19th Sep 2016 07:57
LONDON (Alliance News) - Ascent Resources PLC on Monday said cashflow should "materially strengthen" in 2017 when the Petisovci field comes into production as the company cut costs to narrow its loss in the first half of 2016.
The company is yet to generate any revenue but a reduction in administrative costs to GBP676,000 from GBP1.0 million in the previous year, alongside a fall in net finance costs to GBP668,000 from GBP1.7 million, allowed the pretax loss to come in narrower at GBP1.3 million from the GBP1.7 million loss last year.
Ascent, which has a 75% economic interest in the Petisovci field, signed a gas sales agreement with INA-Industrija Nafte in July to provide untreated gas at the Croatian border, which is facilitated by the re-commissioning of existing pipelines in Slovenia and the construction of 75 kilometres of new pipelines in Croatia to connect the Petisovci field with a Croatian treatment facility in Molve.
Ascent is hoping to carry out production tests at the field in the fourth quarter of 2016 followed by cmmercial operations in the first quarter of 2017.
Notably, the company originally wanted to build its own processing plant rather than having to sell the gas to a third-party, but authorities rejected plans this year for Ascent to build its own plant.
"The company remains of the view that constructing a processing plant in Slovenia remains the most economic solution for both the company and the country and will continue to work to resolve this issue. If this issue cannot be resolved through dialogue the company reserves the right to progress the issue through the Slovenian and European Courts," said the company.
The performance of the phase one wells during 2017 will also be important in assessing the terms of project financing when Ascent comes to develop the much larger phase two of the Petisovci project.
"With 90% of revenues coming preferentially to Ascent to cover historic costs to date of some EUR42.0 million and without the immediate obligation to construct a new Slovenian treatment works the cash flows of the company should materially strengthen during 2017," said Ascent.
Ascent shares were up 5.1% to 1.29 pence per share on Monday.
By Joshua Warner; [email protected]; @JoshAlliance
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