REG - Ascent Resources PLC - Final Results
31/05/2024 07:00
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RNS Number : 5516Q Ascent Resources PLC 31 May 2024
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.
31 May
2024
Ascent Resources plc
("Ascent" or the "Company")
Final Results
Ascent Resources Plc (LON: AST), the US onshore gas and helium processing and
production focused company, announces its final results for the year ended 31
December 2023.
Highlights:
· Filed its memorial under the International Centre for Settlement of
Investment Disputes ("ICSID") registered Energy Charter Treaty ("ECT") claim
against the Republic of Slovenia in relation to a damages claim for €656.5
million
· Secured After The Event insurance policy for the ECT claim
· Achieved positive resolution in mediation with Petrol Geo resulting
in reduced payment of €1.436 million (versus claims of €2+ million) and
successfully restructured monthly fixed fee under the service agreement down
from €40k+VAT per month to the higher of i) €20k+VAT per month; or ii) 35%
of Ascent Slovenia Limited's ("ASL") share of monthly hydrocarbon proceeds
produced from the Pg-10 and Pg-11a wells
· Successful partial resolution to JV partner dispute in mediation,
with the recognition of outstanding amounts owed to ASL from Pg-10 and Pg-11a
production from January 2022 to February 2023 of €1.725 million
· Receipt of binding Arbitration interim decision in favour of ASL's
continuing claims against JV partner to receive share of production above the
baseline production curve for all wells in the concession area which ASL
calculates to be approximately €8 million in revenue owed to ASL
Corporate
· Production of 1.14 million scm of gas and 44,860 litres of condensate
in 2023 from Pg-10 and Pg-11a wells
· Introduced new cornerstone and strategic investor for £1.5 million
in new equity at a 35% premium to the prevailing share price at that time
· Engagement with shareholders over concept to distribute a portion of
the net proceeds received from a successful ECT claim outcome to qualifying
shareholders on a future record date
· Board changes with the resignation of Stephen Birrell as
non-executive director of the Company and the appointment of Jean-Michel
Doublet as independent non-executive director of the Company
Post Balance Sheet Events
· New funding for up to $2.7 million with an initial issue of $700k in
new equity at spot price at that time plus a senior secured loan note facility
for up to $2 million with an initial $1 million drawn down
· New investment into operational US onshore gas and helium processing
business with a 60mmscfd gas processing plant with 1.1mmscfd of helium
purification capacity and 550mscfd helium liquidation unit and which is fed by
over 500 miles of gas gathering system in the helium rich Paradox Basin in
Utah and Colorado
· JV partner, Geoenergo, initiated self-declared insolvency
proceedings, resulting in the subsequent appointment of an administrator
followed by termination of the Restated Joint Operating Agreement (effective
as of 19 January 2024) and expiry of the concession contract (effective as of
19 April 2024)
· Filing of ASL's claim in the Geoenergo insolvency proceedings for a
total of circa €11million, comprised of ~€8 million relating to monies
received by Geoenergo and owed to ASL plus a precautionary claim for ~€3
million relating to ASL's share of JV property in the event a suitable
termination agreement is not able to be achieved
· Director changes with the resignation of Mr Marco Fumagalli and Mr
Malcolm Graham-Wood and the proposed appointment of Mr David Bullion and Mr
Edouard Etienvre
· Completion of distribution of entitlement to 49% of the gross
proceeds received by the Company in the event of a successful ECT claim result
to qualifying shareholders on the 19 February 2024 record date
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
John Belliss
STATEMENT FROM THE CHAIRMAN
The Company announced on 23 April 2024 its maiden investment in a revenue
generating, low risk and growing North American, mid-continent gas processing
and helium purification business. This is an exciting development for the
Company and represents our first shaping move following a long period of deal
origination / screening. We have now, together with our partners in country,
huge scope to invest further to accelerate into the premium markets of
processing and selling liquified helium and position ourselves as a leading
revenue generating listed onshore gas and Helium business across the upstream
and midstream. The investment cements the Company's new forward US onshore gas
and helium strategy and initiates the journey of navigating Ascent towards an
exciting space with significant upside potential and running room. Despite
continued weak capital markets, 2023 was year of solid progress and
preparation for the Company, focused on continuing its claims against the
Republic of Slovenia ("Slovenia" and "State") and its State controlled actors,
securing a new cornerstone investor and preparing for this introduction of the
first new industrial asset post Slovenia. The specific achievements during the
year include:
• filing its memorial under the International Centre for Settlement of
Investment Disputes ("ICSID")
registered Energy Charter Treaty ("ECT") claim against the State with a
revised damages claim of €656.5 million;
• securing a successful mediation outcome with the JV's service provider
resulting in a material reduction in both amounts historically owed the fixed
monthly fee;
• achieving revenue recognition of outstanding amounts owed from Pg-10 and
Pg-11a production;
• initiating and winning the interim arbitration claim for right to payment
from production of other wells totalling €8M for the period October 2019
through to December 2023;
• securing a suitable after the event insurance policy in relation to the
State ECT claim and defending the adequacy of the adverse claim cost coverage
following multiple challenges by Slovenia;
• introducing a new cornerstone investor at a significant premium.
During the first quarter of 2024, the Company, with a view to protect
shareholder interests from future
dilution prior to introducing our new industrial asset, distributed a 49%
economic interest in the net proceeds the Company would receive from the State
ECT claim to qualifying stakeholders.
Having secured this distribution, in April 2024 the Company announced its new
forward strategy and initial investment, structured as a convertible loan of
US$1 million, into GNG Partners LLC ("GNG"), a private US holding company that
has been formed to acquire the assets of Paradox Resources LLC out of Chapter
11Bankruptcy. The Paradox Estate comprises primarily a midstream gas
processing and helium purification business with a liquefaction unit and 521
miles of gas gathering pipelines as well as a downstream helium truck
distribution business. Most notably this includes the 60MMcfd Lisbon Plant, in
Utah's Lisbon Valley (35 miles southeast of Moab). The convertible loan note
converts, exclusively at the election of Ascent, into 1 million new units of
GNG, which would represent 10% of the current issued share capital of GNG.
Ascent will collaborate with GNG to potentially provide further capital over
time to accelerate the business into a premium US liquefied helium producer
and distributor.
As we move forward with our new onshore US gas and helium strategy, alongside
protecting our claims in Slovenia, we continue to be grateful for our
shareholders' continuing support and look forward to delivering value.
James Parsons
Executive Chairman
STATEMENT FROM THE CEO
Legacy Slovenian Investment & ECT Damages Claim
2023 saw the Company continue to find traction on the initiatives launched in
previous years with the continued defence of its working interests in
Slovenia, both against breach of the ECT by the State and an abrasive partner
seeking to deprive Ascent of its contractual entitlements. As the year
progressed the Company prevailed on a number of fronts and has strong momentum
behind it as it continues to seek redress for the losses which have been
forced upon it.
The beginning of the year saw the Company and its subsidiary, Ascent Slovenia
Limited ("ASL"), make progress in mediation and arbitration processes with
related counterparties Petrol GEO (JV service provider) and Geoenergo (JV
partner) respectively. In April the Company announced a successful mediation
outcome with Petrol GEO, which involved settling claims for €2+million in
disputed amounts since 2019 for a final settlement of €1.436million,
representing an approximately 30% discount to the amounts claimed. Furthermore
the JV agreed reduced monthly fixed fees with Petrol GEO, down from €44k a
month to the higher of i) €20k; or ii) 35% of ASL's share of the Pg-10 and
Pg-11a monthly production. At the same time ASL was able to agree with
Geoenergo for payment of hydrocarbon revenues produced from the Pg-10 and
Pg-11a wells for the period January 2022 through to February 2023 which
totalled €1.725million. The resultant situation was that ASL received net
cash payment of €288,689 and a reduced fixed fee.
Meanwhile ASL continued to pursue its domestic arbitration dispute with
Geoenergo in relation to the partners different interpretations of the RJOA.
Following a tribunal hearing in June, ASL prevailed in October with
announcement of the arbitration tribunals binding interim decision in favour
of ASL's claims to receive 90% of the production above the baseline production
profile (as defined in the RJOA) for all wells on the concession area (except
for Pg-1 which is included entirely within the baseline production profile)
whilst it was still in a preferential recovery position (i.e. until it had
received back its investments of €54million). Accordingly, the tribunal
ordered Geoenergo to disclose the required (and previously withheld)
production data and invoices so that ASL can calculate its claim size. ASL
received the bundle and announced that it was owed approximately €8 million
in relation to production owed and unpaid since October 2019 through to
December 2023.
Post period in review, the JV partner filed for voluntary insolvency, the
Company saw this as a direct attempt at Geoenergo to try to dispose of a valid
claim against them and ASL filed a number of appeals. Following the court then
cancelling a hearing in relation to the appeals the Slovenian court appointed
an administrator. Ultimately ASL's appeals have been overturned and Geoenergo
is in administration. The Administrator notified ASL that it has taken the
view that the RJOA is immediately cancelled as of their appointment in 19
January 2024. Furthermore the concession contract expired on the 19 April
2024. At the same time the RJOA was unilaterally terminated the Service
Agreement with Petrol GEO was also simultaneously terminated. The Company
filed an €11million insolvency claim with the administrators ahead of the
deadline. The Claim includes amounts of approximately €8million relating to
monies received by Geoenergo and owed to ASL as well as a claim for
~€3million relating to the value of ASL's share of expropriated JV assets.
In relation to the Company's ECT damages claim against the Republic of
Slovenia, 2023 saw further progress with the appointment of the arbitrators
allowing the Tribunal to be constituted in accordance with Article 37(2)(a) of
the ICSID Convention. Following a preliminary case conference meeting in
April 2023, Ascent and ASL together as claimants filed their memorial (a
lengthy case document which includes the narrative and legal reasoning of our
claim together with factual and expert evidence) in July. At the same time the
Company announced that its damages experts had valued the Company's claim at
€656.5 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 than the full claim.
In September the Company announced it had successfully contracted an after the
event ("ATE") insurance policy in relation to the ECT claim. ATE insurance is
a protective policy for claimants which is expected to provide cover against
the majority, if not all, of an award to pay adverse legal costs and
disbursements in the event a claim is unsuccessful and is an insurance product
with the potential to provide a highly effective mechanism by which parties
involved in arbitration can manage their financial risk. The Company has
secured this policy following the filing of its memorial and supporting
evidence and as a pre-emptive action to secure proof of ability to pay adverse
costs ahead of the respondent potentially requesting the claimants to do so.
Post period in review the Company announced that the tribunal had
comprehensively rejected the State's subsequent application for security for
costs and the claim continues to progress without delay.
