REG - Ascent Resources PLC - Posting of circular

Ascent ResourcesAnnouncement

18/02/2020 07:00

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RNS Number : 2671D  Ascent Resources PLC  18 February 2020

18 February 2020

Ascent Resources plc

("Ascent" or the "Company")

Posting of Circular

Ascent Resources Plc (LON: AST) the onshore European independent oil and gas
exploration and production company, announces that, further to the
announcement on 14 February 2020, a circular will be posted to shareholders
today and a copy will be made available on the Company's website,
www.ascentresources.co.uk (http://www.ascentresources.co.uk) in due course.
The Chairman's Letter has been extracted from the Circular and is shown below.

Enquiries:

 Ascent Resources plc                        0207 251 4905

 Louis Castro, Chairman

 John Buggenhagen, CEO

 WH Ireland, Nominated Adviser & Broker      0207 220 1666

 James Joyce / Chris Savidge
 SP Angel, Joint Broker                      0203 470 0470

 Richard Hail

 

1.     Introduction

Ascent is in a phase of re-focusing its business to positive production growth
including reviewing opportunities outside Slovenia to diversify its asset
base.

Significant production growth at the Petišovci field in Slovenia can only be
achieved when the partners have successfully obtained the required permits to
re-stimulate the existing producing wells (Pg-10 and Pg-11A) as part of a
larger development project to recover the field's significant proven and
potential gas reserves. Additional near term production growth may also be
possible by targeting other conventional oil and gas reservoirs within the
large Petišovci concession area including undrilled fault blocks in the known
producing structure. In 2019, the Company reprocessed the 2010 Petišovci 3D
seismic survey using the latest technology, which has provided several
attractive conventional appraisal and near-field exploration leads. Work is
currently underway to progress these potential drilling opportunities with the
Joint Venture Partners, but these opportunities will also need the requisite
permits before they could be tested.

In order to progress matters in Slovenia, to meet costs and to source and
assess new potential opportunities, further capital will be required.
Accordingly, the Board has identified new management who will bring more
opportunities to the Group and who have facilitated the raising of working
capital for the Company by way of the Placing. The Board also recognises that,
to allow the Placing to proceed and, more generally, the share capital of the
Company requires restructuring, as explained further in paragraph 5 below.

The restructuring of the share capital of the Company and the granting to the
Directors of the authority to allot additional share capital, which will allow
new capital to be raised by way of the Placing, is fundamental to the future
prospects of the Company.

If the Placing Resolutions are not passed in full, the Board doubts the
ability of the Company to continue as a going concern.

2.     The Petišovci project

Ascent holds a 75% interest in the Petišovci gas field in Slovenia, with its
partner Geoenergo holding the remaining 25% through a concession signed in
2002 with a term of 19½ years, which is due for renewal in 2022. Ascent is
liable for 100% of the financing obligations for the project. In 2011, two
wells were drilled and flowed at commercial rates; however, development has
been delayed due to the permitting issues described in further detail below.

The Company has been producing from the field since 2017, with the majority of
production being exported to Croatia and sold to INA, a leading Croatian oil
and gas business. In December 2019 the Company entered into a two-year
extension of the gas sales agreement with INA, ensuring that once production
can be increased, there is an existing route to market for that gas.

3.     Permitting

The proper development of the field has been delayed by the permitting process
in Slovenia. The IPPC Permit which is required for the installation of a
processing plant at the field was finally awarded during 2019. The Well Permit
which is required for the re-stimulation of wells Pg-10 and Pg-11A was blocked
by the Slovenian Environment Minister and this decision has been appealed to
the Administrative Court.

The Company is also progressing with a claim for damages for the significantly
prolonged process and what the Board have been advised is a manifestly wrong
decision.

4.     Change of Directors and Management Reorganisation

Ascent will appoint James Parsons as Executive Chairman following satisfactory
completion of regulatory due diligence. James has a wealth of corporate and
transactional experience on AIM and a demonstrated ability to access capital
to fund junior resource plays. He is Executive Chairman of Regency Mines plc
and Non-Executive Chairman of Echo Energy plc and Coro Energy plc.

Ascent will also appoint Ewen Ainsworth and Leonardo Salvadori as independent
Non-Executive Directors.

