TIDMAST
RNS Number : 4686J
Ascent Resources PLC
14 April 2020
Ascent Resources plc
("Ascent" or the "Company")
Cuba New Market Entry
Board Changes
Issue of Equity
14 April 2020
Ascent Resources Plc (LON: AST) the onshore European and
Caribbean / Hispanic American oil and gas company, is pleased to
announce its first acquisition in its wider international strategy,
a change of Directorate and the issue of equity.
Highlights:
-- First transaction in the Company's Caribbean entry comprising
the acquisition of Energetical Limited ("Energetical"), a UK
Company with exclusive rights to secure a Production Sharing
Contract ('PSC') on a producing onshore Cuban oil licence.
Energetical delivers exclusive rights to the 9B Block in Cuba
("Block 9B") that contains the onshore Majaguillar and San Anton
fields, located on the North coast of Cuba and currently producing
190 bbls/day gross from three wells.
-- The Company is reviewing potential further acquisitions to
develop a broad Cuban portfolio across both oil and gas and
potentially mining, alongside the existing oil and gas asset in
Slovenia and further European growth opportunities which are under
active consideration.
-- Andrew Dennan joins as Chief Executive Officer, subject to
regulatory due diligence, to implement the wider international
strategy.
Executive Chairman James Parsons commented:
'Cuba is one of the last remaining largely untapped hydrocarbon
provinces of scale.
We see here, despite the recent market turmoil and oil price
collapse, the unique ingredients for a new, highly material, growth
trajectory across oil, gas and mining when the cycle turns. We also
see near term inflection points for Cuba, including the approaching
US elections.
We are therefore positioning Ascent as an advantaged platform
for counter cyclical acquisitive growth with a focus on low cost
production, manageable initial capital commitments and near term
re-rate potential. We intend to leverage off our operated position
in Slovenia.'
Cuban Oil and Gas Market
The Company announced on 24 March 2020 that it had identified
the Caribbean and Hispanic America region as highly prospective for
oil and gas, even when taking into consideration current volatile
markets and the recent decline in global oil prices. This is a
region where the new team's industry experience, existing
relationships and skill set can add material value for shareholders
in a short timeframe. The Company is pleased to be able to announce
a transaction so soon after the recent restructuring.
The Republic of Cuba is one of the few remaining world-class,
yet largely unexploited hydrocarbon systems. The Company sees clear
first mover opportunity for a quoted oil and gas Company to counter
cyclically deploy its operational skill and access to capital in a
country which has been starved of investment and technology and
impacted by US Sanctions.
Cuba currently produces approximately 45,000 bopd of mostly
heavy oil with c. 100 mscf/d of gas with clear targets for growth
in their E&P sector to fuel electricity generation in the
country which currently often experiences black outs. Cuba has the
advantage of offering an international investor access to good
infrastructure and an educated workforce alongside significant
under exploited hydrocarbon resource potential. To promote
international investment Cuba enacted a new law in 2014 to offer
protections to foreign investors, allowing payments in foreign
currency and withdrawal of funds from the country. Cuba currently
offers excellent fiscal and commercial terms for oil and gas
operators, including nil cost entries into PSCs and the right to
sell all crude at the wellhead priced in foreign currency, thereby
securing oil commercialisation.
The Company has identified and taken steps in seeking to secure
counter cyclically, a portfolio of onshore assets in Cuba with
significant potential with Energetical being the first transaction.
This targeted portfolio is primarily low cost barrels with a blend
of development, appraisal and exploration potential, representing a
balance of opportunities across the cycle, with selective mining
assets also being considered.
Acquisition of Energetical
As a first step towards building its Cuban portfolio, the
Company announces that it has signed and completed an agreement to
purchase Energetical. The initial consideration for the acquisition
of Energetical comprises the issue of six million new ordinary
shares ("Consideration Shares") to the selling shareholders
("Sellers") of Energetical. A further GBP450,000 of deferred
consideration will be payable on the execution of production
sharing contracts covering the 9B Block, of which GBP350,000 will
be satisfied by the issue of new ordinary shares ("Deferred
Consideration Shares"), priced at the 30 day VWAP at the time of
issue and GBP100,000 will be paid in cash. The Sellers have agreed
not to dispose of any of the Consideration Shares for a period of
one year. The Company has agreed to a carve-out to this lock-in
which permits the sale of up to an aggregate of one million
Consideration Shares following the expiry of an initial three month
period. It is expected that the Consideration Shares will be
admitted to trading on AIM on 20 April 2020.
