Production at Angus Energy’s Saltfleetby gasfield and oil flow at Balcombe would “mark a turnaround in the group’s fortunes” and bring “material cash flow for the first time”, the company said today.
It described Saltfleetby in Lincolnshire as “a gem of an asset” after gas reserves were estimated at a midpoint of 16 billion cubic feet, worth just over £25 million to the company.
Angus also said Balcombe, taken over from Cuadrilla in West Sussex, “looks to have great potential as a producing asset”.
Shares rose sharply on news of the Saltfleetby reserves. At one point they were up 50% and closed at 0.98, up15.59%.
Saltfleetby was the UK’s largest onshore gas field. It has been shut-in since 2017 following the closure of the Theddlethorpe gas terminal.
Non-executive chairman, Patrick Clanwilliam, said Saltfleetby would replace “even some of the more optimistic revenue expectations” that shareholders had in the Kimmeridge sidetrack well drilled at the Brockham oil site in Surrey in 2017. That turned out to be non-commercial without fracking.
The company said it envisaged spending £1.5m to bring the Saltfleetby gas onstream in 2020 and to drill a horizontal sidetrack to well No. 5 in the first half of 2021 to accelerate recovery.
Managing director, George Lucan, said:
“This is clearly a gem of an asset and a just reward to loyal shareholders. We look forward to converting these reserves into clear cash and positive cashflows whilst keeping open the possibility of further substantial upside from the contingent resources.”
He said with Saltfleetby the group was “ready to transition from predominantly exploration led company to one which focuses on safe operations, measured production and quantifiable cash flow”.
At Balcombe, Angus has applied for planning permission to remove what it believes to be brine drilling fluid from the well and then carry out a three-year extended well test.
The next available meeting of West Sussex County Council’s planning committee is 24 March 2020.
At Brockham, Angus is seeking permission from the Environment Agency to resume water injection. It was also considering recompleting the Kimmeridge BRX4z sidetrack as a Portland producer. Disposing of the site and licence was still an option, along with decommissioning all three wells, the company said.
Production at the Lidsey in West Sussex was restricted by the relatively high cost of water injection, Angus said. The new horizontal sidetrack was disappointing and revealed that the current structural mapping was incorrect. Another sidetrack was being considered. Permission had been submitted for oil pumping at Lidsey 24-hours a day, seven days a week.
Revenue and losses up
The company’s accounts described the year to September 2019 as “difficult”.
There were increases in revenue and production, mainly from Lidsey, the accounts revealed.
There were also increased losses over the previous year. This was mainly because of higher administrative expenses from impairment of the carrying value of interests at Brockham and Lidsey.
The year also saw a boardroom coup, ending with the departure of Paul Vonk on a £300,000 pay-off.
Well testing at Balcombe was delayed for a year and conventional oil flow at Brockham was found to be non-commercial.
The company described the regulatory environment as “steadily more challenging”. It also said the UK’s onshore oil and gas industry was “bedevilled” by the sustainability question.
Oil and gas production revenue: £0.2m (2018: £0.066m)
Gross production: 5,346 barrels (5,056 from Lidsey); (2018: 1,678 barrels)
Loss for the year: £5.043m (2018: £2.790m)
Cash balance £3.419m (2018: 0.846m)
Admin expenses: £3.976m (2018: £2.230m)
Total non-current assets: £12.308m (2018: £10.463m)
Total current assets: £4.213m (2018: £1.637m)
Total current liabilities: £1.031m (2018: £1,440m)
Total liabilities: £4.083m (2018)
Saltfleetby (PEDL005) 51%
Brockham (PL235) 65% (operator)
Lidsey (PL241) 80% (operator)
Balcombe (PEDL244) 25% (operator)
A24 (PEDL143) 12.5%