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Angus Energy is playing for time with potential suitors


Shares in independent oil and gas development company, Angus Energy (LON:ANGS) jumped this week on news that it had received a number of offers for the firm, or at least for its principal asset, the Saltfleetby Gas Field.

Shares are now GBX1.14, an 80% rise over the last month and close to its 52-week high of GBX1.35.

This week also saw the company receive its fourth proposal from Sound Energy (LON:SOU). The other three bids – 1.00p per Angus share and 1.30p per Angus share in December 2021 and 1.40p per Angus share on 5 January 2022 – were rejected by Angus’ Board of Directors.

What is Sound Energy’s offer?

Sound Energy’s current proposal values Angus Energy at £21.6 million: this comprises the issue of 0.680 SOU ordinary shares for each Angus ordinary share which represents a value of approximately 1.50p per Angus share based on a closing price of 2.20p per SOU share as of 17 January 2022.

For Angus Energy shareholders it seems a reasonable offer: a 93% premium to the ANGS closing price of 0.775p per share as of 5 January 2022 or a 32% premium to the Angus closing price of 1.13p per share on 17 January 2022.

For Sound Energy, it means around a 30% dilution of shares which means there could be a lot riding on the success of the Saltfleetby Gas Field. Angus Energy’s own analysis confirms that at least 10–12 billion cubic feet (BCF) of gas could be recoverable from the Saltfleetby Gas Field over a 10-12 year period. Additionally, approximately 100,000-180,000 barrels of condensate would be recoverable too. It has also stated that hydrogen storage and carbon capture are also potential end of life uses for this site.

Saltfleetby Gas Field

Once the UK’s biggest onshore gas fields, Saltfleetby began producing gas, water and condensate in 1999 at rates exceeding 50 million standard cubic feet (MMScf) per day and it was piped via a 10” pipeline to the nearby Theddlethorpe Gas Terminal (TGT) where it was processed and sent into the National Grid. Eight wells and several sidetracks had been drilled on the site.

In 2017, TGT was shut down leaving the field stranded with nowhere to process the produced gas and no direct export route. Angus Energy acquired a 51% interest and operatorship in the field in late 2019 with the intention of reconnecting the pipeline to the National Grid and continuing production.

First Gas delayed

Production was due to start around now. However, Angus Energy has applied to Lincolnshire County Council (LCC) to make amendments to planning consents at the gas field – changes to the onsite generation capacity, increasing the height of the flare and installation of a condensate tower and condensate stabilisation equipment. The company has stated that these changes should not be a roadblock to First Gas which was forecast for Q3 2021.

As of January 2022, there is still no decision from LCC and neither from the Environment Agency regarding issues of noise modelling methods and associated software as well as the management of a low pressure, low volume incidental off-gas stream.

No sign of Angus Energy accepting the deal

And there’s no sign from Angus’ Board of Directors of an acceptance or a recommendation to shareholders as yet. It is all subject to due diligence of course, but CEO, George Lucan has stated that the company will continue with the FSP in order to secure maximum value for shareholders and maintain confidentiality for the other companies that have made offers.

Nevertheless, Sound Energy is nothing if not persistent and with the other interested parties yet to reveal themselves, we will continue to monitor the stock.

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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