TIDMANGS
RNS Number : 8423G
Angus Energy PLC
30 November 2020
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF THE MARKET ABUSE REGULATION (EU No. 596/2014) ("MAR"). THIS
INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC
DOMAIN.
30 November 2020
Angus Energy Plc
("Angus Energy", "Angus" or the "Company")
Memorandum of Understanding on Saltfleetby Finance Facility
and Geothermal Projects
Angus Energy plc (AIM: ANGS) is pleased to announce, further to
the RNS of 23 September 2020, that, together with its partner,
Saltfleetby Energy Limited ("SEL"), it has entered into a
Memorandum of Understanding (the "MOU") with Aleph Energy Limited
and Aleph Commodities Limited ("Aleph") detailing non-binding Heads
of Terms to provide up to GBP12 million towards the Saltfleetby
Finance Facility required to develop the Saltfleetby Gas Field
("Saltfleeby"). Angus operates Saltfleetby and holds a 51% working
interest with SEL holding the remaining 49%.
The indicative terms provide for a four year amortising loan
facility of up to GBP12million with a 12% margin over LIBOR, a 3%
commitment fee payable out of the facility, a share grant of 30
million shares in Angus, issued over the life of the facility and
an override of 8% on gross revenue following repayment of the
facility. Given the share grant to be issued by Angus under the
MOU, SEL has agreed net drawdowns from the facility to cover
elements of the pipeline completion, thereby keeping the relative
funding liabilities on the agreed pro rata basis of 51%/49%.
The structure provides minimal equity dilution to the Company,
as well as alignment of interest between Angus, SEL and Aleph to
grow the revenue whilst maintaining strong Environmental, Social
and Governance ("ESG") principles. The Saltfleetby development will
help displace imported liquified natural gas (LNG) and serve to
create local employment opportunities.
From the outset until repayment of the debt, Angus will also
appoint Aleph Energy Limited as its commercial and technical
adviser on this project with particular regard to Aleph's
experience marketing energy products, managing price and logistics
risks, as well as its expertise in all upstream activities.
Under the MOU, upon presentation of a suitable approved
geothermal programme for a new off-site project before the end of
January 2021, which Angus has been developing throughout the
present year, as further detailed below, Aleph Energy and Aleph
Commodities will together seek to procure, on a best efforts basis,
up to a further GBP8 million of committed funding for that
programme. Aleph will also assist in funding and developing
hydrogen and carbon capture solutions with a view of providing
clean energy and local employment opportunities. With H2H Saltend
being recently announced, the partners believe Saltfleetby and the
surroundings will become a hub for the hydrogen economy in the
United Kingdom.
Under the terms of the MOU, Aleph has been granted a 90 day
exclusivity period (extendable if agreed between the parties)
beginning on the date of the MOU in which to undertake customary
legal and financial due diligence investigation in relation to
Saltfleetby, the reasonable costs of which will be met by Angus.
Aleph will also need to agree the funding of the Saltfleetby
Finance Facility with its funding partners. Furthermore, it should
be noted that the MOU is non-binding and shall not constitute and
is not intended to establish any legally binding contractual
obligation or other form of relationship between the Parties.
Aleph Commodities is an investment company, with an ESG focus at
its core, actively engaged in the Energy Transition. Following from
its recent acquisition of InterTank Nordic AB, Aleph is a partner
to producers, consumers and storage companies seeking to actively
develop energy solutions that reduce carbon emissions and
positively impact the local communities where it is active.
Geothermal Projects at Saltfleetby
In June 2020, the Company engaged a third party report from
Soluzioni Hydrocarburi S.A. on the potential to repurpose two wells
at the Saltfleetby Gas Field, SF05 and SF08, for a closed loop
system of heat recovery by producing, and reinjecting, water from
the Sherwood Sandstone water bearing layer. The report examined
preferred flow rates of water necessary to achieve maximum heat
recovery, likely pathways, speed and direction of injected water in
the formation and the potential for connection or otherwise of the
injected water between producer and injector wells and any impact
on heat recovery.
