rule 13. Accordingly, the Board, none of whose members are involved in the Transaction, having consulted with the Company’s nominated adviser, Beaumont Cornish Limited, consider the terms of the Transaction to be fair and reasonable insofar as shareholders are concerned. In taking this view, the Board has carefully considered the near-term liabilities of the Company, alternative sourcing of funding to meet these liabilities and the terms agreed with ACL and AFL and considers them to be fair and reasonable and comparable with other offers of funding and past offerings by other service providers. The Board has calculated, in accordance with the Company’s usual Black Scholes model used for the purposes of its financial reporting, the value of the Warrants at approximately £260,000.

Restructuring of this debt is obviously necessary and given the shareholder structure has been done with ACL and the company has gone to great lengths to say that it was a competitive process. I like what they are doing on the hedging, who wouldn’t and 90/- therms a day ongoing is good. My only quibble is the timing of the RNS, I mean 4.17 on a Friday….?

KeyFacts Energy Industry Directory: Malcy's Blog