28th Sep 2006 07:02
Ascent Resources PLC28 September 2006 Ascent Resources plc / Epic: AST / Index: AIM / Sector: Oil and Gas 28th September 2006 Ascent Resources plc ('Ascent' or 'the Company') Interim Results Ascent Resources plc, the AIM-traded oil and gas exploration and productioncompany with assets in six countries across Europe, announces its results forthe period to 30 June 2006. Overview: • Asset base with interests in 20 oil and gas projects onshore in Italy, Spain, Switzerland, Hungary and Romania, with applications pending offshore in the Netherlands • Commencing a drilling programme of six exploration wells in Hungary, Italy, and Spain in the next few weeks which will use two separate drilling rigs • Planning a further six wells to be drilled in 2007, including in its gas exploration permits in Italy's Po Valley • Farmed out an interest in the Nyirseg Hungarian gas exploration project to Dual Exploration of Canada to drill two wells, with an option to drill two more • Generating revenue from oil production in Spain and shortly also from gas production in Romania • Further strengthened Board of Directors with two key appointments • Assessing selected additional oil and gas opportunities across Europe Managing Director Jeremy Eng said: "Having compiled a high quality portfolio ofoil and gas projects across Europe, we are moving into the next stage of theCompany's development, which will include drilling six wells in Hungary, Italyand Spain. We have concluded an advantageous farm-out in Hungary, and arelooking at other similar possibilities within the Company's portfolio. "Our emphasis is now on exploring and developing the Company's assets, but weare still considering some carefully selected acquisitions that would becomplementary to the existing properties. I believe that the Company is nowvery well-positioned to create value for our shareholders and to define ourreserves." Chairman's Statement This has been an active period for Ascent Resources and I am pleased to reportthat we continue to make good progress. Your Company has expanded its interestsacross Europe and now has assets onshore in Spain, Italy, Hungary, Switzerlandand Romania, as well as applications for offshore exploration acreage in theNetherlands. During this period, most of our efforts have been directed towardsdeveloping this portfolio by implementing an aggressive exploration programme inHungary, Italy and Spain which will culminate in the commencement of drillingoperations in the next few weeks. Six-Well Drilling Programme The six-well drilling programme, with two wells each in Italy, Spain andHungary, is backed by geological and seismic exploration work conducted both bythe Company and by previous holders of the leases. Despite the worldwideshortage of rigs and drilling resources, this programme is starting in a fewweeks, with two rigs deployed. One rig will drill the first two Hungarian wellswith an option to continue with a third and fourth; the other rig will commenceworking in Italy and will then transfer to Spain. In Hungary, the seismic acquisition funded by Ascent in 2005 has generatedvaluable results. The drilling locations that have been selected based on thesedata are the subject of the farm-out to Canadian company, DualEx EnergyInternational Inc. The farm-out agreement provides for the parties to jointlyexplore gas targets in the Nyirseg Del and Nyirseg Szatmar exploration permitsin Hungary. DualEx is to fund 75% of the first two wells with an option toextend the agreement for a second two wells. Other Developments In Spain, where we now control 88.5% of the producing Ayoluengo oil field in theSedano Basin following the purchase of a further 25% interest, productioncurrently averages a net 100 barrels of oil per day. In Romania, through the purchase of Millennium International ResourcesCorporation Ltd, we have a 5% interest in three exploration blocks in theCarpathian Thrust Belt, one of Romania's principal oil and gas producing areas.The consortium, which is led by Aurelian Oil and Gas plc, expects to commencegas production imminently from the Bilca Development. An active explorationprogramme is underway in all three blocks, including new seismic work. Fourexploration wells are to be drilled during the next twelve months. In Switzerland, we have been awarded a third exploration permit. This permit inthe Canton of Vaud, in addition to the two already held in the Canton of Bern,contains the Essertines oil discovery drilled by BEB in 1962. Peter Earl and Nigel Moore have recently joined the Board as Non-ExecutiveDirectors, and between them bring considerable industry experience. Theseappointments complete our strategy of assembling a first-class board with