In relation to the Company's ECT damages claim, the Company announced in
October that it was considering distributing to qualifying stakeholders on a
future record date, an assignment to part of the proceeds which would be
received by the Company in the event of a successful ECT damages claim
monetary payout. Shareholders were invited to discuss their views on this as
well as other matters. Following this, in December the Company updated
shareholders that it was starting a process to be able to distribute an
entitlement to an economic interest in 49% of the net proceeds received (after
all legal fees, costs and expenses relating to the claim) in the event of a
successful claim outcome against the Republic of Slovenia. The intention of
this distribution is to give qualifying stakeholders the opportunity of having
ring-fenced access to a significant portion of the net proceeds received by
the Company from the ECT claim. As part of this process the Company created a
new subsidiary special purpose vehicle and following further announcements
post period in review, completed the proposals and distributed the relevant
SPV shares to qualifying shareholders.
Slovenia Operational Update
Throughout the year the wells in the concession area have continued to produce
small volumes of gas with sales continuing to local industrial buyers through
the low pressure pipeline. Total production from the Pg-10 and Pg-11A wells in
2023 was 1,139,686 scm of gas and 44,860 litres of condensate and the average
realised gas price for this production was €41.87/MWh resulting in
invoiceable hydrocarbon revenues of €0.505 million due to ASL from the PG10
and PG11A wells only. Of these amounts only €0.315 million were paid during
the year under review and the unpaid balance (plus late interest) is being
claimed as part of the insolvency proceedings of Geoenergo which were
initiated post period in review.
During the period in review ASL was not able to progress the wellhead works it
had proposed on Pg-11A, which included a fishing operation to potentially
increase production, due to failure to receive all necessary authorities from
collaborating parties to allow the proposed work to proceed. However,
Geoenergo successfully submitted a concession extension application (ahead of
the deadline) to renew the concession to enable continued production and then
shortly after were able to apply for new 30month automatic concession
extension which was made available for concessions due to expire in 2023 or
2024 (previously the Petišovci concession was due to expire in November 2023)
due to the continued administrative backlog as a result of the impacts caused
during COVID-19 pandemic. Accordingly, in December the concession was
approved to have received the 30 month extension and the concession
termination date became 26 May 2026. However, post period in review the JV
partner and concession holder, Geoenergo, filed for insolvency and an
administrator was appointed. Despite several appeals lodged by ASL, the
administration event was confirmed and the Administrator unilaterally
terminated the RJOA and Service Agreements. Furthermore the concession expired
on 19 April 2024. Following these post period events the RJOA and the
corresponding Service Agreement have been terminated. The Company is pursuing
a €11 million insolvency claim against its insolvent JV partner (of which
~€8million relates to monies received by Geoenergo and owed to ASL and the
balance relates to precautionary claim against the value of ASL's expropriated
interests in JV assets) and continues to vigorously pursue its €656.5
million ECT damages claim.
Corporate Developments
The Company pursued a number of avenues in 2023, including the proposed
introduction of Beryl International as a strategic investor which was
subsequently terminated by the Company to avoid dilution ahead of the partner
arbitration process and following delays to close the transaction with Beryl's
international subsidiary. The Company also considered a bid for the
outstanding shares of Amur Minerals Corporation, which contemplated merging
Amur's cash balance (post payment of their special dividend) with Ascent's
natural resource opportunity set and see an enlarged and combined entity
focused on environmental, social and governance metal ("ESG Metal") processing
business opportunities with an initial focus on South and Latin America.
However, following initial discussions the potential transaction was
terminated. In October the Company signed a new strategic collaboration
agreement with new cornerstone investor MBD Partners. The Company has been
continuing to review a number of natural resource opportunities in upstream
oil and gas and ESG metals for some time. Post period in review the Company
announced its maiden investment away from Slovenia in to a US onshore oil and
gas processing and distribution company called GNG Partners LLC.
On 24 October 2023, Stephen Birrell resigned from the Board and Jean-Michel
Doublet was appointed to the Board on 21 November 2023. The Board would like
to thank Stephen Birrell for his valuable contribution over the last three
years. Jean-Michel joined the Board as an independent non-executive director
with strong M&A experience, from working with independent oil and gas
companies with a focus on emerging markets.
On 23 April 2024 it was announced that David Bullion, CEO of GNG would join
the Board as a non-executive director together with Edouard Etienvre, as an
independent non-executive director subject to regulatory checks and Marco
Fumagalli and Malcolm Graham Wood would be retiring from the Board by the end
of May 2024. Marco Fumagalli stepped down from the Board on 13 May 2024.
Investment into US Helium Business
Post period under review, the Company launched its maiden investment away from
Slovenia with an investment into US onshore gas and helium processing, via an
initial $1million convertible loan into GNG Partners LLC ("GNG"). GNG is a
private US holding company, that was formed to acquire onshore US midstream
gas distribution and processing facilities which includes helium purification
and liquefaction. The Paradox Estate, according to the Chapter 11
documentation, comprises primarily a midstream gas processing and helium
purification business with a liquefaction unit and access to over 500 miles of
gas gathering pipelines as well as a downstream helium truck distribution
business. Most notably this includes the 60MMcfd Lisbon Plant, in Utah's
Lisbon Valley (35 miles southeast of Moab).
GNG has acquired the Paradox Estate for an effective consideration of
~US$11.5M plus cure costs relating to the assigned contracts and leases
related to the continuing operations of approximately US$2M ("Consideration").
The Consideration has been paid via a 7-year loan note for an amount of ~US$7M
with interest accruing at 6% per annum (payable in kind) ("PIK Note") provided
by some of the Paradox pre-insolvency creditors alongside new equity capital
for the balance. Ascent has provided an initial investment of US$1 million
into GNG via a zero coupon unsecured two-year convertible loan note which
converts, exclusively at the election of Ascent, into 1 million membership
units of GNG, which would represent 10% of the issued member units of GNG if
converted on the day of the initial subscription. Ascent will collaborate
with GNG to potentially provide further capital over time to accelerate the
business into a premium US liquefied helium producer and distributor.
The Chapter 11 documentation sets out that the Lisbon Plant is the sole
operating natural gas processing plant in the Paradox Basin and is fed by over
500 miles (of which 279 miles are wholly-owned by GNG) of helium rich gas
gathering pipelines which have access to helium rich gas sources with 7-8% He
concentration in the four corners region, most notably in SE Utah and NW New
Mexico. The Lisbon Plant is a 60 MMcfd (million cubic feet per day) gas
treatment plant which has a 1.1 MMcfd processing capacity for helium, a 45
MMcfd cryogenic plant and 10 MBpd (thousand barrels per day) fractionation
train. The plant was built specifically to process the Paradox Basin natural
gas that often has high CO(2), H(2)S, N(2) and He content. GNG believe that
the Lisbon Plant can produce approximately 3.4% of the US liquid helium
production (or 1.7% of the World's liquid helium). The Lisbon Plant is
currently operational and processing gas and purifying helium which is sold as
gaseous helium directly to industrial consumers via truck. The Lisbon Plant
has a liquification unit which has been in care and maintenance since around
2013 (when the liquified helium price was only ~US$62.25 /Mcf versus the
US$750-1,250 /Mcf range available today).
Underpinning the acquisition of the Paradox Estate and Ascent's investment in
GNG is a plan to quickly recommission the liquification unit to rapidly move
back into premium markets of producing and selling liquified helium, as well
as further opportunity to invest in iso-containers which would provide the
business with even greater price command. Ascent and GNG have agreed to work
together with a view to Ascent potentially providing capital for this critical
value enhancing development.
Revenue Recognition & Fundings
During the year the company recognised revenues of £1.775million, which is
made up of revenue relating to a positive outcome achieved in the tri-party
mediation process between ASL, Geoenergo and Petrol GEO, in which ASL was
successful in being able to recognise the hydrocarbon production revenues from
the Pg-10 and Pg-11A wells for the period January 2022 through to February
2023, which totalled €1,724,689. Additionally, ASL received full payment for
the Pg-10 and Pg-11A wells for the months of May through to September 2023,
but received only partial payments in March and April and no payments from
October onwards. Separately to the above Pg-10 and Pg-11A revenues, ASL
initiated an arbitration process against Geoenergo in December 2022 relating
to the parties different interpretations of the RJOA clauses which ASL
believed entitled it to further revenues produced above the baseline
production profile from other wells on the concession area. In October the
Arbitration Tribunal found in favour of ASL's interpretation of the RJOA and
ordered Geoenergo to disclose the materials required to enable ASL to accurate
calculate its claim amounts, which were subsequently confirmed to be
approximately €8million (including late interest). In January 2024 Geoenergo
filed for self-declared insolvency and an administrator was appointed. ASL has
subsequently filed an insolvency claim for the amounts it is owed and will
only recognise these revenues when the corresponding cash amounts are paid and
received. There can be no certainty of recovery of the amounts being claimed
in the insolvency proceedings.
In relation to costs of production, the Company successfully agreed settlement
with Petrol Geo in the tri-party mediation which involved agreeing to pay
€1.436million as full and final settlement of the claimed amounts of
€2,083,491 (plus interest) relating to disputed invoices issued under the
tri-party service agreement for Petrol Geo to operate the field covering the
period since 2019 through to February 2023. Furthermore the JV successfully
renegotiated the continuing monthly fee through to the concession expiry such
that it was reduced from €44k per month to the higher of i) €20k a month;
or ii) 35% of ASL's share of Pg-10 and Pg-11A production.
The loss for the year after taxation was £0.833 million (loss for 2022:
£41.5 million). The Company loss for the year was £1,486,000 (2022: loss of
£44,159,000). During the year the Company successfully raised £1.9million in
new equity to support its continuing endeavours. In February the Company
announced a strategic investment with Beryl International (Pty) Ltd ("Beryl")
which involved a subscription buy their Mauritian investment entity for
£1million in new equity at a price of 3.6 pence, being a 11% premium to the
prior closing price. However the Company terminated the subscription following
delays by Beryl in closing the transaction and to manage dilution ahead of
ASL's partner arbitration process. In April the Company raise £400k in new
equity from existing shareholders to allow the Company to continue to execute
at full capacity across various initiatives. In October, the Company
introduced MBD Partners SA as a new strategic cornerstone investor and they
subscribed for £1.5million in new equity at 3.5 pence per new share, which
represented a 35% premium to the closing bid price on the previous day. This
investment represented 20% of the enlarged share capital of the Company and
came with the right for MBD to appoint one non-executive director to the Board
and following the successful partner arbitration interim decision MBD were
issued 45million new warrants exercisable at 5 pence per new warrant share at
any time over the next 5 years.
During the year the Company also redeemed £368,366 of an outstanding loan
owed to Riverfort, such that the Company debt at year end had materially
reduced down to £184,183.
