Final Results

Ascent Resources PLC 25 November 2005 Ascent Resources plc / Epic: AST / Index: AIM / Sector: Oil and Gas 25th November 2005 Ascent Resources plc ('Ascent' or 'the Company') Preliminary Results Ascent Resources plc, the AIM traded European focused oil and gas exploration and production company, announces its results for the period to 30 June 2005. OVERVIEW • Assembled a portfolio of investments of oil and gas assets in Europe and Africa in eight months • Production from a 63.5% interest in Ayoluengo oil field in northern Spain • Strong management and technical team demonstrated ability to achieve objectives through utilisation of contact base, experience and proven track record • Healthy financial position to make acquisitions and provide working capital having raised around £4.2 million through two placings in March and May 2005 • Joint Ventures with local partners to benefit from their expertise, local knowledge and contacts • Emphasis in the next 12 months on maturing existing portfolio - planning to drill up to six wells • Project participation in the majority of the Company's assets is generally more than 70% • Continue to evaluate new projects to enlarge portfolio CHAIRMAN'S STATEMENT Ascent Resources Plc ('Ascent' or 'the Company') has come a long way this year having established itself as a European focused oil and gas exploration and production company. Although the reporting period is up to 30 June, I feel that this is an ideal time to provide an overview of how far we have come to date, having assembled a management and technical team and a portfolio of 19 oil and gas projects across six countries in just eight months. Ascent was established for the purpose of making investments in the mining, minerals and oil and gas sectors and admitted to Alternative Investment Market ('AIM') on 10 November 2004. In order to succeed in a competitive environment, it was an absolute necessity to assemble a group of experienced personnel, particularly familiar with the technical, legal and commercial peculiarities of the oil and gas business in order to ensure that we identify the best opportunities and which have the greatest ability to generate value for shareholders. In line with this, Jeremy Eng joined us as Managing Director. He has over 23 years experience in the oil and gas sector both in technical and managerial roles. He has been instrumental in building the Company and creating a firm foundation for future success. We have also appointed to the Board, Jonathan Legg, who was managing director of Consort Resources and, Malcolm Groom, who was previously head of the energy practice at law firms Denton Hall and Norton Rose and most recently, Patrick Heren, with a wide experience in European energy markets. As support, we now have in place a highly experienced technical team that is developing the portfolio as well as evaluating new projects. Eloi Dolivo is our Exploration Manager and he has been strongly supported by Tamas Toth who manages our technical service centre in Budapest. Joe Staffurth and Mike Lakin, who both run geological consultancy companies, JSI Services and Envoi respectively, assist in identifying and screening new projects. In March 2005, we raised £1.5 million with RAB Capital through a non brokered private placing. Then, in May 2005, after appointing WH Ireland as our broker, they assisted us in raising £2,738,410 net of expenses through the placing of 60,184,835 new ordinary shares at 4.55 pence per ordinary share together with one warrant for each two Placing Shares subscribed, each warrant entitling the holder to subscribe for one ordinary share in the Company at 5 pence per share. This not only gave us a strong financial position to make acquisitions and provide working capital but has also given the Company a good institutional share register that includes amongst others, Framlington Investment Management, Fidelity Investment International, First State Investments and Meridian Capital Management. We have developed a core of diverse European oil and gas exploration and production assets with projects in Hungary, Italy, Spain, and Switzerland. We also have applications for new exploration permits lodged with the Dutch government and a minority interest in three permits in Gabon. More details are presented in the Review of Operations section of the accounts. Our portfolio is weighted more towards gas in preference to oil, although our only currently producing asset is our interest in the Ayoleungo oil field in northern Spain, which was acquired after the year end. Acquiring the producing asset was a major step forward in our Company's development as it not only provides cash flow that covers the Company's overheads and contributes to the development of projects but also is an important factor in the negotiating of new opportunities. One of the issues that led us to first assemble the European portfolio was the relatively easy logistics that are conducive to close management supervision of our joint ventures; now as the Company grows, larger scale projects farther distant may be appropriate and this is the focus now for new ventures. As I have already stated, we have made great strides in building our foundation for future growth. We have assembled a portfolio of projects in Europe and Africa whilst maintaining a consistent strategy. Our management and technical team has demonstrated its ability to achieve its objectives through the utilisation of its contact base, experience and proven track record. In the next twelve months, the emphasis is