theexpertise to develop our oil and gas assets. We now have a Board in placecapable of managing Ascent's development into a substantial producing entity. Inline with the Boards' expectations, the Company is reporting a pre tax loss of£599,072 for the period ended 30 June 2006 (6 months to 31 December 2005: lossof £561,265) on a turnover of £232,130 (6 months to 31 December 2005: £nil). To summarise, we have assembled an extensive array of oil and gas assets atvarious stages of development across Europe. We have a demanding drillingprogramme and importantly, our overheads are covered by production from theAyoluengo field in Spain. We look forward to taking the Company to its nextphase of development and crystallising what we believe to be the huge potentialof our portfolio. John KennyChairman27 November 2006 CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE SIX MONTHS ENDED 30 JUNE 2006 Unaudited (Unaudited) (Audited) six months ended six months ended Year ended 30 June 2006 31 December 2005 30 June 2005 Note £ £ £ Group turnover 232,130 - -Cost of sales (140,067) - - Gross profit 92,063 - - Administrative expenses (801,512) (601,529) (438,228) Group operating loss (709,449) (601,529) (438,228) Interest receivable 51,332 47,026 15,594Interest payable - (6,762) - Share of operating profit ofassociated undertaking (net ofrelated goodwill) 59,045 - - Loss on ordinary activitiesbefore taxation (599,072) (561,265) (422,634) Taxation (716) (198) - Loss on ordinary activities (599,788) (561,463) (422,634) after taxation Minority interest 3,994 265 1,314 Loss for the period (595,794) (561,198) (421,320) Dividends - - - Retained loss for the period (595,794) (561,198) (421,320) Loss per shareBasic 2 (0.23)p (0.25)p (0.33)p STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE SIX MONTHS ENDED 30 JUNE 2006 (Unaudited) (Unaudited) (Audited) six months ended six months ended year ended 30 June 2006 31 December 2005 30 June 2005 £ £ £ Retained loss for the period (595,794) (561,198) (421,320) Exchange differences 10,672 41,809 - Total gains and losses relatingto the period (585,122) (519,389) (421,320) Prior period adjustment as (20,188)explained in note 7 Total gains and losses recognisedsince the last annual report andthe interim results for the sixmonths ended 31 December 2005 (605,310) CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2006 (Unaudited) (Unaudited) (Audited) 30 June 31 December 2005 30 June 2005 2006 Notes £ £ £Fixed assetsIntangible assets 3 3,758,400 2,090,644 164,973Tangible assets 65,467 16,303 -Investment in an associatedundertaking 4 338,448 4,162,315 2,106,947 164,973Current assets Current asset investments 44,675 192,794 987,629Debtors 5 563,623 1,051,941 57,418Cash at bank and in hand 2,327,653 3,306,401 3,673,353 2,935,951 4,551,136 4,718,400 Creditors: amounts falling duewithin one year (699,592) (55,544) (54,984) Net current assets 2,236,359 4,495,592 4,663,416 Total assets less currentliabilities 6,398,674 6,602,539 4,828,389 Provision for liabilities andcharges (94,052) - - 6,304,622 6,602,539 4,828,389 Minority interest 3,890 (104) (369) Net assets 6,308,512 6,602,435 4,828,020 Capital and reserves Called up share capital 6 256,671 253,820 208,518Share premium account 7 7,524,123 7,269,136 5,020,634Share based payment reserve 7 53,549 20,188 20,188Profit and loss account 7 (1,525,831) (940,709) (421,320) Shareholders' funds 8 6,308,512 6,602,435 4,828,020 CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2006 (Unaudited) (Unaudited) (Audited) six months ended six months ended 31 year ended December 2005 30 June 2006 30 June 2005 Notes £ £ £ Net cash inflow/(outflow) fromoperating activities 9 121,697 (976,610) (410,447) Returns on investments andservicing of financeInvestment income 51,332 47,026 15,594Interest paid - (6,762) - 173,029 (936,346) (394,853) Taxation - (198) - Acquisitions and disposalsCash acquired with subsidiaryundertakings 24,922 77,533 -Acquisition of subsidiaryundertakings 11 (422,990) (1,508,509) -Acquisition of an associatedundertaking 4 (100,995) - -Loan to an associated undertaking 4 (131,902) - - Payments to acquire tangible (5,832) (18,068) -assets Net funds for investing inexploration 3 (732,029) (955,652) (70,000)Receipt from sale of current assetinvestments 206,549 1,392,811 - Acquisition of current assetinvestments - (585,144) (387,629) Net cash received from a minorityshareholder of subsidiaryundertaking - - 1,683 Net cash outflow from acquisitions (1,162,277) (1,597,029) (455,946)Net cash outflow before financing (989,248) (2,533,573) (850,799) FinancingProceeds from issue of shares 10,500 2,166,621 4,838,410Issue costs - - (314,258) Cash inflow from financing 10,500 2,166,621 4,524,152 (Decrease)/increase in cash 10 (978,748) (366,952) 3,673,353 NOTES TO THE FINANCIAL INFORMATION FOR THE SIX MONTHS ENDED 30 JUNE 2006 1. Basis of preparation The financial information is prepared in accordance with the historical costconvention and in accordance with applicable accounting standards and theStatement of Recommended Practice "Accounting for Oil and Gas Exploration,Development, Production and Decommissioning Activities". The financial information has been prepared on the basis of a going concern. The results for the six months ended 30 June 2006 are unaudited and do notconstitute statutory accounts as defined in section 240 of the Companies Act1985. They have been prepared using accounting bases and policies consistentwith those used in the preparation of the financial statements of AscentResources Plc for the year ended 30 June 2005 except that FRS 20 "Share-basedpayment" has been adopted for the first time and comparative figures restatedaccordingly. The effect of FRS 20 was to increase administrative expenses by£33,361 (six months to 31 December 2005: £nil, year ended 30 June 2005:£20,188). The comparative figures for the year ended 30 June 2005 are extracted from thestatutory financial statements which have been filed with the Registrar ofCompanies and which contain an unqualified audit report. The Company changed its accounting reference date from 30 June to 31 December.The financial information has, therefore, been prepared for the period from 1January 2006 to 30 June 2006 and the statutory accounts for the next period willcover eighteen months ending 31 December 2006. 2. Loss per ordinary share The basic loss per ordinary share has been calculated using the loss for thefinancial period of £595,794 (six months to 31 December 2005 - loss of £561,198;year ended 30 June 2005 - loss of £421,320) and the weighted average number ofordinary shares in issue of 254,577,960 (six months to 31 December 2005 -222,144,713; year ended 30 June 2005 - 127,879,476). No diluted loss per ordinary share has been disclosed because the conversion ofshare warrants would decrease the net loss per share. NOTES TO THE FINANCIAL INFORMATIONFOR THE SIX MONTHS ENDED 30 JUNE 2006 3. Intangible assets The movements during the period were as follows: Exploration and appraisal Positive Negative Goodwill expenditure Goodwill Total £ £ £ £CostAs at 1 January 2006 2,755,484 164,754 (853,478) 2,066,760Additions 732,029 719,760 - 1,451,789Acquired with a subsidiary undertaking 234,922 - - 234,922(note 11)At 30 June 2006 3,722,435 884,514 (853,478) 3,753,471 AmortisationAs at 1 January 2006 - (18,790) 42,674 23,884(Charge)/credit for the period - (61,629) 42,674 (18,955) At 30 June 2006 - (80,419) 85,348 4,929 Net book valueAt 30 June 2006 3,722,435 804,095 (768,130) 3,758,400 At 31 December 2005 2,755,484 145,964 (810,804) 2,090,644 The Directors have assessed the value of the oil and gas exploration expenditureand in their opinion, no impairment provision is considered necessary. Detailsof additions to positive goodwill, arose on the acquisition of the Company'ssubsidiary undertakings, Teredo Oils Limited and Millennium InternationalResources Corporation Limited, are set out in note 11. Goodwill is beingamortised over the Directors' estimate of its useful economic life of 10 yearsuntil the production commences. On commencement of production, it will beamortised on a unit of production basis based on proven and probable reserves. 4. Investment in an associated undertaking Group Associated undertaking £SharesAdditions (note below) 148,217 At 30 June 2006 148,217 LoansGranted in period (net) 131,902 At 30 June 2006 131,902 Share of retained profitsProfit for the period (net of tax and related goodwill) 58,329 At 30 June 2006 58,329 Net book valueAt 30 June 2006 338,448At 31 December 2005 - 4. Investment in an associated undertaking (continued) The group's share of net assets of the associated company at 30 June 2006 is£160,729 and the related unamortised goodwill as at date is £177,719representing the total investment in that company of £338,448. The Company acquired 50% of ordinary shares of Northern Petroleum Exploration Limited, acompany incorporated and registered in England and Wales for £148,217. The goodwill on acquisition has been calculated as follows: £Fair value of net liabilities acquired (77,713)50% thereof (38,857)Consideration paid (settled by issue of 370,370 ordinary sharesat 12.75p and cash of £100,995) (148,217) Goodwill on acquisition 187,074 Northern Petroleum Exploration Limited is the Operator and 22.5% equity interestholder in the La Lora concession in Northern Spain. The La Lora concessioncontains the Ayoluengo field. 