Summary
The Company continues to accelerate on its claims in Slovenia with pursuit of
its ECT claim, which is now well advanced, alongside executing its claim for
over ~€8million in revenues owed from its (now insolvent) JV partner
Geoenergo. Post period in review the Company has had its contractual
relationships under the Restated Joint Operating Agreement in Slovenia
terminated by the administrator and repositioned itself with huge upside
exposure from the in play Slovenian claims whilst putting a solid foot down in
America with an investment into GNG Partners which owns a gas processing and
helium purification business it acquired out of Chapter 11 bankruptcy in the
Paradox Basin. The Company and its shareholders are now well positioned to
still receive what is contractually owed to them from the Company's legacy
Slovenian investment whilst we focus on a future founded on a cash generative
business operating in an exciting area with a strong US onshore gas and helium
story supporting it.
Andrew Dennan
Chief Executive Officer
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2023
Notes Year Ended Year Ended
31 December 31 December
2023 2022
£'000s £'000s
Revenue 2 1,412 581
Cost of Sales 2 (626) (504)
Depreciation of assets 10 (1) (214)
Gross profit/(loss) 785 (137)
Other income 2 363 -
Administrative expenses 3 (1,960) (1,472)
Decommissioning provision 15 - (326)
Goodwill impairment 9 - (203)
Impairment expenses 10,11 - (39,721)
Operating loss (812) (41,859)
Finance cost 5 (39) (32)
Net finance costs (39) (32)
Loss before taxation (851) (41,891)
Income tax expense 6 - -
Loss for the year (851) (41,891)
Other comprehensive income
Items that may be reclassified to profit and loss
Exchange differences on translation of foreign operations 18 318
Total comprehensive income for the year (833) (41,573)
Earnings per share
Basic & fully diluted loss per share (Pence) 8 (49.74) (31.27)
The consolidated balance sheet should be read in conjunction with the
accompanying notes.
Consolidated Statement of Financial Position
For the year ended 31 December 2023
Assets Notes 31 December 31 December
2023 2022
£'000s £'000s
Non-current assets
Property, plant and equipment 9 3 4
Prepaid abandonment fund 12 262 300
Total non-current assets 265 304
Current Assets
Trade and other receivables 12 323 11
Cash and cash equivalents 475 325
Total current assets 798 336
Total assets 1,063 640
Equity and liabilities
Attributable to the equity holders of the Parent Company
Share capital 18 8,495 8,214
Share premium account 77,889 76,298
Merger reserve 570 570
Share-based payment reserve 22 574 2,131
Translation reserve (258) (276)
Retained earnings (87,648) (88,457)
Total equity attributable to the shareholders (378) (1,520)
Total equity (378) (1,520)
Non-current liabilities
Borrowings 14 - 516
Provisions 15 690 663
Total non-current liabilities 690 1,179
Current liabilities
Convertible loan notes 14 5 5
Borrowings 14 184 -
Trade and other payables 16 562 976
Total current liabilities 751 981
Total liabilities 1,441 2,160
Total equity and liabilities 1,063 640
The consolidated balance sheet should be read in conjunction with the
accompanying notes.
Consolidated Statement of Changes in Equity
For the year ended 31 December 2023
Share capital Share premium Merger reserve Share base payment reserve Translation reserve Retained earnings Total
£'000s £'000s £'000s £'000s £'000s £'000s £'000s
Balance at 1 January 2022 7,998 75,021 570 2,129 (594) (46,566) 38,558
Comprehensive income
Loss for the year - - - - - (41,891) (41,891)
Other comprehensive income
Currency translation differences - - - - 318 - 318
Total comprehensive income - - - - 318 (41,891) (41,573)
Transactions with owners
Issue of ordinary shares 216 1,366 - - - - 1,582
Costs related to share issues - (89) - - - - (89)
Share-based payments - - - 2 - - 2
Total transactions with owners 216 1,277 - 2 - - 1,495
Balance at 31 December 2022 8,214 76,298 570 2,131 (276) (88,457) (1,520)
Balance at 1 January 2023 8,214 76,298 570 2,131 (276) (88,457) (1,520)
Comprehensive income
Loss for the year - - - - - (851) (851)
Other comprehensive income
Currency translation differences - - - - 18 - 18
Total comprehensive income - - - - 18 (851) (833)
Transactions with owners
Issue of ordinary shares 281 1,619 - - - - 1,900
Costs related to share issues - (28) - - - - (28)
Share-based payments - charge 103 - - 103
Share-based payments - expired - - - (1,660) 1,660 -
Total transactions with owners 281 1,591 - (1,557) - 1,660 (1,975)
Balance at 31 December 2023 8,495 77,889 570 574 (258) (87,648) (378)
The consolidated balance sheet should be read in conjunction with the
accompanying notes.
Consolidated Cash Flow Statement
For the year ended 31 December 2023
Year ended Year ended
31 December 2023 31 December 2022
Notes £'000s £'000s
Cash flows from operations
Loss after tax for the year (851) (41,891)
Depreciation 1 214
Impairment of PPE and exploration asset - 39,721
Goodwill impairment - 203
Decommissioning provision - 326
Finance costs 39 -
(Increase)/decrease in receivables 12 (274) 3
(Decrease)/increase in payables 16 (419) 205
Increase in provisions 27 -
Share-based payment charge 22 106 2
Exchange differences 18 6
Net cash used in operating activities (1,353) (1,211)
Cash flows from investing activities
Payments for fixed assets 9 (1) (1)
Net cash used in investing activities (1) (1)
Cash flows from financing activities
Loans repaid 14 (368) (20)
Interest paid 5 - (32)
Proceeds from issue of shares 18 1,900 1,581
Share issue costs (28) (89)
Net cash generated from financing activities 1,504 1,440
Net increase in cash and cash equivalents for the year 150 228
Effect of foreign exchange differences - -
Cash and cash equivalents at beginning of the year 325 97
Cash and cash equivalents at end of the year 475 325
The consolidated balance sheet should be read in conjunction with the
accompanying notes.
Notes to the Financial Statements
Reporting entity
Ascent Resources plc (Company no: 05239285) ('the Company' or 'Ascent') is a
company domiciled and incorporated in England. The address of the Company's
registered office is 5 New Street Square, London, EC4A 3TW. The consolidated
financial statements of the Company for the year ended 31 December 2023
comprise the Company and its subsidiaries (together referred to as the
'Group'). The Parent Company financial statements present information about
the Company as a separate entity and not about its Group.
The Company is admitted to AIM, a market of the London Stock Exchange.
Statement of compliance
The financial statements of the Group and Company have been prepared in
accordance with UK-adopted international accounting standards and with the
requirements of the Companies Act 2006.
The Group's and Company's financial statements for the year ended 31 December
2023 were approved and authorised for issue by the Board of Directors on 30
May 2024 and the Statements of Financial Position were signed on behalf of the
Board by James Parsons.
Both the Parent Company financial statements and the Group financial
statements give a true and fair view and have been prepared and approved by
the Directors in accordance with UK-adopted international accounting standards
and with the requirements of the Companies Act 2006.
Basis of preparation
In publishing the Parent Company financial statements here together with the
Group financial statements, the Company is taking advantage of the exemption
in Section 408 of the Companies Act 2006 not to present its individual income
statement and related notes that form a part of these approved financial
statements. The Company loss for the year was £1,395,000 (2022: loss of
£44,159,000).
The presentational currency of the Group is British Pounds Sterling ("GBP")
and the functional currency of the Group's subsidiaries domiciled outside of
the UK in Malta, Slovenia and Netherlands are in Euros ("EUR"). The functional
currency of Ascent Resources PLC, the parent company, is Sterling ("GBP").
Measurement Convention
The financial statements have been prepared under the historical cost
convention. The financial statements are presented in sterling and have been
rounded to the nearest thousand (£'000s) except where otherwise indicated.
The principal accounting policies set out below have been consistently applied
to all periods presented.
Going Concern
The Group and Company financial statements have been prepared under the going
concern assumption, which presumes that the Group and Company will be able to
meet its obligations as they fall due for the foreseeable future.
The Company raised £0.4 million in new equity in April 2023 from new and
existing investors and has settled revenue disputes with its JV partner and
settled invoice disputes with its JV operator such that a net €288,000 was
received by the Company.
In October 2023, the Company signed a Strategic Collaboration Agreement with
investment company MDB Partners SA ("MDB') alongside a cornerstone equity
investment by MDB of £1.5m into the Company. This investment will allow the
Company to evaluate a number of opportunities consistent with the Company's
strategy to grow in onshore oil and gas, oil services, mining and ESG Metals.
Post period in review the Company successfully raised £555,000 by way of new
equity issue with proceeds used to fund its investment into GNG and general
working capital. The Company also entered into a new US$2 million senior
secured fixed coupon loan facility with institutional investor RiverFort
Global Opportunities PCC Ltd, of which $1m has been received and a further
draw down of $1m is available at any time within the first year following
announcement, subject to mutual agreement between the parties.
Under the Group's forecasts, the funds raised together with existing bank
balances provide sufficient funding for twelve months as at the date of this
report.
In addition to the need to raise additional funding in the second half of
2024, the forecasts are sensitive to the timing and cash flows associated with
the continuing situation in Slovenia, and discretionary spend incurred with
executing the strategy to grow in onshore oil and gas, oil services, mining
and ESG Metals. As such, the Company will need to raise new capital within the
forecast period to fund such discretionary spend.
Negotiations with potential new investors is ongoing and based on historical
and recent support from new and existing investors the Board believes that
such funding, if and when required, could be obtained through new debt or
equity issuances. However, the ability to raise these funds is not guaranteed
at the date of signing these financial statements. As a consequence, there is
a material uncertainty to the going concern of the Group.
New and amended Standards effective for 31 December 2023 year-end adopted by
the Group:
The new standards effective from 1 January 2023, as listed above, did not have
a material effect on the Group's financial statements.
i. Standards, amendments and interpretations, which are effective for
reporting periods beginning after the date of these financial statements which
have not been adopted early:
Standard Description Effective date
IAS 1 amendments Non-current Liabilities with Covenants; and Classification of Liabilities as 1 January 2024
Current or Non-current
There are no IFRS's or IFRIC interpretations that are not yet effective that
would be expected to have a material impact on the Company or Group.
