REG - Ascent Resources PLC - Acquisitions, Fundraising and Debt Reprofiling

Ascent ResourcesAnnouncement

22/05/2025 14:15

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RNS Number : 8387J  Ascent Resources PLC  22 May 2025

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22 May 2025

Ascent Resources plc

("Ascent" or the "Company")

Conditional Acquisition of new interests in Colorado & Utah Upstream
Portfolios,

New Fundraising, Debt Reprofiling, Board Changes and Cost Savings

Ascent Resources Plc (LON: AST) is pleased to announce it has signed
agreements to acquire, subject to shareholder approval to issue new shares; i)
a 49% direct non-operated interest in producing and prospective oil and gas
leases in Colorado, owned and operated by Locin Oil Corporation ("Locin"); and
ii) an initial 10% direct non-operated interest in producing and prospective
oil and gas leases in Utah, owned and operated by ARB Energy LLC, ("ARB
Energy"). The Company is also pleased to announce it intendeds to appoint
experienced US based geologist David Patterson as CEO following the next AGM
subject to completion of customary director on-boarding checks, implementation
of cost savings regime, partial redemption and full re-profiling of its senior
secured debt and a new fundraising raising gross proceeds of £1.35 million
(US$1.8 million).

Highlights;

·      Conditional acquisition, subject to shareholder approval to issue
new shares, of a 49% direct non-operated interest in a portfolio of producing
oil and gas leases, with substantial prospective resources, in west Colorado
for total consideration of $2.5 million, which is satisfied via the issuance
of $600,000 worth of shares at a price of 0.5p per share (subject to
shareholder approval) and a $1.9 million 3 year term convertible loan note
issued to vendor;

·      Conditional acquisition, subject to shareholder approval to issue
new shares, of an initial 10% direct non-operated interest in portfolio of
producing oil and gas leases in northern Utah for total consideration of
$750,000 which is satisfied by the issue of new shares (subject to shareholder
approval) at the Placing Price;

·      Rights to earn a 50% economic interest in incremental production
generated from existing well bores by investing in well work programs to
install artificial lift technologies and rights to receive a 50% interest in
any 640-acre section subject to the drilling of a new well on the leases;

·      Option to acquire a further 23% direct non-operated interest in
the leases, on or before 15 October 2025, by paying cash consideration of
$1.5million;

·      Proposed appointment of David Patterson, a US based geologist and
experienced oil and gas explorationist, as Chief Executive Officer of the
Company;

·      Implementation of cost saving initiatives, notably with Directors
and C-suite electing to reduce cash component of their salaries by 30% over
the next six months;

·      New funding raising gross proceeds of £1.35 million ($1.8
million) at 0.5 pence per new share representing a discount of 41% to
yesterday's closing price of 0.85 pence per share;

·      Appointment of Shard Capital and Fortified Securities as joint
brokers to the Company; and

·      Partial redemption of senior lender and re-profiling of
outstanding balance including extension of maturity by two years and fixed
conversion price at 1 pence (representing a 100% premium to the new equity
price).

Conditional acquisition of 49% direct interest in oil and gas leases in
Colorado

Today the Company has entered into an agreement and joint operating agreement
("JOA") to conditionally acquire, subject to shareholder approval to issue new
shares, a direct non-operated interest in 49% of the oil and gas leases owned
and operated by Locin Oil Corporation ("Locin") which includes a portfolio
spanning more than 100,000 acres of oil and gas and helium rich leases in west
Colorado. Ascent has agreed to acquire this interest for a total consideration
of $2.5 million which is being satisfied with the issue of $600,000 in new
shares, which will be issued subject to shareholder approval, at the Pacing
Price (as set out further below) such that Locin will receive 89,552,239 new
shares in the Company ("Locin Oil Shares") and the issuance by Ascent to Locin
of a $1.9 million vendor note which is a 3 year convertible loan note with a
conversion price of 1.0 pence per new conversion share (being a 100% premium
to the Placing Price) and which will accrue interest at a rate of 6.5% per
annum which will be payable quarterly in arrears after the one year
anniversary of issue ("Locin Vendor Note"). The Issue of the Vendor Note is to
facilitate the Company's full acquisition of 49% interests from the outset
whilst avoiding Locin Oil Corporation and its affiliates holding more than
29.9% of the Company's enlarged share capital at any time, accordingly the
conversion rights under the note can only be exercised in the event they do
not cause Locin and/or its concert party to hold more than 29.9% of the
enlarged share capital.

