4th May 2016 09:18
LONDON (Alliance News) - Ascent Resources PLC Wednesday said it is still evaluating different options concerning its project in Slovenia to ensure it can produce its first gas in 2016, as the company looks to make substantial progress in the second quarter of this year.
The oil and gas company operating in Europe said its pretax loss amounted to GBP3.7 million in 2015, shrinking from the GBP5.6 million loss booked in 2014 after the business booked some material finance income and cut administrative costs.
Administrative costs fell to GBP1.6 million from GBP1.9 million whilst finance income rose to GBP745,000 from only GBP3,000 a year earlier. The finance income was mainly derived from the restructuring of convertible loan notes due to fellow London-listed EnQuest PLC as part of the deferred consideration for the acquisition of EnQuest's stake in the Petisovci project in 2010.
Petisovci remains Ascent's only project, but the company also holds back-in rights in Switzerland, Italy and the Netherlands.
Currently, Ascent is focused on getting an integrated pollution prevention permit for the Slovenian field.
"2015 has been a year of solid progress for Ascent. The [permit] process has been a long one. However we are now at the final hurdle and expect a positive outcome from the Slovenian courts. In addition, we've developed an alternative route to market which should accelerate our journey to first gas which we expect in 2016," said Ascent Chairman Clive Carver.
Ascent has identified three potential routes to first gas at the project. The first and most obvious route is securing the permit from authorities to allow the construction of a new gas treatment works, but the other two options include sending gas untreated to be processed in another country or to send untreated gas to a reconditioned methanol plant adjacent to the field.
Regardless, the hurdles that have to be cleared to get production started, and therefore the start of revenue being generated, means Ascent's financial position remains vulnerable.
"We are unable to generate income until we have a clear route to first gas. We have therefore been dependent upon issues of equity and debt to meet the costs of maintaining a presence in the UK and Slovenia," said the company.
Ascent was forced to drawdown GBP500,000 in convertible loan notes in February 2015, a further GBP450,000 was drawn from its GBP7.0 million debt facility in 2015 and another GBP350,000 has been drawn from that same facility since the start of 2016. The company also raised GBP2.0 million in convertible loan notes in July 2015 to settle a GBP3.0 million liability.
Another GBP1.2 million of equity was raised over the year and a further GBP500,000 was raised through Primarybid.com in April this year, demonstrating the financial effect of the delays being experienced at the project in Slovenia.
"We have two live options for a clear path to first gas. Our expectation is that both will crystallise during the second quarter of 2016. An early agreement on the cross border route would still allow first gas in 2016," said Ascent.
Ascent Resources shares were trading up 1.6% to 1.55 pence per share on Wednesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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