What do this week’s management changes at Angus Energy mean for investors?
Shares in Angus Energy (LSE:ANGS) dropped 12.7pc on Tuesday following the news that managing director Paul Vonk had resigned. He is to be replaced by George Charles Bingham, a hereditary peer and the 8th Earl of Lucan, who will take on the dual role of executive director and interim managing director.
The changes mark a severe shift in sentiment from Angus, who appeared to back Vonk and support his plans for the business in response to a requisition several weeks ago. So, should investors be worried that managerial inconsistencies will impact operations moving forward?
Bingham is the son of Lord Lucan, who was issued a death certificate in 2016 more than 40 years after his disappearance following the death of his children’s nanny in London. He will take on the role of managing director until the firm has found a permanent replacement. Angus is seeking out an individual with industry experience that can develop its business beyond its current strategy.
According to Angus, Lucan has more than thirty years of experience in debt and equity markets. The firm added that he will ‘bring contacts and opportunities to the company in the energy sphere’. He has held roles as Dresdner Kleinwort Benson and Rudolf Wolff and also brings private equity experience in energy and alternative energy.
Vonk’s resignation and Lucan’s appointment has prompted the withdrawal of a requisition request issued to Angus last month. The request, which called for Vonk to be removed and Lucan to be appointed alongside an individual named Adam Salim Habib, was suspected to have come from Angus’s former chairman Jonathan Tidswell-Pretorius.
Tidswell-Pretorius stepped down from his role last year amid an investigation into whether he had violated rules concerning share dealing. He stayed on at the firm as operations director.
Alongside the appointment of Lucan, Angus has also agreed to appoint non-board chief financial officer Carlos Fernandes as finance director. Meanwhile, Anus said it is currently looking to appoint an independent non-executive chairperson. When this role is filled, Angus expects that Cameron Buchanan, currently acting chairman, will resume his role as a non-executive director. Chris De Goey will stay on as a non-executive director to help oversee this transition.
Finally, the firm intends to appoint its chief technical officer Andrew Hollis to its board. In conjunction with these board changes, the firm has appointed Beaumont Cornish as its nominated adviser and W.H. Ireland as its broker with immediate effect.
Elsewhere in today’s update, Angus set out operational plans for its UK assets over the near future. Firstly, it committed to delivering a well test on the Balcombe field discovery, where it is 25pc owner and operator. A seven-day test at a horizontal well called Balcombe-2Z at the site last October naturally flowed at 853bopd, not including 22.5pc water. A second flow period saw the well flow naturally at 1,587bopd, not including 6.6pc water.
Earlier this month, Angus said it believes that Balcombe-2Z can produce continuous oil with a low water cut. It now plans to demonstrate commercial oil production. To fund near-term planning as well as a field development plan submission at the site, it entered a two-year £3m loan facility with YA II and Riverfort Global Opportunities.
Elsewhere, the firm pledged to continue with an ongoing well test at its Brockham oil field, where it is operator and 65pc-owner. It said an update will be released here ‘in due course’.
Finally, the firm said it will continue production at its majority owned and operated Lidsey field. Currently, achievable production rates sit at between 20-40bopd, but Angus is looking at feasible ways to improve importance.
Beyond its portfolio, the firm said it hopes to close investigations into Tidswell-Pretorius’s share dealings shortly.
Regardless of what you think of the management changes announced on Tuesday, it is impossible to ignore Angus’s shift in tone.
Indeed, in Tuesday’s RNS, Angus’s chairman Cameron Buchanan said: ‘Following the Shareholder Requisition announced on 9 January 2019, the Board has spent considerable time evaluating its options and believes that the changes announced today are in the best interests of Shareholders as a whole.
We thank Paul for his leadership and important contributions to the Company since its IPO on AIM in 2016 and wish him well for the future. We welcome George to the Board with an immediate remit to broaden and strengthen the management team. We expect George and the growing management team to provide strong leadership, ensuring a focus on delivering on the Company’s strategy, implementing an appropriate corporate governance culture and practices and ensuring Angus can focus on delivering on its promising asset base.’
This is the same company that fewer than three weeks ago called the requisition ‘unwelcome and unnecessary’ and said its resolutions were ‘not in the best interests of the company and its shareholders as a whole’. The firm’s board even said that Vonk had its ‘full support’.
Obviously, we do not know what happened behind the scenes, but it would be interesting to know what led to the firm to make its decision. Such flip-flopping does not send out a confident message to shareholders.
For us, the jury is still out on whether the move was a good one, but the leadership volatility has certainly not been met with open arms by Angus’s investors. With important results incoming at Brockham and Balcombe, we will be keeping an eye on how shares perform over coming months.
In November 2018 Paul Vonk gave an extensive insight to our friends at Share Talk
The author was remunerated but does not hold shares