The Locin Oil Corporation's position in Colorado is a portfolio of oil and gas
leases which have Proved Reserves (PDP plus PDNP), net to Locin and Ascent JOA
partners, of 8.06 Bcf of natural gas (APN Energy Consultants LLC Appraisal of
Reserves and Revenues report dated 1 June 2024 prepared using the standard
petroleum engineering practices in conformity with the SPE Petroleum resources
Management System guidelines). The leases have 333 well bores, of which
approximately 115 wells are currently producing, having averaged daily
production rates of circa 2mmscfd throughout 2024 which generated net income
of $266,850 when Henry Hub averaged $2.2/mcf over the period. Additionally,
there is a further ~3mmscfd of currently shut in production pending the
relocation of a third party's gas processing plant. The Company and Locin
believe that gas assets which have proved production, are adjacent to existing
digital infrastructure and located in cool environments are well suited for
development of well head AI data centres and intend to evaluate partnerships
to commercialise gas via collaboration and strategic alignment with data
centre developers.

Locin has tested the gas composition of several of the existing wells and has
identified up-to 1.2% helium in the producing gas streams. Locin has also
identified a number of material prospects into target structures which have
previously tested or produced gas in the 1960's and 70's as well as on-trend
step-out prospects estimated to have gross Prospective Resources of an
additional 663 Bcf of natural gas with potentially up to 5.3 Bcf of Helium
included as well. Ascent and Locin have also agreed to jointly evaluate the
prospect inventory with a view to high grading the opportunity set over the
coming months. In these evaluations the partners also expect to target the
Entrada production formation which has a high helium content association
contained within the produceable natural gas and condensate volumes.

Conditional acquisition of interest in Utah oil and gas leases

Today the Company has entered into agreements to conditionally acquire,
subject to shareholder approval to issue new shares, a 10% direct non-operated
interest in oil and gas leases owned and operated by ARB Energy which includes
a portfolio of approximately 80,000 acres of leases of oil and gas and helium
rich leases in north Utah. Ascent has agreed to acquire this interest for a
total consideration of $750,000 which is being satisfied, subject to
shareholder approval, with the issue of 111,940,299 new shares ("ARB Energy
Shares") at the Placing Price (as set out further below) such that ARB Energy
will receive 111,940,299 new shares in the Company. Additionally, Ascent shall
have a 50% economic interest in the incremental production generated from
existing well bores where Ascent invests in work programs to install
artificial lift technologies. Ascent also has the option to acquire a further
23% direct interest in the leases by paying a cash consideration of $1.5
million on or before 15 October 2025 and Ascent also has the right to have a
50% direct interest in leases where the JOA partners drill a new well in
future. The Company has also agreed to issue Mr Humberto Sirvent, CEO of ARB
Energy with 18,656,000 warrants in Ascent exercisable at 1p pence per share
over 3 years, which will be granted subject to receipt of shareholder
approval.

The ARB Energy Utah, LLC portfolio has Proved Developed and Producing (PDP)
Reserves, net to the JOA partners, of 8.7 Bcf of natural gas (APN Energy
Consultants LLC reserves and revenues report dated 1 June 2024 prepared using
the standard petroleum engineering practices in conformity with the SPE
Petroleum resources Management System guidelines). The leases have 147 well
bores, of which 110 are currently producing, having averaged daily production
rates of circa 2.3mmscfd throughout 2024 which generated net earnings of
$496,134.

