TIDMAST
RNS Number : 5680N
Ascent Resources PLC
27 October 2016
THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR
RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY
OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA,
JAPAN, SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH
RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL
This Announcement contains inside information.
27 October 2016
Ascent Resources plc
("Ascent", the "Group", or the "Company")
Proposed Placing
The Board of Ascent (AIM: AST) is pleased to announce that it
has conditionally raised approximately GBP4.5 million (gross of
expenses) through the placing of 349,901,027 new Ordinary Shares
(the "Placing Shares") at a price of 1.0 pence per share (the
"Placing Price") and the subscription for GBP1,000,000 in principal
amount of new 2016 Loan Notes at a price of GBP1 each (together,
the "Placing") with existing and new investors. This is expected to
provide the Company with sufficient funds to complete the programme
of works required to bring the Petišovci field into production in
early 2017 and make the Company operating cash flow positive.
The Placing funds will be deployed to:
-- Recomplete wells Pg-10 and Pg-11a
-- Tie-in the two wells to the existing central treatment station (CPP)
-- Refurbish the CPP
-- Provide additional working capital to the Company, and
-- Repay the GBP871,510 outstanding Henderson Loan Facility
Furthermore, the Company has agreed with Henderson on behalf of
the 2013 and 2014 Loan Note holders to defer the redemption date on
the balance of approximately GBP8.2 million 2013 and 2014 Loan
Notes (including rolled up interest) to 19 November 2019, the same
redemption date as for the new 2016 Loan Notes.
The Placing Price and the 2016 Loan Note conversion price of, in
each case, 1 pence, represents a discount of approximately 14.9 per
cent. to the closing price for the Company's ordinary shares on 26
October 2016, being 1.175 pence per Ordinary Share.
The Placing is being implemented under the Company's existing
share authorities, save in respect of the placing of 87,151,027
Placing Shares which are to be issued conditional, inter alia, on
the approval of certain resolutions by shareholders at a general
meeting expected to be convened for 15 November 2016 ("General
Meeting").
Settlement and admission to trading on AIM of the 262,750,000
First Placing Shares, and the issue of the 2016 Loan Notes, is
expected to occur on 31 October 2016. Settlement and admission to
trading on AIM of the 87,151,027 Second Placing Shares is expected
to occur, subject to shareholder approval, shortly following the
General Meeting.
Additionally, the Directors have indicated their desire to
invest up to GBP50,000 in the 2016 Loan Notes. A further
announcement updating the position of the Directors will be made in
due course.
Colin Hutchinson, CEO, commented:
"We are very pleased with the support from our stakeholders,
existing and new in the fund raise, which we expect to allow us to
complete the work required to reach first gas in early 2017 and as
such is a significant development for the Company.
We look forward to updating the market with further news in due
course."
Enquiries:
Ascent Resources plc 0207 251 4905
Clive Carver, Chairman
Colin Hutchinson, CEO
Stockdale Securities Limited, Nominated Adviser and Broker 020 7601 6100
Richard Johnson
Andy Crossley
Northland Capital Partners Limited, Broker 020 3861 6625
Tom Price
John Howes
Abigail Wayne
IFC Advisory Ltd, Financial PR and IR 0203 053 8671
Graham Herring
Tim Metcalfe
Heather Armstrong
A Circular, to include a notice of General Meeting expected to
be held on or around 15 November 2016, will be sent to Shareholders
shortly and will also be available on the Company's website:
www.ascentresources.co.uk.
Note: This announcement contains inside information which is
disclosed in accordance with the Market Abuse Regulation. In
addition, market soundings (as defined in MAR) were taken in
respect of the Placing with the result that certain persons became
aware of inside information (as defined in MAR), as permitted by
MAR. This inside information is set out in this Announcement.
Therefore, those persons that received inside information in a
market sounding are no longer in possession of such inside
information relating to the Company and its securities.
Stockdale Securities Limited ("Stockdale") and Northland Capital
Partners Limited ("Northland") are acting exclusively for the
Company and no-one else in connection with the Placing and
Admission and will not regard themselves as owing duties under the
rules and regulations of the Financial Conduct Authority to any
other person or regard any other persons as their client, nor are
they providing advice in relation to the Placing, Admission or any
transaction, matter or arrangement referred to in this
Announcement.
