TIDMAST
RNS Number : 5957G
Ascent Resources PLC
07 November 2018
Ascent Resources plc / Epic: AST / Index: AIM / Sector: Oil and
Gas
07 November 2018
Ascent Resources plc
("Ascent" or the "Company")
Corporate Update
Recent developments
Following our announcement on 30 October 2018, Board of Ascent
would like to update the market on the status of its IPPC Permit
application.
Last week the Board of Ascent was made aware of the apparent
decision by the Environment Minister to carry out an internal
review of both the IPPC Application and our application to re-enter
wells Pg-10 and Pg-11A.
Since this news was made public the Company has been unable to
contact the Minister; last week most offices in Slovenia were
partially closed for public holidays.
It is unlikely that there will be any substantive developments
this week, as people key to the process are not available to meet.
We hope to bring an update to shareholders once we have some
clarity on the situation next week.
The Company has been in regular contact with our partners and
with officials from the British Chamber of Commerce and the British
Embassy to understand the reasons for the intervention and to
assess what the likely impact will be on our permit
applications.
Shareholder frustration
The Board of Ascent shares the deep frustration felt by
shareholders at the speed of the permitting process and this latest
intervention by the Minister. However, we would again ask
shareholders to show restraint and refrain from directly contacting
elected officials and public servants in Slovenia.
The volume of communications received, and the occasionally
aggressive tone of communications does nothing to further our cause
and could be taken by some as a reason to delay the process
further.
Benefit of the project to Slovenia
The apparent lack of support for the project by those in power
in Slovenia for the project is hard to reconcile with the clear
benefits to the country from the project:
1. Increased & secured employment
The Company and its partners, suppliers and customers are
important employers in the region. If the project develops as
planned, it is envisaged that employment would increase
significantly providing hundreds of well-paid engineering jobs. Any
further delays to the project will put current employment in the
region at risk.
2. Increase in tax revenues
The project will also generate meaningful tax revenues for the
government through the payment of corporate income tax, concession
fee's, employment tax and value added tax.
3. Provides energy independence
The estimated reserves and resources of the Petišovci field are
very significant in the context of Slovenia's national annual
natural gas consumption while the country currently imports a large
majority of its natural gas requirement. The project offers the
country the opportunity to gain a meaningful degree of energy
independence which is currently enjoyed by its neighbours on all
sides.
4. Facilitate a transition to a lower carbon economy
Currently Slovenia generates over 20% of its electricity by
burning coal and lignite while less than 1% comes from natural gas.
By transitioning to a cleaner fossil fuel, as articulated in the
country's strategic energy plan, Slovenia could reduce its carbon
emissions.
Misplaced environmental concerns
There is a long history of Oil and Gas production in the
concession area and it is important to stress that the IPPC
application relates solely to the installation of a new treatment
facility. The installation of such a facility would enable gas
produced in the concession area to be sold into the Slovenia
natural gas network, rather than exported, untreated, to Croatia as
is currently the case.
The Company realises that as it is involved in production which
involves low volume fracture stimulation there are some parties who
raise environmental concerns. The gas is contained in sandstone
reservoirs and therefore these reservoirs need to be stimulated, in
the same way as has been done many times in the history of the
Petišovci field.
The first operation of this kind at Petišovci was carried out in
1956 and, prior to Ascent's participation in the project, there had
been over one hundred such operations carried out with no recorded
negative environmental impact. Following the operations to
stimulate Pg-10 and Pg-11A the impact was studied in detail by
independent third parties in Slovenia and no causes for concern
were raised.
Whilst the process is compared to the hydraulic fracturing
carried out on a large scale in North America and elsewhere, the
practice is so different as to render such comparisons
irrelevant.
The gas in Slovenia is contained within sandstone rather than
shale. As sandstone is much more brittle than shale significantly
less water is needed at much lower pressures and far fewer
stimulations are required. In addition, the maximum number of wells
at Petišovci is expected to be a small fraction of standard North
American developments. The proposed development in Petišovci is
therefore not comparable to projects in North America.
While environmental scare stories may sell newspapers and
generate website traffic, they are not supported by the facts. Any
environment concerns raised during the permitting process by the
Slovenian Environment Agency have been answered to their
satisfaction.
Trading update
Ascent and the partners continue to produce gas from the
concession and production in October was around three times higher
than September which had been impacted by planned maintenance.
Total production for September was 232,228 cubic metres (8,201
Mcf) an average of 1.1 MMscfd, and revenue for the month was
EUR69,559.
Total production in October has increased to 679,191 cubic
metres (23,866 Mcf) an average of 0.9 MMscfd and revenue for the
month is expected to be EUR149,000.
Cash generated in Slovenia from operations currently more than
covers all of our local operating costs while expenditure in the UK
has been reduced significantly.
At 30 June 2018 we reported cash of GBP577,000 of which
GBP226,000 was reported as cash and GBP351,000 was restricted cash
held on deposit under the terms of our Gas Sales Agreement. At 30
September 2018 we have cash of GBP579,000, of this GBP401,000 is
reportable as cash and GBP178,000 is restricted cash held on
deposit under the terms of the Gas Sales Agreement.
Colin Hutchinson, CEO if Ascent Resources plc, commented:
"I ask again for shareholders to show restraint at what we
appreciate is a difficult time, we look forward to meeting with
those responsible for the process to address any concerns they may
have and hopefully find a way forward."
Ascent Resources plc
Clive Carver, Chairman
Colin Hutchinson, CEO 0207 251 4905
WH Ireland, Nominated Adviser & Broker
James Joyce / Chris Viggor 0207 220 1666
Yellow Jersey, Financial PR and IR
Tim Thompson / Harriet Jackson / Henry Wilkinson 0203 735 8825
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END
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