ARB Energy has tested the gas composition of many of the existing wells and
has identified up-to 0.54% helium in the producing gas streams. The leases
have multiple potential upsides in up-dip and on-trend step out prospects
which ARB Energy has estimated to have Proved Undeveloped Reserves of 44 Bcf,
Probable Reserves of a further 23 Bcf and Prospective Resources of an
additional 109 Bcf of natural gas with potentially 1.3 Bcf of Helium included
as well. The JOA partners have also agreed to jointly evaluate the prospect
inventory with a view to high grading the opportunity set over the coming
months. In these evaluations the partners expect to target the Entrada
producing formation which has a high helium content association of up-to 1%
contained within the produceable natural gas and condensate volumes. Ahead of
then Ascent and ARB Energy expect to initiate a number of work operations on
existing well bores to install artificial lift technologies designed to be low
cost and low risk operations which can meaningfully enhance existing
production.

New Funding, Issue of Shares & Partial Redemption and full reprofiling of
Senior Lender

In support of the Company's strategy to expand its footprint in US onshore
producing gas portfolios with proved reserves and significant up-dip and
step-out prospective resources, the Company is pleased to announce that it has
raised gross proceeds of £1.35 million ($1.8 million)  from a combination of
direct company subscriptions from subscribers and placing of new equity with
new institutional and strategic investor placees. The Company will issue
270,000,000 shares at a price of 0.5 pence per share to ("Placing Price") to
raise unconditional proceeds of £1.35 million ($1.8 million) from subscribers
and placees out of the Company's existing share authority to issue new shares
for cash ("New Funding Shares") on a non-pre-emptive basis. Additionally, the
New Funding Shares shall have one warrant attached to every two shares which
is exercisable in cash at 1p per new warrant share at any time in the next two
years, these warrants will be granted subject to shareholder approval.

The Company will use £224,000 ($0.3 million) to partially redeem in cash some
of the RiverFort senior secured loan (as announced on 22 April 2024) and
RiverFort have agreed to convert $100,000 of loan principal into equity at a
price of 0.7245 pence per share (representing a 44% premium to the new
fundraising equity issuance price). Accordingly, 10,300,465 new shares will be
issued to RiverFort ("RiverFort Conversion Shares"). The Company has further
agreed with RiverFort to extend the remaining balance of the senior secured
loan, being $1.05 million (inclusive of remaining principal and outstanding
coupon) on the same terms as announced 22 April 2024, save that the balance
outstanding will accrue a 10% extension fee which will be added on to the
outstanding balance and the loan notes will be amended with an extension of
the maturity date to 22 April 2027. The loan notes will retain a fixed
conversion price of 1p per conversion share throughout the term of the loan
note through to the extended maturity date, save as if the Company issues new
equity securities at a price below 0.71 pence per new share during the term of
the loan then the conversion price will automatically reset to a 40% premium
to such future placing price in the event it is less than 0.71 pence per new
share. Furthermore, Ascent expects to redeem $250,000 of principle on the 22
April 2026 and to amend the warrant deeds relating to 18,439,431 existing
warrants such that they are exercisable at 1p per warrant share at any time
over the next four years and the Company has agreed to issue RiverFort with
warrants equal to 35% of the reprofiled debt amount exercisable at 1p per
warrant share. For the avoidance of doubt this re-profiling of senior secured
debt is at a fixed conversion price and the lender will not have any rights to
convert into new equity of Ascent at a price below this level during the term
of the loan notes. The balance of new fundraising proceeds raised will be used
to fund Ascent corporate costs and investment in an initial campaign to
install artificial lift technologies on at least six existing wells included
in the newly acquired ARB Energy acreage.

Furthermore, the Company also confirms it has issued 2,500,000 shares as part
of the final termination payment of a former director at the Placing Price
("Termination Shares") and has also agreed to issue 4,160,000 shares at the
Placing Price valued at £20,800 in relation to settling a number of
supplier's invoices which total to such notional amount ("Supplier Shares").

