Interim Results

RNS Number : 1351K
Ascent Resources PLC
19 September 2016
 

Ascent Resources plc / Epic: AST / Index: AIM / Sector: Oil and Gas

 

Ascent Resources plc

("Ascent" or "the Company")

 

Interim results for the period ended 30 June 2016

 

Ascent Resources plc, the AIM quoted European oil and gas exploration and production company is pleased to report its interim results for the six months ended 30 June 2016.

Highlights:

·      Raised £1.5million in new equity through three placings.

·      Loan note conversions have reduced the cash owed on convertible loan notes by £2.8 million in six months.

·      Administrative expenses reduced by (33%) to £676k compared with the same period in 2015.

·      Preliminary approach from Cadogan Petroleum plc highlighting the potential value of the asset.

·      Colin Hutchinson appointed as permanent CEO.

 

Post Period Highlights:

·      Gas sales agreement signed with INA-Industrija Nafte d.d. giving a confirmed route to market independent of the IPPC Permit.

·      Alternative route agreements implemented - cheaper and quicker than the construction of a new gas treatment facility.

·      Acquisition of Trameta d.o.o guaranteeing access to key pipeline infrastructure required for the alternative route.

·      Export pipeline has been successfully tested to the proposed operating pressure.

·      First gas sales revenue expected by early 2017.

 

Colin Hutchinson, CEO of Ascent, commented: 

"Progress to date has made 2016 one of the most significant years in the history of the Company.  Following the signing of the INA gas sales agreement we can look forward to delivering gas revenue in early 2017".

Enquiries:

Ascent Resources plc

Clive Carver, Chairman

Colin Hutchinson, CEO

0207 251 4905

 

Stockdale Securities Limited, Nominated Adviser

Richard Johnson

Edward Thomas

0207 601 6100

Northland Capital Partners Limited (Joint Broker)

Tom Price

020 3861 6625

IFC Advisory Ltd, Financial PR and IR

Graham Herring

Tim Metcalfe

Heather Armstrong

0203 053 8671

 

 

Chairman's statement

 

Ascent presents its unaudited results for the six months ended 30 June 2016.

 

I am pleased to be able to issue our first report where we have a clear, short route to first gas production and income. On commencement of commercial production of gas from the Petišovci field Ascent will retain 90% of revenues from hydrocarbons until the full €42 million costs expended to date have been recovered.

 

First gas

 

In July 2016 we announced an agreement between the Petišovci project partners and INA. Under this agreement natural gas with excess water removed but otherwise untreated will be sold to INA at the Croatian border, some 5 kilometres from the Petišovci field.  This was made possible by the re-commissioning of existing pipelines in Slovenia and the construction of 75 kilometres of new pipelines in Croatia to connect the Petišovci field with a Croatian treatment facility in Molve. 

 

We also entered an agreement with the owner of Trameta to acquire the company and its rights over the first section of the Slovenian pipeline. Following the acquisition of Trameta, the existing Slovenian section of gas pipeline has been successfully tested to the optimal operating pressure without the need for any rectification work.  The documentation to recertify the line has been submitted to the Ministry of Infrastructure in Ljubljana. 

 

The remaining work required to commence production primarily consists of completing a short pipeline connecting the export pipeline to the pipeline from the CPP, the refurbishment of an existing gas separation facility (CPP) and working over the existing wells to ready them for production.

 

We hope to carry out the first test production in late Q4 2016 with commercial production commencing in Q1 2017.

 

In anticipation of the agreement with INA, Ascent has in the past few months raised £1.5 million by way of new shares issues.  Additionally, some £2.8 million of Loan Notes have been converted into shares, thereby reducing the indebtedness of the Company.

 

There remains £8.2 million due on the 2013 & 2014 Convertible Loan Notes which are due for redemption on 19 November 2016.  The Company has entered into discussions with the majority note holder with a view to extending their term.

 

To assist the Company with its future plans we have appointed Northland Capital Partners as joint broker with immediate effect.

 

IPPC Permit

 

In May 2016 the Company received the unexpected decision of the Administrative Court to revoke the IPPC Permit to allow the Joint Venture to construct its own processing plant in Slovenia.  The Company remains of the view that constructing a processing plant in Slovenia remains the most economic solution for both the Company and the Country and will continue to work to resolve this issue.  If this issue cannot be resolved through dialogue the Company reserves the right to progress the issue through the Slovenian and European Courts.

 

Outlook

 

The opportunity at Petišovci remains as strong as ever.  Despite the prolonged delays Ascent still has a 75% economic interest in the Petišovci field, which has a net present value, including Phase 2 of some €200 million based on management estimates.

