News alert from Ascent Resources PLC

01 December 2022

Ascent Resources plc

("Ascent" or the "Company")

Issue of new Equity, Debt Extension, Corporate Update, Proposed New Director Appointment and Total Voting Rights

Ascent Resources Plc (LON: AST), theonshore Hispanic American and European focussed energy and natural resources company, announces that it has undertaken a placing raising gross proceeds of £0.6 million, extended the maturity date of its loan and provides an update in relation to operations at its producing Slovenian gas project and ongoing partner disputes. In addition, the Company is delighted to announce the proposed appointment, subject to standard regulatory checks, of Marco Fumagalli, funding partner of Continental Investment Partners, to the Board as a Non-Executive Director.

Fundraising & Equity Issue

The Company is pleased to announce that it has raised £0.6 million (before expenses) in new equity funding to allow the Company to continue to pursue its revenue recognition claim against its joint venture ("JV") partner Geoenergo as well as to fund near term business development and general and administrative expenses.

The Company has today raised total gross new equity proceeds of £0.6 million by way of issue of 15,000,000 new ordinary shares of 0.5 pence each ("Placing Shares"), to new and existing shareholders, at a price of 4 pence per Placing Share ("Placing Price") (the "Fundraising"). The Placing Price represents an approximate 5% discount to the closing mid-market price on 30 November 2022, of 4.25 pence, being the latest practicable date prior to the publication of this announcement. Each Placing Share shall have one warrant attached to it giving the holder the right to exercise the warrant into one new share of the Company by paying a warrant exercise price of 5 pence per new warrant share at any time in the next two years. In addition, the Company will be issuing 1,232,500 new ordinary shares of 0.5 pence each to corporate suppliers and international contractors ("Consultant Shares"), at the Placing Price, in connection with contracted services rendered to the Company totalling £49,300.

Debt Extension

To allow sufficient runway for the Company to advance its revenue recognition claim against its JV partner to a binding conclusion as well as wider corporate initiatives, the Company also announces that it has agreed with its only lender, RiverFort, to restructure its debts of £270,000 plus the 8 per cent. coupon which was previously due to mature on 31 December 2022 as well as the £270,020 which was due for repayment in six monthly cash instalments of  £45,003 per month commencing in mid-February through to July 2023 (as announced 24 December 2021). Ascent has agreed to repay £50,000 of the total outstanding payment obligations of £561,620, with £25,000 in cash plus £25,000 which will be satisfied with the issue of 625,000 new shares ("Debt Shares") in the Company valued at the Placing Price. The remaining balance of £511,620 has also been re-profiled such that it will incur a coupon of 8 per cent and now be redeemable in six equal cash instalments of £92,091.60 as of 14 September 2023 and monthly thereafter with final payment on 14 February 2024. The Company has the right to redeem the loan early at any time. In consideration for Riverfort agreeing to re-profile the loans the Company has agreed to extend the expiry date of the 3.33 million warrants exercisable over 3 years at 7.5 pence (as announced 1 December 2020) and the 3.6 million warrants exercisable over 2 years at 5 pence issued in December 2021 such that both warrants shall now expire on the 31 December 2025, as well as issuing Riverfort with 4.6 million new warrants on the same terms as the placing warrants.

Admission and Total Voting Rights

Application has been made to the London Stock Exchange for the Placing Shares, Consultancy Shares and Debt Shares to be admitted to trading on AIM ("Admission") and it is expected that such Admission will occur at 8.00 a.m. on 6 December 2022. The Placing, Consultancy and Debt Shares will be issued credited as fully paid and will rank in full for all dividends and other distributions declared, made or paid after the admission of the Placing, Consultancy and Debt Shares, respectively and will otherwise be identical to and rank on Admission pari passu in all respects with the existing Ordinary Shares. The Placing, Consultancy and Debt Shares are not being made available to the public and are not being offered or sold into any jurisdiction where it would be unlawful to do so.

Following Admission of the Placing, Consultancy and Debt Shares, the Company will have 152,418,015 Ordinary Shares in issue, none of which will be held in treasury. Accordingly, the total number of voting rights in the Company will be 152,418,015  and shareholders may use this figure as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the FCA's Disclosure Guidance and Transparency Rules.   

Update on Arbitration against the Republic of Slovenia

The Company also announces thatits€500+ million damages claim against the Republic of Slovenia continues to progress. It was formally registered by the International Centre for Settlement of Investment Disputes ("ICSID") on 1 September 2022 and the Company confirms, as is published on the ICSID online case registry, that it has now appointed Mr Klaus Reichert SC as arbitrator. Mr Reichert is of German/Irish nationality. Once the other two arbitrators are appointed, the details will be publishedon ICSID's website and the tribunal will be constituted. The company expects that the procedural first session will take place during the first half of 2023. Further announcements will be made as required.