Neither this Announcement nor any part of it constitutes an
offer to sell or subscribe for, nor a solicitation to offer to
purchase or to subscribe for Company securities in any
jurisdiction.
The distribution of this Announcement and the Placing of the
Placing Shares and 2016 Loan Notes in certain jurisdictions may be
restricted by law. No action has been taken by the Company or
Stockdale or Northland that would permit an offering of such shares
or possession or distribution of this Announcement or any other
offering or publicity material relating to such shares in any
jurisdiction where action for that purpose is required. Persons
into whose possession this Announcement comes are required by the
Company, Stockdale and Northland to inform themselves about, and to
observe, such restrictions.
No offering document, prospectus or admission document has been
or will be submitted to be approved by the FCA or submitted to the
London Stock Exchange plc in relation to the Placing and/or
Admission. Any investment decision to buy securities in the Placing
must be made solely on the basis of publicly available information.
Such information is not the responsibility of and has not been
independently verified by the Company, Stockdale or Northland or
any of their respective affiliates.
1. Introduction
The Board of Ascent is pleased to announce that it has
conditionally raised approximately GBP4.5 million (gross of
expenses) through the placing of 349,901,027 new Ordinary Shares at
a price of 1.0 pence per share and the subscription for
GBP1,000,000 in principal amount of new 2016 Loan Notes at a price
of GBP1 each with existing and new investors. This is expected to
provide the Company with sufficient funds to complete the programme
of works required to bring the Petišovci field into production in
early 2017.
Furthermore, the Company has agreed with Henderson on behalf of
the existing Loan Note holders to defer the redemption date on the
balance of approximately GBP8.2 million 2013 and 2014 Loan Notes
(including rolled up interest which ceased accruing in January
2015) to 19 November 2019, which is the redemption date for the new
2016 Loan Notes.
Additionally, the Directors have indicated their desire to
invest up to GBP50,000 in the 2016 Loan Notes. A further
announcement updating the position of the Directors will be made in
due course.
The proceeds of the Placing will be used principally to fund the
capital programme required to bring the Petišovci field into
production. Additionally, subject to completion of the Second
Placing, the Company will use the GBP871,510 Second Placing
proceeds to repay the outstanding balance including accrued
interest and fees owed on the Company's GBP7 million facility
provided by Henderson Global Investors in 2015 ("Henderson Loan
Facility"). This repayment will materially reduce the Company's
interest-bearing debt. Following repayment of the balance due
Henderson has agreed to release its charge over shares in Ascent
Slovenia Limited.
The Petišovci concession in north eastern Slovenia has
independently verified gas in place of 456 BCF. Ascent has a 75%
interest in the concession which management estimate has an NPV10
of around EUR200 million. The natural gas contained within the
field offers Slovenia the ability to achieve a significant degree
of energy independence and could significantly boost the economy of
the region.
The Placing funds are expected to take the Company through to
first gas and to operating cash flow positive. From early 2017 the
Board expects the Company to be generating cash and building
knowledge about well performance and reservoir behaviour. This
should allow the Company to fund further field development,
principally through a mixture of debt and operating cash flow.
2. The Petišovci project
Background
Ascent has a 75% interest in the Petišovci gas field in
Slovenia, with its partner Geoenergo holding the remaining 25%
through a concession signed in 2002 which is due for renewal in
2022. Ascent is liable for 100% of the financing obligations for
the project. In 2011, two wells were drilled and flowed briefly at
commercial rates; however, as previously reported, development of
the Petišovci field has been delayed due to various joint venture
and permitting issues.
Approximately EUR43 million has been spent to date on the
development of the field, which could supply a significant portion
of Slovenia's future gas requirements, thereby reducing its
dependency on imported gas. The Board estimates that Ascent's
investment in the Petišovci project is the largest UK investment in
Slovenia and Ascent's share of the project has an estimated NPV10
of EUR200 million.
In 2015, in recognition of the key strategic importance of the
project, the Slovenian government designated Nafta Lendava, which
holds an interest in the concession through its shareholding in
Geoenergo, as one of 21 important national assets.
Route to first gas
The Petišovci field is around 5km from the Croatian border and
the location of the Me imurje gas fields of Vučkovec, Vukanovec and
Zebanec which are operated by INA, Croatia's leading Oil & Gas
company.
