Angus Energy shares surge after board indicates possible sale

Angus Energy updated the market on its strategy on Thursday, confirming it was launching a formal sale process given the current market for natural gas in the UK, and its apparently mismatched market cap.

Its directors said that while the company was “fully committed” to achieving first gas at Saltfleetby as soon as possible, it had also been addressing the “urgent need” for transition energy projects, in particular in the geothermal sector in England’s south west.

The AIM-traded firm said that, even though progress in the twin goals was “steady and sure”, the board and some shareholders felt that its market capitalisation did not reflect the short-term value of existing hydrocarbon assets and their immediate cash flow potential, as well as any long-term value in the company's scaleable geothermal project.

It said the valuation mismatch, also experienced by a number of other smaller energy companies, had resulted in a series of approaches with interest in, and in one instance an indicative non-binding offer for, some or all of the company's 51% interest in the Saltfleetby Gas Field asset, which was under consideration.

Additionally, the board said it had received indications that certain parties could be interested in making an offer for the company as a whole.

“Whilst not wishing to be distracted from our immediate aims we must meet our responsibility to shareholders to evaluate any proposals,” the directors of Angus said in a statement.

“As such, the board has been considering options for the company with its advisers.

“In light of these developments, and to better position the company for further growth, and to maximise value for existing shareholders, the board has now determined to undertake a review of the strategic options.”

It said those options included a sale of the company under the framework of a formal sale process, in accordance with the Takeover Code.

“The board is unanimous in its support for such a strategic review, and has appointed Beaumont Cornish (BC) as its financial adviser.”

Looking at its operations, progress was said to be continuing apace at Saltfleetby, and while some suppliers had advised of delays of a few weeks, and the board expected a further increase in the contingency for the project of up to 10% of budget, the directors remained confident of achieving first gas in a timeframe which would not be materially different from their previous advice.

It said a detailed week-by-week construction and commissioning timetable would be issued during January, as matters became clearer.

“The speed of transition has surprised the energy market in general and the resulting shortage of new gas supply, and deficit of renewable sources, is likely to lead to periodic crises such as we saw recently in the UK and a very high forward gas price in years to come,” said chief executive officer George Lucan.

“Presently, the market is attributing little value to hydrocarbon reserves in general, or in our instance, the immediate cash flow prospects of the Saltfleetby Gas Field.

“Accordingly, in the light of this and the interest expressed by other energy market participants, we think it in the best interests of shareholders to conduct this strategic review and formal sale process.”

At 1339 GMT, shares in Angus Energy were up 38.39% at 1.07p.