Angus Energy is looking to borrow up to £12m to redevelop the Saltfleetby gas field in Lincolnshire.
The debt will be secured against the field, Angus said in a statement this morning.
A separate statement confirmed that the company had raised £1m in a placing of more than 111 million shares. This would be used for a working capital contingency fund required by debt providers, it said.
Angus has a 51% stake in Saltfleetby and was approved as operator in December 2019. The remaining 49% interest is held by Saltfleetby Energy Limited, the new name of the former operator, Wingas. The field stopped production in 2017 when a nearby terminal closed.
The new loan would be serviced by cash from the sale of gas when flows recommence, Angus said. It would be spent on:
- Pipeline installation and connection to the National Transition System – £1.8m (£1.1m spent so far)
- Gas processing facilities – £5.7m
- Site preparation, planning and contingencies – £1.6m
- Reserve for sidetrack drilling planned for 2021 – £2.4m
- Reserve for field abandonment – £1.5m
The company said estimates made in March 2020 for capital expenditure of £1.7m for the processing had “proved to be inadequate”.
Angus said it had hoped to use North American certified high-pressure gas equipment but discovered that the cost of recertification for use in Europe would be “prohibitive”. It said it now planned to buy all field equipment, rather than have a mix of leasing and purchasing.
The total number of shares in Angus now stands at more than 715 million. At the time of writing, the share price was down 9.45% at 0.91p.
The company has now used most of the authority given to directors in March 2020 to issue ordinary shares. It said it may need to allot further shares and will arrange a general meeting to agree this.
- Angus managing director, George Lucan, will be answering questions on an investor conference call at 5pm on Thursday 24 September 2020.