Ascent Resources backed by investors after better-than-expected Petišovci frac

With more than a 45 per cent rise in the group’s shares last week it seems investors may be waking up to the potential of Ascent Resources’ (LON:AST) Petišovci project in Slovenia. 

The strong rally to the stock comes as Ascent released very encouraging preliminary frac results from the Pg-11A well last Wednesday. While quantitative data has yet to surface, Ascent managing director Jeremy Eng believes the results so far are more than adequate to support the further development of the project.

After a slow start to trading Ascent shares ultimately finished last Wednesday’s session at 3.325p, up almost 25 per cent. The bull-run continued through the oday as the stock gained a further 20 per cent to peak at 3.925p.

Emphasising the potential that Petišovci presents, finnCap analyst Will Arnstein said that Ascent could rapidly emerge as one of the cheapest stocks in the junior oil and gas sector if Eng’s bold assessment of the preliminary frac job is confirmed by high stabilised flow rates once testing is complete.

"We understand initial results are highly encouraging, with excellent productivity and high pressures observed in the shallower of the three zones fracced within the deeper Miocene reservoir,” Arnstein said in a note to clients.

Speaking with Proactive Investors Ascent’s Jeremy Eng said “it is very early days” in the testing of Pg-11A and it is too early to make any judgements on the sort of gas volumes that could be recovered. 

Although he highlighted that Ascent’s previous in-house estimates for the Petišovci core area, prior to drilling, were in the order of 400 billion cubic feet of gas-in-place and at this preliminary stage the frac on Pg-11A has exceeded previous expectations.

“(At this stage) it looks better than we had been expecting,” Eng told Proactive Investors.

Eng said that the company will have to wait and see whether the better-than-expected frac job could be repeated in the two deeper stages or whether the results could also be repeated on the Pg-10 well.

“(Frac results) can be fairly unpredictable,” he added. “When we have the final results we’ll publish them, but for now it is hard to estimate.”

Drilling was completed in June and Ascent has subsequently carried out a fraccing programme. This morning the group said that testing of the shallowest of three stages has already indicated good productivity. 

So far only preliminary test results are available and the interval is not yet fully cleaned up with gas being produced along with spent fracture fluids, Ascent said.  

Ascent said it is planning more testing on this first stage to ascertain flow capability.  Furthermore due to high pressures, resulting from the higher productivity, a revised procedure is being prepared for the clean-out and testing of the two deeper stages.

A subsequent four stage testing programme is planned for the Pg-10 well, which was drilled in August.

"The indications from the first test of the fracture treatment on the Pg-11A well are very encouraging and it is clear that the improvements in fracture stimulation technology in recent years have worked well in these formations,” Eng said in a stock exchange statement.

“Results so far obtained are more than adequate to support the further development of these resources."

Ascent owns a 75 per cent stake in the Petišovci project, alongside its Slovene partner Geoenergo which owns the remaining 25 per cent.