Ewen Ainsworth is an experienced AIM company director, currently the
Non-Executive Chairman at Nostra Terra Oil and Gas Company plc. He is also a
non-executive director at Regency Mines plc and the CEO of Discovery Energy
Limited, an advisory, consultancy and Investment Company. He has worked in a
variety of senior and board level roles in the international natural resource
sector for over 30 years, most recently as Finance Director for San Leon
Energy plc and previously Gulf Keystone Petroleum Limited.

Leonardo Salvadori has over 35 years of international experience and is
currently the Managing Director of Coro Energy plc's Italian business. Prior
to that he held Managing Director positions in Sound Energy and Dana Gas
Egypt. With a strong focus on business development as well as operations,
Leonardo previously led business development and exploration/technical teams
in Centurion and Eni across MENA, Asia and Europe.

Louis Castro and Colin Hutchinson will set down from the board at the
conclusion of the General Meeting.

5.     Capital Reorganisation

The Company's Ordinary Shares are currently trading at below nominal value.
The Company is not permitted by law to issue shares at an issue price below
their nominal value.

Furthermore, a consequence of having a very large number of shares in issue,
with a very low market share price, is that small share trades can result in
large percentage movements in the market share price which results in
considerable share price volatility. The Board also believes that the
bid-offer spread on shares priced at low absolute levels can be
disproportionate to the market share price, to the detriment of Shareholders.

The Directors propose, therefore that the Company effects the Capital
Reorganisation on the basis that:

a.     the Existing Ordinary Shares of 0.2 pence will each be subdivided
into:

i.  one Redenominated Ordinary Share (being an ordinary share in the capital
of the Company with a nominal value of 0.005 pence); and

ii.                one Deferred Share (being a deferred share
in the capital of the Company with a nominal value of 0.195 pence), and

 

b.     the Redenominated Ordinary Shares of 0.005 pence each (resulting
from the subdivision referred to in paragraph (a) above) will be consolidated
into new ordinary shares of 0.5 pence each (the "New Ordinary Shares") on the
basis of one New Ordinary Share for every 100 Redenominated Ordinary Shares.

Where the Capital Reorganisation results in any Shareholder being entitled to
a fraction of a New Ordinary Share, such fraction shall be aggregated and the
Directors intend to sell (or appoint another person to sell) such aggregated
fractions in the market and retain the net proceeds for the benefit of the
Company.

The Deferred Shares will not be admitted to trading on AIM (or any other
investment exchange). The Deferred Shares will have limited rights, and will
be subject to the restrictions, as set out in the Company's New Articles,
proposed to be adopted at the General Meeting, and as summarised below.

The Deferred Shares will not be transferable. The holders of the Deferred
Shares shall not, by virtue or in respect of their holdings of Deferred
Shares, have the right to receive notice of any general meeting of the Company
or the right to attend, speak or vote at any such general meeting.

The Deferred Shares will not entitle their holders to receive any dividend or
other distribution. The Deferred Shares will on a return of assets in a
winding up entitle the holder only to the repayment of £1.00 for the entire
class of Deferred Shares after repayment of the capital paid up on the New
Ordinary Shares plus the payment of £10,000,000 per New Ordinary Share.

The Company will have irrevocable authority at any time to appoint any person
to execute on behalf of the holders of the Deferred Shares a transfer thereof
and/or an agreement to the transfer of the same to such person as the Company
may determine or as the Company determines as custodian thereof, without
making any payment to the holders thereof, and/or consent to cancel the same
(in accordance with the provisions of the Act) without making any payment to
or obtaining the sanction of the holders thereof. The Company may, at its
option at any time, purchase all or any of the Deferred Shares then in issue,
at a price not exceeding £1.00 for each aggregate holding of Deferred Shares
so purchased. The Directors consider the Deferred Shares, so created, to be of
no economic value.

The Articles have been amended, inter alia, to reflect the creation of the
Deferred Shares and to set out the rights attaching to them and, accordingly,
Resolution 7 seeks approval to adopt the New Articles of the Company
reflecting, inter alia, these changes.

No share certificates will be in issued in respect of the Deferred Shares.
Existing share certificates will remain valid for the Redenominated Ordinary
Shares. New share certificates will be issued for the New Ordinary Shares.

The New Ordinary Shares will be freely transferable, and application will be
made for the New Ordinary Shares to be admitted to trading on AIM. The record
date for the Capital Reorganisation is 5.00 p.m. on 5 March 2020, unless
otherwise agreed by the Board.

The rights attaching to the New Ordinary Shares will be identical in all
respects to those of the Existing Ordinary Shares.

