THE INFORMATION CONTAINED WITHIN
THIS ANNOUNCEMENT IS DEEMED BY THE COMPANY TO CONSTITUTE INSIDE
INFORMATION AS STIPULATED UNDER THE MARKET ABUSE REGULATION (EU)
NO. 596/2014 AS IT
FORMS PART OF UK DOMESTIC LAW PURSUANT TO THE EUROPEAN UNION
(WITHDRAWAL) ACT 2018, AS AMENDED.
UPON THE PUBLICATION OF THIS ANNOUNCEMENT VIA A
REGULATORY INFORMATION SERVICE, THIS INFORMATION IS CONSIDERED TO
BE IN THE PUBLIC DOMAIN.
22
February 2024
Angus Energy
Plc
("Angus Energy", the
"Company" or together with its subsidiaries, the
"Group")
(AIM:ANGS)
£20 million Financing
Facility drawn down
£4.5 million Senior Debt
facility repaid
£6m Bridge facility
repaid
Funds secured for investment
in Saltfleetby Field to expand production
Planned restoration of oil
production from Brockham Field
Strengthening of Balance
Sheet through the issue of equity in lieu of fees, interest and
royalties
Angus will pursue a growth
strategy to acquire additional production
On 20 December 2023, Angus Energy
plc (AIM:ANGS) announced that terms had been agreed with a
subsidiary of Trafigura Group PTE Ltd ("Trafigura ") for a
refinancing of its existing debt. The Company is pleased to
announce that it has today signed definitive loan documentation
which allows it to draw down in full on the £20
million loan
facility (the "Facility") with Trafigura. The existing senior debt
of £4.56 million will be transferred to Trafigura and the proceeds
of the Facility will be applied to repay the bridge facility of £6
million, and £1.75 million of Forum Energy's deferred consideration
from the sale of Saltfleetby Energy Limited's 49% interest in the
Saltfleetby Field to Angus in 2022. The balance of funds from the
Facility will be used to pay legacy creditors and invest in wells
and equipment to increase gas production from Saltfleetby and
restart oil production from the Brockham Field in Southern
England.
The key elements of the Facility are
as follows:
· A £20m debt facility signed with Trafigura to refinance all
existing debt and fund additional capex projects.
· Five-year amortising term with one year grace period for
capital repayment and a cash sweep for accelerated
repayment.
· Interest margin over 3-month term SONIA of 8% compared to 12%
on the existing senior debt and 15% on the bridge facility, rising
to 20% if this is not repaid. As a result, projected servicing
costs for the new Facility over the coming 12 months will be no
higher than if Angus stayed under the existing debt structure,
despite the near doubling of the size of the loan.
· Existing senior debt of £4.56 million transferred to Trafigura
on the new terms. All existing bridge debt and interest to be
repaid amounting to £6.7 million in total. Fees on the £6 million
bridge facility will be settled in shares. In addition, £1.75
million of the deferred consideration to Forum Energy for the
acquisition of their 49% interest in the Saltfleetby Field in 2022
will be paid out, with the remaining balance of £2.88 million owing
to Forum payable in instalments in cash or shares (at Forum's
option) by June 2025.
· After repayment of existing debt and the expenses associated
with the refinancing, the Company expects the remaining proceeds of
the drawdown to be approximately £5.9 million, which will be
utilised to stabilise the Company's creditor position and provide
the short and medium-term capex needs to advance key programmes at
Saltfleetby and Brockham Fields, including the preparations for the
drilling of a new well or side track at Saltfleetby in
2025.
· Trafigura will act as offtaker of the sales gas produced at
the Saltfleetby Field for a 5-year period on terms in line with
Angus's existing offtake agreements.
· The
existing hedge contract to be replaced with a gas offtake, with
embedded price protection, at an average price, to be agreed, for
the period to July 2025. For the duration of the loan, Angus will
hedge a percentage of its production on a rolling basis.