Estimates and judgements
Exploration and evaluation assets (Note 11) - exploration and evaluation costs
are initially classified and held as intangible fixed assets rather than being
expensed. The carrying value of intangible exploration and evaluation assets
are then determined. Management considers these assets for indicators of
impairment under IFRS 6 at least annually based on an estimation of the
recoverability of the cost pool from future development and production of the
related oil and gas reserves which requires judgement. This assessment
includes assessment of the underlying financial models for the Petišovci
field and requires estimates of gas reserves, production, gas prices,
operating and capital costs associated with the field and discount rates (see
Note 11) using the fair value less cost to development method which is
commonplace in the oil and gas sector. The forecasts are based on the JV
partners submitting and obtaining approval for an environmental impact
assessment, and also the renewal of the concessions. The Board considers these
factors to be an ordinary risk for oil and gas developments.
In April 2022, the Republic of Slovenia approved amendments to its Mining Law
which include a total ban on hydraulic stimulation. The Company believes that
this ban has substantially destroyed the economic value of the Petisovci
field. Consequently, the operational and development review conducted by the
Company determined that further field development was not economically viable
and that the current producing wells had a remaining production life of 5.5
years. The result of the impairment review resulted in the exploration assets
fully impaired by £17,800,000 to a carrying value of nil in the year ended 31
December 2022.
Reserves - Reserves are proven, and probable oil and gas reserves calculated
on an entitlement basis and are integral to the assessment of the carrying
value of the exploration, evaluation and production assets. Estimates of
commercial reserves include estimates of the amount of oil and gas in place,
assumptions about reservoir performance over the life of the field and
assumptions about commercial factors which, in turn, will be affected by the
future oil and gas price.
Carrying value of property, plant and equipment (developed oil and gas assets)
(Note 9) - In April 2022, the Republic of Slovenia approved amendments to its
Mining Law which include a total ban on hydraulic stimulation. Consequently,
the operational and development review conducted by the Company determined
that further field development was not economically viable and that the
current producing wells had a remaining production life of 5.5 years. The
result of the impairment review resulted in the developed oil and gas assets
fully impaired by £21,193,000 to a carrying value of nil in the year ended 31
December 2023.
Depreciation of property, plant and equipment (Note 9) - Upon commencing
commercial production we began to depreciate the assets associated with
current production. The depreciation on a unit of production basis requires
judgment and estimation in terms of the applicable reserves over which the
assets are depreciated and the extent to which future capital expenditure is
included in the depreciable cost when such expenditure is required to extract
the reserve base. The calculations have been based on actual production,
estimates of P50 reserves and best estimates of the future workover costs on
the producing wells to extract this reserve. The depreciation charge for the
year was £1,000 for the remaining office equipment assets, (2022: £214,000,
including both depreciation associated with the unit of production method and
straight-line charges for existing processing infrastructure). This is
included in Notes 10 and 11 below.
Deferred tax (Note 7) - judgment has been required in assessing the extent to
which a deferred tax asset is recorded, or not recorded, in respect of the
Slovenian operations. Noting the history of taxable losses and the initial
phases of production, together with assessment of budgets and forecasts of tax
in 2023 the Board has concluded that no deferred tax asset is yet applicable.
This is included at Note 7.
Decommissioning costs (Note 16)
Where a material obligation for the removal of wells and production facilities
and site restoration at the end of the field life exists, a provision for
decommissioning is recognised. The amount recognised is the one-off amount to
the Company's JV partner as per the Revised Joint Venture Agreement. A change
in the key assumptions used to calculate rehabilitation provisions could have
a material impact on the carrying value of the provisions.
The carrying value of these provisions in the financial statements represents
an estimate of the future costs expected to be incurred to rehabilitate each
well, which is reviewed at least annually. Future costs are estimated by
internal experts, with external specialists engaged periodically to assist
management. These estimates are based on current price observations, taking
into account developments in technology and changes to legal and contractual
requirements. Expectations regarding cost inflation are also incorporated. The
carrying value of these provisions have not been discounted to provide a
present value of these future costs due to the near-term uncertainty of when
these costs may materialise.
Intercompany receivables - Company only (Note 13b) - In line with the
requirements of IFRS 9 the Board has carried out an assessment of the
potential future credit loss on intercompany receivables under a number of
scenarios. Arriving at the expected credit loss allowance involved considering
different scenarios for the recovery of the intercompany loan receivables, the
possible credit losses that could arise and the probabilities for these
scenarios. In April 2022, the Republic of Slovenia approved amendments to its
Mining Law which include a total ban on hydraulic stimulation. Consequently,
the operational and development review conducted by the Company determined
that further field development was not economically viable and that the
current producing wells had a remaining production life of 5.5 years.
Recognising the loss in economic value, management took the decision fully
impair the receivable in the Company accounts by £130k (2022: £32 million).
Investments - Company only (note 11) - Judgement has been made in respect of
the carrying value of the Company's carrying value of its investments in the
subsidiaries. The process for this is the same as the consideration given in
respect of both Intangible Assets and Property, Plant and Equipment (see
above). At the year ended 31 December 2022 and 2023, the investment is fully
impaired.
Basis of consolidation (Note 12) - Where the Company has control over an
investee, it is classified as a subsidiary. The Company controls an investee
if all three of the following elements are present: power over the investee,
exposure to variable returns from the investee, and the ability of the
investor to use its power to affect those variable returns. Control is
reassessed whenever facts and circumstances indicate that there may be a
change in any of these elements of control.
The consolidated financial statements present the results of the Company and
its subsidiaries as if they formed a single entity. Inter-company transactions
and balances between Group companies are therefore eliminated in full.
The results of undertakings acquired or disposed of are consolidated from or
to the date when control passes to or from the Group. The results of
subsidiaries acquired or disposed of during the period are included in the
Consolidated Income Statement from the date that control commences until the
date that control ceases.
Where necessary, adjustments are made to the results of subsidiaries to bring
the accounting policies they use into line with those used by the Group.
Business combinations (Note 9) - Business combinations are accounted for using
the acquisition method. The
consideration transferred for the acquisition of a subsidiary comprises the:
• fair value of assets transferred;
• liabilities incurred to the former owners of the acquired business;
• equity instruments issued by the Group;
• fair value of any asset or liability resulting from contingent
consideration arrangement; and
• fair value of any pre-existing equity interest in the subsidiary.
Identifiable assets acquired, and liabilities and contingent liabilities
assumed in a business combination are, with limited exceptions, measured
initially at their fair values at the acquisition date. The Group recognises
any noncontrolling interest in the acquired entity on an
acquisition-by-acquisition basis either at fair value or at the noncontrolling
interest's proportionate share of the acquired entity's net identifiable
assets. Acquisition-related costs are expensed as incurred.
The excess of the consideration transferred, amount of any non-controlling
interest and fair value of pre-existing equity interest over the fair value of
net identifiable assets acquired is recorded as goodwill. If those amounts are
less than the fair value of the net identifiable assets acquired, the
difference is recognised immediately in profit or loss as a gain on bargain
purchase.
Joint arrangements - The Group is party to a joint arrangement when there is a
contractual arrangement that confers joint control over the relevant
activities of the arrangement to the Group and at least one other party. Joint
control is assessed under the same principles as control over subsidiaries.
The Group classifies its interests in joint arrangements as either joint
ventures, where the Group has rights to only the net assets of the joint
arrangement, or joint operations where the Group has both the rights to assets
and obligations for the liabilities of the joint arrangement.
All of the Group's joint arrangements are classified as joint operations. The
Group accounts for its interests in joint operations by recognising its
assets, liabilities, revenues and expenses in accordance with its
contractually conferred rights and obligations.
The Group has one joint arrangement, the Petišovci joint venture in Slovenia
in which Ascent Slovenia Limited (a 100% subsidiary of Ascent Resources plc)
has a 75% working interest, however whilst in a cost recovery position the
Company is entitled to 90% of hydrocarbon revenues produced.
Depreciation of property plant and equipment - The cost of production wells is
depreciated on a unit of production basis. The depreciation charge is
calculated based on total costs incurred to date plus anticipated future
workover expenditure required to extract the associated gas reserves. This
depreciable asset base is charged to the income statement based on production
in the period over their expected lifetime P50 production extractable from the
wells per the field plan. The infrastructure associated with export production
is depreciated on a straight-line basis over a two-year period as this is the
anticipated period over which this infrastructure will be used.
Foreign currency
The Group's strategy is focussed on developing oil and gas projects and ESG
metals funded by shareholder equity and other financial assets which are
principally denominated in sterling. The functional currency of the Company is
sterling.
Transactions in foreign currency are translated to the respective functional
currency of the Group entity at the rates of exchange prevailing on the dates
of the transactions. At each reporting date, monetary assets and liabilities
that are denominated in foreign currencies are retranslated to the functional
currency at the rates prevailing on the reporting date. Exchange gains and
losses on short-term foreign currency borrowings and deposits are included
with net interest payable.
The assets and liabilities of foreign operations are translated to sterling at
foreign exchange rates ruling at the balance sheet date. The revenues and
expenses of foreign operations are translated to sterling at the average rate
ruling during the period. Foreign exchange differences arising on
retranslation are recognised directly in a separate component of equity.
Foreign exchange differences arising on inter-company loans considered to be
permanent as equity are recorded in equity. The exchange rate from euro to
sterling at 31 December 2023 was £1: €1.1537 (2022: £1: €1.1308).
On disposal of a foreign operation, the cumulative exchange differences
recognised in the foreign exchange reserve relating to that operation up to
the date of disposal are transferred to the consolidated income statement as
part of the profit or loss on disposal.
Exchange differences on all other transactions, except inter-company foreign
currency loans, are taken to operating loss.
Cash and cash equivalents
In the consolidated statement of cash flows, cash and cash equivalents
include, deposits held at call with banks with original maturities of three
months or less that are readily convertible to known amounts of cash and which
are subject to an insignificant risk of changes in value. Cash and cash
equivalents are carried at amortised cost because: (i) they are held for
collection of contractual cash flows and those cash flows represent SPPI, and
(ii) they are not designated at fair value through profit or loss (FVTPL).
Taxation (Note 6)
The tax expense represents the sum of the tax currently payable and any
deferred tax.
The tax currently payable is based on the estimated taxable profit for the
period. Taxable profit differs from net profit as reported in the income
statement because it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are never taxable
or deductible. The Group's liability for current tax is calculated using the
expected tax rate applicable to annual earnings.
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the corresponding tax bases used in the computation of taxable
profit. It is accounted for using the balance sheet liability method. Deferred
tax liabilities are recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary
differences can be utilised. The carrying amount of deferred tax assets is
reviewed at each reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all or
part of the asset to be recovered.
Equity-settled share-based payments
The cost of providing share-based payments to employees is charged to the
income statement over the vesting period of the related share options or share
allocations. The cost is based on the fair values of the options and shares
allocated determined using the binomial method. The value of the charge is
adjusted to reflect expected and actual levels of vesting. Charges are not
adjusted for market related conditions which are not achieved. Where equity
instruments are granted to persons other than directors or employees the
Consolidated Income Statement is charged with the fair value of any goods or
services received.
