TIDMAST
RNS Number : 2671D
Ascent Resources PLC
18 February 2020
18 February 2020
Ascent Resources plc
("Ascent" or the "Company")
Posting of Circular
Ascent Resources Plc (LON: AST) the onshore European independent
oil and gas exploration and production company, announces that,
further to the announcement on 14 February 2020, a circular will be
posted to shareholders today and a copy will be made available on
the Company's website, www.ascentresources.co.uk in due course. The
Chairman's Letter has been extracted from the Circular and is shown
below.
Enquiries:
Ascent Resources plc
Louis Castro, Chairman
John Buggenhagen, CEO 0207 251 4905
WH Ireland, Nominated Adviser & Broker
James Joyce / Chris Savidge 0207 220 1666
SP Angel, Joint Broker
Richard Hail 0203 470 0470
1. Introduction
Ascent is in a phase of re-focusing its business to positive
production growth including reviewing opportunities outside
Slovenia to diversify its asset base.
Significant production growth at the Petišovci field in Slovenia
can only be achieved when the partners have successfully obtained
the required permits to re-stimulate the existing producing wells
(Pg-10 and Pg-11A) as part of a larger development project to
recover the field's significant proven and potential gas reserves.
Additional near term production growth may also be possible by
targeting other conventional oil and gas reservoirs within the
large Petišovci concession area including undrilled fault blocks in
the known producing structure. In 2019, the Company reprocessed the
2010 Petišovci 3D seismic survey using the latest technology, which
has provided several attractive conventional appraisal and
near-field exploration leads. Work is currently underway to
progress these potential drilling opportunities with the Joint
Venture Partners, but these opportunities will also need the
requisite permits before they could be tested.
In order to progress matters in Slovenia, to meet costs and to
source and assess new potential opportunities, further capital will
be required. Accordingly, the Board has identified new management
who will bring more opportunities to the Group and who have
facilitated the raising of working capital for the Company by way
of the Placing. The Board also recognises that, to allow the
Placing to proceed and, more generally, the share capital of the
Company requires restructuring, as explained further in paragraph 5
below.
The restructuring of the share capital of the Company and the
granting to the Directors of the authority to allot additional
share capital, which will allow new capital to be raised by way of
the Placing, is fundamental to the future prospects of the
Company.
If the Placing Resolutions are not passed in full, the Board
doubts the ability of the Company to continue as a going
concern.
2. The Petišovci project
Ascent holds a 75% interest in the Petišovci gas field in
Slovenia, with its partner Geoenergo holding the remaining 25%
through a concession signed in 2002 with a term of 19 1/2 years,
which is due for renewal in 2022. Ascent is liable for 100% of the
financing obligations for the project. In 2011, two wells were
drilled and flowed at commercial rates; however, development has
been delayed due to the permitting issues described in further
detail below.
The Company has been producing from the field since 2017, with
the majority of production being exported to Croatia and sold to
INA, a leading Croatian oil and gas business. In December 2019 the
Company entered into a two-year extension of the gas sales
agreement with INA, ensuring that once production can be increased,
there is an existing route to market for that gas.
3. Permitting
The proper development of the field has been delayed by the
permitting process in Slovenia. The IPPC Permit which is required
for the installation of a processing plant at the field was finally
awarded during 2019. The Well Permit which is required for the
re-stimulation of wells Pg-10 and Pg-11A was blocked by the
Slovenian Environment Minister and this decision has been appealed
to the Administrative Court.
The Company is also progressing with a claim for damages for the
significantly prolonged process and what the Board have been
advised is a manifestly wrong decision.
4. Change of Directors and Management Reorganisation
Ascent will appoint James Parsons as Executive Chairman
following satisfactory completion of regulatory due diligence.
James has a wealth of corporate and transactional experience on AIM
and a demonstrated ability to access capital to fund junior
resource plays. He is Executive Chairman of Regency Mines plc and
Non-Executive Chairman of Echo Energy plc and Coro Energy plc.
Ascent will also appoint Ewen Ainsworth and Leonardo Salvadori
as independent Non-Executive Directors.
Ewen Ainsworth is an experienced AIM company director, currently
the Non-Executive Chairman at Nostra Terra Oil and Gas Company plc.
He is also a non-executive director at Regency Mines plc and the
CEO of Discovery Energy Limited, an advisory, consultancy and
Investment Company. He has worked in a variety of senior and board
level roles in the international natural resource sector for over
30 years, most recently as Finance Director for San Leon Energy plc
and previously Gulf Keystone Petroleum Limited.