· With the
refinancing in place and the strengthened balance sheet, Angus is
entering its growth phase to acquire additional production and
develop storage opportunities.
Loan Facility
The principal terms of the Facility
are unchanged from those of the term sheet summarised by the
Company via RNS on 20 December 2023. They are for a 5-year loan,
with a twelve-month grace period on principal repayment and then
approximately even amortisation from March 2025, adjusted downwards
for cash sweeps to lenders and carrying a margin of 8% over 3-month
term SONIA. Cash sweeps are made after allowance for gross
expenditures, principal repayments, interest and hedging costs. The
new sweep mechanism is a significant improvement for Angus,
compared to the current restrictive existing senior debt cash
sweep, which does not permit the Company to recover capex,
corporate G&A or non-Saltfleetby Field costs. Covenants are
tested semi-annually whilst events of
default, representations and undertakings
are those which are customary of senior secured debt facilities.
The existing security package encompassing first fixed and floating
charges over all the Group's leases, licences and equipment has
been novated to Trafigura as has the Gas
Sales Agreement with Shell Trading Europe Limited.
In conjunction with the signing of
the Facility, the Company and Trafigura have agreed an MOU
regarding the potential for gas storage opportunities at
Saltfleetby, the details of which are contained in a separate
announcement released today.
Use of Proceeds
The Facility will be used, as
detailed above, to pay down historic debt. After debt repayment and
payment of associated interest costs, fees and expenses associated
with the refinancing, there will be a remaining balance of
approximately £5.9 million, which will directed towards the
following activities:
· Payment of legacy capex creditors from the drilling of the
Saltfleetby-7 well in 2022-23.
· A programme in Q2 2024 to restore oil production from the
Brockham Field in Southern England, through a tubing-replacement
workover and repairs to the downhole pump in the Brockham-1X well.
In the event of success, it is planned to reperforate the
Brockham-4X well, currently completed in the Kimmeridge zone, in
the main Portland reservoir to increase production. Angus is also
hoping for confirmation soon that it is permitted to conduct a
long-term test of the Balcombe-2Z well.
· At Saltfleetby, invest in equipment to increase production and
improve reliability. This includes the acquisition of a booster
compressor which will be installed in Q4 2024 to allow wells to be
produced to their abandonment pressure, thereby maximising recovery
from the field; purchase of critical spares and a noise suppression
system to be applied to the compressors on site; and
· As detailed in the Saltfleetby Field Competent Person's Report
(CPR) published in October 2023, it is planned to drill a fourth
production well or sidetrack in the field in 2025 to increase
production and accelerate reservoir depletion. Funds from the
Facility will be spent on the planning process for this new well
and the purchase of essential long lead items.
Hedging Programme
Inter alia, the Facility requires a
rolling gas price protection policy to be put in place which
stipulates a minimum price protected amount equal to 45% of gas
produced for the 12 months immediately ahead, and 33% for the
following 6 months and 0% thereafter. The existing Mercuria hedges
are being novated and restruck with Trafigura. The Company will
strike 7.3 million therms of new hedges to price protect the
Mercuria hedges crystallized in July 2023. The terms of future
hedges will be in line with market rates for senior secured price
protection at a discount of 3ppt (pence per therm) to the then
prevailing ICIS Heren price.
Royalty Interest
As part of the senior debt facility
secured in 2021 to redevelop the Saltfleetby Field, the Company
acquired a commitment to pay royalties to the lenders from the
three current producing wells on repayment of that part of the debt
associated with the construction of field facilities. The royalty
period will commence from 1 March 2024 for payments to Aleph
entities of 5% and Mercuria of 3% of gross revenues of sales gas
and condensate. The royalty will not be applied to any future wells
that the Company drills. The entitlement to any gas revenues from
new well stock will be entirely for the benefit of Angus
shareholders as there is no additional royalty attached to the new
Facility.