Block 9B, containing the Majaguillar and San Anton onshore
fields, is on the North coast of Cuba, some 120 km East of Havana
and currently produces 190 bbls/day gross from three wells.
The Company has initially assessed that recovery rates could be
significantly rejuvenated with the simple and relatively low cost
addition of basic equipment and reservoir management. It is also
assessing the viability of new deviated onshore wells drilled into
the crest of the fields which it expects to flow with an initial
production rate in excess of 1,000 bopd. None of these operations
require new seismic and none of the wells have yet to produce any
water and no oil water contact has been identified. There are
another three wells at Majaguillar and the San Anton field that are
shut in at this time mainly due to the lack of basic equipment such
as pumps.
Energetical has entered into a Memorandum of Understanding with
CUPET (the Cuban National Oil Company) giving it exclusive rights
to enter into a PSC over Block 9B.
The Company, following the acquisition of Energetical, is
targeting signature of a Production Sharing Contract with CUPET
(which entitles the Company to benefit from any uplift in
production above the incumbent base production rates). In summary
there are eight wells on these fields, all of which have previously
produced and have workover potential (many of the wells have
deteriorated with age due to old completion techniques and lack of
further field investment). For the 12 month period to 30 June 2019
Energetical made a loss of GBP7,239.
The Company is also currently in negotiation with CUPET
regarding a variety of other onshore blocks and further
announcements will be made in due course.
Board Changes
Ascent has appointed Andrew Dennan as Chief Executive Officer
with immediate effect. Mr Dennan will join the Board following
completion of the prerequisite regulatory checks. Andrew has a
wealth of corporate finance, merger, asset funding and corporate
transaction experience on AIM. He was formerly the Chief Financial
Officer of Coro Energy Plc where he retains the position of Non
Executive Director and he is also a Non Executive Director of
Nu-Oil and Gas Plc.
Andrew Dennan currently holds 1.9 million shares in Ascent
Resources. He has today been granted three year vest, five year
expiry options over 1,385,894 new ordinary shares at a price of 5
pence per share.
Further to the announcement of 14 February 2020 and following
successful completion of the prerequisite checks, the Company
confirms that Leonardo Salvadori has also now been appointed an
independent non-executive director of the Company with immediate
effect. The disclosures required by Schedule 2 (g) of the AIM Rules
can be found in the appendix to this announcement.
The Company also announces that John Buggenhagen is leaving the
Company and will step down from the Board with immediate effect as
a result of the restrictions that could be placed on him as a US
citizen from the Company's new strategy. John will continue to
consult to the Company, however exclusively for its European growth
projects.
Issue of Equity
The Company, consistent with its policy to preserve its cash
balances, has issued 623,777 new ordinary shares of 0.5 pence at a
price of 3.5 pence per share to a previously contracted
professional advisor in lieu of fees (the "Adviser Shares").
Application for admission to trading on AIM for the 623,777
Adviser Shares has been made and admission is expected to take
place on 20 April 2020. The Adviser Shares will rank pari passu
with the existing ordinary shares in issue.
In accordance with the provision of the Disclosure Guidance and
Transparency Rules of the Financial Conduct Authority, the Company
confirms that, following the issue of the Adviser Shares and the
Consideration Shares, its issued ordinary share capital will
comprise 47,291,213 ordinary shares of 0.5 pence each. All of the
ordinary shares have equal voting rights and none of the ordinary
shares are held in Treasury. The total number of voting rights in
the Company will therefore be 47,291,213 on admission of the
Adviser Shares and the Consideration Shares. The above figure may
be used by shareholders as the denominator for the calculations to
determine if they are required to notify their interests in, or
change to their interest in, the Company.
Certain information contained in this announcement would have
constituted inside information (as defined by Article 7 of
Regulation (EU) No 596/2014) ("MAR") prior to its release as part
of this announcement and is disclosed in accordance with the
Company's obligations under Article 17 of MAR.
Enquiries:
Ascent Resources plc Via Vigo Communications
Andrew Dennan
WH Ireland, Nominated Adviser & Broker
James Joyce / Chris Savidge 0207 220 1666
SP Angel, Joint Broker
Richard Hail, Caroline Rowe 0203 470 0470
APPENDIX:
The following details in relation to the appointment of Mr.
Salvadori, aged 61, are disclosed in accordance with Schedule 2(g)
of the AIM Rules:
Current directorships Past directorships held within
the last five years
Apennine Energy Spa Northsun Italia Spa
Dana Gas Egypt
-------------------------------
There are no other disclosures in accordance with Schedule 2(g)
of the AIM Rules.
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END
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