Financing, Corporate Update, Issue of Equity & TVR

Angus Energy PLC

21 July 2023

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) 6/2014 AS IT FORMS PART OF UK DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("MAR"), AND IS DISCLOSED IN ACCORDANCE WITH THE COMPANY'S OBLIGATIONS UNDER ARTICLE 17 OF MAR.

21 July 2023

Angus Energy Plc 

("Angus Energy", "Angus" or the "Company")

Financing & Corporate Update

Issue of Equity and TVR

·    Average Production of 80,000 therms per day in June and 92,000 therms per day in July to date.

·    Gas revenue of £1.735 million in June 2023.

·    Hedged volumes now 50,000 therms per day to July 2024.

·    Future Hedges partially unwound to allow exposure to gas price increases

·    £6m Bridge Facility signed and being drawn

·    Existing £3m Bridge facility rolled

Production & Revenue Update

The Company averaged production of 80,000 therms per day in June and has averaged 92,000 therms per day in the first 18 days of July. As of 1^st July, the daily hedged volume has reduced to 50,000 therms per day until July 2024 when it reduces further to 21,666 therms per day. As a result, Angus is now producing significantly above the hedged volumes and is benefiting from strong gas prices. It is anticipated that production will be maintained at 90-95,000 therms per day over the next quarter. With current prices and after hedges, the Company generated gas revenue of £1.735 million in June.

Partial Hedge Unwind

The Company believes that the winters 23/24 and 24/25 will present the possibility of price spikes as geopolitical tensions and the potential for cold snaps remain. As a consequence, the Company has reduced its future hedge exposure, taking advantage of the recent sell off in gas prices. As announced, the Company has unwound 50% of its hedge position in the second half of 2024 and the first half of 2025. Angus has agreed to settle the following volumes at the following fixed prices: in 3Q24, 1,840,000 therms at GBP1.226/therm; in 4Q24/1Q25, 3,640,000 therms at GBP1.37/therm; in 2Q25, 1,820,000 therms at GBP1.07/therm. This action will provide the Company with exposure to price upside during this period, while keeping 50% of current hedges in place. Settlement of these transactions will take place in the future in the normal way.

Signature of New Bridge

Angus is pleased to announce that, in line with the announcement of 14 July 2023, it has now closed the GBP 6 million junior debt facility (the "Bridge Facility") with Aleph Finance Limited ("AFL"), an associate of the Company's Substantial Shareholder Aleph Commodities Limited ("ACL"). The Bridge Facility has an initial term of three months, extendable, at the option of the Company, for a further 3-month period. Thereafter any roll is with mutual agreement. A roll fee of 3% applies.  Interest on the Bridge Facility, which is payable quarterly, is capitalized on each 3-month period and added to loan balance. There is no exit fee. A  3% penalty fee  applies should the Bridge Facility be repaid earlier than its stated maturity.  

The Bridge Facility is priced at SONIA (Sterling Overnight Index Average) + 15% . The Company will also issue 300 million 3 year warrants to ACL (or associates or parties nominated by ACL) at a strike of 1.5p per share, for which authority will be sought at the next general meeting of the Company.  The warrant strike price will adjust to the price of any equity issued during the term of the Bridge Facility if such equity issuance is at a price which is lower than the Warrant strike price.  The Company is not planning any issuance ahead of a refinancing.

The proceeds of a proposed Global Refinancing, as referenced in the RNS of 14 July 2023, are expected to repay both the current outstanding of £7.3 million under the senior facility and the combined £9 million bridge facilities.  Alternatively, the Company and the Lenders, by mutual consent, may either agree to extend the bridge facilities until the Saltfleetby Field cashflows can be utilized for debt service or, convert part or whole of the Bridge Facility into shares at a 25% discount to the 30 day VWAP, subject to a floor of 0.4p/share, including in an event of default, in which case it will be at the Lender's option, if neither cure nor other remedy can be agreed between the parties.