Until the original Mercuria hedges
end in June 2025, gross revenues for the purpose of royalty
calculations will be adjusted to take
account of the
original strike price of the hedges and the incremental costs of
hedges which were crystallised at Mercuria's request in July
2023. As a result, the Company's
requirement to pay royalties is lowered until June 2025. Beyond
that date the royalties will not be adjusted by any future price
protection which the Company may engage in with Trafigura or other
counterparties.
It has been
agreed with the royalty holders that until June 2025, the royalty
will be settled in cash or through the issue of new ordinary
shares in the Company (in the case of the
Aleph entities, this is subject to shareholder approval),
issued in April (in respect of March) and then
quarterly at a 15% discount to the 30 Day Volume Weighted Average
Price, at the election of the Company. On present production and
gas price assumptions, this will equal approximately £300,000 per
calendar quarter for each quarter until and including the quarter
ending 30 June 2025, or £1.5 million in total over 18 months (the
"Equity Royalty Payments"). Thereafter royalties will be paid in
cash on net gas sales revenue, not taking account of any new
hedges.
Forum Energy
Forum Energy Services Limited's
("Forum") original deferred consideration of £6.25
million which stood at
£4.64 million prior to the transaction will now be reduced to
£2.88 million following the payment of £1.75 million made from this
Facility. Under the terms of the original sale and purchase
agreement of Saltfleetby Energy Limited, Forum was entitled to
acceleration of this residual receivable on a refinancing
event.
Forum has however now agreed to
restructure the payments with
a new profile of £400,000 in June 2024 and
£300,000 in each calendar quarter end thereafter until June 2025
when the balance of £1.59 million
will become payable, together with interest on the
balance, payable in shares, charged at 8% over SONIA. Subject
to receiving shareholder approval, Forum can (in the event that the
Company does not pay in cash) elect to receive payment either in
cash or new ordinary shares issued at a 15% discount to the 30-Day
Volume Weighted Average Price (together the 'Revised Forum
Arrangements').
Forum has, whilst there are
outstanding amounts owing, been granted the right to participate in
future equity raises to maintain its percentage holding. Forum has
retained a right to nominate a Board Director in limited
circumstances.
Fees and Agreements with Trafigura
and Aleph
An arrangement fee
of 2.5% of the Facility is payable to Trafigura. Aleph
Commodities Ltd ("ACL") will receive a fee for structuring and assistance in
securing the Facility of £750,000 satisfied by the issue of
187,500,000 new ordinary shares at 0.40 pence per share. In
addition, Aleph Finance Limited ("AFL"), the provider of the
£6m Bridge Loan has agreed
to accept all fees amounting to in aggregate £256,052
through the issue of 64,013,000 new ordinary
shares at 0.40 pence per share. Accordingly, and subject to
receiving shareholder approval, the Company will issue 251,513,000
new Ordinary Shares (the "Aleph Shares") to ACL and AFL.
Aleph, while it and its affiliates
hold at least 10% of the Company's issued share capital, has been
granted the right to participate in future equity raises in order
to maintain its percentage holding.
Related Party Matters
ACL,
AFL and its associates are
or have been Substantial
Shareholders in the past 12 months
in the Company and accordingly ACL and its
associates, which includes AFL, are related parties under the AIM
Rules. Therefore, both the issue of the
Aleph Shares relating to the conversion into equity of interest and
fees under the £6m Bridge Facility, Equity Royalty
Payments and fees associated with the new Facility payable to ACL (the
"Transaction") are related party
transactions 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 overall net financial benefits to the Company of
securing the Facility, near-term liabilities of the Company,
alternative sourcing of funding to meet these liabilities and the
terms agreed with ACL and AFL.