The candidate wells' deviation profiles were drawn to obtain the
distance between SF05 and SF08 at mid-aquifer depth which is at a
depth of 1,313 m. The wells' average penetration angle across the
Sherwood sandstone was also computed. Note that well distance for a
typical well doublet (a two well project) is of the order of 1 km.
The result of the study yielded a potential thermal power output
for the doublet of between 1.34MW and 6.98 MW which could be used
to power a portion of the site for the next decade.
Further Geothermal Project
Away from Saltfleetby, a further potential large scale
geothermal project is under study. The proposed scheme, located in
an area of high geothermal gradient, would be designed to achieve
significant commercial power generation. Current projects in the
area have de-risked some aspects of this technology and this
project would seek to build on that experience to scale up to a
full power generation project.
Current work is evaluating possible locations including
preliminary discussions with land owners coupled with technical
work on well design, surface facilities and infrastructure
including initial contacts with the electricity grid connection
provider. At the same time the regulatory and planning framework is
being reviewed and initial submissions are in preparation. Deeper
geothermal energy will become increasingly important as a stable
provider of electricity balancing the output from other green
energy sources that are subject to the vagaries of wind and
weather. Angus sees a large new market opening for these projects
and wishes to be an early entrant to the field.
George Lucan, Angus CEO, comments: "We believe that these terms
potentially represent a great result for shareholders in a
difficult time for fundraising for any hydrocarbon project.
Saltfleetby is a considerable opportunity with, according to the
CPR of 4 March 2020, the potential to deliver between GBP75 million
(P90) and GBP250 million (P10) of gross revenues to all parties
over its remaining life.
It is also exciting for us to have a potential partner who
marries technical and commercial skills as well as proven access to
considerable pools of private capital. We believe Aleph is the
right partner to smaller scale energy and ESG projects that provide
much needed local employment and displace more polluting energy
fuel sources.
We see in geothermal, in particular, a natural extension of our
drilling and subsurface geological expertise, our teams' experience
of working safely in high pressure and high temperature
environments subject to rigorous environmental standards and of
dealing with local planning issues with extreme sensitivity.
In view of the impending Christmas break and inevitable Covid-19
related delay, we expect to conclude documentation and drawdown by
the end of January but at any rate in the early first quarter 2021
following which we will be able to accelerate the procurement
process as we head toward First Gas in H1. In the meantime, we
continue with detailed design whilst isolating key long-lead items
for express procurement and are happy to note that our hydrogen
ready pipe is now safely laid and we are progressing with the final
150 m steel stretch of the pipeline."
Jason Joannou (Founding Partner at Aleph Commodities) comments
"Angus is a strategic platform for the future of energy production:
via natural gas and geothermal energy, and with plans for hydrogen
and carbon capture solutions. The partners at Aleph believe Angus,
under the innovative management team led by George Lucan, is the
blueprint for the ideal modern energy company and a beacon for the
Energy Transition. We look forward to working with Angus and
assisting them with their plans for the future."
.
Enquiries:
Angus Energy Plc www.angusenergy.co.uk
George Lucan Tel: +44 (0) 208 899 6380
Beaumont Cornish (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) 113 394 6600
Flagstaff PR/IR angus@flagstaffcomms.com
Tim Thompson Tel: +44 (0) 207 129 1474
Fergus Mellon
Aleph Commodities info@alephcommodities.com
Notes
About Angus Energy plc
Angus Energy plc is a UK AIM quoted independent onshore oil and
gas production and development company focused on leveraging its
expertise to advance its portfolio of UK assets as well as acquire,
manage and monetise select projects. Angus Energy has a 51%
interest in the Saltfleetby Gas Field (PEDL005), majority owns and
operates conventional oil production fields at Brockham (PL 235)
and Lidsey (PL 241) and has a 25% interest in the Balcombe Licence
(PEDL244).
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