 

With 90% of revenues coming preferentially to Ascent to cover historic costs to date of some €42 million and without the immediate obligation to construct a new Slovenian treatment works the cash flows of the company should materially strengthen during 2017.

 

The performance of the Phase 1 wells during 2017 will also be important in assessing the terms of project financing when we come to develop the much larger Phase 2 of the Petišovci project.

 

I would like to take this opportunity to thank shareholders for their patience and understanding during the past few years and look forward to bringing the first two wells on stream from Petišovci in the near future.

 

 

 

 

Clive Carver

Non-executive Chairman

 

 

Consolidated Income Statement

for the Period ended 30 June 2016

 


Six months ended

Six months ended

Year ended


30 June

30 June

31 December


2016
Unaudited

2015
Unaudited

2015
Audited


Notes

£ '000s

£ '000s

£ '000s






Administrative expenses

2

(676)

(1,011)

(1,888)






Loss from operating activities


(676)

(1,011)

(1,888)






Finance income

3

153

1

745

Finance cost

3

(821)

(1,674)

(2,501)

Net finance costs


(668)

(1,673)

(1,756)






Loss before taxation


(1,344)

(2,684)

(3,644)






Income tax expense


-

-

-

Loss for the period


(1,344)

(2,684)

(3,644)






Loss per share





Basic & fully diluted loss per share (Pence) *

4

0.52

3.48

4.13

 

* as restated for the capital reorganisation in November 2015 which effectively reduced shares in issue by a factor of 20.

 

Consolidated Statement of Comprehensive Income

for the Period ended 30 June 2016

 


Six months ended

Six months ended

Year ended


30 June

30 June

31 December



2016
Unaudited

2015
Unaudited

2015
Audited



£ '000s

£ '000s

£ '000s






Loss for the period


(1,344)

(2,684)

(3,644)






Other comprehensive income





Foreign currency translation differences for foreign operations


2,293

(1,809)

(1,059)






Total comprehensive gain / (loss) for the period


949

(4,493)

(4,703)

 

 


Consolidated Statement of Changes in Equity

for the Period ended 30 June 2016

 


Share capital

Share premium

Equity reserve

Share based payment reserve

Translation reserve

Retained earnings

Total



£ '000s

£ '000s

£ '000s

£ '000s

£ '000s

£ '000s

£ '000s

Balance at 1 January 2015


1,459

55,911

2,576

861

(1,746)

(38,613)

20,448

Loss for the period


-

-

-

-

-

(2,684)

(2,684)

Currency translation differences


-

-

-

-

(1,809)

-

(1,809)

Total comprehensive income


-

-

-

-

(1,809)

(2,684)

(4,493)

Issue of shares during the period net of costs


275

250

-

-

-

-

525

Extinguishment of convertible loan notes


-

-

(2,576)

-

-

2,576

-

Extension of convertible loan notes


-

-

1,910

-

-

-

1,910

Share-based payments and expiry of options


-

-

-

73

-

-

73

Balance at 30 June 2015


1,734

56,161

1,910

934

(3,555)

(38,721)

18,463

Balance at 1 January 2015


1,459

55,911

2,576

861

(1,746)

(38,613)

20,448

Loss for the period


-

-

-

-

-

(3,644)

(3,644)

Currency translation differences


-

-

-

-

(1,059)

-

(1,059)

Total comprehensive income


-

-

-

-

(1,059)

(3,644)

(4,703)

Extinguishment of convertible loan notes


-

-

(4,586)

-

-

4,586

-

Extension of convertible loan notes


-

-

3,582

-

-

-

3,582

Conversion of loan notes


4

1

-

-

-

-

5

Issue of shares during the period net of costs


415

781

-

-

-

-

1,196

Share-based payments and expiry of options


-

-

-

(378)

-

524

146

Balance at 31 December 2015


1,878

56,693

1,572

483

(2,805)

(37,147)

20,674

Balance at 1 January 2016


1,878

56,693

1,572

483

(2,805)

(37,147)

20,674

Loss for the period


-

-

-

-

-

(1,344)

(1,344)

Currency translation differences


-

-

-

-

2,293

-

2,293

Total comprehensive income


-

-

-

-

2,293

(1,344)

949

Conversion of loan notes


565

2,260

(369)

-

-

369

2,825

Issue of shares during the period net of costs


405

1,010

-

-

-

-

1,415

Share-based payments and expiry of options


-

-

-

83

-

-

83

Balance at 30 June 2016


2,848

59,963

1,203

566

(512)

(38,122)

25,946

 