on maturing our existing portfolio and to this end we are planning to drill up to six wells. However, we are still evaluating other projects both in countries new to Ascent as well as projects in countries within which we are already active. Our overall strategy has been to take a substantial initial position in each project thereby allowing for the possibility of a subsequent equity farm-out to assist in funding that project's development. It was also a priority to team up with experienced local partners to benefit from their expertise, local know-how and contacts in the region of their operations. This dual strategy allows us to retain full control of the implementation of our projects and, at the same time, cope with the applicable local regulatory and operational challenges. Finally I would like to thank everyone involved with the Company for their hard work and dedication to creating an exciting platform from which I believe we can create a successful company going forward. D C Steinepreis 24 November 2005 CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE PERIOD ENDED 30 JUNE 2005 2005 Notes £ £ Group turnover 2 - Cost of sales - _________ Gross profit - Administrative expenses Administrative expenses before amortisation of goodwill (407,487) Amortisation of goodwill (10,553) ________ (418,040) _________ Group operating loss - continuing (418,040) Interest receivable 15,594 _________ Loss on ordinary activities (402,446) before taxation Taxation 4 - _________ Loss on ordinary activities after taxation (402,446) Minority interest 1,314 _________ Loss for the period (401,132) Dividends - _________ Retained loss for the period (401,132) ========= Loss per share Basic 3 (0.31p) ========= CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2005 Notes 2005 £ £ Fixed assets Intangible assets 5 164,973 Current assets Current asset investments 6 987,629 Debtors 57,418 Cash at bank and in hand 3,673,353 __________ 4,718,400 Creditors: Amounts falling due Within one year (54,984) __________ Net current assets 4,663,416 __________ Total assets less current 4,828,389 liabilities Minority interest (369) __________ Net assets 4,828,020 __________ Capital and reserves Called up share capital 7 208,518 Share premium account 8 5,020,634 Profit and loss account 8 (401,132) __________ Shareholders' funds 4,828,020 __________ CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD ENDED 30 JUNE 2005 Notes 2005 £ £ Net cash outflow from (410,447) operating activities 10 Returns on investments and Servicing of finance Investment income 15,594 __________ (394,853) Acquisitions and disposals Net funds used for investing in (70,000) exploration Acquisition of current asset (387,629) investments Net cash received from a minority shareholder of a subsidiary 1,683 undertaking Net cash outflow from acquisitions (455,946) __________ Net cash outflow before financing (850,799) Financing Proceeds from issue of share 4,838,410 Issue costs (314,258) __________ Cash inflow from financing 4,524,152 __________ Increase in cash 11 3,673,353 __________ NOTES TO THE FINANCIAL INFORMATION FOR THE PERIOD ENDED 30 JUNE 2005 1. Basis of preparation The accounts are prepared in accordance with the historical cost convention and in accordance with applicable accounting standards and the Statement of Recommended Practice 'Accounting for Oil and Gas Exploration, Development, Production and Decommissioning Activities'. The financial information contained in this report does not constitute full statutory accounts within the meaning of Section 240 of the Companies Act 1985. The figures are extracted from the audited full financial statements for the period ended 30 June 2005 which will be filed with the Registrar of Companies in due course. 2. Turnover At the end of the financial year, the Group had not commenced commercial production from its exploration sites and therefore had no turnover in the period. 3. Earnings per share The loss per ordinary share of 0.31p is based on the loss for the financial period of £401,132 and 127,879,476 ordinary shares, being the average number of shares in issue for the period. No diluted loss per ordinary share has been disclosed because the conversion of share warrants would decrease the net loss per share. 4. Taxation Group 2005 £ Current Tax UK corporation tax on profits for the period - Adjustments for previous periods - ________ Total current tax charge - ======= Factors affecting tax charge for period Loss on ordinary activities before tax (402,446) Tax on loss on ordinary activities at the standard rate of UK corporation tax of 30% (120,734) Effects of: Expenses not deductible for tax purposes 6,830 Depreciation 3,166 Tax losses 110,738 ________ Total current tax charge - ======= 5. Intangible assets The movements during the period were as follows: Exploration and appraisal expenditure Goodwill Total £ £ £ Cost Additions 70,000 105,526 175,526 At 30 June 2005 70,000 105,526 175,526 Amortisation Amortisation for the period - (10,553) (10,553) At 30 June 2005 - (10,553) (10,553) Net book value At 30 June 2005 70,000 94,973 164,973 The goodwill of £105,526 arose on the acquisition of the Company's subsidiary undertaking, Borona Holdings Limited during the period. Goodwill is being amortised over the Directors' estimate of its useful economic life of 10 years. In accordance with the accounting policy, the Directors have assessed the value of the oil and gas exploration expenditure carried in the accounts as intangible fixed assets. In the opinion of the Directors, no impairment provision is considered necessary. The exploration and appraisal expenditure represents amount paid by the Company in respect of a farm in agreement with a third party. The farm in interest of the Company is 70% in the Frosinone Exploration Permit and 50% in the Strangolagalli Concession. 