Grants of options in relation to acquiring exploration assets in licence areas
are treated as additions to Slovenian exploration costs at Group level and
increases in investments at Company level.
Provisions (Note 16)
A provision is recognised in the Statement of Financial Position when the
Group has a present legal or constructive obligation as a result of a past
event, and it is probable that an outflow of economic benefits will be
required to settle the obligation. If the effect is material, provisions are
determined by estimating the expected future cash flows at a pre-tax rate that
reflects current market assessments of the time value of money and the risks
specific to the liability.
Convertible loan notes
Upon issue of a new convertible loan, where the convertible option is at a
fixed rate, the net proceeds received from the issue of CLNs are split between
a liability element and an equity component at the date of issue. The fair
value of the liability component is estimated using the prevailing market
interest rate for similar non-convertible debt. The difference between the
proceeds of issue of the CLNs and the fair value assigned to the liability
component, representing the embedded option to convert the liability into
equity of the Group, is included in equity and is not remeasured.
Subsequent to the initial recognition the liability component is measured at
amortised cost using the effective interest method.
When there are amendments to the contractual loan note terms these terms are
assessed to determine whether the amendment represents an inducement to the
loan note holders to convert. If this is considered to be the case the
estimate of fair value adjusted as appropriate and any loss arising is
recorded in the income statement.
Where there are amendments to the contractual loan note terms that are
considered to represent a modification to the loan note, without representing
an inducement to convert, the Group treats the transaction as an
extinguishment of the existing convertible loan note and replaces the
instrument with a new convertible loan note. The fair value of the liability
component is estimated using the prevailing market interest rate for similar
nonconvertible debt. The fair value of the conversion right is recorded as an
increase in equity. The previous equity reserve is reclassified to retained
loss. Any gain or loss arising on the extinguishment of the instrument is
recorded in the income statement, unless the transaction is with a
counterparty considered to be acting in their capacity as a shareholder
whereby the gain or loss is recorded in equity.
Where the loan note is converted into ordinary shares by the loan note holder;
the unaccreted portion of the loan notes is transferred from the equity
reserve to the liability; the full liability is then converted into share
capital and share premium based on the conversion price on the note.
Non-derivative financial instruments
Non-derivative financial instruments comprise of investments in equity and
debt securities, trade and other receivables, cash and cash equivalents, loans
and borrowings and trade and other payables.
Financial instruments
Classes and categories
Financial assets that meet the following conditions are measured subsequently
at amortised cost using effective interest rate method:
• The financial asset is held within a business model whose objective
is to hold financial assets in order to collect contractual cash flows; and,
• The contractual terms of the financial asset give rise on specified
dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
Financial assets for which the amount of future receipts are dependent upon
the Company's share price over the term of the instrument do not meet the
criteria above and are recorded at fair value through profit and loss.
Measurement
Financial assets at amortised cost.
A financial asset is measured at amortised cost only if both of the following
conditions are met: (i) it is held within a business model whose objective is
to hold assets in order to collect contractual cash flows; and (ii) the
contractual terms of the financial asset represent contractual cash flows that
are solely payments of principal and interest.
Impairment
For trade receivables, a simplified approach to measuring expected credit
losses using a lifetime expected loss allowance is available. The Group's
trade receivables are generally settled on a short time frame without material
credit risk.
The Group recognises a loss allowance for expected credit losses on financial
assets which are measured at amortised cost. The measurement of the loss
allowance depends upon the Group's assessment at the end of each reporting
period as to whether the financial instrument's credit risk has increased
significantly since initial recognition, based on reasonable and supportable
information that is available, without undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk
since initial recognition, a twelve-month expected credit loss allowance is
estimated. This represents a portion of the asset's lifetime expected credit
losses that is attributable to a default event that is possible within the
next twelve months. Where a financial asset has become credit impaired or
where it is determined that credit risk has increased significantly, the loss
allowance is based on the asset's lifetime expected credit losses. The amount
of expected credit loss recognised is measured on the basis of the probability
weighted present value of anticipated cash shortfalls over the life of the
instrument discounted at the original effective interest rate.
Lifetime expected credit losses (ECLs) for intercompany loan receivables are
based on the assumptions that repayment of the loans are demanded at the
reporting date due to the fact that the loan is contractually repayable on
demand. The subsidiaries do not have sufficient funds in order to repay the
loan if demanded and therefore the expected manner of recovery to measure
lifetime expected credit losses is considered. A range of different recovery
strategies and credit loss scenarios are evaluated using reasonable and
supportable external and internal information to assess the likelihood of
recoverability of the balance under these scenarios.
Financial liabilities at amortised cost
Financial liabilities are initially recognised at fair value net of
transaction costs incurred. Subsequent to initial measurement financial
liabilities are recognised at amortised costs. The difference between initial
carrying amount of the financial liabilities and their redemption value is
recognised in the income statement over the contractual terms using the
effective interest rate method. This category includes the following classes
of the financial liabilities, trade and other payables, bonds and other
financial liabilities. Financial liabilities at amortised costs are classified
as current or non-current depending on whether these are due within 12 months
after the balance sheet date or beyond.
Financial liabilities are derecognised when either the Group is discharged
from its obligation, they expire, are cancelled, or replaced by a new
liability with substantially modified terms.
Share-based payments
Share-based payments relate to transactions where the Group receives services
from employees or service providers and the terms of the arrangements include
payment of a part or whole of consideration by issuing equity instruments to
the counterparty. The Group measures the services received from non-employees,
and the corresponding increase in equity, at the fair value of the goods or
services received. When the transactions are with employees, the fair value is
measured by reference to the fair value of the share-based payments. The
expense is recognised over the vesting period, which is the period over which
all of the specified vesting conditions are to be satisfied.
Warrants
Warrants granted as part of a financing arrangement which fail the
fixed-for-fixed criteria as a result of either the consideration to be
received or the number of warrants to be issued is variable, are initially
recorded at fair value as a financial liability and charged as transaction
cost deducted against the loan and held subsequently at fair value.
Subsequently the derivative liability is revalued at each reporting date with
changes in the fair value recorded within finance income or costs.
Equity
Share capital is determined using the nominal value of shares that have been
issued.
The Share premium reserve relates to amounts subscribed for share capital in
excess of nominal value less costs of shares associated with share issues.
Share based payments relate to transactions where the Group receives services
from employees or service providers and the terms of the arrangements include
payment of a part or whole of consideration by issuing equity instruments to
the counterparty. The Group measures the services received from non-employees,
and the corresponding increase in equity, at the fair value of the goods or
services received. When the transactions are with employees, the fair value is
measured by reference to the fair value of the shares issued. The expense is
recognised over the vesting period, which is the period over which all of the
specified vesting conditions are to be satisfied.
Equity-settled share-based payments are credited to a share-based payment
reserve as a component of equity until related options or warrants are
exercised or lapse.
The Merger reserve relates to the value of shares, in excess of nominal value,
issued with respect of the Trameta acquisition in 2016.
The Translation reserve comprises the exchange differences from translating
the net investment in foreign entities and of monetary items receivable from
subsidiaries for which settlement is neither planned nor likely in the
foreseeable future.
Retained losses includes all current and prior period results as disclosed in
the income statement.
Investments and loans
Shares and loans in subsidiary undertakings are shown at cost. Provisions are
made for any impairment when the fair value of the assets is assessed as less
than the carrying amount of the asset. Inter-company loans are repayable on
demand but are included as non-current as the realisation is not expected in
the short term.
Segment reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker. The chief operating
decision-maker has been identified as the Chief Executive Officer ("CEO").
Revenue recognition
Sales represent amounts received and receivable from third parties for goods
and services rendered to the customers. Sales are recognised when control of
the goods has transferred to the customer. Condensate, which is collected at a
separating station and transported via trucks to a customer in Hungary is
recorded on delivery according to the terms of the contract. At this point in
time, the performance obligation is satisfied in full with title, risk,
entitlement to payment and customer possession confirmed. Revenue is measured
as the amount of consideration which the Group expects to receive, based on
the market price for gas and condensate after deduction of costs agreed per
the Restated Joint Operating Agreement ("RJOA") and sales taxes. The Company
follows the five step process set out in IFRS 15 for revenue recognition.
Revenue is derived from the production of hydrocarbons under the Petišovci
Concession, which Ascent Slovenia Limited holds a 75% working interest,
however whilst in a cost recovery position the Company is entitled to 90% of
hydrocarbon revenues produced. Under the terms of the RJOA, and in accordance
with Slovenian law, the concession holder retains the rights to all
hydrocarbons produced. The concession holder enters into sales agreements with
customers and transfers the relevant portion of hydrocarbon sales to Ascent
Slovenia Limited for the services it provides under the RJOA.
During the year the revenue recognised was £1,412,000 (2022: £581,000). The
on-going dispute with the JV partner was partially resolved in August 2022
resulting in the recognition of revenue, and receipt of funds, from the
hydrocarbon production for the period April 2020 to December 2021, as a result
revenue of £581,000 was recorded in the year to 31 December 2022. Hydrocarbon
production for 2022 was subject to dispute and therefore was not recognised
until 2023 following a tri-party mediation between ASL, Petrol Geo and
Geoenergo. Sales from Jan, Feb, and May through to Sept 23 as well as partial
payments for March and April were also recognised in 2023.
The sales invoices were netted off against the costs due to Petrol GEO (JV
Service provider). The claim was settled at €1.436million (£1,249million).
The total sales for the period January 2022 through to September 2023 totalled
€1.725million (£1.5million), and were netted off, resulting in a net cash
payment of €288,689 (£251k) to ASL.
Payments are typically received around 30 days from the end of the month
during which delivery has occurred. There are no balances of accrued or
deferred revenue at the balance sheet date.
Under the RJOA, the Group is entitled to 90% of hydrocarbon revenues produced
whilst in a cost recovery position in the Petišovci area and the Group
records revenue on the entitlement basis accordingly.
Credit terms are agreed per RJOA contract and are short term, without any
financing component.
The Group has no sales returns or reclamations of services since it has only
one costumer. Sales are disaggregated by geography.
2. Segmental Analysis
The Group has two reportable segments, an operating segment and a head office
segment, as described below. The operations and day to day running of the
business are carried out on a local level and therefore managed separately.
The operating segment reports to the UK head office which evaluates
performance, decide how to allocate resources and make other operating
decisions such as the purchase of material capital assets and services.
Internal reports are generated and submitted to the Group's CEO for review on
a monthly basis.
The operations of the Group as a whole are the exploration for, development
and production of oil and gas reserves.