Similarly, Forum Energy Services, an
entity controlled by Paul Forrest, a Non-Executive Director of the
Company, has, subject to shareholder approval, also agreed to
potentially be issued with new ordinary shares in satisfaction of
part of the deferred consideration (the "Revised Forum
Arrangements"). Therefore, this transaction is a related party
transaction under AIM Rule 13. Accordingly, the Board, with the
exception of Paul Forrest, having consulted with the Company's
nominated adviser, Beaumont Cornish Limited, consider the
terms of the Revised Forum Arrangements to be fair and reasonable
insofar as shareholders are concerned.
Richard Herbert, CEO, comments: " In
December we announced our
intention to refinance Angus's debt to relieve the Company's
unsustainable debt structure and provide the capital required for
ongoing investment in the Saltfleetby Field and other assets. We
are very pleased to have closed the new facility with Trafigura and
now have a new level of financial stability which allows us to plan
for the future and to maximise the value of our assets for the
benefit of all our shareholders. With current high oil prices, we
are excited to be restarting production from the Brockham Field in
the coming months, and we are hopeful that we will be able to
proceed with the long-term test on the Balcombe well this year.
Trafigura has demonstrated a strong commitment to its new
relationship with Angus and we intend to work together to evaluate
the potential for gas storage at the Saltfleetby site and other
potential projects in the future. "
END
For further information on the
Company, please visit www.angusenergy.co.uk
or contact:
Enquiries:
Angus Energy
Plc
www.angusenergy.co.uk
George Lucan
Tel: +44 (0) 208 899 6380
Beaumont Cornish Limited
(Nomad) www.beaumontcornish.com
James Biddle / Roland
Cornish
Tel: +44 (0) 207 628 3396
WH Ireland Limited
(Broker)
Katy Mitchell / Harry
Ansell
Tel: +44 (0) 207 220 1666
Flagstaff PR/IR
angus@flagstaffcomms.com
Tim Thompson / Fergus Mellon
Tel: +44 (0) 207 129
1474
Aleph
Commodities
info@alephcommodities.com
Disclaimers - this Announcement
includes statements that are, or may be deemed to be,
"forward-looking statements". These forward-looking statements can
be identified by the use of forward-looking terminology, including
the terms "believes", "estimates", "forecasts", "plans",
"prepares", "anticipates", "projects", "expects", "intends", "may",
"will", "seeks", "should" or, in each case, their negative or other
variations or comparable terminology, or by discussions of
strategy, plans, objectives, goals, future events or intentions.
These forward-looking statements include all matters that are not
historical facts. They appear in a number of places throughout this
Announcement and include statements regarding the Company's and the
Directors' intentions, beliefs or current expectations concerning,
amongst other things, the Company's prospects, growth and strategy.
By their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future.
Forward-looking statements are not guarantees of future
performance. The Company's actual performance, achievements and
financial condition may differ materially from those expressed or
implied by the forward-looking statements in this Announcement. In
addition, even if the Company's results of operations, performance,
achievements and financial condition are consistent with the
forward-looking statements in this Announcement, those results or
developments may not be indicative of results or developments in
subsequent periods. Any forward-looking statements that the Company
makes in this Announcement speak only as of the date of such
statement and (other than in accordance with their legal or
regulatory obligations) neither the Company, nor the Bookrunner nor
Beaumont Cornish nor any of their respective associates, directors,
officers or advisers shall be obliged to update such statements.
Comparisons of results for current and any prior periods are not
intended to express any future trends or indications of future
performance, unless expressed as such, and should only be viewed as
historical data.
Beaumont Cornish Limited, which is
authorised and regulated in the United Kingdom by the Financial
Conduct Authority, is acting as nominated adviser to the Company in
relation to the matters referred herein. Beaumont Cornish Limited
is acting exclusively for the Company and for no one else in
relation to the matters described in this announcement and is not
advising any other person and accordingly will not be responsible
to anyone other than the Company for providing the protections
afforded to clients of Beaumont Cornish Limited, or for providing
advice in relation to the contents of this announcement or any
matter referred to in it.