Consolidated Statement of Financial Position

As at 30 June 2016

 

30 June

30 June

31 December


2016
Unaudited

2015
Unaudited

2015
Audited

Assets

Notes

£ '000s

£ '000s

£ '000s

Non-current assets





Property, plant and equipment


4

2

3

Exploration and evaluation costs

5

35,214

31,455

32,711

Total non-current assets


35,218

31,457

32,714

Current assets





Trade and other receivables


23

142

61

Cash and cash equivalents


860

239

32

Total current assets


883

381

93

Total assets


36,101

31,838

32,807






Equity and liabilities





Attributable to the equity holders of the Parent Company





Share capital

7

2,848

1,734

1,878

Share premium account


59,963

56,161

56,693

Equity reserve


1,203

1,910

1,572

Share-based payment reserve


566

934

483

Translation reserves


(512)

(3,555)

(2,805)

Retained earnings


(38,122)

(38,721)

(37,147)

Total equity


25,946

18,463

20,674






Non-current liabilities





Provisions


434

370

386

Total non-current liabilities


434

370

386

Current liabilities





Trade and other payables


297

535

508

Borrowings

6

9,424

9,691

11,239

Other current liabilities


-

2,779

-

Total current liabilities


9,721

13,005

11,747

Total liabilities


10,155

13,375

12,133

Total equity and liabilities


36,101

31,838

32,807

 

 

 

Consolidated Statement of Cash Flows

for the six months ended 30 June 2016

 


6 months ended 30 June

6 months ended 30 June

Year ended 31 December



2016
Unaudited

2015
Unaudited

2015
Audited



£ '000s

£ '000s

£ '000s

Cash flows from operations





Loss after tax for the period


(1,344)

(2,684)

(3,644)

DD&A charge


-

-

(1)

Decrease/ (increase) in receivables


38

(44)

37

(Decrease in payables


(211)

(112)

(222)

Increase in share based payments


83

73

146

Exchange differences


(8)

30

36

Finance income


(153)

(1)

(745)

Finance cost


821

1,674

2,501

Net cash used in operating activities


(774)

(1,064)

(1,892)






Cash flows from investing activities





Interest received


-

1

1

Payments for investing in exploration

5

(158)

(174)

(661)

Purchase of property, plant and equipment


(1)

-

-

Net cash used in investing activities


(159)

(173)

(660)






Cash flows from financing activities





Interest paid and other finance fees


-

(1)

(18)

Proceeds from loans


350

500

950

Loan issue costs


(6)

(1)

-

Proceeds from issue of shares


1,455

550

1,252

Share issue costs


(40)

(25)

(56)

Net cash generated from financing activities


1,759

1,023

2,128






Net increase in cash and cash equivalents for the period


826

(214)

(424)

Effect of foreign exchange differences


2

(3)

-

Cash and cash equivalents at beginning of the period


32

456

456

Cash and cash equivalents at end of the period


860

239

32

 

 

 

 

 

1.     Accounting Policies

Reporting entity

 

Ascent Resources plc ('the Company') is a company domiciled in England.  The address of the Company's registered office is 5 New Street Square, London EC4A 3TW.  The unaudited consolidated interim financial statements of the Company as at 30 June 2015 comprise the Company and its subsidiaries (together referred to as the 'Group').

 

Basis of preparation

 

The interim financial statements have been prepared using measurement and recognition criteria based on International Financial Reporting Standards (IFRS and IFRIC interpretations) issued by the International Accounting Standards Board (IASB) as adopted for use in the EU.  The interim financial information has been prepared using the accounting policies which will be applied in the Group's statutory financial statements for the year ended 31 December 2016 and were applied in the Group's statutory financial statements for the year ended 31 December 2015.

 

All amounts have been prepared in British pounds, this being the Group's presentational currency.

 

The interim financial information for the six months to 30 June 2016 and 30 June 2015 is unaudited and does not constitute statutory financial information.  The comparatives for the full year ended 31 December 2015 are not the Group's full statutory accounts for that year.  The information given for the year ended 31 December 2015 does not constitute statutory financial statements as defined by Section 435 of the Companies Act.  The statutory accounts for the year ended 31 December 2015 have been filed with the Registrar and are available on the Company's web site www.ascentresources.co.uk. The auditors' report on those accounts was unqualified and included an emphasis of matter drawing attention to the importance of disclosures made in the annual report regarding going concern.  It did not contain a statement under Section 498(2)-(3) of the Companies Act 2006.

 

Going Concern

 

The financial statements of the Group are prepared on a going concern basis.

