6th Aug 2018 10:35
LONDON (Alliance News) - Shares in Ascent Resources PLC slumped Monday as the company said permitting delays in Slovenia are deterring potential partners for its Petisovci project.
Ascent's shares were trading at 0.43 pence each Monday, 40% lower.
Ascent in mid-April put Petisovci under review, with a potential sale of the company possible as well as either a farm-in, partnership, or sale of the project.
The firm said Monday "a number" of parties have signed non-disclosure agreements and accessed data to decide on their next moves.
However, Ascent also said permitting delays have put off a number of parties, reducing the numbers of those interested "to those who are able to take a longer-term view".
The company is "increasingly frustrated" with the Slovenian Environment Agency's requests for further amendments to its filings, and further information on things Ascent said have long been agreed.
The lack of concrete support from Slovenian politicians is also disappointing, Ascent continued, despite verbal support and the company's reliance on Russian gas.
Ascent said: "This should not be an issue for the company if the strategic review identifies a partner with funding to allow the development of the wider project over the timelines involved.
"However, the permitting delays will become a greater problem if the strategic review fails to identify such a partner, or if that partner seeks to make the award of the permits a condition of any transaction."
Ascent's July production was 816,940 cubic metres of gas, down from 1.0 million cubic metres in June. Average daily output in June was 26,338 cubic metres, again falling from 34,265 cubic metres a day in July.
The company said well Pg-11 continues to perform below expectations. While Pg-10 is doing much better, it will now require periodic shut-ins to keep pressure up.
Until Ascent gets permitting, it cannot undertake the work needed to re-stimulate these wells, let alone start re-entering of Pg wells.
Ascent said higher gas prices should offset this lower production, but there will come a time if permitting is not granted that production income will fail to cover day-to-day costs. Even if it gets permits, Ascent said it will need funding for a re-stimulation programme.
Ascent said it has taken measures to ensure it can keep going for as long as possible to try to get permitting if the strategic review does not lead to a deal.
It has stopped all investment in Petisovci not essential to production "or to maintaining the AIM quote for the company's shares".
Non-Executive directors have agreed to cut their salaries by 50%, and defer them entirely from July, while Chief Executive Colin Hutchison will move to a part-time basis and have his salary reduced accordingly.
Other UK-based staff have moved to an ad hoc basis, providing support when needed.
Hutchison said: "We continue to expect a positive outcome from the strategic review but have taken steps to prolong the life of the company without the need for additional funding in the event this does not produce a positive outcome, or that outcome takes longer than expected to deliver."
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Ascent Resources