Board Changes and Cost Savings Initiative

Further to the Company's transformation over the last twelve months, which
include significant advancement of its Slovenian legacy claims and a
successful repurposing of the Company to focus itself on growing onshore US
oil and gas with helium assets, the Company proposes to appoint Mr David
Patterson as Chief Executive Officer and Director of the Company. David is an
experienced oil and gas explorer and geologist who has over 43 years oil and
gas experience onshore US which includes a number of years of work in Utah and
Colorado where most notably David was VP Geology for Rose Petroleum Plc (now
called Zephyr Energy Plc) where he led the evaluation of over 250,000 acres of
leases in Utah. David has held previous roles which include VP and manager of
Exploration, VP of Geology, Supervisor of Reserves and Senior Geological
Engineer in prior roles through his career. David is currently a Principal
Partner and Technical Manager for Navarro Energy (where he will also continue
his role) and will be retained by the Company for his services to Ascent with
an annual salary of US$120,000 per annum, relating to which the Company has
agreed with American Helium, Locin Oil and ARB Energy that Ascent can recharge
the respective joint operations the full annual salary such that Ascent
expects to pay $43,200 of this amount per annum, along with grant David an
options package in the Company exercisable at a price of 1p per Option, which
shall vest over 3 years and be exercisable over the following 2 years
thereafter. David will be appointed to the Board and position of CEO following
the Company's next annual general meeting, subject to completion of customary
director on-boarding checks.

The Company announces that Mr Andrew Dennan has elected not to stand for
re-election at the Company's upcoming AGM and will retire as Director and
Chief Executive Officer of the Company upon the convening of the AGM. Andrew
has led Ascent for five years and feels this transformative moment is the
right time to step aside as the business enters a new phase with a particular
focus on the US. He will continue to support the Company during an extended
handover period to the proposed new CEO and will in addition continue to
support the Company in its pursuit of the Company's highly valuable claims
against the Republic of Slovenia under the Energy Charter Treaty, as well as
in insolvency and associated proceedings against its Slovenian former JV
partner and service provider. His detailed knowledge of these ongoing
processes remains invaluable to Ascent.

The Board are very thankful for the leadership and strategic input from Andrew
over the last five years, where he has been instrumental in defending the
Company's interests in Slovenia and re-purposing the Company to execute its
new US onshore growth strategy and wish him success in future pursuits. The
Company also announces that it no longer intends to appoint a Chairman to the
Board as previously announced on 9 December 2024. The Company is reviewing its
current board composition with a view to appointing a Chairman in the short
term, in the meantime the Company is pleased to announce that senior
independent non-executive director Jean-Michel Doublet will take the position
of Interim-Chairman with immediate effect.

Additionally, as part of positioning the Company to grow via a production lead
strategy onshore US, the Company is implementing certain cash preservation
measures which include current C-suite and Board of Directors of the Company
agreeing to reduce the cash component of their employment and/or service
contracts by 30% over the next six months and their corresponding intention to
settle these owed amounts, by subscribing for equity on the same terms as the
placing (above), as soon as they are either out of a closed period or
otherwise not in receipt of insider information and can cause a PMDR dealing.
Furthermore, the Company also expects to implement further cost saving
measures, which in aggregate with the above changes are expected to reduce the
general and administrative cash costs of the business by approximately 20% per
annum, with such savings expected to be realised through 2H 2025 and beyond.

Appointment of Joint Brokers

The Company announces that it has appointed Shard Capital Limited and
Fortified Securities Limited to act as joint brokers to the Company.

Admission & Total Voting Rights

Application has been made to the London Stock Exchange for the New Funding
Shares, RiverFort Conversion Shares, Termination Shares and Supplier Shares to
be admitted to trading on AIM ("Admission") and it is expected that such
Admission shall take place on or around 8.00 a.m. on 5 June 2025. The Company
will put forward resolutions to the Company's shareholders in due course to
increase its authority to allot new shares for the issuance of the ARB Energy
Shares, Locin Oil Shares and other shares needed to create the Locin Vendor
Note, re-profiled RiverFort loan note and increased permissions necessary to
issue all Warrants relating to the aforementioned transactions.