One consequence of the Capital Reorganisation is that Shareholders holding
fewer than 100 Existing Ordinary Shares will receive no New Ordinary Shares,
they will, however, receive Deferred Shares. Any Shareholder holding fewer
than 100 Existing Ordinary Shares may request the cash equivalent of such
Existing Ordinary Shares by contacting Computershare Investor Services PLC,
The Pavilions, Bridgwater Road, Bristol, BS99 6ZY.

6.     Placing

To fund the Company while it pursues these opportunities, the Board has
conditionally raised £800,000 at an issue price of 5 pence per Placing Share,
subject to the approval of Shareholders.

The Placing will be completed by way of subscription letters between the
Company and the relevant placees, and will be conditional on the passing of
the Placing Resolutions at the General Meeting. Shareholders will have their
proportionate shareholdings in the Company diluted by approximately 35 per
cent. as a result of the Placing, assuming that no further shares are issued
after the date of this document.

7.     Authority to allot shares and disapplication of pre-emption rights

The Directors are seeking a general authority, in addition to the authority in
relation to the Placing, to allot new shares, free of pre-emption rights and
without further recourse to shareholders, which is above the level recommended
by the relevant corporate guidelines. The significantly higher level being
sought is due to (i) the relatively low market capitalisation of the Company
at the current time and (ii) the level of funding required by the Company in
the medium term in order to execute on the stated strategy of securing
additional assets outside of Slovenia.

This authority is essential to enable to new Board of Directors to capitalise
in a timely fashion on attractive opportunities to execute on the stated
strategy of diversifying its asset base.

8.     Settlement and dealings

Application will be made to the London Stock Exchange for the New Ordinary
Shares (including the Placing Shares) to be admitted to trading on AIM. It is
expected that such Admission will become effective and that dealings will
commence at 8.00 a.m. on 11 March 2020.

9.     General Meeting

Set out at the end of this document is a notice convening a General Meeting of
the Company to be held at 2.30 p.m. on 5 March 2020 at the offices of Taylor
Wessing LLP, 5 New Street Square, London, EC4A 3TW, at which the Resolutions
will be proposed.

The Resolutions may be summarised as follows:

a.  Resolutions 1 and 2 approve the Subdivision of the entire issued share
capital of the Company into Redenominated Ordinary Shares and Deferred Shares,
together with the Consolidation of the Redenominated Shares into New Ordinary
Shares on the basis of 100 Redenominated Shares for every 1 New Ordinary
Share;

 

b.     Resolutions 3 and 5 seek authority to allot and issue the Placing
Shares free of any pre-emption rights;

 

c.   Resolutions 4 and 6 seek a significantly increased general authority
to allot and issue shares free of pre-emption rights, representing
approximately 100% of the share capital of the Company immediately following
the Capital Reorganisation and the Placing; and

 

d.     Resolution 7 approves the adoption of the New Articles.

 

10.  Action to be taken in respect of the General Meeting

Please check that you have received the following with this document:

·      a Form of Proxy for use in respect of the General Meeting; and

·      a reply-paid envelope for use in connection with the return of
the Form of Proxy (in the UK only).

Whether or not you propose to attend the General Meeting in person, you are
strongly encouraged to complete, sign and return your Form of Proxy in
accordance with the instructions printed thereon as soon as possible, but in
any event so as to be received, by post at Computershare Investor Services
PLC, The Pavilions, Bridgwater Road, Bristol, BS99 6ZY or, during normal
business hours only, by hand, at Computershare Investor Services PLC, The
Pavilions, Bridgwater Road, Bristol, BS13 8AE by no later than 2.30 p.m. on 3
March 2020 (or, in the case of an adjournment of the General Meeting, not
later than 48 hours before the time fixed for the holding of the adjourned
meeting).

This will enable your vote to be counted at the General Meeting in the event
of your absence. The completion and return of the Form of Proxy will not
prevent you from attending and voting at the General Meeting, or any
adjournment thereof.

11.  Recommendation

The restructuring of the share capital of the Company and the granting to the
Directors of the authority to allot additional share capital, which will allow
new capital to be raised, is fundamental to the future prospects of the
Company. If the Placing Resolutions are not passed in full, the Board doubts
the ability of the Company to continue as a going concern.

The Directors intend to vote in favour of the Resolutions in respect of their
aggregate shareholdings of 2,570,370 Ordinary Shares representing
approximately 0.09 per cent. of the Company's Existing Issued Share Capital.
 

 

 

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