INA's existing production pipeline runs from these gas fields to
the methanol plant adjacent to the Petišovci field previously used
to deliver untreated gas to the methanol plant. At Me imurje this
pipeline is linked to INA's newly constructed production pipeline
which connects INA's gas production fields at Me imurje to a gas
processing facility at Molve, also in Croatia.
Over the past 12 months the Company and its Slovenian partners
have negotiated a commercial agreement with INA, and an operational
plan, which will enable the Joint Venture to sell untreated gas,
within our partner's production systems, at the Slovenian/Croatian
border.
The agreement will continue for an initial period of twelve
months whilst the Company tests the productivity of the wells and
the responsiveness of the gas reservoirs. After twelve months the
agreement can be renewed. Gas will be sold at a price indexed to
the day ahead Central European gas hub pricing less a discount to
reflect the costs of treatment in Croatia.
IPPC Permit
The Company's long term plan for the project is to sell joint
venture gas into the national grid in Slovenia as this should
attract a higher margin. Before gas from Petišovci can be injected
into the national or international grid it needs to be cleaned to
remove excess carbon dioxide. The cleaning of the gas requires a
Gas Gathering and Separation Station ("GGSS") to reduce the carbon
dioxide content of the gas to meet national gas grid
specifications.
Under Directives adopted by all EU Governments, the installation
of the GGSS requires an IPPC Permit. The application was completed
in June 2014 and submitted to the Environmental Agency ("ARSO") for
approval. ARSO approved the permit in December 2014, subject to
public consultation, and in June 2015 announced that, following
completion of the consultation, the Permit had been provisionally
awarded, subject to a statutory period for appeals. In August 2015,
the Company received formal notification that two non-government
organisations had lodged appeals, to which Ascent submitted its
responses in August 2015. The Slovenian Environment Minister
informed the Company in November 2015 that she had rejected the
appeals against the June 2015 award of the IPPC permit. One of the
non-governmental organisations appealed the decision to the
Administrative Court.
In May 2016 the Administrative Court ruled that the IPPC Permit
should be withdrawn. The reason given by the Court for this
decision was that, after the original application was made in June
2014, the relevant law was changed and the process that was
followed did not accord to the new law. This is despite the new law
explicitly stating that any applications submitted (but not yet
resolved) prior to the effective date for the new law should be
pursued exclusively under the old rules.
As previously reported, the Company is currently preparing its
appeal against a decision it considers to be wrong and damaging to
the Company, its partners and the Slovenian people. The Company is
working with its partners to avoid the need for an unnecessary
additional Environmental Impact report and therefore to fast-track
the issuance of the IPPC permit. Based on the absence of
environmental rationale for the Court's decision and our continued
dialogue with the Slovenian authorities, the Board is optimistic of
an early success in this regard.
3. Work programme
The pressure test of the export production pipeline, which is a
pre-condition to the commencement of gas deliveries to INA, was
completed to the Company and INA's satisfaction in August 2016. The
Directors are confident that the official certification of the
pipeline will be received shortly.
The remaining work programme consists principally of:
-- refurbishment of an existing gas treatment facility (CPP)
which is owned by Petrol Geoterm, a sub-contractor to the Joint
Venture, which Ascent will finance. This facility will be used to
prepare the gas for transmission into INA's production
pipeline;
-- making existing wells Pg-10 and Pg-11A ready for production
and tying them into the existing pipeline infrastructure; and
-- connecting the pipeline which currently runs from the
existing CPP to INA's production pipeline.
In aggregate the capital expenditure required is expected to be
approximately EUR3 million and the work
programme is expected to take around five months. The Company
plans to begin test production in January 2017 with the first
commercial sale of raw gas expected to occur in early 2017.
4. Funding
Ascent is committed under the terms of existing joint venture
arrangements to fund 100% of the project costs, which to date
amount to EUR43 million. Once in production however, under the
terms of the Joint Venture Agreement, Ascent will receive 90% of
the proceeds from the project until at least the EUR43 million
costs have been recovered.
Commencing production using the new route to Croatia will
provide the Directors with far greater knowledge of the
productivity of the two principal wells and the gas reservoirs. The
Directors now expect the Company to be cash flow positive before
any commitments are entered into concerning a new treatment
facility in Slovenia.
5. Commercial rationale
Completion of the proposed Placing will enable the Company to
conduct the work programme referred to above and to repay a
GBP800,000 short-term loan (along with GBP71,510 of accrued
interest and fees). The loan was part of a facility of up to GBP7
million made available by Henderson during 2015 and 2016.
