Industry

Angus takes out £1.5m loan to pay for clean-up costs

181216 Brockham Brockham Protectors

Angus Energy site at Brockham, Surrey, on 16 December 2018. Photo: Brockham Protectors

Angus Energy has raised a £1.5m loan facility to pay for the costs of decommissioning oil and gas wells.

In a statement this morning, the company estimated it faced bills of about £2m to clean-up four sites.

£1m of the loan has been drawn down immediately, Angus said. The proceeds, after £102,500 costs, would be set aside to fund the future restoration of oil sites at Brockham in Surrey and Lidsey in West Sussex.

Their total clean-up costs were estimated at £650,000, which would go into a dedicated bank account, Angus said.

It said it had decided that Brockham and Lidsey would not generate enough money from oil production to fund decommissioning. The company said they had:

“no near term cash flow horizon sufficient to absorb abandonment reserving from prospective and identifiable reserves.”

191025 Angus decommissioning costs

Source of data: Angus Energy

It also estimated that decommissioning costs at the newly acquired Saltfleetby gas field in Lincolnshire would be £1.25m. Costs for the remaining site, the Balcombe oil well which Angus took over operatorship from Cuadrilla, were estimated at about £100,000.

Angus said Saltfleetby and Balcombe had a “high probability of generating revenue to absorb abandonment costs”. 15% of revenues from these sites would be reserved quarterly in a dedicated account until 100% of potential liability had been covered, the company said.

Angus also said it was exploring insurance against abandonment as an alternative to long-term cash reserve.

Managing director, George Lucan, said the company had decided not to reserve 100% of the cost of eventual abandonment because of exceptionally low interest rates and the cost of tying up shareholders’ capital.

He said:

“The policy adopted, we believe, draws a line under this issue and sets Angus up as best in class in the industry in the thoroughness and professionalism of its approach to its statutory duties to properly abandon and restore its sites to the satisfaction of all stakeholders.

“Most importantly, and as regards new business opportunities, Angus is able to evidence to potential partners its commitment to behave as a responsible and financially capable Operator.”

191025 Angus share price London South East

Chart: London South East

The loan can be converted into shares and the company’s share price opened sharply down on the news. It recovered but still ended the day down 6.09% at 1.08p.

This is well below the price of 1.375p, described by Lord Lucan as the “bottom” when DrillOrDrop interviewed him earlier this month.

Angus Energy’s deal for Saltfleetby included a £2m contribution towards abandonment liability. Angus was criticised by environmental campaigners when it said it would use this money to reconnect the field to the gas main.

The company is still waiting for a decision by the regulator, the Oil & Gas Authority, on whether the Saltfleetby operator’s licence should be transferred from Wingas.

5 replies »

  1. Why don’t these failing IMO idiots just go away an leave us in peace. Eight years of fighting these invasive IMO moral-free monsters. Enough. Waste of life. Threat to human health. Threat to environment. Threat to planet. Angus just p off. Enough. Ruth, sorry. Enough. Enough.

  2. I challenge West Sussex County Council planners to engage properly with this issue. Not just to tick boxes. Not just to protect their jobs. Engage, listen, understand, recognise the fake definitions in law and planning guidance of fracking and ‘unconventional’. Enough. Give us longer to respond to their wretched planning application for Balcombe. Take our part, not the part of IMO flailing, underfunded chancers. Not the part of our benighted government. Enough. Act responsibly. Give us a future. Enough.

  3. And recognise, Chris Bartlet, Jane and Co in West Sussex County Council planning department, that Angus plan to PRODUCE in their hoped-for three years of ‘testing’ in Balcombe. Look what they tell their stressed-out investors:

    “At this point in time, we believe that a convertible loan note, with the bulk of conversion limited to 2020 when the market will have better visibility on significant cash revenues from Balcombe and Saltfleetby, is a better option than an equity placing at a significant discount today.”

  4. Well, Kathryn, let us know when you find a country without “the kind of people”!!

    Meanwhile, perhaps have a word with all those requiring expansion at Heathrow, Gatwick, Southampton, Bristol, Luton Airports etc., etc., and where their aviation fuel may come from. Probably come in handy for you to find the country without “the kind of people”, as well.

    Funny, I thought clean up/reinstatement was a concern for the antis. Damned if you do, damned if you don’t.

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