The two geographic reporting segments are made up as follows:
Slovenia exploration, development and
production
UK head office
The costs of exploration and development works are carried out under shared
licences with joint ventures and subsidiaries which are co-ordinated by the UK
head office. Segment revenue, segment expense and segment results include
transfers between segments. Those transfers are eliminated on consolidation.
Information regarding the current and prior year's results for each reportable
segment is included below.
2023 UK Slovenia Elims Total
£,000s £'000s £'000s £'000s
Hydrocarbon sales - 1,412 - 1,412
Other income 363 - - 363
Total revenue 363 1,412 - 1,775
Cost of sales - (626) - (626)
Administrative expenses (1,681) (279) - (1,960)
Material non-cash items
Depreciation (1) - - (1)
Impairment (130) - 130 -
Net finance costs (38) (1) - (39)
Reportable segment profit/(loss) before taxation (1,487) 506 130 (851)
Taxation - - - -
Reportable segment profit/(loss) after taxation (1,487) 506 130 (851)
Reportable segment assets
Total plant and equipment 3 - - 3
Prepaid abandonment fund - 262 - 262
Investment in subsidiaries - - - -
Intercompany receivables - - - -
Total non-current assets 3 262 - 265
Other assets 765 33 - 798
Consolidated total assets 768 295 - 1,063
Reportable segment liabilities
Trade payables (289) (273) - (562)
External loan balances (189) - - (189)
Inter-group borrowings (209) - 209 -
Other liabilities - (690) - (690)
Consolidated total liabilities (687) (963) 209 (1,441)
Other income of £363k relates to the recharge of the ATE insurance premium.
2022 UK Slovenia Elims Total
£,000s £'000s £'000s £'000s
Hydrocarbon sales - 581 - 581
Intercompany sales 417 12 (429) -
Total revenue 417 593 (429) 581
Cost of sales - (504) - (504)
Administrative expenses (719) (642) (111) (1,472)
Material non-cash items
Depreciation (1) (213) - (214)
Impairment (43,622) (25,795) 29,696 (39,721)
Goodwill impairment (203) - - (203)
Decommission provision - (326) - (326)
Net finance costs (31) (1) - (32)
Reportable segment profit/(loss) before taxation (44,159) (26,888) 29,156 (41,891)
Taxation - - - -
Reportable segment profit/(loss) after taxation (44,159) (26,888) 28,156 (41,891)
Reportable segment assets
Carrying value of exploration assets - 18,463 - 18,463
Impairment to exploration assets - (18,820) - (18,820)
Effect of exchange rate movements - 357 - 357
Total plant and equipment 4 - - 4
Prepaid abandonment fund - 300 - 300
Investment in subsidiaries - - - -
Intercompany receivables - - - -
Total non-current assets 4 300 - 304
Other assets 326 10 - 336
Consolidated total assets 330 310 - 640
Reportable segment liabilities
Trade payables (219) (757) - (976)
External loan balances (521) - - (521)
Inter-group borrowings - (34,536) 34,536 -
Other liabilities (663) - (663)
Consolidated total liabilities (740) (35,956) 34,536 (2,160)
Revenue from customers
Revenue for 2023 was £1,412,000 (2022: £581,000). The on-going dispute with
the JV partner was partially resolved in August 2022 resulting in the
recognition of revenue, and receipt of funds, from the hydrocarbon production
for the period April 2020 to December 2021. Hydrocarbon production for 2022
was subject to dispute and therefore was not recognised until 2023. The
performance obligations are set out in the Group's revenue recognition policy.
The price for the sale of gas and condensate is set with reference to the
market price at the date the performance obligation is satisfied.
3. Operating loss is stated after charging:
Year ended Year ended
31 December 31 December
2023 2022
£'000s £'000s
Employee costs 885 825
Impairment charge for the debtor 72 -
Shared based payment charge 105 2
Depreciation 1 214
Auditor's remuneration:
Audit fees 50 52
1,041 1,093
4. Employees and directors
a) Employees
The average number of persons employed by the Group, including Executive
Directors, was:
Year ended Year ended
31 December 31 December
2023 2022
Management and technical 7 7
b) Directors and employee's remuneration
Year ended Year ended
31 December 31 December
2023 2022
£'000s £'000s
Employees and directors
Wages and salaries 768 667
Social security costs 101 91
Pension costs 3 1
Bonuses - 53
Share base payments 105 2
Taxable benefits 13 13
990 827
c) Director's remuneration
Please see Remuneration report in the Annual Report and Accounts.
5. Finance income and costs recognised in the year
Finance costs Year ended Year ended
31 December 31 December
2023 2022
£'000s £'000s
Interest charge on loans (37) (30)
Bank charges (2) (2)
(39) (32)
Please refer to the accompanying notes to the accounts for a description of
financing activity during the year.
6. Income tax expense
Year ended Year ended
31 December 31 December
2023 2022
£'000s £'000s
Current tax expense - -
Deferred tax expense - -
Total tax expense for the year - -
The difference between the total tax expense shown above and the amount
calculated by applying the standard rate of UK corporation tax to the loss
before tax is as follows:
Year ended Year ended
31 December 31 December
2023 2022
£'000s £'000s
Loss for the year (855) (41,891)
Less tax expense (5) -
Income tax using the Company's domestic tax rate at 19% (2022: 19%) (162) (7,959)
Effects of:
Effect of tax rates in foreign jurisdictions 126 -
Other non-deductible expenses 196 7,959
Net increase in unrecognised losses c/f (160) -
Total tax expense for the year - -
7. Deferred tax - Group and Company
Year ended Year ended
31 December 31 December
2023 2022
£'000s £'000s
Group
Total tax losses - UK and Slovenia 850 (95,118)
Unrecorded deferred tax asset at 19% (2022: 19%) 162 16,170
Company
Total losses (1,544) (59,249)
Unrecorded deferred tax asset at 25% (2022: 19%) 387 10,072
No deferred tax asset has been recognised in respect of the tax losses carried
forward, due to the uncertainty as to when profits will be generated. Refer to
critical accounting estimates and judgments.
8. Earnings per share
Year ended Year ended
31 December 31 December
2023 2022
£'000s £'000s
Result for the year
Total loss for the year attributable to equity shareholders (851) (41,891)
Weighted average number of shares Number Number
For basic earnings per share 171,105,556 133,972,082
Loss per share (pence) (49.74) (31.27)
As the result for the year was a loss, the basic and diluted loss per share
are the same. At 31 December 2023, potentially dilutive instruments in issue
were 78,745,880 (2022: 65,969,404). Dilutive shares arise from share options
and warrants issued by the Company.
9. Property, plant and equipment
Cost Computer Developed Oil Total
Equipment & Gas Assets £'000s
£'000s £'000s
At 1 January 2022 11 22,963 22,974
Additions 1 - 1
Effect of exchange rate movements - 1,203 1,203
At 31 December 2022 12 24,166 24,178
At 1 January 2023 12 24,166 24,178
Additions - - -
Effect of exchange rate movements - - -
At 31 December 2023 12 24,166 24,178
Depreciation
At 1 January 2022 (6) (1,857) (1,863)
Charge for the year (2) (212) (214)
Impairment - (21,193) (21,193)
Effect of exchange rate movements - (904) (904)
At 31 December 2022 (8) (24,166) (24,174)
At 1 January 2023 (8) (24,166) (24,174)
Charge for the year (1) - (1)
Impairment - - -
Effect of exchange rate movements - - -
At 31 December 2023 (9) (24,166) (24,175)
Carrying value
At 31 December 2023 3 - 3
At 31 December 2022 4 - 4
Impairment of nil (2022: £21,193,000) has been recognised during the year. In
April 2022, the Republic of Slovenia approved amendments to its Mining Law
which include a total ban on hydraulic stimulation. Consequently, the
operational and development review conducted by the Company determined that
further field development was not economically viable and that the current
producing wells had a remaining production life of 5.5 years. Details of the
impairment judgments and estimates in the fair value less cost to develop
assessment as set out in Note 1.
10. Exploration and evaluation assets - Group
Cost Slovenia Total
£'000s £'000s
At 1 January 2022 18,463 18,463
Impairment (18,820) (18,820)
Effects of exchange rate movements 357 357
At 31 December 2022 - -
At 1 January 2023 - -
Impairment - -
Effects of exchange rate movements - -
At 31 December 2023 - -
At 31 December 2023 - -
At 31 December 2022 - -
Impairment of nil (2022: £18,820,000) has been recognised during the year. In
April 2022, the Republic of Slovenia approved amendments to its Mining Law
which include a total ban on hydraulic stimulation. Consequently, the
operational and development review conducted by the Company determined that
further field development was not economically viable and that the current
producing wells had a remaining production life of 5.5 years. As at 31
December 2022 the net present value was significantly lower than the carrying
value of the assets which indicated that an impairment of 100% of intangible
oil and gas assets was warranted. Details of the impairment judgments and
estimates and the fair value less cost to develop assessment as set out in
Note 1.
For the purposes of impairment testing the intangible oil and gas assets are
allocated to the Group's cash- generating unit, which represent the lowest
level within the Group at which the intangible oil and gas assets are measured
for internal management purposes, which is not higher than the Group's
operating segments as reported in Note 2.
11. Investments in subsidiaries - Company
2023 2022
£'000s £'000s
Cost
At 1 January - 16,102
Additions - -
At 31 December - 16,102
Accumulated impairment
At 1 January - -
Impairment - (16,102)
At 31 December - -
Net book value
At 31 December - -
In April 2022, the Republic of Slovenia approved amendments to its Mining Law
which include a total ban on hydraulic stimulation. Consequently, the
operational and development review conducted by the Company determined that
further field development was not economically viable and that the current
producing wells had a remaining production life of 5.5 years. As at 31
December 2022 the net present value was significantly lower than the carrying
value of the assets which indicated that an impairment of 100% of investment
in subsidiaries and £16,102,000 was recognised as an impairment expense.
The Company's subsidiary undertakings at the date of issue of these financial
statements, which are all 100% owned, are set out below:
Name of company & registered office address Principal activity Country of incorporation % of share capital held 2023 % of share capital held 2022
Ascent Slovenia Limited Oil and gas exploration Malta 100% 100%
Tower Gate Place
Tal-Qroqq Street
Msida, Malta
Ascent Resources doo Oil and gas exploration Slovenia 100% 100%
Glavna ulica 7
9220 Lendava
Slovenia
Trameta doo Infrastructure owner Slovenia 100% 100%
Glavna ulica 7
9220 Lendava
Slovenia
Ascent Hispanic Resources UK Limited Oil and gas exploration England and Wales 100% 100%
5 New Street Square
London EC4A 3TW
Ascent Hispanic Ventures, S.L. Oil and gas exploration Spain 100% 100%
C Lluis Muntadas, 8
08035 Barcelona
Ascent Claim Entitlement SPV Ltd Holding Company England and Wales 100% -
All subsidiary companies are held directly by Ascent Resources plc.
