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
Andrew Dennan
|
Via Vigo Communications
|
WH
Ireland, Nominated Adviser & Broker
James Joyce / Sarah
Mather
|
0207 220 1666
|
Novum Securities, Joint Broker
John Belliss
|
0207 399 9400
|
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 CO2, H2S,
N2 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
31 December
2023
£'000s
|
Year
Ended
31
December
2022
£'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
2023
£'000s
|
31
December
2022
£'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
£'000s
|
Share
premium
£'000s
|
Merger
reserve
£'000s
|
Share base payment
reserve
£'000s
|
Translation
reserve
£'000s
|
Retained
earnings
£'000s
|
Total
£'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
|
Notes
|
Year ended
31 December
2023
£'000s
|
Year ended
31 December
2022
£'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 Current or
Non-current
|
1 January 2024
|
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
£,000s
|
Slovenia
£'000s
|
Elims
£'000s
|
Total
£'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
£,000s
|
Slovenia
£'000s
|
Elims
£'000s
|
Total
£'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
31
December
2023
£'000s
|
Year
ended
31
December
2022
£'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
31
December
2023
|
Year
ended
31
December
2022
|
Management and technical
|
7
|
7
|
b) Directors and employee's
remuneration
|
Year
ended
31
December
2023
£'000s
|
Year
ended
31
December
2022
£'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
31
December
2023
£'000s
|
Year
ended
31
December
2022
£'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
31
December
2023
£'000s
|
Year
ended
31
December
2022
£'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
31
December
2023
£'000s
|
Year
ended
31
December
2022
£'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
31
December
2023
£'000s
|
Year
ended
31
December
2022
£'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
31
December
2023
£'000s
|
Year
ended
31
December
2022
£'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
Equipment
£'000s
|
Developed
Oil
& Gas
Assets
£'000s
|
Total
£'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
£'000s
|
Total
£'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
£'000s
|
2022
£'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
Tower Gate Place
Tal-Qroqq Street
Msida, Malta
|
Oil and gas exploration
|
Malta
|
100%
|
100%
|
Ascent Resources doo
Glavna ulica 7
9220 Lendava
Slovenia
|
Oil and gas exploration
|
Slovenia
|
100%
|
100%
|
Trameta doo
Glavna ulica 7
9220 Lendava
Slovenia
|
Infrastructure owner
|
Slovenia
|
100%
|
100%
|
Ascent Hispanic Resources UK
Limited
5 New Street Square
London EC4A 3TW
|
Oil and gas exploration
|
England and Wales
|
100%
|
100%
|
Ascent Hispanic Ventures,
S.L.
C Lluis Muntadas, 8
08035 Barcelona
|
Oil and gas exploration
|
Spain
|
100%
|
100%
|
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
£'000s
|
2022
£'000s
|
VAT recoverable
|
10
|
14
|
Prepayments & accrued
income
|
345
|
10
|
|
355
|
24
|
b) Intercompany
Receivables
|
Cash
£'000s
|
2023
Services
£'000s
|
Total
£'000s
|
Cash
£'000s
|
2022
Services
£'000s
|
Total
£'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
£'000s
|
2022
£'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
£'000s
|
2022
£'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
£'000s
|
2022
£'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
£'000s
|
2022
£'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
number
|
2022
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
£'000s
|
Share
premium
£'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
£'000s
|
2022
£'000s
|
2023
£'000s
|
2022
£'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
31 December 2023
£'000s
|
Year
ended
31 December 2022
£'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
£'000s
|
2022
£'000s
|
2023
£'000s
|
2022
£'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
2023
|
Fair Value Year ended 31
December
2023
|
Carrying amount Year ended 31
December
2022
|
Fair Value Year ended 31
December
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
2023
|
Fair Value Year ended 31
December
2023
|
Carrying amount Year ended 31
December
2022
|
Fair Value Year ended 31
December
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.