Leonardo Salvadori has over 35 years of international experience
and is currently the Managing Director of Coro Energy plc's Italian
business. Prior to that he held Managing Director positions in
Sound Energy and Dana Gas Egypt. With a strong focus on business
development as well as operations, Leonardo previously led business
development and exploration/technical teams in Centurion and Eni
across MENA, Asia and Europe.
Louis Castro and Colin Hutchinson will set down from the board
at the conclusion of the General Meeting.
5. Capital Reorganisation
The Company's Ordinary Shares are currently trading at below
nominal value. The Company is not permitted by law to issue shares
at an issue price below their nominal value.
Furthermore, a consequence of having a very large number of
shares in issue, with a very low market share price, is that small
share trades can result in large percentage movements in the market
share price which results in considerable share price volatility.
The Board also believes that the bid-offer spread on shares priced
at low absolute levels can be disproportionate to the market share
price, to the detriment of Shareholders.
The Directors propose, therefore that the Company effects the
Capital Reorganisation on the basis that:
a. the Existing Ordinary Shares of 0.2 pence will each be subdivided into:
i. one Redenominated Ordinary Share (being an ordinary share in
the capital of the Company with a nominal value of 0.005 pence);
and
ii. one Deferred Share (being a deferred share in the capital of
the Company with a nominal value of 0.195 pence), and
b. the Redenominated Ordinary Shares of 0.005 pence each
(resulting from the subdivision referred to in paragraph (a) above)
will be consolidated into new ordinary shares of 0.5 pence each
(the "New Ordinary Shares") on the basis of one New Ordinary Share
for every 100 Redenominated Ordinary Shares.
Where the Capital Reorganisation results in any Shareholder
being entitled to a fraction of a New Ordinary Share, such fraction
shall be aggregated and the Directors intend to sell (or appoint
another person to sell) such aggregated fractions in the market and
retain the net proceeds for the benefit of the Company.
The Deferred Shares will not be admitted to trading on AIM (or
any other investment exchange). The Deferred Shares will have
limited rights, and will be subject to the restrictions, as set out
in the Company's New Articles, proposed to be adopted at the
General Meeting, and as summarised below.
The Deferred Shares will not be transferable. The holders of the
Deferred Shares shall not, by virtue or in respect of their
holdings of Deferred Shares, have the right to receive notice of
any general meeting of the Company or the right to attend, speak or
vote at any such general meeting.
The Deferred Shares will not entitle their holders to receive
any dividend or other distribution. The Deferred Shares will on a
return of assets in a winding up entitle the holder only to the
repayment of GBP1.00 for the entire class of Deferred Shares after
repayment of the capital paid up on the New Ordinary Shares plus
the payment of GBP10,000,000 per New Ordinary Share.
The Company will have irrevocable authority at any time to
appoint any person to execute on behalf of the holders of the
Deferred Shares a transfer thereof and/or an agreement to the
transfer of the same to such person as the Company may determine or
as the Company determines as custodian thereof, without making any
payment to the holders thereof, and/or consent to cancel the same
(in accordance with the provisions of the Act) without making any
payment to or obtaining the sanction of the holders thereof. The
Company may, at its option at any time, purchase all or any of the
Deferred Shares then in issue, at a price not exceeding GBP1.00 for
each aggregate holding of Deferred Shares so purchased. The
Directors consider the Deferred Shares, so created, to be of no
economic value.
The Articles have been amended, inter alia, to reflect the
creation of the Deferred Shares and to set out the rights attaching
to them and, accordingly, Resolution 7 seeks approval to adopt the
New Articles of the Company reflecting, inter alia, these
changes.
No share certificates will be in issued in respect of the
Deferred Shares. Existing share certificates will remain valid for
the Redenominated Ordinary Shares. New share certificates will be
issued for the New Ordinary Shares.
The New Ordinary Shares will be freely transferable, and
application will be made for the New Ordinary Shares to be admitted
to trading on AIM. The record date for the Capital Reorganisation
is 5.00 p.m. on 5 March 2020, unless otherwise agreed by the
Board.
The rights attaching to the New Ordinary Shares will be
identical in all respects to those of the Existing Ordinary
Shares.