6. Placing details
Details of the Placing
The Company intends to raise approximately GBP4.5 million (gross
of expenses) through the issue of 349,901,027 new Ordinary Shares
at the Placing Price and the issue of GBP1,000,000 in principal
amount of new 2016 Loan Notes at a price of GBP1 each. The Placing
Shares will, when issued, rank pari passu in all respects with the
Ordinary Shares, including the right to receive dividends and other
distributions declared following
Admission.
The Placing will be conducted in two tranches. The first tranche
comprises 262,750,000 new Ordinary Shares ("First Placing Shares")
and GBP1.0 million in principal of 2016 Loan Notes, each of which
are being issued using the Directors' existing authority. The
second tranche comprises 87,151,027 new Ordinary Shares ("Second
Placing Shares"), which are being placed, conditional on, inter
alia, the passing of certain resolutions ("Resolutions") at the
general meeting of the shareholders of the Company (the "General
Meeting"), expected to be convened on 15 November 2016.
Application for Admission
Application has been made to the London Stock Exchange for the
First Placing Shares to be admitted to trading on AIM. Subject to
completion of the Placing, it is expected that the First Placing
Shares will be admitted to trading on AIM and that dealings will
commence in the First Placing Shares at 8.00 a.m. on 31 October
2016 ("First Admission"), following which the Company will have
989,542,004 ordinary shares in issue. There are no shares held in
treasury. The total voting rights in the Company will therefore be
989,542,004 at First Admission and Shareholders may use this figure
as the denominator by which they are required to notify their
interest in, or change to their interest in, the Company under the
Disclosure Guidance and Transparency Rules.
Settlement and admission to trading on AIM of the 87,151,027
Second Placing Shares ("Second Admission") is expected to occur,
subject to shareholder approval, shortly following the General
Meeting. A further announcement will be made in due course in
relation to application for admission to trading on AIM of the
87,151,027 Second Placing Shares.
The issue of the First Placing Shares, is conditional, inter
alia, upon the Placing Agreement (as detailed below) becoming
wholly unconditional (save as to First Admission) and not having
been terminated in accordance with its terms at any time prior to
First Admission. The First Placing is not conditional on the
passing of the Resolutions at the General Meeting.
The issue of the Second Placing Shares, is conditional, inter
alia, upon (i) the approval of the Resolutions at the General
Meeting, and (ii) the Placing Agreement becoming wholly
unconditional (save as to Second Admission) and not having been
terminated in accordance with its terms at any time prior to Second
Admission.
Upon First Admission the First Placing Shares will represent
approximately 26.5 per cent. of the Company's issued share capital
at that time. Assuming completion of the Second Placing, the total
Placing Shares will represent 32.5 per cent. of the Company's share
capital as enlarged by the Placing.
No application will be made for the listing of the 2016 Loan
Notes on any exchange.
The Placing Agreement
Pursuant to the terms of the Placing Agreement, Stockdale and
Northland have conditionally agreed to use their reasonable
endeavours, as agents for the Company, to procure subscribers for
the Placing Shares at the Placing Price and subscribers for the new
2016 Loan Notes at a price of GBP1 each. The Placing is not being
underwritten.
The Placing Agreement contains customary warranties given by the
Company with respect to its business and certain matters connected
with the Placing. In addition, the Company has given certain
indemnities to Stockdale and Northland in connection with the
Placing. Stockdale and Northland are entitled to terminate the
Placing Agreement in specified circumstances including where there
has been a material breach of the warranties.
7. General Meeting
The Directors do not currently have the authority to allot all
of the Placing Shares and, accordingly, a Circular, to include a
notice of General Meeting expected to be held on 15 November 2016,
will be sent to Shareholders shortly, at which resolutions will
proposed:
-- authorising the issue of the Second Placing Shares;
-- giving the Directors general authority to allot Ordinary Shares;
-- dis-applying statutory pre-emption rights in relation to the
issue of the Second Placing Shares; and
-- dis-applying statutory pre-emption rights in relation to the
general authority to allot Ordinary Shares.