 

During June 2016 the Company raised £1 million (£977,500 net of costs) in two separate equity placings.  These funds are sufficient to fund current trading obligations of the Company until Q1 2017.

 

On 1 August 2016 the Company announced that it had signed a gas sales agreement with INA, Croatia's leading Oil & Gas Company, to sell joint venture gas production at the Croatian border.  Additional funds will be required to complete the capital programme required in order to make existing wells and facilities ready for production however there is currently no committed expenditure in relation to this programme.

 

Additionally, the Company has £8.2million of convertible loan notes currently due for redemption on 19 November 2016.  While the share price is currently significantly above the conversion price there can be no guarantee that all of the notes will have converted by the redemption date.

 

As such the Company will require further funding to finance the capital programme in Slovenia and repay the loan notes as they fall due.  The Directors have a range of different options including, but not limited to, new borrowings or new equity placings.  However, there can be no guarantee over the outcome of these options and as a consequence there is a material uncertainty of the Group's ability to raise the necessary finance, which may cast doubt on the Group's ability to operate as a going concern. Further, the Group may be unable to realise its assets and discharge its liabilities in the normal course of business.

 

The Directors, however, remain confident of the Group's ability to operate as a going concern given the signing of agreements which give the Company a clear route through to first gas and in light of the significant recent support from new and longer term shareholders.

 

Liquidity and Capital Resources:

 

The Company continues to be an emerging business and currently has no production cash flows; consequently, it manages its working capital and liquidity position by balancing the timing of critical expenditure with available funds.  Further information on future funding arrangements and the Directors' assessment of the Group's going concern position is set out above.

 

Principal Risks and Uncertainties:

 

The principal risks and uncertainties affecting the business activities of the Group remain those detailed on pages 50-52 of the Annual Review 2015, a copy of which is available on the Company's website at www.ascentresources.co.uk. 

 

 

2.     Operating loss is stated after charging


Six months ended

Six months ended

Year ended



30 June

30 June

31 December



2016
Unaudited

2015
Unaudited

2015
Audited



£ '000s

£ '000s

£ '000s

Employee costs


277

397

702

Termination payments


-

-

279

Share based payment charge


83

73

147

Foreign Exchange differences


(1)

-

3






Included within Admin Expenses





Audit Fees


25

26

59

Fees payable to the company's auditor for other services


-

-

3



25

26

62

 

3.     Finance income and costs recognised in loss


Six months ended

Six months ended

Year ended



30 June

30 June

31 December



2016
Unaudited

2015
Unaudited

2015
Audited



£ '000s

£ '000s

£ '000s

Finance income





Income on bank deposits


-

1

1

Foreign exchange movements realised


-

-

3

Other income


153

-

-

Gain on EnQuest liability restructuring


-

-

741



153

1

745

Finance cost





Interest payable on borrowings


(814)

(624)

(1,451)

Bank Charges


(8)

(1)

(5)

Unwinding of EnQuest liability


-

(186)

(186)

Foreign exchange movements realised


1

(9)

(3)

Loss on extinguishment of loan notes


-

(854)

(856)



(821)

(1,674)

(2,501)

 

The liability written off represented a creditor dating back more than five years which the Company no longer deems to be payable.

 

Convertible loan notes were restructured during the prior periods and a full commentary is contained within the audited financial statements for the year ended 31 December 2015 and are available at www.ascentresources.co.uk.

 

 

4.     Loss per share


Six months ended

Six months ended

Year ended



30 June

30 June

31 December



2016
Unaudited

2015
Unaudited

2015
Audited



£ '000s

£ '000s

£ '000s

Result for the period





Total loss for the period attributable to equity shareholders


1,344

2,684

3,644






Weighted average number of ordinary shares


Number

Number

Number

For basic earnings per share


258,096,858

77,060,955

88,160,768






Loss per share (Pence)


0.52

3.48

4.13

 

 

The weighted average number of shares for six months ended 30 June 2015 has been adjusted for the share consolidation.  The previously presented total was 1,514,219,096 which equated to 77,060,955 as if the share consolidation had taken place at the start of 2015.

 

Potential shares to be issued are antidilutive so the basic earnings per share is equivalent to the diluted earnings per share.