One consequence of the Capital Reorganisation is that
Shareholders holding fewer than 100 Existing Ordinary Shares will
receive no New Ordinary Shares, they will, however, receive
Deferred Shares. Any Shareholder holding fewer than 100 Existing
Ordinary Shares may request the cash equivalent of such Existing
Ordinary Shares by contacting Computershare Investor Services PLC,
The Pavilions, Bridgwater Road, Bristol, BS99 6ZY.
6. Placing
To fund the Company while it pursues these opportunities, the
Board has conditionally raised GBP800,000 at an issue price of 5
pence per Placing Share, subject to the approval of
Shareholders.
The Placing will be completed by way of subscription letters
between the Company and the relevant placees, and will be
conditional on the passing of the Placing Resolutions at the
General Meeting. Shareholders will have their proportionate
shareholdings in the Company diluted by approximately 35 per cent.
as a result of the Placing, assuming that no further shares are
issued after the date of this document.
7. Authority to allot shares and disapplication of pre-emption rights
The Directors are seeking a general authority, in addition to
the authority in relation to the Placing, to allot new shares, free
of pre-emption rights and without further recourse to shareholders,
which is above the level recommended by the relevant corporate
guidelines. The significantly higher level being sought is due to
(i) the relatively low market capitalisation of the Company at the
current time and (ii) the level of funding required by the Company
in the medium term in order to execute on the stated strategy of
securing additional assets outside of Slovenia.
This authority is essential to enable to new Board of Directors
to capitalise in a timely fashion on attractive opportunities to
execute on the stated strategy of diversifying its asset base.
8. Settlement and dealings
Application will be made to the London Stock Exchange for the
New Ordinary Shares (including the Placing Shares) to be admitted
to trading on AIM. It is expected that such Admission will become
effective and that dealings will commence at 8.00 a.m. on 11 March
2020.
9. General Meeting
Set out at the end of this document is a notice convening a
General Meeting of the Company to be held at 2.30 p.m. on 5 March
2020 at the offices of Taylor Wessing LLP, 5 New Street Square,
London, EC4A 3TW, at which the Resolutions will be proposed.
The Resolutions may be summarised as follows:
a. Resolutions 1 and 2 approve the Subdivision of the entire
issued share capital of the Company into Redenominated Ordinary
Shares and Deferred Shares, together with the Consolidation of the
Redenominated Shares into New Ordinary Shares on the basis of 100
Redenominated Shares for every 1 New Ordinary Share;
b. Resolutions 3 and 5 seek authority to allot and issue the
Placing Shares free of any pre-emption rights;
c. Resolutions 4 and 6 seek a significantly increased general
authority to allot and issue shares free of pre-emption rights,
representing approximately 100% of the share capital of the Company
immediately following the Capital Reorganisation and the Placing;
and
d. Resolution 7 approves the adoption of the New Articles.
10. Action to be taken in respect of the General Meeting
Please check that you have received the following with this
document:
-- a Form of Proxy for use in respect of the General Meeting; and
-- a reply-paid envelope for use in connection with the return
of the Form of Proxy (in the UK only).
Whether or not you propose to attend the General Meeting in
person, you are strongly encouraged to complete, sign and return
your Form of Proxy in accordance with the instructions printed
thereon as soon as possible, but in any event so as to be received,
by post at Computershare Investor Services PLC, The Pavilions,
Bridgwater Road, Bristol, BS99 6ZY or, during normal business hours
only, by hand, at Computershare Investor Services PLC, The
Pavilions, Bridgwater Road, Bristol, BS13 8AE by no later than 2.30
p.m. on 3 March 2020 (or, in the case of an adjournment of the
General Meeting, not later than 48 hours before the time fixed for
the holding of the adjourned meeting).
This will enable your vote to be counted at the General Meeting
in the event of your absence. The completion and return of the Form
of Proxy will not prevent you from attending and voting at the
General Meeting, or any adjournment thereof.
11. Recommendation
The restructuring of the share capital of the Company and the
granting to the Directors of the authority to allot additional
share capital, which will allow new capital to be raised, is
fundamental to the future prospects of the Company. If the Placing
Resolutions are not passed in full, the Board doubts the ability of
the Company to continue as a going concern.
The Directors intend to vote in favour of the Resolutions in
respect of their aggregate shareholdings of 2,570,370 Ordinary
Shares representing approximately 0.09 per cent. of the Company's
Existing Issued Share Capital.
This information is provided by RNS, the news service of the
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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February 18, 2020 02:00 ET (07:00 GMT)
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