DEFINITIONS
The following definitions apply throughout this announcement
unless the context otherwise requires:
DEFINITIONS
The following definitions apply throughout this announcement
unless the context otherwise requires:
"2013 Loan Notes" the convertible loan notes of GBP1 each which
are convertible at 1p per Ordinary Share and
are now repayable on 19 November 2019, and
were issued on the terms of the 2013 Convertible
Loan Note Instrument
"2013 Convertible the convertible loan note instrument dated
Loan Note Instrument" 23 December 2012 pursuant to which the 2013
Loan Notes were originally constituted
"2014 Loan Notes" the convertible loan notes of GBP1 each which
are convertible at 1p per Ordinary Shares and
are now repayable on 19 November 2019 and were
issued on the terms of the 2014 Convertible
Loan Note Instrument
"2014 Convertible the convertible loan note instrument dated
Loan Note Instrument" 3 February 2014 pursuant to which the 2014
Convertible Loan Notes were originally constituted
"2016 Convertible the convertible loan note instrument dated
Loan Note Instrument" 27 October 2016 pursuant to which the 2016
Convertible Loan Notes were originally constituted
"2016 Loan Notes" the convertible loan notes of GBP1 each which
or "New Loan Notes" are convertible at 1p per Ordinary Share and
are repayable on 19 November 2019 and were
issued on the terms of the 2016 Convertible
Loan Note Instrument
"Admission" admission of the Placing Shares to trading
on AIM becoming effective in accordance with
the AIM Rules
"AIM" the market of that name operated by the London
Stock Exchange
"AIM Rules" the AIM Rules for Companies published by the
London Stock Exchange from time to time
"Announcement" this announcement
"Circular" the document, expected to be despatched to
Shareholders shortly, containing information
about the Placing and the General Meeting
"Closing Price" the closing middle market quotation of a share
as derived from the AIM Appendix to the Daily
Official List of the London Stock Exchange
"Company" or "Ascent" Ascent Resources plc
"Directors" or "Board" the Directors of the Company as at the date
of this announcement, or any duly authorised
committee thereof
"EU" the European Union
"FCA" the UK Financial Conduct Authority
"FSMA" the Financial Services and Markets Act 2000
(as amended from time to time)
"General Meeting" the General Meeting of the Company expected
to be convened for 11.00 a.m. on 15 November
2016
"Geoenergo" Geoenergo d.o.o., a company incorporated and
existing under the laws of the Republic of
Slovenia (company identification number 1465830000,
tax identification number SI28050657), with
its registered office in Lendava, Mlinskaulica
5, 9220 Lendava, Republic of Slovenia, which
is owned in equal parts by Nafta Lendava and
Petrol
"Group" the Company and its existing subsidiaries and
subsidiary undertakings
"Henderson" Henderson Global Investors Limited in its capacity
as discretionary investment manager of The
Strathclyde Pension Fund and Henderson UK and
Irish Smaller Companies Fund; and Alphagen
Capital Limited in its capacity as discretionary
investment manager of The Alphagen Volantis
Fund Limited, Henderson UK Small Cap Best Ideas
Fund and The Citigroup Pension Plan Investment
Committee, both of 201 Bishopsgate, London
EC2M 3AE, or either of them as the context
shall require
"IPPC" Integrated Pollution Prevention and Control
Permit
"Joint Venture" the operating arrangement between Ascent Slovenia
Limited, a wholly owned subsidiary and Geoenergo
in relation to the Petišovci concession
area
"Loan Notes" or "existing the 2013 Loan Notes and/or the 2014 Loan Notes,
Loan Notes" as appropriate
"London Stock Exchange" London Stock Exchange plc
"Nafta Lendava" Nafta Lendava d.o.o., with subsidiaries, Eko
Nafta d.o.o., and Nafta Varovanje In Po arna
Varnost d.o.o.
"Notice of General the notice of General Meeting set out at the
Meeting" or "Notice" end of this document
"Ordinary Shares" ordinary shares of 0.2 pence each in the capital
of the Company
"Petrol" Petrol d.d. a company incorporated and existing
under the laws of the Republic of Slovenia
with its registered office at Dunajska 50,
1000 Ljubljana.
"Prospectus Rules" the Prospectus Rules published by the FCA
"RIS" a regulatory information service approved by
the London Stock Exchange for the purposes
of the AIM Rules
"Shareholders" holders of Ordinary Shares at the date of this
document
"United Kingdom" or the United Kingdom of Great Britain and Northern
"UK" Ireland
A reference to GBP is to pounds sterling, being the lawful
currency of the UK
This information is provided by RNS
The company news service from the London Stock Exchange
END
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