 

 

5.     Exploration and Evaluation Costs

Exploration Costs


Slovenia

Total

Cost




At 1 January 2015


33,166

33,166

Additions


174

174

Effects of exchange rate movements


(1,885)

(1,885)

At 30 June 2015


31,455

31,455

At 1 July 2015


31,455

31,455

Additions


487

487

Effects of exchange rate movements


769

769

At 31 December 2015


32,711

32,711

At 1 January 2016


32,711

32,711

Additions


144

144

Effects of exchange rate movements


2,345

2,345

At 30 June 2016


35,200

35,200





Carrying value




At 30 June 2016


35,200

35,200

At 31 December 2015


32,711

32,711

At 30 June 2015


33,166

33,166

 

 

 

 

6.     Borrowings

 

 

Conversion of loan notes during the period


Shares issued

Principal

Interest

Total



Number

£

£

£

07 April 2016


9,199,293

81,681

10,312

91,993

14 April 2016


12,218,647

108,490

13,696

122,186

14 April 2016


28,156,159

250,000

31,562

281,562

14 April 2016


20,731,493

184,076

23,239

207,315

25 April 2016


38,533,398

342,140

43,194

385,334

04 May 2016


23,786,327

211,200

26,663

237,863

17 May 2016


22,524,931

200,000

25,249

225,249

06 June 2016


99,334

882

111

993

13 June 2016


46,176,109

410,000

51,761

461,761

13 June 2016


46,176,109

410,000

51,761

461,761

21 June 2016


5,862,153

55,112

3,510

58,622

21 June 2016


29,078,558

258,190

32,596

290,786







Total for the period to 30 June 2016


282,542,511

2,511,771

313,654

2,825,425

 

 

 

 

7.     Share Capital


# Ordinary Shares

Nominal Share Price (Pence)

Share Capital £

1st January 2015 Opening Balance


1,458,507,909

0.10

1,458,508

Conversions to 30 June 2015


611,550

0.10

612

May 2015 Placing - PrimaryBid


275,000,000

0.10

275,000

Balance at 30 June 2015


1,734,119,459

0.10

1,734,119

Conversions from 1 July 2015 to 30 November 2015

2,991,304

0.10

2,991

Impact of capital re-organisation


(1,650,255,216)



November 2015 Placing


70,350,000

0.20

140,700

Conversions from 1 December '15 to 31 December '15

101,362

0.20

203

Balance at 31 December 2015


157,306,909


1,878,014

Being:





Ordinary shares


157,306,909

0.20

314,614

Deferred shares


1,737,110,763

0.09

1,563,400





1,878,014






Balance at 1 January 2016


157,306,909


1,878,014

April 2016 Placing - Primary Bid


35,714,285

0.20

71,429

June 2016 Placing - PrimaryBid


83,333,333

0.20

166,667

June 2016 Placing - Henderson


83,333,333

0.20

166,667

Conversions in the period


282,542,511

0.20

565,085

Balance at 30 June 2016


642,230,371


2,847,860

Being:





Ordinary shares


642,230,371

0.20

1,284,461

Deferred shares


1,737,110,763

0.09

1,563,400





2,847,860

 

In total 484,923,471 new ordinary shares were issued during the period in three equity placings and a number of loan note conversions which are detailed in note 6 above.

 

On 7 April 2016 the Company raised £500,000 (£477,500 net of costs) via the placing of 35,714,285 new ordinary shares of 0.2pence each in the Company at a price of 1.4pence per placing share with investors using the PrimaryBid platform.

 

On 1 June 2016 the Company raised £500,000 (£477,500 net of costs) via the placing of 83,333,333 new ordinary shares of 0.2pence each in the Company at a price of 0.6pence per placing share with investors using the PrimaryBid platform.

 

On 7 April 2016 the Company raised £500,000 (£500,000 net of costs) via the placing of 83,333,333 new ordinary shares of 0.2pence each in the Company at a price of 0.6pence per placing share to Henderson Global Investors.

 

These funds have been used to confirm the alternative route to market and to begin planning and ordering of equipment for the connection of our existing wells and the refurbishment of processing facilities.

 

 

8.     Events subsequent to the end of the reporting period

On 1 August 2016 the Company reported that, together with our Slovenian partners, it had signed the conditional agreements necessary to allow commercial gas production to commence as early as January 2017.

The Company and its Slovenian partners have negotiated a gas sale and purchase agreement with INA, Croatia's leading oil & gas company, which will enable the Joint Venture to sell untreated gas, within our partner's production systems, at the Slovenian / Croatian border.

The Company also announced the signing of a condition sale and purchase agreement to acquire 100% of Trameta doo. a company which owns access to a key section of pipeline in Slovenia in return for the issue of up to 75 million Consideration Shares plus Options over a further up to 7.5 million Subscription Shares. 

 

On 22 August 2016 the resolutions necessary to approve these agreements were approved by shareholders.

 

 

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
IR VVLFFQKFXBBK

Companies

Ascent Resources (AST)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today