Operational Update

The PG-10 and PG-11A wells produced a total of 117,687 scm of gas in October 2022 and have produced a total of 97,154 scm of gas for the first three weeks of November 2022, with that level of production expected to continue in the short term. The Company notes that the Central Eastern Gas Hub prices remain favourable with day ahead market currently at circa €140/MWh and Q1 2023 futures at circa €134/MWh.

The Company is pleased to announce that it has agreed with its JV partner, Geoenergo, to implement an Ascent recommended maintenance and operational programme at the PG-11A well, which will include a "fishing" operation. The fishing operation will seek to remove or bypass a mechanical obstruction which was historically left in the well when it was drilled, as previously announced on 5 April 2018, and the Company believes that this has been impairing production.

In accordance with the terms of the joint venture Ascent will pay 100per cent of the costs and receives a preferential cost recovery paid out of 90 per cent of the hydrocarbon revenues it is entitled to until such time as it has recovered its initial investment (currently €50+ million), thereafter which the Company receives 75 per cent of the hydrocarbon revenues. Accordingly, the Company has agreed with Geoenergo that the cost of this operation, which is expected to be circa €185,000, will be paid out of a portion of the H1 2022 hydrocarbon sales proceeds owed to Ascent, but currently held on account by Geoenergo and subject to forthcoming arbitration (as announced on 6 October 2022).  The Company is pleased to be able to progress this important operation and also commence accessing its hydrocarbon production proceeds balance held on account.

The Company has secured the necessary long lead items, initiated the permitting procedures and the works are expected to be completed in January 2023. During the maintenance and operational works, which are expected to last two to three weeks, production at the PG-11A well will be temporarily paused. The Company believes that should the operation be able to remove the obstruction, then production from the PG-11A well could be materially increased on a comparable basis to the PG-11A production levels realised year to date.

Update on JV Partner Disputes

The Company continues to progress its Ljubljana Arbitration Centre ("LAC") registered claim against its defaulting JV partner, Geoenergo, in relation to Ascent Slovenia Limited's ("ASL") immediate receipt of payment for its share of the 2022 PG-10 and PG-11A hydrocarbon sales revenues agreed with Geoenergo, but currently withheld by it, relating to the first 6 months of 2022 production totalling €857,617plus further amounts invoiced by ASL for July 2022 through to October 2022 of €470,626 as well as securing the timely payment of all future invoices. In addition, the arbitration process targets a binding resolution on which wells are included in the application of the baseline production profile with regards to ASL's claims to revenue entitlement from other wells in the concession area. ASL has a total claim in excess of €4 million.

As part of the LAC arbitration process, the parties must pay the arbitration fees of €175,057 (payable equally between Ascent and Geoenergo) by the 16 December 2022. It is expected that the substance of the arbitration proceedings will accelerate through January 2023 and the process will continue to follow a structured path to binding resolution. The Board remains confident in ASLs claims to revenue within the full concession area. Further updates will be announced in due course.

The JV partners and the JV service provider, Petrol Geo, who is a connected party to Geoenergo by virtue of Petrol being a common stakeholder, have agreed to enter into mediation relating to amounts claimed by the service provider of circa €235k relating to services accepted as provided in 2019 and other rejected and disputed amounts of circa €1.5million. Once matters are resolved with Geoenergo on ASL's revenue recognition, ASL expects to be able to conclude the disputed matters with the service provider.

Proposed appointment of Non-executive Director

Ascent is pleased to announce the proposed appointment, subject to completion of the standard regulatory checks, of Marco Fumagalli to the Board as a Non-Executive Director of the Company. Marco is a Funding Partner at Continental Investment Partners SA, a Swiss-based investment fund. Marco is a well-known Italian businessman and industrial investor who was previously a group partner at 3i. He is a qualified accountant and holds a degree in business administration from Bocconi University in Milan and has many years' experience as an AIM company director. On appointment, Marco will become Chairman of the Audit Committee.

James Parsons, Chairman of Ascent Resources, commented:

"The steps we announce today mark important inflection points for Ascent as we continue to both extract value from our Slovenian asset whilst also repositioning the business towards industrial ESG metals opportunities elsewhere.  We of course look forward to welcoming Marco to the Board, with a view to both strengthening our board composition and providing future access to long term institutional capital.  We expect to make material progress across both our arbitration processes early in theNew Yearand look forward to updating shareholders in due course."

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