As identified in the Company's Interim Results announced on 30 June 2023, the Company is required to make a payment due under the derivative instrument of approximately £3.5 million by 20 July 2023 for financial hedges not settled in July and August 2022 due to late start-up of gas production at the Saltfleetby Gas Field. This Bridge Facility will meet this obligation as well as providing funds for existing and proposed capital, general working capital and operating expenditures around the temporary and permanent flowlines at Saltfleetby Gas Field. 

Related Party Matters

ACL and its associates are Substantial Shareholders in the Company and accordingly ACL and its associates, which includes Aleph Finance Limited, are related parties under the AIM Rules. Therefore, both the Bridge Facility and associated warrants and fees (together the "Transaction") are related party transactions under the AIM Rules.

ACL are entitled to an upfront 5% introducer fee (being £300,000). The fee will be settled in shares at the 30 calendar day VWAP of 0.9534 pence per share prior to the date of issue of the Bridge Facility; accordingly Angus will issue and allot 31,466,331 shares in respect of the fee (the "New Shares").

Noting that ACL and its associates are Substantial Shareholders in the Company, the Transaction taken as a whole, being the issue of the £6 million Bridge Facility together with warrants and associated fee arrangements with ACL, is a Related Party Transaction 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 near-term liabilities of the Company, alternative sourcing of funding to meet these liabilities and the terms agreed with ACL and AFL and considers them to be fair and reasonable and comparable with other offers of funding and past offerings by other service providers. The Board has calculated, in accordance with the Company's usual Black Scholes model used for the purposes of its financial reporting, the value of the Warrants at approximately £260,000.

Admission to trading on AIM

Application will be made to the London Stock Exchange for Admission of the New Shares. It is expected that admission will become effective and dealings in the New Shares will commence at 8.00 a.m. on or around 27 July 2023.

Following the issue of the New Shares, the Company will have 3,621,860,032 Ordinary Shares in issue, each share carrying the right to one vote (the "Enlarged Issued Share Capital). The Company does not hold any Ordinary Shares in treasury.

Following Admission of the New Shares, the above figure of 3,621,860,032 Ordinary Shares may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the Financial Conduct Authority's Disclosure Guidance and Transparency Rules.

END.

Enquiries:

Angus Energy Plc	www.angusenergy.co.uk
George Lucan	Tel: [phone]
Beaumont Cornish (Nomad)	www.beaumontcornish.com
James Biddle/ Roland Cornish	Tel: [phone]
WH Ireland Limited (Broker)
Katy Mitchell/ Harry Ansell	Tel: [phone]
Flagstaff PR/IR	[e-mail]
Tim Thompson	Tel: [phone]
Fergus Mellon
Aleph Commodities	[e-mail]

Qualified Person's Statement: Andrew Hollis, the Technical Director of the Company, who has over 40 years of relevant experience in the oil and gas industry, has approved the information contained in this announcement. Mr Hollis is a Fellow of the Geological Society and member of the Society of Petroleum Engineers.

Notes

About Angus Energy plc

Angus Energy plc is a UK AIM quoted independent onshore Energy Transition company with a complementary portfolio of clean gas development assets, onshore geothermal projects, and legacy oil producing fields. Angus is focused on becoming a leading onshore UK diversified clean energy and energy infrastructure company.  Angus Energy has a 100% 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). Angus Energy operates all fields in which it has an interest.

Important Notices

This announcement contains 'forward-looking statements' concerning the Company that are subject to risks and uncertainties. Generally, the words 'will', 'may', 'should', 'continue', 'believes', 'targets', 'plans', 'expects', 'aims', 'intends', 'anticipates' or similar expressions or negatives thereof identify forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Many of these risks and uncertainties relate to factors that are beyond the Company's ability to control or estimate precisely. The Company cannot give any assurance that such forward-looking statements will prove to have been correct. The reader is cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this announcement. The Company does not undertake any obligation to update or revise publicly any of the forward-looking statements set out herein, whether as a result of new information, future events or otherwise, except to the extent legally required.

Nothing contained herein shall be deemed to be a forecast, projection or estimate of the future financial performance of the Company.

 

END