REG - Ascent Resources PLC - Revenue Recognition & Slovenia Update

Ascent ResourcesAnnouncement

02/08/2022 07:15

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RNS Number : 5337U  Ascent Resources PLC  02 August 2022

2 August 2022

Ascent Resources plc

("Ascent" or the "Company")

Revenue Recognition & Slovenia Partner Disputes Update

 

Ascent Resources Plc (LON: AST), the onshore Hispanic America and European
focussed energy and natural resources company, is pleased to announce an
agreement of PG-10 and PG-11A hydrocarbon revenues and update on its
previously announced JV and operator disputes in Slovenia.

Highlights

-     Agreement with JV partner for Ascent to recognise €1.68 million of
hydrocarbon revenues from the PG-10 and PG-11A wells for the period April 2020
through to June 2022

-     Mediation scheduled for September to resolve Ascent's claim to
significant additional hydrocarbon revenues produced in the concession area

-     JV partners seeking to resolve a dispute with JV service provider in
relation to disputed fixed fee operating invoices

Revenue Recognition

As previously announced on 26 April and 4 July, the Company is seeking to
resolve its disputes with its Joint Venture partner, Geoenergo*, in relation
to different interpretations of the Restated Joint Operating Agreement (the
governing document and rules for the JV as amended in 2013, "RJOA") with
regard to Ascent's entitlement to hydrocarbon production revenues generated
from within the Petisovci concession area.

Following the appointment of a High Court Ljubljana Judge as a mediator, as
announced on 4 July, the parties have been in constructive dialogue (on the
executive level and outside of mediation) and have now agreed to Ascent's
entitlement to 90% of the hydrocarbons produced from the PG-10 and PG-11A
wells. Accordingly, the Company has issued new invoices for the period of
April 2020 through to June 2022 for a total gross invoiceable amount of
€1.688 million (including VAT) which the Company's 100% owned subsidiary,
Ascent Slovenia Limited, is expected to receive imminently.

Following receipt of the production revenues, the Company expects to recognise
historic costs relating to an historic liability owed to the field operator
(as explained below), the annual concession fee (approximately €0.2 million
for the whole concession area) and potentially other costs. The recognition of
historic revenues and costs for financial years ending 31 December 2020, 2021
and 2022 is expected to be reflected in the Company's financial statements
when the Company produces its final results following the end of the 2022
financial year.

Dispute with JV Partner, Geoenergo

Furthermore, the parties are still in dispute with regard to a difference in
interpretations of the RJOA relating to which wells Ascent is entitled to
revenues from whilst it is in a preferential cost recovery position (i.e.
until it has received cash flows in excess of its €50 million historic
investment).  The different interpretations hinge on which wells produced
above a baseline production profile (defined in the RJOA) should be included
in the calculation.  Depending on the interpretation this could result in
significant additional revenues for the period in question.

Dispute with Field Operator

As previously announced, the Company is managing a planned contractual default
with the JV's field operating service provider, Petrol Geo (which is a 100%
owned subsidiary of Petrol, with Petrol itself a 50% stakeholder of Geoenergo)
in relation to a significant change in circumstances which impacts the fixed
service fee invoices received since at least 2019.

Ascent has so far recognised a total outstanding liability to the operator of
some €0.23 million, whilst amounts claimed by Petrol Geo in relation to
rejected invoices are significantly higher.  The Company remains hopeful of
resolving the JV's dispute with Petrol Geo and is in dialogue with its JV
partner, Geoenergo, to put forward a productive detailed settlement proposal.

Further updates on resolution of both these matters will be announced in due
course.

*Geoenergo is a jointly owned company, with 50% owned by Nafta Lendava (a 100%
Government controlled entity) and with 50% owned by Petrol (a 30%
Government-controlled entity).

Andrew Dennan, Chief Executive Officer, commented:

"We are very pleased to have agreed recognition of seven figure historic
production revenues from the PG-10 and PG-11A wells. This is a material
development for the Company as we continue to unlock the legacy commercial
stalemate with our partners in Slovenia."

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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