On 6 December 2023, the Company purchased 1 ordinary share of £1 in Ascent
Claim Entitlement SPV Ltd, making it a 100% owned subsidiary and therefore
included in the consolidated accounts.
Consideration of the carrying value of investments is carried out alongside
the assessments made in respect of the recoverability of carrying value of the
group's producing and intangibles assets. The judgements and estimates made
therein are the same as for investments and as such no separate disclosure is
made.
12. Trade and other receivables - Group
2023
£'000s 2022
£'000s
VAT recoverable 9 33
Prepaid abandonment liability 262 300
Prepayments & accrued income 314 (22)
585 311
Less non-current portion (262) (300)
Current portion 323 11
The prepaid abandonment liability represents funds the Group has deposited
into a bank account to be made available for the purposes of decommissioning
wells that are currently in production.
Post year end, the claim for the repayment of the prepaid abandonment fund has
been put forward in full, given that the wells have been transferred to
Geoenergo. See the notes to the accounts for further details.
13. Trade and other receivables - Company
a) Trade Receivables
2023 2022
£'000s £'000s
VAT recoverable 10 14
Prepayments & accrued income 345 10
355 24
b) Intercompany Receivables
Cash 2023 Services Total Cash 2022 Services Total
£'000s £'000s £'000s £'000s £'000s £'000s
Ascent Slovenia Limited - - - - - -
Ascent Resources doo - - - - - -
Trameta doo - - - - - -
Ascent Hispanic Ventures - - - - - -
- - - - - -
Cash refers to funds advanced by the Company to subsidiaries. Services relates
to services provided by the Company to subsidiaries. The loans are repayable
on demand but are classified as non-current reflecting the period of expected
ultimate recovery.
Management have carried out an assessment of the potential future credit loss
the loans classified as 'stage 3' under IFRS 9 and assessed for lifetime
expected credit loss given their on-demand nature under a number of scenarios.
In April 2022, the Republic of Slovenia approved amendments to its Mining Law
which include a total ban on hydraulic stimulation. Consequently, the
operational and development review conducted by the Company determined that
further field development was not economically viable and that the current
producing wells had a remaining production life of 5.5 years. As at 31
December 2022 the net present value was significantly lower than the carrying
value of the assets which indicated that an impairment of 100% of intercompany
receivables at the Company level was warranted. Impairment for the year under
review was £130,000 (2022: £27,520,000).
14. Borrowings - Group and Company
Group 2023 2022
£'000s £'000s
Current
Borrowings 184 368
Convertible loan notes 5 5
Non-current
Borrowing - 148
189 521
Company
Current
Borrowings 184 368
Convertible loan notes 5 5
Non-current
Borrowing - 148
189 521
In December 2022, the Company reprofiled its outstanding debt with Riverfort
Global Opportunities such that it will incur a coupon of 8 per cent. During
the year £368,366 was repaid and interest of £36,836 accrued, leaving an
outstanding balance of £184,183 due within one year. In 2022 the total
balance due to Riverfort was classified as a non current liability, this has
now been corrected to show that £368,366 was due within one year.
The current convertible loan was due for redemption on 19 November 2019 and at
the balance sheet date £5,625 remains unclaimed.
15. Provisions - Group
£000s
At 1 January 2022 312
Foreign exchange movement 13
Provision 338
At 31 December 2022 663
At 1 January 2023 663
Foreign exchange movement 27
Provision -
At 31 December 2023 690
The amount provided for decommissioning costs represents the Group's share of
site restoration costs for the Petišovci field in Slovenia. The Company has
placed €300,000 (£262,000) on deposit as collateral against this liability
see Note 13.
Post year end, the claim for the repayment of the prepaid abandonment fund has
been put forward in full, given that the wells have been transferred to
Geoenergo. See the notes to the accounts for further details.
16. Trade and other payables - Group
2023 2022
£'000s £'000s
Trade payables 489 437
Tax and social security payable 29 44
Accruals and deferred income 44 495
562 976
17. Trade and other payables - Company
2023 2022
£'000s £'000s
Trade payables 210 138
Tax and social security payable 29 28
Accruals and deferred income 50 53
289 219
18. Called up share capital
2023 2022
£'000s £'000s
Authorised
2,000,000,000 ordinary shares of 0.5p each 10,000 10,000
Allotted, called up and fully paid
3,019,648,452 deferred shares of 0.195p each 5,888 5,888
1,737,110,763 deferred shares of 0.09p each 1,563 1,563
109,376,804 ordinary shares of 0.5p each 763 763
13,333,333 ordinary shares of 0.5p each 67 -
42,857,143 ordinary shares of 0.5p each 214 -
8,495 8,214
Reconciliation of share capital movement 2023 2022
number
number
At 1 January 152,418,015 109,376,804
Issue of shares during the year 56,190,476 43,041,211
At 31 December 208,608,491 152,418,015
The deferred shares have no voting rights and are not eligible for dividends.
Shares issued during the year
• On 4 April 2023, the Company raised total gross new equity
proceeds of £0.4 million from the issue of 13,333,333 new ordinary shares at
a placing price of 3 pence per share.
• On 17 October 2023, the Company issued 42,857,143 ordinary shares
of 0.5p each at a subscription price of 3.5p per share to MBD Partners SA.
Reconciliation of share capital and share premium:
Reconciliation of share capital movement Share capital Share premium
£'000s £'000s Total
£'000s
At 1 January 2023 8,214 76,298 84,512
13,333,333 ordinary shares of 0.5p each 66 333 399
42,857,143 ordinary shares of 0.5p each 215 1,286 1,501
Costs related to share issues (28)
(28)
At 31 December 2023 8,495 77,889 86,384
Shares issued during the prior year
• On 19 January 2022, the Company raised £600,000 via a placing of
18,181,818 ordinary shares with investors.
• On 19 January 2022, the Company issued 303,030 ordinary shares at
a price of 3.30p to a professional advisor in lieu of fees.
• On 3 February 2022, the Company issued 1,636,363 ordinary shares
at a price of 3.30p to professional advisors in lieu of fees and to staff in
lieu of bonus.
• On 14 April 2022, the Company received £242,500 in respect to a
warrants exercise over 6,062,500 new ordinary shares.
• On 1 December 2022, the Company raised £600,000 via a placing of
15,000,000 ordinary shares with investors.
• On 1 December 2022, the Company issued 1,232,500 ordinary shares
at a price of 4.00p to professional advisors in lieu of fees.
• On 1 December 2022, The Company issued 625,000 ordinary shares at
a price of 4.00p to Riverfort Global Opportunities as a repayment of loan.
19. Exploration expenditure commitments
In order to maintain an interest in the oil and gas permits in which the Group
is involved, the Group is committed to meet the conditions under which the
permits were granted and the obligations of any joint operating agreements.
The timing and the amount of exploration expenditure commitments and
obligations of the Group are subject to the work programmes required as per
the permit commitments. This may vary significantly from the forecast
programmes based upon the results of the work performed. Drilling results in
any of the projects may also cause variations to the forecast programmes and
consequent expenditure. Such activity may lead to accelerated or decreased
expenditure. It is the Group's policy to seek joint operating partners at an
early stage to reduce its commitments.
At 31 December 2023, the Group had exploration and expenditure commitments of
£Nil (2022 - Nil).
20. Related party transactions
There is no ultimate controlling party for the Company.
Directors
Key management are those persons having authority and responsibility for
planning, controlling and directing the activities of the Group. In the
opinion of the Board, the Group's key management are the Directors of Ascent
Resources plc. Information regarding their compensation is given in Note 4.
2023
There were no transactions involving directors during the year (2022: nil).
21. Events subsequent to the reporting period
On 8 January 2024, the insolvency proceedings were initiated. On 19 January
2024, Geoenergo d.o.o., the Company's Slovenian joint venture partner, had its
application to enter voluntary insolvency approved. The Company is now filing
an appeal against the decision of the court in relation to this unprecedented
situation and will register its claim with the competent court, whilst
continuing to pursue civil and criminal areas of redress against the former
management and stakeholders of Geoenergo d.o.o.
Shortly after the year end, On 23 April 2024, another fundraise took place
which raised up to $2.7million with an initial issue of $1.7million, of which
$1million will be used as an investment into GNG Partners LLC. The investment
is to fund's Ascents participation in a newly formed vehicle which has
acquired onshore US midstream gas distribution and processing facilities which
includes helium purification and liquefaction.
Post year end, the claim for the repayment of the prepaid abandonment fund has
been put forward in full, given that the wells have been transferred to
Geoenergo. See note 25 for further details.
22. Share based payments
The Company has provided the Directors, certain employees and institutional
investors with share options and warrants ('Options'). Options are exercisable
at a price equal to the closing market price of the Company's shares on the
date of grant. The exercisable period varies and can be up to seven years once
fully vested after which time the option lapses.
Details of the Options outstanding during the year are as follows:
Shares Weighted Average Price (pence)
Outstanding at 1 January 2022 7,348,142 253.72
Granted during the year 500,000
Outstanding at 31 December 2022 7,848,142 50.05
Exercisable at 31 December 2022 6,689,404 248.72
Outstanding at 1 January 2023 7,848,142 50.05
Granted during the year 4,600,000 -
Expired during the year (2,874,138) -
Outstanding at 31 December 2023 9,574,004 50.05
Exercisable at 31 December 2023 8,172,438 41.20
The value of the options is measured by the use of a Black Scholes Model. The
inputs into the Black Scholes Model made in 2022 were as follows:
Share price at grant 4.55
Exercise price 5.00
Volatility 54.4%
Expected life 5 years
Risk free rate 3.23%
Expected dividend yield 0%
Expected volatility was determined by calculating the historical volatility of
the Group's share price over the previous 5 years. The expected life is the
expiry period of the options from the date of issue.
Options outstanding at 31 December 2023 have an exercise price of 5p (31
December 2022: 2.9p and 7.78p) and a weighted average contractual life of 5
years (31 December 2022: 4.5 years). The amount recognised in the income
statement for the year ended 31 December 2023 was £105,069 nil (2022:
£2,000).
In 2023, an adjustment of £1,660,000 was recognised in retained earnings in
respect of previously expired options.
Details of the warrants issued in the year are as follows:
Issued Exercisable from Expiry date Number outstanding Exercise price
4 April 2023 Anytime until 3 April 2025 13,333,333 5.00p
Warrants Weighted Average Price (pence)
Outstanding at 1 January 2023 58,121,262 5.20
Granted during the year 13,333,333 5.00
Exercised during the year - -
Expired during the year - -
Outstanding at 31 December 2023 71,454,595 5.00
Exercisable at 31 December 2023 71,454,595 5.00
The warrants outstanding at the period end have a weighted average remaining
contractual life of 2.2 years. The exercise prices of the warrants are between
4.00 - 7.50p per share.