In accordance with the provision of the Disclosure Guidance and Transparency
Rules of the Financial Conduct Authority, the Company confirms that, following
Admission of the new unconditional shares the Company will have 595,612,788
Ordinary Shares in issue, none of which will be held in treasury. Accordingly,
the total number of voting rights in the Company will be 595,612,788 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.

Enquiries:

 Ascent Resources plc                      Via Vigo Communications

 Andrew Dennan
 Zeus, Nominated Adviser & Broker          0203 829 5000

 James Joyce / James Bavister
 Novum Securities, Joint Broker            0207 399 9400

 Jon Belliss / Colin Rowbury               Corporatebroking@novumsecurities.com
 Fortified Securities, Joint-Broker        0203 411 7773

 Guy Wheatley
 Shard Capital Partners LLP, Joint-Broker  0207 186 9952

 Damon Heath

 

Qualified Persons Statement

Leonardo Salvadori, a qualified Geologist with over 35 years of relevant
experience in the oil and gas industry and a member of SPE (Society of
Petroleum Engineers) has reviewed this announcement for the purposes of the
current Guidance Note for Mining, Oil and Gas Companies issued by the London
Stock Exchange in June 2009 and in accordance with the Petroleum Resources
Management System (PRMS) issued in June 2018 by the Society of Petroleum
Engineers, the World Petroleum Council, the American Association of Petroleum
Geologists, the Society of Petroleum Evaluation Engineers, the Society of
Exploration Geophysicists (SEG), the Society of Petrophysicists and Well Log
Analysts (SPWLA) and the European Association of Geoscientists & Engineers
(EAGE).

Table of Reserves and Resources

 Reserves               Gross Reserves       Net Reserves Attributable to Ascent     Operator               Ascent's Interest

                        PDP        PDNP      PDP                 PDNP
 Oil and NGLs (Mbbl)
 ARB Energy Utah, LLC   6.70       -         0.42                -                   ARB Energy Utah, LLC   10%

 Locin Oil Corporation  45.28      4.41      17.65               1.80                Locin Oil Corporation  49%
 Gas (MMcf)
 ARB Energy Utah, LLC   17,673.63  -         867.49              -                   ARB Energy Utah, LLC   10%
 Locin Oil Corporation  12,472.05  4,327.83  2,968.98            982.63              Locin Oil Corporation  49%

 

 

 Prospective            Gross Prospective Resources  Net Prospective Resources Attributable to Ascent  Operator               Ascent's Interest

 Resources
 Oil and NGLs (Mbbl)
 ARB Energy Utah, LLC   -                            -                                                 ARB Energy Utah, LLC   10%
 Locin Oil Corporation  -                            -                                                 Locin Oil Corporation  49%
 Gas (MMcf)
 ARB Energy Utah, LLC   239,935.50                   11,776.92                                         ARB Energy Utah, LLC   10%
 Locin Oil Corporation  711,548.50                   169,384.55                                        Locin Oil Corporation  49%

 

 

Glossary of terms

 "Bcf"                                                Billion standard cubic feet
 "Mcf"                                                Thousand standard cubic feet
 "mbbl"                                               Thousand barrels
 "mmbbl"                                              Million barrels
 "mmscfd"                                             Million standard cubic feet per day
 "Probable Resources"                                 Potentially recoverable resources from discovered accumulations by application
                                                      of future development projects.
 "Proved, Developed and Producing Reserves" or "PDP"  Proved reserves to be recovered through existing producing wells and existing
                                                      facilities
 "Proved Undeveloped Reserves" or "PUD"               Proved reserves to be recovered subject to investment in future development of
                                                      new wells and/or facilities, but are not currently being produced
 "Prospective Resources"                              Potentially recoverable resources from undiscovered accumulations by
                                                      application of future development projects.
 "step out"                                           The development of an additional potential beyond the established boundaries
                                                      of a known oil or gas field to extend the proven limits of the field.
 "Up dip"                                             The development of an additional potential on a structurally higher side of an
                                                      identified reservoir with potentially higher fluid saturation.

 

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