6. Current asset investments 2005 £ (a) Investment in Gabon Investments (Iris Marin) Pty Ltd 507,882 (b) Investment in Gabon Investments (Themis Marin) Ltd 479,747 ________ 987,629 ======= (a) The Company issued 6 million shares at 5.0p to acquire 100% of the share capital of Gabon Investments (Iris Marin) Pty Ltd ('Iris Marin'). Included in the above balance is an amount of £207,882 which represents a loan to the company. This loan is interest free. (b) The Company issued 6 million shares at 5.0p to acquire 100% of the share capital of Gabon Investments (Themis Marin) Pty Ltd ('Themis Marin'). Included in the above balance is an amount of £179,747 which represents a loan to the company. This loan is interest free. Although the above companies are wholly owned subsidiaries of the Company at the year end, they have been excluded from consolidation, because interest in these subsidiary undertakings is held exclusively with a view to subsequent resale. These subsidiary undertakings are recorded in the consolidated financial statements as current asset investments at the lower of cost and net realisable value in accordance with Financial Reporting Standard 2 'Accounting for subsidiary undertakings'. These subsidiary undertakings were sold after the year end on 18 July 2005. The capital and reserves of the excluded subsidiary undertakings (who did not trade during the period) as at 30 June 2005 are as follows: 2005 £ Gabon Investments (Iris Marin) Pty Ltd 415,081 ======= Gabon Investments (Themis Marin) Pty Ltd 502,802 ======= 7. Share capital 2005 £ Authorised 10,000,000,000 ordinary shares of 0.1p each 10,000,000 1,000,000 Allotted, called up and fully paid 208,518,168 ordinary shares of 0.1p each issued 208,518 As at 30 June 2005 208,518 The Company was incorporated on 23 September 2004 with an authorised share capital of £100,000 divided into 100,000 ordinary shares of £1 each, of which 2 shares were issued fully paid, on incorporation. On 19 October 2004, the Company sub-divided each of the 100,000 shares of £1 each in the Company into 1,000 ordinary shares of 0.1p each and increased the share capital of the Company from £100,000 to £10,000,000 by the creation of 9,900,000,000 ordinary shares of 0.1p each. On 26 October 2004 the founder members subscribed for an aggregate of 49,998,000 ordinary Shares, all at par value to raise £49,998. In addition, the following 144,518,168 new shares were issued for cash: 1. 50,000,000 new shares were issued at 1.0p each on 9 November 2004; 2. 1,000,000 new shares were issued at 5.0p each on 19 November 2004; 3. 33,333,333 new shares were issued at 4.5p each on 24 March 2005; 4. 60,184,835 new shares were issued at 4.55p each on 7 June 2005. The Company also issued 2 million shares to acquire Borona Holdings Limited. In addition, the Company issued 6 million shares (each) to acquire Gabon Investments (Iris Marin) Limited and Gabon Investments (Themis Marin) Limited (note 6). The movements in the share capital and the warrants are summarised below: Number of Number of Shares warrants Issue for cash - founder members 50,000,000 - Issue for cash - placement 144,518,168 - Shares issued on acquisition of Borona Holdings Limited 2,000,000 - Shares issued on acquisition of Gabon Investments (Iris Marin) Ltd 6,000,000 - Shares issued on acquisition of Gabon Investments (Themis Marin) Ltd 6,000,000 - Warrants and options issued - 61,692,418 ------------ ----------- 208,518,168 61,692,418 ------------ ----------- The share premiums arising as a result of above transactions were as follows: 2005 £ Issue of shares for cash - placement 4,643,892 Issue of shares in acquisition of Borona Holdings Limited 103,000 Issue of shares on acquisition of Gabon Investments (Iris Marin) Ltd 294,000 Issue of shares on acquisition of Gabon Investments (Themis Marin) Ltd 294,000 __________ 5,334,892 ========= 8. Statement of movements on reserves Movements in the share premium and profit and loss account during the period were as follows: Share Profit Premium and loss Group £ £ Issue of shares 5,334,892 - Issue costs (314,258) - Retained losses - (401,132) _________ ________ At 30 June 2005 5,020,634 (401,132) ========= ======== 9. Reconciliation of movements in shareholders' funds - equity only 2005 £ Loss for the period (401,132) Dividends - __________ (401,132) Share issues less costs 5,229,152 __________ Closing shareholders' funds 4,828,020 ========== 10. Reconciliation of operating loss to net cash inflow from operating activities 2005 £ Group operating loss before interest (418,040) Amortisation of goodwill 10,553 Increase in debtors (57,418) Increase in creditors 54,458 __________ Net cash outflow from operating activities (410,447) ========== 11. Analysis of changes in net funds Cash flows 2005 £ £ Cash at bank and in hand 3,673,353 3,673,353 12. Reconciliation of net cash flow to movement in net funds 2005 £ Increase in cash 3,673,353 Movement in net funds 3,673,353 Net funds at 30 June 2005 3,673,353 * * ENDS * * Contacts: Jeremy Eng Ascent Resources Plc Tel: 020 7251 4905 Hugo de Salis St Brides Media & Finance Ltd Tel: 020 7242 4477 This information is provided by RNS The company news service from the London Stock Exchange

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