Angus Energy completes purchase of majority stakes in Saltfleetby

Angus Energy has completed the Farm-in Agreement with Wingas Storage (UK) Limited for a 51% interest in the Saltfleetby Gas Field in Lincolnshire. Saltfleetby Energy is expected to retain a 49% interest in the Field.

Saltfleetby Energy will pay to Angus Energy Weald Basin No. 3 Limited  an initial contribution of GBP2.5 million (US$3.2 million) which funds will then be applied by Angus either (a) to assume 100% of the costs to be incurred during the reconnection of the Field to the National Gas Grid or (b) to satisfy all abandonment costs at the Field (excluding existing subsurface pipework beyond the immediate sites) if reconnection at commercial rates is not available. At this stage, the Directors are confident that reconnection at commercial rates is possible within the GBP2.5 million (US$3.2 million) budget and advised timescale of completing work between May and August 2020.

Following reconnection and a declaration that gas can be extracted and sold in a commercially viable manner, future abandonment costs together with ordinary Field costs and revenues will be shared 51%/49% by the Group and Saltfleetby Energy under a standard JOA. AWB expects to execute agreements, subject to OGA approval, under which Saltfleetby Energy will transfer to AWB, as soon as regulatory consent is obtained, a 51% share in the relevant blocks, comprising the Field, of the PEDL 005 Licence together with the Operatorship thereof. These, together with the assignment of the underleases of the sites and regulatory assents, are the sole conditions precedent. 

The Saltfleetby Gas Field is located on the onshore UK at the western extent of the Humber Basin, in the PEDL005 license area. A commercial discovery was made in 1996 after re-entering an exploration well drilled in 1986. The field was put on stream in December 1999 producing from Early Westphalian sandstones at a depth of 2300m. This is a proven reservoir comparable with other established oilfields in East Midlands Basin with multiple sources of hydrocarbons including Westphalian coals and organic-rich basinal mudstones. In total 8 wells and several sidetracks have been drilled since production first commenced with 7 completed and licensed for production – being near horizontals (2 with full core available).

A 3D seismic block was acquired in 1997-98 which, with reprocessing in 2003, provides a high degree of confidence in the structural mapping of the Field. Full delineation of the Field from this 3D seismic mapping indicated an in-place estimate of 114 billion cubic feet (“BCF”) of gas based on a peer-reviewed Geological Society paper by T. Hodge in 2003. 67 BCF of dry gas has already been produced from the reservoir with an additional 1.1 mmbls of gas condensate. According to a Field Development Plan prepared for submission to the OGA in 2016 by the previous owner, an estimate of an additional 12.7 BCF should be recoverable from 2 remaining wells in production.

Angus’ own analysis of individual well pressure data confirms that a substantial amount of remaining gas should be recoverable. Angus has considered two future production profiles based on past production trends as outlined in the presentation. These indicated that 10 -18 BCF of gas (gross) could be recoverable over a 10 -12 year period. Additionally, 100,000-180,000 bbls (gross) of gas condensate would also be recoverable. In Angus’ view, with additional workovers and sidetracks, along with optimization of compression, ultimate recovery could be increased further than the 12.7 BCF predicted in 2016. Angus also notes that faulting evident leaves a good chance of further prospectivity in untapped blocks - providing new drilling opportunities.