Details of the warrants issued during the year ended 31 December 2022 are as
follows:
Issued Exercisable from Expiry date Number outstanding Exercise price
27 January 2022 Anytime until 26 January 2024 20,303,030 5.00p
27 January 2022 Anytime until 26 January 2024 1,000,000 5.00p
14 April 2022 Anytime until 14 April 2025 9,093,750 4.00p
1 December 2022 Anytime until 1 December 2024 15,000,000 5.00p
1 December 2022 Anytime until 1 December 2024 4,600,000 5.00p
Warrants Weighted Average Price (pence)
Outstanding at 1 January 2022 21,914,254 6.80
Granted during the year 49,996,780 4.82
Exercised during the year (6,062,500) 4.00
Expired during the year (7,727,272) 5.50
Outstanding at 31 December 2022 58,121,262 5.20
Exercisable at 31 December 2022 58,121,262 5.20
23. Financial risk management
Group and Company
The Group's financial liabilities comprise CLNs, borrowings and trade
payables. All liabilities are measured at amortised cost. These are detailed
in Notes 15.
The Group has various financial assets, being trade receivables and cash,
which arise directly from its operations. All are classified at amortised
cost. These are detailed in Notes 12, 13, 16 and 17.
The main risks arising from the Group's financial instruments are credit risk,
liquidity risk and market risk (including interest risk and currency risk).
The risk management policies employed by the Group to manage these risks are
discussed below:
Credit risk
Credit risk is the risk of an unexpected loss if a counter party to a
financial instrument fails to meet its commercial obligations. The Group's
maximum credit risk exposure is limited to the carrying amount of cash of
£475,000 (2022: £325,000) and trade and other receivables of £394,000
(2022: £11,000). Credit risk is managed on a Group basis. Funds are deposited
with financial institutions with a credit rating equivalent to, or above, the
main UK clearing banks. The Company's liquid resources are invested having
regard to the timing of payment to be made in the ordinary course of the
Group's activities. All financial liabilities are payable in the short term
(between 0 to 3 months) and the Group maintains adequate bank balances to meet
those liabilities.
The Group makes allowances for impairment of receivables where there is an ECL
identified. Refer to Note 14 for details of the intercompany loan ECL
assessment.
The credit risk on cash is considered to be limited because the counterparties
are financial institutions with high and good credit ratings assigned by
international credit rating agencies in the UK.
The carrying amount of financial assets, trade receivables and cash held with
financial institutions recorded in the financial statements represents the
exposure to credit risk for the Group.
At Company level, there is the risk of impairment of inter-company receivables
if the full amount is not deemed as recoverable from the relevant subsidiary
company. These amounts are written down when their deemed recoverable amount
is deemed less than the current carrying value. An IFRS 9 assessment has been
carried out as per Note 1.
Market risk
i) Currency risk
Currency risk refers to the risk that fluctuations in foreign currencies cause
losses to the Company.
The Group's operations are predominantly in Slovenia. Foreign exchange risk
arises from translating the euro earnings, assets and liabilities of the
Ascent Resources doo and Ascent Slovenia Limited into sterling. The Group
manages exposures that arise from receipt of monies in a non-functional
currency by matching receipts and payments in the same currency.
The Company often raises funds for future development through the issue of new
shares in sterling. These funds are predominantly to pay for the Company's
exploration costs abroad in euros. As such any sterling balances held are at
risk of currency fluctuations and may prove to be insufficient to meet the
Company's planned euro requirements if there is devaluation.
The Group's and Company's exposure to foreign currency risk at the end of the
reporting period is summarised below. All amounts are presented in GBP
equivalent.
Group Company
2023 2022 2023 2022
£'000s
£'000s
£'000s
£'000s
Trade and other receivables - - - -
Cash and cash equivalents 65 29 1 6
Trade and other payables (220) (314) - -
Net exposure (155) (285) 1 6
Foreign currency sensitivity analysis
The Group is mainly exposed to the currency of the European Union (the euro).
The Group operates internationally and is exposed to currency risk on sales,
purchases, borrowings and cash and cash equivalents that are denominated in a
currency other than sterling. The currencies giving rise to this are the euro.
Foreign exchange risk arises from transactions and recognised assets and
liabilities.
The Group does not use foreign exchange contracts to hedge its currency risk.
Sensitivity analysis
The following table details the Group's sensitivity to a 10% increase and
decrease in sterling against the stated currencies. 10% is the sensitivity
rate used when reporting foreign currency risk internally to key management
personnel and represents the management's assessment of the reasonably
possible change in foreign exchange rates. The sensitivity analysis comprises
cash and cash equivalents held at the balance sheet date. A positive number
below indicates an increase in profit and other equity where sterling weakens
10% against the relevant currency.
Euro currency change
Group Year ended Year ended
31 December 2023
31 December 2022
£'000s £'000s
Profit or loss
10% strengthening of sterling 20 124
10% weakening of sterling 78 (151)
Equity
10% strengthening of sterling 29 69
10% weakening of sterling (6) (85)
Company
Profit or loss
10% strengthening of sterling - -
10% weakening of sterling - -
Equity
10% strengthening of sterling - -
10% weakening of sterling - -
ii) Interest rate risk
Interest rate risk refers to the risk that fluctuations in interest rates
cause losses to the Company. The Group and Company have no exposure to
interest rate risk except on cash and cash equivalent which carry variable
interest rates. The Group carries low units of cash and cash equivalents and
the Group and Companies monitor the variable interest risk accordingly.
At 31 December 2023, the Group and Company has GBP loans valued at £184,000
(2022: £521,000) with a rate of 8% per annum.
iii) Liquidity risk
Liquidity risk refers to the risk that the Company has insufficient cash
resources to meet working capital requirements.
The Group and Company manages its liquidity requirements by using both short-
and long-term cash flow projections and raises funds through debt or equity
placings as required. Ultimate responsibility for liquidity risk management
rests with the Board of Directors, which has built an appropriate liquidity
risk management framework for the management of the Group's short-, medium-
and long-term funding and liquidity management requirements.
The Group closely monitors and manages its liquidity risk. Cash forecasts are
regularly produced, and sensitivities run for different scenarios (see Note
1). For further details on the Group's liquidity position, please refer to the
Going Concern paragraph in Note 1 of these accounts.
Group Company
Categorisation of Borrowings - Group 2023 2022 2023 2022
£'000s
£'000s
£'000s
£'000s
Less than six months - loans and borrowings 184 - 184 -
Less than six months - trade and other payables - - - -
Between six months and a year - - - -
Over one year - 516 - 516
Capital management
The Group manages its capital to ensure that it will be able to continue as a
going concern while maximising the return to shareholders through the
optimisation of the balance between debt and equity. The Group reviews the
capital structure on an on-going basis. As part of this review, the directors
consider the cost of capital and the risks associated with each class of
capital. The Group will balance its overall capital structure through new
share issues and the issue of new debt or the repayment of existing debt.
There are no externally imposed capital requirements.
Fair value of financial instruments
Set in the foregoing is a comparison of carrying amounts and fair values of
the Group's and the Company's financial instruments:
Categorisation of Financial Assets and Liabilities - Group Carrying amount Year ended 31 December Fair Value Year ended 31 December Carrying amount Year ended 31 December Fair Value Year ended 31 December
2023 2023 2022 2022
Financial assets
Cash and equivalents - unrestricted 475 475 325 325
Cash and equivalents - restricted - - - -
Trade receivables 394 394 11 11
Financial liabilities
Trade and other payables 562 562 599 599
Loans at fixed rate 184 184 516 516
Capital management - Company Carrying amount Year ended 31 December Fair Value Year ended 31 December Carrying amount Year ended 31 December Fair Value Year ended 31 December
2023 2023 2022 2022
Financial assets
Cash and equivalents - unrestricted 410 410 302 302
Trade receivables 355 355 26 26
Financial liabilities
Trade and other payables 289 289 283 283
Loans at fixed rate 184 184 516 516
Convertible loan at fixed rate
Fair value of convertible loans has been determined based on tier 3
measurement techniques. The fair value is estimated at the present value of
future cash flows, discounted at estimated market rates. Fair value is not
significantly different from carrying value.
Trade and other receivables/payables and inter-company receivables
All trade and other receivables and payables have a remaining life of less
than one year. The ageing profile of the Group and Company receivable and
payables are shown in Notes 13, 14.
Cash and cash equivalents
Cash and cash equivalents are all readily available and therefore carrying
value represents a close approximation to fair value.
24. Commitments and contingencies
Decommissioning costs for the JV wells (Pg-10, Pg-11a and D-14) were agreed to
be €345.2k between the JV partners and the relevant Slovenian ministry in
2013 when the RJOA was signed. Decommissioning costs become payable at the
end of a wells operational life and a provision for decommissioning costs is
made only when a well is put into production. With the change in the Slovenian
mining law in in April 2022 creating a ban on hydraulic stimulation, further
development of the concession through hydraulic stimulation is now impossible.
A provision of £690,000 (Note 15) has been made for the decommissioning of
the PG10, PG11A and D-14 wells and represents the Company's estimate of the
Group's share of the restoration costs for the JV wells (i.e. non-baseline
wells) in the Petišovci field.
Post period in review we received correspondence from Petrol Geo (the field
operator) who had produced a new estimate on the abandonment liability that
was significantly higher at €2.3M for the three JV wells only. As part of
the Geoenergo insolvency process the Ministry of Natural Resources requested
that Geoenergo post €2.3M in an unfunded abandonment liability for the
whole concession area (of which the Company ASL is only responsible for
Pg-10, Pg-11a and D-14, which totals €345.2k). Ascent had previously already
prepaid €300k to Geoenergo's private abandonment fund as part of the RJOA.
The RJOA was terminated with an effective date of 19 January 2024 by the
administrator via a letter received from them dated 10 April 2024.
Furthermore on 19 April 2024, the concession expired and according to the RJOA
the parties agreed that upon expiry of the Concession Contract, Ascent shall
transfer the title to the Existing Joint Venture Property on an "as-is" basis
to Geoenergo without any compensation. The Company believes that the Existing
Joint Venture property relates to all JV assets which are reflected in the
accounts of Ascent prior to signature of the RJOA in 2013 which most notably
is the three wells (drilled 2004 and 2011).
Publication of the Annual Report
The Company confirms that the Company's annual report and financial statements
for the year ended 31 December 2023 (the "Annual Report") will be published to
shareholders and will be on the Company's website shortly.
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