Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have been deemed inside information for the purposes of
Article 7 of Regulation (EU) No 596/2014 until the release of this announcement
29 July 2019
Ascent Resources plc
("Ascent" or the "Company")
Directorate Changes and Corporate Review
Ascent Resources plc (AIM: AST), an independent oil and gas exploration and production company, operating the Petišovci Tight Gas Project in Slovenia, is pleased to provide the following corporate update incorporating board changes, future strategic direction, permitting and cost reduction measures.
· Dr. John Buggenhagen appointed CEO
· Louis Castro appointed Non-Executive Chairman
· Colin Hutchinson resigns from the Board
· Dr. Cameron Davies retires from the Board
· Corporate review conducted to determine the future strategy of the Company
o Ascent to evaluate new regional opportunities with a view to diversifying asset base
· Legal claims against the Republic of Slovenia for breaches of EU law being progressed
· Cost reduction strategy to be implemented
o Net monthly cash outflow expected to be reduced by over 50%
Louis Castro, Non-Executive Chairman of Ascent Resources plc, commented:
"I would like to thank Cameron Davies and Colin Hutchinson for their years of dedicated service to the Company. Under their stewardship, the Company negotiated a gas sales agreement with INA, secured access to the export pipeline and successfully brought Petišovci into production in 2017. On behalf of the Board, I would like to wish them well in their future endeavours.
"I am also pleased to welcome John Buggenhagen as our new CEO. John's extensive oil & gas knowledge, combined with his experience of the industry within Central and Eastern Europe and strong network of contacts is both invaluable to the Company and also provides Ascent with the necessary tools to diversify its portfolio.
"I look forward to working with John to build upon the Company's previous achievements and develop Ascent into a dynamic Company that will deliver value for all shareholders."
John Buggenhagen, CEO of Ascent Resources plc, commented:
"I am delighted to lead Ascent going forward. While the ongoing permitting delays at Petišovci have been frustrating, the Board strongly believes that the key to the future of the Company lies in regional diversification of the portfolio.
"The past 15 years of my career have been spent in Central and Eastern Europe where several exciting E&P opportunities exist. It is my intention to identify the best of these opportunities and use my knowledge and experience of the region to identify, evaluate and negotiate any new potential transactions.
"We continue to pursue an appeal against the Environment Ministry in Slovenia, in conjunction with our joint venture partner at Petišovci, and we are prepared to initiate legal action against the Republic of Slovenia, who we believe is in breach of EU law, should the Slovenian government not allow the Company to realise the value of its investment.
"Following the corporate review of the business, the Board agreed that it was necessary to reduce the Company's overheads by implementing various cost reduction initiatives. Costs will be reduced at every level within the Company and we aim to stem the Company's net cash outflow by more than 50% without compromising on our legal, regulatory and ESG obligations, which we remain firmly committed to.
"While there is plenty of hard work ahead, I am optimistic about the future of Ascent and I look forward to working with Louis and our partners as we embark a new and exciting era for the Company. We look forward to updating the market on developments."
Dr. Cameron Davies has informed the Board of his decision to retire as Chairman with immediate effect. Cameron has been a Director of Ascent since 2010 and has provided valuable assistance to the management team in his role as Non-executive Director and more recently as Chairman.
Louis Castro will take over as Non-Executive Chairman with immediate effect. Louis has over 30 years' experience in investment banking and broking both in the UK and overseas. He was previously a Non-Executive Director and then CFO at Eland Oil and Gas PLC, an AIM quoted upstream oil and gas company. Louis is a Chartered Accountant and is currently a Non-Executive Director and Chairman of the Audit Committee at Stanley Gibbons Group plc and Jangada Mines plc.
Colin Hutchinson has informed the Board of his decision to step down as a director of the Company in order to pursue other business interests. Colin will be replaced as Chief Executive Officer by Ascent's current COO, Dr. John Buggenhagen, with immediate effect. Colin will continue to support the Board on a part-time basis as Finance Director until suitable alternative arrangements have been made.
Colin has been a Director of the Company since August 2014 and assumed the role of CEO in September 2015. During Colin's tenure as CEO, the Company concluded the gas sales agreement with INA, acquired Trameta to secure access to the export pipeline and brought Petišovci into production in 2017 by overseeing the recompletions at Pg-10 and Pg-11A.
Dr. John Buggenhagen is an experienced and dynamic geophysicist with 20 years' working knowledge of the industry, who has spent the last 15 years working in Central and Eastern Europe. Most recently, John was the CEO of Palomar Natural Resources, a Polish focussed E&P company. Previously he was the Director of Exploration for San Leon Energy in London and Exploration Manager Europe for Aspect Energy/Hungarian Horizon Energy in Budapest. John began his career as an exploration geophysicist for ConocoPhillips Alaska. John holds a B.S. in geophysics from the University of Arizona, and a M.S. and Ph.D. in geophysics from the University of Wyoming.
Future strategic direction
The revised Board will continue to pursue the strategy of diversifying and growing Ascent in the region, in jurisdictions with well-established oil & gas industries and developed regulatory systems. The Company is assessing several opportunities which offer the potential for near term production and material reserves. In parallel, the Board will continue to work to capture the value of the investment made in Slovenia, through the courts or otherwise.
Permitting & legal remedies
The Company continues to prepare legal claims for damages against the Republic of Slovenia for breaches of EU law in relation to the decision to require full environmental assessments for the re-stimulation of its existing Pg-10 and Pg-11A wells. The claims will be pursued in Slovenian and international courts. The Board will update shareholders on the status of those claims and potential funding for litigation in due course.
Cost reduction initiatives
Given the continued delays in increasing production at Petišovci, the Board is taking significant action to reduce costs across the Company. In aggregate, the impact of the cost cutting measures are expected to reduce net monthly cash outflow by over 50%.
In Slovenia, operating expenses and general costs are being minimised by reducing headcount and halting all non-essential expenditure, including suspending the May 2019 order for compression equipment for the Pg-10 and Pg-11A wells; the Company retains the option to proceed with the order.
In addition to the reductions in Slovenia, the Board has also cut costs at the corporate level by reducing board and management remuneration and terminating non-essential contracts with various parties.
Despite the cost reduction initiatives, the Directors will ensure that the Company continues to operate as an effective quoted company as it transitions to its next phase.
Ascent Resources plc
John Buggenhagen, CEO
Louis Castro, Chairman
020 7251 4905
WH Ireland, Nominated Adviser & Joint Broker
James Joyce / Chris Savidge
020 7220 1666
SP Angel, Joint Broker
Richard Redmayne / Richard Hail
020 3470 0470
Yellow Jersey, Financial PR and IR
Tim Thompson / Harriet Jackson / Henry Wilkinson
020 3004 9512