REG - Ascent Resources PLC - Arbitration Initiation & Revised Damages Estimate

Ascent ResourcesAnnouncement

15/08/2022 14:15

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RNS Number : 0569W  Ascent Resources PLC  15 August 2022

This announcement contains inside information for the purposes of Article 7 of
the UK version of Regulation (EU) No 596/2014 which is part of UK law by
virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"). Upon
the publication of this announcement via a Regulatory Information Service,
this inside information is now considered to be in the public domain.

 

15 August 2022

Ascent Resources plc

("Ascent" or the "Company")

Arbitration Initiation and Revised Damages Estimate

Ascent Resources Plc (LON: AST), the onshore Hispanic American and European
focussed energy and natural resources company, announces the formal submission
of the request for arbitration against the Republic of Slovenia, which
includes an updated preliminary damages assessment in excess of €500
million.

Ascent Resources Plc and Ascent Slovenia Ltd (together, the "Investors") have
submitted their dispute with the Republic of Slovenia (the "Respondent" or
"Slovenia") to arbitration administered by the International Centre for
Settlement of Investment Disputes ("ICSID"). The request for arbitration
follows the Notices of Dispute filed by Ascent Resources Plc ("Ascent UK") and
Ascent Slovenia Ltd ("Ascent Malta") on 23 July 2020 and 5 May 2022
respectively in which Slovenia was formally notified of the existence of a
dispute under the Energy Charter Treaty ("ECT") and the UK-Slovenia bilateral
investment treaty ("BIT"). The Request for Arbitration ("Request") is
submitted pursuant to Article 26 of the ECT and Article 8 of the 1996
Agreement between the Government of the United Kingdom of Great Britain and
Northern Ireland and the Government of the Republic of Slovenia for the
Promotion and Protection of Investments.

Ascent UK and Ascent Malta bring this claim in relation to Slovenia's measures
that have destroyed the value of Ascent's investments in the Slovenian energy
sector, and which have de facto deprived Ascent of its right to produce gas in
Slovenia. Ascent's rights have been unlawfully expropriated by Slovenia, in
breach of the country's obligations under international law and both the ECT
and the BIT. The Investors have therefore sustained losses for which they are
seeking compensation. According to the Investors' preliminary estimates, the
losses sustained are in excess of €500 million. It should be cautioned that
in the event the Company is successful in its claim any amount actually
received by the Company may be significantly lower.

The Investors are represented by ENYO LAW in this legal matter, as announced
on 30 May 2022.

The claim's background

The claim is based on what the Board believe to be a populist campaign carried
out by Slovenia against the Investors and their Investment, which has
prevented the development of the Petišovci oil and gas field.

In particular, Slovenia has prevented the restimulation of two wells (PG-10
and PG-11a, the "Wells") in 2017, which was necessary to maintain the levels
of gas produced from the tight rock reservoir (as has been done multiple times
over the last fifty years). This frustration to the ability to develop the
field was achieved via a decision of its regulator, the Slovenian Environment
Agency ("ARSO"), which determined that an Environmental Impact Assessment
("EIA") would be required to be approved in order to conduct the low-volume
hydraulic stimulation, even though such an EIA was not required and never had
been previously under Slovenian law, and ARSO's conclusion was contrary to the
conclusion of Slovenia's own expert bodies. This decision significantly slowed
down the development of the field by the Investors. Pending such low-volume
hydraulic stimulation, the amount of gas produced by the field was very
significantly reduced, resulting in a significant loss of the Investors'
revenues.

At the same time, the Minister of the Environment and Spatial Planning of
Slovenia repeatedly made public statements portraying the Investors, as well
as the Petišovci project, in a negative light, and the Company believes that
leaks were made by ARSO to the press. This further demonstrates that ARSO was
biased against the Investors and that the ARSO's decision was politically
motivated.

Slovenia's campaign against the Investors culminated in a complete ban on
low-volume hydraulic stimulation, which came in effect on 5 May 2022. The
Board believes that statements made during the parliamentary debate on the Ban
leave no doubt that the Investors were being specifically targeted by it.

 

Andrew Dennan, Chief Executive Officer, commented:

"We have, today, formally initiated arbitration proceedings against the
Republic of Slovenia, following the closing of our "no win - no fee" style
funding arrangement in May.   The formal request for arbitration is a
detailed thirty two page document, plus supporting materials, setting out our
case and includes an initial estimate of damages in excess of €500 million.
The Company remains amenable to discussing settlement with the Republic of
Slovenia following its review of the matter or otherwise pursing our damages
claim through to a binding result for the Company."

 

Enquiries:

 Ascent Resources plc                        Via Vigo Communications

 Andrew Dennan
 WH Ireland, Nominated Adviser & Broker      0207 220 1666

 James Joyce / Sarah Mather
 Novum Securities, Joint Broker              0207 399 9400

 Jon Belliss

 

 

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