5. Debtors 30 June 31 December 2006 2005 £ £ Deposits (includes the value of the shares issued on acquisition of Northern - 181,870Petroleum Exploration Limited)Other debtors 563,623 870,071 563,623 1,051,941 6. Share capital 30 June 2006 31 December 2005 £ £Authorised10,000,000,000 ordinary shares of 0.1p each 10,000,000 10,000,000 Allotted, called up and fully paidAs at 1 January 2006 253,820 208,518Shares issued 2,851 45,302 As at 30 June 2006 256,671 253,820 The movements in the share capital are summarised below: Number of Shares As at 1 January 2006 253,820,167Shares issued in lieu of services provided 572,705Shares issued on acquisition of Teredo Oils Limited 1,500,000Shares issued on acquisition of Millennium International Resources Corporation Limited 678,906Shares issued for cash 100,000 As at 30 June 2006 256,671,778 7. Reserves Movements in the share premium and profit and loss account during the periodwere as follows: Share based payment Share Profit reserve Premium and loss £ £ £At 1 January 2006- As previously stated - 7,269,136 (920,521)- Prior period adjustment 20,188 - (20,188)- As restated 20,188 7,269,136 (940,709)Issue of shares - 254,987 -Cost of share options in issue 33,361 - -Retained losses - - (595,794)Exchange differences - - 10,672 At 30 June 2006 53,549 7,524,123 (1,525,831) The prior period adjustment arises from adoption of FRS 20 as an accountingpolicy on share based payments. 8. Reconciliation of movements in shareholders' funds - equity only Six months to Six months Year ended to 30 June 30 June 2006 31 December 2005 2005 (as restated) £ £ £ Loss for the period (595,794) (561,198) (421,320)Dividends - - - (595,794) (561,198) (421,320) Cost of share options in issue 33,361 - 20,188Shares issues less costs 257,838 2,293,804 5,229,152Exchange differences 10,672 41,809 -Opening shareholders funds 6,602,435 4,828,020 - Closing shareholders' funds 6,308,512 6,602,435 4,828,020 9. Reconciliation of operating loss to net cash outflow from operating activities Six months to Year ended Six months to 31 December 30 June 2005 30 June 2006 2005 (as restated) £ £ £ Group operating loss (709,449) (601,529) (438,228)Decrease/(increase) in debtors 628,633 (325,499) (57,418)Increase/(decrease) in creditors 183,852 (45,887) 54,458Goodwill charged/(credited) 18,955 (34,437) 10,553(Profit)/loss on disposal of current asset investments (56,357) 38,439 -Increase in value of current asset investments (2,073) (51,271) -Share based payment charge 33,361 - 20,188Depreciation 14,103 1,765 -Exchange differences 10,672 41,809 - Net cash inflow/(outflow) from operating activities 121,697 (976,610) (410,447) 10. Analysis of changes in net funds 1 January 2006 Cash flow 30 June 2006 £ £ £ Cash at bank and in hand 3,306,401 (978,748) 2,327,653 11. Acquisition of subsidiary undertakings During the period, the Company acquired the following subsidiary undertakings: Subsidiary undertakings Principal activity Percentage of ordinary share capital held Teredo Oils Limited Oil and gas exploration 100% Millennium International Resources Corporation Limited Oil and gas exploration 100% These purchases have been accounted for using acquisition accounting. Cash SharesTeredo Oils Limited £ £Effective date of acquisition: 30 September 2005Completion date: 30 June 2006The fair values of the assets and liabilities acquiredat the effective date of acquisition were:Fixed assets 57,436Net current liabilities (62,716) Net liabilities acquired (5,280) Total consideration paid 342,791 192,791 150,000 Positive goodwill 348,071 Teredo Oils Limited holds a 52.5% interest in the producing Ayoluengo oil fieldin Northern Spain. Cash SharesMillennium International Resources Corporation Limited £ £Effective date of acquisition: 24 March 2006Completion date: 24 March 2006The fair values of the assets and liabilities acquired at the effective date of acquisition were:Exploration and appraisal expenditure 234,922Current liabilities (318,705) Net liabilities acquired (83,783) Total consideration paid 287,906 230,199 57,707Positive goodwill 371,689 Millennium International Resources Corporation Limited, a British Virgin Islandregistered company, holds a 5% interest in Brodina, Cuejdiu and Bacauexploration blocks, covering 3,800 square kilometres of the Carpathian ThrustBelt in the north eastern part of Romania. 12. Subsequent Events The major events subsequent to 30 June 2006 are set out in the Chairman'sstatement. * * ENDS * * For further information please visit www.ascentresources.co.uk or contacts: Jeremy Eng Ascent Resources plc Tel: 020 7251 4905 Hugo de Salis St Brides Media & Finance Ltd Tel: 020 7242 4477 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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